MICROSTRATEGY INCORPORATED 
By
Third quarter 2008 revenues were
Operating expenses for the third quarter of 2008 were
For the third quarter of 2008, MicroStrategy's effective tax rate on income from continuing operations was 40.7%, compared to 32.7% in the third quarter of 2007. The increase in the effective tax rate was primarily attributable to an increase in cross border withholding taxes and, to a lesser extent, net losses in certain foreign subsidiaries for which the Company is not currently able to recognize a tax benefit from those losses for financial reporting purposes.
As of
New Customers and New Deals with Existing Customers in Q3 2008 Included:
24 Hour Fitness; Air National Guard; AmerisourceBergen Services
Corporation; Avon Products, Inc.; Booz, Allen & Hamilton Inc.; Cabela's
Incorporated; Cancer Care Ontario; Capital Group Companies; Catalina Marketing
Corporation; Dana-Farber Cancer Institute; GE Healthcare; Honeywell Federal
Manufacturing & Technologies, LLC; Meijer Great Lakes Limited Partnership;
Memorial Sloan Kettering Cancer Center; Meredith Corporation; National
Aeronautics and Space Administration; Nordstrom, Inc.; NTT America, Inc.;
Pacific Sunwear; PMSI, Inc.; PPL Services Corporation;
Examples of Customer Deals from Q3 2008:
24 Hour Fitness
24 Hour Fitness, the largest fitness club chain in the U.S., has selected MicroStrategy to support its enterprise business intelligence applications. A new MicroStrategy customer, 24 Hour Fitness plans to use the MicroStrategy Business Intelligence Platform(TM) for reporting on and analyzing a wide range of key performance indicators for its 425 clubs. Club managers, field management, and corporate management will use MicroStrategy to gain greater insights into club traffic, member preferences, and sales and financial data to help them make more informed decisions. MicroStrategy was selected for its data and user scalability, broad range of reporting features and functionality, and excellent query performance.
Cabela's Incorporated
Cabela's, a leading specialty retailer of hunting, fishing, and outdoor gear, has chosen MicroStrategy as its enterprise reporting standard. MicroStrategy will be used across the organization for enhanced insights into key business areas, including inventory planning, customer service, sales administration, forecast analysis, and category management. In addition, MicroStrategy will be used to help Cabela's improve its online business by enabling Cabela's employees to review every item purchased online and better understand the items that customers typically purchase together.
Meredith Corporation
Meredith Corporation, headquartered in
NTT America, Inc.
NTT America, Inc., a wholly owned U.S. subsidiary of NTT Communications Corporation, selected MicroStrategy to analyze and monitor key customer service performance metrics. NTT America chose MicroStrategy's Dynamic Enterprise Dashboards(TM) to monitor customer service data, including response times to trouble tickets. NTT America executives and managers will use the MicroStrategy information dashboards for at-a-glance insights into customer service performance to help them make data-driven decisions. With MicroStrategy, NTT America expects to be able to improve its service response times, allocate resources more efficiently, and address other critical service areas to improve customer satisfaction and retention.
Latest Release of MicroStrategy Advanced Visualizations
In the third quarter of 2008, MicroStrategy announced the latest release of advanced visualization widgets for its Dynamic Enterprise Dashboards. MicroStrategy's library of advanced visualization widgets enables users to view data in a highly visual and interactive manner to augment data comprehension and enhance decision making. MicroStrategy leverages Adobe(R) Flash(R) to incorporate visualization, interactivity, and animation into its widgets.
MicroStrategy customers can use Adobe(R) Flex(TM) 2 and Flex 3 to create their own MicroStrategy-compatible visualization widgets to include in dashboards and reports. Some of the newest widgets include:
-- The Bubble Grid widget, which enables users to plot metric values as bubbles of different colors and sizes within a grid
-- The Funnel widget, a variation of a stacked percent bar chart in a funnel shape, which is well-suited for a variety of business purposes, including pipeline analyses for sales forecasts and sales process analysis
-- The Waterfall widget, which displays a series of increments and decrements that users can modify to perform a scenario analysis on the data and help identify causes for fluctuations in the business
MicroStrategy Recognized by Forbes
For the second consecutive year, MicroStrategy was named to the Forbes 200
Best Small Companies in America list. To qualify, companies must have sales
between
Enhanced Curriculum for MicroStrategy's Introduction to Enterprise BI Class
MicroStrategy recently updated the curriculum for its Introduction to Enterprise Business Intelligence class to address the changing BI needs of organizations and provide insights into MicroStrategy's latest product enhancements. The one-day class is offered at no charge to companies interested in learning about enterprise BI and the MicroStrategy Business Intelligence Platform(TM). MicroStrategy has offered the class since 2006, with thousands of participants attending classes held in cities around the world. Each quarter, MicroStrategy offers approximately 100 classes.
