MSTR - Earnings call transcript Q4 2018 | MicroStrategy Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the MicroStrategy Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Michael Saylor, Chairman, President and CEO. Sir, you may begin.

Michael Saylor

Hello. Saylor. Michael is This and MicroStrategy. President CEO Chairman, of I'm I'd conference quarter call welcome all financial to today's of you regarding like to results. our XXXX fourth Phong I'm with our Operating and here Chief CFO, Officer Le.

safe floor like I'd who's read make for our to comments the the harbor First, to fourth and statement quarter. pass going Phong, to on results some the

Phong Le

statements report statements of plans filed the remarks company's by views subsequent should a representing various change. anticipate result make as discussed about may including safe you, and of as our and important may reflect under Securities Thank not the prospects we factors, the as Michael, purposes any those results statements good to of those developments may Litigation of that evening, Form quarterly be differ SEC. with for constitute provision on today harbor These in Reform indicated our cause forward-looking of views future materially only recent that and views forward-looking from the XXXX. as most upon everyone. and expectations, the subsequent may events Various We Private these our relied XX-Q date. Actual Act our

today's showing GAAP which issued purpose may results to world. to field marketing, across we refer non-GAAP after any company of our the There on company today, global of the are revenue with business. people alliances certain during executed field these is placing around In resources will versus strengthened close is people path market non-GAAP and schedule technology financial a obligation to website feel Also at forward-looking available specifically reconciliation across at our to on our press www.microstrategy.com. investment business the in a statements on call, currently located growth. our release measures. revenue marketing, development point the growing While elect sales, and course the disclaims plan with we entered in XXXX the update our some the future, well we do customers, of We our plan invest to sales, We the and so.

Marketing We In sales launched HyperIntelligence; and our worldwide campaign to work. for of in Officer platform. head center analytics, federated core and we head through the product in concepts a follow-up We of December. focused and are enterprise and enterprise in an new launched of also intelligence outreach analytics, generation April worldwide in transformational a and Chief international on moderated marketing, customers, demand we on our delivering added an head to support core advisory new assessment and and added three respect sales platform, open architecture and With a new proactive features, initiative new three mobility July October. provide

head a dozen We most a added MicroStrategy added consulting XXXX, technology worldwide release to XXXX. September. our product and we since to of our also team. In significant our over MicroStrategy leaders platform We release in technology, first leadership key half new launched technology reorganized our date,

November. in started who CIO, new a hired also We

respect new people, MicroStrategy. to launched our campaign and invested employer systems and in a with at to Finally, people we facilities challenge the inviting accept brand new

our of starting in XXXX the of see very organization, initiatives we strongest team employees, MicroStrategists these the believe successful half We MicroStrategy. to set and now employees organization rate. we We're ever strongest with added growth to as About were technology are XX% investments. these have benefits people Our recruiting of XXX ending a the to worldwide. worldwide X,XXX leadership added

financials. Here are highlights XXXX of our QX

a million $XX.X $X.X Product and X% QX XX% million quarter-over-quarter. revenue XXXX, license First, in $XX.X we a increase a or increase license product quarter. strong or had million revenue was year-over-year

product Domestic license revenue X%. was product our or support million with QX revenue increasing of X%. negatively very strong, Product impacting revenues decrease our year-over-year. license total foreign a or year-over-year $XX.X by Foreign currency impacted in $X.X and license to negatively such XXX% product effects currency effects by revenue, were million revenues XX% contributing million XXXX, $X.X X%

an to of continue see We our customer customer strong base. renewal engaged ongoing rates reflection highly

deferred product XXXX. by $XXX.X the million product half balance our and a a support affecting This as of deferred time foreign million in quoting revenue; implemented impacting to: exchange a In decrease new system Our year system. decrease the primarily one, same time revenue we revenue, foreign represents customer deferred is of was quoting which $XX.X driven ago. XXXX, related second two, and support currency changes our negatively a XX, December valued This invoicing changes from was lines.

