MicroStrategy Announces Second Quarter 2024 Financial Results; Now Holds 226,500 BTC

Rhea-AI Summary

MicroStrategy (Nasdaq: MSTR) announced Q2 2024 financial results, highlighting its bitcoin strategy and software business performance. Key points include:

1. Bitcoin holdings: 226,500 BTC at a total cost of $8.3 billion ($36,821 per BTC) as of July 31, 2024.

2. Acquired 12,222 BTC since Q2 start for $805.2 million ($65,882 per BTC).

3. Introduced 'BTC Yield' KPI, targeting 4-8% annually over next three years (12.2% YTD).

4. Subscription Services Revenues: $24.1 million, up 21% YoY.

5. Total revenues: $111.4 million, down 7.4% YoY.

6. Net loss: $102.6 million, or $5.74 per diluted share.

7. Announced 10-for-1 stock split effective August 7, 2024.

8. Issued $800 million in 2.25% Convertible Senior Notes due 2032.

Positive

• Increased bitcoin holdings to 226,500 BTC, with a market value 70% higher than cost basis
• Subscription Services Revenues grew 21.1% year-over-year to $24.1 million
• Introduced 'BTC Yield' KPI with 12.2% year-to-date performance
• Successfully raised $800 million through 2.25% convertible senior notes due 2032
• Announced 10-for-1 stock split to improve stock liquidity

Negative

• Total revenues decreased 7.4% year-over-year to $111.4 million
• Reported net loss of $102.6 million, or $5.74 per diluted share
• Digital asset impairment losses of $180.1 million in Q2 2024
• Operating expenses increased 134.0% compared to Q2 2023
• Gross profit margin decreased to 72.2% from 77.5% in Q2 2023

Insights

Financial Analyst

MicroStrategy's Q2 2024 results reveal a complex financial picture. The company's bitcoin strategy continues to be a major focus, with holdings now at 226,500 BTC, acquired at an average cost of $36,821 per bitcoin. The current market value of these holdings is 70% higher than the cost basis, indicating significant unrealized gains.

However, the company's core business shows mixed results. While Subscription Services Revenues grew by 21% year-over-year to $24.1 million, total revenues decreased by 7.4% to $111.4 million. This decline was primarily driven by decreases in product support and other services revenues.

The company's aggressive bitcoin acquisition strategy has led to substantial impairment losses of $180.1 million in Q2 2024, compared to $24.1 million in Q2 2023. This contributed to a net loss of $102.6 million for the quarter, a significant swing from the $22.2 million net income in the same period last year.

MicroStrategy's introduction of the 'BTC Yield' KPI, targeting 4-8% annually over the next three years, is an interesting metric to watch. However, investors should be cautious about relying too heavily on this non-standard measure, as it doesn't account for the company's debt obligations or other financial complexities.

The company's financial engineering continues with the issuance of $800 million in new convertible notes and the redemption of $650 million in existing notes. This strategy of using 'intelligent leverage' to acquire more bitcoin carries significant risks, especially if bitcoin prices were to decline substantially.

Market Research Analyst

MicroStrategy's Q2 2024 results highlight the company's continued commitment to its bitcoin-centric strategy, which has yielded mixed results. The company's bitcoin holdings have appreciated significantly, but this has come at the cost of increased financial complexity and risk.

The market's reaction to MicroStrategy's strategy has been generally positive, as evidenced by the stock's performance over the past year. However, this enthusiasm may be masking underlying challenges in the company's core business intelligence operations.

The announced 10-for-1 stock split could potentially increase liquidity and make the stock more accessible to retail investors. However, it's important to note that stock splits don't fundamentally change a company's value.

The introduction of the 'BTC Yield' KPI is an interesting development. While it provides a new metric for evaluating the company's bitcoin strategy, investors should be cautious about its limitations. This non-standard measure doesn't account for debt obligations or other financial complexities and may not provide a complete picture of the company's financial health.

MicroStrategy's strategy of using convertible notes to finance bitcoin purchases is a double-edged sword. While it has allowed the company to accumulate a significant bitcoin position, it also increases financial leverage and risk. The success of this strategy is heavily dependent on the future performance of bitcoin, which remains highly volatile.

Overall, MicroStrategy's Q2 results reflect a company that has effectively tied its fortunes to bitcoin. While this has yielded significant unrealized gains so far, it also exposes the company to substantial risk if the cryptocurrency market turns bearish.

• Previously announced 10-for-1 forward stock split effective August 7, 2024
• 12,222 bitcoins acquired since the beginning of Q2 for $805.2 million, or $65,882 per bitcoin
• 226,500 bitcoin holdings at a total cost of $8.3 billion, or $36,821 per bitcoin, as of July 31, 2024
• “BTC Yield” (a key performance indicator for our bitcoin strategy) year-to-date of 12.2%
• Subscription Services Revenues of $24.1 million, up 21% year-over-year

TYSONS CORNER, Va.--(BUSINESS WIRE)-- MicroStrategy^® Incorporated (Nasdaq: MSTR) (“MicroStrategy” or the “Company”), the largest corporate holder of bitcoin and the world’s first bitcoin development company, today announced financial results for the three-month period ended June 30, 2024 (the second quarter of its 2024 fiscal year).

