MicroStrategy(US:MSTR)2023-07-31 16:00Bitcoin Holdings and Strategy - As of June 30, 2023, the company held approximately 152,333 bitcoins, with a market value of $4.63 billion based on a bitcoin price of $30,361.51[120] - The company has accumulated a total of $4.52 billion in original cost basis for its bitcoin holdings, with impairment losses totaling $2.20 billion[121] - The average purchase price per bitcoin for the holdings as of June 30, 2023, was approximately $29,668[121] - The company plans to continue acquiring bitcoin using excess cash and proceeds from capital raising transactions, with no specific target for total bitcoin holdings[118] - The company views bitcoin as a long-term store of value and a hedge against inflation due to its limited supply[119] - The company’s treasury reserve policy includes cash assets exceeding working capital requirements and bitcoin as the primary treasury reserve asset[120] - The company held approximately 152,333 bitcoins as of June 30, 2023, with 137,069 being unencumbered[183] - As of June 30, 2023, the company held approximately 152,333 bitcoins with a carrying value of $2.323 billion, reflecting cumulative impairments of $2.196 billion[209] - For the six months ended June 30, 2023, the company incurred an impairment loss of $43.1 million on its bitcoin holdings[209] 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] - Operating expenses for Q2 2023 totaled $120 million, a significant reduction from $1.015 billion in Q2 2022, primarily due to lower digital asset impairment losses[140] - 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, a significant improvement from a loss of $92.81 per share in Q2 2022[201] - Non-GAAP net income for the first half of 2023 was $481,967,000, compared to a loss of $1,166,406,000 in the first half of 2022[201] Revenue Breakdown - Total product licenses and subscription services revenues increased by 3.7% to $35.4 million for the three months ended June 30, 2023, and by 12.8% to $71.6 million for the six months ended June 30, 2023[145] - Domestic product licenses revenues decreased by 31.3% to $10.4 million for the three months ended June 30, 2023, and by 23.8% to $19.1 million for the six months ended June 30, 2023[146] - International product licenses revenues increased by 2.9% to $5.1 million for the three months ended June 30, 2023, and by 19.2% to $13.9 million for the six months ended June 30, 2023[146] - Subscription services revenues increased by 41.8% to $19.9 million for the three months ended June 30, 2023, and by 44.0% to $38.7 million for the six months ended June 30, 2023[145] - Consulting revenues decreased by 11.3% to $18.0 million for the three months ended June 30, 2023, and by 10.5% to $37.3 million for the six months ended June 30, 2023[152] - Education revenues decreased by 17.1% to $0.9 million for the three months ended June 30, 2023, and by 26.4% to $1.8 million for the six months ended June 30, 2023[152] Cash Flow and Capital Raising - The company has raised cash through various capital raising transactions, including $336.9 million in Q2 2023 from the sale of class A common stock[123] - Net cash provided by operating activities decreased by 17.2% to $18.925 million for the six months ended June 30, 2023, compared to $22.863 million in the same period of 2022[184] - Net cash used in investing activities increased by 132.3% to $(527.416) 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 $525.911 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 1,348,855 shares of class A common stock under the 2022 Sales Agreement for net proceeds of approximately $339.0 million during the six months ended June 30, 2023[195] 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] - Share-based compensation expense for Q2 2023 was $15.5 million, showing a slight increase from $15.3 million in Q2 2022, attributed to the expansion of the equity award program[142] - The company expects share-based compensation expense to continue as a significant recurring expense over the coming years[199] Market Risks and Currency Exposure - The company continues to face significant volatility and risks associated with the bitcoin market, which may impact its financial results[130] - 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] - If average exchange rates had changed unfavorably by 10%, revenues for the six months ended June 30, 2023 would have decreased by 3.7%[213] - The company attempts to minimize foreign currency risk by converting excess foreign currency to U.S. dollar-denominated cash and investment accounts[212]