MSTR - Earnings call transcript Q2 2022 | MicroStrategy Incorporated

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Shirish Jajodia

Hello, everyone, and good evening. I am Shirish Jajodia, Head of Investor Relations and Treasury at MicroStrategy. I will be your moderator for MicroStrategy's 2022 Second Quarter Earnings Webinar.

Before we proceed, I will read the Safe Harbor statement.

Some of the information we provide during today's call regarding our future expectations, plans and prospects may constitute forward-looking statements. the materially including forward-looking in the recent filed differ various due our may XX-Q factors, important risk with results from statements these to most Actual SEC. factors discussed update We assume as today. forward-looking which speak of these no only statements, to obligation during refer certain measures. we non-GAAP will call, today's financial Also, to microstrategy.com. are Reconciliations issued available are today results our release available website showing GAAP versus and earnings and on in non-GAAP presentation, were our which that we would of to know and you let Q&A to the all your bottom webinar taking like today's will feature I welcome the using questions you at screen.

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Phong Le

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Andrew Kang

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Shirish Jajodia

Andrew. you, Thank

questions, We have the jump questions. lot a of are to so into good we going received right

works first a a is been Michael. or The that while? succession CEO recent is the development, question that something for for Is in had

Michael Saylor

the he was that leadership Board The successive many finance had Board Board the future Okay. company parent. matter to on at involved promote company technology, was developing the we Can ago, single And and succession the on initiatives. for working think of on planned facilities, has throughout on with for and services, years. of activities, from and I him day-to-day of my of the Yes. every team, and the you the We a hear realize in it years was seven upon he had firm projects, Phong IT that our to on within. closely level CEO of because cultivate experience with two seven executives CFO been with on of closely sales believe generations promoted watchers to quarter. is marketing, considered years dependent he I time, ability Phong carefully pretty was years When era President clear was me? proactively on basis our

a point right. the an on. is It to this one when So that execute decision to easy got in years summary, seemed finally seven was in the we making

Shirish Jajodia

Thank you, Michael.

changes Phong. you Next question as a do make for plan What to is CEO?

Phong Le

capacity stated, Well, CFO we've my years and Mike in working as together two off, as now years been I for President. think seven on

to last both fairly I and the in in together enterprise our two aligned, in how very think an years we're company software run Bitcoin strategy. aligned very working closely acquisition

And corporate finance and innovation more now ago the get very Probably and time roles So, company arrival and I partners, see that the transition, with significant focus further more don't biggest professionally, business-as-usual I any gives organization, observed changes the the gives we run with me sort organization to strategy, really changes the to shareholders Bitcoin in media, we've employees, on him credibly. as it of would a is even with running our time months have Andrew's and in planned. our this strategy. the customers, clarify where to with two Mike

Shirish Jajodia

Thanks, Phong.

for your Andrew. any strategy? Next activity and debt is long-term what is capital Do anticipate markets further question you

Andrew Kang

comps. successful, as Thank well extremely capital you performance and XXXX out a believe Shirish. has to evidenced year company so stock our since the thought been it for when has in earlier, far the the prudent Mike structure question, compared Really framework. explained executed I over and last our very

debt has. it approach as equity or remain Our to same the will

to balance sheet will we dollars continuing to accretive, really most to obtain thoughtful the generated. current in the and are are to will of luxury evaluate execution. opportunities for most we said, markets all be now market, the We the continue future premium any the being access that various to continuing look evaluate and That right on have

assure you continue So, for I do a evaluate wait we so a to whatever see, that but safe and bit and will the prudent can future, we're moment in the manner. of in we do

Shirish Jajodia

Andrew. Thanks,

for of your the There you Phong congratulations how the CEO. about Next expect for for the to subscription to your year? and flowing, growth half on do outlook talk second rate your in software growth business billings significant this the this promotion Can Phong. you question are macro crosswinds license second impact is half? of

Phong Le

second quarter, some withstand We macroeconomic primarily the a you able of Thanks, question. in my by Shirish. these in were good opinion -- growing saw, It's to in the cloud. challenges as

think unpredictability more I the see War strong etcetera. changes, in Ukraine, macroeconomic half, the the dollar, challenges, second we'll

there I think will challenges. So, be more

continue grow. to to try to is intent Our

will us. think cloud help I

I all and growing as license have does the negative revenue impact product also has cloud a negative Andrew revenue. a impact short-term know, and on total explained, in As you and on short-term

challenges, cost. in the and continue optimistic optimistic revenues out our on That I in enterprise cloud going be than strength continues. -- in to going macroeconomic we'll sort distraction be grow. about cautious but been the be our our we'll things analytics given able And we'll well given when more see macroeconomic going embedded it. we ahead probably to half. said, create to prudent how our we're have see of But and will in analytics think the and that But second to of challenges. thoughtful. skis not business the get So I'm We're fairly

