10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 000-24435

MICROSTRATEGY INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1850 Towers Crescent Plaza, Tysons Corner, VA 22182	51-0323571
(State of Incorporation)	(Address of Principal Executive Offices) (Zip Code)	(I.R.S. Employer Identification No.)

Registrant’s Telephone Number, Including Area Code: (703) 848-8600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A common stock, par value $0.001 per share	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant (based on the last reported sale price of the registrant’s class A common stock on June 30, 2014 on the NASDAQ Global Select Market) was approximately $1,305.7 million.

The number of shares of the registrant’s class A common stock and class B common stock outstanding on February 20, 2015 was 9,290,853 and 2,035,184, respectively.

Documents incorporated by reference: Portions of the definitive proxy statement for the 2015 Annual Meeting of Stockholders of the Registrant to be filed subsequently with the SEC are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent indicated herein.

MICROSTRATEGY INCORPORATED

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		4
Item 1A.	Risk Factors		20
Item 1B.	Unresolved Staff Comments		34
Item 2.	Properties		35
Item 3.	Legal Proceedings		36
Item 4.	Mine Safety Disclosures		36
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		37
Item 6.	Selected Financial Data		39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		65
Item 8.	Financial Statements and Supplementary Data		65
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		66
Item 9A.	Controls and Procedures		66
Item 9B.	Other Information		67
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		68
Item 11.	Executive Compensation		68
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		68
Item 13.	Certain Relationships and Related Transactions, and Director Independence		68
Item 14.	Principal Accountant Fees and Services		68
PART IV
Item 15.	Exhibits, Financial Statement Schedules		69

2

The trademarks and registered trademarks of MicroStrategy Incorporated and its subsidiaries referred to herein include, but are not limited to, MicroStrategy, MicroStrategy Analytics Platform, MicroStrategy Mobile, MicroStrategy Analytics Desktop, and MicroStrategy Usher. Third-party product and company names mentioned herein may be the trademarks of their respective owners.

CERTAIN DEFINITIONS

All references in this Annual Report on Form 10-K to “MicroStrategy,” the “Company,” “we,” “us,” and “our” refer to MicroStrategy Incorporated and its consolidated subsidiaries (unless the context otherwise indicates).

FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose, any statements contained herein that are not statements of historical fact, including without limitation, certain statements under “Item 1. Business,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects and our results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. The important factors discussed under “Item 1A. Risk Factors,” among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Such forward-looking statements represent management’s current expectations and are inherently uncertain. Investors are warned that actual results may differ from management’s expectations.

3

PART I

Item 1. Business

Overview

MicroStrategy^® is a leading worldwide provider of enterprise-ready analytics, mobile, and security software platforms. MicroStrategy provides system-of-record reporting and interactive visualization capabilities offered on any device or in the cloud. The Company’s mission is to provide enterprise analytics, mobility, and security platforms that are flexible, powerful, scalable, and user-friendly.

MicroStrategy Analytics empowers organizations to analyze vast amounts of data and securely distribute actionable business insight throughout an enterprise through two distinct offerings — MicroStrategy Analytics Platform™ and MicroStrategy Analytics Desktop™. The MicroStrategy Analytics Platform delivers reports and dashboards, and enables users to conduct ad hoc analysis and share insights anywhere, anytime, via mobile devices or the Web. It also combines the agility and productivity of self-service visual data discovery with the security, scalability, and governance features of enterprise-grade business intelligence. The MicroStrategy Analytics Platform is integrated with MicroStrategy Analytics Desktop, a standalone desktop tool designed to enable business users to analyze and understand their data. With MicroStrategy Analytics Desktop, business users can create stunning data visualizations and dashboards that provide new insight and new understanding in just minutes.

MicroStrategy Mobile™ enables organizations to rapidly build information-rich applications that deliver analytics combined with transactions, multimedia, and custom workflows, to mobile devices. The powerful code-free platform approach is designed to reduce the costs of development and enable organizations to deploy powerful mobile business apps quickly and cost-effectively. MicroStrategy Mobile is an easy, fast, and cost-effective vehicle for mobilizing an organization’s information systems, including its data warehouses, business intelligence, ERP, CRM, and Web applications that are currently accessible only on the desktop. With MicroStrategy Mobile, businesses can transform their entire workforce into a connected and more productive mobile workforce using information-driven mobile apps that are significantly more robust and secure than their Web-only counterparts. With mobile access to critical corporate data and systems that drive the business, employees can have a virtual office in their hands at all times.

MicroStrategy Usher™ is a mobile identity and security platform designed to make identity management simple, seamless, and secure. Built on an advanced mobile-centric enterprise security platform, MicroStrategy Usher can dematerialize traditional forms of identity verification such as passwords and physical badges and replace them with a single mobile identity badge, stored on a smartphone, that is cryptographically linked to its owner’s phone and dynamically linked to the enterprise’s existing identity repositories. MicroStrategy Usher’s enterprise mobile identity solution addresses some of the biggest challenges facing corporations today, including authentication, cybersecurity, access management, and resource authorization, while applying industry leading business intelligence and analytics to an enterprise’s security infrastructure. Users can log into applications, unlock doors, validate each other’s identities, and gain a holistic view of network activity using only mobile identities, either through Bluetooth^®, QR codes, or time-limited PIN codes. MicroStrategy Usher can also be used as a powerful workforce management resource because it is designed to enable managers to gain a new real-time window into the activity of their distributed workforces, while providing powerful interactive features to manage or direct them. We currently offer MicroStrategy Usher as a subscription-based service.

MicroStrategy Secure Cloud (formerly known as MicroStrategy Cloud) is a platform for organizations that want to harness the power of enterprise analytics, mobility, and security applications via the cloud. MicroStrategy Secure Cloud brings together enterprise analytics, analytical databases, and extract, transform, load (ETL) capabilities in a high performance integrated environment. MicroStrategy Secure Cloud offers on-demand access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities and is optimized for a variety of enterprise applications. Compared to traditional on-premises approaches, MicroStrategy Secure Cloud is architected to deliver best-of-breed MicroStrategy and Usher software via the cloud, with pre-configured, ready to go MicroStrategy servers, coupled with the required supporting infrastructure with metadata databases, relational databases, and big data storage.

4

The MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud, together with related product and support services, continue to generate the vast majority of our revenue. During 2014, 2013, and 2012, we did not generate significant revenues from MicroStrategy Usher.

We were incorporated as a Delaware corporation on November 17, 1989. Today, with operations in 28 countries worldwide, the company is one of the largest independent publicly-traded analytics vendors as measured by annual revenue.

MicroStrategy Analytics

MicroStrategy Analytics enables users to query and analyze detailed, transaction-level databases, large Hadoop^® distributions, data warehouse appliances, departmental databases, cloud data sources, and user-owned data in spreadsheets. It transforms data into business insights through highly visual, interactive reports and dashboards that can be securely distributed to hundreds of thousands of users throughout an enterprise.

Five key business needs have driven demand for powerful analytics solutions:

• Increased consumption of analytics. In the past, dissemination of information was limited to a few power-users or analysts. Now, a wide range of information users — from customer service representatives to the CEO within a company, and from customers to suppliers outside the organization — can benefit from the insight that analytics provides. The wide acceptance of the Internet as an information source also has fueled demand for enterprise data to be accessible over the Web to tens of thousands of users across an enterprise. In addition, demand for analytics on mobile devices is being driven by the growth of the mobile Internet and by the accelerating proliferation of mobile devices.

• Increased data scalability. Increasing information generation, and in particular, the ability to capture and store electronically every business transaction and interaction, have made terabyte-size data warehouses commonplace. Due to very large data volumes at some organizations, such as data volumes generated by social media, data warehouses can now reach sizes in excess of tens of petabytes (1,000 terabytes). While transaction- and interaction-level information is now routinely captured, organizations often struggle to make productive use of such massive data stores. Organizations need to view data within its operational context — making even the most detailed information meaningful to business users. As a result, users want the ability to easily discover trends hidden in these very large databases and to verify these trends by reviewing the underlying detail.

• Improved analytics system performance. The increase in user population sizes and data volumes puts a strain on analytics infrastructures. Business users expect to retrieve the information they are requesting within seconds of making the request. Mobile devices have set this expectation even higher by increasing demand for near instantaneous responses to requests. Analytics administrators need to systematically monitor and tune the analytics environment to provide the expected service levels.

• Improved data comprehension and visualization. As data volumes have increased, the growing work demands placed on business users have meant progressively less time available to users to monitor and improve their businesses and make informed decisions. As a result, business users need to view the data in a summarized, easy-to-grasp format and navigate to areas of concern for additional insight. Presenting the data in a highly visual, accessible, and interactive format to collate, view, and explore information with agility and ease of use improves the overall comprehension of the business and speeds up the decision-making process.

• Increased demand for personalized, one-to-one customer and/or supplier experience. Many companies have implemented strategies that establish personalized relationships with each customer and/or supplier based on individual needs and preferences. They earn loyalty by providing superior service, security, and convenience. In order to successfully acquire, retain, and upgrade customers, these organizations need to understand their customers’ profiles, transaction histories, past responses to marketing campaigns, and interactions with customer service. This information is often stored in widely dispersed and complex data sources, and obtaining a holistic view of the customer can be challenging.

5

The volume of data available to enterprises is growing at a very high rate, being driven by greater transaction detail, more sensors, more external data, and more data from mobile and social media platforms. MicroStrategy Analytics helps organizations worldwide take advantage of this explosive growth in enterprise data by equipping managers and employees with timely, actionable information to make data-driven business decisions.

Solutions built on MicroStrategy Analytics can give analysts, managers, and executives the critical insight they need to reduce costs, better allocate resources, improve efficiencies, and optimize operations. MicroStrategy Analytics can also be used to build stronger relationships with business partners and suppliers by providing insights for managing inventory levels, analyzing supply chains, and tracking vendor performance. MicroStrategy Analytics also includes predictive capabilities that enable organizations to leverage their historical data to project future business outcomes.

MicroStrategy Analytics provides IT professionals with a powerful, highly automated mechanism for delivering insightful reports, visualizations, and dashboards to employees throughout an organization. In addition, MicroStrategy Analytics includes a self-service feature, MicroStrategy Visual Insight, which enables business users to upload, prepare, and explore enterprise data on their own, without any coding or IT expertise. With this feature, business users can spot trends and outliers in a completely visual and interactive way, thereby eliminating much of the need for IT to create reports and dashboards for them.

MicroStrategy Analytics is available in two different offerings: the MicroStrategy Analytics Platform and MicroStrategy Analytics Desktop. The MicroStrategy Analytics Platform is designed for enterprise-scale business intelligence, supporting high performance analytics on gigabytes, terabytes, or petabytes of data. Organizations can deploy the MicroStrategy Analytics Platform on-premises or access the same functionality within the MicroStrategy Secure Cloud offering. MicroStrategy Analytics Desktop puts the power of MicroStrategy Analytics into the hands of individual users for self-service visual analytics and data discovery. The two products share a common user experience — making it easy to start small with self-service analytics and grow into the production-grade features of the MicroStrategy Analytics Platform.

MicroStrategy Analytics Platform

The MicroStrategy Analytics Platform is our flagship analytics software. It is a comprehensive, enterprise-grade solution featuring sophisticated analytics, scalable performance, multi-level security, and rigorous data governance. It also combines the agility and productivity of self-service data visualization (also known as visual data discovery), which bridges the gap between fast, elegant, interactive visual analytics and powerful, large-scale enterprise business intelligence.

Key benefits of the MicroStrategy Analytics Platform include:

• Flexibility to report, analyze, and monitor. The MicroStrategy Analytics Platform unifies reporting, analysis, and real-time business monitoring into one seamless experience for the business user, one efficient and scalable architecture for the IT professional, and one economical and extensible utility for the CIO.

• Industrial-strength analytics. The MicroStrategy Analytics Platform enables industrial-strength analytics with enterprise-caliber technology and high user- and data-scalability. It enables centralized administration, operations, and maintenance in a unified interface and from within a unified hardware environment. Users can connect through their mobile devices, a zero-footprint Web offering, and office productivity software suites — expanding the reach of business intelligence across the enterprise.

• Integration of analysis in every report or scorecard. The MicroStrategy Analytics Platform makes powerful analytic capability automatically available directly from enterprise reports and scorecards. It delivers analytic integration to users in two ways. The first is by providing online analytical processing (OLAP) capabilities directly to tables, charts, and visualizations embedded within report documents, allowing business users to analyze the data while staying within the bigger report document. The second is by allowing users to “drill” from a report document to a dedicated analysis view that is optimized for conducting detailed analysis. In both cases, the integration of reporting with analysis is automatic.

6

• Data to insight in minutes without IT involvement. Our self-service analytics feature, MicroStrategy Visual Insight, gives business users a simple, powerful, and fast way to analyze data with minimal set-up requirements. It is designed to allow business users to answer business questions on their own, avoiding the lengthy process of report specification and design. By using a variety of graphical visualizations to represent the entire analysis, users can easily and rapidly spot trends and outliers in large data sets, creating a user experience that seems to unfold in real time. The combination of our traditional enterprise scalability along with the MicroStrategy Visual Insight feature brings the power of enterprise analytics to the personal level, and easily extends that power to everyone in the organization.

• Actionable insight. The MicroStrategy Analytics Platform helps organizations accelerate the speed and productivity of their businesses by building mobile apps and Web dashboards that connect to back-end transactional systems and databases to include data entry and action-taking features, including: submitting orders, one-click approvals and denials, notes for tracking and directing business activity, and write-back to data sources.

• Governed data discovery. The MicroStrategy Analytics Platform enables organizations to achieve data consistency and governance across every report, dashboard, visualization, and user within the system through a trusted and centralized metadata store. By leveraging our reusable metadata to define, manage, and maintain common definitions for metrics, attributes, data sets, and other objects through governed data discovery, organizations can lower the overall cost of developing new analytical outputs (such as reports or dashboards), while helping to ensure that the information delivered in those outputs is accurate, governed, and timely.

• Heterogeneous joining of data from across the enterprise. The MicroStrategy Analytics Platform enables organizations to create integrated views of data across heterogeneous data stores. By mapping conforming dimensions from multiple sources within the MicroStrategy object model, the platform automatically joins data from multiple sources in the same table, chart, or visualization. Data can come from any source accessible by MicroStrategy, including the data warehouse, data marts, Apache™ Hadoop^®, SAP^® Business Information Warehouse (SAP BW), Microsoft^® SQL Server^® Analysis Services, IBM^® Cognos^® TM1^®, Oracle^® Essbase, and other operational system databases.

• Integration of advanced analytics into mainstream reporting and analyses. The MicroStrategy Analytics Platform’s analytic engine includes predictive capabilities in MicroStrategy reports and analyses. The analytic engine can train and calculate many of the primary data mining functions, including time-series, association rules, clustering, regression, and decision-tree algorithms. Hand-in-hand with this calculation capability, the MicroStrategy Analytics Platform also includes the ability to import data mining models directly from data mining products from vendors like IBM^® SPSS^®, Teradata^®, and SAS^® using the predictive modeling mark-up language (PMML) standard, and by embedding R statistical packages in the platform. With this capability, data mining models, such as neural network algorithms, rule set algorithms, and support vector machines, as well as ensembles of models, can be imported through a single click and automatically converted into a standard MicroStrategy metric. After that, MicroStrategy’s Data Mining Services^TM extension enables these metrics to be used freely and calculated quickly in reports, analyses, and alerts.

• Support for large data volumes and all major relational database/hardware combinations. The MicroStrategy Analytics Platform supports systems with very large data volumes and is specifically optimized to support all major relational database platforms, Hadoop distributions, and data appliances commonly used for business intelligence systems, as well as multi-dimensional databases, such as SAP BW. Important features of our solution in this area include:

• Dynamically generated SQL, multidimensional expressions (MDX), and Hadoop queries that optimize the performance of each major database;

• Very Large Database (VLDB) parameters that allow individual reports to be tuned for performance;

• Support for hand-written SQL, Hadoop, and XQuery queries;

• Ability to support very large user populations;

• Highly reliable up-time, even in high volume applications; and

• Ability to work with and support multiple languages for international applications.

7

• Powerful distribution engine for information delivery. Our technology offers a high performance, personalized distribution engine for delivering periodic and alert-based information to users via e-mail, Web, and mobile devices. The distribution engine includes drivers for all major device types used in both domestic and international markets, enabling the delivery of information to users when and where it is needed.

MicroStrategy Analytics Desktop

MicroStrategy Analytics Desktop is a fast, powerful, and easy-to-use product for self-service data visualization. It enables business users to gain valuable insight into their organizations’ data by creating stunning, useful visualizations in just minutes, without assistance from the IT department. MicroStrategy Analytics Desktop is available for free and can be readily downloaded and installed on a standard desktop computer or laptop, making the power of MicroStrategy analytics easily available to everyone.

MicroStrategy Analytics Technology Strategy

Our technology strategy is focused on delivering comprehensive platform-based solutions to enable any organization to create immediate value from analytics and then quickly grow its analytics effort to encompass more advanced capabilities as well as larger user and data scale. This strategy includes: expanding support for large information stores, improving performance and administration, enhancing our analysis capabilities, and enhancing report delivery via the Web and mobile devices. We continue to enhance our products for use with a broad range of operating systems and databases to enable our customers to leverage their existing technology investments to achieve faster query times with fewer required resources. We continue to enhance usability and visual data exploration to increase ease of use and functionality, and thus further decrease the need for IT intervention. We are working to further differentiate our products by increasing:

• Visual analysis and user self-service. Ease of use and visual exploration and analysis capabilities on small to extremely large data sets, in conjunction with the enterprise capabilities also offered by our platforms;

• Data capacity. The volume of information that can be efficiently analyzed and utilized;

• User concurrency. The number of users that can be supported simultaneously;

• Analytic sophistication. The range of analytical methods available to the application designer;

• Performance. The throughput and response time of the system, measured in seconds;

• Database flexibility. The range of data sources, data warehouses, and online transaction processing databases that the software is capable of efficiently querying without modification;

• Robustness. The reliability and availability of the software in mission-critical environments;

• Deployability. The ease with which applications can be securely deployed, modified, upgraded, and tuned;

• Personalization. The quality and sophistication of a one-to-one user experience;

• Content flexibility. The range of content, both structured and unstructured, that can be efficiently utilized;

• Media channel and interface flexibility. The range of media channels (including mobile devices), interface options, and display features supported; and

• Transaction capabilities. The ability to efficiently initiate actions and transactions from mobile devices and Web-based dashboards.

MicroStrategy Mobile

MicroStrategy’s consistently highly-rated mobile offering extends beyond basic mobile analytics to deliver an innovative mobile app platform that makes building a variety of mobile business apps easier and faster.

MicroStrategy Mobile enables organizations to rapidly build information-rich applications that deliver analytics combined with transactions, multimedia, and custom workflows to mobile devices. The powerful code-free platform approach is designed to reduce the costs of development and enable organizations to deploy powerful mobile business apps quickly and cost-effectively. MicroStrategy Mobile is an easy, fast, and cost-effective vehicle for mobilizing an organization’s information systems, including its data warehouses, business intelligence, ERP, CRM, and Web applications that are currently accessible only on the desktop. With MicroStrategy Mobile, businesses can transform their entire workforce into a connected and more productive mobile workforce using information-driven mobile apps that are significantly more robust and secure than their Web-only counterparts. With mobile access to critical corporate data and systems that drive the business, employees can have a virtual office in their hands at all times.

8

During 2014, independent analyst firm Dresner Advisory Services rated MicroStrategy Mobile the number one overall offering out of twenty-five vendors for Mobile Computing / Mobile Business Intelligence. This is the fourth year in a row that MicroStrategy has topped the list of vendors included in Dresner’s Wisdom of Crowds^® Mobile Computing / Mobile BI Market Study. Additionally, in its 2014 Value Index for Mobile Business Intelligence (BI) report, Ventana Research ranked MicroStrategy first out of 16 mobile BI vendors. MicroStrategy was cited for the value its solution provides to its customers, with a focus on app usability and return on investment.

MicroStrategy Mobile is available both as on-premises software and hosted as a service offering in MicroStrategy Secure Cloud. It is also available on Amazon Web Services (“AWS”) through the AWS Marketplace^®.

Key benefits of MicroStrategy Mobile include:

• Increased employee productivity by gaining new efficiencies and cutting decision times. MicroStrategy Mobile computing can dramatically improve personal productivity, replacing how people write, carry, touch, and decide today. MicroStrategy Mobile puts materials, information, and system access on devices that are always on, always connected, and always in reach.

• Extending information throughout an organization. MicroStrategy Mobile can help run a business more effectively by extending the reach of critical enterprise systems to all constituents in all locations. It can provide real-time access to the latest information and data-driven visualizations that fuel spontaneous conversations and more effective decision making.

• Conducting business in newer and faster ways. MicroStrategy Mobile context-aware apps that leverage native mobile device functionality (e.g., GPS, camera, etc.) allow users to complete tasks significantly faster or in more efficient ways than Web or desktop-bound apps.

• Fast app development. MicroStrategy Mobile is one of the fastest ways to create new mobile apps and mobile front-ends to existing analytics applications. Its click-to-configure features allow the development of mobile apps in a code free environment without requiring an organization’s IT resources. It also allows for the deployment of native apps across multiple operating systems with a single design and lets a user make an app multi-lingual with a few configuration clicks.

• High Performance Mobilization. MicroStrategy Mobile provides compelling and high-performance MicroStrategy Mobile powered apps that can maximize impact, durability, and adoption.

MicroStrategy Mobile Releases in 2014

MicroStrategy Mobile currently includes the following significant functional enhancements made during 2014:

• Enhanced native transactional capabilities. MicroStrategy enhanced the native transactional capabilities by adding conditional logic, input validation, and smart transactions. Smart transactions allow users to submit information and display the outcome on their app even while offline. For example, if a marketing executive approves spend for a new purchase order, the executive could view how that new spend impacts the total budget while working offline. When connectivity is resumed, the new inputs are transmitted to, and captured by, the database.

• Enhanced enterprise-grade mobile security. Some of the new security capabilities include integration with SAML, Good Dynamics^®, and Apple^®’s Touch ID^TM fingerprint identity sensor. There is also a new logout function that allows users to end their sessions. Additionally, MicroStrategy’s improved certificate server workflow allows a client certificate to be generated on the client’s device and verified on the server for improved security.

• Apple Touch ID integration. MicroStrategy became the first analytics firm to integrate with Apple Touch ID fingerprint identity sensor. Developers can configure app and document-level biometric security for their mobile analytical apps, reports, and documents. Additionally, developers can configure a Touch ID requirement to restrict printing and sharing of information.

9

• Enhanced Mobile SDK. The MicroStrategy Mobile SDK framework now accommodates and integrates with any major custom authentication system. Customized application developers have a simple and reliable way to hook into an authentication workflow that interfaces with any major external custom authentication mechanism.

• Enhanced user interface and experience. We understand that user interface and experience greatly impact user adoption, so we continually introduce new and enhanced features and capabilities in this area. Introductions and enhancements during 2014 include new mobile analytics folder browsing, options to easily switch from light to dark themes, local selection caching, animated information windows and menus, and two new types of prompts: nested and hierarchy.

• Enhanced performance with background fetch. Caching can significantly impact app performance speeds. MicroStrategy Mobile administrators can configure background fetch for apps so that information can be cached on a user’s device without requiring the user to run the app. Background fetch can be scheduled for any desired time or frequency.

• Enhanced mapping. To accelerate performance and improve user interface, MicroStrategy introduced cluster mapping. Upon rendering a map visualization, instead of loading every map marker, markers are grouped into clusters. As a user zooms into desired locations, the clusters ungroup to display the detail of the individual markers.

MicroStrategy Mobile Technology Strategy

We continue to invest in enhancing MicroStrategy Mobile to empower our customers with the ability to build apps that drive their businesses forward and deliver revolutionary applications to their employees, partners, prospects, and customers. We continue to invest in enhancing MicroStrategy Mobile’s overall performance and security as well as its three core capability areas: analytics, transactions, and multimedia. We remain focused on delivering the most compelling native end user experience on devices that are adopted by enterprises. New features specific to supported operating systems will take advantage of the native API’s and incorporate new OS capabilities into apps built by MicroStrategy customers.

We also continue to invest in bringing to life mobile apps in an easy, fast, and flexible way. We will continue to enhance our MicroStrategy Mobile technology to deliver an experience that is philosophically “user first” by combining a powerful user experience on top of a dynamic and accessible development infrastructure.

MicroStrategy Usher

MicroStrategy Usher is a mobile identity and security platform. At its core, MicroStrategy Usher is designed to make identity management simple, seamless, and secure. Built on our advanced mobile-centric enterprise security platform, MicroStrategy Usher can dematerialize traditional forms of identity verification such as passwords and physical badges and replace them with a single mobile identity badge, stored on a smartphone that is cryptographically linked to its owner’s phone and dynamically linked to the enterprise’s existing identity repositories. MicroStrategy Usher is designed to render passwords, physical badges, and other inherently vulnerable security practices unnecessary or irrelevant.

MicroStrategy Usher’s enterprise mobile identity solution addresses some of the biggest challenges facing corporations today, including authentication, cybersecurity, access management, and resource authorization, while applying industry leading business intelligence and analytics to an enterprise’s security infrastructure. Users can log into applications, unlock doors, validate each other’s identity, and gain a holistic view of network activity using only mobile identities, either through Bluetooth^® signals, QR codes, or time-limited PIN codes.

MicroStrategy Usher can appeal to businesses, universities, associations, governments, and other organizations because it adds a layer of biometric security to their systems, physical spaces, and transactions that would otherwise be technically difficult or cost-prohibitive. MicroStrategy Usher is designed to secure an enterprise by offering an alternative to existing forms of identification and authentication. MicroStrategy Usher is designed to provide a more secure alternative to passwords which can be stolen or cracked. MicroStrategy Usher is also designed to help reduce identity-related fraud by replacing physical ID cards that can be counterfeited and stolen. MicroStrategy Usher can also be used as a powerful workforce management resource because it is designed to enable managers to gain a near real-time window into the activity of their distributed workforces, while providing powerful interactive features to manage or direct them.

10

Key benefits of MicroStrategy Usher include:

• Identity protection. MicroStrategy Usher mobile identities are designed to be more secure than traditional physical forms of identity, which can be stolen and counterfeited.

• Cyber security. MicroStrategy Usher is designed to provide a more secure alternative to passwords — which can be the weak link exploited by cybercrime attacks — with biometrically-secured mobile identities.

• Physical access control. MicroStrategy Usher users can unlock doors by tapping on a “digital key” or by scanning a QR code. If a device is Bluetooth-enabled, a user can unlock a door simply by approaching it.

• Workforce management. MicroStrategy Usher can collect data about the locations of users’ MicroStrategy Usher activity, enabling managers to remotely monitor and direct distributed workforces.

• Activity analysis. MicroStrategy Usher uses MicroStrategy Analytics to monitor and analyze MicroStrategy Usher user activity.

• Convenience and cost-effectiveness. MicroStrategy Usher allows users to carry their business credentials in digital form on their smartphones. Enterprises can reduce costs associated with the distribution and management of physical badges, cards, and keys, as well as the costs associated with identity-related fraud and cybercrime.

MicroStrategy Usher Technology Strategy

Our technology strategy for MicroStrategy Usher is focused on taking advantage of developments in mobile and cloud technology to provide more flexible and powerful identification-based services. This involves continued development in the following areas:

• Biometrics. We continue to monitor the market and test new biometric measurement systems that can be integrated into MicroStrategy Usher, such as Apple’s Touch ID, voice authentication, and facial recognition.

• Validation. We continue to explore ways in which users can validate one another’s identities to broaden the applicability of MicroStrategy Usher in interpersonal engagements and business transactions.

• Logical access. We continue to explore new techniques with which MicroStrategy Usher can provide identity to applications and systems and provide alternatives to passwords, keys, and fobs.

• Physical access. We continue to expand on the integration of MicroStrategy Usher with physical access control systems and hardware, so that users with adequate credentials and digital keys can unlock secure doorways.

• Action-oriented intelligence. We are focusing on enhancing MicroStrategy Usher’s ability to determine MicroStrategy Usher member location and activities so that trends and anomalies can be used to provide better security or better workforce management.

MicroStrategy Secure Cloud

MicroStrategy Secure Cloud offers an integrated and optimized cloud business analytics platform that combines infrastructure, technology, people, and processes to offer analytics as a service to our customers. MicroStrategy Secure Cloud builds on MicroStrategy Analytics, and adds class-leading ETL and database technology to provide an agile, high performance, elastic, and cost-effective analytics platform.

MicroStrategy Secure Cloud provides our customers the MicroStrategy Analytics Platform and MicroStrategy Mobile offerings through a Platform-as-a-Service (PaaS) solution hosted in the cloud. In addition to the MicroStrategy Analytics Platform and

11

MicroStrategy Mobile, MicroStrategy Secure Cloud also offers data integration ETL and data hosting services. The MicroStrategy Secure Cloud PaaS provides customers with infrastructure (data center space, rack space, power, cooling, and servers), technology platforms (analytics, mobile data integration, and data hosting), operations, support, and expert analytics practitioners for a subscription fee with no upfront capital investment. MicroStrategy Secure Cloud can offer improved time to market, higher performance, and lower overall total cost of ownership compared to traditional on-premises deployments.

MicroStrategy analytics are offered on the AWS marketplace as a self-service customer managed solution where customers can launch their own MicroStrategy environments within minutes and start using our full MicroStrategy Analytics Platform offering at a subscription or yearly fee.

Key benefits of MicroStrategy Secure Cloud include:

• Agile rapid application development and secure deployment. MicroStrategy Secure Cloud provides the infrastructure, technology, processes, and experts that a customer needs to develop and securely deploy applications quickly. The entire service has been pre-packaged and optimized, and is supported by expert analytics practitioners. This solution allows our customers to get to market much more quickly than traditional approaches and react to business changes as they happen.

• High performance analytics applications. MicroStrategy Secure Cloud combines the high performance characteristics of the MicroStrategy Analytics Platform and MicroStrategy Mobile with high performance servers and network infrastructure. This integration allows our customers to deploy analytics and mobile applications on demand, allowing them to serve their customers more quickly and efficiently.

• Elastic capacity with no capital investment. MicroStrategy Secure Cloud allows customers to get started with no upfront capital investment in infrastructure. Customers can start small and increase their capacity on demand.

• Low overall total cost of ownership. IT application costs are driven by capital investments and the personnel cost associated with hiring a staff of experts to build, maintain, and tune a large-scale environment. MicroStrategy Secure Cloud delivers this high performance, tuned, and monitored environment as a service, lowering overall total cost of ownership.

• Global Availability. Leveraging AWS, the MicroStrategy Analytics Platform is now available in all AWS data centers spanning 11 regions on 5 continents.

MicroStrategy Secure Cloud Technology Strategy

MicroStrategy Secure Cloud offers organizations an alternate purchase and deployment model for business analytics, compared to traditional on-premises deployments. Instead of making large upfront capital investments and building large support teams, MicroStrategy Secure Cloud allows organizations to purchase analytics as a service with no upfront capital investments. Instead, it offers a payment structure that scales with the business requirements.

Our MicroStrategy Secure Cloud technology strategy is focused on continuing to enhance the reliability, self-service, performance, and scalability of our offering. We also seek to differentiate our offering by investing in enhancing the security process and infrastructure around our service, monitoring existing security and compliance certifications, and obtaining new certifications.

Product Support and Other Services

MicroStrategy Services is comprised of the following services lines:

MicroStrategy Technology Services

The Technology Services department provides technical product support to customers and partners specific to MicroStrategy software products. Additionally, Technology Services is responsible for negotiating and maintaining all support contracts with MicroStrategy customers and partners alike, including support services for MicroStrategy Secure Cloud customers. The department is comprised of the following groups:

Customer Support Group (CSG). CSG is a team of Technical Support Engineers responsible for providing first level technical support to all customers, partners, and prospects.

12

Advanced Product Support (APS). APS is a team of product specialists responsible for providing second level technical support to our worldwide call centers, customers, partners, and prospects.

Premium Support. Premium support is a team of Premium Support Engineers that provides dedicated technical support to our elite customers and partners.

Support Renewal – Maintenance. The support renewal business manages the process for renewing software maintenance contracts with customers worldwide. It also helps answer questions from customers while working with those customers on renewing their maintenance contracts.

MicroStrategy Professional Services

MicroStrategy Professional Services provides our customers with access to the most experienced group of certified MicroStrategy development resources in the industry. Through MicroStrategy Professional Services, we provide our customers with consulting and advisory services to help drive critical analytics and mobile solutions across key industries, such as financial services, healthcare, retail, and banking. We work directly with our customers and guide them in defining, developing, and delivering core business analytics solutions for their enterprise. These solutions provide our customers with greater access to critical business information, KPI’s, and metrics, which enables them to make better business decisions faster.

MicroStrategy Professional Services is a worldwide organization with operations in North America, South America, Europe, and Asia Pacific.

MicroStrategy’s Global Delivery Center (GDC) is key to our Global Delivery Model. Located in Warsaw, Poland, the GDC is a hub of several hundred consultants who support analytics projects directly at customer sites around the world or remotely. With functional and business management practices, the appropriate experts can transition on and off projects as needed. The GDC can quickly scale up or down to meet unique technical and industry requirements. Integrating the GDC with on-site project resources is a flexible and cost-efficient way to receive highly specialized services.

MicroStrategy Education Services

MicroStrategy Education Services offers education solutions for customers and partners. Through a variety of offerings, MicroStrategy Education consultants develop an ongoing education program to meet our customers’ specific business needs. Education consultants deliver quality, cost-effective instruction and skill development for administrators, developers, analysts, and business users. MicroStrategy offers programs to train individuals through instructor-led courses and online courses.

Marketing and Sales and Services Strategy

Our business objective is to become the leading enterprise software platform provider for analytics, mobile, and security to the largest enterprises, governments, and the largest databases and data providers in the world. The key elements of our strategy to achieve these objectives are as follows:

Marketing Strategy

Our marketing programs target the following principal constituencies:

• Our historical base of corporate technology buyers and departmental technology buyers across FORTUNE™ Global 2000 enterprises. We also target senior executives and other leaders in these companies for MicroStrategy Mobile and MicroStrategy Usher;

• Corporate and departmental technology buyers in mid-sized enterprises;

• Government technology buyers and the vendors to the government community;

• Independent software vendors that want to embed our technology tools in their solutions; and

13

• System integrators that have technology relationships with the largest enterprises, governments, and information-intensive businesses.

We continually seek to increase our brand awareness by focusing our messaging on the possibilities for value creation and the benefits of using our platforms, and competitive differentiators. The channels we use to communicate with these constituencies include:

• Advertising;

• Direct e-mail;

• Free and evaluation software;

• Industry awards;

• Industry events;

• Media coverage;

• Mobile application downloads;

• Our Website;

• Social media;

• Channel partners;

• User conferences; and

• Word of mouth and peer references.

Sales and Services Strategy

We primarily sell through our dedicated sales force, as well as through channel partners in order to increase market coverage in both domestic and international markets. We provide financial incentives for our channel partners to market and distribute our products and services. We also offer a comprehensive set of educational programs that enhance our potential customers’ and channel partners’ understanding of our software. Furthermore, we offer a wide range of services that provide support in the discovery, planning, development, and deployment stages of a MicroStrategy product or service.

Dedicated Sales Force. We market our software and services chiefly through our direct sales force. We have sales offices in locations throughout the world. We use distributors in several countries where we do not have sales offices.

Channel Partners. MicroStrategy has established strategic alliances with third party vendors to help ensure the success of our customers’ business intelligence initiatives. Our vendors include companies that are system integrators and consulting firms, resellers, value-added resellers, original equipment manufacturers (OEMs), and technology partners. These firms utilize MicroStrategy platforms for a variety of commercial purposes and our agreements with them generally provide non-exclusive rights to market our products and services and allow access to our marketing materials, product training, and direct sales force for field-level assistance.

MicroStrategy makes significant commitments to our channel partners, including investments in joint development including technical training and certifications, pre-sales and sales enablement, and marketing programs. Through our joint efforts, we believe customers are able to minimize their risk and maximize the return on their business intelligence projects. We believe that our channel partners allow us to leverage sales and service resources, as well as marketing and industry-specific expertise, to expand our user base and increase our market coverage.

Customers

MicroStrategy customers include leading companies from a range of industries, as well as the public sector. Below is a representative list of organizations that currently use the MicroStrategy Analytics Platform.

Retail: adidas; Coach; Deichmann SE; Giant Tiger Stores Limited; GUESS?, Inc.; La Perla; Lowe’s Companies, Inc.; New York & Company, Inc.; Pacific Sunwear of California, Inc.; Spar Austria; Staples, Inc.; The Container Store, Inc.

Financial Services and Insurance: Admiral Group; Banco Bilbao Vizcaya Argentaria, S.A. (BBVA); Bankia; Caisse d’Epargne Cote d’Azur; Deutsche Bank; Government Employees Insurance Company (GEICO); Länsförsäkringar AB; RE/MAX, LLC; Société Générale S.A.; Society for Worldwide Interbank Financial Telecommunication (SWIFT); Wintrust Financial Corporation; Zurich Insurance Group

14

Pharmaceutical and Healthcare: CareSource Management Group Co.; Cincinnati Children’s Medical Center; HealthTrust; Johnson & Johnson; NHS Greater Glasgow and Clyde; Novation

Manufacturing: Cardinal Glass Industries; Grupo Argos S.A.; Husqvarna Group; Kinross Gold Corporation; Michelin; Republic National Distributing Company, LLC; Rite-Hite Holding Corporation; Sennheiser electronic; The Sherwin-Williams Company; Watsco; Wilton Industries, Inc.

Technology, Media, and Telecommunications: Adobe; AutoTrader.com; Dell; eBay Inc.; eHarmony; Eyefreight; Facebook; Iridium Satellite LLC; LinkedIn Corporation; Netflix, Inc.; Nielsen Holdings N.V.; Sonic Automotive; Thomson Reuters; Yahoo! Inc.

Consumer Goods: Alsea; Chiquita Brands International, Inc.; Danone; Dr Pepper Snapple Group, Inc.; Electronic Partner Benelux; McCain Foods

Government and Public Services: Brussels Airport; Centers for Medicare & Medicaid Services; City of Austin (TX); International Post Corporation; Texas Department of Transportation; Transportation Security Administration (US); U.S. Postal Service

Restaurants: Chipotle Mexican Grill, Inc.; Domino’s Pizza, Inc.; Logan’s Roadhouse, Inc.; PF Chang’s China Bistro, Inc.; Starbucks Coffee Company

Hospitality and Leisure: 24 Hour Fitness; Accor S.A.; GolfNow; Hilton Worldwide; Orbitz Worldwide; Royal Caribbean International; Starwood Hotels & Resorts Worldwide, Inc.; Tsogo Sun

Customer Deals from 2014

Admiral Group

With headquarters in Cardiff, Wales, Admiral Group is one of the leading car insurance providers in the United Kingdom, insuring more than 3.9 million vehicles and employing 7,000 staff worldwide. A MicroStrategy customer since 2009, Admiral Group will replace its existing policy administration system and leverage the MicroStrategy Analytics Platform to anchor a new dashboard reporting analytics solution. The MicroStrategy-based solution will enable Admiral employees to easily access important brand and product data across Admiral’s multiple lines of business and deliver customized products and services more efficiently to Admiral customers. MicroStrategy was chosen for its solution’s user-friendly capabilities, superior performance and scalability, system availability, as well as its ability to support trusted governed data discovery within a comprehensive enterprise analytics platform.

Bankia

With its operational headquarters in Madrid, Spain, Bankia has 12 million customers and 10,000 employees. Bankia selected MicroStrategy as its enterprise analytics standard to improve efficiencies, boost competitiveness, and deliver better customer service. Bankia currently uses the MicroStrategy Analytics Platform to speed information analytics and management processes, yielding data-driven decisions for its employees. Bankia is currently developing a MicroStrategy-based scorecard for senior management to analyze critical KPIs. Bankia’s sales managers will leverage MicroStrategy Mobile on their mobile devices to track sales and employee performance trends, as well as conduct analyses to boost office productivity and internal competitiveness. After a thorough evaluation of the various analytics solutions available in the market, Bankia selected MicroStrategy for its comprehensive analytics platform, ease of use, ease of deployment, and ability to support various data sources, as well as the platform’s agility, flexibility and scalability to accommodate Big Data.

15

Blackbox BI Consultancy Sdn Bhd

With deep domain knowledge in the retail sector, Blackbox BI Consultancy was established in Malaysia to help retailers across the South East Asia region harness business analytics solutions to increase business performance and gain a competitive advantage. As a strategic partner of MicroStrategy, Blackbox BI Consultancy selected the MicroStrategy Analytics Platform to offer cloud-based retail analytics solutions to its wide spectrum of clients that span across the fashion, home furnishing, consumer durable, groceries, convenience stores, food and beverage, and healthcare industries. MicroStrategy was selected for its scalability, robustness and short development cycle.

Caisse d’Epargne Cote d’Azur

Headquartered in Nice, France, Caisse d’Epargne Cote d’Azur is one of the 17 regional entities of Caisse d’Epargne and part of BPCE, the second largest banking group in France. A new MicroStrategy customer, Caisse d’Epargne Cote d’Azur selected MicroStrategy to deploy an enterprise analytics and reporting platform to develop intuitive, actionable dashboards and reports for 1,700 users across the organization. The MicroStrategy Analytics Platform will be the cornerstone of the bank network’s sales and financial performance management system. Caisse d’Epargne Cote d’Azur selected MicroStrategy for its unified architecture, best-in-class performance and scalability, full range of mobile capabilities, and its commitment to customer success.

Electronic Partner Benelux

Electronic Partner Benelux, with its 550 affiliated stores in the Netherlands and approximately 5,000 stores in Europe, is a leading organization in the consumer and household electrical sector. A new MicroStrategy customer, Electronic Partner Benelux selected MicroStrategy to improve its management information dashboards and reporting. Recently implementing a pilot to distribute reports to its suppliers and customers, Electronic Partner Benelux will roll out mobile dashboards to its salesforce. Electronic Partner Benelux selected MicroStrategy for its ease of use, lower total cost of ownership, and proven retail leadership.

FNV Bondgenoten

FNV Bondgenoten, the largest trade union in the Netherlands, works to advance the work-related and income-related interests of over 460,000 members in the retail, services, industrial, metal, agricultural, technology, temporary agency work and transportation sectors. A new MicroStrategy customer, FNV Bondgenoten will rely on the MicroStrategy Analytics Platform to analyze membership and financial data, better understand union member demographics, and devise appeals to workers to boost its membership. MicroStrategy was cited for its comprehensive enterprise software offerings, superior scalability and reliability, user-friendly capabilities, and its low total cost of ownership.

International Post Corporation

International Post Corporation (IPC), a cooperative association of 24 member postal operators in Asia Pacific, Europe and North America, provides its member postal operators with service quality, postal technology and market intelligence solutions and services, with the aim to support its members to ensure the high performance of international mail, packet and parcel service and respond to consumer needs. With members delivering approximately 80 percent of global postal mail, Brussels, Belgium-based IPC represents the majority of the world’s mail volume. A new MicroStrategy customer, IPC selected MicroStrategy to deploy a single unified analytics platform that will enable it to develop intuitive, actionable dashboards and reports to 1,300 member postal operators and 100 internal users. These members will have access to MicroStrategy Visual Insight to build compelling visualizations and uncover insights in their data quickly. IPC selected the MicroStrategy Analytics Platform for its lowest total cost of ownership and fastest time to market.

Republic National Distributing Company, LLC

Republic National Distributing Company, LLC (RNDC) is the second largest beverage alcohol distributor of premium wine and spirits in the U.S., employing more than 7,000 individuals nationwide. RNDC is extending its enterprise deployment of MicroStrategy to mobile devices. The first project will be an iPad sales enablement app for RNDC’s salesforce. The purpose of the app is to help sales representatives analyze their key performance measures and customer stock, as well as provide them with a snapshot of their performance versus goals. Having this information on-the-go will keep RNDC’s salesforce well-informed

16

wherever they are in the field, and will enable more data-driven discussions when visiting with customers. RNDC chose MicroStrategy for its platform’s ease of use, self-service analytics, scalability, and mobile capabilities.

SBV Services (Pty) Ltd

With over 30 centers in Sub-Saharan Africa, SBV Services is a pioneer in the cash industry, providing services that extend across the entire cash supply value chain. Based in Johannesburg, South Africa, SBV Services recently expanded its agreement with MicroStrategy to enable its employees to access multiple systems to monitor and improve operations. While insight from MicroStrategy-based advanced analytics data currently helps SBV Services to evaluate key performance measures to reduce costs and identify risks, the latest agreement will mobilize its information systems to reach decision makers on their mobile devices. SBV Services chose MicroStrategy for its platform’s ease of use, self-service analytics, scalability, and mobile capabilities.

Sonic Automotive Inc.

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the largest automotive retailers in the U.S. with more than 100 dealerships in 13 states. Sonic Automotive expanded its agreement with MicroStrategy to deploy web and mobile-based applications to additional employees to help them monitor operations and track financial metrics in order to improve productivity and increase sales. A MicroStrategy customer since 2010, Sonic Automotive continues to leverage MicroStrategy Mobile as a strategic differentiator, empowering its dealerships to easily explore sales performance scorecards on their mobile devices to make better decisions. Sonic Automotive chose MicroStrategy for its platform’s ease-of-use, market-leading mobile platform, superior data visualization capabilities, and ability to speed the business forward.

SPAR

SPAR, a 100% privately owned company with headquarters in Salzburg, is one of Austria’s most modern and most innovative trading companies. SPAR’s core business in Austria and abroad is the food retail business. In Austria, there are approximately 1,600 stores and 41,000 employees. SPAR selected the MicroStrategy Analytics Platform to implement on top of its SAP BW data warehouse, with SAP HANA to be implemented later this year. MicroStrategy will initially be used to analyze vendor performance, with employee performance and wholesale reporting applications in development. Eventually, MicroStrategy will be adopted as SPAR’s enterprise analytics standard. MicroStrategy was chosen for its comprehensive analytics platform, scalability, ease of use, and low total cost of ownership.

Watsco

With headquarters in Miami, FL, Watsco is the largest distributor of air conditioning, heating, and refrigeration equipment and related parts and supplies in the HVAC/R distribution industry, currently operating 569 locations in 38 U.S. states, Canada, Mexico and Puerto Rico, with additional market coverage on an export basis to Latin America and the Caribbean. A MicroStrategy customer since 2011, Watsco chose to purchase additional licenses of the MicroStrategy Analytics Platform and MicroStrategy Mobile to provide its employees with the ability to analyze sales performance, improve operational efficiencies, and track inventory levels. Watsco cited MicroStrategy for its user-friendly capabilities, comprehensive analytics platform offering, trusted self-service data discovery, superior scalability, and mobile leadership in the market.

Competition

MicroStrategy Analytics and MicroStrategy Secure Cloud Competitors

The analytics platform market is highly competitive and subject to rapidly changing technology paradigms. Within the analytics space, we compete with many different vendors, including (1) large software vendors (megavendors), such as IBM, SAP, Microsoft, and Oracle, that provide one or more products that directly compete with our products; (2) open source analytics vendors such as TIBCO JasperSoft and Pentaho; (3) various other analytics software providers, such as Qlik, Tableau Software, Information Builders, and the SAS Institute; (4) pure-play mobile analytics vendors, such as MeLLmo (Roambi), that do not offer an analytics platform, but offer a mobile user interface that can be used as an extension to existing analytics platforms; and (5) other vendors offering cloud-based offerings, such as GoodData and Birst. Our future success depends on the effectiveness with which we can differentiate and

17

compete with these vendors and other potential competitors across different sizes of analytics implementation projects. Failure to maintain adequate technology differentiation from these competitors could materially adversely affect our recurring software maintenance revenue and new license and subscription revenues from both existing and prospective customers.

MicroStrategy Mobile Competitors

The market for mobile analytics is rapidly evolving. New mobile devices are being introduced in the market at a rapid pace, and enhancements to mobile operating systems are being made at an even faster rate. The rapidly changing technology landscape creates opportunities for both existing competitors and new vendors to introduce innovative new products. Within the mobile analytics space, we predominantly compete with the same set of analytics vendors that we compete with in the analytics platform market. Our competitiveness in this market will depend on how quickly we can adapt to the changing technology landscape and how effectively we sell, market, and differentiate our offering.

MicroStrategy Usher Competitors

MicroStrategy Usher competes with technologies categorized as user authentication products, which are dominated by a few companies such as RSA, CA, SafeNet, Vasco, and Gemalto. These competitors focus primarily on traditional forms of identity verification such as smart cards, tokens, and password managers. These companies have significant name recognition and offer solutions with security architectures that are familiar to IT buyers. MicroStrategy Usher also competes with companies with newer solutions, often involving mobile technology, including Telesign, Authentify, SecurEnvoy, Daon, and Entrust.

Restructuring

In the third quarter of 2014, we committed to a restructuring plan (the “2014 Restructuring Plan”) to streamline our workforce and spending to better align our cost structure with our business strategy, including reducing our workforce by 777 employees. As of December 31, 2014, we had implemented substantially all of the plan. We do not expect future costs associated with implementing the remainder of the 2014 Restructuring Plan, consisting primarily of the liquidation of certain foreign subsidiaries, to be material. The 2014 Restructuring Plan resulted in pre-tax restructuring charges of $11.6 million and $3.2 million in the third and fourth quarters of 2014, respectively. See Note 8, Restructuring, to the Consolidated Financial Statements for further detail on the 2014 Restructuring Plan. We expect that the 2014 Restructuring Plan will deliver annualized pre-tax savings of approximately $67.2 million, as compared to estimated annualized pre-restructuring expenses. In addition to the 2014 Restructuring Plan, we have implemented other internal cost-savings initiatives that we expect will deliver additional annualized pre-tax savings.

Employees

As of December 31, 2014, we had a total of 2,470 employees, of whom 1,201 were based in the United States and 1,269 were based internationally. Of our 2,470 employees, 662 were engaged in sales and marketing, 645 in research and development, 819 in subscription, product support, consulting, and education services, and 344 in finance, administration, and corporate operations. None of our employees in the United States is represented by a labor union; however, in certain foreign subsidiaries some employees are members of trade or local unions. In France, our employees are represented by a works council as required by local law. We have not experienced any work stoppages and consider our relations with our employees to be good.

18

The following table summarizes employee headcount, as of the dates indicated and reflects changes resulting from the 2014 Restructuring Plan as well as new hires and terminations outside the 2014 Restructuring Plan:

	December 31,		March 31,		June 30,		September 30,		December 31,
	2013		2014		2014		2014		2014
Subscription services		39		47		59		61		57
Product support		164		149		142		144		138
Consulting		669		653		683		676		600
Education		36		40		43		35		24
Sales and marketing		825		861		920		827		662
Research and development		953		992		1,101		965		645
General and administrative		472		479		463		417		344
Total headcount		3,158		3,221		3,411		3,125		2,470

Research and Product Development

We maintain a dedicated performance engineering team and conduct research and development focused on providing our customers with the highest levels of performance for analytics applications of all sizes and security solutions. The description of research and development expenses in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes a detailed breakdown of such expenses. We believe that our future performance will depend in large part on our ability to maintain and enhance our current product line, develop new products that achieve market acceptance, maintain technological competitiveness, and meet an expanding range of customer requirements. As of December 31, 2014, our research and product development staff consisted of 645 employees.

Available Information

MicroStrategy’s Website is located at www.microstrategy.com. MicroStrategy makes available free of charge, on or through the Investor Relations section of our Website (http://ir.microstrategy.com), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the Securities and Exchange Commission (“SEC”). Information found on our Website is not part of this report or any other report filed with the SEC. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

19

Item 1A. Risk Factors

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described below are not the only ones facing MicroStrategy. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

If any of the following risks actually occur, our business, financial condition, or results of operations could be materially adversely affected. In such case, the market price of our class A common stock could decline and you may lose all or part of your investment.

Our quarterly operating results, revenues, and expenses may fluctuate significantly, which could have an adverse effect on the market price of our stock

For a number of reasons, including those described below, our operating results, revenues, and expenses have in the past varied and may in the future vary significantly from quarter to quarter. These fluctuations could have an adverse effect on the market price of our class A common stock.

Fluctuations in Quarterly Operating Results. Our quarterly operating results may fluctuate, in part, as a result of:

• the size, timing, volume, and execution of significant orders and shipments;

• the mix of products and services ordered by customers, including product licenses and subscription offerings, which can affect the extent to which revenue is recognized immediately or over future quarterly periods;

• the timing of the release or delivery of new or enhanced offerings, which may affect the period in which we are able to recognize revenue;

• the timing of announcements of new offerings by us or our competitors;

• changes in our pricing policies or those of our competitors;

• market acceptance of new and enhanced versions of our products and services;

• the length of our sales cycles;

• seasonal or other buying patterns of our customers;

• changes in our operating expenses, including the impact of our recent restructuring activities;

• planned major maintenance activities related to our owned corporate aircraft;

• the timing of research and development projects and the capitalization of software development costs;

• personnel changes, including the impact of our recent restructuring activities;

• our use of channel partners;

• utilization of our consulting and education services, which can be affected by delays or deferrals of customer implementation of our software products;

• changes in foreign currency exchange rates;

• our profitability and expectations for future profitability and its effect on our deferred tax assets and net income for the period in which any adjustment to our net deferred tax asset valuation allowance may be made;

20

• increases or decreases in our liability for unrecognized tax benefits; and

• changes in customer budgets.

Limited Ability to Adjust Expenses. We base our operating expense budgets on expected revenue trends and strategic objectives. Many of our expenses, such as office leases and certain personnel costs, are relatively fixed. We may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall. Accordingly, any shortfall in revenue may cause significant variation in operating results in any quarter. For example, although we have implemented substantially all of the 2014 Restructuring Plan that is designed to reduce our operating expenses, if our revenues in the future are not sufficient to offset our operating expenses, or we are unable to adjust our operating expenses in a timely manner in response to any shortfall in anticipated revenue, we may incur additional operating losses.

Based on the above factors, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. It is possible that in one or more future quarters, our operating results may be below the expectations of public market analysts and investors. In that event, the market price of our class A common stock may fall.

The market price of our class A common stock has been and may continue to be volatile

The market price of our class A common stock historically has been volatile and may continue to be volatile. The market price of our class A common stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include, but are not limited to:

• quarterly variations in our results of operations or those of our competitors;

• announcements about our earnings that are not in line with analyst expectations, the likelihood of which may be enhanced because it is our policy not to give guidance relating to our anticipated financial performance in future periods;

• announcements by us or our competitors of acquisitions, dispositions, new offerings, significant contracts, commercial relationships, or capital commitments;

• the emergence of new sales channels in which we are unable to compete effectively;

• our ability to develop, market, and deliver new and enhanced offerings on a timely basis;

• commencement of, or our involvement in, litigation;

• any major change in our board, management, or governing documents;

• changes in governmental regulations or in the status of our regulatory approvals;

• recommendations by securities analysts or changes in earnings estimates;

• announcements by our competitors of their earnings that are not in line with analyst expectations;

• the volume of shares of our class A common stock available for public sale;

• sales or purchases of stock by us or by our stockholders, and issuances of awards under our stock incentive plan;

• short sales, hedging, and other derivative transactions involving shares of our class A common stock; and

• general economic conditions and slow or negative growth of related markets.

21

In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of technology companies. These broad market and industry factors may seriously harm the market price of our class A common stock, regardless of our actual operating performance.

We may not be able to sustain or increase profitability in the future

We generated income from continuing operations, net of tax, for each of the fiscal years ended December 31, 2014, 2013, and 2012; however, we may not be able to sustain or increase profitability on a quarterly or annual basis in the future.

As of December 31, 2014, option awards granted under our stock incentive plan are expected to result in our recognizing additional share-based compensation expense of approximately $46.6 million over the remaining weighted average vesting period of approximately 3.2 years. If our revenues are not sufficient to offset these and other operating expenses, or we are unable to adjust our operating expenses in a timely manner in response to any shortfall in anticipated revenue, our profitability may decrease, we may cease to be profitable, or we may incur operating losses. As a result, our business, results of operations, and financial condition may be materially adversely affected.

As of December 31, 2014, we had $21.1 million of deferred tax assets, net of a $2.3 million valuation allowance, and if we are unable to sustain profitability in the future, we may be required to increase the valuation allowance against these 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.

We face risks arising from our restructuring activities

In September 2014, we committed to a restructuring plan to streamline our workforce and spending to better align our cost structure with our business strategy. We implemented substantially all of the plan in 2014, including a workforce reduction of 777 employees worldwide. See Note 8, Restructuring, to the Consolidated Financial Statements in “Part IV. Item 15. Exhibits, Financial Statement Schedules” of this Annual Report on Form 10-K for further information relating to the restructuring plan. The restructuring presents significant potential risks that may impair our ability to achieve anticipated cost reductions or otherwise harm our business, including:

• a decrease in employee morale, which could lead to voluntary departures of key employees;

• failure to meet operational targets or customer requirements due to the termination or attrition of employees, or a decrease in employee morale;

• failure to maintain adequate controls and procedures while consolidating operational and administrative infrastructure following the execution of the restructuring;

• diversion of management attention from ongoing business activities; and

• employment by our competitors of employees whose positions were eliminated in connection with the restructuring.

Economic uncertainty, particularly in the retail industry, could materially adversely affect our business and results of operations

General worldwide economic conditions remain uncertain. Economic uncertainty and associated macroeconomic conditions make it extremely difficult for our customers and us to accurately forecast and plan future business activities, and could cause our customers to slow spending on our products and services, which could delay and lengthen sales cycles. Furthermore, during uncertain economic times our customers may face issues gaining timely access to sufficient credit, which could result in an impairment of their ability to make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts and our results would be negatively impacted.

22

Furthermore, we have a significant number of customers in the retail industry. A significant downturn in this industry may cause organizations to react by reducing their capital expenditures in general or by specifically reducing their spending on information technology. In addition, customers in this industry may delay or cancel information technology projects or seek to lower their costs by renegotiating vendor contracts. Customers with excess information technology resources may choose to develop in-house software solutions rather than obtain those solutions from us. Moreover, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers.

We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery generally, or in the retail industry in particular. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be materially adversely affected.

