This content is a transcript of Strategy's Q3 2025 earnings webinar, focusing on the company's strong financial performance, its expanding Bitcoin holdings, and its innovative digital credit offerings designed to generate shareholder value.
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Hello everyone and good evening. I am
Sharij Jodhia, corporate treasurer and
head of investor relations at strategy.
I will be your moderator for strategies 2025
2025
third quarter earnings webinar. We will
start with the call with a 60 minutes
presentation starting first with Andrew
Kang followed by Fong Lee and then
Michael Sailor. This will be followed by
a 30 minutes interactive Q&A session
with uh four Wall Street equity analysts
and four Bitcoin analysts. Before we
proceed, I will read the safe harbor statement.
Some of the information we provide in
this presentation regarding our future
expectations, plans, guidance, and
prospects may constitute forward-looking
statements, including without limitation
our guidance with respect to earnings
and our KPIs contained in this
presentation. Actual results may differ
materially from these forward-looking
statements due to various important
factors including fluctuations in the
price of Bitcoin and the risks factors
discussed in our most recent quarterly
report on form 10Q filed with the SEC on
August 5th, 2025 and our current report
on form 8K filed with the SEC on August
on October 6, 2025. We assume no
obligation to update these
forward-looking statements which speak
only as of today. With that, I will turn
the call over to Andrew Kang, the CFO of strategy.
Thank you, Shares. Um, I'll start with
some highlights for the quarter.
We now hold 640,88
Bitcoin or over 3% of all Bitcoin ever
to exist. This reinforces the scale and
the dominance of our corporate Bitcoin
treasury company. We have a market cap
of $83 billion which positions us among
top publicly listed companies in the US
and we have four listed preferred
securities in the market. STRF, STRK,
STRK,
STRD, and STRC
with STRC's or stretch being the largest
US IPO of 2025 so far, and all which
continue to grow in liquidity and
investor interest each and every day.
We've also raised $19.8 billion in
capital year to date to acquire more
Bitcoin. And our capital markets
platform continues to deepen in
liquidity and investor interest. And we
continue to show positive performance in
our Bitcoin metrics. All central to
generating long-term shareholder value.
Turning to our Q3 2025 GAP financial
results, we reported $3.9 billion in
operating income, $2.8 8 billion in net
income and earnings of $843
per share. That's a transformative
improvement year-over-year, reflecting a
strong performance in Bitcoin, the fair
value treatment we now have on our
Bitcoin, and disciplined capital raising activities.
activities.
This marks our second consecutive
quarter of significant positive gap
earnings and over$8 billion in positive
earnings in the last four quarters.
Next slide.
Our results for the first nine months of
the year show $12 billion in GAP
operating income, $8.6 billion in net
income, and earnings of $27.80
per share, continuing our
Moving on to Bitcoin per share.
Bitcoin per share as we introduced last
quarter measures the accretion of
Bitcoin on a per share basis by
calculating the ratio between the
company's Bitcoin holdings and assumed
diluted shares outstanding here
represented in Satoshi's
through October 26th. Our Bitcoin per
share was 41,370
compared to Bitcoin per share of 39,716
as of July 31st.
We are consistently accumulating more
Bitcoin per share each quarter, the
highest of any Bitcoin treasury company,
creating direct and measurable value for
our shareholders.
Next slide.
Since adopting our Bitcoin strategy in
2020, we've consistently increased
Bitcoin per share.
We began with 56,598
Bitcoin per share in 2020 and as of
October 2025 that has grown to 200,197
Bitcoin per share, more than a 3.5 times
increase over that period. We've also
grown BTC yield year after year through
disciplined capital raises and immediate
conversion into Bitcoin on our balance
sheet, reflecting a 26% BTC yield year
to date. This sustained growth
reinforces our ability to deliver
Bitcoin yield to our shareholders
through market cycles and by
continuously executing on our capital
markets and acquisition strategy.
Next slide.
Here we highlight our year-to- date
Bitcoin performance metrics versus our
full year 2025 targets.
Year-to date, we've achie achieved a 26%
BTC yield compared to our revised
fullear target of 36 30%. Our
year-to-ate BTC gain is 116,555
BTC, up from 88,000 at the end of Q2,
reflecting disciplined capital
deployment and the strengthening of our
Bitcoin balance sheet. Our BTC gain
performance translates into
approximately $12.9 billion in BTC
dollar gain year to date compared to our
$20 billion fullear goal.
We now hold 640,88
Bitcoin or $71 billion purchased at a
total cost of $47 billion or an average
$74,000 per Bitcoin. And we now hold
approximately 3.1% of all Bitcoin that
will ever exist. And as in the past,
100% of our Bitcoin remained fully unencumbered.
This next slide highlights the
transformation of our balance sheet over
the past year and the continued strength
we've seen through the third quarter.
Year-over-year, digital assets grew from
just under $7 billion in Q3 of 2024 to
just over $73 billion in Q3 of 2025,
driven by both additional Bitcoin
acquisitions and the adoption of fair
value accounting at the be at the
beginning of the year.
The accounting change alone added
approximately $18 billion to our digital
assets and $12.7 billion to total equity
at the time of adoption.
Quarter o overquarter, digital assets
have continued to climb from $64.4
billion in Q2 to $73.2 billion in Q3,
alongside steady growth in total equity
on our balance sheet, reaching now 58.1
billion at the end of Q3.
Overall, fair value accounting has made
our balance sheet more transparent for
our investors, while execution in
introducing innovative digital credit
through our preferred equity IPOs this
year has continued to expand shareholder
equity and reinforce the company's
position position as the leading Bitcoin
treasury company.
Next slide.
