MSTR - NASDAQ

Hello, enveryone, and good evening. I am Shirish Jajodia, Corporate Treasurer and Head of Investor Relations at Strategy. I will be your moderator for Strategy's 2025 Second Quarter Earnings Webinar. Today marks a historic day for Strategy and all our investors. We believe this deserves an exciting brand-new format of our earnings call in line with our mission to digitally transform Investor Relations and be the most transparent company in the world. We will start the call with 60-minute presentation approximately. This time, we have shuffled the order of the presenters. Andrew Kang will begin first, followed by Michael Saylor and then Phong Le. This will be followed by a 30-minute interactive Q&A session with our 4 Wall Street equity analysts and 4 Bitcoin analysts. Before we proceed, I will read the safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans, guidance and prospects may constitute forward-looking statements, including, without limitation, our guidance with respect to 2025 operating income, net income, earnings per share, BTC Yield and BTC $ Gain and the hypothetical valuation models contained in this presentation. Actual results may differ materially from these forward-looking statements due to various important factors, including the risk factors discussed in our most recent quarterly report on Form 10-Q filed with the SEC on May 5, 2025, and our current report on Form 8-K filed with the SEC on July 7, 2025. And in the case of our guidance with respect to 2025 operating income, net income, earnings per share, BTC Yield and BTC $ Gain and the hypothetical valuation models contained in this presentation, each of which is based on assumed Bitcoin price at the end of the year, the risk that the price of Bitcoin as of such date may be substantially different than assumed target price. This could cause our actual results to vary substantially from such guidance and the hypothetical values generated by such models. So we assume no obligation to update these forward-looking statements, which speak only as of today. Also in this presentation, we refer to certain non-GAAP financial measures. Reconciliations are available in our earnings release and the appendix of this presentation, which was issued today and available on our website. With that, I will turn the call over to Andrew Kang, CFO of Strategy.

Thank you, Shirish. And I'd like to welcome everyone to today's webinar, and thank you for joining what I think will be one of the most important quarterly earnings calls in the history of our company. I'll start with some key highlights from Q2 and year-to-date. Through July 29, our Bitcoin holdings were 628,791, which now accounts for 3% of all Bitcoin ever to be in existence and positions us as the most dominant player in the Bitcoin Treasury Company space. Our market cap has eclipsed over $112 billion, making Strategy the 96th largest public company in the U.S. And as part of our expanding and innovative capital markets plan this year, so far, we've launched 4 listed preferred equity offerings, STRF, STRK, STRD and STRC, with STRC representing the largest IPO in the U.S. so far this year. And finally, we raised an impressive $18.3 billion in capital year-to-date, which already accounts for 81% of the total capital we raised in all of last year combined. And we accomplished that in just 7 months. So in addition to expanding the depth of Bitcoin-backed credit instruments to the market, we are raising capital more quickly and more efficiently than we have ever before. Now moving on to our EPS results. Q2 '25 stands out as a transformational quarter for Strategy driven by 2 major factors: the substantial appreciation in Bitcoin price between the end of Q1 and Q2 in conjunction with the adoption of FASB's fair value accounting rule at the beginning of this year. We achieved a record $14 billion in GAAP operating income and $10 billion in net income, reflecting a fully diluted EPS of $32.60 per share for the quarter, the highest in the company's history and what may be among the highest of all S&P 500 companies this quarter. Our results for the first half reflect $8.1 billion in GAAP operating income, $5.7 billion in net income and an EPS of $19.43 per share, also a record high for the company. This sets us up for continued momentum through the remaining second half of the year. Here, we introduced an important metric, bitcoin per share or BPS. This measures the accretion of Bitcoin on a per share basis by calculating the ratio between the company's Bitcoin holdings and its assumed diluted shares outstanding. We are presenting bitcoin per share using Satoshis, where 100 million Satoshis equal 1 Bitcoin. In 2021, we achieved a Bitcoin per share of $26,752. The trend in '22 and '23 reflected the then market conditions. However, in '24, we saw a massive increase in our Bitcoin per share of $67,730 on the strong price performance of Bitcoin. This year, the positive performance continues with a year-to-date bitcoin per share of $39,716 as of July 31, close to 60% of what we achieved last year with much of the second half remaining for further execution. In short, our BPS performance shows how Bitcoin treasury model is consistently accumulating more Bitcoin per share, the highest of any Bitcoin Treasury Company directly and measurably value -- increasing value for our shareholders. Beginning in 2020, and over the last 4.5 years, we have increased our cumulative Bitcoin per share to 198,543 as of the end of July and positive growth around BTC Yield across those same years has consistently contributed to our Bitcoin per share outperformance. We have now achieved a BTC Yield of 25% year-to-date, meeting our initial full year target in the first 7 months of the year. Our BTC Gain year-to-date is 111,894 Bitcoin, fueled by a strong Q1 and Q2 through the IPOs of our credit instruments as well as through disciplined activation of our common stock ATM. In terms of BTC $ Gain, our treasury operations have generated $13.2 billion so far this year, closing in on our initial $15 billion full year target. Overall, these results reflect the real incremental value from our ability to strategically manage and maximize our treasury operations, showing strong momentum into the second half and supporting the increase in our full year targets that Phong will detail later in the call. Moving on to our balance sheet. We have added Bitcoin to our balance sheet in every single quarter since August 2020, and 100% of our Bitcoin remain fully unencumbered. We now hold over $74 billion of Bitcoin, which was purchased at a cost of $46 billion or just over $73,000 per bitcoin. Our attractive low-cost basis reflects the benefit of starting our acquisitions over 4.5 years ago, which makes us the most committed and consistent corporate holder of Bitcoin in the world. This slide highlights the increase in the value of our digital assets following the adoption of FASB's fair value accounting standard on January 1, 2025. Under fair value accounting, as of January 1, we recorded a onetime adjustment of $17.9 billion of our Bitcoin balance sheet and an offsetting $5.1 billion deferred tax liability, which increased our total stockholders' equity by $12.7 billion. As of June 30, the value of our total digital assets have grown to over $64 billion with a deferred tax liability of $5.9 billion. With our current long-term debt and added preferred equity, our total stockholders' equity stands at $47.5 billion. The change in accounting to fair value now better reflects our Bitcoin market value, improves balance sheet transparency while driving significant growth in shareholder equity. At the end of Q1, under the new FASB fair value accounting rules and due to the change in the price of Bitcoin between January 1 and March 31, we reported a Q1 unrealized loss of $5.9 billion. However, in Q2, we recognized a dramatic increase in the fair value of our Bitcoin holdings due to the increase of an additional $6.8 billion of Bitcoin to our balance sheet, along with the dramatic bitcoin price increase between the first and last day of the quarter, which drove the $14 billion unrealized fair value gain for Q2. Quarter-to-date, we have further increased the total fair value of our Bitcoin holdings to over $74 billion, having added $3.7 billion through capital markets proceeds and also through the change in Bitcoin price since the end of Q3. At current prices, we sit on approximately $6.2 billion in fair value gains so far this quarter, which will be finalized on the last day of Q3. Here, we show $8.2 billion in total notional debt across our convertible instruments with a market value of over $12.3 billion. All but 2 of the converts are in the money with a total weighted average maturity of 4.7 years, giving us flexibility to manage our long-term obligations. The earliest of the embedded call dates begin in December 2026, and we plan to be strategic in managing our outstanding convert complex. Our current preferred equity outstandings are $6.3 billion, all of which are perpetual and provide stable and long-term capital matched to our long-term strategic asset, Bitcoin. The combination of our large Bitcoin holdings and sizable equity base ensures that both our debt and preferred securities are backed by robust assets and are well fortified. Our $74 billion in Bitcoin holdings provide $60 billion in surplus balance against the $8 billion in convertible debt and preferred equity obligations and our $126 billion of enterprise value consists of $112 billion in equity on top of our debt and preferred stock. Our total annualized interest and dividend obligations today stand at $614 million, which consists of $35 million in interest expense on our converts or about 42 basis points weighted average cost. We have $459 million in dividend obligations against our cumulative preferred, STRF, C and K and an additional $120 million related to our noncumulative preferred stock, STRC. Here, we show that we have more than sufficient access to liquidity to manage our total annual interest and dividend obligations through our proven track record of capital raising activities. Our total annual obligations represent a mere 1.6% of total capital raised in the last 12 months and only 2.3% of total common equity raised in the last 12 months. There is also ample daily market liquidity to more than satisfy our annual obligations based on the current average daily trading volumes of our common stock. With $74 billion in Bitcoin holdings, we are 15x over collateralized against our current $5 billion in out-of-the-money converts. Our fortress Bitcoin balance sheet provides significant cushion to manage these maturities if needed. And after converting -- and after covering our out-of-the-money converts, our Bitcoin holdings at current prices are enough to cover approximately 120 years of our annual preferred dividend needs. So with that, I will now turn it over to Michael for an update on Bitcoin, our financial products as well as our BTC credit model.

