Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Strategy (NASDAQ:MSTR) remains the largest corporate holder of Bitcoin globally, with 553,555 Bitcoins valued at $52 billion.
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The company raised $6.6 billion through an ATM equity offering and $2 billion through convertible notes in Q1 2025.
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Strategy (NASDAQ:MSTR) has consistently added to its Bitcoin holdings every quarter since August 2020, demonstrating strong commitment.
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The company’s stock has outperformed major indices and asset classes, appreciating 2,887% since adopting its Bitcoin strategy.
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Strategy (NASDAQ:MSTR) has introduced innovative securities like Strike and Strife, providing new investment opportunities and capital sources.
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Total software revenues declined by 3.6% year over year, reflecting challenges in transitioning from on-prem to cloud services.
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The company reported a $5.9 billion unrealized fair market value loss due to Bitcoin price decline in Q1 2025.
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High volatility in Bitcoin prices leads to significant swings in earnings, impacting financial stability.
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The market treats Strategy (NASDAQ:MSTR)’s credit instruments as distressed debt, resulting in wide credit spreads.
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The company’s aggressive capital raising strategy may lead to potential dilution concerns among shareholders.
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: Andrew Kang, CFO: The fair value accounting provides more transparency and accurately reflects the true value of our Bitcoin holdings. Despite the volatility, we believe the transparency is vital and expect more corporate adopters of Bitcoin as a treasury asset. While we prefer positive swings, we are unfazed by downswings, confident that Bitcoin’s long-term price trend will be upward, reflecting positively in our earnings.
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: Michael Saylor, Executive Chairman: The adoption of the Bitcoin standard by more companies is beneficial, legitimizing Bitcoin and attracting more capital. As more companies join, it stabilizes and drives up Bitcoin’s price. Each market needs its own BTC companies, and as more join, it accelerates the transition to the Bitcoin standard, pressuring others to join.
Q: Can you update us on the pace of capital raises under the 4,242 plan and how you’re balancing equity and fixed income capital, considering the impact of dilution? A: Fong Li, CEO: We are confident in our capital raises, focusing on BTC yield, BTC per share, and BTC gain. Issuing equity at greater than one times MNA is accretive, not dilutive. Fixed income instruments are more accretive, but the market needs to mature. As MNAV rises, equity issuance becomes more like fixed income, and we aim to make the fixed income market more efficient.
