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MicroStrategy Sees $170M Impairment Charge on BTC Holdings, Company Reports Q1 2022 Earnings

UTC by Ibukun Ogundare · 2 min read
MicroStrategy Sees $170M Impairment Charge on BTC Holdings, Company Reports Q1 2022 Earnings
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In the earnings report, MicroStrategy noted a secured term loan by its wholly-owned subsidiary MacroStrategy.

MicroStrategy Inc (NASDAQ: MSTR), which currently holds approximately 129,218 Bitcoins, reported a $170 million impairment charge on Bitcoin holdings in its Q1 2022 financial results. The impairment signifies a decline in the current price of Bitcoin over its price at the time of acquisition. MicroStrategy had digital asset impairment losses of $831 million in 2021 and $71 million in 2020. On the digital asset impairment losses for Q1 2022, MicroStrategy stated:

“As of March 31, 2022, the original cost basis and market value of MicroStrategy’s bitcoin were $3.967 billion and $5,893 billion, respectively, which reflects an average cost per bitcoin of approximately $30,700 and a market price per bitcoin of $45,602.79, respectively.”

MicroStrategy Announce Q1 2022 Financial Results

The company revealed that non-GAAP expenses for the quarter were $275 million, compared to $298 million recorded in Q1 2021. Explaining the losses in its Q1 2022 financial result, MicroStrategy placed the loss from operations at $170 million. In comparison, the company reported a $183.2 million loss from operations for Q1 2021. Additionally, the net loss for the last quarter was $130.8 million or $11.58 per share based on a diluted basis. Meanwhile, net loss per share in the same quarter of the previous year was $11.40 per share on a diluted basis.

Furthermore, MicroStrategy said gross profit for Q1 2022 was $93.6 million compared to a gross margin of $100.4 million announced in Q1 2021.

In the earnings report, MicroStrategy noted a secured term loan by its wholly-owned subsidiary MacroStrategy. The business intelligence company explained that MicroStrategy “entered into a Credit and Security Agreement” with Silvergate Bank. The bank gave a $205 million term loan to MacroStrategy.

“As of March 31, 2022 the net carrying value of the 2025 Secured Term Loan was $204.6 million, net of unamortized issuance costs, and was classified as a long-term liability in the Long-term debt, net” line item in MicroStrategy’s Consolidated Balance Sheets.”

MicroStrategy has announced Andrew Kang as its new Chief Financial Officer (CFO) and Executive Vice President. Kang will resume his new poisons on 9th May, taking over from Phong Le. Meanwhile, Le will continue as the company’s President. CEO Michael Saylor expressed his excitement over Andrew joining the management team. He referred to Andrew’s vast experience and finance leadership, making him the right choice.

Except for a 1.28% increase to $347.79 in premarket trading, MSTR has been declining. The company’s stock has lost nearly 45% in a year, and 36.93% since 2022 started.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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