Thank you, Andrew. And I want to thank everybody for being with me today. So I thought I'd start with a macro-overview of the Bitcoin universe. And the first thing that I'll note is we have a very supportive White House and that started with the establishment of the Bitcoin strategic reserve, but it continues across the board. Next, as you can see, we have 12 cabinet members in this administration that are all pro Bitcoin. A year ago, we had 1 cabinet member who was neutral and 11 that were indifferent or uninterested and certainly not supportive. So this is a major change in the political landscape. Yesterday, the White House released Crypto Policy Report. It's about 150 pages long. I did a scan. I'm sure some of you have done a scan. The takeaway is that this administration is going to be very enthusiastic and in support of the entire crypto industry and the Bitcoin ecosystem. And in particular, some of the things they're doing include work in the area of taxation to cure unfair tax treatments of digital assets and that includes relief or de minimis digital asset transfers like de minimis Bitcoin payments. And it also includes guidance that digital assets should not be included when calculating CAMT unrealized capital gains taxes or when calculating CAMT minimum taxes. And so we have the support of the administration on this, and that was made very precise in writing just yesterday, and this is an excerpt of it. I think this is just very positive for the entire crypto industry and very positive for Bitcoin. And of course, it's very positive for the hundreds of companies that are starting to put crypto assets on their balance sheet. Wall Street has embraced Bitcoin. We've now got 80 ETFs launched, $170 billion of value flowing into these ETFs. These continue to pick up steam and they're growing more powerful day by day. Public companies are capitalizing on Bitcoin. This is an extraordinary move. And of course, we're seeing these every day. There's a new announcement, whether it's coming from a pure Bitcoin company or whether it's coming from a hybrid or just a random new entrant. But we've now got 950,000 Bitcoin that have been acquired by 160 different listed companies. And we look at the trend. We were the first in 2020. There were 2 at the end of the year, then there were 33, 39, 43. There were 64 last year. And of course, as you look at this trend right now, 160 when we're not even to the end of 2025 is extraordinary. So we're in hyper growth or hyper adoption phase for Bitcoin as a treasury reserve asset. Companies are racing to get into the Bitcoin 100. You can see there's even competition to track the Bitcoin 100 right now. And generally, any given week, there are 20 or more companies that are acquiring more Bitcoin. Just a few minutes ago, Coinbase announced that they acquired more Bitcoin this quarter, thousands of Bitcoin. So I see very positive trends here. And each of these companies could, in theory, acquire just as much bitcoin or attempt to acquire just as much bitcoin and dollar value as we have acquired. Obviously, they won't get 3% of the Bitcoin supply, but you can imagine what happens when 100 companies are all competing to acquire as much Bitcoin as possible. The analysts are all starting to cover and track Bitcoin and they have outlooks for Bitcoin. So if you're going to cover the 160 Bitcoin companies -- companies that have Bitcoin in their balance sheet, you're going to have to form an opinion about Bitcoin. And so you can see that the average end of the year price forecast of an equity analyst covering MSTR is $168,000 and so keep that in mind, $168,000 by the end of the year, that's the consensus of the analyst community that tracks our stock right now. Technology investors are looking for the next great thing. And everybody, the consensus trade is AI. Everybody knows AI is the next thing. But now they're starting to realize that Bitcoin is also the next thing, and it's being lumped as a technology transformation and a digital disruption. This is really positive because this is going to draw lots of Magnificent 7 investors into our space. Financial regulators are embracing Bitcoin. You see a new positive Bitcoin announcement just about every other day now from all parts of the government. Just a few days ago, the SEC released a memo, allowing an in-kind creation and redemption of Bitcoin ETFs. This is a huge deal. This is going to accelerate the development of the industry. They also loosened restrictions on options trading of Bitcoin ETFs. Paul Atkins just released -- gave a speech and made a number of comments about the digital assets industry. It's clear that he's very supportive of innovation, very supportive of the crypto economy, very supportive of your right to self-custody and this is a welcome development from the SEC. Another welcome development is the guidance that came from William Pulte to Fannie Mae and Freddie Mac, where he said they should prepare their businesses to count cryptocurrency as an asset in the mortgage. This is going to accelerate the institutional adoption of Bitcoin as collateral in the banking industry. There could be no more legitimate driver of the collateralization of credit with Bitcoin than the U.S. Federal Housing Authority. Capitol Hill's embracing Bitcoin. There are 3 bills, one of them, the GENIUS Act has already been passed. CLARITY is coming in September and the Bitcoin Act allows for the government to acquire 1 million Bitcoin. These are picking up momentum. This is a positive development. U.S. states are also embracing Bitcoin. We've now got 3 strategic Bitcoin reserves, including 1 in Texas, just recently that was funded with $10 million. So this is a trend that's growing. International governments are enthusiastic about Bitcoin, and we're seeing this everywhere in the world with politicians in Ireland, in the U.K., in Pakistan, in UAE, in Ukraine, et cetera, all of them making pro Bitcoin moves. The crypto industry has coalesced around Bitcoin. There used to be some conflict 2, 3 years ago. I think the previous administration played the crypto industry against the Bitcoin industry. And now they've come together. And it's pretty clear that Bitcoin is viewed as the foundation of the entire crypto economy. And we see that as really, really constructive for the growth of the entire industry. Now I'd like to talk about our financial products and our business. As you can see here on this slide, our company Strategy sits between the crypto economy and the traditional finance economy. So the primary asset and the foundation of the crypto economy is Bitcoin, which is worth $2.3 trillion. And when I think about the crypto economy, I think about every country on Earth and every capitalist on Earth, 24/7, 365 acting rationally in whatever their economic interest is. That's being manifested on Saturday night, and that's creating extraordinary performance and extraordinary demand in the underlying collateral, which is BTC. However, most of the world is unable to access the crypto economy. And so what we're doing is refining and we're harnessing the power of the Bitcoin asset. And we're able to actually refine it into low volatility, low leverage, less risky financial products and then higher volatility, higher leverage financial products. So just like you might refine a barrel of crude oil into kerosene, which would be very, very pure and asphalt, which is not so much, we're basically providing a function that, say, an ETF cannot provide. You can see IBIT, the most famous example here in this chart. It basically wraps Bitcoin and it serves up a security flavor of raw Bitcoin to the investment community. We, on the other hand, are offering stepped-down elements, convertible bonds, convertible preferred stock, senior fixed stock, junior high yield, preferred stock and of course, this treasury preferred stock in the form of Stretch. We're offering those. And those, in essence, we're stripping and modifying the duration of the asset. And we're also stepping down the volatility of the asset, and we're actually extracting the yield from the asset, which is Bitcoin, and we're serving it to each of these fixed income investors. But the excess yield, excess volatility, excess performance that does not go in those fixed income instruments goes into the MSTR common stock. And then, of course, that feeds to the MSTR-based ETFs and the MSTR options. So all of these are different instruments. They're all targeted at a different type of investor. They're all -- some of them offer yield, some of them offer return. So let's delve into them a little bit closer. First, Strike, S-T-R-K. Strike is structured Bitcoin. So some people, they don't want high vol, high return Bitcoin. What they want is something with less downside, less risk, less volatility, more certainty. So how do I actually keep the growth but get some yield certainty, strip some of the risk. And the way to do it is with the convertible preferred stock. If we look at the spec sheet here, what you can see is that, in essence, at $100 a share of Strike offers about $40 worth of equity. So it's like -- at that level, it's a 40 delta -- 35 to 40 delta instrument. So you're getting partial upside on MSTR. You're getting a guaranteed 8% dividend and you're getting a liquidation preference and seniority in the capital structure. So less volatility, less downside, articulated yield that you can count on, but you can still keep some of the growth. What's the market universe for that product? Well, you have growth investors, right? The S&P 500, they've got 9% year-to-date performance, and they've got 1.3% yield. Well, Strike is 7.5% yield effectively, and it's 34% year-to-date performance. So maybe the S&P index buyer, may be a NASDAQ 100 index buyer. Between the 2 of them, there's about $55 trillion in that bucket. Then you've got commercial real estate, people that want some yield, but they also want some growth over time. That's another very large bucket, $30 trillion. Then you have hedge funds that give you downside protection, they may or may not give you performance. Oftentimes, they don't outperform the S&P, but they purport to be hedges and people like the idea of some structured investment, and that's what hedge funds do. And then another target audiences is Bitcoin investors. Maybe someone that doesn't want 55% vol, 55% performance, what they want is they want some guaranteed yield, some downside protection. But they still want to keep some of the upside of Bitcoin. And then that also goes for spot ETFs of Bitcoin. So you can see they're all different pools of capital. The idea of Strike is kind of simple. What if I could have most of the upside of Bitcoin, not so much of the downside and a guaranteed dividend while I'm waiting. And that's very compelling for a lot of people. The second product in our portfolio is Strife. Strife is long-duration senior credit. It's for income-focused investors. They want a premium yield, but they also want seniority and enhanced payment protection. So here's the term sheet. It's the most senior thing in our capital structure. It's 8x over collateralized. As of the date of the term sheet, it's got an 8.7% yield. There are a lot of investor protections. The dividends are cumulative. If we miss a dividend, there's an escalating penalty provision. And so if you're looking for the most senior form of long duration preferred dividend, this would be it. And of course, what's the target audience, the target market? Well, there's a $40 trillion capital market here, long-term treasuries, agencies, mortgage-backed securities, investment-grade corporate bonds, municipal bonds. And you can see Strife is yielding double. Basically, it's giving you 8.7% as opposed to 4% or 5%. Third product is Stride, long-duration, high-yield credit, okay? So if you're looking for the maximum high yield, and you want it for -- you want a long commitment, this is it. And you can see it's more junior in the capital structure, but it's still got a BTC rating of 5.1. 5 overcollateralization is more than any investment-grade bond we could find in the market. And it's more than mortgage-backed securities. It's more than junk, it's more than private credit. So actually, it's 5x overcollateralized is more than just about anything else we would be competing with. But the effective yield is 11.9%. So we've structured this so that it will always have a higher yield than Strife. And for those that understand Bitcoin and want the high yield and they want it for a long period of time, this is how you get it. So what's the addressable market? About $2 billion of high- yield corporate bonds, closed-end funds, preferred stock, ETFs, emerging market debt. And you can see, even though we're pretty well -- way overcollateralized versus this other stuff, we're actually also paying a higher yield, right? It's just a better instrument if that's what you're looking for. And then we've got Stretch. Our latest IPO, short duration high-yield credit, what I call, strong credit. It's for short duration investors, and that means they want to take 1 month of interest rate with risk, not 10 years, not 20 years, just a month of interest rate risk and they're seeking a stable value, but they want higher yield than a money market. And so we designed that for them. It's got a higher BTC rating than Strike or Stride because it comes senior in the capital structure, like 6x over overcollateralized. It's got an effective yield right now of 9.5%. It pays 9% at par. And who is it targeted at? Well, there's $18 trillion of bank accounts that yield 0 or 0.1% to 4% interest. There's $7.4 trillion in money markets that yield 4.2% interest. There's short-term treasuries, there's corporate commercial paper. What you see is that for the most part, all of the short duration credit is going to be close to SOFR. It's going to be about 420 basis points or less. And that's -- you won't really see a lot more than that. We're offering 950 basis points right now. And of course, at par, it would be 9%. And so you can see, the idea of this is a high-yield savings account that just pays twice your normal savings account, if you understand and if you believe in Bitcoin. The other appeal of this is there's just a lot of people that do believe in Bitcoin, but they need money for the next 30 days or 90 days or 6 months or a year or 2 years. if you're running a crypto company or a Bitcoin company and you've got a treasury, maybe you're going to put 20%, 30% of your treasury into cash because you need it to make payroll or do something 6 months out. You would want a stable instrument. But if you could find some Bitcoin-backed money market type thing, credit instrument that yielded double what you would get from a normal money market, this might be interesting to you. This, of course, is also interesting because it's monthly. And because it's monthly and it's variable with engineered to be stable. It's a sort of instrument that's interesting for individuals. It's interesting for retirees. It's interesting for a whole class of people that -- if you go down the street and you ask 100 people, would you like a 1-month instrument