We'll get started. Hello, everyone, and good evening. I am Shirish Jajodia, MicroStrategy's Senior Director of Treasury and Head of Investor Relations. I'll be your moderator for MicroStrategy's 2021 Fourth Quarter Earnings webinar. Before we proceed, I will read the Safe Harbor statement. Some of the information we provide during today's call regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various factors -- important factors, including the risk factors discussed in our most recent 10-Q filed with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today. Also, during today's call, we will refer to certain non-GAAP financial measures. Reconciliations showing GAAP versus non-GAAP results are available in our earnings release and presentation, which were issued today and are available on our website at www.microstrategy.com. With that, I will turn the call over to Michael Saylor, Chairman and CEO of MicroStrategy. Michael?

Thank you, Shirish. I'm Michael Saylor. I'm the Chairman and CEO of MicroStrategy. I'd like to welcome all of you to today's webinar regarding our 2021 fourth quarter financial results. I'm here with Phong Le, our President and Chief Financial Officer. First, I'd like to pass the floor to Phong, who's going to provide an update on our operations and the financials for the quarter.

Thank you, Michael. I'd like to start off with an update on our successful day 1 of our MicroStrategy World 2022 event today. We had 2 parallel tracks. The first was the enterprise analytics track featuring discussions with industry leaders, including Nice, Sainsbury's and the Schwarz Group about why the MicroStrategy platform is their tool of choice for the enterprise for cloud-powered analytics and for OEMs. And the second track was Bitcoin for Corporations, featuring Jack Dorsey, CEO, Chairman and Co-Founder of Block as the keynote speaker. This is our second annual Bitcoin for Corporations event, where we present our playbook to other corporates who are looking to explore how Bitcoin can provide an innovative treasury and product strategy. We had an amazing turnout with over 28,000 attendees viewing the event live worldwide. Replays for today's session will be available on our website. As a reminder, MicroStrategy World 2022 is 100% virtual and free of cost. So please feel free to register and tune in to the second and final day of the event tomorrow. Now turning to our results. The fourth quarter was a good finish to what was an exciting and transformational year for MicroStrategy. Before I review our fourth quarter results in detail, I want to underscore the key highlights from 2021 for the company. First, we had a solid sales year, returning to positive year-over-year revenue growth for the first time since 2014. Total revenue for 2021 was $510.8 million, up 6.2% versus 2020. Product license revenues for the year was up 17%, growing for the first time since 2013. And subscription revenue was up 30% versus the full year 2020. The focus on term license sales contributed to the material growth in license revenue and subscription revenue. We also made important progress in our shift…

Thank you, Phong. I will just comment on our business strategy. We have 2, our business intelligence strategy and our Bitcoin acquisition strategy. With regard to business intelligence, our path forward is to continue to improve the product to rotate our revenues from enterprise-software-based to cloud-based. And to general -- to continue to grow our installed base, we had 6% top line growth last year. That was awesome. I expect we'll continue to grow the business either by taking advantage of special marketing opportunities that our brand brings us for sales activity. And then we will continue to refine and automate the processes with which we provide our products and our services to our customers. So that's a mature but balanced, well-understood enterprise software business, and it's generating excellent free cash flows for us, cash flows in excess of what we need to reinvest in order to grow the business. So that leads us to our second strategy, which is Bitcoin acquisition strategy. We're going to continue to reinvest our free cash flows from the core business into Bitcoin. This morning, we announced we'd acquired $25 million worth of additional Bitcoin from free cash flow. I think that's a powerful strategy for us, and it's working well. Obviously, we'll hold the existing Bitcoin. We've crossed 125,000 Bitcoin now. And as Phong had pointed out, much of that Bitcoin is not pledged as collateral. So the company maintains options that we can consider, and we'll consider different options from time to time to put more leverage on that collateral or to generate yield on those assets if we find a compelling opportunity that we feel would be accretive and appropriate to our risk parameters. As Phong has said, we haven't really decided anything and we don't have any particular intent right…

Okay. Great. Thank you, Michael. We are going to jump right into questions. We have a lot of good questions. First question is for Phong. Could you comment on the strength seen in total billings growth this quarter? Did you see any benefit from early renewals this quarter?

You're on mute.

The short answer is no. I think we’re seeing an acceleration of our software business. We saw it throughout the course of 2021, benefiting from our most recent product cycle, increased demand in the general market, and also, I think some – the flywheel effect I talked about from our Bitcoin strategy. So no, we’re not seeing an acceleration of billings from 2022 to 2021. I think we are seeing general growth.

