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Core Theme
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
They're paid monthly. Tell your friends. And I'll just end
Tell your friends. And I'll just end with our last slide
with our last slide which is our principles that I want to
which is our principles that I want to remind everybody. You know, our
remind everybody. You know, our principles are to buy Bitcoin, hold
principles are to buy Bitcoin, hold Bitcoin,
Bitcoin, treat all our investors with respect,
treat all our investors with respect, prioritize the equity, generate positive
prioritize the equity, generate positive yield, innovate with fixed income
yield, innovate with fixed income securities, maintain a healthy robust
securities, maintain a healthy robust balance sheet, promote global adoption
balance sheet, promote global adoption of BTC as a Treasury Reserve asset, and
of BTC as a Treasury Reserve asset, and uh I want to thank everybody for your
uh I want to thank everybody for your time and also for your support. Uh we
time and also for your support. Uh we couldn't do it without you. Thank you.
Thank you, Michael. We are now going to proceed to the interactive live Q&A
proceed to the interactive live Q&A session
session uh of our webinar. I would like to
uh of our webinar. I would like to invite all of our Q&A guests to come on
invite all of our Q&A guests to come on video
video and we look forward to hearing your
and we look forward to hearing your questions. Uh we'll go one at a time.
questions. Uh we'll go one at a time. I'll call your names and you can direct
I'll call your names and you can direct your question to the management team.
your question to the management team. For the first question, I would like to
For the first question, I would like to invite
invite uh Andrew Hart, a research analyst from
uh Andrew Hart, a research analyst from BTIG. Andrew,
BTIG. Andrew, >> hey Tim. Uh thanks for having me on. I
>> hey Tim. Uh thanks for having me on. I appreciate uh all the details in the
appreciate uh all the details in the presentation as always. So, a lot of our
presentation as always. So, a lot of our investor questions are focused on the
investor questions are focused on the company's ability to pay dividends uh
company's ability to pay dividends uh especially as the preferred equity
especially as the preferred equity strategy continues to grow. Um, can you
strategy continues to grow. Um, can you just shed some additional color and
just shed some additional color and light on on plans to fund those
light on on plans to fund those dividends? And then if there was a
dividends? And then if there was a period where the MNAV, you know,
period where the MNAV, you know, compressed or was even below one times,
compressed or was even below one times, um, how could that plan potentially
um, how could that plan potentially change? Uh, thanks and appreciate it.
change? Uh, thanks and appreciate it. >> Yeah, I I can cover this one. And, uh,
>> Yeah, I I can cover this one. And, uh, you know, Andrew talked about this a
you know, Andrew talked about this a little bit earlier. Right now, um, our,
little bit earlier. Right now, um, our, uh, our our, uh, dividends and interest
uh, our our, uh, dividends and interest on our convertible notes total $689
on our convertible notes total $689 million annually. Uh, and our primary
million annually. Uh, and our primary strategy uh, when our MNAB is above one
strategy uh, when our MNAB is above one is to fund that through ATM issuances.
is to fund that through ATM issuances. And just to remind everybody, uh, in the
And just to remind everybody, uh, in the last, uh, 12 months, we've issued about
last, uh, 12 months, we've issued about 27 billion dollars of equity, which
27 billion dollars of equity, which means that that's about the the $650
means that that's about the the $650 million or so is about 2.6%
million or so is about 2.6% uh, of how much equity we've raised. So,
uh, of how much equity we've raised. So, we clearly have the ability to raise
we clearly have the ability to raise equity to cover our dividend payments
equity to cover our dividend payments and our interest. Now the big question
and our interest. Now the big question is what happens when it becomes dilutive
is what happens when it becomes dilutive to shareholders to issue equity and when
to shareholders to issue equity and when we're below 1xn or if we be go below
we're below 1xn or if we be go below 1xmnab what would we do? Uh and there
1xmnab what would we do? Uh and there are other things that we've explored and
are other things that we've explored and talked about. We would we could sell
talked about. We would we could sell equity derivatives, we could sell
equity derivatives, we could sell Bitcoin derivatives and we could sell
Bitcoin derivatives and we could sell high basis Bitcoin to cover our dividend
high basis Bitcoin to cover our dividend needs for our preferreds. Uh what's
needs for our preferreds. Uh what's important when we do those things and
important when we do those things and we've talked about it is we want to
we've talked about it is we want to preserve uh the rock dividends on our
preserve uh the rock dividends on our preferreds. So we'd have to do them in
preferreds. So we'd have to do them in ways that are uh avoid positive tax
ways that are uh avoid positive tax ENTP, right? We wouldn't do things like
ENTP, right? We wouldn't do things like sell uh you know equity or Bitcoin
sell uh you know equity or Bitcoin derivatives that would cause our ENTP to
derivatives that would cause our ENTP to be above uh zero. uh we are able to sell
be above uh zero. uh we are able to sell high basis Bitcoin potentially that a
high basis Bitcoin potentially that a loss and cause negative ENTP and offset
loss and cause negative ENTP and offset that with uh other Bitcoin that would
that with uh other Bitcoin that would cause positive ENTP. We wouldn't sell
cause positive ENTP. We wouldn't sell the software business. I know there are
the software business. I know there are questions about that because that would
questions about that because that would cause income and positive ENTP and so we
cause income and positive ENTP and so we want to preserve the rock dividends the
want to preserve the rock dividends the preferable tax deferred treatment of um
preferable tax deferred treatment of um our preferred. So those are some of the
our preferred. So those are some of the things that we would do in that
things that we would do in that scenario. We we we don't uh anticipate
scenario. We we we don't uh anticipate that scenario but we do have plans in
that scenario but we do have plans in place.
place. >> Thanks.
>> Thank you. For the next question, I'd like to invite uh Pier Rochard.
>> Hey, thank thank you for organizing this and uh thank you for the invitation. Uh
and uh thank you for the invitation. Uh it it was mentioned that there would be
it it was mentioned that there would be uh marketing and advertising around uh
uh marketing and advertising around uh the preferreds.
the preferreds. um what what do you anticipate that
um what what do you anticipate that expense looking like and and uh what the
expense looking like and and uh what the return on investment would be for those
return on investment would be for those efforts?