that actually pays you 500 basis points more than SOFR or a savings account that pays 9.5%, they would generally say yes. But if you ask them, would you like a 30-year bond or a 20-year bond that pays 9.5%, they might stop and think about it. Like when I ran our corporate treasury, I never wanted to invest in anything with a duration of more than 6 months. So there are a lot of people with a lot of money. They don't want to take interest rate risk. They don't want to take their -- they don't want a 10-year corporate bond or a 20-year bond. What they want is a savings account that gives them double what they can get from their bank, and we power that kind of credit with Bitcoin. So here, you can see how these things stack up. We have purposely engineered MSTR to be the most volatile security in our portfolio and engineered Stretch to be the least volatile thing in our portfolio and Strike is just after MSTR because it's got that 40% conversion rate. And then Strife and Stride are sort of in the middle. And we can go to the next slide. What we're doing here is we're building out a yield curve for BTC credit. And so what you can see here is that Stretch looks like a 1- month instrument, it's way pegged to the left. It's like a 1-month T-bill. Stride has a Macaulay Duration of about 8 to 9. Strife more like almost 11 and Stride getting closer to 14 . Now those instruments like Strife and Stride and Strike, they're perpetual. So as the credit of the company improves, as Bitcoin increases in price, as the BTC ratings go up, it's not unlikely that those durations will keep stretching, right, that at some point, if someone thinks that Strife should be yielding 5%, the duration will stretch 20 years. And so they're going to stretch out on the duration curve and that's a function of credit spreads and SOFR and Bitcoin. Stretch, on the other hand, will always be pegged at 1 month. And then what's the opportunity? The opportunity is between 1 year and 10 years. So we're in a position to issue a perpetual preferred instrument, that's a 1-year credit instrument or 3-year or 5-year or 7-year or 10-year and it would be based on Stretch, the Stretch rate, and it would be precisely exactly 7 years, rolling forward 1 month, just clicking forward. So it would always be 7 years out, it would always be 36 months out. And what's the opportunity for that? Well, there's $30 trillion of medium duration corporate credit, right, out there. So $30 trillion of capital, that's the opportunity. And that means we're in a position to build a perpetual yield curve 1 month, 1 year, 3 years, 5 years, 7 years, 10 years, and then perpetual going out 15 to 20 years or longer. And what you'll also notice from this chart is that at all parts on this duration curve, we've got higher yield, right? So we're offering higher yield on the short end of the curve. We're offering higher yield in the middle, and we're offering higher yield on the end. That means our credit is stronger, right, longer duration, higher yield. What you can see here is that we've also created a much stronger credit from a liquidity point of view. Stride, Strife and Strike, they're somewhere between 50 and 100x as liquid as the typical preferred stock. And that's extraordinary, right? When you're trading $30 million to $50 million a day and the typical preferred stock is trading $400,000 a day right? That's amazing. But now if you look at Stretch, Stretch is up in the hundreds of millions of dollars a day. It traded quite extraordinary amount of volume today and yesterday. And so we believe we've created a breakthrough instrument by combining -- by creating a perpetual preferred by not including calls and by not crippling the instruments, we created extraordinary new instruments with Stride, Strike, Strife and with Stretch, when we made a variable instrument, we did something no one's ever done. As far as we can see, no one's ever issued a truly variable monthly dividend preferred stock. The floaters that you've heard of, they have a fixed credit spread and they float on SOFR. And the others are fixed. We actually created a variable credit spread monthly stock, and we did it with AI. In fact, all 4 of these instruments we did with AI, right? The real key to the outperformance of them is we use digital intelligence, and we built them with digital capital. And we're the first company that ever -- was ever able to create a new digital security with digital intelligence based on digital capital. And that means that, yes, they're going to have superior yield and they're going to have superior liquidity. There are also -- they have superior collateral. They're overcollateralized. And you can see here, the worst thing in our portfolio is a 5x collateralization. Well, that's better than the best thing in most other credit portfolios. You won't find very many credit instruments that are 5x overcollateralized. And of course, you can see ours range from 5 to 9. And this is a big advantage we have as well. And then if we look at the overall market, we're competing against here, ETFs. And you can see, you've got net assets that are in the many, many billions, but the yield handles are 6 to 7 and we're offering 7, 9, 12, 10 and of course, we don't charge any fees. We have higher liquidity. And right now, you can see we have long durations, if you want duration and shorter duration if you want that. And then we've got that opportunity in the middle. Here's another universe of comparable assets. And what you can see here is that some things have liquidity, but they're under-collateralized like mortgage-backed securities investment-grade bonds and junk and preferred, they're all collateralized less than 2.5 to 1. And some don't have much liquidity like junk bonds and preferreds, and what we've got is a nice combination of high collateral, long duration, high-yield, large liquidity. So that takes us to MSTR. What is MSTR? It's amplified Bitcoin, right? If you want more bitcoin, if you want 2x Bitcoin or 3x or 4x the return and 4x the volatility of Bitcoin, you need a Bitcoin-backed equity. And we're aiming this for Magnificent 7 investors that they want -- they believe in the digital transformation of capital, right? We aim to be the Amazon of capital markets, right, completely disrupt the business model. And you can see it in our metrics, where we're running 101% annualized performance 5 years in a row, right? In 10 days, it will be 5 years. So doubling every year for 5 years, it's hard to say that's a fluke. And here's another illustration of amplified Bitcoin. You can see bonds are underperforming, real estate is at 6%, gold is at 10% and S&P is the cost of capital of 14%. The MAG7 doubles that. Bitcoin doubles that, we double Bitcoin, right? And you can see in the last year, it's the same exact thing, right, even more so. So I want to explain how we amplify Bitcoin, okay? So we start with 199,000 Satoshis a share. And if we have no leverage, if we have no credit strategy, we couldn't issue credit, then 10 years from now, we've got 199,000 Satoshis a share. That's like an ETF. That's a BTC factor of 1. But if we issue preferred that's equal to 10% of our Bitcoin assets, that's 10% leverage, it turns out that we have 267,000 Satoshis a share at the end of the period because we're not diluting the common stock as rapidly as we're building the Bitcoin. And if we go to 20% leverage, you see you end up with 376,000 Satoshis a share. And now let's go to 30% leverage. So you can see at 30% leverage, we would have 555,000 Satoshis per share. The green bars you see, that is the work that the treasury operation is doing. When people wonder what's the value added of a Bitcoin Treasury Company, it's the ability to create the green bar over the orange bar, and that's a 2.8 BTC factor. That means that -- what does it mean? It means, in essence, you would think that the floor for mNAV for a company that's got this sort of performance is 2.8, right? It's not the mNAV, but it's at least the floor. The mNAV of the company should be higher than 2.8. Now let's delve a little bit deeper into this idea. So I'm going to show you what happens as you increase the leverage and a Bitcoin Treasury Company like ours. You see if we have 30% leverage and a Bitcoin appreciates at 30% ARR over the time period, you end up with an amplification of 2.8. You're getting 2.8 the Bitcoin performance, probably 2.8 the Bitcoin volatility, right? And you can see here, as Bitcoin grows faster, the amplification increases. If we hold the leverage constant the Bitcoin grows at 50%, you're a 4.7 lever. And you can also see that if you hold the growth rate of Bitcoin constant but increase the leverage like we're growing Bitcoin at 30% a year, but we go to 50% leverage, now we're 7.8 amplified, a BTC factor of nearly 8. You're getting 8x the performance of Bitcoin. In the extreme, if you go to 50% leverage and Bitcoin goes on a tear and grows 50% a year, you're getting 22x performance on the equity versus just holding the ETF. Let's take a different slice of this. If I have Bitcoin growing at 30% a year and my credit improves or the interest rates fall, if SOFR falls to 100 basis points and we're able to reduce our interest -- reduce our dividend rate from 10% to 6%, you can see the amplification goes from 2.6 to 3. And you can see that as the credit improves of the company, the amplification increases. And then if we consider the next slide. when you actually combine leverage with credit, if you actually get to 50% leverage and you get -- and the interest rates fall to 5% or if your credit spreads compress to 5%, this equity is providing 9.9x Bitcoin. So the BTC factor goes almost to 10. And so you can see the blue zone is where you're 2 to 4x Bitcoin and the green zone is just 4 to 20x, it's screaming. So what is the universe of assets that would be interested in MSTR? Well, it's the S&P 500, it's NASDAQ. It's the MAG7 investors. It's Bitcoin investors, and as you can see, MSTR is outperforming all of those competitors right now. And so if what you want is the Amazon of digital capital, then that's Strategy. Now the question in your mind is can you actually go to 30% leverage or 40% or 50% leverage. So let's look at the credit model. So here we go. This is the existing capital structure, assuming the 40 vol and assuming 0% Bitcoin return. So this is a skeptical outlook for Bitcoin. It's going up 0% forever, and it's going to stay volatile. And what this shows you is that the theoretical credit spread for all of the convertible bonds is investment grade, right? And the credit of the preferreds looks to be mezzanine with a slight high-yield one. Now you can see there are spread premiums across the board here. So even if you're a skeptic and you think Bitcoin is going to 0 or going up 0 forever, and it's volatile, you still got massive spread premiums. These are all underpriced by the market. The risk is misunderstood. Next. So here, you see what happens if the volatility comes from 40 to 35 and all of a sudden, all of the preferreds become mezzanine quality and credit -- the risk just drops away from the bonds. We go to 30. At 30 vol, you see pretty much stripped all the risk off the bonds, and you've even got investment-grade credit at the Strife level even assuming a skeptical view of the outlook of Bitcoin. Now let's assume you're not a skeptic. What if you think Bitcoin is as good as the S&P? If Bitcoin goes up 10% a year, even if it stays volatile at 40 vol, every one of these instruments is investment grade, or investment-grade equivalent by our BTC model. And if you think that Bitcoin is going up 20% a year, you can see the risk just drops away, and now you've got credit spreads 0 basis points, 5, 8, 9, 14 basis points. So you can see anybody in the world running fixed income that wants like fixed income that has a positive view toward Bitcoin looking at this model, will see that these are all really compelling instruments. Now what happens if you're a maximalist. If you're a maximalist, you can see the BTC risk drops the basis points, the credit spreads go to nothing. The spread premiums blow out and is the world got a lot of maximalists? Yes, there's a lot of people that believe in Bitcoin, they're running fixed income funds, and they have treasuries or how about people that run Bitcoin companies that have treasuries. So just because you believe Bitcoin is going to go up forever, it doesn't mean that you can put 100% of your corporate treasury in it for the next 4 weeks. So we've got a solution to people that are Bitcoin believers, which is pretty compelling right now. Now we've done a pro forma. What happens if we actually equitize all the convertible bonds? So we convert all the convertible bonds to equity, and now we've just got $6 billion of preferred equity. This isn't liability. It's never coming due. We're never paying back the $6.3 billion. So it's equity as opposed to debt, and yet, it's the best form of leverage, right? It's all the benefits of debt leverage, but none of the liabilities of debt leverage. So we get the leverage of $6 billion in preferreds. You can see the BTC rating of these things goes through the roof. Strife goes to 70, Stretch goes to 20. Strike goes to 15, Stride goes to 12. The BTC risk falls to single double digits, 3 of the 4 are investment-grade credit. One of them is an extremely high-quality mezzanine credit and that is assuming, as you can see that you're a skeptic, and you think Bitcoin is not going to appreciate a single dollar forever, and it's going to stay volatile. Now let's look at another model? What if you're an investor or a trader in this case, you think Bitcoin is going up 10% a year. Now you can see all these instruments are investment grade. Like good, high-quality investment grade, 0 to 15 -- or 0 to 17 basis points. Now let's do another model. What if we actually went to 30% leverage. What if we issued another like 15 -- actually 16 to 17, call it, $16 billion to $17 billion worth of preferreds, and we have $22 billion of preferred outstanding against $75 billion in Bitcoin. Well, now you're looking at an overall BTC rating at 3.3%, a leverage of 30% and even with Bitcoin is volatile, you can see that Strife and Stretch are both investment grade and Strike and Stride are pretty high quality, pretty decent quality mezzanine grade even with high volatility. Now what happens if I go to 50%? You can imagine maybe not tomorrow or in a year, but over time, Bitcoin's volatility will probably move off of 40% to 30%. The 30-day trailing volatility of Bitcoin is less than 30% right now. And so at a 30% BTC vol and a 10% BTC outlook, 3 of these 4 instruments are investment grade. Stride is decent grade mezzanine. And so I remind you what happens when you go to 50% leverage. You're looking at BTC factors that go from 4 to 20 or more. So can we actually generate 2, 3, 4, 5, 6x Bitcoin performance with intelligent leverage? Yes, we can. We just have to be thoughtful about our capital structure, and we got to adjust to evolving Bitcoin volatility. Now with that, I want to pass the floor over to Phong, who's going to talk about our capital plan moving forward.

