Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | ||
Sep. 30, 2013 | Oct. 22, 2013 | Oct. 22, 2013 | |
Class A | Class B Convertible | ||
Document Information [Line Items] | |||
Document Type | 10-Q | ||
Amendment Flag | FALSE | ||
Document Period End Date | 30-Sep-13 | ||
Document Fiscal Year Focus | 2013 | ||
Document Fiscal Period Focus | Q3 | ||
Trading Symbol | MSTR | ||
Entity Registrant Name | MICROSTRATEGY INC | ||
Entity Central Index Key | 1050446 | ||
Current Fiscal Year End Date | -19 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 9,073,710 | 2,227,327 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $163,777 | $223,043 |
Restricted cash | 194 | 50 |
Short-term investments | 180,171 | 36 |
Accounts receivable, net | 62,869 | 89,038 |
Prepaid expenses and other current assets | 13,597 | 12,689 |
Deferred tax assets, net | 21,038 | 26,616 |
Assets held-for-sale | 0 | 10,571 |
Total current assets | 441,646 | 362,043 |
Property and equipment, net | 89,165 | 96,751 |
Capitalized software development costs, net | 11,896 | 10,360 |
Deposits and other assets | 6,882 | 5,120 |
Deferred tax assets, net | 3,088 | 3,664 |
Total assets | 552,677 | 477,938 |
Current liabilities: | ||
Accounts payable and accrued expenses | 36,864 | 40,905 |
Accrued compensation and employee benefits | 64,450 | 71,789 |
Deferred revenue and advance payments | 117,785 | 101,249 |
Deferred tax liabilities | 336 | 523 |
Liabilities held-for-sale | 0 | 4,689 |
Total current liabilities | 219,435 | 219,155 |
Deferred revenue and advance payments | 9,131 | 8,823 |
Other long-term liabilities | 26,602 | 43,418 |
Deferred tax liabilities | 5,427 | 6,231 |
Total liabilities | 260,595 | 277,627 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Additional paid-in capital | 492,453 | 468,087 |
Treasury stock, at cost; 6,405 shares | -475,184 | -475,184 |
Accumulated other comprehensive loss | -1,294 | -1,515 |
Retained earnings | 276,090 | 208,906 |
Total stockholders' equity | 292,082 | 200,311 |
Total liabilities and stockholders' equity | 552,677 | 477,938 |
Class A | ||
Stockholders' Equity | ||
Common stock | 15 | 15 |
Class B Convertible | ||
Stockholders' Equity | ||
Common stock | $2 | $2 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Treasury stock, shares | 6,405,000 | 6,405,000 |
Class A | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 330,000,000 | 330,000,000 |
Common stock, shares issued | 15,478,000 | 15,462,000 |
Common stock, shares outstanding | 9,073,000 | 9,057,000 |
Class B Convertible | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 165,000,000 | 165,000,000 |
Common stock, shares issued | 2,227,000 | 2,227,000 |
Common stock, shares outstanding | 2,227,000 | 2,227,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Revenues: | ||||||||
Product licenses | $33,753 | $31,736 | $92,726 | $101,079 | ||||
Product support and other services | 108,166 | 104,344 | 317,281 | 308,659 | ||||
Total revenues | 141,919 | 136,080 | 410,007 | 409,738 | ||||
Cost of revenues: | ||||||||
Product licenses | 1,336 | 1,059 | 4,550 | 4,187 | ||||
Product support and other services | 31,917 | 33,788 | 101,050 | 100,450 | ||||
Total cost of revenues | 33,253 | 34,847 | 105,600 | 104,637 | ||||
Gross profit | 108,666 | 101,233 | 304,407 | 305,101 | ||||
Operating expenses: | ||||||||
Sales and marketing | 50,798 | 49,551 | 154,198 | 153,385 | ||||
Research and development | 21,977 | 21,920 | 72,021 | 63,111 | ||||
General and administrative | 24,265 | 22,460 | 77,271 | 69,192 | ||||
Total operating expenses | 97,040 | 93,931 | 303,490 | 285,688 | ||||
Income from continuing operations | 11,626 | 7,302 | 917 | 19,413 | ||||
Interest income, net | 80 | 41 | 463 | 93 | ||||
Other (expense) income, net | -3,213 | -112 | -1,924 | 764 | ||||
(Loss) income from continuing operations before income taxes | 8,493 | 7,231 | -544 | 20,270 | ||||
(Benefit from) provision for income taxes | -8,653 | 2,097 | -10,946 | 6,147 | ||||
Income from continuing operations, net of tax | 17,146 | 5,134 | 10,402 | 14,123 | ||||
Discontinued operations: | ||||||||
Gain from sale of discontinued operations, net of tax provision | 0 | 0 | 57,377 | 0 | ||||
Loss from discontinued operations, net of tax benefit | 0 | -371 | -595 | -1,817 | ||||
Discontinued operations, net of tax | 0 | -371 | 56,782 | -1,817 | ||||
Net (loss) income | $17,146 | $4,763 | $67,184 | $12,306 | ||||
Basic earnings (loss) per share | ||||||||
From continuing operations | $1.52 | [1] | $0.46 | [1] | $0.92 | [1] | $1.30 | [1] |
From discontinued operations | $0 | [1] | ($0.03) | [1] | $5.03 | [1] | ($0.17) | [1] |
Basic earnings per share | $1.52 | [1] | $0.43 | [1] | $5.95 | [1] | $1.13 | [1] |
Weighted average shares outstanding used in computing basic earnings (loss) per share | 11,301 | 11,050 | 11,299 | 10,911 | ||||
Diluted earnings (loss) per share | ||||||||
From continuing operations | $1.52 | [1] | $0.46 | [1] | $0.92 | [1] | $1.26 | [1] |
From discontinued operations | $0 | [1] | ($0.03) | [1] | $5.03 | [1] | ($0.16) | [1] |
Diluted earnings (loss) per share | $1.52 | [1] | $0.43 | [1] | $5.95 | [1] | $1.10 | [1] |
Weighted average shares outstanding used in computing diluted earnings (loss) per share | 11,301 | 11,197 | 11,300 | 11,137 | ||||
[1] | Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same. |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Gain from sale of discontinued operations, tax provision | $0 | $0 | $37,548 | $0 |
Loss from discontinued operations, tax benefit | $0 | $219 | $391 | $964 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net income | $17,146 | $4,763 | $67,184 | $12,306 |
Other comprehensive income, net of applicable taxes: | ||||
Foreign currency translation adjustment | 1,042 | 404 | 231 | 180 |
Unrealized (loss) gain on short-term investments | -6 | 2 | -10 | -3 |
Total other comprehensive income | 1,036 | 406 | 221 | 177 |
Comprehensive income | $18,182 | $5,169 | $67,405 | $12,483 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Operating activities: | ||
Net income | $67,184 | $12,306 |
Plus: (Income) loss from discontinued operations, net of tax | -56,782 | 1,817 |
Income from continuing operations, net of tax | 10,402 | 14,123 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 19,620 | 16,197 |
Bad debt expense | 3,402 | 4,822 |
Deferred taxes | -4,035 | 2,239 |
Release of liabilities for unrecognized tax benefits | -14,145 | 0 |
Share-based compensation expense | 444 | 0 |
Excess tax benefits from share-based compensation arrangements | -23,580 | 0 |
Other, net | -36 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 22,389 | 15,131 |
Prepaid expenses and other current assets | 88 | -2,107 |
Deposits and other assets | 503 | 539 |
Accounts payable and accrued expenses | -8,008 | 2,422 |
Accrued compensation and employee benefits | -6,908 | -6,402 |
Deferred revenue and advance payments | 17,723 | -2,090 |
Other long-term liabilities | -2,606 | -1,427 |
Net cash provided by operating activities from continuing operations | 15,253 | 43,447 |
Net cash used in operating activities from discontinued operations | -664 | -2,260 |
Net cash provided by operating activities | 14,589 | 41,187 |
Investing activities: | ||
Proceeds from redemption of short-term investments | 29,000 | 0 |
Purchases of property and equipment | -10,019 | -26,884 |
Purchases of short-term investments | -209,115 | 0 |
Capitalized software development costs | -5,414 | -8,148 |
Insurance proceeds | 0 | 3,206 |
(Increase) decrease in restricted cash | -97 | 74 |
Net cash used in investing activities from continuing operations | -195,645 | -31,752 |
Net cash provided by (used in) investing activities from discontinued operations | 99,136 | -1,127 |
Net cash used in investing activities | -96,509 | -32,879 |
Financing activities: | ||
Proceeds from sale of class A common stock under exercise of employee stock options | 341 | 8,957 |
Excess tax benefits from share-based compensation arrangements | 23,580 | 0 |
Payments on capital lease obligations and other financing arrangements | -2,037 | -256 |
Net cash provided by financing activities from continuing operations | 21,884 | 8,701 |
Net cash provided by financing activities from discontinued operations | 0 | 0 |
Net cash provided by financing activities | 21,884 | 8,701 |
Effect of foreign exchange rate changes on cash and cash equivalents | -580 | -34 |
Net (decrease) increase in cash and cash equivalents | -60,616 | 16,975 |
Cash and cash equivalents (including held-for-sale of $1,350 and $5,300, respectively), beginning of period | 224,393 | 199,634 |
Cash and cash equivalents (including held-for-sale of $0 and $1,840, respectively), end of period | 163,777 | 216,609 |
Supplemental disclosure of noncash investing and financing activities: | ||
Assets acquired under capital lease obligations and other financing arrangements | $3,793 | $0 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Held-for-sale beginning of period | $0 | $1,350 | $1,840 | $5,300 |
Held-for-sale end of period | $0 | $1,350 | $1,840 | $5,300 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||
Sep. 30, 2013 | |||
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies | ||
(a) | Basis of Presentation | ||
Except for the Consolidated Balance Sheet of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) as of December 31, 2012, which was derived from audited financial statements, the accompanying Consolidated Financial Statements are unaudited. In the opinion of management, all adjustments necessary for a fair statement of such financial position and results of operations have been included. All such adjustments are of a normal recurring nature unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified to conform to the current year presentation. | |||
The Consolidated Financial Statements and notes are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. There have been no significant changes in the Company’s accounting policies since December 31, 2012, other than the addition of accounting policies related to “Fair Value Measurements,” “Derivative Financial Instruments,” “Short-term Investments,” and “Share-based Compensation” as disclosed below. | |||
