Q1 2021 MicroStrategy Inc Earnings Call
As of this cycle and are hopeful it will be a sustained benefit for our software business in future periods.
Our first quarter results represented our strongest operational performance. We have delivered in years, we delivered impressive results across all dimensions of our software business, whether it was product license growth subscription billings growth consulting revenue growth renewal rates, non-GAAP operating margin or cash flow and.
Employee engagement and retention rates also are at their best and years.
Our focus is to continue building and a momentum and we recognize that our software business regularly experiences from quarter to quarter variability.
Looking at our performance in more detail, we had a healthy mix of new customer wins upsells to existing customers and conversions of on premise deployments to cloud during the quarter moves.
Moving more aggressively towards a digital transformation and leveraging cloud technologies for business intelligence are growing areas of focus and investment for certain customers.
At the same time, we benefited from improved demand from on premise customers, which drove our recent product license revenues performance. There was a sizable segment of customers who are not in a position to move to the cloud or years away from adoption, who need modern open enterprise <unk> solutions to improve their business performance while.
And we expect to see our mix of business continue to shift towards the cloud, we believe our ability to add value for customers, regardless of how they want to deploy microstrategy as a positive.
And exciting area for us as our embedded OEM business. This is one of our key focus areas and we're seeing growing interest from existing OEM customers as well as new customers looking to leverage the performance and scale of the Microstrategy platform and their own products. We believe this is a significant growth opportunity for us and software application providers need best in.
<unk> analytics capabilities built natively into their solutions, we're investing resources in this area and are excited about the opportunities ahead of us hyper.
Hyper intelligence continues to be and important entre into new customers and is an important indication to customers of our new product innovation.
<unk> now is our SaaS version of hyper intelligence and it has seen increased adoption as well as serving as the foundation of our future enterprise SaaS offering.
What we believe makes our top line performance, even more impressive is the efficiency with which we are generating this growth as noted earlier product license revenues grew 16% since Q1, and 2019 and subscription revenues have grown 40% over that time, which we've done while reducing sales and marketing expenses by 10.
$6 million or 22% during that same period.
We're very pleased by the continued improvements, we're making to our virtual demand generation and customer engagement efforts now that we've had success and moving to a fully virtualized go to market operations, we're able to seek increasingly creative and proactive approaches and how we leverage the improved flexibility.
Greater reach and broader market coverage. This model allows.
Microstrategy World, which we held virtually and early February was a tremendous success. The number of attendees was up nearly five X to over 12000, and we were able to deliver 175 hours of live and prerecorded content over the course of a couple of days.
One of the greatest benefits of a virtual event as our customers and prospects are not tied to specific times to engage with our content and many of continued watching videos from the conference. After the formal event was completed.
Some of the key product enhancements, we unveiled during world include hyper now hyper SDK hyper vision, the Microstrategy application, new gateways and drivers and even faster enterprise grade performance.
Our ability to generate faster and more iterative product development cycles is allowing us to deliver greater value more quickly than ever before our customers are giving us great feedback on our recent innovations, which is an important part of our growth strategy and most highly anticipated and well attended session and Microstrategy World was our bitcoin for corporations truck.
Which had more than 8000 attendees and more than 1 million aggregate and video views of our content online.
And as part of this track, we unveiled the bitcoin for corporations, Playbooks, where and compile key lessons. We've learned is the world's largest public company holder of bitcoin for any incorporation interested and adding bitcoin to their balance sheet. We believe it is important for us to share what we've learned in the past year, so that it becomes easier for organizations that want to benefit.
From a digital asset strategy.
We continue to have success with our bitcoin acquisition strategy and the first quarter and important part of that strategy is acquiring capital we can deploy to that and during the first quarter. We completed a second convertible notes offering this time and selling $1.15 billion and aggregate principal amount of notes.
And even better terms and our first convertible notes offering with a zero percent coupon and 50% conversion premium.