>> I can cover that. You know, we're just starting to get into this. You actually
starting to get into this. You actually you just saw one of our advertisements
you just saw one of our advertisements for those who like money stretch, right?
for those who like money stretch, right? And uh so we'll start to experiment with
And uh so we'll start to experiment with paid advertising on platforms like an X
paid advertising on platforms like an X or YouTube. Um I think whatever the
or YouTube. Um I think whatever the expense is it would be uh quite minimal
expense is it would be uh quite minimal compared to the increased inflows that
compared to the increased inflows that we hope to drive into our preferreds
we hope to drive into our preferreds right and and I think we've gone through
right and and I think we've gone through in the past you know we're able to raise
in the past you know we're able to raise an incremental billion dollars in a
an incremental billion dollars in a preferred we immediately turn around by
preferred we immediately turn around by bitcoin and that's immediately creative
bitcoin and that's immediately creative to bitcoin yield and bitcoin per share
to bitcoin yield and bitcoin per share um I don't expect we're going to spend a
um I don't expect we're going to spend a ton of money up front the whole
ton of money up front the whole experiment and see what are the right
experiment and see what are the right channels and and what causes is um what
channels and and what causes is um what what causes people to to wake up and
what causes people to to wake up and understand uh the Bitcoin credit machine
understand uh the Bitcoin credit machine that we have. Uh and then additionally
that we have. Uh and then additionally just digital marketing, we're out uh
just digital marketing, we're out uh meeting with investors, meeting with
meeting with investors, meeting with potential investors quite a bit now. And
potential investors quite a bit now. And uh I think there's just an an about a
uh I think there's just an an about a feet on the street between Mike, myself,
feet on the street between Mike, myself, Andrew, Shereice, CJ, and the entire
Andrew, Shereice, CJ, and the entire team.
team. Yeah, I I would just piggyback on that
Yeah, I I would just piggyback on that by saying I just spent um a lot of time
by saying I just spent um a lot of time in the in the Schwab studios and and uh
in the in the Schwab studios and and uh recording content that go on the Schwab
recording content that go on the Schwab network. I was in Vegas uh at Money2020.
network. I was in Vegas uh at Money2020. I was in Austin at a credit conference.
I was in Austin at a credit conference. You know, I'll be in Naples, Palm Beach.
You know, I'll be in Naples, Palm Beach. Uh got a big road show throughout the
Uh got a big road show throughout the Middle East uh for a week and a half
Middle East uh for a week and a half coming up. So there's a lot of uh
coming up. So there's a lot of uh there's a lot of outreach. We get
there's a lot of outreach. We get invited to speak at a lot of
invited to speak at a lot of conferences.
conferences. We also get invited to speak on
We also get invited to speak on television, right? So you know some of
television, right? So you know some of the better marketing channels is just go
the better marketing channels is just go on Bloomberg, go on Fox, go on CNBC.
on Bloomberg, go on Fox, go on CNBC. And I think that the difference between
And I think that the difference between what we're doing now and what we were
what we're doing now and what we were doing a year ago is a year ago people
doing a year ago is a year ago people said, "Well, what is Bitcoin? Is it
said, "Well, what is Bitcoin? Is it going away? And can you sell me on
going away? And can you sell me on Bitcoin?" Uh, now we're beyond the
Bitcoin?" Uh, now we're beyond the Bitcoin going away. Everybody's embraced
Bitcoin going away. Everybody's embraced it as digital gold. Now when we go on
it as digital gold. Now when we go on Bloomberg or Fox or CNBC, we're saying,
Bloomberg or Fox or CNBC, we're saying, you know, stretch, it's 10 and a half%
you know, stretch, it's 10 and a half% dividends tax deferred. You might want
dividends tax deferred. You might want to check it out. So we have a, by the
to check it out. So we have a, by the way, you know how I used to say it takes
way, you know how I used to say it takes like, you know, a thousand hours to
like, you know, a thousand hours to understand Bitcoin or a hundred hours
understand Bitcoin or a hundred hours to, you know, to figure this out.
to, you know, to figure this out. It doesn't take that many hours to
It doesn't take that many hours to figure out that some something that
figure out that some something that yields 10 and a half% tax deferred is
yields 10 and a half% tax deferred is better than your existing money market
better than your existing money market or bank account. So, we've got simpler
or bank account. So, we've got simpler messages
messages and we're taking them to every channel.
and we're taking them to every channel. We'll we'll we will try Tradfi.
We'll we'll we will try Tradfi. We don't think we can sell uh the
We don't think we can sell uh the Bitcoin message in 30 seconds to
Bitcoin message in 30 seconds to 70year-old conservative traditional
70year-old conservative traditional retirees.
retirees. But we do think that we can selfstretch
But we do think that we can selfstretch in 15 seconds or 30 seconds to, you
in 15 seconds or 30 seconds to, you know, to military retirees, you know,
know, to military retirees, you know, that want to live happily ever after,
that want to live happily ever after, you know, and and we know this
you know, and and we know this anecdotally
anecdotally because it's happening everywhere we go,
because it's happening everywhere we go, everybody we talk to, you know, it's
everybody we talk to, you know, it's it's the simplest product for us to
it's the simplest product for us to explain.
explain. It's hard to it's hard to sell
It's hard to it's hard to sell convertible bonds. It's hard to sell
convertible bonds. It's hard to sell 30-year crypto bonds. It's hard to sell,
30-year crypto bonds. It's hard to sell, you know, Bitcoin to the rank and file,
you know, Bitcoin to the rank and file, but everybody wants a bank account that
but everybody wants a bank account that pays 10% that you don't have to pay tax
pays 10% that you don't have to pay tax on. So, you know, we're going to work
on. So, you know, we're going to work every possible marketing channel and in
every possible marketing channel and in order to get the word out. And the good
order to get the word out. And the good news there is we're getting an avalanche
news there is we're getting an avalanche of requests to speak. Everybody wants to
of requests to speak. Everybody wants to talk to us now, right? So, just around
talk to us now, right? So, just around the time that everybody wants to
the time that everybody wants to interview us, everybody wants to talk to
interview us, everybody wants to talk to us, we have the simplest message. you
us, we have the simplest message. you put it in 30 seconds and and so it's a
put it in 30 seconds and and so it's a very exciting time for marketing.
