Strategy Inc

Hello everyone and good evening. I am Shireesh Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I will be your moderator for MicroStrategy's 2023 first quarter earnings webinar. Before we proceed, I will read the safe harbor statement.

Some of the information we provide during today's call regarding our future expectations Thank you, Sharich. Hello, everyone.

I'd like to welcome you all to our 2023 first quarter earnings call. We're excited to be reporting live for MicroStrategy World 2023 in Orlando, Florida. We've had a successful day one of the event today. We're excited to see our customers, partners, and employees all in person for the first time since 2020. And share our passion for BI, Bitcoin, and innovation. The business intelligence track tomorrow will feature MicroStrategy One and features keynotes, including how we are integrating augmented analytics, artificial intelligence to drive innovative experiences. We'll also showcase how some of the world's best brands use MicroStrategy to break through and achieve extraordinary results. This includes keynote presentations from Hilton, Sony, and Amica Insurance. The Bitcoin for Corporations track on Wednesday and Lightning for Corporations track on Thursday will feature keynotes from notable institutions and industry luminaries highlighting the advantages of integrating Bitcoin and Lightning as a part of their corporate treasury and product offerings. It'll be a unique gathering of corporations looking to adopt Bitcoin and Lightning strategies, and we're very excited to host this event. The conference also includes workshops, trainings, dedicated networking opportunities, and some fun, too. For those of you attending the conference here in Orlando, we look forward to seeing you in person. Turning to our business results for Q1, we continue to see strong demand for MicroStrategy software, both on-premise and in the cloud, with total revenue growing despite a continuing challenging macroeconomic environment. Total revenue was $121.9 million, representing an increase of 2% year-over-year, or 6% on a constant currency basis. Total software licenses revenues, which consists of total product licenses and subscription services revenue in a consolidated statement of operations, were $36.2 million, representing an increase of 23% year-over-year, or 29% on a constant currency basis. Total subscription services revenue was $18.8 million, an increase of 46% year-over-year, or 52% on a constant currency basis. Our Q1 subscription billions growth was 19% year-over-year, lower than our 2022 annualized subscription billions growth of 39%. We had a good overall revenue result in Q1 2023 and the durability of our enterprise BI platform and the depth of our existing customer base are a testament to our resiliency. However, it's important to note the difficult macro conditions continue to persist and may impact our revenue in the coming quarters. In addition to the revenue results, we also had a successful quarter with our Bitcoin strategy. We acquired 7,500 Bitcoin in Q1, the most in a single quarter since the fourth quarter of 2021, for a net aggregate purchase amount of $179 million, or $23,900 per Bitcoin. As of March 31st, 2023, We held a total of 140,000 Bitcoins at an aggregate cost of $4.2 billion, or average cost of approximately $29,800 per Bitcoin. As you all know, our strategy is to acquire and hold Bitcoin, and we plan to continue to accumulate Bitcoin over time using our excess cash and with the net proceeds of capital markets transactions. Our core business is not impacted by near-term Bitcoin price fluctuations. MicroStrategy is the largest publicly traded corporate holder of Bitcoin in the world, and we remain committed to our Bitcoin acquisition strategy with a high degree of conviction, long-term focus, and a risk-managed approach. To conclude our business highlights, I'd like to highlight that in Q1, we repaid our $205 million Bitcoin-backed loan at a 22% discount. With this transaction, we recognized a $45 million gain on extinguishment of debt and eliminated annualized interest costs of more than $15 million per year. It has also released 34,619 Bitcoins that serve as collateral for this loan, which are now unencumbered. As of March 31, 2023, only 11% of our total Bitcoin holdings are pledged as collateral for debt. next i would like you to introduce you to microstrategy one eight years and over two and a half million hours of engineering have resulted in microstrategy one a modern open cloud native bi platform that can serve all the analytics needs of large enterprises microstrategy one is highlighted by a modern product suite including dossier library workstation and hyper intelligence It is fully open, built on RESTful APIs and Python, and because we are an independent analytics company, works seamlessly with any data sources and clients. Similarly, our cloud platform works on AWS, Microsoft Azure, and soon the Google Cloud Platform, supporting multi-cloud deployments through a container-based architecture. Finally, MicroStrategy One serves all major categories of analytics, self-service, business reporting, advanced applications, and embedded analytics. We're the only analytics software company with this combination of capabilities, which enable enterprises to get value from their customers. We're extremely proud of the work done to build MicroStrategy One and will actively migrate this innovative platform. The platform is intended to be a one stop shop for all of our business intelligence customers and prospects. The next generation platform is built to unleash new levels of efficiency and creativity for users. Organizations are looking to consolidate vendors to save costs, simplify deployment and maximize impact. That's where we stand out in the ability to provide a comprehensive solution. We enable migration off legacy, out of support analytics tools, and also provide a modern experience that offers enterprise-grade security and scalability, a reusable object model, and open architecture to avoid vendor lock-in. Now, while the one platform is a powerhouse that delivers on all core competencies of modern analytics, it's also a new way of talking about what MicroStrategy can do and how we can compete. MicroStrategy One is our most advanced platform to date. It's a result of the immense dedication of the MicroStrategy teams that got us to this point. And