With this new capital we acquired an additional 19000 and 452 bitcoins for 1.0, $2 6 billion or approximately 52007 hundred $65 per bitcoin.
Overall, and the first quarter, we purchased 20857 day coins for $1.86 billion or 52, <unk> thousand $87 per bitcoin and ended the quarter holding 91000, and 326 bitcoins and the average price of 24200 and there are $14.
Bitcoin price more than doubled during the first quarter, we estimate the current market value of our Bitcoin holdings now exceeds $5 billion, including $3 $1 billion of unrealized gains.
We will continue to deploy additional capital into our bitcoin acquisition strategy.
Before going into a detailed review of our financial performance let.
Let me finish by saying how pleased we are by our performance against our key priorities operationally, we're realizing the benefits of the investments into the enterprise analytics software business, which is leading to both improved revenue growth increased customer satisfaction and increased profitability at the same time, our bitcoin acquisition strategy is.
<unk> substantial value for shareholders, and elevate and micro strategy to a global leader and the bitcoin market.
These successes have allowed us to reinvest and our employees leading to the best employee retention and satisfaction engagement and years, which we're very proud of we believe our two corporate strategies are proving to be complementary to increase visibility and thought leadership from a bitcoin acquisition strategy is driving an increase and inbound software leads we.
Believe we are in the early stages of these trends and that there continues to be meaningful opportunities for further improvement and each strategic area.
Turning to our first quarter 2021 financial results in more detail GAAP revenues for the quarter were $122 9 million.
10% year over year and up 7% from the first quarter of 2019.
Product license revenues were $21 3 million and the first quarter of 2021 of 69% year over year and up 16% from the first quarter of 2019 subscription.
Services revenue and the first quarter of 2021 were $10 million.
And increase of 26% year over year, the growth and subscription services revenues reflects the growing portion of our product bookings that are related to our managed cloud platform.
Our current subscription billings were $9 5 million and increase of 19% from the first quarter of 2020.
We're pleased with the performance of our cloud business and the quarter.
Product support revenues were $76 million and the first quarter of 2021, and 1% decrease year over year. The year over year decrease was primarily the result of customer conversions to subscription or term licenses.
Our renewal remains rates remain strong this quarter, we're executing our strategy to actively migrate customers to annual term licenses as we continue to execute on this strategy product support revenues will continue to move to subscription revenues customers transition to the cloud order product license revenues that the customer converts from an on premise perpetual to.
On premise term license.
Finally, other services revenue of $29 million from the first quarter of 2021, which largely reflects our consulting services increased 6% year over year. Despite the necessity of providing remote delivery of our services to customers due to the pandemic. We were very pleased with the results of our consulting business.
Total deferred revenue on March 31, 2021 was $213 5 million. This is up 13% year over year, primarily due to a 104% increase and deferred subscription services, and and 5% increase and deferred product support revenues.
Foreign currency translations positively impacted deferred revenue by 2%, particularly and support revenue.
As we see more existing customers convert to our managed cloud platform. There is a shift from deferred product support revenues to deferred subscription services revenues.
GAAP expenses were $306 $1 million and the first quarter 2020, one which includes a digital asset impairment charge of $194 1 million.
Currently our Bitcoin holdings are considered indefinite lived intangible assets under applicable accounting rules mean and of any decrease and their fair value below our book value for such assets at any time subsequent to their acquisition requires us to recognize impairment charges.
Total non-GAAP expenses were $104 $2 million and the first quarter of 2021, a 4% decrease year over year.
The year over year cost decrease is driven by efficiencies and staffing reductions and corporate travel and a reduction and the number of in person events such as Microstrategy World.
Total GAAP operating loss was $183 two.
$2 million and the first quarter, 2020, one inclusive and it of an impairment related to bitcoin and $194 1 million and.
Stock based compensation expense of $7 $7 million.
Total non-GAAP operating income was $18 7 million and the first quarter 2020, one of $15 $6 million increase year over year.
