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MSTR · Strategy

29 filings

10-K

MSTR 10-K Annual Reports

Strategy - 29 annual reports

Filing record · 2016–202610-K1110-Q338-K265

2025
Strategy Annual Report, Year Ended Dec 31, 2025
Strategy Inc (formerly MicroStrategy Incorporated; Nasdaq: MSTR) describes itself as the world's first and largest Bitcoin Treasury Company and also operates an AI-powered enterprise analytics software business. As of February 13, 2026, it held approximately 717,131 bitcoin, acquired at an aggregate purchase price of $54.5 billion (average about $76,027 per bitcoin), with a market value of $49.3 billion at $68,734 per bitcoin. Its digital assets were carried at $58.85 billion at December 31, 2025, and the company reported a net loss of $3.85 billion for 2025, driven by a $5.40 billion unrealized loss on digital assets, partly offset by a $1.68 billion income tax benefit. Revenue was $477.2 million, up 3.0% from $463.5 million, and the software business did not generate positive operating cash flow. Funding relies heavily on capital markets. The company issued five series of perpetual preferred stock (STRF, STRC, STRE, STRK, STRD) in 2025 and funds preferred dividends, which totaled $381.4 million paid in 2025, and interest on $8.25 billion of indebtedness, primarily through its at-the-market offering of class A common stock. It established a $2.25 billion USD Reserve in December 2025 to cover these obligations, and it states it does not expect to need to sell bitcoin to meet liquidity needs over the next twelve months, though it may do so if necessary. The filing highlights material risks: bitcoin volatility, dependence on continued equity and debt issuance, the lower liquidity of bitcoin relative to cash, custody and counterparty exposure, the accounting volatility introduced by ASU 2023-08, a pending shareholder class action (Dodge) challenging the STRK amendment, and the significant voting influence of Chairman Michael J. Saylor, who controls about 40.1% of total voting power.
Feb 19, 2026
2024
Strategy Annual Report, Year Ended Dec 31, 2024
Strategy (filed as MicroStrategy Incorporated d/b/a Strategy) describes itself as the world's first and largest Bitcoin Treasury Company, adopting bitcoin as its primary treasury reserve asset while also providing AI-powered enterprise analytics software through its Strategy One platform. As of December 31, 2024, the company held approximately 447,470 bitcoins with a carrying value of $23.909 billion, net of $4.059 billion in cumulative impairments. During 2024 it purchased about 258,320 bitcoins for approximately $22.073 billion, funded mainly through at-the-market equity sales and convertible note issuances. As of February 14, 2025, holdings had grown to approximately 478,740 bitcoins acquired at an aggregate cost of $31.134 billion. The company reported a 2024 net loss of $1.167 billion, driven primarily by $1.790 billion of digital asset impairment losses. Total revenues fell to $463.5 million from $496.3 million, with product licenses down 35.5% and subscription services up 31.5%. Total indebtedness was $7.274 billion at year-end, and the company disclosed a $12.745 billion cumulative-effect increase to opening retained earnings from adopting ASU 2023-08, which requires bitcoin to be carried at fair value going forward and will make future earnings more volatile. The filing also flags potential exposure to the corporate alternative minimum tax beginning in 2026 and notes that the enterprise software business did not generate positive operating cash flow in 2024. The filing highlights concentration risk: nearly all assets are bitcoin, and the company states that bitcoin may not serve as a liquidity source to the same extent as cash. Michael Saylor controls about 45.2% of total voting power through class B shares. Subsequent events include a February 2025 issuance of 7.3 million shares of 8.00% Series A Perpetual Strike Preferred Stock for net proceeds of $563.4 million.
Feb 18, 2025
2023
Strategy Annual Report, Year Ended Dec 31, 2023
MicroStrategy Incorporated's Form 10-K for fiscal year 2023 presents the company as a self-described "Bitcoin development company" that continues to run an enterprise analytics software business, which it describes as its predominant operational focus and the source of cash flows that fund its bitcoin strategy. Total revenues were $496.3 million in 2023, down slightly from $499.3 million in 2022, with product licenses declining 12.9% and subscription services rising 33.6%. The company recorded net income of $429.1 million, driven largely by a $553.6 million tax benefit from releasing the valuation allowance on its bitcoin-related deferred tax asset and a $44.7 million gain on debt extinguishment, while loss from operations was $115.0 million including $115.9 million of digital asset impairment losses. The company held approximately 189,150 bitcoins at December 31, 2023, carried at $3.626 billion after $2.269 billion of cumulative impairments, against a market value of $8.04 billion at the year-end Coinbase price of $42,531.41. As of February 14, 2024, it held about 190,000 bitcoins acquired at an aggregate cost of $5.933 billion. Funding came mainly from $2.02 billion of net proceeds from at-the-market sales of class A common stock. Total indebtedness was $2.210 billion at year-end, including $1.7 billion of convertible notes and $500 million of 6.125% senior secured notes due 2028 secured by a portion of its bitcoin. The filing highlights concentration and volatility risk: bitcoin holdings are the majority of assets, and the company notes that the FASB's ASU 2023-08 will require fair value accounting from January 1, 2025, which it expects to have a material impact on results. Michael J. Saylor controls roughly 56.6% of voting power through class B shares.