Thank you, Michael. I am excited to talk about 4 things today: one, our capital plan; two, I'll go through our guidance for 2025. Three, I'll talk about comparables to MSTR and using that comparables, four, I'll talk through how you should think about valuing MSTR going forward. I'll start with our capital plan. As Mike mentioned, our goal is to take Bitcoin, to wrap it in Strategy securities and provide it to the largest possible capital base in the world, to folks who are interested in equities, folks who are interested in debt, the largest addressable market and do it with premium returns and premium yields. And so to do so, a few things I'll point out about this slide here. One is our converts represent a fairly small addressable market of $500 billion, compared to our preferreds, which represent markets of $90 trillion, $40 trillion, $2 trillion, $30 trillion. And so if you think about how we should address our capital structure going forward, I want to share what the midterm looks like. Mike talked about what would our BTC ratings in our credit profile, look, if we didn't have convertible bonds in our structure. And that's our plan going forward. in about 3 years, we'll be able to equitize and retire some of our convertible bonds. And what remains at the top of our capital structure, our Strife and Stretch, which we plan to have a BTC rating of 10x plus over time. And that means that there'll be investment-grade equivalents. Strike will have a BTC rating of 6x-plus, which means there's a mezzanine equivalent and Stride, a BTC rating at 3x plus, which means it's a high-yield equivalent. And if you think about it, we'll have a preferred structure, a stack of preferreds starting with 4 today. You could see us having more in the future. And that will sit on top of our Bitcoin, which continues to be unencumbered. And our objective is to have encumbered Bitcoin, currently $74 billion and MSTR, which is the base of our capital structure, our equity, which today is at $112 billion. Our objective is to be the largest treasury company in the world, not just the largest Bitcoin Treasury Company in the world. If you take our Bitcoin holdings and compare it to cash and short-term investments of companies in the S&P 500, we are currently #5 today. I could see us being in a place by the end of the year or in the next year or so, where we're #2 and we pass the Magnificent 7 Microsoft, Google and Amazon, great companies. And I'd see us be in a place in 3 to 5 years, where we could surpass Berkshire Hathaway's $348 billion of capital, and thus having the largest capital base in the world based on Bitcoin. So how are we going to do that? We're going to do that primarily through tapping the preferred markets. You'll see here in the last year, we were able to add $22.6 billion in capital to our capital structure. Year-to-date, 7 months through, we're near close to that $22.6 billion, and you'll see a lot of that has been done through preferred equity, right? Four IPOs in the first 7 months of the year have led to about $5.6 billion of capital added. And so why are we optimistic that preferreds, which have historically been a sleepy underutilized, under-invested market can become the base of our capital structure going forward and our growth going forward? It's really on the back of the success of Stretch. Stretch last week was the largest IPO in the U.S. markets in this entire year. And I'm not talking about just IPOs of preferred securities, I'm talking about all IPOs. We raised more than fairly well-known companies like CoreWeave, SailPoint Circle, which is another digital assets company raised more than we did with Stride. So we're starting to see a shift of understanding of what a preferred market can look like, and we're seeing that shift because we're offering what the market demands, right? High yield, highly over-collateralized short-term debt. And so we think this is going to lead to success of opening up the preferred market, but also allowing us to use preferreds on a go-forward basis to raise more capital. Another extraordinary evolution from last week or discovery from last week is the retail interest in preferreds. So we went from raising about $153 million and 15% in our previous preferred offering Stride to increasing that retail adoption by 3.7x, $570 million, 23% of the total capital that was raised and stretched was retail. That's thanks to our partners, Morgan Stanley, Fidelity and others who were part of that raising. And so we're seeing demand for a product that we haven't seen before, meaning this is a retail-focused product, but also there's institutionals that will be interested in it. So our fourth time over, fourth time in into the preferred market, we think will unlock something that's going to be able to help us with our capital structure. And how does this look over time with our convertible bonds? You'll see here that through the course of 2029, taking the earliest allowable call date, we should be able to let these equitize over time or we'll be able to call them over time also. So what's our capital plan and credit strategy on a go-forward basis? There's really 4 pieces to this. One is we want to make sure that we maintain what we think are reasonable collateral coverage for our preferreds. So if you look at Strife and Stretch, that means 10x overcollateralized, Strike and Stride 6x and 3x, respectively. But it doesn't mean that we can't increase the leverage that we have today, as long as we're able to responsibly and thoughtfully address our capital structure. The second, and I talked about this, we currently intend to reduce the overall exposure to senior convertible debt outstanding over time. It's a much smaller addressable market and it's a more illiquid market. Retail investors cannot partake in convertible bonds and the pricing is less favorable to us. There's larger spread premiums. Our preferreds will remain perpetual over time. It's important for us to preserve flexibility and also minimize default risk that we have credit instruments that we don't have to return. We don't have to pay off in 2, 3, 4 years. And so we think preferreds are superior. And finally, our goal is to be leading issuer of Bitcoin-backed credit. We're going to do it in a responsible way. We're going to do it in a clear way, and we're going to do it in a very transparent way. And what we've learned over the last 5 years of having used most of the credit instruments out there, we were from margin loans to secured loans to convertible loans, now to preferred. We think we found what is most responsible. And I think we think we've also built a robust market for this. So let's talk about guidance. This is a first for the company. We're going to provide BTC guidance, which we have done in the past. But because of the changes in FASB rules and our ability to partake in fair value accounting for Bitcoin, we're able to now also provide GAAP guidance for 2025. I'll start with our BTC guidance here, and we start with an assumption of BTC price because it drives our ability to calculate what we think our BTC and our GAAP guidance is. And you saw earlier that the consensus is $167,000 by the end of the year for equity analysts that cover Strategy. And so we thought we'd be conservative and start with $150,000. It's a BTC price as of the end of 2025. And so when you feed that in, it drives a BTC yield percentage and BTC dollar gain at 30% and $20 billion. That is our guidance for end of year 2025, and that's building off of us starting at 25% through year-to-date and about $13.2 billion in BTC dollar gain. You might look at the 30% in the $20 billion, you might say, hey, that's pretty conservative. Shouldn't it be higher? There's a couple of things to think about. First, we started the year with a BTC Yield percentage target of 15%. So we're doubling that number 7 months into the year. And we started with a BTC $ Gain target of $10 billion, and we're doubling that 7 months in the year. I think for any company that's able to double their targets throughout the course of the year, you would consider that success. The other piece is and I'll talk about this a little bit later, as we think about ways to generate BTC Yield percentage and BTC $ Gain, there are equity and credit instruments that we can issue. The equity instrument that we issue is MSTR. And I think you've seen with some of the models that Mike went through and some things I'll share later, we think MSTR is undervalued. And so we won't be using the equity ATM as much as we have in the past, and it will be driven very programmatically based on the multiple to NAV, and I'll share that in a little bit. Earnings guidance. So this is our GAAP guidance for 2025. You'll see through the first half of the year, we have achieved $8.1 billion in operating income. Our guidance based on a $150,000 Bitcoin price is $34 billion of operating income by the end of the year. For net income through the first half of the year, we're at $5.7 billion. We think we can increase that more than 4x, $24 billion by the end of the year. And with an earnings per share of $21.60, we think we can achieve an earnings per share of $80 by the end of the year. Some of you might be thinking, are those big numbers? Yes, they are big numbers. How are they relative to the rest of the market? I'll share that in a little bit. So our equity guidance. I talked about the fact that we think MSTR is undervalued and in some cases perhaps significantly undervalued. And even though issuing equity anywhere above 1.0x mNAV is accretive to Bitcoin Yield and Bitcoin Gain. We will, on a go-forward basis, be more disciplined about how we issue our MicroStrategy ATM. And here, I want to provide guidelines to create more transparency with our shareholders. So you don't have to guess when a seller is going to tap the ATM. You'll know when we're going to utilize the ATM on a go-forward basis. So first of all, below 1.0x mNAV, we'll consider issuing credit to actually repurchase shares of MicroStrategy, means we're trading below net asset value. And so it would make sense to be accretive to our shareholder base if we were to issue credit and buyback MSTR. The borrower setting for issuing the ATM on a go-forward basis is 2.5x mNAV. And so that means that if you see our mNAV below 2.5x, you would expect we would not issue our MSTR ATM and issue more equity for the purposes of buying Bitcoin. We would issue equity below 2.5x mNAV to pay interest on our debt obligations, our convertible notes and also to fund preferred equity dividends. As you saw from Andrew earlier, the amounts that we would have to issue compared to our asset base, compared to amounts we've issued in the past and compared to our daily volume are pretty small. When we get to 2.5x mNAV and up to 4x mNAV, we will opportunistically issue MicroStrategy equity to acquire Bitcoin. And to give you a sense, 2.5x mNAV to 4x mNAV, that's about $600 to $1,000 of MSTR price. That would be the implied price. When we get above 4x mNAV above $1,000, which is our view, the minimum that our equity should really be traded at, we'll start to actively and more aggressively issue MicroStrategy to acquire Bitcoin. So hopefully, that provides some more transparency on our equity guidance. I also want to issue some more Stretch credit guidance and clarify and provide more details into what we talked about last week when we launched Stretch. And hopefully, this will also provide more transparency and take some of the guesswork out of how we're going to handle Stretch. So at the end of every month, we will issue guidance or we'll propose a rate structure for the next month. And so what we'll do is at the end of the month, hypothetically, let's say, August 31. If the 5-day VWAP is less than $95 for Stretch, we'll recommend to our Board and our pricing committee a 50 basis points or more rate increase. If the 5-day VWAP is between $95 and $99, we'll recommend a 25 basis point rate increase. And if we're trading within our target price range, $99 to $101, we won't take any action unless the Fed has changed the overnight rate on SOFR to -- and then we may change our rate accordingly. And if we're trading above $101 then at the end of the month, we'll recommend a rate decrease or we'll issue a SNAP follow-on offering. So this is more clarity on how we think about our credit. So let's have some fun and let's talk about comparables. And how do you think about our GAAP net income? How do you think about our GAAP EPS compared to other companies in the S&P 500 universe. So let's start with our operating income, right? Our GAAP operating income target and guidance for the end of the year is $34 billion. That would make us the #9 company in the U.S. in terms of operating income, bigger than household names like Walmart or AT&T or Pfizer, not quite as big yet some companies that are very well known in the MAG7, Meta, Amazon, NVIDIA, and Microsoft. Now what's interesting here is although we're the #9 operating income company, the market cap that we have is #96. So all of the companies that I just