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Strategy 8-K Report, Financial Results (Apr 29, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed April 29, 2024
Period End
April 29, 2024
In the record · 2016–202610-K1110-Q338-K265

MSTR filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 265 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’20Jul ’20
  2. Material agreement8-K · Sep ’22Sep ’22
  3. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed April 29, 2024. Cited figures are marked; the original filing is the authoritative source.

MicroStrategy Incorporated reported first-quarter 2024 results for the three months ended March 31, 2024, in a press release furnished as Exhibit 99.1 to this Form 8-K.

Total revenues were $115.2 milliona, down 5.5% year-over-year, while subscription services revenues rose to $23.0 million from $18.8 million. The company posted a loss from operations of $203.7 million, driven largely by $191.6 million in digital asset impairment losses, and a net loss of $53.1 million, or $3.09 per diluted share, compared with net income of $461.2 million in the prior-year quarter. A benefit from income taxes of $160.8 million partially offset the operating loss.

The company's bitcoin holdings are central to the report. As of April 26, 2024, MicroStrategy held 214,400 bitcoins at a total cost of $7.54 billionb, or $35,180 per bitcoin, after acquiring 25,250 bitcoins since the end of the fourth quarter for $1.65 billion. As of March 31, 2024, the digital assets carrying value was $5.074 billion after cumulative impairment losses of $2.461 billion, while the market value using the quarter-end price of $71,028.14 per bitcoin was $15.220 billion.

Cash and cash equivalents rose to $81.3 millionc from $46.8 million at year-end 2023. Financing activity was significant in the quarter. In March 2024 the company issued $800.0 million of 0.625% convertible senior notes due 2030, with net proceeds of approximately $782.0 million, and $603.8 million of 0.875% convertible senior notes due 2031, with net proceeds of approximately $592.3 million.

Long-term debt, net, rose to $3.56 billiond at March 31, 2024, from $2.18 billion at December 31, 2023. The filing notes that the press release was furnished under Item 2.02 and is not deemed filed for purposes of Section 18 of the Exchange Act.

02—Key points

Key Highlights

  1. Total revenues of $115.2 million, down 5.5% year-over-year (5.7% decline on a non-GAAP constant currency basis).
  2. Subscription services revenues of $23.0 million, up from $18.8 million, a 22.1% increase year-over-year.
  3. Loss from operations of $203.7 million, including $191.6 million of digital asset impairment losses, versus a $20.3 million loss a year earlier.
  4. Net loss of $53.1 million, or $3.09 per diluted share, compared with net income of $461.2 million, or $31.79 per diluted share, in Q1 2023.
  5. Non-GAAP net loss of $142.0 million, or $(8.26) per diluted share, excluding share-based compensation, debt issuance cost amortization, and related tax effects.
  6. Bitcoin holdings of 214,400 bitcoins at a total cost of $7.54 billion as of April 26, 2024, after 25,250 bitcoins were acquired in the period since year-end 2023 for $1.65 billion.
  7. Issued $800.0 million of 2030 convertible notes and $603.8 million of 2031 convertible notes in March 2024, with combined net proceeds of approximately $1.37 billion.

03—Questions

Frequently Asked Questions

  1. Why did MicroStrategy report a larger net loss despite a benefit from income taxes?

    The loss was driven mainly by $191.6 million of digital asset impairment losses on its bitcoin holdings, which pushed the loss from operations to $203.7 million. The $160.8 million income tax benefit, principally reflecting tax effects from share-based compensation and bitcoin holdings, reduced the pre-tax loss of $213.9 million to a net loss of $53.1 million.

  2. How much bitcoin does MicroStrategy hold and what is its cost basis?

    As of April 26, 2024, the company held 214,400 bitcoins at a total cost of $7.54 billion, or $35,180 per bitcoin. As of March 31, 2024, the carrying value of its digital assets (about 214,278 bitcoins) was $5.074 billion after cumulative impairment losses of $2.461 billion, and the market value at the quarter-end price of $71,028.14 per bitcoin was $15.220 billion.

  3. How did MicroStrategy fund its bitcoin purchases in the first quarter of 2024?

    The filing states that Q1 2024 bitcoin purchases were funded using $782.0 million of net proceeds from the 2030 Convertible Notes, $592.3 million of net proceeds from the 2031 Convertible Notes, $137.3 million of net proceeds from sales of class A common stock under its at-the-market program, and Excess Cash.

  4. What are the key terms of the convertible notes issued in March 2024?

    The 2030 Convertible Notes ($800.0 million principal) bear interest at 0.625%, mature March 15, 2030, and have an initial conversion price of $1,497.68 per share. The 2031 Convertible Notes ($603.8 million principal) bear interest at 0.875%, mature March 15, 2031, and have an initial conversion price of $2,327.21 per share. Holders of both series may require repurchase for cash at par plus accrued interest on September 15, 2028.

  5. How did revenue perform in the quarter?

    Total revenues were $115.2 million, a 5.5% decrease from $121.9 million in Q1 2023. Within that, product licenses and subscription services were $35.9 million (down 0.9%), product support was $62.7 million (down 4.3%), and other services were $16.7 million (down 17.6%). Subscription services revenues grew to $23.0 million from $18.8 million.

04—Continue

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