MicroStrategy’s Q1 Profits Owed To BTC Strategy

MicroStrategy’s Q1 Profits Owed To BTC Strategy

Table of Contents

Leading business intelligence software firm MicroStrategy has returned to profit in the first quarter of 2023, thanks to its strong conviction in Bitcoin. 

BTC Holdings In The Green

According to the company's financial results for the first quarter of 2023, MicroStrategy has returned to profit for the first time since 2020. The company has raked in profits of $94 million in this quarter. One of its major sources of funds was the one-time income tax benefit of $453.2 million. Furthermore, the firm also upped its revenue by 2.2% from the same time last year and brought in $121.9 million to contribute to its overall quarter profits. 

The company released a statement announcing a successful quarter, where CEO Phong Lee attributed the profitable quarter to its Bitcoin investment strategy, where the core business was not influenced by minor price fluctuations in Bitcoin.

Lee said, 

“The conviction in our Bitcoin strategy remains strong as the digital asset environment continues to mature. We remain disciplined on costs while investing in growth, and we will continue to execute our dual strategy of growing our business intelligence software business and acquiring Bitcoin for the future.”

Bitcoin Strategy Worked

The company's founder and Chairman, Michael Saylor, is a vocal advocate of the leading cryptocurrency and has been investing in it since 2020. He has always been a strong proponent of BTC as a store of value and has been increasing the company’s exposure to it, despite its volatile price movements. As a result, the firm has accumulated around 140,000 BTC, purchased at an average cost of $29,803 per coin. With BTC’s prices rising 72% in the first quarter of 2023 and even skyrocketing to a recent high of around $31,000 on April 15, the firm was able to rake in profits. 

Saylor attributed the profits of the quarter to the successful execution of its core business strategy, saying, 

“So ultimately, it’s not easy to see what better strategy there might be. And so, we are strong proponents of a Bitcoin strategy. And as you can see from this chart, simply acquiring and holding Bitcoin in a prudent fashion is a pretty good way to outperform the market."

MicroStrategy Paid Back Silvergate Loan

The company’s subsidiary, MacroStrategy has also paid back a $161 million loan extended to it by Silvergate Bank, thus terminating the credit line extended to it by the now-collapsed bank and reducing its leverage. The payoff amount consisted of a $159.9 million payment to repay the full $205.0 million outstanding principal amount and a $1.1 million payment for accrued unpaid interest on the 2025 Secured Term Loan. 

MicroStrategy’s CFO, Andrew Kang, spoke about the loan repayment, saying, 

“By retiring the debt, we also released all of the Bitcoin that were pledged as collateral securing the loan. This was an important and strategic transaction for us and our liability management goals."

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

Investment Disclaimer

You may like