customers. we this and support result this implementation, product a impact for delay of This renewal delays a experienced product support our reduced We in in XXXX. invoices to renew deferred revenue. resulted issuing in product ability As to QX do expect support not our quotes

first return quoting to revenue XX% foreign of such effects million XXXX. services the consulting our to lines We're million $X.X a with standard rate time from $XX.X negatively X%. XXXX, half was by QX transition to lower higher to expect business year-over-year impacting in services. our in We currency revenue continuing decrease Other or

to Turning cost.

in a $X.X our prepare our of other X% XXXX million technology, Our services MicroStrategy $XX.X and a million will million, focus increased and quarter-over-quarter. $X.X QX or or and in product million year-over-year are These XX% Sales XX% to million included upgrade an to increases of increase to strategy which support and to XXXX. more offerings year-over-year and area invest expenses to was $XX.X services services XX% result driving proactive for cost These sales, the or increase increases our increased upgrade customers XXXX. overall. is customers customers, revenues or quarter-over-quarter. $X.X marketing a continue marketing, people be

largely development quarter-over-quarter. a The to XXXX. to This or General in an China Tysons in and our increased location ramped successful saw due increase for our million due in recruiting due revenues increased associated or our where increases and increased translation MicroStrategy expenses we headquarters invested primarily of very XXX were increase Virginia primarily recruiting million million up Hangzhou and quarter-over-quarter. increase This of we expenses was $X.X or $X.X related hires XX% product launch. administration was year-over-year people, million launch variable X% additional and compensation an headcount operating $X.X XX people XXXX, and marketing of Research team increased and XX% technology year-over-year We due loss year-over-year quarter-over-quarter XX% travel or $X.X and fees Corner, improved The and center. X% million primarily a effort due our as was performance, license quarter-over-quarter. campus X% to XXXX had QX cost. and to to quarter-over-quarter $X.X and to MicroStrategy or

XXXX, XXXX per million For interest a quick repurchase $X.X of $X.XX. of the had from and of income stock million. consisted million, $X.X of operating earnings in benefit operating income we million, million, We We update in primarily foreign other program. to full $X.X gains income $X.X diluted of an and which $X.X resulting margin QX on of I year taxes of share exchange had net a provide our want income income had net X%. of also

cash, repurchases quarter of balance $XXX short-term of company's purchase fourth announced in cash of XXX,XXX as of the equivalents part approximately stock investments the common program. resulted XXXX, shares previously an million stock During of used ending million. was and The our $XXX to repurchase

We have continue to no debt.

previously, As a quoting the on half platform. of second new XXXX, in implemented mentioned the system we Force.com

of the systems system, As areas identified information the of information implementation company's user technology project access, management certain support and technology the that this we tested deficiencies financial we implementation general process. controls in reporting change the program and over

a a in and expect reporting XXXX. our statements Form of weakness result in our internal XX-K upcoming emphasize result, misstatements no XX, the the ended weakness, XXXX, to a timely I report in As in annual expect financial report XX-K we over want to to December for a have year the been identified control financial of as material on our we file material manner. that as

to over have identified remediation completing the of this begun. While our controls weakness material we're of still internal reporting, efforts assessment financial related effectiveness

However, controls effectively. testing, concludes, be weakness the fully for remediated period operating a controls sufficient considered material these this through until of operate management and will that are not applicable time,

remediation this year. to prior be completed of to the We end expect

our of investments, pace enter we is all across to our operating maintaining and the XXXX, objective grow areas expand to revenue generally expenses margin. of As back flat our scale business operating