The Company must classify a business line as discontinued operations once the Company has committed to a plan to sell the business. On February 25, 2013, the Company committed to a plan to sell its wholly-owned subsidiary, Angel.com Incorporated (“Angel.com”), which focused outside of the Company’s analytics software and services offerings. On March 15, 2013, the Company completed the sale of this business. Historical financial information presented in the Consolidated Financial Statements and Notes to Consolidated Financial Statements have been reclassified to conform to current year presentation. Refer to Note 12, Discontinued Operations, to the Consolidated Financial Statements for further information. | |||
The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any subsequent event which would require recognition or disclosure. | |||
(b) | Fair Value Measurements | ||
The Company measures certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below: | |||
Level 1: | Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | ||
Level 2: | Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3: | Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. | ||
The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs. | |||
(c) | Derivative Financial Instruments | ||
The Company is exposed to certain risks related to its ongoing business operations, including the effect of changes in foreign exchange rates on the Company’s monetary assets and liabilities denominated in foreign currency. The Company uses foreign currency forward contracts as part of its strategy to manage these risks but does not hold or issue derivative instruments for trading purposes or speculation. These foreign currency forward contracts do not meet the requirements for hedge accounting. | |||
Derivative instruments are recorded on the balance sheet as either an asset or liability measured at their fair value as of the reporting date. Changes in the fair value of derivative instruments are recognized in “Other income (expense), net” in the Company’s Consolidated Statements of Operations. | |||
(d) | Short-term Investments | ||
The Company periodically invests a portion of its excess cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. We determine the appropriate classification of our short-term investments at the time of purchase. | |||
The majority of the Company’s short-term investments are in U.S. Treasury securities and the Company has the ability and intent to hold these investments to maturity. Therefore, these short-term investments are classified and accounted for as held-to-maturity and are reported at amortized cost. Each reporting period, the Company determines whether a decline in fair value below the amortized cost for each individual security is other-than-temporary and if it would be required to sell the security before recovery of its amortized cost basis. If an other-than-temporary impairment has occurred, the amount representing the credit loss is recorded in “Other income (expense), net,” and the amount related to all other factors is recognized in “Accumulated other comprehensive loss.” Upon recognition of an other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment. | |||
(e) | Share-based Compensation | ||
In September 2013, the Board of Directors approved, subject to stockholder approval, the Company’s 2013 Stock Incentive Plan, under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period. The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 10, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the Company’s 2013 Stock Incentive Plan, related share-based compensation expense, and assumptions used in the Black-Scholes option pricing model. |
Recent_Accounting_Standards
Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2013 | |
Recent Accounting Standards | (2) Recent Accounting Standards |
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, Comprehensive Income (Topic 220) (“ASU 2013-02”), which established the effective date for the requirement to present components of reclassifications out of accumulated other comprehensive income either in a single note or parenthetically on the face of the financial statements. ASU 2013-02 is effective for interim and annual periods beginning after December 15, 2012. The adoption of this guidance did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows. | |
In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740) (“ASU 2013-11”), which requires the financial statement presentation of an unrecognized tax benefit in a particular jurisdiction, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the NOL or carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. ASU 2013-11 is effective for interim and annual periods beginning after December 15, 2013. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows. |
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||
Fair Value Measurements | (3) Fair Value Measurements | ||||||||||||||||||
Financial assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands), as of: | |||||||||||||||||||
September 30, 2013 | |||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||
Using Input Types | |||||||||||||||||||
Line Item | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Non-hedging derivative assets: | |||||||||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Non-hedging derivative liabilities: | |||||||||||||||||||
Foreign currency forward contracts | Accounts payable and accrued expenses | $ | 0 | $ | 42 | $ | 0 | $ | 42 | ||||||||||
The fair value of our foreign currency forward contracts is determined using Level 2 observable market inputs to extrapolate forward points to be added to or subtracted from the closing market spot rate on the reporting date, and then discounted to present value. All foreign currency forward contracts outstanding as of September 30, 2013 were for durations of three months or less and consisted of the following sale contracts (in thousands): | |||||||||||||||||||
Notional Value | Notional Value | Fair Value | |||||||||||||||||
Local Currency | U.S. Dollar | Gain (Loss) | |||||||||||||||||
U.S. Dollar | |||||||||||||||||||
Forward contracts to sell: | |||||||||||||||||||
Australian Dollar | AUD | 1,081 | $ | 1,000 | $ | (2 | ) | ||||||||||||
Brazilian Real | BRL | 2,287 | 1,000 | (9 | ) | ||||||||||||||
British Pound | GBP | 807 | 1,300 | (5 | ) | ||||||||||||||
Canadian Dollar | CAD | 414 | 400 | 0 | |||||||||||||||
Chinese Renminbi | CNY | 9,262 | 1,500 | (4 | ) | ||||||||||||||
Euro | EUR | 3,554 | 4,800 | (7 | ) | ||||||||||||||
Indian Rupee | INR | 12,933 | 200 | (1 | ) | ||||||||||||||
Japanese Yen | JPY | 128,089 | 1,300 | (5 | ) | ||||||||||||||
Korean Won | KRW | 758,933 | 700 | (2 | ) | ||||||||||||||
Mexican Peso | MXN | 2,659 | 200 | (1 | ) | ||||||||||||||
Polish Zloty | PLN | 5,033 | 1,600 | (2 | ) | ||||||||||||||
Russian Rouble | RUB | 6,596 | 200 | 0 | |||||||||||||||
Singapore Dollar | SGD | 503 | 400 | (1 | ) | ||||||||||||||
South African Rand | ZAR | 7,139 | 700 | 0 | |||||||||||||||
Swedish Krona | SEK | 1,936 | 300 | 0 | |||||||||||||||
Swiss Franc | CHF | 272 | 300 | (1 | ) | ||||||||||||||
Turkish New Lira | TRY | 207 | 100 | (1 | ) | ||||||||||||||
United Arab Emirates Dirham | AED | 737 | 200 | (1 | ) | ||||||||||||||
$ | 16,200 | $ | (42 | ) | |||||||||||||||
As of December 31, 2012, the Company held no foreign currency forward contracts. | |||||||||||||||||||
Changes in the fair value of our foreign currency forward contracts for each of the three and nine months ended September 30, 2013 and 2012 were as follows (in thousands): | |||||||||||||||||||
Gains (Losses) on Derivative Instruments Recognized in Income | |||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
Location | 2013 | 2012 | 2013 | 2012 | |||||||||||||||
Non-hedging derivative instruments: | |||||||||||||||||||
Foreign currency forward contracts outstanding | Other income (expense), net | $ | (47 | ) | $ | 0 | $ | (42 | ) | $ | 0 | ||||||||
Foreign currency forward contracts settled | Other income (expense), net | $ | (524 | ) | $ | 0 | $ | (524 | ) | $ | 0 | ||||||||
There were no transfers among the levels within the fair value hierarchy during each of the three and nine months ended September 30, 2013 and 2012. As of September 30, 2013 and December 31, 2012, the Company had no assets or liabilities that were required to be measured at fair value on a non-recurring basis. | |||||||||||||||||||
The Company also estimates the fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, and accrued compensation and employee benefits. The Company considers the carrying value of these instruments in the financial statements to approximate fair value due to their short maturities. |
Shortterm_Investments
Short-term Investments | 9 Months Ended |
Sep. 30, 2013 | |
Short-term Investments | (4) Short-term Investments |
The Company periodically invests a portion of its excess cash in short-term investment instruments. The majority of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. The stated maturity dates of these investments are between three months and one year from the purchase date. These held-to-maturity investments are recorded at amortized cost and included within “Short-term investments” on the Consolidated Balance Sheets. The fair value of held-to-maturity investments in U.S. Treasury securities is determined based on quoted market prices in active markets for identical securities (Level 1 inputs). | |
The amortized cost, carrying value, and fair value of held-to-maturity investments at September 30, 2013 were $180.1 million, $180.1 million, and $180.2 million, respectively. The gross unrecognized holding gains and losses were not material for each of the three and nine months ended September 30, 2013 and 2012. No other-than-temporary impairments related to these investments have been recognized in accumulated other comprehensive loss as of September 30, 2013. As of December 31, 2012, the Company had no held-to-maturity investments. As of September 30, 2013 and December 31, 2012, the Company’s available-for-sale investments were not material. |
Accounts_Receivable
Accounts Receivable | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounts Receivable | (5) Accounts Receivable | ||||||||
Accounts receivable (in thousands) consisted of the following, as of: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Billed and billable | $ | 130,301 | $ | 176,511 | |||||
