MicroStrategy,
a business intelligence and software group that has increasingly traded as a proxy for
Bitcoin
—which it holds en masse in its corporate treasury—smashed expectations for first-quarter earnings. Investors can look to 2023’s crypto rally.
MicroStrategy
(ticker: MSTR), founded by high-profile Bitcoin bull Michael Saylor—who is now its chairman—reported earnings per share of $31.79 in the first three months of 2023 on revenue of $122 million. The group snapped a streak of eight consecutive quarters of losses on a per-share basis to firmly beat expectations for a loss of $1.28 a share, with revenue topping the $119 million estimate of analysts surveyed by FactSet.
Shares in MicroStrategy gained 2% in premarket trading on Tuesday. The stock already has gained almost 120% so far this year.
In its core business, software licenses revenue climbed 23% year over year to $36.2 million, with subscription services revenue up 46% on an annual basis to $18.8 million.
But for MicroStrategy, it’s all about Bitcoin. The company has emerged, alongside the likes of
Tesla
(TSLA) and
Block
(SQ), as one of the few publicly listed companies to hold significant cryptocurrency holdings. MicroStrategy, in particular, has emerged as a notable “whale” in crypto markets, with its shares trading in step with Bitcoin prices.
Bitcoin’s rally in 2023—the largest crypto has gained some 70% this year, dwarfing the 8.6% returns in the
S&P 500
stock index—has helped buoy MicroStrategy’s financials at a time when the group continues to double down on digital assets.
MicroStrategy reported an impairment of $19 million on its digital asset holdings as of the end of March—Bitcoin, it should be noted, remains well below its all-time high near $69,000 from late 2021. That’s well down from a $198 million impairment charge in the prior quarter, and a rebound from the $918 million write-down in the second-quarter of 2022, in the heat of the bear market.
“The conviction in our Bitcoin strategy remains strong as the digital asset environment continues to mature,” said Phong Le, MicroStrategy’s president and CEO.
“In Q1, we strengthened our capital structure by reducing leverage by fully repaying our Bitcoin-backed loan,” added Andrew Kang, chief financial officer.
The company continues to bet big on Bitcoin, increasing its holdings by 7,500 Bitcoins in the last quarter at a net aggregate purchase amount of $179 million or just shy of $24,000 per Bitcoin. The largest digital asset traded above $28,000 on Tuesday. As of the end of March, MicroStrategy held 140,000 Bitcoins for a total cost of $4.2 billion, or around $29,800 per Bitcoin, still slightly underwater in the current crypto market.
Write to Jack Denton at jack.denton@barrons.com
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