Strategy, Inc. Q1 FY2025 earnings call

Phong Le announced Strategy World 2025 in Orlando, May 5 - 8. Strategy is largest corporate holder of Bitcoin with 553,555 bitcoins, $52B market value as of April 28. Acquired 106,085 bitcoins in first 4 months of 2025. Trump admin's strategic Bitcoin reserve and pro-bitcoin regs boosted Bitcoin. Raised $6.6B net proceeds via ATM equity offering, $2B via convertible note, $1.4B via preferred stock in Q1 and Q2. Added to balance sheet every quarter since 2020, Bitcoin holdings fully unencumbered. Andrew Kang covered software results and Bitcoin financials. Michael Saylor discussed Bitcoin treasury strategy, BTC models, capital markets transactions, BTC credit models, and importance of educating market on Bitcoin and MSTR opportunities

Software: Q1 total software revenues ~$111M, down 3.6% YoY; cloud subscription services revenues up 62% YoY, now ~33% of total revenues; subscription billings grew 38% to $24.5M; cost of revenues up 13% due to higher cloud hosting costs. Bitcoin: Adopted fair value accounting on Jan 1. Began year with Bitcoin holdings value ~$42B. Recognized $17.9B to retained earnings on adoption. Q1 price of Bitcoin declined, resulting in $5.9B unrealized fair value loss. Purchased additional 80,715 bitcoins in Q1 at average price ~$94,900, totaling $7.7B. Since April 28, equity market cap $109B, with over $100B equity cushion and over $43B Bitcoin cushion over fixed income liabilities

Raised BTC yield target from 15% to 25% and BTC dollar gain target from $10B to $15B for 2025. Filed for new $21B ATM program under 42-42 capital plan, 32% complete, focusing on fixed income instruments while utilizing equity ATM when favorable

Actual results may differ from forward-looking statements due to factors like risk factors in 10-Q and 8-K. Credit rating agencies not yet rating MSTR's fixed income securities, which impacts market perception and liquidity. Market treating MSTR's credit instruments as distressed debt due to traditional finance practices not embracing BTC as collateral

Q: Now that you have adopted the fair value accounting, how do you feel about the big swings in earnings as a result of the bitcoin price volatility?

A: Fair value accounting is more transparent, reflects true value. Old accounting was a barrier. Swings are part of bitcoin's volatility, but over time, positive swings will prevail.

Q: What are your thoughts on the recent MSTR playbook adoptions from other companies? And how does the company plan to sustain its leading role?

A: It's a virtuous cycle. More companies adopting bitcoin legitimizes it. Each capital market needs local BTC companies. More companies joining benefits bitcoin and the space.

Q: Can you please update us on the pace of capital raises under the 42 plan? And how you're thinking about striking the right balance between equity capital and the fixed income capital going forward? And how do you think about the impact of dilution from another $21 billion equity?

A: BTC financial framework shows capital raises via ATM are accretive if at >1x NAV. Fixed income instruments are more accretive but need mature market. Dilution from equity is not dilutive if at >1x NAV, and fixed income instruments have different accretive dynamics