MicroStrategy^® Incorporated (NASDAQ:MSTR) ("MicroStrategy" or the "Company"), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2022 (the fourth quarter of its 2022 fiscal year).

"In 2022, MicroStrategy achieved total revenue growth on a constant currency basis for the fourth quarter as well as the full year on the strength of our cloud business. In the fourth quarter, current subscription billings grew at a double-digit growth rate for the eleventh straight quarter. The stickiness of our products and the long-standing tenure of our top customers is a testament to the resiliency of our business, despite ongoing macroeconomic headwinds," said Phong Le, President and Chief Executive Officer, MicroStrategy.

"I am pleased to report we again increased our bitcoin holdings this past quarter to a total of 132,500 bitcoins. Our corporate strategy and conviction in acquiring, holding, and growing our bitcoin position for the long term remains unchanged. And while we encountered macroeconomic and foreign currency headwinds in 2022, we continue to shift to higher quality, recurring revenues as we grow and scale our cloud business. We remain intentional and precise in prioritizing costs, focusing on areas that drive revenue growth while preserving margins," said Andrew Kang, Chief Financial Officer, MicroStrategy.

Fourth Quarter 2022 Financial Highlights

Revenues: Total revenues for the fourth quarter of 2022 were $132.6 million, a 1.5% decrease, or a 4.1% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2021. Product licenses and subscription services revenues for the fourth quarter of 2022 were $45.0 million, a 1.5% increase, or an 8.5% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2021. Product support revenues for the fourth quarter of 2022 were $66.8 million, a 3.3% decrease, or a 1.0% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2021. Other services revenues for the fourth quarter of 2022 were $20.7 million, a 1.4% decrease, or a 5.0% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2021.
Gross Profit: Gross profit for the fourth quarter of 2022 was $105.8 million, representing a 79.8% gross margin, compared to a gross profit of $110.5 million, representing a gross margin of 82.2%, for the fourth quarter of 2021.
Operating Expenses: Operating expenses for the fourth quarter of 2022 were $299.5 million, a 20.8% increase compared to the fourth quarter of 2021. Operating expenses include impairment losses, net of gains on sale, on MicroStrategy's digital assets, which were $197.6 million during the fourth quarter of 2022, compared to $146.6 million in the fourth quarter of 2021.
Loss from Operations and Net Loss: Loss from operations for the fourth quarter of 2022 was $193.7 million, compared to $137.5 million for the fourth quarter of 2021. Net loss for the fourth quarter of 2022 was $249.7 million, or $21.93 per share on a diluted basis, as compared to $90.0 million, or $8.43 per share on a diluted basis, for the fourth quarter of 2021. Digital asset impairment losses, net of gains on sale, of $197.6 million and $146.6 million for the fourth quarter of 2022 and 2021, respectively, were reflected in these amounts.
Cash and Cash Equivalents: As of December 31, 2022, MicroStrategy had cash and cash equivalents of $43.8 million, as compared to $63.4 million as of December 31, 2021, a decrease of $19.5 million.
Digital Assets: As of December 31, 2022, the carrying value of MicroStrategy's digital assets (comprised of approximately 132,500 bitcoins) was $1.840 billion, which reflects cumulative impairment losses of $2.153 billion since acquisition and an average carrying amount per bitcoin of approximately $13,887. As of December 31, 2022, the original cost basis and market value of MicroStrategy's bitcoin were $3.993 billion and $2.194 billion, respectively, which reflects an average cost per bitcoin of approximately $30,137 and a market price per bitcoin of $16,556.32, respectively. MicroStrategy sold approximately 704 bitcoins for cash proceeds of $11.8 million, net of fees and expenses, resulting in gains on sale of $0.9 million in the fourth quarter of 2022. Additional information on MicroStrategy's digital asset holdings is included in the "Digital Assets – Additional Information" tables at the end of this press release.
Sales Agreement: On September 9, 2022, MicroStrategy entered into a Sales Agreement (the "2022 Sales Agreement") with Cowen and Company LLC and BTIG, LLC, as agents (collectively, the "2022 Sales Agents"), pursuant to which MicroStrategy may issue and sell shares of its class A common stock having an aggregate offering price of up to $500.0 million from time to time through the 2022 Sales Agents. During the three and twelve months ended December 31, 2022, the Company issued and sold 218,575 shares of its class A common stock under the 2022 Sales Agreement, at an average gross price per share of approximately $213.16, for aggregate net proceeds (less $0.4 million in sales commissions and expenses) of approximately $46.2 million. As of December 31, 2022, approximately $453.4 million of the Company's class A common stock remained available for issuance and sale pursuant to the 2022 Sales Agreement.