We may have exposure to greater than anticipated tax liabilities

We are subject to income taxes and non-income taxes in a variety of domestic and foreign jurisdictions. Our future income taxes could be materially adversely affected by earnings that are lower than anticipated in jurisdictions where we have lower statutory rates and earnings that are higher than anticipated in jurisdictions where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, changes in the amount of unrecognized tax benefits, or by changes in tax laws, regulations, accounting principles, or interpretations thereof.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting (BEPS) project being undertaken by the Organisation for Economic Co-operation and Development (OECD). The OECD, which represents a coalition of member countries, is contemplating changes to numerous long-standing tax principles. These contemplated changes, if finalized and adopted by countries, could increase tax uncertainty and may adversely affect our provision for income taxes. In the U.S., a number of proposals for broad reform of the corporate tax system are under evaluation by various legislative and administrative bodies, but it is not possible to accurately determine the overall impact of such proposals on our effective tax rate at this time.

Our determination of our tax liability is subject to review by applicable domestic and foreign tax authorities. For example, we are currently under tax examinations in the U.S. and in Germany. Any adverse outcome of such reviews could have an adverse effect on our operating results and financial condition. The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. Moreover, as a multinational business, we have subsidiaries that engage in many intercompany transactions in a variety of tax jurisdictions where the ultimate tax determination is uncertain.

We also have contingent tax liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, we may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion.

As a result of these and other factors, the ultimate amount of tax obligations owed may differ from the amounts recorded in our financial statements and any such difference may materially affect our financial results in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.

If the market for analytics products fails to grow as we expect, or if businesses fail to adopt our offerings, our business, operating results, and financial condition could be materially adversely affected

Nearly all of our revenues to date have come from sales of analytics products and related technical support, consulting, and education services. We expect these sales to account for a large portion of our revenues for the foreseeable future. Although demand for analytics products has grown in recent years, the market for analytics offerings continues to evolve. Resistance from consumer and privacy groups to increased commercial collection and use of data on spending patterns and other personal behavior and governmental restrictions on the collection and use of personal data may impair the further growth of this market, as may other developments. We cannot be sure that this market will continue to grow or, even if it does grow, that businesses will adopt our solutions.

23

We have spent, and intend to keep spending, considerable resources to educate potential customers about analytics offerings in general and our offerings in particular. However, we cannot be sure that these expenditures will help any of our offerings achieve any additional market acceptance. If the market fails to grow or grows more slowly than we currently expect or businesses fail to adopt our offerings, our business, operating results, and financial condition could be materially adversely affected.

Our products face intense competition, which may lead to lower prices for our products and services, reduced gross margins, loss of market share, and reduced revenue

The analytics platform market is highly competitive and subject to rapidly changing technology paradigms. Within the analytics space, we compete with many different vendors, including (1) large software vendors (megavendors), such as IBM, SAP, Microsoft, and Oracle, that provide one or more products that directly compete with our products; (2) open source analytics vendors such as TIBCO JasperSoft and Pentaho; (3) various other analytics software providers, such as Qlik, Tableau Software, Information Builders, and the SAS Institute; (4) pure-play mobile analytics vendors, such as MeLLmo (Roambi), that do not offer an analytics platform but offer a mobile user interface that can be used as an extension to existing analytics platforms; and (5) other vendors offering cloud-based offerings, such as GoodData and Birst. Our future success depends on the effectiveness with which we can differentiate and compete with these vendors and other potential competitors across different sizes of analytics implementation projects. Failure to maintain adequate technology differentiation from these competitors could materially adversely affect our recurring software maintenance revenue and new license and subscription revenues from both existing and prospective customers.

Some of our competitors have longer operating histories and significantly greater financial, technical, and marketing resources than we do. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion, sale, and marketing of their offerings than we can, such as offering certain analytics products free of charge when bundled with other software offerings. In addition, many of our competitors have strong relationships with current and potential customers, extensive industry and specialized business knowledge, as well as corresponding proprietary technologies that they can leverage, such as multidimensional databases and ERP repositories. As a result, they may be able to prevent us from penetrating new accounts or expanding within existing accounts.

Increased competition may lead to price cuts, reduced gross margins, and loss of market share. We may not be able to compete successfully against current and future competitors and the failure to meet the competitive pressures we face may have a material adverse effect on our business, operating results, and financial condition.

Current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others. By doing so, these competitors may increase their ability to meet the needs of our potential customers by virtue of their expanded offerings. Our current or prospective channel partners may establish cooperative relationships with our current or future competitors. These relationships may limit our ability to sell our analytics offerings through specific distribution channels. Accordingly, new competitors or alliances among current and future competitors may emerge and rapidly gain significant market share. These developments could limit our ability to obtain revenues from new customers and to sustain software maintenance revenues from our installed customer base. In addition, basic office productivity software suites, such as Microsoft Office, could evolve to offer advanced analysis and reporting capabilities that may reduce the demand for our analytics offerings.

MicroStrategy Usher competes with technologies categorized as user authentication products, which are dominated by a few companies such as RSA, CA, SafeNet, Vasco, and Gemalto. These competitors focus primarily on traditional forms of identity verification such as smart cards, tokens, and password managers. These companies have significant name recognition and offer solutions with security architectures that are familiar to IT buyers. MicroStrategy Usher also competes with companies with newer solutions, often involving mobile technology, including Telesign, Authentify, SecurEnvoy, Daon, and Entrust. To date, we have expended significant resources in the development and marketing of MicroStrategy Usher, which has not generated significant revenues. Failure to adequately differentiate and market our technology from these competitors could materially adversely affect our ability to generate significant revenues from MicroStrategy Usher.

24

We depend on revenue from a single suite of products and related services

Our MicroStrategy Analytics software and related products and services account for a substantial portion of our revenue. Because of this revenue concentration, our business could be harmed by a decline in demand for, or in the prices of, our MicroStrategy Analytics software as a result of, among other factors, any change in our pricing model, increased competition, maturation in the markets for these products, or other risks described in this document.

If we are unable to develop and release product enhancements and new offerings to respond to rapid technological change in a timely and cost-effective manner, our business, operating results, and financial condition could be materially adversely affected

The market for our offerings is characterized by rapid technological change, frequent new product introductions and enhancements, changing customer demands, and evolving industry standards. The introduction of offerings embodying new technologies can quickly make existing offerings obsolete and unmarketable. We believe that our future success depends largely on three factors:

• our ability to continue to support a number of popular operating systems and databases;

• our ability to maintain and improve our current offerings; and

• our ability to rapidly develop new offerings and product enhancements that achieve market acceptance, maintain technological competitiveness, and meet an expanding range of customer requirements.

Analytics applications are inherently complex, and it can take a long time and require significant research and development expenditures to develop and test new offerings and product enhancements. In addition, customers may delay their purchasing decisions because they anticipate that new or enhanced versions of our offerings will soon become available. We cannot be sure that we will succeed in developing, marketing, and delivering on a timely and cost-effective basis new or enhanced offerings that respond to technological change or new customer requirements, nor can we be sure that any new or enhanced offerings will achieve market acceptance. Moreover, even if we introduce a new offering, we may experience a decline in revenues of our existing offerings that is not fully matched by the new offering’s revenue. For example, customers may delay making purchases of a new offering to permit them to make a more thorough evaluation of the offering, or until industry and marketplace reviews become widely available. Some customers may hesitate migrating to a new offering due to concerns regarding the complexity of migration and product infancy issues on performance. In addition, we may lose existing customers who choose a competitor’s offering rather than migrate to our new offering. This could result in a temporary or permanent revenue shortfall and materially adversely affect our business.

A substantial customer shift from the deployment of MicroStrategy Analytics based on a perpetual software license to our cloud services offerings could affect the timing of revenue recognition and materially adversely affect our operating results

We offer our analytics platform in the form of a perpetual software license and a cloud-based Platform-as-a-Service subscription. The payment streams and revenue recognition timing for our perpetual software licenses are different from those for our subscription services. For perpetual software licenses, customers typically pay us a lump sum soon after entering into a software license agreement and revenue is typically recognized upon delivery of the software to the customer. For subscription services, customers typically make periodic payments over the subscription period and revenue is typically recognized ratably over the subscription period. As a result, if a substantial number of current or new customers shift to subscribing to our cloud services offerings instead of purchasing perpetual software licenses for MicroStrategy Analytics, the resulting change in payment terms and revenue recognition may materially adversely affect our operating results and cash flows for the reporting periods during which such a shift occurs.

Our investment in new business strategies and initiatives could disrupt the operations of our ongoing business and present risks that we have not adequately anticipated

We have invested, and in the future may invest, in new business strategies and initiatives. For example, in recent years we have introduced a number of innovative technologies designed to enable companies to capitalize on Big Data, mobile applications, cloud-based services, and security trends in the marketplace. These endeavors may involve significant risks and uncertainties, including

25

distraction of management from other business operations, the dedication of significant research and development, sales and marketing, and other resources to these new initiatives at the expense of our other business operations, generation of insufficient revenue to offset expenses associated with new initiatives, incompatibility of our new technologies with third party platforms, inadequate return of capital, and other risks that we may not have adequately anticipated. For example, we have expended significant resources in the development and marketing of MicroStrategy Usher, which has not generated significant revenues to date. Because new strategies and initiatives are inherently risky, these strategies and initiatives may not be successful and could materially adversely affect our financial condition and operating results.

Business disruptions, including interruptions, delays, or failures in service from our third-party data center hosting facilities and other third-party services, could materially adversely affect our operating results or result in a material weakness in our internal controls that could adversely affect the market price of our stock

A significant portion of our research and development activities or certain other critical business operations are concentrated in facilities in Northern Virginia, China, and Poland. In addition, we serve our customers using third-party data center hosting facilities located in the United States and England and other third-party services, including Amazon Web Services and other cloud services. We are a highly automated business, and a disruption or failure of our systems, or the third-party hosting facilities or other services that we use, could cause delays in completing sales and providing services. Such disruptions or failures could include a major earthquake, fire, act of terrorism or other catastrophic event, or a decision by one of our third-party service providers to close facilities that we use without adequate notice or other unanticipated problems with the third-party services that we use, including a failure to meet service standards.

Any such disruptions or failures could (i) result in the destruction or disruption of any of our critical business operations, controls, or procedures or information technology systems, (ii) severely affect our ability to conduct normal business operations, (iii) result in a material weakness in our internal control over financial reporting, (iv) cause our customers to terminate their subscriptions, (v) result in our issuing credits or paying penalties or fines, (vi) harm our reputation, or (vii) adversely affect our attrition rates or our ability to attract new customers, any of which could materially adversely affect our future operating results.

For example, as described in “Item 9A. Controls and Procedures”, we have concluded that our internal control over financial reporting was not effective as of December 31, 2014 because of a material weakness that resulted from a failure by a third-party service organization to provide an adequate Service Organization Control (“SOC”) 1 Type 2 report. If we are unable to address this material weakness with respect to future periods, any ineffectiveness of our internal controls could have a material adverse effect on our operating results, cause us to fail to meet our reporting obligations, cause management to devote significant resources to improving internal controls, or reduce the market’s confidence in our financial statements, which could adversely affect the market price of our stock.

We use channel partners and if we are unable to maintain successful relationships with them, our business, operating results, and financial condition could be materially adversely affected

In addition to our direct sales force, we use channel partners such as resellers, value-added resellers, system integrators and consulting firms, original equipment manufacturers, and technology partners to license and support our products. For the year ended December 31, 2014, transactions by channel partners for which we recognized revenues accounted for 22.4% of our total product licenses revenues. Our channel partners may offer customers the products and services of several different companies, including offerings that compete with ours. Because our channel partners generally do not have an exclusive relationship with us, we cannot be certain that they will prioritize or provide adequate resources to selling our products. Moreover, divergence in strategy or contract defaults by any of these channel partners may materially adversely affect our ability to develop, market, sell, or support our offerings.

Although we believe that direct sales will continue to account for a majority of product licenses revenues, we seek to maintain a significant level of sales activities through our channel partners. There can be no assurance that our channel partners will continue to cooperate with us. In addition, actions taken or omitted to be taken by such parties may materially adversely affect us. Our ability to achieve revenue growth in the future will depend in part on our ability to maintain successful relationships with our channel partners. If we are unable to maintain our relationships with these channel partners, our business, results of operations, and financial condition could be materially adversely affected.

In addition, we rely on our channel partners to operate in accordance with the terms of their contractual agreements with us. For example, our agreements with our channel partners limit the terms and conditions pursuant to which they are authorized to resell or distribute our software and offer technical support and related services. We also typically require our channel partners to represent to us the dates and details of product licenses transactions sold through to end user customers. If our channel partners do not comply with their contractual obligations to us, our business, results of operations, and financial condition may be materially adversely affected.

26

Our recognition of deferred revenue and advance payments and future customer purchase commitments is subject to future performance obligations and may not be representative of revenues for succeeding periods

Our gross current and non-current deferred revenue and advance payments totaled $223.7 million as of December 31, 2014. We offset our accounts receivable and deferred revenue for any unpaid items, which totaled $104.4 million, resulting in net current and non-current deferred revenue and advance payments of $119.3 million as of December 31, 2014. The timing and ultimate recognition of our deferred revenue and advance payments depend on various factors, including our performance of various service obligations.

We have entered into certain additional agreements that include future minimum commitments by our customers to purchase products, subscription services, product support, or other services through 2019 totaling approximately $136.4 million. These future commitments are not included in our deferred revenue balances. Because of the possibility of customer changes or delays in customer development or implementation schedules or budgets, and the need for us to satisfactorily perform product support and other services, deferred revenue and advance payments at any particular date may not be representative of actual revenue for any succeeding period.

Our international operations are complex and expose us to risks that could have a material adverse effect on our business, operating results, and financial condition

We receive a significant portion of our total revenues from international sales, and conduct our business activities in various foreign countries, including some emerging markets where we have limited experience, where the challenges of conducting our business can be significantly different from those we have faced in more developed markets, and where business practices may create internal control risks. International revenues accounted for 41.1%, 40.4%, and 42.3% of our total revenues from continuing operations for the years ended December 31, 2014, 2013, and 2012, respectively. Our international operations require significant management attention and financial resources.

There are certain risks inherent in our international business activities including:

• fluctuations in foreign currency exchange rates;

• new, or changes in, regulatory requirements;

• tariffs, export and import restrictions, restrictions on foreign investments, sanctions, and other trade barriers or protection measures;

• costs of localizing offerings;

• lack of acceptance of localized offerings;

• difficulties in and costs of staffing, managing, and operating our international operations;

• tax issues, including restrictions on repatriating earnings;

• weaker intellectual property protection;

• economic weakness or currency related crises;

• the burden of complying with a wide variety of laws, including those relating to labor matters, consumer and data protection, privacy, network security, and encryption;

• generally longer payment cycles and greater difficulty in collecting accounts receivable;

• our ability to adapt to sales practices and customer requirements in different cultures;

• corporate espionage; and

27

• political instability and security risks in the countries where we are doing business.

Various corporate tax reform bills and other proposals are currently under consideration by Congress and the Obama Administration. These proposals include, among other items, corporate income tax rate changes in varying, uncertain, or unspecified amounts, the reduction or elimination of certain corporate tax incentives, modifications to the existing regime for taxing overseas earnings, and measures to prevent base erosion and profit shifting. It is not clear whether, or to what extent, these proposals may be enacted. Significant changes to the U.S. taxation of our international income could have a material adverse effect on our results of operations.

From time to time, we may undertake various potential intercompany transactions and legal entity restructurings that involve our international subsidiaries. We consider various factors in evaluating these potential transactions and restructurings, including the alignment of our corporate structure with our organizational objectives, the operational and tax efficiency of our corporate structure, and the long-term cash flows and cash needs of our business. Such transactions and restructurings could negatively impact our overall tax rate and result in additional tax liabilities.

In addition, compliance with foreign and U.S. laws and regulations that are applicable to our international operations is complex and may increase our cost of doing business in international jurisdictions, and our international operations could expose us to fines and penalties if we fail to comply with these regulations. These laws and regulations include import and export requirements and anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and local laws prohibiting corrupt payments to governmental officials. Although we have implemented policies and procedures designed to help ensure compliance with these laws, there can be no assurance that our employees, partners, and other persons with whom we do business will not take actions in violation of our policies or these laws. Any violations of these laws could subject us to civil or criminal penalties, including substantial fines or prohibitions on our ability to offer our products and services to one or more countries, and could also materially damage our reputation and our brand.

These factors may have a material adverse effect on our future sales and, consequently, on our business, operating results, and financial condition.

We may lose sales, or sales may be delayed, due to the long sales and implementation cycles of certain of our products, which could reduce our revenues

To date, our customers have typically invested substantial time, money, and other resources and involved many people in the decision to license our software products and purchase our consulting and education services. As a result, we may wait nine months or more after the first contact with a customer for that customer to place an order while it seeks internal approval for the purchase of our products or services. During this long sales cycle, events may occur that affect the size and/or timing of the order or even cause it to be canceled. For example, our competitors may introduce new offerings, or the customer’s own budget and purchasing priorities may change.

Even after an order is placed, the time it takes to deploy our products and complete consulting engagements can vary widely. Implementing some of our offerings can take several months, depending on the customer’s needs, and may begin only with a pilot program. It may be difficult to deploy our products if the customer has complicated deployment requirements, which typically involve integrating databases, hardware, and software from different vendors. If a customer hires a third party to deploy our products, we cannot be sure that our products will be deployed successfully.

Our results in any particular period may depend upon the number and volume of large transactions in that period and these transactions may involve lengthier, more complex, and more unpredictable sales cycles than other transactions

As existing and potential customers seek to standardize on a single analytics vendor or require greater vendor capacity to meet their growing analytics needs, our business may experience larger transactions at the enterprise level and larger transactions may account for a greater proportion of our business. The presence or absence of one or more large transactions in a particular period may have a material positive or negative effect on our revenue and operating results for that period. For the years ended December 31, 2014, 2013, and 2012, our top three product licenses transactions with recognized revenue totaled $6.4 million, $14.3 million, and $13.5 million respectively, or 5.1%, 9.7%, and 9.2% of total product licenses revenues, respectively. These transactions represent significant business and financial decisions for our customers, require considerable effort on the part of customers to assess alternative products,

28

and often require additional levels of management approval. In addition, large transactions are often more complex than smaller transactions. These factors generally lengthen the typical sales cycle and increase the risk that customers may postpone or delay purchasing decisions from one period to another subsequent or later period or that customers will alter their purchasing requirements. The sales effort and service delivery scope for larger transactions also require us to use additional resources to execute the transaction. These factors could result in lower than anticipated revenue and earnings for a particular period or in lower estimated revenue and earnings in future periods.

We face a variety of risks in doing business with the U.S. and foreign governments, various state and local governments, and government agencies, including risks related to the procurement process, budget constraints and cycles, termination of contracts, and compliance with government contracting requirements

Our customers include the U.S. government and a number of state and local governments and government agencies. There are a variety of risks in doing business with government entities, including:

Procurement. Contracting with public sector customers is highly competitive and can be time-consuming and expensive, requiring that we incur significant up-front time and expense without any assurance that we will win a contract.

Budgetary Constraints and Cycles. Demand and payment for our products and services are impacted by public sector budgetary cycles and funding availability, with funding reductions or delays adversely impacting public sector demand for our products and services.

Termination of Contracts. Public sector customers often have contractual or other legal rights to terminate current contracts for convenience or due to a default. If a contract is terminated for convenience, which can occur if the customer’s needs change, we may only be able to collect fees for products or services delivered prior to termination and settlement expenses. If a contract is terminated because of default, we may not recover even those amounts, and we may be liable for excess costs incurred by the customer for procuring alternative products or services.

Compliance with Government Contracting Requirements. Government contractors are required to comply with a variety of complex laws, regulations, and contractual provisions relating to the formation, administration, or performance of government contracts that give public sector customers substantial rights and remedies, many of which are not typically found in commercial contracts. These may include rights with respect to price protection, the accuracy of information provided to the government, contractor compliance with socio-economic policies, and other terms that are particular to government contracts. U.S. government and state and local governments and government agencies routinely investigate and audit contractors for compliance with these requirements. If, as a result of an audit or review, it is determined that we have failed to comply with these requirements, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, cost associated with the triggering of price reduction clauses, fines, and suspensions or debarment from future government business, and we may suffer harm to our reputation.

Our customers also include a number of foreign governments and government agencies. Similar procurement, budgetary, contract, and audit risks also apply to our doing business with these entities. In addition, compliance with complex regulations and contracting provisions in a variety of jurisdictions can be expensive and consume significant management resources. In certain jurisdictions our ability to win business may be constrained by political and other factors unrelated to our competitive position in the market. Each of these difficulties could materially adversely affect our business and results of operations.

We depend on technology licensed to us by third parties, and the loss of this technology could impair our software, delay implementation of our offerings, or force us to pay higher license fees

We license third-party technologies that we incorporate into our existing offerings. There can be no assurance that the licenses for such third-party technologies will not be terminated or that we will be able to license third-party software for future offerings. In addition, we may be unable to renegotiate acceptable third-party license terms or we may be subject to infringement liability if third-party software that we license is found to infringe intellectual property rights of others. Changes in or the loss of third-party licenses could lead to a material increase in the costs of licensing or to our software offerings becoming inoperable or their performance being

29

materially reduced, with the result that we may need to incur additional development costs to ensure continued performance of our offerings, and we may experience a decreased demand for our offerings.

If we are unable to recruit or retain skilled personnel, or if we lose the services of any of our key management personnel, our business, operating results, and financial condition could be materially adversely affected

Our future success depends on our continuing ability to attract, train, assimilate, and retain highly skilled personnel. Competition for these employees is intense. We may not be able to retain our current key employees or attract, train, assimilate, or retain other highly skilled personnel in the future. For example, our restructuring activities may adversely impact our ability to attract or retain key employees. Our future success also depends in large part on the continued service of key management personnel, particularly Michael J. Saylor, our Chairman of the Board of Directors and Chief Executive Officer. If we lose the services of Mr. Saylor or other key personnel, or if we are unable to attract, train, assimilate, and retain the highly skilled personnel we need, our business, operating results, and financial condition could be materially adversely affected.

The emergence of new industry standards may materially adversely affect the demand for our existing offerings

The emergence of new industry standards in related fields may materially adversely affect the demand for our existing offerings. This could happen if new Web standards and technologies or new standards in the field of operating system support emerged that were incompatible with customer deployments of our software offerings. For example, if we are unable to adapt our software offerings on a timely basis to new standards in database access technology, the ability of our software offerings to access customer databases could be impaired.

The nature of our software offerings makes them particularly vulnerable to undetected errors, or bugs, which could cause problems with how the offerings perform and which could, in turn, reduce demand for our offerings, reduce our revenue, and lead to product liability claims against us

Software as complex as ours may contain errors and/or defects. Although we test our software offerings extensively, we have in the past discovered software errors in our offerings after their introduction. Despite testing by us and by our current and potential customers, errors may be found in new offerings or releases after commercial shipments begin. This could result in lost revenue, damage to our reputation, or delays in market acceptance, which could have a material adverse effect upon our business, operating results, and financial condition. We may also have to expend resources and capital to correct these defects.

Our license agreements with customers typically contain provisions designed to limit our exposure to product liability, warranty, and other claims. It is possible, however, that these provisions may not be effective under the laws of certain domestic or international jurisdictions and we may be exposed to product liability, warranty, and other claims. A successful product liability claim against us could have a material adverse effect on our business, operating results, and financial condition.

Changes in laws or regulations relating to privacy or the protection of personal data, or any failure by us to comply with such laws and regulations or our privacy policies, could materially adversely affect our business

Aspects of our business, including our cloud services offerings and MicroStrategy Usher, involve processing, storing, and transmitting personal data, which is subject to our privacy policies and certain federal, state, and foreign laws and regulations relating to privacy and data protection. The amount of data that we store for our customers through our cloud services offerings, networks, and other systems, including personal data, is increasing. In recent years, the collection and use of personal data by companies have come under increased regulatory and public scrutiny. For example, in the United States, protected health information is subject to the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA has been supplemented by the Health Information Technology for Economic and Clinical Health Act with the result of increased civil and criminal penalties for noncompliance. Under HIPAA, entities performing certain functions and creating, receiving, maintaining, or transmitting protected health information provided by covered entities and other business associates are directly subject to HIPAA. Our access to protected health information through our cloud services offerings triggers obligations to comply with certain privacy rules and data security requirements under HIPAA. Any systems failure or security breach that results in the release of, or unauthorized access to, personal data, or any failure or perceived

30

failure by us to comply with our privacy policies or any applicable laws or regulations relating to privacy or data protection, could result in proceedings against us by governmental entities or others. Such proceedings could result in the imposition of sanctions, fines, penalties, liabilities, and/or governmental orders requiring that we change our data practices, any of which could have a material adverse effect on our business, operating results, and financial condition.

Various federal, state, and foreign legislative or regulatory bodies may enact new or additional laws or regulations concerning privacy and data protection that could materially adversely impact our business. Complying with these varying requirements could cause us to incur substantial costs or require us to change our business practices, either of which could materially adversely affect our business and operating results. For example, legislation and regulation regarding mobile data collection continue to evolve and if laws or regulations restricting or limiting the collection or use of mobile data are enacted, they may reduce demand for certain of our services or require changes to our business practices, which could materially adversely affect our business and operating results.

If we experience a security breach and unauthorized parties obtain access to our customers’ data, our data, or our cloud services offerings, networks, or other systems, our offerings may be perceived as not being secure, our reputation may be harmed, demand for our offerings may be reduced, our operations may be disrupted, we may incur significant legal liabilities, and our business could be materially adversely affected

As part of our business, we process, store, and transmit our customers’ information and data as well as our own, including in our cloud services offerings, networks, and other systems. We have security measures in place to help protect our customers’ data, our data, and our cloud services offerings, networks, and other systems against unauthorized access. However, there can be no assurance that these security measures will be effective against all security threats. Our security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers, fraudulent inducement of employees or customers to disclose sensitive information such as user names or passwords, and employee error or malfeasance. Such breach could result in someone obtaining unauthorized access to our customers’ data, our data, or our cloud services offerings, networks, or other systems. Because there are many different security breach techniques and such techniques continue to evolve, we may be unable to anticipate attempted security breaches and implement adequate preventative measures. Third parties may also conduct attacks designed to temporarily deny customers access to our services. Any security breach or successful denial of service attack could result in a loss of customer confidence in the security of our offerings and damage to our brand, reducing the demand for our offerings and our revenue, disrupt our normal business operations, require us to spend material resources to correct the breach, expose us to legal liabilities including litigation and indemnity obligations, and materially adversely affect our operating results. These risks will increase as we continue to grow the number and scale of our cloud-based offerings and process, store, and transmit increasingly large amounts of our customers’ information and data, which may include proprietary or confidential data or personal or identifying information.

Our intellectual property is valuable, and any inability to protect it could reduce the value of our products, services, and brand

We rely on a combination of copyrights, patents, trademarks, trade secrets, confidentiality procedures, and contractual commitments to protect our intellectual property. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any patents owned by us may be invalidated, circumvented, or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. Moreover, recent amendments to and developing jurisprudence regarding U.S. patent law may affect our ability to protect our intellectual property and defend against claims of patent infringement. In addition, the laws of some countries do not provide the same level of protection of our intellectual property as do the laws of the United States. If we cannot protect our intellectual property against unauthorized copying or use, we may not remain competitive.

Third parties may claim we infringe their intellectual property rights

We periodically receive notices from others claiming we are infringing their intellectual property rights, principally patent and trademark rights. We expect the number of such claims will increase as we continue to expand our offerings and branding, the number of offerings and level of competition in our industry segments grow, the functionality of offerings overlap, and the volume of

31

issued patents, patent applications, and trademark registrations continues to increase. Responding to any infringement claim, regardless of its validity, could:

• be time-consuming, costly, and/or result in litigation;

• divert management’s time and attention from developing our business;

• require us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;

• require us to stop selling certain of our offerings;

• require us to redesign certain of our offerings using alternative non-infringing technology or practices, which could require significant effort and expense;

• require us to rename certain of our offerings or entities; or

• require us to satisfy indemnification obligations to our customers.

Additionally, while we monitor our use of third-party software, including open source software, we cannot assure you that our processes for controlling such use in our products will be effective. If we inadvertently embed certain types of open source software into one or more of our products, or if third-party software that we license is found to infringe intellectual property rights of others, we could subject ourselves to infringement liability and be required to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely or cost-effective basis, or to make available to certain third parties or generally available, in source code form, our proprietary code, any of which could materially adversely affect our business, operating results, and financial condition.

If a successful infringement claim is made against us and we fail to develop or license a substitute technology or brand name as applicable, our business, results of operations, financial condition, or cash flows could be materially adversely affected.

For example, in December 2011, we were sued by two separate parties who alleged that certain of our analytics products infringe their respective patents, and we have received indemnification requests from certain of our resellers and customers who were also named as defendants in connection with one of those matters. These matters are described in further detail in this Annual Report on Form 10-K under “Part I. Item 3. Legal Proceedings.”

Pending or future litigation could have a material adverse impact on our results of operation and financial condition

In addition to intellectual property litigation, from time to time, we have been subject to other litigation. Regardless of the merits of any claims that may be brought against us, pending or future litigation could result in a diversion of management’s attention and resources and we may be required to incur significant expenses defending against these claims. If we are unable to prevail in litigation we could incur substantial liabilities. Where we can make a reasonable estimate of the liability relating to pending litigation and determine that it is probable, we record a related liability. As additional information becomes available, we assess the potential liability and revise estimates as appropriate. However, because of uncertainties relating to litigation, the amount of our estimates could be wrong.

Because of the rights of our two classes of common stock, and because we are controlled by Michael J. Saylor, who beneficially owns the majority of our class B common stock, Mr. Saylor could transfer control of MicroStrategy to a third party without the approval of our Board of Directors or our other stockholders, prevent a third party from acquiring MicroStrategy, or limit your ability to influence corporate matters

We have two classes of common stock: class A common stock and class B common stock. Holders of our class A common stock generally have the same rights as holders of our class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. As of February 20, 2015, holders of our class B common stock owned 2,035,184 shares of class B common stock, or 68.7% of the total voting power. Michael J. Saylor, our Chairman and Chief Executive Officer, beneficially owned 2,011,668 shares of class B common stock, or 67.9% of the total voting power, as of

32

February 20, 2015. Accordingly, Mr. Saylor is able to control MicroStrategy through his ability to determine the outcome of elections of our directors, amend our certificate of incorporation and by-laws, and take other actions requiring the vote or consent of stockholders, including mergers, going-private transactions, and other extraordinary transactions and their terms.

Our certificate of incorporation allows holders of class B common stock to transfer shares of class B common stock, subject to the approval of stockholders possessing a majority of the outstanding class B common stock. Mr. Saylor or a group of stockholders possessing a majority of the outstanding class B common stock could, without the approval of our Board of Directors or our other stockholders, transfer voting control of MicroStrategy to a third party. Such a transfer of control could have a material adverse effect on our business, operating results, and financial condition. Mr. Saylor or a group of stockholders possessing a majority of the outstanding class B common stock will also be able to prevent a change of control of MicroStrategy, regardless of whether holders of class A common stock might otherwise receive a premium for their shares over the then current market price. In addition, this concentrated control limits stockholders’ ability to influence corporate matters and, as a result, we may take actions that our non-controlling stockholders do not view as beneficial or that conflict with their interests. As a result, the market price of our class A common stock could be materially adversely affected.

We rely on the “controlled company” exemption from certain corporate governance requirements for NASDAQ-listed companies, which could make our class A common stock less attractive to some investors or otherwise materially adversely affect our stock price

Because we qualify as a “controlled company” under the corporate governance rules for NASDAQ-listed companies, we are not required to have a majority of our Board of Directors be comprised of independent directors. Additionally, our Board of Directors is not required to have an independent compensation or nominating committee, or to have the independent directors exercise the nominating function. We also are not required to have the compensation of our executive officers be determined by a compensation committee of independent directors. In addition, we are not required to empower our Compensation Committee with the authority to engage the services of any compensation consultants, legal counsel, or other advisors, or to have the compensation committee assess the independence of compensation consultants, legal counsel, and other advisors that it engages.

In light of our status as a controlled company, our Board of Directors has determined not to establish an independent nominating committee or have its independent directors exercise the nominating function, and has elected instead to have the Board of Directors be directly responsible for nominating members of the board. A majority of our Board of Directors is currently comprised of independent directors, and our Board of Directors has established a compensation committee comprised entirely of independent directors. The compensation committee determines the compensation of our chief executive officer. However, our Board of Directors has authorized our chief executive officer to determine the compensation of executive officers other than himself, rather than having such compensation determined by the compensation committee, except that certain executive officer compensation that is intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code is determined by the compensation committee pursuant to the requirements of Section 162(m). Awards under our 2013 Stock Incentive Plan are also approved by the compensation committee. Additionally, while our Compensation Committee is empowered with the authority to retain and terminate outside counsel, compensation consultants, and other experts or consultants, it is not required to assess their independence.

Although currently a majority of our Board of Directors is comprised of independent directors and the Compensation Committee is comprised entirely of independent directors, we may elect in the future not to have independent directors constitute a majority of the Board of Directors or the compensation committee, have our chief executive officer’s compensation determined by a compensation committee of independent directors, or have a compensation committee of the Board of Directors at all.

Accordingly, should the interests of our controlling stockholder differ from those of other stockholders, the other stockholders may not have the same protections that are afforded to stockholders of companies that are required to follow all of the corporate governance rules for NASDAQ-listed companies. Our status as a controlled company could make our class A common stock less attractive to some investors or otherwise materially adversely affect our stock price.

33

Revenue recognition accounting pronouncements may materially adversely affect our reported results of operations

We continuously review our compliance with all new and existing revenue recognition accounting pronouncements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016. See Note 3, Recent Accounting Standards, to the Consolidated Financial Statements in “Part IV. Item 15. Exhibits, Financial Statement Schedules” of this Annual Report on Form 10-K for further information regarding ASU
2014-09. We are currently evaluating the impact of this guidance on our consolidated financial position, results of operations, and cash flows. Depending upon the outcome of these ongoing reviews and the potential issuance of further accounting pronouncements, implementation guidelines, and interpretations, we may be required to modify our reported results, revenue recognition policies, or business practices, which could materially adversely affect our results of operations.

Item 1B. Unresolved Staff Comments

None.

34

Item 2. Properties

As of December 31, 2014, we were leasing approximately 233,000 square feet of office space at our corporate headquarters in Northern Virginia, including approximately 19,000 square feet of office space for which we gave written notice in August 2014 of our intent to terminate, effective February 2015, as part of the 2014 Restructuring Plan. We never used the terminated lease space and it remained vacant until it was terminated in early February 2015. The corporate headquarters office lease includes tenant incentives and allowances that we may use for leasehold improvements. The term of the lease expires in December 2020.

In addition, we lease offices in U.S. and foreign locations for our services and support, sales and marketing, research and development, and administrative personnel. As of December 31, 2014, we leased approximately 35,000 square feet of office space in the U.S., in addition to our corporate headquarters and approximately 212,000 square feet of office space in various foreign locations.

35

Item 3. Legal Proceedings

In December 2011, DataTern, Inc. (“DataTern”) filed a complaint for patent infringement against the Company in the United States District Court for the District of Massachusetts. The complaint alleged that the Company infringes U.S. Patent No. 6,101,502 (the “’502 Patent”), allegedly owned by DataTern, by making, selling, or offering for sale several of the Company’s products and services including MicroStrategy 9, MicroStrategy Intelligence Server, MicroStrategy Business Intelligence Platform, MicroStrategy Cloud Personal, and other MicroStrategy applications for creating or using data mining, dashboards, business analytics, data storage and warehousing, and Web hosting support. The complaint accused the Company of willful infringement and sought an unspecified amount of damages, an award of attorneys’ fees, and preliminary and permanent injunctive relief. In October 2012, the case was stayed pending final judgment in a separate action involving the ’502 Patent filed by DataTern in the Southern District of New York, in which MicroStrategy was not a party. Final judgment in that separate action was entered against DataTern in December 2012 (the “New York Judgment”). DataTern appealed the New York Judgment to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). In February 2013, MicroStrategy and DataTern filed motions for summary judgment of non-infringement in light of the New York Judgment and the United States District Court for the District of Massachusetts entered summary judgment against DataTern. In March 2013, DataTern filed a notice of appeal with the Federal Circuit. In January 2014, the Federal Circuit stayed DataTern’s appeal pending the disposition of DataTern’s appeal of the New York Judgment. In May 2014, the Federal Circuit affirmed the New York Judgment in part and reversed it in part. After petitions for rehearing were denied regarding the New York Judgment, the Company and DataTern agreed that the stay in their appeal in the Federal Circuit should be lifted. The Federal Circuit held oral arguments in our appeal in November 2014. On December 19, 2014, the Federal Circuit issued an opinion vacating the District of Massachusetts’ summary judgment, stating that the claim construction on which the summary judgment was based was incorrect. On January 26, 2015, the Federal Circuit ordered that the case be remanded for further proceedings, and in February 2015, MicroStrategy filed motions for summary judgment in the district court on grounds of non-infringement and invalidity. We have received indemnification requests from certain of our resellers and customers who were sued by DataTern in the United States District Court for the District of Massachusetts in lawsuits alleging infringement of the ’502 Patent. The outcome of these matters is not presently determinable.

In December 2011, Vasudevan Software, Inc. (“Vasudevan”) filed a complaint for patent infringement against the Company in the United States District Court for the Northern District of California. The complaint alleged that the Company’s sale of MicroStrategy 9 and other MicroStrategy products infringes four patents allegedly owned by Vasudevan known as U.S. Patent Nos. 6,877,006, 7,167,864, 7,720,861, and 8,082,268, all entitled “Multimedia Inspection Database System for Dynamic Runtime Evaluation.” The complaint accused the Company of infringement, inducing others to infringe, and acts of contributory infringement with respect to the patents at issue and sought a permanent injunction, an unspecified amount of damages, and other relief as may be granted by the court. In October 2013, following a series of motions by the parties, the court dismissed the case, entered judgment of non-infringement based on a stipulation of non-infringement filed by Vasudevan, and also granted MicroStrategy’s motion for summary judgment of invalidity, finding the four patents in the suit invalid. In November 2013, Vasudevan filed its Notice of Appeal with the United States Court of Appeals for the Federal Circuit. Also in November 2013, Vasudevan filed a motion that was unopposed by the Company to consolidate the appeal with Vasudevan’s appeal of a related matter against TIBCO Software, which had also been dismissed by the District Court on summary judgment. In February 2014, in response to Vasudevan’s motion, the Court entered an order that the cases be treated as companion cases. On September 12, 2014, the parties presented oral arguments before the Federal Circuit. The parties are currently awaiting the Federal Circuit’s final decision in the case. The outcome of this matter on appeal is not presently determinable.

We are also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, we do not expect the resolution of these other legal proceedings to have a material adverse effect on our financial position, results of operations, or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

36

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our class A common stock is traded on the NASDAQ Global Select Market under the symbol “MSTR.” The following table sets forth the high and low sales prices for the class A common stock for the periods indicated as reported by the NASDAQ Global Select Market or NASDAQ Global Market, as applicable:

	High		Low
Year ended December 31, 2014
First Quarter	$	135.83	$	112.38
Second Quarter		146.13		98.79
Third Quarter		155.86		129.48
Fourth Quarter		176.96		127.46
Year ended December 31, 2013
First Quarter	$	114.81	$	91.60
Second Quarter		105.00		82.72
Third Quarter		108.88		87.12
Fourth Quarter		130.00		95.22

There is no established public trading market for our class B common stock. As of February 20, 2015, there were approximately 1,446 stockholders of record of our class A common stock and three stockholders of record of our class B common stock.

Holders of our class A common stock generally have the same rights as holders of our class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share.

We have never declared or paid any cash dividends on either our class A or class B common stock and have no current plans to declare or pay any such dividends.

Information regarding our equity compensation plans and the securities authorized for issuance thereunder is incorporated by reference in Item 12 below.

The following table provides information about our repurchases of equity securities that are registered by us pursuant to Section 12 of the Exchange Act during the periods indicated:

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit) (1)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2014 – October 31, 2014	0	N/A	0	$454,708,615
November 1, 2014 – November 30, 2014	0	N/A	0	$454,708,615
December 1, 2014 – December 31, 2014	0	N/A	0	$454,708,615
Total:	0	N/A	0	$454,708,615

37

(1) On July 28, 2005, we announced that the Board of Directors authorized us to repurchase up to an aggregate of $300.0 million of our class A common stock from time to time on the open market (the “2005 Share Repurchase Program”). On April 29, 2008, the Board of Directors amended the 2005 Share Repurchase Program to increase the amount of class A common stock that we are authorized to repurchase from $300.0 million to $800.0 million and extended the term of the 2005 Share Repurchase Program to April 29, 2013. On April 25, 2013, the Board of Directors extended the term of the 2005 Share Repurchase Program through April 29, 2018, although the program may be suspended or discontinued by us at any time. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using our working capital, as well as proceeds from any other funding arrangements that we may enter into in the future. As of December 31, 2014, pursuant to the 2005 Share Repurchase Program, we had repurchased an aggregate of 3,826,947 shares of our class A common stock at an average price per share of $90.23 and an aggregate cost of $345.3 million. As of December 31, 2014, $454.7 million of our class A common stock remained available for repurchase pursuant to the 2005 Share Repurchase Program. The average price per share and aggregate cost amounts disclosed above include broker commissions.

Performance Graph

The following graph compares the cumulative total stockholder return on our class A common stock from December 31, 2009 (the last trading day before the beginning of our fifth preceding fiscal year) to December 31, 2014 (the last trading day of the fiscal year ended December 31, 2014) with the cumulative total return of (i) the Total Return Index for The NASDAQ Stock Market (U.S. Companies) (the “NASDAQ Composite Index”) and (ii) the NASDAQ Computer Index. The graph assumes the investment of $100.00 on December 31, 2009 in our class A common stock, the NASDAQ Composite Index, and the NASDAQ Computer Index, and assumes that any dividends are reinvested. Measurement points are December 31, 2009, December 31, 2010, December 30, 2011, December 31, 2012, December 31, 2013, and December 31, 2014.

	12/31/09		12/31/10		12/30/11		12/31/12		12/31/13		12/31/14
MicroStrategy Incorporated	$	100.00	$	90.91	$	115.21	$	99.32	$	132.14	$	172.73
NASDAQ Composite Index	$	100.00	$	118.02	$	117.04	$	137.47	$	192.62	$	221.02
NASDAQ Computer Index	$	100.00	$	118.48	$	120.07	$	136.84	$	183.49	$	223.30

38

Item 6. Selected Financial Data

The following selected consolidated financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Consolidated Financial Statements and notes thereto, and other financial information appearing elsewhere in this Annual Report on Form 10-K.

	Years Ended December 31,
	2014		2013		2012			2011			2010
	(in thousands, except per share data)
Statements of Operations Data
Total revenues	$	579,830	$	575,888	$	565,724		$	537,168		$	436,088
Income from continuing operations, net of tax	$	5,035	$	26,550	$	22,473		$	21,807		$	46,430
Discontinued operations, net of tax	$	0	$	56,782	$	(1,927	)	$	(3,867	)	$	(2,638	)
Net income	$	5,035	$	83,332	$	20,546		$	17,940		$	43,792
Earnings (loss) per share (1)(2):
Basic, from continuing operations	$	0.45	$	2.35	$	2.05		$	2.03		$	4.08
Basic, from discontinued operations		0.00		5.02		(0.18	)		(0.36	)		(0.23	)
Basic earnings per share	$	0.45	$	7.37	$	1.87		$	1.67		$	3.85
Diluted, from continuing operations	$	0.44	$	2.35	$	2.01		$	1.97		$	3.94
Diluted, from discontinued operations		0.00		5.02		(0.17	)		(0.35	)		(0.22	)
Diluted earnings per share	$	0.44	$	7.37	$	1.84		$	1.62		$	3.72

	As of December 31,
	2014		2013		2012		2011		2010
	(in thousands)
Balance Sheet Data
Total assets, excluding held-for-sale	$	558,797	$	585,514	$	467,367	$	440,487	$	375,610
Long-term liabilities, excluding deferred revenue, advance payments, and held-for-sale	$	26,208	$	32,699	$	49,649	$	55,551	$	37,909
Total stockholders’ equity	$	324,471	$	310,326	$	200,311	$	168,978	$	149,172

(1) Basic and fully diluted earnings per share for class A and class B common stock are the same.

(2) We have never declared or paid any cash dividends on either class A or class B common stock.

39

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Exchange Act. For this purpose, any statements contained herein that are not statements of historical fact, including without limitation, certain statements regarding industry prospects and our results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. The important factors discussed under “Item 1A. Risk Factors,” among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Such forward-looking statements represent management’s current expectations and are inherently uncertain. Investors are warned that actual results may differ from management’s expectations.

Overview

MicroStrategy is a leading worldwide provider of enterprise-ready analytics, mobile, and security software platforms. MicroStrategy provides system-of-record reporting and interactive visualization capabilities offered on any device or in the cloud. The Company’s mission is to provide enterprise analytics, mobility, and security platforms that are flexible, powerful, scalable, and user-friendly.

MicroStrategy Analytics empowers organizations to analyze vast amounts of data and securely distribute actionable business insight throughout an enterprise through two distinct offerings – MicroStrategy Analytics Platform and MicroStrategy Analytics Desktop. The MicroStrategy Analytics Platform delivers reports and dashboards, and enables users to conduct ad hoc analysis and share insights anywhere, anytime, via mobile devices or the Web. It also combines the agility and productivity of self-service visual data discovery with the security, scalability, and governance features of enterprise-grade business intelligence. The MicroStrategy Analytics Platform is integrated with MicroStrategy Analytics Desktop, a standalone desktop tool designed to enable business users to analyze and understand their data. With MicroStrategy Analytics Desktop, business users can create stunning data visualizations and dashboards that provide new insight and new understanding in just minutes.

MicroStrategy Mobile enables organizations to rapidly build information-rich applications that deliver analytics combined with transactions, multimedia, and custom workflows to mobile devices. The powerful code-free platform approach is designed to reduce the costs of development and enable organizations to deploy powerful mobile business apps quickly and cost-effectively. MicroStrategy Mobile is an easy, fast, and cost-effective vehicle for mobilizing an organization’s information systems, including its data warehouses, business intelligence, ERP, CRM, and Web applications that are currently accessible only on the desktop. With MicroStrategy Mobile, businesses can transform their entire workforce into a connected and more productive mobile workforce using information-driven mobile apps that are significantly more robust and secure than their Web-only counterparts. With mobile access to critical corporate data and systems that drive the business, employees can have a virtual office in their hands at all times.

MicroStrategy Usher is a mobile identity and security platform designed to make identity management simple, seamless, and secure. Built on an advanced mobile-centric enterprise platform, MicroStrategy Usher can dematerialize traditional forms of identity verification such as passwords and physical badges and replace them with a single mobile identity badge, stored on a smartphone, that is cryptographically linked to its owner’s phone and dynamically linked to the enterprise’s existing identity repositories. MicroStrategy Usher’s enterprise mobile identity solution addresses some of the biggest challenges facing corporations today, including authentication, cybersecurity, access management, and resource authorization, while applying industry leading business intelligence and analytics to an enterprise’s security infrastructure. Users can log into applications, unlock doors, validate each other’s identities, and gain a holistic view of network activity using only mobile identities, either through Bluetooth, QR codes, or time-limited PIN codes. MicroStrategy Usher can also be used as a powerful workforce management resource because it is designed to enable managers to gain a near real-time window into the activity of their distributed workforces, while providing powerful interactive features to manage or direct them. We currently offer MicroStrategy Usher as a subscription-based service.

MicroStrategy Secure Cloud is a platform for organizations that want to harness the power of enterprise analytics, mobility, and security applications via the cloud. MicroStrategy Secure Cloud brings together enterprise analytics, analytical databases, and ETL capabilities in a high performance integrated environment. MicroStrategy Secure Cloud offers on-demand access to the full breadth of

40

the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities and is optimized for a variety of enterprise applications. Compared to traditional on-premises approaches, MicroStrategy Secure Cloud is architected to deliver best-of-breed MicroStrategy and Usher software via the cloud, with pre-configured, ready to go MicroStrategy servers, coupled with the required supporting infrastructure of metadata databases, relational databases, and big data storage.

The MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud, together with related product and support services, continue to generate the vast majority of our revenue. During 2014, 2013, and 2012, we did not generate significant revenues from MicroStrategy Usher.

We previously operated Angel.com, a provider of cloud-based Customer Experience Management (CEM) solutions for Interactive Voice Response (IVR) and contact centers. On March 15, 2013, we completed the sale of our equity interest in Angel.com. As a result of the transaction, we received consideration of approximately $111.2 million, resulting in a net cash inflow of $100.7 million after $10.5 million in transaction costs. The sale of our ownership interest in Angel.com resulted in us recognizing an after-tax gain of approximately $57.4 million during 2013, which included the cost of terminating all outstanding Angel.com employee stock options prior to the closing of the transaction and other costs associated with the sale. In our Consolidated Statement of Operations, we classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because we have no continuing involvement with or cash flows from this business following its divestiture.

The following tables set forth certain operating highlights (in thousands) for the years ended December 31, 2014, 2013, and 2012:

	Years Ended December 31,
	2014		2013		2012
Revenues
Product licenses	$	125,952	$	147,879	$	147,344
Subscription services		22,322		12,246		3,118
Total product licenses and subscription services		148,274		160,125		150,462
Product support		295,703		277,509		262,048
Other services		135,853		138,254		153,214
Total revenues		579,830		575,888		565,724
Cost of revenues
Product licenses		6,957		6,606		5,819
Subscription services		17,560		15,636		6,621
Total product licenses and subscription services		24,517		22,242		12,440
Product support		14,241		16,617		15,532
Other services		96,452		99,710		113,104
Total cost of revenues		135,210		138,569		141,076
Gross profit		444,620		437,319		424,648
Operating expenses
Sales and marketing		225,086		215,089		209,975
Research and development		103,355		98,056		88,190
General and administrative		96,343		104,734		93,384
Restructuring costs		14,732		0		0
Total operating expenses		439,516		417,879		391,549
Income from continuing operations	$	5,104	$	19,440	$	33,099

The analytics market is highly competitive and our results of operations depend on our ability to market and sell offerings that provide customers with greater value than those offered by our competitors. Within the analytics market we compete with many different vendors, including 1) large software vendors (megavendors), such as IBM, SAP, Microsoft, and Oracle, that provide one or more products that directly compete with our products; 2) open source analytics vendors such as TIBCO JasperSoft and Pentaho; (3) various other analytics software providers, such as Qlik, Tableau Software, Information Builders, and the SAS Institute; (4) pure-play mobile analytics vendors, such as MeLLmo (Roambi), that do not offer an analytics platform, but offer a mobile user interface that can be used as an extension to existing analytics platforms; and (5) other vendors offering cloud-based offerings, such as GoodData and Birst.

41

Our success depends on the effectiveness with which we can differentiate our product from both the megavendors and the independent vendors across large, mid-sized, and small opportunities.

Organizations recently have sought, and we expect may continue to seek, to standardize their various analytics applications around a single software platform. This trend presents both opportunities and challenges for our business. It offers us the opportunity to increase the size of transactions with new customers and to expand the size of our analytics installations with existing customers. On the other hand, it presents the challenge that we may not be able to penetrate accounts that a competitor has penetrated or in which a competitor is the incumbent analytics provider.

The market for mobile business apps is rapidly changing, highly competitive, and complex with many competitors and different offerings ranging from fully custom-coded applications to plug-and-play solutions. While organizations vary greatly in their approach to, and pace of adoption of, mobile solutions, they are increasingly accelerating the transition of their businesses onto mobile devices, such as tablets and smartphones. Over the next few years, we expect that organizations will continue to construct their information and systems to take advantage of the efficiencies and cost savings of mobile computing. Ultimately, we expect that the majority of routine business tasks and workflows will become available as mobile-optimized touch-enabled apps.

In addition, there is increased market demand for analysis of a wider variety of data sources, including sensor data, social data, web log data, and other data types. These new data sources are driving massive increases in the volume of data that can potentially be analyzed (“Big Data”), which in turn is accelerating development of new storage technologies like Hadoop and NoSQL databases. The demand for analytics on Big Data represents an opportunity for MicroStrategy, as it opens up new potential applications and use cases for our technology. It also creates a challenge as we will need to continually enhance our technology to support emerging data sources; deliver faster performance necessary to support analysis against large scale data sets; and support analysis of a wider variety of data types, such as unstructured, semi-structured, and streaming data.

We have undertaken a number of initiatives to address these opportunities and challenges, including:

• a major simplification of our product packaging structure aimed at delivering the best end-to-end customer and partner experience, making it easier to acquire and deploy the MicroStrategy platform, and delivering free upgrades to premium capabilities for existing customers, empowering new and existing clients to realize the full potential of their analytical applications;

• integration with MicroStrategy Usher, through MicroStrategy 9s, which is a comprehensive, unified platform designed to help ensure the security of valuable information;

• improved access to MicroStrategy Analytics through MicroStrategy Secure Cloud, optimally configured to be scalable and elastic, ready to grow with an enterprise’s cloud applications, and also built to scale to meet usage spikes from a user’s analytics and mobile apps;

• enhancement of our ability to support new enterprise-scale requirements for analytics, where we are currently a technology leader, with a focus on supporting more varied database platforms, providing higher performance, and providing greater ability to manage and administer large-scale analytics operations, such as a massively scalable, in-memory analytics service designed to deliver high performance for complex analytical applications that have the largest data sets and highest user concurrency;

• extension of our technology to provide greater support for the latest trend in self-service analytics, which is often referred to as “governed data discovery” or “agile analytics,” by adding new user interface flows, new visualizations, new exploration features, and new self-service capabilities for the preparation of data;

• enhancement of our mobile application platform for creating and deploying analytics applications to the expanding community of mobile device users;

• maintenance of a dedicated performance engineering team and conduct of research and development focused on providing our customers with the highest levels of performance for analytics applications of all sizes and security solutions;

42

In the third quarter of 2014, we committed to a restructuring plan (the “2014 Restructuring Plan”) to streamline our workforce and spending to better align our cost structure with our business strategy. We had implemented substantially all of the plan by the end of the fourth quarter of 2014. The 2014 Restructuring Plan resulted in a pre-tax restructuring charge of $14.7 million in 2014. See Note 8, Restructuring, to the Consolidated Financial Statements for further detail on the 2014 Restructuring Plan. We expect that the 2014 Restructuring Plan will deliver annualized pre-tax savings of approximately $67.2 million, as compared to estimated annualized pre-restructuring expenses. In addition to the 2014 Restructuring Plan, we have implemented other internal cost-savings initiatives that we expect will deliver additional annualized pre-tax savings.

In January 2010, we entered into a lease for approximately 142,000 square feet of office space at a location in Northern Virginia that began serving as our corporate headquarters in October 2010. The lease granted an abatement of base rent until March 2011. In May 2010 and May 2011, we entered into amendments to the lease pursuant to which, in each instance, we leased an additional 24,000 square feet of office space, for a cumulative total of 48,000 square feet of additional office space, at the same location. The May 2010 amendment provided an abatement of base rent on the additional space until July 2011. The May 2011 amendment provided for an abatement of base rent on the additional space until February 2012. In April 2014, we entered into an amendment to the lease pursuant to which we leased an additional 43,000 square feet of office space at the same location (the “April 2014 leased space”). In August 2014, as part of the 2014 Restructuring Plan, we gave written notice of our intent to terminate the lease with respect to approximately 19,000 square feet of the April 2014 leased space effective February 2015. We never used the terminated lease space and it remained vacant until it was terminated in early February 2015. We have recognized and paid all related lease termination costs associated with this terminated lease space during 2014. The lease, as amended, includes tenant incentives and allowances that we may use for leasehold improvements. The term of the lease, as amended, expires in December 2020. Notwithstanding the rent abatements, we are recognizing lease expense on continuing operating leases ratably over the term of the lease.

As discussed in Note 12, Share-based Compensation, to the Consolidated Financial Statements, we have outstanding stock options to purchase shares of our class A common stock under our amended 2013 Stock Incentive Plan (the “2013 Plan”). Share-based compensation expense (in thousands) from these stock option awards was recognized in the following operating expense line items in our Consolidated Statements of Operations for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Sales and marketing	$	335	$	0	$	0
Research and development		967		346		0
General and administrative		10,484		1,732		0
Total share-based compensation expense	$	11,786	$	2,078	$	0

As of December 31, 2014, we estimate that approximately $46.6 million of additional share-based compensation expense for options granted under the 2013 Plan will be recognized over a remaining weighted average period of 3.2 years.

We base our internal operating expense forecasts on expected revenue trends and strategic objectives. Many of our expenses, such as office leases and certain personnel costs, are relatively fixed. Accordingly, any shortfall in revenue 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.

Non-GAAP Financial Measures

We are providing a supplemental financial measure for income from continuing operations that excludes the impact of our share-based compensation arrangements and restructuring activities. This financial measure is not a measurement of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, this financial measure may not be comparable to similarly titled measures of other companies. Management uses this non-GAAP financial measure internally to help understand, manage, and evaluate our business performance and to help make operating decisions. We believe that this non-GAAP financial measure is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis because it excludes a significant non-cash expense that we believe is not reflective of the Company’s general business performance

43

and significant restructuring charges that we believe are not reflective of ongoing operating results. In addition, accounting for share-based compensation arrangements requires significant management judgment and the resulting expense could vary significantly in comparison to other companies. Therefore, we believe the use of this non-GAAP financial measure can also facilitate comparison of our operating results to those of our competitors.

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. For example, we expect that share-based compensation expense, which is excluded from our non-GAAP financial measure, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Our non-GAAP financial measure is 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 measure only supplementally.

The following is a reconciliation of our non-GAAP financial measure to its most directly comparable GAAP measure (in thousands) for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Reconciliation of non-GAAP income from continuing operations:
Income from continuing operations	$	5,104	$	19,440	$	33,099
Share-based compensation expense		11,786		2,078		0
Restructuring costs		14,732		0		0
Non-GAAP income from continuing operations	$	31,622	$	21,518	$	33,099

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of our Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and equity and 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. These estimates, particularly estimates relating to revenue recognition, allowance for doubtful accounts, valuation of property and equipment, accrued restructuring costs, litigation and contingencies, valuation of net deferred tax assets, share-based compensation, and fair value measurements of our derivative financial instruments have a material impact on our financial statements and are discussed in detail throughout our analysis of the results of operations discussed below. In some cases, changes in accounting estimates are reasonably likely to occur from period to period.

In addition to evaluating estimates relating to the items discussed above, we also consider other estimates and judgments, including, but not limited to, software development costs, provision for income taxes, and other contingent liabilities, including liabilities that we deem not probable of assertion. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

We do not have any material ownership interest in any special purpose or other entities that are not wholly-owned and/or consolidated into our Consolidated Financial Statements. Additionally, we do not have any material related party transactions.