In Q3, we recognized an increase in our
Bitcoin holdings from $64.4 from $4
billion at the end of Q2 to $73.2
billion at the end of Q3.
This increase was made up of $3.9
billion of fair value gain in our
Bitcoin holdings, which is due to the
change in Bitcoin price between the
first and last day of the quarter and
also through the addition of $5 billion
of new Bitcoin added to our balance
Next slide.
As of October 24th, our enterprise value
was $98 billion with a market cap of $83
billion, which is supported by a Bitcoin
net asset value of 71 billion or 72% of
total enterprise value. Our $8.2 billion
of convertible debt is equal to just
11.6% of our total Bitcoin NAV and the
$6.6 6 billion of PRs represent just
9.3% of our Bitcoin holdings. Our annual
dividend and interest obligations total
$689 million, which is less than 1% of
our total Bitcoin, reflecting the
efficiency and sustainability of our
balance sheet. And our capital structure
is built to endure volatility, provide
stability, scalability, and long-term
shareholder confidence.
We continue to have $8.2 billion in
total notional debt across our converts
with all but two that remain in the
money with a total weighted average
maturity of 4.4 years. The total current
notional value of our outstanding
preferred equity as of October 24th
stands at approximately 6.7 billion, up
from 6.3 billion as of July 29th.
Next slide. Our
total annual interest and dividend
obligations are $689 million which
consists of $35 million in interest
expense on our converts which is about
42 basis points average cost and we have
$522 million in dividend obligations
from our cumulative preferred STRF, STRC
and STRK
and an additional $125 million related
Here we show we have more than
sufficient access to liquidity to manage
our total annual interest and dividend
obligations through our proven track uh
track record of capital raising
activities. Our total annual obligations
represent only about 1.7% of to total
capital raised in the last 12 months and
only about 2.6% 6% of total common
equity raised in the last 12 months. As
a measure of our strong financial
performance, our fixed obligations
represent only 6.1%
of year-to-ate gap operating income.
Next slide.
Finally, we are extremely pleased with
the IRS interim guidance that was issued
on September 30th, which now excludes
unrealized gains from our Bitcoin
holdings from adjusted financial
statement income for purposes of CAMT.
Not only does this important
clarification directly benefit strategy,
but it also paves the way for other
corporations to hold and grow Bitcoin on
their balance sheets. We are grateful
and appreciative for the support
Treasury, IRS, Congress, and the
administration for aligning on the
importance of clarifying this specific
rule under CAMT and lifting what
otherwise would have been an extremely
burdensome rule that would have targeted
digital assets and for continuing to
support the growth and innovation of the
digital asset economy. I'll now turn the
call over to Fong Lee, Strategies
President and CEO. Thank you.
>> Thank you, Andrew.
I will go through an update on our
capital markets activity and then I will
review the guidance that we provided for 2025.
2025.
Uh so first I want to welcome and invite
everybody to join us in 4 months in Las
Vegas at the beautiful wind resort for
strategy world 2026 and our fth annual
Bitcoin for corporations. So hopefully
those who are listening uh or watching
this presentation and uh have been a fan
of strategy software or strategy uh and
our Bitcoin strategy uh can come out and
join us.
So uh next slide. So, taking a step
back, uh, we used to compare ourselves
to other companies that held Bitcoin in
their balance sheet. And as you know,
with over 640,000 Bitcoin, uh, and
nearly over 3.1% or nearly 3.1% of all
the Bitcoin ever to be created in the
world, uh, we found it best to compare
ourselves to the largest corporate
treasuries in the world. You'll see here
with $71 billion of Bitcoin on our
balance sheet, we're fifth when
comparing cash and short-term
investments and excluding financial
services companies. And our aspiration
the next years to be number two and the
next 5 to 10 years to be number one. And
What we've done in the past in the la
last two years is raise a significant
amount of equity uh and capital through
the capital markets. In 2024, we raised
$22.6 million and about 27% of that or
$6.2 million was from the convertible
debt market. Year to date this year,
we've raised $19.8
billion. Uh and what you can see here is
the way we've raised it has changed
significantly. We've reduced our
convertible debt raises to about 10%.
And we've increased uh our raises
through prefers to $6 billion or about
30%. And that was all happened that has
all happened this year. Uh it's really
just been since the end of January of
2025 that we've launched our preferred
strategy and it's been very successful
As we start to reduce our reliance on
convertible notes, uh our plan is to
allow those to uh equitize over time.
And based on the earliest uh uh
potential equidization dates, you'll see
here that by 2029, we'll have no more
And instead, what we'll do is we'll
start to season the preferred market. uh
you'll see uh through the course of this
year through four IPOs and as Andrew
mentioned the largest IPO coming uh 3
months ago uh with STRC or stretch we've
been able to raise 6.7 billion through
the preferred market and interestingly
as you look at this a large portion of
that raise has come from the retail
market uh the initial offering strike
had about 4% access uh or raises through
retail And the latest one stretch had
about 23% uh through retail. Next slide shish.
shish.
