What exactly do MicroStrategy’s 1,637 employees do?

Ben Weiss, DL News; Translated by Deng Tong, Golden Finance

MicroStrategy wants investors to know it’s hoarding Bitcoin.

The headline of MicroStrategy’s announcement of its first-quarter results was: “Currently holding 214,400 Bitcoins.”

In the second quarter, its announcement read: “Currently holding 226,500 Bitcoins.”

And Michael Saylor, the company’s founder and chairman, seems to have done little on X except fawning over the world’s largest cryptocurrency.

“Bitcoin is a swarm of cyber bumblebees serving the goddess of wisdom, feeding on the fire of truth,” reads the featured post on his X profile.

But MicroStrategy isn’t just buying Bitcoin. It has 1,637 employees.

The vast majority of those employees are working on the company’s data analytics products, said Saurabh Abhyankar, executive vice president and chief product officer.

Yes, MicroStrategy’s bitcoin buying spree has grabbed headlines — especially as the world’s largest cryptocurrency hit an all-time high and surpassed $100,000.

As bitcoin prices have soared, so have MicroStrategy’s shares.

The company’s Nasdaq-listed shares are up more than 450% this year, outpacing bitcoin’s 135% gain.

Even as the bitcoin craze mounts, MicroStrategy employees are still working on low-profile software for companies like hotelier Hilton, furniture retailer Crate & Barrel and airline Emirates.

Abhyankar says MicroStrategy’s software products are a core part of its business—and part of daily life for many people in the U.S. and elsewhere.

“You’re probably already using MicroStrategy,” he says, “because you’re interacting with some of the big banks and big retailers.”

Who does MicroStrategy serve?

MicroStrategy’s marquee product, MicroStrategy ONE, isn’t aimed at everyday users like Uber or Google Search.

Its enterprise software runs behind the scenes at large companies.

Take retailers, for example, Abhyankar says.

“Store managers need to do a lot of things to run their business.”

That includes data on store inventory, employee schedules, and expected deliveries. That data, and the software that sorts it, is often siloed.

In other words, the calendar you use to manage your employees is a different program than the one you use to track store inventory.

But for large companies, it’s more efficient for managers and executives to see everything through one platform.

“Fundamentally, our platform allows you to connect data from all these different systems,” Abhyankar says.

And because every company’s software and data suite is different—Hilton is not the same company as Crate & Barrel—MicroStrategy’s software has to be flexible.

“Banks, retailers, hospitals, pharmaceutical companies—they all run much of their business using MicroStrategy,” Abhyankar adds.

Current customers include a wide variety of companies: Pfizer, the U.S. Postal Service, and even fried chicken giant KFC.

IPO

Investors didn’t rush to buy MicroStrategy shares at prices above $370, though, as they’re bullish on the company’s ability to help hospitals run more efficiently.

MicroStrategy first went public in 1998. But in 2020, MicroStrategy attracted a new wave of investors when Saylor announced his firm had purchased 21,454 bitcoins for about $250 million.

“This investment reflects our belief that Bitcoin, the world’s most widely adopted cryptocurrency, is a reliable store of value and an attractive investment asset with greater long-term appreciation potential than holding cash,” he said in a press release.

According to Bernstein analysts, MicroStrategy’s financial strategy for Bitcoin is as follows: Use excess cash from the software business to buy Bitcoin. Buy Bitcoin by issuing shares or bonds. As the price of Bitcoin (hopefully) rises, so will the value of MicroStrategy’s funds, which will boost MicroStrategy’s stock price.

Since 2020, the company has accumulated more than 402,100 bitcoins, worth about $40 billion.

Bitcoin Proxy

MicroStrategy's stock price has moved in sync with the price of bitcoin, especially this year as the company has devoted more and more corporate resources to cryptocurrencies.

Investors often view cryptocurrency stocks as proxies for bitcoin — an easy, cheap way to lock in bitcoin gains without interacting directly with the cryptocurrency market.

In fact, Wall Street analysts who provide stock recommendations to institutional clients have barely mentioned the software.

On Wednesday, Bernstein even cited the software unit as a potential obstacle to MicroStrategy's inclusion in the benchmark S&P 500 index.

That’s a view shared by Bloomberg Intelligence analyst James Seyffart, who sees the company’s “lack of profits” as an obstacle to inclusion in the S&P 500.

Bernstein expects MicroStrategy to continue investing heavily in Bitcoin, pushing its stock price to $600 in the next 12 months.

Goodbye Software Business?

MicroStrategy’s frenetic focus on the world’s largest cryptocurrency raises the question: Is its software business on the wane?

Quarterly revenue from software sales is stagnant at between $110 million and $135 million from 2020 to 2024.

MicroStrategy's headcount fell 22% from the end of 2020 to the third quarter of 2024.

Abhyankar declined to say whether MicroStrategy was preparing to become a pure play Bitcoin fund. "My goal is to grow the analytics business," he said.

Instead, he said he sees the company's focus on Bitcoin as a good fit with its software business.

He believes MicroStrategy's soaring stock price helps attract and retain software talent, while its Bitcoin-centric balance sheet reduces the need for its analytics business to pursue short-term profits at the expense of long-term gains.

Investors typically measure software vendors by growing quarterly revenue and customers, he said. However, MicroStrategy's Bitcoin balance sheet adds another metric for analysts to assess the company.

“My goal is to grow the analytics business.” — Saurabh Abhyankar

“Our Bitcoin strategy relieves that pressure so we can take a long-term approach to our engineering investment and innovation strategy,” Abhyankar said.

Ultimately, he knows MicroStrategy’s data analytics business won’t make headlines. Still, Abhyankar assures that most of the company’s 1,637 employees are doing other things than just hoarding Bitcoin for Michael Saylor.

“Maybe we’re a small part of MicroStrategy,” Abhyankar said, referring to the software business’s prominence on the company’s balance sheet. “But we’re still an important part.”