Revenue Increases 31%, Operating Income Up 89%, and Net Income Increases 54%, Year-Over-Year
MCLEAN, Va. (July 28, 2005) –
MicroStrategy(R) Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended June 30, 2005 (the second quarter of its 2005 fiscal year).
Second quarter 2005 revenue was $65.4 million versus $49.9 million in the second quarter of 2004, a 31% increase. License revenue for the second quarter of 2005 was $24.3 million versus $18.3 million for the second quarter of 2004, a 32% increase. Net income for the second quarter of 2005 was $17.6 million, or $1.12 per share on a diluted basis. Second quarter 2005 income from operations was $23.0 million, or 35% of revenue, versus $12.2 million, or 24% of revenue, in the second quarter of 2004.
For the six-month period ended June 30, 2005, revenue was $125.4 million versus $99.0 million for the same period in 2004, a 27% increase. License revenue for the six-month period ended June 30, 2005 was $46.1 million versus $37.1 million in 2004, a 24% increase. Net income for the first six months of 2005 was $32.6 million, or $1.99 per share on a diluted basis. Income from operations for the six-month period ended June 30, 2005, was $41.4 million, or 33% of revenue, versus $22.4 million, or 23% of revenue, for the same period in 2004.
During the second quarter of 2005, MicroStrategy repurchased 2.5 million shares of its class A common stock for $127.6 million at an average price per share of $50.84. As of June 30, 2005, MicroStrategy had $50.6 million in cash and cash equivalents and 10,410,090 shares of class A common stock and 3,394,399 shares of class B common stock outstanding.
“MicroStrategy’s business exhibited outstanding operating leverage and generated significant operating cash flows in the second quarter. Operating income increased 89% compared to the second quarter of 2004 and revenues increased 31% during the same period,” said Arthur S. Locke, III, MicroStrategy’s Vice President, Finance & Chief Financial Officer. “Net cash generated from operations for the first half of 2005 was $52.2 million, compared to $37.8 million for the first half of 2004.”
“We are proud of our 31% year-over-year organic revenue growth in the second quarter of 2005,” said Michael Saylor, MicroStrategy’s Chairman and CEO. “We are also pleased that IDC recently cited MicroStrategy as the fastest growing top 10 BI vendor in both 2004 and 2003. We believe that MicroStrategy 8, with its enhanced user interface designed for use by business people, makes MicroStrategy technology even easier to use and well-suited for large scale business intelligence deployments.”
New Customers and New Deals with Existing Customers in Q2 2005 included:
Financial Services
1st Financial Bank USA; Bank of the West; Equity Office Properties Trust;
Wells Fargo
Retail
Charming Shoppes, Inc.; Family Dollar Stores, Inc.; Federated Systems
Group; Hannaford Bros. Co.; HE Butt Grocery Company; Hudson’s Bay
Company; New York & Co., Group Inc.; Retail Ventures, Inc.; Shoppers
Drug Mart
Government
Centers for Medicare and Medicaid Services; Federal Bureau of
Investigation; Ohio Department of Education; Transportation Security
Administration
Pharmaceutical
ImpactRx; Forest Laboratories; Prescription Solutions; Verispan, LLC
Manufacturing/Distribution
CSK Auto Corporation; emedco; Porsche Cars North America; Rheem
Manufacturing
Other
Children International; DMX Group; Focus Technology Group; Marketing
Direct, Inc.; Meredith Corporation; Monster Government Solutions;
Vcommerce Corporation; Yahoo!
Examples of Noteworthy Customer Deals from Q2 2005:
Transportation Security Administration
The Transportation Security Administration’s (TSA) Office of Strategic Management and Analysis, part of the U.S. Department of Homeland Security, implemented the MicroStrategy Business Intelligence Platform(TM) to analyze transportation security operations at commercial airports nationwide. TSA executives, Federal Security Directors, and TSA field staff use MicroStrategy’s software to assess and streamline the performance of commercial airport security operations. MicroStrategy anchors TSA’s Performance Management Information System (PMIS), which collects, analyzes, and reports passenger and baggage screening data. Operational performance metrics, such as wait times at selected airports, TSA staff utilization, and screening equipment utilization are collected and reported via the PMIS system.
Bank of the West
Based in San Francisco, Bank of the West is the fourth-largest commercial bank headquartered west of the Mississippi, with 480 banking locations in 16 states. After evaluating numerous business intelligence products, Bank of the West selected MicroStrategy for risk management reporting and analysis. To mitigate risk in collections and lending, Bank of the West will use MicroStrategy to glean valuable information from its collections data warehouse. With MicroStrategy, Bank of the West personnel can analyze lending and collections data to generate reports that compare risk management strategies, assess effectiveness, and determine optimal risk management policies for the company.
Family Dollar Stores, Inc.