We're pleased with our non-GAAP operating income we continue to expect non-GAAP operating income of $70 million to $90 million for the full year of 2021.
Turning to the balance sheet, we ended the quarter with $82 5 million and cash we issued one point O $5 billion and aggregate principal amount of convertible notes bearing an interest rate of zero percent and a conversion premium of 50% or and initial conversion price of 1004 hundred $32 and 46.
The net proceeds from the sale of the notes were approximately $1 3 billion. After deducting the initial purchasers' discounts and commissions and customary offering expenses and accordance with the company's corporate strategy of acquiring bitcoin. We used the net proceeds from the sales sale of the notes to purchase bitcoin.
The carrying value of our Bitcoin holdings as of March 31, 2021 was $1 9 billion, which reflects a $264 $8 million cumulative impairment charge that also is reflected as a loss on our GAAP income statement and the period and Kirk.
We exclude the quarterly impact of bitcoin impairment charges from our non-GAAP operating income and non-GAAP diluted EPS calculations as mentioned previously we estimate the current market value of our Bitcoin holdings now exceeds $5 billion.
Reflecting $3 1 billion from unrealized gains when compared to the carrying value of our bitcoin and March 31 2021.
We continue to actively manage our balance sheet and pursue our corporate strategy of acquiring a hold and bitcoin and April 5th 2021, we announced the purchase of an additional 253 day coins for $15.1 million and and average price of approximately 59003 hundred $39 per bitcoin inclusive of fees and expenses.
And April 12, 2021, we announce that going forward, our non employee directors will receive all fees for their services and the company's board and bitcoin instead of cash.
And and proven bitcoin as a form of compensation for Board service. The board site is commitment to that coin given its ability to serve as a store value supported by a robust and public open source architecture untethered to sovereign Marlin monetary policy.
Going forward you should expect that we will purchase additional bitcoin when our cash cash equivalents and short term investments exceed current working capital requirements and we may from time to time subject to market conditions issued debt or equity securities and capital raising transactions with the objective of using the proceeds to purchase bitcoin.
We view, our Bitcoin holdings as long term holdings, and we do not plan engaged and regular trading of bitcoin and have not hedged or otherwise entered into derivative contracts with respect to our bitcoin holdings that we may sell bitcoin and future periods as needed to generate cash with Treasury management and other general corporate purposes.
Yes.
We're making significant progress on our two corporate strategies of growing our enterprise software analytics business, and acquiring and holding bitcoin and continued investment and our technology, our people and our processes have laid the foundation for us to execute on these strategies. We're encouraged by our recent performance over the last three quarters in spite of COVID-19 and <unk>.
<unk> pandemic and given that the fact that we are still and the early stages of our cloud transition and our bitcoin and acquisition strategy.
We're looking forward to continued progress in 2021, I'll now turn the call over to Michael to discuss observations from Microstrategy World, a bitcoin acquisition strategy and provide additional feedback on our outlook for 2021.
Thank you Paul.
I'd like to say a few things about marketing.
We over the last 12 months of digitally transformed our sales marketing and services operations.
So I'm really pleased with the advances were making and marketing on our website has grown from being just a small part of our marketing strategy to being the greater and part of our marketing strategy and if you go to the Microstrategy Dot Com website.
You'll see that you can sign up and you can get tech support.
And you can learn about any one of our products you can get education, you can learn as an investor or anything you need to learn and you can find out about jobs and essence. The website has become our streaming on demand version of the company's sales force marketing function.
And even its executive team.
Our website had 281% growth and new accounts created year over a year, so extraordinary boost and our engagement with customers and prospects.
You are all of course, no we converted microstrategy world and to an on demand virtual.
Activity.
We had 811% growth and attendees to our annual conference because of that.
So we were able to dramatically and drive up engagement, while dramatically decreasing our cost.
We use Twitter and more often and both at the corporate level and and I as the Chief Executive I have 775000, Twitter followers now and.
And that is up by something like.
600% or so over the past.
