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One strategy is to acquire and hold bitcoin and the other strategy is to grow our enterprise analytics software business.
−Removed: We believe a key differentiator of MicroStrategy is our two, interdependent corporate strategies in the operation of our business.
−Removed: In the first quarter of 2021, we determined to pursue as part of our overall corporate strategy, a strategy of acquiring bitcoin with our liquid assets that exceed working capital requirements, and from time to time, subject to market conditions, issuing debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase bitcoin.
+Added: We believe that undertaking these two, interdependent corporate strategies serves as a key differentiator for our business, as our bitcoin acquisition strategy has raised our profile with potential software customers while our enterprise analytics software business has provided stable cash flows that allow us to acquire and hold bitcoin for the long-term.
+Added: Our bitcoin acquisition strategy involves acquiring bitcoin with our liquid assets that exceed working capital requirements, and from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.
+Added: As part of our bitcoin acquisition strategy, we also periodically engage in activities to educate the market regarding bitcoin.
+Added: We view our bitcoin holdings as long-term holdings, and we do not plan to engage in regular trading of bitcoin and have not hedged or otherwise entered into derivative contracts with respect to our bitcoin holdings, though we may sell bitcoin in future periods as needed to generate cash for treasury management and other general corporate purposes.
+Added: We may consider entering into additional capital raising transactions that may be collateralized by our bitcoin holdings and may consider strategies to create income streams or otherwise generate funds using our bitcoin holdings, including lending bitcoin to creditworthy counterparties.
+Added: We have not set any specific target for the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional financings to purchase additional bitcoin.
We believe that bitcoin is attractive because it can serve as a store of value, supported by a robust and public open-source architecture, that is untethered to sovereign monetary policy and can therefore serve as a hedge against inflation.
We also believe that bitcoin offers additional opportunity for appreciation in value with increasing adoption due to its limited supply.
−Removed: Under this corporate strategy, we also periodically engage in activities to educate the market regarding bitcoin.
−Removed: We believe that our bitcoin acquisition strategy is complementary to our enterprise analytics software and services business, as we believe that our bitcoin and related activities in support of the bitcoin network enhance awareness of our brand and can provide opportunities to secure new customers for our analytics offerings.
+Added: We believe that our bitcoin acquisition strategy is complementary to our enterprise analytics software business, as we believe that our bitcoin and related activities in support of the bitcoin network enhance awareness of our brand and can provide opportunities to secure new customers for our analytics software offerings.
We are also exploring opportunities to apply bitcoin-related technologies such as blockchain analytics into our software offerings.
−Removed: We view our bitcoin holdings as long-term holdings, and we do not plan to engage in regular trading of bitcoin and have not hedged or otherwise entered into derivative contracts with respect to our bitcoin holdings, though we may sell bitcoin in future periods as needed to generate cash for treasury management and other general corporate purposes.
−Removed: We have not set any specific target for the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to conduct debt or equity financings to purchase additional bitcoin.
Our Bitcoin Acquisition Strategy
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bitcoin held by us, with bitcoin serving as the primary treasury reserve asset on an ongoing basis, subject to market conditions and anticipated needs of the business for Cash Assets.
−Removed: In the first quarter of 2021, we adopted, in addition to and in conjunction with our Treasury Reserve Policy, a corporate strategy of acquiring and holding bitcoin, and from time to time, subject to market conditions, issuing debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase bitcoin.
−Removed: On June 14, 2021, we entered into the Sale Agreement with Jefferies LLC, as agent, pursuant to which we may issue and sell shares of our class A common stock having an aggregate offering price of up to $1.0 billion from time to time through Jefferies.
−Removed: During the three months ended September 30, 2021 we issued and sold 555,179 shares of our class A common stock under the Sale Agreement, at an average gross price per share of approximately $727.64, for aggregate net proceeds (less $4.5 million in sales commissions and expenses) of approximately $399.5 million.
−Removed: We used the net proceeds of these sales to purchase additional bitcoin.
+Added: In the first quarter of 2021, we adopted, in addition to and in conjunction with our Treasury Reserve Policy, a corporate strategy of acquiring and holding bitcoin.
+Added: Pursuant to this corporate strategy, and from time to time, subject to market conditions, we issue debt or equity securities or engage in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.
+Added: During 2021 and 2022, we used the proceeds of the following capital raising transactions to purchase bitcoin .
+Added: The transactions are further described below under “—Liquidity and Capital Resources— Long-term Debt ” and under “Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Open Market Sale Agreement” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 :
+Added: $1.050 billion aggregate principal amount of the 2027 Convertible Notes issued in February 2021;
+Added: $500.0 million aggregate principal amount of the 2028 Secured Notes issued in June 2021;
+Added: 1,413,767 shares of class A common stock issued during the second half of 2021, for aggregate gross proceeds of $1.0 billion pursuant to an Open Market Sale Agreement (the “Open Market Sale Agreement”) with Jefferies LLC, as agent;
+Added: $205.0 million aggregate principal amount of the 2025 Secured Term Loan issued in March 2022.
+Added: As of March 31, 2022, we held an aggregate of approximately 129,218 bitcoins, with 14,109 bitcoins held directly by MicroStrategy Incorporated and 115,109 bitcoins held by MacroStrategy LLC, a wholly-owned subsidiary of MicroStrategy.
+Added: The approximately 14,109 bitcoins held directly by MicroStrategy Incorporated serve as part of the collateral securing our 2028 Secured Notes, and approximately 19,466 of the 115,109 bitcoins held by MacroStrategy serve as part of the collateral securing our 2025 Secured Term Loan.
The following table presents a rollforward of our bitcoin holdings, including additional information related to our bitcoin purchases and digital asset impairment losses within the respective periods.
We have not sold any of our bitcoin as of the date of this Quarterly Report.
−Removed: Source of Capital Used to Purchase Bitcoin
−Removed: Digital Asset Original Cost Basis
+Added: Capital Used to
+Added: Digital Asset
+Added: Original Cost
(in thousands)
−Removed: Digital Asset Impairment Losses
+Added: Digital Asset
(in thousands)
−Removed: Digital Asset Carrying Value
+Added: Digital Asset
+Added: Carrying Value
(in thousands)
−Removed: Approximate Number of
Bitcoins Held
−Removed: Approximate Average Purchase Price Per Bitcoin
−Removed: Balance at June 30, 2020
−Removed: Digital asset purchases
−Removed: Digital asset impairment losses
−Removed: Balance at September 30, 2020
−Removed: Digital asset purchases
−Removed: Digital asset impairment losses
+Added: Purchase Price
Balance at December 31, 2020
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Balance at September 30, 2021
−Removed: In the third quarter of 2020, we purchased bitcoin using excess cash, including cash from the liquidation of short-term investments.
−Removed: In the fourth quarter of 2020, we purchased bitcoin using $634.7 million in net proceeds from our issuance of the 2025 Convertible Notes and excess cash.
+Added: Digital asset purchases
+Added: Digital asset impairment losses
+Added: Balance at December 31, 2021
+Added: Digital asset purchases
+Added: Digital asset impairment losses
+Added: Balance at March 31, 2022
In the first quarter of 2021, we purchased bitcoin using $1.026 billion in net proceeds from our issuance of the 2027 Convertible Notes and excess cash.
In the second quarter of 2021, we purchased bitcoin using $487.2 million in net proceeds from our issuance of the 2028 Secured Notes and excess cash.
−Removed: In the third quarter of 2021, we purchased bitcoin using $399.5 million in net proceeds from our sale of 555,179 shares of class A common stock offered under the Sale Agreement and excess cash.
−Removed: The following table shows the approximate number of bitcoins held at the end of each respective period, as well as market value calculations of our bitcoin holdings based on the lowest, highest, and ending market prices of one bitcoin on the Coinbase exchange (our principal market) for each respective quarter, as further defined below:
−Removed: Approximate Number of
−Removed: Bitcoins Held at End of Quarter
−Removed: Lowest Market Price Per Bitcoin During Quarter (f)
−Removed: Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price
−Removed: (in thousands) (g)
−Removed: Highest Market Price Per Bitcoin During Quarter (h)
−Removed: Market Value of Bitcoin Held at End of Quarter Using Highest Market Price
−Removed: (in thousands) (i)
−Removed: Market Price Per Bitcoin at End of Quarter (j)
−Removed: Market Value of Bitcoin Held at End of Quarter Using Ending Market Price (in thousands) (k)
−Removed: June 30, 2020
−Removed: September 30, 2020
+Added: In the third quarter of 2021, we purchased bitcoin using $399.5 million in net proceeds from our sale of 555,179 shares of class A common stock offered under the Open Market Sale Agreement and excess cash.
+Added: In the fourth quarter of 2021, we purchased bitcoin using $591.0 million in net proceeds from our sale of 858,588 shares of class A common stock offered under the Open Market Sale Agreement and excess cash.
+Added: In the first quarter of 2022, we purchased bitcoin using $190.5 million of the net proceeds from the issuance of the 2025 Secured Term Loan and excess cash.
