- Published: 30 October 2009
- Written by Editor
MicroStrategy Announces Third Quarter 2009 Financial Results 39% Increase in License Revenue Year-Over-YearDiluted Earnings Per Share of $1.73
MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended September 30, 2009 (the third quarter of its 2009 fiscal year).
Third quarter 2009 revenues were $104.0 million versus $90.6 million for the third quarter of 2008, a 15% increase. Product licenses revenues for the third quarter of 2009 were $34.4 million versus $24.8 million for the third quarter of 2008, a 39% increase. Product support and other services revenues for MicroStrategy's core business intelligence (BI) business in the third quarter of 2009 were $65.7 million versus $63.2 million for the third quarter of 2008, a 4% increase.
Operating expenses for the third quarter of 2009 were $57.1 million versus $56.6 million for the third quarter of 2008, a 1% increase. During the third quarter of 2008, MicroStrategy capitalized $5.2 million in research and development costs associated with the development of its MicroStrategy 9(TM) software, while no software development costs have been capitalized since the general release of MicroStrategy 9 in March 2009.
Income from continuing operations before financing and other income and income taxes for the third quarter of 2009 was $30.4 million, or 29% of revenue, versus $17.3 million, or 19% of revenue, for the third quarter of 2008, a 75% increase. Net income for the third quarter of 2009 was $21.4 million, or $1.73 per share on a diluted basis, compared to $11.1 million, or $0.90 per share on a diluted basis, for the third quarter of 2008, a 92% increase.
As of September 30, 2009, MicroStrategy had cash and cash equivalents of approximately $200.7 million versus $122.9 million as of December 31, 2008, an increase of $77.8 million. As of September 30, 2009, MicroStrategy had 9,144,581 shares of class A common stock and 2,770,244 shares of class B common stock outstanding.
New Customers and New Deals with Existing Customers in Q3 2009 Included:
Aeropostale; Air National Guard; Amica Mutual Insurance; Bell Canada; The Bon-Ton Stores; Burlington Coat Factory; Centers for Medicare and Medicaid Services; Charming Shoppes; Chevron Products Company; DineEquity; Discovery Communications; Electronic Arts; The First American Corporation; Foresters; Franklin Templeton Companies; Fraser Health Authority; Freddie Mac; Grange Insurance; GUESS?; Harris Teeter; JC Penney; Kohl's Department Stores; Limited Brands; McAfee; Merkle; Michaels Stores; National Institutes of Health (NIH); Netflix; NTT America; Nu Skin Enterprises; Payless ShoeSource; PHI Service Company; PPL Services Corporation; Ross Stores; SDI; Tesco Group; Transportation Security Administration; Universal Music Group; Urban Outfitters; US Department of State; Warner Bros. Entertainment; The William Carter Company; Yum! Brands
Examples of Customer Deals from Q3 2009:
Grange Insurance
Grange Insurance, with $2 billion in assets and $1.3 billion in annual revenue, is an insurance provider based in Columbus, Ohio, and has been a MicroStrategy customer since 2001. MicroStrategy supports 15 BI applications at Grange for various operational functions, including agency analysis and risk pool business analysis. Grange will be expanding its use of MicroStrategy to leverage Distribution Services, a new product introduced in the MicroStrategy 9 BI platform, to provide high-volume, high-performance, automated report distribution. With the new capabilities, Grange expects to notify adjusters with critical information in order to reduce claim cycle time and better monitor their business.
NTT America, Inc.
NTT America, Inc., the U.S. subsidiary of NTT Communications Corporation, recently expanded its deployment of MicroStrategy to enhance its financial reporting and provide visibility throughout the enterprise. NTT America executives and managers use MicroStrategy information dashboards for at-a-glance insights into financial reports to help the company improve budget allocations, utilize resources more efficiently, and address other critical financial metrics to improve their business.
Tesco Group
UK-based retailer Tesco Group, with over 465,000 employees and 4,226 stores operating in 14 markets across Europe, Asia, and North America, has invested in the MicroStrategy Business Intelligence Platform(TM) to deliver enterprise-wide BI across their operations. Tesco plans to use MicroStrategy to deliver head office analytics and self-service BI, including in-store dashboards across its enterprise. Following a rigorous selection process, Tesco chose MicroStrategy for its lower total cost of ownership and reduced carbon foot-print compared to previous solutions, as MicroStrategy demonstrated that it was able to run on fewer servers and make more efficient use of Tesco's existing data warehouse platform.
