Bitcoin Holdings and Strategy - As of September 30, 2024, the company held approximately 252,220 bitcoins, with a carrying value of $6,850,879,000[137]. - The total original cost basis of bitcoin holdings was $9,903,699,000, with impairment losses amounting to $3,052,820,000[137]. - The average purchase price per bitcoin held as of September 30, 2024, was $39,266[137]. - In Q3 2024, the company purchased bitcoin using $1.105 billion from the sale of class A common stock and $458.2 million from the issuance of convertible notes[140]. - The company’s bitcoin strategy includes funding acquisitions primarily through equity and fixed-income instruments, with no specific target for total bitcoin holdings[134][135]. - The market value of bitcoin held at the end of Q3 2024, using the highest market price, was approximately $17,006,630,000[143]. - The company held approximately 252,220 bitcoins, acquired at an average price of $39,266 per bitcoin, totaling $9.904 billion[147]. - As of September 30, 2024, the company held approximately 252,220 bitcoins, all unencumbered[197]. - The company may incur significant digital asset impairment losses in the future, with at least $18.9 million incurred during the fourth quarter of 2024 on bitcoin holdings[180]. - The company incurred an impairment loss of $783.8 million on its bitcoin holdings for the nine months ended September 30, 2024[229]. Financial Performance - Total revenues for Q3 2024 were $116.1 million, a decrease of 10.3% from $129.5 million in Q3 2023[154]. - Subscription services revenues increased by 32.5% to $27.8 million in Q3 2024, up from $21.0 million in Q3 2023[162]. - Product licenses revenues decreased by 53.9% to $11.1 million in Q3 2024, down from $24.0 million in Q3 2023[162]. - Digital asset impairment losses for Q3 2024 were $412.1 million, representing 80.1% of operating expenses, compared to $33.6 million (26.2%) in Q3 2023[146]. - The gross profit for Q3 2024 was $81.7 million, down from $102.8 million in Q3 2023[154]. - Total operating expenses for Q3 2024 were $514.3 million, significantly higher than $128.0 million in Q3 2023, primarily due to increased digital asset impairment losses[154]. - Non-GAAP loss from operations for the three months ended September 30, 2024, was $413,205, compared to a loss of $8,441 for the same period in 2023[217]. - Non-GAAP net loss for the three months ended September 30, 2024, was $307,796, compared to a loss of $127,666 for the same period in 2023[220]. - Non-GAAP diluted loss per share for the three months ended September 30, 2024, was $1.56, compared to a loss of $0.90 for the same period in 2023[220]. Expenses and Costs - Share-based compensation expense increased to $19.4 million in Q3 2024 from $16.8 million in Q3 2023, primarily due to additional awards granted[157]. - Cost of revenues increased by 28.8% to $34,349,000 for the three months ended September 30, 2024, compared to $26,661,000 in the same period of 2023[168]. - Research and development expenses rose by 12.3% to $33,301,000 for the three months ended September 30, 2024, from $29,660,000 in the prior year[176]. - General and administrative expenses increased by 14.7% to $33,505,000 for the three months ended September 30, 2024, compared to $29,223,000 in the same period of 2023[178]. - Sales and marketing expenses decreased by 0.5% to $35,414,000 for the three months ended September 30, 2024, from $35,606,000 in the prior year[174]. - General and administrative expenses rose by 21.3% to $104.300 million, up from $85.959 million in the same period last year[225]. Cash Flow and Financing Activities - Net cash used in operating activities for the nine months ended September 30, 2024, was $(35.7) million, a 409.8% decrease compared to $11.5 million in the same period of 2023[199]. - Net cash used in investing activities increased by $3.320 billion for the nine months ended September 30, 2024, primarily due to a $3.320 billion increase in bitcoin purchases[201]. - Net cash provided by financing activities increased by $3.370 billion for the nine months ended September 30, 2024, mainly due to a $3.160 billion increase in long-term debt proceeds[202]. - The company anticipates that existing cash and cash equivalents will be sufficient to meet working capital requirements for at least the next 12 months[195]. - The company has long-term cash requirements primarily related to obligations for long-term debt, operating leases, and various purchase agreements[195]. - The company incurred $4.272 billion in principal due upon maturity of long-term debt instruments[198]. - The company paid $23.9 million and $15.3 million in interest to holders of the 2028 Secured Notes during the nine months ended September 30, 2024, and 2023, respectively[205]. - For the nine months ended September 30, 2024, the company did not repurchase or prepay any outstanding debt, but has $891.3 million available for sale under the August 2024 Sales Agreement[208]. Stock and Equity Offerings - The company completed a 10-for-1 stock split on August 7, 2024, retroactively adjusting share information[131]. - The company plans to sell class A common stock with an aggregate offering price of up to $2.0 billion and $21 billion under new at-the-market equity offering programs filed on August 1, 2024, and October 30, 2024, respectively[192]. - Total shares sold under at-the-market equity offering programs for the nine months ended September 30, 2024, were 10,000,069, generating total net proceeds of $1,242,293[214]. - The company terminated the November 2023 Sales Agreement and filed a new prospectus for an at-the-market equity offering program with an aggregate offering price of up to $2.0 billion on August 1, 2024[210]. - As of October 30, 2024, the company filed a prospectus for a new at-the-market equity offering program with an aggregate offering price of up to $21 billion[211]. Employee and Operational Metrics - As of September 30, 2024, total employee headcount was 1,637, a decrease from 1,934 as of December 31, 2023[156]. - The company aims to leverage its software development capabilities to innovate in Bitcoin applications and enterprise analytics[133]. - The company has engaged in advocacy and educational activities to promote Bitcoin as a digital capital asset[136]. International and Currency Impact - International revenues accounted for 44.0% of total revenues for the nine months ended September 30, 2024, compared to 42.7% in the same period of 2023[230]. - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 4.5% as of September 30, 2024[233].
MicroStrategy Inc Series A Pfd(STRK) - 2024 Q3 - Quarterly Report