Okay. Another question for Phong. Non-GAAP operating margin, excluding the Bitcoin impairment, was slightly lower this quarter at 16.6%. What were the areas of investment this quarter? And how do you think about margins going forward we'll continue to see next year?

Yes, I’d say there are 3 areas where we saw some margin dilution in the fourth quarter. The first is in our cloud business, we are starting to ramp up the team in anticipation, as you saw with our cloud billings of significant growth. So as that cloud business starts to scale, that margin dilution, I think, will reduce. And so that’s area #1. Area #2 is related to R&D. We’ll continue to invest in our technology team, more folks around the world. And as probably as well-known at this point in time, there is a lot of wage inflation and a very competitive marketplace for technology resources. And so to make sure we have the right team in place and we retain folks, we will see some wage increases there. I expect that portion in terms of margin dilution will continue for the near future. And then the third area that we saw some margin dilution is in our G&A costs as it relates to our Bitcoin strategy. So fees, custody fees, some onetime costs related to consulting fees, advisory fees, legal fees, that should reduce its dilution over time, too. So those are the 3 areas. And I do recognize the cost structure went up a little bit in Q4, but I think long term, we still expect our margins to be accretive as a business as we grow.

Thank you, Phong. Next question is for Michael. Financial services infrastructure on the digital assets industry continues to quickly evolve. How do you view the opportunities to exploit your large Bitcoin balance in 2022 to drive shareholder value beyond spot appreciation this year versus last year and perhaps a new generation or other strategies?

I think that as enthusiasm to trade and hold and bank digital assets and Bitcoin in particular grows, there are going to be – there’s going to be an increase in the number of creditworthy counterparties that we could do business with and increasing the options that we have. So we have a large amount of assets. So in theory, we could lend them out for yield. 2 years ago, there weren’t that many counterparties and there were no, say, FDIC-insured banks that might want to borrow and give us yield. But I think that as FDIC-insured banks get into the space, and it seems like it’s just a matter of time before they do get into the space and as very large $1 trillion balance sheet entities get in the space, we’ll have a much deeper selection of counterparties that we might work with to either borrow from or generate yield from either of those or – and/or maybe generate some yield on our own through selling volatility. I think all of these options that we have, they all come with a risk – a counterparty risk and they come with a theoretical opportunity cost. And then they also come with an execution cost and a whole set of compliance and other sorts of disclosure issues and strategy issues that we consider. So we’ll parse the opportunities carefully as they evolve. But certainly, in a world where, say, Goldman Sachs and Morgan Stanley and Merrill Lynch, Bank of America and Citigroup and JPMorgan are interested and involved in the space, then I think the options that will be available to us over time will be greater. And the counterparty risk that we would have to incur will be less – and I think that – that’s part of the maturing of the market, which will be good for everybody in it.

And a follow-up on that, can you quantify how much more balance sheet capacity you have left right now and outside of further equity issuance to acquire more Bitcoin, considering both the core business and the MicroStrategy subsidiary?

I think the most important number to focus on is the amount of Bitcoin that we have that is not pledged as collateral, which I think Phong pointed out. What was it, Phong, 110,000 or so?

Yes, 110,000, exactly.

So 110,000 Bitcoin would be the asset that is not pledged as collateral that we could potentially consider using either to generate yield or to leverage.

We'll turn over to Phong now. Congratulations on the strong year. Should we expect any changes to the go-to-market process given the new head of sales?

Well, thank you. No, I don’t think you’re going to – we would expect a lot of major changes. Kevin has been with the company 5 years now. He was instrumental to some of the changes that we made in 2020. As we embraced the virtual wave and went more to digital marketing, obviously, less in-person events, less in-person – fewer in-person meetings and also really moving to the cloud. So I think it’s an acceleration of those elements and better and better sales adoption and customer adoption of those strategies. But I don’t think we have any major fundamental changes planned in the short term.

Another one for Phong. You have set a long-term target at the Investor Day to grow revenue more than 10% annually. What are some of the levers you can pull to get to this growth rate? And what's the -- and how is the timing impacted by the cloud transition?

It’s a couple of things. First of all, if you see our product license revenue growth last year, 17% constant currency, subscription billings growth last year, 35% roughly, you combine those 2, those are really the foundational elements of growing the overall business. Product license revenue growth drives support revenue. Subscription revenue growth drives more cloud and more high-quality recurring revenue. So I think if you see those levels of growth, that should lead to greater than 10% revenue growth over time. We have a shift of decrease in support revenue, and it’s a large amount, but the other pieces should outweigh that. And then our consulting business continues to chug along, and it should grow sort of at the level that you see the product piece is growing. I put all of that together. I think 10% is very achievable. There – it could be slightly depressed this year as we really rapidly accelerate to cloud. But I don’t see that to be a long-term drag on our revenue growth potential.

