MicroStrategy's Q1 2025: Unpacking Key Contradictions in Capital Strategy and Bitcoin Positioning

Capital markets strategy and funding of dividends, Bitcoin as a corporate asset and financial strategy, capital markets strategy and shareholder value, software business transition and cloud revenue growth, Bitcoin as the primary treasury asset are the key contradictions discussed in MicroStrategy's latest 2025Q1 earnings call.



Bitcoin Treasury Strategy and Growth:
- MicroStrategy, Incorporated (MSTR) reported its Bitcoin (BTC) holdings increased to 553,555 bitcoins with a total market value of $52 billion as of April 28.
- This growth was driven by the acquisition of 106,085 bitcoins in the first four months of 2025, contributing to a total purchase cost of $9.9 billion at an average price of approximately $93,600.
- The company's strategy is based on accumulating Bitcoin, intending to become the world's largest corporate holder, with the aim of holding over 700,000 Bitcoin by adopting a Bitcoin-focused playbook.

Capital Raising and Financing Activities:
- MSTR raised $6.6 billion in equity and $3.4 billion in fixed income instruments through its at-the-market (ATM) equity offering program and convertible notes in Q1 2025.
- The company's ability to tap multiple capital sources efficiently is attributed to its strategic capital plan, which includes issuing innovative fixed income securities like the 8% convertible preferred and 10% fixed coupon perpetual preferred securities.

Financial Performance and Shareholder Value:
- MicroStrategy's cloud revenues increased by 38% in Q1, with subscription billings reaching $24.5 million, representing 33% of total revenues.
- The company's focus on cloud growth and demand for its cloud platform has led to expanding revenues, offsetting declines in legacy on-prem products.

Implications of Fair Value Accounting:
- The adoption of fair value accounting for Bitcoin holdings recognized a difference of $17.9 billion between the carrying value on the company's books and the fair value based on Bitcoin's price at 12/31.
- This change in accounting has introduced volatility into financial reporting, impacting both earnings and balance sheet valuations, but it provides a more accurate reflection of Bitcoin's market value.