LIVE: Strategy (MSTR) Q1 2026 Earnings Call

strategies head of investor relations. I also want to take a moment to thank Shereish Dejodia, our corporate treasurer, for helping establish and lead our IR function for the last 20 quarters. As our team grows, I know we will strive to continue to provide transparent and relevant information to all of our shareholders and stakeholders. So, welcome CJ. Now, turning to the quarter's results, uh we are off to a very strong start in 2026. We now hold 818,334 Bitcoin, which is about 3.9% of all Bitcoin that will ever exist. That keeps Strategy in a clear leadership position as the largest corporate Bitcoin holder in the world. Our market cap is now $62 billion and stretch STRC has grown to $8.5 billion outstanding, showing strong market fit and investor demand and filling a gap that has existed for investors seeking stable price and attractive yields backed by Bitcoin. So far in 2026, we raised about 11.7 billion of capital, giving us more flexibility to keep our Bitcoin position and creating long-term value for our sharehold shareholders. Turning to uh Q1 financial results, we reported an operating loss of $14.5 billion and a net loss of 12.8 billion. As you would expect, these results were primarily driven by the decline in Bitcoin's fair value during the quarter. And as these are largely non-cash marketdriven impacts tied to Bitcoin's quarter end price, our underlying strategy remains unchanged. Raise capital responsibly, buy and hold Bitcoin over the long term, and grow Bitcoin per share for our shareholders. On slide eight here, Bitcoin per share increased from 181,030 sats per share in May 2025 to 213,371 sats per share in May 2026, which is roughly an 18% year-over-year increase. Year-to date, we have delivered 9.4% BTC yield compared to 22.8% for the full year of 2025, showing acceleration year-to date compared to the same point last year. We've also generated 63,410 BTC gain so far in 2026, compared with 101,873 BTC for all of 2025, having already achieved about 62% of last year's full BTC gain in just the first four months of the year. In dollar terms, that represents approximately $5 billion of BTC dollar gain year-to date versus $8.9 billion for the full year 2025. Since 2020, Bitcoin per share has grown to 213,371 SAS per share as of May 2026, which is nearly a 4x increase since the beginning, delivering positive BTC yield every year across multiple market environments. In 2025, we delivered 22.8% BTC yield, and so far in 26, we've already added another 9.4%. We remain focused on consistently increasing Bitcoin per share over time through our disciplined treasury operations and long-term conviction in Bitcoin. Here on slide 11, our track record remains constant, having acquired additional Bitcoin in every quarter since 2020 across 108 separate acquisitions. As of May 4th, we held over 818,000 Bitcoin for a total value of approximately $64 billion and a total acquisition cost of about $62 billion. Our average purchase price is approximately $76,000 per Bitcoin and our holdings now represent, as I mentioned, 3.9% of all the Bitcoin that will ever exist. Turning here to the balance sheet, uh, digital assets ended the quarter at 51.6 billion compared to 58.9 billion at year end, having acquired $89,599 Bitcoin in Q1. The change reflects the lower price of Bitcoin at the end of the quarter versus at the end of last year. Cash and cash equivalents were $2.2 billion, which largely reflects our USD cash reserve. Regarding taxes, the change this quarter was driven by the quarter end marktomarket movement in Bitcoin. And as Bitcoin moved from an unrealized gain at the year end to an unrealized loss at the end of Q1, our deferred tax liability of $ 1.9 billion shifted to a deferred tax asset. A full valuation allowance against that tax asset brought the net balance sheet tax position to zero, which also resulted in a non-cash tax benefit on the income statement, which partially offset the pre-tax loss for Q1. Long-term debt remained unchanged at $8.2 billion, while preferred equity increased to $9 billion, driven by strong stretch issuance in the quarter. Overall, the balance sheet remains highly liquid and extremely well capitalized. At the end of Q4, the market value of our Bitcoin was approximately $59 billion, which is based on a Bitcoin price of about $87,500. During Q1, we recognized that unrealized fair value loss of about 14.5 billion. And despite Bitcoin price volatility, uh, we continued to execute, having purchased an additional $89,599 Bitcoin in the quarter for approximately $7.3 billion at an average price of about $80,900. We ended the quarter with a digital asset value of $51.6 billion based on a Q1 ending Bitcoin price of about 67,800. In Q2, so far we are illustrating an unrealized fair value gain of approximately $8.3 billion as of May 1st. We purchased an additional 56,235 Bitcoin quarter to date for approximately $4.1 billion at an average price of roughly $73,400 for that period. Those purchases benefiting from the increase in Bitcoin price adds approximately $300 million dollars of positive fair value. And as of May 1st, our Bitcoin held a market value of approximately $64 billion based on a Bitcoin price of 78350ion dollar Bitcoin reserve implying an MNAV of 1.27 which has expanded since the beginning of the year. We have $13.5 billion of preferred equity representing 34% amplification and net leverage of 9% made up of the $ 8.2 billion of convertible debt. Strategy is building around Bitcoin as digital capital. We have approximately $ 58 billion of equity. You can see here large traditional banks operate with liabilities to asset ratios above 90%. Our ratio is a mere 9%. That gives us a very different foundation made up of a very large equity base, substantial Bitcoin reserves, and structurally lower structurally lower balance sheet risk. We can issue Bitcoin back credit products to support investors with strong collateral and continue accumulating Bitcoin over the long term from a position of strength and durability. We have approximately $6 billion of net debt, which represents just 9.3% net leverage against our Bitcoin reserve, which is effectively a 10.8 times BTC rating. Our strategy is based on a disciplined balance sheet construction, modest leverage, strong collateral, and permanent capital to grow our Bitcoin over time. Our net leverage is lower than the average of the investment grade S&P universe and lower than every major industry sector across most S&P 500 companies. At the current Bitcoin price, our reserve is valued as our Bitcoin reserve is valued at approximately $64 billion compared to $6 billion of net debt, which translates to the 8 10.8 times BTC rating. The stress case on the right shows that even after a 91% Bitcoin price decline to roughly about $7,300 per Bitcoin, our Bitcoin reserve would still be sufficient to cover our net debt at a one times BTC rating. Our USD cash reserve has remained consistent at 2.25 billion. And while the years of coverage has shifted down with the growth of stretch this year, we believe the stable cash along with our Bitcoin reserves and ability to raise additional capital continues to provide us with the flexibility to continue supporting our dividends for the the foreseeable future. On the next slide, the $64 billion of BTC reserves adds an additional 43 years of coverage. Another way to look at this, at today's reserve size, Bitcoin would need to grow by only 2.3% annually for the reserve growth to cover our current obligations. If Bitcoin grows at or faster than the break even ARR here, the BTC reserve alone can support our dividends without requiring any additional capital. Before I turn it over to Fonk for his remarks, I'd like to highlight the amendment to stretch that we have asked for your vote on. We are proposing to move stretch dividends from monthly to semionthly with payments twice per month on the 15th and the last day of the month while keeping the economics unchanged. Our goal is to make Stretch work better for investors by reducing reinvestment lag, improving liquidity, dampening the impact of a single monthly record date, and helping Stretch trade more efficiently around the target price. Today, Stretch pays out 12 times per year with one payment at month end. Under the proposed amendment, Stretch would pay 24 times a year with payments around the 15th and the last day of the month. Again, total dividend economics are unchanged and payments would simply be about half the size and paid twice as often. Under the proposed change, there would be two record dates, one on the 15th and one at the end of the month with the related payment dates made on the next scheduled record date. If the vote is approved, the first record date would be June 30th and the first payment date would be July 15th. The mechanics are pretty straightforward. Same dividend economics, more frequent payments, and a clear transition timeline. We believe this change creates the highest frequency credit instrument in the world and makes a great product twice as better. And we look forward to your support. With that, I will turn it over to Pong. >> Thank you, Andrew. Thank you everyone for joining us on uh this evening's earnings call. I have a few updates to make on our capital markets uh on our equity on our digital credit and then I'll conclude with uh updates on our capital market strategy overall. You know, if you had asked us at the beginning of the year uh what was our target for the year in terms of uh capital markets raises, we would have said it was uncertain uh and it really depended on the success of the stretch product. And I think four months in, we can say that stretch has been more successful than we had expected at the beginning of the year. And one representation of that is the amount of uh capital we've been able to raise for the company and ultimately for Bitcoin. And you'll see here year-to- date 2026, we've raised 11.7 billion as Andrew had mentioned, notably about half from uh issuances of our common equity, half from issuances of our preferred primarily stretch. Uh and no longer are we issuing convertible debt to raise capital. Uh how does that compare to the rest of the uh US capital markets, equity capital markets? You'll see last year we represented about 8% of the equity capital markets in the full year 2025. We are the largest issuer and we are again this year the largest issuer in the equity capital markets about 10% uh total 6% of common equity and 60% notably of preferred equity and we're doing what we said we would do and what we were trying to do which was to shift our ATM more towards credit and you see this even pronounced as we look at each month of the year 2026 we started in January with 20% of our equity issuances using digital credit, 88% using MSTR, and we've largely flipped that number in April with 17 using MSTR and 83% using digital credit, which of course is also less dilutive to our overall shareholders. Research analysts have been consistently supportive uh as we look to exit the Bitcoin uh bear cycle that we're in. The average price target of all of the equity analyst covering strategy for Bitcoin is $138,000 which is about a 70% increase. The average MSTR price target is about $323 which is an 80% increase from current levels. So let's talk about digital equity and MSTR overall. We show this chart every quarter. You can find it on our website strategy.com. But this is our annualized asset performance since we adopted the Bitcoin standard. August 10th of 2020 is when we look back to we've outperformed Bitcoin by about 50%. Bitcoin has outperformed the MAG 7 by about 50%. And the MAG 7 has outperformed the S&P 500. So uh our ultimate objective is for our common to outperform Bitcoin by accreing Bitcoin per share. And uh based on this chart, we've continued to deliver on that performance. As Andrew mentioned, uh our Bitcoin per share is also accreing. That's our business objective ultimately. And we're at 9.8 9.4% Bitcoin per share increase so far this year. And you'll see that's also accelerated in the last month, right? We started off a little bit slow in January and February, 0.4 four and 0.1% increase in the month of March with 3% and really increase doubled in the month of April with 6%. Uh last quarter on this call we said our objective is to double Bitcoin per share in seven years. Doubling Bitcoin per share in seven years implies about a 10% annualized BTC yield. And as I mentioned so far this year we've increased 9.4% uh our BTC yield. So, we're well onto our annual target and we've been happy with the success of Stretch so far this year. And ultimately, MSTR continues to be one of the most widely held uh equities around the world and the most widely held Bitcoin proxy uh in the world. and we're able to reach 1,400 institutions, 927,000 retail accounts, 1300 ETFs and funds, over a 100 million beneficiaries that share nearly 4% of the Bitcoin in the