By Ben Weiss, DL News; translated by Deng Tong, Jinse Finance
MicroStrategy wants investors to know it is hoarding Bitcoin.
MicroStrategy announced the title of its first-quarter earnings report as: “Currently holding 214,400 Bitcoins.”
In the second quarter, its announcement was: “Currently holding 226,500 Bitcoins.”
However, the company's founder and chairman Michael Saylor seems to have done little on X aside from flattering the world's largest cryptocurrency.
“Bitcoin is a network of worker bees serving the goddess of wisdom, feeding on the fire of truth,” reads a featured post on his X profile.
But MicroStrategy is not just buying Bitcoin. It has 1,637 employees.
Executive Vice President and Chief Product Officer Saurabh Abhyankar stated that the vast majority of these employees are working on the company's data analytics products.
Yes, MicroStrategy's Bitcoin buying spree has attracted headlines—especially as the world's largest cryptocurrency reached historical highs and broke through $100,000.
As Bitcoin prices soared, MicroStrategy's stock price also skyrocketed.
The company's stock, listed on Nasdaq, has risen over 450% this year, exceeding Bitcoin's 135% increase.
Despite the Bitcoin craze, MicroStrategy's employees are still developing low-key software for companies such as hotel operator Hilton, furniture retailer Crate & Barrel, and airline Emirates.
Abhyankar stated that MicroStrategy's software products are a core part of its business—and also a part of many people's daily lives in the U.S. and elsewhere.
“You may already be using MicroStrategy,” he said, “because you are interacting with some major banks and large retailers.”
Who does MicroStrategy serve?
MicroStrategy's flagship product MicroStrategy ONE is not targeted at everyday users like Uber or Google Search.
Its enterprise software operates behind the scenes for large enterprises.
Abhyankar cites retailers as an example.
The store manager needs to do many things to run their business.
This includes data on store inventory, employee schedules, and expected deliveries. This data, along with the software used to classify it, is often siloed.
In other words, the calendar used for managing employees is a different program from the calendar used for tracking store inventory.
But for large enterprises, it is more efficient for managers and executives to view everything through one platform.
“Fundamentally, our platform allows you to connect data from all these different systems,” Abhyankar said.
And because each company's software and data suites are different—Hilton and Crate & Barrel are not the same company—MicroStrategy's software must be flexible.
“Banks, retailers, hospitals, pharmaceutical companies, and so on—the majority of their business relies on MicroStrategy to operate,” Abhyankar added.
Current clients include a variety of companies: Pfizer, the United States Postal Service, and even fried chicken giant KFC.
Initial Public Offering
However, investors are not scrambling to buy MicroStrategy stock at over $370 because they are optimistic about the company's ability to help hospitals operate more efficiently.
MicroStrategy went public in 1998. But in 2020, when Saylor announced his company had purchased 21,454 Bitcoins for about $250 million, MicroStrategy attracted a wave of new investors.
He stated in a press release: “This investment reflects our belief that Bitcoin, as the most widely adopted cryptocurrency globally, is a reliable store of value and an attractive investment asset, with greater long-term appreciation potential than holding cash.”
According to Bernstein analysts, MicroStrategy's Bitcoin financial strategy is as follows: use the remaining cash from the software business to buy Bitcoin. Purchase Bitcoin by issuing stocks or bonds. As the price of Bitcoin (hopefully) rises, MicroStrategy's capital value will also increase, boosting MicroStrategy's stock price.
Since 2020, the company has accumulated over 402,100 Bitcoins, worth approximately $40 billion.
Proxy for Bitcoin
MicroStrategy's stock price fluctuates in sync with Bitcoin's price, especially this year, as the company has invested more and more of its resources into cryptocurrency.
Investors often view cryptocurrency stocks as proxies for Bitcoin—a simple, cheap way to lock in Bitcoin gains without directly interacting with the cryptocurrency market.
In fact, Wall Street analysts who provide stock advice for institutional clients hardly mention the software.
On Wednesday, Bernstein even viewed the software division as a potential barrier to MicroStrategy being included in the benchmark S&P 500 index.
Bloomberg Intelligence analyst James Seyffart holds the same view, stating that the company's “lack of profitability” is a barrier to being included in the S&P 500 index.
Bernstein expects MicroStrategy to continue investing heavily in Bitcoin, pushing its stock price to soar to $600 in the next 12 months.
Goodbye software business?
MicroStrategy's intense focus on the world's largest cryptocurrency raises the question: is its software business declining?
From 2020 to 2024, quarterly revenue from software sales has stagnated between $110 million and $135 million.
From the end of 2020 to the third quarter of 2024, MicroStrategy's workforce decreased by 22%.
Abhyankar refused to disclose whether MicroStrategy is preparing to become a pure Bitcoin fund. “My goal is to grow the analytics business,” he said.
Instead, he said, he believes the company’s focus on Bitcoin complements its software business.
He believes that MicroStrategy's soaring stock price helps attract and retain software talent, while its Bitcoin-focused balance sheet reduces the need for its analytics business to pursue short-term profits at the expense of long-term gains.
He said investors typically measure software vendors by increased quarterly revenue and customers. However, MicroStrategy's Bitcoin balance sheet adds another metric for analysts to evaluate the company.
“My goal is to grow the analytics business.” — Saurabh Abhyankar
“Our Bitcoin strategy alleviates this pressure, allowing us to take a long-term approach to implementing our engineering investments and innovation strategy,” Abhyankar said.
Ultimately, he knows that MicroStrategy's data analytics business is not going to make headlines. However, Abhyankar assures that most of the company's 1,637 employees are doing other things, not just hoarding Bitcoin for Michael Saylor.
“Perhaps we are just a small part of MicroStrategy,” Abhyankar said, referring to the analytics business's prominent position on the company's balance sheet. “But we are still an important part.”