+Added: The following table shows the approximate number of bitcoins held at the end of each respective period, as well as market value calculations of our bitcoin holdings based on the lowest, highest, and ending market prices of one bitcoin on the Coinbase exchange (our principal market for bitcoin) for each respective quarter, as further defined below:
+Added: Bitcoins Held
+Added: Held at End of
+Added: Quarter Using
+Added: (in thousands)
+Added: Held at End of
+Added: Quarter Using
+Added: (in thousands)
+Added: Per Bitcoin at
+Added: Held at End of
+Added: Quarter Using
+Added: (in thousands)
December 31, 2020
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September 30, 2021
+Added: December 31, 2021
+Added: March 31, 2022
The "Lowest Market Price Per Bitcoin During Quarter" represents the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our bitcoin.
−Removed: The "Market Value of Bitcoin Held Using Lowest Market Price" represents a mathematical calculation consisting of the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by us at the end of the applicable period.
+Added: The "Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price" represents a mathematical calculation consisting of the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins we held at the end of the applicable period.
The "Highest Market Price Per Bitcoin During Quarter" represents the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when we purchased any of our bitcoin.
−Removed: The "Market Value of Bitcoin Held Using Highest Market Price" represents a mathematical calculation consisting of the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by us at the end of the applicable period.
+Added: The "Market Value of Bitcoin Held at End of Quarter Using Highest Market Price" represents a mathematical calculation consisting of the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins we held at the end of the applicable period.
The "Market Price Per Bitcoin at End of Quarter" represents the market price of one bitcoin on the Coinbase exchange at 4:00 p.m.
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The "Market Value of Bitcoin Held at End of Quarter Using Ending Market Price" represents a mathematical calculation consisting of the market price of one bitcoin on the Coinbase exchange at 4:00 p.m.
−Removed: Eastern Time on the last day of the respective quarter multiplied by the number of bitcoins held by us at the end of the applicable period.
−Removed: The amounts reported as “Market Value” in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported on the Coinbase exchange (our principal market) in each scenario defined above multiplied by the number of bitcoins held by us at the end of the applicable period.
+Added: Eastern Time on the last day of the respective quarter multiplied by the number of bitcoins we held at the end of the applicable period.
+Added: The amounts reported as “Market Value” in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported on the Coinbase exchange (our principal market for bitcoin) in each scenario defined above multiplied by the number of bitcoins we held at the end of the applicable period.
The Securities and Exchange Commission has previously stated that there has not been a demonstration that (i) bitcoin and bitcoin markets are inherently resistant to manipulation or that the spot price of bitcoin may not be subject to fraud and manipulation;
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Accordingly, the Market Value amounts reported above may not accurately represent fair market value, and the actual fair market value of our bitcoin may be different from such amounts and such deviation may be material.
−Removed: Moreover, (i) the bitcoin market historically has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, and various other risks that are, or may be, inherent in its entirely electronic, virtual form and decentralized network and (ii) we may not be able to sell our bitcoins at the Market Value amounts indicated above, at the market price as reported on the Coinbase exchange (our principal market) on the date of sale, or at all.
+Added: Moreover, (i) the bitcoin market historically has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, and various other risks that are, or may be, inherent in its entirely electronic, virtual form and decentralized network and (ii) we may not be able to sell our bitcoins at the Market Value amounts indicated above, at the market price as reported on the Coinbase exchange (our principal market for bitcoin) on the date of sale, or at all.
Our digital asset impairment losses have significantly contributed to our operating expenses and net loss.
−Removed: For the three months ended September 30, 2021, digital asset impairment losses of $65.2 million represented 42.0% of our operating expenses, compared to digital asset impairment losses of $44.2 million representing 35.1% of our operating expenses in the three months ended September 30, 2020, contributing to our net loss of $36.1 million for the three months ended September 30, 2021 compared to net loss of $14.2 million for the three months ended September 30, 2020.
−Removed: For the nine months ended September 30, 2021, digital asset impairment losses of $684.0 million represented 71.6% of our operating expenses, compared to $44.2 million in digital asset impairment losses representing 15.1% of our operating expenses in the nine months ended September 30, 2020, contributing to our net loss of $445.5 million for the nine months ended September 30, 2021 compared to net loss of $10.2 million for the nine months ended September 30, 2020.
−Removed: As of October 27, 2021, we held approximately 114,042 bitcoins that were acquired at an aggregate purchase price of $3.160 billion and an average purchase price of approximately $27,713 per bitcoin, inclusive of fees and expenses.
−Removed: As of October 27, 2021, at 4:00 p.m.
+Added: For the three months ended March 31, 2022, digital asset impairment losses of $170.1 million represented 64.5% of our operating expenses, contributing to our net loss of $130.8 million for the three months ended March 31, 2022, compared to digital asset impairment losses of $194.1 million in the three months ended March 31, 2021, representing 68.5% of our operating expenses and contributing to our net loss of $110.0 million for the three months ended March 31, 2021.
+Added: As of May 2, 2022, we held approximately 129,218 bitcoins that were acquired at an aggregate purchase price of $3.967 billion and an average purchase price of approximately $30,700 per bitcoin, inclusive of fees and expenses.
+Added: As of May 2, 2022, at 4:00 p.m.
Eastern Time, the market price of one bitcoin reported on the Coinbase exchange was $38,550.43.
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As a global leader in enterprise analytics software and services, our vision is to enable Intelligence Everywhere.
−Removed: Our core offering, MicroStrategy 2021 ™ , helps achieve this vision by delivering actionable intelligence and modern analytics on an open, comprehensive enterprise platform.
−Removed: MicroStrategy 2021 allows our customers to build high-performance, governed, and secure applications that can scale across their enterprises.
+Added: Our core offering, the MicroStrategy platform, helps achieve this vision for our enterprise customers around the world.
+Added: It delivers actionable intelligence and modern analytics on an open, comprehensive enterprise platform.
+Added: The MicroStrategy platform empowers our customers to quickly build and deploy high-performance, governed, and secure applications that can scale across their enterprises.
Our core product offering is our software platform.
−Removed: In December 2020, we released MicroStrategy 2021, the newest release of our flagship enterprise analytics platform, which provides customers with the following features:
−Removed: Modern Analytics:
−Removed: We offer a modern analytics experience by delivering insights across multiple devices to users via our HyperIntelligence ® products, visualization and reporting capabilities, mobility features, and custom applications developed on our platform.
−Removed: HyperIntelligence —Our platform improves business processes by providing cards with contextual intelligence, suggestions, and workflows directly within the websites, applications, and mobile devices that people rely on every day.
−Removed: For example, users can simply hover over a highlighted word on a website to instantly bring up relevant, contextual insights on key data.
−Removed: Data Visualization and Reporting —Our platform uses Dossier ® , our self-service dashboarding tool, that provides users with the formatting, layout, and input controls they need to build beautiful analytics applications.
−Removed: Transformational Mobility —Our platform empowers the increasingly mobile workforce to make decisions and take action quickly on-the-go.
−Removed: It delivers more ways for organizations to quickly deploy mobile productivity apps for a variety of business functions and roles on any standard device.
−Removed: Custom Applications —Our platform enables users to create highly customized web and mobile applications using the Document tool.
+Added: In 2021, we moved to a monthly release cadence to enable the same functionality, security, and stability enhancements that we have historically delivered for our platform in annual releases, without the friction of a single, annual release.
+Added: Our platform features the following:
+Added: Pervasive, Modern Analytics:
+Added: MicroStrategy delivers insights across multiple clients and devices to users via our HyperIntelligence ® products, visualization and reporting capabilities, mobility features, and custom applications developed on our platform.
+Added: Data Visualization and Reporting – Dossier ® , our dashboarding and data-visualization tool, provides users with the formatting, layout, and input controls needed to quickly build low-code/no-code analytics applications, from infographic-style reports to high-impact productivity applications.
+Added: Transformational Mobility – Our platform empowers the mobile workforce to make decisions and take action from any location.
+Added: It delivers more ways to quickly deploy mobile productivity apps for a variety of business functions and roles on any standard smartphone or tablet.
+Added: HyperIntelligence – Our platform offers the potential to radically improve business processes by enhancing the websites, applications, and mobile devices people use every day with contextual intelligence, next-action suggestions, and workflows.
+Added: Custom Applications – Our platform enables users to create highly customized web and mobile applications that leverage the full breadth of the MicroStrategy platform to deliver intuitive BI apps for teams, departments, and organizations.
Open, Federated Architecture:
−Removed: Our strategy is to embrace innovation and deliver the most open analytics platform on the market.
+Added: MicroStrategy embraces an agile approach to development and innovation, addressing our strategy of seeking to offer the most open analytics platform on the market.
Federated Analytics – Our platform provides analysts and data scientists with seamless access to trusted, governed data directly within their favorite tools.
−Removed: MicroStrategy 2021 includes integrations with Microsoft Excel, Power BI, and Tableau to provide users with the flexibility to leverage trusted data from MicroStrategy directly within the client applications they are accustomed to.
−Removed: MicroStrategy 2021 also provides integrations for Jupyter and R Studio to enable data scientists to connect to published MicroStrategy data, leverage it in their tools, and publish updated data back into MicroStrategy 2021—all without leaving Jupyter or R Studio.
−Removed: APIs and Gateways —Our gateways, application programming interfaces (“APIs”), and connectors enable MicroStrategy 2021 to integrate with the most popular enterprise platforms and tools.
−Removed: In addition to over 200 connectors to popular drivers and gateways to enterprise assets, we offer a comprehensive set of Representational State Transfer APIs that makes it easy to embed the platform in packaged and custom applications, workflows, and devices.