world. So, I don't think about this as concentrated amongst one company uh a set of leaders, but really amongst 100 million people that we're sharing Bitcoin with per share around the world. So, let's talk about digital credit, our favorite topic so far this year. Uh look the idea of preferred capital and preferred credit is not a new idea. In fact the industrial revolution was built on the railroads which was built on digital credit uh sorry built on analog credit through preferred capital. At that point in time during the late 1800s and early 1900s 20 to 40% of the capital structure around the world was preferred capital. Uh what happened in the mid 1900s and the early 2000s is the rise of liquid debt markets, increased regulation, putting pushing preferred uh capital into what I would call niche use. Now as people are waking up to preferred capital and digital credit especially, we're seeing an reemergence. And my analogy here is where uh preferred capital helped build the railroads which helped drive the inst the the industrial revolution. Uh now digital credit will help drive the digital railroads or the digital rails. It will drive the digital revolution including the AI revolution. So we're excited about bringing this back to the forefront of the world. Uh if you look at an overview here we have five preferreds. We've mostly been focused on Stretch so far this year. I think there's an opportunity for the re remaining prefers to start to perform as Bitcoin starts to perform, but Stretch is clearly uh the tip of the arrow as far as digital credit. And so that's what I'll talk about primarily. We're up to 11 12% dividend yield. Notably, we've kept this flat for the last two months, right? So, we've increased the dividend yield from 9% to 11 and a.5% and now we're flat for the last two months because what we've seen is the volatility has started to decrease. The uh price has started to remain stable uh and we've seen an increase in sharp ratio 2.53. So, the notional value is up to $ 8.5 billion and we're trading $375 million a day. uh and I'll share how that compares to other preferred uh equities and also uh common equities in general. The first thing I'll note is the rapid growth of stretch. Right? In just nine months, we've raised $8.5 billion of capital. We had a running start with 2.8 billion. It slowed down and it's really accelerated over the course of the last couple months. Comparatively, this is uh one of the most successful financial instruments ever created in terms of capital inflows. It's second only to IBIT. Uh compared to other products, uh it has uh seen faster growth in terms of capital inflows and famous products like the iPhone or Google Adwords. So, we're very proud of the acceleration of the product and it means uh that we built something that is resonating uh with people in the US and people around the world. Uh, Stretch is by far the largest tradable preferred in the world, right? We're nearly two times the size of Wells Fargo's preferred. Uh, and you'll see here what's interesting is almost all of these other preferred save us. Uh, and another one are bank preferred. So, this has gone from being an industrialized product that's building the industrial revolution to a niche financial product and and we're excited to bring it back to being a major product uh in the world. uh the liquidity of stretch. Uh so this is the average 30-day average trading volume is 25x the second largest preferred. So where Wells Fargo is about half our size is trading 125th of what we're trading at $15 million versus $375 million. And what that means is with that liquidity, the turnover of the next prefer next best preferred we're at 4.4% 4% 10x of what Wells Fargo is and some of these other products like Bank of America products. So, uh we think we we've really found uh a new product category uh digital credit based on an old product category, preferred capital. And we're excited about where this is going. Uh interestingly and and and as we've pointed out before uh stretch is performing uh not just you know as one would expect in a bull market but performing in a bitcoin bare market. So while bitcoin has gone down 37% uh since the beginning of October now it's starting to rise again. Uh we're seeing stretched trade essentially nearpar and paying dividends that are increasing and then monthly monthly. So we've increased the dividend as I mentioned from 9% to 11 12% and kept it steady at 11 12% for uh 2 months now going on 3 months while Bitcoin has been decreasing and so with that we've also seen the ATM velocity of stretch has accelerated and the ATM velocity is really the net inflows into the product right this is the demand of of the product uh overall and you'll see notably in April we had a week where we raised a billion dollars and then the subsequent week we raised $2.2 billion. Uh and so we've seen tremendous demand coming into Stretch and at the same time we're seeing the volatility decrease and so uh our target price range for Stretch is 99 to $101. We've actually seen it trading in a much tighter range and for the last three months March, April, May, it sat in that price range for 100% of the time. I mentioned here the deli liquidity is uh pretty significant but it's also growing right so from $54 million to 120 in January to 250 in March to 360 in April so for those who are interested in getting into the product and size if you're a corporate or if you're a large institution and you need to have confidence that when you need to trade in and out you need liquidity uh our product is showing that level of liquidity I'll go through a series of uh analyses of sharp ratio because sharp ratio ultimately is a is a measure of uh the returns above the risk-free rate uh given uh the volatility of the instrument and and ultimately if you're an investor people are looking for high sharp ratios right so compared to traditional credit junk bonds investment grade bonds bank preferred uh we outperform uh pretty notably compared to traditional asset classes the S&P 500 even Bitcoin, NASDAQ, etc. We also outperform very notably. And then obviously if you're looking for sharp ratio, a lot of folks go to the MAG7 equities, right? And Nvidia is obviously on a hot tear because of uh the AI trade. Uh Google runs uh essentially a digital monopoly and and and has been a very uh very solid uh equity over the course of the last 20 years. stretches outperformed all of those uh and all of the mag seven. You know, another place people typically go to find a high sharp ratio or hedge funds, right? Hedge funds are built with uh different strategies, different analyses, different quant strategies and typically they're built to outperform uh the S&P 500 uh and with lower volatility. And here what you'll see is uh looking at different hedge fund strategies stretch to date you know notably you know and and understandably early in in its maturity is already outperforming these different hedge fund strategies whether you're a multistrat whether you're macro equity arbitrage etc. So we see a lot of benefits to this emerging category of digital credit right when compared to hedge funds, private credit, private equity. Uh one is extremely liquid, right? To get these levels of returns and these levels of sharp ratios. Sometimes people subject themselves to 90-day lockups for hedge funds, 3 to seven years for private credit, 7 to 10 years for private equity. We charge no fee, right? Uh these other strategies often charge a management fee of 1 to 2% and a 10 to 20% carry, right? A 2 and 20 if you will, right? Digital credit is homogeneous. You know exactly what's behind it. It's Bitcoin. These other strategies are sometimes heterogeneous with many different asset groups, assets grouped together, making it very hard to ultimately assess the risk. Ours is scalable through an ATM mechanism that allows people to buy the product. Uh and uh hedge funds and other strategies are discreet. We're accessible, traded via four-letter ticker on the NASDAQ. And now, interestingly, uh trading on many tokenized uh exchanges and tokenized products. The other ones are typically restricted to those who are accredited institutional investors or high- netw worth individuals. And we're transparent, right? We we disclose our performance our holdings through weekly AKs and websites that update every 15 seconds. So one of the big questions as as we have seen stretch perform over the last uh four months essentially the year 2026 is what does this mean for our capital market strategy? Right? I'll introduce this topic and Michael will talk about it a lot more. Right? Right. And so we said our objective is to double Bitcoin per share uh in seven years through the success of digital credit. And so what does that mean? We sell digital credit, right? And we've said that we target about 10 to 20% of Bitcoin reserves annually in digital credit volume. Uh and of course we'll uh analyze that and assess that to see if that target makes sense. But that will generate amplification to our common stock, right? which should increase the Bitcoin per share in our common stock, which is ultimately our goal. And as we increase Bitcoin per share, that allows MSTR to outperform Bitcoin, which is what we've seen happen over the last 6 years, right? What what allows us to flex these levers even better if our cost of credit goes down, right? If we're able to decrease the yield from 11 12% to lower for a variety of factors, if we're able to sell more stretch, that increases amplification. And if our MNAV goes higher, and I'll talk a little bit about our MNAV, but that also creates benefits uh for example, our cost of paying our dividend. What has happened in the last four months is we have increased optionality for strategy the company, right? We have more sources of capital and we have more uses of capital than we ever have before. And the successive stretch gives us options to do different things from a capital markets and a treasury operations perspective to benefit our common shareholders. Right? Our traditional sources of capital, sell MSTR, sell Stretch, right? We could sell our US dollar reserve, right, to pay dividends which we added in November. We also have Bitcoin that we have the opportunity uh and the option of selling. We can see our other preps start to perform and sell those into the market. And we've talked in the past about also being able to potentially sell BTC or Bitcoin derivatives. What are our uses of capital? Right? Primarily today we bought Bitcoin. We use capital pay our US divid US dollar dividends and we use capital uh to build up a US dollar reserve. We have used capital in the past to pay down our convertible debt, our secured loans, our Bitcoin back loans. We can continue to do that in the future. And then we could also use capital if we want to in the right time to retire any of our other preferreds. Right? So what does this really mean? This means we had three trades that we have executed and really before 2025 two trades. We sold MSTR, we bought Bitcoin. We sold MSTR, we bought US dollars. Last year, we added stretch and prefers, and we sold stretch and we bought Bitcoin. Now, we're really seriously thinking about and contemplating. We want to introduce the concept of a few more trades, right? Selling MSTR at the right MNAV, where it's Bitcoin per share created to buy back debt. What does that mean? considering retiring uh potentially early some of our convertible notes using our common stock selling stretch to buy US dollars, right? We haven't done that that much to date, but perhaps reserving part of our stretch proceeds to build up our US dollar reserve and then selling stretch to buy back debt. Right? You can see how that would be an accreative trade to Bitcoin per share because stretch inherently on sale is not dilutive in buying back future dilutive convertible shares, right? And then the third sort of set of interesting trades that I sort of previewed on the last slide is selling Bitcoin, right? And and this is a big you sort of statement but our ability to sell Bitcoin either to buy US dollars or sell Bitcoin to buy debt if it's accreative to Bitcoin per share right is something that we would consider doing uh going forward. So how do we make these decisions? Ultimately there are two sides of the same coin if you will. One side is our equity performance, right? And to our common shareholders, the most important thing is to accrete Bitcoin per share, which results in higher BTC yield, which ultimately those together result in higher BTC gain, right? Adding more Bitcoin and BTC gain on a dollar basis is the closest proxy to earnings per share. So those are the three KPIs we look to assess equity performance. On the risk side, right, the other side of the coin, right, we have a BTC rating, which is the amount that our debt and our leverage is over collateralized by Bitcoin. We have an MSTR duration, which is the average duration of all of our instruments, right? And and so if you look at our perpetual preferred, they have the longest duration based on a maui duration basis, 10 15 years out. And then we have our convertible debt, which has a shorter duration. So swapping longer duration for shorter duration is a good trade for us, right? And then we have MSTR risk, right? And so the BTC rating and the MSTR rating together influence the total risk profile to the company. And so we'll talk through a little bit more about this framework later. A couple things I want to note before I hand off to Mike. One is Bitcoin per share accretion is our primary goal. MNAV is an input, right? Uh the threshold for Bitcoin per share creation when selling our equity and buying Bitcoin is increasing over time. Right? So where it used to be a 1x MNAV, as we add debt and as we add preferred primarily to our structure, the break even increases. Right? Now it's about 1.22x. That means at 1.22x 22x or higher MNAV, it's accreative for us to sell MSTR and buy Bitcoin. Below 122XMAV, it's actually more accreative for us to sell Bitcoin, right, and pay off our dividends than it is above 122XM. And so that's a note and and we'll talk more about this and we'll explain it further, but it's important point because I think there is a uh misconception that the break even point is 1.0. 