>> Thank you, Pier. For the next question, I'd like to invite Mark Palmer, a
I'd like to invite Mark Palmer, a research analyst from Benchmark.
research analyst from Benchmark. >> Yes. Uh thanks and thanks for taking my
>> Yes. Uh thanks and thanks for taking my questions. Um we have already seen the
questions. Um we have already seen the beginnings of consolidation uh within
beginnings of consolidation uh within the digital asset treasury space. Um,
the digital asset treasury space. Um, is there a circumstance under which
is there a circumstance under which strategy uh would step into the market
strategy uh would step into the market as an acquirer of a Bitcoin treasury
as an acquirer of a Bitcoin treasury company uh that was trading at uh a
company uh that was trading at uh a materially lower MNAV uh in a
materially lower MNAV uh in a transaction that would be by definition
transaction that would be by definition accretive uh as a means of accelerating
accretive uh as a means of accelerating its acquisition of bitcoins.
Um, I'll give my opinion and then Fong can chime in. Um
can chime in. Um you know we've done 84 acquisitions of
you know we've done 84 acquisitions of Bitcoin and every one of them was
Bitcoin and every one of them was homogeneous transparent and you could
homogeneous transparent and you could instantly calculate whether it's
instantly calculate whether it's accretive or dilutive and they were
accretive or dilutive and they were generally all accretive and um
generally all accretive and um and uh our focus is
and uh our focus is to do high-speed transparent digital
to do high-speed transparent digital transactions you know uh and sell
transactions you know uh and sell digital credit and buy Bitcoin And we
digital credit and buy Bitcoin And we think that it's a big it's a big
think that it's a big it's a big advantage of the company that the
advantage of the company that the business model is so transparent,
business model is so transparent, predictable, clear because the business
predictable, clear because the business model is predictable. That makes it easy
model is predictable. That makes it easy for the equity analyst to make their
for the equity analyst to make their decisions and it also makes it easy for
decisions and it also makes it easy for the credit analyst uh to assess a credit
the credit analyst uh to assess a credit quality. So generally we don't have any
quality. So generally we don't have any plans uh to pursue acqu M&A activity
plans uh to pursue acqu M&A activity even if it would look to be uh
even if it would look to be uh potentially accretive
potentially accretive uh it might be but there's just a lot of
uh it might be but there's just a lot of uncertainty and these things tend to
uncertainty and these things tend to stretch out 6 to9 months or a year and
stretch out 6 to9 months or a year and an idea that looks good when you start
an idea that looks good when you start might not still be a good idea six
might not still be a good idea six months later and uh and it and it can be
months later and uh and it and it can be very distracting for the management team
very distracting for the management team uh while you're either integrating or or
uh while you're either integrating or or pursuing those things. So, our
pursuing those things. So, our management team is laserike focused on
management team is laserike focused on selling the four credit instruments that
selling the four credit instruments that we have and then expanding the reach of
we have and then expanding the reach of our digital credit instruments
our digital credit instruments internationally.
internationally. Uh and and of course improving the
Uh and and of course improving the quality of our balance sheet, equitizing
quality of our balance sheet, equitizing the convertible bonds. Those are all the
the convertible bonds. Those are all the things that we're very excited about.
things that we're very excited about. you know, as an operating company, the
you know, as an operating company, the great thing about an operating company
great thing about an operating company is, yeah, you have the option sometime
is, yeah, you have the option sometime in the indefinite future to do
in the indefinite future to do something. And if you're walking down
something. And if you're walking down the street and there's a billion dollars
the street and there's a billion dollars and you can bend over and pick it up for
and you can bend over and pick it up for a nickel, you have the option to do it.
a nickel, you have the option to do it. And uh I don't think we would ever say
And uh I don't think we would ever say we would never, never, never, ever. But
we would never, never, never, ever. But what we would say is the plan, the
what we would say is the plan, the strategy, the focus is sell digital
strategy, the focus is sell digital credit, improve the balance sheet, buy
credit, improve the balance sheet, buy Bitcoin, and communicate that to the
Bitcoin, and communicate that to the credit and the equity investors. Fong,
credit and the equity investors. Fong, do you have anything to add on that?
do you have anything to add on that? >> No, I I don't have anything to add. I
>> No, I I don't have anything to add. I would generally agree with what you've
would generally agree with what you've said. You know, we've been a software
said. You know, we've been a software company for nearly 30 years or over 30
company for nearly 30 years or over 30 years and and software technology M&A is
years and and software technology M&A is very difficult. There's always something
very difficult. There's always something hiding behind what you actually think
hiding behind what you actually think you purchase. And I think that I would
you purchase. And I think that I would say that the same same thing is about
say that the same same thing is about acquiring Bitcoin treasury companies.
>> Okay. >> And uh just one more question. Um uh
>> And uh just one more question. Um uh with regard to your intention to um tap
with regard to your intention to um tap international markets uh from a capital
international markets uh from a capital raising perspective, uh is the idea that
raising perspective, uh is the idea that you would uh effectively market um you
you would uh effectively market um you know the same for uh perpetual preferred
know the same for uh perpetual preferred instruments that you currently have uh
instruments that you currently have uh but just uh to different markets around
but just uh to different markets around the world uh or would you be designing
the world uh or would you be designing uh new instruments that were specific to
uh new instruments that were specific to those geographies? Thank you.
those geographies? Thank you. It'll be the latter. Uh we will design
It'll be the latter. Uh we will design if we're going into Canada, we would
if we're going into Canada, we would design a an instrument that's
design a an instrument that's denominated in Canadian CAD
denominated in Canadian CAD and we would offer it to Canadian
and we would offer it to Canadian investors on a Canadian exchange. Uh so
investors on a Canadian exchange. Uh so it'll be a native product, you know,
it'll be a native product, you know, because if you're the investor there,
because if you're the investor there, you don't want to take currency risk.
you don't want to take currency risk. And if we go into Europe, we would
And if we go into Europe, we would create a Eurodenominated instrument. So,
create a Eurodenominated instrument. So, and we would offer something something
and we would offer something something that represents everything we've learned
that represents everything we've learned from the first four credit instruments.