Revenue Recognition. We recognize revenue from sales of software licenses to end users upon:

1) persuasive evidence of an arrangement, as provided by agreements, contracts, purchase orders or other arrangements, generally executed by both parties;

2) existence of a fixed or determinable fee;

44

3) delivery of the software; and

4) determination that collection is reasonably assured.

When the fees for software upgrades and enhancements, technical support, consulting, and education are bundled with the license fee, they are unbundled for revenue recognition purposes using vendor specific objective evidence (“VSOE”) of fair value of the elements.

Product support or post contract support (“PCS”) revenue is derived from providing technical software support and software updates and upgrades to customers. PCS revenue is recognized ratably over the term of the contract, which in most cases is one year. Our VSOE for PCS, which includes updates, upgrades, and enhancements, is determined based upon the optional stated renewal fee for PCS in the contract, which is the price the customer is required to pay when PCS is renewed. Additionally, the optional stated renewal fee used to establish VSOE for PCS in a software transaction must be above our minimum substantive VSOE rate for PCS. If a stated renewal rate is considered non-substantive, VSOE of PCS has not been established, and we recognize all revenue under the arrangement ratably over the PCS period. A minimum substantive VSOE rate is determined based upon an analysis of historical sales of PCS. For a renewal rate to be non-substantive, we believe it must be significantly lower than our minimum VSOE rate. We consider a 10% variance below our minimum VSOE rate to be significant. It is rare for us to have an arrangement that includes a renewal rate that is below the minimum VSOE rate.

Revenue from consulting, education, and subscription services is recognized as the services are performed. Our VSOE for services other than PCS is determined based upon an analysis of our historical sales of each element when sold separately from software.

For new offerings of services other than PCS or service offerings that have not had a sufficient history of sales activity, we initially establish VSOE based on the list price as determined by management with the relevant authority. Each service offering has a single list price in each country where sold.

If VSOE exists for all undelivered elements and there is no such evidence of fair value established for delivered elements, the arrangement fee is first allocated to the elements where evidence of fair value has been established and the residual amount is allocated to the delivered elements. If evidence of fair value for any undelivered element of an arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value exists for undelivered elements or until all elements of the arrangement are delivered, subject to certain limited exceptions.

If an arrangement includes acceptance criteria, revenue is not recognized until we can objectively demonstrate that the software or service can meet the acceptance criteria or the acceptance period lapses, whichever occurs earlier. If a software license arrangement obligates us to deliver specified future products or upgrades, revenue is recognized when the specified future product or upgrades are delivered or when the obligation to deliver specified future products expires, whichever occurs earlier. If a software license arrangement obligates us to deliver unspecified future products, then revenue is recognized on a subscription basis, ratably over the term of the contract.

License revenue derived from sales to resellers or OEMs who purchase our products for resale is recognized upon sufficient evidence that the products have been sold to the end user, provided all other revenue recognition criteria have been met. Our standard software license and reseller agreements do not include any return rights other than the right to return non-conforming products for repair or replacement under our standard product warranties. During the last three fiscal years, we have not experienced any product returns related to warranty claims.

We generally offer either commercial discounts or referral fees to our channel partners, depending on the nature of services performed. Revenue recognized from transactions with channel partners involved in resale or distribution activities is recorded net of any commercial discounts provided to them. Referral fees paid to channel partners not involved in resale or distribution activities are expensed as cost of revenues and, during the last three fiscal years, were not significant.

Our standard software license agreements do not include any price protection or similar rights. We offer price protection to certain government agencies as required by applicable laws and regulations. For example, transactions under our General Services Administration Federal Supply Schedule contract must comply with the Price Reductions clause. In addition, certain government

45

agencies have the right to cancel contracts for “convenience.” During the last three fiscal years, amounts related to price protection or similar rights clauses and contracts cancelled for convenience were not significant.

Amounts collected prior to satisfying our revenue recognition criteria are included in net deferred revenue and advance payments in the accompanying Consolidated Balance Sheets.

Software revenue recognition requires judgment, including determinations about whether collectibility is reasonably assured, the fee is fixed and determinable, a software arrangement includes multiple elements, and if so, whether VSOE exists for those elements. Judgment is also required to assess whether future releases of certain software represent new products or upgrades and enhancements to existing products.

We also generate subscription services revenues primarily from our cloud services offerings. Subscription services revenues include subscription fees from customers for access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities, database services, and data integration services. Our standard arrangements with customers generally do not provide the customer with the right to take possession of the software supporting the cloud-based application service at any time. As such, these arrangements are considered service contracts and revenue is recognized ratably over the service period of the contract, following completion of the set-up service. Any related set-up service fees are recognized ratably over the longer of the contract period or the estimated average life of the customer relationship.

Our subscription services are generally offered as stand-alone arrangements or as part of arrangements that include professional services. If deliverables in a multiple-element arrangement have stand-alone value upon delivery, we account for each such deliverable separately. We have concluded that our subscription services and our professional services each have stand-alone value. When we enter into multiple-element arrangements that include subscription services and professional services, the total arrangement consideration is allocated to each of the deliverables based on the relative selling price hierarchy. We determine the relative selling price for each deliverable using VSOE of selling price, if available, or our best estimate of selling price (“BESP”), if VSOE is not available. We have determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in our services offerings as compared to other companies and the lack of availability of third-party pricing information. For professional services, we have established VSOE because a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. For subscription services, we have not established VSOE because, among other factors, the offering is relatively new and our pricing model continues to evolve. Accordingly, we use BESP to determine the relative selling price of our subscription services.

We determine BESP by reviewing historical transactions and by considering the service’s pricing models and objectives that take into account factors such as gross margin, the size and volume of the transactions, perceived pricing sensitivity, and growth strategies. The determination of BESP is made through consultation with, and approval by, our management team, taking into consideration our go-to-market strategy. As our pricing and go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to the determination of VSOE and BESP.

Amounts, upon invoicing, are recorded in accounts receivable and either gross deferred revenue or revenue, depending on whether the applicable revenue recognition criteria have been met.

During 2014, 2013, and 2012, we did not generate significant revenues from MicroStrategy Usher.

Allowance for Doubtful Accounts. We have established an allowance for doubtful accounts, which represents our best estimate of probable losses inherent in the accounts receivable balances. We evaluate specific accounts when we become aware that a customer may not be able to meet its financial obligations due to deterioration of its liquidity or financial viability, credit ratings, or bankruptcy. In addition, we periodically adjust this allowance based upon management’s review and assessment of the aging of receivables. While actual credit losses have historically been within management’s expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates we have in the past. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows: three years for computer equipment and purchased software, five years for office equipment and automobiles, and ten years for office furniture and our corporate aircraft, which has an

46

estimated salvage value of 70%. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. We periodically evaluate the appropriateness of the estimated useful lives and salvage value of all property and equipment. Any change in the estimated useful life or salvage value is treated as a change in estimate and accounted for prospectively in the period of change.

Expenditures for maintenance and repairs are charged to expense as incurred, except for certain costs related to the aircraft. The costs of normal, recurring, or periodic repairs and maintenance activities related to the aircraft are expensed as incurred. The cost of planned major maintenance activities (“PMMA”) may be treated differently because those activities may involve the acquisition of additional aircraft components or the replacement of existing aircraft components. PMMA are performed periodically based on passage of time and the use of the aircraft. The classification of a maintenance activity as part of PMMA requires judgment and can affect the amount of expense we recognize in any particular period. The cost of each PMMA is expected to be capitalized and amortized over the period until the next scheduled PMMA.

When assets are retired or sold, the capitalized cost and related accumulated depreciation are removed from the property and equipment accounts and any resulting gain or loss is recognized in the results of operations.

Eligible internal-use software development costs are capitalized subsequent to the completion of the preliminary project stage. Such costs include external direct material and service costs, employee payroll, and payroll-related costs. After all substantial testing and deployment is completed and the software is ready for its intended use, capitalization ceases and internal-use software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three years.

We review long-lived assets, including intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset.

Restructuring Costs. In 2014, we committed to, and substantially implemented, a restructuring plan. In connection with this restructuring plan, we incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. See Note 8, Restructuring, to the Consolidated Financial Statements for further information on our current restructuring activities.

Employee severance and related benefit costs may include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive severance or benefit plan relating to the involuntary termination of employees previously exists, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in which the liability is incurred, which is generally when management has approved and communicated to the terminated employees a detailed plan of termination. Severance costs pursuant to ongoing-benefit arrangements, including statutorily mandated termination benefits or termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Severance costs are reasonably estimated based on the mix of staffing composition and geography. Where termination benefits are offered for a short period of time in exchange for voluntary termination, severance costs are recognized when the employee has irrevocably accepted the offer.

Contract termination costs may include costs to exit office space under existing operating leases and consist of both costs to terminate the contract before the end of the term and costs that will continue to be incurred under the contract for the remaining term without economic benefit to us. Costs to terminate the contract before the end of the term are recognized at fair value when we terminate the contract in accordance with the contract terms. Costs that will continue to be incurred under the contract for the remaining term without economic benefit to us (for example, remaining lease rental payments and executory costs) are recognized at fair value in the period in which we cease using the right conveyed by the contract (for example, when the leased space ceases to be used). In the case of operating leases, these continuing costs are also adjusted for the effects of any prepaid or deferred items previously recognized under the lease and reduced by estimated sublease rental income.

47

Other related costs generally include employee relocation costs, office moving costs, and external consulting and advisory fees related to restructuring activities. Such costs are recognized at fair value in the period in which the costs are incurred.

At each reporting date, we evaluate our accrued restructuring costs to determine if the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans are reflected in the Company’s Consolidated Statements of Operations.

Litigation and Contingencies. We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We have contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, we may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion.

Income Taxes. In determining our net deferred tax assets and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of net operating loss carryforwards, changes in applicable tax laws, transfer pricing methods, and prudent and feasible tax planning strategies. However, judgments and estimates related to our projections and assumptions are inherently uncertain; therefore, actual results could differ materially from our projections, which could impact the carrying value of our net deferred tax assets in future periods.

As a global company with subsidiaries in many countries, we are required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which we operate. This process involves estimating current tax liabilities and exposures in each jurisdiction as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws related to the utilization of net operating losses in various jurisdictions, changes in tax rates, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense and net income. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We consider past and future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance. If we determine that we would not be able to realize all or part of net deferred tax assets in the future, an adjustment to deferred tax assets would reduce income in the period that such determination was made.

Share-based Compensation. We recognize share-based compensation expense associated with stock option awards on a straight-line basis over the award’s requisite service period. The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 12, Share-based Compensation, to our Consolidated Financial Statements for further information regarding the assumptions used in the Black-Scholes option pricing model. These assumptions are based on management’s best judgment, and changes to these assumptions could materially affect the fair value estimates and amount of share-based compensation expense recognized.

Fair Value Measurements. We measure certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below:

Level 1:	Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:	Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

48

The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by us when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

We also estimate the fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, accrued compensation and employee benefits, and accrued restructuring costs. We consider the carrying value of these instruments in our Consolidated Financial Statements to approximate fair value due to their short maturities.

49

Impact of Foreign Currency Exchange Rate Fluctuations on Results of Operations

We conduct a significant portion of our business in currencies other than the U.S. dollar, the currency in which we report our Consolidated Financial Statements. As currency rates change from quarter to quarter and year over year, our results of operations may be impacted. The table below summarizes the impact (in thousands) of fluctuations in foreign currency exchange rates on certain components of our Consolidated Statements of Operations by showing the increase (decrease) in revenues or expenses, as applicable, from the prior year that resulted from such fluctuations. The term “international” refers to operations outside of the United States and Canada.

	Years Ended December 31,
	2014			2013			2012
International product licenses revenues	$	(1,985	)	$	(1,089	)	$	(3,973	)
International subscription services revenues		67			(3	)		(4	)
International product support revenues		(2,782	)		(686	)		(7,732	)
International other services revenues		(1,078	)		(859	)		(4,089	)
Cost of product support revenues		27			(146	)		(216	)
Cost of other services revenues		(665	)		(109	)		(3,906	)
Sales and marketing expenses		(1,583	)		(1,039	)		(5,649	)
Research and development expenses		278			627			270
General and administrative expenses		(536	)		(264	)		(1,241	)

For example, if there had been no change to foreign currency exchange rates from 2013 to 2014, international product licenses revenues would have been $59.1 million rather than $57.1 million for the year ended December 31, 2014. If there had been no change to foreign currency exchange rates from 2013 to 2014, sales and marketing expenses would have been $226.7 million rather than $225.1 million for the year ended December 31, 2014.

50

Results of Operations

Comparison of the years ended December 31, 2014, 2013, and 2012

Revenues

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.

Product licenses and subscription services revenues. The following table sets forth product licenses and subscription services revenues (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Product Licenses and Subscription Services Revenues:
Product Licenses
Domestic	$	68,836	$	87,109	$	80,508		-21.0	%		8.2	%
International		57,116		60,770		66,836		-6.0	%		-9.1	%
Total product licenses revenues		125,952		147,879		147,344		-14.8	%		0.4	%
Subscription Services
Domestic		19,454		10,939		3,054		77.8	%		258.2	%
International		2,868		1,307		64		119.4	%		1942.2	%
Total subscription services revenues		22,322		12,246		3,118		82.3	%		292.8	%
Total product licenses and subscription services revenues	$	148,274	$	160,125	$	150,462		-7.4	%		6.4	%

The following table sets forth a summary, grouped by size, of the number of recognized product licenses transactions for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Product Licenses Transactions with Recognized Licenses Revenue in the Applicable Period:
More than $1.0 million in licenses revenue recognized		14		18		19
Between $0.5 million and $1.0 million in licenses revenue recognized		29		32		31
Total		43		50		50
Domestic:
More than $1.0 million in licenses revenue recognized		11		14		15
Between $0.5 million and $1.0 million in licenses revenue recognized		15		21		18
Total		26		35		33
International:
More than $1.0 million in licenses revenue recognized		3		4		4
Between $0.5 million and $1.0 million in licenses revenue recognized		14		11		13
Total		17		15		17

51

The following table sets forth the recognized revenue (in thousands) attributable to product licenses transactions, grouped by size, and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Product Licenses Revenue Recognized in the Applicable Period:
More than $1.0 million in licenses revenue recognized	$	21,335	$	37,585	$	39,103		–43.2	%		–3.9	%
Between $0.5 million and $1.0 million in licenses revenue recognized		19,755		22,089		20,942		–10.6	%		5.5	%
Less than $0.5 million in licenses revenue recognized		84,862		88,205		87,299		–3.8	%		1.0	%
Total		125,952		147,879		147,344		–14.8	%		0.4	%
Domestic:
More than $1.0 million in licenses revenue recognized		16,231		30,710		25,709		–47.1	%		19.5	%
Between $0.5 million and $1.0 million in licenses revenue recognized		10,596		14,505		12,172		–26.9	%		19.2	%
Less than $0.5 million in licenses revenue recognized		42,009		41,894		42,627		0.3	%		–1.7	%
Total		68,836		87,109		80,508		–21.0	%		8.2	%
International:
More than $1.0 million in licenses revenue recognized		5,104		6,875		13,394		–25.8	%		–48.7	%
Between $0.5 million and $1.0 million in licenses revenue recognized		9,159		7,584		8,770		20.8	%		–13.5	%
Less than $0.5 million in licenses revenue recognized		42,853		46,311		44,672		–7.5	%		3.7	%
Total	$	57,116	$	60,770	$	66,836		–6.0	%		–9.1	%

Product licenses revenues decreased $21.9 million during 2014, as compared to the prior year. Product licenses revenues increased $0.5 million during 2013, as compared to the prior year. For the years ended December 31, 2014, 2013, and 2012, product licenses transactions with more than $0.5 million in recognized revenue represented 32.6%, 40.4%, and 40.8%, respectively, of our product licenses revenues. During 2014, our top three product licenses transactions totaled $6.4 million in recognized revenue, or 5.1% of total product licenses revenues, compared to $14.3 million and $13.5 million, or 9.7% and 9.2% of total product licenses revenues, during 2013 and 2012, respectively. We believe that challenges in execution experienced by our sales, marketing, and technology organizations, particularly as the 2014 Restructuring Plan was being implemented, contributed to the decrease in product licenses revenues during 2014.

Domestic product licenses revenues. Domestic product licenses revenues decreased $18.3 million during 2014, as compared to the prior year, primarily due to a decrease in the number and average deal size of transactions with more than $1.0 million in recognized revenue and a decrease in the number of transactions with recognized revenue between $0.5 million and $1.0 million.

Domestic product licenses revenues increased $6.6 million during 2013, as compared to the prior year, primarily due to an increase in the average deal size of transactions with more than $1.0 million in recognized revenue and an increase in the number and average deal size of transactions with recognized revenue between $0.5 million and $1.0 million, partially offset by a decrease in the number of transactions with less than $0.5 million in recognized revenue.

International product licenses revenues. International product licenses revenues decreased $3.7 million during 2014, as compared to the prior year, primarily due to a decrease in the number of transactions with less than $0.5 million in recognized revenue and a decrease in the number and average deal size of transactions with more than $1.0 million in recognized revenue, partially offset by an increase in the number of transactions with recognized revenue between $0.5 million and $1.0 million.

International product licenses revenues decreased $6.1 million during 2013, as compared to the prior year, primarily due to a decrease in the average deal size of transactions with more than $1.0 million in recognized revenue 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 number of transactions with less than $0.5 million in recognized revenue.

Subscription services revenues. Subscription services revenues are primarily derived from our cloud services offerings that are recognized on a subscription basis over the service period of the contract. Subscription services revenues increased $10.1 million

52

during 2014, as compared to the prior year, primarily due to an increase in the number of new subscription services customers and an increase in the use of subscription services by existing customers as our cloud services business has continued to grow. Subscription services revenues increased $9.1 million during 2013, as compared to the prior year, primarily due to an increase in the number of new customers as our cloud services business has continued to grow.

Product support revenues. The following table sets forth product support revenues (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Product Support Revenues:
Domestic	$	171,505	$	159,659	$	149,738		7.4	%		6.6	%
International		124,198		117,850		112,310		5.4	%		4.9	%
Total product support revenues	$	295,703	$	277,509	$	262,048		6.6	%		5.9	%

Product support revenues are derived from providing technical software support and software updates and upgrades to customers. Product support revenues are recognized ratably over the term of the contract, which is generally one year. Product support revenues increased $18.2 million during 2014, as compared to the prior year, primarily due to an increase in the number of new product and premium support contracts and more timely renewals at quarter-end. Product support revenues increased $15.5 million during 2013, as compared to the prior year, primarily due to an increase in the number of product support contracts and an overall increase in renewal pricing on existing product support contracts.

Other services revenues. The following table sets forth other services revenues (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Other Services Revenues:
Consulting
Domestic	$	73,180	$	75,193	$	81,796		–2.7	%		–8.1	%
International		48,778		47,037		52,586		3.7	%		–10.6	%
Total consulting revenues		121,958		122,230		134,382		–0.2	%		–9.0	%
Education		13,895		16,024		18,832		–13.3	%		–14.9	%
Total other services revenues	$	135,853	$	138,254	$	153,214		–1.7	%		–9.8	%

Consulting revenues. Consulting revenues are derived from helping customers plan and execute the deployment of our software. Consulting revenues decreased during 2014, as compared to the prior year, primarily due to a decrease in billable hours with customers in the domestic and Latin American regions, partially offset by an increase in billable hours with customers in the EMEA region, which includes operations in Europe, the Middle East, and Africa. Consulting revenues decreased during 2013, as compared to the prior year, primarily due to a decrease in billable hours that occurred following the completion of several major client implementations.

Education revenues. Education revenues are derived from the education and training that we provide to our customers to enhance their ability to fully utilize the features and functionality of our software. 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. Education revenues decreased during 2014, as compared to the prior year, primarily due to lower overall contract values, a decrease in private and custom courses delivered, and continued shifting demand from traditional classroom training to virtual training in the domestic, Latin American, and Asia Pacific regions. Education revenues decreased during 2013, as compared to the prior year, primarily due to lower overall contract values, a decrease in private and custom courses delivered, and shifting demand from traditional classroom training to virtual training within our education pass program.

53

Costs and Expenses

Cost of revenues. The following table sets forth cost of revenues (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Cost of Revenues:
Product licenses and subscription services:
Product licenses	$	6,957	$	6,606	$	5,819		5.3	%		13.5	%
Subscription services		17,560		15,636		6,621		12.3	%		136.2	%
Total product licenses and subscription services		24,517		22,242		12,440		10.2	%		78.8	%
Product support		14,241		16,617		15,532		–14.3	%		7.0	%
Other services:
Consulting		90,780		93,661		105,720		–3.1	%		–11.4	%
Education		5,672		6,049		7,384		–6.2	%		–18.1	%
Total other services		96,452		99,710		113,104		–3.3	%		–11.8	%
Total cost of revenues	$	135,210	$	138,569	$	141,076		–2.4	%		–1.8	%

Cost of product licenses revenues. Cost of product licenses revenues consists of amortization of capitalized software development costs, referral fees paid to channel partners, costs of product manuals and media, and royalties paid to third-party software vendors. Capitalized software development costs are generally amortized over a useful life of three years.

Cost of product licenses revenues increased $0.4 million during 2014, as compared to the prior year, primarily due to a $1.4 million increase in amortization of capitalized software development costs related to the release of MicroStrategy 9.4 in October 2013 and a $0.6 million increase in referral fees related to channel partners, partially offset by a $1.3 million decrease in amortization of capitalized software development costs related to MicroStrategy 9.2, which became fully amortized in March 2014, and a $0.4 million decrease in amortization of capitalized software development costs related to MicroStrategy Mobile, which became fully amortized in June 2013. We expect to amortize the remaining balance of our products’ capitalized software development costs as of December 31, 2014 ratably over the applicable remaining amortization periods as follows:

	Capitalized Software Development Costs, Net, as of December 31, 2014 (in thousands)		Remaining Amortization Period (in months)
MicroStrategy 9.3	$	1,901		9
MicroStrategy 9.4		3,172		21
MicroStrategy 10		8,396		n/a
Total capitalized software development costs	$	13,469

During 2014, we also recorded $8.4 million in capitalized software development costs associated with development efforts related to MicroStrategy 10. Upon this product becoming generally available, we will begin to amortize its costs over the estimated product life of 36 months.

All of the above software form part of the MicroStrategy Analytics Platform.

Cost of product licenses revenues increased $0.8 million during 2013, as compared to the prior year, primarily due to a $1.9 million increase in amortization of capitalized software development costs related to the release of MicroStrategy 9.3 in September 2012 and a $0.5 million increase in amortization of capitalized software development costs related to the release of MicroStrategy 9.4 in October 2013, partially offset by a $1.3 million decrease in amortization of capitalized software development costs related to MicroStrategy 9, which became fully amortized in March 2012, and a $0.4 million decrease in amortization of capitalized software development costs related to MicroStrategy Mobile, which became fully amortized in June 2013.

54

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. Cost of subscription services revenues increased $1.9 million during 2014, as compared to the prior year, primarily due to a $3.1 million increase in compensation and related costs due to an increase in staffing levels, partially offset by a $0.7 million decrease in equipment depreciation and facility and other related support costs and a $0.6 million decrease in consulting and advisory costs. Subscription services headcount increased 46.2% to 57 at December 31, 2014 from 39 at December 31, 2013.

Cost of subscription services revenues increased $9.0 million during 2013, as compared to the prior year, due to a $6.6 million increase in equipment depreciation and facility and other related support costs, a $1.7 million increase in compensation and related costs due to an increase in staffing levels, and a $0.7 million increase in consulting and advisory costs. Subscription services headcount increased 160.0% to 39 at December 31, 2013 from 15 at December 31, 2012.

Cost of product support revenues. Cost of product support revenues consists of product support personnel and related overhead costs. Cost of product support revenues decreased $2.4 million during 2014, as compared to the prior year, primarily due to a $1.8 million decrease in compensation and related costs due to a decrease in staffing levels, a $0.2 million decrease in facility and other related support costs, a $0.2 million decrease in consulting and advisory costs, and a $0.1 million decrease in travel and entertainment expenditures. Product support headcount decreased 15.9% to 138 at December 31, 2014 from 164 at December 31, 2013.

Cost of product support revenues increased $1.1 million during 2013, as compared to the prior year, due to a $0.9 million increase in compensation and related costs due to a change in staffing composition and a $0.2 million increase in facility and other related support costs. Product support headcount decreased 9.9% to 164 at December 31, 2013 from 182 at December 31, 2012.

Cost of consulting revenues. Cost of consulting revenues consists of personnel and related overhead costs. Cost of consulting revenues decreased $2.9 million during 2014, as compared to the prior year, primarily due to a $3.9 million decrease in compensation and related costs due to a decrease in staffing levels, a $1.3 million decrease in travel and entertainment expenditures, and a $0.7 million decrease in facility and other related support costs, partially offset by a $3.2 million increase in subcontractor costs. The decrease in cost of consulting revenues during 2014 does not fully reflect the savings expected to be delivered from the 2014 Restructuring Plan that we substantially implemented in the third and fourth quarters of 2014. As noted in “Liquidity and Capital Resources”, as compared to estimated annualized pre-restructuring expenses, we expect to deliver approximately $4.0 million in annualized cost savings in 2015 from reduced cost of consulting revenues as a result of the 2014 Restructuring Plan. Consulting headcount decreased 10.3% to 600 at December 31, 2014 from 669 at December 31, 2013.

Cost of consulting revenues decreased $12.1 million during 2013, as compared to the prior year, due to an $11.0 million decrease in compensation and related costs due to a decrease in staffing levels and a $1.3 million decrease in travel and entertainment expenditures, partially offset by a $0.1 million increase in facility and other related support costs and a $0.1 million increase in subcontractor costs. Consulting headcount decreased 18.8% to 669 at December 31, 2013 from 824 at December 31, 2012.

Cost of education revenues. Cost of education revenues consists of personnel and related overhead costs. Cost of education revenues decreased $0.4 million during 2014, as compared to the prior year, primarily due to a $0.4 million decrease in compensation and related costs due to a decrease in staffing levels and a $0.2 million decrease in facility and other related support costs, partially offset by a $0.3 million increase in subcontractor costs. The decrease in cost of education revenues during 2014 does not fully reflect the savings expected to be delivered from the 2014 Restructuring Plan that we substantially implemented in the third and fourth quarters of 2014. As noted in “Liquidity and Capital Resources”, as compared to estimated annualized pre-restructuring expenses, we expect to deliver approximately $1.7 million in annualized cost savings in 2015 from reduced cost of education revenues as a result of the 2014 Restructuring Plan. Education headcount decreased 33.3% to 24 at December 31, 2014 from 36 at December 31, 2013.

Cost of education revenues decreased $1.3 million during 2013, as compared to the prior year, primarily due to a $0.8 million decrease in compensation and related costs associated with a decrease in staffing levels, a $0.3 million decrease in travel and entertainment expenditures, and a $0.3 million decrease in facility and other related support costs. Education headcount decreased 25.0% to 36 at December 31, 2013 from 48 at December 31, 2012.

55

Sales and marketing expenses. Sales and marketing expenses consists of personnel costs, commissions, office facilities, travel, advertising, public relations programs, and promotional events, such as trade shows, seminars, and technical conferences. The following table sets forth sales and marketing expenses (in thousands) and related percentage changes for the periods indicated,

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
Sales and marketing expenses:	$	225,086	$	215,089	$	209,975		4.6	%		2.4	%

Sales and marketing expenses increased $10.0 million during 2014, as compared to the prior year, primarily due to a $4.1 million increase in compensation and related costs due to an increase in average staffing levels, a $2.9 million increase in marketing and advertising costs, a $1.5 million increase in facility and other related support costs, a $1.3 million increase in recruiting costs, a $1.0 million increase due to previously disputed variable compensation, a $0.7 million increase in consulting and advisory costs, and a $0.3 million increase in share-based compensation expense related to the grant of stock options under the 2013 Plan, partially offset by a $1.2 million decrease in variable compensation primarily due to a reduction in accrued bonus expense, resulting from both a reduction in the percentage payout of targeted bonuses and a decrease in staffing levels, and a $0.4 million decrease in travel and entertainment expenditures. The increase in sales and marketing expenses during 2014 does not fully reflect the savings expected to be delivered from the 2014 Restructuring Plan that we substantially implemented in the third and fourth quarters of 2014. As noted in “Liquidity and Capital Resources”, as compared to estimated annualized pre-restructuring expenses, we expect to deliver approximately $25.6 million in annualized cost savings in 2015 from reduced sales and marketing expenses as a result of the 2014 Restructuring Plan. Sales and marketing headcount decreased 19.8% to 662 at December 31, 2014 from 825 at December 31, 2013. Having substantially implemented the 2014 Restructuring Plan, we do not expect to increase sales and marketing headcount significantly in the near term.

As a result of the grant of stock options under the 2013 Plan, we expect that share-based compensation expense, a portion of which is recognized as sales and marketing expense, will continue to be a significant recurring expense. As of December 31, 2014, we estimate that approximately $6.1 million of additional share-based compensation expense will be recognized as sales and marketing expense over a remaining weighted average period of 3.8 years. See “Overview” and Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the 2013 Plan and related share-based compensation expense.

Sales and marketing expenses increased $5.1 million during 2013, as compared to the prior year, due to a $7.4 million increase in compensation, variable compensation, and related costs, a $0.9 million increase in facility and other related support costs, a $0.4 million increase in consulting and advisory costs, and a $0.4 million increase in recruiting costs, partially offset by a $2.7 million decrease in advertising costs and a $1.3 million decrease in travel and entertainment expenditures. Sales and marketing headcount increased 13.8% to 825 at December 31, 2013 from 725 at December 31, 2012.

General and administrative expenses. General and administrative expenses consists 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. The following table sets forth general and administrative expenses (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,						% Change			% Change
	2014		2013		2012		in 2014			in 2013
General and administrative expenses	$	96,343	$	104,734	$	93,384		-8.0	%		12.2	%

General and administrative expenses decreased $8.4 million during 2014, as compared to the prior year, primarily due to a $9.9 million decrease in variable compensation primarily due to a reduction in accrued bonus expense, resulting from both a reduction in the percentage payout of targeted bonuses and a decrease in staffing levels, and due to the fact that variable compensation in the prior year included additional amounts incurred as a result of the sale of Angel.com, a $3.9 million decrease in legal, consulting, and other advisory costs, a $0.8 million decrease in other aircraft-related operating costs, a $0.8 million decrease in travel and entertainment

56

expenditures, a $0.6 million decrease in facility and other related support costs, a $0.6 million decrease in recruiting costs, and a $0.2 million decrease in compensation and related costs, partially offset by an $8.8 million increase in share-based compensation expense related to the grant of stock options under the 2013 Plan. The decrease in general and administrative expenses during 2014 does not fully reflect the savings expected to be delivered from the 2014 Restructuring Plan that we substantially implemented in the third and fourth quarters of 2014. As noted in “Liquidity and Capital Resources”, as compared to estimated annualized pre-restructuring expenses, we expect to deliver approximately $8.4 million in annualized cost savings in 2015 from reduced general and administrative expenses as a result of the 2014 Restructuring Plan. General and administrative headcount decreased 27.1% to 344 at December 31, 2014 from 472 at December 31, 2013. Having substantially implemented the 2014 Restructuring Plan, we do not expect to increase general and administrative headcount significantly in the near term.

As a result of the grant of stock options under the 2013 Plan, we expect that share-based compensation expense, a portion of which is recognized as general and administrative expense, will continue to be a significant recurring expense. As of December 31, 2014, we estimate that approximately $39.2 million of additional share-based compensation expense will be recognized as general and administrative expense over a remaining weighted average period of 3.1 years. See “Overview” and Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the 2013 Plan and related share-based compensation expense.

General and administrative expenses increased $11.4 million during 2013, as compared to the prior year, primarily due to an $11.7 million increase in compensation and related costs due to an increase in executive bonus accruals and an increase in staffing levels, a $1.7 million increase in share-based compensation expense related to the grant of stock options under the 2013 Plan, a $1.5 million increase in facility and other related support costs, a $0.6 million increase in travel and entertainment expenditures, a $0.6 million increase in non-income taxes, and a $0.4 million decrease in the capitalization of internally developed software, partially offset by a $3.9 million decrease in legal, consulting, and other advisory costs and a $1.5 million decrease in other operating costs of our owned corporate aircraft. General and administrative headcount increased 10.3% to 472 at December 31, 2013 from 428 at December 31, 2012.

Research and development expenses. Research and development expenses consists of the personnel costs for our software engineering personnel, depreciation of equipment, and other related costs. The following table summarizes research and development expenses and amortization of capitalized software development costs (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,									% Change			% Change
	2014			2013			2012			in 2014			in 2013
Gross research and development expenses before capitalized software development costs	$	111,751		$	103,493		$	96,338			8.0	%		7.4	%
Capitalized software development costs		(8,396	)		(5,437	)		(8,148	)		54.4	%		–33.3	%
Total research and development expenses	$	103,355		$	98,056		$	88,190			5.4	%		11.2	%
Amortization of capitalized software development costs included in cost of product licenses revenues	$	5,222		$	5,502		$	4,819			–5.1	%		14.2	%

Research and development expenses, before capitalization of software development costs, increased $8.3 million, or 8.0%, during 2014, as compared to the prior year, primarily due to an $11.8 million increase in compensation and related costs due to an increase in average staffing levels, a $1.2 million increase in recruiting costs, a $0.6 million increase in share-based compensation expense related to the grant of stock options under the 2013 Plan, and a $0.4 million increase in facility and other related support costs, partially offset by a $5.0 million decrease in variable compensation primarily due to a reduction in accrued bonus expense, resulting from both a reduction in the percentage payout of targeted bonuses and a decrease in staffing levels, and a $0.9 million decrease in consulting and advisory costs. During 2014, we capitalized $8.4 million in costs associated with development efforts related to our MicroStrategy 10 software, as compared to $5.4 million in software development costs that were capitalized in the prior year. The increase in research and development expenses, before capitalization of software development costs, during 2014 does not fully reflect the savings expected to be delivered from the 2014 Restructuring Plan that we substantially implemented in the third and fourth quarters of 2014. As noted in “Liquidity and Capital Resources”, as compared to estimated annualized pre-restructuring expenses, we expect to deliver approximately $27.5 million in annualized cost savings in 2015 from reduced research and

57

development expenses as a result of the 2014 Restructuring Plan. Research and development headcount decreased 32.3% to 645 at December 31, 2014 from 953 at December 31, 2013. Having substantially implemented the 2014 Restructuring Plan, we do not expect to increase research and development headcount significantly in the near term.

As a result of the grant of stock options under the 2013 Plan, we expect that share-based compensation expense, a portion of which is recognized as research and development expense, will continue to be a significant recurring expense. As of December 31, 2014, we estimate that approximately $1.3 million of additional share-based compensation expense will be recognized as research and development expense over a remaining weighted average period of 3.3 years. See “Overview” and Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the 2013 Plan and related share-based compensation expense.

Research and development expenses, before capitalization of software development costs, increased $7.2 million, or 7.4%, during 2013, as compared to the prior year, primarily due to a $9.5 million increase in compensation and related costs due to an increase in staffing levels, a $0.3 million increase in share-based compensation expense related to the grant of stock options under the 2013 Plan, and a $0.3 million increase in recruiting costs, partially offset by a $1.9 million decrease in facility and other related support costs that was primarily the result of a reclassification of such costs to cost of subscription services and a $1.3 million decrease in consulting and advisory costs. During 2013, we capitalized $5.4 million in costs associated with the development of our MicroStrategy 9.4 software, as compared to $8.1 million in software development costs associated with the development of our MicroStrategy 9.3 software that were capitalized in the prior year. Research and development headcount increased 7.3% to 953 at December 31, 2013 from 888 at December 31, 2012.

During 2014, our research and development effort was focused on the following: 68.7% on the MicroStrategy Analytics Platform, MicroStrategy Mobile, MicroStrategy Secure Cloud, and internal information technology initiatives and 31.3% on other research and development, including MicroStrategy Usher.

During 2013, our research and development effort was focused on the following: 61.9% on the MicroStrategy Analytics Platform, MicroStrategy Mobile, MicroStrategy Secure Cloud, and internal information technology initiatives and 38.1% on other research and development, including MicroStrategy Usher.

Restructuring costs. In the third quarter of 2014, we adopted the 2014 Restructuring Plan, which included a workforce reduction of 777 employees. Restructuring costs consist primarily of employee severance and related benefit costs, contract termination costs, and other related costs associated with our restructuring activities. Total restructuring costs were $14.7 million for the year ended December 31, 2014, as compared to no such costs in the same period in the prior year, due to the implementation of the 2014 Restructuring Plan in the third and fourth quarters of 2014. See “Overview”, “Liquidity and Capital Resources”, and Note 8, Restructuring, to the Consolidated Financial Statements for further information regarding the 2014 Restructuring Plan and related restructuring costs by major cost category.

Other Income (Expense), Net

Other income (expense), net is comprised primarily of realized and unrealized gains and losses on our foreign currency forward contracts, foreign currency transaction gains and losses, and proceeds from litigation settlements. During 2014, other income, net, of $5.8 million was comprised primarily of $5.3 million in foreign currency transaction net gains, arising mainly from the revaluation of U.S. dollar denominated cash balances held at international locations, and $1.7 million in net unrealized gains from foreign currency forward contracts, offset by $0.6 million in net realized losses from the settlement of certain foreign currency forward contracts, $0.3 million in net losses on disposal of fixed assets, and $0.3 million in impairment losses related to software developed for internal use. During 2013, other expense, net, of $3.2 million was comprised primarily of $3.3 million in foreign currency transaction net losses, arising mainly from the revaluation of U.S. dollar denominated cash balances held at international locations and $0.6 million in net realized losses from the settlement of certain foreign currency forward contracts, partially offset by $0.4 million in proceeds received from litigation settlements. During 2012, other expense, net, of $1.0 million was comprised primarily of $2.0 million in foreign currency transaction net losses, arising mainly from the revaluation of U.S. dollar denominated cash balances held at international locations.

58

Provision for Income Taxes

During 2014, we recorded a provision for income taxes from continuing operations of $6.0 million that resulted in an effective tax rate from continuing operations of 54.4%, as compared to a benefit from income taxes from continuing operations of $9.8 million that resulted in an effective tax rate of negative 58.5% during 2013. The change in the Company’s effective tax rate from continuing operations in 2014, as compared to the prior year, was primarily due to the increase in the valuation allowance in 2014 and the release of liability for certain unrecognized tax benefits in 2013.

As of December 31, 2014, we had U.S. federal net operating loss (“NOL”) carryforwards of $14.7 million and foreign NOL carryforwards of $3.4 million. As of December 31, 2014, U.S. and foreign NOL carryforwards, other temporary differences and carryforwards, and credits resulted in deferred tax assets, net of valuation allowances and deferred tax liabilities, of $17.0 million. As of December 31, 2014, we had a valuation allowance of $2.3 million primarily related to certain foreign tax credit carryforwards and foreign NOL carryforwards that, in our present estimation, more likely than not will not be realized.

Although we have substantially implemented all of the 2014 Restructuring Plan, if we are unable to sustain or increase profitability after we have fully implemented the restructuring plan, we may not be able to realize these tax assets. If we are unable to achieve profitability in the near future, particularly relating to our U.S. operations, we may be required to increase the valuation allowance against our deferred tax assets. We will continue to assess regularly the realizability of deferred tax assets.

Except as discussed below, we intend to indefinitely reinvest our undistributed earnings of all of our foreign subsidiaries. Therefore, the annualized effective tax rate applied to our pre-tax income from continuing operations does not include any provision for U.S. federal and state income taxes on the amount of the undistributed foreign earnings. U.S. federal tax laws, however, require us to include in our U.S. taxable income certain investment income earned outside of the U.S. in excess of certain limits (“Subpart F deemed dividends”). Because Subpart F deemed dividends are already required to be recognized in our U.S. federal income tax return, we regularly repatriate Subpart F deemed dividends to the U.S. and no additional tax is incurred on the distribution. We repatriated Subpart F deemed dividends of $1.3 million, $1.0 million and $2.5 million in 2014, 2013, and 2012, respectively, with no additional tax. As of December 31, 2014 and December 31, 2013, the amount of cash and cash equivalents and short-term investments held by U.S. entities was $139.1 million and $160.5 million, respectively, and by non-U.S. entities was $206.4 million and $196.9 million, respectively. If the cash and cash equivalents and short-term investments held by non-U.S. entities were to be repatriated to the U.S., we would generate U.S. taxable income to the extent of our undistributed foreign earnings, which amounted to $201.7 million at December 31, 2014. Although the tax impact of repatriating these earnings is difficult to determine, we would not expect the maximum effective tax rate that would be applicable to such repatriation to exceed the U.S. statutory rate of 35.0%, after considering applicable foreign tax credits.

During 2012, we recorded a provision for income taxes from continuing operations of $9.7 million, resulting in an effective tax rate of 30.2%. The change in our effective tax rate from continuing operations in 2013, as compared to 2012, was primarily due to the release of liabilities for unrecognized tax benefits as the statute of limitations on certain previously filed tax returns expired in the third quarter of 2013, a favorable settlement of a German tax examination in the second quarter of 2013, and the 2012 U.S. research and development tax credit, which was retroactively reinstated by the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013 and recorded as a tax benefit in the first quarter of 2013.

Discontinued Operations

On March 15, 2013, we completed the sale of our equity interest in our Angel.com business and received consideration of approximately $111.2 million, resulting in a net cash inflow of $100.7 million after $10.5 million in transaction costs. The sale resulted in a gain of $57.4 million, net of tax, during 2013. We reclassified revenues and expenses associated with the Angel.com business to discontinued operations for all periods presented. The following table summarizes the gain from the sale of discontinued operations, net of tax, and loss from discontinued operations, net of tax, (in thousands) and percentage changes for the periods indicated:

59

	Years Ended December 31,						% Change		% Change
	2014		2013		2012		in 2014		in 2013
Gain on sale of discontinued operations, net of tax	$	0	$	57,377	$	0		n/a		n/a
Loss from discontinued operations, net of tax	$	0	$	595	$	1,927		n/a		-69.1	%

Deferred Revenue and Advance Payments

Deferred revenue and advance payments represent subscription services, product support, and other services fees that are collected in advance and recognized over the contract service period and product licenses revenues relating to multiple-element software arrangements that include future deliverables.

The following table summarizes deferred revenue and advance payments (in thousands), as of:

	December 31,
	2014			2013			2012
Current:
Deferred product licenses revenue	$	10,927		$	14,538		$	12,252
Deferred subscription services revenue		16,018			10,923			7,087
Deferred product support revenue		168,833			167,771			145,343
Deferred other services revenue		10,564			17,056			15,132
Gross current deferred revenue and advance payments		206,342			210,288			179,814
Less: unpaid deferred revenue		(97,929	)		(96,632	)		(78,565	)
Net current deferred revenue and advance payments	$	108,413		$	113,656		$	101,249
Non-current:
Deferred product licenses revenue	$	8,012		$	4,401		$	3,280
Deferred subscription services revenue		750			1,161			1,028
Deferred product support revenue		7,505			5,877			8,205
Deferred other services revenue		1,047			1,175			852
Gross non-current deferred revenue and advance payments		17,314			12,614			13,365
Less: unpaid deferred revenue		(6,496	)		(3,644	)		(4,542	)
Net non-current deferred revenue and advance payments	$	10,818		$	8,970		$	8,823
Total current and non-current:
Deferred product licenses revenue	$	18,939		$	18,939		$	15,532
Deferred subscription services revenue		16,768			12,084			8,115
Deferred product support revenue		176,338			173,648			153,548
Deferred other services revenue		11,611			18,231			15,984
Gross current and non-current deferred revenue and advance payments		223,656			222,902			193,179
Less: unpaid deferred revenue		(104,425	)		(100,276	)		(83,107	)
Net current and non-current deferred revenue and advance payments	$	119,231		$	122,626		$	110,072

We offset our accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments.

Total gross deferred revenue and advance payments increased $0.8 million in 2014, as compared to the prior year, primarily due to the recognition of previously deferred other services revenues, partially offset by an increase in deferred revenue from new subscription services and product support contracts. Total gross deferred revenue and advance payments increased $29.7 million in 2013, as compared to the prior year, primarily due to more timely renewals of product support at year-end and an increase in deferred revenue from new product licenses, subscription services, product support, and other services contracts.

We expect to recognize approximately $206.3 million of deferred revenue and advance payments over the next 12 months. However, the timing and ultimate recognition of our deferred revenue and advance payments depend on our performance of various service obligations, and the amount of deferred revenue and advance payments at any date should not be considered indicative of revenues for any succeeding period.

60

As of December 31, 2014, we had entered into certain additional agreements that include future minimum commitments by our customers to purchase products, subscription services, product support, or other services through 2019 totaling approximately $136.4 million. As of December 31, 2013, the future minimum commitments by our customers to purchase products, subscription services, product support, or other services through 2018 totaled approximately $119.7 million. Revenue relating to such future commitments by our customers is not included in our deferred revenue balances. Revenue relating to such agreements will be recognized during the period in which all revenue recognition criteria are met. The timing and ultimate recognition of any revenue from such customer purchase commitments depend on our customers’ meeting their future purchase commitments and our meeting our associated performance obligations related to those purchase commitments.

Liquidity and Capital Resources

Liquidity. Our principal sources of liquidity are cash and cash equivalents and on-going collection of our accounts receivable. Cash and cash equivalents include holdings in bank demand deposits, money market instruments, and U.S. Treasury securities. We also periodically invest a portion of our excess cash in short-term investments with stated maturity dates between three months and one year from the purchase date.

As of December 31, 2014, total accrued restructuring costs were $2.3 million, most of which are expected to be paid in the first quarter of 2015. We do not expect future costs associated with implementing the remainder of the 2014 Restructuring Plan, consisting primarily of the liquidation of certain foreign subsidiaries, to be material. The 2014 Restructuring Plan is expected to deliver annualized pre-tax savings of approximately $67.2 million, as compared to estimated annualized pre-restructuring expenses, primarily as a result of reduced employee compensation and rent expense across the following line items within the Consolidated Statements of Operations (in thousands):

	Estimated Annual
	Pre-Tax Savings
Cost of other services	$	5,700
Sales and marketing		25,600
Research and development		27,500
General and administrative		8,400
Total estimated annual pre-tax savings from restructuring	$	67,200

In our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, we estimated that total annual pre-tax savings from the 2014 Restructuring Plan would be $73.4 million. As of December 31, 2014, we have revised our total estimated annual pre-tax savings from the 2014 Restructuring Plan to be $67.2 million. The $6.2 million decrease in total estimated annual pre-tax savings is primarily due to a change in business strategy and other developments.

In addition to the 2014 Restructuring Plan, we have implemented other internal cost-saving initiatives that we expect will deliver additional annualized pre-tax savings.

As of December 31, 2014 and December 31, 2013, the amount of cash and cash equivalents and short-term investments held by U.S. entities was $139.1 million and $160.5 million, respectively, and by non-U.S. entities was $206.4 million and $196.9 million, respectively. We earn a significant amount of our revenues outside the U.S. and, except for Subpart F deemed dividends, we intend to indefinitely reinvest undistributed earnings of all of our non-U.S. entities. We do not anticipate needing to repatriate the cash or cash equivalents held by non-U.S. entities to the U.S. to finance our U.S. operations. However, if we were to elect to repatriate these amounts, we would generate U.S. taxable income to the extent of our undistributed foreign earnings, which amounted to $201.7 million at December 31, 2014. Although the tax impact of repatriating these earnings is difficult to determine and our effective tax rate could increase as a result of any such repatriation, we would not expect the maximum effective tax rate that would be applicable to such repatriation to exceed the U.S. statutory rate of 35.0%, after considering applicable foreign tax credits.

We believe that existing cash and cash equivalents and short-term investments held by us and cash and cash equivalents anticipated to be generated by us are sufficient to meet working capital requirements, anticipated capital expenditures, restructuring activities, and contractual obligations for at least the next 12 months.

61

The following table sets forth a summary of our cash flows from continuing operations (in thousands) and related percentage changes for the periods indicated:

	Years Ended December 31,									% Change			% Change
	2014			2013			2012			in 2014			in 2013
Net cash provided by operating activities from continuing operations	$	14,600		$	30,598		$	52,163			-52.3	%		-41.3	%
Net cash used in investing activities from continuing operations	$	(82,110	)	$	(154,066	)	$	(34,338	)		-46.7	%		348.7	%
Net cash (used in) provided by financing activities from continuing operations	$	(1,470	)	$	21,637		$	9,759			-106.8	%		121.7	%

Net Cash Provided by Operating Activities from Continuing Operations. The primary source of our cash provided by operating activities from continuing operations is cash collections of our accounts receivable from customers following the sales and renewals of our software licenses, technical software support, software updates and upgrades, as well as consulting, education, and subscription services. Our primary uses of cash in operating activities from continuing operations 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.

Net cash provided by operating activities from continuing operations was $14.6 million, $30.6 million, and $52.2 million during 2014, 2013, and 2012, respectively. The decrease in net cash provided by operating activities during 2014, as compared to the prior year, was due to a $42.3 million change in operating assets and liabilities and a $21.5 million decrease in income from continuing operations, net of tax, partially offset by a $47.8 million increase from changes in non-cash items. The decrease in net cash provided by operating activities during 2013, as compared to the prior year, was primarily due to a $37.1 million decrease from changes in non-cash items, partially offset by an $11.5 million change in operating assets and liabilities and a $4.1 million increase in income from continuing operations, net of tax. Non-cash items primarily consist of depreciation and amortization, bad debt expense, unrealized net gains on foreign currency forward contracts, the non-cash portion of restructuring costs, deferred taxes, release of liabilities for unrecognized tax benefits, share-based compensation expense, and excess tax benefits from share-based compensation arrangements.

Net Cash Used in Investing Activities from Continuing Operations. The changes in net cash used in investing activities from continuing operations primarily relate to purchases and redemptions of short-term investments, expenditures on property, plant and equipment, capitalized software development costs, and receipts of insurance proceeds related to our owned corporate aircraft. Net cash used in investing activities was $82.1 million, $154.1 million, and $34.3 million during 2014, 2013, and 2012, respectively. The decrease in net cash used in investing activities from continuing operations during 2014, as compared to the prior year, was primarily due to a $221.9 million increase in proceeds from the redemption of U.S. Treasury securities, partially offset by a $145.9 million increase in purchases of short-term investments, a $3.0 million increase in capitalized software development costs, and a $1.4 million increase in purchases of property and equipment. The increase in net cash used in investing activities from continuing operations during 2013, as compared to the prior year, was due to a $224.1 million increase in purchases of short-term investments, a $3.2 million decrease in the amount of insurance proceeds received related to our owned corporate aircraft, which was damaged in the first quarter of 2010 and subsequently repaired and returned to service in the second quarter of 2012, and a $0.7 million increase in restricted cash, partially offset by an $87.0 million increase in proceeds from the redemption of U.S. Treasury securities, an $18.6 million decrease in purchases of property and equipment, and a $2.7 million decrease in capitalized software development costs.

Net Cash (Used in) Provided by Financing Activities from Continuing Operations. The changes in net cash (used in) provided by financing activities from continuing operations primarily relate to the exercise of employee stock options, excess tax benefits from share-based compensation arrangements, and payments on capital lease and other financing arrangements. Net cash used in financing activities from continuing operations was $1.5 million during 2014. Net cash provided by financing activities from continuing operations was $21.6 million and $9.8 million during 2013 and 2012, respectively. The decrease in net cash provided by financing activities from continuing operations during 2014, as compared to the prior year, was primarily due to a $23.6 million decrease in excess tax benefits, generated primarily from stock option exercises in previous years that were recognized in 2013 due to the taxable gain arising from the sale of Angel.com, partially offset by a $0.5 million increase in proceeds from the exercise of employee stock options. The increase in net cash provided by financing activities from continuing operations during 2013, as compared to the prior year, was due to a $23.6 million increase in excess tax benefits, generated primarily from stock option exercises in prior years, that

62

were recognized in 2013 due to the taxable gain arising from the sale of Angel.com, partially offset by a $9.9 million decrease in proceeds from the exercise of employee stock options and a $1.8 million increase in payments on capital lease obligations and other financing arrangements.

Share Repurchases. Our Board of Directors has authorized us to repurchase up to an aggregate of $800.0 million of our class A common stock from time to time on the open market through April 29, 2018 (the “2005 Share Repurchase Program”), although the program may be suspended or discontinued by us at any time. The timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using working capital, as well as proceeds from any other funding arrangements that we may enter into in the future. During the years ended December 31, 2014, 2013, and 2012, we did not repurchase any shares of our class A common stock pursuant to the 2005 Share Repurchase Program.

Contractual Obligations. As disclosed in Note 10, Commitments and Contingencies, to the Consolidated Financial Statements, we lease office space and computer and other equipment under operating lease agreements. We also lease certain computer and other equipment under capital lease agreements and license certain software under other financing arrangements. Under the lease agreements, in addition to base rent, we are generally responsible for certain taxes, utilities and maintenance costs, and other fees; and several leases include options for renewal or purchase. The following table shows future minimum rent payments under noncancellable operating and capital leases and agreements with initial terms of greater than one year, net of total future minimum rent payments to be received under noncancellable sublease agreements (in thousands), based on the expected due dates of the various installments as of December 31, 2014:

	Payments due by period ended December 31,
	Total		2015		2016-2017		2018-2019		Thereafter
Contractual Obligations:
Operating leases	$	117,100	$	24,627	$	39,011	$	33,533	$	19,929
Capital leases and other financing arrangements		1,720		1,563		139		18		0
Total	$	118,820	$	26,190	$	39,150	$	33,551	$	19,929

Unrecognized Tax Benefits. As of December 31, 2014, we had $2.5 million of total gross unrecognized tax benefits, including interest accrued. The unrecognized tax benefits have been netted against deferred tax assets upon adoption of Accounting Standards Update No. 2013-11, Income Taxes (Topic 740), and are recorded in other long-term liabilities. The timing of any payments which 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. We do not expect a significant tax payment related to these obligations during 2015.

Off-Balance Sheet Arrangements. As of December 31, 2014, we did not have any off-balance sheet arrangements that had or were reasonably likely to have a current or future material impact on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Recent Accounting Standards

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740) (“ASU 2013-11”), which requires the financial statement presentation of an unrecognized tax benefit in a particular jurisdiction, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the NOL or carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. We adopted ASU 2013-11 on January 1, 2014. As a result, liabilities for unrecognized tax benefits of $1.3 million were netted against deferred tax assets, as of December 31, 2014. The adoption of this guidance did not have a material effect on our consolidated results of operations or cash flows.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance. The standard’s core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to

63

which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (1) the entity’s contracts with customers, (2) the significant judgments, and changes in judgments, made in applying the guidance to those contracts, and (3) any assets recognized from the costs to obtain or fulfill a contract with a customer. ASU 2014-09 is effective for interim and annual periods beginning January 1, 2017. Early adoption is not permitted. The standard allows entities to apply the standard retrospectively to each prior reporting period presented (“full retrospective adoption”) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (“modified retrospective adoption”). We are currently evaluating the impact of this guidance on our consolidated financial position, results of operations, and cash flows.

64

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.

We are exposed to the impact of both interest rate changes and foreign currency fluctuations.

Interest Rate Risk. We face exposure to changes in interest rates primarily relating to our investments. We generally invest our excess cash in short-term, highly-rated, fixed-rate financial instruments. These fixed-rate instruments are subject to interest rate risk and may fall in value if interest rates increase. As of December 31, 2014, we held approximately $198.5 million of investments in U.S. Treasury securities with stated maturity dates between three months and one year from the purchase date, and we intend to hold these investments until maturity.

Foreign Currency Risk. We conduct a significant portion of our business in currencies other than the U.S. dollar, the currency in which we report our Consolidated Financial Statements. International revenues accounted for 41.1%, 40.4%, and 42.3% of our total revenues from continuing operations for the years ended December 31, 2014, 2013, and 2012, respectively. We anticipate that international revenues will continue to account for a significant portion of our total revenues. The functional currency of each of our foreign subsidiaries is the local currency.

Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the applicable balance sheet date and any resulting translation adjustments are included as an adjustment to stockholders’ equity. Revenues and expenses generated from these subsidiaries are translated at average monthly exchange rates during the quarter in which the transactions occur. Gains and losses from transactions in local currencies are included in net income.

As a result of transacting in multiple currencies and reporting our financial statements in U.S. dollars, our operating results may be adversely impacted by currency exchange rate fluctuations in the future. The impact of foreign currency exchange rate fluctuations on current and comparable periods is described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We cannot predict the effect of exchange rate fluctuations upon our future results. We attempt to minimize our foreign currency risk by converting our excess foreign currency held in foreign jurisdictions to U.S. dollar denominated cash and investment accounts. In addition, beginning in the second quarter of 2013, we entered into foreign currency forward contracts to hedge certain risks associated with foreign currency exchange exposure. We manage the use of foreign exchange derivative instruments centrally, and we do not hold or enter into derivative financial instruments for speculative trading purposes. See Note 4, Fair Value Measurements, to the Consolidated Financial Statements for further information on foreign currency forward contracts held. We cannot be sure that our hedging techniques will be successful or that our business, results of operations, financial condition, and cash flows will not be materially adversely affected by exchange rate fluctuations.

As of December 31, 2014 and 2013, a 10% adverse change in foreign currency exchange rates versus the U.S. dollar, before applying the impact of our foreign currency forward contracts, would have decreased our aggregate reported cash and cash equivalents and short-term investments by 0.3% and 0.4%, respectively. The decrease in exposure to an adverse change in foreign currency rates as of December 31, 2014 was due to a strengthening of the U.S. dollar and a decrease of cash balances in our non-U.S. dollar based bank accounts as compared to the prior year. Our foreign currency forward contracts further decrease the negative impact that a 10% adverse change in foreign currency exchange rates would have on our aggregate reported cash and cash equivalents and short-term investments from 0.3% to 0.1% as of December 31, 2014. If average exchange rates during the year ended December 31, 2014 had changed unfavorably by 10%, our revenues for the year ended December 31, 2014 would have decreased by 3.7%. During the year ended December 31, 2014, our revenues decreased 1.0% as a result of a 1.5% unfavorable change in weighted average exchange rates, as compared to the prior year.

Item 8. Financial Statements and Supplementary Data

Our Consolidated Financial Statements, together with the related notes and the associated Reports of Independent Registered Public Accounting Firms, are set forth on the pages indicated in Item 15.