0x. Next thing I'll note, there are benefits to the way we bought Bitcoin and the holdings of Bitcoin that we have by cost basis tier. And you'll have this here taking $20,000 tranches 0 to 20k, 20 to 40, 40 to 60, 68 and beyond. We've bought Bitcoin at every price level below current prices about 80K. we have an unrealized gain from a tax basis on that Bitcoin. Above 80K, we have unrealized losses. If we were to sell Bitcoin, our objective would be to sell high cost basis Bitcoin to capture some of those unrealized losses and to take some of those unrealized tax benefits of which on our balance sheet there's about $2.2 billion, right, estimated of tax benefits. So there is a tax benefit if we were to sell high costes based high cost basis Bitcoin as an example right to pay down some of our dividends over time amplification. We're currently at about 34% amplification. A portion of that about 10% of that is driven by our convertible debt. The ability for us to increase amplification to the company is higher when we have long duration digital credit than it is when we have short duration convertible debt. So as the company starts to cycle over time from convertible debt to digital credit, we can uh take on more amplification with lower risk levels. And so we could see ourselves getting 50 60% amplification levels over time and still feel like we have a high credit quality and a high risk quality to the company. And the last thing I I'll I'll share here before I get to some of our principles is a US dollar reserve. Right? We have built up a $2.25 billion US reserve which at that point represented over two years of dividends and interest payments. And now we're with the same exact US dollar reserve at about one and a half years. Adding to the US dollar reserve reduces Bitcoin per share but improves the credit quality of the company. And so it's something that we'll continue to evaluate over time what the right level of US dollar reserve is. We feel like at a minimum it should be $2.25 billion, but likely as we grow our uh digital credit and stretch we will want to add to this at a certain level. So, I'll summarize uh what I shared here because hopefully it addresses a lot of questions from our shareholders. How do we think about managing capital markets and our balance sheet? Um, one, our objective is to create long-term value for MSTR, right? We want to increase Bitcoin per share, which will increase the price of the common equity and ultimately be better for our common shareholders. Two, we're going to continue to grow demand for Stretch. We've seen it to be a very popular product in the market and very beneficial to our balance sheet and we'll continue to improve the features as we can. For example, moving the semionthly dividends. Three, we are going to proactively reduce convertible debt based on market conditions and that could mean actively purchasing back through whatever means we think appropriate some of the convertible debt before it comes due. Right? Fourth, we're going to look at the stretch demand and credit risk to determine the size of the US dollar reserve. There's a natural market mechanism that as uh the US dollar reserve in months to cover or years to cover decreases, the credit risk of stress goes up nominally and could decrease the demand and so we will monitor that to decide what is the right US dollar reserve size. Fifth, similarly, the amplification, the appropriate amplification for the company will also base on market conditions, right? Mike and I and Andrew and and and the entire team are looking literally every day at what are the trades that are creative to Bitcoin per share, what are the trades that uh create the right uh equity accretion and what are the right trades that manage the credit risk at the right levels. And six, uh, not necessarily most importantly, but maybe most notable, we will sell Bitcoin when it's advantageous to the company, right? We're not going to sit back and and and just say, you know, we'll never sell the Bitcoin. We want to be net aggregators of Bitcoin, increasing our total Bitcoin, but more importantly, increasing our Bitcoin per share because we think that is what is going to be most accreative long term for MSTR and for the common. Uh and with that I will hand it over to Michael Sailor to complete the presentation. >> Uh thank you Fong. Um I thought I'd elaborate on um on some of the things set up till now and just uh give you an overview of the BTC market and then our capital market strategy. uh everything is based on digital capital and Bitcoin is digital capital and that means global uh legitimate collateral global property. So we we keep track of uh Bitcoin as digital capital and the consensus in the market and what you can see here is the US government has embraced it. All of our key financial regulators, the head of Treasury, the head of the SEC, the head of the CFDC, and now the incoming head of the Fed are all digital assets enthusiast, innovators, and Bitcoin believers, as is um the president of the United States, Donald Trump, and the vice president, JD Vance, along with many, many other cabinet members. And I think that's a very important fact. Um there are a lot of bills still working their way through Congress. Uh the most uh notable one right now is clarity. The real key here is that uh Bitcoin is a priority uh in the House and the Senate on the Hill at the White House and there's bipartisan support and bipartisan agreement for Bitcoin as digital capital and for legislation that supports the adoption of Bitcoin as digital capital in the world. Um really exciting. A few months ago at our at our Bitcoin for corporations conference, we saw major announcements by systemically important banks, Morgan Stanley, City, TD, all with intent to integrate Bitcoin into their operations. This is something we only uh hoped for three or four years ago, and now it's reality. And at the point that Bitcoin's integrated into the banking system, then it's digital capital here to stay. uh you can just see the announcements across your ticker right everywhere in the world. This is a global phenomena. It turns out whatever happens in the US and with the US banks is is spreading to Europe, to the UAE, to Hong Kong, to South America, etc. I think you're going to see these announcements accelerate, but we've we've crossed the event horizon and it's pretty clear that you can't put the genie back in the bottle. Bitcoin has arrived. We uh try to be systemic. So we track it and we track the 15 uh largest or most systemically visible banks in the world and we look at at uh their embrace of uh Bitcoin as a creditworthy instrument. Will they trade it? Will they offer credit against it? Will they custody it? Uh will they handle the derivatives? Uh etc. And what you can see here is that uh adoption has actually advanced since even last quarter and everywhere in the world across all of these banks there are active efforts uh to improve uh Bitcoin support. If uh you track the number of accounts that support Bitcoin access, you can see we're marching up into the high hundreds of millions. 840 million crypto exchange accounts, nearly a billion NEO bank accounts, nearly a billion brokerage accounts that all have access to some sort of Bitcoin derivative. Uh ETFs of course continue to embrace Bitcoin. There's now been 125 ETFs with um about $126 billion of capital. Uh the capital flowing in these ETFs continues to accelerate and as you can see we were the first company to embrace Bitcoin and now we're up to 194 public companies. We anticipate this will continue to grow. Um lots and lots of IPOs. the public markets have embraced Bitcoin and and this is just an example of some of the notable companies that have come public just recently that have substantial Bitcoin exposure. Um the digital credit ecosystem has been a very pleasant surprise. It has grown very rapidly. It's and has become very diverse. And the way that we know that digital credit is working is that that companies and economic actors everywhere in the world that we've never met face to face are discovering this and they're building products and businesses around it. So right now what we see is very enthusiastic support with retail investors, with corporate treasurers, with institutional investors, with cryptonative innovators, and with tradi uh innovators. So, five different groups of uh of capitalist, but they're all getting very heavily involved enthusiastically and rapidly. If we drill into retail, 80% of all STRC shares is held by retail as of our last check. This is an extraordinary fact. Normally, it's very difficult to get uh broad deep retail support for a common stock and or a public stock. And yet we've been very pleasantly surprised. Um we're able to trace uh about 120,000 individual retail accounts. Uh word of mouth is spreading this. It's spreading virally. Um based upon our studies, we see that anybody that buys STRC is generally telling their friends, their family, their parents, uh their uh their uh working associates about it. and it continues to spread uh word of mouth. Um you can also see Schwab is a big distribution channel. 23% of Stretch is held in Schwab accounts. Fidelity is a channel. Robin Hood is a channel. Morgan Stanley Erader channels. Black Rockck is a channel. Interestingly enough, Vanguard uh that won't let their investors buy Bitcoin natively. They actually are a channel for Stretch. And so it's pretty exciting that we have uh wrapped Bitcoin into a credit instrument that is uh being distributed through all sorts of traditional finance channels to types of investors that otherwise would never be able to buy Bitcoin itself or would never want to. Um we actually have uh traced uh stretch exposure and we estimate that there are about three million households that are benefiting from stretch right now. So think of it as powering a savings account for 3 million households. Fong mentioned about a 100 million beneficiaries of MSTR. Well 3 million beneficiaries of STRC in 8 months is a pretty good uh start to the race. Uh our ambition is to spread this to tens of millions and then hundreds of millions of people. So we're off to a good start, but we're just very enthusiastic about the retail support. Uh we're also very enthusiastic about corporate support. Corporations un uh unprompted by us. We didn't go and sell this to them. They just figured out that it was a good idea for them. But corporate treasurers and corporate CFOs uh with working capital have been allocating some of their treasury capital to stretch. And um this is a really pleasant development and you know we're starting to think that there might be thousands of companies that might allocate some amount of their treasury capital to stretch and um you know I've had a lot of experience uh selling BTC uh to corporations. What I found is that tends to be a board level decision. It goes all the way to the board of directors. The CEO has to be way behind it. And if one director on the board has concerns, the the cycle slows down. But with STRC, it's not a board level decision. It's more like a CFO level decision. If the treasur is enthusiastic, the CFO can greenlight it. They might or might not give the CEO a heads up. But this is a very different value proposition. you know, it's maybe a five minute conversation with the CEO instead of a two-hour conversation with the entire board. Uh, for that reason, we think that, uh, STRC really is Bitcoin for corporations. It's going to spread very rapidly. Now, um, the other thing that's very exciting is that uh that STRC has spread into credit indexes. Uh, Black Rockck's PFF is a 14 billion dollar