So how do we season the market and how
do we grow our preferred offerings and
uh raising more capital through our
preferred offerings. Uh three real
techniques that you'll see us continue
to use. First is distribution. Uh
recently uh in the last month we've seen
uh more brokerages uh list our
preferred. Uh Robin Hood listed each of
our four prefers in the last month and
we've seen significant volume uh and
liquidity uh through Robin Hood uh and
they listed those as the first ever
prefers on the platform because of
demand from other folks that were on
Robin Hood. Uh we're also going to
continue to distribute through wealth
management broker dealers raas. Morgan
Stanley participated in our latest
preferred which gave us significant
access to their wealth management
channel retail customers. And we'll
start to work with different banks and
financial institutions to explore other
types of products potentially ETF
rappers and structured finance products
that have our preferreds underlying
them. We're doing more and more in terms
of field marketing, industry
conferences, le leverage finance events
where we uh seek access to customers and
buyers who are interested in credit and
debt products. We're also doing more and
more teaching. So just feet on the
street meeting with financial advisors,
brokers, raas and family offices. And
last is you'll see more digital
marketing, right? You're already seeing
us uh provide some information and
advertise some of our preferred namely
Stretch on social media and X. We plan
to have even greater presence on
YouTube. Uh traditional media
potentially uh channels like Wall Street
Journal and Bloomberg. Uh we continue to
use our strategy.com website and our
strategy app which if you have not
downloaded it I s suggest you do so and
more and more presence on interviews and
podcasts. So these are three different
ways we'll continue to create
distribution and awareness of our credit instruments.
The other uh area of distribution that
we are going to look to access with our
preferred credit instruments uh is uh
international expansion. Right?
Currently our products are listed uh on
the NASDAQ and are US-based products, US
dollarbased products. Uh but there's a
significant access to capital that we
can get if we were to as an example
launch a Canadian product on a Canadian
exchange uh in Canadian dollars, launch
a European product on a European
exchange, a euro or potentially other
areas of the world like Asia or Latin
America also. And we think by accessing
these markets and by providing new
products that are similar to our
preferred products like Stretch or
Strife that we can access even greater
pools of capital to provide more funding
for us to ultimately buy more Bitcoin
We announced this week on Monday that we
have uh now uh the first ever published
rating of a Bitcoin treasury company by
a major credit agency. S&P assigned us a
B minus issuer credit rating to
Strategy. And we think this is a big
milestone not just for Strategy and for
uh Bitcoin treasury companies, but a big
milestone for Bitcoin in of itself.
There's been a lot of discussion around
whether we think this is a good rating
or or not a good rating. I think it's a
solid starting rating and I think even
more importantly to have a rating it
gives us access to more pools of
capital. Uh so what does a B minus
rating mean? Uh by definition it means
that there's a stable outlook and it
reflects the expectation that we'll
continue to manage our capital structure
prudently and we tain that we maintain
market access. uh we were rated under a
uh a structure that's a framework that's
called non-bank financial institutions.
That's a framework the S&P uses to rate
us. And importantly at this point in
time, Bitcoin is uh we we don't get any
credit for the Bitcoin on our balance
sheet when it comes to our rating. It's
deducted from our equity and this drives
negative risk adjusted capital. Uh so
what needs to change for the rating to
improve? Well, one, I think it's
appropriate at some point in time that
Bitcoin be treated uh differently and
and as a capital asset at full credit
and that would require the risk adjusted
capital or the Basil frameworks to
change or for S&P to change how they
look at capital and at Bitcoin as
capital and I think that'll start to
happen over time. We see already other
banks uh seeing Bitcoin as potential
collateral. We've seen uh the US housing
agencies uh suggest that Bitcoin should
be collateral for mortgages. So as that
starts to evolve, I think the uh risk
adjusted capital and the Basel
frameworks will start to evolve and I
think the S&P will evolve in its view on
Bitcoin. But it's good to have a stake
in the ground. Uh I mentioned the
potential equidization of our
outstanding convertible debt because
these are senior to our preferreds uh
and are at at the top of our capital
structure in terms of seniority. As
these start to roll off that will start
to reduce uh our maturity risk and that
should also improve our rating. And and
finally what we've been doing for the
last 5 years we've demonstrated strong
access to capital markets. we
demonstrate in 2022 the ability to
service our debt uh during a Bitcoin
bare market. As we continue to show
improve uh consistent uh leadership uh
in this area, we'll start to see a
better rating too. Um but I'll go to the
next slide. And this is probably the
most important point about getting a
rating because we are now S&P rated. It
gives us access to larger pools of
capital than we had before, right? And
the unrated uh credit market is about
$2.8 trillion uh worldwide.
Now we have access to what we would call
a high yield rated, right? A B minus is
in the high yield category, which is a
market that's about three times the size
of the existing market that we're in.
And over time, our hope is if Bitcoin
was to be treated as a as as you know, a
true uh capital on our balance sheet, uh
that we would be considered an
investment grade uh rated uh company.
And when we get to that point, we would
be able to access a market that's 11x uh
what it is today. So, in summary on on
the S&P rating, uh I think it's a good
starting point and it's important that
we're rated and I think an agency like a
credit um agency like S&P uh validates
uh our company valid starts to validate
Bitcoin as an asset class and it's a
uh the other part of S&P uh so their
index business has also started to
embrace crypto right the S&P 500 has uh
in successive quarters uh added Coinbase
then Block then Robin Hood to their
index and we now meet all the criteria
that's required to uh be in the S&P 500
index. Uh we're number 131 by market cap
of US publicly traded companies. Uh and
you know unlike the NASDAQ 100 that uh
sets its criteria purely by market cap
S&P also has some other uh criteria. You
have to be US company USlisted which we
are. And you have to have a minimum of
$23 billion market cap uh which we have
and 250,000 shares traded each month for
six months which we have. You have to
have a last quarter with positive
earnings. We've had two now. And the sum
of the last four quarters have to have
positive earnings which we also have. So
now that we meet all the criteria, uh
the question we get often is why are we
not included? Um we don't know exactly,
right? this is a a a S&P 500 process
that they don't publish ex exactly, you
know, why someone gets added or not. Uh
but first of all, you know, we just
became eligible in the last quarter and
uh eligibility doesn't mean immediate in
inclusion and that's pretty typical.
