Hello, everyone, and good evening. I'm Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I'll be your moderator for MicroStrategy's 2023 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 at microstrategy.com. I would like to now welcome you all to today's webinar and let you know that we will be taking questions during the Q&A 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, Phong Le will cover the business results for the second quarter of 2023. Second, Andrew Kang will cover the financial results for the second quarter of 2023. Then, Michael Saylor will provide a strategic review and discuss the recent bitcoin market updates. And lastly, we will open up to Q&A. With that, I'll turn the call over to Phong Le, President and CEO of MicroStrategy. Phong?

Thank you, Shirish. Hello, everyone. I'd like to welcome all of you to today's webinar, and I'll start with the highlights of our software business. Our total revenue results in the second quarter of 2023 were mixed with challenges in product license revenue, balanced by strength in our cloud business. Revenues were primarily impacted by an uncertain macroeconomic environment leading to longer and delayed sales cycles. Growth in our recurring revenue illustrates the durability of our enterprise-grade platform and continued traction in cloud. We also saw continued strong profitability as we thoughtfully manage our cost structure. Total revenue was $120.4 million, representing a decrease of 1% year-over-year or flat on a constant-currency basis. Total software license revenues, which consist of total product licenses and subscription services revenues were $35.4 million, representing an increase of 4% year-over-year or 7% on a constant-currency basis. Total software license revenue performance benefited from increased adoption of our cloud platform, which was partially offset by a decrease in product license revenues. Total subscription services revenue was $19.9 million, an increase of 42% year-over-year or 44% on a constant-currency basis. And our Q2 subscription billings growth was 15% year-over-year. Even though difficult macroeconomic conditions continue to persist and may continue to impact our revenue in the coming quarters, MicroStrategy continues to invest in and focus on innovation, and I'm excited to tell you more about our product developments. At our MicroStrategy World User Conference held in person in May 2023, we highlighted and introduced MicroStrategy1, our enterprise AI/BI platform. In our keynote address, we highlighted how some of the biggest brands in the world, including organizations like Hilton Hotels, Amica Insurance, and Sony Interactive Entertainment leverage the power and unified capabilities of MicroStrategy to transform how they operate and succeed amidst fierce competition. With an eye…

Thank you, Phong. I'll start by recapping some of the key GAAP financial results for the quarter. GAAP total revenues for Q2 were $120.4 million, down $1.7 million or 1% year-over-year and flat year-over-year at constant currency. Total software license revenues, which consist of product license revenues and subscription services revenues were $35.4 million, up 4% year-over-year and up 7% at constant currency. Subscription service revenues which reflect recurring revenues from our cloud business were $19.9 million, an increase of 42% year-over-year or an increase of 44% at constant currency. Product license revenues were $15.5 million for the quarter, down 23% year-over-year or down 20% at constant currency. While we saw some ongoing headwinds from the overall challenging macroenvironment this past quarter, our results continue to reflect the expected decline in product license revenues as we transition our BI business to the cloud. We expect the mix of this revenue will continue to shift from product license to subscription services as we transition the platform over time. Product support revenues were $66.1 million, down 1% year-over-year and down 1% in constant currency. Customer renewal rates were 93% for the quarter and remained above 90% for the sixth consecutive quarter continuing to demonstrate the durability of our customer base even with a tough macroeconomic backdrop. Lastly, other services revenues were $18.9 million or 12% decrease year-over-year or 11% at constant currency, primarily due to lower consulting revenues. While we have seen higher average build rates worldwide, we did experience lower customer demand for consulting services in the quarter. However, we do expect consulting engagements to normalize in the second half of the year. On Slide 16, total current software license billings were $39.1 million in the second quarter, a slight decrease of 2% year-over-year. Current subscription billings were $23.1 million, an…

Thank you, Andrew. I'd like to take this time to review our corporate strategy with regard to bitcoin and then talk about our going forward strategy. So first, I thought it would be appropriate to do a review of the results of our strategy since August 10, 2020. We're nine days away from the three-year anniversary of us embarking on a bitcoin strategy. And I think it's very significant because August was the doldrums of the summer in 2020 when we were just a few months post-COVID and the entire world was thinking about how to react to these unprecedented times. We started out with a thought how does one preserve wealth in the face of what is likely to be monetary inflation? And as you all recall, interest rates were 0% there, lots of stocks had adjusted, lots of assets were moving around. If we look at the chart in front of us, what you'll see is, the S&P 500 appreciated 37% since then. So, call it, on average about 12% a year for the three years and Nasdaq underperformed the S&P, but 37% is really the hurdle rate for wealth preservation. If you underperform 37%, then presumably you're destroying shareholder value and you're destroying wealth, and if you can outperform the 37%, you're creating wealth. So as we look at these various asset classes, we can see that bitcoin is the winner of the asset class, almost 4 times what the S&P 500 did. So bitcoin performed 100 -- returned 145% in that three-year timeframe. So that's a pretty stunning performance really, in fact, bitcoin's performance outdoes every other asset class and every big tech stock and every enterprise software stock. And so, of course, bitcoin is the most thermodynamically sound asset and our thesis has always been…

Great. Thank you, Michael. We're going to jump right into questions and the first question is for Michael. Bow would a spot ETF impact your strategy of serving as a vehicle to gain exposure to bitcoin? And how would an approval or rejection of a spot ETF impact MicroStrategy?

