MicroStrategy’s third-quarter 2024 earnings call marked a pivotal moment in the company’s evolution—from a business intelligence software provider to the world’s first and largest bitcoin treasury company, or BTC. The call unveiled an ambitious three-year capital strategy, financial performance highlights, and a visionary outlook on digital capital transformation.
With 252,220 bitcoins held as of September 30, 2024—valued at $18 billion—the company is not just investing in bitcoin; it is redefining how public companies can leverage digital assets for long-term value creation.
Strategic Vision: Becoming the World’s First Bitcoin Treasury Company
Phong Le, President and CEO, opened the call by reaffirming MicroStrategy’s identity shift. The company now defines itself as the world’s first and largest bitcoin treasury company, adopting bitcoin as its primary treasury reserve asset.
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This transformation is driven by three core mechanisms:
- Debt financing: $4.3 billion in convertible debt at a blended cost of just 0.8% annually.
- Equity issuance: $4.3 billion raised through accretive equity offerings.
- Software cash flows: $836 million reinvested into bitcoin since August 2020.
The goal? To scale bitcoin holdings using intelligent leverage while maintaining shareholder value.
The 21-21 Strategic Capital Plan: $42 Billion in Three Years
One of the most significant announcements was the 21-21 strategic capital plan for 2025–2027. The company aims to raise $42 billion in total capital:
- $21 billion in equity
- $21 billion in fixed income instruments
This includes the filing of a $21 billion ATM (at-the-market) equity program—the largest in U.S. capital markets history.
Annual Targets:
- 2025: $10 billion ($5B equity + $5B fixed income)
- 2026: $14 billion ($7B + $7B)
- 2027: $18 billion ($9B + $9B)
Capital will be used primarily to acquire more bitcoin. The strategy hinges on intelligent leverage—balancing equity and debt raises to maintain favorable financing terms and avoid over-reliance on software cash flows.
Bitcoin Holdings and Acquisition Performance
As of Q3 2024, MicroStrategy holds:
- 252,220 BTC
- Average purchase price: $39,000 per BTC
- Total acquisition cost: $9.9 billion
- Market value: $16 billion (as of Sept 30)
During Q3 alone, the company acquired 25,889 BTC for $1.6 billion**, at an average price of **$60,839.
All bitcoin holdings are now fully unencumbered after redeeming the $500 million senior secured notes due 2028. This enhances financial flexibility and strengthens the balance sheet.
Financial Results: Software Business Transition and Cloud Growth
While bitcoin dominates headlines, MicroStrategy continues to operate a leading enterprise analytics platform.
Key Software Metrics (Q3 2024):
- Non-GAAP subscription billings: $32.4 million, up 93% year-over-year
- Subscription services revenue: $27.8 million, up 32% YoY, now 24% of total revenue
- Total software revenue: $116 million, down 10% YoY due to on-premise to cloud transition
The decline in traditional license revenue reflects a deliberate shift toward recurring cloud subscriptions. Customers are migrating to MicroStrategy 1 on Azure, AWS, and Google Cloud, driven by AI-powered analytics using Azure OpenAI.
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Introducing BTC Yield: A New KPI for Value Creation
To measure strategic success, MicroStrategy introduced BTC yield—a key performance indicator tracking the growth of bitcoin holdings relative to diluted shares.
What Is BTC Yield?
BTC yield = Period-to-period % change in (Total BTC Holdings / Assumed Diluted Shares Outstanding)
A positive BTC yield means the company is acquiring bitcoin faster than issuing shares—creating value rather than dilution.
Historical BTC Yield:
- Q3 2024: 5.1%
- Q2 2024: 3.7%
- Q1 2024: 8.1%
- Year-to-date 2024: 17.8%
The company has revised its annual target from 4–8% to 6–10% for each of the next three years.
Michael Saylor’s Vision: Volatility as Vitality
Michael Saylor, Chair and CEO, delivered a compelling narrative on why volatility is not a risk—but a competitive advantage.
Key Insights:
- MicroStrategy outperformed all S&P 500 stocks since August 2020, with equity value up 1,989%.
- Despite high volatility, MSTR is the most actively traded stock in options volume relative to market cap.
- Convertible bonds have delivered up to 224% returns, outperforming direct bitcoin in some cases.
Saylor likened MicroStrategy to a refinery—transforming raw digital capital (bitcoin) into structured financial products (equity, converts, preferreds) that serve different investor needs.
Fixed Income Innovation: Creating Bitcoin-Backed Securities
MicroStrategy isn’t just holding bitcoin—it’s creating a new class of financial instruments:
- Convertible bonds with downside protection and upside exposure
- Potential future issuance of preferred stock, high-yield debt, or income-generating securities
These products allow investors to gain exposure to bitcoin with varying degrees of risk, volatility, and return—something ETFs cannot offer due to management fees and full correlation.
Balance Sheet Discipline and Long-Term Principles
Saylor outlined nine core principles guiding MicroStrategy’s strategy:
- Buy and hold bitcoin indefinitely
- Prioritize long-term shareholder value
- Treat all investors with transparency
- Structure MSTR to outperform BTC
- Pursue positive BTC yield on all capital raises
- Grow rapidly but responsibly
- Issue innovative fixed-income securities
- Maintain a pristine, transparent balance sheet
- Promote global adoption of BTC as treasury reserve
These principles reinforce trust and predictability—critical for institutional adoption.
Frequently Asked Questions (FAQ)
What is MicroStrategy’s BTC yield and why does it matter?
BTC yield measures how efficiently the company grows its bitcoin holdings relative to share issuance. A positive yield indicates value creation; a negative yield suggests dilution. It’s a transparent metric that aligns management incentives with shareholder interests.
How does MicroStrategy plan to service interest on new debt?
With software cash flows strengthened by debt refinancing—such as redeeming high-cost notes—and future capital raises under the 21-21 plan, MicroStrategy expects to manage interest expenses efficiently. The shift to unsecured convertible debt with sub-1% blended rates enhances financial flexibility.
Is MicroStrategy still focused on its software business?
Yes. While bitcoin is central to its treasury strategy, MicroStrategy remains the largest independent public BI company. The cloud transition is accelerating, with subscription billings growing 93% YoY, ensuring long-term operational resilience.
Can MicroStrategy sustain its aggressive capital-raising plan?
The company has demonstrated consistent access to capital markets, becoming the top U.S. issuer of convertible notes in 2024. With a transparent strategy, strong investor demand, and growing institutional interest in digital assets, the plan is feasible if market conditions remain favorable.
Why is volatility beneficial for MicroStrategy?
Volatility attracts options traders, boosts liquidity, and enables creative financing. Unlike traditional firms that suppress risk, MicroStrategy embraces it—turning volatility into a strategic asset that fuels trading volume and capital formation.
How does MicroStrategy compare to spot bitcoin ETFs?
Unlike ETFs that charge fees and offer 1x exposure, MicroStrategy uses intelligent leverage to deliver potential outperformance (historically ~1.5–2x BTC). Its securities offer structural advantages through convertible instruments and balance sheet innovation.
MicroStrategy’s Q3 2024 earnings call wasn’t just a financial update—it was a declaration of intent. By merging capital markets expertise with a bold bitcoin strategy, the company is pioneering a new model for corporate value creation in the digital age.
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