MSTR - Earnings call transcript Q2 2024 | MicroStrategy Incorporated

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Shirish Jajodia

Hello, everyone, and good evening. I'm Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I'll be your moderator for MicroStrategy's 2024 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 earnings refer certain release and which issued measures. we and non-GAAP results are are will versus today our microstrategy.com. showing presentation, GAAP non-GAAP call, website available available today's financial Also, to Reconciliations in at on our were

to all the be of you webinar at let like today's would will I bottom we you welcome taking and to your the know Q&A that screen. using questions feature

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bitcoin. issuances the have from these our X.X% annually. The at used We to of principally outstanding proceeds is purchase blended debt cost fixed

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the As have leverage. capital development ability intelligent bitcoin markets a create we unique the to access company, to

the second holdings total increased quarter respectively. by and our and first bitcoin of During XX.X% XXXX, X.X%,

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our ability look become into yield assess As positive for consistently our our crucial to of bitcoin anticipate a strategy. the will we to achieve future, investors we benchmark execution that

services Turning subscription towards wins. the traded cloud services the offering, $XX our company. the customer customer world's XXXX, increase migrations The publicly existing of positioned in revenue business both growth cloud in XX% of we was independent by quarter our is resulting an continued new also and to revenue of largest as year-over-year. subscription to million, business. strong software driven shift our intelligence the In second MicroStrategy

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to be growing maintaining revenue continues objective cloud Our profitability. to migrating customers while cloud by

the May in the AI, combat users and At In of like more data World XXXX, we their way ONE conference can user world, easy to We application and address, and utilize our single MicroStrategy successfully to data platform an U.S. high-performing some AI the in a Vuori, our without brands of allowing organizations organizations. how showcased Auto the with Bayer create build how leverage we unveiled highlighted biggest code. competitive, our and stand-alone State, Vegas innovative, Las engage Express to Department of line stupor keynote AI in in BI own MicroStrategy bot including their offer MicroStrategy big held insightful to sprawl.

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ultimately include customers software, our rates, benefits using very more latest retention growing engaged higher and recurring overall revenues. Additional

turn now the our to over Andrew discuss in detail. for call I'll further the financials quarter to

Andrew Kang

the of on to results, our I'll Thank continue bitcoin I'll Phong. with then you, software financial recap our move strategy. and

to the $XXX.X million, overall revenues quarter quarters, year-over-year. from the recent reflects on-premise for trend down Consistent revenue were cloud. X% transition Total our second the business of with

a customers contract. upfront of recognized As revenues shift the subscription we cloud, life over to the license services which revenues, we are to ratably product migrate

with we license along and As respectively, expect revenues, down decline, down were a of result, both revenues, to which year-on-year. fully XX% X%, support product

more seen any in reported stronger, that upfront that more isn't revenue time, over revenues, a we for which reduction faster quarter's or revenue will through building results. are to last And consistent in on-prem larger is immediately which cloud transition. up we saw migrations is have durable cloud robust is recurring cloud temporary What in but comes what

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numbers to quarterly reported we X into QX, our enhanced our results categories. out break In

charges non-software-related BI to and the with corporate category holdings, costs. business. which related First, third-party operations impairment reflects software asset loss or the The from represents our category other our business specifically associated digital related and areas income other include

isolating performance While one impacts business operating related we operate of reportable with segment, these operating we categories software while our under of to in provides continue the the results bitcoin believe to respect our more to into price. transparency X breakout changes

mentioned of which our software was to with customer In compared QX, moment hosting of million, were XX% result a associated higher business $XXX QX while year. is to million, functions. I last cloud ago, as up in due costs business, The were setting $XX of success increase revenues cost growing a well cloud part as direct enhancing revenues as up costs,

operating this advisory employee comp, expenses up quarter quarter. QX higher the $XX compared well legal, in G&A of consulting second as costs business Higher were and to X% connection last payroll employer higher stock-based year. Software million, exercises in other was related as with taxes stock option to

marketing, on recent as overall sales operating expense in However, also maintain cost offset were consistent with and and management. by expenses lower discipline strong costs quarters we

million. from XX% business $X.X overall profit the year-over-year. stock-based QX operating Noncash or expense compensation software up $XX.X million, was income And category non-GAAP in was