I think the big milestones for institutional adoption of bitcoin over the next year will be: one, fair value accounting; two, the spot ETF; three, the having; four, any particular regulatory rules that come out of Washington DC. So we're waiting for all of those. The spot ETF isn't -- approval isn't necessary for us to continue to be successful. I think in general, there is a class of investors like, let's say, a sovereign wealth fund. If they want to buy $1 billion of bitcoin in a week or billions of dollars of bitcoin and win 10 or 100 of them all want to do it, they're going to need the spot ETFs because MicroStrategy doesn't have the room in our capital structure for someone to buy that much of our stock. So, I think that the spot ETFs will expand the entire asset class dramatically, it will be -- it will create a very convenient path for mass adoption of retail and mass adoption of institutional investors and mass adoption of sovereign wealth and the like. It solves the -- I think Larry Fink made the point on CNBC, he said, it will drive the fees down by a factor of 10 to 100 like the trade -- the acquisition fees. It solves the problem of, do I need to start a new account with the crypto exchange or can I just call up my existing banker -- banking relationship my existing wealth manager or existing broker. So it's going to smooth access to many, many types of investors. It's going to democratize access, it's going to allow size that now, currently the market doesn't allow this kind of size, because the futures ETFs and the futures market is not an effective vehicle, it's not deep enough and broad enough to allow someone to take on many, many billions of dollars of exposure without paying a 10% or 20% annualized fee or more and no rational investor is going to do that for any material amount of time. So I think, it will be good. I do believe at some point, we'll have spot ETFs. I just can't tell you when they will arrive. And when they do arrive, MicroStrategy will still be differentiated as a particular bitcoin operating strategy. But the spot ETFs will serve another set of customers in a synergistic fashion to grow the entire asset class.

Thanks, Mike. So we might be having some technical difficulties from Shirish. So I'll maybe ask the next question for Phong. Phong, how should we be thinking about the AI partnership with Microsoft and its monetization? Are you expecting any kind of incremental boost from that in 2023 or is it more of a 2024 growth driver.

Thanks, Andrew. First, I'm pretty excited about our AI capabilities that we're bringing to market in Q3, so in September. And part of the capabilities will include a new product or a new skew, if you will, that will sell separately from our existing BI platform and sort of on-top of that. So I do anticipate some incremental revenue, whether it comes in Q4, whether it comes in 2024, I think time will tell as to how quickly the market is willing to adopt and pay for AI capabilities. I do think there's a couple of things that we're doing that's pretty unique from the rest of the BI market, if you will. One is, we're directly embedding open AI into the MicroStrategy Platform, which means you do not need to go and have a separate Microsoft agreement or separate open AI agreement, it will be fully embedded in the MicroStrategy Platform. And second, as you mentioned, we're going to [indiscernible] and partnering in directly with Microsoft, which there are lot of companies who are trying to build their own AI capabilities or use a different platform that's inferior at this point in time to open AI. So I think what we're going to rollout is quite differentiated. And I'm excited about the revenue opportunity that will bring.

Thanks Phong. Next question is for Andrew. We are projecting the company to improve its cash position in 2023 and beyond. Bearing in mind the company's strategy to purchase bitcoins with excess cash above working capital needs, is there a minimum cash balance that the company targets and what is a reasonable number to anchor to?

I'd say just to comment on kind of our treasury reserve policy or how we think about cash. Our goal is to always be as efficient as possible with our cash and then really minimize any excess cash in the business. This since we operate globally we ensure we maintain adequate cash in each region and country. We operate in and we manage cash and in the U.S., primarily to take into account, meaning, working capital needs, as well as our debt interest payments needs as well. I'd say, probably anywhere between $40 million based on the calendar to maybe as high as $50 million probably is a little bit high, but I think about those ranges being kind of where we think working capital needs are. That being said, sometimes you will see cash balances that are slightly higher as we build towards working capital needs and sometimes you will see them lower when we're operating efficiently as possible. So, hopefully that answers the question.

Thanks, Andrew. So thanks everyone for your questions. We received a lot of good questions. But [indiscernible] the top of our time for today. So we will be available offline for any other questions, but this concludes the Q&A portion of the webinar and I will now turn the call over to Phong for final closing remarks.

Thanks. Shirish, and. I want to thank everyone for being with us today and we appreciate your support. We're as enthusiastic as ever with both of our strategies, our enterprise software strategy and our bitcoin strategy and we wish everyone a good quarter and good rest of your summer and look-forward to seeing you again in 12 weeks. Thank you.