Q2 2024 Earnings Summary
Reported on Mar 7, 2025 (After Market Close)
Pre-Earnings Price$151.18Last close (Aug 1, 2024)
Post-Earnings Price$148.58Open (Aug 2, 2024)
Price Change
$-2.60(-1.72%)
- MicroStrategy's substantial growth in Bitcoin holdings reinforces its position as the largest corporate holder of Bitcoin in the world, now holding 226,500 bitcoins with a total market value of $15 billion as of the earnings call. This strategic accumulation could lead to significant gains if Bitcoin prices continue to rise.
- The company's strong growth in subscription services revenue, resulting from its shift towards cloud offerings, saw subscription services revenue increase by 21% year-over-year to $24 million in Q2 2024. This growth is driven by both existing customer migrations to the cloud and new customer wins, contributing to a more durable recurring revenue stream.
- MicroStrategy's successful capital market activities have enabled it to raise funds at attractive rates to acquire more Bitcoin. The issuance of $800 million of convertible notes due 2032 at an annual interest rate of 2.25% demonstrates its ability to secure low-cost financing. Additionally, the company is targeting a Bitcoin yield of 4% to 8% per year for the next 3 years (2025-2027), aiming to increase Bitcoin holdings at a faster rate than share issuance, which could enhance shareholder value.
- Dependence on Software Business Performance: MicroStrategy's ability to service its existing debt relies heavily on the performance of its software business, especially during the transition to the cloud. Any challenges in this transition could impact cash flows needed for debt service.
- Reliance on Capital Markets: The company's strategy involves substantial reliance on capital markets activities, such as issuing equity and debt to acquire bitcoin. This dependence could pose risks if market conditions become unfavorable, potentially limiting their ability to generate positive BTC Yield and leading to shareholder dilution.
- Risks Associated with Bitcoin Holdings: The focus on BTC Yield as a key performance indicator may not fully account for the risks associated with holding significant amounts of bitcoin, including volatility and regulatory uncertainties, which could adversely affect shareholder value.