Earnings Call Transcript - MSTR Q3 2025

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Hello, everyone, and good evening. I'm Shirish Jajodia, Corporate Treasurer and Head of Investor Relations at Strategy. I will be your moderator for Strategy's 2025 Third Quarter Earnings Webinar. We will start with the call with a 60-minute presentation, starting first with Andrew Kang, followed by Phong Le and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with 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 risk factors discussed in our most recent quarterly report on Form 10-Q filed with the SEC on August 5, 2025, and our current report on Form 8-K filed with the SEC 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.

Andrew Kang, CFO

Thank you, Shirish. And I'll start with some highlights for the quarter. We now hold 640,808 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 U.S. And we have four listed preferred securities in the market, STRF, STRK, STRD, and STRC. With STRCs or Stretch being the largest U.S. 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. Moving on to EPS results. Turning to our Q3 2025 GAAP financial results. We reported $3.9 billion in operating income, $2.8 billion in net income and earnings of $8.43 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. This marks our second consecutive quarter of significant positive GAAP 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 showed $12 billion in GAAP operating income, $8.6 billion in net income and earnings of $27.80 per share, continuing our record-breaking year of performance. 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 Satoshis. Through October 26, our Bitcoin per share was $41,370 compared to Bitcoin per share of $39,716 as of July 31. 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 3.5x 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.

Phong Le, President and CEO

Thank you, Andrew. I will provide an update on our capital markets activity and then review the guidance we have set for 2025. First, I would like to invite everyone to join us in four months at the Wynn resort in Las Vegas for Strategy World 2026 and our fifth annual Bitcoin for corporations. We hope that those who are listening or watching this presentation and have supported Strategy Software or our Bitcoin strategy will join us. Taking a step back, we used to compare ourselves to other companies that hold Bitcoin on their balance sheets. With over 640,000 Bitcoin, accounting for more than 3.1% of all Bitcoin ever created, we believe it makes more sense to compare ourselves to the largest corporate treasuries. Currently, with $71 billion in Bitcoin, we rank fifth among corporations in terms of cash and short-term investments, excluding financial services firms. Our goal is to be second within the next year and to take the top spot within five to ten years. To achieve this, we have significantly raised equity and capital in the past two years. In 2024, we raised $22.6 million, with about 27% from the convertible debt market. This year to date, we have raised $19.8 billion, with our approach to raising funds shifting. We have reduced our reliance on convertible debt to about 10% and increased our preferred raises to $6 billion or around 30%. This change has taken place since January 2025 with the launch of our preferred strategy, which has already shown success this year. As we decrease our dependence on convertible notes, we plan for them to equitize over time, aiming for no convertible debt by 2029. Instead, we will focus on developing the preferred market. This year alone, through four IPOs, including the largest IPO three months ago with STRC or Stretch, we have raised $6.7 billion through the preferred market. Notably, a significant portion of these raises came from the retail market. The initial offering of Strike had around 4% retail participation, while Stretch saw about 23%. In terms of expanding our preferred offerings and raising more capital, we will employ three main strategies. First is distribution. Recently, more brokerages, including Robinhood, have begun listing our preferreds, leading to increased volume and liquidity for these instruments. Robinhood is now listing our four preferreds as the first on their platform due to demand. We will also continue to work through wealth management, broker-dealers, and RIAs. Participation from firms like Morgan Stanley in our latest preferred offering has opened significant access to their retail customers. We are exploring partnerships with various banks and financial institutions for potential products like ETF wrappers and structured finance products featuring our preferreds. Our marketing efforts will include attending industry conferences and leveraged finance events to connect with customers interested in credit and debt products. We will conduct more in-person meetings with financial advisers, brokers, RIAs, and family offices. Finally, we are ramping up our digital marketing, promoting our preferreds, particularly Stretch, on social media platforms like X. We plan to enhance our presence on YouTube and traditional media outlets such as The Wall Street Journal and Bloomberg, along with leveraging our strategy.com website and app, which I encourage you to download. We will also increase visibility through interviews and podcasts. These are the strategies we will implement to enhance distribution and awareness of our credit instruments.

