Good evening, everyone. I'm Jeremy Price, MicroStrategy's Senior Vice President of Financial Planning and Analysis and Head of Investor Relations. I'll be your moderator for MicroStrategy's 2021 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 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.

Thank you, Jeremy. 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 second 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 is going to provide an update on our operations and finance for the quarter.

Thank you, Michael. I'll start with some highlights from our second quarter performance. MicroStrategy performed well across the Board, demonstrating continued momentum in our business analytics software business, while also completing another successful capital raise that expanded our digital asset holdings. We built upon our strong first quarter performance and now delivered to the strongest quarters of operational performance in years. We are pleased with the strength and consistency of our execution as we continue to benefit from the numerous product introductions we've made since 2019 and the operational changes we undertook in the first half of 2020. Total revenue in the quarter grew 13% year-over-year or 10% on a constant currency basis and it was up 6% versus Q2 2019, which is our strongest Q2 quarterly performance in six years. Our cloud offerings continue to gain traction for both new and existing customers. While we once again, got some benefit from our favorable comparison against the COVID-19 impacts during Q2 2020, our performance shows clear momentum across our entire business. License revenue grew 50% year-over-year, but more impressively grew 10% versus the second quarter of 2019. Subscription revenue in the quarter was up 29% compared to Q2 2020. Current subscription billings grew 13%, our fifth straight quarter of double-digit growth. Our Q2 subscription billings were impacted by a decrease in short-term deferred subscription revenue as we no longer include contract values that are invoiced in the future. Without this decrease, Q2 subscription billings would have grown 42%.

Thanks, Phong. Well, I'd just like to start by reiterating the company has two strategies. The MicroStrategy software mission is to make every enterprise the more intelligent enterprise via our business intelligence software platform. And our strategy with regard to – and plan with regard to that is make all of our functionality available on demand via the cloud, make it easier for all of our customers to upgrade to the cloud and then make our business intelligence software faster, better, smarter, stronger. And we were well positioned to do that because that's our singular operational focus. With the exception of just a few people in legal and finance, the entire company is focused upon enterprise business intelligence. That is our MicroStrategy. Where the second strategy, as you know, a MacroStrategy, and our MacroStrategy is to acquire and to hold Bitcoin. Our plan with regard to that, of course, is to continue to acquire Bitcoin, continue to hold Bitcoin. It's a very straightforward strategy. Along the way, we'll be educating the world with regard to the benefits of digital property. We'll advocate Bitcoin and the benefits of the technology to corporations like ourselves to institutional investors will help explain Bitcoin to regulators, to the public, to the media and that will keep us busy, I believe. So MicroStrategy, MacroStrategy. Pursuant to our MacroStrategy, this quarter, we did complete that $500 million senior secured debt offering. That was a big deal. We are very excited about it because it was a seven-year senior note. It's bearing interest at 6% and 18% interest. We thought that was a very favorable interest rate for a very favorable timeframe. We were able to purchase 13,005 Bitcoin using the proceeds of that debt offering and we did that around $37,617 Bitcoin. We thought that was…

Thank you, Michael. We're going to jump right into questions. And so the first question is for Phong. First, congratulations on the great quarter. Have you seen any changes in the competitive landscape and what impact do you expect the consolidation of BI and visualization tools will have on your business in the coming years? You are on mute, Phong.

Sorry. Rookie Move, I was on mute there. Thanks Jeremy. It's a good question. So thanks, we did have a really good quarter, we’re excited about it. And I do think the changes in the competitive landscape are part of what's impacting the quarter. I mentioned a few of them, Mike mentioned a few others, some are the really large legacy BI vendors, SAP's BusinessObjects, IBM's Cognos, Oracle's OBIEE. We all know those companies are really focused on transitioning their own businesses to the cloud, competing with Google and competing with AWS and Azure, and they've de-invested in their BI platforms. So we're seeing an increasing pace of the inquiry and execution and migration off of those legacy BI platforms. And in the case the companies are looking to do that, especially large enterprises were the logical answer because they're looking for a full scale enterprise platform. That's what those Cognos, SAP BusinessObjects are. And so that bodes well for us. The other thing that we're seeing on the lower end is, is some of the newer entrance into BI in the last five years that have very niche solutions, and we're not well-capitalized, starting to get weaker in the last three years and especially with COVID and pressures on capital structure, we saw them get even weaker and either get bought, or start to wither. And in that case, we weren't competing with them directly. But we were competing with their mining share, right? And so with fewer players and with more consolidation, it tends to be a good thing for us. We saw this cycle in 2008 and we came out of that very strong and growing. And I think we're seeing something similar now. So as long as we stay focused on our customer and focus on our product, I think we can continue to grow based on some of those trends that we're seeing. And over the next few years if the trends continue, that’s good for MicroStrategy.

