MicroStrategy, the business intelligence company, has revealed a substantial increase in its cryptocurrency holdings in its Q2 2024 earnings report. The firm now possesses 226,500 bitcoins, solidifying its position as one of the largest corporate holders of the digital asset.
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.
MicroStrategy’s Chief Financial Officer, Andrew Kang, highlighted the company’s use of “intelligent leverage” in its Bitcoin acquisition strategy, which has resulted in significant Bitcoin accumulation for shareholders.
While MicroStrategy’s Bitcoin holdings have expanded, the company’s core software business recorded mixed results. Overall revenue decreased by 7.4% compared to Q2 2023, amounting to $111.4 million. Subscription services revenues, however, increased by 21% year-over-year to $24.1 million. But product licenses and subscription services revenues fell 5.7% to $33.4 million, and product support revenues declined 6.6% to $61.7 million.
In order to foster further growth and Bitcoin acquisitions, MicroStrategy has announced plans for a new $2 billion at-the-market (ATM) equity offering program. This follows the company’s successful fundraising endeavors in 2023, when 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.
The company’s reliance on convertible notes and equity offerings to fund its Bitcoin purchases is a subject of debate. MicroStrategy’s software business barely generates enough cash to cover operating expenses, currently running an annual free cash flow deficit of at least $60-70 million in interest expenses.
With $4 billion in debt and Bitcoin holdings valued at $15 billion (against a cost basis of $8.4 billion), the company faces financial challenges.
To increase the liquidity of its shares and make them more accessible to a wider range of investors, MicroStrategy has announced a 10-for-1 forward stock split, set to take effect on August 7.
Despite concerns, MicroStrategy reported a “BTC Yield” of 12.2% year-to-date, indicating that its Bitcoin holdings have contributed positively to shareholder equity.