MicroStrategy, now known as Strategy, is a company that creates software for analyzing data to help businesses make smart decisions. Founded in 1989, Strategy offers business intelligence, mobile software, and cloud services. They are based in Tysons Corner, Virginia.
Lately, Strategy has been in the spotlight for investing heavily in Bitcoin, making it one of the biggest corporate holders of the cryptocurrency. They are also focusing on artificial intelligence as part of their new direction. Despite financial challenges, Strategy continues to invest in its digital transformation initiatives.
Strategy Fiscal Q4 2024
MicroStrategy (MSTR) now known as Strategy, the largest corporate holder of bitcoin and the world’s first Bitcoin Treasury Company, announced its financial results for the fourth quarter of fiscal year 2024, which ended on December 31, 2024.
For the full year 2024, the company’s BTC Yield was 74.3%. Strategy is revising its 2025 target to achieve an annual BTC Yield of over 15%. BTC Yield is a key performance indicator used to assess the performance of Strategy’s bitcoin acquisition strategy, believed to be accretive to shareholders.
Highlights:
- Total Revenues: $120.7 million, a 3% decrease year-over-year.
- Subscription Services Revenues: $31.9 million, a 48.4% increase year-over-year.
- Product Licenses and Subscription Services Revenues: $47.2 million, an 18.3% increase year-over-year.
- Product Support Revenues: $58.4 million, a 10.8% decrease year-over-year.
- Other Services Revenues: $15.1 million, a 20.8% decrease year-over-year.
- Gross Profit: Decreased to $86.5 million (71.7% gross margin), compared to $96.3 million (77.3% gross margin) for Q4 2023.
- Operating Expenses: $1.103 billion, a 693.2% increase year-over-year, including $1.006 billion in impairment losses on digital assets, compared to $39.2 million in Q4 2023.
- Loss from Operations: Increased to $1.016 billion, compared to $42.8 million for Q4 2023.
- Net Loss: Increased to $670.8 million, or $3.03 per diluted share, compared to net income of $89.1 million, or $0.50 per diluted share, for Q4 2023.
Guidance
During the Q4 2024 earnings call, Strategy shared their plans for the future. They aim to use strong investor support and capital market performance to achieve their goals. They also plan to increase shareholder value and continue growing their cloud platform and Bitcoin strategy.
Boards Statements
Phong Le, CEO of Strategy, announced the company’s new name and emphasized its focus on Bitcoin and AI, key technologies of the 21st century. Strategy has completed $20 billion of its $42 billion capital plan ahead of schedule, positioning itself well for 2025 with strong investor support.
CFO Andrew Kang highlighted the significant increase in bitcoin holdings in Q4 2024, acquiring 218,887 bitcoins for $20.5 billion. This momentum continued into Q1 with an additional $584 million raised. The introduction of new KPIs and fair value accounting for bitcoin holdings will bring more transparency and profitability to the company’s operations in 2025.
Impact on the Stock Market
The Q4 2024 earnings report had mixed impacts on Strategy (MSTR) stock. On the positive side, the strong growth in subscription services and the company’s inclusion in the NASDAQ 100 index boosted investor confidence.
However, the significant digital asset impairment charge and the challenges in transitioning to cloud services caused some concerns, leading to increased volatility in the stock price.
Strategy faced challenges with software revenues, which decreased by 3% due to difficulties transitioning to cloud services. Operating expenses increased and showed rising costs during revenue declines. A $1 billion digital asset impairment charge highlighted the volatility and risks of Bitcoin holdings. The company also faces potential risks from unrealized capital gains tax on crypto assets and relies heavily on Bitcoin, exposing it to market volatility and affecting financial stability and investor confidence.
