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MicroStrategy Announces Fourth Quarter 2013 Financial Results

Companies mentioned in this article: MicroStrategy Incorporated

TYSONS CORNER, Va., Jan. 27, 2014 /PRNewswire/ -- MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of enterprise software platforms, today announced financial results for the three-month period ended December 31, 2013 (the fourth quarter of its 2013 fiscal year).

Fourth quarter 2013 revenues were $165.9 million versus $156.0 million for the fourth quarter of 2012, a 6% increase. Product licenses and subscription services revenues for the fourth quarter of 2013 were $58.8 million versus $48.1 million for the fourth quarter of 2012, a 22% increase. Product support revenues for the fourth quarter of 2013 were $72.5 million versus $68.8 million for the fourth quarter of 2012, a 5% increase. Other services revenues for the fourth quarter of 2013 were $34.6 million versus $39.1 million for the fourth quarter of 2012, a 12% decrease.

Operating expenses for the fourth quarter of 2013 were $114.4 million versus $105.9 million for the fourth quarter of 2012, an 8% increase.

Income from continuing operations for the fourth quarter of 2013 was $18.5 million, as compared to income from continuing operations of $13.7 million for the fourth quarter of 2012, a 35% increase. Net income for the fourth quarter of 2013 was $16.1 million, or $1.43 per share on a diluted basis, as compared to net income of $8.2 million, or $0.73 per share on a diluted basis, for the fourth quarter of 2012.

Non-GAAP income from continuing operations, which excludes share-based compensation expense, was $20.2 million for the fourth quarter of 2013, as compared to non-GAAP income from continuing operations of $13.7 million for the fourth quarter of 2012, a 47% increase.

As of December 31, 2013, MicroStrategy had cash and cash equivalents and short-term investments, excluding those held-for-sale, of $357.4 million versus $223.1 million as of December 31, 2012, an increase of $134.3 million. As of December 31, 2013, MicroStrategy had 9.1 million shares of class A common stock and 2.2 million shares of class B common stock outstanding.

The table at the end of this press release includes a reconciliation of income from continuing operations to non-GAAP income from continuing operations for the three and twelve months ended December 31, 2013 and 2012. An explanation of this non-GAAP measure is also included under the heading "Non-GAAP Financial Measure" below.

BI Scorecard Places MicroStrategy as Top Vendor Across All 14 Product Capabilities for BI Platforms

In December 2013, the widely followed BI Scorecard rated MicroStrategy the top vendor across all 14 of the product capabilities identified for Business Intelligence (BI) Platforms. This is the third year in a row that MicroStrategy has topped the list of vendors in the BI Scorecard. Highlights from the study produced by independent analyst Cindi Howson include:

    --  Only vendor to achieve "Excellent" or "Good" (green) ratings in all 14
        functional areas.
    --  Largest number of "Excellent" ratings of any vendor - in eight of
        fourteen categories.
    --  Only vendor to be rated "Excellent" in the "Mobile BI" category.
    --  Highest rated among BI Platform vendors in the "Ease of Use" and "Visual
        Discovery" categories.
    --  Only vendor to be rated "Excellent" in both the "Administration" and
        "Architecture" categories.

"The fact that MicroStrategy was the only vendor to achieve "Excellent" or "Good" ratings in all major 14 functional areas and had the largest number of "Excellent" ratings of any vendor - in eight of fourteen categories - is testament to their focus on innovation and BI Platform architecture," said Howson, founder of the BI Scorecard.

Forrester Research Cited MicroStrategy as a Leader in its Report Entitled "The Forrester Wave(TM): Enterprise Business Intelligence Platforms, Q4 2013"

In December 2013, Forrester Research, Inc. cited MicroStrategy as a leader in its report entitled "The Forrester Wave(TM): Enterprise Business Intelligence Platforms, Q4 2013." MicroStrategy received its top scores in Product direction, Global presence and install base, and Architecture.