Feb 15, 2024
2022
Strategy Annual Report, Year Ended Dec 31, 2022
MicroStrategy Incorporated's 10-K for fiscal 2022 describes two interdependent strategies: acquiring and holding bitcoin, and growing its enterprise analytics software business. At December 31, 2022 the company carried $1.840 billion of digital assets, consisting of approximately 132,500 bitcoins, after $2.153 billion in cumulative impairment losses. Digital asset impairment losses, net of gains on sale, were $1.286 billion, representing 76.9% of operating expenses, and drove a net loss of $1.470 billion for 2022, compared with a net loss of $535.5 million in 2021. Total revenues declined to $499.3 million from $510.8 million, with product licenses down 15.0% and product support down 5.2%, while subscription services rose 41.0%. The company reported $2.4 billion of aggregate indebtedness at year-end, including convertible notes, 6.125% senior secured notes due 2028, and a $205.0 million secured term loan secured by bitcoin. The filing highlights concentrated risk: the majority of assets are bitcoin, bitcoin is less liquid than cash, and a significant bitcoin price decline could affect debt service. Michael J. Saylor controls about 67.1% of total voting power through class B common stock. The company also discloses an unresolved District of Columbia False Claims Act complaint naming the company and Mr. Saylor, and a patent infringement suit by Daedalus Blue, LLC, with outcomes described as not presently determinable.
Feb 16, 2023
2021
Strategy Annual Report, Year Ended Dec 31, 2021
MicroStrategy Incorporated's 10-K for fiscal 2021 describes two interdependent corporate strategies: acquiring and holding bitcoin as its primary treasury reserve asset, and growing its enterprise analytics software business. As of February 14, 2022, the company held approximately 125,051 bitcoins acquired at an aggregate purchase price of $3.777 billion (average approximately $30,200 per bitcoin). Bitcoin was carried at $2.850 billion at December 31, 2021, reflecting $901.3 million in cumulative impairment losses. Digital asset impairment losses of $830.6 million in 2021 drove a net loss of $535.5 million, compared with a net loss of $7.5 million in 2020. Total revenues rose to $510.8 million from $480.7 million, with product licenses and subscription services revenues up 20.9% to $144.9 million. The company funded bitcoin purchases through $1.050 billion of 2027 Convertible Notes, $500.0 million of 6.125% 2028 Secured Notes, $650.0 million of 2025 Convertible Notes issued in 2020, and about $1.0 billion of Class A common stock sold under an Open Market Sale Agreement. Total long-term debt carrying value was $2.155 billion at year end. The filing states the company has not sold any bitcoin and does not plan regular trading, though it may sell bitcoin for treasury management. Michael J. Saylor controls the company through Class B shares carrying 67.7% of total voting power, and the filing lists bitcoin price volatility, custody and security risks, and regulatory uncertainty as principal risks.
Feb 16, 2022
2020
Strategy Annual Report, Year Ended Dec 31, 2020
MicroStrategy Incorporated's 10-K for fiscal 2020 describes two parallel corporate strategies: growing its enterprise analytics software business and acquiring and holding bitcoin. In September 2020 the Board adopted a Treasury Reserve Policy under which bitcoin became the primary treasury reserve asset, and in 2021 the company added a business strategy of purchasing bitcoin, potentially funded by debt or equity raises. As of December 31, 2020 the company carried $1.054 billion of digital assets (approximately 70,469 bitcoins, net of $70.7 million of cumulative impairments) and $59.7 million of cash and cash equivalents. As of February 8, 2021 it held approximately 71,079 bitcoins acquired at an aggregate price of $1.145 billion. The company reported total 2020 revenues of $480.7 million, down from $486.3 million in 2019, and a net loss of $7.5 million (EPS of -$0.78), compared with net income of $34.4 million in 2019. The loss was driven primarily by $70.7 million of digital asset impairment losses. Product licenses revenue was $86.7 million and product support revenue was $284.4 million. Operating cash flow was $53.6 million. The company issued $650.0 million of 0.750% Convertible Senior Notes due 2025 in December 2020, which were used in part to buy bitcoin, and it had $800.0 million of share repurchase authorization with $209.1 million remaining. Investors should note the risk factors the filing emphasizes: bitcoin price volatility now directly affects reported earnings because impairments are recognized on declines below carrying value while gains are recognized only on sale, bitcoin is less liquid than cash, and Michael J. Saylor controls about 72.0% of the voting power through class B shares. The company also disclosed a Brazilian subsidiary matter in which it believes a loss is probable but not reasonably estimable.
Feb 12, 2021
2019
Strategy Annual Report, Year Ended Dec 31, 2019
MicroStrategy Incorporated, a global provider of enterprise analytics software and services, reported total revenues of $486.3 million for 2019, down from $497.6 million in 2018, and net income of $34.4 million, up from $22.5 million. The increase in net income was driven in part by a one-time $29.8 million gain from the May 2019 sale of the Voice.com domain name, which the filing says contributed net income of $21.8 million after tax. Operating results were weaker: the company posted a loss from operations of $1.0 million, compared with income from operations of $4.0 million in 2018, as sales and marketing expenses fell while research and development spending rose. Revenue mix was led by product support ($292.0 million) and other services ($77.4 million), with product licenses and subscription services totaling $116.9 million. Product licenses revenue declined slightly, and consulting revenue fell 6.6%. International revenues accounted for 43.7% of total revenues in 2019. Cash and short-term investments were supported by a $60.9 million operating cash flow, and the company repurchased $72.7 million of class A stock under an $800.0 million program, leaving $271.0 million available. The filing also highlights governance and risk factors: Michael J. Saylor controls about 70.8% of total voting power through class B shares, and the company is a "controlled company" under Nasdaq rules. Management reported that previously disclosed material weaknesses in internal control were remediated as of December 31, 2019. The company disclosed a Brazilian subsidiary investigation in which bank accounts were frozen up to about $2.3 million, and stated that a loss is probable but not reasonably estimable.
