Hello, everyone, and good evening. I am Shirish Jajodia, Head of Investor Relations and Treasury at MicroStrategy. I will be your moderator for MicroStrategy's 2022 Second 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 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 microstrategy.com. I would like to welcome you all to today's webinar and let you know that we will taking questions using the Q&A feature at the bottom of your screen. You can submit questions throughout the webinar, and Michael, Phong or Andrew will answer questions at the end of the session. Please be sure to provide your name and your company's name when submitting your questions. Now I will walk you through the agenda for today's call. First, Michael Saylor will provide a strategic review and discuss our recently announced executive transition. Second, Phong Le, we'll cover the operational results for second quarter 2022. Then Andrew Kang will cover the financial results for second quarter 2022. And lastly, we will open up to Q&A. 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 2022 second quarter financial results. First, I'd like to provide a strategic review. As you know, MicroStrategy has two corporate strategies. The first is to operate and grow our enterprise analytics business. The second is to acquire a whole Bitcoin. We've made great strides in both areas over the past two years. We've digitally transformed our sales, marketing and services. We've upgraded our enterprise BI platform and we've migrated many of our customers to our integrated cloud intelligence offering. We've also established a trusted network of digital asset service providers. We've developed a set of corporate procedures for acquiring and holding Bitcoin in custody and executed multiple equity debt and convertible debt offerings in order to expand our balance sheet. We are now the largest independent publicly traded business intelligence company, as well as the largest public holder of Bitcoin. MicroStrategy represents a new kind of firm. which generates cash flow based on enterprise software products and cloud intelligence services and has a balance sheet based on Bitcoin, a digital commodity that we believe is superior to traditional physical commodities, like energy, metals or agricultural products. This hybrid corporate strategy represents a paradigm shift. What started as a defensive strategy and intended to protect our balance sheet rapidly evolved into an opportunistic strategy as we sought to create shareholder value during the pandemic crisis. We no longer view Bitcoin acquisition is opportunistic. It is simply our second corporate strategy. Our future now depends on how we manage and develop our intellectual property, that is software, as well as how we manage and develop our digital property that is Bitcoin. I'd like to talk a bit…

Thank you, Michael. I'm honored and looking forward to leading this truly innovative organization in my new role as President and CEO. MicroStrategy has founded 33 years ago as a technology innovator with a vision of intelligence everywhere. Since then, we've become a global leader in business intelligence serving the largest, most respected enterprises and government organizations in the world. We've also been a technology pioneer in the fields of relational, web, mobile and cloud analytics. Our employees and executives are the foundation upon which our strength in enterprise analytics was built, and I'm enthusiastic to work with them to continue to grow this business going forward. More recently, MicroStrategy has pioneered the use of digital assets as a core component of corporation's treasury policy. We believe it's still early and further adoption of Bitcoin globally can have a positive effect on the Bitcoin price, which has the potential to offer upside to our shareholders. Bitcoin is the right long-term store value for MicroStrategy, enterprises, institutions, individuals and the world. Our history of innovation has allowed MicroStrategy to be successful for a sustained period of time. I plan to continue to build a culture and a company where innovation thrives. In addition, our ecosystem of customers, partners, shareholders and employees are essential to our success. Our commitment and focus on this group will strengthen under my leadership. I look forward to leading the organization for the long-term health and growth of our enterprise software and Bitcoin acquisition strategies. I'd also like to thank Michael Saylor. Following Mike's footsteps, our founder and a pioneer in enterprise analytics Bitcoin for institutions and CEO of MicroStrategy for 33 years is a great honor and a great responsibility. I've learned a tremendous amount for Mike over the last seven years, and I'm honored to…

