According to Bloomberg, analysts are increasingly scrutinizing the enterprise software business of MicroStrategy, a company known for its substantial Bitcoin holdings. While MicroStrategy's Bitcoin stockpile has surged to nearly $15 billion, making it the largest corporate holder of the digital asset, its software business revenue has stagnated. The company is expected to report little change in revenue for the second quarter later today.

MicroStrategy has used various methods to raise funds for Bitcoin purchases, including issuing over $2 billion in convertible notes this year. The proceeds from the software business are used to cover related interest expenses and taxes. The company faces about $45 million in interest expenses and approximately $20 million in cash taxes this year, with earnings before items such as taxes estimated at around $82 million. Due to tight cash conditions, analysts expect the company to refrain from issuing additional notes to buy more Bitcoin until next year.

Despite the significant increase in the value of MicroStrategy's Bitcoin holdings, the tokens do not contribute to the company's top or bottom line as they generate no income. This has not deterred investors, as the company's shares have surged 156% this year, outperforming Bitcoin's roughly 50% increase during the same period. Analysts surveyed by Bloomberg predict a quarterly loss of 78 cents per share and little change in revenue at $119.3 million, compared to earnings of $1.68 per share in the same period last year. The company is also likely to post an impairment charge on its Bitcoin holdings, potentially making it unprofitable for 12 of the 16 quarters since it began purchasing Bitcoin.

MicroStrategy has several options to manage its financial obligations, as none of its debt is due until 2027 or later. The company could issue another convertible note, secure a loan, issue more shares, or sell Bitcoin to raise funds. Cash flow could also be impacted by an accounting change next year that requires the company to value its digital assets at market prices. Additionally, MicroStrategy may need to pay a 15% corporate alternative minimum tax if its average annual adjusted financial statement income for any consecutive three-tax-year period exceeds $1 billion.

Jacob Joseph, an analyst at CCData, noted that the likelihood of MicroStrategy or its co-founder and Chairman Michael Saylor selling their Bitcoin holdings is very low, given Saylor's public statements and optimistic projections for Bitcoin's future value. Saylor has been a prominent advocate of the Bitcoin HODLing movement, consistently sharing positive outlooks for the digital asset's potential.