Feb 14, 2020
2018
Strategy Annual Report, Year Ended Dec 31, 2018
MicroStrategy Incorporated reported full-year 2018 total revenues of $497.6 million, down from $503.8 million in 2017, and net income of $22.5 million, up from $18.2 million. Income from operations fell sharply to $4.0 million from $73.2 million, as sales and marketing expense rose to $205.5 million and research and development expense rose to $102.5 million, both reflecting the company's stated strategy of increasing investment in sales, marketing, and technology. Net income was helped by a $2.0 million income tax benefit, compared with a $53.3 million provision in 2017 that included a one-time $44.0 million charge under the Tax Act. Product licenses revenue declined 5.6% and subscription services revenue declined 8.6%, while product support revenue grew 2.4%. Operating cash flow fell to $10.6 million from $78.3 million, and the company repurchased $111.0 million of class A common stock during 2018. The company concluded that its internal control over financial reporting was not effective as of December 31, 2018, citing material weaknesses tied to the implementation of a Configure Price Quote application and a Professional Services Application, both residing on a third-party CRM platform. KPMG LLP issued an adverse opinion on internal control, though it issued an unqualified opinion on the financial statements. Management expects to complete remediation before the end of 2019. The filing also notes that Michael J. Saylor controls the company through class B common stock, holding 70.4% of total voting power as of February 11, 2019, and that the company adopted ASU 2014-09 (revenue recognition) with full retrospective application effective January 1, 2018.
Feb 20, 2019
2017
Strategy Annual Report, Year Ended Dec 31, 2017
MicroStrategy Incorporated's annual report on Form 10-K for fiscal 2017 shows total revenues of $504.5 million, down from $512.2 million in 2016, with product licenses revenue falling 17.2% to $94.0 million. Net income declined to $17.6 million from $90.9 million, largely because of a one-time $44.0 million tax provision tied to the Tax Cuts and Jobs Act, which included a $40.3 million transition tax on deemed repatriation of foreign earnings. Excluding that tax charge, the company reports non-GAAP net income of $61.7 million and non-GAAP diluted EPS of $5.34. Income from operations fell to $74.4 million from $107.6 million, as sales and marketing expense rose 10.0% to $174.6 million. The company's revenue mix is weighted toward product support ($289.2 million) and other services ($89.0 million), while subscription services grew 5.9% to $32.4 million. Domestic product licenses revenue dropped 33.2%, while international product licenses revenue rose 7.8%. International revenues made up 41.9% of total revenues in 2017. Cash and cash equivalents plus short-term investments totaled roughly $675 million at year-end, against $245.2 million in total liabilities. Operating cash flow was $78.3 million, down from $110.6 million. The company repurchased no shares in 2017 and had $454.7 million remaining under its 2005 repurchase program. The filing also highlights governance and risk factors. Michael J. Saylor controls the majority of the class B common stock, which carries ten votes per share, and the company is a controlled company under NASDAQ rules. The company adopted ASU 2014-09 (revenue recognition) on a full retrospective basis effective January 1, 2018, which it expects to change timing for term licenses and channel partner sales. The DataTern patent infringement suit was dismissed in October 2017.
Feb 7, 2018
2016
Strategy Annual Report, Year Ended Dec 31, 2016
MicroStrategy Incorporated, filed under that name with the Commission for fiscal 2016, reported total revenues of $512.2 million for 2016, down from $529.9 million in 2015 and $579.8 million in 2014. Net income was $90.9 million, or $7.89 diluted earnings per share, compared with $105.9 million in 2015. Income from operations fell to $107.6 million from $134.0 million, while non-GAAP income from operations, which excludes share-based compensation and restructuring, was $119.5 million. Product licenses revenue declined 4.7% to $113.5 million, and consulting revenue dropped 20.3% as billable hours fell, while subscription services grew 9.8% to $30.6 million and product support rose 1.2% to $285.1 million. The company ended 2016 with $401.975 million in cash and cash equivalents and $187.4 million in short-term investments, and stockholders' equity of $552.2 million. Operating cash flow was $110.6 million, down from $149.7 million. Total gross deferred revenue and advance payments were $221.0 million. The company repurchased no shares in 2016, and $454.7 million remained available under its 2005 repurchase program. Management highlighted the Usher identity product, which has not generated significant revenue, and the company's dependence on a single product suite. Its Chairman, President and CEO, Michael J. Saylor, controls 68.4% of total voting power through class B shares. The filing also discloses a pending patent infringement lawsuit brought by DataTern, Inc. over the '502 Patent, for which the outcome is not presently determinable, and the company says it cannot reasonably estimate a possible loss, so no liability has been accrued. Management concluded that internal control over financial reporting was effective as of December 31, 2016, and KPMG LLP issued an unqualified audit opinion.
Feb 10, 2017
2015
Strategy Annual Report, Year Ended Dec 31, 2015
MicroStrategy Incorporated's 10-K for fiscal 2015 reports total revenues of $529.9 million for 2015, down from $579.8 million in 2014, with product licenses revenue of $119.1 million and product support revenue of $281.7 million. Income from continuing operations, net of tax, rose to $105.9 million in 2015 from $5.0 million in 2014, helped by lower operating expenses; the filing notes restructuring costs of $0.3 million in 2015 versus $14.7 million in 2014, and a 2015 tax provision at a 23.2% effective rate. Cash and cash equivalents were $292.3 million at year-end 2015, with short-term investments of $193.3 million, and net cash provided by operating activities from continuing operations was $149.7 million. The company emphasized its MicroStrategy 10 Secure Enterprise platform (analytics, mobile, and Usher security) and MicroStrategy Secure Cloud. Usher, the security product, had not generated significant revenue in 2013 through 2015 despite significant development spending. The filing also discloses that Michael J. Saylor controls roughly 67.7% of total voting power through class B shares, and that a patent infringement lawsuit by DataTern remains unresolved, with the outcome not presently determinable. In January 2016, the company reorganized its executive management, eliminating the Office of the President and the departures of Paul N. Zolfaghari and Jonathan F. Klein, which will result in a roughly $1.6 million reversal of share-based compensation expense in the first quarter of 2016.