+Added: The MicroStrategy platform integrates with popular business apps, including Microsoft Excel, Power BI, and Tableau to provide users with the flexibility to leverage trusted data from MicroStrategy directly within the client applications to which they are accustomed.
+Added: The MicroStrategy platform also provides out-of-the-box integrations to popular data-science tools like Jupyter and RStudio, allowing users to develop predictive, machine learning-enhanced data models on top of the secure and trusted foundation offered by the MicroStrategy platform.
+Added: APIs and Gateways – Our gateways, application programming interfaces (“APIs”), and connectors enable the MicroStrategy platform to integrate with the most popular enterprise platforms and tools.
+Added: We certify more than 200 connectors to popular data sources both locally stored and in the cloud, and we offer a comprehensive set of Representational State Transfer (“REST”) APIs that makes it easy to embed the platform in packaged and custom applications, workflows, and devices.
Multiple Deployment Options – We also believe that customers should have the choice of where to deploy their analytics platform without compromising functionality.
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on premises, the customer’s cloud environment, or the MicroStrategy Cloud™ Environment (“MCE”).
−Removed: MCE is a cloud subscription service that allows customers to deploy the platform on Amazon Web Services (“AWS”) or Microsoft Azure environments hosted and managed by us.
+Added: MCE is a cloud subscription service that allows customers to deploy the platform on Amazon Web Services (“AWS”) or Microsoft Azure environments, fully managed and hosted by us.
Enterprise Platform:
−Removed: Our platform is designed to securely scale analytics across the enterprise.
−Removed: MicroStrategy 2021 has the tools that enable organizations to deliver secure, high-performance applications at scale.
+Added: Our platform is designed to securely scale analytics at high data volumes.
+Added: The MicroStrategy platform has the tools and functionality that enable organizations to deliver secure, high-performance applications at scale.
Enterprise Semantic Graph ™ – The engine of our platform is our proprietary Enterprise Semantic Graph, which provides a structured view of a company’s data assets by organizing them into understandable business terms.
Our Enterprise Semantic Graph also enriches metadata content with real-time location intelligence and content and system usage telemetry.
−Removed: The Enterprise Semantic Graph allows users to have a consistent and secure view across multiple data sources to deliver a single version of truth.
+Added: This feature allows users to have a consistent and secure view of data across the enterprise—effectively delivering what we refer to as a single version of truth .
Scalability – Our platform powers some of the largest business intelligence deployments in the world.
−Removed: Our platform is designed to scale efficiently to hundreds of thousands of users, with millions of personalized queries, across hundreds of applications, built on top of the largest datasets.
−Removed: Security — Our platform includes a comprehensive set of features for superior administration, security, and architecture, including role-based access to both row and column data.
−Removed: Our cloud environment also provides robust security delivered via annual certification, regular assessment, and proactive enhancements.
+Added: The platform is designed to scale efficiently to hundreds of thousands of users, with millions of personalized queries, across hundreds of applications, built on top of the largest datasets.
+Added: Security – Our platform includes a comprehensive set of features that provides superior administration, security, and architecture, including role-based access to both row and column data.
+Added: This level of data security gives our customers that are subject to the most stringent data security requirements, including financial institutions, healthcare providers, and government agencies, the confidence they need to deploy our platform across their enterprise.
Our customers include leading global organizations from a wide range of industries, including retail, consulting, technology, manufacturing, banking, insurance, finance, healthcare, telecommunications, as well as the public sector.
2 unchanged sentences
The COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption despite progress made in the development and distribution of vaccines.
−Removed: It has already disrupted global travel and supply chains and adversely impacted global commercial activity.
+Added: It has continued to disrupt global travel and supply chains and adversely impacted global commercial activity.
Considerable uncertainty still surrounds COVID-19, the evolution of its variants, its potential long-term economic effects, as well as the effectiveness of any responses taken by government authorities and businesses and of various efforts to inoculate the global population.
1 unchanged sentence
Significant uncertainty continues to exist concerning the impact of the COVID-19 pandemic on our customers’ and prospects’ business and operations in future periods.
−Removed: Although our total revenues for the three and nine months ended September 30, 2021 were not materially impacted by COVID-19, we believe our revenues may be negatively impacted in future periods until the effects of the pandemic have fully subsided and the current macroeconomic environment has substantially recovered.
+Added: Although our total revenues for the three months ended March 31, 2022 and 2021 were not materially impacted by COVID-19, our revenues may be negatively impacted in future periods until the effects of the pandemic and the efforts to address it have fully subsided and the current macroeconomic environment has substantially recovered.
The uncertainty related to COVID-19 may also result in increased volatility in the financial projections we use as the basis for estimates and assumptions used in our financial statements.
−Removed: We have adapted our operations to meet the challenges of this uncertain and rapidly evolving situation, including establishing remote working arrangements for our employees, limiting non-essential business travel, and cancelling or shifting our customer, employee, and industry events to a virtual-only format for the foreseeable future.
−Removed: We have received, and may continue to receive, government assistance from various relief packages available in countries where we operate.
−Removed: For example, in the United States, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020 to provide broad-based economic relief to various sectors of the U.S.
−Removed: economy through a variety of means, including payroll and income tax deferrals and employee retention credits.
−Removed: We deferred payment of $4.6 million of our employer portion of U.S.
−Removed: social security taxes accrued through December 31, 2020, half of which we expect to pay by December 31, 2021 and the remainder by December 31, 2022.
−Removed: Where taxes payable to government entities have been deferred to a later date, no reduction of expenses has been recorded.
+Added: We adapted our operations to meet the challenges of the pandemic, including establishing flexible working arrangements for our employees, reducing business travel, and shifting certain of our customer, employee, and industry events to virtual formats.
Effects of the COVID-19 pandemic that may negatively impact our business in future periods include, but are not limited to:
6 unchanged sentences
Operating Highlights
−Removed: The following table sets forth certain operating highlights (in thousands) for the three and nine months ended September 30, 2021 and 2020:
+Added: The following table sets forth certain operating highlights (in thousands) for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Product licenses
21 unchanged sentences
Many of our expenses, such as office leases and certain personnel costs, are relatively fixed.
−Removed: Accordingly, any shortfall in revenue in our software business may cause significant variation in our operating results.
+Added: Accordingly, any decrease in the price of bitcoin during any quarter, any sales by us of our bitcoin at prices above their then current carrying costs or any shortfall in revenue in our software business may cause significant variation in our operating results.
We therefore believe that quarter-to-quarter comparisons of our operating results may not be a good indication of our future performance.
−Removed: As of September 30, 2021, we had a total of 2,057 employees, of whom 787 were based in the United States and 1,270 were based internationally.
+Added: As of March 31, 2022, we had a total of 2,143 employees, of whom 775 were based in the United States and 1,368 were based internationally.
The following table summarizes employee headcount as of the dates indicated:
−Removed: September 30,
−Removed: September 30,
Subscription services
8 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Cost of subscription services revenues
6 unchanged sentences
Total share-based compensation expense
−Removed: As of September 30, 2021, we estimated that an aggregate of approximately $151.1 million of additional share-based compensation expense associated with the 2013 Equity Plan and the 2021 ESPP will be recognized over a remaining weighted average period of 3.3 years.
+Added: The $6.7 million increase in share-based compensation expense during the three months ended March 31, 2022, as compared to the same period in the prior year, is primarily due to the continued expansion of our equity award programs worldwide.
+Added: As of March 31, 2022, we estimated that an aggregate of approximately $201.0 million of additional share-based compensation expense associated with the 2013 Equity Plan and the 2021 ESPP will be recognized over a remaining weighted average period of 3.2 years.
Non-GAAP Financial Measures
−Removed: We are providing supplemental financial measures for (i) non-GAAP income from operations that excludes the impact of our share-based compensation expense and impairment losses and gains on sale from intangible assets, which include our digital assets, (ii) non-GAAP net income and non-GAAP diluted earnings per share that exclude the impact of our share-based compensation expense, impairment losses and gains on sale from intangible assets, which include our digital assets, interest expense arising from the amortization of debt issuance costs on our long-term debt, and related income tax effects, and (iii) certain non-GAAP constant currency revenues, cost of revenues, and operating expenses that exclude foreign currency exchange rate fluctuations.
−Removed: These supplemental financial measures are not measurements of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies.
+Added: We are providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of our share-based compensation expense, (ii) non-GAAP net loss and non-GAAP diluted loss per share that exclude the impact of our share-based compensation expense, interest expense arising from the amortization of debt issuance costs on our long-term debt, and related income tax effects, and (iii) certain non-GAAP constant currency revenues, cost of revenues, and operating expenses that exclude foreign currency exchange rate fluctuations.
+Added: These supplemental financial measures are not measurements of financial performance under
+Added: generally accepted accounting principles in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies.
Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions.
We believe that these non-GAAP financial measures are also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis.
−Removed: The first supplemental financial measure excludes ( i ) a significant non-cash expense that we believe is not reflective of our general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies and (ii) significant impairment losses and gains on sale from intangible assets, which include our bitcoin.
−Removed: The second set of supplemental financial measures excludes the impact of ( i ) share-based compensation expense , (ii) impairment losses and gains on sale from intangible assets, which include our bitcoin , (iii) non-cash interest expense arising from the amortization of debt issuance costs related to our long-term debt , and (iv) related income tax effects.
