MicroStrategy Announces Fourth Quarter 2012 Financial Results Record $164.5 Million in Total Revenues PR Newswire TYSONS CORNER, Va., Jan. 28, 2013 TYSONS CORNER, Va., Jan. 28, 2013 /PRNewswire/ --MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence (BI) and mobile software, today announced financial results for the three-month period ended December 31, 2012 (the fourth quarter of its 2012 fiscal year). Fourth quarter 2012 revenues were $164.5 million versus $160.3 million for the fourth quarter of 2011, a 3% increase. Product licenses revenues for the fourth quarter of 2012 were $46.3 million versus $54.5 million for the fourth quarter of 2011, a 15% decrease. Product support and other services revenues for MicroStrategy's core BI business for the fourth quarter of 2012 were $109.7 million versus $99.5 million for the fourth quarter of 2011, a 10% increase. Operating expenses for the fourth quarter of 2012 were $111.3 million versus $113.7 million for the fourth quarter of 2011, a 2% decrease. The decrease in operating expenses was due primarily to a reduction in sales and marketing expense. Net income for the fourth quarter of 2012 was $8.2 million, or $0.73 per share on a diluted basis, compared to $9.0 million, or $0.81 per share on a diluted basis, for the fourth quarter of 2011. As of December 31, 2012, MicroStrategy had cash and cash equivalents of $224.4 million versus $199.6 million as of December 31, 2011, an increase of $24.8 million. As of December 31, 2012, MicroStrategy had 9,057,303 shares of class A common stock and 2,227,327 shares of class B common stock outstanding. Fourth Quarter Highlights in Big Data, Mobile Applications, and Cloud-based BI In the fourth quarter of 2012, MicroStrategy continued to bolster its position as a leading worldwide provider of business intelligence and mobile software. The company continued to offer visionary thought leadership, superior service to its customers, and disruptive new products. MicroStrategy Announces the General Availability of Express, an Innovative New Software-as-a-Service (SaaS) Offering In October 2012, MicroStrategy announced the general availability of Express, enabling any business person – regardless of technical skill – to access and analyze data on their own, and deploy powerful data-driven mobile apps to thousands of users within days. Express combines the simplicity and flexibility of a cloud-based solution with the analytical depth, performance and scalability of world-class business intelligence. Business people can access on-premises and cloud-based data rapidly and securely, and explore it using powerful and intuitive data visualizations. They can design and share mobile apps without writing a line of code. They can build boardroom-quality dashboards using pixel-perfect editing capabilities, and automatically publish personalized documents to any number of recipients. To try the free service, visit http://www.microstrategy.com/cloud/express/. MicroStrategy Rated #1 by Dresner Advisory Study for Second Year in a Row for Mobile Business Intelligence Offering In November 2012, MicroStrategy announced that it has been rated the top Mobile Business Intelligence offering out of 25 product offerings in the widely followed 2012 Wisdom of Crowds® Mobile Business Intelligence Market Study® from Dresner Advisory Services. This is the second year in a row MicroStrategy Mobile received this number one ranking. The MicroStrategy Mobile BI platform goes above and beyond standard business intelligence to become a full mobile app development platform. The MicroStrategy Mobile App Platform enables organizations to build a wide variety of essential mobile apps that deliver workflows, transactions, mobile operations systems access, multimedia, and business intelligence in compelling custom native apps. The Dresner study rated MicroStrategy the top Mobile BI offering, with the highest platform score and the highest customer user rating for Mobile BI among all 25 vendors rated. MicroStrategy Enhances Innovative Big Data Capabilities with Certified Integration to Amazon Redshift Analytical Data Warehouse Service In November 2012, MicroStrategy announced that it certified its integration with the Amazon Redshift data warehouse service. Launched by Amazon Web Services (AWS), Amazon Redshift is a cloud-based analytical data warehouse service designed to deliver high performance analytics for data warehouse and Big Data applications. MicroStrategy Releases Survey Results on the Use of Tablet Computers to Support Sales Activities