uh, credit ETF and Stretch is the number two holding. VanXPFXF is another credit ETF and it's all and strategies uh, Stretch is also the number two holding. And so imagine an instrument uh, coming out of the blue didn't exist 12 months ago and in less than 12 months we've gone from non-existent to number two. Next stop, number one, we're enthusiastic about seeing Stretch embedded in lots and lots of institutional credit in indexes and lots of institutional credit funds. Third party ETFs have been finding Stretch and they're building innovative ETFs. Strive is building a digital credit ETF. Uh 21 shares uh created an an ETF with Stretch and uh took it public in Europe. Uh there's a number of ETF uh providers that are working with us that are in the pipeline right now. I think active discussions with four right now and so we would think that over time there'll be more ETFs that build STRC into their uh into their fund offering. So here I'd like to talk about digital money and digital yield. Um we we start with digital capital. Bitcoin is 34 vault. On a rolling 30-day average, it's 39 ARR. The one-year trailing V of Bitcoin is almost 40. So, think of it as a 40 V 40 AR asset, raw economic energy. We split that asset into STRC, which is three V 11.5% yield, and then MSTR, which is 71 V, 59% ARR. So one's an amplified Bitcoin we call digital equity and the other one is damped you know digital credit. Now digital credit we believe is like the kerosene of finance right it is it is it is the monetary fuel um and is a universal monetary fuel. It's high-grade, highly distilled. But from here, you can build all manner of products. And we see the layer three is digital money and digital yield. And neither of them would really be possible without digital credit. It's it's it's just too difficult to distill pure zero va 8% money from a 40 AR asset. You have to crack it. You have to have a crypto reactor and you have to have 50 billion billions of dollars of equity capital to do it. And that's what we did to create stretch. So simple definition digital money in our lexicon is 0% volatility daily liquid instruments built on digital credit like zero v 8% yield coin. And then digital yield, that's nonzero volatility or it might be illquid. It might be a threemonth lock up 5x levered 35% yielding fund that loops digital money four, five, six times in order to get there. And so digital yield is is u a levered construct and uh digital money is uh is the stripped down construct. We think digital credit's programmable across lots of dimensions. There a lot of ways to add value to it. You can um you can tokenize it, put it in a private fund, put it in a public fund, put it in a bank account, you can deploy it on a crypto exchange, on a NEO bank. You can deploy it on a real bank. You can deploy it on a crypto network. You can program it to have volatility of zero or let it float up to a volatility of 10. You could uh program the liquidity to be continuous or daily or monthly. But you could also put in a quarterly lock up or an annual lock up in order to put more leverage on it or create a different characteristic. You can program the yield from 5% up to 25% reasonably. Some people might go beyond that, but we think 5 to 25 is reasonable. And then you can convert the currency. you can create great British pounds or euros or yen or Swiss Franks uh with digital credit starting from STRC. And so when you think about all these different forms, the question is do you want to create a yield coin like a digital money coin? Do you want to create a yield fund? Do you want to create an account? Right? And depending upon what your assets are, if you're the biggest bank in Australia or if you're a Deutsche Bank, you probably would do it one way, but you, you know, if you're a crypto exchange, you might do a different way. The math is pretty straightforward. You start with 11.5% performance and like three V right now. Um, if we're lucky, maybe we'll be able to get our V to two or to a one handle. I mean, that's a that's the goal of our proposal to the shareholders, but I I doubt seriously we get below a one and a half or a one V. One V is sort of what publicly trading traded money market funds look like right now. But getting to zero V takes a bit of work. So, so one approach to add value is is to step it down, strip the vault to zero and maybe instead of um three 11% you offer zero v 8%. And that's uh digital money. And the other approach is step it up, right? Leverage it 3 to one, pay 5% for the capital and you know, maybe you end up with uh something that's paying you like $35. You pay $10 on the capital and you get a 25% yielding levered uh yield fund and and these are all opportunities. Uh we're we are not going to do it ourself. Our our laser-like focus is make stretch the deepest, most liquid, most stable, least volatile, highest sharp ratio credit instrument in the world. And that's a mission. But what we think is there a lot of crypto innovators and you see right here on this screen, a lot of very impressive companies, you know, that are that are moving fast right now. Apex has had enormous success early on. Saturn's doing the same thing. But you know, Hermetica, Kraken, Rox, uh, Roxom, Onondo, Pendle, Spread, Strada, they're all doing very interesting things right now and they're very innovative and they're moving about 10x faster than the Tradfi complex normally moves on these sort of initiatives. But having said it, there's a lot of interesting Tradi initiatives, things you can do in a traditional finance environment, either with a private fund or a public fund. and and we see those things happening as well. Um 8 weeks ago uh there was no stretch in the DeFi industry. Uh and in those eight weeks we have rapidly grown to something like $270 million of exposure. So this is just really extraordinary the rate at which money is flowing. Sometimes money is flowing into this complex a million dollars an hour, $2 million an hour. Um, it's starting to to feel to me like like we may very well see more than a billion dollars of stretch enter the DeFi industry uh in the in the near future. It's moving very fast and it's very dynamic. So, let's speak about Outlook and our vision. We are a structured finance company and you can see here we're taking raw capital digital capital 40 vol 40 ARR $1.6 trillion market cap of Bitcoin. We we are stripping we are stripping the currency risk. We are reducing the credit risk. We are reducing we are compressing the duration risk. We are distilling a yield. We are damping a volatility in order to create various instruments and our greatest uh product and biggest success right now is stretch. As you can see it's you know it's taking a 71 V down to a threevall. You know we're targeting a onevall. Um some some important items to be aware. Um the Bitcoin break even ARR we calculate it all the time. It's very significant for this reason. If Bitcoin grows more than 2.3% a year that break even um that break even ARR we can fund our dividends forever. We can fund our dividends forever without selling a single share of stock. It is a very critical point. If Bitcoin does not grow at all forever, we can fund the dividends for 43 years. We're very clear about this. You'll see we publish it on our website and uh we update it every 15 seconds. So, let's go to the next slide. Here you see this is our website. If you go to the credit tab, you're going to see we show you the Bitcoin reserve. We show you the years of dividends. That's the years we have of coverage of Bitcoin appreciates 0% a year. And then we show you the Bitcoin break even ARR 2.27%. It's updated every 15 seconds. So for those people that are wondering um you know what is the credit risk in in all of these instruments, I encourage you to go to the credit tab. You can go and you can type in you can assume the Bitcoin price crashes to 30,000. You can change your V outlook. You can change your AR outlook. Uh the model will recalculate all of the risk and credit spreads for every credit instrument and especially for STRC. And um as I said, you know, we're updating all of these things in real time every 15 seconds. Uh there's there's a misnomer. Sometimes people think, well, Bitcoin has to appreciate 11% or 11 12% for us us to be successful or cover the dividend. Not true. 2.3%. Or they think 30%. No, that's what we think it'll do. The number that really matters is 2.27% the big BTC break even ARR. Now it's important for another reason. Uh the BTC break even AR is also the inflection point uh where stretch issuance uh where stretch issuance uh results in more Bitcoin uh being stacked by our company than the Bitcoin we uh use to pay dividends if we choose to pay dividends with Bitcoin. So this chart here, what it illustrates is that we don't have to sell a single share of stock. We could stop selling MSTR common stock right now. We can fund the dividends uh with Bitcoin sales and if stretch issuance is greater than that BTC break even number, not only will we fund the dividends forever, we will increase the amount of Bitcoin that we hold forever at the same time. So, so you would say, well, how much is that? Well, you can see if we were to sell $1.5 billion of stretch per year, we can sell Bitcoin, pay the dividends, buy more Bitcoin than we sell, grow our Bitcoin stack, and generate Bitcoin yield. Now, of course, we saw 1.5 uh billion dollars of Bitcoin in like sorry, 1.5 billion in stretch in two days a few weeks ago. So yeah, I think we can definitely stay above that uh break even point. What you see here on this slide is that if we actually have stretch issuance equal to 20%. That would equate to 12.8 billion of stretch sales this year. And we're kind of on the path to that. If we look at the first four months of performance, we might exceed it. Who knows? We might be less. But if we actually run it a 20% issuance rate, then the first order model shows or indicates that we generate a BTC yield of 17.7%. We accumulate an additional 144,000 Bitcoin and that's after we pay all the dividends by selling Bitcoin. So again, the most important point here is there are occasionally some short narratives. People would would say things like, "Well, you know, if they sell the Bitcoin, that's bad for the business or it proves the business doesn't work or something." But, you know, we look at it as if you're a real estate development company and you bought land for $10,000 an acre and you sold it at $100,000 an acre and then you bought more land with the profit. No, you know, or if you sold $100,000 an acre to pay some interest expense on on debt that you use to buy more land, nobody would say that that's bad for the price of real estate. And no one would say that that proves business doesn't work. Real estate development companies literally exist to buy land cheap and sell it expensively. We're like a Bitcoin development company. We buy it cheap. We sell it uh deer. Um where do the dividends come from? Capital gains fund credit dividends, right? That is the essence of the business. We invest in digital capital Bitcoin. The capital gains uh from the investment fund the credit dividends. They will do it in perpetuity if you if the capital appreciates at that break even rate. And it turns out that sometimes we will sell a Bitcoin derivative because it's in the best interest of the company, but it's not necessary. This chart really illustrates that you can strip the business down to something very simple. You uh buy Bitcoin with credit, you let it appreciate, and then you sell Bitcoin to pay the dividend. And as long as you're you're issuing credit in excess of the break even point, then this business works and and grows forever. So, how do we decide what to do? because every single day we've got a bunch of uh trading decisions. Well, we have a very sophisticated equity and risk model. Um we calculate the benefits of the equity and the and the deltas to the risk for every single capital markets transaction. And that means we're we're making these decisions not just every day, oftentimes every minute of every day based upon all the fluctuating prices of the trading pairs. Right now um our BTC rating corporately is about 3.3. The duration of our liabilities is 10.9. That's the stochcastic duration. It's our estimate of of the stochastic duration of all the debt in the press. The risk uh that we've sent it on uh works out to 818 basis points and that works out to a fair credit spread of 61 basis points. uh 818 basis points of risk means that there's an 8% chance at the end of the duration of the liabilities that you're trading at a BTC rating of one. Um and 61 basis points is the credit spread a rational investor needs to be paid to offset the risk. What you can see here is um two things. First of all, the assumptions we plug into the model to estimate that centerline risk is 10% BTC AR. We assume that Bitcoin will perform about at the level of the S&P 500 over the last 100 years. It's