Michael Saylor, Executive Chairman

Thank you, Phong, and thanks for being with us today. I'm eager to discuss digital capital and digital credit. Let's move to the first slide. First, I want to highlight that Bitcoin has become recognized as digital capital, often referred to as digital gold. Capital serves as a long-term store of value, and Bitcoin fits that definition. The U.S. government has acknowledged Bitcoin as a store of value, which includes support from every major cabinet member. Furthermore, the decision for America to establish itself as a Bitcoin superpower, along with the President's assertion that Bitcoin should not be sold, is significant. Moving to the next slide, Wall Street has also accepted Bitcoin as digital capital. Currently, spot ETFs hold around 1.5 million Bitcoin, with a valuation of about $170 billion. The most successful ETF in Wall Street history is IBIT, which has seen explosive growth in recent months. The daily liquidity of IBIT is nearing or exceeding $4 billion. Additionally, open interest in BE has surpassed $50 billion, showcasing its immense success. Public companies have recognized Bitcoin as digital capital too. We were the first public holder, followed by two, then four. Roughly a year ago, there were about 60 public companies holding Bitcoin, and that number has now exceeded 200. This accumulates to more than 1 million Bitcoin, valued at around $116 billion. There are several metrics on this slide that illustrate the magnitude of the Bitcoin market, which has a capital of $2.3 trillion. It experiences daily liquidity of $58 billion, with $76 billion in BTC open interest in the derivatives market, supported by 26 gigawatts of power equivalent to 26 nuclear reactors. The hash rate keeps increasing; we are now at 1,100 exahash. Additionally, 30% of registered voters in the United States are crypto holders. The overall crypto industry is valued at $3.9 trillion, with 700 million crypto users, and about 300 million Bitcoin holders. This has become a global movement. Bitcoin stands as the capital asset at the core of the entire crypto industry and is traded across 1,000 exchanges.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Thank you, Michael. We are now going to proceed to the interactive live Q&A session of our webinar. I would like to invite all of our Q&A guests to come on video. And we look forward to hearing your questions. We'll go one at a time. I'll call your names and you can direct your question to the management team. For the first question, I would like to invite Andrew Harte, a research analyst from BTIG. Andrew?

Andrew Harte, Analyst

Team, thanks for having me on. I appreciate all the details in the presentation as always. So a lot of our investor questions are focused on the company's ability to pay dividends, especially as the preferred equity strategy continues to grow. Can you just shed some additional color and light on plans to fund those dividends? And then if there was a period where the mNAV compressed or was even below 1x, how could that plan potentially change?

Phong Le, President and CEO

Yes, I can cover this one. And Andrew talked about this a little bit earlier. Right now, our dividends and interest on our convertible notes totaled $689 million annually. And our primary strategy when our mNAV is above 1x is to fund that through ATM issuances. And just to remind everybody, in the last 12 months, we've issued about $27 billion of equity, which means that, that's about the $650 million or so is about 2.6% of how much equity we've raised. So we clearly have the ability to raise equity to cover our dividend payments and our interest. The big question is what happens when it becomes dilutive to shareholders to issue equity and when we're below 1x NAV or if we go below 1x NAV, what would we do? And there are other things that we've explored and talked about. We would sell equity derivatives, we could sell Bitcoin derivatives, and we could sell high basis Bitcoin to cover our dividend needs for our preferreds. What's important when we do those things, and we've talked about it, is we want to preserve the ROC dividends on our preferreds. So we'd have to do them in ways that are avoided positive tax E&P. Right? We wouldn't do things like sell equity or Bitcoin derivatives that would cause our E&P to be above zero. We are able to sell high basis Bitcoin potentially at a loss and cause negative E&P and offset that with other Bitcoin that would cause positive E&P. We wouldn't sell the software business. I know there are questions about that because that would cause income and positive E&P. And so we want to preserve the ROC dividends, the preferable tax deferred treatment of our preferreds. So those are some of the things that we would do in that scenario. We don't anticipate that scenario, but we do have plans in place.

