MicroStrategy Inc., the enterprise-software maker that is the largest publicly-traded holder of Bitcoin, returned to profitability in the second quarter after having to take a large writedown a year earlier because of a plunge in the value of the cryptocurrency.
The Tysons Corner, Virginia-based company had net income of $22.2 million, or $1.54 a share, compared with a loss of more than $1 billion, or $94 a share, in the year-ago period. The company, controlled by Bitcoin advocate Michael Saylor, missed Wall Street’s revenue estimates, with sales dropping 1.4% to $120.4 million. Analysts surveyed by Bloomberg expected $123.2 million. The firm recorded digital-asset impairment losses of $24.1 million.
MicroStrategy acquired about $361.4 million in Bitcoin during the second quarter, the company’s largest purchase since prices peaked in late 2021. That brought MicroStrategy’s Bitcoin purchases to around $4.53 billion. The company bought 467 more tokens since June 30, according to a statement Tuesday. As of July 31, the company held 152,800 Bitcoins.
Saylor began buying Bitcoin in 2020, citing the need to reduce the company’s holdings of cash because of the perceived eroding threat of inflation. The shift came as revenue from the software business stagnated. Saylor gave up his chief executive officer title a year ago, saying he would focus on the Bitcoin aspect of the company’s dual strategy.
MicroStrategy’s operations are still unprofitable, having booked a quarterly operating loss of $26.7 million in the quarter. The company has over $700 million in deferred tax benefits from prior writedowns of its Bitcoin holdings. Now that Bitcoin has recovered in value, the company has removed a valuation allowance against the tax assets.
Phong Le, who took over as CEO when Saylor shifted to executive chairman, said on a conference call Tuesday that the company’s chief revenue officer resigned and he has assumed those responsibilities.
Bitcoin closed the second quarter up 7% to $30,390, building on a first-quarter surged of almost 72%. In last year’s second quarter, the largest digital currency by market value had tumbled 59% to $$18,731. Bitcoin traded at around $29,250 on Tuesday.
Shares of MicroStrategy, which serve as a Bitcoin proxy for many equity investors, was little changed at around $434 after the close of regular trading. They’ve more than tripled this year, after tumbling 74% in 2022. The stock soared as high as $1,315 in February 2021.
--With assistance from Tom Contiliano.
(Updates with additional profitability information in the fifth paragraph.)