Author: Ben Weiss, DL News; Translated by: Deng Tong, Golden Finance
MicroStrategy wants investors to know it is hoarding Bitcoins.
MicroStrategy announced the headline of its first-quarter earnings report: "Currently holding 214,400 Bitcoins."
In the second quarter, its announcement stated: "Currently holding 226,500 Bitcoins."
And the company's founder and chairman Michael Saylor seems to do little on X beyond flattering the world's largest cryptocurrency.
"Bitcoin is a network of service-oriented bumblebees serving the goddess of wisdom, feeding on the fire of truth," his featured post on X read.
But MicroStrategy is not just buying Bitcoins. It has 1,637 employees.
Executive Vice President and Chief Product Officer Saurabh Abhyankar stated that the vast majority of these employees are engaged in the company's data analytics products.
Yes, MicroStrategy's Bitcoin buying frenzy has attracted headlines—especially as the world's largest cryptocurrency reaches historic highs and breaks above $100,000.
As the price of Bitcoin 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 hotel operators like Hilton, furniture retailer Crate & Barrel, and airline Emirates.
Abhyankar stated that MicroStrategy's software products are a core part of its business—and 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 big banks and large retailers."
Who does MicroStrategy serve?
MicroStrategy's flagship product, MicroStrategy ONE, is not aimed at everyday users like Uber or Google Search.
Its enterprise software operates behind the scenes in large enterprises.
Abhyankar cited retailers as an example.
"Store managers need to do a lot to run their businesses."
This includes data on store inventory, employee scheduling, and expected deliveries. These data and the software to categorize them are often isolated.
In other words, calendars used to manage employees are different programs than those used to track 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 since 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, etc.—most of their businesses utilize MicroStrategy to operate," Abhyankar added.
Current clients include a wide variety of companies: Pfizer, the U.S. Postal Service, and even fried chicken giant KFC.
Initial Public Offering
However, investors did not rush to buy MicroStrategy stock at over $370, as they were optimistic about the company's ability to help hospitals operate more efficiently.
MicroStrategy went public in 1998. But in 2020, when Saylor announced that his company purchased 21,454 Bitcoins for about $250 million, MicroStrategy attracted a new batch of investors.
In a press release, he stated: "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 leftover cash from the software business to buy Bitcoins. Buy Bitcoins by issuing stocks or bonds. As the price of Bitcoin (hopefully) rises, the value of MicroStrategy's funds will also increase, boosting MicroStrategy's stock price.
Since 2020, the company has accumulated over 402,100 Bitcoins, worth about $40 billion.
Agents of Bitcoin
MicroStrategy's stock price fluctuates in sync with the price of Bitcoin, especially this year, as the company is allocating more and more of its corporate resources to cryptocurrency.
Investors often view cryptocurrency stocks as proxies for Bitcoin—a simple and inexpensive way to lock in Bitcoin gains without directly interacting with the cryptocurrency market.
In fact, Wall Street analysts providing stock recommendations for institutional clients hardly mention the software.
On Wednesday, Bernstein even viewed the software division as a potential obstacle to MicroStrategy being included in the benchmark S&P 500 index.
Bloomberg Intelligence analyst James Seyffart holds the same view, arguing that the company's "lack of profitability" is an obstacle 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 to the software business?
MicroStrategy's intense focus on the world's largest cryptocurrency raises a question: Is its software business heading for decline?
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 declined to disclose whether MicroStrategy is preparing to become a pure Bitcoin fund. "My goal is to grow the analytics business," he said.
On the contrary, he said he believes the company's focus on Bitcoin complements its software business.
He believes MicroStrategy's soaring stock price helps attract and retain software talent, while its Bitcoin-centric 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 gauge software vendors by increasing quarterly revenue and customers. However, MicroStrategy's Bitcoin balance sheet adds another metric for analysts to assess 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 will not make headlines. However, Abhyankar assures that most of the company's 1,637 employees are doing other things and not just hoarding Bitcoin for Michael Saylor.
"Maybe we are just a small part of MicroStrategy," Abhyankar said, referring to the prominent position of the software business on the company's balance sheet. "But we are still an important part."