<PAGE>
Exhibit 99.1
------------
MicroStrategy Announces Second
Quarter Financial Results
VIENNA, Va., July 26 /PRNewswire/ -- MicroStrategy(R) Incorporated (Nasdaq:
MSTR-news), a leading worldwide provider of Intelligent E-Business(TM) software,
today announced results for the three month period ended June 30, 2000, which
was the second quarter of its 2000 fiscal year.
Financial Overview
The company reported revenues for the quarter of $50.3 million, compared to
$40.5 million in the same quarter last year. Revenues for the first half of 2000
of $101.0 million represent a 44.7% increase over revenues for the first half of
1999. The company reported a net loss for the quarter of $43.1 million, or $0.54
per share, excluding $4.2 million of intangible assets amortization, a non-cash
charge of $19.4 million relating to the beneficial conversion feature inherent
in the preferred stock issued in connection with the company's recent $125
million private placement, and a charge of $5.1 million from the loss on the
sale of shares of certain securities. The Company's net loss for the quarter
including these non-cash and other charges was $71.8 million or $0.90 per share.
The loss for the quarter compares to $0.00 in the second quarter of 1999. The
company's deferred revenue increased from $70.6 million at the end of the first
quarter of this year to $79.9 million as of June 30, 2000.
The net loss for the current six-month period was $78.5 million, or $0.99 per
share, before intangible assets amortization and other charges, versus $3.8
million or $0.05 per share for the same period last year. The net loss for the
six months ended June 30, 2000 was $104.7 million, or $1.32 per share after
these non-cash and other charges.
"While our revenue growth for the first half of the year continued to outpace
the growth of the Business Intelligence market as a whole, the growth in Q2
slowed due to uncertainty created with customers by the publicity associated
with our accounting problems," said Michael J Saylor, president and CEO of
MicroStrategy Incorporated. Saylor continued, "However, during the quarter we
completed our $125 million financing and launched significant new software. We
believe that these actions have restored customer confidence that MicroStrategy
will continue to be an independent leader in our market."
"In terms of technology and product offerings, the lifeblood of our company,
this has been the most prolific quarter in our history," added Saylor. "With
strong analyst and customer support, we launched MicroStrategy 7, which we
believe is the most comprehensive intelligence software platform on the market.
The sophistication of MicroStrategy 7 will power applications that enhance the
intelligence needs of companies of all sizes across many industries. In addition
we launched new software in two of the fastest growing segments in the software
industry -- eCRM software and transaction enabling software. These new products
can have significant positive impact on revenues."
Saylor continued, "Moving forward we have two main corporate goals -- the first
is to implement financial controls and metrics designed to emphasize
profitability across the entire organization, and to tie employee performance
and compensation to these metrics. In order to get expenses more in line with
our revenues, we are taking steps to significantly reduce expenses across the
company and decrease the growth rate of headcount, and are working aggressively
with a goal of making MicroStrategy profitable on a consolidated basis by Q4 of
2001. The second is to transition into a world-class e- business company by
implementing a distribution strategy designed to significantly increase our
customer base through online merchandising and sales. The new web-based company
store will enable customers, prospects and partners interested in MicroStrategy
software to get a complete understanding of the products and to take themselves
through the sales process. Users can do everything from viewing a presentation
about the products to accessing self- running and interactive demos to ordering
the software. The web site includes free products available for evaluation, and
limited use licenses for purchase. This e-business initiative will provide any
size organization interested in MicroStrategy's software the ability to order
and begin using it immediately."
Quarterly Highlights
The company achieved a number of important operating achievements during the
quarter, including:
Technology
* MicroStrategy launched MicroStrategy 7, a completely re-architected version
of the company's core intelligence platform. MicroStrategy 7 enables the
building of numerous applications, including business intelligence, eCRM,
narrowcast networks, ERP analytics, mobile commerce and click-stream
analysis. MicroStrategy 7 has been lauded by partners, customers, and key
members of the industry analyst community.