Less: unpaid deferred revenue | (63,249 | ) | (83,107 | ) | |||||
Accounts receivable, gross | 67,052 | 93,404 | |||||||
Less: allowance for doubtful accounts | (4,183 | ) | (4,366 | ) | |||||
Accounts receivable, net | $ | 62,869 | $ | 89,038 | |||||
The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments. | |||||||||
The Company maintains an allowance for doubtful accounts which represents its best estimate of probable losses inherent in the accounts receivable balances. The Company evaluates specific accounts when it becomes aware that a customer may not be able to meet its financial obligations due to deterioration of its liquidity or financial viability, credit ratings, or bankruptcy. In addition, the Company periodically adjusts this allowance based upon its review and assessment of the aging of receivables. |
Deferred_Revenue_and_Advance_P
Deferred Revenue and Advance Payments | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Deferred Revenue and Advance Payments | (6) Deferred Revenue and Advance Payments | ||||||||
Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Deferred product licenses revenue | $ | 9,419 | $ | 12,252 | |||||
Deferred product support revenue | 146,633 | 145,343 | |||||||
Deferred subscription services revenue | 7,891 | 6,569 | |||||||
Deferred other services revenue | 14,074 | 15,650 | |||||||
Gross current deferred revenue and advance payments | 178,017 | 179,814 | |||||||
Less: unpaid deferred revenue | (60,232 | ) | (78,565 | ) | |||||
Net current deferred revenue and advance payments | $ | 117,785 | $ | 101,249 | |||||
Non-current: | |||||||||
Deferred product licenses revenue | $ | 2,978 | $ | 3,280 | |||||
Deferred product support revenue | 6,655 | 8,205 | |||||||
Deferred subscription services revenue | 861 | 696 | |||||||
Deferred other services revenue | 1,654 | 1,184 | |||||||
Gross non-current deferred revenue and advance payments | 12,148 | 13,365 | |||||||
Less: unpaid deferred revenue | (3,017 | ) | (4,542 | ) | |||||
Net non-current deferred revenue and advance payments | $ | 9,131 | $ | 8,823 | |||||
The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies | (7) Commitments and Contingencies |
(a) Commitments | |
From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third party claims. These contracts primarily relate to agreements under which the Company has agreed to indemnify customers and partners for third party claims arising from intellectual property infringement. The conditions of these obligations vary and generally a maximum obligation is explicitly stated. Because the conditions of these obligations vary and the maximum is not always explicitly stated, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its balance sheets as of September 30, 2013 or December 31, 2012. | |
On March 15, 2013, the Company completed the sale of its wholly-owned subsidiary, Angel.com, pursuant to a stock purchase and sale agreement, which contains certain customary seller representations, warranties, and indemnification provisions. | |
The Company leases office space and computer and other equipment under operating lease agreements. It also leases certain computer and other equipment under capital lease agreements and licenses certain software under other financing arrangements. Under the lease agreements, in addition to base rent, the Company is generally responsible for certain taxes, utilities and maintenance costs, and other fees; and several leases include options for renewal or purchase. The Company leases approximately 190,000 square feet of office space at a location in Northern Virginia that began serving as its corporate headquarters in October 2010. The term of the lease expires in December 2020. At September 30, 2013 and December 31, 2012, deferred rent of $20.7 million and $22.7 million, respectively, is included in other long-term liabilities, and $2.8 million and $2.5 million, respectively, is included in current accrued expenses. | |
(b) Contingencies | |
In December 2011, DataTern, Inc. (“DataTern”) filed a complaint for patent infringement against the Company in the United States District Court for the District of Massachusetts. The complaint alleged that the Company infringes U.S. Patent No. 6,101,502 (the “’502 Patent”), allegedly owned by DataTern, by making, selling, or offering for sale several of the Company’s products and services including MicroStrategy 9TM, MicroStrategy Intelligence ServerTM, MicroStrategy Business Intelligence PlatformTM, MicroStrategy Cloud PersonalTM, and other MicroStrategy applications for creating or using data mining, dashboards, business analytics, data storage and warehousing, and web hosting support. The complaint accused the Company of willful infringement and sought an unspecified amount of damages, an award of attorneys’ fees, and preliminary and permanent injunctive relief. In October 2012, the case was stayed pending final judgment in a separate action involving the ’502 Patent filed by DataTern in the Southern District of New York, in which MicroStrategy was not a party. Final judgment in that separate action was entered against DataTern in December 2012. In February 2013, MicroStrategy and DataTern filed motions for summary judgment of non-infringement in light of the New York judgment and the Court entered summary judgment against DataTern. In March 2013, DataTern filed a notice of appeal. The Company filed its brief in opposition on July 25, 2013, and DataTern filed its reply brief on August 12, 2013. The appeal has not yet been scheduled for oral argument. The Company has received indemnification requests from certain of its resellers who were sued by DataTern in the United States District Court for the District of Massachusetts in lawsuits alleging infringement of the ’502 Patent. The outcome of these matters is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to these matters at this time. Accordingly, no estimated liability for these matters has been accrued in the accompanying Consolidated Financial Statements. | |
In December 2011, Vasudevan Software, Inc. (“Vasudevan”) filed a complaint for patent infringement against the Company in the United States District Court for the Northern District of California. The complaint alleged that the Company’s sale of MicroStrategy 9 and other MicroStrategy products infringes four patents allegedly owned by Vasudevan known as U.S. Patent Nos. 6,877,006, 7,167,864, 7,720,861, and 8,082,268, all entitled “Multimedia Inspection Database System for Dynamic Runtime Evaluation.” The complaint accused the Company of infringement, inducing others to infringe, and acts of contributory infringement with respect to the patents at issue and sought a permanent injunction, an unspecified amount of damages, and other relief as may be granted by the court. The Company filed its answer to the Vasudevan complaint and pled inequitable conduct counterclaims in March 2012. On June 5, 2013, each party filed motions for summary judgment, and the court heard arguments regarding these motions on July 25, 2013. On September 19, 2013, the court issued a claims construction clarification order. Vasudevan has stated that this order meant that it could not prove infringement and filed a stipulation of non-infringement on October 16, 2013. Following Vasudevan’s stipulation, on October 17, 2013, the court dismissed the case, entered judgment of non-infringement based upon Vasudevan’s stipulation, and also granted MicroStrategy’s motion for summary judgment of invalidity, finding the four patents in the suit invalid. Vasudevan is likely to appeal the court’s claims construction clarification order and invalidity judgment. The outcome of this matter on appeal is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to this matter at this time. Accordingly, no estimated liability for this matter has been accrued in the accompanying Consolidated Financial Statements. | |
The Company is also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, management does not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows. | |
The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion. |
Treasury_Stock
Treasury Stock | 9 Months Ended |
Sep. 30, 2013 | |
Treasury Stock | (8) Treasury Stock |
The Board of Directors previously authorized the Company’s repurchase of up to an aggregate of $800.0 million of its class A common stock from time to time on the open market through April 29, 2013 (the “2005 Share Repurchase Program”). On April 25, 2013, the Board of Directors extended the term of the 2005 Share Repurchase Program through April 29, 2018, although the program may be suspended or discontinued by the Company at any time. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using the Company’s working capital, as well as proceeds from any other funding arrangements that the Company may enter into in the future. During each of the three and nine months ended September 30, 2013 and 2012, the Company did not repurchase any shares of its class A common stock pursuant to the 2005 Share Repurchase Program. As of September 30, 2013, pursuant to the 2005 Share Repurchase Program, the Company had repurchased an aggregate of 3,826,947 shares of its class A common stock at an average price per share of $90.23 and an aggregate cost of $345.3 million. The average price per share and aggregate cost amounts disclosed above include broker commissions. |
Income_Taxes
Income Taxes | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Income Taxes | (9) Income Taxes | ||||||||
The Company and its subsidiaries conduct business in the U.S. and various foreign countries and are subject to taxation in numerous domestic and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by various federal, state and local, and foreign tax authorities. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examination by tax authorities for years before 2010. However, due to its use of state net operating loss (“NOL”) and federal tax credit carryovers in the U.S., U.S. tax authorities may attempt to reduce or fully offset the amount of state NOL or federal tax credit carryovers from tax years ended in 2005 and forward that were used in later tax years. The Company is currently under tax examination in Spain. The Company settled a tax examination in Germany covering the years 2005-2008 in April 2013. | |||||||||
