Exhibit 99.1
Contact:
MicroStrategy Incorporated
Investor Relations
ir@microstrategy.com
(703) 848-8600
MicroStrategy Announces
Second Quarter 2007 Financial Results
Year-Over-Year Revenue Increases by 14%
MCLEAN, Va., July 27, 2007 - MicroStrategy® Incorporated (NASDAQ: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended June 30, 2007 (the second quarter of its 2007 fiscal year).
Second quarter 2007 revenue was $84.8 million versus $74.1 million for the second quarter of 2006, a 14% increase. Product licenses revenue for the second quarter of 2007 was $21.7 million versus $23.1 million for the second quarter of 2006, a 6% decrease. Product support and other services revenue for the second quarter of 2007 was $63.1 million versus $51.0 million for the second quarter of 2006, a 24% increase. Product support and other services revenue increased primarily due to an increase in technical support revenue and an increase in the hardware and services revenue generated by MicroStrategy’s Alarm.com subsidiary, which provides wireless and web-enabled security system technology to residential and commercial customers. Revenues from non-core operations, which consist of MicroStrategy’s Alarm.com subsidiary and Angel.com business unit, were $8.3 million for the second quarter of 2007 compared to $2.0 million for the second quarter of 2006. The cost of revenues attributable to these non-core operations was $6.0 million for the second quarter of 2007 compared to $0.8 million for the second quarter of 2006.
Operating expenses for the second quarter of 2007 were $48.3 million versus $39.8 million for the second quarter of 2006, a 22% increase. The increase in second quarter operating expenses was primarily due to an increase in the worldwide employee headcount of our core business intelligence (BI) business and reflects the continued expansion in the second quarter of 2007 of our worldwide sales and services organization and administrative and IT support functions. Operating expenses related to Alarm.com and Angel.com were $3.3 million in the second quarter of 2007 compared to $2.2 million in the second quarter of 2006, a 53% increase. Consolidated income from operations for the second quarter of 2007 was $18.4 million, or 22% of revenue, versus $23.7 million, or 32% of revenue, for the second quarter of 2006.
“The results of our core BI business in the second quarter continued to be mixed with a year-over-year increase in product support and other services revenue offset in part by a decline in product license revenues,” said Arthur S. Locke, III, MicroStrategy’s Vice President, Finance & Chief Financial Officer. “In the second quarter, we continued efforts to enhance our global sales and services organization although
we slowed the headcount growth in that organization in order to focus on integrating and leveraging the additional capacity that we now have in place. We are also considering strategic alternatives relating to our Alarm.com and Angel.com businesses.”
For the second quarter of 2007, MicroStrategy’s effective tax rate was 39.6% compared to 30.5% in the second quarter of 2006. The increase in the effective tax rate was primarily caused by net losses of certain foreign subsidiaries for which the company was not able to recognize a tax benefit for financial reporting purposes and the establishment of valuation allowances on certain foreign deferred tax assets. Net income for the second quarter of 2007 was $11.6 million, or $0.90 per share on a diluted basis, versus $16.6 million, or $1.21 per share on a diluted basis, for the second quarter of 2006.
As of June 30, 2007, MicroStrategy had $76.1 million in cash and cash equivalents and 9,638,150 shares of class A common stock and 2,775,244 shares of class B common stock outstanding.
New Customers and New Deals with Existing Customers in Q2 2007 Included:
Capital Group Companies; Classic Residence by Hyatt; The Container Store, Inc.; Cryptologic, Inc.; David’s Bridal; Dick’s Sporting Goods Inc.; The First American Financial Corporation; First Franklin Financial Corporation; Focus Technology Group; Gander Mountain; GE Healthcare; Goal Financial; Grange Insurance; IQ Solutions; KeyBank National Association; La Capitale Assurances Generales; LowerMyBills; Netflix; The NPD Group; Porsche Cars North America, Inc.; Ross Stores, Inc.; Sanmina SCI Corporation; SchoolNet; Starwood Hotels & Resorts, Inc.; TRX Data Services Inc.; US Department of State; Verisign; VSM Group; and Wells Fargo Bank, N.A.