The tables provided at the end of this press release include a reconciliation of the most directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP") to non-GAAP financial measures for the three and twelve months ended December 31, 2022 and 2021. An explanation of non-GAAP financial measures is also included under the heading "Non-GAAP Financial Measures" below. Additional non-GAAP financial measures are included in MicroStrategy's "Q4 2022 Earnings Presentation," which will be available under the "Events and Presentations" section of MicroStrategy's investor relations website at https://www.microstrategy.com/en/investor-relations.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of share-based compensation expense, (ii) non-GAAP net loss and non-GAAP diluted loss per share that exclude the impacts of share-based compensation expense, interest expense arising from the amortization of debt issuance costs related to MicroStrategy's long-term debt, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.

MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impacts of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs related to MicroStrategy's long-term debt, and (iii) related income tax effects. The third set of supplemental financial measures excludes changes resulting from fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy's operating results to those of its competitors.

Conference Call

MicroStrategy will be discussing its fourth quarter 2022 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. ET. The live Video Webinar and accompanying presentation materials will be available under the "Events and Presentations" section of MicroStrategy's investor relations website at https://www.microstrategy.com/en/investor-relations. Log-in instructions will be available after registering for the event. An archived replay of the event will be available beginning approximately two hours after the call concludes.

About MicroStrategy Incorporated

MicroStrategy (NASDAQ:MSTR) is the largest independent publicly-traded analytics and business intelligence company. The MicroStrategy analytics platform is consistently rated as the best in enterprise analytics and is used by many of the world's most admired brands in the Fortune Global 500. We pursue two corporate strategies: (1) acquire and hold bitcoin, which we view as a dependable store of value supported by a robust, public, open-source architecture untethered to sovereign monetary policy and (2) grow our enterprise analytics software business to promote our vision of Intelligence Everywhere. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, Intelligent Enterprise, and MicroStrategy Library 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 estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect," "will," 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: fluctuations in the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price of bitcoin below the value at which the Company's bitcoins are carried on its balance sheet; gains or losses on any sales of bitcoins; changes in the accounting treatment relating to the Company's bitcoin holdings; changes in securities laws or other laws or regulations, or the adoption of new laws or regulations, relating to bitcoin that adversely affect the price of bitcoin or the Company's ability to transact in or own bitcoin; a decrease in liquidity in the markets in which bitcoin is traded; security breaches, cyberattacks, unauthorized access, loss of private keys, fraud or other circumstances or events that result in the loss of the Company's bitcoins; impacts to the price and rate of adoption of bitcoin associated with financial difficulties and bankruptcies of various participants in the digital asset industry; the level and terms of the Company's substantial indebtedness and its ability to service such debt; the extent and timing of market acceptance of the Company's new product offerings; continued acceptance of the Company's other products in the marketplace; the Company's ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; customers shifting from a product license model to a cloud subscription model, which may delay the Company's ability to recognize revenue; fluctuations in tax benefits or provisions; competitive factors; general economic conditions, including high levels of inflation and increased interest rates; currency fluctuations; and other risks detailed in MicroStrategy's registration statements and periodic reports filed with the Securities and Exchange Commission ("SEC"). The Company undertakes no obligation to update these forward-looking 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						Twelve Months Ended
	December 31,						December 31,
	2022			2021			2022			2021*
	(unaudited)			(unaudited)			(unaudited)
Revenues
Product licenses	$	27,570		$	32,543		$	86,498		$	101,804
Subscription services		17,470			11,848			60,746			43,069
Total product licenses and subscription services		45,040			44,391			147,244			144,873
Product support		66,839			69,146			266,521			281,209
Other services		20,675			20,978			85,499			84,680
Total revenues		132,554			134,515			499,264			510,762