from the first four credit instruments. If we could improve it, we would. But
If we could improve it, we would. But primarily, uh, you know, the Europeans
primarily, uh, you know, the Europeans want a a euro currency instrument in
want a a euro currency instrument in Europe, you know, and every
Europe, you know, and every international investor does. What we've
international investor does. What we've discovered is, you know, a lot of
discovered is, you know, a lot of European investors, they can buy the
European investors, they can buy the American instrument. So if they wanted a
American instrument. So if they wanted a USD dollarbased treasury credit
USD dollarbased treasury credit instrument, they they would buy Stretch
instrument, they they would buy Stretch and and so so they can already get to
and and so so they can already get to it. In fact, one of the more pleasant
it. In fact, one of the more pleasant surprises I learned is is we accumulated
surprises I learned is is we accumulated a ton of European and British investors
a ton of European and British investors in 2020 because they could buy MSTR and
in 2020 because they could buy MSTR and they couldn't buy Bitcoin. So So uh our
they couldn't buy Bitcoin. So So uh our digital credit instruments are already
digital credit instruments are already global. If you want US dollar credit
global. If you want US dollar credit instruments, then you're already buying
instruments, then you're already buying them globally. We think the big unlock
them globally. We think the big unlock is that we can create a digital credit
is that we can create a digital credit in any currency. We can take JPY risk or
in any currency. We can take JPY risk or we can take euro. We we can we can solve
we can take euro. We we can we can solve that problem. And and there's people
that problem. And and there's people that will buy a billion dollars of
that will buy a billion dollars of something if they don't have to take the
something if they don't have to take the currency risk and they'll buy nothing if
currency risk and they'll buy nothing if they have to take the currency risk. So
they have to take the currency risk. So So our job is to bridge that capital
So our job is to bridge that capital divide. And so when we do it, we'll do
divide. And so when we do it, we'll do it with a native instrument and a native
it with a native instrument and a native currency on a native exchange that uh
currency on a native exchange that uh that is going to be presumably the most
that is going to be presumably the most compelling credit instrument in that
compelling credit instrument in that capital market that anybody's ever seen.
capital market that anybody's ever seen. >> Thank you, Mark. For the next question,
>> Thank you, Mark. For the next question, I would like to invite uh Natalie
I would like to invite uh Natalie Brunell.
Brunell. >> Thank you so much for including me.
>> Thank you so much for including me. Beyond Bitcoin price action, can you
Beyond Bitcoin price action, can you identify two or three very specific
identify two or three very specific challenges that are serving as headwinds
challenges that are serving as headwinds for the growth and performance of
for the growth and performance of strategy and even the Bitcoin treasury
strategy and even the Bitcoin treasury industry more broadly and what actions
industry more broadly and what actions can be taken to overcome those.
can be taken to overcome those. >> Um I you know I think Fong uh
>> Um I you know I think Fong uh highlighted some of them in the
highlighted some of them in the discussion of uh S&P credit ratings
discussion of uh S&P credit ratings issues, right? the the fact that Bitcoin
issues, right? the the fact that Bitcoin is not viewed as capital by the
is not viewed as capital by the traditional credit ratings industry.
traditional credit ratings industry. So I think the view of Bitcoin is as as
So I think the view of Bitcoin is as as the collateral value of Bitcoin and the
the collateral value of Bitcoin and the traditional views under the Basel rules
traditional views under the Basel rules under under the rules that govern our
under under the rules that govern our banking system, our insurance companies
banking system, our insurance companies and our credit rating agencies. I think
and our credit rating agencies. I think that that's a structural thing, you
that that's a structural thing, you know, like uh when when uh Fazby uh
know, like uh when when uh Fazby uh didn't allow you to recognize gains, but
didn't allow you to recognize gains, but they made you recognize losses and you
they made you recognize losses and you didn't have and you had indefinite
didn't have and you had indefinite tangible accounting, that was pretty
tangible accounting, that was pretty crippling. Uh I think that um we fixed
crippling. Uh I think that um we fixed that and I think that fixing uh capital
that and I think that fixing uh capital risk rules, you know, will be a big one.
risk rules, you know, will be a big one. I think the second is um
I think the second is um banking acceptance
banking acceptance uh custody and credit rel uh banks
uh custody and credit rel uh banks issuing credit on Bitcoin. So um we're
issuing credit on Bitcoin. So um we're hearing rumors uh and and we've heard
hearing rumors uh and and we've heard you know that a number of major banks in
you know that a number of major banks in the US in the first half of 2026 will
the US in the first half of 2026 will start to buy Bitcoin, sell Bitcoin,
start to buy Bitcoin, sell Bitcoin, custody Bitcoin and issue credit and and
custody Bitcoin and issue credit and and margin lines against the native Bitcoin
margin lines against the native Bitcoin asset.
asset. that will be great for them, that will
that will be great for them, that will be great for Bitcoin, that will be great
be great for Bitcoin, that will be great for us, that will accelerate adoption.
for us, that will accelerate adoption. And uh and so I I would say that neither
And uh and so I I would say that neither of these are things that I would ask for
of these are things that I would ask for government help for. Like we don't need
government help for. Like we don't need a law to fix it. Uh what we do need to
a law to fix it. Uh what we do need to do is lobby the banks, lobby the
do is lobby the banks, lobby the insurance companies.
Maybe I should rever replace that word with educate. educate the banks, educate
with educate. educate the banks, educate the insurance companies, educate the
the insurance companies, educate the credit rating agencies,
credit rating agencies, and then finally, educate the
and then finally, educate the traditional
traditional uh fixed income investor, the retiree,
uh fixed income investor, the retiree, you know, and the corporate treasurer.
you know, and the corporate treasurer. Educate them that they're actually now
Educate them that they're actually now is a better option. And so, so I I think
is a better option. And so, so I I think um that's what we need to do in order to
um that's what we need to do in order to grow the industry right now. That's
grow the industry right now. That's going to be our focus over the next few
going to be our focus over the next few years.
Thank you. >> Thanks, Natalie. For the next question,
>> Thanks, Natalie. For the next question, I would like to invite Brian Dobson, uh,
I would like to invite Brian Dobson, uh, research analyst from Clear Street.
research analyst from Clear Street. >> Yeah. So, you received a credit rating,
>> Yeah. So, you received a credit rating, and I agree that that's a very important
and I agree that that's a very important first step to opening doors at pension
first step to opening doors at pension funds and insurance companies. I I know
funds and insurance companies. I I know it's very early days, but are you
it's very early days, but are you already having conversations with those
already having conversations with those investors? And if so, what's the
investors? And if so, what's the feedback? And then as a second part to
feedback? And then as a second part to that question, would you have the
that question, would you have the preferreds and converts rated
preferreds and converts rated separately? I mean, I think a lot of
separately? I mean, I think a lot of investors will probably just infer
investors will probably just infer instrument ratings from the general
instrument ratings from the general company rating, but what are your
company rating, but what are your thoughts on that?
