MicroStrategy Inc. wrapped up its first profitable year since 1998, reporting net income of $4.6 million, or 33 cents per share, on sales of $42.0 million in its fourth quarter ended Dec. 31, 2002. That compares with a loss of $24.0 million, or $2.61 per share, on sales of $43.7 million in the same period one year ago.

Product license sales, a key indicator of future growth, were up 9% year-over-year to $20.5 million, MicroStrategy reported Thursday, but a 14% decline in product support and service revenue pushed total sales below the year-ago quarter. For all of 2002, MicroStrategy reported net income of $67.4 million, or $3.12 per share, on sales of $147.8 million, compared with a loss of $16.9 million, or $1.95 per share, on sales of $182.1 million in 2001.

An expanded sales force and a major new release of MicroStrategy's business-intelligence platform in April fueled the company's growth for the past several quarters, says Sanju Bansal, chief operations officer and executive VP.

MicroStrategy was profitable in all four quarters of 2002 and it's reaping the benefits of financial stability. The company's financial struggles between 1999 and 2001 undoubtedly scared off customers; it took several profitable quarters to clear away those doubts. "Earlier in the year, potential customers questioned the financial soundness of the company and its long-term viability," Bansal acknowledges. "But we feel we've put those concerns to bed, given our performance in fiscal 2002."

The stagnant economy is holding down growth. Deals of more than $1 million are relatively rare these days, in contrast to the late 1990s, when multimillion-dollar contracts with customers weren't uncommon, Bansal says. Most deals today are in the $100,000 to $250,000 range as customers buy only what they need for the short term. Customers "are buying incrementally as they need capacity," he says.

For the current quarter, MicroStrategy is projecting revenue in the range of $33 million to $37 million and net income ranging from a $200,000 loss to a $600,000 profit. For 2003, the vendor projects 10% revenue growth, with final numbers ranging from $150 million to $160 million and net income of $11 million to $16 million.