+Added: The first supplemental financial measure excludes a significant non-cash expense that we believe is not reflective of our general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies.
+Added: The second set of supplemental financial measures excludes the impact of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs related to our long-term debt, and (iii) related income tax effects.
The third set of supplemental financial measures excludes changes resulting from fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis.
We believe the use of these non-GAAP financial measures can also facilitate comparison of our operating results to those of our competitors.
−Removed: With respect to the exclusion of impairment losses on bitcoin in the first two supplemental financial measures, we also believe that adjusting our operating results to remove GAAP impairment losses aligns with our corporate strategy of acquiring and holding bitcoin because the impairment losses do not account for the subsequent increases in market value we have experienced while holding our bitcoin.
−Removed: In addition, in conjunction with other excluded items, the exclusion of impairment losses on bitcoin helps to provide greater transparency on the operating results from our enterprise analytics software business.
Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP.
1 unchanged sentence
Similarly, we expect that interest expense arising from the amortization of debt issuance costs will continue to be a recurring expense over the term of the long-term debt.
−Removed: We have also excluded impairment losses and gains on sale from intangible assets from the first two non-GAAP financial measures, either of which may occur in future periods as a result of our continued holdings of significant amounts of bitcoin.
Our non-GAAP financial measures are not meant to be considered in isolation and should be read only in conjunction with our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
We rely primarily on such Consolidated Financial Statements to understand, manage, and evaluate our business performance and use the non-GAAP financial measures only supplementally.
−Removed: The following is a reconciliation of our non-GAAP income from operations, which excludes the impact of (i) share-based compensation expense and (ii) impairment losses and gains on sale from intangible assets, which include our digital assets, to its most directly comparable GAAP measures (in thousands) for the periods indicated:
+Added: The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of share-based compensation expense, to its most directly comparable GAAP measures (in thousands) for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
−Removed: Reconciliation of non-GAAP income from operations:
+Added: Reconciliation of non-GAAP loss from operations:
Loss from operations
Share-based compensation expense
−Removed: Digital asset impairment losses
−Removed: Non-GAAP income from operations
−Removed: The following are reconciliations of our non-GAAP net income and non-GAAP diluted earnings per share, in each case excluding the impact of (i) share-based compensation expense (ii) impairment losses and gains on sale from intangible assets, which include our digital assets, (iii) interest expense arising from the amortization of debt issuance costs on our long-term debt, and (iv) related income tax effects to their most directly comparable GAAP measures (in thousands, except per share data) for the periods indicated:
+Added: Non-GAAP loss from operations
+Added: The following are reconciliations of our non-GAAP net loss and non-GAAP diluted loss per share, in each case excluding the impact of (i) share-based compensation expense, (ii) interest expense arising from the amortization of debt issuance costs on our long-term debt, and (iii) related income tax effects to their most directly comparable GAAP measures (in thousands, except per share data) for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
−Removed: Reconciliation of non-GAAP net income:
+Added: Reconciliation of non-GAAP net loss:
Share-based compensation expense
−Removed: Digital asset impairment losses
Interest expense arising from amortization of debt issuance costs
Income tax effects (1)
−Removed: Non-GAAP net income
−Removed: Reconciliation of non-GAAP diluted earnings per share (2):
+Added: Non-GAAP net loss
+Added: Reconciliation of non-GAAP diluted loss per share (2):
Diluted loss per share
Share-based compensation expense (per diluted share)
−Removed: Digital asset impairment losses (per diluted share)
Interest expense arising from amortization of debt issuance costs (per diluted share)
Income tax effects (per diluted share)
−Removed: Non-GAAP diluted earnings per share
−Removed: Income tax effects reflect the net tax effects of stock-based compensation expense, digital asset impairment losses, and interest expense for amortization of debt issuance costs.
+Added: Non-GAAP diluted loss per share
+Added: Income tax effects reflect the net tax effects of share-based compensation expense, which includes tax benefits on exercises of stock options and vesting of share-settled restricted stock units, and interest expense for amortization of debt issuance costs.
For reconciliation purposes, the non-GAAP diluted earnings (loss) per share calculations use the same weighted average shares outstanding as that used in the GAAP diluted earnings (loss) per share calculations for the same period.
2 unchanged sentences
Three Months Ended
−Removed: September 30,
Foreign Currency
20 unchanged sentences
General and administrative expenses
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Foreign Currency
−Removed: Exchange Rate
−Removed: Product licenses revenues
−Removed: Subscription services revenues
−Removed: Product support revenues
−Removed: Other services revenues
−Removed: Cost of product support revenues
−Removed: Cost of other services revenues
−Removed: Sales and marketing expenses
−Removed: Research and development expenses
−Removed: General and administrative expenses
−Removed: Foreign Currency
−Removed: Exchange Rate
−Removed: Product licenses revenues
−Removed: Subscription services revenues
−Removed: Product support revenues
−Removed: Other services revenues
−Removed: Cost of product support revenues
−Removed: Cost of other services revenues
−Removed: Sales and marketing expenses
−Removed: Research and development expenses
−Removed: General and administrative expenses
The “Foreign Currency Exchange Rate Impact” reflects the estimated impact of fluctuations in foreign currency exchange rates on international components of our Consolidated Statements of Operations.
3 unchanged sentences
The “Non-GAAP Constant Currency % Change” reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.
−Removed: Critical Accounting Policies
+Added: Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and equity, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
−Removed: These estimates, particularly estimates relating to revenue recognition and, in the prior year only, to our Convertible Notes prior to the adoption of ASU 2020-06, have a material impact on our Consolidated Financial Statements.
Actual results and outcomes could differ from these estimates and assumptions.
−Removed: The section “Critical Accounting Policies” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 provides a more detailed explanation of the judgments made and a discussion of our accounting estimates and policies relating to revenue recognition.
−Removed: There have been no significant changes in such estimates and policies since December 31, 2020.
+Added: Critical accounting estimates involve a significant level of estimation uncertainty and are estimates that have had or are reasonably likely to have a material impact on our financial condition or results of operations.
+Added: We consider certain estimates and judgments related to revenue recognition to be critical accounting estimates for us, as discussed under “Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
+Added: There have been no significant changes in such estimates and judgments since December 31, 2021.
Results of Operations
−Removed: Comparison of the three and nine months ended September 30, 2021 and 2020
+Added: Comparison of the three months ended March 31, 2022 and 2021
Except as otherwise indicated herein, the term “domestic” refers to operations in the United States and Canada and the term “international” refers to operations outside of the United States and Canada.
2 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Product Licenses and Subscription Services Revenues:
8 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Product Licenses Transactions with Recognized Licenses Revenue in the Applicable Period:
8 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Product Licenses Revenue Recognized in the Applicable Period:
9 unchanged sentences
Less than $0.5 million in licenses revenue recognized
−Removed: Product licenses revenues decreased $3.7 million and increased $12.3 million for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in the prior year.
−Removed: For the three months ended September 30, 2021 and 2020, product licenses transactions with more than $0.5 million in recognized revenue represented 38.2% and 58.7%, respectively, of our product licenses revenues.
−Removed: For the nine months ended September 30, 2021, our top three product licenses transactions totaled $10.1 million in recognized revenue, or 14.6% of total product licenses revenues, compared to $14.7 million, or 25.8% of total product licenses revenues, for the nine months ended September 30, 2020.
+Added: Product licenses revenues decreased $4.8 million for the three months ended March 31, 2022, as compared to the same period in the prior year.
+Added: For the three months ended March 31, 2022 and 2021, product licenses transactions with more than $0.5 million in recognized revenue represented 18.6% and 43.0%, respectively, of our product licenses revenues.
+Added: For the three months ended March 31, 2022, our top three product licenses transactions totaled $2.6 million in recognized revenue, or 15.6% of total product licenses revenues, compared to $7.0 million, or 32.8% of total product licenses revenues, for the three months ended March 31, 2021.
Domestic product licenses revenues.
−Removed: Domestic product licenses revenues decreased $6.2 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a decrease in the average deal size of transactions with more than $1.0 million in recognized revenue (in particular, from one deal in the third quarter of 2020 that resulted in $9.8 million in recognized revenue in the prior year period) and a decrease in the number of transactions with recognized revenue between $0.5 million and $1.0 million, partially offset by an increase in the average deal size of transactions with less than $0.5 million in recognized revenue.
−Removed: Domestic product licenses revenues increased $4.4 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in the average deal size of transactions with less than $0.5 million in recognized revenue and an increase in the number of transactions with more than $0.5 million in recognized revenue.
+Added: Domestic product licenses revenues decreased $3.4 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a decrease in the average deal size and number of transactions with more than $1.0 million in recognized revenue and a decrease in the number of transactions with less than $0.5 million in recognized revenue, partially offset by an increase in the average deal size of transactions with less than $0.5 million in recognized revenue.
International product licenses revenues.
−Removed: International product licenses revenues increased $2.5 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in the number of transactions with less than $0.5 million in recognized revenue and more than $1.0 million in recognized revenue, partially offset by a decrease in the number of transactions with recognized revenue between $0.5 million and $1.0 million.
−Removed: International product licenses revenues increased $7.9 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in the number of transactions with less than $0.5 million in recognized revenue.