thoughts on that? >> I I can start on that, Brian. Uh we we
>> I I can start on that, Brian. Uh we we we had before we received a rating
we had before we received a rating conversations
conversations with large institutions, insurance
with large institutions, insurance companies, pension funds that said that
companies, pension funds that said that they could not easily without
they could not easily without significant uh capital penalties invest
significant uh capital penalties invest in an unrated instrument and that they
in an unrated instrument and that they were quite interested in the structure
were quite interested in the structure of what we provided but just couldn't do
of what we provided but just couldn't do it. So that was why we went and pursued
it. So that was why we went and pursued a rating with a major rating agencies.
a rating with a major rating agencies. one of the reasons. So, I do think this
one of the reasons. So, I do think this opens up doors to some of the categories
opens up doors to some of the categories that you just mentioned before. And I
that you just mentioned before. And I think, you know, it's not going to be an
think, you know, it's not going to be an avalanche like tomorrow, but as we go
avalanche like tomorrow, but as we go out and market and Mike has discussions
out and market and Mike has discussions and I and Andrew all go out in the
and I and Andrew all go out in the market and we start talking to uh these
market and we start talking to uh these folks, I think their their thought
folks, I think their their thought process will process will certainly
process will process will certainly change over time.
change over time. >> Yeah. And then I just wanted to follow
>> Yeah. And then I just wanted to follow up on an earlier question about selling
up on an earlier question about selling into Asia and Europe. Um, both of those
into Asia and Europe. Um, both of those markets represent or have, you know,
markets represent or have, you know, rather unique regulatory hurdles, I
rather unique regulatory hurdles, I guess. How far along are you in those
guess. How far along are you in those markets?
markets? We're pretty far along. And you're
We're pretty far along. And you're right, that that's part of the reason
right, that that's part of the reason why we need to create products that are
why we need to create products that are very specific. Uh, what exchange? Is it
very specific. Uh, what exchange? Is it retail focused? Is it institutional
retail focused? Is it institutional focused? Uh, is it regulated? Is it
focused? Uh, is it regulated? Is it unregulated? What is the tax regime?
unregulated? What is the tax regime? Look, uh, what we've done since the
Look, uh, what we've done since the beginning of the year with preferred is
beginning of the year with preferred is we went uphill against a market that
we went uphill against a market that wasn't familiar with a Bitcoin back
wasn't familiar with a Bitcoin back perpetual preferred with a return of
perpetual preferred with a return of capital uh, tax structure and it took us
capital uh, tax structure and it took us 9 months and we were able to raise $6.5
9 months and we were able to raise $6.5 billion or $6 billion, right? And uh,
billion or $6 billion, right? And uh, because we did that, I think we sort of
because we did that, I think we sort of cornered this market for a good period
cornered this market for a good period of time. I think our ability to to go
of time. I think our ability to to go understand the regulatory structures,
understand the regulatory structures, the tax structures, yeah, it's it's it's
the tax structures, yeah, it's it's it's harder than in the US, but once we've
harder than in the US, but once we've broken through that, that creates a
broken through that, that creates a competitive moat for us to be able to
competitive moat for us to be able to offer products that clearly are superior
offer products that clearly are superior to what's out there. Um, so we we
to what's out there. Um, so we we welcome the challenge, I guess, is what
welcome the challenge, I guess, is what I'd say.
I'd say. >> Great. Excellent. Thanks a lot.
>> Great. Excellent. Thanks a lot. >> Thanks, Brian. For the next question, I
>> Thanks, Brian. For the next question, I would like to invite uh Adam Livingston.
would like to invite uh Adam Livingston. Thanks so much for having me. Congrats
Thanks so much for having me. Congrats on the great quarter and the credit
on the great quarter and the credit rating. The Japanese Bitcoin treasury
rating. The Japanese Bitcoin treasury company Metaplanet has recently
company Metaplanet has recently announced a share buyback program with
announced a share buyback program with the intention of being able to
the intention of being able to strategically deploy buybacks at times
strategically deploy buybacks at times that would increase Bitcoin per share
that would increase Bitcoin per share for the equity holders. Would strategy
for the equity holders. Would strategy ever consider adopting a similar program
ever consider adopting a similar program as means to increase Bitcoin exposure
as means to increase Bitcoin exposure for shareholders if MSTR ever trades
for shareholders if MSTR ever trades below a 1xm?
Long, you want to start? >> Yeah, I'll start with that. I I I don't
>> Yeah, I'll start with that. I I I don't think there is anything that we wouldn't
think there is anything that we wouldn't do that would create incremental Bitcoin
do that would create incremental Bitcoin yield uh that increates uh more Bitcoin
yield uh that increates uh more Bitcoin per share for our shareholders
per share for our shareholders and uh preserves our rock dividends for
and uh preserves our rock dividends for our preferred holders, right? And so we
our preferred holders, right? And so we have an open buyback uh authorization
have an open buyback uh authorization already. We've done it a long time ago.
already. We've done it a long time ago. I think the last buyback we did was 2018
I think the last buyback we did was 2018 or so. Um it's not our primary strategy,
or so. Um it's not our primary strategy, but it's an option if if we were to go
but it's an option if if we were to go down that path. Mike, you want to add
down that path. Mike, you want to add anything?
anything? >> Yeah, I I would say um we're we're
>> Yeah, I I would say um we're we're open-minded toward a variety of options.
open-minded toward a variety of options. Right now, our our preference is to grow
Right now, our our preference is to grow the capital base, but but if it was
the capital base, but but if it was compelling enough, you know, we would
compelling enough, you know, we would look at it.
look at it. >> Thank you so much. Appreciate it.
>> Thank you so much. Appreciate it. Thanks Adam. We have two more questions
Thanks Adam. We have two more questions to go. So for the next one I will invite
to go. So for the next one I will invite Lance Watanza, our research analyst from
Lance Watanza, our research analyst from TD. Coin.
TD. Coin. >> Thanks guys. Um the 30% BTC yield target
>> Thanks guys. Um the 30% BTC yield target for 2025. I'm surprised you maintained
for 2025. I'm surprised you maintained it given the recent del in Bitcoin
it given the recent del in Bitcoin accumulation. Getting to 30% would seem
accumulation. Getting to 30% would seem to require you to raise at least another
to require you to raise at least another couple of billion dollars. and we only
couple of billion dollars. and we only have two months left in the in the year.
have two months left in the in the year. You're not going to get there on ATMs
You're not going to get there on ATMs alone. Are you currently contemplating a
alone. Are you currently contemplating a big underwritten transaction perhaps in
big underwritten transaction perhaps in an overseas market? Is that sort of how
an overseas market? Is that sort of how you get to the 30%?