Unknown Analyst, Analyst

Thank you for organizing this, and thank you for the invitation. It was mentioned that there would be marketing and advertising around the preferreds. What do you anticipate that expense looking like? And what the return on investment would be for those efforts?

Phong Le, President and CEO

I can cover that. We're just starting to get into this. Actually, you just saw one of our advertisements for those who like money Stretch, right? And so we'll start to experiment with paid advertising on platforms like X or YouTube. I think whatever the expense is, it would be quite minimal compared to the increased inflows that we hope to drive into our preferreds, right? And I think we've gone through in the past, if we're able to raise an incremental $1 billion in a preferred, we immediately turn around buy Bitcoin, and that's immediately accretive to Bitcoin yield and Bitcoin per share. I don't expect we're going to spend a ton of money upfront. We'll experiment and see what are the right channels and what causes people to wake up and understand the Bitcoin credit machine that we have. And then in addition to just digital marketing, we're out meeting with investors, meeting with potential investors quite a bit now. And I think there's just a about a feet on the street between Mike, myself, Andrew, Shirish, CJ and the entire team.

Michael Saylor, Executive Chairman

I have recently spent considerable time creating content for the Schwab network and attending various conferences, including Money 20/20 in Las Vegas and a credit conference in Austin. I also have upcoming events in Naples and Palm Beach, along with a substantial road show in the Middle East for a week and a half. There is extensive outreach happening, as we receive numerous invitations to speak at conferences and on television. Our marketing strategy now includes appearances on Bloomberg, Fox, and CNBC. Unlike a year ago when there were questions about Bitcoin's longevity, today it is widely accepted as digital gold. Now, our pitch focuses on Stretch, which offers 10.5% dividends tax deferred, making it highly attractive. In the past, I mentioned it took a significant amount of time to grasp Bitcoin, but figuring out a product that provides 10.5% tax-deferred yield is much simpler. We are conveying straightforward messages through various channels. While we may not successfully pitch Bitcoin to conservative retirees in a short time, we believe we can effectively communicate the benefits of Stretch to military retirees seeking stability. This has been evident in our interactions with people, as it’s our easiest product to explain compared to more complex offerings. Everyone desires a bank account offering a significant yield without tax implications, so we're fully committed to exploring every marketing avenue available to relay this message. Fortunately, we are receiving a surge of requests to engage with us, and with the current demand for interviews, we are well-prepared to deliver our straightforward message succinctly. This is a promising time for our marketing efforts.

Mark Palmer, Analyst

We have already seen the beginnings of consolidation within the digital asset treasury space. Is there a circumstance under which Strategy would step into the market as an acquirer of a Bitcoin treasury company that was trading at a materially lower mNAV in a transaction that would be, by definition, accretive as a means of accelerating its acquisition of Bitcoins.

Michael Saylor, Executive Chairman

I'll give my opinion, and then Phong can chime in. We've done 84 acquisitions of Bitcoin, and every one of them was homogeneous, transparent, and you could instantly calculate whether it's accretive or dilutive, and they were generally all accretive. And our focus is to do high-speed transparent digital transactions and sell digital credit and buy Bitcoin. And we think that it's a big advantage of the company that the business model is so transparent, predictable, clear. Because the business model is predictable, that makes it easy for the equity analysts to make their decisions. And it also makes it easy for the credit analysts to assess the credit quality. So, generally, we don't have any plans to pursue M&A activity, even if it would look to be potentially accretive. It might be, but there's just a lot of uncertainty, and these things tend to stretch out six to nine months or a year. And an idea that looks good when you start might not still be a good idea six months later. And it can be very distracting for the management team while you're either integrating or pursuing those things. So our management team is laser-like focused on selling the four credit instruments that we have and then expanding the reach of our digital credit instruments internationally and, of course, improving the quality of our balance sheet, equitizing the convertible bonds. Those are all the things that we're very excited about.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Thank you, Mark. For the next question, I would like to invite Natalie Brunell.

