MicroStrategy Announces Third Quarter 2018 Financial Results 

TYSONS CORNER, Va., Oct. 26, 2018 -- MicroStrategy Incorporated, a leading worldwide provider of enterprise analytics and mobility software, has announced financial results for the three-month period ended September 30, 2018 (the third quarter of its 2018 fiscal year).

MicroStrategy adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) and its subsequent amendments (“ASU 2014-09”), effective January 1, 2018, and has adjusted its prior period consolidated financial statements to reflect full retrospective adoption.

Third quarter 2018 revenues were $122.2 million versus $126.0 million for the third quarter of 2017, a 3.1% decrease. Product licenses and subscription services revenues for the third quarter of 2018 were $27.5 million versus $30.1 million for the third quarter of 2017, an 8.6% decrease. Product support revenues for the third quarter of 2018 were $74.5 million versus $72.9 million for the third quarter of 2017, a 2.2% increase. Other services revenues for the third quarter of 2018 were $20.2 million versus $23.0 million for the third quarter of 2017, a 12.4% decrease. Foreign currency effects had an unfavorable impact on revenues for the third quarter of 2018.

Operating expenses for the third quarter of 2018 were $91.5 million versus $80.4 million for the third quarter of 2017, a 13.8% increase, reflecting MicroStrategy’s previously announced strategy to seek to take greater advantage of the opportunities in the market by increasing its sales and marketing expenditures and increasing its research and development expenditures as it invests in its technology products and personnel. MicroStrategy did not capitalize any software development costs during the third quarter of 2018 or 2017.

Income from operations for the third quarter of 2018 was $7.2 million versus $21.2 million for the third quarter of 2017. Net income for the third quarter of 2018 was $12.7 million, or $1.10 per share on a diluted basis, as compared to net income of $18.2 million, or $1.58 per share on a diluted basis, for the third quarter of 2017. Previously, in the fourth quarter of 2017, we recorded an estimated one-time tax charge of $44.0 million resulting from the enactment of U.S. corporate tax reform legislation. This charge included a $40.3 million tax expense related to the mandatory deemed repatriation of certain foreign earnings and profits. During the third quarter of 2018, we recorded a measurement-period adjustment to reduce our previously recorded one-time tax charge by $3.1 million. Excluding the impact of this measurement-period adjustment, non-GAAP net income for the third quarter of 2018 was $9.6 million, or $0.83 per share on a diluted basis.

Additionally, non-GAAP income from operations, which excludes share-based compensation expense, was $10.2 million for the third quarter of 2018 versus $24.8 million for the third quarter of 2017. The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three months ended September 30, 2018 and 2017. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below.

As of September 30, 2018, MicroStrategy had cash and cash equivalents and short-term investments of $699.2 million, as compared to $675.2 million as of December 31, 2017, an increase of $24.0 million. As of September 30, 2018, MicroStrategy had 9.4 million shares of class A common stock and 2.0 million shares of class B common stock outstanding.

The Company uses the MicroStrategy Intelligent Enterprise platform across the enterprise and has created an interactive dossier with quarterly financial performance data. Anyone can access the MSTR Financials dossier via a web browser, or by downloading the MicroStrategy Library app on an iOS or Android device. To download the native apps, visit MicroStrategy Library for iPad, MicroStrategy Library for iPhone, or MicroStrategy Library for Android tablet and smartphone.

Conference Call

MicroStrategy will be discussing its third quarter 2018 financial results on a conference call today beginning at approximately 5:00 p.m. EDT. To access the conference call, dial (844) 824-7425 (domestically) or (716) 220-9429 (internationally) and use conference ID 5562168. A live and archived webcast will be available under the “Events” section on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm. A replay of the conference call will be available beginning approximately two hours after the call concludes until November 1, 2018 at (855) 859-2056 (domestically) or (404) 537-3406 (internationally) using the passcode 5562168.

Source: MicroStrategy