65

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

The Company utilizes a cloud-based professional service automation system provided by a third-party service organization, Changepoint, in the Company’s consulting and education business lines. This system is used to track billable time used to invoice customers, as well as to track and process internal business travel and entertainment expenses. The Company’s contract with the third-party service organization requires that the third-party service organization provide to the Company, on an annual basis, a Service Organization Control (“SOC”) 1 Type 2 report in accordance with the AICPA Attestation Standards, Section 801, Reporting on Controls at a Service Organization, addressing the suitability of the design and operating effectiveness of controls relating to the cloud-based system and business processing activities performed by the service organization on the Company’s behalf. The third-party service organization provided such reports in the past. The Company relies upon this report, among other things, in assessing the effectiveness of its internal control over financial reporting. The third-party service organization did not provide an adequate SOC 1 Type 2 report for the year ended December 31, 2014. As a result, the Company did not have evidence of the design and operating effectiveness of the automated transaction level controls to track billable time and expenses and internal business travel and entertainment expenses, and related general information technology controls intended to prevent unauthorized system access and inappropriate change management for the cloud-based system at the third-party service organization, and accordingly, the Company has concluded that there is a material weakness in the Company’s internal control over financial reporting at December 31, 2014.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this annual report, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level because of a material weakness related to the control activities performed by the third-party service organization described above. Although the Company has not received an adequate SOC 1 Type 2 report from the third-party service organization, management believes, based on substantive testing performed, that the financial statements included in this annual report fairly present in all material respects our financial condition, results of operations, and cash flows for the periods presented.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Such internal control includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, our management used the criteria set forth in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, our management has identified the following deficiency in internal control that we have deemed to be a material weakness in our internal control over financial reporting as of December 31, 2014:

The Company had a failure of the operating effectiveness of a monitoring control designed to ensure that the Company obtains evidence of the design and operating effectiveness of the automated transaction level controls related to a third-party service organization’s cloud-based professional services automation system used to track billable time and expenses and internal business travel and entertainment expenses (information), and the related general information technology controls intended to prevent unauthorized system access and inappropriate change management to the cloud-based professional services automation system and information contained within.

Although no adjustment was required to our consolidated financial statements, management concluded that there is a reasonable possibility that a material misstatement could occur in consulting revenue and travel and entertainment expenses in the consolidated financial statements if the control deficiency was not remediated. Accordingly, management concluded that there is a material weakness in the Company’s internal control over financial reporting and that the Company did not maintain effective internal control over financial reporting as of December 31, 2014.

KPMG LLP has issued an adverse report on the effectiveness of our internal control over financial reporting. This report is included in the Reports of Independent Registered Public Accounting Firms in Item 15.

Planned Remediation of Material Weakness

This cloud-based professional services automation system is used by the Company to track billable time used to invoice customers within the Company’s consulting business line, as well as to track and process the Company’s internal business travel and entertainment expenses. The Company relies upon a SOC 1 Type 2 report from the service organization, in assessing the effectiveness of its internal control over financial reporting as it relates to the design and operating effectiveness of the automated transaction level controls and the related general information technology controls described above. The Company was unable to obtain an adequate SOC 1 Type 2 report from the service organization for the year ended December 31, 2014. To address this issue, the Company intends to implement alternative controls and additional testing procedures in the interim and to demand that the third-party service organization provide an adequate, contractually required SOC 1 Type 2 report with respect to future periods, as well as to consider transitioning off of the cloud-based system provided by the third-party service organization.

Changes in Internal Control Over Financial Reporting

Other than the identification of the material weakness described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2014 (due to either ongoing or restructuring activities) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management plans to transition to the revised COSO 2013 Framework in 2015.

66

Item 9B. Other Information

None.

67

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference to the information provided under the headings “Executive Officers of the Company,” “Election of Directors — Nominees,” and “Corporate Governance and the Board of Directors and its Committees” in our definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after the fiscal year ended December 31, 2014 (the “2015 Proxy Statement”).

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the information provided under the headings “Executive and Director Compensation,” “Compensation Committee Report,” and “Corporate Governance and the Board of Directors and its Committees — Compensation Committee” in the 2015 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the information provided under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Executive and Director Compensation” in the 2015 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to the information provided under the heading “Corporate Governance and the Board of Directors and its Committees” in the 2015 Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference to the information provided under the heading “Independent Registered Public Accounting Firm Fees and Services” in the 2015 Proxy Statement.

68

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

	Page
1.	Consolidated Financial Statements
	Reports of Independent Registered Public Accounting Firms	70
	Consolidated Financial Statements:
	Balance Sheets	73
	Statements of Operations	74
	Statements of Comprehensive Income	75
	Statements of Stockholders’ Equity	76
	Statements of Cash Flows	77
	Notes to Consolidated Financial Statements	78
2.	Consolidated Financial Statement Schedule
	Schedule II — Valuation and Qualifying Accounts	105
3.	Exhibits	106

(b) Exhibits

We hereby file as part of this Annual Report on Form 10-K the exhibits listed in the Index to Exhibits.

(c) Financial Statement Schedule

The following financial statement schedule is filed herewith:

Schedule II — Valuation and Qualifying Accounts

All other items included in an Annual Report on Form 10-K are omitted because they are not applicable or the answers thereto are none.

69

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

MicroStrategy Incorporated:

We have audited MicroStrategy Incorporated’s (the Company) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness relating to ineffective monitoring controls over the activities performed by a third-party service provider on the Company’s behalf regarding billable time and expenses and internal business travel and entertainment expenses (information) and the Company’s failure to design and operate effective transaction-level controls including the related general information technology controls intended to prevent unauthorized system access and inappropriate change management to the service provider’s cloud-based professional services automation system and information contained within, has been identified and included in management’s assessment under the heading Management’s Report on Internal Control Over Financial Reporting, included under Item 9A.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company and subsidiaries as of December 31, 2014, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2014 consolidated financial statements, and this report does not affect our report dated February 26, 2015, which expressed an unqualified opinion on those consolidated financial statements.

In our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

McLean, Virginia

February 26, 2015

70

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

MicroStrategy Incorporated:

We have audited the accompanying consolidated balance sheets of MicroStrategy Incorporated and subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the years then ended. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule listed in the index appearing under Item 15(a)(2). These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), MicroStrategy Incorporated’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2015, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

McLean, Virginia

February 26, 2015

71

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

MicroStrategy Incorporated

We have audited the accompanying consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows of MicroStrategy Incorporated (a Delaware corporation) and subsidiaries (the “Company”) for the year ended December 31, 2012. Our audit of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of MicroStrategy Incorporated and subsidiaries for the year ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Grant Thornton LLP

McLean, Virginia

February 13, 2013 (except Note 16, as to which the date is February 12, 2014)

72

MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	December 31, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	146,919		$	220,171
Restricted cash		661			583
Short-term investments		198,547			137,198
Accounts receivable, net		78,633			86,181
Prepaid expenses and other current assets		17,669			14,260
Deferred tax assets, net		19,936			21,555
Total current assets		462,365			479,948
Property and equipment, net		77,852			85,445
Capitalized software development costs, net		13,469			10,295
Deposits and other assets		3,951			6,622
Deferred tax assets, net		1,160			3,204
Total assets	$	558,797		$	585,514
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	35,458		$	39,946
Accrued compensation and employee benefits		50,588			79,495
Accrued restructuring costs		2,284			0
Deferred revenue and advance payments		108,413			113,656
Deferred tax liabilities		557			422
Total current liabilities		197,300			233,519
Deferred revenue and advance payments		10,818			8,970
Other long-term liabilities		22,679			25,511
Deferred tax liabilities		3,529			7,188
Total liabilities		234,326			275,188
Commitments and Contingencies
Stockholders’ Equity
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding		0			0
Class A common stock, $0.001 par value; 330,000 shares authorized; 15,660 shares issued and 9,255 shares outstanding, and 15,478 shares issued and 9,073 shares outstanding, respectively		16			15
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 2,055 shares issued and outstanding, and 2,227 shares issued and outstanding, respectively		2			2
Additional paid-in capital		506,727			494,086
Treasury stock, at cost; 6,405 shares		(475,184	)		(475,184	)
Accumulated other comprehensive loss		(4,363	)		(831	)
Retained earnings		297,273			292,238
Total stockholders’ equity		324,471			310,326
Total liabilities and stockholders’ equity	$	558,797		$	585,514

The accompanying notes are an integral part of these Consolidated Financial Statements.

73

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Years Ended December 31,
	2014		2013			2012
Revenues:
Product licenses	$	125,952	$	147,879		$	147,344
Subscription services		22,322		12,246			3,118
Total product licenses and subscription services		148,274		160,125			150,462
Product support		295,703		277,509			262,048
Other services		135,853		138,254			153,214
Total revenues		579,830		575,888			565,724
Cost of revenues:
Product licenses		6,957		6,606			5,819
Subscription services		17,560		15,636			6,621
Total product licenses and subscription services		24,517		22,242			12,440
Product support		14,241		16,617			15,532
Other services		96,452		99,710			113,104
Total cost of revenues		135,210		138,569			141,076
Gross profit		444,620		437,319			424,648
Operating expenses:
Sales and marketing		225,086		215,089			209,975
Research and development		103,355		98,056			88,190
General and administrative		96,343		104,734			93,384
Restructuring costs		14,732		0			0
Total operating expenses		439,516		417,879			391,549
Income from continuing operations		5,104		19,440			33,099
Interest income, net		162		497			143
Other income (expense), net		5,785		(3,186	)		(1,035	)
Income from continuing operations before income taxes		11,051		16,751			32,207
Provision for (benefit from) income taxes		6,016		(9,799	)		9,734
Income from continuing operations, net of tax		5,035		26,550			22,473
Discontinued operations:
Gain from sale of discontinued operations, net of tax provision ($0, $37,548, and $0, respectively)		0		57,377			0
Loss from discontinued operations, net of tax benefit ($0, $391, and $1,049, respectively)		0		(595	)		(1,927	)
Discontinued operations, net of tax		0		56,782			(1,927	)
Net income	$	5,035	$	83,332		$	20,546
Basic earnings (loss) per share (1):
From continuing operations	$	0.45	$	2.35		$	2.05
From discontinued operations		0.00		5.02			(0.18	)
Basic earnings per share	$	0.45	$	7.37		$	1.87
Weighted average shares outstanding used in computing basic earnings (loss) per share		11,301		11,300			10,995
Diluted earnings (loss) per share (1):
From continuing operations	$	0.44	$	2.35		$	2.01
From discontinued operations		0.00		5.02			(0.17	)
Diluted earnings per share	$	0.44	$	7.37		$	1.84
Weighted average shares outstanding used in computing diluted earnings (loss) per share		11,356		11,301			11,174

(1) Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

The accompanying notes are an integral part of these Consolidated Financial Statements.

74

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Years Ended December 31,
	2014			2013		2012
Net income	$	5,035		$	83,332	$	20,546
Other comprehensive (loss) income, net of applicable taxes:
Foreign currency translation adjustment		(3,585	)		684		535
Unrealized gain on short-term investments		53			0		2
Total other comprehensive (loss) income		(3,532	)		684		537
Comprehensive income	$	1,503		$	84,016	$	21,083

The accompanying notes are an integral part of these Consolidated Financial Statements.

75

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

				Class A Common Stock				Class B Convertible Common Stock					Additional Paid-in								Accumulated Other Comprehensive			Retained
															Treasury Stock
	Total			Shares		Amount		Shares			Amount		Capital		Shares			Amount			Income (Loss)			Earnings
Balance at January 1, 2012	$	168,978			14,810	$	15		2,378		$	2	$	457,837		(6,405	)	$	(475,184	)	$	(2,052	)	$	188,360
Net income		20,546			0		0		0			0		0		0			0			0			20,546
Other comprehensive income		537			0		0		0			0		0		0			0			537			0
Conversion of class B to class A common stock		0			151		0		(151	)		0		0		0			0			0			0
Issuance of class A common stock under stock option plans		10,250			501		0		0			0		10,250		0			0			0			0
Balance at December 31, 2012	$	200,311			15,462	$	15		2,227		$	2	$	468,087		(6,405	)	$	(475,184	)	$	(1,515	)	$	208,906
Net income		83,332			0		0		0			0		0		0			0			0			83,332
Other comprehensive income		684			0		0		0			0		0		0			0			684			0
Issuance of class A common stock under stock option plans		341			16		0		0			0		341		0			0			0			0
Tax effect of stock option exercises		23,580			0		0		0			0		23,580		0			0			0			0
Share-based compensation expense		2,078			0		0		0			0		2,078		0			0			0			0
Balance at December 31, 2013	$	310,326			15,478	$	15		2,227		$	2	$	494,086		(6,405	)	$	(475,184	)	$	(831	)	$	292,238
Net income		5,035			0		0		0			0		0		0			0			0			5,035
Other comprehensive loss		(3,532	)		0		0		0			0		0		0			0			(3,532	)		0
Conversion of class B to class A common stock		0			172		0		(172	)		0		0		0			0			0			0
Issuance of class A common stock under stock option plans		856			10		1		0			0		855		0			0			0			0
Share-based compensation expense		11,786			0		0		0			0		11,786		0			0			0			0
Balance at December 31, 2014	$	324,471			15,660	$	16		2,055		$	2	$	506,727		(6,405	)	$	(475,184	)	$	(4,363	)	$	297,273

The accompanying notes are an integral part of these Consolidated Financial Statements.

76

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended December 31,
	2014			2013			2012
Operating activities:
Net income	$	5,035		$	83,332		$	20,546
Plus: (Income) loss from discontinued operations, net of tax		0			(56,782	)		1,927
Income from continuing operations, net of tax		5,035			26,550			22,473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,295			26,399			22,454
Bad debt expense		2,969			2,281			2,361
Unrealized net gain on foreign currency forward contracts		(1,682	)		0			0
Non-cash portion of restructuring costs		199			0			0
Deferred taxes		(1,526	)		(3,319	)		1,967
Release of liabilities for unrecognized tax benefits		0			(14,643	)		(472	)
Share-based compensation expense		11,786			2,078			0
Excess tax benefits from share-based compensation arrangements		0			(23,580	)		0
Changes in operating assets and liabilities:
Accounts receivable		(276	)		676			526
Prepaid expenses and other current assets		(2,713	)		(565	)		305
Deposits and other assets		909			794			175
Accounts payable and accrued expenses		(1,701	)		(4,786	)		3,763
Accrued compensation and employee benefits		(26,875	)		8,176			4,578
Accrued restructuring		2,379			0			0
Deferred revenue and advance payments		731			13,465			(3,967	)
Other long-term liabilities		70			(2,928	)		(2,000	)
Net cash provided by operating activities from continuing operations		14,600			30,598			52,163
Net cash used in operating activities from discontinued operations		0			(664	)		(2,279	)
Net cash provided by operating activities		14,600			29,934			49,884
Investing activities:
Proceeds from redemption of short-term investments		308,900			87,000			0
Purchases of property and equipment		(12,400	)		(11,043	)		(29,621	)
Purchases of short-term investments		(370,050	)		(224,103	)		0
Capitalized software development costs		(8,396	)		(5,437	)		(8,148	)
Insurance proceeds		0			0			3,206
(Increase) decrease in restricted cash		(164	)		(483	)		225
Net cash used in investing activities from continuing operations		(82,110	)		(154,066	)		(34,338	)
Net cash provided by (used in) investing activities from discontinued operations		0			99,136			(1,495	)
Net cash used in investing activities		(82,110	)		(54,930	)		(35,833	)
Financing activities:
Proceeds from sale of class A common stock under exercise of employee stock options		856			341			10,250
Excess tax benefits from share-based compensation arrangements		0			23,580			0
Payments on capital lease obligations and other financing arrangements		(2,326	)		(2,284	)		(491	)
Net cash (used in) provided by financing activities from continuing operations		(1,470	)		21,637			9,759
Net cash provided by financing activities from discontinued operations		0			0			0
Net cash (used in) provided by financing activities		(1,470	)		21,637			9,759
Effect of foreign exchange rate changes on cash and cash equivalents		(4,272	)		(863	)		949
Net (decrease) increase in cash and cash equivalents		(73,252	)		(4,222	)		24,759
Cash and cash equivalents (including held-for-sale of $0, $1,350, and $5,300, respectively), beginning of year		220,171			224,393			199,634
Cash and cash equivalents (including held-for-sale of $0, $0, and $1,350, respectively), end of year	$	146,919		$	220,171		$	224,393
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	74		$	78		$	31
Cash paid during the year for income taxes, net of tax refunds	$	5,529		$	12,941		$	6,463
Supplemental disclosure of noncash investing and financing activities:
Assets acquired under capital lease obligations and other financing arrangements	$	70		$	3,793		$	2,505

The accompanying notes are an integral part of these Consolidated Financial Statements.

77

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Organization

MicroStrategy is a leading worldwide provider of enterprise-ready analytics, mobile, and security software platforms. MicroStrategy provides system-of-record reporting and interactive visualization capabilities offered on any device or in the cloud. The Company’s mission is to provide enterprise analytics, mobility, and security platforms that are flexible, powerful, scalable, and user-friendly.

MicroStrategy Analytics empowers organizations to analyze vast amounts of data and securely distribute actionable business insight throughout an enterprise through two distinct offerings – MicroStrategy Analytics Platform and MicroStrategy Analytics Desktop. The MicroStrategy Analytics Platform delivers reports and dashboards, and enables users to conduct ad hoc analysis and share insights anywhere, anytime, via mobile devices or the Web. It also combines the agility and productivity of self-service visual data discovery with the security, scalability, and governance features of enterprise-grade business intelligence. The MicroStrategy Analytics Platform is integrated with MicroStrategy Analytics Desktop, a standalone desktop tool designed to enable business users to analyze and understand their data. With MicroStrategy Analytics Desktop, business users can create stunning data visualizations and dashboards that provide new insight and new understanding in just minutes.

MicroStrategy Mobile enables organizations to rapidly build information-rich applications that deliver analytics combined with transactions, multimedia, and custom workflows, to mobile devices. The powerful code-free platform approach is designed to reduce the costs of development and enable organizations to deploy powerful mobile business apps quickly and cost-effectively. MicroStrategy Mobile is an easy, fast, and cost-effective vehicle for mobilizing an organization’s information systems, including its data warehouses, business intelligence, ERP, CRM, and Web applications that are currently accessible only on the desktop. With MicroStrategy Mobile, businesses can transform their entire workforce into a connected and more productive mobile workforce using information-driven mobile apps that are significantly more robust and secure than their Web-only counterparts. With mobile access to critical corporate data and systems that drive the business, employees can have a virtual office in their hands at all times.

MicroStrategy Usher is a mobile identity and security platform designed to make identity management simple, seamless, and secure. Built on an advanced mobile-centric enterprise platform, MicroStrategy Usher can dematerialize traditional forms of identity verification such as passwords and physical badges and replace them with a single mobile identity badge, stored on a smartphone, that is cryptographically linked to its owner’s phone and dynamically linked to the enterprise’s existing identity repositories. MicroStrategy Usher’s enterprise mobile identity solution addresses some of the biggest challenges facing corporations today, including authentication, cybersecurity, access management, and resource authorization, while applying industry leading business intelligence and analytics to an enterprise’s security infrastructure. Users can log into applications, unlock doors, validate each other’s identities, and gain a holistic view of network activity using only mobile identities, either through Bluetooth, QR codes, or time-limited PIN codes. MicroStrategy Usher can also be used as a powerful workforce management resource because it is designed to enable managers to gain a near real-time window into the activity of their distributed workforces, while providing powerful interactive features to manage or direct them. We currently offer MicroStrategy Usher as a subscription-based service.

MicroStrategy Secure Cloud is a platform for organizations that want to harness the power of enterprise analytics, mobility, and security applications via the cloud. MicroStrategy Secure Cloud brings together enterprise analytics, analytical databases, and ETL capabilities in a high performance integrated environment. MicroStrategy Secure Cloud offers on-demand access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities and is optimized for a variety of enterprise applications. Compared to traditional on-premises approaches, MicroStrategy Secure Cloud is architected to deliver best-of-breed MicroStrategy and Usher software via the cloud, with pre-configured, ready to go MicroStrategy servers, coupled with the required supporting infrastructure of metadata databases, relational databases, and big data storage.

The MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud together with related product and support services, continue to generate the vast majority of our revenue. During 2014, 2013, and 2012, we did not generate significant revenues from MicroStrategy Usher.

78

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

On March 15, 2013, the Company completed the sale of its wholly owned subsidiary, Angel.com Incorporated (“Angel.com”). In the Company’s Consolidated Statement of Operations, the Company classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because it does not have any continuing involvement with or cash flows from this business following its divestiture. Refer to Note 16, Discontinued Operations, to the Consolidated Financial Statements for further information.

Certain amounts in the prior years’ Consolidated Financial Statements and Notes to Consolidated Financial Statements have also been reclassified to conform to current year presentation. Revenues and cost of revenues have been reclassified in the Consolidated Statements of Operations to reflect the separate components of total product licenses and subscription services.

(b) Use of Estimates

The preparation of the Consolidated Financial Statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, investments, derivative financial instruments, software development costs, fixed assets, intangible assets, variable compensation, restructuring costs, share-based compensation, income taxes, including the carrying value of deferred tax assets, and litigation and contingencies, including liabilities that the Company deems not probable of assertion. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

(c) Fair Value Measurements

The Company measures certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below:

Level 1:	Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:	Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

79

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also estimates the fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, accrued compensation and employee benefits, and accrued restructuring costs. The Company considers the carrying value of these instruments in the financial statements to approximate fair value due to their short maturities.

(d) Cash and Cash Equivalents and Restricted Cash

Cash equivalents include bank deposits, money market instruments, U.S. Treasury bills, and equivalent funds. The Company generally considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash consists of cash balances restricted in use by contractual obligations with third parties.

(e) Short-term Investments

The Company periodically invests a portion of its excess cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. The Company determines the appropriate classification of its short-term investments at the time of purchase.

Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. Therefore, these short-term investments are classified and accounted for as held-to-maturity and are reported at amortized cost. Each reporting period, the Company determines whether a decline in fair value below the amortized cost for each individual security is other-than-temporary and if it would be required to sell the security before recovery of its amortized cost basis. If an other-than-temporary impairment has occurred, the amount representing the credit loss is recorded in “Other income (expense), net,” and the amount related to all other factors is recognized in “Accumulated other comprehensive income (loss).” Upon recognition of an other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment.

(f) Derivative Financial Instruments

The Company is exposed to certain risks related to its ongoing business operations, including the effect of changes in foreign exchange rates on the Company’s monetary assets and liabilities denominated in foreign currency. The Company uses foreign currency forward contracts as part of its strategy to manage these risks, but does not hold or issue derivative instruments for trading purposes or speculation. We execute these instruments with financial institutions that hold an investment grade credit rating. These foreign currency forward contracts do not meet the requirements for hedge accounting and are recorded on the balance sheet as either an asset or liability measured at their fair value as of the reporting date. Changes in the fair value of derivative instruments, as measured using the three-level hierarchy described above, are recognized in “Other income (expense), net” in the Company’s Consolidated Statements of Operations.

(g) Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows: three years for computer equipment and purchased software, five years for office equipment and automobiles, and ten years for office furniture and owned corporate aircraft, which has an estimated salvage value of 70%. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. The Company periodically evaluates the appropriateness of the estimated useful lives and salvage value of all property and equipment. Any change in the estimated useful life or salvage value is treated as a change in estimate and accounted for prospectively in the period of change.

80

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expenditures for maintenance and repairs are charged to expense as incurred, except for certain costs related to the aircraft. The costs of normal, recurring, or periodic repairs and maintenance activities related to the aircraft are expensed as incurred. The cost of planned major maintenance activities (“PMMA”) may be treated differently because those activities may involve the acquisition of additional aircraft components or the replacement of existing aircraft components. PMMA are performed periodically based on passage of time and the use of the aircraft. The classification of a maintenance activity as part of PMMA requires judgment and can affect the amount of expense recognized in any particular period. The cost of each PMMA is expected to be capitalized and amortized over the period until the next scheduled PMMA. The costs of the repairs associated with the Company’s owned aircraft, which was returned to service in the second quarter of 2012, did not constitute PMMA. There have been no PMMA to date.

When assets are retired or sold, the capitalized cost and related accumulated depreciation are removed from the property and equipment accounts and any resulting gain or loss is recognized in the results of operations.

Eligible internal-use software development costs are capitalized subsequent to the completion of the preliminary project stage. Such costs include external direct material and service costs, employee payroll, and payroll-related costs. After all substantial testing and deployment is completed and the software is ready for its intended use, capitalization ceases and internal-use software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three years.

The Company reviews long-lived assets, including intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset.

(h) Software Development Costs

Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. Capitalized software development costs include direct labor costs and fringe benefit costs attributed to programmers, software engineers, and quality control and field certifiers working on products after they reach technological feasibility, but before they are generally available to customers for sale. Technological feasibility is considered to be achieved when a product design and working model of the software product have been completed. Capitalized software development costs are typically amortized over the estimated product life of three years, on a straight-line basis.

Capitalized software development costs, net of accumulated amortization, were $13.5 million and $10.3 million as of December 31, 2014 and 2013, respectively. Amortization expense related to software development costs was $5.2 million, $5.5 million, and $4.8 million for the years ended December 31, 2014, 2013, and 2012, respectively, and is included in cost of product licenses and subscription services revenues. During the years ended December 31, 2014, 2013, and 2012, the Company capitalized software development costs of $8.4 million, $5.4 million, and $8.1 million, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs.

(i) Restructuring Costs

In 2014, the Company committed to, and substantially implemented, a restructuring plan. In connection with this restructuring plan, the Company has incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. See Note 8, Restructuring, to the Consolidated Financial Statements for further information on the Company’s current restructuring activities.

Employee severance and related benefit costs may include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive severance or benefit plan relating to the involuntary termination of employees previously exists, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in

81

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which the liability is incurred, which is generally when management has approved and communicated to the terminated employees a detailed plan of termination. Severance costs pursuant to ongoing-benefit arrangements, including statutorily mandated termination benefits or termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Severance costs are reasonably estimated based on the mix of staffing composition and geography. Where termination benefits are offered for a short period of time in exchange for voluntary termination, severance costs are recognized when the employee has irrevocably accepted the offer.

Contract termination costs may include costs to exit office space under existing operating leases and consist of both costs to terminate the contract before the end of the term and costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company. Costs to terminate the contract before the term has ended are recognized at fair value when the Company terminates the contract in accordance with the contract terms. Costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company (for example, remaining lease rental payments and executory costs) are recognized at fair value in the period in which the Company ceases using the right conveyed by the contract (for example, when the leased space ceases to be used). In the case of operating leases, these continuing costs are also adjusted for the effects of any prepaid or deferred items previously recognized under the lease and reduced by estimated sublease rental income.

Other related costs generally include employee relocation costs, office moving costs, and external consulting and advisory fees related to restructuring activities. Such costs are recognized at fair value in the period in which the costs are incurred.

At each reporting date, the Company evaluates its accrued restructuring costs to determine if the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans are reflected in the Company’s Consolidated Statements of Operations.

(j) Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

(k) Deferred Revenue and Advance Payments

Deferred revenue and advance payments related to product support, subscription services, and other services result from payments received prior to the performance of services for technical support, subscription, consulting, and education. Deferred revenue and advance payments related to product licenses result primarily from multiple-element arrangements that include future deliverables. Deferred revenue comprises deferred product licenses and subscription services, deferred product support, or other services revenue based on the objective fair value of the multiple elements of the arrangement, except for software licenses for which the Company does not have an objective measure of fair value. The Company offsets its accounts receivable and deferred revenue for any billed and unpaid items included in deferred revenue and advance payments.

As of December 31, 2014, the Company has entered into certain additional agreements that include future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2019 totaling approximately $136.4 million. As of December 31, 2013, the future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2018 totaled approximately $119.7 million. These future commitments are not included in deferred revenue balances. Revenue relating to such agreements will be recognized during the period in which all revenue recognition criteria are met. The timing and ultimate recognition of any revenue from such customer purchase commitments depend on the customers’ meeting their future purchase commitments and the Company’s ability to meet its associated performance obligations related to those purchase commitments.

82

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(l) Revenue Recognition

The Company recognizes revenue from sales of software licenses to end users upon:

1) persuasive evidence of an arrangement, as provided by agreements, contracts, purchase orders, or other arrangements, generally executed by both parties;

2) existence of a fixed or determinable fee;

3) delivery of the software; and

4) determination that collection is reasonably assured.

When the fees for software upgrades and enhancements, technical support, consulting, and education are bundled with the license fee, they are unbundled for revenue recognition purposes, using vendor specific objective evidence (“VSOE”) of fair value of the elements.

Product support or post-contract support (“PCS”) revenue is derived from providing technical software support and software updates and upgrades to customers. PCS revenue is recognized ratably over the term of the contract, which in most cases is one year. The Company’s VSOE for PCS, which includes updates, upgrades, and enhancements, is determined based upon the optional stated renewal fee for PCS in the contract, which is the price the customer is required to pay when PCS is renewed. Additionally, the optional stated renewal fee used to establish VSOE for PCS in a software transaction must be above the Company’s minimum substantive VSOE rate for PCS. If a stated renewal rate is considered non-substantive, VSOE of PCS has not been established and the Company recognizes all revenue under the arrangement ratably over the PCS period. A minimum substantive VSOE rate is determined based upon an analysis of historical sales of PCS. For a renewal rate to be non-substantive, the Company believes it must be significantly lower than its minimum VSOE rate. We consider a 10% variance below our minimum VSOE rate to be significant. It is rare for the Company to have an arrangement that includes a renewal rate that is below the minimum VSOE rate.

Revenue from consulting, education, and subscription services is recognized as the services are performed. The Company’s VSOE for services other than PCS is determined based upon an analysis of its historical sales of each element when sold separately from software.

For new offerings of services other than PCS or service offerings that have not had a sufficient history of sales activity, the Company initially establishes VSOE based on the list price as determined by management with the relevant authority. Each service offering has a single list price in each country where sold.

If VSOE exists for all undelivered elements and there is no such evidence of fair value established for delivered elements, the arrangement fee is first allocated to the elements where evidence of fair value has been established and the residual amount is allocated to the delivered elements. If evidence of fair value for any undelivered element of an arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value exists for undelivered elements or until all elements of the arrangement are delivered, subject to certain limited exceptions.

If an arrangement includes acceptance criteria, revenue is not recognized until the Company can objectively demonstrate that the software or service can meet the acceptance criteria, or the acceptance period lapses, whichever occurs earlier. If a software license arrangement obligates the Company to deliver specified future products or upgrades, revenue is recognized when the specified future product or upgrades are delivered, or when the obligation to deliver specified future products expires, whichever occurs earlier. If a software license arrangement obligates the Company to deliver unspecified future products, then revenue is recognized on a subscription basis, ratably over the term of the contract.

License revenue derived from sales to resellers or original equipment manufacturers (“OEMs”) who purchase the Company’s products for resale is recognized upon sufficient evidence that the products have been sold to the end user, provided all other revenue recognition criteria have been met. The Company’s standard software license and reseller agreements do not include any return rights other than the right to return non-conforming products for repair or replacement under standard product warranties. During the last three fiscal years, the Company has not experienced any product returns related to warranty claims.

83

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company generally offers either commercial discounts or referral fees to its channel partners, depending on the nature of services performed. Revenue recognized from transactions with channel partners involved in resale or distribution activities is recorded net of any commercial discounts provided to them. Referral fees paid to channel partners not involved in resale or distribution activities are expensed as cost of revenues and, during the last three fiscal years, were not significant.

The Company’s standard software license agreements do not include any price protection or similar rights. The Company offers price protection to certain government agencies as required by applicable laws and regulations. For example, transactions under the General Services Administration Federal Supply Schedule contract must comply with the Price Reductions clause. In addition, certain government agencies have the right to cancel contracts for “convenience.” During the last three fiscal years, amounts related to price protection or similar rights clauses and contracts cancelled for convenience were not significant.

Amounts collected prior to satisfying the above revenue recognition criteria are included in net deferred revenue and advance payments in the accompanying Consolidated Balance Sheets.

Software revenue recognition requires judgment, including determinations about whether collectibility is reasonably assured, the fee is fixed and determinable, whether a software arrangement includes multiple elements, and if so, whether VSOE exists for those elements. Judgment is also required to assess whether future releases of certain software represent new products or upgrades and enhancements to existing products.

The Company also generates subscription services revenues primarily from its cloud services offerings. Subscription services revenues include subscription fees from customers for access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities, database services, and data integration services. Our standard arrangements with customers generally do not provide the customer with the right to take possession of the software supporting the cloud-based application service at any time. As such, these arrangements are considered service contracts and revenue is recognized ratably over the service period of the contract, following completion of the set-up service. Any related set-up service fees are recognized ratably over the longer of the contract period or the estimated average life of the customer relationship.

The Company’s subscription services are generally offered as stand-alone arrangements or as part of arrangements that include professional services. If deliverables in a multiple-element arrangement have stand-alone value upon delivery, the Company accounts for each such deliverable separately. The Company has concluded that its subscription services and its professional services each have stand-alone value. When the Company enters into multiple-element arrangements that include subscription services and professional services, the total arrangement consideration is allocated to each of the deliverables based on the relative selling price hierarchy. The Company determines the relative selling price for each deliverable using VSOE of selling price, if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its services offerings as compared to other companies and the lack of availability of third-party pricing information. For professional services, the Company has established VSOE because a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. For subscription services, the Company has not established VSOE because, among other factors, the offering is relatively new and our pricing model continues to evolve. Accordingly, the Company uses BESP to determine the relative selling price of its subscription services.

The Company determines BESP by reviewing historical transactions and by considering its pricing models and objectives that take into account factors such as gross margin, the size and volume of the transactions, perceived pricing sensitivity, and growth strategies. The determination of BESP is made through consultation with, and approval by, the Company’s management team, taking into consideration the go-to-market strategy. As the Company’s pricing and go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to the determination of VSOE and BESP.

84

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts, upon invoicing, are recorded in accounts receivable and either gross deferred revenue or revenue, depending on whether the applicable revenue recognition criteria have been met.

During 2014, 2013, and 2012, the Company did not generate significant revenues from MicroStrategy Usher.

(m) Advertising Costs

Advertising costs include production costs, which are expensed the first time the advertisement takes place, and media placement costs, which are expensed in the month the advertising appears. Total advertising costs were $3.0 million, $1.9 million, and $4.1 million for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, the Company had no prepaid advertising costs.

(n) Share-based Compensation

In September 2013, the Board of Directors approved the Company’s 2013 Stock Incentive Plan, under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock. In April 2014, the Company’s stockholders approved the 2013 Stock Incentive Plan at the Company’s annual meeting. In April 2014, following the Company’s annual meeting, the Board of Directors authorized, subject to stockholder approval, an amendment to the 2013 Plan to increase the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Plan from 600,000 to 1,500,000 shares (“Amendment No. 1”). Also in April 2014, the Compensation Committee of the Board of Directors (the “Compensation Committee”) authorized, subject to stockholder approval, an additional amendment to the 2013 Plan to provide for automatic annual stock option grants to each of the Company’s non-employee directors with respect to 5,000 shares of the Company’s class A common stock, beginning in 2015 (“Amendment No. 2”). The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the Company’s 2013 Stock Incentive Plan, related share-based compensation expense, and assumptions used in the Black-Scholes option pricing model.

(o) Income Taxes

The Company is subject to federal, state, and local income taxes in the United States and many foreign countries. Deferred income taxes are provided based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. For uncertain income tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. The Company recognizes accrued interest related to unrecognized tax benefits as part of income tax expense. Penalties, if incurred, are recognized as a component of income tax expense.

The Company provides a valuation allowance to reduce deferred tax assets to their estimated realizable value, when appropriate.

(p) Basic and Diluted Earnings Per Share

Basic earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings per share calculation when dilutive. Diluted earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding employee stock options and warrants are computed using the treasury stock method. Potential common shares also consist of common stock issuable upon the conversion of preferred stock.

85

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A and class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of December 31, 2014 and 2013, there were no shares of preferred stock outstanding.

(q) Foreign Currency Translation

The functional currency of the Company’s international operations is the local currency. Accordingly, all assets and liabilities of international subsidiaries are translated using exchange rates in effect at the end of the period and revenue and expenses are translated using weighted average exchange rates for the period. The related translation adjustments are reported in accumulated other comprehensive income (loss) in stockholders’ equity. Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in the results of operations.

Transaction gains and losses arising from transactions denominated in foreign currencies resulted in net gains of $5.3 million in 2014, and net losses of $3.3 million, and $2.0 million in 2013 and 2012, respectively, and are included in “Other income (expense), net” in the accompanying Consolidated Statements of Operations.

As of December 31, 2014, 2013, and 2012, the cumulative foreign currency translation balances were $(4.4) million, $(0.8) million, and $(1.5) million, respectively. Since the Company intends to indefinitely reinvest its undistributed earnings of all of its subsidiaries, no taxes were recognized on the temporary differences resulting from foreign currency translation adjustments for the years ended December 31, 2014, 2013, and 2012.

(r) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, foreign currency forward contracts, and accounts receivable. The Company places its cash equivalents and enters into foreign currency forward contracts with high credit-quality financial institutions and invests its excess cash primarily in short-term investments. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity.

The Company sells products and services to various companies across several industries throughout the world in the ordinary course of business. The Company routinely assesses the financial strength of its customers and maintains allowances for anticipated losses. As of December 31, 2014 and 2013, no individual customer accounted for 10% or more of net accounts receivable and for the years ended December 31, 2014, 2013, and 2012, no individual customer accounted for 10% or more of revenue.

(3) Recent Accounting Standards

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740) (“ASU 2013-11”), which requires the financial statement presentation of an unrecognized tax benefit in a particular jurisdiction, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the NOL or carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. The Company adopted ASU 2013-11 on January 1, 2014. As a result, liabilities for unrecognized tax benefits of $1.3 million were netted against deferred tax assets, as of December 31, 2014. The adoption of this guidance did not have a material effect on the Company’s consolidated results of operations or cash flows.

86

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance. The standard’s core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (1) the entity’s contracts with customers, (2) the significant judgments, and changes in judgments, made in applying the guidance to those contracts, and (3) any assets recognized from the costs to obtain or fulfill a contract with a customer. ASU 2014-09 is effective for interim and annual periods beginning January 1, 2017. Early adoption is not permitted. The standard allows entities to apply the standard retrospectively to each prior reporting period presented (“full retrospective adoption”) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (“modified retrospective adoption”). The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows.

(4) Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands), as of:

		December 31, 2014
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	1,647	$	0	$	1,647
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	6	$	0	$	6
		December 31, 2013
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	5	$	0	$	5
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	46	$	0	$	46

The fair value of our foreign currency forward contracts is determined using Level 2 observable market inputs to extrapolate forward points to be added to or subtracted from the closing market spot rate on the reporting date, and then discounted to present value. All foreign currency forward contracts outstanding as of December 31, 2014 were for durations of twelve months or less and consisted of the following sale contracts (in thousands):

87

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Notional Value Local Currency			Notional Value U.S. Dollar		Fair Value Gain (Loss) U.S. Dollar
Forward contracts to sell:
Australian Dollar		AUD	985	$	900	$	103
Brazilian Real		BRL	3,184		1,300		157
British Pound		GBP	950		1,600		122
Canadian Dollar		CAD	757		700		49
Chinese Renminbi		CNY	10,664		1,700		(5	)
Euro		EUR	3,534		4,800		515
Indian Rupee		INR	19,347		300		3
Japanese Yen		JPY	131,508		1,300		201
Korean Won		KRW	881,552		850		53
Mexican Peso		MXN	4,001		300		32
Polish Zloty		PLN	4,980		1,600		203
Russian Rouble		RUB	7,323		200		86
Singapore Dollar		SGD	500		400		23
South African Rand		ZAR	6,769		600		32
Swedish Krona		SEK	1,698		250		33
Swiss Franc		CHF	268		300		30
Turkish New Lira		TRY	230		100		5
United Arab Emirates Dirham		AED	738		200		(1	)
				$	17,400	$	1,641

Changes in the fair value of our foreign currency forward contracts during 2014, 2013, and 2012 were as follows (in thousands):

	Gain (Loss) on Derivative Instruments Recognized in Income
		Years Ended December 31,
	Location	2014			2013			2012
Non-hedging derivative instruments:
Unrealized gain (loss) on foreign currency forward contracts	Other income (expense), net	$	1,682		$	(41	)	$	0
Realized loss on foreign currency forward contracts	Other (expense) income, net	$	(562	)	$	(629	)	$	0

There were no transfers among the levels within the fair value hierarchy during the years ended December 31, 2014, 2013, and 2012. As of December 31, 2014 and December 31, 2013, the Company had no assets or liabilities that were required to be measured at fair value on a non-recurring basis.

(5) Short-term Investments

The Company periodically invests a portion of its excess cash in short-term investment instruments. Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. The stated maturity dates of these investments are between three months and one year from the purchase date. These held-to-maturity investments are recorded at amortized cost and included within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of held-to-maturity investments in U.S. Treasury securities is determined based on quoted market prices in active markets for identical securities (Level 1 inputs).

The amortized cost, carrying value, and fair value of held-to-maturity investments at December 31, 2014 were $198.5 million, $198.5 million, and $198.5 million, respectively. The amortized cost, carrying value, and fair value of held-to-maturity investments at December 31, 2013 were $137.2 million, $137.2 million, and $137.2 million, respectively. The gross unrecognized holding gains and

88

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

losses were not material for 2014, 2013, or 2012. No other-than-temporary impairments related to these investments have been recognized in accumulated other comprehensive loss as of December 31, 2014 and December 31, 2013. As of December 31, 2014 and December 31, 2013, the Company’s available-for-sale investments were not material.

(6) Accounts Receivable

Accounts receivable (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Billed and billable	$	187,470		$	190,446
Less: unpaid deferred revenue		(104,425	)		(100,276	)
Accounts receivable, gross		83,045			90,170
Less: allowance for doubtful accounts		(4,412	)		(3,989	)
Account receivable, net	$	78,633		$	86,181

The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments.

The Company maintains an allowance for doubtful accounts which represents its best estimate of probable losses inherent in the accounts receivable balances. The Company evaluates specific accounts when it becomes aware that a customer may not be able to meet its financial obligations due to deterioration of its liquidity or financial viability, credit ratings, or bankruptcy. In addition, the Company periodically adjusts this allowance based upon its review and assessment of the aging of receivables.

(7) Property and Equipment

Property and equipment (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Transportation equipment	$	48,906		$	48,917
Computer equipment and purchased software		72,602			66,713
Furniture and equipment		11,477			11,647
Leasehold improvements		28,500			29,116
Internally developed software		9,408			8,393
Property and equipment, gross		170,893			164,786
Less: accumulated depreciation and amortization		(93,041	)		(79,341	)
Property and equipment, net	$	77,852		$	85,445

Included in transportation equipment is the Company’s owned corporate aircraft, including capitalizable costs related to the repairs to the aircraft, and aircraft-related equipment. As of December 31, 2014, the net asset value of the aircraft and aircraft-related equipment was $41.5 million, net of $7.1 million of accumulated depreciation. As of December 31, 2013, the net asset value of the aircraft and aircraft-related equipment was $43.0 million, net of $5.6 million of accumulated depreciation.

Included in computer equipment at December 31, 2014 and December 31, 2013 is $2.9 million and $2.9 million, respectively, acquired under capital lease arrangements. At December 31, 2014 and December 31, 2013, accumulated amortization relating to computer equipment under capital lease arrangements totaled $2.5 million and $1.7 million, respectively.

89

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation and amortization expense related to property and equipment, including assets under capital leases, was $20.1 million, $21.0 million, and $17.7 million for the years ended December 31, 2014, 2013, and 2012, respectively.

(8) Restructuring

In September 2014, the Company committed to a restructuring plan (the “2014 Restructuring Plan”) to streamline its workforce and spending to better align its cost structure with its business strategy, including reducing the Company’s workforce by 777 employees, comprised of 217 employees in North America, 400 employees in Asia Pacific, 141 employees in Europe, the Middle East, and Africa, and 19 employees in Latin America. As of December 31, 2014, the Company has implemented substantially all of the 2014 Restructuring Plan. The Company does not expect future costs associated with implementing the remainder of the 2014 Restructuring Plan, consisting primarily of the liquidation of certain foreign subsidiaries, to be material.

Costs associated with the 2014 Restructuring Plan include employee severance and related benefit costs (including outplacement services and continuing health insurance coverage), contract termination costs (including operating lease terminations for certain office space at the Company’s corporate headquarters and other international locations), and other charges (including external consulting and advisory fees related to implementing the restructuring plan). The following table summarizes the major types of costs associated with the 2014 Restructuring Plan (in thousands) for the year ended December 31, 2014, total costs incurred through December 31, 2014 and total costs expected to be incurred:

	Year Ended December 31, 2014		Total Costs Incurred To Date		Total Expected Plan Costs
Severance and related employee benefits	$	13,162	$	13,162	$	13,162
Contract termination costs		1,159		1,159		1,159
Other costs		411		411		692
Total restructuring costs	$	14,732	$	14,732	$	15,013

In the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, the Company estimated that total expected costs of the 2014 Restructuring Plan would be $18.4 million. As of December 31, 2014, the Company has revised its total expected costs of the 2014 Restructuring Plan to be $15.0 million. The $3.4 million decrease in total expected plan costs is primarily due to a $3.1 million decrease in total expected severance and related employee benefit costs, which was primarily due to a change in business strategy and other developments.

The total restructuring costs above are reported as “Restructuring costs” under “Operating expenses” in the Company’s Consolidated Statements of Operations.

Restructuring-related liabilities are reported as “Accrued restructuring costs” in the Company’s Consolidated Balance Sheets. The following table presents a summary of changes in the restructuring-related liabilities (in thousands) for the year ended December 31, 2014:

	Balance as of January 1, 2014		Costs Incurred		Cash Payments			Non-cash Settlements			Adjustments and Other			Balance as of December 31, 2014
Current:
Severance and related employee benefits	$	0	$	13,162	$	(10,746	)	$	0		$	(201	)	$	2,215
Contract termination costs		0		1,159		(960	)		(441	)		242			0
Other costs		0		411		(302	)		0			(40	)		69
Total current accrued restructuring costs	$	0	$	14,732	$	(12,008	)	$	(441	)	$	1		$	2,284

90

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9) Deferred Revenue and Advance Payments

Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of:

	December 31,
	2014			2013
Current:
Deferred product licenses revenue	$	10,927		$	14,538
Deferred subscription services revenue		16,018			10,923
Deferred product support revenue		168,833			167,771
Deferred other services revenue		10,564			17,056
Gross current deferred revenue and advance payments		206,342			210,288
Less: unpaid deferred revenue		(97,929	)		(96,632	)
Net current deferred revenue and advance payments	$	108,413		$	113,656
Non-current:
Deferred product licenses revenue	$	8,012		$	4,401
Deferred subscription services revenue		750			1,161
Deferred product support revenue		7,505			5,877
Deferred other services revenue		1,047			1,175
Gross non-current deferred revenue and advance payments		17,314			12,614
Less: unpaid deferred revenue		(6,496	)		(3,644	)
Net non-current deferred revenue and advance payments	$	10,818		$	8,970

The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments.

(10) Commitments and Contingencies

(a) Commitments

From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company has agreed to indemnify customers and partners for third-party claims arising from intellectual property infringement. The conditions of these obligations vary. Thus, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its balance sheets as of December 31, 2014 or December 31, 2013.

The Company leases office space and computer and other equipment under operating lease agreements. It also leases certain computer and other equipment under capital lease agreements and licenses certain software under other financing arrangements. Under the lease agreements, in addition to base rent, the Company is generally responsible for certain taxes, utilities and maintenance costs, and other fees; and several leases include options for renewal or purchase. As of December 31, 2014, the Company was leasing approximately 233,000 square feet of office space at a location in Northern Virginia that began serving as its corporate headquarters in October 2010, including approximately 19,000 square feet of office space for which it gave written notice in August 2014 of its intent to terminate, effective February 2015, as part of the 2014 Restructuring Plan. The Company never used the terminated lease space and it remained vacant until it was terminated in early February 2015. The term of the lease expires in December 2020. At December 31, 2014 and December 31, 2013, deferred rent of $18.9 million and $20.1 million, respectively, is included in other long-term liabilities and $3.0 million and $2.8 million, respectively, is included in current accrued expenses.

91

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows future minimum rent payments under noncancellable operating and capital leases and agreements with initial terms of greater than one year, net of total future minimum rent payments to be received under noncancellable sublease agreements (in thousands), based on the expected due dates of the various installments as of December 31, 2014:

Year	Operating Leases Amount		Capital Leases and Other Financing Amount
2015	$	24,627	$	1,563
2016		21,150		121
2017		17,861		18
2018		17,270		18
2019		16,263		0
Thereafter		19,929		0
	$	117,100	$	1,720

Total rental expenses under operating lease agreements for the years ended December 31, 2014, 2013, and 2012 were $30.4 million, $28.3 million, and $26.4 million, respectively.

(b) Contingencies

In December 2011, DataTern, Inc. (“DataTern”) filed a complaint for patent infringement against the Company in the United States District Court for the District of Massachusetts. The complaint alleged that the Company infringes U.S. Patent No. 6,101,502 (the “’502 Patent”), allegedly owned by DataTern, by making, selling, or offering for sale several of the Company’s products and services including MicroStrategy 9™, MicroStrategy Intelligence Server, MicroStrategy Business Intelligence Platform™, MicroStrategy Cloud Personal, and other MicroStrategy applications for creating or using data mining, dashboards, business analytics, data storage and warehousing, and Web hosting support. The complaint accused the Company of willful infringement and sought an unspecified amount of damages, an award of attorneys’ fees, and preliminary and permanent injunctive relief. In October 2012, the case was stayed pending final judgment in a separate action involving the ’502 Patent filed by DataTern in the Southern District of New York, in which MicroStrategy was not a party. Final judgment in that separate action was entered against DataTern in December 2012 (the “New York Judgment”). DataTern appealed the New York Judgment to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). In February 2013, MicroStrategy and DataTern filed motions for summary judgment of non-infringement in light of the New York Judgment and the United States District Court for the District of Massachusetts entered summary judgment against DataTern. In March 2013, DataTern filed a notice of appeal with the Federal Circuit. In January 2014, the Federal Circuit stayed DataTern’s appeal pending the disposition of DataTern’s appeal of the New York Judgment. In May 2014, the Federal Circuit affirmed the New York Judgment in part and reversed it in part. After petitions for rehearing were denied regarding the New York Judgment, the Company and DataTern agreed that the stay in their appeal in the Federal Circuit should be lifted. The Federal Circuit held oral arguments in MicroStrategy’s appeal in November 2014. On December 19, 2014, the Federal Circuit issued an opinion vacating the District of Massachusetts’ summary judgment, stating that the claim construction on which the summary judgment was based was incorrect. On January 26, 2015, the Federal Circuit ordered that the case be remanded for further proceedings, and in February 2015, the Company filed motions for summary judgment in the district court on grounds of non-infringement and invalidity. The Company has received indemnification requests from certain of its resellers and customers who were sued by DataTern in the United States District Court for the District of Massachusetts in lawsuits alleging infringement of the ’502 Patent. The outcome of these matters is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to these matters at this time. Accordingly, no estimated liability for these matters has been accrued in the accompanying Consolidated Financial Statements.

In December 2011, Vasudevan Software, Inc. (“Vasudevan”) filed a complaint for patent infringement against the Company in the United States District Court for the Northern District of California. The complaint alleged that the Company’s sale of MicroStrategy 9 and other MicroStrategy products infringes four patents allegedly owned by Vasudevan known as U.S. Patent Nos. 6,877,006, 7,167,864, 7,720,861, and 8,082,268, all entitled “Multimedia Inspection Database System for Dynamic Runtime Evaluation.” The complaint accused the Company of infringement, inducing others to infringe, and acts of contributory infringement with respect to the patents at issue and sought a permanent injunction, an unspecified amount of damages, and other relief as may be granted by the

92

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

court. In October 2013, following a series of motions by the parties, the court dismissed the case, entered judgment of non-infringement based on a stipulation of non-infringement filed by Vasudevan, and also granted MicroStrategy’s motion for summary judgment of invalidity, finding the four patents in the suit invalid. In November 2013, Vasudevan filed its Notice of Appeal with the United States Court of Appeals for the Federal Circuit. Also in November 2013, Vasudevan filed a motion that was unopposed by the Company to consolidate the appeal with Vasudevan’s appeal of a related matter against TIBCO Software, which had also been dismissed by the District Court on summary judgment. In February 2014, in response to Vasudevan’s motion, the Court entered an order that the cases be treated as companion cases. On September 12, 2014, the parties presented oral arguments before the Federal Circuit. The parties are currently awaiting the Federal Circuit’s final decision in the case. The outcome of this matter on appeal is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to this matter at this time. Accordingly, no estimated liability for this matter has been accrued in the accompanying Consolidated Financial Statements.

The Company is also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, management does not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion.

(11) Income Taxes

U.S. and international components of income (loss) from continuing operations before income taxes (in thousands) were comprised of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.	$	(5,389	)	$	(6,158	)	$	587
Foreign		16,440			22,909			31,620
Total	$	11,051		$	16,751		$	32,207

The benefit from or provision for income taxes from continuing operations (in thousands) consisted of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	(306	)	$	(12,404	)	$	533
State		(1	)		172			68
Foreign		7,638			5,994			7,269
	$	7,331		$	(6,238	)	$	7,870
Deferred:
Federal	$	(2,132	)	$	(3,417	)	$	995
State		(1,038	)		267			1,310
Foreign		1,855			(411	)		(441	)
	$	(1,315	)	$	(3,561	)	$	1,864
Total provision (benefit)	$	6,016		$	(9,799	)	$	9,734

93

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The benefit from or provision for income taxes from continuing operations differs from the amount computed by applying the federal statutory income tax rate to the Company’s income from continuing operations before income taxes as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Income tax expense at federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal tax effect		-4.3	%		2.0	%		3.0	%
Foreign earnings taxed at different rates		2.9	%		-18.3	%		-21.5	%
Withholding tax		14.3	%		9.7	%		6.3	%
Foreign tax credit		-9.6	%		-5.4	%		-3.4	%
Other international components		0.8	%		3.4	%		1.9	%
Change in valuation allowance		21.1	%		-0.8	%		0.1	%
Deferred tax adjustments and rate changes		-4.9	%		-2.8	%		0.6	%
Meals and entertainment		5.9	%		4.5	%		2.9	%
Non-deductible officers compensation		2.0	%		7.1	%		2.1	%
Personal use of corporate aircraft		2.5	%		2.5	%		2.6	%
Subpart F income		4.0	%		2.4	%		1.2	%
Research and development tax credit		-13.7	%		-12.6	%		0.7	%
Other permanent differences		-1.6	%		0.8	%		0.6	%
Release of unrecognized tax benefits		0.0	%		-86.0	%		-1.9	%
Total		54.4	%		-58.5	%		30.2	%

The 2013 “research and development tax credit” rate of negative 12.6% is comprised of U.S. research and development tax credits generated in 2013 and 2012. The 2012 U.S. research and development tax credit was retroactively reinstated by the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013 and recorded as a tax benefit in the first quarter of 2013.

The Company’s U.S. and foreign effective tax rates for income from continuing operations before income taxes were as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.		64.5	%		249.7	%		495.1	%
Foreign		57.7	%		24.4	%		21.6	%
Combined		54.4	%		-58.5	%		30.2	%

Except as discussed below, the Company intends to indefinitely reinvest its undistributed earnings of all of its foreign subsidiaries. Therefore, the annualized effective tax rate applied to the Company’s pre-tax income from continuing operations does not include any provision for U.S. federal and state income taxes on the amount of the undistributed foreign earnings. U.S. federal tax laws, however, require the Company to include in its U.S. taxable income certain investment income earned outside of the U.S. in excess of certain limits (“Subpart F deemed dividends”). Because Subpart F deemed dividends are already required to be recognized in the Company’s U.S. federal income tax return, the Company regularly repatriates Subpart F deemed dividends to the U.S. and no additional tax is incurred on the distribution. The Company repatriated Subpart F deemed dividends to the U.S. of $1.3 million, $1.0 million and $2.5 million in 2014, 2013, and 2012, respectively, with no additional tax incurred. As of December 31, 2014 and December 31, 2013, the amount of cash and cash equivalents and short-term investments held by U.S. entities was $139.1 million and $160.5 million, respectively, and by non-U.S. entities was $206.4 million and $196.9 million, respectively. If the cash and cash equivalents and short-term investments held by non-U.S. entities were to be repatriated to the U.S., the Company would generate U.S. taxable income to the extent of the Company’s undistributed foreign earnings, which amounted to $201.7 million at December 31, 2014. Although the tax impact of repatriating these earnings is difficult to determine, the Company would not expect the maximum effective tax rate that would be applicable to such repatriation to exceed the U.S. statutory rate of 35.0%, after considering applicable foreign tax credits.

94

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows for the periods indicated:

	December 31,
	2014			2013
Deferred tax assets, net:
Net operating loss carryforwards	$	6,911		$	981
Tax credits		10,402			8,723
Intangible assets		59			1,317
Deferred revenue adjustment		1,989			2,746
Accrued compensation		11,452			17,465
Share-based compensation expense		5,485			714
Deferred rent		3,428			3,709
Other		3,425			2,197
		43,151			37,852
Valuation allowance		(2,311	)		(77	)
Deferred tax assets, net of valuation allowance		40,840			37,775
Deferred tax liabilities:
Prepaid expenses and other		1,044			1,084
Property and equipment		17,149			15,751
Capitalized software development costs		5,637			3,791
Total deferred tax liabilities		23,830			20,626
Total net deferred tax asset	$	17,010		$	17,149
Reported as:
Current deferred tax assets, net	$	19,936		$	21,555
Non-current deferred tax assets, net		1,160			3,204
Current deferred tax liabilities		(557	)		(422	)
Non-current deferred tax liabilities		(3,529	)		(7,188	)
Total net deferred tax asset	$	17,010		$	17,149

The table of deferred tax assets and liabilities shown above does not include a deferred tax asset of $0.2 million related to U.S. federal net operating loss carryforwards of $0.4 million as of December 31, 2014 that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting.