>> Yeah, we need to raise roughly $2 billion uh you know in a non-diluted
billion uh you know in a non-diluted fashion to our of capital. uh and you've
fashion to our of capital. uh and you've seen us do that uh at quick pace in a
seen us do that uh at quick pace in a short period of time. We have 2 months
short period of time. We have 2 months left to go. Uh and so we'll be racing
left to go. Uh and so we'll be racing and we'll see what we can accomplish,
and we'll see what we can accomplish, right? Uh we're always working, always
right? Uh we're always working, always trying new things, uh developing new
trying new things, uh developing new things, and this credit factory that
things, and this credit factory that Mike talks about, we're very bullish on.
Mike talks about, we're very bullish on. Obviously, we can't say exactly what
Obviously, we can't say exactly what we're going to do when, but uh it's it's
we're going to do when, but uh it's it's uh it's two good months, 60 days right
uh it's two good months, 60 days right before the holidays.
>> Great. Thank you. And for the last question, I will invite Ben Workman from
question, I will invite Ben Workman from Strike.
Strike. >> Thank you, Shish, and thank you guys for
>> Thank you, Shish, and thank you guys for taking my question. Over the last 12
taking my question. Over the last 12 months, Strategy's been extremely
months, Strategy's been extremely successful at building the capital base
successful at building the capital base and expanding the balance sheet using
and expanding the balance sheet using primarily equity in the IPOs from the
primarily equity in the IPOs from the preferred markets. And over that 12
preferred markets. And over that 12 months, you saw MSTR underperform
months, you saw MSTR underperform Bitcoin in a fairly significant manner.
Bitcoin in a fairly significant manner. Do you guys view the strategic
Do you guys view the strategic priorities moving forward as focusing
priorities moving forward as focusing more on increasing amplification and
more on increasing amplification and less on expanding the balance sheet? and
less on expanding the balance sheet? and how has this past year informed your go
how has this past year informed your go forward strategy and how you might
forward strategy and how you might prioritize the press over the common
prioritize the press over the common equity moving forward? Thank you.
equity moving forward? Thank you. >> Yeah, that's an open-ended question. So,
>> Yeah, that's an open-ended question. So, I'll start and then Fong or Andrew may
I'll start and then Fong or Andrew may have something to add. Yeah, clearly uh
have something to add. Yeah, clearly uh with equity,
with equity, if you're I would say if you're going to
if you're I would say if you're going to own Bitcoin, you need a fouryear or
own Bitcoin, you need a fouryear or longer time horizon. If you're going to
longer time horizon. If you're going to own amplified Bitcoin, a company that
own amplified Bitcoin, a company that aims to be more volatile than Bitcoin,
aims to be more volatile than Bitcoin, you can't have a lower time horizon. So,
you can't have a lower time horizon. So, you probably need a longer time horizon.
you probably need a longer time horizon. So, we we manage the company such that
So, we we manage the company such that we think 10 years from now, we're going
we think 10 years from now, we're going to create
to create an insane amount of shareholder value.
an insane amount of shareholder value. And and that doesn't mean we're looking
And and that doesn't mean we're looking for 10-year payoffs. We're generally
for 10-year payoffs. We're generally thinking if it doesn't return what we
thinking if it doesn't return what we expected within four years, we'd be very
expected within four years, we'd be very disappointed.
disappointed. But we never do anything where we where
But we never do anything where we where we demand to get the payback in four
we demand to get the payback in four months. And so we don't have a fourmonth
months. And so we don't have a fourmonth time horizon or even a year time
time horizon or even a year time horizon. And and uh we think that
horizon. And and uh we think that generally
generally I would say if your time horizon is 12
I would say if your time horizon is 12 weeks, you should own the STRC, right?
weeks, you should own the STRC, right? you really should go to the short end of
you really should go to the short end of the risk curve and the short end of the
the risk curve and the short end of the duration curve because that one we're
duration curve because that one we're trying to strip volatility away and if
trying to strip volatility away and if your time horizon is 10 years and if you
your time horizon is 10 years and if you are Bitcoin maxi then maybe you like the
are Bitcoin maxi then maybe you like the equity or you like Bitcoin um the credit
equity or you like Bitcoin um the credit instruments
instruments I would say
I would say if we wanted to raise the max amount of
if we wanted to raise the max amount of capital
capital then we could do two things that we
then we could do two things that we don't do. One thing we could do is we
don't do. One thing we could do is we could just open up the ATM and we could
could just open up the ATM and we could sell stock at any mnav any week all the
sell stock at any mnav any week all the time. And what you've seen is we don't
time. And what you've seen is we don't do that. You know, I uh after the red
do that. You know, I uh after the red sweep when there was when there was a
sweep when there was when there was a massive enthusiasm, we would sell a
massive enthusiasm, we would sell a billion or two or three billion dollars
billion or two or three billion dollars of stock like a billion in a week or two
of stock like a billion in a week or two billion in a week. And so you see, we're
billion in a week. And so you see, we're not shy when the market is strong and
not shy when the market is strong and and uh the premiums are high. We would
and uh the premiums are high. We would go very hard. But you see a lot of weeks
go very hard. But you see a lot of weeks where we sell nothing and we c we could
where we sell nothing and we c we could have sold a billion dollars of equity a
have sold a billion dollars of equity a week. We chose not to sell any equity.
week. We chose not to sell any equity. If the equity is weak and it's crashing,
If the equity is weak and it's crashing, it's almost certain. In fact, it is
it's almost certain. In fact, it is certain we're not the ones doing it,
certain we're not the ones doing it, right? We're watching, right? because
right? We're watching, right? because our view is we only sell into strength
our view is we only sell into strength and we only sell into strength when we
and we only sell into strength when we like the premium. So, so we have
like the premium. So, so we have actively decided we don't want uh to
actively decided we don't want uh to maximize capital by selling equity. And
maximize capital by selling equity. And then I think the other thing is just
then I think the other thing is just like we could raise a billion dollars of
like we could raise a billion dollars of equity in a few days if we wanted to. I
equity in a few days if we wanted to. I could also pick up the phone and I could
could also pick up the phone and I could raise a billion dollars overnight in
raise a billion dollars overnight in debt. If I just said we wanted to do a
debt. If I just said we wanted to do a pipe deal with a debt investor, I would
pipe deal with a debt investor, I would have 12 firms over the weekend and by
have 12 firms over the weekend and by Monday morning we could have raised two,
Monday morning we could have raised two, three, four, five, six billion dollars.