Gartner Publishes MicroStrategy SWOT Report:
Gartner, Inc. recently published the report, "SWOT: MicroStrategy, Business Intelligence Platforms, Worldwide."( )According to Gartner, MicroStrategy is one of the leading business intelligence (BI) platform vendors. This document offers a strength, weakness, opportunity, and threat (SWOT) framework for assessing the MicroStrategy 9 BI Platform and related offerings. A copy of the Gartner report is available, compliments of MicroStrategy, at http://www.microstrategy.com/gartnerswot.
MicroStrategy 9 Certified on VMware Virtualization Platform:
MicroStrategy announced that customers can now deploy MicroStrategy 9 BI applications on VMware-based virtual machines, enabling BI applications to achieve the hardware efficiencies, streamlined operations, and low cost of operation available through virtualization. Virtual machine technology allows companies to increase processing capacity from their servers by pooling that capacity across multiple applications and operating systems. Large BI applications that have varying usage throughout the day will benefit from a virtual environment where processing power can be fully utilized during peak times and directed to other applications when BI demand is low.
By running MicroStrategy in a virtual environment, companies will be able to use less server hardware and require fewer IT personnel to manage and maintain their BI systems, leading to overall lower capital costs and reduced operating expenses. To try MicroStrategy 9 Evaluation software on VMware, visit http://www.microstrategy.com/freeevalcd.asp.
MicroStrategy Augments OEM Program with New Product Capabilities for SaaS Companies:
MicroStrategy has enhanced its OEM program with new product capabilities for Software-as-a-Service (SaaS) companies. MicroStrategy 9 offers new capabilities specifically for SaaS companies, including enhanced end user design features, in-memory BI enabling higher data scalability to support larger multi-tenant systems, improved security integration with third-party tools, a plug-in architecture for simpler customization, and the ability for different companies to use their own reporting terminology, even across multiple languages within the same multi-tenant application.
MicroStrategy's business intelligence platform provides integrated reporting and analytics, allowing software companies and technology providers to easily add reporting, dashboarding, and analytical and alerting applications to their existing product offerings with minimal development costs and resources. MicroStrategy's portfolio of OEM partners has continued to expand, and companies choosing MicroStrategy for SaaS BI deployments have represented the largest area of growth within the Company's OEM program.
MicroStrategy Events:
On October 28, 2009, MicroStrategy hosted a live Webcast, "Top 5 Strategies for Business Intelligence Success in Today's Economic Environment." The Webcast featured best practices for rapid BI reporting for small to mid-sized businesses, along with a live demo of MicroStrategy Reporting Suite(TM) and insights from leading industry analyst Cindi Howson. Launched earlier this year, MicroStrategy Reporting Suite enables companies to use MicroStrategy's integrated BI platform to develop and deploy premium, Web-based reporting applications, at no cost. MicroStrategy Reporting Suite has eliminated cost and time impediments for departments and workgroups to initiate new reporting applications. More information is available at http://www.microstrategy.com/freereportingsoftware.
MicroStrategy held numerous Business Intelligence Symposia during the third quarter, and has several more planned in the fourth quarter at various locations including the following: Lisbon, Sydney, Paris, Melbourne, Milan, and Johannesburg.
The Company's 13th annual user conference, MicroStrategy World 2010, will be held January 25-28, 2010 at the Wynn Las Vegas in Las Vegas, Nevada. The event will feature more than 100 educational sessions, dozens of customer speakers from industry-leading organizations, and an exhibit hall showcasing MicroStrategy partners. MicroStrategy World 2010 will also include an update on the Company's latest technology advances, insightful keynote presentations, and networking opportunities.
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 9, MicroStrategy Reporting Suite, MicroStrategy Business Intelligence Platform and MicroStrategy Distribution Services are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.
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 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; 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.