a it's a fairly conservative realistic view and we plug in 40 vol we assume that the uh that the asset will remain volatile at infinitum. So we see that is uh two conservative estimates but even with those estimates what pops out is a credit spread of 61 basis points. The investment grade credit spread is like 88. And so this is investment grade credit even with very realistic pragmatic inputs. Let's delve a bit more into this. Here's the risk model. What you can see, of course, is that if you're a Bitcoin maxi, you think Bitcoin's going up 30% a year, there is no risk, right? The the more bullish you are in Bitcoin, the more the risk drops away. If you're a tech investor and you think Bitcoin's as good as a MAG7 stock and it goes up 20% a year, the risk is fairly dimminimous. Uh if you're a trader and you think Bitcoin is no different than the S&P, well then you're on that 10% AR line. And then if you think that the V stays constant, you've got that 818 basis points. If you're a skeptic and you think Bitcoin's going up 0% forever, the risk increases, you know. And if you're a hater, pessimist, and you just think that Bitcoin is is going down at infin item, then the risk actually explodes. There's a lot of risk here, and you can see it in the model. Um, we will show you risk numbers here with that realistic view as though you're uh an agnostic trader. You don't love Bitcoin. You just think it's just as good as any other equity capital asset that's diversified. You can see you can you can calculate the risk with various bitcoin prices and uh you'll get the answer you would expect. Bitcoin price going up is good. Uh bitcoin balling ball going down is good. And uh on the next slide you can see you can uh you can slice this uh with various assumptions about the outlook of bitcoin as well. So let's look at some trades. Um, if we decide to sell a billion dollars of MSTR stock and buy a billion dollars of Bitcoin, uh, if you do that at less than 1.2 MNAV, when you do it at one MNAV, you can see it's dilutive. It's a minus 48 basis point yield, it costs the shareholders $310 million. For that reason, not very good idea. What you can see here is that as the MNAB goes to two or 2.25, 25 it becomes a screamingly accreative deal. At two, you make $457 million in gains on the trade. We've broken it down to basis points of yield. It's also another point 57 basis points of BTC's a lot of money. It's worth a third of a billion dollars. So, it's not that complicated to see whether something's accreative or dilutive when you're swapping common for Bitcoin. You can also see here what it does to the credit risk. um it improves our BTC rating. It decreases the risk. So, whenever we're swapping uh MSTR for Bitcoin, uh it's credit positive. It's probably equity positive unless we're trading below that 1.22 uh break even. Now, let's consider whether we want to use equity to pay the dividends or whether or not we want to use Bitcoin to pay the dividends. If we fund a billion dollars of dividends with Bitcoin, it cost us a billion dollars. It's a billion dollars of cost of the shareholders. Look at the lowest line. You'll see it. It's a 12,763 Bitcoin loss, 156 basis points. And what you can see here is that's pretty comparable to funding the dividends with common equity at 1.22 MNAV. They're pretty much the same. If you fund the dividends with equity below that break even, it gets more expensive for the shareholders. you know, it cost you an extra $290 million to fund at one MNAV. So, you'd be better off to sell the Bitcoin than to sell the equity uh on this analysis if you if the equity is trading weak. On the other hand, if the equity is trading at 2 MNAV, uh then it only cost, you know, $535 million. So, it's an 83 basis point hit instead of 156 basis point hit. So, as you can see, we're always con considering do you use MSTR, do you use BTC uh to fund obligations of the company? What you'll notice is if you do use equity, it doesn't change uh the credit metrics at all because you're expanding the capital base of the company. With Bitcoin, it may be less dilutive, but it does slightly increase uh the credit risk. It drives down the BTC rating. the risk goes up 13 basis points. That would equate to like a one basis point increase in a credit spread. Now, uh what about funding the US dollar reserve to the tune of a billion dollars? What you can see is well, it's a lot more efficient for the shareholders to fund it at a high MNAV like 2.25 or two than it is to fund it at a lower MNAV. And of course, it's constant to fund it at BTC. And uh that's the negative from the equity point of view. The positive from the credit point of view is is it extends our duration dramatically. 160 days of duration. It it it decreases MSTR risk by 55 basis points. It improves the rating. Next. Now what if we actually buy back one of the converts or some of the converts? You can see here I if we go and we uh sell $500 million of stretch to buy $500 million of convertible bond, we actually generate substantial BTC gains. We get a you know a yield of anywhere from 22 basis points on the 2029 convert to 63 basis points of yield on the 2030 convert in the middle. So why? because different converts have different equity uh content in them and so some converts are more dilutive to the common than others and you can see here all the analytics you can see the impact on the rating you can see the impact on the re on the risk generally we'll stretch the duration we'll dramatically decrease the leverage we'll slightly increase the risk and we'll of course generate massive BTC gains through this trade you have to evaluate this of course every day because the price of all converts will be changing every day and and and so this is an illustrative of the illustrative of the model we use. So what if we actually sold Bitcoin to buy the common stock back? This is not something that we have considered before but I like to illustrate it. Uh because what you can see here is that below 1.22 22 MNAV, it's actually extremely accreative to the investors to swap BTC for MSTR, you know, and so if you have an irrational market, let's say some crazy shortseller shorted our stock to.5 MNAV, well, the most profitable trade, you know, in the entire model is to actually swap BTC for common stock at a massive discount to MNAV and you pick up 636 basis points of yield. massive amounts of BTC gain. And of course, the opposite is intuitive. Uh if you're trading at a high MNAV and you're swapping BTC for the stock, you're generating a a dilution. So, you know, you won't see us swap BTC uh at a high MNAV, but you might see us swap it at a low MNAV in the future. And you can see all of these trades, they have a small impact on risk, but it's fairly dimminimous. It's primarily an equity uh dilution or accretion and you know you can see we can we can swap BTC for MSTR but here another very powerful tool the company has is we can swap STRC we can sell credit to buy MSTR. So over time as the business model becomes more unders well understood uh the company has the ability to do its own uh lever buyout or you know LBO on its own common stock. We can le we can create amplification. I'm not going to use the word leverage because leverage implies that you've got a debt obligation comes due. Really it's amplification on the equity. And if we wanted to amplify the returns of the equity, we would simply sell the credit and buy back the common equity. And of course, um, we get to take advantage of market mispricing. If the market perfectly prices everything, we don't have great arbitrage opportunities. I mean, but you can see here, even if uh if the equity was trading at 2 MNAV, we can generate 85 basis points of yield by swapping a billion dollars of credit for a billion dollars of equity. But if uh if the market trades down to 0.5 MNAB, we can generate 800 basis points of yield. So it starts to become uh pretty accreative and this is an option in the in the future that we have as an operator and of course we can actually sell dollars to buy common equity. So you can see the impact of this and and of course uh probably one of the more expensive programs we have is to carry the US dollar reserve. It's uh it's dilutive to the equity. It's equity negative, but it's credit positive. And you can see we do have the option if the equity were to trade to a discount to actually swap the dollars back for the um for the common and it would be extremely profitable for the common stock shareholders to do that. So we've got some scenarios here. Uh we can continue with our conventional strategy at one times MNA. So even if the stock was trading at a discount to break even, I if we're selling credit and selling equity uh and we use the equity to fund the dividends and and we hold the US dollar reserve constant at one and a half years, we would run a 10.6% BTC yield and we would accrete up to 263,000 BTC per share or Satoshi's per share over the next three years. So you can see you know even if the if the market conditions aren't great right we have a business to to deliver 10.6% yield the uh duration would stretch out a bit uh the risk would increase a bit the fair credit spread you know looks like 94 basis points but it's still just a shade off of investment grade so that's a conservative case uh should should the market continue if we were at 1.22 22 MNAB. You can see that the yield expands to 12.2%. Uh the credit metrics don't change, but this is really positive for the equity investors. And now uh here at 1.5 MNAV, you can see that the the BTC yield goes to 13.4. So you can see market sentiment and confidence in our ability uh to maintain this business or or belief in digital capital, belief in digital credit is going to drive an expansion of the MNAV which is going to actually drive an increase in the rate of accretion of Bitcoin per share. It's going to drive the BTC yield up. It's going to drive Bitcoin per share aggressively. And then at 2MNAV, you see the BTC yield of this strategy gets you to 14.6%. So those are just different scenarios showing how market sentiment uh drives the business. But you know negative sentiment, it's a pretty good business. We'll double double Bitcoin per share over seven years. And positive sentiment means that we will double Bitcoin per share faster. Now the company, as I said before, it can fund its dividends without selling any equity. We can fund the dividends by selling Bitcoin and we can still grow Bitcoin holdings continuously. So here's a scenario where what we do is we fund uh the dividends, we fund the USD reserve at one and a half years. We do it by selling Bitcoin. And you can see we drive a 12.2% BTC yield. We go from from the 670,000 BTC level to 850 to 950 to a million. So we'll go through a million Bitcoin held on the balance sheet in the next 36 months. And we'll do that while funding all of our obligations with Bitcoin. You can see the impact uh the impact that's that's measurable is a slight increase in credit risk and a a slight increase in credit spread. But you know I I think it would be a second order effect of the market. So this is interesting to keep in mind. Now what happens if we fix the US dollar dividend and fund dividends with Bitcoin? Here what we do is we just hold the dividend at 2.25 billion and we pay all of our obligations by selling Bitcoin. And what you see is we get to a 14.7% BTC yield. Again, a slight increase in credit spreads, a slight increase in risk, but you know, this is this is without accessing the equity capital markets at all to drive the business. And you know, there we we're looking at first order effects. We're not really showing the second order effect and the third order effect. You know, there are tax credit advantages that are second order effect. There's reflexivity in the common stock itself. It might very well be that, you know, if people decided we, you know, we weren't going to sell any common stock, they might actually decide that the the rational MNAP should go to two or three or four. And so, we can't really model those. What we can just illustrate here is that even the first order model, it's pretty clear that the company has the option to run on the Bitcoin engine or on the Bitcoin derivative engine. MSTR is a Bitcoin derivative and either of them are options. Here's a scenario where we just retire all the converts. And if we if we diverted uh 20% of the stretch uh the stretch issuance to retire debt, we retire all the debt in the next three years. We'll go from $ 8.2 billion of debt to zero. Net leverage goes to zero. The duration of our instruments goes up to 15 years. There's 114 basis points of credit spread, you know, on the on the digital credit, but there is zero leverage. And we run with a 12.4% yield. And we maintain uh this constant 1 and a half year USD reserve. And so you can see that's kind of interesting as well and an option that's available to us. So here's a table that just shows all the various