MicroStrategy Returns to Profitability in Q4 with Bitcoin-Related Tax Benefit

MicroStrategy Inc., a prominent enterprise-software maker and the largest publicly-traded holder of Bitcoin, announced its return to profitability in the fourth quarter of the fiscal year, attributing the turnaround to a significant tax benefit related to its substantial holdings of the cryptocurrency.

The Virginia-based company, led by Bitcoin advocate Michael Saylor, reported a net income of $89.1 million, equivalent to $4.96 per share, a remarkable reversal from the loss of $249.7 million, or $21.93 per share, in the same period a year earlier.

Despite a 6.1% decrease in revenue, which stood at $124.5 million and missed analysts’ expectations, MicroStrategy’s profitability was buoyed by the tax benefit arising from its Bitcoin assets.

MicroStrategy has long been known for its aggressive approach to Bitcoin investment, becoming the first public company to allocate significant capital to the cryptocurrency in 2020.

The firm’s adoption of Bitcoin as a treasury reserve strategy has been spearheaded by Saylor, who believes in the long-term potential of digital assets.

The latest earnings report marks a notable shift in the company’s fortunes, particularly as it navigates the volatile terrain of cryptocurrency markets.

MicroStrategy’s decision to hold Bitcoin on its balance sheet has drawn both praise and skepticism from investors and industry observers alike.

Despite the positive financial outcome, MicroStrategy chose not to adopt a recently passed accounting rule that would value its Bitcoin holdings at market prices.

Instead, the company recorded a $39.2 million digital-asset impairment loss for the fourth quarter.

MicroStrategy’s stock performance has been closely tied to its Bitcoin holdings, with shares soaring over 300% since the company initiated its Bitcoin investment strategy.

As of February 5, MicroStrategy owned 190,000 Bitcoins, with a total cost of $5.93 billion. The company’s stock price remained relatively stable in after-hours trading following the earnings announcement, hovering around $498 per share, while Bitcoin traded at approximately $43,160.