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billion and Currently, of MacroStrategy, turning of bitcoins the unencumbered total more current strategy. coin. our are which acquired bitcoins second bitcoin as $XX.X the another of in of or And market held we unencumbered. or billion XX, XXX,XXX Now bitcoins of of cost to $XX,XXX holdings acquired aggregate currently unrestricted July in hold had at wholly per to subsidiary company MicroStrategy, adding of all XX% sheet we owned a our total represents the extremely as value, which XX,XXX our balance successful bitcoin quarter quarter. an for XXX,XXX $X.X We approximately

as The at convertible secured XXXX in securing from our proceeds served collateral are senior bitcoin MicroStrategy, we QX our acquired notes. using notes offering parent, held the and

proceeds During aggregate XX,XXX using issuance. QX, to $XXX we note convertible holdings from purchase at price net our added bitcoins of an million MicroStrategy's

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end from During MicroStrategy's QX, of price to excess $XX also excess an at an the million at $X QX, million, purchase added bitcoins we XXX using of to aggregate holdings from cash. purchase we holdings added XXX proceeds aggregate additional bitcoins Since of an MicroStrategy price cash.

at As of value. billion July $X.X XX, or held XX,XXX bitcoins market in are MicroStrategy current

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of strategy, notes XXXX convertible conversion a X.XX% enables of blended a we due to starting maturities a of rate to XX% at and convertible We and a in price in Now activities. secured well cost our XXXX. leverage $X,XXX notes Yield. Continuing and premium of active thoughtful received February million of several markets through at us inception add was key capital in X a component $XXX senior billion We conversion approximately in our more by attractive BTC of Intelligent share. the reserve manner, to bitcoin convert and convertible when treasury June X.X% of deployed very momentum debt interest with an rate annual staggered billion interest over Since allocation low the approach which our with disciplined note the approximately XXXX of with our strategy, our June remains an issued recent years debt through upsized March, outstanding $X.X with maximizing capital per $X.X now issued bitcoin to market. have a with have June of financings turning the notes. from

past, net the in used into new proceeds the As from convert the were our additional bitcoin treasury to reserve. acquire

for notes. million We $XXX to liabilities. XXXX we redemption end, existing of called will that to continue actively convertible manage our our And

As in all a into the substantially our date. to prior of notes holders Class notes converted were common of the redemption of A shares money, notes stock the those substantially

traded notes extremely for partners. XXXX successful up over issuance, and bond an of investment investors time in our Our from resulting XXX%

continue solid addition accretive $X manner announced issuing filed offering. new to a In to shelf we a ATM, track demonstrate that to raising record for debt, is at-the-market, in we billion equity equity that Today, shareholders. we or a of a registration

will extremely on the ATM it activities, achieve executing yield. we them capital of and bitcoin markets will the both We when most disciplined other remain in use believe the

capital overall be BTC in results our we on bitcoins total which a rate focused to faster at Yield. issue allocation Our continues new higher shares, strategy increasing than

targets annual differentiating that earlier, value BTC and Having mentioned each targeting further Phong XXXX. X% also over XXXX our MicroStrategy's X% we provide goal Yield transparency of of As already BTC positive reinforcing Yield exceeded XXXX, are XXXX, to in in in achievable of believe are those consistent, and proposition. we an time,

in trading liquidity A effected to B and as to for as a after dividend. on have options lead commence split distributed the XXXX. our other accessibility and stock stock well split-adjusted XX-for-X MicroStrategy's employees basis stock investors Class as stock is and of activity. of also in any stockholders. be This our will and The at a market on greater we expected not of our better the open on will rights common to X, announced Class X, stock August the common Lastly, stock close expected on August a are XXXX, The dividend trading shares voting impact and

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and the and see, future capital maturity as conversion XXXX. of monitor as management debt well notes opportunities raise can our you XXXX the We convertible manage liability As nearest debt due out markets expense to the actively the interest additional moved to has to financings. opportunities evaluate

record track believe demonstrated to of has established our bitcoin a to through the approach and credibility disciplined have our significant execute value we goal volatile generating in applying shareholders. market, we a of strategic strong MicroStrategy times on navigate for

As value said believe of that we earlier, technology and a strategy combination bitcoin our exposure. unique forms proposition when on compared innovation the Tom focus for shareholders structure, of other operating to bitcoin provides

time Thank for now to MicroStrategy. today of I'll your the his turn over Michael support your for you continued and remarks. call for

Michael Saylor

here us Thank you, all being of our like to for Andrew, and thank you with I'd on a give today. bitcoin, macro the and few shareholders thoughts operations. environment to MicroStrategy's

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Shirish Jajodia

Michael. you, Thank

first your jump for swings is the has premium holdings questions. positive and equity And attribute this now bitcoin MicroStrategy's bitcoin to achieve you going to Yield? remained question are to few its We the ability the Would months Michael. directions. over price BTC despite Board into healthy past to

Michael Saylor

Yes.