In December 2012, MicroStrategy announced the results of a survey of over 500 U.S. organizations on the use of tablet computers to support sales activities across many industries. Results of the online survey revealed that: oNearly one in two salespeople cite limited mobile access to key sales systems – i.e. Customer Relationship Management (CRM), Content Management, Order Management – as a challenge. oC-level executives point to their respective salesforces' lack of understanding of customer needs as a major barrier to selling (75%), along with failure to keep product knowledge current (50%). oThe top five desired activities to perform on a mobile device include: create or update opportunities, view sales collateral, view CRM records, view sales analytics, and collaborate and share ideas with other sales team members. oMost sales organizations (72%) grade themselves at a B-level or below on sales meeting quality. To see additional survey result detail, visit http://www.microstrategy.com/download/files/mobile/MSESurveyResults.pdf. Examples of Customer Deals from Q4 2012 Kinross Gold Corporation Kinross Gold Corporation (NYSE: KGC) is a Canadian-based gold mining company with mines and projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauritania, Russia and the United States, employing approximately 8,000 people worldwide. Kinross is expanding its use of the MicroStrategy Business Intelligence, Mobile and Analytics platforms to support initiatives around continuous improvement, cost management and mining productivity. Kinross selected MicroStrategy for its integrated architecture platform, ease-of-use, and visualization and reporting capabilities. Nielsen Holdings N.V. Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen selected MicroStrategy as its enterprise BI and Mobile software solution to provide its manufacturing, retailer and media clients with the ability to report and analyze market information for their respective products and services. About MicroStrategy Incorporated Founded in 1989, MicroStrategy (Nasdaq: MSTR) is a leading worldwide provider of enterprise software, including the MicroStrategy Business Intelligence (BI) Platform™, the MicroStrategy Mobile Platform™, and MicroStrategy Applications™. The Company offers its technologies for deployment in customer data centers and as proprietary cloud services. The MicroStrategy BI Platform enables leading organizations to analyze vast amounts of data and distribute business insight throughout the enterprise. The MicroStrategy Mobile Platform lets organizations rapidly build enterprise-caliber mobile applications needed to mobilize business processes and information. MicroStrategy Applications are a set of application services designed to help enterprises deploy mobile commerce and loyalty services, build mobile identity and cyber security services, as well as generate real-time insights into consumer preferences. MicroStrategy Cloud™ allows enterprises to deploy MicroStrategy BI apps and mobile apps more quickly and with lower financial risk than with traditional on-premises solutions. To learn more about MicroStrategy, visit www.microstrategy.com and follow us on Facebook (http://www.facebook.com/microstrategy) and Twitter (http://www.twitter.com/microstrategy). MicroStrategy, MicroStrategy Business Intelligence Platform, MicroStrategy Mobile Platform, MicroStrategy Applications, MicroStrategy Express, and MicroStrategy Cloud are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners. This press release may include statements that may constitute "forward-looking statements," including estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect," or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the "Company") to differ materially from the forward-looking statements. Factors that could contribute to such differences include: the extent and timing of market acceptance of MicroStrategy's new offerings, including MicroStrategy 9.3, MicroStrategy Express, MicroStrategy Wisdom, MicroStrategy Alert and MicroStrategy Usher; the Company's ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's other products in the marketplace; the timing of significant orders; delays in the Company's ability to develop or ship new products; competitive factors; general economic conditions, including significant downturns in industries, including the financial services and retail industries, in which we have a significant number of customers; currency fluctuations; and other risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011* (unaudited) (unaudited) (unaudited) Revenues