The Company released a liability for unrecognized tax benefits of $1.4 million related to the German tax examination in the second quarter of 2013 and $12.7 million due to the expiration of the statute of limitations in the third quarter of 2013. As of September 30, 2013, the Company had recorded unrecognized tax benefits of $2.9 million, which are recorded in other long-term liabilities. If recognized, $2.4 million of these unrecognized tax benefits would impact the effective tax rate. The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the provision for income tax accounts. Penalties relating to income taxes, if incurred, would also be recognized as a component of the Company’s provision for income taxes. Over the next 12 months, the amount of the Company’s liability for unrecognized tax benefits is expected to decrease by approximately $0.8 million primarily as a result of expiring statute of limitations periods. As of September 30, 2013, the amount of cumulative accrued interest expense on unrecognized income tax benefits was approximately $0.3 million. | |||||||||
The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets, net of deferred tax liabilities | $ | 18,595 | $ | 23,757 | |||||
Valuation allowance | (232 | ) | (231 | ) | |||||
Deferred tax assets, net of deferred tax liabilities and valuation allowance | $ | 18,363 | $ | 23,526 | |||||
The valuation allowance as of September 30, 2013 and December 31, 2012 primarily relates to certain foreign net operating loss carryforward tax assets. The Company has determined that there is insufficient positive evidence that it is more likely than not that such deferred tax assets will be realized. | |||||||||
In accordance with FASB Accounting Standards Codification 740, Income Taxes, each interim period is considered integral to the annual period and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period. If, however, the entity is unable to reliably estimate its annual effective tax rate, then the actual effective tax rate for the year-to-date may be the best annual effective tax rate estimate. For the nine months ended September 30, 2013, the Company determined that it was unable to make a reliable estimate of the annual effective tax rate as relatively small changes in its projected income or loss produce significant variance in its annual effective tax rate. Therefore, the Company recorded a tax benefit for the nine months ended September 30, 2013 based on the actual effective rate for the nine months ended September 30, 2013 (i.e. the “cut-off” method). The effective tax rate for the nine months ended September 30, 2012 was calculated based on an estimated annual effective tax rate plus discrete items, such as return to provision adjustments. | |||||||||
For the nine months ended September 30, 2013, the Company recorded a benefit for income taxes from continuing operations of $10.9 million that resulted in an effective tax rate of 2,012.1%, as compared to an estimated annual effective tax rate of 30.3%, resulting in a provision for income taxes from continuing operations of $6.1 million for the nine months ended September 30, 2012. The change in income taxes for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012 was primarily due to the release of liabilities for unrecognized tax benefits as the statute of limitations with respect to certain previously filed tax returns expired in the third quarter of 2013, a favorable settlement of a German tax examination in the second quarter of 2013, and the 2012 U.S. research and development tax credit, which was retroactively reinstated by the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013 and recorded as a tax benefit in the first quarter of 2013. | |||||||||
Except as discussed below, the Company intends to indefinitely reinvest its undistributed earnings of certain foreign subsidiaries. Therefore, the income tax benefit for the period ended September 30, 2013 does not include any provision for U.S. federal and state income taxes on the amount of the undistributed foreign earnings. U.S. federal tax laws, however, require the Company to include in its U.S. taxable income certain investment income earned outside of the U.S. in excess of certain limits (“Subpart F deemed dividends”). Because Subpart F deemed dividends are already required to be recognized in the Company’s U.S. federal income tax return, the Company regularly repatriates Subpart F deemed dividends to the U.S. and no additional tax is incurred on the distribution. As of September 30, 2013 and December 31, 2012, the amount of cash and cash equivalents and short-term investments, excluding those held for sale, held by U.S. entities was $127.7 million and $39.2 million, respectively, and by non-U.S. entities was $216.3 million and $183.8 million, respectively. If the cash and cash equivalents and short-term investments held by non-U.S. entities were to be repatriated to the U.S., the Company would generate U.S. taxable income to the extent of the Company’s undistributed foreign earnings, which amounted to $184.0 million at December 31, 2012. Although the tax impact of repatriating these earnings is difficult to determine, the Company would not expect the maximum effective tax rate that would be applicable to such repatriation to exceed the U.S. statutory rate of 35.0%, after considering applicable foreign tax credits. | |||||||||
In determining the Company’s provision or benefit for income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of net operating loss carryforwards, applicable tax rates, transfer pricing methods, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly changes related to the utilization of net operating losses in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense or benefit and net income. | |||||||||
Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections. The timing and manner in which the Company will use research and development tax credit carryforward tax assets, alternative minimum tax credit carryforward tax assets, and foreign tax credit carryforward tax assets in any year, or in total, may be limited by provisions of the Internal Revenue Code regarding changes in the Company’s ownership. Currently, the Company expects to use the tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. |
Sharebased_Compensation
Share-based Compensation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Share-based Compensation | (10) Share-based Compensation | ||||||||||||||||
In September 2013, the Board of Directors approved, subject to stockholder approval, the Company’s 2013 Stock Incentive Plan (the “2013 Plan”), under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation. The Board of Directors authorized 600,000 shares of the Company’s class A common stock for issuance under the 2013 Plan. No awards may be issued more than ten years after the 2013 Plan’s effective date. Shares issued under the 2013 Plan may consist in whole or in part of authorized but unissued shares or treasury shares. Stock options that are granted under the 2013 Plan have an exercise price equal to at least the fair market value of the Company’s class A common stock on the date of grant, become exercisable as established by the Board of Directors or the Compensation Committee of the Board of Directors, and expire no later than ten years following the date of grant. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. The Company expects to obtain stockholder approval of the 2013 Plan at the Company’s annual meeting of stockholders in 2014. | |||||||||||||||||
The Black-Scholes option pricing model requires the input of certain management assumptions, including the expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The Company estimates the term over which optionholders are expected to hold their stock options by using the simplified method for “plain-vanilla” stock option awards because the Company’s stock option exercise history does not provide a reasonable basis to compute the expected term for stock options granted under the 2013 Plan. The Company relies exclusively on its historical stock price volatility to estimate the expected stock price volatility over the expected term because the Company believes future volatility is unlikely to differ from the past. In estimating the expected stock price volatility, the Company uses a simple average calculation method. The risk-free interest rate is based on U.S. Treasury securities with terms that approximate the expected term of the stock options. The expected dividend yield is based on the Company’s past cash dividend history and anticipated future cash dividend payments. The expected dividend yield is zero, as the Company has not previously declared cash dividends and does not currently intend to declare cash dividends in the foreseeable future. These assumptions are based on management’s best judgment, and changes to these assumptions could materially affect the fair value estimates and amount of share-based compensation expense recognized. | |||||||||||||||||
In September 2013, the Compensation Committee of the Board of Directors approved, subject to stockholder approval of the 2013 Plan, the grant of stock options to purchase an aggregate of 600,000 shares of class A common stock to certain Company executives pursuant to the 2013 Plan. These awards will be terminated or forfeited if stockholder approval is not obtained within 12 months of the date of grant of the award, and no award may be exercised or settled prior to such stockholder approval. However, the Company considers stockholder approval of the 2013 Plan to be perfunctory since our Chairman and Chief Executive Officer holds a majority of the total voting power of all the Company’s outstanding voting stock. In the event stockholder approval of the 2013 Plan is not obtained within 12 months of the date of grant of the award, the cumulative share-based compensation expense associated with stock option awards granted under the 2013 Plan would be reversed. The stock option awards vest in equal annual installments over an approximately four-year vesting period (unless accelerated upon a change in control event (as defined in the stock option agreement for the applicable award) or otherwise in accordance with provisions of the 2013 Plan or applicable option agreement). The following table summarizes stock option activity for the Company for the three months ended September 30, 2013 (in thousands, except per share data and years): | |||||||||||||||||