Six months, so we've got dramatic growth, there and we're able to use that in order to deliver messages and information to customers and prospects and and to investors.
We're utilizing Youtube a lot more.
The corporate micro strategy Youtube channel had 1000% growth year over year and views and has exploded.
We did a keynote for Microstrategy world with myself and raw Stevens that and ended up streaming 500000 sessions just that one came out and to reach 500000 people with the assertion of horses.
A game changer for us compared to the way we used to communicate.
I I engaged and a bitcoin versus gold debates.
And we released that on Youtube that had 530000 views and seven days. So we aren't getting to the point now where we're able to reach half of audiences of half a million or more.
And that has helped us build our corporate brand.
And it has helped us to build and build our reach with new constituencies of a.
A bitcoin holders.
Investors of customers or prospects and it would be.
Employees and recruits.
Not to mention their families.
So I would summarize that as as to say, we're utilizing a powerful marketing platforms and we're expanding our reach dramatically and we're doing it and a much more efficient way and I anticipate that we'll continue with that and we will build on the successes of the last year.
Going forward and 2021.
We have two strategies as you know we have the enterprise software strategy to sell business intelligence software, that's our core business and we have the bitcoin acquisition strategy to acquire and hold bitcoin.
Fang laid out are our corporate results for the business intelligence business I'm incredibly pleased to see that business growing I think that and the last 12 months. The changes that we made to our marketing strategy and digital transformation of marketing the digital transfer.
<unk> of our services from our technical support.
All of our sales engineering of our sales per hour programs and general and of our education, all had a very constructive impact on that business. They help us to deliver a better product and to reach more customers and prospects.
And so.
That's been a source of optimism for Asa and and it's very auspicious looking forward.
We have moved to streamline and and to improve the productivity of our technical offering by emphasizing the cloud by emphasizing ease of use by emphasizing speed and performance and simplicity with our hyper now offer.
During our cloud offering and our soon to be and Cal now offering those have been well received by our customers and they are a linchpin for our business intelligence growth strategy moving forward.
Switching gears to the.
Bitcoin strategy.
The book one strategy is working out well.
Of course, we're as Fang has pointed out we've realized very very strong capital gains and our investment program.
Perhaps more importantly, we have established a balance sheet of approximately $5 billion of assets, primarily bitcoin assets.
That give us exposure and give us.
A great way to protect our shareholders from monetary inflation and actually in fact benefit from monetary and inflation.
And we roll the clock back a year ago, we had approximately $500 million of cash assets and no expectation of any investment gain from those assets.
And today.
We have $5 billion and bitcoin assets and as bitcoin grows the company is going to benefit and the shareholders will benefit clearly if you're a micro strategy shareholder.
And you have a negative sentiment on bitcoin and we're probably not the right company for you, but if you have a positive sentiment and.
About where bitcoin is going to head and then we have aligned our balance sheet and all of our shareholders interest with that sentiment.
The big activity.
With regard to bitcoin and the quarter.
Once the convertible debt issuance.
And following laid out the details I just wanted to share a few a few ah.
Observations.
Whenever we think about financing activities our number one concern is.
Is this going to be accretive to all of our classes and shareholders and is this going to improve the strength of the capital structure of the corporation over the long term.
So and this particular case, we did this financing at zero percent interest. So that clearly is is on the surface pretty positive because we certainly expect to get more than zero percent appreciation and our use of proceeds.
We also did it where the strike price or a conversion price of <unk> hundred $32 a share.
I think that's important because our previous conversion price for the previous convertible.
Debt issuance was about $398 a share and.
And of course, the stock was trading substantially last 50%.
And while we did it at a 50% premium so the stock was trading just slightly loss and $1000 a share when we did this deal.
That means that it's an accretive transaction for the equity holders, but it's also an accretive transaction for the holders of the first convertible debt issuance.
We want to make sure that we're doing a transaction that they would be they would view as being accretive and and their best interest and so now we actually have.
Equity holders, we have holders of the of the first $650 million convert struck at 398 that was 75 basis points.
