MicroStrategy Delivers Mixed Q4 Results; Adds Bitcoins

MicroStrategy, Inc. (NASDAQ: MSTR) delivered mixed fourth-quarter results, with earnings missing and revenues beating expectations. Shares closed up 1.4% at $373 on February 1.

MSTR is the largest independent publicly-traded analytics and business intelligence company, and one of its main corporate strategies is to acquire and hold bitcoin. Meanwhile, MSTR shares have lost 33.2% year-to-date with the broader market sell-off, especially with the slide in the bitcoin prices.

Mixed Q4 Results

MSTR reported a Q4 adjusted loss of $8.41 per share, while the analysts had estimated adjusted earnings of $1.58 per share. In Q4FY20, MSTR had posted adjusted earnings of $0.13 per share. The huge loss was attributed to the digital asset impairment charges of $146.6 million recorded during the quarter.  

On a positive note, total revenues came in better than analyst estimates of $133.2 million. Q4 total revenues climbed 2.4% year-over-year to $134.52 million. MSTR’s Product licenses and Subscription services revenues grew 15.1% year-over-year, while Product support revenues decreased 3.8% compared to Q4FY20.

For the full year fiscal 2021, MSTR reported a massive adjusted loss of $53.11 per share, significantly worse than the FY20 adjusted loss of $0.05 per share. Meanwhile, FY21 total revenues grew 6.2% annually to $510.76 million.

Bitcoin Holdings

In a piece of complementary news, the company disclosed in a regulatory filing that during the period from December 30, to January 31, when bitcoin prices crashed more than 20%, the company bought approximately 660 bitcoins for $25 million in cash.

The company is also facing a regulatory hurdle for its accounting treatment for the bitcoin holdings. MSTR has been told to stop adjusting its earnings to exclude accounting losses related to the prices of the assets.

During Q4, the company added over 10,300 bitcoins to its holdings, after raising capital through an at-the-market equity offering. As of date, with over 125,000 bitcoins, MicroStrategy boasts to be the world’s largest publicly traded corporate owner of bitcoin.

CEO Saylor Comments

MicroStrategy CEO, Michael J. Saylor, said, “2021 was another transformational year for MicroStrategy. Our software business returned to positive revenue growth for the first time since 2014, highlighted by our enterprise analytics business delivering another strong quarter as we saw a growing adoption of the MicroStrategy platform, especially in the Cloud.”

Being a huge advocate of bitcoin, Saylor said, “We will continue to evaluate opportunities to raise additional capital to execute on our bitcoin acquisition strategy.”

Analysts’ View

Responding to MSTR’s results, William Blair analyst Kamil Mielczarek reiterated a Buy rating on the stock and noted that the company reported a strong end to fiscal 2021.

Commenting on his optimistic view of the stock, Mielczarek said, “MicroStrategy’s stock will likely be driven by revenue growth, margin expansion, the cloud migration, and the continued appreciation of bitcoin price. We see a favorable risk/reward trade-off over the next two years and view MicroStrategy as a unique asset that provides investors with exposure to the cryptocurrency market.”

With 1 Buy and 1 Hold, one of the best bitcoin stocks, MSTR has a Moderate Buy consensus rating. The average MicroStrategy price target of $765 implies a whopping 105.1% upside potential to current levels.

News Sentiment

TipRanks data shows that the News Score for MicroStrategy is currently Neutral based on 15 articles over the past seven days. 50% of the articles have a Bullish Sentiment compared to a sector average of 63%, while 50% of the articles have a Bearish Sentiment compared to a sector average of 37%.

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