MicroStrategy Events
MicroStrategy held numerous Business Intelligence Symposia during the
third quarter, and has several more planned in the fourth quarter of 2008,
including in
About MicroStrategy Incorporated
Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. More information about MicroStrategy (Nasdaq: MSTR) is available at www.microstrategy.com.
MicroStrategy, MicroStrategy 8, MicroStrategy Business Intelligence
Platform, MicroStrategy Dynamic Enterprise Dashboards, MicroStrategy Mobile,
and MicroStrategy Integrity Manager are either trademarks or registered
trademarks of MicroStrategy Incorporated in
This press release may include statements that may constitute "forward- looking statements," including estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect" or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the "Company") to differ materially from the forward-looking statements. Factors that could contribute to such differences include: the ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 8 software on a timely basis; the Company's ability to recognize deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's products in the marketplace; the timing of significant orders; delays in the Company's ability to develop or ship new products; market acceptance of new products; the Company's ability to effect the sale of its Alarm.com business on acceptable terms, or at all; competitive factors; general economic conditions, including significant downturns in industries, including the financial services and retail industries, in which we have a significant number of customers; currency fluctuations; and other risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward- looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
Contact:
MicroStrategy Incorporated
Investor Relations
ir@microstrategy.com
(703) 848-8600
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues
Product licenses $24,787 $30,210 $67,966 $68,608
Product support and
other services 65,841 61,022 197,422 171,539
Total revenues 90,628 91,232 265,388 240,147
Cost of Revenues
Product licenses 422 713 1,442 2,156
Product support and
other services 16,304 11,784 45,898 34,925
Total cost of revenues 16,726 12,497 47,340 37,081
Gross profit 73,902 78,735 218,048 203,066
Operating Expenses
Sales and marketing 35,888 28,544 100,060 79,223
Research and development 5,922 9,279 24,449 25,126
General and administrative 14,744 12,170 47,055 37,176
Total operating expenses 56,554 49,993 171,564 141,525
Income from continuing
operations before financing
and other income and income
taxes 17,348 28,742 46,484 61,541
Financing and Other Income
Interest income, net 623 927 2,081 2,782
Other income (expense), net 694 (828) (269) (791)
Total financing and
other income 1,317 99 1,812 1,991
Income from continuing
operations before income
taxes 18,665 28,841 48,296 63,532
Provision for income taxes 7,593 9,439 20,365 22,797
Income from continuing
operations 11,072 19,402 27,931 40,735
Income (loss) from
discontinued operations,
net of tax provision
(benefit) ($53 and ($54)
for the three months
ended, respectively, and
$176 and $46 for the nine
months ended,
respectively) 52 (67) (383) 58
Net Income $11,124 $19,335 $27,548 $40,793
Basic earnings (loss) per
share (1):
From continuing
operations $0.93 $1.58 $2.35 $3.28
From discontinued
operations $0.01 $(0.01) $(0.03) $0.01
Basic earnings per
share $0.94 $1.57 $2.32 $3.29
Weighted average shares
outstanding used in
computing basic earnings
per share 11,887 12,286 11,890 12,416
Diluted earnings (loss)
per share (1):
From continuing
operations $0.90 $1.52 $2.26 $3.14
From discontinued
operations $0.00 $(0.01) $(0.03) $0.01
Diluted earnings per
share $0.90 $1.51 $2.23 $3.15
Weighted average shares
outstanding used in
computing diluted
earnings per share 12,306 12,771 12,332 12,953
(1) Basic and fully diluted earnings per share for class A and class B
common stock are the same
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Core BI Business Angel.com Consolidated
Three Months Three Months Three Months
Ended Ended Ended
September 30, September 30, September 30,