We have the holders of the second convert struck at 1400 32.
As we go forward and we think about bitcoin acquisition clearly as we generate cash flow from the core business and access of our working capital needs. We will convert that into bitcoin and of course, that's and that's a straightforward accretive transaction for us because we.
Ben Cohen to appreciate it a far more rapid rate than the yield we could get on the U S. Dollar.
We even expect that coin to appreciate at a rate faster than the likely organic growth rate of our enterprise software business and I think that's an important nuance as well but.
Perhaps it's equally useful to say that we don't really see a strong need for cash to grow our enterprise software business. We believe we can grow our enterprise software business based upon our existing working capital balances and we've allocated.
So cash and access of that working capital.
It would be a nonperforming asset on the balance sheet. If we just left it and traditional treasury, so converting that into bad coin allows us to.
To increase our exposure to what we think will be the fastest growing asset that we could reasonably hold.
And <unk>.
As we look forward Fong pointed out.
And we've left the door open to issue equity or debt.
There are lots of different types of of a day.
Our equity we might pursue.
We're always considering.
Is it and the best interests and is it accretive to all of our classes of shareholders and is it going to be a stabilizing constructive addition to our balance sheet.
Certainly.
The financing, we can do that would either and credit risk of where if we're marking our position to market against collateral which is changing every day, that's not something that we're enthusiastic about.
And our if we were to to finance the fixed asset of the company at a reasonable interest rate and it and it wasn't otherwise finance then we'd probably pursue something like that.
From time to time, we will see different options and we're always looking.
Obviously, the state of the bond market the state of the equity markets. The state of the convert markets and the state of other structured financing markets will determine what we view as being accretive and of course the price of bitcoin. So we keep our options open but I do want everybody that is a shareholder of the company to <unk>.
Know that.
While we could do many things we will probably reject most things is not being accretive to the interest of all of our classes of security holders and when we find something that we believe is a good idea then won't pursue that.
And.
Yeah.
Yeah.
Looking at the outlook a bit coin going forward.
We think that the last 12 weeks were really good.
For a bitcoin and for the adoption of bitcoin as a treasury reserve assets throughout the rest of the corporate world.
I mean as as everyone knows we saw many other U S publicly traded companies buy bitcoin during the quarter.
And we're starting to see international companies, and Korea, Japan, and Hong Kong buying bitcoin and putting it on their balance sheets of course, many private companies and high net worth.
Offices are putting it on their balance sheet and institutions.
I am heartened by by the degree of adoption Bitcoin as a treasury investment option.
Across the general financial landscape.
And the actions that we're seeing from J P. Morgan Goldman Sachs Morgan Stanley The analysts' reports from Citigroup.
All of the day coin ETF sitting for approval before the SEC right now the success of international Bitcoin Etfs.
And the engagement.
Of Big Tech companies like Paypal and square.
Two to integrate with bitcoin the rollout of bitcoin availability to venmo and these are all auspicious.
I thought that the that the direct offering of coinbase.
And and the fact that now the largest U S exchange for bitcoin as a small publicly traded company I thought that was very auspicious for the space. So generally I thought that the first quarter and the last 12 weeks have been just really good ones for bitcoin.
There are lots of concerns about.
Where does bitcoin and said visa b the U S dollar and currencies.
Especially over the past six months I think that that its becoming emergent and clear that the world is going to settle and to billions of mobile wallets and those mobile wallets are going to hold a selection of digital currencies and a selection of digital assets.
And the strongest digital currency is going to be the U S dollar.
U S dollar is going to drive everything and the U S. Dollar is spreading to millions and hundreds of millions and then billions of these mobile wallets I think the strongest digital asset clearly as bitcoin and what people are beginning to realize is that bitcoin is going to spread everywhere and the world.
And the U S. Dollar is going to also spread everywhere and the world on top of the Bitcoin Crypto rail.
And what's good for Bitcoin is good for the U S dollar and vice versa.