options. And of course there's a lot of other things you know we've got a sophisticated model. We can plug in any possible trade in any size on any day of the week and and uh rest assured we're cons continuing or we're considering these every single day and we're programming trading algorithms uh to trade all these instruments sometimes every single second. And so the the key that point that Fong made is the optionality in the business is expanding dramatically. Um you can see on the equity side our assumptions are 30% BTC AR 20% stretch issuance 11% dividend rate. On the credit side we're much more pessimistic or conservative or you could call it realistic if you want 10% BTC or high V. If uh if Bitcoin V starts to fall, as Bitcoin uh price appreciation accelerates, we have a lot of other options we can take advantage of and and rest assured we'll jump on top of those. I thought I'd I'd uh show one last slide of interest here, which is sometimes people have this misnomer. They think that we're borrowing money at 11 12% and it's a fixed obligation. um that's not correct. We're not borrowing money. Uh when we sell a billion dollars of stretch, we're never paying it back. And so the first obligation is stretch is a perpetual swap. It is not uh a loan. And the second observation is the cost of capital is not 11 a.5%. There is a stochastic cost of capital. What stretch is is a perpetual swap where the issuer agrees to pay sulfur plus a credit spread a variable credit spread adjustable each month and then the issuer invests that in bitcoin. So we are we are paying sulfur plus a credit spread we are taking back the bitcoin return and the company the issuer has a couple of very powerful options. One powerful option the company has is over time to reduce the credit spread. That is an option. Uh and of course the credit spread is probably at at a high point when you're early in the in the industry when digital credit is not understood. But you would think after three years or after six years or after nine years the credit spreads will compress. As confidence in Bitcoin grows, as confidence in stretch grows, as AUM grows, as confidence in the business model grows, the credit spread should compress. The second option is the company has the option uh to lower the dividend to a floor of sulfur. So as sulfur falls, when sulfur's 375 basis points, that's the floor. But if sulfur goes to 200 basis points, the company gained 175 basis points of additional optionality. Sofur has gone to zero or 25 basis points in the past. So, so the fact that sulfur generally fluctuates between 500 basis points and 25 or 50 basis points on an 8-year cycle is a very important point. And when you consider those two options, the stochcastic cost of capital for stretch, you know, has to be modeled as something less than 11 12% maybe more than the long-term rate. If you imagine sofur's 2 or 3% and we have a 300 basis point credit spread 20 years out, it that might be 6%. So somewhere between 6% and 11 12% gets you to like a blended rate of 875 basis points. So when we think about the cost of capital, we think that it's probably 875 basis points and the debt's never coming due. And um I think that's an important point to to make to the world. Uh and it colors your thinking. And so with that, I'll just end with our capital markets principles and I'll reiterate what Fong said. You know, we're here to drive Bitcoin per share up and we're doing everything we can to drive Bitcoin per share up. We think the best product and the best tool to do it is Stretch. Uh and it's clear the market's telling us that. And so we will focus laser-like on making Stretch the best digital credit instrument. uh we do see a world where we're debt free and sooner rather than later um we're going to adjust our amplification and our our credit metrics and our US dollar reserves and our use of proceeds uh based upon market feedback. Uh we get market feedback every minute. We're literally staring at all of these uh all these signals every minute. And of course, we're talking to every credit investor and every equity investor continuously. And again, with Bitcoin, um the company's got more than $60 billion of Bitcoin and the Bitcoin market has $20 billion or more of daily liquidity. Um, if we were to uh if we were to be boxed in by a troll or a cynic or a skeptic into agreeing that we're never going to sell the Bitcoin and we're never going to tap the liquidity, we would be impairing the asset which accounts for 99% of the future of the company. So, you know, it's kind of like a real estate developer saying, "I'm just never going to sell any real estate ever at any price." It's it's kind of a silly thing. Um, if a wealthy person, you know, if if a billionaire spends a sells a million dollars or spends a million dollars to make a billion dollars, nobody says they're poorer. And nobody would would lament that uh spending a few million dollars is going to crash the US currency either. I don't think that if we spend a hundred million dollars of Bitcoin or sell 100 million of Bitcoin to pay a dividend, I don't think it's going to I don't think it's going to negatively impact the Bitcoin network. I think it's probably good for the Bitcoin network. It definitely doesn't impair our business model. If if anything, it just creates more optionality and second and third order effects. So the the management team's uh practice is to run the company in the best interest of all the stakeholders and that means there are three that we laser like focus on whenever we're making a decision. We asked the question is it good for the common equity MSTR and we ask the second question is it good for the creditors especially STRC investors and the third question we ask is is it good for the capital investors BTC investors and we happen to believe uh that running our business uh in such a way as to commercialize digital credit in the most efficient fashion is the best thing we can do for Bitcoin and Bitcoin investors the best thing we can do for digital credit investors and the best thing that we can do for our common equity investors. There is no uh there is no conflict between those three goals because if we suboptimize to the benefit of one to the detriment of the other two, the entire machine doesn't work. And so when we balance the interest of the three, the more credit we sell, the higher the equity mnab, the higher the equity mnab, the more credit we can sell, the less the credit risk, the more Bitcoin we can buy, the better it is for Bitcoin, the better it is for the price of Bitcoin, the less risky the credit is, the more more profitable the equity is. Uh there really are concentric flywheels here. Uh feedback loop within feedback loop within feedback loop. when we're in harmony all three all of those feedback loops are working really well and you can see that happening in the market we monitor it and indisha of um of everything working is when the MNAV is expanding and the equity is healthy and the equity is outperforming Bitcoin when the volatility of stretch is falling and liquidity is increasing right that is indisha of the success of the credit and when bitcoin prices appreciate appreciating and and Bitcoin support and liquidity and the world is appreciating that's indisha of success of the capital and so that's what we've been doing that's what we'll continue to do and we thank you for your support now I think we'll open it up for Q&A thank you Michael so before we jump into the Q&A I'd like to just share with all our investors that we're organizing a special Q&A for retail investors next week on May 13th. You can scan this QR code if you'd like to submit questions. We'll share the link on X and we'll share more details as well. With that said, let's jump into the Q&A. I'd like to invite all our guests to turn on the cameras. Get ready to ask some tough questions. Let's get started with Pete Christensen from City. Pete, please go ahead. >> Uh, thank you, CJ. Um, trying to start the video here. I think it's disabled. Um anyway, uh hop right in here. Michael, I I just want to I just hope h hopefully we just can take this call and how you've laid out I think all these these scenarios um and and and think about like in in in historically I guess well I'm pointing to last year the end of last year that there was a false signal that strategy was selling Bitcoin and it was taken negatively in the marketplace. Today you outline a lot of different optionality uh scenarios that that strategy now has to optimize it its capital stack. Should we take today's call as a signal to the market that yes, strategy is willing to to be more proactive with its capital stack which may include the sale of Bitcoin maybe for tax purposes or maybe for other optimization purposes, credit, what have you. Um should we take today's call as a signal that yes strategy is going to be more uh tactical with its capital stack uh going forward? >> Uh yeah, you should I I think the company got much healthier when we proactively began to utilize the equity ATM and we said it we're going to do it. We're not ashamed of it. We'll probably do it again. And then when the company started proactively executing on the stretch the credit ATM and we said we're going to we're not ashamed of it. We're going to keep doing it. We think it's good and we've got a plan for it. And now I think at this point to say we're turning on the BTC drive. We're not ashamed of it. We got 65 billion. We we have a, you know, a $2.2 billion tax credit that's lying on the floor. We ought to go find a way to pick up the 2.2 billion, right? And uh and just like you know with everything else the more optionality we create and and uh and the more tools we have at our disposal I think the better it is for the equity investors. You know you know we'll probably sell some Bitcoin to fund a dividend just to inoculate the market just to send the message that we did it. Look the company's fine the Bitcoin's fine. The industry is fine. the world didn't come to an end. And if you're a short seller and your thesis is the company's got to sell equity in order to fund the dividends, I would like nothing better than to, you know, rip your wings off. >> I like that term inocuate. Very well. Thank you. >> Thank you, Peter. I'd like to invite Jeff Pog next. >> Hello. Um, first off, congrats to the team, particularly on uh, Stretch's accelerated region. Happy to be a part of this. Thanks for having me here. Um, my questions focused on understanding how macro factors may influence the firm's Bitcoin acquisition strategy. Um, and particularly in regards to interest rates. Um, you know, as as we all know, we're just about a few weeks away now from Kevin Worsh's official inauguration. And even though rate cuts odds are a little lower this year, uh strategy now does have like an explicit uh growing interest rate sensitivity, right? As we just saw from the stoastic model. And so if if hypothetically we see interest rates being lowered, Stretch has this momentum that it will likely trade above par uh more aggressively given the nature of like the floating rate dynamic. And now the company has like a really really interesting fork. You can either at one issue more stretch and push the price back down to par or you can actually use that moment to reduce the interest burden itself right on what's outstanding and there's a healthy tension between these two things. Um, I guess my question is, can you help us understand that risk framework a little better to calibrate that particular trade-off, right? Lowering the coupon versus selling TRC, it changes a little bit of the Bitcoin acquisition velocity, but it also um cuts interest expenses, especially in that lower rate interest environment and any specific like input parameters that you might say takes priority here in your calculation. I >> I'll start and then Fong or Andrew may have some comments. Um so first of all you know when when the macro uh macro indicators are moving against us we've got a headwind everything slows down right uh and when we go when we go to a a restrictive monetary policy you know that that's bad for Bitcoin that's bad really bad for Bitcoin it's bad for risk assets Bitcoin is risk assets squared MSTR is risk assets cubed so I feel like we're like we're like tech cubed and um big tech cubed and bitcoin is big tech squared in a a riskoff environment and you could see that in a riskon environment or a more accommodative monetary econ economy I expect you'll see the opposite I think bitcoin will rally hard as squared our equity should rally as tech cubed uh the credit presumably we have more optionality if sofur falls Um our bias is to grow the business uh responsibly but as rapidly as we can and our bias is to grow Bitcoin. So if we have the ability to accelerate our capital raising, you know, and we could raise twice as much capital in a risk on or a more a looser, more accommodating monetary policy. We will run uh the