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MicroStrategy Incorporated
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MSTR-F
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues
Product licenses $34,443 $24,787 $71,897 $67,966
Product support and
other services 69,574 65,841 200,120 197,422
------ ------ ------- -------
Total revenues 104,017 90,628 272,017 265,388
------- ------ ------- -------
Cost of Revenues
Product licenses 1,947 422 4,523 1,442
Product support and
other services 14,592 16,304 42,614 45,898
------ ------ ------ ------
Total cost of
revenues 16,539 16,726 47,137 47,340
------ ------ ------ ------
Gross profit 87,478 73,902 224,880 218,048
------ ------ ------- -------
Operating Expenses
Sales and marketing 31,489 35,888 93,376 100,060
Research and
development 11,400 5,922 30,407 24,449
General and
administrative 14,204 14,744 41,348 47,055
------ ------ ------ ------
Total operating
expenses 57,093 56,554 165,131 171,564
------ ------ ------- -------
Income from continuing
operations before
financing and other
income and income
taxes 30,385 17,348 59,749 46,484
------ ------ ------ ------
Financing and Other
(Expense) Income
Interest income, net 121 623 516 2,081
Other (expense)
income, net (422) 694 (1,626) (269)
---- --- ------ ----
Total financing and
other (expense)
income (301) 1,317 (1,110) 1,812
---- ----- ------ -----
Income from continuing
operations before
income taxes 30,084 18,665 58,639 48,296
Provision for income
taxes 8,730 7,593 18,673 20,365
----- ----- ------ ------
Income from
continuing operations 21,354 11,072 39,966 27,931
Discontinued operations:
Gain from sale of
discontinued
operations, net of
tax provision
($11,190 and $0,
respectively) - - 14,437 -
Income (loss) from
discontinued
operations, net of
tax provision
(benefit) ($0 and $53,
for the three months
ended, respectively,
and ($54) and $176 for
the nine months ended,
respectively) - 52 (107) (383)
--- -- ---- ----
Discontinued operations,
net of tax - 52 14,330 (383)
--- -- ------ ----
------- ------- ------- -------
Net Income $21,354 $11,124 $54,296 $27,548
------- ------- ------- -------
Basic earnings (loss)
per share (1):
From continuing
operations $1.79 $0.93 $3.36 $2.35
From discontinued
operations $- $0.01 $1.20 $(0.03)
-- ----- ----- ------
Basic earnings per
share $1.79 $0.94 $4.56 $2.32
----- ----- ----- -----
Weighted average shares
outstanding used in
computing basic earnings
per share 11,909 11,887 11,898 11,890
------ ------ ------ ------
Diluted earnings (loss)
per share (1):
From continuing
operations $1.73 $0.90 $3.26 $2.26
From discontinued
operations $- $- $1.17 $(0.03)
-- -- ----- ------
Diluted earnings per
share $1.73 $0.90 $4.43 $2.23
----- ----- ----- -----
Weighted average shares
outstanding used in
computing diluted
earnings per share 12,311 12,306 12,262 12,332
------ ------ ------ ------
(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,
------------- ------------- -------------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Revenues
Product licenses $34,443 $24,787 $- $- $34,443 $24,787
Product support and
other services 65,721 63,153 - - 65,721 63,153
Angel.com services - - 3,853 2,688 3,853 2,688
--- --- ----- ----- ----- -----
Total revenues 100,164 87,940 3,853 2,688 104,017 90,628
------- ------ ----- ----- ------- ------
Cost of Revenues
Product licenses 1,947 422 - - 1,947 422
Product support and
other services 13,048 15,908 - - 13,048 15,908
Angel.com services - - 1,544 396 1,544 396
--- --- ----- --- ----- ---
Total cost of
revenues 14,995 16,330 1,544 396 16,539 16,726
------ ------ ----- --- ------ ------
Gross profit 85,169 71,610 2,309 2,292 87,478 73,902
------ ------ ----- ----- ------ ------
Operating Expenses
Sales and marketing 30,364 33,767 1,125 2,121 31,489 35,888
Research and
development 10,443 5,234 957 688 11,400 5,922
General and
administrative 13,817 14,679 387 65(a) 14,204 14,744
------ ------ --- -- ------ ------
Total operating
expenses 54,624 53,680 2,469 2,874 57,093 56,554
------ ------ ----- ----- ------ ------
Income (loss) from
continuing operations
before financing and
other income and
income taxes 30,545 17,930 (160) (582) 30,385 17,348
