Business analytics software company MicroStrategy (NASDAQ: MSTR) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 2.7% year on year to $114.5 million. Its GAAP profit of $32.60 per share was significantly above analysts’ consensus estimates.
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MicroStrategy (MSTR) Q2 CY2025 Highlights:
- Revenue: $114.5 million vs analyst estimates of $113.1 million (2.7% year-on-year growth, 1.2% beat)
- EPS (GAAP): $32.60 vs analyst estimates of -$0.07 (significant beat)
- EPS (GAAP) guidance for the full year is $80 at the midpoint, beating analyst estimates by 596%
- Operating Margin: 12,256%, up from -180% in the same quarter last year
- Market Capitalization: $112 billion
“In the second quarter and into July, Strategy delivered another period of exceptional execution and growth. We expanded our bitcoin holdings to 628,791 bitcoins, raised over $10 billion through our ATM programs and IPOs, and saw growing institutional and retail demand for our securities. STRC, our short duration, high yield credit instrument, which was our largest ever IPO, demonstrates how we amplify our bitcoin holdings through intelligent leverage. Our overall capital raising activities have resulted in our Bitcoin per Share ('BPS') increasing by 25% year-to-date and as a result we are raising our full year BTC Yield and BTC $ Gain KPI targets to 30% and $20 billion, respectively. These achievements underscore the scale of our Bitcoin treasury strategy and the strength of our capital markets platform. In this release, we are also publishing a capital markets framework, which provides a clear structure for how we intend to raise capital to increase our bitcoin balance sheet and grow long-term shareholder value,” said Phong Le, President and Chief Executive Officer.
Company Overview
Founded in 1989 with an initial contract with DuPoint, MicroStrategy (NASDAQ: MSTR) started as a data mining and business intelligence software platform, but in 2020, the company made waves by investing heavily in Bitcoin.
Note that our analysis is rooted in fundamentals, not Bitcoin-driven technicals.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. MicroStrategy’s demand was weak over the last three years as its sales fell at a 2.8% annual rate. This was below our standards and suggests it’s a lower quality business.
This quarter, MicroStrategy reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 1.2%.
Looking ahead, sell-side analysts expect revenue to grow 1.5% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
MicroStrategy’s demanding reinvestments have drained its resources over the last year, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 23.2%, meaning it lit $23.18 of cash on fire for every $100 in revenue. This is a stark contrast from its operating margin, and its investments (i.e., stocking inventory, building new facilities) are the primary culprit.
Key Takeaways from MicroStrategy’s Q2 Results
We were impressed by MicroStrategy’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 1.2% to $406.38 immediately following the results.
Indeed, MicroStrategy had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
