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Company: MicroStrategy (rebranded or called "Strategy" in the call) Fiscal Period: Q1 2025 (ended 2025-03-31)
Key Developments & Business Highlights
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Bitcoin Holdings & Capital Strategy:
- MicroStrategy remains the world's largest corporate holder of Bitcoin, holding 553,555 BTC ($52B value as of April 28, 2025).
- In the first four months of 2025, the company bought 106,085 BTC for $9.9B at an average price of ~$93,600 per BTC, accelerating its pace.
- All BTC holdings are unencumbered; MSTR now owns 2.6% of all BTC in existence.
- Major new capital-raising initiatives:
- $6.6B in net equity (ATM) raised Q1-Q2.
- $2B in a new convertible note.
- $1.4B through newly-listed perpetual preferred stocks, "Strike" (8% convertible) and "Strife" (10% fixed coupon).
- Ongoing innovation in fixed income securities, aim to enable the stock to outperform Bitcoin through "intelligent leverage."
- Since 2020, over $37.3B of capital has been raised, mainly through debt, equity, perpetual preferred, and operational cash flow.
- MSTR unveiled the "42.42" plan: a new target of raising $42B in equity and $42B in fixed income by 2027 (doubling their prior plan).
- 2025 focus: Raising more through fixed income; $57B of the new plan to go.
- The company currently maintains a disciplined leverage ratio of 20-30%.
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Regulatory & Macroeconomic Updates:
- Notable government actions: Trump administration announced the establishment of a strategic Bitcoin reserve, the first public recognition of BTC as a national reserve asset, and pro-Bitcoin regulatory stance fueling institutional interest and integration into US financial markets.
- The company believes this type of action will drive broader adoption among corporates and further legitimize BTC.
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Software Business Update:
- Q1 2025 software revenue: $111M (-3.6% YoY), as expected with an ongoing transition from on-prem to cloud.
- Cloud subscription revenue grew 62% YoY, now 33% of total revenues.
- Subscription billings up 38%.
- Cost of revenues rose 13% (primarily due to increased cloud hosting costs).
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BTC KPIs & Guidance:
- Achieved a 13.7% BTC yield YTD (target now raised to 25% for the year, previously 15%).
- Raised BTC dollar gain target to $15B (from $10B).
- CEO cited disciplined Bitcoin acquisitions as key to hitting/raising targets despite market volatility.
Q&A – Most Important Questions & Answers (with Quotes)
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On Fair Value Accounting and BTC Volatility in Earnings
- Question: "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?"
- Answer (CFO Andrew Kang): > "The fair value accounting, even with the swings, is far more transparent for our investors and more accurately reflects, the true value of our Bitcoin holdings versus the previous accounting rules... So how do we feel about the swings? We, of course, like the positive swings more than the negative swings, but the reality is that Bitcoin is volatile. So I think, you know, overall, I think we're unfazed by the downswings and believe over time, there will be more upswings."
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On Other Companies Adopting the MSTR Bitcoin Playbook & Sustaining Leadership
- Question: "What are your thoughts on the recent MSTR playbook adoptions from other companies, and how does the company plan to sustain its leading role?"
- Answer (Chairman Michael Saylor): > "I think it's a very virtuous cycle, and it's a mutually beneficial competition. The more companies that adopt the Bitcoin standard, the more legitimizing it is... There’s only $4.50 Bitcoin a day. And so as we’re all buying that Bitcoin, the price of Bitcoin is stabilized, supported, and then driven up... The more companies that join, the better it is for Bitcoin, the better it is for the companies in the space. And they're really going to ex accelerate the transition to the Bitcoin standard such that the companies that don't join will find themselves pressured to join over time."
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On Capital-Raising Pace, Mix, and Dilution ("42.42" Plan)
- Question: "Can you please update us on the pace of capital raises under the $42.42 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 $21B equity?"
- Answer (CEO Phong Le): > "Our BTC KPIs say we look at things on a BTC yield, BTC per share, BTC gain basis. Every single capital raise we've done via our ATM... has been accretive on a BTC yield and a BTC per share and a BTC gain basis. If we issue ATM or equity at greater than one times MNAV, all other things being equal, that's accretive, and it's not dilutive to shareholders. That said, if you look at our fixed income instruments, those are even more accretive... The ask and for all of us who are interested in Bitcoin is we need to develop and make that market for fixed income more efficient, and that's an opportunity for strategy, and that's an opportunity for Bitcoin."
Additional Updates, Risks & Opportunities Highlighted in the Call (Not Found in 8-Ks)
Macro Risks, Market Drivers & Forward-Looking Statements
- Tariffs / Trade: No direct mention of tariffs.
- Inflation & Economic Uncertainty:
- The company’s fundamental premise is that corporate BTC accumulation serves as a hedge against fiat currency debasement and macroeconomic/sociopolitical instability, but they did not specify new inflation trends this quarter.
- Major government initiatives (e.g., US Bitcoin reserve) seen as reducing regulatory/economic risk for further BTC adoption.
AI Infrastructure & Services
- No detailed discussion of AI infrastructure or service ROI provided in this specific call. References to strategy on "innovations in AI and BI" at upcoming company events, but no new financial/investment disclosures specific to AI this quarter.
Product Remarks & Company-Specific Services
- No new product launches or significant updates; ongoing focus on cloud migration in the legacy business and BTC as the primary asset/strategy.
- Software business remains secondary to treasury/asset strategy in management’s discussion.
Conclusion
MicroStrategy continues to be the highest-conviction, most innovative BTC treasury operator, pushing the envelope in capital stack innovation, risk management, and advocacy for BTC adoption. This quarter was marked by significant capital raising, launch of highly liquid innovative preferreds, and an increased pace of BTC accumulation, all while the company’s leadership sees further regulatory and institutional normalization of BTC unfolding.
Guidance: BTC yield and dollar gain targets were raised for 2025, reflecting high confidence in accretive deal-making and continued bull case for Bitcoin.
Core Risks: As ever, company fortunes are highly levered to BTC price and volatility, but management argues that portfolio construction and structure innovation largely mitigates the downside for equity and especially for new fixed income holders.
Final Management Principle: “Buy and hold BTC indefinitely, prioritize the MSTR common stock... Structure our company to outperform BTC.”
Quoted Q&A and business drivers provided as requested. For any further detail or full transcript analysis, please specify.
Fiscal Date Ending: 2025-03-31