Examples of Customer Deals from Q2 2007:
Dick’s Sporting Goods, Inc.
Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment, operating 309 stores in 34 states. Dick’s uses the MicroStrategy platform as its enterprise reporting standard to track product sales and inventory levels across its network of retail stores. With MicroStrategy, Dick’s employees perform sales, category, and inventory analyses enabling them to make analytically-based decisions that can improve business performance and customer service. Given the success of the MicroStrategy projects, Dick’s recently expanded its use of the MicroStrategy platform with the purchase of additional licenses to facilitate the fast-paced growth of the Dick’s store base.
Netflix Inc.
Netflix Inc., the world’s largest online movie rental service, has selected MicroStrategy as its enterprise reporting and analysis standard. Netflix will utilize MicroStrategy for reporting and analysis of financial data, marketing campaigns, and movie recommendations. With MicroStrategy, Netflix users will gain valuable insight into critical marketing data to evaluate marketing campaigns and personalized movie recommendation data, enhance its marketing programs, and better serve its subscriber base of 6.8 million members. MicroStrategy was selected by Netflix for its ease-of-use, robust reporting and analytical capabilities, and scalability for large databases.
Porsche Cars North America, Inc.
Porsche Cars North America, Inc. (PCNA), based in Atlanta, GA, and its subsidiary, Porsche Cars Canada, Ltd., are the exclusive importers of Porsche sports cars and Cayenne sport utility vehicles for the United States and Canada, Ltd, and is a wholly owned, indirect subsidiary of Dr. Ing. h.c. F. Porsche AG. PCNA uses the MicroStrategy Business Intelligence Platform to report on, analyze, and monitor marketing and sales performance information. With MicroStrategy, PCNA personnel can make analytically-based decisions that help Porsche dealerships enhance customer service and help the company achieve its
business objectives. PCNA recently expanded its deployment of MicroStrategy to support its growing business intelligence requirements.
Launch of MicroStrategy Mobile and MicroStrategy Integrity Manager:
MicroStrategy recently announced its plans to launch MicroStrategy Mobile™, a new product that delivers timely BI information directly to BlackBerry® smartphones from Research In Motion. With MicroStrategy Mobile, business users will receive the same reports on their BlackBerry smartphone as they receive on their desktop, without the need for reformatting or retrofitting existing reports. The report manipulation features available in MicroStrategy Mobile allow users to view even the largest reports within the compact screen size of the BlackBerry smartphone.
MicroStrategy Mobile was engineered to work cooperatively with other BlackBerry applications, including phone, e-mail, and text messages. Designed for all levels of users, MicroStrategy Mobile reports are displayed in an easy-to-view and easy-to-navigate format, enabling users to review, analyze, and interact with important data at their convenience. Users can also access reports while they are offline, or when their BlackBerry smartphone is not within connectivity range.
MicroStrategy Mobile is well-suited to meet the BI needs of a broad range of mobile workers:
| • | An executive from a large financial services company can monitor the organization’s top financial metrics and make time-sensitive decisions that impact the company’s bottom line while out of the country. |
| • | A retail buyer can access merchandise sales data to determine what is selling and not selling in specific stores to support purchasing and inventory reallocation discussions with store managers. |
| • | A pharmaceutical salesperson can review the latest market share reports, prescription sales, and inventory data to prepare for sales calls. |
| • | A manufacturer’s field technician can provide enhanced customer service on-site by checking the customer’s historical service record and product availability before scheduling a follow-up service call. |
| • | A marketing executive from a Fortune 500 company can evaluate the latest marketing campaign analytics while meeting with the advertising agency to make key decisions on future expenditures. |
MicroStrategy also announced its plans to launch MicroStrategy Integrity Manager™, a new product that tests the accuracy of BI applications by validating data and report integrity. MicroStrategy Integrity Manager automatically compares and verifies the consistency of reports as changes are made to the BI ecosystem, and then highlights issues and discrepancies to monitor the overall reliability of the BI content used by business decision makers.