Stock Options Outstanding | |||||||||||||||||
Shares | Weighted Average | Aggregate | Weighted Average | ||||||||||||||
Exercise Price | Intrinsic | Remaining Contractual | |||||||||||||||
Per Share | Value | Term (Years) | |||||||||||||||
Balance as of July 1, 2013 | 0 | $ | 0 | ||||||||||||||
Granted | 600 | 92.84 | |||||||||||||||
Exercised | 0 | 0 | |||||||||||||||
Forfeited/Expired | 0 | 0 | |||||||||||||||
Balance as of September 30, 2013 | 600 | $ | 92.84 | ||||||||||||||
Exercisable as of September 30, 2013 | 0 | $ | 0 | $ | 0 | 0 | |||||||||||
Expected to vest as of September 30, 2013 | 600 | $ | 92.84 | $ | 6,594 | 9.9 | |||||||||||
Total | 600 | $ | 92.84 | $ | 6,594 | 9.9 | |||||||||||
No stock options vested during the three months ended September 30, 2013. The Company expects all unvested options at September 30, 2013 to fully vest in future years in accordance with their vesting schedules and therefore share-based compensation expense has not been adjusted for any expected forfeitures. The weighted average grant date fair value of stock option awards using the Black-Scholes option pricing model was $42.03 for each share subject to a stock option granted during the three months ended September 30, 2013, based on the following assumptions: | |||||||||||||||||
Three months ended | |||||||||||||||||
September 30, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected term of options in years | 6.3 | 0 | |||||||||||||||
Expected volatility | 42.8 | % | 0 | % | |||||||||||||
Risk-free interest rate | 2.5 | % | 0 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
The Company recognized approximately $0.4 million in share-based compensation expense related to stock options for the three months ended September 30, 2013. As of September 30, 2013, there was approximately $24.8 million of total unrecognized share-based compensation expense related to unvested stock options. The Company expects to recognize this remaining share-based compensation expense over a weighted-average period of approximately 3.8 years. | |||||||||||||||||
Prior to the adoption of the 2013 Plan, the Company had maintained other share-based compensation plans with respect to the Company’s class A common stock (the “Other Stock Incentive Plans”), but had not granted any share-based awards under the Other Stock Incentive Plans since the first quarter of 2004 and is no longer authorized to grant any awards under such plans. As of September 30, 2013, there were no outstanding share-based awards granted under the Other Stock Incentive Plans. During the nine months ended September 30, 2013, the Company was able to recognize and utilize net operating loss carryforwards arising directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting that was generated primarily in prior years under the Other Stock Incentive Plans. Accordingly, stockholders’ equity increased by $23.6 million during the nine months ended September 30, 2013. | |||||||||||||||||
MicroStrategy’s former subsidiary, Angel.com, previously maintained a stock incentive plan under which certain employees, officers, and directors of MicroStrategy and Angel.com were granted options to purchase shares of the class A common stock of Angel.com, subject to the satisfaction of both performance and continued service conditions. Share-based compensation expense would have been recognized over the requisite service period of the award based on the probability of the satisfaction of the performance condition, reduced by the number of awards that were not expected to vest due to the failure to satisfy the continued service condition. In connection with the sale of Angel.com in the first quarter of 2013, the Angel.com stock incentive plan was terminated and all outstanding options thereunder were terminated in exchange for cash payments totaling $8.0 million. Prior to their termination, no share-based compensation expense was recognized for these awards for the three and nine months ended September 30, 2013 and 2012 because the performance condition had not been satisfied. |
Common_Equity_and_Earnings_per
Common Equity and Earnings per Share | 9 Months Ended |
Sep. 30, 2013 | |
Common Equity and Earnings per Share | (11) Common Equity and Earnings per Share |
The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of September 30, 2013 and December 31, 2012, there were no shares of preferred stock issued or outstanding. | |
Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. For the three and nine months ended September 30, 2013, stock options issued under the 2013 Plan to purchase an aggregate of 600,000 shares of class A common stock were excluded from the diluted earnings per share calculation because their impact would have been anti-dilutive. Potential shares of common stock issuable upon exercise of outstanding stock options are calculated using the treasury stock method. |
Discontinued_Operations
Discontinued Operations | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Discontinued Operations | (12) Discontinued Operations | ||||||||||||||||
On February 25, 2013, the Company committed to a plan to sell its Angel.com business. The Company made the decision to sell Angel.com in order to focus on its analytics software and services offerings. | |||||||||||||||||
On March 15, 2013, the Company completed the sale of its equity interest in Angel.com for consideration to the Company of approximately $111.2 million, resulting in a net cash inflow of $100.7 million after $10.5 million in transaction costs. The sale resulted in a gain of $57.4 million, net of tax. As of December 31, 2012, the associated assets and liabilities of the Angel.com business are classified as held-for-sale and are presented in the following table (in thousands): | |||||||||||||||||
December 31, 2012 | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,350 | |||||||||||||||
Accounts receivable, net of unpaid deferred revenue of $554 and allowance for doubtful accounts of $347, respectively | 4,720 | ||||||||||||||||
Prepaid expenses and other assets | 738 | ||||||||||||||||
Property and equipment, net | 3,763 | ||||||||||||||||
Total assets | $ | 10,571 | |||||||||||||||
Liabilities: | |||||||||||||||||
Accounts payable and accrued expenses | $ | 1,587 | |||||||||||||||
Accrued compensation and employee benefits | 2,364 | ||||||||||||||||
Gross deferred revenue and advance payments, net of unpaid deferred revenue of $554 | 639 | ||||||||||||||||
Other liabilities | 99 | ||||||||||||||||
Total liabilities | $ | 4,689 | |||||||||||||||
Net assets and liabilities of disposal group | $ | 5,882 | |||||||||||||||
The following table summarizes the revenues and pre-tax loss generated by the Angel.com business during the three and nine months ended September 30, 2013 and 2012, respectively, in addition to the pre-tax gain on the sale of Angel.com recorded by the Company during the three and nine months ended September 30, 2013 and 2012, respectively (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Angel.com revenues | $ | 0 | $ | 7,150 | $ | 6,320 | $ | 20,415 | |||||||||
Angel.com pre-tax loss | $ | 0 | $ | 590 | $ | 986 | $ | 2,781 | |||||||||
MicroStrategy pre-tax (loss) gain on sale | $ | 0 | $ | 0 | $ | 94,925 | $ | 0 |
Segment_Information
Segment Information | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Segment Information | (13) Segment Information | ||||||||||||||||
The Company manages its business in one operating segment. As discussed in Note 12, the Angel.com business was sold on March 15, 2013. Prior to its divestiture, the Angel.com business was the sole component of the former operating segment “Other.” The Company’s one operating segment is engaged in the design, development, marketing, and sales of analytics software through licensing arrangements and cloud-based subscriptions and related services. It includes the MicroStrategy Analytics PlatformTM, MicroStrategy MobileTM, and MicroStrategy CloudTM. The Company has also included the MicroStrategy Loyalty PlatformTM, branded as MicroStrategy Alert, and the MicroStrategy Identity PlatformTM, branded as MicroStrategy UsherTM, as part of the one operating segment for each of the three and nine months ended September 30, 2013 and 2012 since these platforms did not generate significant revenues during these periods. The following table presents total revenues from continuing operations, gross profit from continuing operations, and long-lived assets, excluding long-term deferred tax assets and assets held-for-sale, (in thousands) according to geographic region: | |||||||||||||||||
Domestic | EMEA | Other Regions | Consolidated | ||||||||||||||
Geographic regions: | |||||||||||||||||
Three months ended September 30, 2013 | |||||||||||||||||
Total revenues | $ | 89,114 | $ | 38,795 | $ | 14,010 | $ | 141,919 | |||||||||
Gross profit | 69,384 | 27,955 | 11,327 | 108,666 | |||||||||||||
Three months ended September 30, 2012 | |||||||||||||||||
Total revenues | $ | 77,321 | $ | 43,728 | $ | 15,031 | $ | 136,080 | |||||||||
Gross profit | 55,619 | 33,693 | 11,921 | 101,233 | |||||||||||||
Nine months ended September 30, 2013 | |||||||||||||||||
Total revenues | $ | 249,709 | $ | 115,339 | $ | 44,959 | $ | 410,007 | |||||||||
Gross profit | 186,664 | 80,967 | 36,776 | 304,407 | |||||||||||||
Nine months ended September 30, 2012 | |||||||||||||||||
Total revenues | $ | 237,428 | $ | 127,624 | $ | 44,686 | $ | 409,738 | |||||||||
Gross profit | 173,845 | 96,085 | 35,171 | 305,101 | |||||||||||||
As of September 30, 2013 | |||||||||||||||||
Long-lived assets | $ | 94,269 | $ | 7,588 | $ | 6,086 | $ | 107,943 | |||||||||
As of September 30, 2012 | |||||||||||||||||
Long-lived assets | $ | 97,725 | $ | 9,603 | $ | 6,858 | $ | 114,186 | |||||||||
The domestic region consists of the United States and Canada. The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America and the Asia Pacific region. For the three and nine months ended September 30, 2013, no individual foreign country accounted for 10% or more of total consolidated revenues from continuing operations. For the three months ended September 30, 2012, no individual foreign country other than Germany accounted for 10% or more of total consolidated revenues from continuing operations. For the nine months ended September 30, 2012, no individual foreign country accounted for 10% or more of total consolidated revenues from continuing operations. | |||||||||||||||||