mentioned that we have more operating income than Walmart, AT&T, Comcast, we actually have a smaller valuation then. And if you look at the market caps of companies above us, their multiples, 10, 20, 30, 40x bigger than us. Now let's look at net income. Similarly ranked against the S&P 500, we would be the #13 company in terms of net income. And in terms of market cap, again, 96. Let's look at the P/E multiple of the S&P 500 universe. And this is fairly staggering when you look at these numbers. We have a P/E multiple of 4.7x. There are only 5 companies in the S&P 500 universe that have a lower P/E multiple than us. So on the one hand, we're capitalized on the most innovative technology and capital assets in the history of mankind. In the other hand, we're possibly the most misunderstood and undervalued stock in the U.S. and potentially in the world. So let's look at us versus financial services companies, right? And maybe this is a different picture. Not really. Number four, in terms of estimated net income for 2025 behind great companies like JPMorgan and Berkshire Hathaway and Bank of America. #17 in terms of market cap and #104 in terms of our P/E multiple and our valuation. What about top crypto companies? Our estimated net income of $24 billion is nearly double of that of Tether, which is a great digital asset and stablecoin company and far and beyond other similar crypto companies, Block, Coinbase, Circle, Riot, Mira. What about Bitcoin Treasury Companies. And in this case, we switched to a BTC metric, which is BTC $ Gain. You'll see here, not surprisingly, our $13 billion target for 2025 is more than 13x that of the #2 Bitcoin Treasury Company in terms of BTC $ Gain, Metaplanet and far and away above some of the other folks in this space. And I'll remind you here of publicly listed companies ranked by Bitcoin, we are more than 10x the next closest company, Marathon, and there have been a lot of other Bitcoin Treasury Companies that have arisen over time, and we're supportive of all of them, but they're not close to us in terms of BTC stack. And if you look across all of our other performance metrics, whether it be annualized return, BSE return, the size of the options market, our options open interest, we also ranked #1. And so there are a lot of sort of #1 superlatives with the company. And our view is we're still misunderstood and still undervalued, which is why we spend this time with these types of activities and investor relations activities, communications. So let's think about what a hypothetical valuation could be and potentially should be if we were better understood and Bitcoin Treasury Companies were better understood. A traditional valuation model would say, let's take your earnings and multiply it by a PE multiple, and you might look at things like earnings growth, margins and efficiency, industry and market the company is in, what's its competitive position? Is it innovating products? Are they managing their balance sheet well? Do they have a strategic vision? Do they have leaders that have a track record of execution and how is your Investor Relations? And that's how you might look at it traditionally. The Bitcoin Treasury Company is not too different. You would take the equivalent of earnings, a Bitcoin dollar gain or BTC dollar gain, you multiply it by a multiple. You'd add the value of the Bitcoin on its balance sheet. And then you would base it on things like not earnings growth but BTC $ Gain growth, the scale and liquidity of the company. What is it doing in the capital markets? What kind of credit products is it creating? Is it using intelligent leverage? What are the banking channel partners that it has? Is it innovating in the product? What is the capital structure? What might be the credit rating? And similarly, does it have a strategic vision? Does it have a management team with a track record of execution? And how are its Investor Relations? Is it communicating transparently what's happening with the company? And so I'll remind you here, if you take a look again at the P/E multiple, the average P/E multiple of our company -- sorry, of the S&P 500 companies is about 24x compared to us at 4.7x. And our addressable market compared to Bitcoin and compared to Bitcoin ETFs but also compared to a lot of the S&P 500 companies is large. Our market are people who are buying equity, $35 trillion MSTR, STRK and a $60 trillion credit market for STRF, STRK, STRD, STRC. This is 30x bigger than a traditional market that BTC commodities would address. So let's take this valuation and let's think about what this might mean for our equity, if we were to think about the valuations that may be hypothetically other companies are getting. So on top of a $24 billion earnings, this is a traditional valuation. And let's say you take a 10x to 40x multiple with 24x right in between those 2. The 24x multiple would mean a $600 billion valuation for Strategy of the company, which would mean that we're about 5x undervalued, right? And the range of a 10x multiple might say it's $240 billion. So we're 50% undervalued or $960 billion, nearly $1 trillion if we get a valuation equivalent to some of the best performing companies out there like NVIDIA. What about if you were to take a Bitcoin treasury approach to the valuation? You would take a $20 billion of BTC $ Gain, take a multiple of 10x to 40x on that, also using a similar multiple structure, add the $75 billion BTC NAV, and you get to a $575 billion valuation, maybe a range of, again, $250 billion to $900 billion. And if you're following along, you're doing the math, you would say that, that range should mean that multiple to net asset value, the mNAV of MSTR hypothetically could be 2.5x, which was at the low end, which is the floor for which we've set to issue equity to 4x, which is the middle range here, which is where we would start to more aggressively issue equity to buy Bitcoin to as much as 12x, right? If you believe that our multiple should be similar to one of -- some of the top-performing tech companies in the world. So then you ask yourself, well, if our multiple really should be hypothetically looking at some of those valuation models, 2.5 to 12x, why should we be trading at a premium to Bitcoin NAV to spot Bitcoin ETPs. And this is where Mike talked about the first thing is we can utilize intelligent leverage. We've cracked the code of preferred equity, which is perpetual, which is high yield, which is overcollateralized and with Stretch, which is short duration and attracting a retail market. And if we can use these types of instruments, we can amplify the credit quality, we can issue intelligent leverage. Bitcoin can't do that. Spot Bitcoin ETPs can't do that. We also have an options advantage. We've created options market because of the volatility of our equities and because of the leverage we've created through our convertible bonds and through our preferred notes and you'll see here, Strategy alone has $100 billion in open interest compared to over $2 trillion asset class Bitcoin, which has 5x less of an options market. And spot Bitcoin ETPs, we have more than 3x the size of an options market. The third thing here is we have access to passive flows, right? Our inclusion in the NASDAQ 100 and the MSCI Russell 1000 today, hopefully, S&P 500 at some point in time means that passive flows of capital are coming into MSTR, even for those who are not Bitcoin Maxis or Bitcoin initiated and even for those who aren't MSTR initiated. You see that when you look at our largest shareholder is Vanguard. Vanguard is investing in Strategy primarily through passive ETFs. And of course, the spot Bitcoin ETPs and Bitcoin don't have access to those passive flows. And the last piece is institutional access. We have access to an extremely large addressable market because institutions who can only invest in equity, a $35 trillion market or can only invest in credit, a $60 trillion market, can't for the most part, invest in spot Bitcoin ETPs and can't for the most part, invest in Bitcoin. And those are much smaller markets. So hopefully, you've seen through the course of this presentation, there are a lot of reasons why we think we're undervalued or we're misunderstood. And I think people will start to understand over time, and it's still early. So I'm going to summarize with our BTC principles. We've shared these before, but hopefully, these are starting to come into even more of a stark understanding of what is MSTR? What are our preferreds? What is our credit strategy and what is Strategy all about? And what are we trying to do? One, we buy and hold BTC, definitely, exclusively and securely. It means we're not going to sell, it means, we're not going to diversify into other crypto assets and other digital assets. And it means a big focus of us is how do we secure a Bitcoin, how do we custody our Bitcoin. And we spend a lot of time thinking and a lot of resources thinking about how to make sure we're holding our Bitcoin securely. Second, we're prioritizing MSTR common stock for the long-term value creation. When we think about long term, we're talking about 5 to 10 years out. So a lot of the actions we take today or tomorrow or last week or last month are all about how do we make sure we create value for our MSTR shareholders for 5 years, for 10 years from now, right? And that's important to us. And third, we treat all investors with respect to consistency and transparency. And that includes our convertible holders, that includes chose our preferred noteholders, that includes derivatives that are on top of MSTR. It's important for us to think about the entire ecosystem of Strategy, entire ecosystem of Bitcoin too. And the transparency is important to us. This is why we're providing guidance on BTC KPIs today, on GAAP metrics today on how we think about utilizing our MSTR ATM and how we think about our Stretch credit. One thing you'll note when I talk about mNAV, you have a very easy way to see how we calculate mNAV, right? MNAV is basically based on our enterprise value which is our Bitcoin net asset value plus the outstanding debt and plus the outstanding preferreds on our balance sheet. We show all of those metrics on our strategy.com website. You can download the Strategy app and you can track our mNAV, and that's the number that we'll be utilizing to determine when and how we issue MSTR. Third, our structure -- we structure MSTR to outperform Bitcoin via intelligent leverage. You've heard about that. You've seen slides that we shared and how we are outperforming Bitcoin 1.5 to 2x at certain times, and that's our goal, is to continue to outperform Bitcoin. Fifth, we'll acquire Bitcoin continually with the goal of achieving positive BTC yield. And we continue to do that. And so that is one of our most important KPIs when we think about issuing equity, issuing credit to acquire Bitcoin. Sixth, we're going to grow rapidly and responsibly subject to market dynamics. Growing BTC dollar gain is important to us, just like growing EPS is to a traditional company. And so we're going to look at ways to do that. fast and responsibly. Seventh, we're going to issue innovative fixed income securities backed by Bitcoin. Hopefully, you've seen throughout this presentation, you saw last week with Stretch, right? We're using AI to come up with ideas that nobody has before. We're disrupting the traditional capital markets. We're disrupting the preferred markets, and we're doing so by providing the market, consumers and institutions what they want, right? And so we're really trying to create digitally transformed AI-generated capital instruments to fix the market that exists today and make it better. Eighth, we're going to maintain a healthy, robust pristine balance sheet. We're thinking about BTC rating. We're creating new credit metrics for the Bitcoin world. And our importance there is to maintain a pristine balance sheet. So we're going to continue to focus on that. And finally, #9, we're going to promote global adoption of BTC as a treasury reserve asset. We've been doing that since 5 years ago with Bitcoin for corporations. We outsourced our initial Bitcoin treasury up, which back then was really just about buying and holding Bitcoin. As we learn to leverage our company through intelligent leverage, we've been very open about convertible bonds, secured notes, margin loans and the preferreds. And we're going to continue to do that. We think that the more Bitcoin Treasury Companies that enter the market, the better. We don't think of them as competitors. We think of them as peers. And ultimately, our goal is to advocate for, to provide advice for, to work with nation states all around the world, to work with companies all around the world, to work with investors all around the world, so people understand Bitcoin better and to improve Bitcoin and to improve the company and to improve the world. So that's our presentation. Thank you all very much, and I'm now going to hand it over to Shirish Jajodia, who will facilitate a new form of Q&A, first time we've ever done this.