Cost of revenues
Product licenses		358			431			1,672			1,721
Subscription services		7,467			5,181			24,770			16,901
Total product licenses and subscription services		7,825			5,612			26,442			18,622
Product support		5,722			4,901			21,264			19,254
Other services		13,176			13,490			55,283			54,033
Total cost of revenues		26,723			24,003			102,989			91,909

Gross profit		105,831			110,512			396,275			418,853

Operating expenses
Sales and marketing		41,371			43,413			146,882			160,141
Research and development		31,617			30,875			127,428			117,117
General and administrative		28,930			27,104			111,421			95,501
Digital asset impairment losses (gains on sale), net		197,630			146,587			1,286,286			830,621
Total operating expenses		299,548			247,979			1,672,017			1,203,380

Loss from operations		(193,717	)		(137,467	)		(1,275,742	)		(784,527	)
Interest expense, net		(14,837	)		(11,629	)		(53,136	)		(29,149	)
Other (expense) income, net		(5,829	)		656			6,413			2,287
Loss before income taxes		(214,383	)		(148,440	)		(1,322,465	)		(811,389	)
Provision for (benefit from) income taxes		35,286			(58,463	)		147,332			(275,909	)
Net loss	$	(249,669	)	$	(89,977	)	$	(1,469,797	)	$	(535,480	)

Basic loss per share (1):	$	(21.93	)	$	(8.43	)	$	(129.83	)	$	(53.44	)
Weighted average shares outstanding used in computing basic loss per share		11,386			10,679			11,321			10,020

Diluted loss per share (1):	$	(21.93	)	$	(8.43	)	$	(129.83	)	$	(53.44	)
Weighted average shares outstanding used in computing diluted loss per share		11,386			10,679			11,321			10,020

(1)		Basic and fully diluted loss per share for class A and class B common stock are the same.

* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)

	December 31,			December 31,
	2022			2021*
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	43,835		$	63,356
Restricted cash		7,033			1,078
Accounts receivable, net		189,280			189,280
Prepaid expenses and other current assets		24,418			14,251
Total current assets		264,566			267,965

Digital assets		1,840,028			2,850,210
Property and equipment, net		32,311			36,587
Right-of-use assets		61,299			66,760
Deposits and other assets		23,916			15,820
Deferred tax assets, net		188,152			319,782
Total assets	$	2,410,272		$	3,557,124

Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable, accrued expenses, and operating lease liabilities	$	42,976		$	46,084
Accrued compensation and employee benefits		53,716			54,548
Accrued interest		2,829			1,493
Current portion of long-term debt, net		454			0
Deferred revenue and advance payments		217,428			209,860
Total current liabilities		317,403			311,985

Long-term debt, net		2,378,560			2,155,151
Deferred revenue and advance payments		12,763			8,089
Operating lease liabilities		67,344			76,608
Other long-term liabilities		17,124			26,224
Deferred tax liabilities		198			109
Total liabilities		2,793,392			2,578,166

Stockholders' (Deficit) Equity
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding		0			0
Class A common stock, $0.001 par value; 330,000 shares authorized; 18,269 shares issued and 9,585 shares outstanding, and 18,006 shares issued and 9,322 shares outstanding, respectively		18			18
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 1,964 shares issued and outstanding, respectively		2			2
Additional paid-in capital		1,841,120			1,727,143
Treasury stock, at cost; 8,684 shares and 8,684 shares, respectively		(782,104	)		(782,104	)
Accumulated other comprehensive loss		(13,801	)		(7,543	)
(Accumulated deficit) retained earnings		(1,428,355	)		41,442
Total stockholders' (deficit) equity		(383,120	)		978,958
Total liabilities and stockholders' (deficit) equity	$	2,410,272		$	3,557,124

* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands)

	Twelve Months Ended
	December 31,
	2022			2021*
	(unaudited)
Net cash provided by operating activities	$	3,211		$	93,833
Net cash used in investing activities		(278,590	)		(2,629,235	)
Net cash provided by financing activities		265,188			2,541,685
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		(3,375	)		(2,608	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(13,566	)		3,675
Cash, cash equivalents, and restricted cash, beginning of year		64,434			60,759
Cash, cash equivalents, and restricted cash, end of year	$	50,868		$	64,434

* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED REVENUE AND COST OF REVENUE DETAIL (in thousands)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2022		2021		2022		2021*
	(unaudited)		(unaudited)		(unaudited)
Revenues
Product licenses and subscription services:
Product licenses	$	27,570	$	32,543	$	86,498	$	101,804
Subscription services		17,470		11,848		60,746		43,069
Total product licenses and subscription services		45,040		44,391		147,244		144,873
Product support		66,839		69,146		266,521		281,209
Other services:
Consulting		19,591		19,661		80,844		79,732
Education		1,084		1,317		4,655		4,948
Total other services		20,675		20,978		85,499		84,680
Total revenues		132,554		134,515		499,264		510,762

Cost of revenues
Product licenses and subscription services:
Product licenses		358		431		1,672		1,721
Subscription services		7,467		5,181		24,770		16,901
Total product licenses and subscription services		7,825		5,612		26,442		18,622
Product support		5,722		4,901		21,264		19,254
Other services:
Consulting		12,416		12,258		50,820		48,773
Education		760		1,232		4,463		5,260
Total other services		13,176		13,490		55,283		54,033
Total cost of revenues		26,723		24,003		102,989		91,909

Gross profit	$	105,831	$	110,512	$	396,275	$	418,853

* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED DIGITAL ASSETS – ADDITIONAL INFORMATION ROLLFORWARD OF BITCOIN HOLDINGS (unaudited)

	Source of Capital Used to Purchase Bitcoin	Digital Asset Original Cost Basis (in thousands)			Digital Asset Impairment Losses (in thousands)			Digital Asset Carrying Value (in thousands)			Approximate Number of Bitcoins Held (Disposed) *			Approximate Average Purchase or Sale Price Per Bitcoin
Balance at December 31, 2020		$	1,125,000		$	(70,698	)	$	1,054,302			70,469		$	15,964
Digital asset purchases	(a)		1,086,375						1,086,375			20,857			52,087
Digital asset impairment losses						(194,095	)		(194,095	)
Balance at March 31, 2021		$	2,211,375		$	(264,793	)	$	1,946,582			91,326		$	24,214
Digital asset purchases	(b)		529,231						529,231			13,759			38,464
Digital asset impairment losses						(424,774	)		(424,774	)
Balance at June 30, 2021		$	2,740,606		$	(689,567	)	$	2,051,039			105,085		$	26,080
Digital asset purchases	(c)		419,865						419,865			8,957			46,876
Digital asset impairment losses						(65,165	)		(65,165	)
Balance at September 30, 2021		$	3,160,471		$	(754,732	)	$	2,405,739			114,042		$	27,713
Digital asset purchases	(d)		591,058						591,058			10,349			57,113
Digital asset impairment losses						(146,587	)		(146,587	)
Balance at December 31, 2021		$	3,751,529		$	(901,319	)	$	2,850,210			124,391		$	30,159
Digital asset purchases	(e)		215,500						215,500			4,827			44,645
Digital asset impairment losses						(170,091	)		(170,091	)
Balance at March 31, 2022		$	3,967,029		$	(1,071,410	)	$	2,895,619			129,218		$	30,700
Digital asset purchases	(f)		10,000						10,000			481			20,790
Digital asset impairment losses						(917,838	)		(917,838	)
Balance at June 30, 2022		$	3,977,029		$	(1,989,248	)	$	1,987,781			129,699		$	30,664
Digital asset purchases	(g)		5,978						5,978			301			19,860
Digital asset impairment losses						(727	)		(727	)
Balance at September 30, 2022		$	3,983,007		$	(1,989,975	)	$	1,993,032			130,000		$	30,639
Digital asset purchases	(h)		56,443						56,443			3,204			17,616
Digital asset impairment losses						(198,557	)		(198,557	)
Digital asset sales **			(46,260	)		35,370			(10,890	)		(704	)		16,786
Balance at December 31, 2022		$	3,993,190		$	(2,153,162	)	$	1,840,028			132,500		$	30,137