Thanks, Phong. All right. The next couple of questions, we'll turn to Michael. The digital asset environment continues to evolve rapidly. So couple of questions. First, wondering if you have a thought about diversifying across other digital assets just as Ethereum instead of staying focused on Bitcoin?

Our strategy is to focus upon Bitcoin. We think the Bitcoin is digital property and digital property in our opinion is the most compelling technical opportunity of the decade. Digital property means that 8 billion people with a mobile phone can carry their property around in a mobile phone. Digital property is a trillion dollar opportunity for Apple, for Google, for Facebook, right, for Amazon. Digital property is the solution to the cybersecurity problem and the trust problem across billions and billions of people. Digital property is going to allow 100 million companies to trade with each other on an open protocol at the speed of light. And so Bitcoin is that is a compelling solution if not the compelling solution. The other crypto assets and digital assets have their own places. After digital property, you've got digital currency, but digital currencies aren't really an investment strategy. They're really just a medium of exchange in the crypto universe. So holding digital currency is just like holding U.S. dollars, it’s not a strategy for investment. Then you have digital platforms like Ethereum and you have digital applications like the decentralized exchange Uniswap something on top of Ethereum. Those are different businesses. But they are in essence businesses that have to compete in a market and you have to consider. The digital currencies are competing against existing currencies. The platforms – the decentralized platforms are competing against centralized platforms. The decentralized applications are competing against centralized applications. When I look at all those, I think there's competitive risk, there's technical risk, there's regulatory risk. There's a lot of uncertainty. There's a lot of moving parts and they're completely different businesses. So just because one is involved in Bitcoin doesn't mean that it makes sense to consider the other crypto assets. So we…

Thanks Mike. And one quick follow-up on that one. Clearly with the financing in Q2, we're exploring the inherent value of Bitcoin on the balance sheet, but this person is wondering if you have any updates on how further to use the balance sheet to drive either core business – the core business, or help drive the strategy to build our digital asset balance?

Yes. Well, our view with regard to future balance sheet decisions is we'll take into account market considerations and then we'll look for accretive opportunities that are in the interest of our shareholders. And from time-to-time, we'll find those opportunities.

Thank you, Michael. And Phong, next question is for you. Why didn't the company issue the 1 billion in equity and buy more Bitcoin?

Yes. So as I think we're referring to here, we issued – put-out-of-shelf to be able to issue $1 billion in equity. And we put that out in September 14, which is right the day before quiet period begins, which is September 15. And during that period, until our next open period, we're not able to issue shares in the market.

And then one more for you Phong. Subscription revenue growth seems rather modest especially with continued higher mix in SaaS solutions. How do you feel this is trending against your expectations and around the dozen or so new hyper customers that are net new or expansion from current customers?

Yes. So subscription revenues grew 29% year-over-year, which we were pretty pleased with. I think maybe what you're referring to here is subscription billings, which grew 13%, that’s five straight quarters of double-digit growth, but it is a decline versus previous quarters. The primary reason for that is in Q2, we no longer include contract values that are invoiced in the future where we had done that in the past. If we had done the same thing we had in previous quarters, we would have seen subscription billings growth of 42%. And it's a bit of a toss up there, different ways to do that. We thought this would be more conservative on a go-forward basis. So if you sort of normalize it, the 42% subscription billings growth was quite strong and going forward, I think we'll see that level of subscription billings growth. We still see quite a bit of growth in the cloud business overall.

Thank you, Phong. Michael, back to you. Can you walk through some of the factors you consider when determining future debt or equity raises to purchase Bitcoin? And how much room does the business have to raise additional debt or equity to fund Bitcoin purchases? And will MicroStrategy evaluate lending Bitcoin for yield?

