Author: Weilin, PANews
In the early morning of February 6, Beijing time, MicroStrategy held a Q4 2024 earnings conference call and announced a brand rebranding plan, with the company officially renamed "Strategy" and claiming to be the "world's first and largest bitcoin asset management company".
The Q4 financial report shows that the company had a net loss of $670.8 million, with operating expenses (including bitcoin holding impairment losses) reaching $1.103 billion in the quarter, an increase of 693% year-over-year.
Strategy's bitcoin holdings have nearly doubled in just three months. Meanwhile, Strategy has set KPI indicators, namely annual "Bitcoin Gain" and "Bitcoin $ Gain", and has set a target of $10 billion in annual "Bitcoin $ Gain" for 2025. During the conference, the company's founder and CEO Michael Saylor also revealed a new strategy to attract "a large number of investors".
Q4 Earnings: Bitcoin Holdings Nearly Doubled in Three Months
In Q4 2024, Strategy had a net loss of $670.8 million, or $3.03 per share. In contrast, the company had a profit of $89.1 million, or $0.50 per share, in the same period last year. The loss was mainly due to a $1.01 billion impairment charge on bitcoin holdings, a significant increase from $39.2 million in the same period last year.
Operating expenses (including bitcoin holding impairment losses) reached $1.103 billion in the quarter, up 693% year-over-year. As of December 31, 2024, the company had $38.1 million in cash and cash equivalents, down from $46.8 million in the same period last year.
Although most investors focus on Strategy's bitcoin assets, Strategy also reported earnings from its traditional software business. Fourth-quarter software revenue was approximately $121 million, down 3% year-over-year. Full-year 2024 total revenue was approximately $464 million, down 7% year-over-year.
According to the financial report, the most notable aspect is that its already massive bitcoin holdings have nearly doubled in just three months. As of January 24, Strategy currently holds 471,107 bitcoins, with a market value of approximately $44 billion and a total cost of $30.4 billion. The fourth quarter was the company's largest quarterly increase in bitcoin holdings, with a cumulative purchase of 218,887 bitcoins at a cost of $20.5 billion. In 2024, the company purchased 258,320 bitcoins at a total cost of $22.1 billion, with an average price of $85,447.
Strategy has been adding bitcoins to its balance sheet every quarter since August 2020, with more than 50 announcements. This time, the company reported a bitcoin yield of 74.3% in 2024, a metric used to evaluate the strategic performance of investing in bitcoin.
According to the conference documents, "Bitcoin Yield" is a key performance indicator (KPI) that represents the percentage change in the ratio of the company's bitcoin holdings to its assumed diluted outstanding shares over a period. Strategy has raised its annual BTC Yield target for the next three years from 6%-8% to 15%. The company's BTC Yield was 2.9% in the fourth quarter, compared to 5.1% in the third quarter.
Strategy also announced another new KPI, the annual "Bitcoin Gain" and "Bitcoin $ Gain", and set a target of $10 billion in annual "Bitcoin $ Gain" for 2025.
Bitcoin Gain represents the company's bitcoin holdings at the beginning of a period multiplied by the bitcoin yield (BTC Yield) for that period. Bitcoin $ Gain is the US dollar value of the Bitcoin Gain, calculated by multiplying the Bitcoin Gain by the bitcoin market price on the last day of the applicable period at 4:00 PM Eastern Time on the Coinbase exchange.
Bitcoin's "Smart Leverage"
To better reflect its bitcoin strategy, MicroStrategy announced that the company is now operating under the Strategy brand. The announcement states that Strategy is the world's first and largest bitcoin reserve company, as well as the largest independent publicly traded business intelligence company and a component of the NASDAQ-100 index. The new logo includes a stylized "B" letter, symbolizing the company's bitcoin strategy and its unique position as a bitcoin asset management company. The brand's main color has been changed to orange, representing energy, wisdom, and bitcoin.
In the Q3 2023 earnings report released last October, Strategy announced its "21/21 Plan", with the goal of raising $42 billion in funding over the next three years, including $21 billion from equity financing and another $21 billion from the issuance of fixed-income securities.
Strategy's capital raising and bitcoin purchasing pace accelerated significantly in Q4 2024, with the company raising $15 billion through equity issuance and $3 billion through convertible bonds in less than two months.
"We have completed $20 billion of our $42 billion capital plan, far exceeding our original timeline, while leading the digital transformation of capital markets," said CEO Phong Le in the announcement. "Looking ahead to the remaining time in 2025, we are well-positioned to further enhance shareholder value through the strong support of institutional and retail investors for our strategic plan."
Additionally, during the earnings call, company founder Michael Saylor pointed out a 45% volatility gap between bitcoin and traditional markets, and revealed a new strategy to attract "a large number of investors".
"We design our business to maintain volatility," Saylor said, contrasting Strategy's approach with traditional corporate finance operations that typically aim to minimize volatility.
There is a gap of around 45% in volatility levels between traditional assets (such as the SPDR S&P 500 ETF and Invesco QQQ Trust, with volatility levels between 15-20) and bitcoin (with volatility levels between 50-60). Strategy's common stock target volatility is even higher than bitcoin itself, aiming for a volatility level of 80-90, while maintaining what Saylor calls "smart leverage" through a combination of equity issuance and convertible bonds.
"There are a lot of investors who want that kind of volatility. They may not want the extreme leverage of MicroStrategy, or even the raw, unvarnished volatility of IBIT or BTC, but Strike (Strategy's perpetual preferred stock STRK) is attracting a new cohort with different return characteristics and volatility characteristics."
The Strike preferred shares Saylor mentioned offer an 8% dividend yield and have bitcoin exposure. On January 27, according to official news, MicroStrategy announced that, subject to market and other conditions, it intends to issue 2,500,000 shares of MicroStrategy Series A Perpetual Convertible Preferred Stock. MicroStrategy plans to use the net proceeds from this offering for general corporate purposes, including the purchase of bitcoin and as working capital.
Subsequently, these shares were sold at $80 per share, 20% below the market price, effectively raising the buyer's yield to 10%.
Looking ahead, with the rebranding of the Strategy brand and the significant growth in its bitcoin holdings, the company has demonstrated its ambition to be one of the world's largest bitcoin reserve companies. Whether Strategy can continue to achieve investment returns from bitcoin while flexibly implementing its strategic layout will be key to its success.
