Monday, April 15, 2024

MicroStrategy Q3 2023: 158,400 Bitcoin Holdings at $29,586 per BTC

MicroStrategy Incorporated (Nasdaq: MSTR), a leading independent business intelligence company, disclosed its third quarter financial results for 2023 on November 1, revealing a continued focus on Bitcoin acquisition and AI integration in its offerings. The Q3 report highlighted an acquisition of 6,067 bitcoins at a total cost of $167.0 million, averaging $27,531 per bitcoin, bringing their total holdings to 158,400 bitcoins valued at $4.69 billion as of October 31, 2023. The report also indicated a year-over-year revenue increase of 3% amounting to $129.5 million, with significant growth in Software Licenses Revenues (up 16% to $45.0 million) and Subscription Services Revenues (up 28% to $21.0 million).

MicroStrategy’s foray into artificial intelligence was showcased with the launch of its inaugural MicroStrategy AI software, leveraging Microsoft Azure OpenAI, marking a significant stride in the business intelligence industry which sees AI as a pivotal innovation driver. The release reflects a broader industry trend of integrating AI capabilities to provide enhanced analytics and business insights.

The firm’s financial data also spotlighted a gross profit of $102.8 million with a gross margin of 79.4%, alongside an operational loss of $25.2 million largely attributed to digital asset impairment losses amounting to $33.6 million. The net loss for the quarter stood at $143.4 million or $10.09 per share on a diluted basis, starkly contrasted against Q3 2022’s net loss of $27.1 million or $2.39 per share. Tax provisions reflecting changes in valuation allowance on deferred tax assets related to bitcoin impairment significantly impacted the net loss figures.

MicroStrategy’s balance sheet as of September 30, 2023, showed cash and equivalents of $45.0 million, a modest increase from December 31, 2022’s $43.8 million. The carrying value of their digital assets was $2.451 billion, reflecting cumulative impairment losses of $2.230 billion since acquisition. Under a Sales Agreement initiated on August 1, 2023, with Cowen and Company, LLC, Canaccord Genuity LLC, and Berenberg Capital Markets LLC, MicroStrategy issued and sold 403,362 shares of its class A common stock for net proceeds of approximately $147.2 million. As of the quarter’s end, roughly $602.1 million of class A common stock remained available for issuance and sale under this agreement.

MicroStrategy’s dual corporate strategy of acquiring and holding bitcoin alongside growing its enterprise analytics software business portrays a bifocal approach to value creation. The commitment towards bitcoin, seen as a reliable value store, juxtaposed with a drive to promote ‘Intelligence Everywhere’ through its analytics platform, underscores MicroStrategy’s aim to capitalize on the synergies between emerging digital assets and advancing business intelligence technology.

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