MicroStrategy Reports $123 Million Q2 Loss, Bitcoin Holdings Reach 226,500

TLDR

MicroStrategy reported a Q2 net loss of $123 million, an improvement from $137 million loss in Q2 2023
The company’s Bitcoin holdings increased to 226,500 BTC, worth approximately $14.7 billion at current prices
MicroStrategy’s Q2 revenue was $111.4 million, down 7% year-over-year and below analyst estimates
The company introduced a new KPI called “Bitcoin Yield” and targets a 4-8% annual yield from 2025-2027
MicroStrategy plans to file for a $2 billion at-the-market equity offering to potentially raise more capital

MicroStrategy, the business intelligence firm known for its significant Bitcoin investments, released its second-quarter earnings report for 2024 on August 1, revealing a mix of financial challenges and strategic growth in its cryptocurrency holdings.

The company reported a net loss of $123 million for Q2, or $5.74 per share, which exceeded analyst expectations of a $0.78 per share loss. While this represents a substantial loss, it marks an improvement from the $137 million loss reported in the same quarter of 2023. The adjusted loss per share stood at $7.62, slightly better than the previous quarter’s $8.26 per share loss.

MicroStrategy’s Q2 revenue came in at $111.4 million, falling short of the consensus estimate of $122 million and representing a 7% decline year-over-year. Despite the overall revenue decrease, the company reported a 21% year-over-year increase in subscription services revenues, totaling $24.1 million for the quarter.

The firm’s Bitcoin strategy remained a central focus of its financial activities. During Q2, MicroStrategy acquired an additional 12,222 Bitcoin for $805 million, bringing its total holdings to 226,500 BTC as of July 31. These holdings, purchased for a total of $8.3 billion at an average price of $36,821 per Bitcoin, are now valued at approximately $14.7 billion at current market prices.

MicroStrategy’s continued accumulation of Bitcoin resulted in an impairment charge of $180.1 million for the quarter, significantly higher than the $24.1 million impairment reported in Q2 2023. It’s worth noting that while new accounting guidelines allow companies to mark their digital asset holdings to market, MicroStrategy has not yet adopted this practice.

The company introduced a key performance indicator called “Bitcoin Yield,” which measures the percentage change over time in the ratio between the firm’s Bitcoin holdings and its diluted outstanding shares. MicroStrategy reported a Bitcoin Yield of 12.2% year-to-date and set a target of 4-8% annually for the next three years.

Looking ahead, MicroStrategy announced plans to file a registration form for a $2 billion at-the-market equity offering to potentially raise additional capital. While the company did not specify the intended use of these funds, historically, such capital raises have been used to purchase more Bitcoin.

CEO Phong Le expressed optimism about Bitcoin’s growing acceptance, stating,

“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.”

MicroStrategy also confirmed its previously announced 10-for-1 stock split, which will take effect on August 7, 2024. This move aims to make the company’s shares more accessible to investors and employees.

Despite the reported losses, MicroStrategy’s stock showed resilience, rising approximately 1% in after-hours trading following the earnings release.

This suggests that investors may be focusing on the company’s expanded Bitcoin holdings and long-term strategy rather than short-term financial losses.