XXXX enthusiasm for users to to expect the are drive developers our new the as product base upgrade brings feature, We as well our products, next Intelligence and showing which customer already MicroStrategy and enterprise. data HyperIntelligence months. across especially across analyst business XX executives in Zero-Click our our Customers cycles

in XXXX in marketing promising and administrative new integration of fall, up Technology improved incremental especially XXXX across lower organization organization, part the and may XXXX in cost. help successful arriving is our efficiency investments lower in We set expected increases also executive A products very expect our spring sales turnover cause costs. the of a leadership on recruiting strategic increases to and in process, hiring believe new hires, with account productivity and a marketing We and campus for XXXX. our as general and decrease pace us technology investments. our and employee to recruits, increase return

like to Now, Michael back Saylor. turn I would it to

Michael Saylor

with a speak XXXX to plans about Phong's about I Phong. XXXX. comments like our then you, Thank for would elaborate on few and thoughts

technology on force our back a all talent a a think a Workday, pleased CPQ HR pains, direct world, worldwide way the I great IT, I all of together head of Latin implemented talented great systems very team -- in America head big And seminal new were all We're that our XXXX, new the although, talented marketing a demand of executive international international at we've already the a the large of was pool with a in the and and pool for of with They systems. and around we quotation to and of these adding will new look consulting, head made in enterprise which lay in of head environment. of the new think, and a and our the marketing, sales, executives, of and professionals systems strengthening marketing not very, strengthening forward forward. XXXX, new modern sales and we MicroStrategy, I that we new As I'm they're head at a difference a integrating good the very a platform for of it's of head I our new hundreds think success here pleased adding head support, our new sales, head progress, strong company. In And for engineers step also new of a of a of system And common attract making organization. all including new able a implementation also without few system growing down the made big extraordinarily we engagement XXXX, company. firm. going the also talent been sales generation. strides achievements was of strengthened a

at strengthened material our very dramatically As years. Phong returned mentioned, the year, product offering, in the we product with delivered and we of of release a And we to XXXX three the capital also pleased MicroStrategy $XXX that. achievement. biggest We're and million shareholders end that's the

going that the interesting lot best their I they're architecture. of but specialty but And XXXX like a at created There are are open modern not don't a they're valuable enterprise-grade is people prospects to going platforms. and in often because modern they shareholders, there the desktop analytics, open assess appeal or architecture, many product the ever in analytics, quite to look times the have analytic marketplace. tools plan, an quite It's the XXXX have we've highlight makes many As to are with architecture our I'd to at not MicroStrategy. and but approach. then just MicroStrategy enterprise and And that open modern is platform. it XXXX platform analytics there forward

solutions organizations is the ones, in use of key deliver version the are to together spot believe a love marketplace. with that the are and tools unique interested truth. we that in platform single Federated the platform. some but to on there of XXXX unique offering Most We one a the So put the single the gives you clearly in analytics can us open that deploying modern, trust. the that enterprise characteristics the the ability really you

and that a ability characteristics are of the of them. existing lots era. we're And potential. digital the moved new enterprises XXXX new the third mobile order of certainly HyperIntelligence Now mobile embedded that era. tools years. thing and and HyperIntelligence. And offer we XXXX. them was do about for in more and another in transformation the is started mobile very go XXXX, expansion previous about personal a that and the Transformational is to intelligence was XX It's was may unique then XX or rapidly And we're to and or with that than years, just industry embraced new intelligence the a Power XXXX most it deploy opened shift. than saw constituencies offering with attribute And browsers. lots mobility enterprises. with beginning And XX company, go interfaces transactional federated XXXX. until MicroStrategy enterprise intelligence lot applications the the get and to people about been advent MicroStrategy just is beginning their of through. yet intelligence by intelligence, up the another starting to deploy the offering can founding a android more wave growth really era year If has major datasets, deploying MicroStrategy represents And we also next unique seeking back deploy of the have using we eras growth saw web exciting platform we web unique enterprises. XXXX, that of Tableau of projects. of And paradigm to HyperIntelligence wave intelligence to throughout PC a or the selling thinking have graphical we supports and functionality using are the point the And excited in the unique while about the in computers And PC feature. And they iOS analytics indeed, keep XXXX, use up of intelligence. that innovation into very Each because and it's lot and strong of solution. a a And beginning look now, like the cases the years of truly we in by we of BI devices of custom these apps