For the three and nine months ended September 30, 2013 and 2012, no individual customer accounted for 10% or more of total consolidated revenues from continuing operations. | |||||||||||||||||
As of September 30, 2013 and December 31, 2012, no individual foreign country accounted for 10% or more of total consolidated assets, excluding assets held-for-sale. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||
Sep. 30, 2013 | |||
Basis of Presentation | (a) | Basis of Presentation | |
Except for the Consolidated Balance Sheet of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) as of December 31, 2012, which was derived from audited financial statements, the accompanying Consolidated Financial Statements are unaudited. In the opinion of management, all adjustments necessary for a fair statement of such financial position and results of operations have been included. All such adjustments are of a normal recurring nature unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified to conform to the current year presentation. | |||
The Consolidated Financial Statements and notes are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. There have been no significant changes in the Company’s accounting policies since December 31, 2012, other than the addition of accounting policies related to “Fair Value Measurements,” “Derivative Financial Instruments,” “Short-term Investments,” and “Share-based Compensation” as disclosed below. | |||
The Company must classify a business line as discontinued operations once the Company has committed to a plan to sell the business. On February 25, 2013, the Company committed to a plan to sell its wholly-owned subsidiary, Angel.com Incorporated (“Angel.com”), which focused outside of the Company’s analytics software and services offerings. On March 15, 2013, the Company completed the sale of this business. Historical financial information presented in the Consolidated Financial Statements and Notes to Consolidated Financial Statements have been reclassified to conform to current year presentation. Refer to Note 12, Discontinued Operations, to the Consolidated Financial Statements for further information. | |||
The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any subsequent event which would require recognition or disclosure. | |||
Fair Value Measurements | (b) | Fair Value Measurements | |
The Company measures certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below: | |||
Level 1: | Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | ||
Level 2: | Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3: | Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. | ||
The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs. | |||
Derivative Financial Instruments | (c) | Derivative Financial Instruments | |
The Company is exposed to certain risks related to its ongoing business operations, including the effect of changes in foreign exchange rates on the Company’s monetary assets and liabilities denominated in foreign currency. The Company uses foreign currency forward contracts as part of its strategy to manage these risks but does not hold or issue derivative instruments for trading purposes or speculation. These foreign currency forward contracts do not meet the requirements for hedge accounting. | |||
Derivative instruments are recorded on the balance sheet as either an asset or liability measured at their fair value as of the reporting date. Changes in the fair value of derivative instruments are recognized in “Other income (expense), net” in the Company’s Consolidated Statements of Operations. | |||
Short-term Investments | (d) | Short-term Investments | |
The Company periodically invests a portion of its excess cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. We determine the appropriate classification of our short-term investments at the time of purchase. | |||
The majority of the Company’s short-term investments are in U.S. Treasury securities and the Company has the ability and intent to hold these investments to maturity. Therefore, these short-term investments are classified and accounted for as held-to-maturity and are reported at amortized cost. Each reporting period, the Company determines whether a decline in fair value below the amortized cost for each individual security is other-than-temporary and if it would be required to sell the security before recovery of its amortized cost basis. If an other-than-temporary impairment has occurred, the amount representing the credit loss is recorded in “Other income (expense), net,” and the amount related to all other factors is recognized in “Accumulated other comprehensive loss.” Upon recognition of an other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment. | |||
Share-based Compensation | (e) | Share-based Compensation | |
In September 2013, the Board of Directors approved, subject to stockholder approval, the Company’s 2013 Stock Incentive Plan, under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period. The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 10, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the Company’s 2013 Stock Incentive Plan, related share-based compensation expense, and assumptions used in the Black-Scholes option pricing model. |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy | Financial assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands), as of: | ||||||||||||||||||
September 30, 2013 | |||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||
Using Input Types | |||||||||||||||||||
Line Item | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Non-hedging derivative assets: | |||||||||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Non-hedging derivative liabilities: | |||||||||||||||||||
Foreign currency forward contracts | Accounts payable and accrued expenses | $ | 0 | $ | 42 | $ | 0 | $ | 42 | ||||||||||
Sale Contracts Consisted in Foreign Currency Forward Contracts Outstanding | All foreign currency forward contracts outstanding as of September 30, 2013 were for durations of three months or less and consisted of the following sale contracts (in thousands): | ||||||||||||||||||
Notional Value | Notional Value | Fair Value | |||||||||||||||||
Local Currency | U.S. Dollar | Gain (Loss) | |||||||||||||||||
U.S. Dollar | |||||||||||||||||||
Forward contracts to sell: | |||||||||||||||||||
Australian Dollar | AUD | 1,081 | $ | 1,000 | $ | (2 | ) | ||||||||||||
Brazilian Real | BRL | 2,287 | 1,000 | (9 | ) | ||||||||||||||
British Pound | GBP | 807 | 1,300 | (5 | ) | ||||||||||||||
Canadian Dollar | CAD | 414 | 400 | 0 | |||||||||||||||
Chinese Renminbi | CNY | 9,262 | 1,500 | (4 | ) | ||||||||||||||
Euro | EUR | 3,554 | 4,800 | (7 | ) | ||||||||||||||
Indian Rupee | INR | 12,933 | 200 | (1 | ) | ||||||||||||||
Japanese Yen | JPY | 128,089 | 1,300 | (5 | ) | ||||||||||||||
Korean Won | KRW | 758,933 | 700 | (2 | ) | ||||||||||||||
Mexican Peso | MXN | 2,659 | 200 | (1 | ) | ||||||||||||||
Polish Zloty | PLN | 5,033 | 1,600 | (2 | ) | ||||||||||||||
Russian Rouble | RUB | 6,596 | 200 | 0 | |||||||||||||||
Singapore Dollar | SGD | 503 | 400 | (1 | ) | ||||||||||||||
South African Rand | ZAR | 7,139 | 700 | 0 | |||||||||||||||
Swedish Krona | SEK | 1,936 | 300 | 0 | |||||||||||||||
Swiss Franc | CHF | 272 | 300 | (1 | ) | ||||||||||||||
Turkish New Lira | TRY | 207 | 100 | (1 | ) | ||||||||||||||
United Arab Emirates Dirham | AED | 737 | 200 | (1 | ) | ||||||||||||||
$ | 16,200 | $ | (42 | ) | |||||||||||||||
Changes in Fair Value of Foreign Currency Forward Contracts | Changes in the fair value of our foreign currency forward contracts for each of the three and nine months ended September 30, 2013 and 2012 were as follows (in thousands): | ||||||||||||||||||
Gains (Losses) on Derivative Instruments Recognized in Income | |||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
Location | 2013 | 2012 | 2013 | 2012 | |||||||||||||||
Non-hedging derivative instruments: | |||||||||||||||||||
Foreign currency forward contracts outstanding | Other income (expense), net | $ | (47 | ) | $ | 0 | $ | (42 | ) | $ | 0 | ||||||||
Foreign currency forward contracts settled | Other income (expense), net | $ | (524 | ) | $ | 0 | $ | (524 | ) | $ | 0 |
Accounts_Receivable_Tables
Accounts Receivable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Schedule Of Accounts Receivable | Accounts receivable (in thousands) consisted of the following, as of: | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Billed and billable | $ | 130,301 | $ | 176,511 | |||||
Less: unpaid deferred revenue | (63,249 | ) | (83,107 | ) | |||||
Accounts receivable, gross | 67,052 | 93,404 | |||||||
Less: allowance for doubtful accounts | (4,183 | ) | (4,366 | ) | |||||
Accounts receivable, net | $ | 62,869 | $ | 89,038 | |||||
Deferred_Revenue_and_Advance_P1
Deferred Revenue and Advance Payments (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Deferred Revenue and Advance Payments | Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Deferred product licenses revenue | $ | 9,419 | $ | 12,252 | |||||
Deferred product support revenue | 146,633 | 145,343 | |||||||
Deferred subscription services revenue | 7,891 | 6,569 | |||||||
Deferred other services revenue | 14,074 | 15,650 | |||||||
Gross current deferred revenue and advance payments | 178,017 | 179,814 | |||||||
Less: unpaid deferred revenue | (60,232 | ) | (78,565 | ) | |||||
Net current deferred revenue and advance payments | $ | 117,785 | $ | 101,249 | |||||
Non-current: | |||||||||
Deferred product licenses revenue | $ | 2,978 | $ | 3,280 | |||||
Deferred product support revenue | 6,655 | 8,205 | |||||||
Deferred subscription services revenue | 861 | 696 | |||||||
Deferred other services revenue | 1,654 | 1,184 | |||||||
Gross non-current deferred revenue and advance payments | 12,148 | 13,365 | |||||||
Less: unpaid deferred revenue | (3,017 | ) | (4,542 | ) | |||||
Net non-current deferred revenue and advance payments | $ | 9,131 | $ | 8,823 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Company's Deferred Tax Assets, Liabilities and Valuation Allowance | The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets, net of deferred tax liabilities | $ | 18,595 | $ | 23,757 | |||||