* MicroStrategy launched eCRM 6(TM), an easy-to-install packaged
application that assists companies with developing a 360 degree view of
their customers and building personalized, one-to-one relationships.
* MicroStrategy launched MicroStrategy 6m(TM), a platform that enables the
deployment of mobile commerce applications. MicroStrategy 6m provides
organizations with the ability to narrowcast information and enable
transactions between a database and a variety of wireless devices,
including WAP-enabled phones.
* MicroStrategy launched MicroStrategy Transactor(TM), a platform that
allows companies to build transaction systems to better serve their
customers via web, wireless and voice. MicroStrategy Transactor enables
the fast development of "response-based" transactions, allowing
customers to make immediate transactions in response to e-mail pitches,
wireless alerts or even automated telephone calls.
<PAGE>
Sales & Marketing
* MicroStrategy implemented an e-business strategy designed to
significantly increase its customer base through an online store. This
store will provide any size organization interested in MicroStrategy's
software the ability to order and begin using it immediately. As part of
this strategy, the company is offering complimentary copies of its
software to prospective customers and partners for evaluation, and is
implementing a new pricing model, available directly over the web, for
any company throughout the world to purchase software with no human
interaction. "Through this e-business strategy, we seek to dramatically
increase our customer base," said Saylor. "We believe there are more
than 100,000 development efforts that could make good use of our
software, and we intend to make it as easy as possible for all of them
to get our software and begin benefiting immediately."
* MicroStrategy 7, launched on June 27, has been strongly embraced by
customers and partners. In the second quarter MicroStrategy signed deals
with Kmart, Carefirst, R.L. Polk, and NetGenesis for the platform.
* MicroStrategy added 65 new customers across a broad range of industries
during the quarter, bringing the worldwide total to more than 990.
* In the second quarter MicroStrategy entered into agreements with, Jumpy
and iExchange.com for eCRM. Closing deals so soon after product launch
indicates high demand and shortened sales cycles for MicroStrategy's
eCRM offering.
* MicroStrategy expanded its relationship with several existing customers
in the quarter, including Cable & Wireless, The Capital Group, Cardinal
Health, Clorox, The Container Store, Federated Systems Group, First
Union, Global Crossing, Kimberly Clark, McLeod USA Telecommunications,
Merck-Medco, Nationwide, NBCi, Nike, Ohio Department of Education,
Payless ShoeSource, R.L. Polk, SC Johnson Wax, Sprint, Stanley Tools,
and Wakefern.
* MicroStrategy entered into agreements with 27 system integrators,
application development and platform partners during the quarter,
increasing the number of partners supporting the company's Intelligent
E-Business Platform to approximately 275.
Strategy.com
* Strategy.com launched two new channels -- Strategy.com News(TM) and
Strategy.com Weather(TM). Both channels allow organizations to deliver
timely and personalized information, either by request or alert, to
their customers.
* Strategy.com launched iWAPu(TM), a wireless instant messaging service.
Strategy.com iWAPu offers real-time communication anywhere, anytime
through wireless Internet enabled phones.
* Strategy.com signed 45 new affiliates, bringing the total number of
companies on the Strategy.com network to 195.
* Strategy.com added 90,000 new subscribers, bringing the total number of
subscribers on the Strategy.com network to more than 410,000.
* Strategy.com announced a link agreement with Motorola to provide
personalized, intelligent financial information to Motorola's web-
enabled phone users. It also became a member of Motorola's Web W/O
Wires alliance program.
Other Key Financial Metrics
* MicroStrategy's balance sheet was significantly improved by a $125
million private placement of convertible preferred stock with
institutional investors.
* Deferred revenues were $79.9 million at the end of the quarter, compared
to $70.6 million at the end of the March 31, 2000 quarter. The increase
represents cash received during the quarter for software and services
contracts and hosting arrangements where the revenue was deferred but
will be recognized in future quarters.