Feb 26, 2016
2014
Strategy Annual Report, Year Ended Dec 31, 2014
MicroStrategy Incorporated's 10-K for fiscal 2014 reports total revenues of $579.8 million, up slightly from $575.9 million in 2013, but income from continuing operations fell to $5.0 million from $26.6 million, with 2014 results including a $14.7 million restructuring charge. Product license revenue declined 14.8% to $126.0 million, while subscription services revenue rose 82.3% to $22.3 million and product support revenue grew 6.6% to $295.7 million. Management attributes the license decline in part to execution challenges during the restructuring, and says the 2014 Restructuring Plan, which reduced the workforce by 777 employees, is expected to deliver annualized pre-tax savings of about $67.2 million. The company identified a material weakness in internal control over financial reporting as of December 31, 2014. It arose because a third-party service organization did not provide an adequate SOC 1 Type 2 report for its cloud-based professional services automation system, and KPMG issued an adverse opinion on internal control. Management stated that no adjustment to the financial statements was required. Cash and short-term investments were $146.9 million in cash and cash equivalents plus $198.5 million in short-term investments at year end, and the company did not repurchase shares in 2014. Control of the company remains concentrated: Chairman and CEO Michael J. Saylor beneficially owned 2,011,668 class B shares, or 67.9% of total voting power, as of February 20, 2015. The filing also discloses ongoing patent litigation with DataTern, Inc. and Vasudevan Software, Inc., with outcomes described as not presently determinable.
Feb 26, 2015
2013
Strategy Annual Report, Year Ended Dec 31, 2013
MicroStrategy Incorporated, filed under that name, reported total revenues of $575.9 million for 2013, up from $565.7 million in 2012, and income from continuing operations, net of tax, of $26.6 million, compared with $22.5 million in 2012. Net income was $83.3 million, driven largely by a $57.4 million after-tax gain on the March 2013 sale of its Angel.com subsidiary. Product licenses and subscription services revenue rose 6.4% to $160.1 million, with subscription services growing to $12.2 million from $3.1 million as MicroStrategy Cloud expanded. Product support revenue grew 5.9% to $277.5 million, while other services revenue fell 9.8% to $138.3 million, mainly from lower consulting billable hours. Operating expenses rose to $417.9 million from $391.6 million, led by research and development, which increased to $98.1 million, and general and administrative costs, which increased to $104.7 million. Management stated it expects 2014 investment and related expenses to be higher than in 2013 and warned that profitability could decline if revenue does not keep pace. The company reported $220.2 million in cash and cash equivalents and $137.2 million in short-term investments at year end, and it had $173.7 million in unrecognized...
Feb 12, 2014
2012
Strategy Annual Report, Year Ended Dec 31, 2012
MicroStrategy Incorporated, now Strategy Inc, filed this annual report on Form 10-K for fiscal 2012, dated February 13, 2013. The company reported total revenues of $594.6 million for 2012, up from $562.2 million in 2011, and net income of $20.5 million, or $1.84 per diluted share, down from $17.9 million, or $1.62 per diluted share, in 2011. Product licenses revenue fell 4.7% to $147.3 million, while product support and other services revenue rose 9.7% to $447.3 million, making recurring support and services the larger part of the business. Operating income before financing and other items was $30.2 million, up from $15.0 million in 2011. The company describes itself as a business intelligence and mobile software provider and says it has extended its offerings to seven product lines, including MicroStrategy Cloud, Express, Wisdom, Alert and Usher. The filing states that these newer offerings did not generate significant revenue in 2012 or 2011, and that the BI and Mobile Platforms continue to generate the vast majority of revenue. Management expects investment and related expenses in 2013 to be higher than in 2012, and warns that profitability may decline if revenue does not keep pace with operating expenses. Cash and cash equivalents were $224.4 million at December 31, 2012, and the company says existing cash is sufficient for at least the next 12 months. Risk disclosures include two pending patent infringement suits (DataTern and Vasudevan), a controlling stake held by Class B shareholders, with Michael J. Saylor holding 64.2% of total voting power, and customer concentration in financial services and retail. Management reported no share repurchases under the 2005 program in 2012 and 2011, leaving $454.7 million authorized.
Feb 13, 2013
2011
Strategy Annual Report, Year Ended Dec 31, 2011
MicroStrategy Incorporated's 10-K for fiscal 2011 reports total revenues of $562.15 million, up from $454.58 million in 2010, and net income of $17.94 million, down from $43.79 million. Diluted EPS was $1.62, versus $3.72 in 2010. Product licenses revenue rose to $154.57 million, while product support and other services revenue reached $407.58 million. Income from continuing operations before financing and other income and income taxes was $15.04 million, compared with $50.59 million in 2010, as sales and marketing expense rose to $243.03 million and research and development to $72.62 million, reflecting investment in its big data, mobile, cloud, and social intelligence initiatives. The company stated that it did not generate significant revenue from its new cloud and social intelligence offerings during 2011. The company ended 2011 with $199.63 million in cash and cash equivalents and total stockholders' equity of $168.98 million. Management stated it believes existing cash and cash equivalents, together with cash anticipated to be generated, are sufficient to meet working capital, capital expenditure, and contractual obligations for at least the next 12 months. Operating cash flow was $60.81 million in 2011, compared with $75.83 million in 2010. The company repurchased no shares in 2011, leaving $454.71 million available under its 2005 Share Repurchase Program. Key risks disclosed include ongoing patent infringement suits filed by Datatern, Inc. and Vasudevan Software, Inc., a pending matter with Acacia Research and Database Application Solutions LLC (trial scheduled for May 29, 2012), and the corporate aircraft damaged in a 2010 hangar collapse, which carried $8.6 million in cumulative impairment charges. Michael J. Saylor controls 64.4% of total voting power through class B shares.