Valuation allowance | (232 | ) | (231 | ) | |||||
Deferred tax assets, net of deferred tax liabilities and valuation allowance | $ | 18,363 | $ | 23,526 | |||||
Sharebased_Compensation_Tables
Share-based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Summary of Stock Option Activity | The following table summarizes stock option activity for the Company for the three months ended September 30, 2013 (in thousands, except per share data and years): | ||||||||||||||||
Stock Options Outstanding | |||||||||||||||||
Shares | Weighted Average | Aggregate | Weighted Average | ||||||||||||||
Exercise Price | Intrinsic | Remaining Contractual | |||||||||||||||
Per Share | Value | Term (Years) | |||||||||||||||
Balance as of July 1, 2013 | 0 | $ | 0 | ||||||||||||||
Granted | 600 | 92.84 | |||||||||||||||
Exercised | 0 | 0 | |||||||||||||||
Forfeited/Expired | 0 | 0 | |||||||||||||||
Balance as of September 30, 2013 | 600 | $ | 92.84 | ||||||||||||||
Exercisable as of September 30, 2013 | 0 | $ | 0 | $ | 0 | 0 | |||||||||||
Expected to vest as of September 30, 2013 | 600 | $ | 92.84 | $ | 6,594 | 9.9 | |||||||||||
Total | 600 | $ | 92.84 | $ | 6,594 | 9.9 | |||||||||||
Assumptions Used in Black-Scholes Option-Pricing Model | The weighted average grant date fair value of stock option awards using the Black-Scholes option-pricing model was $42.03 for each share subject to a stock option granted during the three months ended September 30, 2013, based on the following assumptions: | ||||||||||||||||
Three months ended | |||||||||||||||||
September 30, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Expected term of options in years | 6.3 | 0 | |||||||||||||||
Expected volatility | 42.8 | % | 0 | % | |||||||||||||
Risk-free interest rate | 2.5 | % | 0 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Assets and Liabilities Classified as Held for Sale and Revenues and Pretax Loss Generated in Addition to Pretax Gain on Sale of Discontinued Operations | As of December 31, 2012, the associated assets and liabilities of the Angel.com business are classified as held-for-sale and are presented in the following table (in thousands): | ||||||||||||||||
December 31, 2012 | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,350 | |||||||||||||||
Accounts receivable, net of unpaid deferred revenue of $554 and allowance for doubtful accounts of $347, respectively | 4,720 | ||||||||||||||||
Prepaid expenses and other assets | 738 | ||||||||||||||||
Property and equipment, net | 3,763 | ||||||||||||||||
Total assets | $ | 10,571 | |||||||||||||||
Liabilities: | |||||||||||||||||
Accounts payable and accrued expenses | $ | 1,587 | |||||||||||||||
Accrued compensation and employee benefits | 2,364 | ||||||||||||||||
Gross deferred revenue and advance payments, net of unpaid deferred revenue of $554 | 639 | ||||||||||||||||
Other liabilities | 99 | ||||||||||||||||
Total liabilities | $ | 4,689 | |||||||||||||||
Net assets and liabilities of disposal group | $ | 5,882 | |||||||||||||||
The following table summarizes the revenues and pre-tax loss generated by the Angel.com business during the three and nine months ended September 30, 2013 and 2012, respectively, in addition to the pre-tax gain on the sale of Angel.com recorded by the Company during the three and nine months ended September 30, 2013 and 2012, respectively (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Angel.com revenues | $ | 0 | $ | 7,150 | $ | 6,320 | $ | 20,415 | |||||||||
Angel.com pre-tax loss | $ | 0 | $ | 590 | $ | 986 | $ | 2,781 | |||||||||
MicroStrategy pre-tax (loss) gain on sale | $ | 0 | $ | 0 | $ | 94,925 | $ | 0 |
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Revenues and Long-Lived Assets, by Geographic Region | The following table presents total revenues from continuing operations, gross profit from continuing operations, and long-lived assets, excluding long-term deferred tax assets and assets held-for-sale, (in thousands) according to geographic region: | ||||||||||||||||
Domestic | EMEA | Other Regions | Consolidated | ||||||||||||||
Geographic regions: | |||||||||||||||||
Three months ended September 30, 2013 | |||||||||||||||||
Total revenues | $ | 89,114 | $ | 38,795 | $ | 14,010 | $ | 141,919 | |||||||||
Gross profit | 69,384 | 27,955 | 11,327 | 108,666 | |||||||||||||
Three months ended September 30, 2012 | |||||||||||||||||
Total revenues | $ | 77,321 | $ | 43,728 | $ | 15,031 | $ | 136,080 | |||||||||
Gross profit | 55,619 | 33,693 | 11,921 | 101,233 | |||||||||||||
Nine months ended September 30, 2013 | |||||||||||||||||
Total revenues | $ | 249,709 | $ | 115,339 | $ | 44,959 | $ | 410,007 | |||||||||
Gross profit | 186,664 | 80,967 | 36,776 | 304,407 | |||||||||||||
Nine months ended September 30, 2012 | |||||||||||||||||
Total revenues | $ | 237,428 | $ | 127,624 | $ | 44,686 | $ | 409,738 | |||||||||
Gross profit | 173,845 | 96,085 | 35,171 | 305,101 | |||||||||||||
As of September 30, 2013 | |||||||||||||||||
Long-lived assets | $ | 94,269 | $ | 7,588 | $ | 6,086 | $ | 107,943 | |||||||||
As of September 30, 2012 | |||||||||||||||||
Long-lived assets | $ | 97,725 | $ | 9,603 | $ | 6,858 | $ | 114,186 |
Financial_Assets_and_Liabiliti
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy (Detail) (Foreign currency forward contracts, Non-hedging derivative, USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Prepaid expenses and other current assets | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative assets | $0 |
Accounts payable and accrued expenses | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative liabilities | 42 |
Level 1 | Prepaid expenses and other current assets | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative assets | 0 |
Level 1 | Accounts payable and accrued expenses | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative liabilities | 0 |
Level 2 | Prepaid expenses and other current assets | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative assets | 0 |
Level 2 | Accounts payable and accrued expenses | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative liabilities | 42 |
Level 3 | Prepaid expenses and other current assets | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative assets | 0 |
Level 3 | Accounts payable and accrued expenses | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | |
Derivative liabilities | $0 |
Sale_Contracts_Consisted_in_Fo
Sale Contracts Consisted in Foreign Currency Forward Contracts Outstanding (Detail) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||||||||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
USD ($) | Australia, Dollars | Australia, Dollars | Brazil, Brazil Real | Brazil, Brazil Real | United Kingdom, Pounds | United Kingdom, Pounds | Canada, Dollars | Canada, Dollars | China, Yuan Renminbi | China, Yuan Renminbi | Euro Member Countries, Euro | Euro Member Countries, Euro | India, Rupees | India, Rupees | Japan, Yen | Japan, Yen | Korea (South), Won | Korea (South), Won | Mexico, Pesos | Mexico, Pesos | Poland, Zlotych | Poland, Zlotych | Russia, Rubles | Russia, Rubles | Singapore, Dollars | Singapore, Dollars | South Africa, Rand | South Africa, Rand | Sweden, Kronor | Sweden, Kronor | Switzerland, Francs | Switzerland, Francs | Turkey, New Lira | Turkey, New Lira | United Arab Emirates, Dirhams | United Arab Emirates, Dirhams | |
USD ($) | AUD | USD ($) | BRL | USD ($) | GBP (£) | USD ($) | CAD | USD ($) | CNY | USD ($) | EUR (€) | USD ($) | INR | USD ($) | JPY (¥) | USD ($) | KRW | USD ($) | MXN | USD ($) | PLN | USD ($) | RUB | USD ($) | SGD | USD ($) | ZAR | USD ($) | SEK | USD ($) | CHF | USD ($) | TRY | USD ($) | AED | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||||||||||||||||||||||||||||
Notional Value | $16,200 | $1,000 | 1,081 | $1,000 | 2,287 | $1,300 | £ 807 | $400 | 414 | $1,500 | 9,262 | $4,800 | € 3,554 | $200 | 12,933 | $1,300 | ¥ 128,089 | $700 | 758,933 | $200 | 2,659 | $1,600 | 5,033 | $200 | 6,596 | $400 | 503 | $700 | 7,139 | $300 | 1,936 | $300 | 272 | $100 | 207 | $200 | 737 |
Fair Value Gain (Loss) | ($42) | ($2) | ($9) | ($5) | $0 | ($4) | ($7) | ($1) | ($5) | ($2) | ($1) | ($2) | $0 | ($1) | $0 | $0 | ($1) | ($1) | ($1) |
Changes_in_Fair_Value_of_Forei
Changes in Fair Value of Foreign Currency Forward Contracts (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) recognized in income on derivatives | ($42) | |||
Foreign currency forward contracts | Non-hedging derivative | Other income expense net | Outstanding Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) recognized in income on derivatives | -47 | 0 | -42 | 0 |
Foreign currency forward contracts | Non-hedging derivative | Other income expense net | Settled Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (losses) recognized in income on derivatives | ($524) | $0 | ($524) | $0 |
Short_Term_Investments_Additio
Short Term Investments - Additional Information (Detail) (US Treasury Securities, USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Investment [Line Items] | |
Held to maturity securities, amortized cost | 180.1 |
Held to maturity securities, carrying value | 180.1 |
Held to maturity securities, fair value | 180.2 |
Minimum | |
Investment [Line Items] | |
Held to maturity securities maturity range | 3 months |
Maximum | |
Investment [Line Items] | |
Held to maturity securities maturity range | 1 year |
Accounts_Receivable_Detail
Accounts Receivable (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Billed and billable | $130,301 | $176,511 |
Less: unpaid deferred revenue | -63,249 | -83,107 |
Accounts receivable, gross | 67,052 | 93,404 |
Less: allowance for doubtful accounts | -4,183 | -4,366 |
Account receivable, net | $62,869 | $89,038 |
Deferred_Revenue_and_Advance_P2
Deferred Revenue and Advance Payments (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred product licenses revenue, Current | $9,419 | $12,252 |
Deferred product support revenue, Current | 146,633 | 145,343 |
Deferred subscription services revenue, Current | 7,891 | 6,569 |
Deferred other services revenue, Current | 14,074 | 15,650 |
Gross current deferred revenue and advance payments | 178,017 | 179,814 |
Less: unpaid deferred revenue | -60,232 | -78,565 |
Net current deferred revenue and advance payments | 117,785 | 101,249 |
