GuruFocus -
- Bitcoin Holdings: 252,220 Bitcoins with a market value of $18 billion.
- Bitcoin Acquisition: Acquired 25,889 Bitcoins for $1.6 billion at an average price of $60,839.
- Equity and Debt Financing: Raised $1.1 billion through ATM equity offering and $1.01 billion through convertible notes.
- Software Business Revenue: $116 million, down 10% year-over-year.
- Non-GAAP Subscription Billings: Grew 93% year-over-year to $32.4 million.
- Subscription Services Revenue: Increased 32% year-over-year, now 24% of total revenues.
- Cost of Revenues: $34 million, up 29% due to higher cloud hosting costs.
- Operating Expenses: $100 million, up 7% year-over-year.
- Severance Costs: $14 million, resulting in $30 million in expected savings next year.
- Bitcoin Impairment: $414 million in Q3.
- Convertible Debt: $4.3 billion outstanding with a 0.8% blended interest rate.
- Market Value of Bitcoin Holdings: $16 billion with an aggregate cost of $9.9 billion.
- BT C Yield: 5.1% in Q3, with a year-to-date yield of 17.8%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MicroStrategy Inc (NASDAQ:MSTR) remains the largest corporate holder of Bitcoin, with 252,220 Bitcoins valued at $18 billion.
- The company successfully raised $1.1 billion through an ATM equity offering and $1.01 billion through convertible notes, enhancing its Bitcoin acquisition strategy.
- MicroStrategy Inc (NASDAQ:MSTR) reported a 93% year-over-year growth in non-GAAP subscription billings, driven by cloud migrations and new customer wins.
- The company has a strategic plan to raise $42 billion over the next three years to acquire more Bitcoin, showcasing its commitment to its Bitcoin Treasury strategy.
- MicroStrategy Inc (NASDAQ:MSTR) has demonstrated strong performance, outperforming the S&P 500 and major tech stocks since adopting its Bitcoin strategy in 2020.
- MicroStrategy Inc (NASDAQ:MSTR) reported a 10% year-over-year decline in software business revenues, reflecting the ongoing transition from on-premise to cloud.
- The company incurred $14 million in severance costs related to workforce optimization, impacting short-term financials.
- There is a potential risk associated with the ambitious $42 billion capital raising plan, which could lead to dilution of existing shareholders.
- MicroStrategy Inc (NASDAQ:MSTR) faces high volatility in its stock, which may concern risk-averse investors.
- The company's heavy reliance on Bitcoin exposes it to significant market risk and volatility, which could impact financial stability.
A: Andrew Kang, Chief Financial Officer, explained that they have reduced their annual debt cost by about $30 million by redeeming their 2028 notes, which were their highest cost debt. This action also released them from all covenants, creating potential opportunities. Additionally, their 2,121 plan to raise $42 billion of capital could be used to service interest if needed. Overall, they feel confident about their ability to issue new debt and fixed income securities.
Q: Given your ambitious ATM plan, are you concerned about the control company status, and how do you view it in the long term?
A: Michael Saylor, Chairman of the Board and CEO, stated that although his voting interest might slip below 50% as they raise more capital, he is not concerned. He emphasized that the company will be run in partnership with common stock shareholders, who will have a say in the company. Saylor believes the company can operate effectively even if his voting share decreases, as the principles and plans are clear and aligned with shareholder interests.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.