Many other highly successful companies,
Tesla and the ones I've mentioned here,
Block and Robin Hood were not uh
included in their first quarter of
eligibility. But we hope to access the
index and 13 trillion dollars of capital
that's tracks the S&P 500 at some point
The other big development that's
happened really just in the last 3
months uh with the passage of uh the
Genius Act and with more and more
government uh clarity on regulations uh
related to Bitcoin and related digital
assets is big banks further embracing
crypto. uh Morgan Stanley's dropped
their restrictions in which wealth
clients can now own crypto funds. In
fact, uh they can solicit Bitcoinbacked
uh securities and including
Bitcoinbacked ETFs. Uh and they are
recommending as much as in some cases 5
to 6% of clients portfolios owning
Bitcoin. They also underwrote our most
recent offering stretch and as I
mentioned earlier gave us access to the
wealth management channel. Uh, City Bank
recently launched coverage, the first
I'll call it bulge bracket bank that's
launched coverage on our equity and they
also provide now price target and
they've announced that they're going to
launch crypto custody services next year
which I think is going to be
transformative in terms of uh major
banks uh now custody bitcoin and other
digital assets. Societ General which is
a large bank in France with became the
first major bank to launch dollar peg
stable coins and even banks like JP
Morgan now are allowing Bitcoin and
and I mentioned that uh city has
launched coverage on on on strategy and
they've also given a bitcoin price
target which is a major improvement uh
you'll see here of all the banks that
are covering us and and all the research
analysts that are covering us. There's
an average price of Bitcoin for 2025 of 156K.
156K.
Average price at the end of 2026 of $180,000.
$180,000.
You'll also see here strong price
targets and ratings on all of the banks
So let me move to 2025 guidance and uh
review the guidance that we provided
last quarter and talk through some of
the additional guidance that we'll
provide this quarter.
The first piece is I want to reaffirm
the BTC guidance for 2025. This is all
assuming a Bitcoin price of $150,000 at
year end which is based off of off of
the consensus targets that I just
reviewed. We have a BTC yield target at
the end of the year of 30% and a BTC
gain dollar gain target of $20 billion.
And we have activities underway to try
to achieve those which include capital
As for our earnings guidance, I also
want to reaffirm what we communicated
three months ago, which is an operating
income target of $34 billion, a net
income target of $24 billion, and an EPS
target of $80 at the end of this year.
Again, all assuming a Bitcoin price of $150,000.
Stretch, which we just launched three
months ago. I also want to reaffirm the
guidance that we've given on how we
think about uh the dividend rate. Uh if
the 5-day VWAP of the price stretches
above $101, we'd recommend a rate
decrease or potentially a follow-on
offering. If the 5day VWAP is between 95
and $99, we'd recommend a 25 basis point
rate increase to get the price uh to to
try to get the price to stretch within
our target price range of 99 to $101.
And if the 5day VWAP is uh below $95 at
the end of the month, we'd recommend a
50 basis point rate increase. And so let
me show you what we've done so far since
we've launched Stretch and what we will
uh update today as far as our five as
far as our dividend for the next month.
So as you recall when we launched the
product in July we launched with a 9% uh
dividend rate. We increased that to 10%
in August. We increased it further to
10.25% in September. And today we're
announcing that effective November 1st,
uh the the we'll increase another 25
basis points our dividend and we'll be
at 10.5%
The last guidance I want to talk through
is is something that that's new uh to
this group uh which is what we're
calling return of capital guidance. And
Mike will talk about this a little bit
more, but this is a pretty unique
feature uh to all of our preferred uh
equity, which is that the dividends are
paid the div the dividends that are paid
are taxed as a return of capital. And if
it's taxed as a return of capital, it
means that it's tax deferred until you
sell the underlying asset. And so if you
hold on to the underlying asset, you can
expect that you're paying essentially
zero taxes on that. That compares to a
qualified dividend which is at a rate of
anywhere between 20 and 35% depending on
the state you live in and the city that
you live in in the US and compare it to
an interest income which is what you
would pay on something like a money
market or bank account of 37% to 55%.
We call these rock dividends. It's a
pretty unique feature and one that I
think uh is not as clear and is maybe
lost on folks, but when you invest in
our preferreds for the foreseeable
future, you can expect rock dividends.
And so why do we have rocks dividends?
It's fairly unique to our company, which
is that we have negative taxable
earnings and profits, which is a
function of uh the business that we're
in. uh and it's a function of our intent
to buy and hold Bitcoin and not sell
Bitcoin whereas negative uh from a tax
perspective and not engage in activities
that will result in uh significantly
positive taxable earnings and profits.
And our guidance here is that we expect
that this rock treatment continues for
the foreseeable future uh for 10 years
or more and we can impact that guidance
and we can impact our negative ENTP with
how we run our business. Uh so uh the
summary here is that our preferred
dividends are taxfree or tax deferred
and that we expect that to continue for
the foreseeable future. Could be 10
So with that, I want to hand it over to
our executive chairman, Michael Sailor.
>> Thank you, Fong, and uh thanks for
joining us today. Uh I'm really excited
to talk to you about um digital capital
and digital credit. So let's go to the
the the first slide. Um the first uh
point that I want to make is that
Bitcoin has emerged as digital capital.
Uh what is uh digital capital? Digital
gold. Uh capital is a long-term store of
value. Bitcoin is a store of value.
The US government has embraced Bitcoin
as a store of value. And that means
every major cabinet member and I'm I'm
showing them here. And of course, the
decision that America is going to be the
Bitcoin superpower is an endorsement uh
along with uh with the president's point
that you don't ever sell your Bitcoin.