Okay. Switching to Michael now. Can you speak about the issuance of additional stock at the market to purchase Bitcoin and if it is accretive? Additionally, can you also talk about the ability to pay the interest on bond offerings from cash flows of current MicroStrategy business intelligence arm?

Yes. So regarding the first question, we wouldn’t choose to issue stock if we didn’t think it was accretive. And whether it’s accretive or not depends on a variety of circumstances and – facts and circumstances. But we’re certainly not going to issue stock if we don’t believe it’s accretive. Regarding to the second question, we have free cash flow in excess of the debt service and the interest on the debt, and we’re comfortable that we can cover the interest on our debt from our free cash flows.

Thank you. Turning to Phong. Could you talk about how far along in the cloud migration journey we are at currently? And are you seeing larger customers migrate? Or are they still waiting for more enhancements in the cloud product?

Yes. So we saw for the full year of 2021, 35% growth in our cloud billings. In the fourth quarter, we saw it at 53%. And I think as we get into 2022, that number could further accelerate. And today at least, that is on the back of some medium-sized and sort of a few large customers. I do think we will start to see that trend more and more towards large customers in 2022. I think there is a comfort for large customers to move to the cloud more so in the next year or so, and then it’s just a process, right? It takes longer for a large customer to go through the cloud migration process. But I would say as we enter 2022, we’re sort of right in the meat of really starting to accelerate that cloud migration journey, which is exciting. We’ve done a lot of work on our product and on our processes and our operations to be prepared for that.

Okay. Let's switch to Michael. Can you elaborate on what are your plans for Bitcoin for Corporations and whether this will have a revenue benefit for MicroStrategy?

Well, this is our second annual Bitcoin for corporations conference. We kicked it off last year. To my knowledge, this has like been the primary, if not one of the fewer or the only Bitcoin-related conference, focused upon corporate adoption of Bitcoin as opposed to institutional investors or retail investors or technology or some other audience. We expect to continue to do the conference annually. We found that annual is good cadence. Our goal is to educate corporations on the benefits of Bitcoin and then the mechanics and the other nuances of integrating Bitcoin into their products or their services or their balance sheet. And there are going to be new developments every year. So I think that we’ll want to do a refresher each year, and we try to curate a set of institutional-grade vendors that can help with things like commercial banking a Bitcoin or investment banking Bitcoin companies or payments on Bitcoin rails or exchange trading Bitcoin or custody of Bitcoin. So we feel like it’s been good for our brand. It’s helped in our – it’s improved our marketing reach. We don’t see it as a revenue generator per se. We don’t have any intentions to monetize the event now or in the future. We’re primarily providing this as an educational service to the general public because we believe it’s in the best interest of the industry. To the extent of more corporations become comfortable integrating Bitcoin or a facility in their way to integrate Bitcoin to their product or service or they’re facilitated in integrating Bitcoin with their balance sheet, we think that it will be beneficial to Bitcoin, all Bitcoin holders and our shareholders included.

Thank you. So moving to Phong now. Are there any bond covenants that could force MicroStrategy to liquidate Bitcoin holdings?

No. We don’t have any covenants that will require us to liquidate any Bitcoin holdings. The covenants we have on our convertible notes and – are secured on or primarily incurrence covenants, which means they may limit our ability to kind of additional debt but nothing that would stop us in our tracks and say we have to do something prior to the bonds maturing. So really, the first maturity – as you saw, we mentioned in the prepared remarks, is December 2025 would be the first time we’d have to adjust any of our bonds.

Okay. And one more question for Phong -- actually, we'll move to Mike now. And one question is whether do we plan to expand into Bitcoin products to grow our revenue?

Right now, our strategy is to acquire and hold Bitcoin. So we don’t have any plans to offer additional products. Our product focus is business intelligence. Our treasury and our balance sheet focus is acquiring and hold Bitcoin. It’s always theoretically possible that we will find new and interesting opportunities, but if we were to find those things, we would vet them, consider them carefully, evaluate whether they’re likely to be accretive or dilutive and whether they’re a distraction or whether they’re really strategic. And if we deem it to be something material, we would disclose at that time.

Great. I think -- thank you, Michael and Phong. This brings us to the end of our question-and-answer sessions. Thank you, everyone, for your questions. And now I will turn the call over to Michael again for the closing remarks.

Thanks, Shirish. I want to thank all of our shareholders. Thanks for spending the time with us today. Thanks for your support. We couldn't do it without you. And I wish you a good quarter, and we'll see you again in 12 weeks.

Thanks, everyone.