* MicroStrategy owns and has purchased bitcoins both directly and indirectly through its wholly-owned subsidiary, MacroStrategy. References to MicroStrategy below refer to MicroStrategy and its subsidiaries on a consolidated basis.
** In the fourth quarter of 2022, MicroStrategy sold approximately 704 bitcoins having an original cost basis of $46.3 million and cumulative digital asset impairment losses of $35.4 million, resulting in a carrying value of $10.9 million at the time of sale. The approximately 704 bitcoins were sold for cash proceeds of $11.8 million, net of fees and expenses, resulting in gains on sale of $0.9 million.

(a)		In the first quarter of 2021, MicroStrategy purchased bitcoin using $1.026 billion in net proceeds from its issuance of its 0% Convertible Senior Notes due 2027 (together with the 0.750% Convertible Senior Notes due 2025, the "Convertible Notes") and Excess Cash.
(b)		In the second quarter of 2021, MicroStrategy purchased bitcoin using $487.2 million in net proceeds from its issuance of its 6.125% Senior Secured Notes due 2028 and Excess Cash.
(c)		In the third quarter of 2021, MicroStrategy purchased bitcoin using $399.5 million in net proceeds from its sale of 555,179 shares of class A common stock offered under an Open Market Sale Agreement (the "Open Market Sale Agreement") with Jefferies LLC, as agent, and Excess Cash.
(d)		In the fourth quarter of 2021, MicroStrategy purchased bitcoin using $591.0 million in net proceeds from its sale of 858,588 shares of class A common stock offered under the Open Market Sale Agreement and Excess Cash.
(e)		In the first quarter of 2022, MicroStrategy purchased bitcoin using $190.5 million of the net proceeds from the issuance of the 2025 Secured Term Loan and Excess Cash.
(f)		In the second quarter of 2022, MicroStrategy purchased bitcoin using Excess Cash.
(g)		In the third quarter of 2022, MicroStrategy purchased bitcoin using Excess Cash.
(h)		In the fourth quarter of 2022, MicroStrategy purchased bitcoin using $44.6 million of the net proceeds from its sale of class A common stock offered under the Sales Agreement and $11.8 million in proceeds from sales of bitcoin.

Excess Cash refers to cash in excess of the minimum Cash Assets that MicroStrategy is required to hold under its Treasury Reserve Policy, which may include cash generated by operating activities and cash from the proceeds of financing activities. Cash Assets refers to cash and cash equivalents and short-term investments.

MICROSTRATEGY INCORPORATED DIGITAL ASSETS – ADDITIONAL INFORMATION MARKET VALUE OF BITCOIN HOLDINGS (unaudited)

	Approximate Number of Bitcoins Held at End of Quarter *	Lowest Market Price Per Bitcoin During Quarter (a)		Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price (in thousands) (b)		Highest Market Price Per Bitcoin During Quarter (c)		Market Value of Bitcoin Held at End of Quarter Using Highest Market Price (in thousands) (d)		Market Price Per Bitcoin at End of Quarter (e)		Market Value of Bitcoin Held at End of Quarter Using Ending Market Price (in thousands) (f)
December 31, 2020	70,469	$	10,363.76	$	730,324	$	29,321.90	$	2,066,285	$	29,181.00	$	2,056,356
March 31, 2021	91,326	$	27,678.00	$	2,527,721	$	61,788.45	$	5,642,892	$	58,601.28	$	5,351,820
June 30, 2021	105,085	$	28,800.00	$	3,026,448	$	64,899.00	$	6,819,911	$	34,763.47	$	3,653,119
September 30, 2021	114,042	$	29,301.56	$	3,341,609	$	52,944.96	$	6,037,949	$	43,534.56	$	4,964,768
December 31, 2021	124,391	$	42,333.00	$	5,265,844	$	69,000.00	$	8,582,979	$	45,879.97	$	5,707,055
March 31, 2022	129,218	$	32,933.33	$	4,255,579	$	48,240.00	$	6,233,476	$	45,602.79	$	5,892,701
June 30, 2022	129,699	$	17,567.45	$	2,278,481	$	47,469.40	$	6,156,734	$	18,895.02	$	2,450,665
September 30, 2022	130,000	$	18,153.13	$	2,359,907	$	25,214.57	$	3,277,894	$	19,480.51	$	2,532,466
December 31, 2022	132,500	$	15,460.00	$	2,048,450	$	21,478.80	$	2,845,941	$	16,556.32	$	2,193,712

* MicroStrategy owns and has purchased bitcoins both directly and indirectly through its wholly-owned subsidiary, MacroStrategy. References to MicroStrategy below refer to MicroStrategy and its subsidiaries on a consolidated basis.