Um, let's go to the next slide.
Wall Street has embraced Bitcoin as
digital capital. Uh, now you've got 1.5
million Bitcoin held by the spot ETFs,
about $170 billion worth.
The most successful ETF in the history
of Wall Street is IBIT. And um, and IBIT
has has explosively uh, grown even in
the past few months. Uh the daily
liquidity in IBIT is now approaching $4
billion or more a day. Open interest in
IBIT IBIT has gone to more than $50
billion in open interest. Uh and so this
is wildly successful. Next,
Next,
public companies have embraced Bitcoin
as digital capital. We were the first
public holder of Bitcoin. Then there
were two, then there were four. About a
year ago, there were 60. Now there are
200 plus publicly listed companies
holding Bitcoin.
That's more than a million Bitcoin and
it's about 116 billion in value. I've
got a few metrics here uh on this slide
that show just the scale of the Bitcoin
market. It's a $2.3 trillion market cap.
It's 58 billion of daily liquidity. Uh
$76 billion in BTC open interest in the
derivatives market.
Um, and it's backed by 26 gawatts of
power. Uh, that's 26 full-on nuclear
reactors. It's, uh, and the hash rate
keeps going up. We're now up to,00 xahash.
xahash.
Um, and you have 30% of all voters in
the United States that are registered
uh, of the registered voters that are
that are crypto holders.
The industry crypto is 3.9 trillion and
there's 700
million crypto users and of course 300
million Bitcoin holders. So this is a
global movement at this point. Bitcoin
is is the capital asset at the center of
the entire crypto industry and it is
Now what do you do with digital gold?
Well, what do you do with gold? You
issue credit on gold. For 300 years, the
Western world ran on gold back credit.
Bitcoin is digital gold. What we've
realized is that the killer application
of digital capital is digital credit and
strategy enables a wide variety of
securities based on that digital
capital. What you can see here is um
that the baseline is IBIT. IBIT is
digital capital in a ETF wrapper and
it's got a 53%
annual a 53% return on average for the
past 5 years and uh the volatility is
38% right now. Now what we have done is
created four digital credit instruments
that strip the volatility
and extract or distill the performance
out of IBIT. So strikes volatility is 28
and it gives you a 9% effective yield
and some upside. Strides volatility is
16. It gives you a 13% effective yield.
Stripes volatility is 14 and we
extracted a 9% effective yield. And of
course what we're doing is we're
extracting a certain type of risk uh or
or we're mitigating or stripping off a
bunch of risk. We're extracting a yield.
We're damping the volatility
and the largest piece or the the
greatest piece of financial engineering
we've performed is stretch which is has
converted that 38% volatility into eight
and extracted that effective yield of
10%. And of course as you can see since
we we damped the volatility there is
sort of a conservation of energy or a
conservation of volatility in the
thermodynamic universe. And so where
does the volatility go? It goes to the
equity. So the volatility that we strip
off of BTC acrru to MSTR
and of course the performance and the
opportunity that we strip off of BTC
also acrru to MSTR. So what you see here
is a fairly straightforward financial
engineering exercise. We are a
structured finance company and we are
starting with a blob of high energy
capital, long duration, highly volatile,
high performance.
We are uh we are engineering out
different durations, different
volatilities, different risk profiles,
different performance profiles. We're
even transforming it from the BTC
currency into the USD or to different
currencies. And uh and that is the
exercise. Next.
Now, uh this chart shows the economic um
landscape we work in.
Here you see Bitcoin's performance of
53% over five years, almost double the
mag 7. Uh you can see gold performed 15%
a year. Uh it's slightly edged out the
S&P at 14%.
S&P is the conventional cost of capital.
Real estate is underperforming the S&P
dramatically in this time frame only up
6% a year. Money market instruments
those in short dur duration treasuries
in the US on average have provided 3%
performance a year and midated to
longdated bonds are minus3.
uh strategies equity is plus 83. And of course,
course,
all of our financial engineering is
based upon taking advantage of a lower
cost of equity and a lower cost of
credit uh and then using that in order
to acquire Bitcoin which then uh acrru
to the benefit of the equity holders.
Let's go to the next slide.
So let's look at our products. Strike.
Strike is structured Bitcoin. It's
convertible preferred. So, it has some
upside via via the equity component. At
33% of Strike is equity. It has some
dividend uh an 8% dividend of par. Right
now, an effective yield of 9.1%.
And then Strike pays rock dividends,
which means they're tax deferred as you
uh as you step down your basis. And um
so the the tax equivalent adjusted yield
is 21.6%.
Uh how do you get to that? Well, you
take the cost of strike, you subtract
the equity component, and then you look
at the effective yield of the remainder,
and then you look at the tax adjusted
effective yield and and you end up
getting to 21.6%. So this is a misunderstood
misunderstood security
security
but uh it's got very compelling uh
compelling offers because on one hand
it's an indefinite uh a perpetual
duration call option on the stock
and it's also a perpetual dividend. So,
if you're a very long-term investor that
wants that wants uh the best of both
worlds, some upside, some some income,
and if you want risk stripped away,
well, we've got a BTC rating of 5.2,
which means that Bitcoin could fall by
80% and you would still be overcolateralized.
overcolateralized.
You know, if you bought Bitcoin and it
fell by 80%, you lose 80% of your money.
If you buy this and Bitcoin falls by
80%, you still keep your money, right?
It's a it's a it's a principal
protection. And so down here at the
bottom I've got a table and you can see
you know the effective yield of the
things that strike competes against or
one to 4%.
And so this is a very unique thing and
it's it's really um it's higher yield
more upside longer duration than
alternative investments. And let's go to
the next slide.