Product licenses $ $ $ $ 46,265 54,502 147,344 154,574 Product support and 118,188 105,764 447,262 407,576 other services Total revenues 164,453 160,266 594,606 562,150 Cost of revenues Product licenses 1,632 2,260 5,819 8,774 Product support and 38,050 35,392 146,973 133,246 other services Total cost of 39,682 37,652 152,792 142,020 revenues Gross profit 124,771 122,614 441,814 420,130 Operating expenses Sales and marketing 59,230 69,125 219,845 243,029 Research and 26,708 22,312 94,565 72,618 development General and 25,340 22,223 97,251 89,441 administrative Total operating 111,278 113,660 411,661 405,088 expenses Income from operations before financing and other income and income 13,493 8,954 30,153 15,042 taxes Financing and other (expense) income Interest income, net 50 60 141 199 Gain on sale of - - - 3,371 investment Other (expense) (1,801) 666 (1,063) 688 income, net Total financing and (1,751) 726 (922) 4,258 other (expense) income Income from operations 11,742 9,680 29,231 19,300 before income taxes Provision for income 3,502 680 8,685 1,360 taxes Net income $ $ $ $ 8,240 9,000 20,546 17,940 Basic earnings per $ $ $ $ share (1): 0.73 0.84 1.87 1.67 Weighted average shares outstanding used in computing 11,245 10,767 10,995 10,719 basic earnings per share Diluted earnings per $ $ $ $ share (1): 0.73 0.81 1.84 1.62 Weighted average shares outstanding used in computing 11,281 11,078 11,174 11,066 diluted earnings per share (1) Basic and fully diluted earnings per share for class A and class B common stock are the same. *Derived from audited financial statements. MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Core BI Business Angel.com Consolidated Three Months Ended Three Months Ended Three Months Ended December 31, December 31, December 31, 2012 2011 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenues Product $ $ $ $ $ $ licenses 46,265 54,502 - - 46,265 54,502 Product support and 109,721 99,467 - - 109,721 99,467 other services Angel.com - - 8,467 6,297 8,467 6,297 services Total 155,986 153,969 8,467 6,297 164,453 160,266 revenues Cost of revenues Product 1,632 2,260 - - 1,632 2,260 licenses Product support and 34,807 32,539 - - 34,807 32,539 other services Angel.com - - 3,243 2,853 3,243 2,853 services Total cost 36,439 34,799 3,243 2,853 39,682 37,652 of revenues Gross profit 119,547 119,170 5,224 3,444 124,771 122,614 Operating expenses Sales and 56,590 66,628 2,640 2,497 59,230 69,125 marketing Research and 25,079 20,946 1,629 1,366 26,708 22,312 development General and 24,192 21,288 1,148 935 25,340 22,223 administrative Total operating 105,861 108,862 5,417 4,798 111,278 113,660 expenses Income (loss) from operations before financing and other income 13,686 10,308 (193) (1,354) 13,493 8,954 and income taxes Financing and other (expense) income Interest 50 60 - - 50 60 income, net Gain on sale - - - - - - of investment Other (expense) (1,799) 709 (2) (43) (1,801) 666 income, net Total financing and other (1,749) 769 (2) (43) (1,751) 726 (expense) income Income (loss) from $ $ $ $ $ $ operations 11,937 11,077 (195) (1,397) 11,742 9,680 before income taxes Provision for income 3,502 680 taxes Net income $ $ 8,240 9,000 Basic earnings $ $ per share 0.73 0.84 Weighted average shares outstanding used in 11,245 10,767 computing basic earnings per share Diluted $ $ earnings per 0.73 0.81 share Weighted average shares outstanding used in 11,281 11,078 computing diluted earnings per share MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Core BI Business Angel.com Consolidated Twelve Months Ended Twelve Months Ended Twelve Months Ended December 31, December 31, December 31, 2012 2011 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenues Product $ $ $ $ $ $ licenses 147,344 154,574 - - 147,344 154,574 Product support and 418,380 382,594 - - 418,380 382,594 other services Angel.com - - 28,882 24,982 28,882 24,982 services Total 565,724 537,168 28,882 24,982 594,606 562,150 revenues Cost of revenues Product 5,819 8,774 - - 5,819 8,774 licenses Product support and 135,257 121,924 - - 135,257 121,924 other services Angel.com - - 11,716 11,322 11,716 11,322 services Total cost 141,076 130,698 11,716 11,322 152,792 142,020 of revenues Gross profit 424,648 406,470 17,166 13,660 441,814 420,130 Operating expenses Sales and 209,975 231,504 9,870 11,525 219,845 243,029 marketing Research and 88,190 67,863 6,375 4,755 94,565 72,618 development General and 93,384 86,237 3,867 3,204 97,251 89,441 administrative Total operating 