MicroStrategy Integrity Manager reduces the need for resource-intensive manual testing by comparing versions of reports after data updates and throughout the BI development cycle, thereby automating report regression testing. Data inconsistencies can be captured much sooner in the development cycle, saving time in report testing, end user support, and issue resolution.
Every day, there are changes made in a company’s BI environment, and data can be corrupted or compromised, causing reports that are used by business decision-makers to become inaccurate.
Common types of BI ecosystem changes that require report and data validation include:
| • | Software upgrades – MicroStrategy Integrity Manager ensures that database and BI software upgrades designed to address defect fixes and enhancements do not impact report integrity, and that inconsistencies are identified so they can be corrected prior to being viewed by business users. |
| • | BI project migrations – As part of the normal BI development life cycle, developers continuously migrate entire BI projects or project objects across the development, test, and production |
environments. Administrators need to confirm that migrated objects perform as expected and do not negatively impact existing BI reports. |
| • | Data warehouse ETL processes – Data loads and ETL scripts can modify or even corrupt existing information within the data warehouse. Database administrators require certainty that the ETL processes are successfully completed, without altering previously loaded data and introducing inconsistencies to BI reports and content. |
| • | Database optimizations – System tuners can alter existing database objects and report parameters, or add new objects such as indexes and aggregate tables to improve report performance and system throughput. Developers need to ensure that subtle SQL changes and database alterations made for performance do not alter query results. |
| • | User profile modifications – As BI applications are modified to provide richer capabilities or as end users move roles within companies, administrators must modify user and user groups’ application privileges and data security profiles. Validation testing ensures that user profile changes do not improperly alter users’ BI reports. |
MicroStrategy Mobile and MicroStrategy Integrity Manager are currently in beta-testing and expected to be generally available in the second half of 2007, as part of the MicroStrategy 8.1.1 release.
MicroStrategy 2007 Events:
In May, MicroStrategy hosted a one-hour webcast, “Using Dashboards to Improve Corporate Performance: Top 10 Best Practices.” More than 1,000 people participated in the webcast, which included demonstrations of MicroStrategy’s new Dynamic Enterprise Dashboards; commentary from Wayne Eckerson, Director of TDWI Research; and speakers from Lowe’s Companies and Classic Residence by Hyatt.
The MicroStrategy Symposia series continued with events in London and New York City. Each Symposium featured technical sessions as well as presentations from MicroStrategy customers sharing best practices in deploying business intelligence applications in their organization. The MicroStrategy Symposium in London included customer presentations from Virgin Retail, Yahoo! Inc., Highways Agency, Amlin plc, and Cork County Council. Customer speakers at the MicroStrategy Symposium in New York City included Liz Claiborne Inc., Massachusetts General Hospital, Herbalife, Guy Carpenter & Company, Rite-Hite Corporation, Forest Laboratories, and Aperity.
Additional 2007 Symposia are scheduled in Sao Paulo, Chicago, and Paris. MicroStrategy also plans to hold Technology Day events in locations including Milan, Johannesburg, Zurich, San Francisco, Toronto, and Washington DC. These one-day events offer a technical and a business track, with practical tools to enhance business intelligence initiatives.
MicroStrategy plans to hold its biggest event next year, MicroStrategy World 2008, on January 14-17, 2008 at the InterContinental Miami in Miami, Florida. The conference will feature dozens of customer speakers from industry-leading organizations, more than 100 educational sessions, and an exhibit hall showcasing MicroStrategy partners. MicroStrategy World 2008 will also include an update on the company’s latest technology advances, insightful keynote presentations, and networking opportunities.
Industry Awards:
In June, Corporate Express US received the 2007 Best Practices Award from The Data Warehousing Institute (TDWI) for a MicroStrategy-based business intelligence application. TDWI’s Best Practices Awards program is designed to identify and honor companies that have demonstrated excellence in developing, deploying, and maintaining BI and Data Warehouse (DW) applications.