As of December 31, 2014, the Company had unrecognized tax benefits of $2.5 million, which are recorded in other long-term liabilities. The change in unrecognized tax benefits (in thousands) is presented in the table below:

Unrecognized tax benefits at January 1, 2014	$	2,312
Increase related to positions taken in prior period		938
Increase related to positions taken in current period		270
Decrease related to expiration of statute of limitations		(60	)
Unrecognized tax benefits at December 31, 2014		3,460
Accrued interest		292
Netting of deferred tax assets and unrecognized tax benefits		(1,273	)
Unrecognized tax benefits recorded in other long-term liabilities at December 31, 2014	$	2,479

95

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

If recognized, $1.7 million of the gross unrecognized tax benefits would impact the Company’s effective tax rate. Over the next 12 months, the amount of the Company’s liability for unrecognized tax benefits shown above is not expected to change by a material amount. The Company recognizes estimated accrued interest related to unrecognized tax benefits in the provision for income tax accounts. During the year ended December 31, 2014, the Company recognized an immaterial amount of accrued interest. During the years ended December 31, 2013 and 2012, the Company (released) recognized approximately ($1.0) million and $0.4 million, respectively, in accrued interest. The amount of accrued interest related to the above unrecognized tax benefits was approximately $0.3 million and $0.3 million as of December 31, 2014 and December 31, 2013, respectively.

The Company files tax returns in numerous foreign countries as well as the U.S. and its tax returns may be subject to audit by tax authorities in all countries in which it files. Each country has its own statute of limitations for making assessment of additional tax liabilities. The Company’s U.S. tax returns for tax years from 2011 forward are subject to examination by the Internal Revenue Service.

The Company’s major foreign tax jurisdictions and the tax years that remain subject to examination are Germany for tax years 2009 forward, Poland and China for tax years 2010 forward, Spain for tax years 2011 forward, and the United Kingdom for tax years 2013 forward. The Company settled tax examinations in Germany for tax years 2005 through 2008 and Spain for tax years 2009 through 2010 in the second quarter and fourth quarter of 2013, respectively. To date there have been no material audit assessments related to audits in the U.S. or any of the applicable foreign jurisdictions.

The Company had $14.7 million and $0.0 million of U.S. net operating loss carryforwards as of December 31, 2014 and 2013, respectively. The Company had $3.4 million and $4.4 million of foreign net operating loss carryforwards as of December 31, 2014 and 2013, respectively. The Company had domestic research and development tax credit, foreign tax credit, and alternative minimum tax credit carryforward tax assets totaling $10.5 million and $8.7 million at December 31, 2014 and 2013, respectively, which begin to expire in 2016. The timing and ability of the Company to use these losses and credits may be limited by Internal Revenue Code provisions regarding changes in ownership of the Company as discussed below.

The Company’s valuation allowances of $2.3 million and $0.1 million at December 31, 2014 and 2013, respectively, primarily relate to certain foreign net operating loss carryforward and foreign tax credit carryforward tax assets.

In determining the Company’s provision for or benefit from income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of net operating loss carryforwards, applicable tax rates, transfer pricing methodologies, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly related to the utilization of net operating losses in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense or benefit and net income.

Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections. The timing and manner in which the Company will use net operating loss carryforward tax assets, research and development tax credit carryforward tax assets, alternative minimum tax credit carryforward tax assets, and foreign tax credit carryforward tax assets in any year, or in total, may be limited by provisions of the Internal Revenue Code regarding changes in the Company’s ownership. Currently, the Company expects to use the tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. If the Company is unable to achieve profitability in future periods, particularly relating to the U.S. operations, it may not be able to realize these tax assets. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to achieve profitability in future periods, it may be required to increase the valuation allowance against the 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.

96

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Section 382 provides an annual limitation on the amount of federal net operating losses and tax credits that may be used in the event of an ownership change. The limitation is based on, among other things, the value of the company as of the change date multiplied by a U.S. federal long-term tax exempt interest rate. The Company does not currently expect the limitations under the §382 ownership change rules to impact the Company’s ability to use its net operating loss carryforwards or tax credits that existed as of the date of the ownership change.

(12) Share-based Compensation

In September 2013, the Board of Directors approved the Company’s 2013 Stock Incentive Plan (the “2013 Plan”), under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, and authorized 600,000 shares of the Company’s class A common stock for issuance under the 2013 Plan. In April 2014, the Company’s stockholders approved the 2013 Plan at the Company’s annual meeting.

In April 2014, following the Company’s annual meeting, the Board of Directors authorized, subject to stockholder approval, an amendment to the 2013 Plan to increase the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Plan from 600,000 to 1,500,000 shares (“Amendment No. 1”). Also in April 2014, the Compensation Committee of the Board of Directors (the “Compensation Committee”) authorized, subject to stockholder approval, an additional amendment to the 2013 Plan to provide for automatic annual stock option grants to each of the Company’s non-employee directors with respect to 5,000 shares of the Company’s class A common stock, beginning in 2015 (“Amendment No. 2”). The Company considers stockholder approval of both amendments to the 2013 Plan to be perfunctory since the Company’s Chairman and Chief Executive Officer holds a majority of the total voting power of all the Company’s outstanding voting stock.

During 2014, the Compensation Committee approved, in each case subject to stockholder approval of Amendment No. 1, the grant of stock options to purchase an aggregate of 745,000 shares of class A common stock to certain Company employees, officers, and directors pursuant to the 2013 Plan. These awards, and any additional awards granted prior to stockholder approval of Amendment No. 1, will be terminated or forfeited if stockholder approval is not obtained within 12 months of the date of grant of the awards, and no awards may be exercised or settled prior to such stockholder approval. However, the Company expects to obtain stockholder approval of both amendments to the 2013 Plan at the Company’s annual meeting of stockholders in 2015. In the event stockholder approval for Amendment No. 1 is not obtained within 12 months of the grant date of any option awards, the cumulative share-based compensation expense associated with those stock option awards would be reversed. As of December 31, 2014, there were options to purchase 1,200,800 shares of class A common stock outstanding under the 2013 Plan (including options to purchase 685,000 shares of class A common stock that are subject to stockholder approval of Amendment No. 1). As of December 31, 2014, there were 290,000 remaining shares of class A common stock authorized for future issuance under the 2013 Plan, subject to stockholder approval of Amendment No. 1.

Shares issued under the 2013 Plan may consist in whole or in part of authorized but unissued shares or treasury shares. No awards may be issued more than ten years after the 2013 Plan’s effective date. Stock options that are granted under the 2013 Plan must have an exercise price equal to at least the fair market value of the Company’s class A common stock on the date of grant, become exercisable as established by the Board of Directors or the Compensation Committee, and expire no later than ten years following the date of grant. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The stock option awards granted to date vest in equal annual installments over an approximately four-year vesting period (unless accelerated upon a change in control event (as defined in the stock option agreement for the applicable award) or otherwise in accordance with provisions of the 2013 Plan or applicable option agreement).

Share-based compensation expense is based on the fair value of the stock option awards on the date of grant, as estimated using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of certain management assumptions, including the expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The Company estimates the term over which optionholders are expected to hold their stock options by using the simplified method for “plain-vanilla” stock option awards because the Company’s stock option exercise history does not provide a reasonable basis to compute the expected

97

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

term for stock options granted under the 2013 Plan. The Company relies exclusively on its historical stock price volatility to estimate the expected stock price volatility over the expected term because the Company believes future volatility is unlikely to differ from the past. In estimating the expected stock price volatility, the Company uses a simple average calculation method. The risk-free interest rate is based on U.S. Treasury securities with terms that approximate the expected term of the stock options. The expected dividend yield is based on the Company’s past cash dividend history and anticipated future cash dividend payments. The expected dividend yield is zero, as the Company has not previously declared cash dividends and does not currently intend to declare cash dividends in the foreseeable future. These assumptions are based on management’s best judgment, and changes to these assumptions could materially affect the fair value estimates and amount of share-based compensation expense recognized.

Prior to the adoption of the 2013 Plan, the Company had maintained other share-based compensation plans with respect to the Company’s class A common stock (the “Other Stock Incentive Plans”), but had not granted any share-based awards under the Other Stock Incentive Plans since the first quarter of 2004 and is no longer authorized to grant any awards under such plans. As of December 31, 2014, there were no outstanding share-based awards granted under the Other Stock Incentive Plans.

The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the periods indicated:

	Stock Options Outstanding
	Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (Years)
Balance as of January 1, 2012		517		$	20.31
Granted		0			0
Exercised		(501	)		20.30	$	51,564
Forfeited/Expired		0			0
Balance as of December 31, 2012		16		$	20.81
Granted		600			92.84
Exercised		(16	)		20.81	$	1,262
Forfeited/Expired		0			0
Balance as of December 31, 2013		600		$	92.84
Granted		745			125.46
Exercised		(9	)		92.84	$	653
Forfeited/Expired		(135	)		104.48
Balance as of December 31, 2014		1,201		$	111.77
Exercisable as of December 31, 2014		141		$	92.84	$	9,794		7.7
Expected to vest as of December 31, 2014		1,060		$	114.29		51,001		9.1
Total		1,201		$	111.77	$	60,795		9.0

Stock options outstanding as of December 31, 2014 are comprised of the following range of exercise prices per share (in thousands, except per share data and years):

	Stock Options Outstanding at December 31, 2014
Range of Exercise Prices per Share	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)
$92.84 - $120.00		596	$	96.34		8.5
$120.01 - $150.00		520	$	121.43		9.3
$150.01 - $160.88		85	$	160.88		9.8
Total		1,201	$	111.77		9.0

98

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An aggregate of 150,000 stock options with an aggregate fair value of $6.3 million vested during the year ended December 31, 2014. No stock options vested during the years ended December 31, 2013 and, 2012. The Company expects all unvested and outstanding options at December 31, 2014 to fully vest in future years in accordance with their vesting schedules and therefore share-based compensation expense has not been adjusted for any expected forfeitures. The weighted average grant date fair value of stock option awards using the Black-Scholes option pricing model was $55.84 and $42.03 for each share subject to a stock option granted during the years ended December 31, 2014 and December 31, 2013, respectively, based on the following assumptions:

	Years Ended December 31,
	2014			2013
Expected term of options in years		6.3			6.3
Expected volatility		41.5 - 42.5	%		42.8	%
Risk-free interest rate		2.1 - 2.3	%		2.5	%
Expected dividend yield		0.0	%		0.0	%

No stock options were granted during the year ended December 31, 2012. The Company recognized approximately $11.8 million and $2.1 million in share-based compensation expense for the years ended December 31, 2014 and December 31, 2013, respectively, from stock options granted under the 2013 Plan. The Company recognized no share-based compensation expense for the years ended December 31, 2014, 2013, and 2012 from stock options granted under the Other Stock Incentive Plans as all such options fully vested in prior years. As of December 31, 2014, there was approximately $46.6 million of total unrecognized share-based compensation expense related to unvested stock options. The Company expects to recognize this remaining share-based compensation expense over a weighted-average vesting period of approximately 3.2 years. Such amounts do not include the impact from the grants of stock options in February 2015 to purchase an aggregate of 200,000 shares of class A common stock. See Note 19, Subsequent Events, for further detail.

During the year ended December 31, 2013, the Company was able to recognize and utilize net operating loss carryforwards arising directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting that was generated primarily in prior years under the Other Stock Incentive Plans. Accordingly, stockholders’ equity increased by $23.6 million during the year ended December 31, 2013. No windfall tax benefit was realized from the exercise of stock options during the years ended December 31, 2014 and 2012.

MicroStrategy’s former subsidiary, Angel.com, previously maintained a stock incentive plan under which certain employees, officers, and directors of MicroStrategy and Angel.com were granted options to purchase shares of the class A common stock of Angel.com, subject to the satisfaction of both performance and continued service conditions. Share-based compensation expense would have been recognized over the requisite service period of the award based on the probability of the satisfaction of the performance condition, reduced by the number of awards that were not expected to vest due to the failure to satisfy the continued service condition. In connection with the sale of Angel.com in the first quarter of 2013, the Angel.com stock incentive plan was terminated and all outstanding options thereunder were terminated in exchange for cash payments totaling $8.0 million. Prior to their termination, no share-based compensation expense was recognized for these awards for the years ended December 31, 2013 and 2012 because the performance condition had not been satisfied.

(13) Basic and Diluted Earnings per Share

Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. Potential shares of common stock, consisting of common stock issuable upon exercise of outstanding employee stock options, are calculated using the treasury stock method.

99

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data) for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Numerator:
Income (loss) from:
Continuing operations, net of tax	$	5,035	$	26,550	$	22,473
Discontinued operations, net of tax		0		56,782		(1,927	)
Net income	$	5,035	$	83,332	$	20,546
Denominator:
Weighted average common shares of class A common stock		9,246		9,073		8,768
Weighted average common shares of class B common stock		2,055		2,227		2,227
Total weighted average common stock shares outstanding		11,301		11,300		10,995
Effect of dilutive securities:
Employee stock options		55		1		179
Adjusted weighted average shares		11,356		11,301		11,174
Earnings per share:
Basic earnings (loss) per share
From continuing operations	$	0.45	$	2.35	$	2.05
From discontinued operations		0		5.02		(0.18	)
Basic earnings per share	$	0.45	$	7.37	$	1.87
Diluted earnings (loss) per share:
From continuing operations	$	0.44	$	2.35	$	2.01
From discontinued operations		0		5.02		(0.17	)
Diluted earnings per share	$	0.44	$	7.37	$	1.84

For the year ended December 31, 2014, stock options issued under the 2013 Plan to purchase an aggregate of 735,000 shares of class A common stock were excluded from the diluted earnings per share computation because the effect of their inclusion would have been anti-dilutive. For the year ended December 31, 2013, stock options issued under the 2013 Plan to purchase an aggregate of 600,000 shares of class A common stock were excluded from the diluted earnings per share computation because the effect of their inclusion would have been anti-dilutive. No options to purchase shares of common stock were excluded from the diluted earnings per share computation for the year ended December 31, 2012.

(14) Treasury Stock

The Board of Directors has authorized the Company’s repurchase of up to an aggregate of $800.0 million of its class A common stock from time to time on the open market through April 29, 2018 (the “2005 Share Repurchase Program”), although the program may be suspended or discontinued by the Company at any time. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using the Company’s working capital, as well as proceeds from any other funding arrangements that the Company may enter into in the future. As of December 31, 2014, the Company had repurchased an aggregate of 3,826,947 shares of its class A common stock at an average price per share of $90.23 and an aggregate cost of $345.3 million pursuant to the 2005 Share Repurchase Program. The average price per share and aggregate cost amounts disclosed above include broker commissions. During the years ended December 31, 2014, 2013, and 2012, the Company did not repurchase any shares of its class A common stock pursuant to the 2005 Share Repurchase Program.

(15) Employee Benefit Plan

The Company sponsors a benefit plan to provide retirement benefits for its employees, known as the MicroStrategy 401(k) Savings Plan (the “Plan”). Participants may make voluntary contributions to the Plan of up to 50% of their annual base pre-tax compensation,

100

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cash bonuses, and commissions not to exceed the federally determined maximum allowable contribution amounts. The Plan permits for discretionary company contributions. Effective April 1, 2008, the Company elected to make a matching contribution to each plan participant in the amount of 50% of the first 6% of a participant’s contributions, up to a maximum of $3,000 per year. A participant vests in the matching contributions in increments based on the participant’s years of employment by the Company, becoming fully vested after completing six years of employment. The Company made contributions to the Plan totaling $2.9 million, $2.7 million, and $2.6 million during the years ended December 31, 2014, 2013, and 2012, respectively.

(16) Discontinued Operations

On March 15, 2013, the Company completed the sale of its equity interest in its Angel.com business for consideration to the Company of approximately $111.2 million, resulting in a net cash inflow of $100.7 million after $10.5 million in transaction costs. The sale resulted in a gain of $57.4 million, net of tax, in the year ended December 31, 2013. In the Company’s Consolidated Statement of Operations, the Company has classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because the Company does not have any continuing involvement with or cash flows from this business following its divestiture.

The following table summarizes the revenues and pre-tax loss generated by the Angel.com business during the years ended December 31, 2013 and 2012, respectively, in addition to the pre-tax gain on the sale of Angel.com recorded by the Company during the year ended December 31, 2013 (in thousands):

	Years Ended December 31,
	2014		2013		2012
Angel.com revenues	$	0	$	6,320	$	28,882
Angel.com pre-tax loss	$	0	$	986	$	2,976
MicroStrategy pre-tax gain on sale	$	0	$	94,925	$	0

(17) Segment Information

The Company manages its business in one operating segment. As discussed in Note 16, the Angel.com business was sold on March 15, 2013. Prior to its divestiture, the Angel.com business was the sole component of the former operating segment “Other.” The Company’s one operating segment is engaged in the design, development, marketing, and sales of analytics software through licensing arrangements and cloud-based subscriptions and related services. It includes the MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud. The Company has also included MicroStrategy Usher as part of the one operating segment for each of the years ended December 31, 2014, 2013, and 2012 because this platform did not generate material revenues during these periods. The following table presents total revenues from continuing operations, gross profit from continuing operations, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region:

101

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Geographic regions:	Domestic		EMEA		Other Regions		Consolidated
Year ended December 31, 2014
Total revenues	$	341,692	$	176,774	$	61,364	$	579,830
Gross profit	$	261,459	$	131,790	$	51,371	$	444,620
Year ended December 31, 2013
Total revenues	$	343,073	$	169,194	$	63,621	$	575,888
Gross profit	$	261,134	$	123,373	$	52,812	$	437,319
Year ended December 31, 2012
Total revenues	$	326,333	$	177,543	$	61,848	$	565,724
Gross profit	$	241,440	$	133,986	$	49,222	$	424,648
As of December 31, 2014
Long-lived assets	$	85,504	$	5,690	$	4,078	$	95,272
As of December 31, 2013
Long-lived assets	$	89,342	$	7,111	$	5,909	$	102,362

The domestic region consists of the United States and Canada. The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America and the Asia Pacific region. For the years ended December 31, 2014, 2013, and 2012, no individual foreign country accounted for 10% or more of total consolidated revenues from continuing operations.

For the years ended December 31, 2014, 2013, and 2012, no individual customer accounted for 10% or more of total consolidated revenues from continuing operations.

As of December 31, 2014 and 2013, no individual foreign country accounted for 10% or more of total consolidated assets.

(18) Selected Quarterly Financial Data (Unaudited)

The following tables contain unaudited Statement of Operations information for each quarter of 2014 and 2013. The Company believes that the following information reflects all normal recurring adjustments. During the fourth quarter of 2014, the Company recognized a reduction in its accrued bonus expense as a result of a change in estimate, which resulted in a $7.4 million increase in income from continuing operations. The operating results for any quarter are not necessarily indicative of results for any future period.

102

MICROSTRATEGY INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2014
Revenues	$	137,904		$	141,853		$	151,202		$	148,871	$	579,830
Gross profit	$	104,895		$	106,240		$	116,249		$	117,236	$	444,620
(Loss) income from continuing operations, net of tax	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
Discontinued operations, net of tax		0			0			0			0		0
Net (loss) income	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
(Loss) earnings per share:(1)
Basic, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Basic, from discontinued operations		0			0			0			0		0
Basic (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Diluted, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
Diluted, from discontinued operations		0			0			0			0		0
Diluted (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2013
Revenues	$	130,183		$	137,905		$	141,919		$	165,881	$	575,888
Gross profit	$	94,282		$	101,459		$	108,666		$	132,912	$	437,319
(Loss) income from continuing operations, net of tax	$	(5,191	)	$	(1,553	)	$	17,146		$	16,148	$	26,550
Discontinued operations, net of tax		56,782			0			0			0		56,782
Net income (loss)	$	51,591		$	(1,553	)	$	17,146		$	16,148	$	83,332
Earnings (loss) per share:(1)
Basic, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Basic, from discontinued operations		5.03			0			0			0		5.02
Basic earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37
Diluted, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Diluted, from discontinued operations		5.03			0			0			0		5.02
Diluted earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37

⁽¹⁾ The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

(19) Subsequent Events

In February 2015, the Compensation Committee of the Board of Directors approved, subject to stockholder approval of Amendment No. 1 to the 2013 Plan, the grant of stock options to purchase an aggregate of 200,000 shares of class A common stock to certain Company employees and officers pursuant to the 2013 Plan. The fair value of these stock options is approximately $13.6 million, to be recognized as share-based compensation expense over a four year vesting period.

These awards will be terminated or forfeited if stockholder approval of Amendment No. 1 is not obtained within 12 months of the date of grant of the awards, and no awards may be exercised or settled prior to such stockholder approval. However, the Company expects to obtain stockholder approval of Amendment No. 1 to the 2013 Plan at the Company’s annual meeting of stockholders in 2015. The 2013 Plan is described in further detail in Note 12, Share-based Compensation, to the Consolidated Financial Statements.

103

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MICROSTRATEGY INCORPORATED
(Registrant)
By:	/s/ Michael J. Saylor
Name:	Michael J. Saylor
Title:	Chairman of the Board of Directors and Chief Executive Officer
Date: February 26, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Position	Date
/S/ MICHAEL J. SAYLOR Michael J. Saylor	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)	February 26, 2015
/S/ DOUGLAS K. THEDE Douglas K. Thede	Senior Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)	February 26, 2015
/S/ ROBERT H. EPSTEIN Robert H. Epstein	Director	February 26, 2015
/S/ STEPHEN X. GRAHAM Stephen X. Graham	Director	February 26, 2015
/S/ JARROD M. PATTEN Jarrod M. Patten	Director	February 26, 2015
/S/ CARL J. RICKERTSEN Carl J. Rickertsen	Director	February 26, 2015

104

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2014, 2013, and 2012

(in thousands)

	Balance at the beginning of the period		Additions (1)		Deductions			Balance at the end of the period
Allowance for doubtful accounts:
December 31, 2014	$	3,989		2,969		(2,546	)	$	4,412
December 31, 2013	$	4,366		2,281		(2,658	)	$	3,989
December 31, 2012	$	5,628		2,361		(3,623	)	$	4,366
Deferred tax valuation allowance:
December 31, 2014	$	77		2,234		0		$	2,311
December 31, 2013	$	231		77		(231	)	$	77
December 31, 2012	$	736		7		(512	)	$	231

(1) Reductions in/charges to revenues and expenses.

105

INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Second Restated Certificate of Incorporation of the registrant (filed as Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 (File No. 000-24435) and incorporated by reference herein).
3.2	Amended and Restated By-Laws of the registrant (filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on January 30, 2015 and incorporated by reference herein).
4.1	Form of Certificate of Class A Common Stock of the registrant (filed as Exhibit 4.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 (File No. 000-24435) and incorporated by reference herein).
10.1†	MicroStrategy Incorporated 2013 Stock Incentive Plan (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on September 9, 2013 and incorporated by reference herein).
10.2†	Amendment No. 1 to the MicroStrategy Incorporated 2013 Stock Incentive Plan (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on April 28, 2014 and incorporated by reference herein).
10.3†	Amendment No. 2 to the MicroStrategy Incorporated 2013 Stock Incentive Plan (filed as Exhibit 99.3 to the registrant’s Registration Statement on Form S-8 (File No. 333-197645) filed on July 25, 2014 and incorporated by reference herein).
10.4†	Form of Nonstatutory Stock Option Agreement (filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on September 9, 2013 and incorporated by reference herein).
10.5†	Summary of Perquisites and Associated Other Compensation Arrangements for Named Executive Officers.
10.6†	Summary of Director Fees and Perquisites and Associated Other Compensation Arrangements for Non-Employee Directors (filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 (File No. 000-24435) and incorporated by reference herein).
10.7†	Sublease Agreement, dated as of January 31, 2011, by and between the Company and Aeromar Management Company, LLC (filed as Exhibit 10.14 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 000-24435) and incorporated by reference herein).
10.8†	Material Terms for Payment of Certain Executive Incentive Compensation (filed as Exhibit 10.10 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (File No. 000-24435) and incorporated by reference herein).
10.9†	Summary of Designated Company Vehicles Policy (filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q (File No. 000-24435) filed on August 3, 2007 and incorporated by reference herein).
10.10†	Amended and Restated Performance Incentive Plan (filed as Exhibit 99.1 to the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on December 28, 2012 and incorporated by reference herein).
10.11†	Summary of 2014 Cash Bonus Arrangements for Michael J. Saylor, Jonathan F. Klein, and Paul N. Zolfaghari (set forth in Item 5.02 of the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on March 7, 2014 under the headings “2014 CEO Bonus Formula” and “2014 President Bonus Formulas” and incorporated by reference herein).

106

10.12†	Summary of 2014 Cash Bonus Arrangements for Douglas K. Thede and Peng Xiao (set forth in Item 5.02 of the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on April 10, 2014 under the heading “2014 Cash Bonus Targets for Chief Financial Officer and Chief Technology Officer” and incorporated by reference herein).
10.13†	Summary of Changes in Salary and Cash Bonus for Michael J. Saylor (set forth in Item 5.02 of the registrant’s Current Report on Form 8-K (File No. 000-24435) filed on September 8, 2014 and incorporated by reference herein).
10.14†	General Release of Claims, dated as of November 21, 2014, by and between the Company and Marcus Starke.
10.15†	Agreement, dated as of December 17, 2014, by and between the Company and Peng Xiao.
10.16†	Summary of Cash Bonus Arrangement with Timothy E. Lang.
21.1	Subsidiaries of the registrant.
23.1	Consent of KPMG LLP.
23.2	Consent of Grant Thornton LLP.
31.1	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Chairman of the Board of Directors and Chief Executive Officer.
31.2	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Senior Executive Vice President & Chief Financial Officer.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

† Management contracts and compensatory plans or arrangements.

107

EX-10.5

Exhibit 10.5

Summary of Perquisites and Associated Other Compensation Arrangements for Named Executive Officers

This Summary sets forth, as of February 26, 2015, perquisites and other personal benefits that MicroStrategy Incorporated (“MicroStrategy” and, collectively with its subsidiaries, the “Company”) provides to its “named executive officers,” as defined in Item 402 of Regulation S-K.

On January 31, 2011, MicroStrategy entered into an agreement with Aeromar Management Company, LLC, a Delaware limited liability company (“Aeromar”), of which Michael J. Saylor, MicroStrategy’s Chairman of the Board of Directors (the “Board”) and Chief Executive Officer, is the sole member, effective October 11, 2010. Under the agreement, MicroStrategy is (i) providing to Aeromar use of approximately 150 square feet of office space within MicroStrategy’s leased headquarters space at 1850 Towers Crescent Plaza, Tysons Corner, Virginia, (ii) providing to Aeromar various related services and arrangements, and (iii) providing to Mr. Saylor gross-up payments in respect of taxes that he may incur as a result of the arrangement. The agreement does not require any rental or other payments from Aeromar or Mr. Saylor. MicroStrategy has filed a copy of this agreement as Exhibit 10.14 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which was filed with the Securities and Exchange Commission on February 18, 2011.

For each named executive officer who elects to be a member of a private club located near the Company’s headquarters that offers dining services and hosts business, professional, and social community events, the Company pays the monthly dues associated with such membership.

The Company has a program pursuant to which it arranges for individual disability insurance policies to be provided to eligible executives (including the named executive officers) as a supplement to the group disability insurance that is available to most Company employees and pays the premiums with respect to such supplemental policies.

The Company has a program pursuant to which the Company pays the cost of annual healthcare screenings for eligible executives (including the named executive officers).

The Company has adopted a fifth amended and restated aircraft use policy (the “Aircraft Use Policy”) which, among other things, permits certain non-business use of (i) the Bombardier Global Express XRS aircraft owned by the Company (the “Global Express”), (ii) any aircraft in which the Company has leased a fractional interest (the “Fractional Aircraft”) and which is managed by NetJets International, Inc. or any of its affiliates (collectively, “NetJets”), together with all other aircraft managed or provided by NetJets to the extent that the Company uses such other aircraft in connection with the Company’s lease of the Fractional Aircraft (collectively, the “NetJets Aircraft”), and (iii) such other aircraft (A) that the Company may, from time to time, lease or charter, including, without limitation, any aircraft subject to a fractional interest program in which the Company may participate by leasing a fractional interest, and (B) that has been designated by MicroStrategy to be “Company Aircraft” for purposes of the Aircraft Use Policy (collectively with the Global Express and the NetJets Aircraft, “Company Aircraft”). Company Aircraft are available for non-business use only when such aircraft are not otherwise being used by the Company exclusively for business use. The Aircraft Use Policy permits non-business use of Company Aircraft by the Chief Executive Officer, other officers or employees of the Company to the extent approved by the Chief Executive Officer, and under certain circumstances, non-employee members of the Board.

Non-business use of Company Aircraft is subject to various limitations, including those described below. During each calendar year:

• the total number of flight hours used by the Company for non-business use of the NetJets Aircraft in such calendar year must be less than fifty percent (50%) of the total number of flight hours of the NetJets Aircraft used by the Company for business use and non-business use during such calendar year;

• the total number of flight hours used by the Company for non-business use of the Global Express in such calendar year must be less than fifty percent (50%) of the total number of flight hours of the Global Express used by the Company for business use and non-business use during such calendar year; and

• the total number of flight hours used by the Company for non-business use of all Company Aircraft in such calendar year may not exceed 200 flight hours.

The Company has adopted a policy pursuant to which the Company makes available, from time to time, certain designated vehicles that the Company owns or may acquire (“Designated Vehicles”) and related driving services for personal use by eligible Company personnel, to the extent the Designated Vehicle is not at such time being used exclusively by the Company for business purposes. Eligible personnel include the Chief Executive Officer and any employees and members of the Board authorized by the Chief Executive Officer to use Designated Vehicles.

The Company also pays for the services of one or more drivers for vehicles other than Company-owned vehicles (such services, “Alternative Car Services”) for personal use by eligible Company personnel. Eligible personnel include the Chief Executive Officer and any employees and members of the Board authorized by the Chief Executive Officer to use Alternative Car Services. The Company has established a policy that the aggregate compensation to all Company personnel as a result of use of Alternative Car Services, excluding any associated tax gross-up payments, may not exceed $100,000 in any fiscal year.

The Company has adopted a policy pursuant to which the Company makes available, from time to time, tickets to sporting, charity, dining, entertainment, or similar events as well as use of corporate suites, club memberships, or similar facilities that the Company may acquire (“Corporate Development Programs”), for personal use by Company personnel to the extent a Corporate Development Program is not at such time being used exclusively by the Company for business purposes. Eligible personnel include executive officers and other employees of the Company and members of the Board.

From time to time, the Board may hold meetings and other related activities in various locations for which the Company pays for specified travel, lodging, food, beverage, entertainment, and related expenses on behalf of the participants and their guests.

The Company sponsors an annual trip and related events for sales and services personnel who have met specified performance criteria as well as certain named executive officers and their guests (“President’s Club Events”) and pays for specified travel, lodging, food, beverage, entertainment, and related expenses on behalf of the participants. The Company has established a policy that the compensation imputed to Mr. Saylor as a result of his participation in President’s Club Events, excluding any associated tax gross-up payments, may not exceed $30,000 in any fiscal year.

In addition, the Company may hold, host, or otherwise arrange parties, outings, or other similar entertainment functions at which Mr. Saylor is permitted to entertain personal guests (“Entertainment Events”). The Company has established a policy that the aggregate incremental cost to the Company of Entertainment Events (to the extent that they are not Corporate Development Programs) attributable to Mr. Saylor, including any associated tax gross-up payments, may not exceed $75,000 in any fiscal year (the “Entertainment Events Cap”).

The Company may also request that Company personnel participate in conferences, symposia, and other similar events or activities relating to the Company’s business for which the Company pays for the expenses of Company participants and their guests (“Company-Sponsored Activities”).

From time to time, Company personnel are offered meals prepared by the Company’s in-house catering department (“Company Meals”). In addition, the Company permits Mr. Saylor to make personal use of the Company’s in-house catering resources (such use, other than for Company Meals, “Non-Business Catering Use”). The Company has established a policy that the compensation imputed to Mr. Saylor as a result of Non-Business Catering Use, excluding any associated tax gross-up payments, may not exceed $25,000 per year.

In 2014, the Company reimbursed Mr. Saylor for approximately $29,000 of expenses that he incurred and paid related to commuting in 2013. The Company also reimbursed Paul Zolfaghari, MicroStrategy’s President, for his reasonable expenses related to commuting in 2013 and Timothy E. Lang, the Company’s Senior Executive Vice President & Chief Technology Officer, and Marcus H. Starke, the Company’s former Senior Executive Vice President & Chief Marketing Officer, for their reasonable expenses related to commuting in 2014. In addition, the Company reimbursed Mr. Zolfaghari in 2013 and each of Messrs. Lang and Starke in 2014 for

2

their reasonable expenses, including airline flights, rental car service, parking, meals, temporary lodging, and professional moving services, related to the applicable executive’s relocation to the Washington D.C. metropolitan area. With respect to Mr. Starke, the total amount of reimbursements for relocation expenses was not more than $25,000.

The Company paid the costs of security services rendered to Mr. Saylor by a security firm in December 2012 and January 2013. In addition, the Company (i) reimbursed Mr. Saylor in 2014 for approximately $48,000 of expenses that he incurred and paid related to the provision of security services to him in the fourth quarter of 2013 and (ii) paid for other expenses that Mr. Saylor incurred related to the provision of security services to him in the fourth quarter of 2013, which expenses were approximately $6,000 (the expenses described in (i) and (ii), collectively, the “Q4 2013 Security Services Expenses”).

The Company has established a CEO security program, effective as of January 1, 2014, pursuant to which the Company may pay for various costs related to the provision of security to Mr. Saylor, provided that the total costs to the Company of such program, together with any associated tax gross-up payments to Mr. Saylor, do not exceed $950,000 in any given calendar year (the “CEO Security Program Cap”).

In 2013, the Company paid the costs of tax advisory services rendered to Mr. Saylor by a tax advisory firm in connection with Mr. Saylor’s filing of foreign entity tax forms which are required in connection with his status as a controlling stockholder of MicroStrategy.

To the extent that any of the arrangements described above (except payment of Messrs. Saylor’s and Zolfaghari’s expenses for commuting in the second half of 2013, payment of Mr. Zolfaghari’s relocation expenses related to the second half of 2013, and payment of Mr. Saylor’s Q4 2013 Security Services Expenses) result in imputed compensation to any of the named executive officers, the Company pays to (or withholds and pays to the appropriate taxing authority on behalf of) such individual a “tax gross-up” in cash approximating his (i) federal and state income and payroll taxes on the taxable income associated with such arrangements plus (ii) federal and state income and payroll taxes on the taxes that the individual may incur as a result of the payment of taxes by the Company with respect to the imputed compensation, subject to the Entertainment Events Cap and the CEO Security Program Cap as applicable.

3

EX-10.14

Exhibit 10.14

GENERAL RELEASE OF CLAIMS

THIS GENERAL RELEASE OF CLAIMS (“Release”) is made and entered into by and between MicroStrategy Services Corporation. (“MicroStrategy”) and Marcus Starke (“Employee”).

WHEREAS, Employee and MicroStrategy have agreed that Employee’s employment with MicroStrategy and/or with any of its subsidiaries, affiliates or related companies (together, the “Company”) terminated on November 19, 2014 (the “Termination Date”);

WHEREAS, Employee and the Company desire to enter into the following Release to resolve all issues between them including, but not limited to, those relating to Employee’s employment with the Company, and the termination thereof; and;

WHEREAS, Employee wishes to receive, and the Company has offered to provide, valuable consideration in exchange for execution by Employee of this Release;

NOW THEREFORE, in consideration of the payments and benefits listed below, and provided by the Company, Employee agrees to all of the following:

1. Complete Release by Employee.

(a) Release. In exchange for the consideration stated below and provided to Employee by the Company, Employee irrevocably and unconditionally releases the Released Parties listed in Subsection l(b) from any and all claims, promises, offers, debts, causes of action or similar rights of any type or nature that Employee may have as of the date of the execution of this Release, including but not limited to those described in Subsection l(c) and except as provided in Subsection l(d).

(b) Released Parties. The “Released Parties” are the Company, all of its current and former parents, subsidiaries, affiliates, related companies, partnerships, or joint ventures (including but not limited to MicroStrategy Services Corporation, Usher Incorporated, and/or MicroStrategy Incorporated), and, with respect to each such entity, its predecessors and successors and all of its past, present, and future parents, agents, directors, officers, managers, supervisors, employees, stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries, and insurers of such programs), and any other persons acting by, through, under, or in concert with any of the persons or entities listed in this subsection, and their successors.

(c) Claims Released. The claims released include but are not limited to those which in any way relate to: (a) Employee’s employment with the Company or the termination of Employee’s employment, such as claims for compensation, sales incentive compensation, special payments, sign on bonuses, retention bonuses or any other cash bonuses, commissions, stock grants, option grants, lost wages, meal and rest period payments or premiums, unused accrued vacation or sick pay, relocation benefits; (b) the design or administration of any employee benefit plan or Employee’s entitlement to benefits under any such plan; (c) any rights Employee may have to severance or similar income replacement benefits under any plan of the Company; (d) any rights Employee may have to the continued receipt of health or life insurance-type benefits, except for any rights Employee may have to benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”); (e) any claims to attorneys’ fees or other indemnities; and (f) any other claims or demands Employee may have on any basis. The claims released, for example, may have arisen under any of the following statutes or common law doctrines:

Employee Initials    MS Employer Initials    DT Page 1 of 10

(i) Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, § 1981 of the Civil Rights Act of 1866 and Executive Order 11246; the Equal Pay Act; the Americans With Disabilities Act and § 503 and § 504 of the Rehabilitation Act of 1973; the Genetic Information Nondiscrimination Act of 2008; and any other federal, state or local law or regulation prohibiting retaliation or discrimination on the basis of race, color, national origin, religion, gender, disability, age, marital status, sexual orientation, gender identity, genetic information or any other protected characteristic.

(ii) Other Federal Statutes, and their state or local counterparts, such as the Worker Adjustment and Retraining Notification Act; the Sarbanes-Oxley Act; and the Employee Retirement Income Security Act of 1974 (“ERISA”).

(iii) Other Laws, such as state or local laws or regulations restricting an employer’s right to terminate employees, enforcing express or implied employment contracts, requiring an employer to deal with employees fairly or in good faith, relating to salary, commission, compensation, or benefits, or otherwise regulating employment; laws or regulations limiting unfair competition; laws or regulations relating to the private enforcement of state labor codes; and any other federal, state or local laws, whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, unfair competition, negligent misrepresentation, libel, slander, defamation and similar or related claims.

(iv) Age Discrimination In Employment Act

1. Employee also acknowledges and agrees that Employee is waiving and releasing any and all claims or rights Employee may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), that this waiver and release is knowing and voluntary, and that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled as an employee of the Company. Employee further acknowledges that Employee is advised that: (a) Employee should consult with an attorney (at Employee’s own expense) prior to executing this Release (Employee understands that whether Employee consults an attorney or not is Employee’s decision); (b) this Release does not waive or release any rights or claims Employee may have under the ADEA which may arise after Employee executes this Release; and (c) if Employee is age forty (40) or older on the date Employee signs this Release (i) Employee has at least twenty-one (21) days in which to consider this Release (although Employee may choose to execute this Release earlier but not before the conclusion of Employee’s last day of employment); (ii) Employee has seven (7) days following execution

Employee Initials    MS Employer Initials    DT Page 2 of 10

of this Release to revoke this Release (to be effective, any revocation must be actually received in writing by the Company by 12:00 a.m. on the eighth day); and (iii) this Release shall not be effective until the revocation period has expired.

2. Employee acknowledges and agrees that Employee was given a copy of this Release and has carefully read it and understands it, that Employee has been given the opportunity to consult with the persons identified In Section 11 regarding this Release and that Employee has entered into this Release voluntarily and with full knowledge of its final and binding effect.

(d) Claims Not Released. This Release does not release: (a) Employee’s claims for reimbursement of business expenses owed to Employee, provided, however, that Employee represents that all expenditures have been submitted in accordance with Company policy prior to the date Employee signs this Release; (b) any pending claims for Workers’ Compensation benefits that have been submitted in writing to the Company prior to the Company issuing notice to Employee of Employee’s termination; (c) any claims Employee may now have to vested benefits in any 401 (k), pension plan or other employee benefits plans; and (d) Employee’s right to enforce this Release. This Release also does not release any other claim or abridge any legal right that as a matter of law cannot be released or abridged by private agreement between the Company and Employee.

(e) Release Extends to Known and Unknown, Suspected and Unsuspected Claims. This Release covers both claims that Employee knows about or suspects as well as those Employee does not know about or does not suspect, and Employee expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown and unsuspected claims.

(f) No Pursuit of Released Claims. Employee represents that Employee has not filed, submitted or caused to be filed any lawsuit, complaint or charge pertaining in any way to Employee’s employment or encompassing any claim released by this Release. Employee promises never to file, prosecute, join, opt-in or participate in a lawsuit (including a collective or class action) or other complaint or charge asserting any claims that are released by this Release. This promise, however, shall not limit and does not affect Employee’s right to challenge the validity of this Release under the ADEA or Older Workers Benefit Protection Act. Notwithstanding the foregoing, nothing in this Subsection precludes Employee from filing an administrative charge of discrimination or an administrative charge within the jurisdiction of the National Labor Relations Board, or from filing a charge or communicating with any other federal, state or local government office, official or agency. Employee promises never to seek or accept any damages, remedies, or other relief for Employee personally (any right to which Employee hereby waives and promises never to accept) with respect to any claim included in Section 1 of this Release, in any proceeding including, but not limited to, any Equal Employment Opportunity Commission (“EEOC”) proceeding.

(g) Further Representations.

(i) Employee warrants and represents that, as of the date of execution of this Release, Employee is not aware of any violations of law by the Company or any of the Released Parties.

Employee Initials    MS Employer Initials    DT Page 3 of 10

(ii) Employee represents and warrants that Employee is not aware of any facts that would (a) establish, (b) tend to establish, or (c) in any way support an allegation of a potential violation by any of the Released Parties of the federal False Claims Act (and/or any state or local qui tam counterpart) or that to the extent Employee has or ever had any such information, Employee has reported the information to the Company in accordance with Company policy. The term “potential violation” includes the presentation by any of the Released Parties of false claims and statements or the creation of false records or statements in order to obtain payment of federal, state, county or municipal funds, or to avoid refunds of such government funds, with the presentation or creation being made with actual knowledge by any of the Released Parties of the falsity, or with deliberate ignorance or reckless disregard of the falsity.

(iii) Employee represents and warrants that Employee is not aware of any facts that would (a) establish, (b) tend to establish, or (c) in any way support an allegation that any of the Released Parties has engaged in conduct that Employee believes to constitute a violation of any rule or regulation of the Securities and Exchange Commission, or any provision of federal law relating to fraud against shareholders pursuant to the Sarbanes-Oxley Act and/or any state or local counterpart.

(iv) Employee represents and warrants that under the Family and Medical Leave Act of 1993, as amended, and/ or any state or local counterpart (collectively, “FMLA”) that Employee (a) has received all leave required and currently does not, and in the past did not, have any claim for denial of any such leave, and (b) does not claim that the Company violated or denied him rights under the FMLA or retaliated against Employee in any way for exercising rights under the FMLA.

(v) Employee represents and warrants that under the federal Fair Labor Standards Act and/ or any state or local counterpart (collectively, “FLSA”) that Employee (a) was properly classified as either exempt or nonexempt from overtime (i.e., as either ineligible or eligible to receive overtime), (b) has been fully paid for all hours Employee worked for the Company, and (c) does not claim that the Company violated or denied any wage and hour rights under the FLSA.

2. Payments and Benefits. In exchange for the release and other promises made by Employee herein, the Company will provide the following benefits to Employee:

(a) The Company will pay to Employee the lump sum of five hundred seventy five thousand dollars ($575,000.00), less applicable taxes and other withholdings. Employee acknowledges and agrees that he/she is not otherwise entitled to these or any other monies, whether in the form of wages, commissions, bonuses, or any other payment or benefit, from Employer, except as described below in section 2(b). Payment will be made in a lump sum as soon as administratively practicable after Employee executes and returns this Release and the revocation period (if applicable) has expired.

Employee Initials    MS Employer Initials    DT Page 4 of 10

(b) After the termination of Employee’s Group Insurance coverage on November 19, 2014, Employee will be entitled to continue health benefits under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Should Employee elect to continue health benefits coverage through timely submission of a COBRA election form, the Company will cover Employee for the cost of COBRA premiums for a period of six months beginning the day after Employee executes and returns this Release and the revocation period (if applicable) has expired.

3. Existing Obligations Continue. Employee agrees to remain bound by any Company agreement relating to confidential information, invention, nonsolicitation, arbitration, or similar matters to which Employee is now subject. The provisions of the MicroStrategy Agreement, herein referred to as the MicroStrategy Agreement, signed by Employee on May 1, 2014 are incorporated as if set forth fully herein.

4. Return of Property. Employee represents that Employee personally returned, by close of business on Employee’s Termination Date, all Company property (tangible, intangible, paper or electronic), including but not limited to all keys, credit cards, manuals, computers, PDAs, , equipment and software, records, data, plans, customer lists, computer programs and related documentation or other materials of any nature which are in Employee’s possession or control and any and all copies thereof; and that Employee has not compromised, corrupted, misappropriated, damaged or inappropriately shared, uploaded, or downloaded Company data. Employee may retain a Company issued iPad.

5. No Disparagement.

(a) Employee agrees to refrain from making untruthful or disparaging statements in any private or public forum, including but not limited to newspapers, television, radio, or the internet, about any Released Party, Employee’s employment with the Company, or any general matter concerning any Released Party’s reputation, standing in the business community, business practices, or products; provided, however, that nothing in this Release will prohibit Employee from (a) complying with any valid subpoena or court order; or (b) initiating or cooperating with any official investigation conducted by a law enforcement agency.

(b) Employer agrees to refrain from making untruthful or disparaging statement in any private or public forum, including but not limited to newspapers, television, radio, or the internet, about the Employee, Employee’s employment with the Company, or any general matter concerning Employee’s reputation; provided, however, that nothing in this Release will prohibit Employer from (a) complying with any valid subpoena or court order; or (b) initiating or cooperating with any official investigation conducted by a law enforcement agency.

6. Agreement to Cooperate With the Company. Employee agrees to assist the Company in any formal or informal legal matters in which Employee is named as a party or has knowledge relevant to the matter. Employee understands that Employee will receive no additional pay for Employee’s assistance beyond that provided in this Release, and that Employee in rendering such services will be acting as a bona fide independent contractor.

Employee Initials    MS Employer Initials    DT Page 5 of 10

7. Standard Reference. Consistent with its policies, the Company will only confirm Employee’s dates of employment with the Company, Employee’s job title, and salary in any references it may provide.

8. No Liability Admitted. Employee understands and agrees that this Release and the payments and benefits described in this Release do not constitute an admission by the Company or any Released Party, or any of their present or former officers, directors, members, employees, consultants, representatives, independent contractors or related entities, of any liability to Employee or wrongdoing whatsoever and that this Release is not admissible as evidence in any proceeding other than for enforcement of its provisions.

9. Tax Consequences. Employee understands that Employee is obligated to pay any taxes, interest or penalties which may be due should a final tax determination be rendered that any portion of the benefits and/or payments herein is taxable to Employee (or accorded different tax treatment) under any applicable provision of federal, state or local law. Employee acknowledges that neither the Company nor any of its attorneys or representatives has made any promise, representation or warranty, express or implied, regarding the tax consequences of any consideration paid pursuant to this Release. Employee agrees that the Company is to withhold all taxes it determines it is legally required to withhold. Employee further agrees not to make any claim against the Company or any other person based on how the Company reports amounts paid under this Release to tax authorities or if an adverse determination is made as to the tax treatment of any amounts payable under this Release.

10. No Other Inducements. Employee acknowledges that no promise or agreement not expressed in this Release has been made to Employee.

11. Confidentiality of Agreement. Employee agrees to keep the fact and terms of this Release and all benefits and payments confidential, and Employee will not publicize them or communicate them in any newspaper, electronic media or other public or private forum, or in any manner whatsoever, except the terms may be disclosed to Employee’s lawyers, accountants and immediate family or as required by law or by subpoena. Employee will, however, caution his/her lawyers, accountants and immediate family against any public or private disclosure of the above information.

12. Challenges to Validity.

(a) Should Employee attempt to challenge the enforceability of this Release, Employee agrees first to deliver a certified check to the Company for all cash benefits received in conjunction with this Release and to invite the Company to cancel this Release. If the Company accepts Employee’s offer, this Release will be canceled. If it rejects Employee’s offer, the Company will notify employee and deposit the amount repaid in an interest-bearing account pending a determination of the enforceability of this Release. If the Release is determined to be enforceable, the Company will pay Employee the amount in the account, less any amounts Employee owes the Company. If this Release is not enforceable, the Company or its designee is to retain the account.

(b) The provisions of Subsection 13 (a) shall not be applicable to challenges to the validity of this Release under the ADEA or Older Workers Benefit Protection Act, nor will the Company seek any damages of any sort against Employee for Employee’s having made such a challenge.

Employee Initials    MS Employer Initials    DT Page 6 of 10

13. Binding Nature of Release. This Release shall be binding on Employee’s heirs, legal representatives, administrators, executors, and assigns, and shall inure to the benefit of the Released Parties and their heirs, legal representatives, administrators, executors, and assigns.

14. No Assignment. Employee’s rights, duties or obligations under this Release may not be assigned, delegated or transferred.

15. Interpretation. This Release will be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. Unless the context indicates otherwise, the term “or” will be deemed to include the term “and” and the singular or plural number will be deemed to include the other. Section headings used in this Release are intended solely for convenience of reference and will not be used in the interpretation of any of this Release.

17. Dispute Resolution. Any dispute arising between the parties, including but not limited to those concerning the formation, validity, interpretation, effect, or alleged violations of this Release, the arbitrability of any dispute, any federal, state or local statutory claim (including discrimination or retaliation statutes), contract claims, tort claims, and claims of any other sort, must be submitted to arbitration pursuant to the terms of the Agreement to Arbitrate signed by Employee.

18. Law Governing. This Release shall be governed by and construed under the laws of the Commonwealth of Virginia; provided, however, that the dispute resolution process in the Agreement to Arbitrate and referenced in Section 17 shall be governed by the Federal Arbitration Act unless it is found by a decisionmaker of competent jurisdiction not to be governed by the Federal Arbitration Act, in which case it will be governed by Virginia law.

19. Entire Agreement. This Release, the MicroStrategy Agreement, the Agreement to Arbitrate, and the Employee Handbook Acknowledgement Form comprise the entire agreement between the parties regarding the matters contained herein and has been entered into by Employee with a full understanding of its terms, with an opportunity to consult with counsel and without inducement or duress. This Release may be executed in counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. This Release may not be changed orally, and any written change or amendment must be signed and accepted on behalf of MicroStrategy Incorporated by Douglas K. Thede, or his successor or designee. This Release, the MicroStrategy Agreement, the Agreement to Arbitrate, and the Employee Handbook Acknowledgement Form which constitute this entire agreement, supersede any prior or contemporaneous agreement, arrangement or understanding on their subject matter.

20. Severability. The provisions of this Release are severable. If any provision in this Release is found to be unenforceable, all other provisions will remain fully enforceable.

21. State-Specific Requirements.

Employee Initials    MS Employer Initials    DT Page 7 of 10

(a) Georgia. If Employee resides or works in the State of Georgia, Employee must initial in the space provided at the end of Section 17 (titled “Dispute Resolution”) of this Release, and thereby agrees to be bound by the provisions of Section 17.

(b) Minnesota. If Employee resides or works in the State of Minnesota, Employee has fifteen (15) days following execution of this Release to revoke this Release (to be effective, any revocation must be actually received in writing by the Company by 12:00 a.m. on the sixteenth day or must be postmarked within the fifteen (15) day period and sent via certified mail return receipt requested to the Company) and this Release shall not be effective until the revocation period has expired. If Employee resides or works in the State of Minnesota, this Subsection applies regardless of age and notwithstanding any other lesser revocation period provided elsewhere in this Release.

(c) West Virginia. If Employee resides or works in the State of West Virginia, Employee is advised to consult with an attorney prior to executing this Release and may contact the West Virginia Bar Association at 1-866-989-8227 to find an attorney. Furthermore, if Employee resides or works in the State of West Virginia and Employee is under the age of forty (40) on the date Employee signs this Release then: (a) Employee has twenty-one (21) days to sign this Release (as set forth on the signature page); and (2) Employee has seven (7) days in which to revoke this Release (to be effective, any revocation must be actually received by the Company by 12:00 a.m. on the eighth day), and it does not take effect until that seven-day period has ended.

(The remainder of this page intentionally left blank.)

Employee Initials    MS Employer Initials    DT Page 8 of 10

SIGNATURE PAGES (1 of 2)

INSTRUCTIONS IF YOU ARE AGE FORTY (40) OR OLDER

AS OF THE DATE YOU SIGN THIS RELEASE

• You may not make any changes to this Release and you may not sign this Release until after your Termination Date.

• You must (1) sign and date this Release where indicated below, and (2) return the original fully executed Release so that it is received by Joty Paparello at MicroStrategy Incorporated, 1850 Towers Crescent Plaza, Tysons Corner, VA 22182 within five (5) business days of the date on which you signed it. If you reside or work in the State of Georgia, you also must initial in the space provided at the end of Section 17 (titled “Dispute Resolution”) of this Release. You may submit the form by facsimile at (703) 714-1288 to meet the deadline, but if you do so, you must also provide the original executed agreement by mail thereafter.

• You have up to twenty-one (21) days after receiving this Release to consider and sign it, although you may waive this time period by signing it sooner (but not until after your Termination Date).

• You have another seven (7) days after signing this Release in which to revoke this Release, and this Release does not take effect until that seven-day period has ended, unless you reside or work in the State of Minnesota, in which case, the fifteen (15) day revocation period set forth in Subsection 20 shall apply.

Employee Initials    MS Employer Initials    DT Page 9 of 10

SIGNATURE PAGES (2 of 2)

PLEASE READ THIS RELEASE CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN, SUSPECTED AND UNSUSPECTED CLAIMS.

Acknowledged and Agreed:

Marcus Starke
/s/ Marcus Starke	November 21, 2014
Employee’s Signature	Date
FOR MICROSTRATEGY SERVICES CORPORATION
/s/ Douglas K. Thede	November 21, 2014
Douglas K. Thede	Date

Employee Initials     Employer Initials    DT Page 10 of 10

EX-10.15

Exhibit 10.15

AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into by and between MicroStrategy Incorporated (“MicroStrategy”) and Peng Xiao (“Employee”).

WHEREAS, Employee and MicroStrategy have agreed that Employee’s employment with MicroStrategy and/or with any of its subsidiaries, affiliates or related companies (together, the “Company”) terminated on December 15, 2014 (the “Termination Date”);

WHEREAS, Employee and the Company desire to enter into this Agreement to resolve issues between them including, but not limited to, those relating to Employee’s employment with the Company and the termination of such employment; and

WHEREAS, Employee wishes to receive, and the Company has offered to provide, valuable consideration in exchange for execution by Employee of this Agreement;

NOW THEREFORE, in consideration of the payments and benefits listed below, and provided by the Company, Employee agrees to all of the following:

1. Complete Release by Employee.

(a) Release. In exchange for the consideration stated below and provided to Employee by the Company, Employee irrevocably and unconditionally releases the Released Parties listed in Subsection 1(b) from any and all claims, promises, offers, debts, causes of action or similar rights of any type or nature that Employee may have as of the date of the execution of this Agreement, including but not limited to those described in Subsection 1(c) and except as provided in Subsection 1(d).

(b) Released Parties. The “Released Parties” are the Company, all of its current and former parents, subsidiaries, affiliates, related companies, partnerships, or joint ventures (including but not limited to MicroStrategy Services Corporation, Usher Incorporated, and/or MicroStrategy Incorporated), and, with respect to each such entity, its predecessors and successors and all of its past, present, and future parents, agents, directors, officers, managers, supervisors, employees, stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries, and insurers of such programs), and any other persons acting by, through, under, or in concert with any of the persons or entities listed in this subsection, and their successors.

(c) Claims Released. The claims released include but are not limited to those which in any way relate to: (a) Employee’s employment with the Company or the termination of Employee’s employment, such as claims for compensation, sales incentive compensation, special payments, sign on bonuses, retention bonuses or any other cash bonuses, commissions, stock grants, option grants, lost wages, meal and rest period payments or premiums, unused accrued vacation or sick pay, relocation benefits; (b) the design or administration of any employee benefit plan or Employee’s entitlement to benefits under any such plan; (c) any rights Employee may have to severance or similar income replacement benefits under any plan of the

Company; (d) any rights Employee may have to the continued receipt of health or life insurance-type benefits, except for any rights Employee may have to benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”); (e) any claims to attorneys’ fees or other indemnities; (f) any claims relating to any outstanding awards under the Company’s Performance Incentive Plan, as amended (the “PIP”) (which Employee agrees shall be cancelled immediately on the date hereof and shall have no further force or effect); and (g) any other claims or demands Employee may have on any basis. The claims released, for example, may have arisen under any of the following statutes or common law doctrines:

(i) Anti-Discrimination Statutes, such as Title VII of the Civil Rights Act of 1964, § 1981 of the Civil Rights Act of 1866 and Executive Order 11246; the Equal Pay Act; the Americans With Disabilities Act and § 503 and § 504 of the Rehabilitation Act of 1973; the Genetic Information Nondiscrimination Act of 2008; the Virginia Human Rights Act; and any other federal, state or local law or regulation prohibiting retaliation or discrimination on the basis of race, color, national origin, religion, gender, disability, age, marital status, sexual orientation, gender identity, genetic information or any other protected characteristic.

(ii) Other Federal Statutes, and their state or local counterparts, such as the Worker Adjustment and Retraining Notification Act; the Sarbanes-Oxley Act; and the Employee Retirement Income Security Act of 1974 (“ERISA”).

(iii) Other Laws, such as state or local laws or regulations restricting an employer’s right to terminate employees, enforcing express or implied employment contracts, requiring an employer to deal with employees fairly or in good faith, relating to salary, commission, compensation, or benefits, or otherwise regulating employment; laws or regulations limiting unfair competition; laws or regulations relating to the private enforcement of state labor codes; and any other federal, state or local laws, whether based on statute, regulation or common law, providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, unfair competition, negligent misrepresentation, libel, slander, defamation and similar or related claims.

(iv) Age Discrimination In Employment Act

1. Employee also acknowledges and agrees that Employee is waiving and releasing any and all claims or rights Employee may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), that this waiver and release is knowing and voluntary, and that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled as an employee of the Company. Employee further acknowledges that Employee is advised that: (a) Employee should consult with an attorney (at Employee’s own expense) prior to executing this Agreement (Employee understands that whether Employee consults

2

an attorney or not is Employee’s decision); (b) this Agreement does not waive or release any rights or claims Employee may have under the ADEA which may arise after Employee executes this Agreement; and (c) if Employee is age forty (40) or older on the date Employee signs this Agreement (i) Employee has at least twenty-one (21) days in which to consider this Agreement (although Employee may choose to execute this Agreement earlier but not before the conclusion of Employee’s last day of employment); (ii) Employee has seven (7) days following execution of this Agreement to revoke this Agreement (to be effective, any revocation must be actually received in writing by the Company by 12:00 a.m. on the eighth day); and (iii) this Agreement shall not be effective until the revocation period has expired.