Deferred product licenses revenue, Non-current | 2,978 | 3,280 |
Deferred product support revenue, Non-current | 6,655 | 8,205 |
Deferred subscription services revenue, Non-current | 861 | 696 |
Deferred other services revenue, Non-current | 1,654 | 1,184 |
Gross non-current deferred revenue and advance payments | 12,148 | 13,365 |
Less: unpaid deferred revenue | -3,017 | -4,542 |
Net non-current deferred revenue and advance payments | $9,131 | $8,823 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (Northern Virginia Office Space, USD $) | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 | Oct. 31, 2010 |
sqft | |||
Northern Virginia Office Space | |||
Commitments and Contingencies [Line Items] | |||
Office space available for lease under the agreement | 190,000 | ||
Lease expiration date | 31-Dec-20 | ||
Deferred rent included in other long-term liabilities | $20.70 | $22.70 | |
Deferred rent included in current accrued expenses | $2.80 | $2.50 |
Treasury_Stock_Additional_Info
Treasury Stock - Additional Information (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 |
Two Thousand Five Share Repurchase Program | Two Thousand Five Share Repurchase Program | |||
Class A | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock authorized to repurchase by board of directors | $800,000,000 | |||
Treasury stock, shares | 6,405,000 | 6,405,000 | 3,826,947 | |
Shares repurchased, average price per share | $90.23 | |||
Treasury stock, cost | $475,184,000 | $475,184,000 | $345,300,000 | |
Shares repurchased program expiration date | 29-Apr-18 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 1 Months Ended | ||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Apr. 30, 2013 | Apr. 30, 2013 | |
U.S. Entities | U.S. Entities | Non-U.S. Entities | Non-U.S. Entities | GERMANY | GERMANY | GERMANY | ||||||
Minimum | Maximum | |||||||||||
Income Taxes | ||||||||||||
Tax examination year | 2005 | 2008 | ||||||||||
Reduction in unrecognized tax benefits due to settlement with taxing authorities | $1,400,000 | |||||||||||
Reductions in unrecognized tax benefits due to the expiration of the statute of limitations | 12,700,000 | |||||||||||
Unrecognized tax benefits | 2,900,000 | 2,900,000 | ||||||||||
Unrecognized tax benefits would impact the effective tax rate | 2,400,000 | 2,400,000 | ||||||||||
Decrease in unrecognized tax benefits | 800,000 | |||||||||||
Interest accrued | 300,000 | 300,000 | ||||||||||
Effective tax rate from operations | 2012.10% | 30.30% | ||||||||||
Provision for income taxes | -8,653,000 | 2,097,000 | -10,946,000 | 6,147,000 | ||||||||
Cash and cash equivalents and short-term investments | 127,700,000 | 39,200,000 | 216,300,000 | 183,800,000 | ||||||||
Undistributed foreign earnings | $184,000,000 | |||||||||||
U.S. statutory rate | 35.00% |
Companys_Deferred_Tax_Assets_N
Companys Deferred Tax Assets Net of Deferred Tax Liabilities and Valuation Allowance (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Schedule of Deferred Income Tax Assets and Liabilities | ||
Deferred tax assets, net of deferred tax liabilities | $18,595 | $23,757 |
Valuation allowance | -232 | -231 |
Deferred tax assets, net of deferred tax liabilities and valuation allowance | $18,363 | $23,526 |
Share_Based_Compensation_Addit
Share Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Angel. Com | 2013 Plan | |||
Class A | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation, stock authorized | 600,000 | |||
Stock incentive plan expiration period | 10 years | |||
Share-based compensation award expiration period | 10 years | |||
Stock option awards granted | 600,000 | 600,000 | ||
Stock option awards, vesting period | 4 years | |||
Weighted average grant date fair value of stock option awards | $42.03 | |||
Share-based compensation expense recognized | $0.40 | |||
Unrecognized share-based compensation expense | 24.8 | 24.8 | ||
Unrecognized compensation expense expected to be recognized | 3 years 9 months 18 days | |||
Increase in equity | 23.6 | |||
Cash payment for termination of incentive plan | $8 |
Summary_of_Stock_Option_Activi
Summary of Stock Option Activity (Detail) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 |
Options outstanding, shares | |
Balance as of July 1, 2013 | 0 |
Granted | 600 |
Exercised | 0 |
Forfeited/Expired | 0 |
Balance as of September 30, 2013 | 600 |
Exercisable as of September 30, 2013 | 0 |
Expected to vest as of September 30, 2013 | 600 |
Total | 600 |
Weighted Average Exercise Price Per Share | |
Balance as of July 1, 2013 | $0 |
Granted | $92.84 |
Exercised | $0 |
Forfeited/Expired | $0 |
Balance as of September 30, 2013 | $92.84 |
Exercisable as of September 30, 2013 | $0 |
Expected to vest as of September 30, 2013 | $92.84 |
Total | $92.84 |
Exercised | |
Exercisable as of September 30, 2013 | 0 |
Expected to vest as of September 30, 2013 | 6,594 |
Total | $6,594 |
Weighted Average Remaining Contractual Term (Years) | |
Exercisable as of September 30, 2013 | 0 years |
Expected to vest as of September 30, 2013 | 9 years 10 months 24 days |
Total | 9 years 10 months 24 days |
Assumptions_Used_in_Determinin
Assumptions Used in Determining Fair Value of Options Granted (Detail) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Fair Value Assumptions Disclosure [ Line Items] | ||
Expected term of options in years | 6 years 3 months 18 days | 0 years |
Expected volatility | 42.80% | 0.00% |
Risk-free interest rate | 2.50% | 0.00% |
Expected dividend yield | 0.00% | 0.00% |
Recovered_Sheet1
Common Equity and Earnings Per Share - Additional Information (Detail) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
Class A | Class A | Class A | Class B | |||
2013 Plan | 2013 Plan | |||||
Class of Stock | ||||||
Common stock, votes per share | One | Ten | ||||
Payments of dividends, common stock | ||||||
Preferred stock, shares issued | ||||||
Preferred stock, shares outstanding | ||||||
Shares issuable under stock options excluded from calculation of diluted earnings per share | 600,000 | 600,000 |
Discontinued_Operations_Additi
Discontinued Operations - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Mar. 31, 2013 | |
Angel. Com | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Discontinued operation, cash from sale | $111,200,000 | ||||
Discontinued operation, net cash from sale | 100,700,000 | ||||
Discontinued operation, gain on sale | 0 | 0 | 57,377,000 | 0 | 57,400,000 |
Discontinued operation, transaction costs | $10,500,000 |
Assets_and_Liabilities_of_Ange
Assets and Liabilities of Angel Dot Com Business Classified as Held for Sale (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Assets: | ||||
Cash and cash equivalents | $0 | $1,350 | $1,840 | $5,300 |
Angel. Com | ||||
Assets: | ||||
Cash and cash equivalents | 1,350 | |||
Accounts receivable, net of unpaid deferred revenue of $554 and allowance for doubtful accounts of $347, respectively | 4,720 | |||
Prepaid expenses and other assets | 738 | |||
Property and equipment, net | 3,763 | |||
Total assets | 10,571 | |||
Liabilities: | ||||
Accounts payable and accrued expenses | 1,587 | |||
Accrued compensation and employee benefits | 2,364 | |||
Gross deferred revenue and advance payments, net of unpaid deferred revenue of $554 | 639 | |||
Other liabilities | 99 | |||
Total liabilities | 4,689 | |||
Net assets and liabilities of disposal group | $5,882 |
Assets_and_Liabilities_of_Ange1
Assets and Liabilities of Angel Dot Com Business Classified as Held for Sale (Parenthetical) (Detail) (Angel. Com, USD $) | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |
Angel. Com | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Unpaid Deferred Revenue | $554 |
Allowance for doubtful accounts | 347 |
Unpaid Deferred Revenue | $554 |
Summary_of_Revenues_and_PreTax
Summary of Revenues and Pre-Tax Loss Generated by Angel Dot Com Business In Addition to Pre-Tax Gain on Sale Recorded (Detail) (Angel. Com, USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Angel. Com | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Angel.com revenues | $0 | $7,150 | $6,320 | $20,415 |
Angel.com pre-tax loss | 0 | 590 | 986 | 2,781 |
MicroStrategy pre-tax (loss) gain on sale | $0 | $0 | $94,925 | $0 |
Segment_Information_Additional
Segment Information - Additional Information (Detail) | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | |
Segment | Customer Concentration Risk | Customer Concentration Risk | Customer Concentration Risk | Customer Concentration Risk | Geographic Concentration Risk | Geographic Concentration Risk | Geographic Concentration Risk | Geographic Concentration Risk | Geographic Concentration Risk | Geographic Concentration Risk | |
Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Sales Revenue, Goods, Net | Assets, Total | Assets, Total | ||
Customer | Customer | Customer | Customer | Country | Country | Country | Country | Country | |||
Segment Reporting Information | |||||||||||
Number of operating segments | 1 | ||||||||||
Number Of Individual Country accounted for 10% or more of total revenues | 0 | 0 | 0 | ||||||||
Individual Country accounted for 10% or more of total revenues | Germany | ||||||||||
Number Of Individual Customer accounted for 10% or more of total consolidated revenues | 0 | 0 | 0 | 0 | |||||||
Number Of Individual country accounted for 10% or more of total consolidated assets | 0 | 0 |
Total_Revenues_Gross_Profit_an
Total Revenues Gross Profit and Long Lived Assets Excluding Long Term Deferred Tax Assets (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $141,919 | $136,080 | $410,007 | $409,738 |
Gross profit | 108,666 | 101,233 | 304,407 | 305,101 |
Long-lived assets | 107,943 | 114,186 | 107,943 | 114,186 |
Domestic | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 89,114 | 77,321 | 249,709 | 237,428 |
Gross profit | 69,384 | 55,619 | 186,664 | 173,845 |
Long-lived assets | 94,269 | 97,725 | 94,269 | 97,725 |
EMEA | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 38,795 | 43,728 | 115,339 | 127,624 |
Gross profit | 27,955 | 33,693 | 80,967 | 96,085 |
Long-lived assets | 7,588 | 9,603 | 7,588 | 9,603 |
Other Regions | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 14,010 | 15,031 | 44,959 | 44,686 |
Gross profit | 11,327 | 11,921 | 36,776 | 35,171 |
Long-lived assets | $6,086 | $6,858 | $6,086 | $6,858 |