Corporate Express built a market basket application, leveraging MicroStrategy’s business intelligence technology to improve its online business. The application looks at each item purchased online and determines a list of complementary items to recommend to purchasers. The Corporate Express market
basket application uncovered insightful new data about the items that customers typically purchase together, enabling Corporate Express to present these items as complementary offerings to online customers. As a result, the average order size for orders with the market basket pairings is more than twice the average order size for orders without pairings. In addition, the information has helped Corporate Express to better serve its customers, with a deeper understanding of purchasing preferences.
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 atwww.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 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 ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 8.1 software and Dynamic Enterprise Dashboards 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, including any delays in shipping the MicroStrategy Mobile or MicroStrategy Integrity Manager products beyond the second half of 2007; market acceptance of new products; competitive factors; general economic conditions; 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.
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
| Revenues | |||||||||||||||
Product licenses | $ | 21,699 | $ | 23,111 | $ | 38,398 | $ | 46,244 | |||||||
Product support and other services | 63,107 | 50,995 | 118,836 | 97,360 | |||||||||||
Total revenues | 84,806 | 74,106 | 157,234 | 143,604 | |||||||||||
| Cost of Revenues | |||||||||||||||
Product licenses | 854 | 592 | 1,443 | 1,296 | |||||||||||
Product support and other services | 17,260 | 10,039 | 28,990 | 18,869 | |||||||||||
Total cost of revenues | 18,114 | 10,631 | 30,433 | 20,165 | |||||||||||
Gross profit | 66,692 | 63,475 | 126,801 | 123,439 | |||||||||||
| Operating Expenses | |||||||||||||||
Sales and marketing | 26,410 | 20,313 | 51,207 | 40,282 | |||||||||||
Research and development | 9,621 | 8,732 | 16,634 | 16,981 | |||||||||||
General and administrative | 12,268 | 10,716 | 25,868 | 21,466 | |||||||||||
Amortization of intangible assets | 18 | 18 | 36 | 36 | |||||||||||
Total operating expenses | 48,317 | 39,779 | 93,745 | 78,765 | |||||||||||
Income from operations | 18,375 | 23,696 | 33,056 | 44,674 | |||||||||||
| Financing and Other Income | |||||||||||||||
Interest income, net | 874 | 648 | 1,855 | 1,479 | |||||||||||
Other income (expense), net | (18 | ) | (515 | ) | 5 | (667 | ) | ||||||||
Total financing and other income | 856 | 133 | 1,860 | 812 | |||||||||||
Income before income taxes | 19,231 | 23,829 | 34,916 | 45,486 | |||||||||||
Provision for income taxes | 7,618 | 7,271 | 13,458 | 13,935 | |||||||||||
Net income | $ | 11,613 | $ | 16,558 | $ | 21,458 | $ | 31,551 | |||||||
Basic earnings per share | $ | 0.94 | $ | 1.27 | $ | 1.72 | $ | 2.37 | |||||||
Diluted earnings per share | $ | 0.90 | $ | 1.21 | $ | 1.64 | $ | 2.26 | |||||||
Basic weighted average shares outstanding | 12,404 | 13,024 | 12,484 | 13,295 | |||||||||||
Diluted weighted average shares outstanding | 12,940 | 13,678 | 13,048 | 13,990 | |||||||||||
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Core BI Business | Alarm.com | Angel.com | Consolidated | ||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||