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Shirish Jajodia

Thank Michael. you,

Next question for is Phong.

how your think of AI-related we the to On rest respect cloud how should conversions QX the year you software the your about and relative about with expectations? feel to the cloud partnerships? side, And did migrations

Phong Le

had, bookings about including of QX, twofold. company the the a and -- Thanks, Shirish. quarter, we've We that by in than cloud bit more little in the history conversions largest had twofold

have depresses is because great. revenue. the ARR recognized and going So revenue long-term the our short-term over recognized to quarter. doesn't conversions and But of recognized gets accelerating, the the show which mentioned, as get that It's our recognized are It ratably up long-term Andrew in year. it course

we health is of the had the the our available And the conversions. of because the quarter terms it AI cloud. adoption that cloud is only of But with So it overall on really in other business. does good helps accelerates a AI product of thing course,

of quarter. purchase second accelerate start also we saw the And in And uptick also. I a that's to and the use big so to in going AI the think

see and so product. of usage AI And our adoption we'll first-to-market nice

the So overall. well both bode of those are positive trends business and in

Shirish Jajodia

Tom. Thanks,

decide equity debt or think for raising issuances options? whether How and about Next different And between or from management Michael. ATM we question convertible how do equity issuances? use again is to debt does the proceeds

Michael Saylor

Well, of we have lots options.

spot of accretive. go did have and accretive. equity income issuance. that straight bitcoin that we the market, might we evaluating convert debt, then a surged the capital offering. into use acquire from the We can convertible opportunities purchases, market extremely market business and our market surged measures markets. week, equity that that the acquire we was our the and equity turns And the It have continually Then We're the relationship debt next between debt, market options, another the and out with cash counterparties generate in we a offering the convertible mix. or options the types market, other that, operational and including surged thought developments to was and all bitcoin And market, do bitcoin that the This various bitcoin. debt year, did extremely convertible we could offering equity we futures

a literally took days. process of that That decision-making place was matter over a

early debt that market the capital consider always markets. in response next We when in deal. an We're to redeemed went so move to in didn't choose we'll things ahead like deal the consider shifting. markets. was much the just duration the deal. the QX days, pursue note we offers because Then of last or of the We of QX in and pricing we 'XX in of nature was QX opportunity. -- Sometimes we did really equity to year in response the as the the The markets QX the are capital

say bitcoin, sometimes but statement, the change. month-by-month. fixed between income change debt is convertible they changing. market, reasonable they are the the relationship equity They week-by-week literally market, the market, the a To And and market, all those change options every quarter

situation is do we we great to QX, also quarter convertible deal, in we're deal, We don't we off. purchase. use an anything we afford -- a cash quarter-by-quarter. the do deal debt But hurry. debt in to think that and I a like do ATM second a So can have can we X convertible can that a can different can in all and a And things, take

like BTC yield, Yield negative If we to that's So good markets our understand We the do. entertain KPI then decision-making yield them keeping useful pass helps we that market substantial a And looks we no obviously, and shareholders a we on generate de minimis by probably if deal a think a we'll the what BTC us being and we that Yield, a tend just it. or give capital do proposition wanted an drive how is open yield to to think about mind let can flexible. a deal our that. offering was or

Shirish Jajodia

Thank you, Michael.

operating cash expense capacity the interest overall I think is software for increased to expense from have think flows do and time business? given any last we Andrew. about interest for this and one you relative incremental question, capacity the How leverage

Andrew Kang

the transition Thanks, revenues, to continue moment, the existing question. to I overall And cloud. service I'd we cash. before, manage actively we as forecast start mentioned the we on adequate by ARR forecast cash our as stronger building software durable. to based remain which Shirish, guess and for And our the we're debt at saying we

a also our into We well after business needs. service cash fully as account debt manage as taking our funded software

debt take we say And full interest just the it So we're and carefully. incremental we I extremely thinking manage about when picture expense. would

also too, us mind, assess across mentioned, the additional needed. in liability Michael via gives needs profile markets we we various as keep have management capacity. the opportunities stack a that if debt of of kind our capital as continually available And our to as sources And liquidity of us, well

the So we'll overall, to continue today. say And will KPI comfortable in debt. ways I'd service earlier we that to feel to BTC active Yield continue our generate that that ability with very we be announced

Shirish Jajodia

Andrew. Thanks, Great.

hand now to Q&A everyone, portion thank of you, And for call final webinar. this So the closing the the for I Phong concludes questions. your will over remarks.

Phong Le

next time quarter. support, want to everybody Thanks. and I I of seeing to everyone look forward thank today, and their your appreciate all for again

MicroStrategy (MSTR) 1 Aug 242024 Q2 Earnings call transcript