Stride is our second credit instrument.
This is long duration high yield credit.
The effective yield is 12 and a half
percent. That makes the tax equivalent
yield nearly 20% 19.9%.
It's still 4.8 times over
collateralized. So, Bitcoin can still
fall by 75%. You're still over
collateralized. and it's got a duration
of eight years which which is a Macaulay
duration but really what you're getting
is you're getting the 10% uh dividend at
par perpetually forever
and um so if you compare it to the
universe it competes against
the effective yield on most high high
yield corporate bonds is 6% and they're
taxable 6.2% leverage loans are 6.8% 8%
they're taxable as uh as normal income
you know preferred stock ETF 6.2%
emerging market debt 5.6%.
So the effective yield of stride is
double but the tax equivalent yield of
stride is triple and so you get triple
tax equivalent yield with more
collateral coverage. This again is a
misunderstood instrument but if you are
seeking maximum cash flows
right and if you trust Bitcoin
minimally and you trust the company then
this is a very interesting opportunity
for you.
The next instrument is Strife STRF.
Well that's long duration senior credit.
It's cumulative and it's got more
protections because there are penalties
if the company were ever to suspend a
dividend, but and it's also more highly
collateralized. The BTC rating is 7.5,
you know, so $7.50 of Bitcoin for every
dollar of strife outstanding. The
effective yield is 9.1% because it
trades above par and the tax equivalent
yield is 14.4%.
So when you look at this against uh
comparable assets the effective yield is
double the tax equivalent yield is triple
triple
and the collateral coverage is is 2 to
3x more.
This is uh got a duration of 11 years
and so longer duration. What that means
is that if interest rates move up or
move down there's going to be more
volatility on this. If you believe
interest rates are going to dive then
this is a great thing. uh you would like
a long duration instrument. If you
believe that interest rates are going to
go up, then that would be the opposite.
You probably wouldn't. Now, let's go on
Stretch is the highest degree of
financial engineering we've engaged in
because with stretch, our our goal was
to strip the volatility, strip the
compress the duration,
convert the BTC into a pure USD yield.
and and then offer that to the to the
investor. So right now stretch is 10.4%
effective yield but that's a tax
equivalent yield of 16%. It's just
slightly under six times over
collateralized and of course it's the
lowest volatility.
Our goal with stretch is you know we
want to give everybody uh something
that's compro something that's
competitive with a money market that
pays you 10.4% 4% that is tax deferred.
You know, if you walk down the street
and you say to someone, "Do you want a
convertible bond?" "Not sure." "Uh, do
you want a 20-year crypto bond?" "Not
sure." "Do you want a crypto junk bond?"
"Not sure." "Would you like a bank
account that pays you 10% tax deferred?" "Yeah."
"Yeah."
"Yeah, everybody wants a bank account
that pays them 10% tax deferred, right?
Why wouldn't you, right?" Um and so this
is to be clear it's not a bank account.
It's not even a money market but we are
we are structuring it to compete with uh
that source of funds. That's why we call
it treasury credit. It's for corporate
treasurers. It's for your family
treasury. It's the money the money that
you probably need to spend in the next
12 24 36 months. If you if you didn't
need the money for four years or more, I
would say, you know, you probably ought
to go look at buying Bitcoin. If you
don't need the money for a decade, you
buy Bitcoin. It's a better deal. But if
you need the money in four months or 8
months or two years, or you have 30% of
your working capital that's stable.
That's a treasury obligation. And right
now, uh, your options aren't great. So,
here we're offering 10.4% effective
yield, but 16% tax equivalent yield. If
you look at um bank accounts, they yield
nothing. Money markets are 4% in the US.
So this is four times better
4x better than the tax equivalent yield
of a money market. Now you'll note uh
it's more volatile, right? The money
markets managed to get down to less than
1% or about approximately 1% volatility.
We're still 8% volatility. And I I think
that's in some part because we're still
seasoning. And so we we are going to
continue to work to get this volatility
down below 8 to 7 to six. We got to 5%
uh you know about a week ago. You know,
we don't know how low we can get it, but
our goal is to make it the least
volatile of our credit instruments.
Vong spoke about uh return of capital.
Uh the point that I want to make is um
you know rock dividends have been around
uh this is settled tax law since 1910.
You know return of capital's been around
since 1910. You'll find hundreds of
companies that have issued uh dividends
that are return of capital. Um you'll
find oil pipelines, natural gas
companies, real estate companies, etc.
We just happen to have a very compelling
business model. The treasury business
model uh allows us to have much greater
visibility um to return of capital than
if you were just a REIT or you were a
gas pipeline or something. And so the
difference really is it's 0% upfront uh
dividend tax rate versus 20 to 30 or 30
to 55. And you know, if you got your
money in a money market and you live in
California or New York City, it's a
pretty heavy tax load. And so presumably
New Yorkers or San Francisco dwellers
when they start to look at at at this
are going to be find it to be pretty compelling.
compelling. Um
Um
the fact that we expect this to continue
for the next 10 years means that that
we're not we're not just announcing that
this quarter is a return of capital.
We're expecting the next 40 quarters to
be return to capital. And I think that's
a pretty material thing. Let's go to the
next slide.
Now all of those credit instruments have
one impact. they amplify
our our Bitcoin exposure.
So right now uh strategy has 11% um leverage
leverage
21% amplification.
Okay, amplification is the leverage that
comes from debt plus uh the improved
performance that comes from equity. Our
goal, our target as a company is to
drive leverage to zero. When we equitize
the convertible bonds and if we don't
issue any more bonds and we don't intend
to, leverage will go from 11% to 9% to 7
to 5 to 3 to 1 to zero. So our leverage
is going to zero. Our our target for amplification
amplification
is to drive the amplification to 30%.