According to the report, "MicroStrategy shines with seamless architecture and a top mobile BI platform. MicroStrategy has grown organically and architected its entire suite as a single platform. Forrester clients find that, after making the initial investment and effort in MicroStrategy, the reusability of all objects and the relational OLAP engine with drill-anywhere capability often result in longer lower-term total cost of ownership. We've also seen clients having the most success with enterprise-scalable mobile BI applications delivered on the MicroStrategy platform. Forrester found that MicroStrategy had excellent mobile information delivery, scalability, integrated metadata and reporting, and querying functionality."

According to the report, MicroStrategy customers praised our data access, information delivery, reporting and querying, operational capabilities, and corporate and product vision. The report found that MicroStrategy is differentiated by its completeness, comprehensiveness, and integration of its entire BI architectural stack.

Dresner Advisory Services Rated MicroStrategy the Number One Overall Offering out of 25 Vendors for Mobile Computing / Mobile Business Intelligence

In December 2013, Dresner Advisory Services rated MicroStrategy the number one overall offering out of 25 vendors for Mobile Computing / Mobile Business Intelligence. This is the third year in a row that MicroStrategy has topped the list of vendors included in Dresner's Wisdom of Crowds® Mobile Computing / Mobile BI Market Study.

Highlights from the study include:

    --  Users in Sales & Marketing business functions have been among the
        earliest adopters of Mobile BI.
    --  Top perceived benefits include pervasive access to information, better
        and faster decision-making, and better support for increasingly mobile
        and customer-facing workforce.
    --  As in 2011 and 2012, Apple's iOS devices remain the top priority in
        terms of what devices organizations are using or plan to use, followed
        by Android smartphones.
    --  Also notable is the continued decline in the RIM Blackberry platform -
        with more than 50% of respondents indicating "no interest."
    --  From a vertical industry perspective, Retail & Wholesale assign Mobile
        BI the highest importance and have been among the most ambitious in its
        adoption - with many examples of excellent use cases related to store
        and field management.
    --  For the most popular mobile platforms (iOS, Android) users still have a
        strong preference for native apps over web apps.

"Mobile Computing / Mobile BI is not only becoming more pervasive in and across organizations, it's becoming much more mature and advanced," said Howard Dresner, Founder and Chief Research Officer, Dresner Advisory Services, and author of the 2013 Wisdom of Crowds® Mobile Computing / Mobile BI Market Study. "Users' needs have shifted away from simple viewing of charts / reports and KPIs in favor of more sophisticated capabilities including data selection and filtering / drill-down navigation. For the third year in a row, the study rated MicroStrategy the top Mobile BI offering with the highest overall score for Mobile Computing / Mobile BI among all 25 vendors rated."

MicroStrategy Recognized as the #1 Retail Software Vendor in the 2013 Retail Information Systems News Software LeaderBoard

In December 2013, MicroStrategy was named the top retail software vendor in the 2013 Retail Information Systems (RIS) News Software LeaderBoard. This annual report highlights all of the major retail technology vendors in head-to-head comparisons largely based on retailer evaluations and serves as an objective guide to help retailers find the solutions and vendors they need. MicroStrategy finished in first place in the Top 20 Overall category among an international group of 87 leading retail software vendors. According to Joe Skorupa, Editor-in-Chief of RIS News, all vendors that appear on this master list are "truly retail technology's best of the best."

In addition to its number one rank in the Top 20 Overall, MicroStrategy also topped the following LeaderBoard charts:

    --  Large Vendor Leaders
    --  Broad Suite Vendor Leaders
    --  Top Vendors for Tier One Retailers

Furthermore, MicroStrategy ranked in the top 10 in 11 other categories: Leaders in Apparel; Leaders in Specialty Retailing; Leaders in Retail Concentration; Large Vendor Customer Satisfaction; Leaders for Mid-Size Retailers; Leaders in Recommendation Status by Tier One Retailers; Leaders in Product Reliability by Tier One Retailers; Leaders by Apparel Retailers; Leaders in Overall Performance by Tier One Retailers; Leaders in Administration/Maintenance by Tier One Retailers; and Broad Suite Vendor Customer Satisfaction.