2. However, Employee represents and warrants, and Company agrees, that the revisions made to this Agreement after it was first provided to Employee on November 19, 2014 are not material changes to the Agreement that restart the running of the 21-day period for considering the Agreement. In any event, whether the changes are material or immaterial, Employee and the Company agree that the running of the 21-day period is not restarted.

3. Employee acknowledges and agrees that Employee was given a copy of this Agreement and has carefully read it and understands it, that Employee has been given the opportunity to consult with the persons identified in Section 15 regarding this Agreement and that Employee has entered into this Agreement voluntarily and with full knowledge of its final and binding effect.

(d) Claims Not Released. This Agreement does not release: (a) Employee’s claims for reimbursement of business expenses owed to Employee, provided, however, that Employee represents that all expenditures have been submitted in accordance with Company policy prior to the date Employee signs this Agreement; (b) any pending claims for Workers’ Compensation benefits that have been submitted in writing to the Company prior to the Company issuing notice to Employee of Employee’s termination; (c) any claims Employee may now have to vested benefits in any 401(k), pension plan, or other employee benefits plans; and (d) Employee’s right to enforce this Agreement. This Agreement also does not release any other claim or abridge any legal right that as a matter of law cannot be released or abridged by private agreement between the Company and Employee.

(e) Release Extends to Known and Unknown, Suspected and Unsuspected Claims. This Agreement covers both claims that Employee knows about or suspects as well as those Employee does not know about or does not suspect, and Employee expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown and unsuspected claims.

3

(f) No Pursuit of Released Claims. Employee represents that Employee has not filed, submitted or caused to be filed any lawsuit, complaint or charge pertaining in any way to Employee’s employment or encompassing any claim released by this Agreement. Employee promises never to file, prosecute, join, opt-in or participate in a lawsuit (including a collective or class action) or other complaint or charge asserting any claims that are released by this Agreement. This promise, however, shall not limit and does not affect Employee’s right to challenge the validity of this Agreement under the ADEA or Older Workers Benefit Protection Act. Notwithstanding the foregoing, nothing in this Subsection precludes Employee from filing an administrative charge of discrimination or an administrative charge within the jurisdiction of the National Labor Relations Board, or from filing a charge or communicating with any other federal, state or local government office, official or agency. Employee promises never to seek or accept any damages, remedies, or other relief for Employee personally (any right to which Employee hereby waives and promises never to accept) with respect to any claim included in Section 1 of this Agreement, in any proceeding including, but not limited to, any Equal Employment Opportunity Commission (“EEOC”) proceeding.

(g) Further Representations.

(i) Employee represents and warrants that Employee’s age, race, color, gender, religion, disability, national origin or any other protected characteristic has not been a factor in any employment decision involving Employee, including the termination of Employee’s employment.

(ii) Employee represents and warrants that Employee has not been the victim of discrimination, retaliation, or wrongful treatment in connection with Employee’s employment with the Company, or termination thereof.

(iii) Employee represents and warrants that Employee has the capacity to enter into this Agreement and that Employee is voluntarily and willingly consenting to this Agreement. In addition, Employee represents and warrants that Employee has at no time felt compelled, obligated or pressured in any manner, by any person or entity, to consent to this Agreement.

(iv) Employee warrants and represents that, as of the date of execution of this Agreement, Employee is not aware of any violations of law by the Company or any of the Released Parties.

(v) Employee represents and warrants that Employee is not aware of any facts that would establish, tend to establish or in any way support an allegation that any Released Party has engaged in conduct that Employee believes could violate: (1) any provision of federal law relating to fraud (including but not limited to the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and/or any state or local counterpart); (2) any rule or regulation of the Securities and Exchange Commission; (3) the federal False Claims Act and/or any state or local or municipal qui tam counterpart (which prohibit the presentation by the

4

Company or any affiliate of false claims and statements or the creation of false records or statements in order to obtain payment of federal, state, county or municipal funds, or to avoid refunds of such government funds); and (4) any other federal, state or local law.

(vi) Employee represents and warrants that under the Family and Medical Leave Act of 1993, as amended, and/or any state or local counterpart (collectively, “FMLA”) that Employee (a) has received all leave required and currently does not, and in the past did not, have any claim for denial of any such leave, and (b) does not claim that the Company violated or denied him rights under the FMLA or retaliated against Employee in any way for exercising rights under the FMLA.

(vii) Employee represents and warrants that under the federal Fair Labor Standards Act and/or any state or local counterpart (collectively, “FLSA”) that Employee (a) was properly classified as either exempt or nonexempt from overtime (i.e., as either ineligible or eligible to receive overtime), (b) has been fully paid for all hours Employee worked for the Company, and (c) does not claim that the Company violated or denied any wage and hour rights under the FLSA.

(viii) Employee has been advised and acknowledges that Employee will not receive a bonus or other variable compensation for any past, current or future performance year.

2. Payments and Benefits. In exchange for the release and other promises made by Employee herein, the Company will provide the following benefits to Employee:

(a) The Company will pay to Employee the lump sum of One Hundred Fifteen Thousand Dollars ($115,000.00), less applicable taxes and other withholdings. Payment will be made in a lump sum as soon as administratively practicable after Employee executes and returns this Agreement and the revocation period has expired.

(b) After the termination of Employee’s Group Insurance coverage on December 15, 2014, Employee will be entitled to continue health benefits under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Should Employee elect to continue health benefits coverage through timely submission of a COBRA election form, the Company will cover Employee for the cost of COBRA premiums for a period of 6 months beginning the day after Employee executes and returns this Agreement and the revocation period has expired.

(c) Notwithstanding certain rights the Company may have pursuant to Sections 4(c) and 4(e) of the Nonstatutory Stock Option Agreement between Employee and the Company, (the “Option Agreement”) the Company will permit Employee to exercise the stock option granted to Employee by the Company on September 5, 2013 under the Company’s 2013 Stock Incentive Plan, as amended (the “Stock Incentive Plan”) and the Option Agreement evidencing such stock option grant (such option, the

5

“Stock Option”) to the extent that (i) any such exercise is conducted (A) with respect to a maximum of 25,000 shares in the aggregate, (B) after Employee has executed and returned this Agreement and the revocation period has expired and (C) in accordance with the Stock Incentive Plan, Option Agreement, and a duly completed exercise notice provided to Employee by the Company and (ii) Employee represents and warrants to the Company in writing at the time of any such exercise that Employee is not in possession of any “Material Nonpublic Information” concerning the Company (as defined in the “MicroStrategy Incorporated Insider Trading Policy and Guidelines with respect to Certain Transactions in MicroStrategy Securities”).

(d) The Company will pay the Employee for any vacation leave accrued and not used by Employee as of the Termination Date, as such leave is reflected in the Company’s time-off system or other appropriate system of record.

(e) The Company will reimburse Employee for legitimate business expenses incurred by Employee but not reimbursed by the Company as of the Termination Date. Employee hereby represents that all such expenses were incurred and submitted to the Company in accordance with Company policy prior to the date Employee signs this Agreement.

The Company will deduct federal and state withholding taxes and other deductions the Company determines it is required by law to make and issue Employee an IRS Form W-2 for these payments.

3. Existing Obligations Continue. Employee agrees to remain bound by any Company agreement relating to confidential information, invention, nonsolicitation, arbitration, or similar matters to which Employee is now subject. The provisions of the MicroStrategy Agreement, signed by Employee on April 2, 1999, are incorporated as if set forth fully herein, but the parties agree that in the event of any conflict between this Agreement and the April 2, 1999 Agreement, the provisions of this Agreement shall apply.

4. Covenant Not to Solicit.

(a) While employed by the Company and for a one (1) year period after the termination of Employee’s employment, Employee agrees not solicit, induce or attempt to solicit, induce or influence any Company employee with whom Employee has worked or about whom Employee has obtained Confidential Information during the last twelve (12) months of his employment with the Company to leave his or her job with the Company in order to accept employment with another company or entity, and Employee will not assist others to do these things. Employee understands that the fact that an employee contacts him first is not a defense to a claim of violation of this provision.

(b) While employed by the Company and for a one (1) year period after the termination of Employee’s employment, Employee agrees that he will not, directly or indirectly, solicit or divert, or assist others to solicit or divert business from any of the Company’s Customers. Employee also will not induce or attempt to induce any of the Company’s Customers to cease or refrain from conducting business with the Company, or to conduct the same or similar business with any other person or

6

entity. Employee understands that the fact that any other entity he becomes associated with has an existing business relationship with any such customer is not a defense to a claim of violation of this provision. This does not preclude the solicitation of business that has no relation to and does not compete with the products or services the Company provides to such Customers. “Customer” includes any person or entity (or employee or agent thereof), within the three (3) years before the termination of Employee’s employment (i) with whom Employee dealt or had direct contact; (ii) from whom Employee or an employee under his supervision solicited business or deals, directly or indirectly; or (iii) about whom, even without direct contact, Employee received confidential information.

5. Non-Competition. While Employee is employed by the Company and for twelve (12) months after the termination of Employee’s employment, Employee will not directly or indirectly, for himself or on behalf of any other person or entity, engage or attempt to engage in business that competes with the business of the Company in the United States.

(a) Employee understands that some entities engaging in the same or similar business as the Company may also have lines of business, parts of their business, or specific jobs that are wholly unrelated to the Company’s business and do not compete with the Company, and Employee understands that the Company does not intend for these restrictions to include such unrelated lines of business, parts of businesses or jobs.

(b) Employee understands and agrees, however, that if he intends to be employed by, perform services for, or otherwise become associated with (as a principal, partner, officer, director, employee, agent, representative, contractor or consultant or any other individual or representative role) an entity that engages in the same or similar business as the Company, it is presumed that the restrictions contained herein apply. Employee agrees that if he does not believe the restrictions should apply because he will be performing services that he believes are wholly unrelated to the Company’s business and do not compete with the Company, he will alert a Vice President of Human Resources for the Company prior to accepting employment or engagement with such an entity so that the Company may make an assessment as to whether this Agreement would be violated before any potential damage is incurred.

(c) Employee acknowledges that his experience, skills, education and training are readily transferrable and of such breadth that he can use them to his advantage in many other fields. As such, Employee agrees that the terms of this Agreement will not unreasonably impair his ability to engage in business or employment activities after he leaves the Company.

6. Assignment of Intellectual Property.

(a) Employee acknowledges and agrees that all intellectual property, including without limitation, all designs, techniques, devices, discoveries, processes, software, writings, inventions, improvements or documentation and all related know how, produced, made, conceived or authored by Employee, solely or jointly with others, in the course of Employee’s employment with the Company together with any intellectual property rights therein, are works made for hire and the property of the Company if

7

such works (i) relate in any manner, at the time the work is conceived or reduced to practice, to the actual or anticipated business, research, or development of the Company; (ii) are suggested by or result from any task assigned to Employee or work performed by Employee for or on behalf of the Company; or (iii) are created or developed with the use of Company equipment, supplies, facilities, information or materials. Employee shall disclose any such intellectual property promptly to the Company and hereby assigns any and all rights in such works to the Company or its assignees.

(b) To the extent that any such intellectual property may not, by operation of law, be works made for hire, Employee will assign and does hereby assign to the Company the ownership of, and all right, title and interest in, such items, and the Company shall have the right to obtain and hold in its own name, all intellectual property rights, including without limitation, patent, trade secret, copyright and similar protections which may be available in such works throughout the world.

(c) Employee agrees that all intellectual property made by him, solely or jointly with others, that are based on or contain proprietary information of the Company shall belong to the Company, and Employee hereby assigns any and all rights in such future intellectual property to the Company. For the purposes of this subsection, a work of authorship is based on the proprietary information of the Company if the work derives from or incorporates any such information in principle, structure, expression or design.

(d) Employee agrees to assign to the Company all rights in any other work of authorship made by Employee if the Company is required to grant those rights to the United States Government or any of its agencies.

(e) Employee agrees to assist the Company, or its designee or assignee, at the Company’s expense, in every proper way to secure the Company’s rights in such intellectual property and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such works of authorship, and any copyright, patents, mask work rights or other intellectual property rights relating thereto. Employee further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the date hereof.

(f) In the event the Company is unable due to Employee’s subsequent disability or incapacity or for any other reason whatsoever to secure Employee’s signature to any lawful and necessary document required to apply for, register or execute any patent, copyright or other applications with respect to any such intellectual property, Employee hereby irrevocably appoints the Company and its duly authorized officers and agents as his agents and attorneys-in-fact to execute and file any such application

8

and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights or other rights thereon with the same legal force and effect as if executed by him.

(g) In order to permit the Company to claim rights to which it may be entitled, Employee agrees to disclose to the Company in writing and in confidence (i) all intellectual property as described in paragraph (a) above that Employee made, either solely or jointly with others, during the term of his employment with the Company, and (ii) all patent and copyright applications filed by him during, or within one (1) year after the termination of, his employment, unless such disclosure is prevented by law or a separate agreement. Employee also agrees to submit to a reasonable and confidential review process under which the Company may determine such issues as may arise under this paragraph.

(h) If in the course of Employee’s employment with the Company, Employee incorporated into a Company product, process or code any invention, original work of authorship, development, improvement, or trade secrets that was made by Employee before his employment with the Company (collectively referred to as “Prior Inventions”), the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process or code.

7. Return of Property. Employee represents that Employee personally returned, by close of business on Employee’s Termination Date, all Company property (tangible, intangible, paper or electronic), including but not limited to all keys, credit cards, manuals, computers, PDAs, iPads, equipment and software, records, data, plans, customer lists, computer programs and related documentation or other materials of any nature which are in Employee’s possession or control and any and all copies thereof, except for two Apple laptop computers (Serial/Tag/ID Nos. C02KR0ZSFLCF and C02LK2JUFR1M), one iPhone (Serial/Tag/ID No. 013790002219658), and one iPad (Serial/Tag/ID No. DMPLL0F9FKYH) that Employee may retain; and that Employee has not compromised, corrupted, misappropriated, damaged or inappropriately shared, uploaded, or downloaded Company data.

8. No Disparagement.

(a) Employee agrees to refrain from making untruthful or disparaging statements in any private or public forum, including but not limited to newspapers, television, radio, or the internet, about any Released Party, Employee’s employment with the Company, or any general matter concerning any Released Party’s reputation, standing in the business community, business practices, or products; provided, however, that nothing in this Agreement will prohibit Employee from (a) complying with any valid subpoena or court order; or (b) initiating or cooperating with any official investigation conducted by a law enforcement agency.

(b) Employer agrees to take reasonable steps to ensure senior management refrains from making untruthful or disparaging statements in any private or public forum, including but not limited to newspapers, television, radio, or the internet, about

9

Employee or Employee’s employment with the Company; provided, however, that nothing in this Agreement will prohibit Employer from (a) complying with any law, rule, regulation, valid subpoena or court order; or (b) initiating or cooperating with any official investigation conducted by a law enforcement agency.

9. Agreement to Cooperate With the Company. Employee agrees to assist the Company in any formal or informal legal matters in which Employee is named as a party or has knowledge relevant to the matter. Employee acknowledges and agrees that such assistance may include, but will not be limited to, providing background information regarding any matter on which Employee previously worked, aiding in the drafting of declarations, executing declarations or similar documents, testifying or otherwise appearing at investigation interviews, depositions, arbitrations or court hearings and preparing for the above-described or similar activities. The Company will use reasonable efforts to ensure that any assistance requested will be arranged so that it does not unreasonably interfere with Employee’s other employment or family commitments. Employee understands that Employee will receive no additional pay for Employee’s assistance beyond that provided in this Agreement, and that Employee in rendering such services will not be acting as an employee of the Company.

10. Promise Not to Facilitate Claims Against the Company: Employee promises not to voluntarily encourage, counsel or assist (directly or indirectly) any current or former employee or third party (excluding government law enforcement agencies) in the preparation or prosecution of any civil dispute, difference, grievance, claim, charge or complaint against the Company and/or any Released Party (in such Released Party’s Company capacity) unless compelled to do so by valid legal process. Nothing in this provision is intended to prevent or prohibit Employee from assisting another individual in filing a charge with the EEOC or in participating in an EEOC investigation or proceeding. In the event Employee receives notice that Employee is required to provide testimony or information in any context about the Company and/or any Released Party (related to his/her work for the Company) to any third party (excluding government law enforcement agencies), Employee agrees to inform the Office of the General Counsel of MicroStrategy in writing within 24 hours of receiving such notice. Employee, thereafter, agrees to cooperate with the Company in responding (if necessary) to such legal process. Employee also agrees not to testify or provide any information in any context if the Company has informed Employee of its intent to contest the validity or enforceability of any request, subpoena or court order until such time as the Company has informed Employee in writing that it consents to Employee’s testimony or has fully exhausted its efforts to challenge any request, subpoena or court order requiring Employee’s testimony. If Employee is required to provide testimony in any context about the Company (with the Company’s consent or after the Company completes its challenges), Employee shall testify truthfully at all times. Nothing in this Agreement will prohibit Employee from (a) complying with any valid subpoena or court order, or (b) cooperating with any official government investigation

11. Standard Reference. Consistent with its policies, the Company will only confirm Employee’s dates of employment with the Company, Employee’s job title, and salary in any references it may provide. The parties agree that Employee’s last day of employment with the Company was December 15, 2014.

12. No Liability Admitted. Employee understands and agrees that this Agreement and the payments and benefits described in this Agreement do not constitute an admission by the Company or any Released Party, or any of their present or former officers, directors, members, employees, consultants, representatives, independent contractors or related entities, of any liability to Employee or wrongdoing whatsoever and that this Agreement is not admissible as evidence in any proceeding other than for enforcement of its provisions.

10

13. Tax Consequences. Employee understands that Employee is obligated to pay any taxes, interest or penalties which may be due should a final tax determination be rendered that any portion of the benefits and/or payments herein is taxable to Employee (or accorded different tax treatment) under any applicable provision of federal, state or local law. Employee acknowledges that neither the Company nor any of its attorneys or representatives has made any promise, representation or warranty, express or implied, regarding the tax consequences of any consideration paid pursuant to this Agreement. Employee agrees that the Company is to withhold all taxes it determines it is legally required to withhold. Employee further agrees not to make any claim against the Company or any other person based on how the Company reports amounts paid under this Agreement to tax authorities or if an adverse determination is made as to the tax treatment of any amounts payable under this Agreement.

14. No Other Inducements. Employee acknowledges that no promise or agreement not expressed in this Agreement has been made to Employee.

15. Confidentiality of Agreement. Employee agrees to keep the fact and terms of this Agreement and all benefits and payments confidential, and Employee will not publicize them or communicate them in any newspaper, electronic media or other public or private forum, or in any manner whatsoever, except the terms may be disclosed to Employee’s lawyers, accountants and immediate family or as required by law or by subpoena. Employee will, however, caution his/her lawyers, accountants and immediate family against any public or private disclosure of the above information.

16. Enforcement.

(a) General Consequences: If Employee breaks any of Employee’s promises in this Agreement, for example, by bringing a lawsuit based on claims that Employee has released, by making a false representation in this Agreement, or by a past or future breach of any portion of the MicroStrategy Agreement, other than a breach of the covenant set forth in Section 16(b), Employee (i) shall forfeit all right to future benefits under this Agreement; (ii) must repay all benefits previously received, pursuant to this Agreement, upon the Company’s demand; and (iii) must pay reasonable attorneys’ fees and all other costs incurred as a result of Employee’s breach or false representation, such as the cost of defending any suit brought with respect to a released claim by Employee. However, ten percent (10%) of the cash severance set forth in Section 2(a) will be exempt from this repayment provision and will constitute consideration for the release of claims set forth in Section 1 and for Employee’s other promises in this Agreement.

(b) In addition to the obligations set forth in Section 16(a), and notwithstanding anything to the contrary herein or in any other agreement between Employee and the Company, Employee (i) covenants not to challenge the validity or enforceability of this Agreement or any provision herein and (ii) agrees that if Employee breaches such covenant Employee shall immediately (A) forfeit and pay to the Company an amount in cash equal to the Total Proceeds (as defined below) from the sale of any

11

and all shares that resulted from exercise of the Stock Option and (B) to the extent there are any shares that resulted from exercise of the Stock Option which have not been sold, forfeit and tender all such shares to the Company. For purposes of this Agreement, “Total Proceeds” means, in the case of shares that resulted from a net exercise of the Stock Option and that were sold, the total proceeds from the sale of those shares, and in all other cases, the difference between the exercise price and the fair market value at the time of sale of the applicable shares, but in all cases net of brokerage costs and applicable taxes. In addition, any value received in connection with any derivative transaction relating to any such shares shall also be deemed Total Proceeds for purposes of this Agreement; provided, however, that for the sake of clarity, it is understood that the amount of any gains derived from the reinvestment of any proceeds obtained in connection with the sale of shares shall not be deemed to constitute Total Proceeds for purposes of this Agreement.

(c) The provisions of Subsection 16(a) and 16(b) shall not be applicable to challenges to the validity of this Agreement under the ADEA or Older Workers Benefit Protection Act.

17. Binding Nature of Agreement. This Agreement shall be binding on Employee’s heirs, legal representatives, administrators, executors, and assigns, and shall inure to the benefit of the Released Parties and their heirs, legal representatives, administrators, executors, and assigns.

18. No Assignment. Employee’s rights, duties or obligations under this Agreement may not be assigned, delegated or transferred.

19. Interpretation. This Agreement will be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. Unless the context indicates otherwise, the term “or” will be deemed to include the term “and” and the singular or plural number will be deemed to include the other. Section headings used in this Agreement are intended solely for convenience of reference and will not be used in the interpretation of any of this Agreement.

20. Dispute Resolution. Any dispute arising between the parties, including but not limited to those concerning the formation, validity, interpretation, effect, or alleged violations of this Agreement, the arbitrability of any dispute, any federal, state or local statutory claim (including discrimination or retaliation statutes), contract claims, tort claims, and claims of any other sort, must be submitted to arbitration.

Any controversy or claim arising out of or relating to the employment relationship cognizable at law and that could be the subject of legal action, shall be settled by arbitration in accordance with American Arbitration Association (“AAA”) National Rules for the Resolution of Employment Disputes and any applicable state or local laws. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

Notwithstanding the above-referenced Rules, any arbitration held under this Section shall be conducted by a single, neutral arbitrator in McLean, Virginia, or, where state or local law requires, in the jurisdiction where the employee provides services to the Company. The parties shall be limited to one deposition per side as part of the arbitration proceedings.

12

The Company shall pay all of the AAA’s administrative fees (“fees” here means the arbitrator’s honorarium (if applicable), the arbitrator’s expenses and any other costs for the transcription of the hearing, or of depositions to perpetuate the testimony of unavailable witnesses). The arbitrator shall issue a written award listing the issues submitted by the parties, together with a succinct explanation of the manner in which the arbitrator resolved or decided issues.

The arbitrator’s decision will be subject to limited judicial review under circumstances allowed by law. Employee understands that by entering into this agreement, Employee is waiving his/her right to a jury trial. To the extent that any provision of this Section violates or is otherwise inconsistent with state or local law, this Section shall be modified to the extent necessary to comply with state or local law.

21. Law Governing. This Agreement shall be governed by and construed under the laws of the Commonwealth of Virginia; provided, however, that the dispute resolution process referenced in Section 20 shall be governed by the Federal Arbitration Act unless it is found by a decisionmaker of competent jurisdiction not to be governed by the Federal Arbitration Act, in which case it will be governed by Virginia law.

22. Entire Agreement and Construction. This Agreement and the MicroStrategy Agreement comprise the entire agreement between the parties regarding the matters contained herein and has been entered into by Employee with a full understanding of its terms. Employee acknowledges that he signed this Agreement without inducement or duress, and that he was represented by counsel when negotiating this Agreement with the Company. The parties hereto agree that this Agreement has been prepared jointly and has been the subject of arm’s length and careful negotiation. Accordingly, the drafting of this Agreement is not to be attributed to either party, and any laws or regulations that provide that the language of a contract will be construed against the drafter will not apply to this Agreement. This Agreement may be executed in counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. This Agreement may not be changed orally, and any written change or amendment must be signed and accepted on behalf of MicroStrategy Incorporated by Douglas K. Thede, or his successor or designee. This Agreement and the MicroStrategy Agreement which constitute this entire agreement, supersede any prior or contemporaneous agreement, arrangement or understanding on their subject matter.

23. Severability. The provisions of this Agreement are severable. If any provision in this Agreement is found to be unenforceable, all other provisions will remain fully enforceable.

(The remainder of this page intentionally left blank.)

13

SIGNATURE PAGES (1 of 2)

INSTRUCTIONS IF YOU ARE AGE FORTY (40) OR OLDER

AS OF THE DATE YOU SIGN THIS AGREEMENT

• You may not make any changes to this Agreement and you may not sign this Agreement until after your Termination Date.

• You must (1) sign and date this Agreement where indicated below, and (2) return the original fully executed Agreement so that it is received by Richard Wiedis at MicroStrategy Incorporated, 1850 Towers Crescent Plaza, Tysons Corner, VA 22182 within five (5) business days of the date on which you signed it. You may submit the form by facsimile at (703) 714-1288 to meet the deadline, but if you do so, you must also provide the original executed agreement by mail thereafter.

• Subject to the language of Section 1(c)(iv)(2), you have up to twenty-one (21) days after receiving this Agreement to consider and sign it, although you may waive this time period by signing it sooner (but not until after your Termination Date).

• You have another seven (7) days after signing this Agreement in which to revoke this Agreement, and this Agreement does not take effect until that seven-day period has ended.

14

SIGNATURE PAGES (2 of 2)

PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN, SUSPECTED AND UNSUSPECTED CLAIMS.

Acknowledged and Agreed:

PENG XIAO
/s/ Peng Xiao	December 16, 2014
Employee’s Signature	Date
FOR MICROSTRATEGY INCORPORATED
/s/ Douglas K. Thede	December 17, 2014
Douglas K. Thede	Date

15

EX-10.16

Exhibit 10.16

Summary of Cash Bonus Arrangement with Timothy E. Lang

Timothy Lang currently serves as an executive officer of MicroStrategy Incorporated (“MicroStrategy” and, collectively with its subsidiaries, the “Company”), and is one of MicroStrategy’s “named executive officers” as defined in Item 402 of Regulation S-K. In connection with the commencement of Mr. Lang’s employment with the Company in August 2014, the Company issued, and Mr. Lang accepted, an offer letter providing, among other things, that Mr. Lang is eligible to receive an annual, discretionary bonus of up to $200,000 less applicable withholdings. In addition, the letter provides that MicroStrategy will guarantee payment of 50% of his annual, discretionary bonus for 2014, amounting to $100,000, to be paid at the time of the Company’s normal bonus cycle, if Mr. Lang is in good standing with MicroStrategy at the time of payment.

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF REGISTRANT

MicroStrategy Incorporated’s subsidiaries as of February 20, 2015 are listed below.

821,393 LLC (Delaware)	MicroStrategy Deutschland GmbH (Germany)
Alert Media Group LLC (Delaware)	MicroStrategy France SARL (France)
Alert Media Group II LLC (Delaware)	MicroStrategy Holdings (Hong Kong) Co. Ltd. (Hong Kong)
MicroStrategy Administration Corporation (Delaware)	MicroStrategy Ibérica, S.L.U. (Spain)
MicroStrategy Enterprises, Inc. (Delaware)	MicroStrategy India Private Limited (India)
MicroStrategy Management Corporation (Delaware)	MicroStrategy International Limited (Bermuda)
MicroStrategy Services Corporation (Delaware)	MicroStrategy International II Limited (Bermuda)
Reporting Technologies, Inc. (Delaware)	MicroStrategy Italy S.r.l. (Italy)
SMCR Corp. (Delaware)	MicroStrategy Japan Kabushiki Kaisha (MicroStrategy Japan Inc.) (Japan)
Strategy.com Incorporated (Delaware)	MicroStrategy Korea Co., Ltd. (Korea)
Strategy Inc. (Delaware)	MicroStrategy Limited (United Kingdom)
Usher Incorporated (Delaware)	MicroStrategy México, S. de R.L. de C.V. (Mexico)
AMG International C.V. (Netherlands)	MicroStrategy Middle East FZ-LLC (UAE — Dubai Free Zone)
Alert Media Group International B.V. (Netherlands)	MicroStrategy Poland sp. z. o. o. (Poland)
Limited Liability Company MicroStrategy (Russia)	MicroStrategy Portugal, Sociedade Unipessoal, Lda. (Portugal)
MicroStrategy Austria GmbH (Austria)	MicroStrategy Pty. Ltd. (Australia)
MicroStrategy Belgium BVBA (Belgium)	MicroStrategy Singapore Pte. Ltd. (Singapore)
MicroStrategy Beijing R&D Center (China)	MicroStrategy Software (Shanghai) Co., Ltd. (China)

MicroStrategy Benelux B.V. (Netherlands)	MicroStrategy South Africa (Proprietary) Limited (South Africa)
MicroStrategy Brasil Ltda. (Brazil)	MicroStrategy Sweden AB (Sweden)
MicroStrategy Canada Incorporated (Canada)	MicroStrategy Switzerland GmbH (Switzerland)
MicroStrategy China Technology Center Limited (China)	MicroStrategy Yazilim Hizmetleri Ve Ürünleri Limited Şirketi (Turkey)
MicroStrategy Denmark ApS (Denmark)	Strategy.com International Limited (Bermuda)

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

MicroStrategy Incorporated:

We consent to the incorporation by reference in the registration statements on Form S-3 (No. 333-58136) and on Form S-8 (No. 333-197645) of MicroStrategy Incorporated of our reports dated February 26, 2015, with respect to the consolidated balance sheets of MicroStrategy Incorporated as of December 31, 2014 and December 31, 2013, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the years ended December 31, 2014 and December 31, 2013, the related financial statement schedules, and the effectiveness of internal control over financial reporting as of December 31, 2014, which reports appear in the December 31, 2014 annual report on Form 10-K of MicroStrategy Incorporated.

Our report dated February 26, 2015, on the effectiveness of internal control over financial reporting as of December 31, 2014, expresses our opinion that MicroStrategy Incorporated did not maintain effective internal control over financial reporting as of December 31, 2014 because of the effect of a material weakness on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that a material weakness relating to ineffective monitoring controls over the activities performed by a third-party service provider on the Company’s behalf regarding billable time and expenses and internal business travel and entertainment expenses (information) and the Company’s failure to design and operate effective transaction-level controls including the related general information technology controls intended to prevent unauthorized system access and inappropriate change management to the service provider’s cloud-based professional services automation system and information contained within, has been identified and included in management’s assessment under the heading Management’s Report on Internal Control Over Financial Reporting, included under Item 9A.

/s/ KPMG LLP

McLean, Virginia

February 26, 2015

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated February 13, 2013 (except Note 16, as to which the date is February 12, 2014) with respect to the consolidated financial statements and schedule included in the Annual Report of MicroStrategy Incorporated on Form 10-K for the year ended December 31, 2014. We hereby consent to the incorporation by reference of said report in the Registration Statements of MicroStrategy Incorporated on Form S-3 (File No. 333-58136) and on Form S-8 (File No. 333-197645).

/s/ Grant Thornton LLP

McLean, Virginia

February 26, 2015

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Michael J. Saylor, certify that:

1. I have reviewed this Annual Report on Form 10-K of MicroStrategy Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 26, 2015 /s/ Michael J. Saylor Michael J. Saylor Chairman of the Board of Directors and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Douglas K. Thede, certify that:

1. I have reviewed this Annual Report on Form 10-K of MicroStrategy Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 26, 2015 /s/ Douglas K. Thede Douglas K. Thede Senior Executive Vice President & Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of MicroStrategy Incorporated (the “Company”) for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer of the Company and the Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge on the date hereof:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 26, 2015	/s/ Michael J. Saylor Michael J. Saylor Chairman of the Board of Directors and Chief Executive Officer
Dated: February 26, 2015	/s/ Douglas K. Thede Douglas K. Thede Senior Executive Vice President & Chief Financial Officer

XML

Basic and Diluted Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2014

Basic And Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data) for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Numerator:
Income (loss) from:
Continuing operations, net of tax	$	5,035	$	26,550	$	22,473
Discontinued operations, net of tax		0		56,782		(1,927	)
Net income	$	5,035	$	83,332	$	20,546
Denominator:
Weighted average common shares of class A common stock		9,246		9,073		8,768
Weighted average common shares of class B common stock		2,055		2,227		2,227
Total weighted average common stock shares outstanding		11,301		11,300		10,995
Effect of dilutive securities:
Employee stock options		55		1		179
Adjusted weighted average shares		11,356		11,301		11,174
Earnings per share:
Basic earnings (loss) per share
From continuing operations	$	0.45	$	2.35	$	2.05
From discontinued operations		0		5.02		(0.18	)
Basic earnings per share	$	0.45	$	7.37	$	1.87
Diluted earnings (loss) per share:
From continuing operations	$	0.44	$	2.35	$	2.01
From discontinued operations		0		5.02		(0.17	)
Diluted earnings per share	$	0.44	$	7.37	$	1.84

XML

Summary of Changes in Restructuring-Related Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Restructuring Cost and Reserve [Line Items]
Costs Incurred	$ 14,732	$ 0	$ 0
Accrued restructuring costs | Current accrued restructuring costs
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0
Costs Incurred	14,732
Cash Payments	(12,008)
Non-cash Settlements	(441)
Adjustments and Other	1
Ending Balance	2,284
Accrued restructuring costs | Current accrued restructuring costs | Severance and related employee benefits
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0
Costs Incurred	13,162
Cash Payments	(10,746)
Non-cash Settlements	0
Adjustments and Other	(201)
Ending Balance	2,215
Accrued restructuring costs | Current accrued restructuring costs | Contract termination costs
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0
Costs Incurred	1,159
Cash Payments	(960)
Non-cash Settlements	(441)
Adjustments and Other	242
Ending Balance	0
Accrued restructuring costs | Current accrued restructuring costs | Other costs
Restructuring Cost and Reserve [Line Items]
Beginning Balance	0
Costs Incurred	411
Cash Payments	(302)
Non-cash Settlements	0
Adjustments and Other	(40)
Ending Balance	$ 69

XML

Short Term Investments - Additional Information (Detail) (US Treasury Securities, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Investment [Line Items]
Held to maturity securities, amortized cost	198.5	$ 137.2
Held to maturity securities, carrying value	198.5	137.2
Held to maturity securities, fair value	198.5	$ 137.2
Minimum
Investment [Line Items]
Held to maturity securities maturity range	3 months
Maximum
Investment [Line Items]
Held to maturity securities maturity range	1 year

XML

Basic and Diluted Earnings per Share - Additional Information (Detail) (Class A, 2013 Plan)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Class A | 2013 Plan
Earnings Per Share [Line Items]
Shares issuable under stock options excluded from calculation of diluted earnings per share	735,000	600,000	0

XML

Deferred Revenue and Advance Payments (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred Revenue Arrangement [Line Items]
Deferred product licenses revenue, Current	$ 10,927	$ 14,538
Deferred subscription services revenue, Current	16,018	10,923
Deferred product support revenue, Current	168,833	167,771
Deferred other services revenue, Current	10,564	17,056
Gross current deferred revenue and advance payments	206,342	210,288
Less: unpaid deferred revenue	(97,929)	(96,632)
Net current deferred revenue and advance payments	108,413	113,656
Deferred product licenses revenue, Non-current	8,012	4,401
Deferred subscription services revenue, Non-current	750	1,161
Deferred product support revenue, Non-current	7,505	5,877
Deferred other services revenue, Non-current	1,047	1,175
Gross non-current deferred revenue and advance payments	17,314	12,614
Less: unpaid deferred revenue	(6,496)	(3,644)
Net non-current deferred revenue and advance payments	$ 10,818	$ 8,970

XML

Statement of Operations Information (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Schedule Of Quarterly Financial Information [Line Items]
Revenues	$ 148,871		$ 151,202		$ 141,853		$ 137,904		$ 165,881		$ 141,919		$ 137,905		$ 130,183		$ 579,830		$ 575,888		$ 565,724
Gross profit	117,236		116,249		106,240		104,895		132,912		108,666		101,459		94,282		444,620		437,319		424,648
(Loss) income from continuing operations, net of tax	22,699		(845)		(10,337)		(6,482)		16,148		17,146		(1,553)		(5,191)		5,035		26,550		22,473
Discontinued operations, net of tax	0		0		0		0		0		0		0		56,782		0		56,782		(1,927)
Net (loss) income	$ 22,699		$ (845)		$ (10,337)		$ (6,482)		$ 16,148		$ 17,146		$ (1,553)		$ 51,591		$ 5,035		$ 83,332		$ 20,546
(Loss) earnings per share:
Basic, from continuing operations	$ 2.01		$ (0.07)		$ (0.91)		$ (0.57)		$ 1.43		$ 1.52		$ (0.14)		$ (0.46)		$ 0.45		$ 2.35		$ 2.05
Basic, from discontinued operations	$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 5.03		$ 0.00		$ 5.02		$ (0.18)
Basic (loss) earnings per share	$ 2.01	[1]	$ (0.07)	[1]	$ (0.91)	[1]	$ (0.57)	[1]	$ 1.43	[1]	$ 1.52	[1]	$ (0.14)	[1]	$ 4.57	[1]	$ 0.45	[1],[2]	$ 7.37	[1],[2]	$ 1.87	[2]
Diluted, from continuing operations	$ 1.99		$ (0.07)		$ (0.91)		$ (0.57)		$ 1.43		$ 1.52		$ (0.14)		$ (0.46)		$ 0.44		$ 2.35		$ 2.01
Diluted, from discontinued operations	$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 5.03		$ 0.00		$ 5.02		$ (0.17)
Diluted (loss) earnings per share	$ 1.99	[1]	$ (0.07)	[1]	$ (0.91)	[1]	$ (0.57)	[1]	$ 1.43	[1]	$ 1.52	[1]	$ (0.14)	[1]	$ 4.57	[1]	$ 0.44	[1],[2]	$ 7.37	[1],[2]	$ 1.84	[2]

[1] The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

[2] Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

XML

Sale Contracts Consisted in Foreign Currency Forward Contracts Outstanding (Detail) In Thousands, unless otherwise specified	12 Months Ended			12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2014 USD ($)	Dec. 31, 2014 Australia, Dollars USD ($)	Dec. 31, 2014 Australia, Dollars AUD	Dec. 31, 2014 Brazil, Brazil Real USD ($)	Dec. 31, 2014 Brazil, Brazil Real BRL	Dec. 31, 2014 United Kingdom, Pounds USD ($)	Dec. 31, 2014 United Kingdom, Pounds GBP (£)	Dec. 31, 2014 Canada, Dollars USD ($)	Dec. 31, 2014 Canada, Dollars CAD	Dec. 31, 2014 China, Yuan Renminbi USD ($)	Dec. 31, 2014 China, Yuan Renminbi CNY	Dec. 31, 2014 Euro Member Countries, Euro USD ($)	Dec. 31, 2014 Euro Member Countries, Euro EUR (€)	Dec. 31, 2014 India, Rupees USD ($)	Dec. 31, 2014 India, Rupees INR	Dec. 31, 2014 Japan, Yen USD ($)	Dec. 31, 2014 Japan, Yen JPY (¥)	Dec. 31, 2014 Korea (South), Won USD ($)	Dec. 31, 2014 Korea (South), Won KRW	Dec. 31, 2014 Mexico, Pesos USD ($)	Dec. 31, 2014 Mexico, Pesos MXN	Dec. 31, 2014 Poland, Zlotych USD ($)	Dec. 31, 2014 Poland, Zlotych PLN	Dec. 31, 2014 Russia, Rubles USD ($)	Dec. 31, 2014 Russia, Rubles RUB	Dec. 31, 2014 Singapore, Dollars USD ($)	Dec. 31, 2014 Singapore, Dollars SGD	Dec. 31, 2014 South Africa, Rand USD ($)	Dec. 31, 2014 South Africa, Rand ZAR	Dec. 31, 2014 Sweden, Kronor USD ($)	Dec. 31, 2014 Sweden, Kronor SEK	Dec. 31, 2014 Switzerland, Francs USD ($)	Dec. 31, 2014 Switzerland, Francs CHF	Dec. 31, 2014 Turkey, New Lira USD ($)	Dec. 31, 2014 Turkey, New Lira TRY	Dec. 31, 2014 United Arab Emirates, Dirhams USD ($)	Dec. 31, 2014 United Arab Emirates, Dirhams AED
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Value	$ 17,400	$ 900	985	$ 1,300	3,184	$ 1,600	£ 950	$ 700	757	$ 1,700	10,664	$ 4,800	€ 3,534	$ 300	19,347	$ 1,300	¥ 131,508	$ 850	881,552	$ 300	4,001	$ 1,600	4,980	$ 200	7,323	$ 400	500	$ 600	6,769	$ 250	1,698	$ 300	268	$ 100	230	$ 200	738
Fair Value Gain (Loss)	$ 1,641	$ 103		$ 157		$ 122		$ 49		$ (5)		$ 515		$ 3		$ 201		$ 53		$ 32		$ 203		$ 86		$ 23		$ 32		$ 33		$ 30		$ 5		$ (1)

XML

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Schedule Of Property And Equipment

Property and equipment (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Transportation equipment	$	48,906		$	48,917
Computer equipment and purchased software		72,602			66,713
Furniture and equipment		11,477			11,647
Leasehold improvements		28,500			29,116
Internally developed software		9,408			8,393
Property and equipment, gross		170,893			164,786
Less: accumulated depreciation and amortization		(93,041	)		(79,341	)
Property and equipment, net	$	77,852		$	85,445

XML

Subsequent Events - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 26, 2015
Subsequent Event [Line Items]
Stock option awards granted	745,000	600,000	0
Unrecognized share-based compensation expense	$ 46.6
Subsequent Event | Amendment No. 1 to the 2013 Plan | Class A
Subsequent Event [Line Items]
Stock option awards granted				200,000
Unrecognized share-based compensation expense				$ 13.6
Vesting period, in years				4 years

XML

Discontinued Operations - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain from sale of discontinued operations, net of tax provision	$ 0	$ 57,377,000	$ 0
Angel.Com
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Discontinued operation, cash from sale		111,200,000
Discontinued operation, net cash from sale		100,700,000
Gain from sale of discontinued operations, net of tax provision		57,377,000
Discontinued operation, transaction costs		$ 10,500,000

XML

Future Minimum Rent Payments Under Noncancellable Operating and Capital Leases (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Leases Future Minimum Payments [Line Items]
2015	$ 24,627
2016	21,150
2017	17,861
2018	17,270
2019	16,263
Thereafter	19,929
Total future minimum rent payments under noncancellable operating lease agreements	117,100
2015	1,563
2016	121
2017	18
2018	18
2019	0
Thereafter	0
Total future minimum rent payments under noncancellable capital lease agreements	$ 1,720

XML

Total Revenues Gross Profit and Long Lived Assets Excluding Long Term Deferred Tax Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets
Total revenues	$ 148,871	$ 151,202	$ 141,853	$ 137,904	$ 165,881	$ 141,919	$ 137,905	$ 130,183	$ 579,830	$ 575,888	$ 565,724
Gross profit	117,236	116,249	106,240	104,895	132,912	108,666	101,459	94,282	444,620	437,319	424,648
Long-lived assets	95,272				102,362				95,272	102,362
Domestic
Revenues from External Customers and Long-Lived Assets
Total revenues									341,692	343,073	326,333
Gross profit									261,459	261,134	241,440
Long-lived assets	85,504				89,342				85,504	89,342
EMEA
Revenues from External Customers and Long-Lived Assets
Total revenues									176,774	169,194	177,543
Gross profit									131,790	123,373	133,986
Long-lived assets	5,690				7,111				5,690	7,111
Other Regions
Revenues from External Customers and Long-Lived Assets
Total revenues									61,364	63,621	61,848
Gross profit									51,371	52,812	49,222
Long-lived assets	$ 4,078				$ 5,909				$ 4,078	$ 5,909

XML

Selected Quarterly Financial Data - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2014
Quarterly Financial Information [Line Items]
Increase in income from continuing operations as result of reduction in its accrued bonus expense	$ 7.4

XML

Treasury Stock - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Equity, Class of Treasury Stock [Line Items]
Treasury stock, shares	6,405,000	6,405,000
Treasury stock, cost	475,184,000	$ 475,184,000
Two Thousand Five Share Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Shares repurchased program expiration date	Apr. 29, 2018
Two Thousand Five Share Repurchase Program | Class A
Equity, Class of Treasury Stock [Line Items]
Stock authorized to repurchase by board of directors	800,000,000
Treasury stock, shares	3,826,947
Shares repurchased, average price per share	90.23
Treasury stock, cost	345,300,000

XML

Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations

(16) Discontinued Operations

On March 15, 2013, the Company completed the sale of its equity interest in its Angel.com business for consideration to the Company of approximately $111.2 million, resulting in a net cash inflow of $100.7 million after $10.5 million in transaction costs. The sale resulted in a gain of $57.4 million, net of tax, in the year ended December 31, 2013. In the Company’s Consolidated Statement of Operations, the Company has classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because the Company does not have any continuing involvement with or cash flows from this business following its divestiture.

The following table summarizes the revenues and pre-tax loss generated by the Angel.com business during the years ended December 31, 2013 and 2012, respectively, in addition to the pre-tax gain on the sale of Angel.com recorded by the Company during the year ended December 31, 2013 (in thousands):

	Years Ended December 31,
	2014		2013		2012
Angel.com revenues	$	0	$	6,320	$	28,882
Angel.com pre-tax loss	$	0	$	986	$	2,976
MicroStrategy pre-tax gain on sale	$	0	$	94,925	$	0

XML

Components of Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 170,893	$ 164,786
Less: accumulated depreciation and amortization	(93,041)	(79,341)
Property and equipment, net	77,852	85,445
Transportation Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	48,906	48,917
Computer Equipment And Purchased Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	72,602	66,713
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	11,477	11,647
Leaseholds and Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	28,500	29,116
Software Development
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 9,408	$ 8,393

XML

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Selected Quarterly Financial Data

The following tables contain unaudited Statement of Operations information for each quarter of 2014 and 2013. The Company believes that the following information reflects all normal recurring adjustments. During the fourth quarter of 2014, the Company recognized a reduction in its accrued bonus expense as a result of a change in estimate, which resulted in a $7.4 million increase in income from continuing operations. The operating results for any quarter are not necessarily indicative of results for any future period.

	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2014
Revenues	$	137,904		$	141,853		$	151,202		$	148,871	$	579,830
Gross profit	$	104,895		$	106,240		$	116,249		$	117,236	$	444,620
(Loss) income from continuing operations, net of tax	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
Discontinued operations, net of tax		0			0			0			0		0
Net (loss) income	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
(Loss) earnings per share:(1)
Basic, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Basic, from discontinued operations		0			0			0			0		0
Basic (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Diluted, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
Diluted, from discontinued operations		0			0			0			0		0
Diluted (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2013
Revenues	$	130,183		$	137,905		$	141,919		$	165,881	$	575,888
Gross profit	$	94,282		$	101,459		$	108,666		$	132,912	$	437,319
(Loss) income from continuing operations, net of tax	$	(5,191	)	$	(1,553	)	$	17,146		$	16,148	$	26,550
Discontinued operations, net of tax		56,782			0			0			0		56,782
Net income (loss)	$	51,591		$	(1,553	)	$	17,146		$	16,148	$	83,332
Earnings (loss) per share:(1)
Basic, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Basic, from discontinued operations		5.03			0			0			0		5.02
Basic earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37
Diluted, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Diluted, from discontinued operations		5.03			0			0			0		5.02
Diluted earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37

⁽¹⁾ The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

XML

Segment Information - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2014 Country	Dec. 31, 2013 Country	Dec. 31, 2012 Country
Segment Reporting Information
Number of operating segments	1
Geographic Concentration Risk | Sales Revenue, Goods, Net
Segment Reporting Information
Number Of Individual Country accounted for 10% or more of total revenues	0	0	0
Geographic Concentration Risk | Assets, Total
Segment Reporting Information
Number Of Individual country accounted for 10% or more of total consolidated assets	0	0
Customer Concentration Risk | Sales Revenue, Goods, Net
Segment Reporting Information
Number Of Individual Customer accounted for 10% or more of total consolidated revenues	0	0	0

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Schedule Of Components Of Income From Continuing Operations Before Income Taxes

U.S. and international components of income (loss) from continuing operations before income taxes (in thousands) were comprised of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.	$	(5,389	)	$	(6,158	)	$	587
Foreign		16,440			22,909			31,620
Total	$	11,051		$	16,751		$	32,207

Schedule Of Benefit From Or Provision For Income Taxes From Continuing Operations

The benefit from or provision for income taxes from continuing operations (in thousands) consisted of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	(306	)	$	(12,404	)	$	533
State		(1	)		172			68
Foreign		7,638			5,994			7,269
	$	7,331		$	(6,238	)	$	7,870
Deferred:
Federal	$	(2,132	)	$	(3,417	)	$	995
State		(1,038	)		267			1,310
Foreign		1,855			(411	)		(441	)
	$	(1,315	)	$	(3,561	)	$	1,864
Total provision (benefit)	$	6,016		$	(9,799	)	$	9,734

Schedule Of Effective Income Tax Rate Reconciliation

The benefit from or provision for income taxes from continuing operations differs from the amount computed by applying the federal statutory income tax rate to the Company’s income from continuing operations before income taxes as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Income tax expense at federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal tax effect		-4.3	%		2.0	%		3.0	%
Foreign earnings taxed at different rates		2.9	%		-18.3	%		-21.5	%
Withholding tax		14.3	%		9.7	%		6.3	%
Foreign tax credit		-9.6	%		-5.4	%		-3.4	%
Other international components		0.8	%		3.4	%		1.9	%
Change in valuation allowance		21.1	%		-0.8	%		0.1	%
Deferred tax adjustments and rate changes		-4.9	%		-2.8	%		0.6	%
Meals and entertainment		5.9	%		4.5	%		2.9	%
Non-deductible officers compensation		2.0	%		7.1	%		2.1	%
Personal use of corporate aircraft		2.5	%		2.5	%		2.6	%
Subpart F income		4.0	%		2.4	%		1.2	%
Research and development tax credit		-13.7	%		-12.6	%		0.7	%
Other permanent differences		-1.6	%		0.8	%		0.6	%
Release of unrecognized tax benefits		0.0	%		-86.0	%		-1.9	%
Total		54.4	%		-58.5	%		30.2	%

Effective Rate For Income From Operations Before Income Taxes

The Company’s U.S. and foreign effective tax rates for income from continuing operations before income taxes were as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.		64.5	%		249.7	%		495.1	%
Foreign		57.7	%		24.4	%		21.6	%
Combined		54.4	%		-58.5	%		30.2	%

Schedule Of Components Of Company's Deferred Tax Assets And Liabilities

Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows for the periods indicated:

	December 31,
	2014			2013
Deferred tax assets, net:
Net operating loss carryforwards	$	6,911		$	981
Tax credits		10,402			8,723
Intangible assets		59			1,317
Deferred revenue adjustment		1,989			2,746
Accrued compensation		11,452			17,465
Share-based compensation expense		5,485			714
Deferred rent		3,428			3,709
Other		3,425			2,197
		43,151			37,852
Valuation allowance		(2,311	)		(77	)
Deferred tax assets, net of valuation allowance		40,840			37,775
Deferred tax liabilities:
Prepaid expenses and other		1,044			1,084
Property and equipment		17,149			15,751
Capitalized software development costs		5,637			3,791
Total deferred tax liabilities		23,830			20,626
Total net deferred tax asset	$	17,010		$	17,149
Reported as:
Current deferred tax assets, net	$	19,936		$	21,555
Non-current deferred tax assets, net		1,160			3,204
Current deferred tax liabilities		(557	)		(422	)
Non-current deferred tax liabilities		(3,529	)		(7,188	)
Total net deferred tax asset	$	17,010		$	17,149

Schedule Of Change In Unrecognized Tax Benefits

The change in unrecognized tax benefits (in thousands) is presented in the table below:

Unrecognized tax benefits at January 1, 2014	$	2,312
Increase related to positions taken in prior period		938
Increase related to positions taken in current period		270
Decrease related to expiration of statute of limitations		(60	)
Unrecognized tax benefits at December 31, 2014		3,460
Accrued interest		292
Netting of deferred tax assets and unrecognized tax benefits		(1,273	)
Unrecognized tax benefits recorded in other long-term liabilities at December 31, 2014	$	2,479

XML

Restructuring - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014 Employee	Sep. 30, 2014
Restructuring Cost and Reserve [Line Items]
Total Expected Plan Costs	$ 15,000,000	15,000,000	$ 18,400,000
Total expected costs
Restructuring Cost and Reserve [Line Items]
Decrease in total expected plan costs	(3,400,000)
Total expected severance and related employee benefit costs
Restructuring Cost and Reserve [Line Items]
Decrease in total expected plan costs	$ (3,100,000)
2014 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Number of workforce expected to be reduced		777
2014 Restructuring Plan | Domestic
Restructuring Cost and Reserve [Line Items]
Number of workforce expected to be reduced		217
2014 Restructuring Plan | Asia Pacific
Restructuring Cost and Reserve [Line Items]
Number of workforce expected to be reduced		400
2014 Restructuring Plan | EMEA
Restructuring Cost and Reserve [Line Items]
Number of workforce expected to be reduced		141
2014 Restructuring Plan | Latin America
Restructuring Cost and Reserve [Line Items]
Number of workforce expected to be reduced		19

XML

Range of Exercise Prices (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Shares, Stock Options Exercisable	1,201,000
Weighted Average Exercise Price, Stock Options Exercisable	$ 111,770
Weighted Average Remaining Contractual Term, Stock Options Exercisable	9 years
92.84 - 120.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price per Share, minimum	$ 92.84
Range of Exercise Price per Share, maximum	$ 120.00
Shares, Stock Options Exercisable	596
Weighted Average Exercise Price, Stock Options Exercisable	$ 96.34
Weighted Average Remaining Contractual Term, Stock Options Exercisable	8 years 6 months
120.01 - 150.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price per Share, minimum	$ 120.01
Range of Exercise Price per Share, maximum	$ 150.00
Shares, Stock Options Exercisable	520
Weighted Average Exercise Price, Stock Options Exercisable	$ 121.43
Weighted Average Remaining Contractual Term, Stock Options Exercisable	9 years 3 months 18 days
150.00 - 160.88
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price per Share, minimum	$ 150.01
Range of Exercise Price per Share, maximum	$ 160.88
Shares, Stock Options Exercisable	85
Weighted Average Exercise Price, Stock Options Exercisable	$ 160.88
Weighted Average Remaining Contractual Term, Stock Options Exercisable	9 years 9 months 18 days

XML

Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes
Research and development tax credit	(13.70%)	(12.60%)	0.70%
Previously taxed foreign income, repatriated	$ 1,300,000	$ 1,000,000	$ 2,500,000
Undistributed foreign earnings	201,700,000
U.S. statutory rate	35.00%	35.00%	35.00%
U.S. deferred tax asset	200,000
U.S. deferred assets, net operating loss carryforwards	400,000
Unrecognized tax benefits	2,479,000
Unrecognized tax benefits would impact the effective tax rate	1,700,000
Interest expense related to unrecognized tax benefits		(1,000,000)	400,000
Interest accrued	292,000	300,000
Tax credit carryforward, expiration date	2016
Tax credit carryforward tax assets	10,500,000	8,700,000
Valuation allowances	2,311,000	77,000
Federal
Income Taxes
Cash and cash equivalents and short-term investments	139,100,000	160,500,000
Operating loss carryforwards	14,700,000	0
Foreign
Income Taxes
Cash and cash equivalents and short-term investments	206,400,000	196,900,000
Operating loss carryforwards	$ 3,400,000	$ 4,400,000

XML

Changes in Fair Value of Foreign Currency Forward Contracts (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative instruments	$ 1,682	$ 0	$ 0
Unrealized (loss) gain on foreign currency forward contracts | Other (expense) income, net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative instruments	1,682	(41)	0
Realized loss on foreign currency forward contracts | Other (expense) income, net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative instruments	$ (562)	$ (629)	$ 0

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Held-for-sale beginning of period	$ 0	$ 0	$ 1,350	$ 5,300
Held-for-sale end of period	$ 0	$ 0	$ 1,350	$ 5,300

XML

Effective Rate for Income from Operations Before Income Taxes (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule Of Effective Tax Rates Line Items
Effective tax rates	54.40%	(58.50%)	30.20%
U.S.
Schedule Of Effective Tax Rates Line Items
Effective tax rates	64.50%	249.70%	495.10%
Foreign
Schedule Of Effective Tax Rates Line Items
Effective tax rates	57.70%	24.40%	21.60%

XML

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2014	Sep. 30, 2013
Summary Of Significant Accounting Policies [Line Items]
Estimated salvage value	70.00%
Capitalized software development costs, net of accumulated amortization	$ 13,469,000	$ 10,295,000
Capitalized computer software, amortization	5,200,000	5,500,000	4,800,000
Additions to capitalized software development costs	8,400,000	5,400,000	8,100,000
Long-term purchase commitment amount	136,400,000	119,700,000
Variance below minimum VSOE rate	10.00%
Advertising costs	3,000,000	1,900,000	4,100,000
Common stock, conversion ratio	One	One
Transaction gains (losses) arising from transactions denominated in foreign currencies	5,300,000	(3,300,000)	(2,000,000)
Cumulative foreign currency translation amount	$ (4,400,000)	$ (800,000)	$ (1,500,000)
Class A
Summary Of Significant Accounting Policies [Line Items]
Common stock, voting rights, per share	One	One
Class A | 2013 Plan
Summary Of Significant Accounting Policies [Line Items]
Share-based compensation, stock authorized				1,500,000	600,000
Class A | 2013 Plan | Non Employee Directors
Summary Of Significant Accounting Policies [Line Items]
Number of automatic annual stock option grants authorized to each of the Company's non-employee directors beginning 2015				5,000
Class B Convertible
Summary Of Significant Accounting Policies [Line Items]
Common stock, voting rights, per share	Ten	Ten
Computer Equipment And Purchased Software
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets, years	3 years
Office Equipment And Automobiles
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets, years	5 years
Office Furniture And Corporate Aircraft
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets, years	10 years
Software Development
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of assets, years	3 years

XML

Schedule II Valuation And Qualifying Accounts

12 Months Ended

Dec. 31, 2014

Schedule II Valuation And Qualifying Accounts

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2014, 2013, and 2012

(in thousands)

	Balance at the beginning of the period		Additions (1)		Deductions			Balance at the end of the period
Allowance for doubtful accounts:
December 31, 2014	$	3,989		2,969		(2,546	)	$	4,412
December 31, 2013	$	4,366		2,281		(2,658	)	$	3,989
December 31, 2012	$	5,628		2,361		(3,623	)	$	4,366
Deferred tax valuation allowance:
December 31, 2014	$	77		2,234		0		$	2,311
December 31, 2013	$	231		77		(231	)	$	77
December 31, 2012	$	736		7		(512	)	$	231

(1) Reductions in/charges to revenues and expenses.