Thank you, Phong. We are now going to proceed to the interactive live Q&A section of our webinar. I would invite all of our analysts to come on video now. And we look forward to hearing your questions. We'll go one at a time. I will call your names and then you can direct your questions to the management team. First, we will begin with Lance Vitanza, our research analyst from TD Bank.

Let me see if I can get 2 and if I can. The first is, at some point, does concentration of Bitcoin holdings at a single corporation impede adoption of Bitcoin as a store of value, let alone other potential monetary functions, such as medium of exchange or unit of account? And if so, when might that point realistically come for Strategy? Is that 5 years out? Is it 10 years out? Is it longer? Is it shorter? Or is it just the wrong question?

I'm sure everybody's got an opinion, but I'll start. I think we're accelerating institutional adoption, but we're also accelerating the adoption of Bitcoin just like BlackRock is accelerating adoption of Bitcoin because we're channeling new forms of capital into the ecosystem. And you couldn't -- there's whole sets of capital that wouldn't come into the ecosystem if they don't have an investment- grade, creditworthy counterparty to trade with. So we don't really think there's any number. It's -- we're up to 3% of the system. I mean it's getting exponentially harder I've said before -- it feels to me like if we get to 5%, Bitcoin is going to be $1 million a coin, and if we get to 7.5%, it's going to be $10 million a coin or some ridiculous amount. If it does get to $10 million a coin, and if we do get to 7.5%, that will mean that 93% of all the Bitcoin is held by somebody else somewhere and that will cause an explosion of innovation in the rest of the world. For all we know, right, the harder we try to acquire it, the more it will decentralize to other places because you're going to see an explosion of other innovation because everybody else that's not BlackRock or not us or not whatever is going to have all this Bitcoin that's valued at millions and millions of dollars of coin.

And then just as a follow-up, and Phong, you touched on this. You've been actively encouraging other public companies to follow in Strategy's footsteps and create their own Bitcoin treasury models. Are you worried that you may have been too successful in making that pitch? And at what point does the plethora of public Bitcoin Treasury Companies or PBTCs as I like to call them, at what point does that become a problem for you either in terms of access to capital or potential for bad actors, et cetera?

I can start. I don't think we get to that point. I think the positive of more Bitcoin Treasury Companies is creating knowledge. As you can see, we're quite understood. And so the more companies there are, the more analysts will cover them, the more retail investors will get involved, the more institutional investors will get involved, the more large banks. And the more there is just knowledge about, for example, how to value a Bitcoin Treasury company. And I think we're pretty far from understanding that. Second piece, if they're all buying Bitcoin, Bitcoin price is going to go up, which causes our Bitcoin net asset value to go up, which caused our equity to go up, which caused our ability to raise more capital. I don't think we're even close to a place where this capital markets and the credit markets for Bitcoin are saturated. I think we're in the first inning of a 9-inning game. And I think more and more access will occur. And I think they're all getting started. Look, a lot of these Bitcoin Treasury Companies are markets that would be very difficult for us to access. Bitcoin Treasury Company in India, Bitcoin Treasury Company in Sweden and Brazil. So I think they're all additive. They're all accretive right now. And I think they all have their own niche strategy and look, they're not really close to us in size, right? The place at which they can issue innovative preferred securities might be 2, 3, 4, 5 years out. So even if they did, it's going to take a while. But I think they're great.

And I would say we're not -- the Bitcoin companies aren't competing with each other. We're competing against 20th century credit instruments for the part. If you think about the fundamentals. You're competing against corporate bonds and preferred stocks, illiquid bonds, illiquid preferred stocks, illiquid credit that is generating normally a 400, 500 basis point yield. And all these BTC companies are in a position to create digital credit that generates 400 basis points more than the risk-free rate in all their own markets. And that's 100 trillion -- hundreds of trillions of dollars. So the real competition is between the credit instruments that come out of the BTC ecosystem versus the credit instruments that are backed by real or yen or euros or rubles or naira or dollars or whatever the other source of credit is. So that's another way of saying we're all very cooperative. It's -- the more of us there are, the more of those capital markets we can provide a digital solution to. And then the other point, coming back to your first question is, if you want to sell $100 billion worth of investment-grade credit to insurance companies or pension funds that are conservative in the United States, you're going to need a big Bitcoin Treasury Company to do it. And if you want to sell an equivalent type of credit in Germany, you're going to need a German operation or a Japanese operation to do it in Tokyo. So what's really happening is the digital transformation of credit-type assets. They were either backed by some currency derivative or some kind of -- what backs a junk bond like the effort of a struggling company is what backs a junk bond. And we're replacing that with something better and different and so companies at all scales are needed. You need a monster Bitcoin Treasury Company in Japan. You need a big one in France, a big one in Germany. But there's always going to be home court advantages and national champions. And the way that we all cooperate is we're all competing for the same 450 Bitcoin a day. And once you bought the 450 Bitcoin, the price of Bitcoin has got to move up, increasing the collateral value of everyone in the ecosystem. And as the collateral value increases -- and the other thing we're doing is we're dampening the volatility. As we increase the collateral value and damp the volatility, the BTC risk numbers plunge the leverage increases. And you can imagine, you can create a lot more of this BTC-backed credit, which is just a very positive feedback loop. And so we're in a virtuous competition or a virtuous cooperative cycle with any company that's capitalized on a Bitcoin standard anywhere in the world.

Thank you, Lance. Next, I will invite Lyn Alden. Lyn Alden So Strategy navigated the 2022 bear market successfully. And so my question is going to relate to stress testing as it relates to these midterm BTC ratings. Given the strategies credit products are backed more by assets and capital access than operating cash flows, are there certain Bitcoin bear market assumptions or thresholds, either such as in terms of drawdown magnitudes or lengths of time where capital markets might become inconducive for new capital issuance that you're planning for as you design these forward leverage ratios and for your overall capital structure?

I think that if we equitize the convertible bonds and we go to all preferreds, you can imagine, for example, you have $100 billion of bitcoin, you have $50 billion of preferred in an extreme -- like the extreme case, a 50% leverage case. And if that $50 billion was a debt liability coming due in 3 years, that would be a lot of risk. And if it was a debt liability coming due in 25 years, it would be less risk, but it would still be something. But if it's actually equity, if it's $50 billion preferred equity, it never comes due, and so now you have a different kind of risk. In that particular case, Bitcoin can draw down 80% and you're fine. It can draw down 90%. So I actually think -- if you look at our structure, as we migrate to preferreds, we end up with this very, very robust antifragile capital structure where the principal never comes due, and then you have to ask the question, well, where is the liability? And the liability is in the dividend. And you noticed when Andrew showed the liabilities. He showed you 3 tranches. He showed you the interest liability, the cumulative liabilities and the noncumulative liabilities. That's because the interest has got to be paid or you're in default. The cumulative doesn't have to be paid. But if you don't -- if you suspend it, it accumulates, so it's still a liability to. And then the noncumulative, you could suspend it, and it isn't a liability. So when you add all that up, you imagine that you've got $50 billion and you have -- even if you had a 10% dividend, that means you're down to $5 billion. So on $100 billion of assets, you've got $5 billion of dividend liabilities, but some of them are more collapsible than others of them. But -- so you say to yourself, well, what happens if Bitcoin falls 95%? You'd still make -- you'd still meet those liabilities, most likely. You might -- you might in a 95% drawdown, you might suspend something, but you can see for the most part, no one really contemplates more than the 80% extreme craze case of the crypto -- well, I guess the crypto whatever is like 75% or something, you would know 6,000 to 16,000, I guess, was like the peak to trough, call it, 80%. I think that our structure is smooth, and we wouldn't miss a single dividend payment on an 80% drawdown. On a 90% to 95% drawdown. In theory, you might suspend something for a little bit of time, but you would eventually get back current on it. So I think in terms of robustness, it's pretty robust. And if you compare it to the fragility of a conventional bank, we're -- think about the leverage we've got in order to generate our earnings. We've got maybe 1.2 leverage. Typical banks got 10, 20x leverage to get their earnings. So this model is orders of magnitude less risky than a conventional banking model. Phong, Andrew, do you guys have anything to add on that?