MicroStrategy CEO Addressed Technology-based Public Safety Solutions in the Post-9/11 World at POLITICO Panel on Emergency Preparedness

In November 2013, Chairman and CEO Michael Saylor participated on a POLITICO emergency-preparedness panel at the Newseum in Washington, D.C. Saylor discussed how mobile technology provides critical solutions for emergency and disaster response in the post-9/11 world. Among these solutions is MicroStrategy's Usher(TM) mobile identity management platform, which represents a transformational mobile app technology for public safety, at a time when the U.S. Department of Commerce is exploring a high-speed, nationwide network of secure communications for the country's First Responder Network Authority (FirstNet).

Examples of Customer Deals from Q4 2013:

    --  Brussels Airport Company Brussels Airport is the airport to the capital
        of Europe and is situated seven miles northeast of Brussels, Belgium. 
        It provides flight information and booking services, assistance
        services, baggage and travel information, and a wide range of other
        services to both passengers and business partners.  Brussels Airport
        selected MicroStrategy as its new enterprise analytics standard
        replacing its previous BI solution.  A new MicroStrategy customer,
        Brussels Airport will use the MicroStrategy Analytics Platform(TM) to
        analyze its business operations and improve insights into the airport's
        operational performance and costs, and will provide executives and
        managers with information dashboards that display volumes of data in a
        highly visual and interactive manner.  In choosing MicroStrategy,
        Brussels Airport cited MicroStrategy's ease of use, interactivity,
        performance, and scalability.



    --  Einstein Noah Restaurant Group Inc. Einstein Noah Restaurant Group Inc.,
        with headquarters in Lakewood, Colorado, is the nation's largest
        operator of bagel bakeries and a leader in the quick casual segment of
        the restaurant industry, owning retail brands Einstein Bros.® Bagels,
        Noah's New York Bagels®, and Manhattan Bagel®.  Einstein Noah
        Restaurant Group said an expansion of MicroStrategy licenses will allow
        it to rapidly deploy and extend its mobile application providing
        store-level information to its management team.  The focus will be on
        migrating from traditional grid reports to delivering similar
        information in a highly visual and interactive manner to generate rapid
        insight into operational performance at the store, region, and brand
        level.  Additionally, Einstein Noah Restaurant Group is using
        MicroStrategy Mobile(TM) to monitor restaurant evaluation information
        from customer surveys providing feedback regarding customer
        satisfaction.  Tracking sales and cost information for each individual
        store will be combined with customer service ratings, providing company
        leadership a more detailed view of store and staff performance. 
        Einstein Noah Restaurant Group selected MicroStrategy for its platform's
        ease of use, self-service analytics, scalability, and mobile leadership.



    --  Elektroskandia Sverige ABElektroskandia Sverige AB, with headquarters in
        Sollentuna, Sweden, is the market leading wholesaler of electronic
        equipment in Sweden.  Elektroskandia chose MicroStrategy to supply its
        sales managers and field sales force with easy and accurate access to
        KPIs via the web and mobile devices.  Having a single reliable access
        point to information will help Elektroskandia's senior leadership make
        better decisions to increase productivity and overall revenue. 
        Elektroskandia chose MicroStrategy for its low total cost of ownership,
        scalability, comprehensive analytics platform, and ease of use.



    --  Hawaii Medical Service Association (HMSA) Hawaii Medical Service
        Association (HMSA), headquartered in Oahu, is an independent licensee of
        the Blue Cross and Blue Shield Association, as well as Hawaii's most
        experienced health plan, insuring more than 50 percent of Hawaii's
        population.  A recent addition of MicroStrategy licenses will allow HMSA
        to expand its presence in the community and focus its analytic efforts
        on understanding consumers by measuring and predicting their behavior. 
        MicroStrategy was chosen for its platform's ease of use, self-service
        analytics, and scalability.



    --  Michelin Headquartered in Clermont-Ferrand, France, Michelin is a
        leading global tire company dedicated to manufacturing and marketing
        tires for every type of vehicle.  Michelin is present in more than 170
        countries, has 113,400 employees, and operates 69 production plants in
        18 different countries.  A MicroStrategy customer since 1998, Michelin
        uses MicroStrategy for a broad range of analytics applications,
        including finance, operations, sales and marketing and supply chain
        analysis. Michelin recently chose to expand its usage of the
        MicroStrategy Analytics Platform, making it its worldwide analytics
        standard.  MicroStrategy will help Michelin to better monitor the
        performance of its worldwide manufacturing plants and improve business
        decisions through visual and mobile analytics.  MicroStrategy was
        selected for its scalability, robustness, ease of use, and comprehensive
        analytics and mobile architecture.