Unknown Analyst, Analyst

Beyond Bitcoin price action, can you identify two or three very specific challenges that are serving as headwinds for the growth and performance of Strategy and even the Bitcoin treasury industry more broadly? And what actions can be taken to overcome those?

Michael Saylor, Executive Chairman

I believe Phong pointed out some of the issues regarding S&P credit ratings. Bitcoin is not considered capital by the traditional credit ratings industry. The perception of Bitcoin and its collateral value, along with the established views under Basel rules that affect our banking system, insurance companies, and credit rating agencies represent a structural challenge. It's similar to when FASB required the recognition of losses but not gains, which was quite detrimental. I think we have made progress in that area, and adjusting the capital risk rules will be significant. Another key area is the acceptance of banking practices, custody, and the provision of credit by banks using Bitcoin. We've heard that several major U.S. banks may begin to buy, sell, and provide custody for Bitcoin in the first half of 2026, as well as offer credit and margin lines against Bitcoin. This would be beneficial for them, for Bitcoin, and for us, as it would foster adoption. I believe neither of these challenges require government intervention; we don’t need new laws to address them. What is crucial is to advocate for banks, educate the banks, insurance companies, and credit rating agencies, and also inform traditional fixed income investors, retirees, and corporate treasurers about the improved options available. Our focus for the next few years will be on educating and growing the industry.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Thanks, Natalie. For the next question, I would like to invite Brian Dobson, research analyst from Clear Street.

Brian Dobson, Analyst

Yes. So you received a credit rating, and I agree that, that's a very important first step to opening doors at pension funds and insurance companies. I know it's very early days, but are you already having conversations with those investors? And if so, what's the feedback?

Phong Le, President and CEO

I can start on that, Brian. We had before we received a rating conversations with large institutions, insurance companies, pension funds that said that they could not easily without significant capital penalties invest in an unrated instrument and that they were quite interested in the structure of what we provided, but just couldn't do it. So that was why we went and pursued a rating with a major rating agency is one of the reasons. So I do think this opens up doors to some of the categories that you just mentioned before. And I think it's not going to be an avalanche like tomorrow, but as we go out and market and Mike has discussions and I and Andrew all go out in the market and we start talking to these folks, I think their thought process will certainly change over time. We're pretty far along. You're right, but that's part of the reason why we need to create products that are very specific. What exchange, is it retail-focused? Is it institutional-focused? Is it regulated? Is it unregulated? What is the tax regime? Look, what we've done since the beginning of the year with preferreds is we went uphill against a market that wasn't familiar with the Bitcoin-backed perpetual preferred with a return of capital tax structure. And it took us nine months, and we were able to raise $6.5 billion or $6 billion, right? And because we did that, I think we've sort of cornered this market for a good period of time. I think our ability to go understand the regulatory structures, the tax structures, yes, it's harder than in the U.S. But once we've broken through that, that creates a competitive moat for us to be able to offer products that clearly are superior to what's out there. So we welcome the challenge, I guess, is what I'd say.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Thanks, Brian. For the next question, I would like to invite Adam Livingston.

Unknown Analyst, Analyst

Congrats on the great quarter and the credit rating. The Japanese Bitcoin treasury company, Metaplanet, has recently announced a share buyback program with the intention of being able to strategically deploy buybacks at times that would increase Bitcoin per share for the equity holders. Would Strategy ever consider adopting a similar program as a means to increase Bitcoin exposure for shareholders if MSTR ever trades below a 1x mNAV?

Michael Saylor, Executive Chairman

Yes, that's a good question. Phong, do you want to start?

Phong Le, President and CEO

Yes, I'll start with that. I don't think there is anything that we wouldn't do that would create incremental Bitcoin yield that increases more Bitcoin per share for our shareholders and preserves our ROC dividends for our preferred holders, right? And so we have an open buyback authorization already. We've done it a long time ago. I think the last buyback we did was 2018 or so. It's not our primary strategy, but it's an option if we were to go down that path. Mike, do you want to add anything?

