STRF

Company Position & Core Strategy

• Strategy is the world's largest institutional Bitcoin holder, with 843,775 Bitcoin (≈4% of all Bitcoin that will ever exist), and its holdings exceed those of the largest Bitcoin ETFs, any nation state, and major DeFi custody platforms.
• Long-term corporate objective is to become the world's most valuable company by market cap via a three-part virtuous cycle: accumulate the most Bitcoin capital, issue the strongest Bitcoin-backed digital credit, and create the best amplified Bitcoin equity (MSTR).
• Core long-term KPI is growing Bitcoin per share, which has increased more than 4x from 46,000 sats in 2020 to 203,683 sats as of July 2026, with a 6% year-over-year increase and 5% Q2 2026 increase.

Balance Sheet & Capital Structure Updates

• Cash and USD reserves grew to $2.4 billion at end-Q2 2026 and $3.75 billion as of July 2026, providing 2.1 years of dividend and interest coverage, meeting the 2-3 year target range with a 1-year minimum coverage requirement.
• Net leverage is 5.4%, with 18.5x BTC collateral coverage against net debt of ~$3 billion; even in a 95% Bitcoin price crash to $4,000 per Bitcoin, convertible debt remains fully covered at 1.0x.
• Shifted from one-way capital issuance (only issuing new capital to buy Bitcoin) to active capital management, with flexibility to buy/sell equity, preferred credit, debt, and Bitcoin to optimize the balance sheet and support STRC.

Digital Credit (STRC/Stretch) Initiatives

• Five pillars implemented to return STRC to its target par price of $99-$100 (it traded at ~$89.50 as of the call): maintain a strong USD reserve, sell Bitcoin to fund reserves/dividends/repurchases, authorize up to $1 billion in STRC repurchases, authorize up to $1 billion in MSTR repurchases, and manage dividends to support STRC price.
• STRC is now the top holding across the three largest publicly traded preferred credit index funds (BlackRock PFF, Virtus InfraCap PFFA, VanEck PFXF), reflecting strong institutional demand; the product offers a 13.6% effective yield and 21.6% tax equivalent yield, higher than competing junk bonds, bank preferreds, and private credit.
• Management will not issue STRC below par, and is prioritizing returning the product to par before resuming large-scale new issuance, with a target of 70 trading days (around September 8, 2026) to achieve par, matching the timeline after its IPO.

Market & Ecosystem Developments

• Bitcoin is currently trading at a slight premium to its 200-week moving average, with sentiment near a cycle low, facing five headwinds: AI capital buildout sucking up capital, global trade tensions, Gulf War macro disruption, restrictive Fed monetary policy, and delayed regulatory clarity.
• Positive long-term developments: Bitcoin market dominance (vs. other crypto tokens) has grown 20% since 2021 to over two-thirds of total crypto market cap, confirming its position as the dominant digital asset. Global bank adoption of Bitcoin has grown from 9% to 32% per the company's new Bitcoin Banking Adoption Index.
• Co-founded the Bitcoin Security Consortium with major institutional Bitcoin market participants to coordinate on network security (including addressing potential quantum computing threats) and support long-term network stability, to build confidence for institutional and regulatory adoption.

• The company maintains its long-term target of doubling Bitcoin per share every seven years via digital credit growth.
• Management expects to return STRC to its $99-$100 par target within ~70 trading days from its May 2028 dip below par, targeting completion around September 8, 2026, and has ample capital (the full $1 billion repurchase authorization plus additional balance sheet capacity) to achieve this goal.
• Going forward, the company will actively manage the mix of USD and BTC reserves, with a more counter-cyclical approach: leaning toward USD reserves when Bitcoin trades at a large premium to its 200-week moving average, and leaning toward accumulating Bitcoin when Bitcoin trades at a discount or small premium. It will no longer automatically allocate 100% of new capital from credit/equity issuance to Bitcoin purchases.
• The company will progressively reduce the number of outstanding credit instruments over time, consolidating liquidity into the flagship STRC product rather than issuing new credit instruments; new instrument innovation will be left to third parties building products on top of STRC.
• There is no set timeline for liability management of outstanding convertible debt; all options (equitization, repayment, refinancing) remain open, and management will act opportunistically based on market conditions, with the next convertible maturity in September 2027.