Shirish Jajodia

for strategy with accompanied volatility on impacted price forward? Bitcoin is the Has recent question Bitcoin your accounting adjustment Michael. your going view large Next

Michael Saylor

Yes, is when assets. that, than it's we the of volatility The is our means advantages we The I view volatility implications the decade less comes Bitcoin to last the bitcoin B, a interest, that accounting assets. competitive We on the strategy. -- holding our as A, vitality. more volatile these it's it bitcoin class great interesting volatile less embarked And because is and believe for question. best-performing We attracts the Bitcoin anticipated both mind understood special. MicroStrategy very volatility volatility asset reasons creates of is more one capital interesting firm. is is opportunities of than companies trading, phrase

does someone then or we're and that our to about were obsessing to our and of try Our and to might spikes XX% unique? on the that, magnitude firm since why what discover magnitude. to XX% lots weekend, opposite. lots maybe do? on explain it and they of about notice and up us, me Bitcoin the orders means about the of to increased unique strategy. volatile X that software, that Monday what to And stock means fact of by stock our convince cover companies We visibility have don't other is more increased the to to they're morning do MicroStrategy hearing and by channels us, be X we They're they want embarked they us. questions, from they asking started Tell that's that. there's thinking Bitcoin securities and obsessing notice when on Oh, has And all fact sudden, orders been And has X in a X interest our Bitcoin have also mispriced

to they've the of us. CEO, the invest used economic Traders have people. incentive So, C-suite, every I to with MicroStrategy. in us, And heard they've joke heard media CXOs, an of CFO,

us. then got stock that our Bitcoin, and If you you'll you'll want on if opinion you to an still trade hate Bitcoin, to Bitcoin, everybody's like hate our they like to want because But do like stock it. people people trade Bitcoin like have us, and

capital, So, and more company interesting. makes much the just the volatility attracts and attracts it attention

world. and knows don't, do, important, When be for is succeed whether you the interest or because -- thing nobody don't to nobody the knows that's you you death. what cares kiss want you is and and to of As irrelevant the the no one

this world to market, to on emerged helped really has company has retain to shareholders, sell our et to it and us cetera. recruit, to employees so, find And scene,

see I as positives. all those so, And

accounting our treatment also standard. firm, I think Bitcoin the benefits the decided adopt we because to

we indefinite given or and be and know day committed to in you're it of an accounting worth, in the we balance be would intangible, then the of corporate Dutch what with shareholders and they think is that in, the times X% were committed Most and business on they completely we X% to when it able things sheet and actually able XXXX. add -- daunting treatment, do or price can all XXX,XXX deal. with XX, a corporate auction But kind of bitcoin firms this they other transition to software and committed. makes easy, did find launched wouldn't August the support transform the in way because that's challenging XX% the it this that that of committed it's sort very So, people all any multiply transformational

continue has use to I value going largest us the and we given forward. a competitive that people that, a So, afraid edge and develop first are have the the of asset sustainable a off the by they're company digital build Bitcoin in as as that and of and differentiator standard, to volatility result lead sometimes, accounting, think a operating been to can a shareholder public space on able because put we

Shirish Jajodia

to add And color? further Phong, you like any would

Phong Le

I it think very No, Mike said well.

Shirish Jajodia

Great.

the digital new for structure? beyond become Are from time, that for there also evident executive asset it investors further a work Michael. holding? will should is over How development example, question Next Bitcoin strategy of tangible benefits any evaluate the

Michael Saylor

to Well, be I think us. benefit the to executive structure a going is of all

management a has addition with full-time and with all, you team our our to own. that our grown to and the the $X.X as our Andrew. job we're balance And the $XXX know, become expanding the sheet finance billion, finance ability has enterprise value debt offerings executive, that means issue of a of full-time actually explosion million from in and gives us First equity of function its

and made and efficiently it the team, that the Bitcoin get which I them? Officer, Sales, promote more things they're to role the even and integrate that's possible you the well our just awesome they -- XXX,XXX world, also incredibly with And evangelism move in CEO I year will they job some team everywhere are every have done. not so Phong into Andrew a the focus bolts on rest Head have an corporate scope. Phong enthusiastically And and an call to the how him, Phong is and But communications ignoring and Marketing, right? of brought CXO of right, comes with But and the the gifted arrived to of with exploding. right upon and with network, world Executive skills will executive has unsung IT, Bitcoin Phong haven't in mentioned be to done, executive just accomplished, us of is that drive operating able this advocacy with and that in very in get and place plug this need knowing And has mission. feel comfortable of the unambiguous do people growing but our and of aren't Head they heroes to executive and of with and And well our company, that's means we interested actually that effective and more Andrew strategy and there’s Head of Head is business, as President new this stable. Consulting, I'm for it, we support software very power and so Andrew with MicroStrategy how Andrew Chief now. a the can of structure the as more new but Head day-to-day team, can our And that of operations nuts the in our And Technology,

more effective, effective. be I'll welcome It’s a will just like Phong be Andrew's addition. more feel win-win-win. I So