it's the foundation for all of our future innovation. With the completion of the MicroStrategy One platform and focus on rebuilding much of our platform in the last eight years, we're now able to increasingly focus on MicroStrategy's hallmark, product innovation. Our innovation is focused on four areas. One, core analytics. Two, augmented analytics. Three, artificial intelligence. And four, lightning network. On the innovation side, MicroStrategy's core differentiators that position us to lead the next innovation age of analytics in a modern and open business world are semantic graph with object reusability, enterprise-grade security and scalability, open architecture, and multi-cloud. We believe the future of core analytics is going to center around three key themes. Empowered self-service, productivity, and data personalization. One area we've heard about a great deal from our customers is self-service. Self-service is long overdue for disruption. The notion that business users have interest, let alone time, to learn an offering interface is a non-starter. End users typically have no concept of your data structures and sources on your schema. Providing end users with basic authoring tools may result in non-performant dashboards and inaccurate data combinations. The shift away from single-use analysis results in true self-service through reusable content. Govern authoring. is the new way authoring experience a library that allows business users to build their own dossiers by using predefined assets and a vastly simplified experience while removing the complexities of data import and blending. Our AI engine will suggest additional visualizations that may be useful to relevant or relevant to users based on ones they've already selected or based on topics they're researching. It will also ensure that the assets they're combining in their design are compatible and performant. Next is innovation and augmented analytics. MicroStrategy Insights, released in September 2022, was our first set of products released in the area of artificial intelligence and machine learning to augment more traditional reporting capabilities and provide contextual and immediate insights. Now, integrated with MicroStrategy One, the insights feature accelerates decision-making and uncovers data patterns of automated alerting and library applications. The alerts are based on machine learning models working behind the scenes to proactively detect data trends, outliers, and anomalies, equipping users with the timely insights to drive action. This is the basis on which we are combining MicroStrategy's semantic layer of hyperintelligence and open architecture to provide data tracking, alerts, forecasting, and recommendations. We believe this is something MicroStrategy is uniquely positioned to provide, and we expect to release more functionality in this area every quarter. Next is further innovation and generative artificial intelligence. MicroStrategy with our semantic graph, including our metadata and platform analytics, is well positioned to leverage AI-driven technologies like chatpots to drive productivity across all personas. How AI is leveraged to integrate into organizations will become the business differentiator. Generative AI can use the semantic layer to better understand the data and its relationships, resulting in more accurate predictions, better data quality, and faster, actionable insights. On the Bitcoin innovation side, MicroStrategy Lightning is the new product we are developing, which utilizes the Lightning Network, a second-layer network that sits atop the Bitcoin network. We envision MicroStrategy Lightning as an enterprise platform designed to leverage the power of the Bitcoin Lightning Network to enable new e-commerce use cases and tackle modern cybersecurity challenges. The first use case of the MicroStrategy Lightning platform is Lightning Rewards. Lightning Rewards is intended to allow any enterprise to reward their employees, customers, partners, and prospects for their engagement. Companies spend vast amounts of time and energy on digital marketing, driving engagement with their brand and their customers, and for some, monetizing online content. We believe a platform like MicroStrategy Lightning can enable them to drive that engagement, rewarding their customers for that engagement directly, rather than lining the pockets of marketing or financial intermediaries. We expect future capabilities of the Lightning platform will provide opportunities for new business models to monetize online content or minimize threats in the nuisance of bots and other malicious actors. While we envision MicroStrategy Lightning as an independent product offering, it builds on our core strengths and deep experience building highly available, easy-to-use software delivered in the cloud. Especially in the last earnings call, we're taking a very disciplined investment approach, such that our Lightning development efforts currently occupy less than 1% of our R&D capability. While our core focus remains on BI innovation, we believe we're uniquely positioned to bring value here. We will talk about MicroStrategy Lightning further in our Lightning for Corporations event on Thursday. These incremental areas of product focus and innovation will drive MicroStrategy's strategy of being at the forefront of analytics. I cannot be more excited about our product roadmap, which we will share more about tomorrow in MicroStrategy World. Last but not least, I want to take a moment to recognize our former Chief Technology Officer, Tim Lang, who retired after eight and a half years from the position of CTO with MicroStrategy. It's been my privilege to work with Tim over the past seven years, and we wish him the best. With Tim's departure, we'll be splitting his former responsibilities as CTO into two distinct organizations within our technology team, product and engineering, both of which I will oversee. Leading our engineering organization will be Cesare Roxo, our Executive Vice President of Engineering. Cesari has been with MicroStrategy for 24 years, starting as a software engineer and growing to lead teams that have built much of our platform. I'm excited for Cesari to step into this leadership role and focus more and more on customer satisfaction as well as product innovation. I'll now turn the call over to Andrew to discuss our financials for the quarter in further detail.