* Approximately $1 million of software development expenses were
capitalized during the quarter due to the FASB 86 accounting treatment
of MicroStrategy 7's development efforts between the month when the
product reached technological feasibility and when it became generally
available.
The below summary of financial highlights compares the 2000 second quarter
results to the same period
last year.
MicroStrategy will hold a conference call chaired by Michael Saylor today at
5:30 p.m. (EST). Investors can call (888) 441-5984, or for international (904)
779-4768, prior to 5:30 p.m. (EST). A replay will be available for 48 hours
after the call at (800) 252-6030, or for international (402) 220-2491, with
access code 6481392. Also, a live Webcast and replay can be accessed at the
investor relation section of the MicroStrategy web site, www.microstrategy.com,
or from the StreetEvents site, www.streetevents.com.
<PAGE>
About MicroStrategy Incorporated
MicroStrategy is a leading worldwide provider of Intelligent E- Business(TM)
software and related services. MicroStrategy's technology platform is creating a
new generation of one-to-one e-business solutions that enable global 2000
organizations to build personal relationships with their partners, supply-
chains, and customers. MicroStrategy delivers these solutions via web, wireless,
and voice. In addition to its industry leading technology, MicroStrategy also
offers a comprehensive set of consulting, training and support services for its
customers and partners.
MicroStrategy has approximately 1000 customers across such diverse industries as
retail, finance, telecommunications, dot-com, insurance, healthcare,
pharmaceuticals and consumer packaged goods. MicroStrategy also has entered into
relationships with more than 270 systems integrators, application development
and platform partners.
For more information, please visit MicroStrategy's Web site:
http://www.microstrategy.com.
MicroStrategy, Intelligent E-Business, MicroStrategy 7, eCRM 6, MicroStrategy
6m, Strategy.com, Strategy.com Weather, Strategy.com News, iWAPu, Strategy.com
Wireless Internet 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 to differ materially
from the forward-looking statements. Factors that could contribute to such
differences include: the Company's ability to secure financing for its current
operations and long-term plans on acceptable terms; the ability of the Company
to implement and achieve widespread customer acceptance of its MicroStrategy
software and the Strategy.com network on a timely basis; adverse reaction by the
Company's employees, investors, customers, vendors and lenders to the
restatement of the Company's financial results or its future prospects; 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.
<PAGE>
MICROSTRATEGY INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
[CAPTION]
Three Months Ended
June 30,
2000 1999
Restated
(unaudited) (unaudited)
<TABLE>
<S> <C> <C>
Revenues
Product licenses $ 21,829 $ 25,177
Product support and other services 28,515 15,288
Total revenues 50,344 40,465
Cost of Revenues
Product licenses 392 563
Product support and other services 21,776 7,906
Total cost of revenues 22,168 8,469
Gross profit 28,176 31,996
Operating Expenses
Sales and marketing 38,343 21,125
Research and development 15,813 6,088
General and administrative 17,385 5,316
Amortization of intangible assets 4,242 20
Total operating expenses 75,783 32,549
Loss from operations (47,607) (553)
Interest income 441 671
Interest expense (7) (51)
Other expense, net (4,969) (14)
Total other (expense) income (4,535) 606
(Loss) income before income taxes (52,142) 53
Provision for income taxes - 56
Net loss $ (52,142) $ (3)
Accrued preferred stock dividends $ (312) $ -
Beneficial conversion feature $ (19,375) $ -
Net loss attributable to common
stockholders $ (71,829) $ (3)
Net loss per share (basic and diluted) $(0.90) $(0.00)
Weighted average outstanding
shares (basic and diluted) 79,756,787 76,052,372
Supplemental Data (1):
Core operating (loss) income $ (43,137) $ 17
Pro forma net (loss) income
per share (basic and diluted) $(0.54) $0.00
</TABLE>
(1) Excludes charges for amortization of intangibles assets of $4,242,
loss on sale of investment of $5,075 and the beneficial conversion
feature of $19,375.