    --  Nomura Research Institute, Ltd.With headquarters in Tokyo, Nomura
        Research Institute (NRI) is Japan's largest consulting firm and has a
        more than 30-year history of delivering IT services to the world's
        largest convenience store chain, with more than 50,000 stores worldwide.
        NRI selected MicroStrategy to better understand the performance of
        product sales across 8,000 stores in the US, Canada and Mexico.  With
        MicroStrategy, all levels of  managers, from store managers through
        operations managers, to company executives will be able to track the
        performance of critical KPIs, improve sales performance and labor
        productivity, and lower perishable food costs.  In selecting
        MicroStrategy over other analytics products, NRI cited scalability,
        robustness, ease of use, and MicroStrategy's leading comprehensive
        analytics and mobile architecture platforms.



    --  S-Group Headquartered in Helsinki, Finland, S-Group (SOK) is a retailing
        cooperative organization consisting of 20 regional cooperatives
        operating across Finland in the markets for groceries, consumer
        durables, service stations, hotel and restaurant services, agricultural
        supplies, and car sales.  A MicroStrategy customer since 1999, SOK uses
        MicroStrategy for a broad range of analytics applications, including
        sales, operations and merchandising.  A recent investment in
        MicroStrategy Mobile licenses will allow SOK executives and management
        to consume business- critical data on their mobile devices, and react to
        trends and anomalies quickly.  SOK selected MicroStrategy for its
        strategic focus and leadership in mobility, ease of use, scalability,
        and device-independent enterprise platform.



    --  The Weather Channel The Weather Channel, with headquarters in Atlanta,
        Georgia, provides millions of people every day with the world's best
        weather forecasts, content, and data, connecting with them through
        television, online, mobile, and tablet screens.  A new MicroStrategy
        customer, The Weather Channel selected the MicroStrategy Analytics
        Platform to help them better analyze performance and trends around
        products, audience, pricing, and revenue.  The Weather Channel chose
        MicroStrategy for its platform's ease of use, self-service analytics,
        scalability, and mobile capabilities.


    --  Virginia Tech Virginia Tech is a public land-grant, space-grant, and
        sea-grant university with its main campus in Blacksburg, Virginia, with
        other research and educational centers throughout the Commonwealth of
        Virginia, the National Capital Region, and international locations in
        Switzerland, India, and the Dominican Republic.  Virginia Tech selected
        MicroStrategy as its enterprise BI software solution.  By standardizing
        its reports and dashboards on MicroStrategy, Virginia Tech will give its
        end users highly interactive views of university data for admissions and
        enrollment information, as well as financial and HR data.  Virginia Tech
        selected MicroStrategy for its organically-grown architecture platform,
        ease of use, superior customer references in the higher education space,
        as well as for its visualization and reporting capabilities.

Non-GAAP Financial Measure

MicroStrategy is providing a supplemental financial measure for income from continuing operations that excludes the impact of share-based compensation arrangements. This financial measure is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP") and, as a result, this financial measure may not be comparable to similarly titled measures of other companies. Management uses this non-GAAP financial measure internally to help understand, manage, and evaluate business performance and to help make operating decisions. MicroStrategy believes that this non-GAAP financial measure is also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis because it excludes a significant non-cash expense that the Company believes is not reflective of its general business performance. In addition, accounting for share-based compensation arrangements requires significant management judgment and the resulting expense could vary significantly in comparison to other companies. Therefore, MicroStrategy believes the use of this non-GAAP financial measure can also facilitate comparison of the Company's operating results to those of its competitors.

About MicroStrategy Incorporated

Founded in 1989, MicroStrategy (Nasdaq: MSTR) is a leading worldwide provider of enterprise software platforms. The Company's mission is to provide the most flexible, powerful, scalable and user-friendly platforms for analytics, mobile, identity and loyalty, offered either on premises or in the cloud.