We look at a lot of different factors. We look at the market in Bitcoin. We look at the price of Bitcoin. We look at the trading patterns. We look at the history. We look at the outlook. We look at the debt markets. We consider fixed income debt markets and both the liquidity available in those markets and also the outlook for those markets and general interest rates and spreads. We look at the convert markets and the trading and the convert markets and the outlook of those markets. We look at our own equity markets and the general software equity markets and the way that our own stock is traded. And we look at the futures and the options market for our stock. We look at the futures markets and the derivatives markets for Bitcoin. We consider all of the history. We try to compile all of the information at our disposal. We think about the outlook for our core business. We look at the technology trends with regard to Bitcoin and how it's being integrated. We look at the macroeconomic trends. What's going on with the macro economy? What's going on in the general market? We look at institutional adoption of Bitcoin and institutional views. We look at the status of the Bitcoin mining industry, and also the degree of maturity of Bitcoin mining. And as Bitcoin miners come public, they're getting better capitalized. And as billions of dollars flow into the Bitcoin mining network, then that capital is going to change the stock to flow ratio a Bitcoin is also – every single dollar that a Bitcoin miner raises may in fact be a dollar that flows into huddling Bitcoin. So we try to assess that and the overall regulatory environment, and then the FUD that's in our rear view mirror and the FUD that we may think will be in our forward mirror. And after we consider all of those things, we asked the question, is there an accretive activity that we can take. And sometimes the accretive activity would be to buy stock. In August of last year, we announced that we’re going to buy our stock back to buy Bitcoin. That was a Dutch auction. And sometimes the accretive activity is to convert existing treasury cash. And sometimes the accretive activity is to sell convertible debt. We'd done that twice. Sometimes the accretive activity is to sell senior secured debt. And from time to time, the accretive activity maybe to sell equity, and that really just depends. So those are all – that's a subset of the factors we consider. So you can be sure that we're thinking about it all the time in order to make sure that we act appropriately.

Thank you, Michael. Phong, next question for you. Can you explain the rationale behind creating a separate entity to huddle your Bitcoin?

Yes. So we created MacroStrategy LLC, and other than it being a cool name and we wanted to make sure we had ownership of that. The primary reason was when we issued our secured notes, it was secured against our BI business. So we did not need to use our 92,079 Bitcoin that we had at that point in time to secure the debt. And so we created a separate entity for those 92,079 Bitcoin as separate to our BI business. So that was the primary reason we set it up.

And Mike, looking out over the next one to two years, do you expect institutional adoption to be largely led by founder-led tech savvy companies? Or do you expect companies and other industries with a more diverse set of owners to begin adopting cryptocurrency? And what do you think are the next catalyst to drive that broader adoption?

I see institutional adoption coming from macro hedge funds that actually would have bought gold or whatever invested in hard assets or commodities. Now that a Bitcoin is getting on their radar as digital property and the Apex digital commodity and now they've got like a multi-year track record of Bitcoin outperforming gold. I think that there's a lot of money that's going to flow from gold funds and investment funds into digital gold that is Bitcoin. I think that you're seeing a lot of family offices, high net worth individuals that are private having private money, they're starting to see Bitcoin as an interesting investment because it's a generational wealth preservation strategy. If I'm investing to give money to my grandchildren, then I need a very long duration asset. They're operating out of the public eye, but I hear through my back channels, a lot of that activity going on. I think Goldman Sachs did a survey that was published about a week ago, where they indicated there was a lot of interest in Bitcoin from family offices. I think that in terms of public companies, the public companies that you will see embracing Bitcoin most enthusiastically will certainly be the founder-led technology companies because they have charismatic founders that are risk takers that understand technical nuance. The companies that disrupted digital music, digital video, digital movies, digital books, digital maps, digital retail, they had to think differently. And if you think different, then once you start thinking different about property and it clicks in your mind, a Bitcoin is digital property, then you go from not understanding it to understanding it. And then there's oh crap moment, where you realize that not only do you understand it, but if you don't embrace it and your competitor embraces it,…

Thanks, Michael. We are out of time, so I'm going to turn it back to you for closing remarks. Michael, closing remarks from you.

Yes. Okay. I want to thank everybody for being with us for our Q2 2021 financial results webinar. We appreciate your support. To all of our shareholders, we couldn't do without you. And I will look forward to speaking with all of you again in three months. So until then take care.