The U S. Dollar is emerging as a medium of exchange and the preferred medium and exchange everywhere and the world.
Especially in countries and weaker currencies and bitcoin is emerging as the as the preferred open digital monetary network and the advantage of the day coin network is it allows.
And if not tens of thousands of companies all to exchange value with each other to synchronize and to settle across all jurisdictions across across all nations everywhere and the wall and across time zones and across applications.
And.
And they can all build to the same open protocol.
So bitcoin is emerging as the base layer for the 21st century Fintech economy.
And it's an accelerant to the spread of digital currencies, it's an accelerant to the spread of digital assets and of course, it's an accelerant to the integration of sophisticated fintech offerings on mobile devices.
And that are currently exploding in popularity as we see with square as we see with Venmo and Paypal and the like.
As we look forward.
We will continue to execute our two strategies and of of growing our enterprise software business intelligence business and acquiring and holding bitcoin.
We're going to do it because they are both working very well over the past 12 months and even more importantly, they're very synergistic with each other.
Our employees are happier than ever over the last 12 months and in fact, our annual attrition is down 28, almost 29% year over year.
The the engagement of the employees and there are more row is up.
3% year over year, and so we believe that it's been really good for recruiting it's been really good for employee retention is very good for employee morale or digital transformation of our of our operations has been very good for engagement and for work life balance and has allowed us to two.
Angela navigate all of all of the restrictions and all other constraints.
Needed to deal with the last 12 months.
Our bitcoin commitment has elevated our brand dramatically and the world.
Everywhere, we go micro strategies a name that's been heard of.
The bitcoin community is adding something on the order of 10 million people a month.
Perhaps even more millions a week and.
And that means that we will approach more than 250 million people and the bitcoin community by the end of this year.
Our leadership stance with regard to bitcoin is has generated lots of good well for us and the bitcoin community. It's good for our marketing it's good for our sales it's opening doors for us, it's it's generating goodwill and our sales service operations everywhere our customers.
<unk> are happier they like to see that we're taking a leadership role here and so not only has been beneficial to our employees, but it has been beneficial with our customers and our partners and we're able to.
To get our message out and be heard more effectively than ever before.
So.
Our bitcoin strategy has made our brands stronger and it's really a corporate strategy.
Over the last 12 months we.
We've strengthened our balance sheet, we've created and an endowment and micro strategy that allows us to take the long view.
And and we've made clear what we stand for and to everywhere every one and the world and every single week.
There are two to three more and.
3 million people more they care about this thing so we'll continue.
And to educate the world on Bitcoin will continue.
To educate corporations and do everything we can to make it easier for other companies public and private.
And to adopt that coin strategies will continue to acquire Beck coined by any means thats accretive and from time to time and we have the opportunity we're going to continue to enhance our core product and market our core product down all of these channels, including Twitter and Youtube and our website.
And and we're more enthusiastic now and then than we have been and a long time 2021 is looking like a really good year and we've got a really good plan and a really good set of techniques are ahead of us that we can rely upon to grow the business and to create shareholder.
Value.
And I want to thank everybody for your support and at this point I'll go ahead and pass the floor back to Jeremy to take questions.
Alright, Thank you Michael we're going to jump right in and we've got lots of great questions and so the first question is going to be for fun.
The comment and question or perpetual license growth was one of the strongest growth rates, you've seen and many years.
Yes, easy comp that was impressive.
What is driving this was at perpetual versus cloud.
And so we saw strength there and both are perpetual growth and our cloud growth, which we're pretty excited about as you mentioned the comp was easy year over year, we were up 69% and perpetual license revenue, but even compared to Q1 and 2019 were up 16%.
And on the cloud side, we were up 26% year over year and our cloud billings is up 19% year over year. So all of those metrics are some of the best that we've seen and history and I would say we've seen growth on both sides.
The reason why we're still seeing growth and perpetual two drivers one is our existing customer base.
Is primarily large enterprises and for them moving to cloud.