three, four, five, six billion dollars. They would be licking their chops and
They would be licking their chops and delighted to give us the capital.
delighted to give us the capital. They would want to be senior to all the
They would want to be senior to all the other creditors in the capital
other creditors in the capital structure. And what they would do is
structure. And what they would do is they would undermine the
they would undermine the creditworthiness of of the preferred
creditworthiness of of the preferred instruments that we actually want to
instruments that we actually want to sell. So So you could just assume with
sell. So So you could just assume with our 75 billion of capital right now,
our 75 billion of capital right now, we've already chosen not to raise 20
we've already chosen not to raise 20 billion or 30 billion. We could be
billion or 30 billion. We could be hundred billion dollars, but we'd be
hundred billion dollars, but we'd be hundred billion and the risk profile,
hundred billion and the risk profile, the leverage wouldn't be 11%.
the leverage wouldn't be 11%. you know, the leverage, you know, would
you know, the leverage, you know, would go up, you know, and so we actively
go up, you know, and so we actively decided that we don't want to generate
decided that we don't want to generate leverage, right? We're literally on a
leverage, right? We're literally on a path to drive leverage down. We're also
path to drive leverage down. We're also on a path, we've decided we we don't
on a path, we've decided we we don't want to do deals that don't have
want to do deals that don't have positive BTC yield.
positive BTC yield. Um, but more importantly, we're on a
Um, but more importantly, we're on a mission. The mission is to create the
mission. The mission is to create the digital credit market.
digital credit market. So, I think the company has two speeds.
So, I think the company has two speeds. Well, maybe more than two speeds. When
Well, maybe more than two speeds. When we're coasting, when when uh when the
we're coasting, when when uh when the credit markets don't offer us anything
credit markets don't offer us anything compelling and the equity markets aren't
compelling and the equity markets aren't compelling, we are coasting. And in my
compelling, we are coasting. And in my mind, I think that that is a $75 billion
mind, I think that that is a $75 billion company growing 30% a year for the next
company growing 30% a year for the next 20 years. So, that is that is an idol.
20 years. So, that is that is an idol. And then I for those of you who know me,
And then I for those of you who know me, you know I believe in the hypocratic
you know I believe in the hypocratic oath do no harm. And so the risk-free
oath do no harm. And so the risk-free rate the rate uh the company is going to
rate the rate uh the company is going to get the 30% a year for 20 years if we
get the 30% a year for 20 years if we take no risk.
take no risk. So how do you know what can we do where
So how do you know what can we do where we feel like it's worthwhile? And of
we feel like it's worthwhile? And of course if if we sell credit we can take
course if if we sell credit we can take that 30% to 40% or to 50%.
that 30% to 40% or to 50%. But we have we have an agenda here. The
But we have we have an agenda here. The agenda is not
agenda is not the agenda is not to artfully um manage
the agenda is not to artfully um manage the balance sheet in you know it's like
the balance sheet in you know it's like if you told me well you know you can you
if you told me well you know you can you could issue $10 billion of junk five to
could issue $10 billion of junk five to seven years and roll them every year and
seven years and roll them every year and roll them every quarter and you could
roll them every quarter and you could pursue a a credit strategy based on debt
pursue a a credit strategy based on debt that gets you a lot more capital and
that gets you a lot more capital and you're continually rolling it. Yeah. And
you're continually rolling it. Yeah. And you would do that with 144A offerings.
you would do that with 144A offerings. We could like fire up a $2 billion 144A
We could like fire up a $2 billion 144A offering next week and we just go do it.
offering next week and we just go do it. But the point is
But the point is we don't want to be
we don't want to be the revolutionary company that adopted
the revolutionary company that adopted digital capital that grew the company
digital capital that grew the company with conventional traditional credit.
with conventional traditional credit. We want to be the revolutionary company
We want to be the revolutionary company that discovered digital capital that
that discovered digital capital that then went on to discover and found the
then went on to discover and found the digital credit market. And you know when
digital credit market. And you know when you're just rolling a bunch of five to
you're just rolling a bunch of five to sevenyear bonds and when you're you know
sevenyear bonds and when you're you know when you're opportunistic
when you're opportunistic then uh you know you're careening toward
then uh you know you're careening toward the future with an advantage.
I want MSTR to stand for monster. We want to create a monster company. We
We want to create a monster company. We don't want to carine toward the future
don't want to carine toward the future with an advantage, you know. We don't
with an advantage, you know. We don't want to be the talented fighter, you
want to be the talented fighter, you know, that kind of wins and loses and
know, that kind of wins and loses and mostly wins and is a little bit sloppy
mostly wins and is a little bit sloppy and undisiplined.
and undisiplined. We want to create the the digital credit
We want to create the the digital credit instruments that are two to four times
instruments that are two to four times better than everything in the $300
better than everything in the $300 trillion market. And we want to eat the
trillion market. And we want to eat the world, right? And we want to sell a
world, right? And we want to sell a hundred billion dollars of them. And
hundred billion dollars of them. And after we sell 10 billion, then 20
after we sell 10 billion, then 20 billion, then 40 billion, then 80
billion, then 40 billion, then 80 billion. When people go, "Well, aren't
billion. When people go, "Well, aren't you levered?" We want to say, "Well, you
you levered?" We want to say, "Well, you know, actually, our leverage is zero."
know, actually, our leverage is zero." Huh? What? Wait, what? We have 30%
Huh? What? Wait, what? We have 30% amplification,
amplification, but we don't have 100 billion of debt.
but we don't have 100 billion of debt. We have 100 billion of equity that
We have 100 billion of equity that happens to actually amplify the common
happens to actually amplify the common equity. let me educate you on a new way
equity. let me educate you on a new way to build a company. So, so I would say
to build a company. So, so I would say you want to boil that down. It's a very
you want to boil that down. It's a very disciplined growth strategy. We would
disciplined growth strategy. We would rather coast and have a bulletproof
rather coast and have a bulletproof balance sheet and a and a $75 billion
balance sheet and a and a $75 billion company growing 30% a year than to
company growing 30% a year than to stretch for capital or stretch for for
stretch for capital or stretch for for some kind of yield but but undermine the
some kind of yield but but undermine the balance sheet and take on credit risk
balance sheet and take on credit risk because you know some someone says I'll
because you know some someone says I'll give you $10 billion tomorrow and it's
give you $10 billion tomorrow and it's you know it's senior to STRC we just
you know it's senior to STRC we just created volatility and we crumpled the
created volatility and we crumpled the credit of the instrument that is going
credit of the instrument that is going to provide a comfortable retirement to a
to provide a comfortable retirement to a billion people.
