MicroStrategy Incorporated Q2 FY2025 earnings call

Andrew Kang welcomed to the webinar, highlighted Q2 and year-to-date highlights like Bitcoin holdings, market cap, capital raised, EPS results, Bitcoin per share, BTC Yield and $ Gain. Michael Saylor gave macro-overview of Bitcoin universe with supportive White House, cabinet members, regulatory support, Wall Street adoption, public companies capitalizing on Bitcoin, analyst coverage, technology investors interest, financial regulators support, Capitol Hill and states embracing Bitcoin, crypto industry coalescing around Bitcoin. Talked about financial products and business, including Strike, Strife, Stride, Stretch, building yield curve for BTC credit, MSTR as amplified Bitcoin. Phong Le talked about capital plan, guidance for 2025, comparables to MSTR, valuation, BTC principles like 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 with STRC being the largest IPO this year. Year-to-date raised $18.3 billion. Q2 '25 had record GAAP operating income of $14 billion, net income of $10 billion, fully diluted EPS of $32.60. First half had $8.1 billion operating income, $5.7 billion net income, EPS of $19.43. Bitcoin per share year-to-date was $39,716. BTC Yield year-to-date was 25%, meeting full year target. BTC $ Gain year-to-date was 111,894 Bitcoin, treasury operations generated $13.2 billion. Balance sheet has added Bitcoin every quarter since Aug 2020, 100% unencumbered, holds over $74 billion of Bitcoin purchased at $46 billion, fair value of digital assets grew with deferred tax liability changes. Convertible instruments have $8.2 billion notional debt, market value over $12.3 billion. Preferred equity outstandings $6.3 billion, perpetual.

Assumed BTC price at end of 2025 is $150,000, guidance for BTC yield percentage is 30% and BTC $ Gain is $20 billion. GAAP operating income guidance for end of 2025 is $34 billion, net income guidance is $24 billion, EPS guidance is $80. Equity guidance is to be more disciplined about issuing MicroStrategy ATM with guidelines based on mNAV. Stretch credit guidance is to issue guidance or propose rate structure at end of every month based on 5-day VWAP and Fed changes.

Actual results may differ from forward-looking statements due to various factors like risk factors in quarterly and current reports with SEC, risk that Bitcoin price at end of year may differ from assumed target price affecting guidance and hypothetical values. Concentration of Bitcoin holdings could potentially impede adoption, but uncertain when. Stress testing related to credit products and capital structure, need to consider Bitcoin bear market assumptions and thresholds.

Q: At some point, does concentration of Bitcoin holdings at a single corporation impede adoption of Bitcoin as a store of value, etc. and when might that point come for Strategy?

A: Michael Saylor said accelerating institutional adoption, harder to acquire leading to more decentralization.

Q: Worried about being too successful in making pitch to other public companies and PBTCs becoming a problem?

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

Q: Stress testing related to credit products and capital structure?

A: Michael J. Saylor and Phong Le talked about robustness of structure, survived 80% drawdown before, current structure bulletproof.

Q: Preferred shares yield in crab market and when to increase?

A: Michael J. Saylor said market education needed, BTC-backed credit better, structure benefits from Bitcoin trading sideways.

Q: Next area of improvement for regulators?

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

Q: Feedback from buy side on offerings and future offerings?

A: Andrew Kang said increasing demand on IPOs, expect more retail and institutional demand, potential for international deployments and yield curve building.

Q: Overcoming education burden for institutional investors?

A: Michael J. Saylor, Phong Le talked about product packaging, distribution channel, education through conferences and content, credit model sharing.

Q: Proof of reserves for the company?

A: Michael J. Saylor, Phong Le, Andrew Kang said studying it, considering audits and security, internal controls robust with big 4 audit firms