“After yet another successful quarter for our bitcoin strategy, MicroStrategy today holds 226,500 bitcoins reflecting a current market value 70% higher than our cost basis. We remain laser focused on our Bitcoin development strategy and intend to continue to achieve positive “BTC Yield,” which is a new KPI that we are introducing, targeting 4-8% annually, over each of the next three years. On the adoption front, we are extremely optimistic with the improved understanding of bitcoin and the increasing support for the ecosystem from bipartisan politicians and institutions on display at the Bitcoin 2024 Conference in Nashville. We also continue to see increased global adoption of our cloud-powered BI and AI software, achieving another quarter of strong double-digit growth in both subscription revenue and subscription billings,” said Phong Le, President and Chief Executive Officer, MicroStrategy.

“In Q2, we successfully raised an additional $800 million through our offering of 2.25% convertible senior notes due 2032 and called for redemption our $650 million convertible senior notes due 2025. Since the beginning of Q2, we grew our bitcoin holdings by adding 12,222 bitcoins through proceeds from our capital markets activities and excess cash. Additionally, we announced a 10-for-1 stock split earlier this month. We continue to closely manage our equity capital, and are filing a registration statement for a new $2 billion at-the-market equity offering program. Through our use of intelligent leverage, we have again achieved a “BTC Yield” of 12.2% year-to-date, which we believe demonstrates significant bitcoin accretion to shareholders,” said Andrew Kang, Chief Financial Officer, MicroStrategy.

The Company previously announced that its board of directors had declared a 10-for-1 stock split of the Company’s class A common stock and class B common stock. The stock split will be effected by means of a stock dividend to the holders of record of the Company’s class A common stock and class B common stock as of the close of business on August 1, 2024, the record date for the dividend. The dividend is expected to be distributed after the close of trading on August 7, 2024. Trading is expected to commence on a split-adjusted basis at market open on August 8, 2024. All information contained herein is presented on a pre-split basis.

Second Quarter 2024 Financial Highlights

• Bitcoin Yield KPI: BTC Yield is a key performance indicator (“KPI”) that represents the % change period-to-period of the ratio between the Company’s bitcoin holdings and its Assumed Diluted Shares Outstanding. Assumed Diluted Shares Outstanding refers to the aggregate of the Company’s actual shares of common stock outstanding as of the end of the applicable period plus all additional shares that would result from the assumed conversion of all outstanding convertible notes, exercise of all outstanding stock option awards, and settlement of all outstanding restricted stock units and performance stock units. The Company uses BTC Yield as a KPI to help assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. The Company believes this KPI can be used to supplement an investor’s understanding of the Company’s decision to fund the purchase of bitcoin by issuing additional shares of its common stock or instruments convertible to common stock. Year-to-date 2024, the Company’s BTC Yield is 12.2%. The Company is targeting to achieve an annual BTC Yield of 4-8% from 2025-2027.
• Digital Assets: As of June 30, 2024, the carrying value of the Company’s digital assets (comprised of approximately 226,331 bitcoins) was $5.688 billion, which reflects cumulative impairment losses of $2.641 billion since acquisition and an average carrying amount per bitcoin of approximately $25,131. As of June 30, 2024, the original cost basis and market value of the Company’s bitcoin were $8.329 billion and $14.016 billion, respectively, which reflects an average cost per bitcoin of approximately $36,798 and a market price per bitcoin of $61,926.69, respectively.
• Issuance of 2032 Convertible Notes: In June 2024, the Company issued $800.0 million aggregate principal amount of 2.250% Convertible Senior Notes due 2032 (the “2032 Convertible Notes”) with an initial conversion price of $2,043.32 per share of class A common stock.
• Redemption and Conversions of 2025 Convertible Notes: On June 13, 2024, the Company announced that it delivered a notice of redemption to the trustee of its 0.750% Convertible Senior Notes due 2025 (the “2025 Convertible Notes”) for redemption of all $650.0 million in aggregate principal amount of the 2025 Convertible Notes then outstanding on July 15, 2024 (the “Redemption Date”). The holders of substantially all of the 2025 Convertible Notes converted such notes into shares of our class A common stock prior to the Redemption Date.
• Revenues: Total revenues were $111.4 million, a 7.4% decrease, or a 6.9% decrease on a non-GAAP constant currency basis, compared to the second quarter of 2023. Subscription Services Revenues were $24.1 million, a 21.1% increase, or a 21.8% increase on a non-GAAP constant currency basis, compared to the second quarter of 2023. Product licenses and subscription services revenues were $33.4 million, a 5.7% decrease, or a 5.3% decrease on a non-GAAP constant currency basis, compared to the second quarter of 2023. Product support revenues were $61.7 million, a 6.6% decrease, or a 6.0% decrease on a non-GAAP constant currency basis, compared to the second quarter of 2023. Other services revenues were $16.3 million, a 13.7% decrease, or a 12.9% decrease on a non-GAAP constant currency basis, compared to the second quarter of 2023.
• Gross Profit: Gross profit was $80.5 million, representing a 72.2% gross margin, compared to $93.3 million, representing a gross margin of 77.5%, for the second quarter of 2023.
• Operating Expenses: Operating expenses were $280.8 million, a 134.0% increase compared to the second quarter of 2023. Operating expenses include impairment losses on the Company’s digital assets, which were $180.1 million during the second quarter of 2024, compared to $24.1 million in the second quarter of 2023.
• Loss from Operations and Net (Loss) Income: Loss from operations was $200.3 million, compared to $26.7 million for the second quarter of 2023. Net loss was $102.6 million, or $5.74 per share on a diluted basis, as compared to a net income of $22.2 million, or $1.52 per share on a diluted basis, for the second quarter of 2023. Digital asset impairment losses of $180.1 million and $24.1 million for the second quarter of 2024 and 2023, respectively, were reflected in these amounts.
• Cash and Cash Equivalents: As of June 30, 2024, the Company had cash and cash equivalents of $66.9 million, as compared to $46.8 million as of December 31, 2023, an increase of $20.1 million.