<PAGE>
MICROSTRATEGY INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
[CAPTION]
Six Months Ended
June 30,
2000 1999
Restated
(unaudited) (unaudited)
<TABLE>
<S> <C> <C>
Revenues
Product licenses $ 47,840 $ 41,595
Product support and other services 53,119 28,192
Total revenues 100,959 69,787
Cost of Revenues
Product licenses 997 1,083
Product support and other services 37,537 14,515
Total cost of revenues 38,534 15,598
Gross profit 62,425 54,189
Operating Expenses
Sales and marketing 79,855 37,879
Research and development 32,013 11,149
General and administrative 29,503 9,549
Amortization of intangible assets 8,148 40
Total operating expenses 149,519 58,617
Loss from operations (87,094) (4,428)
Interest income 901 1,175
Interest expense (10) (143)
Other income, net 1,461 32
Total other income 2,352 1,064
Loss before income taxes (84,742) (3,364)
Provision for income taxes 250 443
Net loss $ (84,992) $ (3,807)
Accrued preferred stock dividends $ (312) $ -
Beneficial conversion feature $ (19,375) $ -
Net loss attributable to
common stockholders $ (104,679) $ (3,807)
Net loss per share (basic and diluted) $(1.32) $(0.05)
Weighted average outstanding
shares (basic and diluted) 79,321,000 74,926,492
Supplemental Data (1):
Core operating loss $ (78,512) $ (3,767)
Pro forma net loss per share
(basic and diluted) $(0.99) $(0.05)
</TABLE>
(1) Excludes charges for amortization of intangibles assets of $8,148, net
gain on sale of investment of $1,356 and the beneficial conversion
feature of $19,375.
<PAGE>
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
[CAPTION]
June 30, December 31,
2000 1999
(Restated)
(unaudited) (audited)
<TABLE>
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 122,423 $ 25,941
Short-term investments 6,208 42,418
Accounts receivable, net 40,716 37,586
Prepaid expenses and other current assets 16,041 15,461
Total current assets 185,388 121,406
Property and equipment, net 54,154 30,594
Intangible assets, net of
accumulated amortization
of $8,600 and $503, respectively 43,078 47,154
Deposits and other assets 5,057 4,214
Total Assets $ 287,677 $203,368
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 46,656 $ 15,357
Accrued compensation and employee benefits 16,025 14,912
Deferred revenue and advance payments 69,262 38,028
Total current liabilities 131,943 68,297
Deferred revenue and advance payments 10,611 33,255
Other long-term liabilities 2,710 -
Total Liabilities 145,264 101,552
Series A convertible preferred stock 119,794 -
Stockholders' equity:
Preferred stock; $.001 par value;
5,000 shares authorized; no
shares issued or outstanding - -
Class A common stock; $.001 par value;
100,000 shares authorized; 24,680 and 22,384
shares issued and outstanding, respectively 25 22
Class B common stock; $.001 par value;
100,000 shares authorized; 55,164 and 55,867
shares issued and outstanding, respectively 55 56
Additional paid-in capital 165,674 138,943
Deferred compensation (759) (895)
Accumulated other comprehensive income 256 1,643
Accumulated deficit (142,632) (37,953)
Total Liabilities and Stockholders' Equity $ 287,677 $203,368
</TABLE>
<PAGE>
MICROSTRATEGY INCORPORATED
UNAUDITED FINANCIAL DATA
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000
MicroStrategy MicroStrategy
Strategy.com Platform Consolidated
<S> <C> <C> <C>
Total revenues $ 1,144 $ 49,200 $ 50,344
Total expenses $ 12,460 $ 85,491 $ 97,951
Operating loss $(11,316) $(36,291) $(47,607)
<CAPTION>
Six Months Ended
June 30,
2000
MicroStrategy MicroStrategy
Strategy.com Platform Consolidated
<S> <C> <C> <C>
Total revenues $ 1,257 $ 99,702 $100,959
Total expenses $ 24,051 $164,002 $188,053
Operating loss $(22,794) $(64,300) $(87,094)
</TABLE>