Shirish Jajodia

Michael. Thanks,

question for Next Phong. is

us think growth margin Given how revenue macroeconomic balancing risk, about the on versus can expansion? you update you

Phong Le

We're growing revenue. focused on the

structure cost do it. in have I the place right to think we

reducing need And reduce that our we think we revenue we to believe growth to at continue if can don't expansion. cost will margin to I start grow the costs, to I I current were in structure. result by So also sacrifice think

So not opinion. trade-offs my direct they're in

Shirish Jajodia

Phong. for Another one

and growth more between So SaaS? software, us idea now where you see to we the stand growth growth we needle an move give might mix good expect core begin When license to in SaaS on see can to in materially?

Phong Le

subscription recognized a Yeah. basis, XX% is it's of XX%. basis, On about our revenue revenue. recurring cloud about a On billings revenue our

to I an that not continue revenue reached gets point accretive the inflection say, our haven't would we in north grow, fully the So in but to, whereas accretive short-term. it's the Right short-term. to to SaaS of long-term, where it's quite now XX%, revenue business we

short-term that out that how and product comes revenue. in So you time Obviously, the of acceleration to the on revenue, I with past. end in familiar companies left. go of subscription you're its some seen perpetual have license many a think -- think total we revenue other have transition of license on impact And revenue I with and an a from all dip you

demand there's going high we're cloud, is for So now right through -- exciting. which

the understand customers Our value proposition.

to understand explain. marketers how Our

to how Our we sell scale. to better-and-better And at salespeople are it. how learning operate understand

full say, with the cloud speed ahead would transition. I it's, So

Shirish Jajodia

Thank you.

Would expenses you further on the is of second question half in managing for Next elaborate Andrew. like XXXX? to

Andrew Kang

Sure.

think business haven't And in over Head stable. cost think I in very tagging years. of Phong growth this been on head that's has company our very earlier, long-standing for And I said structure had stable. XX is count. to count benefit we being a the massive what

over haven't recently. seen we've We in hired many the do as market

that we think cost sales. expenses and think be in talent, a I to And we of new areas the the and to new can be like continue efficient. key and costs. a around to I've we where more fact, scrutinize of benefit So are opportunistic will on in to really bringing lot costs tech cloud look getting other And accretive on and questions got coming focus we in certain ask perspective, we'll on can We'll areas from profitability. that

and and I understanding be our can will And will But efficient. going ultimately, grow. opportunistic so that that we we're I business think where in spend helpful to help areas think be more be

Shirish Jajodia

We'll Andrew. Phong one for take last just Thanks, here. question

what is seeing view customers rest On demand your from the for software, environment, And any on what of the XXXX? macro? for deal cycles the in on outlook uncertainty you environment or their, elongated, the demand And any demand have BI are on spend?

Phong Le

times I can through push All before, enterprise in said, leverage the expertise Yeah. Thanks, can be build the rely mentioned better applications second as fact the in have especially environment, that that future. this challenges turbulent our transition, choppier cloud that if large we I think in Shirish. especially cycles deal elongated I enterprises work there's leverage execution. to do certainly we at and and in seeing volatility, more more grow execute, our we're on, and in international. we half selling demand, we But in think through analytics, our and

to our customer We precise and our and pipeline, in be have our engagements, more and our managing our sales cycles, conversations. and opportunities,

company product, And great execution. that at. these times. We're and good So is this a requires execution types great of we're it has in great better what look, strategy

through hard, it's it. So but work we'll

Shirish Jajodia

Great.

the So the Q&A over today's Michael time call the This end of will we the the for I call. Thank turn are webinar. portion for for at concludes questions. closing you, of to everyone, now remarks.

Michael Saylor

want to day. Andrew, forward your Have you all look seeing Phong, we happy a summer. Shirish I I support, in you wish thank a to for and good everybody weeks, and and again will XX

MicroStrategy (MSTR) 2 Aug 222022 Q2 Earnings call transcript