+Added: International product licenses revenues decreased $1.4 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a decrease in the number of transactions with recognized revenue between $0.5 million and $1.0 million and a $0.5 million unfavorable foreign currency exchange impact.
Subscription services revenues.
−Removed: Subscription services revenues are derived from the MicroStrategy Cloud Environment, a cloud subscription service, and are recognized ratably over the service period in the contract.
−Removed: Subscription services revenues increased $2.5 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to conversions to cloud-based subscriptions from existing on-premises customers and an increase in the use of subscription services by existing customers.
−Removed: Subscription services revenues increased $6.9 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to conversions to cloud-based subscriptions from existing on-premises customers, an increase in the use of subscription services by existing customers, and a $0.6 million favorable foreign currency exchange impact.
+Added: Subscription services revenues are derived from our MCE cloud subscription service and are recognized ratably over the service period in the contract.
+Added: Subscription services revenues increased $2.8 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to conversions to cloud-based subscriptions from existing on-premises customers, an increase in the use of subscription services by existing customers, and sales contracts with new customers.
+Added: We expect our subscription services revenues to continue to grow in future periods as we continue to promote our cloud offering to new and existing customers.
Product support revenues.
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Product Support Revenues:
3 unchanged sentences
Product support revenues are recognized ratably over the term of the contract, which is generally one year.
−Removed: Product support revenues decreased $1.0 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to certain existing customers converting from perpetual product licenses with separate support contracts to our subscription services or term product licenses offerings.
−Removed: Product support revenues did not materially change for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to certain existing customers converting from perpetual product licenses with separate support contracts to our subscription services or term product licenses offerings, substantially offset by a $4.8 million favorable foreign currency exchange impact.
+Added: Product support revenues decreased $3.5 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to certain existing customers converting from perpetual product licenses with separate support contracts to our subscription services or term product licenses offerings and a $1.7 million unfavorable foreign currency exchange impact.
Other services revenues.
1 unchanged sentence
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Other Services Revenues:
4 unchanged sentences
Consulting revenues are derived from helping customers plan and execute the deployment of our software.
−Removed: Consulting revenues increased $2.8 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in billable hours worldwide, partially offset by a decrease in average bill rates and a decrease in billable travel and entertainment expenditures.
−Removed: Consulting revenues increased $8.1 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an increase in billable hours worldwide and a $1.4 million favorable foreign currency exchange impact, partially offset by a decrease in average bill rates and a decrease in billable travel and entertainment expenditures.
+Added: Consulting revenues increased $1.7 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to an increase in billable hours worldwide, partially offset by a $0.8 million unfavorable foreign currency exchange impact and a decrease in average bill rates.
Education revenues.
1 unchanged sentence
These offerings include self-tutorials, custom course development, joint training with customers’ internal staff, and standard course offerings, with pricing dependent on the specific offering delivered.
−Removed: Education revenues did not materially change for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year.
+Added: Education revenues did not materially change for the three months ended March 31, 2022, as compared to the same period in the prior year.
Costs and Expenses
2 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Cost of Revenues:
9 unchanged sentences
Cost of product licenses revenues consists of referral fees paid to channel partners, the costs of product manuals and media, and royalties paid to third-party software vendors.
−Removed: Cost of product licenses revenues did not materially change for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year.
+Added: Cost of product licenses revenues did not materially change for the three months ended March 31, 2022, as compared to the same period in the prior year.
Cost of subscription services revenues.
Cost of subscription services revenues consists of equipment, facility and other related support costs, and personnel and related overhead costs.
−Removed: Subscription services headcount increased 31.5% to 71 at September 30, 2021 from 54 at September 30, 2020.
−Removed: Cost of subscription services revenues increased $0.6 million for the three months ended September 30, 2021, as compared to the same period in the prior year primarily due to a $1.0 million increase in technology infrastructure costs.
−Removed: Cost of subscription services revenues did not materially change for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $1.6 million increase in technology infrastructure costs, partially offset by a $1.3 million decrease in compensation and related costs due to a decrease in average staffing levels.
+Added: Subscription services headcount increased 42.6% to 77 at March 31, 2022 from 54 at March 31, 2021.
+Added: Cost of subscription services revenues increased $1.8 million for the three months ended March 31, 2022, as compared to the same period in the prior year primarily due to a $1.2 million increase in cloud hosting infrastructure costs, which is a result of the increased usage by new and existing cloud subscription services customers, and a $0.4 million increase in employee salaries primarily due to periodic wage increases and an increase in average staffing levels.
Cost of product support revenues.
2 unchanged sentences
Compensation related to personnel providing Enterprise Support services is reported as cost of product support revenues.
−Removed: Product support headcount was 165 as of both September 30, 2021 and 2020.
−Removed: Cost of product support revenues decreased $1.0 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $1.0 million decrease in compensation and related costs attributable to non-product support personnel providing a decreased level of Enterprise Support services.
−Removed: Cost of product support revenues decreased $4.9 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $3.0 million decrease in compensation and related costs due to a decrease in product support average staffing levels, a $1.9 million decrease in compensation and related costs attributable to non-product support personnel providing a decreased level of Enterprise Support services, and a $0.6 million decrease in facility and other related support costs, partially offset by a $0.7 million net increase in share-based compensation expense.
−Removed: The $0.7 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan.
+Added: Product support headcount increased 7.7% to 167 at March 31, 2022 from 155 at March 31, 2021.
+Added: Cost of product support revenues did not materially change for the three months ended March 31, 2022, as compared to the same period in the prior year.
Cost of consulting revenues.
Cost of consulting revenues consists of personnel and related overhead costs, excluding those under our Enterprise Support program which are allocated to cost of product support revenues.
−Removed: Consulting headcount decreased 1.0% to 393 at September 30, 2021 from 397 at September 30, 2020.
−Removed: Cost of consulting revenues increased $1.4 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $1.0 million increase in subcontractor costs and a $0.9 million increase in compensation and related costs attributable to consulting personnel providing a decreased level of Enterprise Support services, partially offset by a $0.5 million decrease in compensation and related costs due to a decrease in average staffing levels.
−Removed: Cost of consulting revenues increased $4.6 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $3.3 million increase in subcontractor costs, a $1.6 million increase in compensation and related costs attributable to consulting personnel providing a decreased level of Enterprise Support services, and a $0.4 million increase in variable compensation, partially offset by a $1.0 million decrease in travel and entertainment expenditures.
−Removed: Included in cost of consulting revenues for the nine months ended September 30, 2021 is an aggregate $0.8 million unfavorable foreign currency exchange impact.
+Added: Consulting headcount increased 9.7% to 429 at March 31, 2022 from 391 at March 31, 2021.
+Added: Cost of consulting revenues increased $1.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a $0.5 million increase in employee salaries primarily due to an increase in average staffing levels and consulting personnel providing a decreased level of Enterprise Support services.
+Added: Included in cost of consulting revenues for the three months ended March 31, 2022 is an aggregate $0.7 million favorable foreign currency exchange impact.
Cost of education revenues.
−Removed: Cost of education revenues consists of personnel and related overhead costs and technology infrastructure costs.
−Removed: Education headcount decreased 5.3% to 36 at September 30, 2021 from 38 at September 30, 2020.
−Removed: Cost of education revenues did not materially change for the three months ended September 30, 2021, as compared to the same period in the prior year.
−Removed: Cost of education revenues decreased $1.8 million for the nine months ended September 30, 2021, as compared to the same period in the prior
−Removed: year , primarily due to a $0.
−Removed: 8 million decrease in technology infrastructure costs associated with education offerings that we made available at no charge for a limited time period during the first half of 2020 in response to the COVID-19 pandemic and a $0.6 million decrease in compensation and related costs due to a decrease in average staffing levels .
+Added: Cost of education revenues consists of personnel and related overhead costs.
+Added: Education headcount decreased 7.7% to 36 at March 31, 2022 from 39 at March 31, 2021.
+Added: Cost of education revenues did not materially change for the three months ended March 31, 2022, as compared to the same period in the prior year.
Sales and marketing expenses.
Sales and marketing expenses consist of personnel costs, commissions, office facilities, travel, advertising, public relations programs, and promotional events, such as trade shows, seminars, and technical conferences.
−Removed: Sales and marketing headcount decreased 4.4% to 473 at September 30, 2021 from 495 at September 30, 2020.
+Added: Sales and marketing headcount decreased 1.9% to 462 at March 31, 2022 from 471 at March 31, 2021.
The following table sets forth sales and marketing expenses (in thousands) and related percentage changes for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Sales and marketing expenses
−Removed: Sales and marketing expenses increased $2.9 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $3.4 million net increase in share-based compensation expense and a $0.5 million increase in marketing and advertising costs, partially offset by a $1.0 million decrease in compensation and related costs due to a decrease in average staffing levels.
−Removed: The $3.4 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan.
−Removed: Sales and marketing expenses increased $6.9 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $10.1 million increase in variable compensation and an $8.2 million net increase in share-based compensation expense, partially offset by a $5.6 million decrease in employee salaries due to a decrease in average staffing levels, a $3.1 million decrease in travel and entertainment expenditures, a $1.5 million decrease in facility and other related support costs, a $0.8 million decrease in marketing and advertising costs, and a $0.5 million decrease in subcontractor costs.
−Removed: The $8.2 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan and the 2021 ESPP.
