MicroStrategy Incorporated (MSTR) experienced a notable earnings miss in Q3 2024, with a reported loss of $340.2 million, or $1.72 per share, compared to a net loss of $143.4 million, or $1.01 per share, in the same quarter last year1. The factors contributing to this earnings miss include:
- Revenue Decline: Total revenues decreased by 10.3% year-over-year, amounting to $116.1 million, falling short of analyst estimates of $122.66 million. This decline was primarily driven by a decrease in product licenses and product support revenues1.
- Operating Expenses Increase: Operating expenses surged by 301.6% year-over-year, reaching $514.3 million, largely due to significant digital asset impairment losses amounting to $412.1 million. This increase in expenses disproportionately strained the company's profitability, contributing to the earnings shortfall1.
- Gross Profit Decrease: Despite achieving a gross profit of $81.7 million with a gross margin of 70.4%, this figure was a decline from $102.8 million and a gross margin of 79.4% in Q3 2023. The reduction in gross profit further underscored the challenges faced by the company during the quarter1.
In summary, MicroStrategy's Q3 2024 earnings miss was primarily driven by a combination of revenue decline, increased operating expenses, and a decrease in gross profit. These factors, collectively, significantly impacted the company's financial performance during the quarter.