The tables provided at the end of this press release include a reconciliation of the most directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) to non-GAAP financial measures for the three and six months ended June 30, 2024 and 2023. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below. Additional non-GAAP financial measures are included in MicroStrategy’s “Q2 2024 Earnings Presentation,” which will be available under the “Events and Presentations” section of MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of share-based compensation expense, (ii) non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share that exclude the impacts of share-based compensation expense, interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s long-term debt, gain on debt extinguishment, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude certain foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.

MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impacts of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s long-term debt, (iii) a gain on debt extinguishment, and (iv) related income tax effects. The third set of supplemental financial measures excludes changes resulting from certain fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.

Important Information about BTC Yield KPI

BTC Yield is a key performance indicator (“KPI”) that represents the % change period-to-period of the ratio between the Company’s bitcoin holdings and its Assumed Diluted Shares Outstanding. Assumed Diluted Shares Outstanding refers to the aggregate of the Company’s actual shares of common stock outstanding as of the end of each period plus all additional shares that would result from the assumed conversion of all outstanding convertible notes, exercise of all outstanding stock option awards, and settlement of all outstanding restricted stock units and performance stock units. Assumed Diluted Shares Outstanding is not calculated using the treasury method and does not take into account any vesting conditions (in the case of equity awards), the exercise price of any stock option awards or any contractual conditions limiting convertibility of convertible debt instruments.

The Company uses BTC Yield as a KPI to help assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. The Company believes this KPI can be used to supplement an investor’s understanding of its decision to fund the purchase of bitcoin by issuing additional shares of its common stock or instruments convertible to common stock. When the Company uses this KPI, management also takes into account the various limitations of this metric, including that it does not take into account debt and other liabilities and claims on company assets that would be senior to common equity and that it assumes that all indebtedness will be refinanced or, in the case of the Company’s senior convertible debt instruments, converted into shares of common stock in accordance with their respective terms.

Additionally, this KPI is not, and should not be understood as, an operating performance measure or a financial or liquidity measure. In particular, BTC Yield is not equivalent to “yield” in the traditional financial context. It is not a measure of the return on investment the Company’s shareholders may have achieved historically or can achieve in the future by purchasing stock of the Company, or a measure of income generated by the Company’s operations or its bitcoin holdings, return on investment on its bitcoin holdings, or any other similar financial measure of the performance of its business or assets.

The trading price of the Company’s class A common stock is informed by numerous factors in addition to the amount of bitcoins the Company holds and number of actual or potential shares of its stock outstanding, and as a result, the market value of the Company’s shares may trade at a discount or a premium relative to the market value of the bitcoin the Company holds, and BTC Yield is not indicative nor predictive of the trading price of the Company’s shares of class A common stock.

As noted above, this KPI is narrow in its purpose and is used by management to assist it in assessing whether the Company is using equity capital in a manner accretive to shareholders solely as it pertains to its bitcoin holdings.

In calculating this KPI, the Company does not take into account the source of capital used for the acquisition of its bitcoin. The Company notes in particular, it has acquired bitcoin using proceeds from the offerings of its 6.125% Senior Secured Notes due 2028 (the “Senior Secured Notes”) as well as convertible senior notes, which currently are not exercisable or have conversion prices above the current trading prices of the Class A common stock, each of which would have the effect of increasing the BTC Yield without taking into account the corresponding debt. Conversely, if any of the Company’s convertible senior notes mature or are redeemed without being converted into common stock or the Company needs cash to repay the Senior Secured Notes, the Company may be required to sell shares in quantities greater than the shares such notes are convertible into or generate cash proceeds from the sale of bitcoin, either of which would have the effect of decreasing the BTC Yield due to changes in the Company’s bitcoin holdings and shares in ways that were not contemplated by the assumptions in calculating BTC Yield. Accordingly, this metric might overstate or understate the accretive nature of the Company’s use of equity capital to buy bitcoin because not all bitcoin may be acquired using proceeds of equity offerings and not all issuances of equity may involve the acquisition of bitcoin.