I can add. Lyn, we've had the benefit of being a Bitcoin Treasury Company for 5 years. We went through a crypto winter in 2022 with a much more fragile debt structure and capital structure. We had a Silvergate margin loan that was Bitcoin backed. We had a secured note that had onerous causes. And so we learned a lot from that. And at that point in time, our most pristine debt were our convertible amounts. And now I think we're much more prepared for a Bitcoin drawdown because over time, we won't have -- we already don't have secured notes. We don't have a margin loan. Over time, we may not have convertible notes. And to Mike's point, we will be relying on perpetual preferred notes that don't ever come due. So I think we learned a lot during this period of time, and we hope to share that with everybody out there.

And of course, the point is we did survive the 80% drawdown with a much weaker capital structure. So this capital structure is bulletproof compared to that one. So I think we're good to 90%. And if it goes below 90%, then we'll shuffle a few things around. It will be colorful.

Great. Thank you. Next, I'll invite Samson Mow. Samson Mow First, just a quick comment. 0.15 by end of year is very conservative. But I think you have to use what the analysts are providing. But my question is the preferred shares, they have a BTC/credit rating ranging somewhere between 3 to 9 or 5 to 9. How effective are those preferred at generating yield assuming we have periods of crab market? Like it seems after a 1.25x increase in Bitcoin price, you might have to wait time before you buy again? And in what conditions would you increase that or relax it a bit to go above 9 or above 10?

One of the interesting things is, right now, you can see from all of our credit models, the credit is all undervalued. Like the marketplace doesn't appreciate the credit very much. So over the next 36 months, you would think that the drivers of our credit strategy will be education of the market, just getting out and talking to people and educating them on our credit models is a big plus. The more -- every time we do an IPO, you've noticed the first IPO was a little bit smaller than this -- or more difficult than the second. The second was easier. The third was double that. The fourth was more than double that. So every time we go back to the market, we educate more people, we're educating credit rating agencies. And as the world's view of Bitcoin as collateral evolves, that makes it easier. So as a general trend, the direction of travel is the world is getting more comfortable with Bitcoin-backed credit, and that makes our strategy easier. Let's assume the Bitcoin chops sideways. The negative is that the collateral value doesn't go up. But the positive is, if you actually look at the trailing 30-day BTC vol, it's low. It was like 20 the other day. So when the market chops sideways, the volatility of Bitcoin falls. And you can see one of the most important drivers in Black- Scholes and the important driver in our risk models is volatility. So we're kind of winning when Bitcoin is surging up because we've got a lot of collateral and a high BTC rating. But we're also winning. You'll be -- if you go and you play with our model and you crank vol from 40 to 35 to 30 and I just showed you an example, it goes to -- it falls 10 points, stuff that looks like it's high yield becomes investment grade. And so I think our credit strategy might benefit from Bitcoin trading sideways for a while in a counterintuitive way, and for the most part, we're not -- we're really competing against a bunch of people that don't know, like the Wall Street Journal is running an ad, high-yield savings accounts, you get 3.6% interest from such and such bank and there's a world of people that are -- by the way, if SOFR falls, if the Fed changes policy, those banks will be yielding 2%. Your bank account will be 2% or 1.5%. And we're out there educating the retail market that there's something better than that. And I think that our credit strategy right now is primarily driven by educating institutional buyers, educating retail buyers, educating credit rating agencies and having the world embrace Bitcoin as good collateral and at the point that JPMorgan and somebody else starts to accept its good collateral, then I think people come back and look at our credit and they rerate it and they say, "Oh, actually, it doesn't deserve a 600 basis point credit spread. It should be a 200-basis point credit spread." So I think I think that all of those dynamics actually overwhelm whatever the price action is of Bitcoin in the next 24 months to 36 months. Any of the other guys have something to add?

Heads you win, tails you win.

I think it's -- the important point is when Bitcoin is highly volatile, it's very good for our equity. And when Bitcoin -- people go, "Aha, what happens when Bitcoin is not volatile." And what they don't realize is if you take that credit model I showed you and you crank in 20 vol and all of a sudden, we fall to 20 or 25 vol, you can go to 90% leverage. Because the credit looks like investment grade at 90% leverage. Bearing in mind, by the way, that banks that are issuing preferred stocks we compete against, they're 20x levered, right? They have $20 of a liability for every dollar of equity and they're paying 5% or 6% yield, and we're offering 9% and we're not. So really, this all comes down to educating the 20th century market about why this Bitcoin-backed credit is better. And that's a fundamental thing that overwhelms, I think the near-term volatility or lack of volatility or price change in BTC itself.

Next, I'll invite Brian Dobson, our research analyst from Clear Street?

So the Trump administration has made some very positive regulatory changes for Bitcoin. If you had your way, taking a big picture view, what would be the next area of improvement for regulators?

Yes. My opinion is it would be beneficial to the market if they nail down the digital assets taxonomy, under what circumstances can you tokenize a security? What's a digital security? If they can clarify a digital commodity, what's an asset without an issuer versus a digital token. If they could clarify token asset class dynamics, what can I create a token? And is it less than a security and different than a commodity. I think there's a lot of murkiness around all that. And they're supposed to be dealing with the Clarity Act in September. I think that will create a very rich framework for the entire crypto industry. And I think absent that, there's going to be a lot of confusion about the difference between tokens and commodities and securities and who can issue what and how long it takes and in the ideal world, 40 million business will be able to issue a token in 4 hours for $40. And in the current world, it takes you a year to issue a public security, minimal, maybe 2 or 3 years and $40 million, and we might end up in a world where we're halfway -- half in the middle, which is, oh, yes, it only takes 6 months, and it only takes $2 million to create a quasi half, not security, on the way to being a crypto commodity, but not really for the next 2 years. And if that's the case, you won't have really achieved the full potential of the industry. And so I think that we've still got a lot of uncertainty around that, that needs to be resolved.

Yes. Great. And then just as a quick follow-up. You've had some very successful offerings this year. Could you share any kind of feedback that you've gotten from the buy side regarding those offerings? And what kind of securities could we see the firm offering in the future in addition to the ones already on offer?

Phong or Andrew or Shirish, you guys want to start?

I would -- I can jump in there. I would say that we launched our first perpetual preferred early this year. And there was a lot of I would say, analysis and price discovery and just trying to get an understanding of that innovative instrument. I think ever since then, we've shown a track record of growing demand on every subsequent IPO. We've seen institutional demand increase deal over deal. We've seen retail demand increase transaction over transaction. We've also seen high net worth individual demand. And so I think what we're doing is we're providing opportunities to different aspects of the market that haven't existed before. And I expect that there will be more interest. STRC just recently got listed on NASDAQ. I think it's the most innovative treasury -- Bitcoin treasury security out there. I think we'll start to see more retail demand, more institutional demand. So I would expect that those existing securities will continue to season and mature and grow. And as for other types of opportunities, other offerings, I think we continue to focus on this preferred equity segment. We have opportunities to take our existing type structures and deploy them internationally. That's something we've talked about in the past, the different markets and different currencies. And then we sort of -- we're building out a bit of a Bitcoin treasury yield curve. And right now, we've got long duration. We've got short duration and as everyone knows, there's maturities everywhere in between. So I think we have a lot of opportunity to grow and potentially explore new areas as well.

Thank you. Next, I'll invite Preston Pysh.

Congrats on the amazing results. I think you guys are at a really monumental point right now, especially considering you guys have been exercising the Strategy since 2020. The performance has been in excess of that of NVIDIA and you've become of a size that it's near impossible for people on Wall Street to really kind of ignore where you're at right now and what you're doing. And if I was just going to try to like capture what that is, it's your arbitraging the difference between Bitcoin's annualized return of, call it, 45% versus the 10% that you're paying out in the preferred market for a 35% delta. Michael, you just mentioned that one of your biggest challenges is the education side with institutional investors. And I think from the outsider's perspective, they're looking at what you're doing and they're looking at all this preferred issuance and they're saying, Oh my God, there's so much perpetual drag that's going to be on this company that's going to bog it down. And if Bitcoin goes down 50%, it's going to have all these types of issues, which, by the math, is just not true. But how are you -- what are the steps that you're taking to kind of overcome this education burden that continues to persist and continues to be a problem in the Bitcoin space, in general? Yes, that's all I got.

Phong, do you want to start on that one?

Yes. I'll start with -- Andrew mentioned, in January of this year, we started working on Strike, and we had to educate every investment banker and every convertible note banker and every preferred banker and it was like a knock-down, drag-out 2-month process, all of our accountants, all of our attorneys. And then we issued Stretch, 6 months later in about 2 weeks, and everybody gets it. And that's the process. That's the process to educate people, and we're going to go out there. Mike is very well known for all the podcast he does, right? I'm becoming more public. All of you are doing an amazing job out there. It's a process. But the more people figure out, the faster it goes. And most -- like we're selling preferreds to lot of people who've never even heard of a preferred right? And we sold almost $600 million of preferreds to retail investors who just see a 9% dividend yield, twice as much as what a money market gives you 10x over -- more than 10x overcollateralized and they're like, oh, it's overnight money. So I'm going to take the money that I was going to use to send my kids to college 6 months from now or whatever it is, I'm going to put it in there, sit it there, get 10% and then use it 6 months from now. I mean, innovative products will start to sell themselves, but I think there's a market out there and it's the stuff that Jeff and True North and everybody is doing. This is how the word gets out, is viral. That's why we're doing this Investor Relations digitally transforming Investor Relations. That's why we have you all here. People will learn. The great thing is good products, great products. It's not much different than the iPhone, right? A great product when someone first looks at, I may not realize how great it is. Two months later, it sells itself by word of mouth. And I think people will get educated and bankers are making fees. We're the largest IPO this year. Guess who makes money off of IPOs? Bankers. Guess what bankers like? Making money. So they figure this out pretty quickly, right? So I do think the market will figure this out. And I think it starts with us, it starts with you. It becomes the banking community, the retail community.