Feb 17, 2012
2010
Strategy Annual Report, Year Ended Dec 31, 2010
MicroStrategy Incorporated's annual report for fiscal year 2010 shows total revenues of $454.6 million, up from $377.8 million in 2009, with product licenses revenues of $126.7 million and product support and other services revenues of $327.9 million. Income from continuing operations before financing and other income and income taxes fell to $50.6 million from $86.3 million, and net income was $43.8 million compared with $74.8 million in 2009, which included a $14.4 million gain on the sale of Alarm.com. Diluted earnings per share from continuing operations were $3.72, versus $4.92 in 2009. Management attributed the 2010 revenue growth to higher average deal sizes and growth in technical support contracts, and noted a $5.3 million non-recurring increase in operating expenses tied to paying rent on the former headquarters. Cash and cash equivalents declined to $174.1 million from $224.8 million, largely because the company spent $109.0 million repurchasing class A common stock during 2010. Management stated that existing cash and cash expected to be generated from operations would be sufficient to meet working capital and capital expenditure needs for at least the next 12 months. Total stockholders' equity fell to $149.2 million from $214.2 million, reflecting the buybacks. Class B holders controlled 77.2% of total voting power as of February 10, 2011. The filing also highlights risks including a pending insurance lawsuit over the corporate aircraft damaged in a February 2010 hangar collapse, where the carrying value was reduced to $42.6 million after a $3.6 million impairment, with damage estimates ranging up to $46.2 million. A separate patent dispute with Acacia Research affiliate DAS is unresolved, and the company is under tax examination in Germany.
Feb 18, 2011
2009
Strategy Annual Report, Year Ended Dec 31, 2009
MicroStrategy Incorporated, which now trades as Strategy Inc, reported total revenues of $377.8 million for 2009, up from $360.4 million in 2008, with income from continuing operations of $60.5 million. Product licenses revenue was $101.9 million and product support and other services revenue was $275.9 million. Net income reached $74.8 million, or $6.09 diluted earnings per share, helped by a $14.4 million net-of-tax gain on the February 2009 sale of its Alarm.com equity interest. Operating income from continuing operations was $86.3 million, compared with $67.8 million in 2008, and cash and cash equivalents rose to $224.8 million at December 31, 2009 from $122.9 million a year earlier. The company's core business intelligence segment generated $363.8 million of revenue, and the non-core Angel.com unit contributed $14.0 million with an operating loss of $1.8 million. Management stated that existing cash and cash generated by operations should be sufficient for working capital and capital expenditures for at least the next 12 months. The company also disclosed $82.2 million of future minimum customer purchase commitments through 2014, and $106.8 million of future minimum operating lease payments. Investors should note the governance structure, since class B shares carry ten votes each and held 74.5% of total voting power as of February 16, 2010, with CEO Michael J. Saylor beneficially holding 65.6%. The filing also flags a February 6, 2010 collapse of the hangar housing the corporate aircraft, whose carrying value was $47.6 million; the company could not yet estimate the potential loss or insurance recovery.
Feb 24, 2010
2008
Strategy Annual Report, Year Ended Dec 31, 2008
MicroStrategy Incorporated's annual report on Form 10-K for fiscal 2008 shows total revenues of $360.4 million in 2008, up from $335.4 million in 2007, with net income of $41.8 million, or $3.40 per diluted share, compared with $58.5 million in 2007. Growth came from product support and other services, which rose to $264.5 million from $235.0 million, while product license revenues declined 4.4% to $95.9 million. Operating income from continuing operations fell to $67.8 million from $89.7 million, driven by higher sales and marketing and general and administrative expenses. International revenues were 40.4% of total revenues in 2008. The company is positioned around its MicroStrategy 8 business intelligence platform and expects to make MicroStrategy 9 generally available in the first quarter of 2009. Cash and cash equivalents rose to $122.9 million at December 31, 2008, and net cash from operating activities was $88.9 million. Management stated that existing cash and expected operating cash flow will be sufficient for working capital and capital expenditures for at least the next twelve months, and it does not currently expect to borrow. Investor risk factors include concentrated voting control, with Michael J. Saylor and holders of class B common stock controlling 75.2% of total voting power, and an unresolved patent infringement suit by Diagnostic Systems Corp. whose outcome the filing describes as not presently determinable. The company also completed the sale of its Alarm.com equity interest on February 13, 2009 for approximately $27.7 million in cash, with an expected after-tax gain of $14 million to $17 million in the first quarter of 2009.
