MSTR MicroStrategy Inc

• 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

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