an of because the HyperIntelligence. weeks. to days profound the you gives the technology HyperIntelligence question Now to the and it's very interesting you is you instead of that technology to we're moving question. ask answer in answer within question the And era or it's knew gives hours, before that And seconds minutes,

and much so this feature. as X think to fad. don't be routine it's more new don't into value And inject use you propositions. cases, business to you find operational going think X is new year processes, intelligence a simple be constituencies, new new or executive going a I sponsors I

enterprise-grade. of going product MicroStrategy stage era is next uniquely I marketplace the We're trend. a us And think for like mature waves. and to previous of this the the go advantage these this early HyperIntelligence to on positions just XXXX that's of take decade with arriving to

be just a for as powerful will the think us. of part this how be marketplace all realize the rest is, theme. starts certainly will And big marketing I And to of HyperIntelligence good so this of our

Azure, mobility that is to single sources, go a marketplace that cloud more enterprise-grade, analytics, us. we we federated the the they We've going offering on AWS trend have for And think one of customers. have be open, very the source like weren't didn't and want good days into or And cloud HyperIntelligence, accentuating As Azure. XXXX, powerful and a embrace are AWS lot Those are advantage more enthusiastic the cloud And addition architecture for mature. of a that these in their feedback I an we're public either in to also really to cloud transformational choices. on sources. early or interested getting a offerings now from good focused of taking public of flexible cloud our them

our to solutions customers I understand XXXX all to that unique my and to first kind product sure market offering they bring that of of MicroStrategy all we for make and forward, the bear. As agenda of can look our is, to XXXX foremost, and prospects the

and people to base, and across can to and value with the can we see feel own bear base is our this move capabilities to MicroStrategy technology. customer item agenda aggressively the kind the eyes their touch and second with new XXXX upgrade Our prospect the of bring that customers pilot of so new

existing to client third The and to item prospects, and like clients Azure. begin new new public that our we product can customers platforms services, various the license AWS the and to lines -- platform offers new is so agenda to servers sell the application products believe clients new HyperCard cloud MicroStrategy and and and like mobile XXXX some new for product software and and and we

new all sell, its we And with to course, entirety, to when we goal, in So to conjunction is revenue sell intend the of both. have we product grow new And and and products. in have finally, margin. to those offer services of take this we

the that, so open from like floor for And analysts. would ahead I to up go questions with the and

Operator

question our Karl Keirstead And first with line the Bank. Instructions]. Deutsche [Operator of comes from

Austin Dietz

Phong, Dietz Austin you. had couple is on This I Karl. a questions for for

of, Just little think XXXX revenue quarter? of about in I first there how be is a XXXX we release, XXXX Perhaps, platform throughout had pause should of, one, year? follow-up. release more then there a the from the first customer kind the half? release? more, little kind a on contribution Could it ahead revenue pronounced And would any bit a the then And it be the than was if lift gradual, this or early second, platform platform the buying

Phong Le

the Austin, thanks question. for

a some see saw the think and purchasing I customers say second can revenue time know fair XXXX. to second I that platform of may it's quantify we out. that, it XXXX who half our the don't the their amount to taken that impacted test have on in half XXXX, I little in decision that

on our which as XXXX was As started XXXX starting market aggressively X, our goes, we January external product far to launch.

We have about major next week up for be Phoenix, to our event world communicate platform. our able customers us to is Arizona, the another milestone MicroStrategy coming in which XXXX to

of I'd our out, revenue. marketing uplift customers terms so upgrade license and that our And should course we we expect message as year, of in the product see over the get we

Austin Dietz

quarters, this I flipped but license product in I business, declining it agree. think past the And XX% then had it been plus certainly few domestic the quarter.

maybe So there? you'd kind out the of, call to seemed just what in what maybe quarter, change,

Phong Le

good activity And see that for North deal positive out wouldn't large start was QX. had about America. We rebound. obviously us in anything to I it to a call business specific

and I executives them XX leadership think some to account the of team in, the brought we're whether legs ago, of their that starting get hires it'd traction XX months be or their management underneath see to hires we place. back some and see and see take the start

positive quarter a So for overall, North for America it was sure.