Feb 24, 2009
2007
Strategy Annual Report, Year Ended Dec 31, 2007
MicroStrategy Incorporated's Form 10-K for fiscal year 2007 reports total revenues of $350.7 million for 2007, up from $313.8 million in 2006, with net income of $58.5 million (diluted EPS $4.55) versus $70.9 million in 2006. Product license revenues declined 6.6% to $100.3 million, while product support, services and other revenues rose to $250.3 million. Income from operations was $88.2 million, down from $99.8 million, and total stockholders' equity fell to $103.3 million from $133.2 million, largely due to $89.0 million of share repurchases during 2007. The core business intelligence segment generated $328.3 million of revenue, with Alarm.com ($15.3 million) and Angel.com ($7.1 million) described as non-core businesses under strategic review. Cash, cash equivalents and investments were $85.2 million at year-end, and management stated that existing cash and operating cash flow would be sufficient for at least the next twelve months. Net cash provided by operating activities was $97.9 million. The filing highlights a pending patent infringement suit by Diagnostic Systems Corp. (a subsidiary of Acacia Technology Group) over U.S. Patent No. 5,537,590, with an outcome the company states is not presently determinable and no provision recorded. Class B shares carry ten votes each, and Michael J. Saylor controls the company through his voting power, with holders of class B common stock owning 75.1% of total voting power as of February 1, 2008.
Feb 19, 2008
2006
Strategy Annual Report, Year Ended Dec 31, 2006
MicroStrategy Incorporated's annual report on Form 10-K for fiscal 2006 shows a business intelligence software company with total revenues of $313.8 million in 2006, up from $268.7 million in 2005 and $231.2 million in 2004. Product licenses revenue was $107.4 million, product support revenue was $142.1 million, and other services revenue was $64.3 million. Income from operations rose to $99.8 million from $93.9 million, and net income was $70.9 million, or $5.20 per diluted share, compared with $64.7 million in 2005. The company stated that its product licenses revenue growth was driven by more and larger transactions of at least $1.0 million, and that its installed base of technical support contracts grew 23.2% in 2006. The balance sheet at December 31, 2006 showed cash and cash equivalents of $79.0 million, total assets of $248.8 million, and stockholders' equity of $133.2 million, down from $180.7 million a year earlier. Stockholders' equity declined mainly because treasury stock purchases totaled $132.0 million in 2006 under the $300.0 million 2005 Share Repurchase Program, of which $161.1 million remained available at year end. Management said existing cash and cash generated from operations would be sufficient to meet working capital and capital expenditure needs for at least the next twelve months. Subsequent to year end, the company agreed on January 31, 2007 to buy a corporate aircraft for $46.0 million, with delivery expected in mid-2009. The filing also highlights concentration risks. Michael J. Saylor, Chairman, President and CEO, together with other holders of class B common stock, controlled 73.7% of total voting power as of February 1, 2007, which the filing says allows that group to control the outcome of director elections and prevent a change of control. International sales accounted for 36.3% of 2006 revenues, and the company disclosed a $1.1 million adverse judgment in Spain, which it is appealing while paying the amount under provisional execution.
Feb 23, 2007
2005
Strategy Annual Report, Year Ended Dec 31, 2005
MicroStrategy Incorporated, filed under that name on March 10, 2006, reported total revenues of $268.7 million for fiscal 2005, up from $231.2 million in 2004, and income from operations of $93.9 million versus $68.5 million the prior year. Net income was $64.7 million, or $4.19 per diluted share, compared with $168.3 million in 2004, which had included a $99.0 million income tax benefit from releasing a valuation allowance. Product licenses revenue rose modestly to $99.9 million, while product support and other services revenue grew to $168.7 million. International sales accounted for 38.4% of total revenues in 2005, versus 40.7% in 2004. Balance sheet and capital allocation shifted notably in 2005. Cash, cash equivalents and investments totaled $96.1 million at year-end, down from $132.5 million, as the company repurchased 2,607,145 Class A shares for $134.5 million under its 2004 and 2005 share repurchase programs. Stockholders' equity fell to $180.7 million from $240.6 million, and the accumulated deficit narrowed to $112.9 million. Management stated that existing cash and operating cash flow are expected to be sufficient for working capital and capital expenditures for at least the next twelve months. The filing highlights significant risks. Michael J. Saylor controls roughly 66.3% of total voting power through Class B shares, limiting minority shareholders' influence over corporate matters. The company is also engaged in ongoing patent and trade secret litigation with Business Objects, S.A. and Crystal Decisions. On January 23, 2006, the court entered judgment in favor of Business Objects and against MicroStrategy, with any notice of appeal due by March 27, 2006, and the outcome is described as not presently determinable.
Mar 10, 2006
2004
Strategy Annual Report, Year Ended Dec 31, 2004
MicroStrategy Incorporated's annual report on Form 10-K for fiscal year 2004 shows a sharp turnaround in results. Total revenues rose to $231.2 million in 2004 from $175.6 million in 2003, with product licenses at $97.0 million and product support and other services at $134.2 million. Income from operations was $68.5 million, compared with $28.0 million a year earlier, and net income was $168.3 million, or $9.83 per diluted share. That net income figure is driven largely by a $107.4 million release of deferred tax valuation allowance recorded as an income tax benefit, which management notes will not recur in future periods. The balance sheet strengthened considerably over the year. Cash, cash equivalents and short- and long-term investments totaled $132.5 million at December 31, 2004, up from $51.9 million, and stockholders' equity rose to $240.6 million from $44.3 million. The company repaid its remaining debt in 2003, reported interest expense of only $53,000 in 2004, and terminated its $15 million revolving credit facility on March 15, 2005. Management believes existing cash and internally generated cash will be sufficient for at least the next twelve months. The filing also highlights ongoing risks. Class B common stock held by Michael J. Saylor and other holders carries 72.6% of total voting power, giving Mr. Saylor control of the company. Litigation with Business Objects, S.A. over patents and trade secrets remains unresolved, with the outcome described as not presently determinable, and a separate patent suit against Crystal Decisions, Inc. is scheduled for trial in November 2005. International revenues accounted for 40.7% of total revenues in 2004.