Thank you, Phong. I am delighted to be with everyone today and would like to start by turning to our second quarter 2022 financial results in more detail. GAAP revenues for the quarter were $122 million, down 3% year-over-year. While weakening foreign currencies impacted our revenues this quarter when isolating FX impacts, total revenue increased 2% on a constant currency basis. Total software license revenues, which consist of both product license revenues and subscription services revenues were in total $34 million, up 5% year-over-year or up 8% year-over-year on a constant currency basis. The growth in total software license revenues this past quarter reflects our strategic focus on the migration of our platform to the cloud, which Phong highlighted earlier. In the second quarter, cloud subscription service revenues were $14 million, an increase of 36% year-over-year or up 40% on a constant currency basis. Total product license revenues were $20 million, a decrease of 9% year-over-year or a decrease of 6% on a constant currency basis. And product support revenues were $66.5 million, a decrease of 6% year-over-year or 2% lower on a constant currency basis. Both product license and product support revenues are impacted when new and existing customers convert to our cloud model. And as a result, we expect those revenues to modestly decline alongside a corresponding increase in cloud subscription revenues and billings. It is important to note that even in light of this transition, our on-prem customers continue to reflect the durability of our business as demonstrated with a Q2 support renewal rate of 95% among the highest we've ever experienced. Finally, other services revenues, which largely reflect our consulting business, were $21.4 million this quarter, a decrease of 2% year-over-year but an increase of 4% on a constant currency basis. We continue to see positive…

Thank you, Andrew. We have received a lot of good questions, so we are going to jump right into the questions. The first question is for Michael. Is the CEO succession a recent development, or that is something that had been in works for a while?

Okay. Can you hear me? Yes. The matter of CEO succession has been carefully considered and planned for at the Board level for many years. We believe in proactively developing our leadership team, and we realize the future of the firm is dependent upon our ability to cultivate successive generations of executives and promote from within. I had seven years of closely working with Phong on a day-to-day basis on IT projects, sales activities, on technology, on marketing, on services, on facilities, on finance initiatives. And the Board had seven years of experience with him because he was the CFO throughout that time, and he was closely involved with the Board every single quarter. When Phong was promoted to President of the company two years ago, I think it was pretty clear to company watchers that he was my era parent. So in summary, this is a decision seven years in the making when we finally got to the point that seemed right. It was an easy one to execute on.

Thank you, Michael. Next question is for Phong. What changes do you plan to make as a CEO?

Well, I think Mike stated, we've been working together for seven years now in my capacity as CFO on and off, two years as President. I think we're fairly aligned in how to run both an enterprise software company and very aligned, working very closely together in the last two years in our Bitcoin acquisition strategy. So, I would sort of see this as a business-as-usual transition, where we get to even further clarify our roles in the organization, with our employees, with customers, with partners, with shareholders in the media, and I don't have any significant changes planned. Probably the biggest changes that we've observed is really Andrew's arrival two months ago and him now running the finance organization very credibly. And professionally, it gives me more time to run the company and gives Mike more time to focus on corporate strategy, innovation and the Bitcoin strategy.

Thanks, Phong. Next question is for Andrew. Do you anticipate any further capital markets activity and what is your long-term debt strategy?

Thank you for the question, Shirish. I believe the company has executed so far in a very prudent and well thought out capital structure framework. Really since 2020 and it has been extremely successful, as evidenced earlier, when Mike explained our stock performance over the last year compared to our comps. Our approach to debt or equity will remain the same as it has. We will continue to evaluate access to the markets that are most accretive, and we will look to obtain the most premium for dollars generated. That being said, right now in the current market, we are continuing to evaluate all the various opportunities and really have the luxury of continuing to be thoughtful on any future balance sheet execution. So, for the moment we're a bit of evaluate wait and see, but I can assure you that whatever we do in the future, we will continue to do so in a prudent and safe manner.

Thanks, Andrew. Next question is for Phong. Phong congratulations on your promotion to CEO. Can you talk about your growth outlook for the software business for the second half of this year? There are significant macro crosswinds flowing, how do you expect this to impact the growth rate of your license and subscription billings in the second half?