391,549 385,604 20,112 19,484 411,661 405,088 expenses Income (loss) from operations before financing and other income 33,099 20,866 (2,946) (5,824) 30,153 15,042 and income taxes Financing and other (expense) income Interest income 143 199 (2) - 141 199 (expense), net Gain on sale - 3,371 - - - 3,371 of investment Other (expense) (1,035) 764 (28) (76) (1,063) 688 income, net Total financing and other (892) 4,334 (30) (76) (922) 4,258 (expense) income Income (loss) from $ $ $ $ $ $ operations 32,207 25,200 (2,976) (5,900) 29,231 19,300 before income taxes Provision for income 8,685 1,360 taxes Net income $ $ 20,546 17,940 Basic earnings $ $ per share 1.87 1.67 Weighted average shares outstanding used in 10,995 10,719 computing basic earnings per share Diluted $ $ earnings per 1.84 1.62 share Weighted average shares outstanding used in 11,174 11,066 computing diluted earnings per share MICROSTRATEGY INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) December 31, December 31, 2012 2011* Assets (unaudited) Current assets Cash and cash equivalents $ 224,393 $ 199,634 Restricted cash and short-term 86 289 investments Accounts receivable, net 93,758 94,723 Prepaid expenses and other current 13,288 17,043 assets Deferred tax assets, net 26,616 31,516 Total current assets 358,141 343,205 Property and equipment, net 100,514 95,311 Capitalized software development costs, 10,360 7,031 net Deposits and other assets 5,259 5,306 Deferred tax assets, net 3,664 2,998 Total Assets $ 477,938 $ 453,851 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $ 42,492 $ 46,401 Accrued compensation and employee 74,153 68,308 benefits Deferred revenue and advance payments 101,888 103,199 Deferred tax liabilities 523 485 Total current liabilities 219,056 218,393 Deferred revenue and advance payments 8,823 10,841 Other long-term liabilities 43,517 45,141 Deferred tax liabilities 6,231 10,498 Total Liabilities 277,627 284,873 Stockholders' Equity Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or - - outstanding Class A common stock, $0.001 par value; 330,000 shares authorized; 15,462 shares issued and 9,057 shares outstanding, and 14,810 shares issued and 8,405 shares 15 15 outstanding, respectively Class B common stock, $0.001 par value; 165,000 shares authorized; 2,227 and 2,378 shares issued and 2 2 outstanding, respectively Additional paid-in capital 468,087 457,837 Treasury stock, at cost; 6,405 shares (475,184) (475,184) Accumulated other comprehensive loss (1,515) (2,052) Retained earnings 208,906 188,360 Total Stockholders' Equity 200,311 168,978 Total Liabilities and Stockholders' $ 477,938 $ 453,851 Equity *Derived from audited financial statements. MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Twelve Months Ended December 31, 2012 2011* (unaudited) Operating activities: Net income $ 20,546 $ 17,940 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,519 18,526 Bad debt expense 4,977 1,485 Deferred taxes (79) (5,403) Gain on sale of investment - (3,371) Changes in operating assets and liabilities: Accounts receivable (3,438) (15,141) Prepaid expenses and other current assets 1,002 7,115 Deposits and other assets 94 85 Accounts payable and accrued expenses 3,154 4,775 Accrued compensation and employee benefits 5,431 9,061 Deferred revenue and advance payments (3,861) 18,498 Other long-term liabilities (2,461) 7,244 Net cash provided by operating 49,884 60,814 activities Investing activities: Proceeds from sale of investment - 3,371 Purchases of property and equipment (31,116) (40,660) Capitalized software development costs (8,148) (5,907) Insurance proceeds 3,206 7,065 Decrease (increase) in restricted cash and 225 (51) investments Net cash used in investing (35,833) (36,182) activities Financing activities: Proceeds from sale of class A common stock 10,250 2,463 under exercise of employee stock options Payments on capital lease obligations (491) - Net cash provided by financing 9,759 2,463 activities Effect of foreign exchange rate changes on cash 949 (1,558) and cash equivalents Net increase in cash and cash equivalents 24,759 25,537 Cash and cash equivalents, beginning of period 199,634 174,097 Cash and cash equivalents, end of period $ 224,393 $ 199,634 *Derived from audited financial statements. MSTR-F Contact: MicroStrategy Incorporated Investor Relations firstname.lastname@example.org (703) 848-8600 SOURCE MicroStrategy Incorporated Website: http://www.microstrategy.com
MicroStrategy Announces Fourth Quarter 2012 Financial Results
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