The MicroStrategy Analytics Platform(TM) enables leading organizations to analyze vast amounts of data and distribute actionable business insight throughout the enterprise. Our analytics platform delivers reports and dashboards, and enables users to conduct ad hoc analysis and share their insights anywhere, anytime. MicroStrategy Mobile(TM) lets organizations rapidly build information-rich applications that combine multimedia, transactions, analytics, and custom workflows. The MicroStrategy Identity Platform(TM) (branded as MicroStrategy Usher(TM)) provides organizations the ability to develop a secure mobile app for identity and credentials. The MicroStrategy Loyalty Platform(TM) (branded as MicroStrategy Alert) is a next-generation, mobile customer loyalty and engagement solution. To learn more about MicroStrategy, visit www.microstrategy.com and follow us on Facebook (http://www.facebook.com/microstrategy) and Twitter (http://www.twitter.com/microstrategy).

MicroStrategy, MicroStrategy Analytics Platform, MicroStrategy Mobile, MicroStrategy Identity Platform, MicroStrategy Loyalty Platform, and MicroStrategy Usher 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," 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: the extent and timing of market acceptance of MicroStrategy's new offerings; the Company's ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's other products in the marketplace; fluctuations in tax benefits or provisions; the timing of significant orders; delays in the Company's ability to develop or ship new products; competitive factors; general economic conditions, including significant downturns in industries, including the financial services and retail industries, in which we have a significant number of customers; 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.

MSTR-F

Contact:
MicroStrategy Incorporated
Investor Relations
ir@microstrategy.com
(703) 848-8600

                                                                                                                 
                                          MICROSTRATEGY INCORPORATED
                                                                                                                 
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                 
                                    (in thousands, except per share data)
                                                                                                                 
                                                                                                                               
                                                                      Three Months Ended               Twelve months Ended
                                                                                                                               
                                                                         December 31,                     December 31,
                                                                        ------------                  ------------
                                                                                                                              
                                                                        2013            2012            2013            2012
                                                                        ----            ----            ----            ----
                                                                                                                 
                                                                 (unaudited)     (unaudited)     (unaudited)     (unaudited)
                                                                                                                 
    Revenues
                                                                                                                 
    Product licenses and
     subscription services                                           $58,809         $48,095        $160,125        $150,462
                                                                                                                              
    Product support                                                   72,504          68,819         277,509         262,048
                                                                                                                              
    Other services                                                    34,568          39,072         138,254         153,214
                                                                                                                              
      Total revenues                                                 165,881         155,986         575,888         565,724
                                                                     -------         -------         -------         -------
                                                                                                                 
                                                                                                                 
    Cost of revenues
                                                                                                                              
    Product licenses and
     subscription services                                             5,900           3,801          22,242          12,440
                                                                                                                              
    Product support                                                    4,057           4,340          16,617          15,532
                                                                                                                              
    Other services                                                    23,012          28,298          99,710         113,104
                                                                                                                              
      Total cost of revenues                                          32,969          36,439         138,569         141,076
                                                                      ------          ------         -------         -------
                                                                                                                 
                                                                                                                              
    Gross profit                                                     132,912         119,547         437,319         424,648
                                                                     -------         -------         -------         -------
                                                                                                                 
                                                                                                                 
    Operating expenses
                                                                                                                              
    Sales and marketing                                               60,891          56,590         215,089         209,975
                                                                                                                              
    Research and development                                          26,035          25,079          98,056          88,190
                                                                                                                              
    General and administrative                                        27,463          24,192         104,734          93,384
                                                                                                                              
      Total operating expenses                                       114,389         105,861         417,879         391,549
                                                                     -------         -------         -------         -------
                                                                                                                 
                                                                                                                              
    Income from continuing
     operations                                                       18,523          13,686          19,440          33,099
                                                                                                                              
      Interest income, net                                                34              50             497             143
                                                                                                                              
      Other expense, net                                              (1,262)         (1,799)         (3,186)         (1,035)
                                                                      ------          ------          ------          ------
                                                                                                                              
    Income from continuing
     operations before income
     taxes                                                            17,295          11,937          16,751          32,207
                                                                                                                              
      Provision for (benefit from)
       income taxes                                                    1,147           3,587          (9,799)          9,734
                                                                       -----           -----          ------           -----
                                                                                                                              