The Company determines its KPI targets based on its history and future goals. The Company’s ability to achieve positive BTC Yield may depend on a variety of factors, including its ability to generate cash from operations in excess of its fixed charges and other expenses, as well as factors outside of its control, such as the availability of debt and equity financing on favorable terms. Past performance is not indicative of future results.

The Company has historically not paid any dividends on its shares of common stock, and by presenting this KPI the Company makes no suggestion that it intends to do so in the future. Ownership of common stock does not represent an ownership interest in the bitcoin the Company holds.

Investors should rely on the financial statements and other disclosures contained in the Company’s SEC filings. This KPI is merely a supplement, not a substitute. It should be used only by sophisticated investors who understand its limited purpose and many limitations.

Conference Call

MicroStrategy will be discussing its second quarter 2024 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. ET. The live Video Webinar and accompanying presentation materials will be available under the “Events and Presentations” section of MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations. Log-in instructions will be available after registering for the event. An archived replay of the event will be available beginning approximately two hours after the call concludes.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) considers itself the world’s first Bitcoin development company. We are a publicly-traded operating company committed to the continued development of the Bitcoin network through our activities in the financial markets, advocacy and technology innovation. As an operating business, we are able to use cashflows as well as proceeds from equity and debt financings to accumulate bitcoin, which serves as our primary treasury reserve asset. We also develop and provide industry-leading AI-powered enterprise analytics software that promotes our vision of Intelligence Everywhere, and are using our software development capabilities to develop bitcoin applications. We believe that the combination of our operating structure, bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, MicroStrategy AI, Intelligence Everywhere, Intelligent Enterprise, and MicroStrategy Library are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.

This press release may include statements that may constitute “forward-looking statements,” including estimates of future business prospects or financial results, our targets relating to our BTC Yield, and statements containing the words “believe,” “estimate,” “project,” “expect,” “will,” or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the “Company”) to differ materially from the forward-looking statements. Factors that could contribute to such differences include: fluctuations in the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price of bitcoin below the value at which the Company’s bitcoins are carried on its balance sheet; the availability of debt and equity financing on favorable terms; gains or losses on any sales of bitcoins; changes in the accounting treatment relating to the Company’s bitcoin holdings; changes in securities laws or other laws or regulations, or the adoption of new laws or regulations, relating to bitcoin that adversely affect the price of bitcoin or the Company’s ability to transact in or own bitcoin; the impact of the availability of spot exchange traded products for bitcoin and other digital assets; a decrease in liquidity in the markets in which bitcoin is traded; security breaches, cyberattacks, unauthorized access, loss of private keys, fraud or other circumstances or events that result in the loss of the Company’s bitcoins; impacts to the price and rate of adoption of bitcoin associated with financial difficulties and bankruptcies of various participants in the digital asset industry; the level and terms of the Company’s substantial indebtedness and its ability to service such debt; the extent and timing of market acceptance of the Company’s new product offerings; continued acceptance of the Company’s other products in the marketplace; the Company’s ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; customers continuing to shift from a product license model to a cloud subscription model, which may delay the Company’s ability to recognize revenue; fluctuations in tax benefits or provisions; changes in the market price of bitcoin as of period-end and their effect on our deferred tax assets and related valuation allowance; other potentially adverse tax consequences; competitive factors; general economic conditions, including levels of inflation and interest rates; currency fluctuations; and other risks detailed in MicroStrategy’s registration statements and periodic reports filed with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this release.

MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues:
Product licenses		$	9,286			$	15,522			$	22,224			$	32,934
Subscription services			24,080				19,878				47,046				38,688
Total product licenses and subscription services			33,366				35,400				69,270				71,622
Product support			61,740				66,081				124,425				131,562
Other services			16,336				18,919				32,993				39,131
Total revenues			111,442				120,400				226,688				242,315
Cost of revenues:
Product licenses			794				444				1,361				978
Subscription services			9,560				7,216				18,164				15,072
Total product licenses and subscription services			10,354				7,660				19,525				16,050
Product support			8,193				5,816				16,740				11,584
Other services			12,388				13,645				24,685				27,428
Total cost of revenues			30,935				27,121				60,950				55,062
Gross profit			80,507				93,279				165,738				187,253
Operating expenses:
Sales and marketing			34,251				37,660				67,702				73,766
Research and development			30,311				29,354				59,494				60,712
General and administrative			36,129				28,830				70,795				56,736
Digital asset impairment losses			180,090				24,143				371,723				43,054
Total operating expenses			280,781				119,987				569,714				234,268
Loss from operations			(200,274	)			(26,708	)			(403,976	)			(47,015	)
Interest expense, net			(15,466	)			(11,095	)			(27,347	)			(26,025	)
Gain on debt extinguishment			0				0				0				44,686
Other income (expense), net			694				(250	)			2,390				(1,693	)
Loss before income taxes			(215,046	)			(38,053	)			(428,933	)			(30,047	)
Benefit from income taxes			(112,487	)			(60,296	)			(273,256	)			(513,483	)
Net (loss) income		$	(102,559	)		$	22,243			$	(155,677	)		$	483,436
Basic (loss) earnings per share (1)		$	(5.74	)		$	1.68			$	(8.88	)		$	41.18
Weighted average shares outstanding used in computing basic (loss) earnings per share			17,861				13,247				17,533				11,739
Diluted (loss) earnings per share (1)		$	(5.74	)		$	1.52			$	(8.88	)		$	33.56
Weighted average shares outstanding used in computing diluted (loss) earnings per share			17,861				16,095				17,533				14,534
(1) Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same.

MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
		June 30,				December 31,
		2024				2023*
		(unaudited)
Assets
Current assets
Cash and cash equivalents		$	66,923			$	46,817
Restricted cash			1,878				1,856
Accounts receivable, net			112,234				183,815
Prepaid expenses and other current assets			27,234				35,407
Total current assets			208,269				267,895
Digital assets			5,687,890				3,626,476
Property and equipment, net			28,332				28,941
Right-of-use assets			53,591				57,343
Deposits and other assets			43,449				24,300
Deferred tax assets, net			1,031,542				757,573
Total Assets		$	7,053,073			$	4,762,528
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, accrued expenses, and operating lease liabilities		$	44,188			$	43,090
Accrued compensation and employee benefits			46,853				50,045
Accrued interest			5,066				1,493
Current portion of long-term debt, net			145,119				483
Deferred revenue and advance payments			204,837				228,162
Total current liabilities			446,063				323,273
Long-term debt, net			3,703,381				2,182,108
Deferred revenue and advance payments			5,964				8,524
Operating lease liabilities			56,544				61,086
Other long-term liabilities			5,965				22,208
Deferred tax liabilities			357				357
Total liabilities			4,218,274				2,597,556
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; 25,787 shares issued and 17,103 shares outstanding, and 23,588 shares issued and 14,904 shares outstanding, respectively			26				24
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 1,964 shares issued and outstanding, respectively			2				2
Additional paid-in capital			4,785,336				3,957,728
Treasury stock, at cost; 8,684 shares and 8,684 shares, respectively			(782,104	)			(782,104	)
Accumulated other comprehensive loss			(13,550	)			(11,444	)
Accumulated deficit			(1,154,911	)			(999,234	)
Total Stockholders’ Equity			2,834,799				2,164,972
Total Liabilities and Stockholders’ Equity		$	7,053,073			$	4,762,528
* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
		Six Months Ended
		June 30,
		2024				2023
		(unaudited)				(unaudited)
Net cash provided by operating activities		$	5,258			$	18,925
Net cash used in investing activities			(2,435,405	)			(527,416	)
Net cash provided by financing activities			2,451,831				525,911
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash			(1,556	)			(235	)
Net increase in cash, cash equivalents, and restricted cash			20,128				17,185
Cash, cash equivalents, and restricted cash, beginning of period			48,673				50,868
Cash, cash equivalents, and restricted cash, end of period		$	68,801			$	68,053

MICROSTRATEGY INCORPORATED
DIGITAL ASSETS – ADDITIONAL INFORMATION
ROLLFORWARD OF BITCOIN HOLDINGS
(unaudited)
		Source of Capital Used to Purchase Bitcoin		Digital Asset Original Cost Basis (in thousands)				Digital Asset Impairment Losses (in thousands)				Digital Asset Carrying Value (in thousands)				Approximate Number of Bitcoins Held *				Approximate Average Purchase Price Per Bitcoin
Balance at December 31, 2022				$	3,993,190			$	(2,153,162	)		$	1,840,028				132,500			$	30,137
Digital asset purchases		(a)			179,275								179,275				7,500				23,903
Digital asset impairment losses									(18,911	)			(18,911	)
Balance at March 31, 2023				$	4,172,465			$	(2,172,073	)		$	2,000,392				140,000			$	29,803
Digital asset purchases		(b)			347,003								347,003				12,333				28,136
Digital asset impairment losses									(24,143	)			(24,143	)
Balance at June 30, 2023				$	4,519,468			$	(2,196,216	)		$	2,323,252				152,333			$	29,668
Digital asset purchases		(c)			161,681								161,681				5,912				27,348
Digital asset impairment losses									(33,559	)			(33,559	)
Balance at September 30, 2023				$	4,681,149			$	(2,229,775	)		$	2,451,374				158,245			$	29,582
Digital asset purchases		(d)			1,214,340								1,214,340				30,905				39,293
Digital asset impairment losses									(39,238	)			(39,238	)
Balance at December 31, 2023				$	5,895,489			$	(2,269,013	)		$	3,626,476				189,150			$	31,168
Digital asset purchases		(e)			1,639,309								1,639,309				25,128				65,238
Digital asset impairment losses									(191,633	)			(191,633	)
Balance at March 31, 2024				$	7,534,798			$	(2,460,646	)		$	5,074,152				214,278			$	35,164
Digital asset purchases		(f)			793,828								793,828				12,053				65,861
Digital asset impairment losses									(180,090	)			(180,090	)
Balance at June 30, 2024				$	8,328,626			$	(2,640,736	)		$	5,687,890				226,331			$	36,798