2008 2007 2008 2007 2008 2007
Revenues
Product licenses $24,787 $30,210 $- $- $24,787 $30,210
Product support
and other
services 63,153 59,197 - - 63,153 59,197
Angel.com
telephony
services - - 2,688 1,825 2,688 1,825
Total revenues 87,940 89,407 2,688 1,825 90,628 91,232
Cost of Revenues
Product licenses 422 713 - - 422 713
Product support
and services
revenues 15,908 11,277 - - 15,908 11,277
Angel.com
telephony
services - - 396 507 396 507
Total cost of
revenues 16,330 11,990 396 507 16,726 12,497
Gross profit 71,610 77,417 2,292 1,318 73,902 78,735
Operating
Expenses
Sales and
marketing 33,767 26,932 2,121 1,612 35,888 28,544
Research and
development 5,234 8,615 688 664 5,922 9,279
General and
administrative 14,679 12,163 65(a) 7(a) 14,744 12,170
Total
operating
expenses 53,680 47,710 2,874 2,283 56,554 49,993
Income (loss)
from continuing
operations 17,930 29,707 (582) (965) 17,348 28,742
Financing and
Other Income
Interest income,
net 623 927 - - 623 927
Other income
(expense), net 694 (828) - - 694 (828)
Total financing
and other
income 1,317 99 - - 1,317 99
Income (loss)
from continuing
operations
before
income taxes $19,247 $29,806 $(582) $(965) $18,665 $28,841
Provision for
income taxes 7,593 9,439
Income from
continuing
operations 11,072 19,402
Income (loss)
from
discontinued
operations,
net of tax 52 (67)
Net income $11,124 $19,335
Basic earnings
(loss) per
share:
From continuing
operations
$0.93 $1.58
From
discontinued
operations $0.01 $(0.01)
Basic
earnings
per share $0.94 $1.57
Diluted earnings
(loss) per share:
From continuing
operations $0.90 $1.52
From
discontinued
operations $0.00 $(0.01)
Diluted
earnings
per share $0.90 $1.51
Basic weighted
average shares
outstanding 11,887 12,286
Diluted weighted
average shares
outstanding 12,306 12,771
(a) An insignificant amount of general and administrative services is
provided to the Angel.com business unit by MicroStrategy's core
business operations.
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Core BI Business Angel.com Consolidated
Nine Months Nine Months Nine Months
Ended Ended Ended
September 30, September 30, September 30,
2008 2007 2008 2007 2008 2007
Revenues
Product licenses $67,966 $68,608 $- $- $67,966 $68,608
Product support
and other
services 189,629 166,622 - - 189,629 166,622
Angel.com
telephony
services - - 7,793 4,917 7,793 4,917
Total
revenues 257,595 235,230 7,793 4,917 265,388 240,147
Cost of Revenues
Product licenses 1,442 2,156 - - 1,442 2,156
Product support
and services
revenues 44,602 33,482 - - 44,602 33,482
Angel.com
telephony
services - - 1,296 1,443 1,296 1,443
Total cost of
revenues 46,044 35,638 1,296 1,443 47,340 37,081
Gross profit 211,551 199,592 6,497 3,474 218,048 203,066
Operating
Expenses
Sales and
marketing 93,962 74,684 6,098 4,539 100,060 79,223
Research and
development 22,229 23,048 2,220 2,078 24,449 25,126
General and
administrative 46,840 37,169 215(a) 7(a) 47,055 37,176
Total
operating
expenses 163,031 134,901 8,533 6,624 171,564 141,525
Income (loss)
from
continuing
operations 48,520 64,691 (2,036) (3,150) 46,484 61,541
Financing and
Other Income
Interest income,
net 2,081 2,782 - - 2,081 2,782
Other expense,
net (269) (791) - - (269) (791)
Total
financing
and other
income 1,812 1,991 - - 1,812 1,991
Income (loss)
from continuing
operations
before income
taxes $50,332 $66,682 $(2,036) $(3,150) $48,296 $63,532
Provision for
income taxes 20,365 22,797
Income from
continuing
operations 27,931 40,735
Income (loss)
from
discontinued
operations,
net of tax (383) 58
Net income $27,548 $40,793
Basic earnings
(loss) per share:
From
continuing
operations $2.35 $3.28
From
discontinued
operations $(0.03) $0.01
Basic
earnings
per share $2.32 $3.29
Diluted earnings
(loss) per share:
From
continuing
operations $2.26 $3.14
From
discontinued
operations $(0.03) $0.01
Diluted
earnings
per share $2.23 $3.15
Basic weighted
average shares
outstanding 11,890 12,416
Diluted weighted
average shares
outstanding 12,332 12,953
(a) An insignificant amount of general and administrative services is
provided to the Angel.com business unit by MicroStrategy's core
business operations.