vehicle as hard as we can. Uh but we won't run it so hard that the capital structure doesn't keep up with it. So the circumstances under which we would slow down or want to throttle the credit would be if Bitcoin if if we go to risk on and Bitcoin doesn't rally and our equity doesn't rally but the credit rallies, right? So, if the demand for the credit triples and somehow Bitcoin uh and and Bitcoin doesn't react uh to the interest rate macro environment and or MSTR doesn't, then we might very well say, well, we're going to want to adjust the dividend rate down uh because we're getting too much demand for the credit. By the way, Jeeoff, I don't think that'll happen, right? I I think the likelihood that we go to a risk-on environment and Bitcoin doesn't rally is small. So then if Bitcoin rallies then our capital stack and our collateral base expands and then we can accommodate more credit. So so the rate of stretch issuance or credit sales is a function of the BTC growth rate or ARR. If Bitcoin grows 30% we can expand you know credit aggressively. if it grow 50% we could go faster. And then the second order is is um really the the equity capital markets enthusiasm for our business model. So if the equity capital markets looked at our business and said, "Okay, we're going to run a BTC yield of 20% a year and I'm going to give you a PTOE of 10. I'm going to give you a 200% premium in NAV and you're trading at 3x mnav." Well, that that would be better than we are right now. If the equity capital markets did that, gave us a 10p to E on BTC yield or BTC gain, then of course, you know, our optionality increases. We grow faster. And you know, the counterveiling view is, well, you've only been doing this for a year or two years, and so the lendy effect says, I'm only going to put a PD of two on that. And so if we get a P to E of two, we could have a Bitcoin rally uh that gets us a collateral stack, but the equity doesn't go as fast and that might govern the rate at which we run the credit engine. But the bottom line is if Bitcoin if if macro if the macro environment turns risk on and expands and Bitcoin rallies, our equity rallies, it's go time. We're going to go and we're going to go with the credit like we're going to use the credit. Make no mistake about it. We want to see the MNAV the the equity is undervalued. We want to see the MNAV expand to two, three, four, five or six. And it would nothing would make me happier than to rip the faces off of all the skeptics and the shorts and drive the equity to the moon. And uh and I think the question you got to ask yourself is is this company going to sell 10 billion dollars of stretch this year or 20 or 40 or 80, right? And the answer to how much we can sell responsibly is a function of where the Bitcoin price is and to a lesser extent how the equity capital markets react. If the equity capital markets are accommodating and supportive and Bitcoin rallies, the company has a lot of tools to manage the BTC rating and the collateral coverage and we can and we can add more equity capital and and you could see I just showed you we can put equity capital in the market fast. We're the biggest equity equity issuer last year and this year. We could also take common equity out of the market if we decided to. Um, what we're going to look at is we're going to we're going to look at the interest rate forward yield curve. We're going to look at how Bitcoin performs. If Bitcoin keeps performing as big tech squared, we're going to look at the forward curve or the forward um the forward expectation curve of BTC. We're going to look at the forward V curve, right? Bitcoin at V 40 or 35 is different than V at 50 or V at 20. When Bitcoin V falls to 20 or 25, you can leverage these things and still have investment grade. You can leverage two, three, four, 5x more and still have investment grade. So, so that's by the way, Bitcoin V being 30 right now is not the same as institutional credit investors expecting bit Bitcoin V to be 30 for a decade, right? So the forward yield curve, the forward vault curve, the forward price curve, the forward, you know, equity curve, all that stuff gets discounted back and we get up and we ask oursel the question, what what is the rational thing to do? But at the end of the day, what we're wanting to do is to uh drive the MNAV to the sky and drive the Bitcoin price to the sky and to build stretch into the biggest credit instrument in the world because the higher stretch aum we have, the more liquidity. And if we can get to a billion dollars of liquidity for STRC, the V will keep coming off. Adoption will expand and we get a network effect. So yeah, I I think you know how Amazon gave like free shipping or shipping for 10 bucks a month and everybody said you're losing money on that and they lost money on that for a decade and then one day they just raised the price and they were the only player in the world and they made a fortune and people, you know, thought well I guess I guess that was a good idea. Um, I think we would like, if you gave me a choice, do I want to sell $500 billion dollars of stretch and pay 11% or do I want to sell $50 billion and pay nine? If you know me and the company, I think you can guess which of the two we want. At the end of the day, our long-term view is Bitcoin's going to go up more than 11%. It's going to go up 30% and if we're wrong, it's 20%. 200 basis points won't make the difference one way or the other. But I rather think that if we have if we gather an extra hundred billion dollars of capital, I think the war to determine the future of the credit markets and the war to determine the future of money is going to be fought and won with money. And so we're going to get the money if we can do it in a responsible way, right? and and at some point if you have this perverse random situation where Bitcoin price is is not reacting and MSTR is not reacting but everybody in I can't imagine that credit investors are more uh are more bullish on Bitcoin credit than equity investors or Bitcoin investors but if you construct that tortured scenario then maybe we would slow down the credit machine but if if equity investors are more bullish than capital investors And if if if capital or Bitcoin investors are more bullish than credit investors, then I think I think the entire system solves its own problems because we're probably not going to be able to keep up with the expansion of our BTC collateral stack. >> I I'll um I'll add one short thing to this, Jeeoff. I I think the scenario you lay out is in a maturation of the digital credit market, right? five ten years out when digital credit is three or 30 trillion on a 300 trillion dollar market um we would run into this issue of how do you manage the demand for stretch I think 10 months into it I think our issue is not so much are we what interest rate or or are we paying or or what does the Fed do to interest rates I think the demand is going to be driven by awareness and marketing of the product right now. So, I I don't think that scenario is going to be much of an issue for the short term. >> Got it. Thank you for those thought responses. We'll take it in. >> Thank you, Jeff. Next, I'd like to invite Andrew Hod from BTIG. >> Hey, uh thank thanks for the question. I think the optionality in the business uh really came through clearly today. Uh maybe just shifting gears a bit. Uh ear earlier in the slide Michael you talked about uh bitcoin being digital capital and micro strategy being digital equity and and stretch being digital credit then you also talked about kind of innovators kind of building digital money uh down the road you called it like a layer three in that example I guess considering stretch is going to be the foundation or the building blocks for digital money uh at some point as the market continues to mature I guess uh you know what do you think that solution looks like? Are you having conversations with innovators who are out there looking to build on top of Stratchet and create these digital money solutions? Uh, thanks. Hold on. Sorry. I can you hear me? >> Yeah, I can hear you. >> Oh, you hear me fine? Okay. Um so uh you know I think you see it with um Apex and Saturn and Hermetica and a lot of the token issuers that are creating these yield coins uh that are powered by stretch and so they're rapidly innovating. I think if you look at some of the the DeFi protocols that are offering, you know, 2x, 3x, 5x, 10x leverage and looping, you know, uh, pendals of the world and the like. I think they're they're also innovating pretty rapidly. We don't know the the final shape. I think there's a thousand different combinations of digital money and digital yield. I think there's a different, for example, there's a different currency in every country. I think you can create various yield coins in different currencies. I think that I think that in Australia you can you can deploy it via a regulated bank or by a token that can sell in Australia or via an ETF taken public in Australia or via private fund in Australia. So when you take the combination of currencies and platforms and containers, you know, the sky's the limit. But what I what I do notice is the people that seem to be moving the fastest and the most enthusiastically right now are the DeFi players. And it's people that are launching stable coins that have to compete with Tether and Circle. And the issue is how do I convince people to put AUM or put uh capital into my stable coin and I need to create either a digital monetary a yield coin zero of all 8% yielding. That's kind of compelling. Or I need to create like a 25% ARR, you know, staked lock. You know, I lock up your money for a month and I'll give you 25% on three or four turns on the capital or something. And obviously the market's going to decide who it trusts and it's going to decide what form of that it wants to buy and it votes with its money and you can literally watch the money flowing every hour in that system. I think I think you'll see some ETF players. They'll but they'll come slower because they're a little bit more there's more regulatory friction there and uh and uh we hold out hope that we'll see a NEO bank offer a digital yield account. There's no reason why that you know a bank or you know any any uh NEO bank that is a mobile app couldn't just say hey we'll just give you 8% on your money in this yield account if you want it. Each one of these things, it's a different counterparty, a different platform, a different regulatory container. Um, what I would say is we had none of these conversations going on 8 weeks ago or 12 weeks ago and now I see like three dozen like three dozen initiatives and so I think there's Cambrian explosion and check back in in 12 more weeks. I think we'll have some exciting news and some exciting partners. but or just watch my X feed because I retweet some of the more interesting digital yield uh digital money offerings that are literally happening. A lot of times people are inventing stuff and I'm finding out, you know, at the same time you are, but the the market's evolving in real time right now. >> Thank you, Andrew. Next, I'd like to invite Eric Baljunos. Eric, please go ahead. >> Yeah. Hi, thank you for having me today. Uh great presentation. Uh my question's um maybe a little more philosophical. I think it impacts the price in the future, but it's about the changing ownership and identity of Bitcoin. So according to River, in the past 16 months, you've had businesses bought buying 560,000 Bitcoin. ETFs bought another 28,000. Governments bought 160,000. So that's a million total Bitcoin by those entities. Meanwhile, individuals sold 730,000 Bitcoin. Some have called this the silent IPO and it's arguably the reason for that 45% draw down. Um this changing ownership is being reflected I think at the recent Bitcoin conferences where you see an increasing number of uh you know suit coiners as some have called them. um which you highlighted in the slide on the government and the banks and I've noticed it's made some of the native Bitcoiners a little uncomfortable and conflicted regarding the original mission given it was made to bypass governments and banks. Uh to me it feels like Facebook 10 years ago when everyone's parents joined. Some people left the platform although the user base did grow from 1 billion to three billion since then. And I just want to get your read on this transition and the sort of mainstreamification of Bitcoin and how important it is to keep uh the the original base of investors, keep them along for the ride and keep the sort of cipher punk edge of Bitcoin as it goes more mainstream and gets adopted by companies, asset managers, governments and and boomers in general. Uh maybe it doesn't matter, you know, given the size of the institutional advisory market uh for that price, you know, maybe hitting a million dollars, but maybe it does. Just curious your thoughts. >> Well, I'll make a quick point. You know, since we