Product licenses | $ | 21,699 | $ | 23,111 | $ | — | $ | — | $ | — | $ | — | $ | 21,699 | $ | 23,111 | |||||||||||||||
Product support and other services | 54,771 | 49,030 | — | — | — | — | 54,771 | 49,030 | |||||||||||||||||||||||
Angel.com telephony services | — | — | — | — | 1,582 | 1,080 | 1,582 | 1,080 | |||||||||||||||||||||||
Alarm.com hardware and services revenue | — | — | 6,754 | 885 | — | — | 6,754 | 885 | |||||||||||||||||||||||
Total revenues | 76,470 | 72,141 | 6,754 | 885 | 1,582 | 1,080 | 84,806 | 74,106 | |||||||||||||||||||||||
| Cost of Revenues | |||||||||||||||||||||||||||||||
Product licenses | 854 | 603 | — | — | — | (11 | ) | 854 | 592 | ||||||||||||||||||||||
Product support and other services | 11,278 | 9,248 | — | — | — | — | 11,278 | 9,248 | |||||||||||||||||||||||
Angel.com telephony services | — | — | — | — | 493 | 234 | 493 | 234 | |||||||||||||||||||||||
Alarm.com hardware and services | — | — | 5,489 | 557 | — | — | 5,489 | 557 | |||||||||||||||||||||||
Total cost of revenues | 12,132 | 9,851 | 5,489 | 557 | 493 | 223 | 18,114 | 10,631 | |||||||||||||||||||||||
Gross profit | 64,338 | 62,290 | 1,265 | 328 | 1,089 | 857 | 66,692 | 63,475 | |||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||
Sales and marketing | 24,587 | 19,026 | 314 | 227 | 1,509 | 1,060 | 26,410 | 20,313 | |||||||||||||||||||||||
Research and development | 8,507 | 8,050 | 414 | 240 | 700 | 442 | 9,621 | 8,732 | |||||||||||||||||||||||
General and administrative | 11,869 | 10,499 | 399 | 217 | — | (a) | — | (a) | 12,268 | 10,716 | |||||||||||||||||||||
Amortization of intangible assets | 18 | 18 | — | — | — | — | 18 | 18 | |||||||||||||||||||||||
Total operating expenses | 44,981 | 37,593 | 1,127 | 684 | 2,209 | 1,502 | 48,317 | 39,779 | |||||||||||||||||||||||
Income (loss) from operations | 19,357 | 24,697 | 138 | (356 | ) | (1,120 | ) | (645 | ) | 18,375 | 23,696 | ||||||||||||||||||||
| Financing and Other Income | |||||||||||||||||||||||||||||||
Interest income, net | 874 | 648 | — | — | — | — | 874 | 648 | |||||||||||||||||||||||
Other expense, net | (18 | ) | (515 | ) | — | — | — | — | (18 | ) | (515 | ) | |||||||||||||||||||
Total financing and other income | 856 | 133 | — | — | — | — | 856 | 133 | |||||||||||||||||||||||
Income (loss) before income taxes | $ | 20,213 | $ | 24,830 | $ | 138 | $ | (356 | ) | $ | (1,120 | ) | $ | (645 | ) | 19,231 | 23,829 | ||||||||||||||
Provision for income taxes | 7,618 | 7,271 | |||||||||||||||||||||||||||||
Net income | $ | 11,613 | $ | 16,558 | |||||||||||||||||||||||||||
Basic earnings per share | $ | 0.94 | $ | 1.27 | |||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.90 | $ | 1.21 | |||||||||||||||||||||||||||
Basic weighted average shares outstanding | 12,404 | 13,024 | |||||||||||||||||||||||||||||
Diluted weighted average shares outstanding | 12,940 | 13,678 | |||||||||||||||||||||||||||||
| (a) | An insignificant amount of general and administrative services is provided to the Angel.com business unit by MicroStrategy’s core business operations. |
| Core BI Business | Alarm.com | Angel.com | Consolidated | ||||||||||||||||||||||||||
| Six Months Ended | Six Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
Product licenses | $ | 38,398 | $ | 46,244 | $ | — | $ | — | $ | — | $ | — | $ | 38,398 | $ | 46,244 | |||||||||||||