------ ------ ---- ---- ------ ------
Financing and Other
(Expense) Income
Interest income, net 121 623 - - 121 623
Other (expense)
income, net (422) 694 - - (422) 694
---- --- --- --- ---- ---
Total financing and
other (expense)
income (301) 1,317 - - (301) 1,317
---- ----- --- --- ---- -----
Income (loss) from
continuing
operations before
income taxes $30,244 $19,247 $(160) $(582) $30,084 $18,665
Provision for
income taxes 8,730 7,593
----- -----
Income from
continuing
operations 21,354 11,072
Discontinued
operations:
Income from
discontinued
operations,
net of tax - 52
--- --
Discontinued
operations,
net of tax - 52
------- -------
Net income $21,354 $11,124
======= =======
Basic earnings
per share:
From
continuing
operations $1.79 $0.93
From
discontinued
operations $- $0.01
-- -----
Basic
earnings
per share $1.79 $0.94
----- -----
Diluted earnings
per share:
From
continuing
operations $1.73 $0.90
From
discontinued
operations $- $-
-- --
Diluted
earnings
per share $1.73 $0.90
----- -----
Basic weighted
average shares
outstanding 11,909 11,887
====== ======
Diluted weighted
average shares
outstanding 12,311 12,306
====== ======
(a) An insignificant amount of general and administrative services was
provided to the Angel.com business unit by MicroStrategy's core
business operations during the three months ended September 30, 2008.
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,
------------- ------------- -------------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Revenues
Product licenses $71,897 $67,966 $- $- $71,897 $67,966
Product support and
other services 190,451 189,629 - - 190,451 189,629
Angel.com services - - 9,669 7,793 9,669 7,793
--- --- ----- ----- ----- -----
Total revenues 262,348 257,595 9,669 7,793 272,017 265,388
------- ------- ----- ----- ------- -------
Cost of Revenues
Product licenses 4,523 1,442 - - 4,523 1,442
Product support and
services revenues 38,780 44,602 - - 38,780 44,602
Angel.com services - - 3,834 1,296 3,834 1,296
--- --- ----- ----- ----- -----
Total cost of
revenues 43,303 46,044 3,834 1,296 47,137 47,340
------ ------ ----- ----- ------ ------
Gross profit 219,045 211,551 5,835 6,497 224,880 218,048
------- ------- ----- ----- ------- -------
Operating Expenses
Sales and marketing 90,012 93,962 3,364 6,098 93,376 100,060
Research and
development 27,582 22,229 2,825 2,220 30,407 24,449
General and
administrative 40,077 46,840 1,271 215(a) 41,348 47,055
------ ------ ----- --- ------ ------
Total operating
expenses 157,671 163,031 7,460 8,533 165,131 171,564
------- ------- ----- ----- ------- -------
Income (loss) from
continuing operations
before financing
and other income
and income taxes 61,374 48,520 (1,625) (2,036) 59,749 46,484
------ ------ ------ ------ ------ ------
Financing and Other
(Expense) Income
Interest income, net 516 2,081 - - 516 2,081
Other expense, net (1,626) (269) - - (1,626) (269)
------ ---- --- --- ------ ----
Total financing and
other (expense)
income (1,110) 1,812 - - (1,110) 1,812
------ ----- --- --- ------ -----
Income (loss) from
continuing
operations before
income taxes $60,264 $50,332 $(1,625) $(2,036) $58,639 $48,296
Provision for
income taxes 18,673 20,365
------ ------
Income from
continuing
operations 39,966 27,931
Discontinued
operations:
Gain from sale
of discontinued
operations,
net of tax 14,437 -
Loss from
discontinued
operations,
net of tax (107) (383)
---- ----
Discontinued
operations,
net of tax 14,330 (383)
------- -------
Net income $54,296 $27,548
======= =======
Basic earnings
(loss) per share:
From
continuing
operations $3.36 $2.35
From
discontinued
operations $1.20 $(0.03)
----- ------
Basic
earnings
per share $4.56 $2.32
----- -----
Diluted earnings
(loss) per share:
From
continuing
operations $3.26 $2.26
From
discontinued
operations $1.17 $(0.03)
----- ------
Diluted
earnings
per share $4.43 $2.23
----- -----
Basic weighted
average shares
outstanding 11,898 11,890
====== ======
Diluted weighted
average shares
outstanding 12,262 12,332
====== ======
(a) An insignificant amount of general and administrative services was
provided to the Angel.com business unit by MicroStrategy's core
business operations during the nine months ended September 30, 2008.