So, we're going to drive amplification
up and drive leverage down. And of
course, here you can see on this chart,
if we run at a 30% amplification level,
you know what naturally happens is your
200,000 Satoshi's per share become 560,000
560,000
Satoshi's per share over 10 years.
That's a BTC factor of 2.8.
That means that we actually perform 2.8
times better than an ETF. That is the
source of the premium and the equity.
That is that is the value that's being
created by the treasure the digital
treasury model. And of course the value
creation is a function of the
amplification. Um when you increase
leverage you increase risk but when you
increase amplification you just increase
value creation. So if we get to 30%
amplification, then we we may very well
go to 35 or 40% amplification
uh because we're doing it with digital
credit and digital credit doesn't have
the risk profile of debt.
We are at a a historic point. We're kind
of at an inflection point. We believe
our our multiple the NAV MNAV uh has has
been trending down and has been trending
down over time as the Bitcoin asset
class matures as the volatility
decreases. The volatility by the way is
decreasing in part because of the growth
of companies like ours, the the
maturation of the Bitcoin treasury
industry. It's it's it's uh decreasing
because of the success of IBIT. It's
decreasing because the derivatives
market uh onshore has grown
dramatically. Uh the derivatives market
in IVID has gone from 10 billion to 50
billion. And so people are using those
derivatives to damp volatility and and
that's very good for the asset class.
It's very good for the industry. Uh in
the near term it's resulted probably in
some pressure on our MNAB. But we think
that over time as the credit investors
start to understand the appeal of
digital credit, they're going to want to
buy more and we're going to sell more
and issue more credit. And as the equity
investors start to appreciate the
uniqueness of the Bitcoin treasury model
and especially the uniqueness of our
company and our ability to issue digital
credit worldwide at scale, we think that
that's going to drive an appreciation of
the equity.
Uh, next slide. Why am I so enthusiastic
about digital credit?
Well, there are seven innovations in
digital credit that make it better than
traditional credit.
So, I'm going to take you through the
seven things. First of all, traditional
credit like a a mortgage, well, it's
built on a depreciating house or
depreciating warehouse or a traditional
credit, uh it's it's it's built on uh
collateral that's a depreciating asset,
a bunch of fiat currency, a corporate
product, a corporate service, a
corporate warehouse, uh a bunch of
hardware, you know, a data center full
of Nvidia chips that are depreciating
with a four-year useful life
that is collateral which is uh which is
collapsing. It makes it hard to pay uh a
higher yield when you have depreciating
asset. But our collateral is Bitcoin.
It's digital capital and Bitcoin is an
appreciating asset. So So whereas $10
billion of warehouses are most valuable
the day they're built, $10 billion of
Bitcoin is only going to get more
valuable, not less valuable. And so that
digital capital is the first big innovation.
innovation.
Next, the second innovation
is where we're replacing traditional
risk with digital risk. Traditional
risk, it's opaque. It's heterogeneous.
It's discreet. you own 8,700 houses or
you own, you know, you're exposed to a
portfolio of 47 junk bond issuers
uh and maybe they're fine, but then
there's a tariff or there's a trade war
or there's a competitive change
or maybe there's a strike or maybe an
airplane crashes, you know, or there's a
COVID lockdown. Whenever you have these
kind of uh conventional real world
issues, you have a discrete explosion of
risk, a forest fire, an earthquake
um or a change in a political regime or
a change in tax rates or a change in
customs duties. So traditional risk is
opaque, it's heterogeneous, it's
discreet. On the other hand, uh digital
risk is transparent, it's homogeneous,
it's continuous. You can go to our
website and we update the risk model
every 15 seconds. And so it is
completely continuous.
We update the price of Bitcoin. We
update the volatility of Bitcoin on a on
a continuous basis. We update the BTC
ratings. You you can plug in your
statistical models into them. And of
course all the risk is based upon the B
your outlook of BTC AR BTC V BTC price
and BTC rating. So digital risk is uh is
something where you don't have to wait
for a year for a credit rating agency to
publish a new report to tell you whether
your favorite airline or your favorite,
you know, restaurant chain is riskier or
less risky. Uh with digital risk, you
can literally plug into the website and
you can recalibrate and calculate your
risk uh every 15 seconds on Saturday
morning. And that's a big uh upgrade.
Now there's a third innovation in uh
digital credit.
Our third innovation is we don't just
all credit is not created equal. We
don't just issue debt. Debt is credit.
Uh bank deposits are credit. When a bank
takes your money, uh, they're creating
credit and that in your bank account
pays you whatever they pay you. When you
put money in a money market, it's
credit. Uh, of course, junk bonds,
sovereign debt, mortgage back bonds,
they're credit, but they're debt.
And debt and deposits are liabilities.
They amplify risk. If there's a run on
the bank, you know, people uh withdraw
their deposits, right, you're going to
have a collapse of the entire banking system.
system.
When the debt comes due, when your
three-year note comes due, when you get
to month 34, everybody goes crazy and
loses their mind because the capital is
getting called away from you, right? If
you have a bad quarter in the 12th
quarter and you've got four-year debt,
you amplify risk that the the equity
collapses, people go crazy.
What we've done is use preferred equity.
It's not debt. Sometimes people think,
okay, well, it's a liability. It it's
it's equity. It's actually uh counted as
preferred equity is equity on the
balance sheet. It's not debt. It's an
asset, not a liability. And so there
therefore it mitigates risk.
