MicroStrategy Incorporated Variable Rate Series A Perpetual Stretch Preferred Stock Q2 FY2025 earnings call

• Andrew Kang: Highlighted Bitcoin holdings, market cap, capital raised, EPS results, Bitcoin per share, BTC Yield, BTC $ Gain, balance sheet details.
• Michael J. Saylor: Macro-overview of Bitcoin universe, supportive White House, Wall Street embracing Bitcoin, public companies capitalizing on Bitcoin, financial products like Strike, Strife, Stride, Stretch, explained how MSTR is amplified Bitcoin, credit model.
• Phong Q. Le: Capital plan, guidance for 2025, comparables to MSTR, valuation of MSTR, BTC principles including buying and holding BTC, prioritizing MSTR common stock, treating investors with respect, structuring MSTR to outperform Bitcoin, acquiring Bitcoin, growing rapidly, issuing innovative fixed income securities, maintaining balance sheet, promoting global adoption of BTC as treasury reserve asset.

Bitcoin holdings were 628,791, accounting for 3% of all Bitcoin ever in existence. Market cap eclipsed over $112 billion. Launched 4 listed preferred equity offerings, raised $18.3 billion year-to-date. Q2 '25 had record $14 billion GAAP operating income, $10 billion net income, fully diluted EPS $32.60. First half had $8.1 billion operating income, $5.7 billion net income, EPS $19.43. Bitcoin per share year-to-date $39,716. BTC Yield 25% year-to-date, BTC $ Gain year-to-date $111,894, BTC $ Gain so far this year $13.2 billion. Balance sheet: added Bitcoin every quarter since Aug 2020, 100% unencumbered, hold over $74 billion Bitcoin, value of digital assets over $64 billion as of June 30, total stockholders' equity $47.5 billion. Convertible instruments: $8.2 billion notional debt, market value over $12.3 billion, all but 2 in the money. Preferred equity outstandings $6.3 billion, perpetual.

BTC guidance starts with $150,000 BTC price, drives BTC yield 30% and BTC $ Gain $20 billion for end of 2025. GAAP guidance: operating income $34 billion, net income $24 billion, EPS $80 by end of 2025. Equity guidance: more disciplined about issuing MicroStrategy ATM, below 1.0x mNAV consider issuing credit to repurchase shares, borrower setting 2.5x mNAV, 2.5x to 4x mNAV opportunistically issue equity to acquire Bitcoin, above 4x mNAV actively issue equity. Stretch credit guidance: end of every month propose rate structure, based on 5-day VWAP.

Forward-looking statements may differ due to factors like risk factors in quarterly reports, risk that Bitcoin price may differ from assumed target price affecting guidance and hypothetical values. Concentration of Bitcoin holdings could potentially impede adoption, but no set point identified. Stress testing related to midterm BTC ratings, potential capital markets becoming inconducive for new capital issuance in bear markets not fully planned out. Educating market about Bitcoin-backed credit has challenges. Proof of reserves consideration has operational security and other issues to carefully consider.

Q: Does concentration of Bitcoin holdings impede adoption?

A: Michael J. Saylor says accelerating institutional adoption, not a set point, harder to acquire leads to decentralization.

Q: Worried about plethora of PBTCs?

A: Phong Q. Le says more PBTCs create knowledge, additive, not close in size.

Q: Stress testing in bear markets?

A: Michael J. Saylor says structure is robust, survived 80% drawdown.

Q: Preferred shares in crab market?

A: Michael J. Saylor says credit models undervalued, educating market important.

Q: Next area of regulator improvement?

A: Michael J. Saylor says clarify digital assets taxonomy.

Q: Feedback on offerings?

A: Andrew Kang says growing demand on IPOs, focus on preferred equity, international deployment, building yield curve.

Q: Overcoming education burden?

A: Phong Q. Le says process, innovative products sell themselves.

Q: Proof of reserves?

A: Michael J. Saylor says studying, considering responsibly.