This month MicroStrategy, the leading platform providing access to AI-powered workflows, unlimited data sources, cloud-native technologies, and unparalleled performance to speed up time from data to action, announced third quarter results. And, while the description of MicroStrategy in our lead might be informative, it isn’t necessarily what the company is known for. Today our story focuses on why MicroStrategy is more than the sum of its Bitcoins. 158,400 of them at last count.
A deep dive into MicroStrategy’s third quarter financial results shows a company that should be profitable. Except for the exposure to Bitcoin, it would have been. Gross profit for the quarter was $102.8 million, whilst losses were $128.0 million. Mainly due to losses related to digital assets. A loss of $33.6 million during the third quarter.
Revenues have grown in 2023 so far. The second quarter’s gross profit was $93.3 million, whilst the first quarter stood at $94.0 million. The biggest blip on the results so far this year has been the losses related to digital assets. The same digital assets that the President and Chief Executive Officer, Phong Le, has also been supportive of. When he took on the role, Phong was quoted in CoinDesk as saying that “We at our core are inventors, we’re innovators,” which aligns with the firm’s investment into Bitcoin.
There is a catch, though. MicroStrategy as a firm doesn’t deliver crypto wallets or bitcoin ETFs to its clients. Yet. In fact, the firm is firmly focused on business intelligence, data, and artificial intelligence. Something that can often get lost in translation.
What does the market say about MicroStrategy?
MicroStrategy has been listed on the Nasdaq Stock Exchange in New York since 1998 – (Nasdaq: MSTR). The stock opened at $12 per share. Today the share price is firmly above $450. However, in February 2021, the company’s share price shot up to over $1200 per share briefly.
Bearing in mind that Michael Saylor, now Executive Chairman of MicroStrategy, only bought the first Bitcoins in August 2020. At the time the cryptocurrency was hovering above $10,000. Just before the rally that saw Bitcoin rise to over $60,000.
Interestingly, prior to investment into Bitcoin the share price of MicroStrategy was struggling to get above $200.
The Motley Fool recently shared valuable insights into the relationship between MicroStrategy’s share price and the value of Bitcoin. The suggestion is that the Bitcoin horde that the company has accumulated is worth roughly ten years of revenue. Which leads to speculation as to when the company would consider selling Bitcoin. Some observers have offered $1,000,000 as a target price in the past.
Clearly the whole organization benefits from its exposure to digital assets. However, where companies like Tesla or Apple may see a surge in their share prices on the release of a new product. The same isn’t the case at MicroStrategy.
To emphasize the point, the TradingView platform offers a Buy Rating for ‘Technicals’ and a Strong Buy Rating for ‘Analyst rating’. Is that because of the product or are investors bullish on Bitcoin?
Adding Artificial Intelligence to 34 years of Business Intelligence Experience
As part of the release of AI enabled MicroStrategy products, the company announced a new partnership with Microsoft this June. The partnership will integrate MicroStrategy’s advanced analytics capabilities with Azure OpenAI Service. This will increase the ability of its analytics platform, MicroStrategy ONE™.
Additionally, the partnership includes the integration of MicroStrategy’s products with Microsoft 365, including Teams and PowerPoint.
All of this was put in place before a big announcement in October. The announcement of the New Era of AI Capabilities at MicroStrategy. From Architecting with Auto SQL to Authoring with Auto Dashboard, joined by Support with Auto Expert, and then Consumption with Auto Answer.
In a recent video, Saurabh Abhyankar, Chief Product Officer at MicroStrategy, explained more about the new product launches. One of these products is Auto. The new virtual AI assistant that MicroStrategy has released. It is designed to embed into any app, website, or portal. The Auto AI chatbot enhances UX and amplifies existing analytics capabilities with AI.
The important thing about the AI at MicroStrategy is how it is ‘trusted’. Saurabh explains how teams of people have helped to help large language models to deliver the right responses when analysing data. How governance is made easier when working with a supplier with such a good grasp of data. And at MicroStrategy, the firm’s understanding of how to work with a semantic layer to better harness data is impressive.
“Do more. With less. Auto AI.” Is the catchphrase on the company’s website.
What about the Team at MicroStrategy?
There is a wide spread of team involvement in either press releases or online presentations at MicroStrategy. The firm boasts over 2,000 employees, not all of them will get a chance to shine.
According to LinkedIn most employees of MicroStrategy are based in the U.S., with large pockets in China and Poland as well. There is a lot of IT and Engineering roles amongst these employees, whilst others work in Sales or Consulting roles. Business Intelligence, SQL, Microsoft products and Data skills dominate the profiles of current employees.
There are over 1000 reviews on Glassdoor giving an average 3.8/5 rating. 72% of employees would recommend a friend. Recent reviews do mention Bitcoin, as well as a friendly working environment. Others complain that the company has gone from a startup to a corporate. Further voices suggest marketing as an area to improve.
Where can you find MicroStrategy on the Event circuit?
Much of what is visible on MicroStrategy’s feed relates to what the company calls the ‘AI / BI Symposia’ and ‘AI/BI Innovation Summits’. These are in-house events where interested market participants can hear from MicroStrategy experts at the company’s offices. There is also a MicroStrategy WORLD event next April in Las Vegas that you can already sign up for.
However, at Disruption Banking, we pride ourselves as knowing a lot about what is happening in the world of banking and financial services. MicroStrategy itself has a strong vertical for financial services. Clients include Standard Chartered, VISA, or AllianceBernstein. However, as yet, we haven’t met any speakers representing MicroStrategy apart from Michael Saylor himself on the circuit we are part of. Back in 2018 there is a mention of MicroStrategy at Money20/20, but other than that the largest Fintech events including Hong Kong, Singapore, Dubai, London or New York have not had a representative from the firm attend in the recent past.
That doesn’t detract from an abundance of events related to data in financial services, like FIMA. VISA and banks like HSBC, NatWest and Santander are all represented in this year’s speakers in London in late November. Importantly MongoDB and Snowflake both have speakers at the event. Both firms are also sponsoring the event.
Maybe Phong Le should consider approaching Vanity Fair to highlight his vision and achievements to date. It will always be a challenge to grow a successful brand next to a legendary figure like Saylor. But let’s not just worry about the fintech and the data. Highlighting the value of working with the largest independent publicly-traded analytics and business intelligence company can’t be that hard.
Author: Andy Samu