Mar 16, 2005
2003-A
Strategy Annual Report (Amendment), Year Ended Dec 31, 2003
This Amendment No. 1 to MicroStrategy Incorporated's Form 10-K for the fiscal year ended December 31, 2003 is a Part III filing that supplements the original annual report. It was filed May 26, 2004, and contains only executive compensation disclosure, director compensation, employment-related arrangements, and a short list of exhibits. It does not contain financial statements, business description, or results of operations. The filing's compensation tables cover the chief executive officer and five other most highly compensated executive officers for fiscal 2003. Michael J. Saylor, Chairman and CEO, received a salary of $375,000 and a bonus of $532,889 in 2003, and was granted options on 410,000 shares at an exercise price of $20.69. The filing states the Class A common stock closed at $52.48 on December 31, 2003, and that aggregate market value held by non-affiliates was approximately $381.9 million as of June 30, 2003. As of March 1, 2004, there were 12,431,663 Class A and 3,603,730 Class B shares outstanding. For investors, the main takeaways are the scale of option grants to executives in 2003, the change-in-control vesting provisions for certain executives granted options in July 2002, and the director compensation structure, which includes annual retainers and per-meeting fees. The filing also attaches a stock option agreement with former director Jonathan J. Ledecky and two officer certifications.
May 26, 2004
2003
Strategy Annual Report, Year Ended Dec 31, 2003
MicroStrategy Incorporated reported total revenues of $175.6 million for 2003, up 18.8% from $147.8 million in 2002, with product licenses revenue rising to $77.2 million and product support and other services revenue to $98.4 million. Income from operations was $28.0 million, compared with $10.4 million in 2002, but the company posted a net loss of $3.9 million for 2003 after a $31.1 million loss on early extinguishment of notes payable, which was tied to the July 2003 conversion of the remaining $53.0 million of Series A Notes into class A common stock. Management stated it expects to be profitable in 2004, though it may not achieve profitability, and the accumulated deficit stood at $345.9 million at December 31, 2003. Balance sheet and cash flow figures improved over the year. Stockholders' equity was $44.3 million, compared with a deficit of $34.5 million a year earlier. Cash and cash equivalents rose to $51.9 million, and net cash provided by operating activities was $37.1 million. The company has no outstanding notes payable at year-end 2003, and it had a $10 million secured revolving credit facility with $4.9 million of available borrowing capacity. Risks noted in the filing include concentrated voting control: Chairman and CEO Michael J. Saylor controlled 58.8% of total voting power as of March 1, 2004, through class B shares. The company is also pursuing patent litigation against Business Objects and Crystal Decisions, and it carries vacant office space with restructuring reserves of $6.1 million. Its international revenues were 34.0% of total revenues in 2003.
Mar 12, 2004
2002
Strategy Annual Report, Year Ended Dec 31, 2002
MicroStrategy Incorporated, filed under that name on March 14, 2003 (now Strategy Inc), reported its annual results for fiscal 2002 in this Form 10-K. Total revenues fell to $147.8 million in 2002 from $182.1 million in 2001 and $218.3 million in 2000, with product license revenue of $62.9 million and product support and other services revenue of $85.0 million. Despite the revenue decline, the company reported net income of $38.1 million for 2002, compared with net losses of $80.9 million in 2001 and $261.3 million in 2000. The 2002 result was helped by non-operating items, including a $16.8 million gain on contract termination, a $36.1 million net gain on refinancing of preferred stock, and an $11.4 million reduction in the estimated cost of the securities litigation settlement. Income from operations was $10.4 million in 2002, against an operating loss of $66.7 million in 2001. The balance sheet remained weak at year-end 2002, with total assets of $79.9 million, cash and cash equivalents of $15.0 million, a working capital deficit of $6.9 million, a stockholders' deficit of $34.5 million, and an accumulated deficit of $342.0 million. Management stated that existing cash and internally generated cash would be sufficient through the end of 2003, but it also said the company continues to explore additional financing and may need to take further cost-reduction actions if financing is not available on acceptable terms. Significant overhangs include $63.3 million of 7.5% series A unsecured notes that are convertible into class A common stock, with the filing noting that conversion could result in substantial dilution; roughly 103,000 square feet of unoccupied leased space; and pending patent and trade secret litigation with Business Objects, S.A. Control is concentrated: holders of class B common stock controlled 83.4% of voting power as of March 1, 2003, and Chairman and CEO Michael J. Saylor controlled 67.1% of total voting power. The company's Class A common stock traded on the Nasdaq National Market under the symbol MSTR, and it has never paid cash dividends on that stock.
Mar 14, 2003
2000-A
Strategy Annual Report (Amendment), Year Ended Dec 31, 2000
This amended Form 10-K/A from MicroStrategy Incorporated (now Strategy Inc) for the fiscal year ended December 31, 2000 is limited to Part III information. It supplies executive compensation, option grant and exercise data, director compensation, and related-party transactions for the Named Executive Officers, and it does not contain full financial statements or business and risk disclosures. The filing reports that Michael J. Saylor, Chairman and CEO, and Sanju K. Bansal, Vice Chairman and COO, received no bonus in 2000 beyond salaries of $150,000 and $115,000, respectively. Eric F. Brown, President and CFO, was granted 500,000 Class A options at $21.00 and joined in February 2000. Stephen S. Trundle and Eric D. Driscoll also received option grants, and Joseph P. Payne resigned from the Company on February 28, 2001. The filing discloses that the Company paid approximately $1,009,360 and $334,553 in 2000 legal fees on behalf of Mr. Saylor and Mr. Bansal, who were defendants in a class action and shareholder derivative action and subjects of an SEC investigation tied to the restatement of 1999, 1998 and 1997 results. It also describes a business alliance with Wheelhouse Corporation, whose chairman, director Frank A. Ingari, sits on the Compensation Committee. Wheelhouse paid the Company approximately $374,000 in 2000. As of May 1, 2001, 31,100,485 Class A and 50,975,624 Class B shares were outstanding, and non-affiliate market value was approximately $174.2 million.
