Microstrategy ((MSTR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call for MicroStrategy, now rebranded as Strategy, conveyed a positive sentiment, with the company outlining ambitious strategic initiatives. The call highlighted the company’s focus on rebranding, capital raises, and a continued emphasis on Bitcoin and cloud services. Despite some challenges in the traditional software business and significant past impairment charges, Strategy demonstrated robust growth in new ventures and innovative financial strategies.
Rebranding and Strategic Expansion
Strategy announced its rebranding from MicroStrategy, a move aimed at emphasizing simplicity, continuity, and ambition. This rebranding was complemented by the launch of a new website and merchandise store. Furthermore, the company was included in the NASDAQ 100 Index, marking a significant milestone in its strategic expansion.
Significant Bitcoin Holdings and Valuation
Strategy continues to be the largest corporate holder of Bitcoin, with a staggering 471,107 Bitcoins valued at $46 billion. The company adopted FASB’s Fair Value Accounting Standard, which led to a substantial $12.75 billion increase in retained earnings.
Record Capital Raising and Convertible Debt Issuance
The company raised a remarkable $18.8 billion through equity and $6.2 billion through convertible notes in 2024, becoming the largest issuer of convertible bonds in a decade. This capital raising effort underscores Strategy’s aggressive financial strategies.
Cloud Services Growth
Strategy reported a 48% year-over-year increase in subscription services revenues and a 57% growth in subscription billings, reflecting successful efforts in transitioning to cloud services. This growth highlights the company’s strategic focus on expanding its cloud offerings.
Introduction of New Financial Instruments
The launch of ‘Strike’ perpetual convertible preferred stock, which raised $584 million, was a notable development. ‘Strike’ offers an 8% fixed coupon and a perpetual conversion option, expanding the company’s financial instrument offerings.
Decline in Software Business Revenues
Despite the growth in new areas, Strategy’s traditional software business saw a decline, with total software revenues decreasing by 3% in Q4 and 7% for the full year 2024. This decline reflects a strategic shift towards cloud services.
Digital Asset Impairment Charges
The company recorded digital asset impairment charges of $1 billion in Q4 and $1.8 billion for the full year. However, with the adoption of new accounting standards, these figures are expected to change.
Forward-Looking Guidance
During the earnings call, Strategy provided extensive guidance for its future financial and strategic directions. The company aims for a 50% year-over-year increase in subscription billings and a 48% rise in subscription services revenues. As a Bitcoin treasury company, Strategy holds 471,107 Bitcoins and plans to continue its acquisition strategy with ambitious targets, including a 15% BTC Yield and a $10 billion BTC dollar gain for 2025.
In conclusion, Strategy’s earnings call was marked by a clear focus on strategic rebranding, significant Bitcoin holdings, and strong growth in cloud services. Despite challenges in its traditional software business, the company is poised for continued success through innovative financial strategies and ambitious forward-looking goals.