And will take time, and so we want to be part of that impetus, but many are still buying on prem and obviously, we're not going to turn that down.
And the second key factor.
Is we are also actively moving people off of.
Perpetual maintenance, which you see and our product support line and moving them to term licenses, which will show up and product license revenue and so that's another driver or some of that growth that youre seeing but.
Overall, we're very happy with the growth rates in Q1, and whether you compare it to 2000 22019 area and the years recent years before that.
Great. Thank you. Paul next question is from Michael post the convert.
And Im wondering if you could go into more detail on how you might further use the balance sheet to acquire more bitcoin.
Well I think.
Yeah.
So far we've we've done two financings both of them are are unsecured.
So that means that we have not pledged any assets on our balance sheet.
As as part of any future financing. So we we've got a lot of options.
And so as to whether we pursue secured financing and when we pursue more unsecured financing are we locked to pledge additional collateral either cash or bitcoin to financing we don't have any concrete.
Thing to announce at this point and so we're just always involve evolve evaluating different options. When we have an option and we find to be compelling and accretive then we'll pursue it and we will make an announcement at the appropriate time.
Great. Thank you Michael.
Next question for phone can you give some more color on the license revenue strength and the mix between net new upsell, perhaps by verticals and regions, where you see a faster recovery versus areas of weakness.
Yeah, I wouldn't say that there were any particular surprises versus previous trends right like.
And any particular quarter, we generally average around 20% of our revenues from new customers and <unk> 80 per cent of our license revenues from existing customers and that was similar for Q1, Although we are seeing more leads as we mentioned with net new prospects as they come on and they typically purchase and smaller dollar amounts starting upfront.
And then it will expand over time.
As far as the industry breakdowns go a similar breakdown as we've seen in the past our technology in particular, but retail financial services Federal government sectors Health care were all very strong for us and Q1. So I would say, we're continuing to play to our strengths and will probably continue to do that.
And we will see some expansion over time of prospects.
Specially.
Thanks, Paul and maybe a follow on to that.
One question is around what drove the pickup and the large deal activity and can you talk a little bit about what youre hearing from customers on their purchasing pensions and how this might translate to growth and license revenue going forward.
I'll take the second part first purchase intentions, we are seeing and expanding of investment and enterprise analytics and general, especially the enterprise part of analytics I think a lot of corporations are realizing how important.
Things like forecasting and scenario analysis, and real time analytics and understanding supply chains et cetera. All of those things became very important last year and I think what corporations realize is you kept patchwork solutions you can't put in.
Departmental dashboards and place of enterprise analytics.
You can't have Ungoverned and data all of the things that we were competing against.
Everyone realizes need a true enterprise analytics solution for a large corporation to be able to differentiate and to be able to primarily deal with a lot of external changes, which is what hall last year was so large enterprises I think are coming back to us and and we are focused on.
Bringing in large deals and and we did well in Q1. The other big piece that I mentioned is our OEM business and that continues to do really well and generally speaking when we sell to Oems to embed our software and theirs those tend to be larger sized deals also.
Okay.
Next question, Michael as we move more towards a digital society and micro strategy firmly placed substantial suitably to achieve further growth.
What are some concerns that keep you up and night from a CEO perspective and <unk>.
And secondly, do you have plants and quickly blockchain into related technologies and your products and services.
I think it's an exciting time right now is that as we see the digital transformation of society and and.
And I think people understand that.
And that there's a big digital transformation of their P&L and their operations, but we've been big advocates and evangelists for the digital transformation of the balance sheet and the conversion of analog assets and conventional treasury assets and two digital assets like bitcoin.
And what keeps me up I think.
The Big challenge is to educate the marketplace. There's a lot of education that we need to do.
And to that effect we've uploaded.
All of our Playbooks to hope Dot Com, we've got lots of education materials and hope Dot com.
We have.
Curated the best and the brightest box papers resources reports that we can we make them available and we're and we're continuing to invest.
