MicroStrategy, the top corporate holder of Bitcoin, just posted a net loss of $53.1 million for the first quarter of 2024, but that hasn’t stopped them from buying more Bitcoin in April. Their losses mainly came from a huge $191.6 million loss on their digital assets.
This loss was ten times more than what they faced last year. Their total money made, also called revenue, dropped by 5.5% to $115.2 million compared to the same time last year.
This quarter, they scooped up an additional 25,250 bitcoins, costing them $1.65 billion, which works out to about $65,232 per bitcoin. As of April 26, 2024, they own 214,400 bitcoins in total, which have cost them $7.54 billion, averaging $35,180 per bitcoin. While their overall revenue dipped, their subscription services are looking up, pulling in $23.0 million, a 22% increase from last year.
Unwavering Commitment to Bitcoin
MicroStrategy’s top brass, including President and CEO Phong Le, stands firm on their Bitcoin strategy. Le highlighted the company’s ongoing work to push the Bitcoin network forward, not just through market plays but also advocacy and tech innovations. The strategy seems to be paying off, at least in some areas, with their subscription services growing due to a shift to a more modern, cloud-based platform.
Andrew Kang, the CFO, pointed out their active financial maneuvers which include two big sales of convertible debt that helped them raise over $1.5 billion. These funds helped support their continued Bitcoin purchases, marking their 14th consecutive quarter of adding to their Bitcoin stash. Kang noted significant gains in Bitcoin’s value, partly thanks to new spot Bitcoin exchange-traded products which boosted demand and regulatory clarity.
Losses Amidst Gains
Their first-quarter financials are a mixed bag. They made $115.2 million, down 5.5% from last year. Breaking it down, their product licenses and services made $35.9 million, just slightly down by 0.9%. However, their product support cash dipped by 4.3% to $62.7 million, and other services dropped significantly by 17.6% to $16.7 million.
Their gross profit was at $85.2 million, down from $94.0 million last year, showing a drop in gross margin from 77.1% to 74.0%. Their operating expenses skyrocketed to $288.9 million, up by a whopping 152.8%, largely due to the massive $191.6 million lost in crypto impairments.
Their cash and equivalents saw a rise to $81.3 million from last year’s $46.8 million. The value of their digital assets was listed at $5.074 billion, despite a cumulative impairment loss of $2.461 billion. As of the end of March, their bitcoins had a market value of $15.220 billion, against a cost basis of $7.535 billion.
In March, MicroStrategy issued $800.0 million in 0.625% convertible notes due in 2030 and another $603.8 million in 0.875% notes due in 2031. The 2030 notes are convertible at $1,497.68 per share, and the 2031 notes at $2,327.21 per share.
These notes are key parts of their long-term financial planning, offering options for conversion or cash repurchase by 2028 or 2031. After all costs, the 2030 notes netted them about $782.0 million, and the 2031 notes about $592.3 million. These are recorded as long-term liabilities on their balance sheet.
So, MicroStrategy is still all-in on Bitcoin, buying more despite the losses. They are betting big on their tech and market strategies, hoping the cryptocurrency’s ups outweigh its downs.