Image source: Getty Images.

MicroStrategy (NASDAQ:MSTR) reported third-quarter results on Oct. 27 and while total revenue was essentially flat with the year-ago period, the company experienced some moderate growth from its product licensing and subscription services. Management said there will be more "unevenness" in the coming quarters but remains optimistic for 2017.

MicroStrategy results: The raw numbers

MetricQ3 2016Q3 2015Growth (YOY)
Revenue $129.9 million $129.5 million 0.3%
Net income $26.6 million $23.9 million 11.3%
Earnings per share $2.31 $2.06 12%

Data source: Company SEC Filings. YOY = Year over year. 

What happened with MicroStrategy this quarter?

  • Revenue from the company's product licensing and subscription services increased 9% year over year, to $37.3 million.
  • Product support revenues were relatively flat -- an increase of just 1% year over year, to $72.5 million in the third quarter.
  • MicroStrategy's "other services" revenue fell by 16% year over year, down to $20.2 million.
  • The company's North American business performed well in the third quarter, representing 74% of total product license revenue, up from 54% in the same quarter last year.
  • Operating expense ticked up slightly to $77 million, a 4% year-over-year increase.
  • Cash and cash equivalents and short-term investments equaled $578.9 million in the third quarter, an increase of $93.2 million from the end of 2015.

What management had to say

MicroStrategy Chief Financial Officer Phong Le said during the earnings call that the company's total revenue increased "for the first time since our restructuring began" two years ago.

Part of that can be attributed to strong sales and larger customer deals from the company's North America business in the third quarter.

Management also said it's trying to bring costs down while expanding new offerings to customers. Chief Executive Officer Michael Saylor said, "We're working very hard on managing costs and managing efficiency while we actually lay in place the framework to grow the business." Saylor pointed to the company's launch of its new, free desktop analytics program as one of its new initiatives.

He also pointed to several key service and product offerings that helped the company deliver in the third quarter:

I would say that the product gets consistently better and the product in Q3 was better. I think that we made a lot of improvements in our support policy. We announced our platform release. We changed management and tech support function and I think that was a positive.

Looking forward

MicroStrategy's management said that the company will be on the path to more organic growth next year, but Saylor said that there will be some "volatility" in upcoming quarters. 

Echoing that sentiment, Le said, "As we continue to work on transforming our business, we expect continued quarterly unevenness in our key financial metrics, but we are optimistic that our changes will put us on the path to profitable organic growth in 2017."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.