What are MicroStrategy's 1637 employees actually doing?

Author: Ben Weiss, DL News; Translation: Deng Tong, Jinse Caijing

MicroStrategy wants investors to know that it is hoarding Bitcoin.

MicroStrategy announced that the title of its first quarter earnings report is: “Currently holding 214,400 bitcoins.”

In the second quarter, the announcement was: “Currently holding 226,500 bitcoins.”

And the founder and chairman of the company, Michael Saylor, seems to have done almost nothing on X except flattery to the world’s largest cryptocurrency.

“Bitcoin is a group of network bees serving the goddess of wisdom, feeding on the fire of truth,” his X-profile featured post said.

But MicroStrategy is not just buying Bitcoin. It has 1,637 employees.

Executive Vice President and Chief Product Officer Saurabh Abhyankar said that the majority of these employees are working on the company’s data analytics products.

Yes, MicroStrategy’s Bitcoin buying frenzy has attracted headlines—especially as the world’s largest cryptocurrency hit historic highs and surpassed $100,000.

As the price of Bitcoin soared, so did the stock price of MicroStrategy.

The company’s stock listed on NASDAQ has risen by more than 450% this year, surpassing the 135% increase of Bitcoin.

Despite the Bitcoin frenzy, MicroStrategy employees are quietly developing software for companies such as hotel operator Hilton, furniture retailer Crate & Barrel, and airline Emirates.

Abhyankar said that MicroStrategy’s software products are a core part of its business - and also a part of daily life for many people in the United States and elsewhere.

“You may already be using MicroStrategy,” he said, “because you are interacting with some big banks and large retailers.”

Who does MicroStrategy serve?

MicroStrategy’s flagship product, MicroStrategy ONE, is not aimed at everyday users like Uber or Google Search.

Its enterprise software operates behind the scenes in large companies.

Abhyankar said, taking retailers as an example.

The store manager needs to do a lot of things to operate their business.

This includes data on store inventory, employee schedules, and projected deliveries. This data, along with the software that categorizes it, is often isolated.

In other words, the calendar used for scheduling employees is different from the one used for tracking store inventory.

However, for large enterprises, it is more efficient for managers and senior executives to view all content through a single platform.

“Fundamentally, our platform can allow you to connect data from all these different systems,” Abhyankar said.

And because each company has different software and data suites - Hilton and Crate & Barrel are not the same company - MicroStrategy’s software must be flexible.

“Banks, retailers, hospitals, pharmaceutical companies, and more — most of their businesses are running with MicroStrategy,” Abhyankar adds. **

Current customers include a variety of companies: Pfizer, United States Postal Service, and even fried chicken giant KFC.

Initial Public Offering

However, investors did not rush to buy MicroStrategy stock at over $370, as they are optimistic about the company’s ability to help hospitals operate more efficiently.

MicroStrategy went public in 1998. However, in 2020, when Saylor announced that his company had purchased 21,454 bitcoins for about $250 million, MicroStrategy attracted a new group of investors.

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

According to analysts at Bernstein, MicroStrategy’s Bitcoin financial strategy is as follows: purchase Bitcoin with the remaining cash from the software business. Purchase Bitcoin through the issuance of stocks or bonds. As the price of Bitcoin (hopefully) rises, the value of MicroStrategy’s funds will also increase, which will boost MicroStrategy’s stock price.

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

Bitcoin Agent

MicroStrategy’s stock price fluctuates in sync with the price of Bitcoin, especially this year, as the company allocates more and more corporate resources to cryptocurrencies.

Investors typically view cryptocurrency stocks as proxies for Bitcoin - a simple, cost-effective way to capture Bitcoin returns without directly interacting with the cryptocurrency market.

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

On Wednesday, Bernstein even considered the software division as a potential obstacle to MicroStrategy’s inclusion in the benchmark S&P 500 index.

Bloomberg Intelligence analyst James Seyffart holds a similar view, believing the company’s ‘lack of profitability’ is a barrier to being included in the S&P 500 index.

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

Farewell to software business?

MicroStrategy’s intense focus on the world’s largest cryptocurrency has raised a question: Is its software business on the decline?

From 2020 to 2024, quarterly revenue from software sales stagnated between $110 million and $135 million.

From the end of 2020 to the third quarter of 2024, the number of MicroStrategy’s employees decreased by 22%.

Abhyankar refused to disclose whether MicroStrategy is ready to become a pure Bitcoin fund. “My goal is to develop the analytics business,” he said.

On the contrary, he said that he believes the company’s focus on Bitcoin complements its software business.

He believes that the soaring stock price of MicroStrategy helps attract and retain software talents, while its bitcoin-centric balance sheet reduces the need for its analytics business to sacrifice long-term gains for the sake of short-term profits.

He said, investors typically measure software suppliers by increasing quarterly revenue and customers. However, MicroStrategy’s Bitcoin assets have added another metric for analysts to assess the company.

“My goal is to develop the analytics business.” - Saurabh Abhyankar

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

In the end, he knew that MicroStrategy’s data analytics business would not make headlines. However, Abhyankar assured that most of the company’s 1,637 employees are doing other things, not just hoarding Bitcoin for Michael Saylor.

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