LUCKNOW (CoinChapter.com) – MicroStrategy, the business intelligence firm, has reported a significant expansion of its cryptocurrency holdings in its Q2 2024 earnings report. The company now holds 226,500 bitcoins, solidifying its position as one of the largest corporate holders of the digital asset.
MicroStrategy BTC holding reached 226,500 in Q2. Source: MicroStrategy Q2 Earning Report
BTC Acquisition Spree Expected to Continue Post MicroStrategy Earnings Report
In the second quarter alone, MicroStrategy acquired an additional 12,222 bitcoins, investing $805.2 million at an average price of $65,882 per bitcoin. This brings the company’s total Bitcoin investment to approximately $8.3 billion, with an average purchase price of $36,821 per bitcoin.
Andrew Kang, MicroStrategy’s Chief Financial Officer, emphasized the company’s use of “intelligent leverage” in its Bitcoin acquisition strategy, which has resulted in significant Bitcoin accretion for shareholders.
While MicroStrategy’s Bitcoin holdings have grown, the company’s core software business showed mixed results. Overall revenue decreased by 7.4% compared to Q2 2023, totaling $111.4 million. Subscription services revenues increased by 21% year-over-year to $24.1 million, but product licenses and subscription services revenues fell 5.7% to $33.4 million. Product support revenues also declined 6.6% to $61.7 million.
MicroStrategy’s core software business revenue decreased by 7%. Source: MicroStrategy Q2 Earning Report
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The Firm Announced $2 Billion Stock Offering
To fuel further growth and Bitcoin acquisitions, MicroStrategy announced plans for a new $2 billion at-the-market (ATM) equity offering program. This follows the company’s successful fundraising efforts in 2023, where it raised $1.6 billion through three ATM equity offerings.
However, market analysts caution that the full $2 billion may not be raised due to increased competition from Bitcoin ETFs, the scale of the offering compared to previous fundraising efforts, and potential investor fatigue with MicroStrategy’s Bitcoin-focused strategy.
MicroStrategy’s reliance on convertible notes and equity offerings to fund its Bitcoin purchases is debatable. The company’s software business barely generates enough cash to cover operating expenses. MicroStrategy is currently running a free cash flow deficit of at least $60-70 million in annual interest expenses.
MicroStrategy is currently $4 billion in debt and its Bitcoin holdings values at $15 billion (against a cost basis of $8.4 billion).
Stock Split to Increase Liquidity
To make its shares more accessible to a broader range of investors, MicroStrategy announced a 10-for-1 forward stock split, set to take effect on August 7. This move is designed to increase the liquidity of the company’s stock.
Despite concerns, MicroStrategy reported a “BTC Yield” of 12.2% year-to-date. This indicates that its Bitcoin holdings have contributed positively to shareholder equity.
MicroStrategy reported a “BTC Yield” of 12.2% year-to-date. Source: MicroStrategy Q2 Earning Report
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