    Income from continuing
     operations, net of tax                                           16,148           8,350          26,550          22,473
                                                                                                                 
                                                                                                                 
    Discontinued operations
                                                                                                                 
      Gain from sale of discontinued operations, net of tax
       provision ($0 and $0 and $37,548 and $0, respectively)
                                                                                                              
                                                              -            -          57,377               -
                                                                                                                 
      Loss from discontinued operations, net of tax benefit ($0
       and $85 and $391 and $1,049, respectively)
                                                                                                              
                                                              -         (110)           (595)         (1,927)
                                                                                                                 
    Discontinued operations, net
     of tax                                                                -            (110)         56,782          (1,927)
                                                                                                                 
                                                                                                                 
    Net income                                                       $16,148          $8,240         $83,332         $20,546
                                                                     =======          ======         =======         =======
                                                                                                                 
                                                                                                                 
    Basic earnings (loss) per share (1):
                                                                                                                 
      From continuing operations                                       $1.43           $0.74           $2.35           $2.05
                                                                                                                 
      From discontinued operations                                         -           (0.01)           5.02           (0.18)
                                                                         ---           -----            ----           -----
                                                                                                                 
        Basic earnings per share                                       $1.43           $0.73           $7.37           $1.87
                                                                       =====           =====           =====           =====
                                                                                                                              
    Weighted average shares
     outstanding used in computing
     basic earnings (loss) per
     share                                                            11,301          11,245          11,300          10,995
                                                                      ======          ======          ======          ======
                                                                                                                 
                                                                                                                 
    Diluted earnings (loss) per share (1):
                                                                                                                 
      From continuing operations                                       $1.43           $0.74           $2.35           $2.01
                                                                                                                 
      From discontinued operations                                         -           (0.01)           5.02           (0.17)
                                                                         ---           -----            ----           -----
                                                                                                                 
        Diluted earnings per share                                     $1.43           $0.73           $7.37           $1.84
                                                                       =====           =====           =====           =====
                                                                                                                              
    Weighted average shares
     outstanding used in computing
     diluted earnings (loss) per
     share                                                            11,301          11,281          11,301          11,174
                                                                      ======          ======          ======          ======
                                                                                                                 
                                                                                                                 
    (1) Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.


                                           MICROSTRATEGY INCORPORATED

                                           CONSOLIDATED BALANCE SHEETS

                                      (in thousands, except per share data)


                                                December 31,                December 31,

                                                                  2013          2012*
                                                                  ----          ----

    Assets                                       (unaudited)

    Current assets

      Cash
       and
       cash
       equivalents                                            $220,171                   $223,043

       Restricted
       cash                                                        583                         50

      Short-
       term
       investments                                             137,198                         36

       Accounts
       receivable,
       net                                                      86,181                     89,038

       Prepaid
       expenses
       and
       other
       current
       assets                                                   14,260                     12,689

       Deferred
       tax
       assets,
       net                                                      21,555                     26,616

      Assets
       held-
       for-
       sale                                                          -                     10,571
                                                                   ---                     ------

    Total
     current
     assets                                                    479,948                    362,043


     Property
     and
     equipment,
     net                                                        85,445                     96,751

     Capitalized
     software
     development
     costs,
     net                                                        10,295                     10,360

     Deposits
     and
     other
     assets                                                      6,622                      5,120

     Deferred
     tax
     assets,
     net                                                         3,204                      3,664
                                                                 -----                      -----

    Total
     Assets                                                   $585,514                   $477,938
                                                              ========                   ========


    Liabilities and Stockholders' Equity

    Current liabilities

       Accounts
       payable
       and
       accrued
       expenses                                                $39,946                    $40,905

       Accrued
       compensation
       and
       employee
       benefits                                                 79,495                     71,789

       Deferred
       revenue
       and
       advance
       payments                                                113,656                    101,249

       Deferred
       tax
       liabilities                                                 422                        523

       Liabilities
       held-
       for-
       sale                                                          -                      4,689
                                                                   ---                      -----

    Total
     current
     liabilities                                               233,519                    219,155


     Deferred
     revenue
     and
     advance
     payments                                                    8,970                      8,823