I think if I could add to that, yes, I think the product is important. To Phong's point, it's not just we're selling preferred stocks to people that never heard of a preferred. We're selling a Bitcoin-backed preferred to people that have never heard of Bitcoin, that don't even know what Bitcoin is. And we're even selling it to people that are afraid of Bitcoin. So -- but if you walk down the street and you say, would you like a high-yield bank account that pays double what your bank is currently paying? The answer is going to be 99%. Yes. The only question is, do I trust you, right? Do I like you? The car flies, it's an electro hover car and it flies, do you want one? Well, if my neighbor's got one and it looks safe, then of course, I want one. So what we found is the key is to package the product. And then we've got to build the distribution channel with the banks, and then we've got to build digital education. So you can't knock on doors, you got to actually upload content. So we've taken to -- now we upload video content directly to hundreds of thousands of people which is another thing. And conferences, right? These Bitcoin Treasury Company conferences, one part of education is helping companies become Bitcoin Treasury Companies and figure out what it means to capitalize on Bitcoin and how to issue BTC-backed credit. Another marketing strategy and education strategy, Preston, would be outreach to the credit rating agencies and the creation of credit models. And what I just covered here in my voluminous comments, which took too long was I talked about an equity model, right? I laid out an equity model. What is -- how do you create leverage and an mNAV of 2, 3, 4, 5 and then I also lay out a credit model rooted in statistics. And then we share that with the world. We open source it. And so I think that's part of it. And then I think the other part of it is the outreach to investors. And that means going to a lot of investment conferences and uploading a lot of investor content. And you can see an evolution in our presentations, like the one today. We're spending a lot of time identifying the total addressable market for short 1-month duration credit investors versus high-yield 5-year duration credit investors. And so we started thinking about that, and we've broken down the markets in Japan, the markets all across Europe, the markets in the U.S. And to Andrew's point -- the question is, do we want to sell a particular instrument in 6 different currencies? Do we want to sell the same instrument, but at 1-year, 3-year and 5-year tenors? Do we want to package a convertible instrument? And it all comes down to understanding the customer. It turns out that the investors are all different, and they're different everywhere, and there's many, many channels to reach them. So I don't think there's one answer, but I think that the success of Bitcoin is getting people's attention. And I think that when you give them a compelling product they want, that gets their attention. And then pretty soon, you get like the money magazines and the financial reporters of the world. If Wall Street Journal is going to write an article about high-yield bank accounts that give you 380 basis points, then presumably at some point, the Wall Street Journal will write about Stretch-type securities that give you 900 basis points. And I think that we got to let the market do its thing.

You should go on Preston's Pod.

Thank you, Preston. Next, I'll invite Mark Palmer from Benchmark.

One of the really attractive elements of Bitcoin is the fact that it is trustless that you can look at the Bitcoin blockchain and know what transactions had occurred on it. Along those lines, we have seen at least 1 company move toward proof of reserves as part of their Bitcoin treasury strategy. Insofar as you're looking to get incremental trust from investors as you build out your capital strategy, would proof of reserves be an element that would make sense for the company at this point?

Phong, do you want to take that?

No, I think you can take this one, Mike.

Okay. We're studying it, and we're working on responsible ways that we can provide that transparency, and we're considering it in the context of our audits and our own security issues and controls and the scale of our operation. We just had a famous example of a concern, which is 80,000 Bitcoin got transferred to Galaxy, who then sold them and everybody in the world knew that the Bitcoin was moving and they knew where it went to and they knew who was dealing with it and they knew when it happened, and it created a massive dislocation in the market, like $3,000, $4,000 dislocation and people lost their minds. We would like to not be in a situation where a routine custody reshuffling creates the same degree of chaos and dislocation because when you're a large multinational, you do a lot of stuff for a lot of different reasons. And if everybody on Twitter is or an X is obsessing over every time something moves from wallet A to wallet B for any particular reason, it could be, let's say, counterproductive. So as we would always point out, you can't really hold the security unless you trust the auditor, trust the management team, trust the Board of Directors and trust the processes and then the auditor's job is to audit the assets and the liabilities and then make sure that there are no side agreements, no related party transactions and nothing else we would undermine the integrity of that audit. So that's a much higher degree of transparency in the capital markets than simply publishing a single-wallet address. So I think that at some point, if we can find a way to do it in a way that doesn't introduce other operational security issues, we're open to it. It's just -- it's a complicated thing that we need to consider very carefully.

Sorry, I was going to add. I do get the irony of people wanting to access Bitcoin for a decentralized, transparent nature and then buying Bitcoin-backed securities through a U.S. public company. But what we do and what we provide on top of Bitcoin, and we laid out is with MSTR we provide superior performance through intelligent leverage. With our preferreds, we provide the ability to get pretty good dividend yields with a lot of downside protection. And part of the price of that is you're working with a U.S. public company that has Bitcoin behind it. And we have 15 people working on this. Could you imagine if we had to take 2 away to work on proof of reserves, you wouldn't get Stretch. You wouldn't get Stride, you wouldn't get Strike, you wouldn't get all this other product innovation. That's where we're focusing our energy right now. But it's not lost on us that we could find ways to do something to improve the transparency. That's why we do these earnings calls. That's why we do all these conferences, right? We do want to be a transparent company. That's very important to Bitcoin. And maybe we can get to a way we can do -- provide proof of reserves without exerting a ton of energy and without creating a security risk for the company and for ourselves.

I was just going to add, we've been a public company for 27 years. Our internal controls process is robust. We have 2 big audit firms that we interact with. So if you want to think about who other people use, we have 2 of the big 4 that look at our information and our data and our tie outs on a quarterly and annual basis. So while they might not be out there publicly, I think you take into account what Michael and Phong said. We are one of the longest-standing public companies out there, and we rely on our mature internal controls process internally as well as our external big 4 audit firms.

Great. Jeff Walton, you're up next. We saved you for the last. Jeff Walton Great. Everybody could ask all the questions before I went. That's perfect. Thanks for having me. Honored to be here. And my question is very similar to Lyn's, but a little bit different framework. Given that Bitcoin and MSTR volatility is near multiyear lows and Strategy has historically targeted a 20% to 30% leverage ratio during the convertible bond era. How does Strategy team now think about future volatility leverage? And do you anticipate revisiting your leverage framework, reflecting the difference in preferred leverage characteristics and understanding the goal of retiring the convertible bond dated liabilities?

What I would say is 20% to 30% leverage is appropriate if you have a mix of bonds or mostly bonds on your balance sheet. But if you eliminate the bonds, which come due for cash, if they're not in the money, and you replace them with a preferred equity, then clearly, it's reasonable to go beyond 20% to 30% and you could look at 30% to 50%. We don't -- I don't think it's appropriate to say we've changed the target range now because we still have $8.3 billion of convertible bonds. But what I think is, over time, as we go to a preferred credit strategy, then the world opens up, and we can take on more leverage and the amount of leverage we can take on will be a function of the credit instruments. If we go to pure -- for example, if you were a noncumulative credit, you could even take more leverage than cumulative credit, right. So the nature of the credit instrument will determine that. And then the volatility of Bitcoin will also determine that if you're at 50 vol, you have a different view towards what that should be versus a 30 vol. So I think those will be part of our calculus each year for the next 10 years, and we will evolve. I don't know if we'll evolve quarter-by-quarter, but we'll probably evolve year-by-year, and we generally do. And as for the volatility in the stock, I think the volatility is going to come back. We're going to see a lot more performance and volatility in the MSTR stock for a couple of reasons. One, the equity guidance we gave, if we take a more programmatic disciplined view toward using the MSTR ATM, then I think there'll be more volatile in the equity because now there'll be more value in out-of-the-money calls and things, right? If you thought the company was going to sell MSTR at $500, you probably wouldn't want to buy a $600 call option, right? So I think that our equity guidance will probably be very positive for the options market and for the shorter-term traders that have an impact. And then I think that the acceleration -- the transformation from bonds to preferred will also have a positive impact. And then I think the acceleration of our credit strategy via the preferred ATMs will have another impact. And I think the wildcard here, Jeff, is I think that Stretch is our iPhone moment. I really think that if you think about products we have, if I walk -- like I literally show people that the convertible bonds are mispriced and trading 40% cheap. And then I show you there's an 800 basis point unjustified spread premium and people blink and nothing happens. And then nothing happens because nobody can buy that stuff, right? So the convertible bonds clearly were not our iPhone. And on the other hand, Stride, Strife and Strike are breakthrough revolutionary instruments but they're complicated and they're long duration. And if I saw a retiree who said, what do you have? And I said, well, you can get 5% yield or 5% more than your bank account if you buy Strife. And if it was trading $122 and then it dropped to $116, the next week, the person would be really pretty anxiety ridden because having 5% or 10% change in the principal when you're getting a 5% credit spread isn't really a consumer thing, right? That's too much of a roller coaster for them. So I think that the idea of a consumer product is, what's the product that you can offer anybody any day of the week for the next 10 years, regardless of what the stock is trading at, if the stock is trading at 10 mNAV, or 1 mNAV, right? That's an MSTR equity roller coaster. And if Bitcoin all of a sudden raises up to $500,000 and someone saying, well, should I buy this instrument or not? It's like there's a roller coaster. But if I'm saying that we've stripped down to a 1-month duration and it pays 500 basis points above your bank account, it's always going to be trading hopefully in our range. It's all -- we're going to hope and expect it trades around 100 plus or minus 1/4 or something, and it's always paying more than your bank account and if people see that and they see liquidity, then in theory, I don't know why you can't sell. If you walk down the street and you ask 100 people, do you want high-yield bank account, 99 of 100 say yes. And if you said, do you want this 100-year long Bitcoin-backed senior or junior instrument, like 1, 2, 3, 5 out of 10 or 5 of them might try to figure it out. And I know that's a long-winded answer, but the point is if there's infinite demand for Stretch, if it works, right, and we can't declare that -- we can't declare it seasoned until 30, 40, 50 days after we've launched it. But if Stretch actually hits its par and it trades with low volatility then you could, in theory, sell infinite $100 billion of it, $200 billion of it, right? And you could use that to have any amount of leverage you wanted. And then the question of how much leverage do you want is really going to be a question of how rapidly does Bitcoin price appreciate and with what volatility and then how rapidly do we roll out of the convertible bonds? And then how rapidly do we get embraced by institutional investors and credit rating agencies. And those are all things that we don't know in the future. But if you take all that in its entirety, wouldn't you think that the performance and the volatility is coming back into the equity, we've got a plan for it, right? We've got 3 or 4 different ways to get there and maybe time will just do it for us.

Torque adjusted.

Fully torque Bitcoin. Do we have any other questions?

Excellent. So thank you, everyone, for staying with us for more than 2 hours. This was awesome. This concludes the Q&A portion of our webinar. I would like to thank all of our analysts for their questions and the audience for staying with us. We had thousands of people watch it live and join us on different mediums. I would now like to turn the call over to Phong for the final closing remarks.