XML

Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events

(19) Subsequent Events

In February 2015, the Compensation Committee of the Board of Directors approved, subject to stockholder approval of Amendment No. 1 to the 2013 Plan, the grant of stock options to purchase an aggregate of 200,000 shares of class A common stock to certain Company employees and officers pursuant to the 2013 Plan. The fair value of these stock options is approximately $13.6 million, to be recognized as share-based compensation expense over a four year vesting period.

These awards will be terminated or forfeited if stockholder approval of Amendment No. 1 is not obtained within 12 months of the date of grant of the awards, and no awards may be exercised or settled prior to such stockholder approval. However, the Company expects to obtain stockholder approval of Amendment No. 1 to the 2013 Plan at the Company’s annual meeting of stockholders in 2015. The 2013 Plan is described in further detail in Note 12, Share-based Compensation, to the Consolidated Financial Statements.

XML

Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies [Line Items]
Total rental expenses under operating lease agreements	$ 30.4	$ 28.3	$ 26.4
Northern Virginia Office Space
Commitments and Contingencies [Line Items]
Office space area leased under the agreement	233,000
Lease expiration date	2020-12
Deferred rent included in other long-term liabilities	18.9	20.1
Deferred rent included in current accrued expenses	$ 3.0	$ 2.8
Northern Virginia Office, Additional Office Space | 2014 Restructuring Plan
Commitments and Contingencies [Line Items]
Lease expiration date	2015-02
Office space ceased to be used	19,000

XML

Recent Accounting Standards - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unrecognized tax benefits	$ 3,460	$ 2,312
Netted against deferred tax assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Unrecognized tax benefits	$ 1,300

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Basis of Presentation

(a) Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

On March 15, 2013, the Company completed the sale of its wholly owned subsidiary, Angel.com Incorporated (“Angel.com”). In the Company’s Consolidated Statement of Operations, the Company classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because it does not have any continuing involvement with or cash flows from this business following its divestiture. Refer to Note 16, Discontinued Operations, to the Consolidated Financial Statements for further information.

Certain amounts in the prior years’ Consolidated Financial Statements and Notes to Consolidated Financial Statements have also been reclassified to conform to current year presentation. Revenues and cost of revenues have been reclassified in the Consolidated Statements of Operations to reflect the separate components of total product licenses and subscription services.

Use of Estimates

(b) Use of Estimates

The preparation of the Consolidated Financial Statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, investments, derivative financial instruments, software development costs, fixed assets, intangible assets, variable compensation, restructuring costs, share-based compensation, income taxes, including the carrying value of deferred tax assets, and litigation and contingencies, including liabilities that the Company deems not probable of assertion. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

Fair Value Measurements

(c) Fair Value Measurements

The Company measures certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below:

Level 1:	Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:	Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company also estimates the fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, accrued compensation and employee benefits, and accrued restructuring costs. The Company considers the carrying value of these instruments in the financial statements to approximate fair value due to their short maturities.

Cash and Cash Equivalents and Restricted Cash

(d) Cash and Cash Equivalents and Restricted Cash

Cash equivalents include bank deposits, money market instruments, U.S. Treasury bills, and equivalent funds. The Company generally considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash consists of cash balances restricted in use by contractual obligations with third parties.

Short-term Investments

(e) Short-term Investments

The Company periodically invests a portion of its excess cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. The Company determines the appropriate classification of its short-term investments at the time of purchase.

Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. Therefore, these short-term investments are classified and accounted for as held-to-maturity and are reported at amortized cost. Each reporting period, the Company determines whether a decline in fair value below the amortized cost for each individual security is other-than-temporary and if it would be required to sell the security before recovery of its amortized cost basis. If an other-than-temporary impairment has occurred, the amount representing the credit loss is recorded in “Other income (expense), net,” and the amount related to all other factors is recognized in “Accumulated other comprehensive income (loss).” Upon recognition of an other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment.

Derivative Financial Instruments

(f) Derivative Financial Instruments

The Company is exposed to certain risks related to its ongoing business operations, including the effect of changes in foreign exchange rates on the Company’s monetary assets and liabilities denominated in foreign currency. The Company uses foreign currency forward contracts as part of its strategy to manage these risks, but does not hold or issue derivative instruments for trading purposes or speculation. We execute these instruments with financial institutions that hold an investment grade credit rating. These foreign currency forward contracts do not meet the requirements for hedge accounting and are recorded on the balance sheet as either an asset or liability measured at their fair value as of the reporting date. Changes in the fair value of derivative instruments, as measured using the three-level hierarchy described above, are recognized in “Other income (expense), net” in the Company’s Consolidated Statements of Operations.

Property and Equipment

(g) Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows: three years for computer equipment and purchased software, five years for office equipment and automobiles, and ten years for office furniture and owned corporate aircraft, which has an estimated salvage value of 70%. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. The Company periodically evaluates the appropriateness of the estimated useful lives and salvage value of all property and equipment. Any change in the estimated useful life or salvage value is treated as a change in estimate and accounted for prospectively in the period of change.

Expenditures for maintenance and repairs are charged to expense as incurred, except for certain costs related to the aircraft. The costs of normal, recurring, or periodic repairs and maintenance activities related to the aircraft are expensed as incurred. The cost of planned major maintenance activities (“PMMA”) may be treated differently because those activities may involve the acquisition of additional aircraft components or the replacement of existing aircraft components. PMMA are performed periodically based on passage of time and the use of the aircraft. The classification of a maintenance activity as part of PMMA requires judgment and can affect the amount of expense recognized in any particular period. The cost of each PMMA is expected to be capitalized and amortized over the period until the next scheduled PMMA. The costs of the repairs associated with the Company’s owned aircraft, which was returned to service in the second quarter of 2012, did not constitute PMMA. There have been no PMMA to date.

When assets are retired or sold, the capitalized cost and related accumulated depreciation are removed from the property and equipment accounts and any resulting gain or loss is recognized in the results of operations.

Eligible internal-use software development costs are capitalized subsequent to the completion of the preliminary project stage. Such costs include external direct material and service costs, employee payroll, and payroll-related costs. After all substantial testing and deployment is completed and the software is ready for its intended use, capitalization ceases and internal-use software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three years.

The Company reviews long-lived assets, including intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset.

Software Development Costs

(h) Software Development Costs

Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. Capitalized software development costs include direct labor costs and fringe benefit costs attributed to programmers, software engineers, and quality control and field certifiers working on products after they reach technological feasibility, but before they are generally available to customers for sale. Technological feasibility is considered to be achieved when a product design and working model of the software product have been completed. Capitalized software development costs are typically amortized over the estimated product life of three years, on a straight-line basis.

Capitalized software development costs, net of accumulated amortization, were $13.5 million and $10.3 million as of December 31, 2014 and 2013, respectively. Amortization expense related to software development costs was $5.2 million, $5.5 million, and $4.8 million for the years ended December 31, 2014, 2013, and 2012, respectively, and is included in cost of product licenses and subscription services revenues. During the years ended December 31, 2014, 2013, and 2012, the Company capitalized software development costs of $8.4 million, $5.4 million, and $8.1 million, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs.

Restructuring Costs

(i) Restructuring Costs

In 2014, the Company committed to, and substantially implemented, a restructuring plan. In connection with this restructuring plan, the Company has incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. See Note 8, Restructuring, to the Consolidated Financial Statements for further information on the Company’s current restructuring activities.

Employee severance and related benefit costs may include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive severance or benefit plan relating to the involuntary termination of employees previously exists, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in

which the liability is incurred, which is generally when management has approved and communicated to the terminated employees a detailed plan of termination. Severance costs pursuant to ongoing-benefit arrangements, including statutorily mandated termination benefits or termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Severance costs are reasonably estimated based on the mix of staffing composition and geography. Where termination benefits are offered for a short period of time in exchange for voluntary termination, severance costs are recognized when the employee has irrevocably accepted the offer.

Contract termination costs may include costs to exit office space under existing operating leases and consist of both costs to terminate the contract before the end of the term and costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company. Costs to terminate the contract before the term has ended are recognized at fair value when the Company terminates the contract in accordance with the contract terms. Costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company (for example, remaining lease rental payments and executory costs) are recognized at fair value in the period in which the Company ceases using the right conveyed by the contract (for example, when the leased space ceases to be used). In the case of operating leases, these continuing costs are also adjusted for the effects of any prepaid or deferred items previously recognized under the lease and reduced by estimated sublease rental income.

Other related costs generally include employee relocation costs, office moving costs, and external consulting and advisory fees related to restructuring activities. Such costs are recognized at fair value in the period in which the costs are incurred.

At each reporting date, the Company evaluates its accrued restructuring costs to determine if the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans are reflected in the Company’s Consolidated Statements of Operations.

Loss Contingencies and Legal Costs

(j) Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

Deferred Revenue and Advance Payments

(k) Deferred Revenue and Advance Payments

Deferred revenue and advance payments related to product support, subscription services, and other services result from payments received prior to the performance of services for technical support, subscription, consulting, and education. Deferred revenue and advance payments related to product licenses result primarily from multiple-element arrangements that include future deliverables. Deferred revenue comprises deferred product licenses and subscription services, deferred product support, or other services revenue based on the objective fair value of the multiple elements of the arrangement, except for software licenses for which the Company does not have an objective measure of fair value. The Company offsets its accounts receivable and deferred revenue for any billed and unpaid items included in deferred revenue and advance payments.

As of December 31, 2014, the Company has entered into certain additional agreements that include future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2019 totaling approximately $136.4 million. As of December 31, 2013, the future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2018 totaled approximately $119.7 million. These future commitments are not included in deferred revenue balances. Revenue relating to such agreements will be recognized during the period in which all revenue recognition criteria are met. The timing and ultimate recognition of any revenue from such customer purchase commitments depend on the customers’ meeting their future purchase commitments and the Company’s ability to meet its associated performance obligations related to those purchase commitments.

Revenue Recognition

(l) Revenue Recognition

The Company recognizes revenue from sales of software licenses to end users upon:

1) persuasive evidence of an arrangement, as provided by agreements, contracts, purchase orders, or other arrangements, generally executed by both parties;

2) existence of a fixed or determinable fee;

3) delivery of the software; and

4) determination that collection is reasonably assured.

When the fees for software upgrades and enhancements, technical support, consulting, and education are bundled with the license fee, they are unbundled for revenue recognition purposes, using vendor specific objective evidence (“VSOE”) of fair value of the elements.

Product support or post-contract support (“PCS”) revenue is derived from providing technical software support and software updates and upgrades to customers. PCS revenue is recognized ratably over the term of the contract, which in most cases is one year. The Company’s VSOE for PCS, which includes updates, upgrades, and enhancements, is determined based upon the optional stated renewal fee for PCS in the contract, which is the price the customer is required to pay when PCS is renewed. Additionally, the optional stated renewal fee used to establish VSOE for PCS in a software transaction must be above the Company’s minimum substantive VSOE rate for PCS. If a stated renewal rate is considered non-substantive, VSOE of PCS has not been established and the Company recognizes all revenue under the arrangement ratably over the PCS period. A minimum substantive VSOE rate is determined based upon an analysis of historical sales of PCS. For a renewal rate to be non-substantive, the Company believes it must be significantly lower than its minimum VSOE rate. We consider a 10% variance below our minimum VSOE rate to be significant. It is rare for the Company to have an arrangement that includes a renewal rate that is below the minimum VSOE rate.

Revenue from consulting, education, and subscription services is recognized as the services are performed. The Company’s VSOE for services other than PCS is determined based upon an analysis of its historical sales of each element when sold separately from software.

For new offerings of services other than PCS or service offerings that have not had a sufficient history of sales activity, the Company initially establishes VSOE based on the list price as determined by management with the relevant authority. Each service offering has a single list price in each country where sold.

If VSOE exists for all undelivered elements and there is no such evidence of fair value established for delivered elements, the arrangement fee is first allocated to the elements where evidence of fair value has been established and the residual amount is allocated to the delivered elements. If evidence of fair value for any undelivered element of an arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value exists for undelivered elements or until all elements of the arrangement are delivered, subject to certain limited exceptions.

If an arrangement includes acceptance criteria, revenue is not recognized until the Company can objectively demonstrate that the software or service can meet the acceptance criteria, or the acceptance period lapses, whichever occurs earlier. If a software license arrangement obligates the Company to deliver specified future products or upgrades, revenue is recognized when the specified future product or upgrades are delivered, or when the obligation to deliver specified future products expires, whichever occurs earlier. If a software license arrangement obligates the Company to deliver unspecified future products, then revenue is recognized on a subscription basis, ratably over the term of the contract.

License revenue derived from sales to resellers or original equipment manufacturers (“OEMs”) who purchase the Company’s products for resale is recognized upon sufficient evidence that the products have been sold to the end user, provided all other revenue recognition criteria have been met. The Company’s standard software license and reseller agreements do not include any return rights other than the right to return non-conforming products for repair or replacement under standard product warranties. During the last three fiscal years, the Company has not experienced any product returns related to warranty claims.

The Company generally offers either commercial discounts or referral fees to its channel partners, depending on the nature of services performed. Revenue recognized from transactions with channel partners involved in resale or distribution activities is recorded net of any commercial discounts provided to them. Referral fees paid to channel partners not involved in resale or distribution activities are expensed as cost of revenues and, during the last three fiscal years, were not significant.

The Company’s standard software license agreements do not include any price protection or similar rights. The Company offers price protection to certain government agencies as required by applicable laws and regulations. For example, transactions under the General Services Administration Federal Supply Schedule contract must comply with the Price Reductions clause. In addition, certain government agencies have the right to cancel contracts for “convenience.” During the last three fiscal years, amounts related to price protection or similar rights clauses and contracts cancelled for convenience were not significant.

Amounts collected prior to satisfying the above revenue recognition criteria are included in net deferred revenue and advance payments in the accompanying Consolidated Balance Sheets.

Software revenue recognition requires judgment, including determinations about whether collectibility is reasonably assured, the fee is fixed and determinable, whether a software arrangement includes multiple elements, and if so, whether VSOE exists for those elements. Judgment is also required to assess whether future releases of certain software represent new products or upgrades and enhancements to existing products.

The Company also generates subscription services revenues primarily from its cloud services offerings. Subscription services revenues include subscription fees from customers for access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities, database services, and data integration services. Our standard arrangements with customers generally do not provide the customer with the right to take possession of the software supporting the cloud-based application service at any time. As such, these arrangements are considered service contracts and revenue is recognized ratably over the service period of the contract, following completion of the set-up service. Any related set-up service fees are recognized ratably over the longer of the contract period or the estimated average life of the customer relationship.

The Company’s subscription services are generally offered as stand-alone arrangements or as part of arrangements that include professional services. If deliverables in a multiple-element arrangement have stand-alone value upon delivery, the Company accounts for each such deliverable separately. The Company has concluded that its subscription services and its professional services each have stand-alone value. When the Company enters into multiple-element arrangements that include subscription services and professional services, the total arrangement consideration is allocated to each of the deliverables based on the relative selling price hierarchy. The Company determines the relative selling price for each deliverable using VSOE of selling price, if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its services offerings as compared to other companies and the lack of availability of third-party pricing information. For professional services, the Company has established VSOE because a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. For subscription services, the Company has not established VSOE because, among other factors, the offering is relatively new and our pricing model continues to evolve. Accordingly, the Company uses BESP to determine the relative selling price of its subscription services.

The Company determines BESP by reviewing historical transactions and by considering its pricing models and objectives that take into account factors such as gross margin, the size and volume of the transactions, perceived pricing sensitivity, and growth strategies. The determination of BESP is made through consultation with, and approval by, the Company’s management team, taking into consideration the go-to-market strategy. As the Company’s pricing and go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to the determination of VSOE and BESP.

Amounts, upon invoicing, are recorded in accounts receivable and either gross deferred revenue or revenue, depending on whether the applicable revenue recognition criteria have been met.

During 2014, 2013, and 2012, the Company did not generate significant revenues from MicroStrategy Usher.

Advertising Costs

(m) Advertising Costs

Advertising costs include production costs, which are expensed the first time the advertisement takes place, and media placement costs, which are expensed in the month the advertising appears. Total advertising costs were $3.0 million, $1.9 million, and $4.1 million for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, the Company had no prepaid advertising costs.

Share-based Compensation

(n) Share-based Compensation

In September 2013, the Board of Directors approved the Company’s 2013 Stock Incentive Plan, under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock. In April 2014, the Company’s stockholders approved the 2013 Stock Incentive Plan at the Company’s annual meeting. In April 2014, following the Company’s annual meeting, the Board of Directors authorized, subject to stockholder approval, an amendment to the 2013 Plan to increase the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Plan from 600,000 to 1,500,000 shares (“Amendment No. 1”). Also in April 2014, the Compensation Committee of the Board of Directors (the “Compensation Committee”) authorized, subject to stockholder approval, an additional amendment to the 2013 Plan to provide for automatic annual stock option grants to each of the Company’s non-employee directors with respect to 5,000 shares of the Company’s class A common stock, beginning in 2015 (“Amendment No. 2”). The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the Company’s 2013 Stock Incentive Plan, related share-based compensation expense, and assumptions used in the Black-Scholes option pricing model.

Income Taxes

(o) Income Taxes

The Company is subject to federal, state, and local income taxes in the United States and many foreign countries. Deferred income taxes are provided based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. For uncertain income tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. The Company recognizes accrued interest related to unrecognized tax benefits as part of income tax expense. Penalties, if incurred, are recognized as a component of income tax expense.

The Company provides a valuation allowance to reduce deferred tax assets to their estimated realizable value, when appropriate.

Basic and Diluted Earnings Per Share

(p) Basic and Diluted Earnings Per Share

Basic earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings per share calculation when dilutive. Diluted earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding employee stock options and warrants are computed using the treasury stock method. Potential common shares also consist of common stock issuable upon the conversion of preferred stock.

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A and class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of December 31, 2014 and 2013, there were no shares of preferred stock outstanding.

Foreign Currency Translation

(q) Foreign Currency Translation

The functional currency of the Company’s international operations is the local currency. Accordingly, all assets and liabilities of international subsidiaries are translated using exchange rates in effect at the end of the period and revenue and expenses are translated using weighted average exchange rates for the period. The related translation adjustments are reported in accumulated other comprehensive income (loss) in stockholders’ equity. Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in the results of operations.

Transaction gains and losses arising from transactions denominated in foreign currencies resulted in net gains of $5.3 million in 2014, and net losses of $3.3 million, and $2.0 million in 2013 and 2012, respectively, and are included in “Other income (expense), net” in the accompanying Consolidated Statements of Operations.

As of December 31, 2014, 2013, and 2012, the cumulative foreign currency translation balances were $(4.4) million, $(0.8) million, and $(1.5) million, respectively. Since the Company intends to indefinitely reinvest its undistributed earnings of all of its subsidiaries, no taxes were recognized on the temporary differences resulting from foreign currency translation adjustments for the years ended December 31, 2014, 2013, and 2012.

Concentrations of Credit Risk

(r) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, foreign currency forward contracts, and accounts receivable. The Company places its cash equivalents and enters into foreign currency forward contracts with high credit-quality financial institutions and invests its excess cash primarily in short-term investments. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity.

The Company sells products and services to various companies across several industries throughout the world in the ordinary course of business. The Company routinely assesses the financial strength of its customers and maintains allowances for anticipated losses. As of December 31, 2014 and 2013, no individual customer accounted for 10% or more of net accounts receivable and for the years ended December 31, 2014, 2013, and 2012, no individual customer accounted for 10% or more of revenue.

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy

Financial assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands), as of:

		December 31, 2014
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	1,647	$	0	$	1,647
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	6	$	0	$	6
		December 31, 2013
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	5	$	0	$	5
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	46	$	0	$	46

Sale Contracts Consisted in Foreign Currency Forward Contracts Outstanding

All foreign currency forward contracts outstanding as of December 31, 2014 were for durations of twelve months or less and consisted of the following sale contracts (in thousands):

	Notional Value Local Currency			Notional Value U.S. Dollar		Fair Value Gain (Loss) U.S. Dollar
Forward contracts to sell:
Australian Dollar		AUD	985	$	900	$	103
Brazilian Real		BRL	3,184		1,300		157
British Pound		GBP	950		1,600		122
Canadian Dollar		CAD	757		700		49
Chinese Renminbi		CNY	10,664		1,700		(5	)
Euro		EUR	3,534		4,800		515
Indian Rupee		INR	19,347		300		3
Japanese Yen		JPY	131,508		1,300		201
Korean Won		KRW	881,552		850		53
Mexican Peso		MXN	4,001		300		32
Polish Zloty		PLN	4,980		1,600		203
Russian Rouble		RUB	7,323		200		86
Singapore Dollar		SGD	500		400		23
South African Rand		ZAR	6,769		600		32
Swedish Krona		SEK	1,698		250		33
Swiss Franc		CHF	268		300		30
Turkish New Lira		TRY	230		100		5
United Arab Emirates Dirham		AED	738		200		(1	)
				$	17,400	$	1,641

Changes in Fair Value of Foreign Currency Forward Contracts

Changes in the fair value of our foreign currency forward contracts during 2014, 2013, and 2012 were as follows (in thousands):

	Gain (Loss) on Derivative Instruments Recognized in Income
		Years Ended December 31,
	Location	2014			2013			2012
Non-hedging derivative instruments:
Unrealized gain (loss) on foreign currency forward contracts	Other income (expense), net	$	1,682		$	(41	)	$	0
Realized loss on foreign currency forward contracts	Other (expense) income, net	$	(562	)	$	(629	)	$	0

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities:
Net income	$ 5,035	$ 83,332	$ 20,546
Plus: (Income) loss from discontinued operations, net of tax	0	(56,782)	1,927
Income from continuing operations, net of tax	5,035	26,550	22,473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,295	26,399	22,454
Bad debt expense	2,969	2,281	2,361
Unrealized net gain on foreign currency forward contracts	(1,682)	0	0
Non-cash portion of restructuring costs	199	0	0
Deferred taxes	(1,526)	(3,319)	1,967
Release of liabilities for unrecognized tax benefits	0	(14,643)	(472)
Share-based compensation expense	11,786	2,078	0
Excess tax benefits from share-based compensation arrangements	0	(23,580)	0
Changes in operating assets and liabilities:
Accounts receivable	(276)	676	526
Prepaid expenses and other current assets	(2,713)	(565)	305
Deposits and other assets	909	794	175
Accounts payable and accrued expenses	(1,701)	(4,786)	3,763
Accrued compensation and employee benefits	(26,875)	8,176	4,578
Accrued restructuring	2,379	0	0
Deferred revenue and advance payments	731	13,465	(3,967)
Other long-term liabilities	70	(2,928)	(2,000)
Net cash provided by operating activities from continuing operations	14,600	30,598	52,163
Net cash used in operating activities from discontinued operations	0	(664)	(2,279)
Net cash provided by operating activities	14,600	29,934	49,884
Investing activities:
Proceeds from redemption of short-term investments	308,900	87,000	0
Purchases of property and equipment	(12,400)	(11,043)	(29,621)
Purchases of short-term investments	(370,050)	(224,103)	0
Capitalized software development costs	(8,396)	(5,437)	(8,148)
Insurance proceeds	0	0	3,206
(Increase) decrease in restricted cash	(164)	(483)	225
Net cash used in investing activities from continuing operations	(82,110)	(154,066)	(34,338)
Net cash provided by (used in) investing activities from discontinued operations	0	99,136	(1,495)
Net cash used in investing activities	(82,110)	(54,930)	(35,833)
Financing activities:
Proceeds from sale of class A common stock under exercise of employee stock options	856	341	10,250
Excess tax benefits from share-based compensation arrangements	0	23,580	0
Payments on capital lease obligations and other financing arrangements	(2,326)	(2,284)	(491)
Net cash (used in) provided by financing activities from continuing operations	(1,470)	21,637	9,759
Net cash provided by financing activities from discontinued operations	0	0	0
Net cash (used in) provided by financing activities	(1,470)	21,637	9,759
Effect of foreign exchange rate changes on cash and cash equivalents	(4,272)	(863)	949
Net (decrease) increase in cash and cash equivalents	(73,252)	(4,222)	24,759
Cash and cash equivalents (including held-for-sale of $0, $1,350, and $5,300, respectively), beginning of year	220,171	224,393	199,634
Cash and cash equivalents (including held-for-sale of $0, $0, and $1,350, respectively), end of year	146,919	220,171	224,393
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	74	78	31
Cash paid during the year for income taxes, net of tax refunds	5,529	12,941	6,463
Supplemental disclosure of noncash investing and financing activities:
Assets acquired under capital lease obligations and other financing arrangements	$ 70	$ 3,793	$ 2,505

XML

Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Accounts Receivable

Accounts receivable (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Billed and billable	$	187,470		$	190,446
Less: unpaid deferred revenue		(104,425	)		(100,276	)
Accounts receivable, gross		83,045			90,170
Less: allowance for doubtful accounts		(4,412	)		(3,989	)
Account receivable, net	$	78,633		$	86,181

XML

Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2014

Pretax Loss Generated in Addition to Pretax Gain on Sale of Discontinued Operations

The following table summarizes the revenues and pre-tax loss generated by the Angel.com business during the years ended December 31, 2013 and 2012, respectively, in addition to the pre-tax gain on the sale of Angel.com recorded by the Company during the year ended December 31, 2013 (in thousands):

	Years Ended December 31,
	2014		2013		2012
Angel.com revenues	$	0	$	6,320	$	28,882
Angel.com pre-tax loss	$	0	$	986	$	2,976
MicroStrategy pre-tax gain on sale	$	0	$	94,925	$	0

XML

Summary of Major Types of Costs, Cumulative Costs Incurred and Total Cost Expected Associated With Restructuring Activities (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 14,732	$ 0	$ 0
Total Expected Plan Costs	15,000			18,400
Operating expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	14,732
Total Costs Incurred To Date	14,732
Total Expected Plan Costs	15,013
Operating expenses | Severance and related employee benefits
Restructuring Cost and Reserve [Line Items]
Restructuring costs	13,162
Total Costs Incurred To Date	13,162
Total Expected Plan Costs	13,162
Operating expenses | Contract termination costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	1,159
Total Costs Incurred To Date	1,159
Total Expected Plan Costs	1,159
Operating expenses | Other costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	411
Total Costs Incurred To Date	411
Total Expected Plan Costs	$ 692

XML

Employee Benefit Plan - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Contribution Plan Disclosure [Line Items]
Maximum employee contribution to 401k	50.00%
Employer match for first 6% contributed by plan participant	50.00%
Maximum contribution by participant that employer will match at 50%	6.00%
Maximum annual contribution by employer	$ 3,000
Employer contribution to the plan	$ 2,900,000	$ 2,700,000	$ 2,600,000

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 146,919	$ 220,171
Restricted cash	661	583
Short-term investments	198,547	137,198
Accounts receivable, net	78,633	86,181
Prepaid expenses and other current assets	17,669	14,260
Deferred tax assets, net	19,936	21,555
Total current assets	462,365	479,948
Property and equipment, net	77,852	85,445
Capitalized software development costs, net	13,469	10,295
Deposits and other assets	3,951	6,622
Deferred tax assets, net	1,160	3,204
Total assets	558,797	585,514
Current liabilities:
Accounts payable and accrued expenses	35,458	39,946
Accrued compensation and employee benefits	50,588	79,495
Accrued restructuring costs	2,284	0
Deferred revenue and advance payments	108,413	113,656
Deferred tax liabilities	557	422
Total current liabilities	197,300	233,519
Deferred revenue and advance payments	10,818	8,970
Other long-term liabilities	22,679	25,511
Deferred tax liabilities	3,529	7,188
Total liabilities	234,326	275,188
Commitments and Contingencies
Stockholders' Equity
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding	0	0
Additional paid-in capital	506,727	494,086
Treasury stock, at cost; 6,405 shares	(475,184)	(475,184)
Accumulated other comprehensive loss	(4,363)	(831)
Retained earnings	297,273	292,238
Total stockholders' equity	324,471	310,326
Total liabilities and stockholders' equity	558,797	585,514
Class A
Stockholders' Equity
Common stock	16	15
Class B Convertible
Stockholders' Equity
Common stock	$ 2	$ 2

XML

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis by Level within Fair Value Hierarchy (Detail) (Fair Value, Measurements, Recurring, Foreign currency forward contracts, Non-hedging derivative, USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 1,647	$ 5
Accounts payable and accrued expenses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	6	46
Level 1 | Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Level 1 | Accounts payable and accrued expenses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	0	0
Level 2 | Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,647	5
Level 2 | Accounts payable and accrued expenses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	6	46
Level 3 | Prepaid expenses and other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Level 3 | Accounts payable and accrued expenses
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 0	$ 0

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income	$ 5,035	$ 83,332	$ 20,546
Other comprehensive (loss) income, net of applicable taxes:
Foreign currency translation adjustment	(3,585)	684	535
Unrealized gain on short-term investments	53	0	2
Total other comprehensive (loss) income	(3,532)	684	537
Comprehensive income	$ 1,503	$ 84,016	$ 21,083

XML

Benefit from or Provision for Income Taxes from Continuing Operations (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Components Of Income Tax Expense Benefit [Line Items]
Federal, Current	$ (306)	$ (12,404)	$ 533
State, Current	(1)	172	68
Foreign, Current	7,638	5,994	7,269
Income tax expense (benefit), Current, total	7,331	(6,238)	7,870
Federal, Deferred	(2,132)	(3,417)	995
State, Deferred	(1,038)	267	1,310
Foreign, Deferred	1,855	(411)	(441)
Income tax expense (benefit), Deferred, total	(1,315)	(3,561)	1,864
Total (benefit) provision	$ 6,016	$ (9,799)	$ 9,734

XML

Deferred Revenue and Advance Payments (Tables)

12 Months Ended

Dec. 31, 2014

Deferred Revenue and Advance Payments

Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of:

	December 31,
	2014			2013
Current:
Deferred product licenses revenue	$	10,927		$	14,538
Deferred subscription services revenue		16,018			10,923
Deferred product support revenue		168,833			167,771
Deferred other services revenue		10,564			17,056
Gross current deferred revenue and advance payments		206,342			210,288
Less: unpaid deferred revenue		(97,929	)		(96,632	)
Net current deferred revenue and advance payments	$	108,413		$	113,656
Non-current:
Deferred product licenses revenue	$	8,012		$	4,401
Deferred subscription services revenue		750			1,161
Deferred product support revenue		7,505			5,877
Deferred other services revenue		1,047			1,175
Gross non-current deferred revenue and advance payments		17,314			12,614
Less: unpaid deferred revenue		(6,496	)		(3,644	)
Net non-current deferred revenue and advance payments	$	10,818		$	8,970

XML

Share Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended			1 Months Ended	0 Months Ended
	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2014	Feb. 26, 2015	Dec. 31, 2011	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option awards granted		745,000	600,000	0
Options outstanding, shares		1,201,000	600,000	16,000			517,000
Expected dividend yield		0.00%	0.00%
Stock options vested		150,000	0	0
Aggregate fair value of stock option vested		$ 6,300,000
Weighted average grant date fair value of stock option awards		$ 55.84	$ 42.03
Unrecognized share-based compensation expense		46,600,000
Unrecognized compensation expense expected to be recognized		3 years 2 months 12 days
Increase in equity			23,600,000
Tax benefit realized from exercise of stock options		0		0
Cash payment for termination of incentive plan	8,000,000
2013 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense recognized		11,800,000	2,100,000
2013 Plan | Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, stock authorized					1,500,000			600,000
Remaining Share-based compensation, stock authorized for issuance		685,000
Remaining shares of class A common stock authorized for future issuance		290,000
Share-based compensation award expiration period		10 years
Stock option awards, vesting period		4 years
2013 Plan | Class A | Non Employee Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of automatic annual stock option grants authorized to each of the Company's non-employee directors beginning 2015					5,000
2013 Plan | Class A | Executives and Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option awards granted		745,000
Options outstanding, shares		1,200,800
Other Stock Incentive Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense recognized		0	0	0
Amendment No. 1 to the 2013 Plan | Class A | Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option awards granted						200,000
Stock option awards, vesting period						4 years
Unrecognized share-based compensation expense						$ 13,600,000

XML

Basic and Diluted Earnings per Share

12 Months Ended

Dec. 31, 2014

Basic and Diluted Earnings per Share

(13) Basic and Diluted Earnings per Share

Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. Potential shares of common stock, consisting of common stock issuable upon exercise of outstanding employee stock options, are calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data) for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
Numerator:
Income (loss) from:
Continuing operations, net of tax	$	5,035	$	26,550	$	22,473
Discontinued operations, net of tax		0		56,782		(1,927	)
Net income	$	5,035	$	83,332	$	20,546
Denominator:
Weighted average common shares of class A common stock		9,246		9,073		8,768
Weighted average common shares of class B common stock		2,055		2,227		2,227
Total weighted average common stock shares outstanding		11,301		11,300		10,995
Effect of dilutive securities:
Employee stock options		55		1		179
Adjusted weighted average shares		11,356		11,301		11,174
Earnings per share:
Basic earnings (loss) per share
From continuing operations	$	0.45	$	2.35	$	2.05
From discontinued operations		0		5.02		(0.18	)
Basic earnings per share	$	0.45	$	7.37	$	1.87
Diluted earnings (loss) per share:
From continuing operations	$	0.44	$	2.35	$	2.01
From discontinued operations		0		5.02		(0.17	)
Diluted earnings per share	$	0.44	$	7.37	$	1.84

For the year ended December 31, 2014, stock options issued under the 2013 Plan to purchase an aggregate of 735,000 shares of class A common stock were excluded from the diluted earnings per share computation because the effect of their inclusion would have been anti-dilutive. For the year ended December 31, 2013, stock options issued under the 2013 Plan to purchase an aggregate of 600,000 shares of class A common stock were excluded from the diluted earnings per share computation because the effect of their inclusion would have been anti-dilutive. No options to purchase shares of common stock were excluded from the diluted earnings per share computation for the year ended December 31, 2012.

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Future Minimum Rent Payments Under Noncancellable Operating and Capital Leases

The following table shows future minimum rent payments under noncancellable operating and capital leases and agreements with initial terms of greater than one year, net of total future minimum rent payments to be received under noncancellable sublease agreements (in thousands), based on the expected due dates of the various installments as of December 31, 2014:

Year	Operating Leases Amount		Capital Leases and Other Financing Amount
2015	$	24,627	$	1,563
2016		21,150		121
2017		17,861		18
2018		17,270		18
2019		16,263		0
Thereafter		19,929		0
	$	117,100	$	1,720

XML

Employee Benefit Plan

12 Months Ended

Dec. 31, 2014

Employee Benefit Plan

(15) Employee Benefit Plan

The Company sponsors a benefit plan to provide retirement benefits for its employees, known as the MicroStrategy 401(k) Savings Plan (the “Plan”). Participants may make voluntary contributions to the Plan of up to 50% of their annual base pre-tax compensation,

cash bonuses, and commissions not to exceed the federally determined maximum allowable contribution amounts. The Plan permits for discretionary company contributions. Effective April 1, 2008, the Company elected to make a matching contribution to each plan participant in the amount of 50% of the first 6% of a participant’s contributions, up to a maximum of $3,000 per year. A participant vests in the matching contributions in increments based on the participant’s years of employment by the Company, becoming fully vested after completing six years of employment. The Company made contributions to the Plan totaling $2.9 million, $2.7 million, and $2.6 million during the years ended December 31, 2014, 2013, and 2012, respectively.

XML

Assumptions Used in Determining Fair Value of Options Granted (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Fair Value Assumptions Disclosure [ Line Items]
Expected term of options in years	6 years 3 months 18 days	6 years 3 months 18 days
Expected volatility		42.80%
Expected volatility, maximum	42.50%
Expected volatility, minimum	41.50%
Risk-free interest rate		2.50%
Risk-free interest rate, maximum	2.30%
Risk-free interest rate, minimum	2.10%
Expected dividend yield	0.00%	0.00%

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Class A Common Stock	Class B Convertible Common Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Beginning Balance at Dec. 31, 2011	$ 168,978	$ 15	$ 2	$ 457,837	$ (475,184)	$ (2,052)	$ 188,360
Beginning Balance (in shares) at Dec. 31, 2011		14,810	2,378		(6,405)
Net income (loss)	20,546	0	0	0	0	0	20,546
Other comprehensive (loss) income	537	0	0	0	0	537	0
Conversion of class B to class A common stock	0	0	0	0	0	0	0
Conversion of class B to class A common stock (in shares)		151	(151)		0
Issuance of class A common stock under stock option plans	10,250	0	0	10,250	0	0	0
Issuance of class A common stock under stock option plans (in shares)	501	501	0		0
Ending Balance at Dec. 31, 2012	200,311	15	2	468,087	(475,184)	(1,515)	208,906
Ending Balance (in shares) at Dec. 31, 2012		15,462	2,227		(6,405)
Net income (loss)	83,332	0	0	0	0	0	83,332
Other comprehensive (loss) income	684	0	0	0	0	684	0
Issuance of class A common stock under stock option plans	341	0	0	341	0	0	0
Issuance of class A common stock under stock option plans (in shares)	16	16	0		0
Tax effect of stock option exercises	23,580	0	0	23,580	0	0	0
Share-based compensation expense	2,078	0	0	2,078	0	0	0
Ending Balance at Dec. 31, 2013	310,326	15	2	494,086	(475,184)	(831)	292,238
Ending Balance (in shares) at Dec. 31, 2013		15,478	2,227		(6,405)
Net income (loss)	5,035	0	0	0	0	0	5,035
Other comprehensive (loss) income	(3,532)	0	0	0	0	(3,532)	0
Conversion of class B to class A common stock	0	0	0	0	0	0	0
Conversion of class B to class A common stock (in shares)		172	(172)		0
Issuance of class A common stock under stock option plans	856	1	0	855	0	0	0
Issuance of class A common stock under stock option plans (in shares)	9	10	0		0
Share-based compensation expense	11,786	0	0	11,786	0	0	0
Ending Balance at Dec. 31, 2014	$ 324,471	$ 16	$ 2	$ 506,727	$ (475,184)	$ (4,363)	$ 297,273
Ending Balance (in shares) at Dec. 31, 2014		15,660	2,055		(6,405)

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Treasury stock, shares	6,405,000	6,405,000
Class A
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	330,000,000	330,000,000
Common stock, shares issued	15,660,000	15,478,000
Common stock, shares outstanding	9,255,000	9,073,000
Class B Convertible
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	165,000,000	165,000,000
Common stock, shares issued	2,055,000	2,227,000
Common stock, shares outstanding	2,055,000	2,227,000

XML

Restructuring

12 Months Ended

Dec. 31, 2014

Restructuring

(8) Restructuring

In September 2014, the Company committed to a restructuring plan (the “2014 Restructuring Plan”) to streamline its workforce and spending to better align its cost structure with its business strategy, including reducing the Company’s workforce by 777 employees, comprised of 217 employees in North America, 400 employees in Asia Pacific, 141 employees in Europe, the Middle East, and Africa, and 19 employees in Latin America. As of December 31, 2014, the Company has implemented substantially all of the 2014 Restructuring Plan. The Company does not expect future costs associated with implementing the remainder of the 2014 Restructuring Plan, consisting primarily of the liquidation of certain foreign subsidiaries, to be material.

Costs associated with the 2014 Restructuring Plan include employee severance and related benefit costs (including outplacement services and continuing health insurance coverage), contract termination costs (including operating lease terminations for certain office space at the Company’s corporate headquarters and other international locations), and other charges (including external consulting and advisory fees related to implementing the restructuring plan). The following table summarizes the major types of costs associated with the 2014 Restructuring Plan (in thousands) for the year ended December 31, 2014, total costs incurred through December 31, 2014 and total costs expected to be incurred:

	Year Ended December 31, 2014		Total Costs Incurred To Date		Total Expected Plan Costs
Severance and related employee benefits	$	13,162	$	13,162	$	13,162
Contract termination costs		1,159		1,159		1,159
Other costs		411		411		692
Total restructuring costs	$	14,732	$	14,732	$	15,013

In the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, the Company estimated that total expected costs of the 2014 Restructuring Plan would be $18.4 million. As of December 31, 2014, the Company has revised its total expected costs of the 2014 Restructuring Plan to be $15.0 million. The $3.4 million decrease in total expected plan costs is primarily due to a $3.1 million decrease in total expected severance and related employee benefit costs, which was primarily due to a change in business strategy and other developments.

The total restructuring costs above are reported as “Restructuring costs” under “Operating expenses” in the Company’s Consolidated Statements of Operations.

Restructuring-related liabilities are reported as “Accrued restructuring costs” in the Company’s Consolidated Balance Sheets. The following table presents a summary of changes in the restructuring-related liabilities (in thousands) for the year ended December 31, 2014:

	Balance as of January 1, 2014		Costs Incurred		Cash Payments			Non-cash Settlements			Adjustments and Other			Balance as of December 31, 2014
Current:
Severance and related employee benefits	$	0	$	13,162	$	(10,746	)	$	0		$	(201	)	$	2,215
Contract termination costs		0		1,159		(960	)		(441	)		242			0
Other costs		0		411		(302	)		0			(40	)		69
Total current accrued restructuring costs	$	0	$	14,732	$	(12,008	)	$	(441	)	$	1		$	2,284

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Feb. 20, 2015
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	MSTR
Entity Registrant Name	MICROSTRATEGY INC
Entity Central Index Key	0001050446
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 1,305,700,000
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding			9,290,853
Class B Convertible
Document Information [Line Items]
Entity Common Stock, Shares Outstanding			2,035,184

XML

Deferred Revenue and Advance Payments

12 Months Ended

Dec. 31, 2014

Deferred Revenue and Advance Payments

(9) Deferred Revenue and Advance Payments

Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of:

	December 31,
	2014			2013
Current:
Deferred product licenses revenue	$	10,927		$	14,538
Deferred subscription services revenue		16,018			10,923
Deferred product support revenue		168,833			167,771
Deferred other services revenue		10,564			17,056
Gross current deferred revenue and advance payments		206,342			210,288
Less: unpaid deferred revenue		(97,929	)		(96,632	)
Net current deferred revenue and advance payments	$	108,413		$	113,656
Non-current:
Deferred product licenses revenue	$	8,012		$	4,401
Deferred subscription services revenue		750			1,161
Deferred product support revenue		7,505			5,877
Deferred other services revenue		1,047			1,175
Gross non-current deferred revenue and advance payments		17,314			12,614
Less: unpaid deferred revenue		(6,496	)		(3,644	)
Net non-current deferred revenue and advance payments	$	10,818		$	8,970

The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments.

XML

Valuation And Qualifying Accounts (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Allowance for Doubtful Accounts
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at the beginning of the period	$ 3,989		$ 4,366		$ 5,628
Additions	2,969	[1]	2,281	[1]	2,361	[1]
Deduction	(2,546)		(2,658)		(3,623)
Balance at the end of the period	4,412		3,989		4,366
Valuation Allowance of Deferred Tax Assets
Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at the beginning of the period	77		231		736
Additions	2,234	[1]	77	[1]	7	[1]
Deduction	0		(231)		(512)
Balance at the end of the period	$ 2,311		$ 77		$ 231

[1] Reductions in/charges to revenues and expenses.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Revenues:
Product licenses	$ 125,952		$ 147,879		$ 147,344
Subscription services	22,322		12,246		3,118
Total product licenses and subscription services	148,274		160,125		150,462
Product support	295,703		277,509		262,048
Other services	135,853		138,254		153,214
Total revenues	579,830		575,888		565,724
Cost of revenues:
Product licenses	6,957		6,606		5,819
Subscription services	17,560		15,636		6,621
Total product licenses and subscription services	24,517		22,242		12,440
Product support	14,241		16,617		15,532
Other services	96,452		99,710		113,104
Total cost of revenues	135,210		138,569		141,076
Gross profit	444,620		437,319		424,648
Operating expenses:
Sales and marketing	225,086		215,089		209,975
Research and development	103,355		98,056		88,190
General and administrative	96,343		104,734		93,384
Restructuring costs	14,732		0		0
Total operating expenses	439,516		417,879		391,549
Income from continuing operations	5,104		19,440		33,099
Interest income, net	162		497		143
Other income (expense), net	5,785		(3,186)		(1,035)
Income from continuing operations before income taxes	11,051		16,751		32,207
Provision for (Benefit from) income taxes	6,016		(9,799)		9,734
Income from continuing operations, net of tax	5,035		26,550		22,473
Discontinued operations:
Gain from sale of discontinued operations, net of tax provision	0		57,377		0
Loss from discontinued operations, net of tax benefit	0		(595)		(1,927)
Discontinued operations, net of tax	0		56,782		(1,927)
Net income	$ 5,035		$ 83,332		$ 20,546
Basic earnings (loss) per share
From continuing operations	$ 0.45		$ 2.35		$ 2.05
From discontinued operations	$ 0.00		$ 5.02		$ (0.18)
Basic earnings per share	$ 0.45	[1],[2]	$ 7.37	[1],[2]	$ 1.87	[2]
Weighted average shares outstanding used in computing basic earnings (loss) per share	11,301		11,300		10,995
Diluted earnings (loss) per share
From continuing operations	$ 0.44		$ 2.35		$ 2.01
From discontinued operations	$ 0.00		$ 5.02		$ (0.17)
Diluted earnings per share	$ 0.44	[1],[2]	$ 7.37	[1],[2]	$ 1.84	[2]
Weighted average shares outstanding used in computing diluted earnings (loss) per share	11,356		11,301		11,174

[1] The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

[2] Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

XML

Recent Accounting Standards

12 Months Ended

Dec. 31, 2014

Recent Accounting Standards

(3) Recent Accounting Standards

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740) (“ASU 2013-11”), which requires the financial statement presentation of an unrecognized tax benefit in a particular jurisdiction, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the NOL or carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. The Company adopted ASU 2013-11 on January 1, 2014. As a result, liabilities for unrecognized tax benefits of $1.3 million were netted against deferred tax assets, as of December 31, 2014. The adoption of this guidance did not have a material effect on the Company’s consolidated results of operations or cash flows.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance. The standard’s core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (1) the entity’s contracts with customers, (2) the significant judgments, and changes in judgments, made in applying the guidance to those contracts, and (3) any assets recognized from the costs to obtain or fulfill a contract with a customer. ASU 2014-09 is effective for interim and annual periods beginning January 1, 2017. Early adoption is not permitted. The standard allows entities to apply the standard retrospectively to each prior reporting period presented (“full retrospective adoption”) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (“modified retrospective adoption”). The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations, and cash flows.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Summary of Significant Accounting Policies

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

On March 15, 2013, the Company completed the sale of its wholly owned subsidiary, Angel.com Incorporated (“Angel.com”). In the Company’s Consolidated Statement of Operations, the Company classified operations of the Angel.com business as Loss from Discontinued Operations, net of tax, because it does not have any continuing involvement with or cash flows from this business following its divestiture. Refer to Note 16, Discontinued Operations, to the Consolidated Financial Statements for further information.

Certain amounts in the prior years’ Consolidated Financial Statements and Notes to Consolidated Financial Statements have also been reclassified to conform to current year presentation. Revenues and cost of revenues have been reclassified in the Consolidated Statements of Operations to reflect the separate components of total product licenses and subscription services.

(b) Use of Estimates

The preparation of the Consolidated Financial Statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, investments, derivative financial instruments, software development costs, fixed assets, intangible assets, variable compensation, restructuring costs, share-based compensation, income taxes, including the carrying value of deferred tax assets, and litigation and contingencies, including liabilities that the Company deems not probable of assertion. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities, and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

(c) Fair Value Measurements

The Company measures certain assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that is expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The three levels of the fair value hierarchy are described below:

Level 1:	Quoted (unadjusted) prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Inputs other than quoted prices that are either directly or indirectly observable, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:	Inputs that are generally unobservable, supported by little or no market activity, and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation techniques used by the Company when measuring fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company also estimates the fair value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, accrued compensation and employee benefits, and accrued restructuring costs. The Company considers the carrying value of these instruments in the financial statements to approximate fair value due to their short maturities.

(d) Cash and Cash Equivalents and Restricted Cash

Cash equivalents include bank deposits, money market instruments, U.S. Treasury bills, and equivalent funds. The Company generally considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash consists of cash balances restricted in use by contractual obligations with third parties.

(e) Short-term Investments

The Company periodically invests a portion of its excess cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. The Company determines the appropriate classification of its short-term investments at the time of purchase.

Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. Therefore, these short-term investments are classified and accounted for as held-to-maturity and are reported at amortized cost. Each reporting period, the Company determines whether a decline in fair value below the amortized cost for each individual security is other-than-temporary and if it would be required to sell the security before recovery of its amortized cost basis. If an other-than-temporary impairment has occurred, the amount representing the credit loss is recorded in “Other income (expense), net,” and the amount related to all other factors is recognized in “Accumulated other comprehensive income (loss).” Upon recognition of an other-than-temporary impairment, the previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment.

(f) Derivative Financial Instruments

The Company is exposed to certain risks related to its ongoing business operations, including the effect of changes in foreign exchange rates on the Company’s monetary assets and liabilities denominated in foreign currency. The Company uses foreign currency forward contracts as part of its strategy to manage these risks, but does not hold or issue derivative instruments for trading purposes or speculation. We execute these instruments with financial institutions that hold an investment grade credit rating. These foreign currency forward contracts do not meet the requirements for hedge accounting and are recorded on the balance sheet as either an asset or liability measured at their fair value as of the reporting date. Changes in the fair value of derivative instruments, as measured using the three-level hierarchy described above, are recognized in “Other income (expense), net” in the Company’s Consolidated Statements of Operations.

(g) Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows: three years for computer equipment and purchased software, five years for office equipment and automobiles, and ten years for office furniture and owned corporate aircraft, which has an estimated salvage value of 70%. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the term of the lease, whichever is shorter. The Company periodically evaluates the appropriateness of the estimated useful lives and salvage value of all property and equipment. Any change in the estimated useful life or salvage value is treated as a change in estimate and accounted for prospectively in the period of change.

Expenditures for maintenance and repairs are charged to expense as incurred, except for certain costs related to the aircraft. The costs of normal, recurring, or periodic repairs and maintenance activities related to the aircraft are expensed as incurred. The cost of planned major maintenance activities (“PMMA”) may be treated differently because those activities may involve the acquisition of additional aircraft components or the replacement of existing aircraft components. PMMA are performed periodically based on passage of time and the use of the aircraft. The classification of a maintenance activity as part of PMMA requires judgment and can affect the amount of expense recognized in any particular period. The cost of each PMMA is expected to be capitalized and amortized over the period until the next scheduled PMMA. The costs of the repairs associated with the Company’s owned aircraft, which was returned to service in the second quarter of 2012, did not constitute PMMA. There have been no PMMA to date.

When assets are retired or sold, the capitalized cost and related accumulated depreciation are removed from the property and equipment accounts and any resulting gain or loss is recognized in the results of operations.

Eligible internal-use software development costs are capitalized subsequent to the completion of the preliminary project stage. Such costs include external direct material and service costs, employee payroll, and payroll-related costs. After all substantial testing and deployment is completed and the software is ready for its intended use, capitalization ceases and internal-use software development costs are amortized using the straight-line method over the estimated useful life of the software, generally three years.

The Company reviews long-lived assets, including intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset.

(h) Software Development Costs

Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. Capitalized software development costs include direct labor costs and fringe benefit costs attributed to programmers, software engineers, and quality control and field certifiers working on products after they reach technological feasibility, but before they are generally available to customers for sale. Technological feasibility is considered to be achieved when a product design and working model of the software product have been completed. Capitalized software development costs are typically amortized over the estimated product life of three years, on a straight-line basis.

Capitalized software development costs, net of accumulated amortization, were $13.5 million and $10.3 million as of December 31, 2014 and 2013, respectively. Amortization expense related to software development costs was $5.2 million, $5.5 million, and $4.8 million for the years ended December 31, 2014, 2013, and 2012, respectively, and is included in cost of product licenses and subscription services revenues. During the years ended December 31, 2014, 2013, and 2012, the Company capitalized software development costs of $8.4 million, $5.4 million, and $8.1 million, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs.

(i) Restructuring Costs

In 2014, the Company committed to, and substantially implemented, a restructuring plan. In connection with this restructuring plan, the Company has incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. See Note 8, Restructuring, to the Consolidated Financial Statements for further information on the Company’s current restructuring activities.

Employee severance and related benefit costs may include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive severance or benefit plan relating to the involuntary termination of employees previously exists, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in

which the liability is incurred, which is generally when management has approved and communicated to the terminated employees a detailed plan of termination. Severance costs pursuant to ongoing-benefit arrangements, including statutorily mandated termination benefits or termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Severance costs are reasonably estimated based on the mix of staffing composition and geography. Where termination benefits are offered for a short period of time in exchange for voluntary termination, severance costs are recognized when the employee has irrevocably accepted the offer.

Contract termination costs may include costs to exit office space under existing operating leases and consist of both costs to terminate the contract before the end of the term and costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company. Costs to terminate the contract before the term has ended are recognized at fair value when the Company terminates the contract in accordance with the contract terms. Costs that will continue to be incurred under the contract for the remaining term without economic benefit to the Company (for example, remaining lease rental payments and executory costs) are recognized at fair value in the period in which the Company ceases using the right conveyed by the contract (for example, when the leased space ceases to be used). In the case of operating leases, these continuing costs are also adjusted for the effects of any prepaid or deferred items previously recognized under the lease and reduced by estimated sublease rental income.

Other related costs generally include employee relocation costs, office moving costs, and external consulting and advisory fees related to restructuring activities. Such costs are recognized at fair value in the period in which the costs are incurred.

At each reporting date, the Company evaluates its accrued restructuring costs to determine if the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans are reflected in the Company’s Consolidated Statements of Operations.

(j) Loss Contingencies and Legal Costs

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve during the administration and litigation process and additional information becomes known, the Company reassesses its estimates related to loss contingencies. Legal costs are expensed in the period in which the costs are incurred.

(k) Deferred Revenue and Advance Payments

Deferred revenue and advance payments related to product support, subscription services, and other services result from payments received prior to the performance of services for technical support, subscription, consulting, and education. Deferred revenue and advance payments related to product licenses result primarily from multiple-element arrangements that include future deliverables. Deferred revenue comprises deferred product licenses and subscription services, deferred product support, or other services revenue based on the objective fair value of the multiple elements of the arrangement, except for software licenses for which the Company does not have an objective measure of fair value. The Company offsets its accounts receivable and deferred revenue for any billed and unpaid items included in deferred revenue and advance payments.

As of December 31, 2014, the Company has entered into certain additional agreements that include future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2019 totaling approximately $136.4 million. As of December 31, 2013, the future minimum commitments by the Company’s customers to purchase products, subscription services, product support, or other services through 2018 totaled approximately $119.7 million. These future commitments are not included in deferred revenue balances. Revenue relating to such agreements will be recognized during the period in which all revenue recognition criteria are met. The timing and ultimate recognition of any revenue from such customer purchase commitments depend on the customers’ meeting their future purchase commitments and the Company’s ability to meet its associated performance obligations related to those purchase commitments.

(l) Revenue Recognition

The Company recognizes revenue from sales of software licenses to end users upon:

1) persuasive evidence of an arrangement, as provided by agreements, contracts, purchase orders, or other arrangements, generally executed by both parties;

2) existence of a fixed or determinable fee;

3) delivery of the software; and

4) determination that collection is reasonably assured.

When the fees for software upgrades and enhancements, technical support, consulting, and education are bundled with the license fee, they are unbundled for revenue recognition purposes, using vendor specific objective evidence (“VSOE”) of fair value of the elements.

Product support or post-contract support (“PCS”) revenue is derived from providing technical software support and software updates and upgrades to customers. PCS revenue is recognized ratably over the term of the contract, which in most cases is one year. The Company’s VSOE for PCS, which includes updates, upgrades, and enhancements, is determined based upon the optional stated renewal fee for PCS in the contract, which is the price the customer is required to pay when PCS is renewed. Additionally, the optional stated renewal fee used to establish VSOE for PCS in a software transaction must be above the Company’s minimum substantive VSOE rate for PCS. If a stated renewal rate is considered non-substantive, VSOE of PCS has not been established and the Company recognizes all revenue under the arrangement ratably over the PCS period. A minimum substantive VSOE rate is determined based upon an analysis of historical sales of PCS. For a renewal rate to be non-substantive, the Company believes it must be significantly lower than its minimum VSOE rate. We consider a 10% variance below our minimum VSOE rate to be significant. It is rare for the Company to have an arrangement that includes a renewal rate that is below the minimum VSOE rate.

Revenue from consulting, education, and subscription services is recognized as the services are performed. The Company’s VSOE for services other than PCS is determined based upon an analysis of its historical sales of each element when sold separately from software.

For new offerings of services other than PCS or service offerings that have not had a sufficient history of sales activity, the Company initially establishes VSOE based on the list price as determined by management with the relevant authority. Each service offering has a single list price in each country where sold.

If VSOE exists for all undelivered elements and there is no such evidence of fair value established for delivered elements, the arrangement fee is first allocated to the elements where evidence of fair value has been established and the residual amount is allocated to the delivered elements. If evidence of fair value for any undelivered element of an arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value exists for undelivered elements or until all elements of the arrangement are delivered, subject to certain limited exceptions.

If an arrangement includes acceptance criteria, revenue is not recognized until the Company can objectively demonstrate that the software or service can meet the acceptance criteria, or the acceptance period lapses, whichever occurs earlier. If a software license arrangement obligates the Company to deliver specified future products or upgrades, revenue is recognized when the specified future product or upgrades are delivered, or when the obligation to deliver specified future products expires, whichever occurs earlier. If a software license arrangement obligates the Company to deliver unspecified future products, then revenue is recognized on a subscription basis, ratably over the term of the contract.

License revenue derived from sales to resellers or original equipment manufacturers (“OEMs”) who purchase the Company’s products for resale is recognized upon sufficient evidence that the products have been sold to the end user, provided all other revenue recognition criteria have been met. The Company’s standard software license and reseller agreements do not include any return rights other than the right to return non-conforming products for repair or replacement under standard product warranties. During the last three fiscal years, the Company has not experienced any product returns related to warranty claims.

