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Factors to Note Ahead of MicroStrategy's (MSTR) Q3 Earnings

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·3 min read
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MicroStrategy MSTR is slated to report third-quarter 2021 results on Oct 28.

For the to-be-reported quarter, the consensus mark for earnings is pegged at $1.12 per share, which suggests a decline of 45.6% from the year-ago quarter’s levels.

The Zacks Consensus Estimate for revenues is currently pegged at $127.5 million, indicating an increase of 0.1% from the prior-year quarter’s reported figure.

Recap of Q2 Performance

In second-quarter 2021, the company reported revenues of $125.4 million, up 13% from the year-ago quarter’s reported figure. The top line beat the Zacks Consensus Estimate by 4.5%.

The company reported earnings of $1.72 per share compared with 60 cents per share reported in the second quarter of 2020. The bottom line beat the Zacks Consensus Estimate by 135.6%.

MicroStrategy Incorporated Price and EPS Surprise

MicroStrategy Incorporated Price and EPS Surprise
MicroStrategy Incorporated Price and EPS Surprise

MicroStrategy Incorporated price-eps-surprise | MicroStrategy Incorporated Quote

Let’s see how things have shaped up prior to this announcement.

Factors to Note Ahead of Q3 Release

MicroStrategy is a well-known provider of business intelligence software and serves companies across several industries like retail, technology, finance and so on.

The company’s top-line performance is likely to have benefited from rapid adoption of its cloud solutions (by existing and new clients), triggered by the accelerated digital transformation taking place globally.

Higher migration of existing on-premises customers to cloud platform bodes well. Increasing interest from OEM customers for its cloud solutions is likely to have favored the top line in the to-be-reported quarter.

Strong subscription billings growth is likely to have acted as a tailwind. In the last reported quarter, subscription billing rose 13% year over year despite a negative decrease in short-term deferred subscription revenues as the company ceased to include contract values that are invoiced in the future.

The company is benefitting from the adoption of its solutions like Workstation, HyperIntelligence, Hyper.Now, Library and Dossier as well as its efficient marketing expenditures.

MicroStrategy has doubled down on increasing its bitcoin reserve as it believes that its strategy of acquiring more bitcoins is complementary to its enterprise analytics software business. It holds the idea that bitcoin-related endeavours will put the spotlight on its brand and attract new clients for its software business.

In the second quarter of 2021, MicroStrategy purchased additional 13,759 bitcoins worth $529 million. As of Jun 30, 2021, MicroStrategy held 105,085 bitcoins for a cumulative cost of $2.7 billion.

Increasing competition in the software space and higher research and development costs as well as toward product development might have affected margin expansion in the third quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for MicroStrategy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

MicroStrategy has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these have the right mix of elements to beat estimates this time.

Texas Instruments TXN has an Earnings ESP of +9.22% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices AMD has an Earnings ESP of +2.31% and a Zacks Rank of 2.

Alphabet GOOGL has an Earnings ESP of +7.71% and a Zacks Rank of 2.


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