And synthesizing better education materials, so that other corporations and other investors can can rapidly get educated.
And what is bitcoin and what is this digital monitoring network wise and important and and how can they best craft their bitcoin strategy.
Thank you Michael and.
Oh and one for you will there be dividend payouts or stock splits now or in the future.
Maybe [laughter].
And don't think we really comment on our capital allocation and dividend payouts and stock splits and those kinds of things, but they're all they're all things that we consider from time to time.
Thanks and.
One, let's say stay on the topic of accounting and what exactly is the 265 million cumulative impairment charge and what is it consistent.
Yes, it's a great question the way the accounting for intangible.
Assets work is we have to assess them every single quarter for impairment charges and with Bitcoin. We take a look at what is the lowest price of any particular bitcoin and that we carry and we impair it down to the lowest price.
It's a.
Sort of precedent GAAP accounting it is a little bit unusual and we've taken impairment as a result of that that's the reason we reconcile to what we call and non-GAAP.
Our results also we should take out that impairment charge and take out the.
Share based compensation and.
And show our.
Our results without those charges and we also share what we and most of our investors see is our actual market value Bitcoin and addition to the book value of the coin.
Thanks phone and let's shift back to Michael.
And this might be Michael info can you share some direct commentary you've heard from Ceos, and cfos and about how they might incorporate bitcoin into their broader and treasury treasury strategies during your customers.
I'll start and then foreign can go.
I think that.
I've had a number of conversations with our management teams and Ceos and I think they are very interested and what we did why we did it the outlook for bitcoin and then.
And the legal accounting and regulatory and execution issues and <unk>.
And for large companies, sometimes I speak with them directly and then for smaller companies and for follow up we direct them to all the content. We've got on the website and that's been very popular and well received.
And any additional comments.
Yeah, just in general I mean, youre seeing it and the results we see it and our leads also there are folks who are just discovery and micro strategy either through digital channels or through our website and Mike Michael mentioned that traffic Microstrategy World is a big lead generation and event for US. So the fact that we had five extra number of people attend all of those.
Things end up creating more leads for our software business, which end up creating overtime more revenue. It also creates and energy.
Talked about a little bit.
And sort of this energy of us being a forward leaning technology company and Theres a lot of positives that come with that and the halo effect into our <unk> business also.
And so that all is very positive.
That said a lot a big part of the reason why we're starting to see successes, we laid the groundwork over the last five years right, we rolled out Microstrategy 2019.
And 2019, we upgraded customers aggressively and those customers that upgraded to our latest version of our software is starting to see the value of it and are willing to invest more into the company and micro strategy.
And so things that we've done over the last three four or five years are starting to see results and positive aspects of that too.
Thanks, Tom.
We have time for one more question I think so.
Michael and maybe firmed at the and you mentioned that Bitcoin thought leadership is driving inbound software at least from your customers can you elaborate a little bit more on that.
It's just for me and for Phong.
I think it is directed towards you, but I think from we'll have something to say as well.
I just think that the lead flows are much higher because people know about us and and.
And they are aware of of our company and our brand and our products and what we stand for and.
Because bitcoin is the.
And the most explosive and most exciting idea right now and mainstream investing.
That means that our name gets associated with it a lot today on CNBC. They had their annual draft, where they where they drafted the top 10 investment ideas for the year and the number one draft Tech was a bitcoin and the Idaho announcers were kind of irritated they didn't get the draft that coin so I <unk>.
And that we benefit by association and it drives other types of lead flow to us.
Any other thoughts phone no I think Mike got that and I don't have anything to add to it okay.
Okay.
Alright with that.
Thank you everyone for the thoughtful questions. This concludes the Q&A portion of the webinar, we'll now move on to closing remarks from Michael.
Well.
I want to thank all of our shareholders. Thanks, and thanks for logging into this call.
<unk>.
And thank you for your support.
We do appreciate it.
I will look forward, along with falling and Germany to saying, you and 12 weeks and.
And and until then all the best.