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
September 30, December 31,
2008 2007
Assets (unaudited) (audited)
Current assets
Cash and cash equivalents $127,287 $85,194
Restricted cash and investments 514 2,982
Accounts receivable, net 45,196 49,392
Prepaid expenses and other current
assets 11,553 12,106
Deferred tax assets, net 24,535 29,652
Assets held-for-sale 7,663 4,272
Total current assets 216,748 183,598
Property and equipment, net 8,543 9,473
Capitalized software development
cost, net 9,573 2,340
Deposits and other assets 37,313 11,433
Deferred tax assets, net 26,710 35,347
Total Assets $298,887 $242,191
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $50,130 $22,083
Accrued compensation and employee
benefits 35,969 38,604
Deferred revenue and advance
payments 69,757 64,234
Liabilities held-for-sale 7,338 3,436
Total current liabilities 163,194 128,357
Deferred revenue and advance payments 1,569 1,368
Other long-term liabilities 9,647 9,137
Total Liabilities 174,410 138,862
Stockholders' Equity
Preferred stock undesignated,
$0.001 par value; 5,000 shares
authorized; no shares issued or
outstanding - -
Class A common stock, $0.001 par
value; 330,000 shares authorized;
14,165 shares issued and 9,118
shares outstanding, and 14,113
shares issued and 9,184 shares
outstanding, respectively 14 14
Class B common stock, $0.001 par
value; 165,000 shares authorized;
2,770 issued and outstanding,
respectively 3 3
Additional paid-in capital 450,622 448,229
Treasury stock, at cost; 5,047 and
4,929 shares, respectively (366,191) (357,804)
Accumulated other comprehensive income 2,523 2,929
Retained earnings 37,506 9,958
Total Stockholders' Equity 124,477 103,329
Total Liabilities and Stockholders' Equity $298,887 $242,191
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2008 2007
Operating activities:
Net income $27,548 $40,793
Plus: Loss (income) from
discontinued operations, net 383 (58)
Income from continuing
operations 27,931 40,735
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,825 5,710
Bad debt expense 1,074 1,447
Deferred taxes 13,655 18,559
Stock-based compensation 45 413
Excess tax benefits from stock-based
payment arrangements (241) (2,269)
Other, net 49 116
Changes in operating assets and liabilities:
Accounts receivable 3,617 5,710
Prepaid expenses and other current assets 176 (258)
Deposits and other assets (218) (1,414)
Accounts payable and accrued expenses,
compensation and employee benefits,
accrued interest 294 (8,447)
Deferred revenue and advance payments 6,071 6,579
Other long-term liabilities 568 37
Net cash provided by operating
activities from continuing operations 57,846 66,918
Net cash provided by (used in)
operating activities from discontinued
operations 1,399 (2,184)
Net cash provided by operating
activities 59,245 64,734
Investing activities:
Advance deposits on purchases of
property and equipment - (7,500)
Purchases of property and equipment (2,972) (2,819)
Capitalized software development costs (8,078) (2,650)
Decrease in restricted cash and
investments 1,062 997
Net cash used in investing activities
from continuing operations (9,988) (11,972)
Net cash used in investing activities
from discontinued operations (158) (49)
Net cash used in investing activities (10,146) (12,021)
Financing activities:
Proceeds from sale of class A common stock
under exercise of employee stock options
and employee stock purchase plan 2,073 2,013
Excess tax benefits from stock-based
payment arrangements 241 2,269
Purchases of treasury stock (8,387) (62,634)
Net cash used in financing activities
from continuing operations (6,073) (58,352)
Net cash used in financing activities
from discontinued operations - -
Net cash used in financing activities (6,073) (58,352)
Effect of foreign exchange rate changes
on cash and cash equivalents (933) 2,384
Net increase (decrease) in cash and
cash equivalents from continuing operations 42,093 (3,255)
Cash and cash equivalents, beginning
of period 85,194 78,980
Cash and cash equivalents, end of period $127,287 $75,725
SOURCE MicroStrategy Incorporated