Product support and other services | 107,425 | 93,666 | — | — | — | — | 107,425 | 93,666 | |||||||||||||||||||||
Angel.com telephony services | — | — | — | — | 3,092 | 2,236 | 3,092 | 2,236 | |||||||||||||||||||||
Alarm.com hardware and services revenue | — | — | 8,319 | 1,458 | — | — | 8,319 | 1,458 | |||||||||||||||||||||
Total revenues | 145,823 | 139,910 | 8,319 | 1,458 | 3,092 | 2,236 | 157,234 | 143,604 | |||||||||||||||||||||
| Cost of Revenues | |||||||||||||||||||||||||||||
Product licenses | 1,443 | 1,292 | — | — | — | 4 | 1,443 | 1,296 | |||||||||||||||||||||
Product support and other services | 22,205 | 17,231 | — | — | — | — | 22,205 | 17,231 | |||||||||||||||||||||
Angel.com telephony services | — | — | — | — | 936 | 465 | 936 | 465 | |||||||||||||||||||||
Alarm.com hardware and services | — | — | 5,849 | 1,173 | — | — | 5,849 | 1,173 | |||||||||||||||||||||
Total cost of revenues | 23,648 | 18,523 | 5,849 | 1,173 | 936 | 469 | 30,433 | 20,165 | |||||||||||||||||||||
Gross profit | 122,175 | 121,387 | 2,470 | 285 | 2,156 | 1,767 | 126,801 | 123,439 | |||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||
Sales and marketing | 47,752 | 38,055 | 528 | 370 | 2,927 | 1,857 | 51,207 | 40,282 | |||||||||||||||||||||
Research and development | 14,433 | 15,757 | 787 | 494 | 1,414 | 730 | 16,634 | 16,981 | |||||||||||||||||||||
General and administrative | 24,970 | 20,972 | 898 | 494 | — | (a) | — | (a) | 25,868 | 21,466 | |||||||||||||||||||
Amortization of intangible assets | 36 | 36 | — | — | — | — | 36 | 36 | |||||||||||||||||||||
Total operating expenses | 87,191 | 74,820 | 2,213 | 1,358 | 4,341 | 2,587 | 93,745 | 78,765 | |||||||||||||||||||||
Income (loss) from operations | 34,984 | 46,567 | 257 | (1,073 | ) | (2,185 | ) | (820 | ) | 33,056 | 44,674 | ||||||||||||||||||
| Financing and Other Income | |||||||||||||||||||||||||||||
Interest income, net | 1,855 | 1,479 | — | — | — | — | 1,855 | 1,479 | |||||||||||||||||||||
Other income (expense), net | 5 | (667 | ) | — | — | — | — | 5 | (667 | ) | |||||||||||||||||||
Total financing and other income | 1,860 | 812 | — | — | — | — | 1,860 | 812 | |||||||||||||||||||||
Income (loss) before income taxes | $ | 36,844 | $ | 47,379 | $ | 257 | $ | (1,073 | ) | $ | (2,185 | ) | $ | (820 | ) | 34,916 | 45,486 | ||||||||||||
Provision for income taxes | 13,458 | 13,935 | |||||||||||||||||||||||||||
Net income | $ | 21,458 | $ | 31,551 | |||||||||||||||||||||||||
Basic earnings per share | $ | 1.72 | $ | 2.37 | |||||||||||||||||||||||||
Diluted earnings per share | $ | 1.64 | $ | 2.26 | |||||||||||||||||||||||||
Basic weighted average shares outstanding | 12,484 | 13,295 | |||||||||||||||||||||||||||
Diluted weighted average shares outstanding | 13,048 | 13,990 | |||||||||||||||||||||||||||
| (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)
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
| (unaudited) | (audited) | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 76,140 | $ | 78,980 | ||||
Restricted cash and investments | 3,787 | 3,799 | ||||||
Short-term investments | 11 | 16 | ||||||
Accounts receivable, net | 41,215 | 54,468 | ||||||
Prepaid expenses and other current assets | 9,698 | 8,633 | ||||||
Deferred tax assets, net | 31,515 | 29,510 | ||||||
Total current assets | 162,366 | 175,406 | ||||||
Property and equipment, net | 10,486 | 11,102 | ||||||
Capitalized software development cost, net | 3,214 | 1,903 | ||||||
Deposits and other assets | 8,963 | 2,461 | ||||||