(a)		The "Lowest Market Price Per Bitcoin During Quarter" represents the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when MicroStrategy purchased any of its bitcoin.
(b)		The "Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price" represents a mathematical calculation consisting of the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.
(c)		The "Highest Market Price Per Bitcoin During Quarter" represents the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when MicroStrategy purchased any of its bitcoin.
(d)		The "Market Value of Bitcoin Held at End of Quarter Using Highest Market Price" represents a mathematical calculation consisting of the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.
(e)		The "Market Price Per Bitcoin at End of Quarter" represents the market price of one bitcoin on the Coinbase exchange at 4:00 p.m. Eastern Time on the last day of the respective quarter.
(f)		The "Market Value of Bitcoin Held at End of Quarter Using Ending Market Price" represents a mathematical calculation consisting of the market price of one bitcoin on the Coinbase exchange at 4:00 p.m. Eastern Time on the last day of the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.

The amounts reported as "Market Value" in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported on the Coinbase exchange (MicroStrategy's principal market for bitcoin) in each scenario defined above multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period. The SEC has previously stated that there has not been a demonstration that (i) bitcoin and bitcoin markets are inherently resistant to manipulation or that the spot price of bitcoin may not be subject to fraud and manipulation; and (ii) adequate surveillance-sharing agreements with bitcoin-related markets are in place, as bitcoin-related markets are either not significant, not regulated, or both. Accordingly, the Market Value amounts reported above may not accurately represent fair market value, and the actual fair market value of MicroStrategy's bitcoin may be different from such amounts and such deviation may be material. Moreover, (i) the bitcoin market historically has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, and various other risks that are, or may be, inherent in its entirely electronic, virtual form and decentralized network and (ii) MicroStrategy may not be able to sell its bitcoins at the Market Value amounts indicated above, at the market price as reported on the Coinbase exchange (its principal market) on the date of sale, or at all.

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES LOSS FROM OPERATIONS (in thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Reconciliation of non-GAAP loss from operations:
Loss from operations	$	(193,717	)	$	(137,467	)	$	(1,275,742	)	$	(784,527	)
Share-based compensation expense		17,032			13,153			63,619			44,126
Non-GAAP loss from operations	$	(176,685	)	$	(124,314	)	$	(1,212,123	)	$	(740,401	)

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET LOSS AND DILUTED LOSS PER SHARE (in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Reconciliation of non-GAAP net loss:
Net loss	$	(249,669	)	$	(89,977	)	$	(1,469,797	)	$	(535,480	)
Share-based compensation expense		17,032			13,153			63,619			44,126
Interest expense arising from amortization of debt issuance costs		2,204			2,117			8,694			7,201
Income tax effects (1)		(3,064	)		(15,099	)		(13,250	)		(47,976	)
Non-GAAP net loss	$	(233,497	)	$	(89,806	)	$	(1,410,734	)	$	(532,129	)

Reconciliation of non-GAAP diluted loss per share (2):
Diluted loss per share	$	(21.93	)	$	(8.43	)	$	(129.83	)	$	(53.44	)
Share-based compensation expense (per diluted share)		1.50			1.23			5.62			4.40
Interest expense arising from amortization of debt issuance costs (per diluted share)		0.19			0.20			0.77			0.72
Income tax effects (per diluted share)		(0.27	)		(1.41	)		(1.17	)		(4.79	)
Non-GAAP diluted loss per share	$	(20.51	)	$	(8.41	)	$	(124.61	)	$	(53.11	)

(1)		Income tax effects reflect the net tax effects of share-based compensation expense, which includes tax benefits and expenses on exercises of stock options and vesting of share-settled restricted stock units, and interest expense for amortization of debt issuance costs.

