01—Abstract
Summary
Summary of the 10-K filed February 24, 2010. Cited figures are marked; the original filing is the authoritative source.
MicroStrategy Incorporated, which now trades as Strategy Inc, reported total revenues of $377.8 milliona for 2009, up from $360.4 million in 2008, with income from continuing operations of $60.5 million.
Product licenses revenue was $101.9 millionb 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 millionc 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 milliond; the company could not yet estimate the potential loss or insurance recovery.
02—Key points
Key Highlights
- Total revenues rose to $377.8 million in 2009 from $360.4 million in 2008, and to $335.4 million in 2007.
- Net income was $74.8 million ($6.09 diluted EPS) in 2009, versus $41.8 million ($3.40 diluted EPS) in 2008, including a $14.4 million net-of-tax gain on the sale of Alarm.com.
- Income from continuing operations before financing and income taxes was $86.3 million in 2009, up from $67.8 million in 2008.
- Cash and cash equivalents increased to $224.8 million at December 31, 2009, and the company does not currently expect to borrow to finance operations.
- Gross deferred revenue and advance payments totaled $152.4 million, with future customer purchase commitments of $82.2 million through 2014.
- International revenues accounted for 40.0% of total revenues in 2009, compared with 40.4% in 2008.
- Class B common stock (ten votes per share) gave holders 74.5% of total voting power as of February 16, 2010, and CEO Michael J. Saylor beneficially held 65.6%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Strategy kept $0.20.
- Revenue$377.8M100.0%
- Cost of revenue−$66.6M17.6%
- Gross profit$311.2M82.4%
- Operating costs−$224.9M59.5%
- Operating income$86.3M22.8%
- Interest, other & tax−$11.5M3.0%
- Net income$74.8M19.8%
Where FY2009 revenue went
$377.8M- Other operating costs: $183.1M, 48% of revenue
- Net income: $74.8M, 20% of revenue
- Cost of revenue: $66.6M, 18% of revenue
- R&D: $41.8M, 11% of revenue
- Interest, other & tax: $11.5M, 3.0% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 24, 2010Financial Statements
| Revenue | $377.79M |
| Cost of Revenue | $66.60M |
| Gross Profit | $311.19M |
| R&D Expenses | $41.80M |
| Operating Expenses | $224.88M |
| Operating Income | $86.30M |
| Net Income | $74.84M |
| EPS (Basic) | $6.28 |
| EPS (Diluted) | $6.09 |
| Shares Outstanding (Basic) | 11.91M |
| Shares Outstanding (Diluted) | 12.28M |
05—Questions
Frequently Asked Questions
How did MicroStrategy's revenue and profitability change in 2009?
Total revenues increased to $377.8 million from $360.4 million, and income from continuing operations before financing and income taxes rose to $86.3 million from $67.8 million. Net income was $74.8 million, which includes $14.3 million of income from discontinued operations, primarily the gain on the Alarm.com sale.
What drove product licenses revenue in 2009?
Product licenses revenue rose 6.2% to $101.9 million, due primarily to more transactions with $500,000 to $1.0 million in recognized revenue and a larger average deal size for transactions under $500,000. Domestic product licenses revenue grew 3.3% and international grew 10.6%.
Does the company have enough liquidity to fund operations?
Management believes existing cash of $224.8 million and cash expected from operations will be sufficient for working capital and anticipated capital expenditures for at least the next 12 months. Net cash provided by operating activities was $96.4 million in 2009.
What risks did the filing highlight regarding the corporate aircraft?
On February 6, 2010, the hangar leased at Dulles International Airport collapsed and damaged the corporate aircraft, which had a carrying value of $47.6 million. The company is in the earliest stages of assessing the damage and could not estimate the potential loss or insurance recovery. A write-down could reduce results if not offset by insurance proceeds.
How is control of the company held?
Class A common stock carries one vote per share and class B carries ten votes per share. Holders of class B stock owned 74.5% of total voting power as of February 16, 2010, and Michael J. Saylor beneficially owned 65.6% of total voting power, allowing him to influence director elections and major transactions.
06—Continue