Deferred tax assets, net | 41,054 | 57,944 | ||||||
Total Assets | $ | 226,083 | $ | 248,816 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 23,077 | $ | 24,378 | ||||
Accrued compensation and employee benefits | 24,812 | 31,872 | ||||||
Deferred revenue and advance payments | 66,113 | 56,578 | ||||||
Total current liabilities | 114,002 | 112,828 | ||||||
Deferred revenue and advance payments | 1,894 | 1,127 | ||||||
Other long-term liabilities | 2,853 | 1,710 | ||||||
Total Liabilities | 118,749 | 115,665 | ||||||
| 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; 14,050 shares issued and 9,638 shares outstanding, and 13,972 shares issued and 9,918 shares outstanding, respectively | 14 | 14 | ||||||
Class B common stock; $0.001 par value; 165,000 shares authorized; 2,775 issued and outstanding for both periods | 3 | 3 | ||||||
Additional paid-in capital | 445,257 | 440,768 | ||||||
Treasury stock, at cost; 4,412 and 4,054 shares, respectively | (313,516 | ) | (268,776 | ) | ||||
Accumulated other comprehensive income | 2,628 | 3,123 | ||||||
Accumulated deficit | (27,052 | ) | (41,981 | ) | ||||
Total Stockholders’ Equity | 107,334 | 133,151 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 226,083 | $ | 248,816 | ||||
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six months ended | ||||||||
| June 30, | ||||||||
| 2007 | 2006 | |||||||
| (unaudited) | (unaudited) | |||||||
Operating activities: | ||||||||
Net income | $ | 21,458 | $ | 31,551 | ||||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,855 | 3,886 | ||||||
Bad debt provision | 626 | 656 | ||||||
Deferred taxes | 10,647 | 11,981 | ||||||
Share-based compensation | 307 | 821 | ||||||
Excess tax benefits from share-based payment arrangements | (2,191 | ) | (2,214 | ) | ||||
Other, net | 70 | 50 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 12,954 | 9,444 | ||||||
Prepaid expenses and other current assets | (886 | ) | (1,074 | ) | ||||
Deposits and other assets | (6,512 | ) | 391 | |||||
Accounts payable and accrued expenses, compensation and employee benefits | (9,329 | ) | (8,055 | ) | ||||
Deferred revenue and advance payments | 9,293 | 11,853 | ||||||
Other long-term liabilities | 1,336 | (273 | ) | |||||
Net cash provided by operating activities | 41,628 | 59,017 | ||||||
Investing activities: | ||||||||
Proceeds from maturities of short-term investments | — | 106,691 | ||||||
Purchases of short-term investments | — | (52,924 | ) | |||||
Purchases of property and equipment, net | (2,112 | ) | (1,622 | ) | ||||
Capitalized software development costs | (2,419 | ) | — | |||||
Increase in restricted cash and investments | 39 | (97 | ) | |||||
Net cash (used in) provided by investing activities | (4,492 | ) | 52,048 | |||||
Financing activities: | ||||||||
Proceeds from sale of class A common stock under employee stock purchase plan and exercise of employee stock options | 1,816 | 2,758 | ||||||
Excess tax benefits from share-based payment arrangements | 2,191 | 2,214 | ||||||
Purchases of treasury stock | (44,740 | ) | (112,807 | ) | ||||
Net cash used in financing activities | (40,733 | ) | (107,835 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 757 | 1,392 | ||||||
Net (decrease) increase in cash and cash equivalents | (2,840 | ) | 4,622 | |||||
Cash and cash equivalents, beginning of period | 78,980 | 42,318 | ||||||
Cash and cash equivalents, end of period | $ | 76,140 | $ | 46,940 | ||||