(2)		For reconciliation purposes, the non-GAAP diluted earnings (loss) per share calculations use the same weighted average shares outstanding as that used in the GAAP diluted earnings (loss) per share calculations for the same period. For example, in periods of GAAP net loss, otherwise dilutive potential shares of common stock from MicroStrategy's share-based compensation arrangements and Convertible Notes are excluded from the GAAP diluted loss per share calculation as they would be antidilutive, and therefore are also excluded from the non-GAAP diluted earnings or loss per share calculation.

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES CONSTANT CURRENCY (in thousands)

	Three Months Ended
	December 31,
	(unaudited)
	GAAP		Foreign Currency Exchange Rate Impact (1)			Non-GAAP Constant Currency (2)		GAAP		GAAP % Change			Non-GAAP Constant Currency % Change (3)
	2022		2022			2022		2021		2022			2022
Revenues
Product licenses	$	27,570	$	(2,303	)	$	29,873	$	32,543		-15.3	%		-8.2	%
Subscription services		17,470		(815	)		18,285		11,848		47.5	%		54.3	%
Total product licenses and subscription services		45,040		(3,118	)		48,158		44,391		1.5	%		8.5	%
Product support		66,839		(3,023	)		69,862		69,146		-3.3	%		1.0	%
Other services		20,675		(1,349	)		22,024		20,978		-1.4	%		5.0	%
Total revenues		132,554		(7,490	)		140,044		134,515		-1.5	%		4.1	%

	Twelve Months Ended
	December 31,
	(unaudited)
	GAAP		Foreign Currency Exchange Rate Impact (1)			Non-GAAP Constant Currency (2)		GAAP		GAAP % Change			Non-GAAP Constant Currency % Change (3)
	2022		2022			2022		2021		2022			2022
Revenues
Product licenses	$	86,498	$	(4,618	)	$	91,116	$	101,804		-15.0	%		-10.5	%
Subscription services		60,746		(2,331	)		63,077		43,069		41.0	%		46.5	%
Total product licenses and subscription services		147,244		(6,949	)		154,193		144,873		1.6	%		6.4	%
Product support		266,521		(11,570	)		278,091		281,209		-5.2	%		-1.1	%
Other services		85,499		(5,263	)		90,762		84,680		1.0	%		7.2	%
Total revenues		499,264		(23,782	)		523,046		510,762		-2.3	%		2.4	%

(1)		The "Foreign Currency Exchange Rate Impact" reflects the estimated impact of fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decrease) in international revenues from the same period in the prior year, based on comparisons to the prior year quarterly average foreign currency exchange rates. The term "international" refers to operations outside of the United States and Canada.

(2)		The "Non-GAAP Constant Currency" reflects the current period GAAP amount, less the Foreign Currency Exchange Rate Impact.

(3)		The "Non-GAAP Constant Currency % Change" reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.

MICROSTRATEGY INCORPORATED DEFERRED REVENUE DETAIL (in thousands)

	December 31,		December 31,
	2022		2021*
	(unaudited)
Current:
Deferred product licenses revenue	$	2,825	$	993
Deferred subscription services revenue		51,861		35,589
Deferred product support revenue		155,366		166,477
Deferred other services revenue		7,376		6,801
Total current deferred revenue and advance payments	$	217,428	$	209,860

Non-current:
Deferred product licenses revenue	$	2,742	$	68
Deferred subscription services revenue		3,030		1,064
Deferred product support revenue		6,387		6,203
Deferred other services revenue		604		754
Total non-current deferred revenue and advance payments	$	12,763	$	8,089

Total current and non-current:
Deferred product licenses revenue	$	5,567	$	1,061
Deferred subscription services revenue		54,891		36,653
Deferred product support revenue		161,753		172,680
Deferred other services revenue		7,980		7,555
Total current and non-current deferred revenue and advance payments	$	230,191	$	217,949

* Derived from audited financial statements.

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MicroStrategy Announces Fourth Quarter 2022 Financial Results