The Company generally offers either commercial discounts or referral fees to its channel partners, depending on the nature of services performed. Revenue recognized from transactions with channel partners involved in resale or distribution activities is recorded net of any commercial discounts provided to them. Referral fees paid to channel partners not involved in resale or distribution activities are expensed as cost of revenues and, during the last three fiscal years, were not significant.

The Company’s standard software license agreements do not include any price protection or similar rights. The Company offers price protection to certain government agencies as required by applicable laws and regulations. For example, transactions under the General Services Administration Federal Supply Schedule contract must comply with the Price Reductions clause. In addition, certain government agencies have the right to cancel contracts for “convenience.” During the last three fiscal years, amounts related to price protection or similar rights clauses and contracts cancelled for convenience were not significant.

Amounts collected prior to satisfying the above revenue recognition criteria are included in net deferred revenue and advance payments in the accompanying Consolidated Balance Sheets.

Software revenue recognition requires judgment, including determinations about whether collectibility is reasonably assured, the fee is fixed and determinable, whether a software arrangement includes multiple elements, and if so, whether VSOE exists for those elements. Judgment is also required to assess whether future releases of certain software represent new products or upgrades and enhancements to existing products.

The Company also generates subscription services revenues primarily from its cloud services offerings. Subscription services revenues include subscription fees from customers for access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities, database services, and data integration services. Our standard arrangements with customers generally do not provide the customer with the right to take possession of the software supporting the cloud-based application service at any time. As such, these arrangements are considered service contracts and revenue is recognized ratably over the service period of the contract, following completion of the set-up service. Any related set-up service fees are recognized ratably over the longer of the contract period or the estimated average life of the customer relationship.

The Company’s subscription services are generally offered as stand-alone arrangements or as part of arrangements that include professional services. If deliverables in a multiple-element arrangement have stand-alone value upon delivery, the Company accounts for each such deliverable separately. The Company has concluded that its subscription services and its professional services each have stand-alone value. When the Company enters into multiple-element arrangements that include subscription services and professional services, the total arrangement consideration is allocated to each of the deliverables based on the relative selling price hierarchy. The Company determines the relative selling price for each deliverable using VSOE of selling price, if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its services offerings as compared to other companies and the lack of availability of third-party pricing information. For professional services, the Company has established VSOE because a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. For subscription services, the Company has not established VSOE because, among other factors, the offering is relatively new and our pricing model continues to evolve. Accordingly, the Company uses BESP to determine the relative selling price of its subscription services.

The Company determines BESP by reviewing historical transactions and by considering its pricing models and objectives that take into account factors such as gross margin, the size and volume of the transactions, perceived pricing sensitivity, and growth strategies. The determination of BESP is made through consultation with, and approval by, the Company’s management team, taking into consideration the go-to-market strategy. As the Company’s pricing and go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to the determination of VSOE and BESP.

Amounts, upon invoicing, are recorded in accounts receivable and either gross deferred revenue or revenue, depending on whether the applicable revenue recognition criteria have been met.

During 2014, 2013, and 2012, the Company did not generate significant revenues from MicroStrategy Usher.

(m) Advertising Costs

Advertising costs include production costs, which are expensed the first time the advertisement takes place, and media placement costs, which are expensed in the month the advertising appears. Total advertising costs were $3.0 million, $1.9 million, and $4.1 million for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, the Company had no prepaid advertising costs.

(n) Share-based Compensation

In September 2013, the Board of Directors approved the Company’s 2013 Stock Incentive Plan, under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock. In April 2014, the Company’s stockholders approved the 2013 Stock Incentive Plan at the Company’s annual meeting. In April 2014, following the Company’s annual meeting, the Board of Directors authorized, subject to stockholder approval, an amendment to the 2013 Plan to increase the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Plan from 600,000 to 1,500,000 shares (“Amendment No. 1”). Also in April 2014, the Compensation Committee of the Board of Directors (the “Compensation Committee”) authorized, subject to stockholder approval, an additional amendment to the 2013 Plan to provide for automatic annual stock option grants to each of the Company’s non-employee directors with respect to 5,000 shares of the Company’s class A common stock, beginning in 2015 (“Amendment No. 2”). The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The share-based compensation expense is based on the fair value of such awards on the date of grant, as estimated using the Black-Scholes option pricing model. See Note 12, Share-based Compensation, to the Consolidated Financial Statements for further information regarding the Company’s 2013 Stock Incentive Plan, related share-based compensation expense, and assumptions used in the Black-Scholes option pricing model.

(o) Income Taxes

The Company is subject to federal, state, and local income taxes in the United States and many foreign countries. Deferred income taxes are provided based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. For uncertain income tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. The Company recognizes accrued interest related to unrecognized tax benefits as part of income tax expense. Penalties, if incurred, are recognized as a component of income tax expense.

The Company provides a valuation allowance to reduce deferred tax assets to their estimated realizable value, when appropriate.

(p) Basic and Diluted Earnings Per Share

Basic earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings per share calculation when dilutive. Diluted earnings per share is determined by dividing the net income attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding employee stock options and warrants are computed using the treasury stock method. Potential common shares also consist of common stock issuable upon the conversion of preferred stock.

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A and class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of December 31, 2014 and 2013, there were no shares of preferred stock outstanding.

(q) Foreign Currency Translation

The functional currency of the Company’s international operations is the local currency. Accordingly, all assets and liabilities of international subsidiaries are translated using exchange rates in effect at the end of the period and revenue and expenses are translated using weighted average exchange rates for the period. The related translation adjustments are reported in accumulated other comprehensive income (loss) in stockholders’ equity. Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in the results of operations.

Transaction gains and losses arising from transactions denominated in foreign currencies resulted in net gains of $5.3 million in 2014, and net losses of $3.3 million, and $2.0 million in 2013 and 2012, respectively, and are included in “Other income (expense), net” in the accompanying Consolidated Statements of Operations.

As of December 31, 2014, 2013, and 2012, the cumulative foreign currency translation balances were $(4.4) million, $(0.8) million, and $(1.5) million, respectively. Since the Company intends to indefinitely reinvest its undistributed earnings of all of its subsidiaries, no taxes were recognized on the temporary differences resulting from foreign currency translation adjustments for the years ended December 31, 2014, 2013, and 2012.

(r) Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, foreign currency forward contracts, and accounts receivable. The Company places its cash equivalents and enters into foreign currency forward contracts with high credit-quality financial institutions and invests its excess cash primarily in short-term investments. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity.

The Company sells products and services to various companies across several industries throughout the world in the ordinary course of business. The Company routinely assesses the financial strength of its customers and maintains allowances for anticipated losses. As of December 31, 2014 and 2013, no individual customer accounted for 10% or more of net accounts receivable and for the years ended December 31, 2014, 2013, and 2012, no individual customer accounted for 10% or more of revenue.

XML

Treasury Stock

12 Months Ended

Dec. 31, 2014

Treasury Stock

(14) Treasury Stock

The Board of Directors has authorized the Company’s repurchase of up to an aggregate of $800.0 million of its class A common stock from time to time on the open market through April 29, 2018 (the “2005 Share Repurchase Program”), although the program may be suspended or discontinued by the Company at any time. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The 2005 Share Repurchase Program may be funded using the Company’s working capital, as well as proceeds from any other funding arrangements that the Company may enter into in the future. As of December 31, 2014, the Company had repurchased an aggregate of 3,826,947 shares of its class A common stock at an average price per share of $90.23 and an aggregate cost of $345.3 million pursuant to the 2005 Share Repurchase Program. The average price per share and aggregate cost amounts disclosed above include broker commissions. During the years ended December 31, 2014, 2013, and 2012, the Company did not repurchase any shares of its class A common stock pursuant to the 2005 Share Repurchase Program.

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies

(10) Commitments and Contingencies

(a) Commitments

From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company has agreed to indemnify customers and partners for third-party claims arising from intellectual property infringement. The conditions of these obligations vary. Thus, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its balance sheets as of December 31, 2014 or December 31, 2013.

The Company leases office space and computer and other equipment under operating lease agreements. It also leases certain computer and other equipment under capital lease agreements and licenses certain software under other financing arrangements. Under the lease agreements, in addition to base rent, the Company is generally responsible for certain taxes, utilities and maintenance costs, and other fees; and several leases include options for renewal or purchase. As of December 31, 2014, the Company was leasing approximately 233,000 square feet of office space at a location in Northern Virginia that began serving as its corporate headquarters in October 2010, including approximately 19,000 square feet of office space for which it gave written notice in August 2014 of its intent to terminate, effective February 2015, as part of the 2014 Restructuring Plan. The Company never used the terminated lease space and it remained vacant until it was terminated in early February 2015. The term of the lease expires in December 2020. At December 31, 2014 and December 31, 2013, deferred rent of $18.9 million and $20.1 million, respectively, is included in other long-term liabilities and $3.0 million and $2.8 million, respectively, is included in current accrued expenses.

The following table shows future minimum rent payments under noncancellable operating and capital leases and agreements with initial terms of greater than one year, net of total future minimum rent payments to be received under noncancellable sublease agreements (in thousands), based on the expected due dates of the various installments as of December 31, 2014:

Year	Operating Leases Amount		Capital Leases and Other Financing Amount
2015	$	24,627	$	1,563
2016		21,150		121
2017		17,861		18
2018		17,270		18
2019		16,263		0
Thereafter		19,929		0
	$	117,100	$	1,720

Total rental expenses under operating lease agreements for the years ended December 31, 2014, 2013, and 2012 were $30.4 million, $28.3 million, and $26.4 million, respectively.

(b) Contingencies

In December 2011, DataTern, Inc. (“DataTern”) filed a complaint for patent infringement against the Company in the United States District Court for the District of Massachusetts. The complaint alleged that the Company infringes U.S. Patent No. 6,101,502 (the “’502 Patent”), allegedly owned by DataTern, by making, selling, or offering for sale several of the Company’s products and services including MicroStrategy 9™, MicroStrategy Intelligence Server, MicroStrategy Business Intelligence Platform™, MicroStrategy Cloud Personal, and other MicroStrategy applications for creating or using data mining, dashboards, business analytics, data storage and warehousing, and Web hosting support. The complaint accused the Company of willful infringement and sought an unspecified amount of damages, an award of attorneys’ fees, and preliminary and permanent injunctive relief. In October 2012, the case was stayed pending final judgment in a separate action involving the ’502 Patent filed by DataTern in the Southern District of New York, in which MicroStrategy was not a party. Final judgment in that separate action was entered against DataTern in December 2012 (the “New York Judgment”). DataTern appealed the New York Judgment to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). In February 2013, MicroStrategy and DataTern filed motions for summary judgment of non-infringement in light of the New York Judgment and the United States District Court for the District of Massachusetts entered summary judgment against DataTern. In March 2013, DataTern filed a notice of appeal with the Federal Circuit. In January 2014, the Federal Circuit stayed DataTern’s appeal pending the disposition of DataTern’s appeal of the New York Judgment. In May 2014, the Federal Circuit affirmed the New York Judgment in part and reversed it in part. After petitions for rehearing were denied regarding the New York Judgment, the Company and DataTern agreed that the stay in their appeal in the Federal Circuit should be lifted. The Federal Circuit held oral arguments in MicroStrategy’s appeal in November 2014. On December 19, 2014, the Federal Circuit issued an opinion vacating the District of Massachusetts’ summary judgment, stating that the claim construction on which the summary judgment was based was incorrect. On January 26, 2015, the Federal Circuit ordered that the case be remanded for further proceedings, and in February 2015, the Company filed motions for summary judgment in the district court on grounds of non-infringement and invalidity. The Company has received indemnification requests from certain of its resellers and customers who were sued by DataTern in the United States District Court for the District of Massachusetts in lawsuits alleging infringement of the ’502 Patent. The outcome of these matters is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to these matters at this time. Accordingly, no estimated liability for these matters has been accrued in the accompanying Consolidated Financial Statements.

In December 2011, Vasudevan Software, Inc. (“Vasudevan”) filed a complaint for patent infringement against the Company in the United States District Court for the Northern District of California. The complaint alleged that the Company’s sale of MicroStrategy 9 and other MicroStrategy products infringes four patents allegedly owned by Vasudevan known as U.S. Patent Nos. 6,877,006, 7,167,864, 7,720,861, and 8,082,268, all entitled “Multimedia Inspection Database System for Dynamic Runtime Evaluation.” The complaint accused the Company of infringement, inducing others to infringe, and acts of contributory infringement with respect to the patents at issue and sought a permanent injunction, an unspecified amount of damages, and other relief as may be granted by the

court. In October 2013, following a series of motions by the parties, the court dismissed the case, entered judgment of non-infringement based on a stipulation of non-infringement filed by Vasudevan, and also granted MicroStrategy’s motion for summary judgment of invalidity, finding the four patents in the suit invalid. In November 2013, Vasudevan filed its Notice of Appeal with the United States Court of Appeals for the Federal Circuit. Also in November 2013, Vasudevan filed a motion that was unopposed by the Company to consolidate the appeal with Vasudevan’s appeal of a related matter against TIBCO Software, which had also been dismissed by the District Court on summary judgment. In February 2014, in response to Vasudevan’s motion, the Court entered an order that the cases be treated as companion cases. On September 12, 2014, the parties presented oral arguments before the Federal Circuit. The parties are currently awaiting the Federal Circuit’s final decision in the case. The outcome of this matter on appeal is not presently determinable, and the Company cannot make a reasonable estimate of the possible loss or range of loss with respect to this matter at this time. Accordingly, no estimated liability for this matter has been accrued in the accompanying Consolidated Financial Statements.

The Company is also involved in various other legal proceedings arising in the normal course of business. Although the outcomes of these other legal proceedings are inherently difficult to predict, management does not expect the resolution of these other legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flows.

The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion.

XML

Accounts Receivable

12 Months Ended

Dec. 31, 2014

Accounts Receivable

(6) Accounts Receivable

Accounts receivable (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Billed and billable	$	187,470		$	190,446
Less: unpaid deferred revenue		(104,425	)		(100,276	)
Accounts receivable, gross		83,045			90,170
Less: allowance for doubtful accounts		(4,412	)		(3,989	)
Account receivable, net	$	78,633		$	86,181

The Company offsets its accounts receivable and deferred revenue for any unpaid items included in deferred revenue and advance payments.

The Company maintains an allowance for doubtful accounts which represents its best estimate of probable losses inherent in the accounts receivable balances. The Company evaluates specific accounts when it becomes aware that a customer may not be able to meet its financial obligations due to deterioration of its liquidity or financial viability, credit ratings, or bankruptcy. In addition, the Company periodically adjusts this allowance based upon its review and assessment of the aging of receivables.

XML

Reconciliation of Effective Income Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule Of Effective Tax Rates Line Items
Income tax expense at federal statutory rate	35.00%	35.00%	35.00%
State taxes, net of federal tax effect	(4.30%)	2.00%	3.00%
Foreign earnings taxed at different rates	2.90%	(18.30%)	(21.50%)
Withholding tax	14.30%	9.70%	6.30%
Foreign tax credit	(9.60%)	(5.40%)	(3.40%)
Other international components	0.80%	3.40%	1.90%
Change in valuation allowance	21.10%	(0.80%)	0.10%
Deferred tax adjustments and rate changes	(4.90%)	(2.80%)	0.60%
Meals and entertainment	5.90%	4.50%	2.90%
Other tax credits	2.50%	2.50%	2.60%
Subpart F income	4.00%	2.40%	1.20%
Research and development tax credit	(13.70%)	(12.60%)	0.70%
Other permanent differences	(1.60%)	0.80%	0.60%
Release of unrecognized tax benefits	0.00%	(86.00%)	(1.90%)
Total	54.40%	(58.50%)	30.20%
Non-deductible Officers Compensation
Schedule Of Effective Tax Rates Line Items
Other tax credits	2.00%	7.10%	2.10%

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Fair Value Measurements

(4) Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, consisted of the following (in thousands), as of:

		December 31, 2014
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	1,647	$	0	$	1,647
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	6	$	0	$	6
		December 31, 2013
		Fair Value Measurements Using Input Types
	Line Item	Level 1		Level 2		Level 3		Total
Non-hedging derivative assets:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	0	$	5	$	0	$	5
Non-hedging derivative liabilities:
Foreign currency forward contracts	Accounts payable and accrued expenses	$	0	$	46	$	0	$	46

The fair value of our foreign currency forward contracts is determined using Level 2 observable market inputs to extrapolate forward points to be added to or subtracted from the closing market spot rate on the reporting date, and then discounted to present value. All foreign currency forward contracts outstanding as of December 31, 2014 were for durations of twelve months or less and consisted of the following sale contracts (in thousands):

	Notional Value Local Currency			Notional Value U.S. Dollar		Fair Value Gain (Loss) U.S. Dollar
Forward contracts to sell:
Australian Dollar		AUD	985	$	900	$	103
Brazilian Real		BRL	3,184		1,300		157
British Pound		GBP	950		1,600		122
Canadian Dollar		CAD	757		700		49
Chinese Renminbi		CNY	10,664		1,700		(5	)
Euro		EUR	3,534		4,800		515
Indian Rupee		INR	19,347		300		3
Japanese Yen		JPY	131,508		1,300		201
Korean Won		KRW	881,552		850		53
Mexican Peso		MXN	4,001		300		32
Polish Zloty		PLN	4,980		1,600		203
Russian Rouble		RUB	7,323		200		86
Singapore Dollar		SGD	500		400		23
South African Rand		ZAR	6,769		600		32
Swedish Krona		SEK	1,698		250		33
Swiss Franc		CHF	268		300		30
Turkish New Lira		TRY	230		100		5
United Arab Emirates Dirham		AED	738		200		(1	)
				$	17,400	$	1,641

Changes in the fair value of our foreign currency forward contracts during 2014, 2013, and 2012 were as follows (in thousands):

	Gain (Loss) on Derivative Instruments Recognized in Income
		Years Ended December 31,
	Location	2014			2013			2012
Non-hedging derivative instruments:
Unrealized gain (loss) on foreign currency forward contracts	Other income (expense), net	$	1,682		$	(41	)	$	0
Realized loss on foreign currency forward contracts	Other (expense) income, net	$	(562	)	$	(629	)	$	0

There were no transfers among the levels within the fair value hierarchy during the years ended December 31, 2014, 2013, and 2012. As of December 31, 2014 and December 31, 2013, the Company had no assets or liabilities that were required to be measured at fair value on a non-recurring basis.

XML

Short-term Investments

12 Months Ended

Dec. 31, 2014

Short-term Investments

(5) Short-term Investments

The Company periodically invests a portion of its excess cash in short-term investment instruments. Substantially all of the Company’s short-term investments are in U.S. Treasury securities, and the Company has the ability and intent to hold these investments to maturity. The stated maturity dates of these investments are between three months and one year from the purchase date. These held-to-maturity investments are recorded at amortized cost and included within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of held-to-maturity investments in U.S. Treasury securities is determined based on quoted market prices in active markets for identical securities (Level 1 inputs).

The amortized cost, carrying value, and fair value of held-to-maturity investments at December 31, 2014 were $198.5 million, $198.5 million, and $198.5 million, respectively. The amortized cost, carrying value, and fair value of held-to-maturity investments at December 31, 2013 were $137.2 million, $137.2 million, and $137.2 million, respectively. The gross unrecognized holding gains and losses were not material for 2014, 2013, or 2012. No other-than-temporary impairments related to these investments have been recognized in accumulated other comprehensive loss as of December 31, 2014 and December 31, 2013. As of December 31, 2014 and December 31, 2013, the Company’s available-for-sale investments were not material.

XML

Property and Equipment

12 Months Ended

Dec. 31, 2014

Property and Equipment

(7) Property and Equipment

Property and equipment (in thousands) consisted of the following, as of:

	December 31,
	2014			2013
Transportation equipment	$	48,906		$	48,917
Computer equipment and purchased software		72,602			66,713
Furniture and equipment		11,477			11,647
Leasehold improvements		28,500			29,116
Internally developed software		9,408			8,393
Property and equipment, gross		170,893			164,786
Less: accumulated depreciation and amortization		(93,041	)		(79,341	)
Property and equipment, net	$	77,852		$	85,445

Included in transportation equipment is the Company’s owned corporate aircraft, including capitalizable costs related to the repairs to the aircraft, and aircraft-related equipment. As of December 31, 2014, the net asset value of the aircraft and aircraft-related equipment was $41.5 million, net of $7.1 million of accumulated depreciation. As of December 31, 2013, the net asset value of the aircraft and aircraft-related equipment was $43.0 million, net of $5.6 million of accumulated depreciation.

Included in computer equipment at December 31, 2014 and December 31, 2013 is $2.9 million and $2.9 million, respectively, acquired under capital lease arrangements. At December 31, 2014 and December 31, 2013, accumulated amortization relating to computer equipment under capital lease arrangements totaled $2.5 million and $1.7 million, respectively.

Depreciation and amortization expense related to property and equipment, including assets under capital leases, was $20.1 million, $21.0 million, and $17.7 million for the years ended December 31, 2014, 2013, and 2012, respectively.

XML

Schedule Of Changes In Unrecognized Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Schedule of Unrecognized Tax Benefits [Line Items]
Unrecognized tax benefits at January 1, 2014	$ 2,312
Increase related to positions taken in prior period	938
Increase related to positions taken in current period	270
Decrease related to expiration of statute of limitations	(60)
Unrecognized tax benefits at December 31, 2014	3,460
Accrued interest	292	300
Netting of deferred tax assets and unrecognized tax benefits	(1,273)
Unrecognized tax benefits recorded in other long-term liabilities at December 31, 2014	$ 2,479

XML

Summary of Stock Option Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Options outstanding, shares
Beginning Balance	600	16	517
Granted	745	600	0
Exercised	(9)	(16)	(501)
Forfeited/Expired	(135)	0	0
Ending Balance	1,201	600	16
Exercisable as of December 31, 2014	141
Expected to vest as of December 31, 2014	1,060
Total	1,201
Weighted Average Exercise Price Per Share
Beginning Balance	$ 92.84	$ 20.81	$ 20.31
Granted	$ 125.46	$ 92.84	$ 0
Exercised	$ 92.84	$ 20.81	$ 20.30
Forfeited/Expired	$ 104.48	$ 0	$ 0
Ending Balance	$ 111.77	$ 92.84	$ 20.81
Exercisable as of December 31, 2014	$ 92.84
Expected to vest as of December 31, 2014	$ 114.29
Total	$ 111.77
Aggregate Intrinsic Value
Exercised	$ 653	$ 1,262	$ 51,564
Exercisable as of December 31, 2014	9,794
Expected to vest as of December 31, 2014	51,001
Total	$ 60,795
Weighted Average Remaining Contractual Term (Years)
Exercisable as of December 31, 2014	7 years 8 months 12 days
Expected to vest as of December 31, 2014	9 years 1 month 6 days
Total	9 years

XML

Components of Deferred Tax Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Components Of Deferred Tax Assets And Liabilities [Line Items]
Deferred tax assets, Net operating loss carryforwards	$ 6,911	$ 981
Deferred tax assets, Tax credits	10,402	8,723
Deferred tax assets, Intangible assets	59	1,317
Deferred tax assets, Deferred revenue adjustment	1,989	2,746
Deferred tax assets, Accrued Compensation	11,452	17,465
Share-based compensation expense	5,485	714
Deferred tax assets, Deferred rent	3,428	3,709
Deferred tax assets, Other	3,425	2,197
Deferred tax assets, gross, Total	43,151	37,852
Deferred tax assets, Valuation allowance	(2,311)	(77)
Deferred tax assets, net of valuation allowance	40,840	37,775
Deferred tax liabilities, Prepaid expenses and other	1,044	1,084
Deferred tax liabilities, Property and equipment	17,149	15,751
Deferred tax liabilities, Capitalized software development costs	5,637	3,791
Total deferred tax liabilities	23,830	20,626
Total net deferred tax asset	17,010	17,149
Current deferred tax assets, net	19,936	21,555
Non-current deferred tax assets, net	1,160	3,204
Current deferred tax liabilities	(557)	(422)
Non-current deferred tax liabilities	(3,529)	(7,188)
Total net deferred tax asset	$ 17,010	$ 17,149

XML

Restructuring (Tables)

12 Months Ended

Dec. 31, 2014

Summary of Major Types of Costs, Cumulative Costs Incurred and Total Cost Expected Associated With Restructuring Activities

The following table summarizes the major types of costs associated with the 2014 Restructuring Plan (in thousands) for the year ended December 31, 2014, total costs incurred through December 31, 2014 and total costs expected to be incurred:

	Year Ended December 31, 2014		Total Costs Incurred To Date		Total Expected Plan Costs
Severance and related employee benefits	$	13,162	$	13,162	$	13,162
Contract termination costs		1,159		1,159		1,159
Other costs		411		411		692
Total restructuring costs	$	14,732	$	14,732	$	15,013

Summary of Changes in Restructuring-Related Liabilities

The following table presents a summary of changes in the restructuring-related liabilities (in thousands) for the year ended December 31, 2014:

	Balance as of January 1, 2014		Costs Incurred		Cash Payments			Non-cash Settlements			Adjustments and Other			Balance as of December 31, 2014
Current:
Severance and related employee benefits	$	0	$	13,162	$	(10,746	)	$	0		$	(201	)	$	2,215
Contract termination costs		0		1,159		(960	)		(441	)		242			0
Other costs		0		411		(302	)		0			(40	)		69
Total current accrued restructuring costs	$	0	$	14,732	$	(12,008	)	$	(441	)	$	1		$	2,284

XML

Property and Equipment - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 77,852,000	$ 85,445,000
Accumulated depreciation	93,041,000	79,341,000
Property and equipment, gross	170,893,000	164,786,000
Depreciation and amortization	20,100,000	21,000,000	17,700,000
Aircraft And Aircraft-Related Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, net	41,500,000	43,000,000
Accumulated depreciation	7,100,000	5,600,000
Computer Equipment And Purchased Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	72,602,000	66,713,000
Computer Equipment And Purchased Software | Assets Held under Capital Leases
Property, Plant and Equipment [Line Items]
Accumulated depreciation	2,500,000	1,700,000
Property and equipment, gross	$ 2,900,000	$ 2,900,000

XML

Share-based Compensation

12 Months Ended

Dec. 31, 2014

Share-based Compensation

(12) Share-based Compensation

In September 2013, the Board of Directors approved the Company’s 2013 Stock Incentive Plan (the “2013 Plan”), under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, and authorized 600,000 shares of the Company’s class A common stock for issuance under the 2013 Plan. In April 2014, the Company’s stockholders approved the 2013 Plan at the Company’s annual meeting.

In April 2014, following the Company’s annual meeting, the Board of Directors authorized, subject to stockholder approval, an amendment to the 2013 Plan to increase the total number of shares of the Company’s class A common stock authorized for issuance under the 2013 Plan from 600,000 to 1,500,000 shares (“Amendment No. 1”). Also in April 2014, the Compensation Committee of the Board of Directors (the “Compensation Committee”) authorized, subject to stockholder approval, an additional amendment to the 2013 Plan to provide for automatic annual stock option grants to each of the Company’s non-employee directors with respect to 5,000 shares of the Company’s class A common stock, beginning in 2015 (“Amendment No. 2”). The Company considers stockholder approval of both amendments to the 2013 Plan to be perfunctory since the Company’s Chairman and Chief Executive Officer holds a majority of the total voting power of all the Company’s outstanding voting stock.

During 2014, the Compensation Committee approved, in each case subject to stockholder approval of Amendment No. 1, the grant of stock options to purchase an aggregate of 745,000 shares of class A common stock to certain Company employees, officers, and directors pursuant to the 2013 Plan. These awards, and any additional awards granted prior to stockholder approval of Amendment No. 1, will be terminated or forfeited if stockholder approval is not obtained within 12 months of the date of grant of the awards, and no awards may be exercised or settled prior to such stockholder approval. However, the Company expects to obtain stockholder approval of both amendments to the 2013 Plan at the Company’s annual meeting of stockholders in 2015. In the event stockholder approval for Amendment No. 1 is not obtained within 12 months of the grant date of any option awards, the cumulative share-based compensation expense associated with those stock option awards would be reversed. As of December 31, 2014, there were options to purchase 1,200,800 shares of class A common stock outstanding under the 2013 Plan (including options to purchase 685,000 shares of class A common stock that are subject to stockholder approval of Amendment No. 1). As of December 31, 2014, there were 290,000 remaining shares of class A common stock authorized for future issuance under the 2013 Plan, subject to stockholder approval of Amendment No. 1.

Shares issued under the 2013 Plan may consist in whole or in part of authorized but unissued shares or treasury shares. No awards may be issued more than ten years after the 2013 Plan’s effective date. Stock options that are granted under the 2013 Plan must have an exercise price equal to at least the fair market value of the Company’s class A common stock on the date of grant, become exercisable as established by the Board of Directors or the Compensation Committee, and expire no later than ten years following the date of grant. The Company recognizes share-based compensation expense associated with such stock option awards on a straight-line basis over the award’s requisite service period (generally, the vesting period). The stock option awards granted to date vest in equal annual installments over an approximately four-year vesting period (unless accelerated upon a change in control event (as defined in the stock option agreement for the applicable award) or otherwise in accordance with provisions of the 2013 Plan or applicable option agreement).

Share-based compensation expense is based on the fair value of the stock option awards on the date of grant, as estimated using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of certain management assumptions, including the expected term, expected stock price volatility, risk-free interest rate, and expected dividend yield. The Company estimates the term over which optionholders are expected to hold their stock options by using the simplified method for “plain-vanilla” stock option awards because the Company’s stock option exercise history does not provide a reasonable basis to compute the expected

term for stock options granted under the 2013 Plan. The Company relies exclusively on its historical stock price volatility to estimate the expected stock price volatility over the expected term because the Company believes future volatility is unlikely to differ from the past. In estimating the expected stock price volatility, the Company uses a simple average calculation method. The risk-free interest rate is based on U.S. Treasury securities with terms that approximate the expected term of the stock options. The expected dividend yield is based on the Company’s past cash dividend history and anticipated future cash dividend payments. The expected dividend yield is zero, as the Company has not previously declared cash dividends and does not currently intend to declare cash dividends in the foreseeable future. These assumptions are based on management’s best judgment, and changes to these assumptions could materially affect the fair value estimates and amount of share-based compensation expense recognized.

Prior to the adoption of the 2013 Plan, the Company had maintained other share-based compensation plans with respect to the Company’s class A common stock (the “Other Stock Incentive Plans”), but had not granted any share-based awards under the Other Stock Incentive Plans since the first quarter of 2004 and is no longer authorized to grant any awards under such plans. As of December 31, 2014, there were no outstanding share-based awards granted under the Other Stock Incentive Plans.

The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the periods indicated:

	Stock Options Outstanding
	Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (Years)
Balance as of January 1, 2012		517		$	20.31
Granted		0			0
Exercised		(501	)		20.30	$	51,564
Forfeited/Expired		0			0
Balance as of December 31, 2012		16		$	20.81
Granted		600			92.84
Exercised		(16	)		20.81	$	1,262
Forfeited/Expired		0			0
Balance as of December 31, 2013		600		$	92.84
Granted		745			125.46
Exercised		(9	)		92.84	$	653
Forfeited/Expired		(135	)		104.48
Balance as of December 31, 2014		1,201		$	111.77
Exercisable as of December 31, 2014		141		$	92.84	$	9,794		7.7
Expected to vest as of December 31, 2014		1,060		$	114.29		51,001		9.1
Total		1,201		$	111.77	$	60,795		9.0

Stock options outstanding as of December 31, 2014 are comprised of the following range of exercise prices per share (in thousands, except per share data and years):

	Stock Options Outstanding at December 31, 2014
Range of Exercise Prices per Share	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)
$92.84 - $120.00		596	$	96.34		8.5
$120.01 - $150.00		520	$	121.43		9.3
$150.01 - $160.88		85	$	160.88		9.8
Total		1,201	$	111.77		9.0

An aggregate of 150,000 stock options with an aggregate fair value of $6.3 million vested during the year ended December 31, 2014. No stock options vested during the years ended December 31, 2013 and, 2012. The Company expects all unvested and outstanding options at December 31, 2014 to fully vest in future years in accordance with their vesting schedules and therefore share-based compensation expense has not been adjusted for any expected forfeitures. The weighted average grant date fair value of stock option awards using the Black-Scholes option pricing model was $55.84 and $42.03 for each share subject to a stock option granted during the years ended December 31, 2014 and December 31, 2013, respectively, based on the following assumptions:

	Years Ended December 31,
	2014			2013
Expected term of options in years		6.3			6.3
Expected volatility		41.5 - 42.5	%		42.8	%
Risk-free interest rate		2.1 - 2.3	%		2.5	%
Expected dividend yield		0.0	%		0.0	%

No stock options were granted during the year ended December 31, 2012. The Company recognized approximately $11.8 million and $2.1 million in share-based compensation expense for the years ended December 31, 2014 and December 31, 2013, respectively, from stock options granted under the 2013 Plan. The Company recognized no share-based compensation expense for the years ended December 31, 2014, 2013, and 2012 from stock options granted under the Other Stock Incentive Plans as all such options fully vested in prior years. As of December 31, 2014, there was approximately $46.6 million of total unrecognized share-based compensation expense related to unvested stock options. The Company expects to recognize this remaining share-based compensation expense over a weighted-average vesting period of approximately 3.2 years. Such amounts do not include the impact from the grants of stock options in February 2015 to purchase an aggregate of 200,000 shares of class A common stock. See Note 19, Subsequent Events, for further detail.

During the year ended December 31, 2013, the Company was able to recognize and utilize net operating loss carryforwards arising directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting that was generated primarily in prior years under the Other Stock Incentive Plans. Accordingly, stockholders’ equity increased by $23.6 million during the year ended December 31, 2013. No windfall tax benefit was realized from the exercise of stock options during the years ended December 31, 2014 and 2012.

MicroStrategy’s former subsidiary, Angel.com, previously maintained a stock incentive plan under which certain employees, officers, and directors of MicroStrategy and Angel.com were granted options to purchase shares of the class A common stock of Angel.com, subject to the satisfaction of both performance and continued service conditions. Share-based compensation expense would have been recognized over the requisite service period of the award based on the probability of the satisfaction of the performance condition, reduced by the number of awards that were not expected to vest due to the failure to satisfy the continued service condition. In connection with the sale of Angel.com in the first quarter of 2013, the Angel.com stock incentive plan was terminated and all outstanding options thereunder were terminated in exchange for cash payments totaling $8.0 million. Prior to their termination, no share-based compensation expense was recognized for these awards for the years ended December 31, 2013 and 2012 because the performance condition had not been satisfied.

XML

Segment Information

12 Months Ended

Dec. 31, 2014

Segment Information

(17) Segment Information

The Company manages its business in one operating segment. As discussed in Note 16, the Angel.com business was sold on March 15, 2013. Prior to its divestiture, the Angel.com business was the sole component of the former operating segment “Other.” The Company’s one operating segment is engaged in the design, development, marketing, and sales of analytics software through licensing arrangements and cloud-based subscriptions and related services. It includes the MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud. The Company has also included MicroStrategy Usher as part of the one operating segment for each of the years ended December 31, 2014, 2013, and 2012 because this platform did not generate material revenues during these periods. The following table presents total revenues from continuing operations, gross profit from continuing operations, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region:

Geographic regions:	Domestic		EMEA		Other Regions		Consolidated
Year ended December 31, 2014
Total revenues	$	341,692	$	176,774	$	61,364	$	579,830
Gross profit	$	261,459	$	131,790	$	51,371	$	444,620
Year ended December 31, 2013
Total revenues	$	343,073	$	169,194	$	63,621	$	575,888
Gross profit	$	261,134	$	123,373	$	52,812	$	437,319
Year ended December 31, 2012
Total revenues	$	326,333	$	177,543	$	61,848	$	565,724
Gross profit	$	241,440	$	133,986	$	49,222	$	424,648
As of December 31, 2014
Long-lived assets	$	85,504	$	5,690	$	4,078	$	95,272
As of December 31, 2013
Long-lived assets	$	89,342	$	7,111	$	5,909	$	102,362

The domestic region consists of the United States and Canada. The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America and the Asia Pacific region. For the years ended December 31, 2014, 2013, and 2012, no individual foreign country accounted for 10% or more of total consolidated revenues from continuing operations.

For the years ended December 31, 2014, 2013, and 2012, no individual customer accounted for 10% or more of total consolidated revenues from continuing operations.

As of December 31, 2014 and 2013, no individual foreign country accounted for 10% or more of total consolidated assets.

XML

Accounts Receivable (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Billed and billable	$ 187,470	$ 190,446
Less: unpaid deferred revenue	(104,425)	(100,276)
Accounts receivable, gross	83,045	90,170
Less: allowance for doubtful accounts	(4,412)	(3,989)
Account receivable, net	$ 78,633	$ 86,181

XML

Segment Information (Tables)

12 Months Ended

Dec. 31, 2014

Revenues and Long-Lived Assets, by Geographic Region

The following table presents total revenues from continuing operations, gross profit from continuing operations, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region:

Geographic regions:	Domestic		EMEA		Other Regions		Consolidated
Year ended December 31, 2014
Total revenues	$	341,692	$	176,774	$	61,364	$	579,830
Gross profit	$	261,459	$	131,790	$	51,371	$	444,620
Year ended December 31, 2013
Total revenues	$	343,073	$	169,194	$	63,621	$	575,888
Gross profit	$	261,134	$	123,373	$	52,812	$	437,319
Year ended December 31, 2012
Total revenues	$	326,333	$	177,543	$	61,848	$	565,724
Gross profit	$	241,440	$	133,986	$	49,222	$	424,648
As of December 31, 2014
Long-lived assets	$	85,504	$	5,690	$	4,078	$	95,272
As of December 31, 2013
Long-lived assets	$	89,342	$	7,111	$	5,909	$	102,362

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Gain from sale of discontinued operations, tax provision	$ 0	$ 37,548	$ 0
Loss from discontinued operations, tax benefit	$ 0	$ 391	$ 1,049

XML

Organization

12 Months Ended

Dec. 31, 2014

Organization

(1) Organization

MicroStrategy is a leading worldwide provider of enterprise-ready analytics, mobile, and security software platforms. MicroStrategy provides system-of-record reporting and interactive visualization capabilities offered on any device or in the cloud. The Company’s mission is to provide enterprise analytics, mobility, and security platforms that are flexible, powerful, scalable, and user-friendly.

MicroStrategy Analytics empowers organizations to analyze vast amounts of data and securely distribute actionable business insight throughout an enterprise through two distinct offerings – MicroStrategy Analytics Platform and MicroStrategy Analytics Desktop. The MicroStrategy Analytics Platform delivers reports and dashboards, and enables users to conduct ad hoc analysis and share insights anywhere, anytime, via mobile devices or the Web. It also combines the agility and productivity of self-service visual data discovery with the security, scalability, and governance features of enterprise-grade business intelligence. The MicroStrategy Analytics Platform is integrated with MicroStrategy Analytics Desktop, a standalone desktop tool designed to enable business users to analyze and understand their data. With MicroStrategy Analytics Desktop, business users can create stunning data visualizations and dashboards that provide new insight and new understanding in just minutes.

MicroStrategy Mobile enables organizations to rapidly build information-rich applications that deliver analytics combined with transactions, multimedia, and custom workflows, to mobile devices. The powerful code-free platform approach is designed to reduce the costs of development and enable organizations to deploy powerful mobile business apps quickly and cost-effectively. MicroStrategy Mobile is an easy, fast, and cost-effective vehicle for mobilizing an organization’s information systems, including its data warehouses, business intelligence, ERP, CRM, and Web applications that are currently accessible only on the desktop. With MicroStrategy Mobile, businesses can transform their entire workforce into a connected and more productive mobile workforce using information-driven mobile apps that are significantly more robust and secure than their Web-only counterparts. With mobile access to critical corporate data and systems that drive the business, employees can have a virtual office in their hands at all times.

MicroStrategy Usher is a mobile identity and security platform designed to make identity management simple, seamless, and secure. Built on an advanced mobile-centric enterprise platform, MicroStrategy Usher can dematerialize traditional forms of identity verification such as passwords and physical badges and replace them with a single mobile identity badge, stored on a smartphone, that is cryptographically linked to its owner’s phone and dynamically linked to the enterprise’s existing identity repositories. MicroStrategy Usher’s enterprise mobile identity solution addresses some of the biggest challenges facing corporations today, including authentication, cybersecurity, access management, and resource authorization, while applying industry leading business intelligence and analytics to an enterprise’s security infrastructure. Users can log into applications, unlock doors, validate each other’s identities, and gain a holistic view of network activity using only mobile identities, either through Bluetooth, QR codes, or time-limited PIN codes. MicroStrategy Usher can also be used as a powerful workforce management resource because it is designed to enable managers to gain a near real-time window into the activity of their distributed workforces, while providing powerful interactive features to manage or direct them. We currently offer MicroStrategy Usher as a subscription-based service.

MicroStrategy Secure Cloud is a platform for organizations that want to harness the power of enterprise analytics, mobility, and security applications via the cloud. MicroStrategy Secure Cloud brings together enterprise analytics, analytical databases, and ETL capabilities in a high performance integrated environment. MicroStrategy Secure Cloud offers on-demand access to the full breadth of the MicroStrategy Analytics Platform and MicroStrategy Mobile capabilities and is optimized for a variety of enterprise applications. Compared to traditional on-premises approaches, MicroStrategy Secure Cloud is architected to deliver best-of-breed MicroStrategy and Usher software via the cloud, with pre-configured, ready to go MicroStrategy servers, coupled with the required supporting infrastructure of metadata databases, relational databases, and big data storage.

The MicroStrategy Analytics Platform, MicroStrategy Mobile, and MicroStrategy Secure Cloud together with related product and support services, continue to generate the vast majority of our revenue. During 2014, 2013, and 2012, we did not generate significant revenues from MicroStrategy Usher.

XML

Components of Income from Continuing Operations Before Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Components of Income Before Income Tax Expense (Benefit) [Line Items]
U.S.	$ (5,389)	$ (6,158)	$ 587
Foreign	16,440	22,909	31,620
Income from continuing operations before income taxes	$ 11,051	$ 16,751	$ 32,207

XML

Computation of Basic and Diluted Earnings (loss) Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Earnings Loss Per Share [Line Items]
Continuing operations, net of tax	$ 22,699		$ (845)		$ (10,337)		$ (6,482)		$ 16,148		$ 17,146		$ (1,553)		$ (5,191)		$ 5,035		$ 26,550		$ 22,473
Discontinued operations, net of tax	0		0		0		0		0		0		0		56,782		0		56,782		(1,927)
Net income	$ 22,699		$ (845)		$ (10,337)		$ (6,482)		$ 16,148		$ 17,146		$ (1,553)		$ 51,591		$ 5,035		$ 83,332		$ 20,546
Total weighted average common stock shares outstanding																	11,301		11,300		10,995
Employee stock options																	55		1		179
Adjusted weighted average shares																	11,356		11,301		11,174
Basic earnings (loss) per share
From continuing operations	$ 2.01		$ (0.07)		$ (0.91)		$ (0.57)		$ 1.43		$ 1.52		$ (0.14)		$ (0.46)		$ 0.45		$ 2.35		$ 2.05
From discontinued operations	$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 5.03		$ 0.00		$ 5.02		$ (0.18)
Basic earnings per share	$ 2.01	[1]	$ (0.07)	[1]	$ (0.91)	[1]	$ (0.57)	[1]	$ 1.43	[1]	$ 1.52	[1]	$ (0.14)	[1]	$ 4.57	[1]	$ 0.45	[1],[2]	$ 7.37	[1],[2]	$ 1.87	[2]
Diluted earnings (loss) per share:
From continuing operations	$ 1.99		$ (0.07)		$ (0.91)		$ (0.57)		$ 1.43		$ 1.52		$ (0.14)		$ (0.46)		$ 0.44		$ 2.35		$ 2.01
From discontinued operations	$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 0.00		$ 5.03		$ 0.00		$ 5.02		$ (0.17)
Diluted earnings per share	$ 1.99	[1]	$ (0.07)	[1]	$ (0.91)	[1]	$ (0.57)	[1]	$ 1.43	[1]	$ 1.52	[1]	$ (0.14)	[1]	$ 4.57	[1]	$ 0.44	[1],[2]	$ 7.37	[1],[2]	$ 1.84	[2]
Class A
Earnings Loss Per Share [Line Items]
Total weighted average common stock shares outstanding																	9,246		9,073		8,768
Class B Convertible
Earnings Loss Per Share [Line Items]
Total weighted average common stock shares outstanding																	2,055		2,227		2,227

[1] The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

[2] Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

XML

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2014

Selected Quarterly Financial Data (Unaudited)

(18) Selected Quarterly Financial Data (Unaudited)

The following tables contain unaudited Statement of Operations information for each quarter of 2014 and 2013. The Company believes that the following information reflects all normal recurring adjustments. During the fourth quarter of 2014, the Company recognized a reduction in its accrued bonus expense as a result of a change in estimate, which resulted in a $7.4 million increase in income from continuing operations. The operating results for any quarter are not necessarily indicative of results for any future period.

	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2014
Revenues	$	137,904		$	141,853		$	151,202		$	148,871	$	579,830
Gross profit	$	104,895		$	106,240		$	116,249		$	117,236	$	444,620
(Loss) income from continuing operations, net of tax	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
Discontinued operations, net of tax		0			0			0			0		0
Net (loss) income	$	(6,482	)	$	(10,337	)	$	(845	)	$	22,699	$	5,035
(Loss) earnings per share:(1)
Basic, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Basic, from discontinued operations		0			0			0			0		0
Basic (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	2.01	$	0.45
Diluted, from continuing operations	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
Diluted, from discontinued operations		0			0			0			0		0
Diluted (loss) earnings per share	$	(0.57	)	$	(0.91	)	$	(0.07	)	$	1.99	$	0.44
	Quarter Ended
	March 31			June 30			September 30			December 31		Year
	(in thousands, except per share data)
2013
Revenues	$	130,183		$	137,905		$	141,919		$	165,881	$	575,888
Gross profit	$	94,282		$	101,459		$	108,666		$	132,912	$	437,319
(Loss) income from continuing operations, net of tax	$	(5,191	)	$	(1,553	)	$	17,146		$	16,148	$	26,550
Discontinued operations, net of tax		56,782			0			0			0		56,782
Net income (loss)	$	51,591		$	(1,553	)	$	17,146		$	16,148	$	83,332
Earnings (loss) per share:(1)
Basic, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Basic, from discontinued operations		5.03			0			0			0		5.02
Basic earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37
Diluted, from continuing operations	$	(0.46	)	$	(0.14	)	$	1.52		$	1.43	$	2.35
Diluted, from discontinued operations		5.03			0			0			0		5.02
Diluted earnings (loss) per share	$	4.57		$	(0.14	)	$	1.52		$	1.43	$	7.37

⁽¹⁾ The sum of the basic and diluted earnings (loss) per share for the four quarters may differ from annual earnings (loss) per share as the weighted-average shares outstanding are computed independently for each of the quarters presented.

XML

Summary of Revenues and Pre-Tax Loss Generated by Angel Dot Com Business In Addition to Pre-Tax Gain on Sale Recorded (Detail) (Angel.Com, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Angel.Com
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Angel.com revenues	$ 0	$ 6,320	$ 28,882
Angel.com pre-tax loss	0	986	2,976
MicroStrategy pre-tax gain on sale	$ 0	$ 94,925	$ 0

XML

Share-based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Summary of Stock Option Activity

The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the periods indicated:

	Stock Options Outstanding
	Shares			Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (Years)
Balance as of January 1, 2012		517		$	20.31
Granted		0			0
Exercised		(501	)		20.30	$	51,564
Forfeited/Expired		0			0
Balance as of December 31, 2012		16		$	20.81
Granted		600			92.84
Exercised		(16	)		20.81	$	1,262
Forfeited/Expired		0			0
Balance as of December 31, 2013		600		$	92.84
Granted		745			125.46
Exercised		(9	)		92.84	$	653
Forfeited/Expired		(135	)		104.48
Balance as of December 31, 2014		1,201		$	111.77
Exercisable as of December 31, 2014		141		$	92.84	$	9,794		7.7
Expected to vest as of December 31, 2014		1,060		$	114.29		51,001		9.1
Total		1,201		$	111.77	$	60,795		9.0

Range Of Exercise Prices

Stock options outstanding as of December 31, 2014 are comprised of the following range of exercise prices per share (in thousands, except per share data and years):

	Stock Options Outstanding at December 31, 2014
Range of Exercise Prices per Share	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)
$92.84 - $120.00		596	$	96.34		8.5
$120.01 - $150.00		520	$	121.43		9.3
$150.01 - $160.88		85	$	160.88		9.8
Total		1,201	$	111.77		9.0

Assumptions Used in Black-Scholes Option-Pricing Model

The weighted average grant date fair value of stock option awards using the Black-Scholes option pricing model was $55.84 and $42.03 for each share subject to a stock option granted during the years ended December 31, 2014 and December 31, 2013, respectively, based on the following assumptions:

	Years Ended December 31,
	2014			2013
Expected term of options in years		6.3			6.3
Expected volatility		41.5 - 42.5	%		42.8	%
Risk-free interest rate		2.1 - 2.3	%		2.5	%
Expected dividend yield		0.0	%		0.0	%

XML

Income Taxes

12 Months Ended

Dec. 31, 2014

Income Taxes

(11) Income Taxes

U.S. and international components of income (loss) from continuing operations before income taxes (in thousands) were comprised of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.	$	(5,389	)	$	(6,158	)	$	587
Foreign		16,440			22,909			31,620
Total	$	11,051		$	16,751		$	32,207

The benefit from or provision for income taxes from continuing operations (in thousands) consisted of the following for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	(306	)	$	(12,404	)	$	533
State		(1	)		172			68
Foreign		7,638			5,994			7,269
	$	7,331		$	(6,238	)	$	7,870
Deferred:
Federal	$	(2,132	)	$	(3,417	)	$	995
State		(1,038	)		267			1,310
Foreign		1,855			(411	)		(441	)
	$	(1,315	)	$	(3,561	)	$	1,864
Total provision (benefit)	$	6,016		$	(9,799	)	$	9,734

The benefit from or provision for income taxes from continuing operations differs from the amount computed by applying the federal statutory income tax rate to the Company’s income from continuing operations before income taxes as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
Income tax expense at federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal tax effect		-4.3	%		2.0	%		3.0	%
Foreign earnings taxed at different rates		2.9	%		-18.3	%		-21.5	%
Withholding tax		14.3	%		9.7	%		6.3	%
Foreign tax credit		-9.6	%		-5.4	%		-3.4	%
Other international components		0.8	%		3.4	%		1.9	%
Change in valuation allowance		21.1	%		-0.8	%		0.1	%
Deferred tax adjustments and rate changes		-4.9	%		-2.8	%		0.6	%
Meals and entertainment		5.9	%		4.5	%		2.9	%
Non-deductible officers compensation		2.0	%		7.1	%		2.1	%
Personal use of corporate aircraft		2.5	%		2.5	%		2.6	%
Subpart F income		4.0	%		2.4	%		1.2	%
Research and development tax credit		-13.7	%		-12.6	%		0.7	%
Other permanent differences		-1.6	%		0.8	%		0.6	%
Release of unrecognized tax benefits		0.0	%		-86.0	%		-1.9	%
Total		54.4	%		-58.5	%		30.2	%

The 2013 “research and development tax credit” rate of negative 12.6% is comprised of U.S. research and development tax credits generated in 2013 and 2012. The 2012 U.S. research and development tax credit was retroactively reinstated by the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013 and recorded as a tax benefit in the first quarter of 2013.

The Company’s U.S. and foreign effective tax rates for income from continuing operations before income taxes were as follows for the periods indicated:

	Years Ended December 31,
	2014			2013			2012
U.S.		64.5	%		249.7	%		495.1	%
Foreign		57.7	%		24.4	%		21.6	%
Combined		54.4	%		-58.5	%		30.2	%

Except as discussed below, the Company intends to indefinitely reinvest its undistributed earnings of all of its foreign subsidiaries. Therefore, the annualized effective tax rate applied to the Company’s pre-tax income from continuing operations does not include any provision for U.S. federal and state income taxes on the amount of the undistributed foreign earnings. U.S. federal tax laws, however, require the Company to include in its U.S. taxable income certain investment income earned outside of the U.S. in excess of certain limits (“Subpart F deemed dividends”). Because Subpart F deemed dividends are already required to be recognized in the Company’s U.S. federal income tax return, the Company regularly repatriates Subpart F deemed dividends to the U.S. and no additional tax is incurred on the distribution. The Company repatriated Subpart F deemed dividends to the U.S. of $1.3 million, $1.0 million and $2.5 million in 2014, 2013, and 2012, respectively, with no additional tax incurred. As of December 31, 2014 and December 31, 2013, the amount of cash and cash equivalents and short-term investments held by U.S. entities was $139.1 million and $160.5 million, respectively, and by non-U.S. entities was $206.4 million and $196.9 million, respectively. If the cash and cash equivalents and short-term investments held by non-U.S. entities were to be repatriated to the U.S., the Company would generate U.S. taxable income to the extent of the Company’s undistributed foreign earnings, which amounted to $201.7 million at December 31, 2014. Although the tax impact of repatriating these earnings is difficult to determine, the Company would not expect the maximum effective tax rate that would be applicable to such repatriation to exceed the U.S. statutory rate of 35.0%, after considering applicable foreign tax credits.

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows for the periods indicated:

	December 31,
	2014			2013
Deferred tax assets, net:
Net operating loss carryforwards	$	6,911		$	981
Tax credits		10,402			8,723
Intangible assets		59			1,317
Deferred revenue adjustment		1,989			2,746
Accrued compensation		11,452			17,465
Share-based compensation expense		5,485			714
Deferred rent		3,428			3,709
Other		3,425			2,197
		43,151			37,852
Valuation allowance		(2,311	)		(77	)
Deferred tax assets, net of valuation allowance		40,840			37,775
Deferred tax liabilities:
Prepaid expenses and other		1,044			1,084
Property and equipment		17,149			15,751
Capitalized software development costs		5,637			3,791
Total deferred tax liabilities		23,830			20,626
Total net deferred tax asset	$	17,010		$	17,149
Reported as:
Current deferred tax assets, net	$	19,936		$	21,555
Non-current deferred tax assets, net		1,160			3,204
Current deferred tax liabilities		(557	)		(422	)
Non-current deferred tax liabilities		(3,529	)		(7,188	)
Total net deferred tax asset	$	17,010		$	17,149

The table of deferred tax assets and liabilities shown above does not include a deferred tax asset of $0.2 million related to U.S. federal net operating loss carryforwards of $0.4 million as of December 31, 2014 that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting.

As of December 31, 2014, the Company had unrecognized tax benefits of $2.5 million, which are recorded in other long-term liabilities. The change in unrecognized tax benefits (in thousands) is presented in the table below:

Unrecognized tax benefits at January 1, 2014	$	2,312
Increase related to positions taken in prior period		938
Increase related to positions taken in current period		270
Decrease related to expiration of statute of limitations		(60	)
Unrecognized tax benefits at December 31, 2014		3,460
Accrued interest		292
Netting of deferred tax assets and unrecognized tax benefits		(1,273	)
Unrecognized tax benefits recorded in other long-term liabilities at December 31, 2014	$	2,479

If recognized, $1.7 million of the gross unrecognized tax benefits would impact the Company’s effective tax rate. Over the next 12 months, the amount of the Company’s liability for unrecognized tax benefits shown above is not expected to change by a material amount. The Company recognizes estimated accrued interest related to unrecognized tax benefits in the provision for income tax accounts. During the year ended December 31, 2014, the Company recognized an immaterial amount of accrued interest. During the years ended December 31, 2013 and 2012, the Company (released) recognized approximately ($1.0) million and $0.4 million, respectively, in accrued interest. The amount of accrued interest related to the above unrecognized tax benefits was approximately $0.3 million and $0.3 million as of December 31, 2014 and December 31, 2013, respectively.

The Company files tax returns in numerous foreign countries as well as the U.S. and its tax returns may be subject to audit by tax authorities in all countries in which it files. Each country has its own statute of limitations for making assessment of additional tax liabilities. The Company’s U.S. tax returns for tax years from 2011 forward are subject to examination by the Internal Revenue Service.

The Company’s major foreign tax jurisdictions and the tax years that remain subject to examination are Germany for tax years 2009 forward, Poland and China for tax years 2010 forward, Spain for tax years 2011 forward, and the United Kingdom for tax years 2013 forward. The Company settled tax examinations in Germany for tax years 2005 through 2008 and Spain for tax years 2009 through 2010 in the second quarter and fourth quarter of 2013, respectively. To date there have been no material audit assessments related to audits in the U.S. or any of the applicable foreign jurisdictions.

The Company had $14.7 million and $0.0 million of U.S. net operating loss carryforwards as of December 31, 2014 and 2013, respectively. The Company had $3.4 million and $4.4 million of foreign net operating loss carryforwards as of December 31, 2014 and 2013, respectively. The Company had domestic research and development tax credit, foreign tax credit, and alternative minimum tax credit carryforward tax assets totaling $10.5 million and $8.7 million at December 31, 2014 and 2013, respectively, which begin to expire in 2016. The timing and ability of the Company to use these losses and credits may be limited by Internal Revenue Code provisions regarding changes in ownership of the Company as discussed below.

The Company’s valuation allowances of $2.3 million and $0.1 million at December 31, 2014 and 2013, respectively, primarily relate to certain foreign net operating loss carryforward and foreign tax credit carryforward tax assets.

In determining the Company’s provision for or benefit from income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make judgments and estimates related to projections of domestic and foreign profitability, the timing and extent of the utilization of net operating loss carryforwards, applicable tax rates, transfer pricing methodologies, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly related to the utilization of net operating losses in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate which, in turn, impacts the overall level of income tax expense or benefit and net income.

Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections. The timing and manner in which the Company will use net operating loss carryforward tax assets, research and development tax credit carryforward tax assets, alternative minimum tax credit carryforward tax assets, and foreign tax credit carryforward tax assets in any year, or in total, may be limited by provisions of the Internal Revenue Code regarding changes in the Company’s ownership. Currently, the Company expects to use the tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. If the Company is unable to achieve profitability in future periods, particularly relating to the U.S. operations, it may not be able to realize these tax assets. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to achieve profitability in future periods, it may be required to increase the valuation allowance against the 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.

Section 382 provides an annual limitation on the amount of federal net operating losses and tax credits that may be used in the event of an ownership change. The limitation is based on, among other things, the value of the company as of the change date multiplied by a U.S. federal long-term tax exempt interest rate. The Company does not currently expect the limitations under the §382 ownership change rules to impact the Company’s ability to use its net operating loss carryforwards or tax credits that existed as of the date of the ownership change.