−Removed: Included in sales and marketing expenses for the nine months ended September 30, 2021 is an aggregate $1.3 million unfavorable foreign currency exchange impact.
+Added: Sales and marketing expenses decreased $5.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a $7.1 million decrease in variable compensation primarily due to an increase in capitalized commissions
+Added: and decreases in bonuses and personnel costs , partially offset by a $ 1.9 million net increase in share-based compensation expense .
+Added: 9 million net in crease in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan , partially offset by the forfeiture of certain awards .
+Added: Included in sales and marketing expenses for the three months ended March 31, 2022 is an aggregate $0.8 million favorable foreign currency exchange impact.
Research and development expenses.
Research and development expenses consist of the personnel costs for our software engineering personnel, depreciation of equipment, and other related costs.
−Removed: Research and development headcount decreased 0.8% to 661 at September 30, 2021 from 666 at September 30, 2020.
+Added: Research and development headcount increased 10.1% to 720 at March 31, 2022 from 654 at March 31, 2021.
The following table summarizes research and development expenses (in thousands) and related percentage changes for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Research and development expenses
−Removed: Research and development expenses increased $1.6 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $2.3 million net increase in share-based compensation expense, partially offset by a $0.5 million decrease in facility and other related support costs.
+Added: Research and development expenses increased $4.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a $2.6 million increase in employee salaries primarily due to periodic wage increases and an increase in average staffing levels, partially offset by a shift in staffing levels to lower cost regions, and a $1.2 million net increase in share-based compensation expense, partially offset by a $0.6 million decrease in cloud hosting infrastructure costs.
The $1.2 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan.
−Removed: Research and development expenses increased $7.6 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $5.7 million net increase in share-based compensation expense, a $2.1 million increase in variable compensation which, in the nine months ended September 30, 2020, included certain COVID-19-related employer payroll tax exemptions in the Asia Pacific region, and a $0.5 million increase in technology infrastructure costs, partially offset by a $0.6 million decrease in facility and other related support costs.
−Removed: The $5.7 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan and the 2021 ESPP.
−Removed: Included in research and development expenses for the nine months ended September 30, 2021 is an aggregate $1.5 million unfavorable foreign currency exchange impact.
General and administrative expenses.
General and administrative expenses consist of personnel and related overhead costs, and other costs of our executive, finance, human resources, information systems, and administrative departments, as well as third-party consulting, legal, and other professional fees.
−Removed: General and administrative headcount was 258 as of both September 30, 2021 and 2020.
+Added: General and administrative headcount increased 0.4% to 252 at March 31, 2022 from 251 at March 31, 2021.
The following table sets forth general and administrative expenses (in thousands) and related percentage changes for the periods indicated:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
General and administrative expenses
−Removed: General and administrative expenses increased $4.0 million for the three months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a $3.3 million net increase in share-based compensation expense and a $1.8 million increase in legal, consulting, and other advisory costs, partially offset by a $0.9 million decrease in compensation and related costs due to a decrease in average staffing levels and a $0.8 million decrease in bad debt expense.
−Removed: The $3.3 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan.
−Removed: General and administrative expenses increased $7.9 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to an $8.0 million net increase in share-based compensation expense and a $4.9 million increase in legal, consulting, and other advisory costs, partially offset by a $3.6 million decrease in compensation and related costs due to a decrease in average staffing levels, and a $1.3 million decrease in bad debt expense.
−Removed: The $8.0 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan, partially offset by certain awards becoming fully vested.
+Added: General and administrative expenses increased $5.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a $2.8 million net increase in share-based compensation expense and a $0.7 million increase in facility and other related support costs.
+Added: The $2.8 million net increase in share-based compensation expense is primarily due to the grant of additional awards under the 2013 Equity Plan, partially offset by certain awards that became fully vested.
Digital asset impairment losses.
3 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Digital asset impairment losses
−Removed: We did not sell any of our digital assets during the three and nine months ended September 30, 2021.
−Removed: Interest (Expense) Income, Net
−Removed: For the three and nine months ended September 30, 2021, interest expense, net, of $10.7 million and $17.5 million, respectively, were primarily related to the contractual interest expense and amortization of issuance costs related to our long-term debt arrangements.
+Added: We did not sell any of our digital assets during the three months ended March 31, 2022 and 2021.
+Added: We may continue to incur significant digital asset impairment losses in the future.
+Added: For example, we have incurred at least $30.2 million in digital asset impairment losses during the second quarter of 2022 and on bitcoin we held as of March 31, 2022.
+Added: Interest Expense, Net
+Added: For the three months ended March 31, 2022, interest expense, net, of $11.0 million was primarily related to the contractual interest expense related to our 2028 Secured Notes, 2025 Convertible Notes, and 2025 Secured Term Loan, and the amortization of issuance costs related to our long-term debt arrangements.
+Added: For the three months ended March 31, 2021, interest expense, net, of $2.4 million was primarily related to the contractual interest expense related to our 2025 Convertible Notes and the amortization of issuance costs related to our Convertible Notes.
Refer to Note 4, Long-term Debt, to the Consolidated Financial Statements for further information.
−Removed: For the three months ended September 30, 2020, interest income, net, was not material.
−Removed: For the nine months ended September 30, 2020, interest income, net, of $2.6 million was primarily related to interest earned on cash and cash equivalents balances and the amortization of the discount on our short-term investments.
−Removed: Other Income (Expense), Net
−Removed: For the three and nine months ended September 30, 2021, other income, net, of $1.3 million and $1.6 million, respectively, were comprised primarily of foreign currency transaction net gains.
−Removed: For the three and nine months ended September 30, 2020 other expense, net, of $3.0 million and $4.5 million, respectively, were comprised primarily of foreign currency transaction net losses.
+Added: Other Income, Net
+Added: For the three months ended March 31, 2022 and 2021, other income, net, of $2.2 million and $1.3 million, respectively, were comprised primarily of foreign currency transaction net gains.
Benefit from Income Taxes
−Removed: In determining our tax provision or benefit from income taxes, we estimate an annual effective tax rate for the full fiscal year and apply that rate to our income or loss before income taxes.
−Removed: We also record discrete items in each respective period as appropriate.
−Removed: The estimated effective tax rate is subject to fluctuation based on the level and mix of earnings and losses by tax jurisdiction, foreign tax rate differentials, and the relative impact of permanent book to tax differences (e.g., non-deductible expenses).
−Removed: Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter.
−Removed: As a result of these factors, and due to potential changes in our period-to-period results, fluctuations in our effective tax rate and respective tax provisions or benefits may occur.
−Removed: For the nine months ended September 30, 2021 , we recorded a benefit from income taxes of $ 217.4 million that resulted in an effective tax rate of 32.8 %, as compared to a benefit from income taxes of $ 5.7 million that resulted in an effective tax rate of 36.0 % for the nine months ended September 30, 2020 .
−Removed: The change in the effective tax rate in 2021 is mainly due to certain discrete items and the change in the expected proportion of U.S.
−Removed: versus foreign income between periods.
−Removed: As of September 30, 2021, we estimated that we had NOL carryforwards, other temporary differences and carryforwards, and credits that resulted in deferred tax assets, net of valuation allowances and deferred tax liabilities, of $259.3 million.
−Removed: As of September 30, 2021, we had a valuation allowance of $1.3 million related to certain foreign tax credit carryforwards that, in our present estimation, more likely than not will not be realized.
−Removed: If we are unable to regain or increase profitability in future periods, we may be required to increase the valuation allowance against our deferred tax assets, which could result in a charge that would materially adversely affect net income in the period in which the charge is incurred.
+Added: We recorded a benefit from income taxes of $48.0 million on a pretax loss of $178.8 million for the three months ended March 31, 2022 and a benefit from income taxes of $74.3 million on a pretax loss of $184.3 million for the three months ended March 31, 2021.
+Added: Our benefit from income taxes decreased from the same period in the prior year primarily due to higher excess tax benefits from share-based compensation expense in 2021 as compared to 2022.
+Added: As of March 31, 2022, we had a valuation allowance of $1.0 million primarily related to certain foreign tax credit carryforward tax assets that, in our present estimation, more likely than not will not be realized.
+Added: If the market value of bitcoin declines or we are unable to regain profitability in future periods, we may be required to increase the valuation allowance against our deferred tax assets, which could result in a charge that would materially adversely affect net income (loss) in the period in which the charge is incurred.
We will continue to regularly assess the realizability of deferred tax assets.
+Added: Our effective tax rate may fluctuate due to changes in our domestic and foreign earnings and losses, material discrete tax items, or a combination of these factors resulting from transactions or events.
Deferred Revenue and Advance Payments
Deferred revenue and advance payments represent amounts received or due from our customers in advance of our transferring our software or services to the customer.
−Removed: In the case of multi-year service contracts arrangements, the Company generally does not invoice more than one year in advance of services and does not record deferred revenue for amounts that have not been invoiced.
+Added: In the case of multi-year service contract arrangements, we generally do not invoice more than one year in advance of services and do not record deferred revenue for amounts that have not been invoiced.
Revenue is subsequently recognized in the period(s) in which control of the software or services is transferred to the customer.
The following table summarizes deferred revenue and advance payments (in thousands), as of:
−Removed: September 30,
−Removed: September 30,
Deferred product licenses revenue
14 unchanged sentences
Total current and non-current deferred revenue and advance payments
−Removed: Total deferred revenue and advance payments decreased $36.9 million as of September 30, 2021, as compared to December 31, 2020, primarily due to the timing of product support and subscription services renewals and the presentation of multi-year contracts.
