Microstrategy 2025 Q1 Earnings Misses Targets as Net Loss Widens 7839.6%

Microstrategy (MSTR), ranking 122nd by market capitalization, reported its fiscal 2025 Q1 earnings on May 01st, 2025. The results missed expectations as the company reported a significant widening of net losses, reflecting its ongoing challenges with digital asset strategies. Despite this downturn, Microstrategy raised its guidance for Bitcoin-related gains, aiming to capitalize on its substantial holdings. The adjusted guidance reflects the company's optimism in achieving higher targets for Bitcoin yield and gains by the end of 2025, indicating confidence in its long-term strategic direction.

Revenue

Microstrategy's total revenue for Q1 2025 fell by 3.6% to $111.07 million, compared to $115.25 million in Q1 2024. The revenue breakdown showed product licenses and subscription services generating $44.37 million, with product licenses alone contributing $7.27 million. Subscription services accounted for $37.10 million, while product support and other services added $52.53 million and $14.16 million, respectively. Overall, the company's revenue performance was impacted by declines across several segments.

Earnings/Net Income

Microstrategy's losses deepened substantially, with a reported loss of $16.49 per share for Q1 2025, versus a loss of $0.31 per share in Q1 2024, marking a 5219.4% wider loss. The company's net loss increased dramatically to $-4.22 billion in 2025 Q1, representing a 7839.6% surge from the $-53.12 million loss recorded in 2024 Q1. The EPS results indicate a challenging financial position.

Price Action

The stock price of Microstrategy edged down 2.73% during the latest trading day, jumped 8.92% over the most recent full trading week, and surged 32.38% month-to-date.

Post-Earnings Price Action Review

Microstrategy's earnings reports have historically led to positive short-to-medium-term stock price gains. Backtest data shows that following earnings releases, the stock's 3-Day win rate is 55.07%, the 10-Day win rate is 58.10%, and the 30-Day win rate is 61.21%. These statistics suggest that the stock usually performs well in the immediate aftermath of earnings announcements, with the highest observed return being 37.91% over 30 days. This pattern indicates potential for significant price appreciation post-earnings, reflecting investor optimism despite challenging earnings outcomes.

CEO Commentary

Phong Le, President and CEO, highlighted the successful execution of a $21 billion common stock ATM, leading to a 50% increase in MSTR's share price. He emphasized a strong start to the year with a "BTC Yield" of 13.7%, achieving over 90% of the 2025 target in just four months. The "BTC $ Gain" of $5.8 billion met 58% of the annual target. Le expressed confidence in the company’s Bitcoin treasury strategy and capital markets approach to enhance shareholder value.

Guidance

Microstrategy increased its 2025 "BTC Yield" target from 15% to 25% and its "BTC $ Gain" target from $10 billion to $15 billion. With current Bitcoin prices suggesting a potential $8.0 billion fair value gain for Q2, the company anticipates strong performance in its Bitcoin strategy. The adoption of fair value accounting has positively impacted retained earnings, setting a favorable outlook for future growth and capital market activities.

Additional News

Microstrategy recently acquired 15,355 Bitcoin for $1.42 billion, increasing its total holdings to 553,555. This aggressive acquisition strategy is part of CEO Michael Saylor's broader Bitcoin bet, which has inspired other market players like Tether and SoftBank to follow suit. Additionally, HC Wainwright & Co. initiated coverage of Microstrategy with a Buy recommendation on April 29, 2025, suggesting a 22.47% upside. Meanwhile, investor alert from Pomerantz LLP announced an investigation into the company for potential securities fraud, which has raised concerns among shareholders.