Jun 22, 2001
2000
Strategy Annual Report, Year Ended Dec 31, 2000
MicroStrategy Incorporated's 10-K for fiscal 2000 reports total revenues of $223.9 million, up from $151.3 million in 1999, but a net loss of $261.3 million (net loss attributable to common stockholders of $285.4 million, or $3.58 per share). The loss was driven by an $89.7 million provision for litigation settlement, a $163.8 million loss from operations, $17.7 million of intangible amortization, a $10.8 million restructuring charge and a $9.4 million loss on investments. Operating expenses rose sharply, with sales and marketing at $151.1 million and general and administrative at $58.8 million. Cash used in operations was $87.8 million, and the accumulated deficit reached $299.3 million, with total stockholders' deficit of $145.5 million at year-end. The company's liquidity position rests on several recent financings. It issued $119.6 million (net) of Series A redeemable convertible preferred stock in June 2000, and its Strategy.com subsidiary raised $49.8 million (net) in preferred stock financing completed in January 2001, with the company retaining about 84% of the economic interest. In February 2001 MicroStrategy entered a $30.0 million Credit Facility with Foothill Capital Corporation, consisting of a $10.0 million term loan and a $20.0 million revolver. Management states that existing cash, operating cash flow and this facility will meet working capital needs for the next 12 months, but it also warns that further financing may be needed if revenues do not grow as expected. The filing is dominated by legal and governance matters. Settlements of the securities class action and the Delaware derivative suit, both tied to the restatement of 1997 to 1999 results, call for $80.5 million of five-year notes, 550,000 or more Class A shares (minimum value $16.5 million), and warrants for 1.9 million shares. A final approval hearing was scheduled for April 2, 2001. The company also consented to an SEC cease-and-desist order with no monetary penalty. Michael J. Saylor controls about 73.8% of voting power through Class B stock, and NCR has raised a possible patent licensing dispute.
Apr 2, 2001
1999
Strategy Annual Report, Year Ended Dec 31, 1999
MicroStrategy Incorporated's Form 10-K for the fiscal year ended December 31, 1999 reports a restatement that turned a reported profit into a loss. The company reduced 1999 reported revenue from $205.3 million to $151.3 million and changed diluted net income per share from $0.15 to a diluted net loss per share of $(0.44). The revisions primarily relate to applying SOP 97-2 revenue recognition, so that large, complex contracts are recognized over time, and to a cutoff issue on contracts not fully executed by both parties within the reporting period. Deferred revenue at December 31, 1999 rose from $16.8 million to $71.3 million. The filing states that financial statements and announced earnings for the affected quarterly periods should not be relied upon. The company reported a 1999 loss from operations of $(34.5) million and a net loss of $(33.7) million, and it expects operating losses to increase significantly in 2000 as it invests in its Strategy.com personal intelligence network, which had recognized no revenue through December 31, 1999. Management states that it will require additional external financing, that it is not in compliance with all covenants of its $25.0 million line of credit and has a waiver through April 30, 2000, and that it expects to restructure the facility. Governance risk is also significant: Class B shares held by insiders represented 95.9% of total voting power as of March 1, 2000, and Michael J. Saylor alone controlled 75.3%. Investors face litigation and regulatory exposure. Securities class actions were filed in March 2000 alleging false statements about the 1999 and 1998 results, and the SEC issued a formal order of private investigation related to the restatement. The company states the outcome of both cannot yet be determined and that it intends to defend the actions vigorously.
Apr 13, 2000
1998
Strategy Annual Report, Year Ended Dec 31, 1998
MicroStrategy Incorporated, filed under that name, reports its 10-K for the year ended December 31, 1998. The company describes itself as a leading worldwide provider of enterprise decision support system (DSS) software applications and related services, with its DSS Suite product family. Total revenues rose to $106.4 million in 1998 from $53.6 million in 1997, an increase of 98.5%, with product licenses at $72.7 million and product support at $33.7 million. Income from operations was $9.3 million, and net income was $6.2 million, or $0.16 per diluted share, after a $3.4 million income tax provision that reflects the company's termination of its S corporation status in connection with its June 1998 initial public offering. The balance sheet strengthened over the year. Cash and cash equivalents reached $27.5 million, total assets were $82.7 million, and stockholders' equity was $46.3 million at December 31, 1998. Cash used in operations was $2.5 million, reflecting a $17.5 million increase in accounts receivable. The company raised $48.1 million net from its June 1998 IPO and a further $40.1 million net from a February 10, 1999 secondary offering of 1,585,000 Class A shares. The company had no outstanding borrowings under its business loan at year end and subsequently expanded that facility to $25.0 million. Investors should note a few risk factors stated in the filing. Chairman and CEO Michael J. Saylor, through Alcantara LLC, is stated to control 72.6% of voting power via Class B shares carrying ten votes per share. The filing also discloses concentration of revenue in quarters' final weeks, a sales cycle of nine months or more, reliance on channel partners that accounted for 35.0% of 1998 revenues, and international revenues of 23.6% of the total. The company reported 907 employees at December 31, 1998.
Mar 25, 1999