Michael Saylor, Executive Chairman

Yes. I would say we're open-minded toward a variety of options. Right now, our preference is to grow the capital base. But if it was compelling enough, we would look at it.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Thanks, Adam. We have two more questions to go. So for the next one, I will invite Lance Vitanza, our research analyst from TD Cowen?

Lance Vitanza, Analyst

The 30% BTC yield target for 2025, I'm surprised you maintained it given the recent decel in Bitcoin accumulation. And getting to 30% would seem to require you to raise at least another couple of billion dollars, and we only have 2 months left in the year. You're not going to get there on ATMs alone. Are you currently contemplating a big underwritten transaction perhaps in an overseas market? Is that sort of how you get to the 30%?

Phong Le, President and CEO

Yes. We need to raise roughly $2 billion in a non-dilutive fashion to of capital. And you've seen us do that at quick pace in a short period of time. We have two months left to go. And so we'll be racing and we'll see what we can accomplish, right? We're always working, always trying new things, developing new things and this credit factory that Mike talks about, we're very bullish on. Obviously, we can't say exactly what we're going to do when. But it's two good months, 60 days, right before the holidays.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Great. And for the last question, I will invite Ben Werkman from Strive.

Ben Werkman, Analyst

Over the last 12 months, Strategy has been extremely successful at building the capital base and expanding the balance sheet using primarily equity in the IPOs from the preferred markets. And over that 12 months, you saw MSTR underperform Bitcoin in a fairly significant manner. Do you guys view the strategic priorities moving forward as focusing more on increasing amplification and less on expanding the balance sheet? And how has this past year informed your go-forward strategy and how you might prioritize the prefs over the common equity moving forward?

Michael Saylor, Executive Chairman

That's a broad question, so I'll give my thoughts, and Phong or Andrew might want to add. If you're planning to invest in Bitcoin, you should consider a long-term outlook of at least four years. For those interested in more volatile investments related to Bitcoin, a longer time frame is essential. We aim to position the company for substantial shareholder value over the next decade, although we do not expect payback to take that long. If we don’t see expected returns within four years, we would be disappointed, but we don’t rush for returns in the short term. If your investment horizon is just a few months, you should consider alternative options while we focus on stable investments. Over a 10-year horizon, you might prefer the equity or Bitcoin. Regarding raising capital, we could easily sell stock whenever we want, but we have chosen not to aggressively capitalize during market highs, even though the opportunity was there. We typically place our sales strategically, preferring to capitalize on strong market conditions. While we could quickly raise substantial amounts in equity or debt, doing so might not serve our broader goals of maintaining creditworthiness and strategic growth. Our mission is to establish a digital credit market, and we have two operational modes. When the market isn’t providing attractive opportunities, we may stay steady, targeting sustainable growth. We believe we can grow successfully without taking on excessive risk or compromising our balance sheet by chasing short-term capital. Our intent is to create innovative credit instruments that truly benefit investors while maintaining a robust structure. We’re focused on offering credit as a reliable product, ensuring a comfortable retirement for our investors. We prefer not to follow conventional routes that could dilute our equity or increase our debt unnecessarily. Our strategy aims to redefine the credit market by designing superior instruments that prioritize the interests of the investors over traditional corporate advantages. We want to revolutionize how credit works, ensuring that our offerings meet the needs of our investors while providing substantial returns.

Shirish Jajodia, Corporate Treasurer and Head of Investor Relations

Excellent. So this concludes the Q&A portion of the webinar. I would like to thank all of our analysts for their questions and all the attendees for tuning in live. We had over 25,000 people across YouTube, X live stream, and the Zoom webinar. So thank you all for joining in. And I will now turn the call over to Phong for the closing remarks.

Phong Le, President and CEO

I also want to thank the analysts for joining us and being on video and asking questions. I want to thank everybody who watched our earnings call and all of our supporters and all of our shareholders out there. And I invite you all to join us in Las Vegas, February 23 to 26 at the Wynn resort. And for everybody else, have a great holiday season, and we'll see you in three months at our next earnings call. Thank you.