+Added: The changes in total deferred revenue and advance payments as of March 31, 2022, as compared to December 31, 2021 and March 31, 2021, were not material.
The portions of such multi-year contracts that will be invoiced in the future are not presented on the balance sheet in “Accounts receivable, net” and “Deferred revenue and advance payments” and instead are included in the remaining performance obligation disclosure below.
−Removed: Included in our international deferred revenue balances at September 30, 2021 is a $3.3 million unfavorable foreign currency impact from the general strengthening of the U.S.
−Removed: dollar compared to the fourth quarter of 2020.
−Removed: The decrease in total deferred revenue and advance payments as of September 30, 2021 as compared to September 30, 2020 was not material.
−Removed: Our r emaining performance obligation represent s all future revenue under contract and includes deferred revenue and advance payments and billable non-cancelable amounts that will be invoiced and recognized as revenue in future periods.
−Removed: The r emaining performance obligation exclude s contracts that are billed in arrears, such as certain time and materials contracts.
−Removed: As of September 30, 2021 , we had an aggregate transaction price of $ 198.9 million allocated to the remaining performance obligation relate d to product support, subscription services, other services, and in limited cases, product licenses contracts.
+Added: Included in our international deferred revenue balances at March 31, 2022 are $1.4 million and $3.8 million unfavorable foreign currency impacts from the general strengthening of the U.S.
+Added: dollar compared to December 31, 2021 and March 31, 2021, respectively.
+Added: Our remaining performance obligation represents all future revenue under contract and includes deferred revenue and advance payments and billable non-cancelable amounts that will be invoiced and recognized as revenue in future periods.
+Added: The remaining performance obligation excludes contracts that are billed in arrears, such as certain time and materials contracts.
+Added: As of March 31, 2022, we had an aggregate transaction price of $280.6 million allocated to the remaining performance obligation related to product support, subscription services, product licenses, and other services contracts.
We expect to recognize approximately $221.4 million of the remaining performance obligation over the next 12 months and the remainder thereafter.
4 unchanged sentences
Treasury securities.
−Removed: Under our Treasury Reserve Policy and bitcoin acquisition strategy, we use a significant portion of our cash to acquire bitcoins, which are classified as indefinite-lived intangible assets.
−Removed: As of September 30, 2021 and December 31, 2020, the amount of cash and cash equivalents held by our U.S.
+Added: Under our Treasury Reserve Policy and bitcoin acquisition strategy, we use a significant portion of our cash, including cash generated from capital raising transactions, to acquire bitcoins, which are classified as indefinite-lived intangible assets.
+Added: As of March 31, 2022 and December 31, 2021, the amount of cash and cash equivalents held by our U.S.
entities was $42.2 million and $13.1 million, respectively, and by our non-U.S.
1 unchanged sentence
We earn a significant amount of our revenues outside the United States.
−Removed: We repatriated foreign earnings and profits of $186.6 million during 2020 and $57.5 million during the nine months ended September 30, 2021.
−Removed: As of September 30, 2021, the accumulated undistributed foreign earnings and profits is estimated to be $109.5 million.
−Removed: Beginning in the third quarter of 2020, we determined to no longer permanently reinvest our foreign earnings and profits.
−Removed: Therefore, we accrued for foreign withholding tax and U.S.
−Removed: state income taxes on undistributed foreign earnings in addition to the Transition Tax and GILTI tax.
+Added: We repatriated foreign earnings and profits of $57.5 million during 2021 and $10.0 million during the three months ended March 31, 2022.
+Added: Our material contractual obligations and cash requirements consist of:
+Added: principal and interest payments related to our long-term debt;
+Added: rent payments under noncancellable operating leases;
+Added: payments related to the mandatory deemed repatriation transition tax (the “Transition Tax”) under the U.S.
+Added: Tax Cuts and Jobs Act (the “Tax Act”);
+Added: payments under various purchase agreements, primarily related to third-party software supporting our products, marketing, and operations;
+Added: ongoing personnel-related expenditures and vendor payments.
+Added: The above items are explained in further detail in Note 4, Long-term Debt, to the Consolidated Financial Statements included in this Quarterly Report as well as under “Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in the Notes to the Consolidated Financial Statements included therein.
+Added: There have been no changes to our material contractual obligations and cash requirements since December 31, 2021, except for the issuance of the 2025 Secured Term Loan, as described in Note 4, Long-term Debt, to the Consolidated Financial Statements.
We believe that existing cash and cash equivalents held by us and cash and cash equivalents anticipated to be generated by us are sufficient to meet working capital requirements, anticipated capital expenditures, and contractual obligations for at least the next 12 months.
−Removed: As of September 30, 2021, we held approximately 114,042 bitcoins.
−Removed: We do not believe we will need to sell any of our bitcoins within the next twelve months to meet our working capital requirements, although we may from time to time sell bitcoins as part of treasury management operations, including to increase our cash balances.
−Removed: The bitcoin market historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various other risks inherent in its entirely electronic, virtual form and decentralized network.
−Removed: During times of instability in the bitcoin market, we may not be able to sell our bitcoins at reasonable prices or at all.
−Removed: As a result, our bitcoins are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
+Added: Beyond the next 12 months, our long-term cash requirements are primarily for obligations related to our long-term debt.
+Added: We have principal due upon maturity of our long-term debt instruments in the aggregate of $2.405 billion in addition to $2.4 million in coupon interest due each semi-annual period for the 2025 Convertible Notes, $15.3 million in coupon interest due each semi-annual period for the 2028 Secured Notes, and an estimated $0.7 million due monthly in variable coupon interest for the 2025 Secured Term Loan (based on the interest rate in effect at March 31, 2022).
+Added: We also have long-term cash requirements for obligations related to our operating leases, the Transition Tax, and our various purchase agreements.
+Added: If cash and cash equivalents generated by future operating activities are not sufficient to enable us to satisfy these obligations, we may seek to generate cash and cash equivalents from other sources.
+Added: The sources could include the sale of bitcoins, additional borrowings collateralized by our bitcoins, as well as the issuance and sale of shares of our class A common stock.
+Added: Furthermore, if certain conditions are met, we may have the right to elect to settle the Convertible Notes upon a conversion of such Convertible Notes in shares of our class A common stock, or a combination of cash and shares of class A common stock, which may enable us to reduce the amount of our cash obligations under the Convertible Notes.
+Added: As of March 31, 2022, we held approximately 129,218 bitcoins, of which approximately 95,643 are unencumbered.
+Added: We do not believe we will need to sell or engage in other transactions with respect to any of our bitcoins within the next twelve months to meet our working capital requirements, although we may from time to time sell or engage in other transactions with respect to our bitcoins as part of treasury management operations, as noted above.
+Added: The bitcoin market historically has been characterized by significant volatility in its
+Added: price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity , a developing regulatory landscape, susceptibility to market abuse and manipulation , and various other risk s inherent in its entirely electronic, virtual form and decentralized network.
+Added: During times of instability in the b itcoin market, we may not be able to sell our bitcoins at reasonable prices or at all.
+Added: A s a result, our bitcoin s are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents .
In addition, upon sale of our bitcoin, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited .
−Removed: On June 14, 2021, we entered into the Sale Agreement with Jefferies pursuant to which we may issue and sell shares of our class A common stock having an aggregate offering price of up to $1.0 billion from time to time through Jefferies.
−Removed: During the three and nine months ended September 30, 2021, we sold 555,179 shares of our class A common stock under the Sale Agreement, at an average gross price per share of approximately $727.64, for aggregate net proceeds (less $4.5 million in sales commissions and expenses) of approximately $399.5 million.
−Removed: As of September 30, 2021, approximately $596.0 million of our class A common stock remained available for issuance and sale pursuant to the Sale Agreement.
The following table sets forth a summary of our cash flows (in thousands) and related percentage changes for the periods indicated:
−Removed: Nine Months Ended September 30,
Net cash provided by operating activities
Net cash used in investing activities
−Removed: Net cash provided by (used in) financing activities
+Added: Net cash provided by financing activities
Net cash provided by operating activities.
1 unchanged sentence
Our primary uses of cash in operating activities are for personnel-related expenditures for software development, personnel-related expenditures for providing consulting, education, and subscription services, and for sales and marketing costs, general and administrative costs, and income taxes.
−Removed: Non-cash items to further reconcile net loss to net cash provided by operating activities consist primarily of depreciation and amortization, reduction in the carrying amount of ROU lease assets, credit losses and sales allowances, deferred taxes, share-based compensation expense, digital asset impairment losses, and amortization of debt issuance costs on our long-term debt.
−Removed: Net cash provided by operating activities increased $62.3 million for the nine months ended September 30, 2021 , as compared to the same period in the prior year, due to a $ 458.1 million increase from changes in non-cash items and a $ 39.5 million increase from changes in operating assets and liabilities, partially offset by a $ 435.3 million increase in net loss .
+Added: Non-cash items to further reconcile net loss to net cash provided by operating activities consist primarily of depreciation and amortization, reduction in the carrying amount of operating lease right-of-use assets, credit losses and sales allowances, deferred taxes, share-based compensation expense, digital asset impairment losses, and amortization of debt issuance costs on our long-term debt.