billion people. I I don't want to be the dude that made
I I don't want to be the dude that made a good trade that made 25 or made $50
a good trade that made 25 or made $50 billion by trading Bitcoin by using
billion by trading Bitcoin by using cheap corporate money. We don't want to
cheap corporate money. We don't want to be the company that made 25 or $50
be the company that made 25 or $50 billion or or a hail Mary or maybe we
billion or or a hail Mary or maybe we lost it by whatever borrowing money,
lost it by whatever borrowing money, however we can get it to buy Bitcoin. We
however we can get it to buy Bitcoin. We want to be the company that provided a
want to be the company that provided a comfortable retirement to a billion
comfortable retirement to a billion people and changed the world, right? We
people and changed the world, right? We want to change the monetary system. I
want to change the monetary system. I want everybody to get up in America and
want everybody to get up in America and say, "I'm not getting paid 10% tax
say, "I'm not getting paid 10% tax deferred from my bank or from my money
deferred from my bank or from my money market. That's not fair. That's an
market. That's not fair. That's an abomination.
abomination. I'm going to tell all my friends that
I'm going to tell all my friends that I'm going to I'm so mad about it. I'm
I'm going to I'm so mad about it. I'm going to go tell my hundred people that
going to go tell my hundred people that I know. They all need to pull their
I know. They all need to pull their money out of the money market. they need
money out of the money market. they need to buy stretch and we want to be in a
to buy stretch and we want to be in a position where we can accommodate that
position where we can accommodate that demand. And so what you have is the
demand. And so what you have is the money that comes easy is always the
money that comes easy is always the money that comes with strings attached.
money that comes with strings attached. And I've learned that over 354 years and
And I've learned that over 354 years and I think the people in the Bitcoin
I think the people in the Bitcoin treasury market, they're learning it
treasury market, they're learning it now. Easy the easy money is the toxic
now. Easy the easy money is the toxic money.
money. What you really want is is you want to
What you really want is is you want to create a revolutionary new product that
create a revolutionary new product that solves a problem for $300 trillion of
solves a problem for $300 trillion of investors and for billions of people.
investors and for billions of people. And and you know what?
And and you know what? When we sell a billion dollars worth of
When we sell a billion dollars worth of digital credit, they're giving us the
digital credit, they're giving us the money forever
money forever and we're taking no credit risk. But the
and we're taking no credit risk. But the quidd proquo is we're giving them 10%
quidd proquo is we're giving them 10% tax deferred,
tax deferred, right? And and so I would rather pay 10%
right? And and so I would rather pay 10% tax deferred and get the money forever
tax deferred and get the money forever than than pay 5% and get the money in
than than pay 5% and get the money in the form of a junk bond and pay and pay
the form of a junk bond and pay and pay a taxable 5% coupon. Even if you wanted
a taxable 5% coupon. Even if you wanted to give it to me and and Ben, you can
to give it to me and and Ben, you can see the obvious reason why. The world's
see the obvious reason why. The world's full of 50,000 companies that will give
full of 50,000 companies that will give you the 5% taxable. How many companies
you the 5% taxable. How many companies are in the world that will give you 10%
are in the world that will give you 10% gleefully, enthusiastically as a rock
gleefully, enthusiastically as a rock dividend and then do everything in their
dividend and then do everything in their power to to actually issue more
power to to actually issue more dividends.
dividends. So for us, the credit is the product,
So for us, the credit is the product, right? The the the aspiration or the
right? The the the aspiration or the offering is a comfortable retirement to
offering is a comfortable retirement to everybody who's a credit investor.
everybody who's a credit investor. That's the offering.
That's the offering. If we can do it by selling equity, we
If we can do it by selling equity, we will. But when the equity, you know,
will. But when the equity, you know, when the equity is dilutive, we won't.
when the equity is dilutive, we won't. And uh we won't do debt because debt,
And uh we won't do debt because debt, you know, debt is a conventional credit
you know, debt is a conventional credit idea. It's a 20th century idea.
idea. It's a 20th century idea. I think I laid out with my seven
I think I laid out with my seven differentiators for digital credit. We
differentiators for digital credit. We think that digital credit is an
think that digital credit is an inversion of everybody's value system.
inversion of everybody's value system. every other credit issuer in the world
every other credit issuer in the world gets up and says, "How do I the
gets up and says, "How do I the credit and pay you the lowest coupon and
credit and pay you the lowest coupon and and maximize the advantages to my
and maximize the advantages to my company?" And we get up every day and
company?" And we get up every day and say, "How do we create the greatest
say, "How do we create the greatest credit credit instrument that pays the
credit credit instrument that pays the highest tax tax equivalent cash flows
highest tax tax equivalent cash flows that's going to be best for the buyer,
that's going to be best for the buyer, right, for the for the investor. So
right, for the for the investor. So that's uh that's the answer to your
that's uh that's the answer to your question. Um hopefully.
question. Um hopefully. >> Thank you.
>> Excellent. So this concludes the Q&A portion of the
So this concludes the Q&A portion of the webinar. I would like to thank all of
webinar. I would like to thank all of our analysts for their questions and all
our analysts for their questions and all the attendees for tuning in live. We had
the attendees for tuning in live. We had over 20 thou 25,000 people across
over 20 thou 25,000 people across YouTube X live stream and the Zoom
YouTube X live stream and the Zoom webinar. So, thank you all for joining
webinar. So, thank you all for joining in and I will now turn the call over to
in and I will now turn the call over to Fong for the closing remarks.
Fong for the closing remarks. >> I also want to thank the analysts for
>> I also want to thank the analysts for joining us and and being on video and
joining us and and being on video and and asking questions. I want to thank
and asking questions. I want to thank everybody uh who watched us uh our
everybody uh who watched us uh our earnings call and all of our supporters
earnings call and all of our supporters and all our shareholders out there. Uh,
and all our shareholders out there. Uh, and I invite you all to uh join us in
and I invite you all to uh join us in Las Vegas February 23rd through 26th at
Las Vegas February 23rd through 26th at the Win Resort. And for everybody else,
the Win Resort. And for everybody else, uh have a great holiday season and uh
uh have a great holiday season and uh we'll see you in 3 months at our next
we'll see you in 3 months at our next earnings call. Thank you.
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