*		MicroStrategy owns and has purchased bitcoins both directly and indirectly through its wholly-owned subsidiary, MacroStrategy. References to MicroStrategy below refer to MicroStrategy and its subsidiaries on a consolidated basis.
(a)		In the first quarter of 2023, MicroStrategy purchased bitcoin using $179.3 million of the net proceeds from its sale of class A common stock under its at-the-market equity offering program.
(b)		In the second quarter of 2023, MicroStrategy purchased bitcoin using $336.9 million of the net proceeds from its sale of class A common stock under its at-the-market equity offering program and Excess Cash.
(c)		In the third quarter of 2023, MicroStrategy purchased bitcoin using $147.3 million of the net proceeds from its sale of class A common stock under its at-the-market equity offering program and Excess Cash.
(d)		In the fourth quarter of 2023, MicroStrategy purchased bitcoin using $1.201 billion of the net proceeds from its sale of class A common stock under its at-the-market equity offering program and Excess Cash.
(e)		In the first quarter of 2024, MicroStrategy purchased bitcoin using $782.0 million of the net proceeds from its issuance of the 2030 Convertible Notes, $592.3 million of the net proceeds from its issuance of the 2031 Convertible Notes, $137.3 million of the net proceeds from its sale of class A common stock under its at-the-market equity offering program, and Excess Cash.
(f)		In the second quarter of 2024, MicroStrategy purchased $793.8 million of bitcoin using net proceeds from its issuance of the 2032 Convertible Notes and Excess Cash.
Excess Cash refers to cash in excess of the minimum Cash Assets that MicroStrategy is required to hold under its Treasury Reserve Policy, which may include cash generated by operating activities and cash from the proceeds of financing activities. Cash Assets refers to cash and cash equivalents and short-term investments.

MICROSTRATEGY INCORPORATED
DIGITAL ASSETS – ADDITIONAL INFORMATION
MARKET VALUE OF BITCOIN HOLDINGS
(unaudited)
		Approximate Number of Bitcoins Held at End of Quarter *				Lowest Market Price Per Bitcoin During Quarter (a)				Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price (in thousands) (b)				Highest Market Price Per Bitcoin During Quarter (c)				Market Value of Bitcoin Held at End of Quarter Using Highest Market Price (in thousands) (d)				Market Price Per Bitcoin at End of Quarter (e)				Market Value of Bitcoin Held at End of Quarter Using Ending Market Price (in thousands) (f)
December 31, 2022			132,500			$	15,460.00			$	2,048,450			$	21,478.80			$	2,845,941			$	16,556.32			$	2,193,712
March 31, 2023			140,000			$	16,490.00			$	2,308,600			$	29,190.04			$	4,086,606			$	28,468.44			$	3,985,582
June 30, 2023			152,333			$	24,750.00			$	3,770,242			$	31,443.67			$	4,789,909			$	30,361.51			$	4,625,060
September 30, 2023			158,245			$	24,900.00			$	3,940,301			$	31,862.21			$	5,042,035			$	27,030.47			$	4,277,437
December 31, 2023			189,150			$	26,521.32			$	5,016,508			$	45,000.00			$	8,511,750			$	42,531.41			$	8,044,816
March 31, 2024			214,278			$	38,501.00			$	8,249,917			$	73,835.57			$	15,821,338			$	71,028.14			$	15,219,768
June 30, 2024			226,331			$	56,500.00			$	12,787,702			$	72,777.00			$	16,471,691			$	61,926.69			$	14,015,930

*		MicroStrategy owns and has purchased bitcoins both directly and indirectly through its wholly-owned subsidiary, MacroStrategy. References to MicroStrategy below refer to MicroStrategy and its subsidiaries on a consolidated basis.
(a)		The "Lowest Market Price Per Bitcoin During Quarter" represents the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when MicroStrategy purchased any of its bitcoin.
(b)		The "Market Value of Bitcoin Held at End of Quarter Using Lowest Market Price" represents a mathematical calculation consisting of the lowest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.
(c)		The "Highest Market Price Per Bitcoin During Quarter" represents the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter, without regard to when MicroStrategy purchased any of its bitcoin.
(d)		The "Market Value of Bitcoin Held at End of Quarter Using Highest Market Price" represents a mathematical calculation consisting of the highest market price for one bitcoin reported on the Coinbase exchange during the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.
(e)		The "Market Price Per Bitcoin at End of Quarter" represents the market price of one bitcoin on the Coinbase exchange at 4:00 p.m. Eastern Time on the last day of the respective quarter.
(f)		The "Market Value of Bitcoin Held at End of Quarter Using Ending Market Price" represents a mathematical calculation consisting of the market price of one bitcoin on the Coinbase exchange at 4:00 p.m. Eastern Time on the last day of the respective quarter multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period.
The amounts reported as “Market Value” in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported on the Coinbase exchange (MicroStrategy’s principal market for bitcoin) in each scenario defined above multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period. Bitcoin and bitcoin markets may be subject to manipulation and the spot price of bitcoin may be subject to fraud and manipulation. Accordingly, the Market Value amounts reported above may not accurately represent fair market value, and the actual fair market value of MicroStrategy’s bitcoin may be different from such amounts and such deviation may be material. Moreover, (i) the bitcoin market historically has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks that are, or may be, inherent in its entirely electronic, virtual form and decentralized network and (ii) MicroStrategy may not be able to sell its bitcoins at the Market Value amounts indicated above, at the market price as reported on the Coinbase exchange (its principal market) on the date of sale, or at all.

MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
LOSS FROM OPERATIONS
(in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Reconciliation of non-GAAP loss from operations:
Loss from operations		$	(200,274	)		$	(26,708	)		$	(403,976	)		$	(47,015	)
Share-based compensation expense			20,621				15,494				38,412				33,049
Non-GAAP loss from operations		$	(179,653	)		$	(11,214	)		$	(365,564	)		$	(13,966	)

MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET (LOSS) INCOME AND DILUTED (LOSS) EARNINGS PER SHARE
(in thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Reconciliation of non-GAAP net (loss) income:
Net (loss) income		$	(102,559	)		$	22,243			$	(155,677	)		$	483,436
Share-based compensation expense			20,621				15,494				38,412				33,049
Interest expense arising from amortization of debt issuance costs			3,842				2,190				6,399				4,400
Gain on debt extinguishment			0				0				0				(44,686	)
Income tax effects (1)			(57,962	)			(2,998	)			(167,200	)			5,768
Non-GAAP net (loss) income		$	(136,058	)		$	36,929			$	(278,066	)		$	481,967
Reconciliation of non-GAAP diluted (loss) earnings per share (2):
Diluted (loss) earnings per share		$	(5.74	)		$	1.52			$	(8.88	)		$	33.56
Share-based compensation expense (per diluted share)			1.15				0.96				2.19				2.27
Interest expense arising from amortization of debt issuance costs (per diluted share) (3)			0.22				0.03				0.37				0.06
Gain on debt extinguishment (per diluted share)			0.00				0.00				0.00				(3.07	)
Income tax effects (per diluted share) (3)			(3.25	)			(0.16	)			(9.54	)			0.46
Non-GAAP diluted (loss) earnings per share		$	(7.62	)		$	2.35			$	(15.86	)		$	33.28

(1)		Income tax effects reflect the net tax effects of share-based compensation, which includes tax benefits and expenses on exercises of stock options and vesting of share-settled restricted stock units, interest expense for amortization of debt issuance costs, and gain on debt extinguishment.
(2)		For reconciliation purposes, the non-GAAP diluted earnings (loss) per share calculations use the same weighted average shares outstanding as that used in the GAAP diluted earnings (loss) per share calculations for the same period. For example, in periods of GAAP net loss, otherwise dilutive potential shares of common stock from MicroStrategy’s share-based compensation arrangements and convertible notes are excluded from the GAAP diluted loss per share calculation as they would be antidilutive, and therefore are also excluded from the non-GAAP diluted earnings or loss per share calculation.
(3)		For the three and six months ended June 30, 2023, interest expense from the amortization of issuance costs of the convertible notes has been added back to the numerator in the GAAP diluted earnings per share calculation, and therefore the per diluted share effects of the amortization of issuance costs of the convertible notes have been excluded from the “Interest expense arising from amortization of debt issuance costs (per diluted share)” and “Income tax effects (per diluted share)” lines in the above reconciliation for the three and six months ended June 30, 2023.

MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
CONSTANT CURRENCY
(in thousands)
		Three Months Ended
		June 30,
		(unaudited)
		GAAP				Foreign Currency Exchange Rate Impact (1)				Non-GAAP Constant Currency (2)				GAAP				GAAP % Change				Non-GAAP Constant Currency % Change (3)
		2024				2024				2024				2023				2024				2024
Revenues
Product licenses		$	9,286			$	(20	)		$	9,306			$	15,522				-40.2	%			-40.0	%
Subscription services			24,080				(125	)			24,205				19,878				21.1	%			21.8	%
Total product licenses and subscription services			33,366				(145	)			33,511				35,400				-5.7	%			-5.3	%
Product support			61,740				(364	)			62,104				66,081				-6.6	%			-6.0	%
Other services			16,336				(146	)			16,482				18,919				-13.7	%			-12.9	%
Total revenues			111,442				(655	)			112,097				120,400				-7.4	%			-6.9	%

		Six Months Ended
		June 30,
		(unaudited)
		GAAP				Foreign Currency Exchange Rate Impact (1)				Non-GAAP Constant Currency (2)				GAAP				GAAP % Change				Non-GAAP Constant Currency % Change (3)
		2024				2024				2024				2023				2024				2024
Revenues
Product licenses		$	22,224			$	(102	)		$	22,326			$	32,934				-32.5	%			-32.2	%
Subscription services			47,046				(39	)			47,085				38,688				21.6	%			21.7	%
Total product licenses and subscription services			69,270				(141	)			69,411				71,622				-3.3	%			-3.1	%
Product support			124,425				(120	)			124,545				131,562				-5.4	%			-5.3	%
Other services			32,993				(88	)			33,081				39,131				-15.7	%			-15.5	%
Total revenues			226,688				(349	)			227,037				242,315				-6.4	%			-6.3	%

(1)		The “Foreign Currency Exchange Rate Impact” reflects the estimated impact of fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decrease) in international revenues from the same period in the prior year, based on comparisons to the prior year quarterly average foreign currency exchange rates. “International revenues” refers to revenues from operations outside of the United States and Canada only where the functional currency is the local currency (i.e., excluding any location whose economy is considered highly inflationary).
(2)		The “Non-GAAP Constant Currency” reflects the current period GAAP amount, less the Foreign Currency Exchange Rate Impact.
(3)		The “Non-GAAP Constant Currency % Change” reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.