    Other
     long-
     term
     liabilities                                                25,511                     43,418

     Deferred
     tax
     liabilities                                                 7,188                      6,231
                                                                 -----                      -----


    Total
     Liabilities                                               275,188                    277,627
                                                               -------                    -------


    Stockholders' Equity

      Preferred stock undesignated, $0.001
       par value; 5,000 shares authorized;

          no
           shares
           issued
           or
           outstanding                                               -                          -

      Class A common stock, $0.001 par
       value; 330,000 shares authorized;

        15,478 shares issued and 9,073 shares
         outstanding, and 15,462 shares

         issued
          and
          9,057
          shares
          outstanding,
          respectively                                              15                         15

      Class B common stock, $0.001 par
       value; 165,000 shares authorized;

         2,227
          shares                            respectively
          issued
          and
          outstanding,
          and
          2,227
          shares
          issued
          and
          outstanding,                                               2                          2

       Additional
       paid-
       in
       capital                                                 494,086                    468,087

       Treasury
       stock,
       at
       cost;
       6,405
       shares                                                 (475,184)                  (475,184)

       Accumulated
       other
       comprehensive
       loss                                                       (831)                    (1,515)

       Retained
       earnings                                                292,238                    208,906

    Total
     Stockholders'
     Equity                                                    310,326                    200,311
                                                               -------                    -------

    Total
     Liabilities
     and
     Stockholders'
     Equity                                                   $585,514                   $477,938
                                                              ========                   ========


    *Derived from audited financial
     statements.


                 MICROSTRATEGY INCORPORATED

           CONSOLIDATED STATEMENTS OF CASH FLOWS

                       (in thousands)


                                              Twelve Months Ended

                                                 December 31,
                                                  ------------

                                                  2013            2012
                                                  ----            ----

                                           (unaudited)     (unaudited)

    Operating activities:

      Net income                               $83,332         $20,546

      Plus:
       (Income)
       loss from
       discontinued
       operations,
       net of tax                              (56,782)          1,927
                                               -------           -----

          Income from continuing
           operations, net of tax               26,550          22,473

      Adjustments to reconcile net income
       to net cash provided by operating
       activities:

        Depreciation
         and
         amortization                           26,399          22,454

        Bad debt
         expense                                 2,281           2,361

        Deferred
         taxes                                  (3,319)          1,967

        Release of
         liabilities
         for
         unrecognized
         tax benefits                          (14,643)           (472)

        Share-based
         compensation
         expense                                 2,078               -

        Excess tax
         benefits
         from share-
         based
         compensation
         arrangements                          (23,580)              -

      Changes in operating assets and
       liabilities:

        Accounts
         receivable                                676             526

        Prepaid
         expenses and
         other
         current
         assets                                   (565)            305

        Deposits and
         other assets                              794             175

        Accounts
         payable and
         accrued
         expenses                               (4,786)          3,763

        Accrued
         compensation
         and employee
         benefits                                8,176           4,578

        Deferred
         revenue and
         advance
         payments                               13,465          (3,967)

        Other long-
         term
         liabilities                            (2,928)         (2,000)
                                                ------          ------

          Net cash provided by operating
           activities from continuing
           operations                           30,598          52,163

          Net cash used in operating
           activities from discontinued
           operations                             (664)         (2,279)

          Net cash provided by operating
           activities                           29,934          49,884
                                                ------          ------


    Investing activities:

      Proceeds from
       redemption
       of short-
       term
       investments                              87,000               -

      Purchases of
       property and
       equipment                               (11,043)        (29,621)

      Purchases of
       short-term
       investments                            (224,103)              -

      Capitalized
       software
       development
       costs                                    (5,437)         (8,148)

      Insurance
       proceeds                                      -           3,206

      (Increase)
       decrease in
       restricted
       cash and
       investments                                (483)            225
                                                  ----             ---

          Net cash used in investing
           activities from continuing
           operations                         (154,066)        (34,338)

          Net cash provided by (used in)
           investing activities from
           discontinued operations              99,136          (1,495)

          Net cash used in investing
           activities                          (54,930)        (35,833)
                                               -------         -------


    Financing activities:

      Proceeds from
       sale of
       class A
       common stock
       under
       exercise of
       employee
       stock
       options                                     341          10,250

      Excess tax
       benefits
       from share-
       based
       compensation
       arrangements                             23,580               -

      Payments on
       capital
       lease
       obligations
       and other
       financing
       arrangements                             (2,284)           (491)

          Net cash provided by financing
           activities from continuing
           operations                           21,637           9,759

          Net cash provided by financing
           activities from discontinued
           operations                                -               -

          Net cash provided by financing
           activities                           21,637           9,759
                                                ------           -----


    Effect of foreign exchange rate
     changes on cash and cash
     equivalents                                  (863)            949
                                                  ----             ---

    Net (decrease) increase in cash
     and cash equivalents                       (4,222)         24,759

    Cash and cash equivalents
     (including held-for-sale of
     $1,350 and $5,300,
     respectively), beginning of
     period                                    224,393         199,634
                                               -------         -------

    Cash and cash equivalents
     (including held-for-sale of
     $0 and $1,350, respectively),
     end of period                            $220,171        $224,393
                                              ========        ========


      MICROSTRATEGY INCORPORATED

      RECONCILIATION OF GAAP TO NON-GAAP MEASURES

      (in thousands)


                                                  Three Months Ended      Twelve months Ended

                                                     December 31,             December 31,
                                                     ------------             ------------

                                                                     2013                     2012                2013                2012
                                                                     ----                     ----                ----                ----

                                                     (unaudited)              (unaudited)          (unaudited)         (unaudited)


    Reconciliation of
     non-GAAP income
     from continuing
     operations:

      Income from
       continuing
       operations                                                 $18,523                  $13,686             $19,440             $33,099

      Share-based
       compensation
       expense                                                      1,634                        -               2,078                   -

      Non-GAAP income
       from continuing
       operations                                                 $20,157                  $13,686             $21,518             $33,099
                                                                  =======                  =======             =======             =======


                                                      MICROSTRATEGY INCORPORATED

                                                  REVENUE AND COST OF REVENUE DETAIL

                                                            (in thousands)


                          Three Months Ended          Twelve months Ended

                             December 31,                 December 31,
                             ------------                 ------------

                                             2013                         2012                       2013                 2012
                                             ----                         ----                       ----                 ----

                             (unaudited)                  (unaudited)                (unaudited)          (unaudited)

    Revenues

    Product
     licenses
     and
     subscription
     services:

        Product
         licenses                         $55,153                      $46,265                   $147,879             $147,344

         Subscription
         services                           3,656                        1,830                     12,246                3,118

            Total
             product
             licenses
             and
             subscription
             services                      58,809                       48,095                    160,125              150,462
                                           ------                       ------                    -------              -------

    Product
     support                               72,504                       68,819                    277,509              262,048

    Other
     services:

        Consulting                         30,433                       33,971                    122,230              134,382

        Education                           4,135                        5,101                     16,024               18,832

            Total
             other
             services                      34,568                       39,072                    138,254              153,214
                                           ------                       ------                    -------              -------

            Total
             revenues                     165,881                      155,986                    575,888              565,724
                                          -------                      -------                    -------              -------


    Cost of
     revenues

    Product
     licenses
     and
     subscription
     services:

        Product
         licenses                           2,056                        1,632                      6,606                5,819

         Subscription
         services                           3,844                        2,169                     15,636                6,621

            Total
             product
             licenses
             and
             subscription
             services                       5,900                        3,801                     22,242               12,440
                                            -----                        -----                     ------               ------

    Product
     support                                4,057                        4,340                     16,617               15,532

    Other
     services:

        Consulting                         21,659                       26,411                     93,661              105,720

        Education                           1,353                        1,887                      6,049                7,384

            Total
             other
             services                      23,012                       28,298                     99,710              113,104
                                           ------                       ------                     ------              -------

            Total
             cost of
             revenues                      32,969                       36,439                    138,569              141,076
                                           ------                       ------                    -------              -------


    Gross
     profit                              $132,912                     $119,547                   $437,319             $424,648
                                         ========                     ========                   ========             ========

SOURCE MicroStrategy Incorporated