Bitcoin Holdings and Strategy - As of June 30, 2023, the company held approximately 152,333 bitcoins, with a market value of $4.6 billion based on a bitcoin price of $30,361.51[120] - The company has accumulated a total of $4.5 billion in original cost basis for its bitcoin holdings, with impairment losses amounting to $2.2 billion[122] - The average purchase price per bitcoin in the second quarter of 2023 was approximately $28,136, with 12,333 bitcoins acquired during this period[124] - The company's bitcoin acquisition strategy is supported by stable cash flows from its enterprise analytics software business, which allows for long-term bitcoin holdings[117] - The company plans to continue monitoring market conditions to determine additional financings for bitcoin purchases, with no specific target for total bitcoin holdings[118] - The market value of bitcoins held at the end of the second quarter of 2023 was calculated at $4.6 billion using the ending market price[125] - As of July 31, 2023, the company held approximately 152,800 bitcoins, acquired at an aggregate purchase price of $4.534 billion, with an average purchase price of $29,672 per bitcoin[132] - The company held approximately 152,333 bitcoins as of June 30, 2023, with 137,069 being unencumbered[182] - The company expects to meet its working capital requirements and contractual obligations for at least the next 12 months without needing to sell bitcoins[180] Financial Performance - Total revenues for Q2 2023 were $120.4 million, slightly down from $122.1 million in Q2 2022, while total revenues for the first half of 2023 were $242.3 million, compared to $241.4 million in the same period of 2022[140] - The gross profit for Q2 2023 was $93.3 million, compared to $96.9 million in Q2 2022, indicating a decline in profitability[140] - Total operating expenses for Q2 2023 were $120 million, significantly lower than $1.015 billion in Q2 2022, primarily due to reduced digital asset impairment losses[140] - Non-GAAP loss from operations for the six months ended June 30, 2023, was $13.97 million, a decrease from a loss of $1.06 billion in the same period of 2022[200] - Non-GAAP net income for Q2 2023 was $36,929,000, compared to a loss of $1,048,734,000 in Q2 2022[201] - Non-GAAP diluted earnings per share for Q2 2023 was $2.35, while it was a loss of $92.81 in Q2 2022[201] Revenue Breakdown - Total product licenses and subscription services revenues increased by 3.7% to $35,400,000 for the three months ended June 30, 2023, and by 12.8% to $71,622,000 for the six months ended June 30, 2023[145] - Domestic product licenses revenues decreased by 31.3% to $10,416,000 for the three months ended June 30, 2023, and by 23.8% to $19,066,000 for the six months ended June 30, 2023[145] - International product licenses revenues increased by 2.9% to $5,106,000 for the three months ended June 30, 2023, and by 19.2% to $13,868,000 for the six months ended June 30, 2023[145] - Subscription services revenues increased by 41.8% to $19,878,000 for the three months ended June 30, 2023, and by 44.0% to $38,688,000 for the six months ended June 30, 2023[145] - Product licenses revenues decreased by 22.9% year-over-year to $16,180,000 in Q2 2023, compared to $20,129,000 in Q2 2022[203] - Total revenues for the first half of 2023 were $39,750,000 for subscription services, reflecting a 44.0% increase from $26,862,000 in the same period of 2022[204] Expenses and Cost Management - Research and development expenses decreased by 7.7% to $29,354,000 for the three months ended June 30, 2023, compared to $31,790,000 in the same period of 2022[162] - Sales and marketing expenses increased by 2.2% to $36,862,000 for the three months ended June 30, 2023, compared to $37,660,000 in the same period of 2022[160] - General and administrative expenses increased by 1.2% to $28,830,000 for the three months ended June 30, 2023, compared to $28,502,000 in the same period of 2022[164] - Cost of subscription services revenues increased by $1.7 million for the three months ended June 30, 2023, primarily due to a $1.2 million increase in cloud hosting infrastructure costs[155] Cash Flow and Financing Activities - Net cash provided by operating activities decreased by 17.2% to $18.9 million for the six months ended June 30, 2023, compared to $22.9 million in the same period of 2022[184] - Net cash used in investing activities increased by 132.3% to $527.4 million for the six months ended June 30, 2023, primarily due to a $300.8 million increase in bitcoin purchases[186] - Net cash provided by financing activities increased by 140.7% to $525.9 million for the six months ended June 30, 2023, driven by $672.4 million in net proceeds from the sale of class A common stock[187] - The company issued and sold 1,079,170 shares of class A common stock under the 2023 Sales Agreement for net proceeds of approximately $333.5 million during the six months ended June 30, 2023[196] Market Risks and Currency Fluctuations - The company recognizes that fluctuations in bitcoin prices and revenue shortfalls in its software business may significantly impact its operating results[140] - The company is exposed to market risks related to fluctuations in bitcoin prices and foreign currency exchange rates[208] - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 4.6% as of June 30, 2023[213] - Revenues for the six months ended June 30, 2023, would have decreased by 3.7% if average exchange rates had changed unfavorably by 10%[213] - The company attempts to minimize foreign currency risk by converting excess foreign currency to U.S. dollar-denominated cash and investment accounts[212]
MicroStrategy Inc Series A Pfd(STRK) - 2023 Q2 - Quarterly Report