Bitcoin Holdings and Strategy - As of March 31, 2024, the company held approximately 214,278 bitcoins, with a market value of $15.82 billion based on a bitcoin price of $73,835.57[139] - The company has accumulated a total of approximately $7.54 billion in bitcoin, with an average purchase price of $35,180 per bitcoin[143] - The company’s bitcoin acquisition strategy involves using liquid assets exceeding working capital requirements and proceeds from capital raising transactions to purchase bitcoin[133] - The company plans to continue accumulating bitcoin without setting a specific target, monitoring market conditions for potential additional purchases[133] - The company’s bitcoin holdings are viewed as long-term investments, with potential strategies to generate income streams from these assets[133] - As of December 31, 2023, the company reported a carrying value of $3.63 billion for its bitcoin holdings, with a total of 189,150 bitcoins[136] - The company held approximately 214,278 bitcoins as of March 31, 2024, with a carrying value of $5.074 billion, reflecting cumulative impairments of $2.461 billion[210] Financial Performance - Total revenues for the three months ended March 31, 2024, were $115,246,000, a decrease of 5.5% compared to $121,915,000 for the same period in 2023[150] - Product licenses revenues decreased by 25.7% to $12,938,000 in Q1 2024 from $17,412,000 in Q1 2023, primarily due to a decrease in deal volume[156] - Subscription services revenues increased by 22.1% to $22,966,000 in Q1 2024 from $18,810,000 in Q1 2023, driven by conversions to cloud-based subscriptions[157] - Product support revenues decreased by 4.3% to $62,685,000 in Q1 2024 from $65,481,000 in Q1 2023, attributed to customers converting to subscription services[158] - Non-GAAP loss from operations for Q1 2024 was $185.911 million, compared to a loss of $2.752 million in Q1 2023, reflecting a significant increase in operational losses[205] - Non-GAAP net loss for Q1 2024 was $142.008 million, a stark contrast to a net income of $445.038 million in Q1 2023, indicating a substantial decline in profitability[206] - Non-GAAP diluted loss per share for Q1 2024 was $8.26, compared to diluted earnings per share of $30.59 in Q1 2023, indicating a significant decline in per-share performance[206] Operating Expenses and Losses - Total operating expenses surged to $288,933,000 in Q1 2024, compared to $114,281,000 in Q1 2023, largely due to digital asset impairment losses of $191,633,000[150] - Loss from operations for Q1 2024 was $(203,702,000), significantly higher than $(20,307,000) in Q1 2023[150] - Digital asset impairment losses for the three months ended March 31, 2024, were $191.6 million, representing 66.3% of operating expenses, compared to $18.9 million or 16.5% of operating expenses in the same period of 2023[142] - Digital asset impairment losses surged to $191.633 million for the three months ended March 31, 2024, compared to $18.911 million in the same period of the prior year, representing a 913.3% increase[169] Cash Flow and Investments - Net cash provided by operating activities decreased by 23.6% to $28.6 million for the three months ended March 31, 2024, compared to $37.4 million in the same period of 2023[189] - Net cash used in investing activities increased by 812.7% to $1.64 billion for the three months ended March 31, 2024, primarily due to a $1.46 billion increase in bitcoin purchases[191] - Net cash provided by financing activities increased by 778.6% to $1.65 billion for the three months ended March 31, 2024, driven by a $1.376 billion increase in long-term debt proceeds[192] - The company purchased $1.639 billion of bitcoin during the three months ended March 31, 2024, compared to $179.3 million in the same period of 2023[191] Workforce and Expenses - Employee headcount decreased to 1,851 as of March 31, 2024, down from 2,123 a year earlier, reflecting a reduction in workforce[151] - Share-based compensation expense increased to $17,791,000 in Q1 2024 from $17,555,000 in Q1 2023, primarily due to additional awards granted[152] - Sales and marketing expenses decreased by $2.7 million, or 7.4%, to $33.451 million for the three months ended March 31, 2024, primarily due to a decrease in employee salaries and variable compensation[166] - Research and development expenses decreased by $2.2 million, or 6.9%, to $29.183 million for the three months ended March 31, 2024, mainly due to a decrease in employee salaries[167] - General and administrative expenses increased by $6.8 million, or 24.2%, to $34.666 million for the three months ended March 31, 2024, primarily due to increased payroll taxes and share-based compensation[168] Future Outlook and Obligations - The company expects subscription services revenues to continue to grow as it promotes its cloud offerings to new and existing customers[157] - The company expects long-term cash requirements for obligations related to long-term debt totaling $3.612 billion, with additional coupon interest payments of $2.4 million, $2.5 million, $2.6 million, and $15.3 million due semi-annually for various convertible notes and secured notes[183][184] - The company does not expect cash generated from its enterprise analytics software business to meet its long-term obligations as of March 31, 2024[183] - The company may seek to satisfy its long-term obligations through refinancing, generating cash from other sources, or selling bitcoins[183] International Revenue and Currency Impact - International revenues accounted for 44.1% of total revenues in Q1 2024, up from 42.8% in Q1 2023, highlighting the growing importance of international markets[211] - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 3.7% as of March 31, 2024[214]
MicroStrategy Inc Series A Pfd(STRK) - 2024 Q1 - Quarterly Report