Family Dollar, one of the fastest growing discount store chains in the United States with stores in 44 states, has selected MicroStrategy for enhanced sales analysis and inventory management. Using MicroStrategy, Family Dollar personnel will generate comprehensive sales and inventory reports for greater insight into what products are selling at their 5,700 stores. MicroStrategy’s intuitive user interface and Web report delivery provides Family Dollar business users with valuable data to make better-informed decisions that can improve sales performance, inventory management, and customer satisfaction.
Monster Government Solutions
Monster Government Solutions is a leading provider of government human capital solutions and a wholly owned subsidiary of Monster Worldwide, Inc. Monster Government Solutions selected MicroStrategy to support its enterprise hiring management solution, which allows government HR professionals to build and post vacancy announcements and develop online questionnaires to help them evaluate and hire the best candidates. Monster Government Solutions is relying on MicroStrategy to develop a new business intelligence module for its hiring management solution, which is used by more than 100 government agencies. With the new module, agencies will be able to report on, analyze, and drive the performance of their critical human capital initiatives and operations. Monster Government Solutions chose MicroStrategy over the competing products because of its easy-to-use Web interface, outstanding security, and scalability for a growing number of users.
Update on MicroStrategy 8:
Launched earlier this year, MicroStrategy 8 provides fully integrated reporting, analysis, and dashboarding capabilities. The MicroStrategy 8 user interface has been redesigned to greatly improve productivity for business people. Unlike products that require technically-trained developers for report development, MicroStrategy 8 enables business people to format reports and scorecards in WYSIWYG (what-you-see-is-what-you-get) mode. These business people can control the content and structure of their own reports with minimal assistance from IT staff.
On July 14, 2005, MicroStrategy announced the release of MicroStrategy 8 for 64-bit Linux and the new high-capacity, entry-level servers containing 64- bit x86 processors. MicroStrategy customers now have additional operating system and hardware options to increase the performance and value of their BI systems. MicroStrategy 8’s 64-bit architecture enables customers to run more applications and support larger numbers of users per server, and our support for Linux provides customers with increased operating system flexibility for deployment of their business intelligence applications.
IDC Cites MicroStrategy as Fastest Growing Top 10 BI Vendor:
IDC’s Worldwide Business Intelligence 2004 Vendor Shares report identified MicroStrategy as the fastest-growing top 10 Business Intelligence software vendor for the second year in a row, with software license and maintenance revenue growth of 32.8% in 2004 and 24.0% in 2003. According to the IDC report, MicroStrategy’s results during these periods have been based on a strong focus on its core strength in highly scalable business intelligence deployments. The IDC report also noted that MicroStrategy has been on the leading edge in user interface development for both end users and developers.
MicroStrategy Regional and Annual User Conferences:
The MicroStrategy Summer Symposium was held on July 18-20, 2005 in Chicago, Illinois and offered an environment for participants to exchange ideas and learn from MicroStrategy customers such as Intel, Cardinal Health, Nationwide Insurance, Corporate Express, Inovant, Sprint, Tyco International, U.S. Postal Service, and Retail Ventures who presented business intelligence case studies. The event was interactive. Attendees provided MicroStrategy product managers feedback and input on MicroStrategy technology and also participated in one-on-one consultations with MicroStrategy Technology Advisory Service (TAS) principals to get expert advice on their particular BI challenges.
Following the success of EuroWorld 2004, the Company’s first European users’ conference, MicroStrategy is planning this year’s event in Bonn, Germany. EuroWorld 2005, October 18-20, will feature visionary keynote speakers, more than 35 technical sessions covering a wide range of topics, and customer presentations from leading European companies including British American Tobacco, METRO Group, PEPSI Bottling Group, Deutsche Borse, Telefonica, and MACH.
Other upcoming MicroStrategy user events include the MicroStrategy Fall Symposium in October and MicroStrategy World 2006, February 13-16, in Miami, Florida.