Thanks, Shirish. It's a good question. We were able to -- in my opinion withstand some of these macroeconomic challenges in the second quarter, as you saw, primarily by growing in the cloud. I think the second half, we'll see more macroeconomic changes, challenges, the strong dollar, unpredictability the War in Ukraine, etcetera. So, I think there will be more challenges. Our intent is to try to continue to grow. I think cloud will help us. As you all know, and as I and Andrew explained, growing in the cloud does have a short-term negative impact on product license revenue and also has a short-term negative impact on total revenue. So that will create probably more distraction in our revenues than the macroeconomic challenges. But I think we'll be able to continue to grow. I'm optimistic about it. That said, we're going to be prudent and thoughtful. We're not going to get out ahead of our skis on cost. And we'll see how the business continues. But things have been going fairly well when we see macroeconomic challenges, given our sort of -- given our strength in enterprise analytics and embedded analytics in the cloud and we'll be cautious but optimistic in the second half.

Next question is for Michael. Has the recent Bitcoin price volatility accompanied with large accounting adjustment impacted your view on your Bitcoin strategy going forward?

Yes, it's a great question. We anticipated bitcoin volatility and we understood the accounting implications when we embarked on our Bitcoin strategy. I view both of these as competitive advantages for our firm. The volatility means that, A, bitcoin is more interesting than less volatile assets. And B, MicroStrategy is more interesting than companies holding less volatile assets. The phrase that comes to mind is volatility is vitality. We believe one of the reasons Bitcoin is the best-performing asset class of the last decade is because the volatility attracts interest, capital trading, it creates opportunities -- it's very special. Our firm visibility has been increased by 1 to 2 orders of magnitude since we embarked on our Bitcoin strategy. And interest in our securities has also increased by 1 to 2 orders of magnitude. We don't have to try to convince companies to want to cover our stock and explain why we're unique? They're hearing from lots and lots of other channels that were unique and the fact that Bitcoin is volatile means that, on the weekend, Bitcoin spikes up 20% or 10% then our stock might be mispriced and all of a sudden, there's someone that's thinking about it and obsessing about what to do on Monday morning and maybe the opposite. And the fact that they're obsessing means they have to discover us, and they notice us. And when they notice us, they started asking questions, what does MicroStrategy do? Oh, software, Tell me more about that. So, every CFO, CEO, CXOs, the C-suite, they've heard of us, the media they've heard of us. Traders have an economic incentive to invest in MicroStrategy. And I used to joke with people. If you like Bitcoin, then you'll like us. But if you hate Bitcoin, you'll still like us, because…

And Phong, would you like to add any further color?

No, I think Mike said it very well.

Great. Next question is also for Michael. How should investors evaluate the new executive work structure? Are there any tangible benefits from it that will become evident over time, for example, a further development of the digital asset strategy beyond Bitcoin holding?

Well, I think the executive structure is going to be a benefit to all of us. First of all, we're actually expanding the management team with the addition of Andrew. And that gives us a full-time finance executive, and as you know, our balance sheet has grown with our debt offerings and our ability to issue equity and the explosion of our enterprise value from $666 million to $5.5 billion, means that the finance function has become a full-time job in its own. And so Andrew has arrived and brought some new skills with him, but also Andrew has made it possible for us to promote Phong to President and Chief Executive Officer, and Phong is just an incredibly gifted operating executive and with the support of Andrew and with the CEO role and the unambiguous power that comes with it, Phong will be more effective and able to move more efficiently and drive the corporate mission. And I feel comfortable with Phong and Andrew in place as well as with the -- we haven't mentioned the rest of the executive team, but we have an awesome CXO team, right, our Head of Technology, our Head of IT, our Head of Consulting, our Head of Sales, right? And our Head of Marketing, they're the unsung heroes that aren't on this call right now. But that team is just very accomplished, very stable. And this new executive structure means that I can even more enthusiastically focus upon communications and strategy and Bitcoin advocacy and evangelism knowing that I'm not ignoring the nuts and bolts day-to-day operations of the business, of which there’s 100,000 things you have to do well every year in a software company, and they need to get done, and they will get done. But the world of Bitcoin is exploding. And everywhere in the world, people are interested in how they plug into this network, and how can MicroStrategy integrate with them? And so that's a job that's actually growing in scope. So I feel like I'll be more effective, Phong will be more effective. Andrew's welcome addition. It’s just a win-win-win.