Strategy is a Bitcoin-focused company with two core reporting segments: Bitcoin holdings and digital credit. 1. Bitcoin Holdings: As of end-Q2 2026, Strategy held 846,000 Bitcoin, with an average purchase price of ~$75,000 per Bitcoin. Total Bitcoin reserve market value was ~$55 billion at current prices, representing ~93.8% of total company reserves (which totaled ~$58.5 billion as of July 27, 2026). Year-to-date 2026, net Bitcoin holdings increased by 30,000 Bitcoin, a 25% increase from the start of the year, with 174,895 Bitcoin purchased and only 3,620 Bitcoin sold year-to-date. 2. Digital Credit (led by flagship product STRC/Stretch): Total notional value of outstanding digital credit reached $10.5 billion at end-Q2 2026, a 250% increase from the start of 2026. Year-to-date 2026, the company issued $7.52 billion of new digital credit, representing 44% of total $17 billion capital issued year-to-date, up from 28% in 2025. Institutional holdings of STRC tripled over the past three months to $3.1 billion, accounting for 29% of total outstanding STRC, up from 22% in mid-March 2026. Other legacy credit instruments (including convertible debt, senior bonds, and other preferred shares) totaled $6.7 billion of long-term debt at end-Q2 2026, down from $8.2 billion at end-Q1 2026 following $1.5 billion of convertible debt repurchased at an 8% discount in Q2.

• Bitcoin price volatility creates mark-to-market gains/losses on the company's balance sheet: Q2 2026 recorded an $8.3 billion unrealized fair value loss due to a quarter-end Bitcoin price of $58,700, though a subsequent price recovery to $65,000 created an estimated $5.2 billion fair value gain by late July 2026.
• Current weak market sentiment for Bitcoin and digital credit has led to STRC trading at a ~10.5% discount to par, creating pressure on the company to deploy capital to repurchase shares to restore par, and requires active balance sheet management.
• Second/third-order leverage in the STRC market created unexpected volatility: when STRC price declined in June 2026, broker-dealers reduced advance ratios for leveraged positions, creating a reflexive liquidation cycle that pushed STRC as low as $70, highlighting risks from layered leverage in the novel digital credit market.
• Regulatory uncertainty around digital assets and delayed regulatory clarity for Bitcoin remains a headwind for market adoption.
• Restrictive Federal Reserve monetary policy and competing capital demand from large-scale AI data center buildouts have created headwinds for Bitcoin price performance and capital raising for digital assets.
• Macro headwinds including global trade tensions and the Gulf War disruption have weighed on Bitcoin market sentiment.

Q: Would the company consider borrowing against Bitcoin from a bank to build USD reserves and get STRC back to par? / A: Management says bank borrowing against Bitcoin is not currently on the table. The market for large-scale Bitcoin-backed bank loans is not large or attractively priced, and carries counterparty risk that would create uncertainty for investors. The company prefers to build USD reserves via equity issuance at a premium to NAV, which is a simpler, lower-risk approach, and plans to progressively reduce existing debt over time rather than adding new margin debt that could create negative short seller narratives.

Q: Will the company continue launching new credit/equity instruments, and would it consider selling volatility on the derivatives layer as a new tool? / A: Management will not launch new instruments, and will instead consolidate existing credit instruments down to focus all liquidity on the flagship STRC product. New product innovation would fragment liquidity from STRC, which is already a trillion-dollar scale opportunity. The company will also not sell volatility on the derivatives layer: doing so would fragment liquidity, complicate the tax efficiency of the business, create counterparty risk, and compete with third-party derivatives traders who already provide this service, which conflicts with the company's long-term goal of building trust and a large, liquid ecosystem for MSTR and STRC.

Q: What is the ideal amplification/leverage target, and will the company shift to a more counter-cyclical approach to capital issuance? / A: Management confirms it will adopt a more counter-cyclical approach, referencing the 200-week moving average as a key metric it now tracks publicly. It will hold a mix of USD and BTC rather than 100% BTC, with USD allocation increasing when Bitcoin trades at a large premium to the 200-week moving average and BTC accumulation increasing when prices are low. The company is also open to reducing STRC dividend rates in bull markets to balance credit stability and long-term sustainable growth, prioritizing long-term Bitcoin accumulation over short-term aggressive buying.

Q: What assumptions from past cycles were proven wrong, and how will on-chain tokenization create new opportunities? / A: The key lesson from prior bear markets was the importance of USD reserves and avoiding restrictive covenants/margin loans on Bitcoin, which has been addressed with the current capital structure. Management also learned that retail and institutional credit investors value USD reserves more than Bitcoin collateral coverage, which changed the company's capital management approach. For tokenization, the company sees large opportunities: tokenized STRC can be transformed by DeFi participants into stable yield tokens in any fiat currency, which addresses the unmet need for high-yield stablecoin-like instruments. The company is well positioned to benefit from growth in tokenized securities, though it does not see on-chain activity as material enough today to change its core near-term focus.