+Added: Net cash provided by operating activities decreased $19.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, due to a $20.7 million increase in net loss and a $1.5 million decrease from changes in operating assets and liabilities, partially offset by a $3.2 million increase from changes in non-cash items.
Net cash used in investing activities.
−Removed: The changes in net cash (used in) provided by investing activities relate to purchases of digital assets, purchases and redemptions of short-term investments, and expenditures on property and equipment.
−Removed: Net cash used in investing activities increased $1.721 billion for the nine months ended September 30, 2021, as compared to the same period in the prior year, due to a $1.610 billion increase in purchases of bitcoins and a $119.9 million decrease in proceeds from the redemption of short-term investments, partially offset by a $9.9 million decrease in purchases of short-term investments.
−Removed: During the nine months ended September 30, 2021, we purchased bitcoin using the net proceeds from the issuance of our 2027 Convertible Notes and 2028 Secured Notes, the issuance and sale of class A common stock under the Sale Agreement, and excess cash.
−Removed: During the nine months ended September 30, 2020, we purchased bitcoin using excess cash, including cash from the liquidation of short-term investments.
−Removed: Net cash provided by (used in) financing activities.
−Removed: The changes in net cash provided by (used in) financing activities primarily relate to our issuance of long-term debt, the sale of class A common stock offered under the Sale Agreement, the purchase of treasury stock, the exercise of stock options under the 2013 Equity Plan, and the issuance of class A common stock under the 2021 ESPP.
−Removed: Net cash provided by financing activities was $1.946 billion for the nine months ended September 30, 2021, while net cash used in financing activities was $118.9 million for the nine months ended September 30, 2020.
−Removed: The change in net cash provided by (used in) financing activities was due to $1.050 billion in gross proceeds from our 2027 Convertible Notes, $500.0 million in gross proceeds from our 2028 Secured Notes, $404.0 million in gross proceeds from the sale of class A common stock offered under the Sale Agreement, a $122.5 million decrease in purchases of treasury stock, a $27.8 million increase in proceeds from the exercise of stock options under the 2013 Equity Plan, and $2.9 million in proceeds from the issuance of class A common stock under the 2021 ESPP, partially offset by $24.7 million of issuance costs paid for our Convertible Notes, $12.8 million of issuance costs paid for our 2028 Secured Notes, and $4.5 million of issuance costs paid related to the Sale Agreement.
−Removed: Convertible Senior Notes and 2028 Senior Secured Notes
−Removed: In December 2020 and February 2021, we issued $650.0 million aggregate principal amount of the 2025 Convertible Notes and $1.050 billion aggregate principal amount of the 2027 Convertible Notes.
+Added: The changes in net cash used in investing activities primarily relate to purchases of digital assets and expenditures on property and equipment.
+Added: Net cash used in investing activities decreased $870.7 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to a $870.9 million decrease in purchases of bitcoins.
+Added: During the three months ended March 31, 2022, we purchased bitcoin using $190.5 million of the net proceeds from the issuance of the 2025 Secured Term Loan and excess cash.
+Added: During the three months ended March 31, 2021, we purchased bitcoin using the net proceeds from the issuance of our 2027 Convertible Notes and excess cash.
+Added: Net cash provided by financing activities.
+Added: The changes in net cash provided by (used in) financing activities primarily relate to the issuance of our long-term debt, the exercise of stock options under the 2013 Equity Plan, the sales of class A common stock under the 2021 ESPP, and the payment of withholding tax on vesting of restricted stock units.
+Added: Net cash provided by financing activities decreased $842.0 million for the three months ended March 31, 2022, as compared to the same period in the prior year, primarily due to $1.050 billion in gross proceeds from our 2027 Convertible Notes during the three months ended March 31, 2021, a $23.6 million decrease in proceeds from the exercise of stock options under the 2013 Equity Plan, and $0.5 million of withholding tax paid on vesting of restricted stock units during the three months ended March 31, 2022, partially offset by $204.7 million in gross proceeds, net of lender fees, from our 2025 Secured Term Loan during the three months ended March 31, 2022, $24.6 million in issuance costs paid for our Convertible Notes during the three months ended March 31, 2021, and $2.8 million in proceeds from the sales of class A common stock under the 2021 ESPP in the three months ended March 31, 2022.
+Added: Long-term Debt
+Added: In December 2020, we issued $650.0 million aggregate principal amount of the 2025 Convertible Notes and in February 2021, we issued $1.050 billion aggregate principal amount of the 2027 Convertible Notes.
We used the net proceeds from the issuance of the Convertible Notes to acquire bitcoin.
−Removed: The terms of the Convertible Notes are discussed more fully in Note 6, Long-term Debt, to the Consolidated Financial Statements.
−Removed: The Company did not pay any interest to holders of the 2025 Convertible Notes during the three months ended September 30, 2021.
−Removed: For the nine months ended September 30, 2021, the Company paid $2.5 million in interest to holders of the 2025 Convertible Notes.
−Removed: The 2027 Convertible Notes do not bear regular interest and the Company has not paid any special interest to holders of the 2027 Convertible Notes to date.
+Added: The terms of the Convertible Notes are discussed more fully in Note 4, Long-term Debt, to the Consolidated Financial Statements included in this Quarterly Report as well as Note 8, Long-term Debt, to the Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
+Added: We did not pay any interest to holders of the 2025 Convertible Notes during the three months ended March 31, 2022 and 2021.
+Added: The 2027 Convertible Notes do not bear regular interest and we have not paid any special interest to holders of the 2027 Convertible Notes to date.
In June 2021, we issued $500.0 million aggregate principal amount of the 2028 Secured Notes.
We used the net proceeds from the issuance of the 2028 Secured Notes to acquire bitcoin.
−Removed: The terms of the 2028 Secured Notes are discussed more fully in Note 6, Long-term Debt to the Consolidated Financial Statements.
−Removed: The Company did not pay any interest to holders of the 2028 Secured Notes during the three and nine months ended September 30, 2021.
−Removed: Share repurchases.
−Removed: See “ Part II.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds” of this Quarterly Report and Note 8, Treasury Stock, to the Consolidated Financial Statements for further information.
−Removed: Contractual obligations.
−Removed: The following table shows future minimum rent payments under noncancellable operating leases with initial terms of greater than one year, payments related to our Convertible Notes and 2028 Secured Notes (semi-annual interest payments and principal upon maturity), payments under purchase agreements with initial terms of greater than one year, and anticipated payments related to the Transition Tax resulting from the Tax Act, based on the expected due dates of the various installments as of September 30, 2021 (in thousands).
−Removed: The contractual principal payments related to the 2028 Secured Notes are included in the table below based on their stated maturity date of June 15, 2028 and our expectation that the springing maturity feature of the 2028 Secured Notes will not be triggered.
−Removed: Payments due by period ended September 30,
−Removed: Contractual Obligations:
−Removed: Operating leases
−Removed: 2025 Convertible Notes
−Removed: 2027 Convertible Notes
−Removed: 2028 Secured Notes
−Removed: Purchase obligations
−Removed: Transition Tax
−Removed: Unrecognized tax benefits.
−Removed: As of September 30, 2021, we had $4.3 million of total gross unrecognized tax benefits, including accrued interest, of which $2.9 million was recorded in “Other long-term liabilities” and $1.4 million was recorded in “Deferred tax assets, net.” The timing of any payments that could result from these unrecognized tax benefits will depend on a number of factors, and accordingly the amount and period of any future payments cannot be estimated.
−Removed: We do not expect any significant tax payments related to these obligations during 2021.
−Removed: Off-balance sheet arrangements.
−Removed: As of September 30, 2021, we did not have any off-balance sheet arrangements that had a material impact on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
−Removed: Recent Accounting Standards
−Removed: See Note 2, Recent Accounting Standards, to the Consolidated Financial Statements for further information.
+Added: As of March 31, 2022, approximately 14,109 of the bitcoins held by the Company serve as part of the collateral for the 2028 Secured Notes.
+Added: The terms of the 2028 Secured Notes are discussed more fully in Note 4,
+Added: Long-term Debt to the Consolidated Financial Statements included in this Quarterly Report as well as Note 8 , Long-term Debt, to the Consolidated Financial Statements of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 .
+Added: We did not pay any interest to holders of the 2028 Secured Notes during the three months ended March 31, 2022 .
+Added: In March 2022, MacroStrategy, our wholly-owned subsidiary, entered into a Credit and Security Agreement with Silvergate Bank, pursuant to which Silvergate Bank issued the $205.0 million 2025 Secured Term Loan to MacroStrategy.
+Added: We used $190.5 million of the net proceeds from the issuance of the 2025 Secured Term Loan to acquire bitcoin, used $5.0 million of the net proceeds to establish the Reserve Account which serves as collateral for the 2025 Secured Term Loan, and expect to use the remaining net proceeds to pay fees, interest, and expenses related to the 2025 Secured Term Loan or for general corporate purposes.
+Added: As of March 31, 2022, approximately 19,466 of the bitcoins held by MacroStrategy serve as part of the collateral for the 2025 Secured Term Loan.
+Added: The terms of the 2025 Secured Term Loan are discussed more fully in Note 4, Long-term Debt to the Consolidated Financial Statements.
+Added: We did not pay any interest to Silvergate during the three months ended March 31, 2022.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.