About MicroStrategy Incorporated
Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. More information about MicroStrategy (Nasdaq: MSTR) is available at http://www.microstrategy.com
MicroStrategy, MicroStrategy 8 and MicroStrategy Business Intelligence Platform 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 its 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 ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 8, MicroStrategy 7i, MicroStrategy Universal Edition, and MicroStrategy Report Services software on a timely basis; the Company’s ability to recognize deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company’s products in the marketplace; the timing of significant orders; delays in the Company’s ability to develop or ship new products; market acceptance of new products; competitive factors; general economic conditions; 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
(unaudited) (unaudited)
Revenues
Product licenses $24,255 $18,323 $46,066 $37,134
Product support and
other services 41,182 31,561 79,357 61,856
Total revenues 65,437 49,884 125,423 98,990
Cost of revenues
Product licenses 918 870 2,195 1,714
Product support and
other services 8,179 7,269 15,595 14,180
Total cost of
revenues 9,097 8,139 17,790 15,894
Gross profit 56,340 41,745 107,633 83,096
Operating expenses
Sales and marketing 16,533 15,538 33,767 31,944
Research and
development 8,061 6,516 15,279 13,246
General and
administrative 8,773 7,503 17,125 15,456
Amortization of
intangible assets 18 17 36 35
Total operating
expenses 33,385 29,574 66,207 60,681
Income from
operations 22,955 12,171 41,426 22,415
Financing and other
income (expense)
Interest income 721 174 1,593 289
Interest expense (17) (11) (32) (25)
Loss on investments (149) (85) (131) (85)
Other income
(expense), net 1,157 (241) 1,415 565
Total financing
and other income
(expense) 1,712 (163) 2,845 744
Income before income
taxes 24,667 12,008 44,271 23,159
Provision for
income taxes 7,080 581 11,631 1,353
Net income $17,587 $11,427 $32,640 $21,806
Basic earnings per
share $1.16 $0.71 $2.08 $1.36
Diluted earnings per
share $1.12 $0.67 $1.99 $1.27
Basic weighted
average shares
outstanding 15,149 16,056 15,683 16,033
Diluted weighted
average shares
outstanding 15,767 17,128 16,363 17,190
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
June 30, December 31,
2005 2004
Assets (unaudited) (audited)
Current assets
Cash and cash equivalents $50,632 $68,314
Restricted cash and investments 5,998 1,210
Short-term investments 14 37,816
Accounts receivable, net 32,387 40,917
Prepaid expenses and other current assets 4,685 6,337
Deferred tax assets, net 22,874 20,583
Total current assets 116,590 175,177
Property and equipment, net 13,950 16,096
Capitalized software development costs, net 4,804 5,479
Long-term investments – 26,365
Deposits and other assets 2,623 3,021
Deferred tax assets, net 101,090 110,818
Total assets $239,057 $336,956
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses $15,239 $18,906
Accrued compensation and employee benefits 19,389 25,292
Accrued restructuring costs 1,756 1,762
Deferred revenue and advance payments 47,113 43,674
Total current liabilities 83,497 89,634
Deferred revenue and advance payments 2,002 1,681
Other long-term liabilities 2,974 3,157
Accrued restructuring costs 1,231 1,906
Total liabilities 89,704 96,378
Stockholders’ equity:
Preferred stock undesignated; $0.001 par
value; 4,971 shares authorized; no shares
issued or outstanding – –
Class A common stock; $0.001 par value;
330,000 shares authorized; 12,988 shares
issued and 10,410 shares outstanding, and
12,841 shares issued and 12,773 shares
outstanding, respectively 13 13
Class B common stock; $0.001 par value;
165,000 shares authorized; 3,394 and
3,394 shares issued and outstanding,
respectively 3 3
Additional paid-in capital 422,263 417,287
Treasury stock, at cost; 2,578 and 68
shares, respectively (129,893) (2,331)
Accumulated other comprehensive income 1,926 3,206
Accumulated deficit (144,959) (177,600)
Total stockholders’ equity 149,353 240,578
Total liabilities and stockholders’ equity $239,057 $336,956
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended
June 30,
2005 2004
(unaudited)
Operating activities:
Net income $32,640 $21,806
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 4,521 4,167
Bad debt recovery (49) (27)
Loss on investments 131 85
Discount amortization on short-
and long-term investments (490) –
Deferred taxes 9,592 288
Other, net 12 60
Changes in operating assets and
liabilities:
Accounts receivable 7,444 3,245
Prepaid expenses and other current
assets 1,058 (1,263)
Deposits and other assets 292 (1,458)
Accounts payable and accrued
expenses, compensation and employee
benefits (8,019) (1,050)
Accrued restructuring costs (724) (1,470)
Deferred revenue and advance payments 5,932 11,705
Other long-term liabilities (183) 1,683
Net cash provided by operating
activities 52,157 37,771
Investing activities:
Proceeds from maturities of short-
term investments 38,000 –
Proceeds from sales of short-term
investments 49,593 –
Proceeds from sales of long-term
investments 26,517 –
Purchases of short-term investments (49,293) –
Purchases of long-term investments – (26,353)
Purchases of property and equipment, net (881) (3,193)
Capitalized software development costs (926) (1,414)
Increase in restricted cash and investments (4,845) (3)
Net cash provided by (used in)
investing activities 58,165 (30,963)
Financing activities:
Proceeds from sale of class A common stock
under exercise of employee stock options
and employee stock purchase plan 2,952 2,412
Purchases of treasury stock (127,562) –
Net cash (used in) provided by
financing activities (124,610) 2,412
Effect of foreign exchange rate
changes on cash and cash equivalents (3,394) (319)
Net (decrease) increase in cash and cash
equivalents from continuing operations (17,682) 8,901
Net cash received from discontinued
operations – 34
Net (decrease) increase in cash and cash
equivalents (17,682) 8,935
Cash and cash equivalents, beginning of period 68,314 51,882
Cash and cash equivalents, end of period $50,632 $60,817
SOURCE MicroStrategy Incorporated
CONTACT: MicroStrategy Incorporated Investor Relations, +1-703-848-8600,
ir@microstrategy.com
Source: MicroStrategy
Tags: MicroStrategy
