Enterprise analytics and mobility software specialist MicroStrategy Incorporated (MSTR 0.48%) reported its fourth-quarter 2017 results on Jan. 25. The company saw its top line shrink by 1.4% and its net income fall by nearly 49%, both on a year-over-year basis. Part of the income drop was due to a one-time tax charge, which the company will pay out over the next eight years.
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MicroStrategy results: The raw numbers
| Metric | Q4 2017 | Q4 2016 | Year-Over-Year Change |
|---|---|---|---|
| Sales |
$138.1 million |
$140.1 million | (1.4%) |
| Net income |
($26.2 million) |
$31.1 million | N/A |
| Adjusted earnings per share | ($2.29) | $2.69 | N/A |
Data source: MicroStrategy.
What happened with MicroStrategy this quarter?
- The company said its $26.2 million net loss was primarily due to an estimated one-time tax charge of $44 million resulting from the recent tax reform law. The charge includes $40.3 million related to repatriating money now held overseas, which the company plans to pay over eight years.
- Backing out that charge, MicroStrategy's net income would have been $17.8 million, a decrease of 43% from the year-ago quarter, and diluted earnings per share would have been $1.55.
- Cash, cash equivalents, and short-term investments totaled $675.2 million, and the company continues to have no debt.
- Product license revenue was $32.3 million, representing a 15% decrease year over year.
- Sales from the company's subscription services segment increased by 9%, to $8.5 million.
- Support revenue ticked up by 3% to $75 million.
- MicroStrategy's services revenue was $22.3 million, a 3% increase year over year.
- Operating expenses jumped by 18% year over year, to $94.6 million.
What management had to say
Management has continued to express its optimism about the company's potential, primarily by addressing new investments in its sales workforce and its marketing. That continued to be the theme on the fourth-quarter earnings call, when CEO Michael Saylor said:
As we look forward through 2018, 2019 and 2020, it's clear to me that we need to invest in a very thoughtful fashion if we're going to grow the business. And we're focused upon investments in three areas: our sales and marketing programs, our services programs, and our technology programs. We've got really exciting plans in all three of these areas.
Looking ahead
MicroStrategy didn't offer any specific guidance on what it expects in the first quarter of 2018, but the company's CFO, Phong Le, did say that 2018 is "strongly about our ability to execute in our investment plans across sales and marketing," as well as through growing its technology offerings and its customers.
He added that management is "optimistic" about seeing sales from its product license segment grow but added that they're "uncertain about the exact timing of this."