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
September 30, December 31,
2009 2008
---- ----
Assets (unaudited) (audited)
Current assets
Cash and cash equivalents $200,670 $122,915
Restricted cash and investments 321 619
Accounts receivable, net 56,010 49,670
Prepaid expenses and other current assets 10,145 9,518
Deferred tax assets, net 14,857 26,743
Assets held-for-sale - 4,964
--- -----
Total current assets 282,003 214,429
Property and equipment, net 7,220 8,978
Capitalized software development cost, net 15,161 14,823
Deposits and other assets 36,414 36,804
Deferred tax assets, net 5,767 17,105
----- ------
Total Assets $346,565 $292,139
-------- --------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $26,191 $27,697
Accrued compensation and employee benefits 39,607 42,634
Deferred revenue and advance payments 73,045 66,495
Deferred tax liabilities 556 -
Liabilities held-for-sale - 6,325
--- -----
Total current liabilities 139,399 143,151
Deferred revenue and advance payments 3,848 1,679
Other long-term liabilities 10,869 9,268
------ -----
Total Liabilities 154,116 154,098
------- -------
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; 14,192 shares
issued and 9,145 shares outstanding, and
14,167 shares issued and 9,120 shares
outstanding, respectively 14 14
Class B common stock, $0.001 par value;
165,000 shares authorized; 2,770 issued
and outstanding 3 3
Additional paid-in capital 451,705 450,953
Treasury stock, at cost; 5,047 shares (366,191) (366,191)
Accumulated other comprehensive income 831 1,471
Retained earnings 106,087 51,791
------- ------
Total Stockholders' Equity 192,449 138,041
------- -------
Total Liabilities and Stockholders' Equity $346,565 $292,139
-------- --------
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2009 2008
---- ----
Operating activities:
Net income $54,296 $27,548
Plus: (Income) loss from discontinued operations,
net (14,330) 383
------- ---
Income from continuing operations 39,966 27,931
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,681 4,825
Bad debt expense 1,153 1,074
Deferred taxes 14,294 13,655
Stock-based compensation - 45
Excess tax benefits from stock-based payment
arrangements (200) (241)
Other, net (10) 49
Changes in operating assets and liabilities:
Accounts receivable (7,900) 3,617
Prepaid expenses and other current assets (445) 176
Deposits and other assets 254 (218)
Accounts payable and accrued expenses (1,948) 2,034
Accrued compensation and employee benefits (4,224) (1,740)
Deferred revenue and advance payments 7,085 6,071
Other long-term liabilities 1,572 568
----- ---
Net cash provided by operating activities from
continuing operations 57,278 57,846
Net cash (used in) provided by operating
activities from discontinued operations (472) 1,399
---- -----
Net cash provided by operating activities 56,806 59,245
------ ------
Investing activities:
Purchases of property and equipment (1,860) (2,972)
Capitalized software development costs (4,218) (8,078)
Decrease in restricted cash and investments 504 1,062
--- -----
Net cash used in investing activities from
continuing operations (5,574) (9,988)
Net cash provided by (used in) investing
activities from discontinued operations 24,546 (158)
------ ----
Net cash provided by (used in) investing
activities 18,972 (10,146)
------ -------
Financing activities:
Distribution to Alarm.com minority shareholders (60) -
Proceeds from sale of class A common stock under
exercise of employee stock options 565 2,073
Excess tax benefits from stock-based payment
arrangements 200 241
Purchases of treasury stock - (8,387)
--- ------
Net cash provided by (used in) financing
activities from continuing operations 705 (6,073)
Net cash provided by financing activities from
discontinued operations - -
--- ---
Net cash provided by (used in) financing
activities 705 (6,073)
Effect of foreign exchange rate changes on cash
and cash equivalents 1,272 (933)
----- ----
Net increase in cash and cash equivalents 77,755 42,093
Cash and cash equivalents, beginning of period 122,915 85,194
------- ------
Cash and cash equivalents, end of period $200,670 $127,287
======== ========
SOURCE MicroStrategy Incorporated