Operator

And with [Operator our comes Instructions]. next Radke of line from Tyler the Citi. question

Tyler Radke

I or a you you've could Phong Michael, -- XXXX. on you your made investments. was obviously lot Do outlook comment wondering of if for

up going things coming. Your getting in in here terms North you you're execution of major headcount nicely. a have is release like sounds It And product America.

in growth can what in expect XXXX? revenue terms we So license of

Phong Le

had optimistic beginning our our both year XXXX and mentioned think, in XXXX investment the mentioned. of prospects the cost our you prepared saw Tyler, operating the reasons as my for that about the for and was, year. stated Yes, some of we're I Mike as income. the we at year, in remarks very I reiterated, And you

start all to I not revenue XXXX, across to we're for activity little But think major frankly, a margin we'd line we mention our start that I'm magnitude going the revenue, expansion of comment operating license looking XXXX scale to saw our investment As growth. as to entered the like as specifically grow you grow revenue business. did we'll see in and acceleration And product overall items. investment to the to see our bit. we back

Tyler Radke

now. maintenance look some like on you kind would as or kind I well -- of, I system and any delays of revenue, that changes as rate -- maintenance a quarters mean, in next I'm to you revenue. do impacts follow-up we invoicing what was maintenance currency a talked growth about you year-over-year three just a growth curious maintenance for the if were? deferred headwinds. based year? return nice down, have And at know on some from looks basis, maintenance Great. it expect can, revenue tax? there And what on rate excess to Is way revenue deferred those grown a quantify new

Phong Le

I basis. maintenance we Yes, X% revenues the related basis, currency saw full Tyler, on year, about full And close deals. constant any downs a some year-over-year we particular a maintenance ups grow there's our when think quarter, large year by for on to and

fact of that currency stated. So that's QX. currency question just in I of basis, were And into read deferred and too a expect your piece, due revenue year-over-year a and support as And put main the were, revenue that don't much the wouldn't overall, that second I out I that deferred foreign place the to delay dollar. that revenue in on little bit invoice, related in to is product saw a a One there long-term factors portion the a depreciation deferred us we put two flat system constant revenue ability that on caused a terms the be and effect. result, send to in to to balance. quotes deferred our a mentioned, as strengthening I we of is

recognize from of don't and half of our the think revenue. it receive to that So the ability affect I course expect amount stabilize the to product the year, customers you'll ultimately, year-over-year start I But collect our and basis maintenance on XXXX, a again. support see to over first

Tyler Radke

in the buyback that. was curious But me. the And briefly you Okay. quarter. question behind last what know addressed for motivation I just the

the stabilizing. the and talked deploying capital confidence about business business as the in in get more potentially you've past think I you

forward And curious is? what buybacks outlook what for there. you're going seeing your So

Phong Le

It's a good the Tyler. question, And I curiosity. appreciate

that about on a is, the part decision buyback, talked different in factor. know would most important factors you to I the to particular we our making few I past, and and mean, point the wouldn't capital quite our wanted to investors. return any we've address As there's

what disclosure you'll and we and did, that we SEC future that's on filings. that our so a more in XX-K And fulsome see file as in

Operator

And now turn back remarks. closing concludes would gentlemen, I Saylor over the Mr. Q&A like today's this ladies any call session. to to and for

Michael Saylor

everybody appreciate today, I'd to with support. months. look and for thank being three we speaking your us again to like in We the forward you All best. with

Operator

and may program, Ladies gentlemen, in conclude you all This you a participating for conference. and today's Everyone, thank have disconnect. does today's wonderful day.

MicroStrategy (MSTR) 29 Jan 192018 Q4 Earnings call transcript