MICROSTRATEGY INCORPORATED
DEFERRED REVENUE DETAIL
(in thousands)
		June 30,				December 31,				June 30,
		2024				2023*				2023
		(unaudited)								(unaudited)
Current:
Deferred product licenses revenue		$	4,200			$	3,579			$	974
Deferred subscription services revenue			69,566				65,512				49,898
Deferred product support revenue			127,170				152,012				141,605
Deferred other services revenue			3,901				7,059				3,340
Total current deferred revenue and advance payments		$	204,837			$	228,162			$	195,817
Non-current:
Deferred product licenses revenue		$	0			$	0			$	2,493
Deferred subscription services revenue			1,623				3,097				2,888
Deferred product support revenue			3,974				4,984				5,340
Deferred other services revenue			367				443				523
Total non-current deferred revenue and advance payments		$	5,964			$	8,524			$	11,244
Total current and non-current:
Deferred product licenses revenue		$	4,200			$	3,579			$	3,467
Deferred subscription services revenue			71,189				68,609				52,786
Deferred product support revenue			131,144				156,996				146,945
Deferred other services revenue			4,268				7,502				3,863
Total current and non-current deferred revenue and advance payments		$	210,801			$	236,686			$	207,061
* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED
SEGMENT INFORMATION
(in thousands, unaudited)
		Three Months Ended June 30, 2024												Three Months Ended June 30, 2023
		Software Business				Corporate & Other				Total Consolidated				Software Business				Corporate & Other				Total Consolidated
Total revenues		$	111,442							$	111,442			$	120,400							$	120,400
Total cost of revenues			30,935								30,935				27,121								27,121
Gross profit		$	80,507							$	80,507			$	93,279							$	93,279
Total operating expenses			99,236				181,545				280,781				95,521				24,466				119,987
Loss from operations		$	(18,729	)		$	(181,545	)		$	(200,274	)		$	(2,242	)		$	(24,466	)		$	(26,708	)

		Six Months Ended June 30, 2024												Six Months Ended June 30, 2023
		Software Business				Corporate & Other				Total Consolidated				Software Business				Corporate & Other				Total Consolidated
Total revenues		$	226,688							$	226,688			$	242,315							$	242,315
Total cost of revenues			60,950								60,950				55,062								55,062
Gross profit		$	165,738							$	165,738			$	187,253							$	187,253
Total operating expenses			195,359				374,355				569,714				190,008				44,260				234,268
Loss from operations		$	(29,621	)		$	(374,355	)		$	(403,976	)		$	(2,755	)		$	(44,260	)		$	(47,015	)
MicroStrategy manages its business in one reportable operating segment which is engaged in the design, development, marketing, and sales of its software platform through licensing arrangements and cloud subscriptions and related services. Beginning in 2024, MicroStrategy has broken out a Corporate & Other category, which is not considered an operating segment, and includes the impairment charges and other third-party costs associated with its digital asset holdings.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801276948/en/

MicroStrategy Incorporated

Shirish Jajodia

Investor Relations

ir@microstrategy.com

Source: MicroStrategy Incorporated

FAQ

What was MicroStrategy's (MSTR) bitcoin holdings as of July 31, 2024?

MicroStrategy (MSTR) held 226,500 bitcoins as of July 31, 2024, at a total cost of $8.3 billion, or $36,821 per bitcoin.

How many bitcoins did MicroStrategy (MSTR) acquire since the beginning of Q2 2024?

MicroStrategy (MSTR) acquired 12,222 bitcoins since the beginning of Q2 2024 for $805.2 million, or $65,882 per bitcoin.

What was MicroStrategy's (MSTR) Subscription Services Revenue for Q2 2024?

MicroStrategy's (MSTR) Subscription Services Revenue for Q2 2024 was $24.1 million, up 21% year-over-year.

What is the 'BTC Yield' KPI introduced by MicroStrategy (MSTR) in Q2 2024?

BTC Yield is a key performance indicator representing the % change in the ratio between MicroStrategy's (MSTR) bitcoin holdings and its Assumed Diluted Shares Outstanding. The company is targeting an annual BTC Yield of 4-8% from 2025-2027.

When will MicroStrategy's (MSTR) 10-for-1 stock split take effect?

MicroStrategy's (MSTR) 10-for-1 stock split is expected to take effect after the close of trading on August 7, 2024, with split-adjusted trading commencing on August 8, 2024.