How does it mitigate risk? Well, I mean
the first the first obvious way it
mitigates risk is when you sell a
billion dollars of bonds, you have to
pay them back in five years or seven
years or three years. When you sell a
billion dollars of preferred stock, you
never pay it back. So there's a billion
dollars of refinance risk that just goes
away. The second way that it mitigates
risk is that the dividends are approved
by the board. They're not coupons. You
miss $1 million of coupon payments,
you're in default. Whereas if you're
short a million dollar uh you know of a
dividend payment, you can suspend a
million dollars. you're not in default.
So you could think about uh preferred
equity is is permanent capital and shock
absorbers to uh to the business model of
the company. And therefore digital
credit based on preferred equity is is
dramatically better than digital credit
or credit that's based upon debt or deposits.
deposits.
Um the fourth innovation is you know we
didn't just issue preferred equity. Um
we issued perpetual preferred equity.
Sometimes banks or or or issuers issue
equity which has got a three-year life
or a fiveyear life or a refinance option
or a call option or a put option that
creates some sort of refinance risk or
withdrawal risk. But when you have uh a
perpetual equity, it is permanent
capital, right? Your bank might have
hundred billion dollars that's overnight
money. Someone can take the hundred
billion away from them. You have $100
billion of debt at your airline. It's
going to be taken away from you in three
to five years. When we have a hundred
billion dollars of preferred equity, we
have it forever. Like forever, a
thousand years. It just goes on and on
and on. Perpetual life. When you have
permanent capital,
you can make indefinite investments. We
can buy Bitcoin to hold for 100 years if
we have capital for 100 years. When you
have a 5-year junk bond, you can't make
a decision that that's going to and the
truth is you have to have decisions that
are no longer than like two or three
years because you have to keep rolling
them because of the refinance and the
withdrawal risk. So, the perpetual life
of the instruments is the fourth big innovation.
innovation.
The fifth big innovation is um that we
took these uh securities public. This is
public credit. Um a lot of times people
sell their credit instruments via 144A
offerings to a private market. It's like
uh I sold it to 50 investors and they're
traded over the counter. Uh those are
illlquid. They're unbranded. Can anybody
name the 17th trunch of bank credit sold by, you know, one of the large banks in
by, you know, one of the large banks in the US? They have cuspip numbers.
the US? They have cuspip numbers. They're traded on Bloombergs between 37
They're traded on Bloombergs between 37 uh counterparties and they all know each
uh counterparties and they all know each other. Um, so it's it's unbranded, it's
other. Um, so it's it's unbranded, it's illquid, it's local, it's very difficult
illquid, it's local, it's very difficult to buy it. Even if you wanted to buy it,
to buy it. Even if you wanted to buy it, you would need a professional money
you would need a professional money manager to even find it for you or buy
manager to even find it for you or buy it for you. When you do, there would be
it for you. When you do, there would be 300 basis point credits or or bid ass
300 basis point credits or or bid ass spreads, very big spreads. The thing
spreads, very big spreads. The thing traded last two weeks ago.
traded last two weeks ago. That's the problem with private credit.
That's the problem with private credit. Public credit like uh STRC, it's liquid.
Public credit like uh STRC, it's liquid. I mean, it traded nearly a hundred
I mean, it traded nearly a hundred million dollars today in the market.
million dollars today in the market. It's branded. It's got a name, Stretch.
It's branded. It's got a name, Stretch. It's global. You can buy it if you're in
It's global. You can buy it if you're in the UK from your retirement account.
the UK from your retirement account. It's easy to access.
It's easy to access. You can buy it on Robin Hood. You can
You can buy it on Robin Hood. You can buy it on Schwab. And so, public
buy it on Schwab. And so, public securities are become public brands. And
securities are become public brands. And if you're going to buy uh a credit
if you're going to buy uh a credit instrument,
instrument, what would you rather have? a credit
what would you rather have? a credit instrument that's traded by 12 funds in
instrument that's traded by 12 funds in Italy that know each other or would you
Italy that know each other or would you rather have a credit instrument that's
rather have a credit instrument that's held by tens or hundreds of thousands of
held by tens or hundreds of thousands of investors worldwide that all refer to it
investors worldwide that all refer to it by the name stretch and if it ever gets
by the name stretch and if it ever gets mispriced or it gets undervalued they're
mispriced or it gets undervalued they're going to leap in and they're going to uh
going to leap in and they're going to uh put lots of money behind behind it. When
put lots of money behind behind it. When we did the IPO
we did the IPO um stretch,
um stretch, we priced it at 90.
we priced it at 90. We said we're targeting par 100.
We said we're targeting par 100. There were individual investors that
There were individual investors that bought $250 million of that instrument.
bought $250 million of that instrument. 250 million, right? The val the value of
250 million, right? The val the value of a public security, a public credit
a public security, a public credit instrument, is if someone goes wacky
instrument, is if someone goes wacky crazy and decides they want to mispric
crazy and decides they want to mispric it. There are people that will walk in
it. There are people that will walk in and they'll buy 50 million or 100
and they'll buy 50 million or 100 million or 500 million to fix the market
million or 500 million to fix the market because they can. That doesn't that does
because they can. That doesn't that does not happen in private credit markets.
not happen in private credit markets. And so public branded global securities
And so public branded global securities are just better. Let's go to the next
are just better. Let's go to the next innovation.
digital creation. You know, ask yourself, how long does it take for a
yourself, how long does it take for a bank to create $1 billion worth of home
bank to create $1 billion worth of home mortgages? You know, how long does it
mortgages? You know, how long does it take to issue a thousand1 million loans?
take to issue a thousand1 million loans? It's very difficult. It's very, it's