Thanks, Michael. Next question is for Phong. Given the macroeconomic risk, can you update us on how you think about balancing revenue growth versus margin expansion?

We're focused on growing the revenue. I think we have the right cost structure in place to do it. So I don't believe we need to sacrifice revenue growth by reducing if we were to reduce our costs, I think we can continue to grow at the current cost structure. And I think that will also start to result in margin expansion. So they're not direct trade-offs in my opinion.

Another one for Phong. So good to see growth in core software, can you give us an idea on where we stand now in mix between license and SaaS? When might we expect to see SaaS growth begin to move the growth needle more materially?

Yeah. On a recognized revenue basis, our cloud subscription revenue is about 15% of our recurring revenue. On a billings basis, it's about 20%. So we haven't reached that an inflection point where our SaaS business gets to, I would say, north of 40%, whereas we continue to grow, it's fully accretive to revenue in the short-term. Right now it's accretive to revenue in the long-term, but not quite the short-term. So I think we have some time left. Obviously, all of you -- many of you have seen companies go from a perpetual license to a subscription revenue transition in the past. And I think you're familiar with that short-term dip in product license revenue and its impact on total revenue, and how that comes out on the other end with an acceleration of revenue. So we're going through right now -- there's high demand for cloud, which is exciting. Our customers understand the value proposition. Our marketers understand how to explain. Our salespeople understand how to sell it. And we are learning better-and-better how to operate at scale. So it's, I would say, full speed ahead with the cloud transition.

Thank you. Next question is for Andrew. Would you like to elaborate further on managing expenses in the second half of 2022?

Sure. I think tagging on to what Phong said earlier, our cost structure is very stable. And I think that's the benefit of being a long-standing company in business for over 30 years. And we haven't had this massive growth in head count. Head count has been very stable. We haven't over hired as we've seen many in the market do recently. So I think from a cost perspective, we will continue to focus on areas that are accretive to profitability. We'll look to be opportunistic where we can on bringing in new talent, in fact, around key areas like tech and cloud and sales. And we'll really scrutinize the other costs that we think we can be more efficient. And I've got the benefit of coming in and getting to ask a lot of new questions on certain expenses and costs. And so I think that will be helpful and understanding where we can be more efficient. But ultimately, I think we're going to be opportunistic and spend in areas that will help our business grow.

Thanks, Andrew. We'll just take one last question for Phong here. On the demand environment, what are you seeing in the demand environment for BI software, on the uncertainty on macro? And what is your demand outlook for the rest of 2022? And have any deal cycles elongated, or any view from customers on their, spend?

Yeah. Thanks, Shirish. I do think we're seeing choppier demand, elongated deal cycles more challenges in our selling environment, especially in international. All that said, as I mentioned before, if we can push through and execute, leverage our expertise in enterprise analytics, the fact that we build applications that large enterprises rely on, especially in turbulent times and leverage our cloud transition, I think we can work through this and grow in the second half and in the future. But there's certainly more volatility, we have to be better at execution. We have to be more precise in managing our pipeline, and our sales cycles, and our opportunities, and our customer engagements, and our conversations. So look, it requires better execution in these types of times. And this is what we're good at. We're a company that has great product, great strategy and great execution. So it's hard, but we'll work through it.

Great. So we are at the end of time for today's call. Thank you, everyone, for the questions. This concludes the Q&A portion of the webinar. I will now turn the call over to Michael for closing remarks.

I want to thank everybody for your support, and Phong, Andrew, Shirish and I will all look forward to seeing you again in 12 weeks, and we wish you a happy summer. Have a good day.