got into this space, there's been something like uh call it $1.4 trillion dollars of wealth created for people other than the suit coiners. So I don't know who got the money but uh there's certainly 80 I think we can trace uh 4% to Black Rockck investors and they must have 50 to 100 million beneficiaries. You can trace almost 4% to our investors. We've got 100 million beneficiaries. So, you know, if you look at the corporates, they're representing thousands of institutions and tens of millions of investment accounts and hundreds of millions of beneficiaries and and the network is decentralizing. It is distributing through them and it is maturing through them and finding its way into, you know, retiree accounts and, you know, and insurance beneficiaries and trust funds and three-year-old, you know, trust fund babies. Everybody in the world is is uh getting exposure now. But you know when everybody criticizes the centralization of the network, I note that 85% of the network is held by others. It's held by the crypto OGs. And we don't know how many people that is, but it's almost certainly represents fewer beneficiaries than a beneficiaries that rely upon uh Black Rocks ETF or or a common public stock. So, so the corporations have been spreading exposure to Bitcoin uh by an order of magnitude or orders of magnitude right now. I do think that, you know, if you ask, well, well, who owns the trillion dollars of Bitcoin that's not public? And the Chinese, there are Chinese, there are Russians, there are Americans, there are Europeans, there are South Americans, there are Ukrainians, there are Iranians. When you wonder who's selling it, well, it's a trillion dollars of uh capital held by crypto OGs that are unbanked. Maybe they're selling it because, you know, the currency in Iran crashed. Maybe they're selling it because of some fear of, you know, some Chinese government memo. If the Chinese mined half the Bitcoin in the first like 15 years, it's kind of impossible that there aren't a lot of people with Bitcoin in China. You would figure since they mined a great deal of it. So, I I think generally the industry is maturing. It's rotating from the crypto OGs, but they're not going away, right? We for we spent 60 62 billion dollars to get to less than 4%. It's pretty expensive to not get to the other 96%. And if you look at all the money that Black Rockck and us put in this together, right? The 150 or $200 billion of capital that flowed from the institutions, it didn't get 90% of the network. So 90% of the network is still in in global crypto OG hands. And I meet people, you know, I go everywhere in the world. I'll walk down the beach and there's someone that's like, you know, slapping me on the back thanking me for making them a lot of money, right? And it's because, you know, literally people that would you will never know who they are and they will never announce it. They're sitting on $1.2 2 trillion dollar of capital gains right now in the crypto ecosystem. So I I guess what I'm saying is I'm not worried that the crypto ethos is being squashed. People with a trillion dollars probably have a lot of power to do whatever they're going to do and they're continuing to do it. Uh the Bitcoin network is still highly decentralized. The miners are decentralized. This is a global phenomena. If anything, what's happening is the corporates are just powering up the network. We're the people that invest the hundred or 200 billion dollars of capital to drive the price from 10,000 to 80,000 or from 10,000 to 100,000. But when we do it, 90% of the gain goes to other crypto actors and they power the entire decentralized digital economy. And good for them. That's good. they'll do whatever they're going to do. Uh I think that if you want to I I don't use the analogy it's like Facebook when your parents came along. I use the analogy it's like the internet when it used to be a a girl or a dude in a dorm posted their blog on their web page and then all of a sudden Amazon started selling hundreds of billions or trillions of dollars of products on the internet. Right? It's just we started doing business with digital assets and ultimately you know the killer app of Bitcoin that we see is digital credit and the way you know it's a good app is when someone wants to buy a billion dollars of your product a day right that's I mean everybody in the entire crypto ecosystem has always dreamed about let's invent the killer app and and a good product is is something that people will buy a billion dollars a day of and there aren't that many in the history of the world and we found one so I I think that the the network's going to grow. We're going to power it up. You're going to see an explosion of all the other crypto ideas. Whatever crypto idea didn't catch fire over the past decade, now they've got 10 times as much money and opportunity to catch fire. And some of them will, and the ones that don't won't because the the the market doesn't want them. But, uh, the the industry is the network's evolving in every direction simultaneously. And uh I would take issue with anybody that ever said it's centralizing. It's absolutely not. It's decentralizing. Uh the truth of the matter today is that there's a lot of people with money and power and influence in the world that are going to support this network and defend this network because of the success of all the corporations whether it's Coinbase or whether it's Black Rockck or whether it's Strategy, right? and and if you're going to lobby for things that are good for digital assets in Washington DC, it's not going to be a Chinese crypto pseudonymous billionaire hiding off the grid that's going to do that lobbying, right? So, so the the trillion dollars of crypto OG money is not going to fix the accounting, fix the tax code, fix the banking system, and build the technologies that actually commercialize these apps to a billion people. They're not going to give a bank account to a billion people that pays them 10%. And they're not going to put the crypto OGs are not going to put Bitcoin on every iPhone and every Android phone in the world. That's going to be corporate actors. And so the corporations are doing their part. The crypto OGs did their part. Everybody's in the system. There's tension. It's healthy tension. We welcome the healthy tension. It's what the the global geo that the fact that, you know, someone's going to sell Bitcoin because they're in Iran and some missiles got launched, right? That's a feature, not a bug. It's just, you know, people are trading based upon things that have nothing to do with the way Wall Street trades the S&P index. And I think that's what makes Bitcoin special. And that's why we welcome it as global digital capital. >> Thank you, Eric. Next, we'll invite Ramsey Alisal from Cantor. >> Hi, thanks for taking my question tonight. Um, Michael, you mentioned that if Bitcoin volatility were to fall as the asset price accelerates, you'd have some options and cards to play to preserve the attractiveness of the model. I just wondering if you can kind of elaborate a little further on what you meant there. And then and then completely separately, I was wondering if you could just give us a quick update on the the BTC security initiative. How has that been received? And has there been any developments on the the quantum risk topic worth calling out? Thank you. >> I'll answer the first. I'll let F answer the second. Um, if you go to our credit tab on our website and and you type in a V of like 40 and you have a BTC rating of three, stuff starts to look sort of investment grade. When the V falls to 30, you know, you can have a BTC rating of one and a half and it looks investment grade. when the V falls below 30, you know, your amplification can triple, quadruple, you know, you you know, and so as the V falls, the credit risk falls. So I think that the forward volatility curve changes the view of credit investors and it's going to create more demand amongst more traditional credit investors and it's it's also going to change the view of uh banking regulators and and you know credit rating agencies and the like. So so you know there's there's a certain gift here or a certain what what is the word like uh nuance. If the ball is high, it's equity positive. Every you know today the I think on CNBC at like 350 they said the largest options trade in the entire market in the entire stock market today was an MSTR options trade. Someone traded hundreds of millions of our options today in the market number one of all companies in the entire United States. That's because of the V. So when V is high it feeds the equity market and that's good and is equity positive. when the ball falls, it won't be so good for the equity, but it's very credit positive. And the answer, yeah, the conclusion you come to is is you're going to get performance through volatility on the V side, and you're going to get performance through more amplification and more intelligent leverage as the V falls. And of course the entire asset class is going to expand and people's view of it is going to improve as the vault develops as the vault you know falls and I you know I do think over time over the long time horizon if the assets 40 arr it's it's it's just kind of common sense that as it gets bigger and it gets more liquid the law of large numbers and the inertia of the market and its relative size to all the other pools of capital are going to damp the ball. I think it'll always be more volatile than the S&P and always be more useful. But I think that if you're a credit issuer and a credit investor, you just want to be sensitive to it. And you know certainly right now the single number one issue in the entire market is what is your forward volatility curve for Bitcoin because if you think that Bitcoin is a 30 asset everything we sell is investment grade and it should be priced double or triple what it is if that's what if that's what you think. And so your view of volatility will control how much of this you want. If if the ball starts to fall, there's just no reason why there shouldn't be, you know, a 10x bid on all this stuff and then you might decide rather than levering at 3:1, you lever it 8:1, right? Or something and so it'll change the behavior of all the downstream players uh as the volume increases or or as it changes. Okay. So, Fong, you want to talk about security? Yeah, Ramsey, we we started to bring together uh a group of folks calling it the Bitcoin Security Program or Council and the objective is to to bring together institutions that represent custodians, exchanges, large Bitcoin treasury companies who have a vested interest in the success of Bitcoin and share a combined point of view on what is the potential risk and time horizon of quantum him what activities are underway in the development community, how do we get to consensus? And so likely in the next month or so, we'll share who's in that group and what is our combined point of view. Right now, I'd say there's a lot of uh divergent point of views and I thought it would be useful those who are interested in the success of Bitcoin bring something together. Uh and so you'll hear from the Bitcoin uh security program likely in the next month or so. Excellent. Thank you. Appreciate it. >> Thank you, Ramsey. Next, Jeff Walton. Please go ahead. >> Thank you for including me and uh very appreciative of your leadership and I've got a bit of a two-parter here. So, you spent a lot of the presentation talking about risk of the credit instruments. You've created a really unique arbitrage surface between all of the different instruments and a really unique incentive structure. It's resulted in people buying and selling the instruments right below par on STRC and some of the other instruments. So first question is do you find that that the market agrees with you and this is kind of in line with the answer to the last question on forward looking volatility curve. Do you find that the market agrees with you and the the instruments are trading in tandem with each other? What's the biggest hurdle in communicating that relative risk profile? And then part two is what is the biggest hurdle in accelerating the adoption of the digital credit instruments into the future. >> Well, I think all the credit instruments are undervalued. So, no, the market doesn't agree with us. If the market agreed with with us, then STRF would be trading 200 bucks a share right now, not where it is. So, so I think I think all of the I think the equity is is trading uh weak. I think it's undervalued. I think all the credit instruments are undervalued. I think all the bond instruments are way undervalued. So I would say the market is is much more skeptical and biased pessimistically than we are. Um, and uh, that's why, for example, we're not we're not selling STRF, STRD, STRK, STRE, you know, and we don't really have much interest in selling MSTR. We think all of those assets are un undervalued. The uh, STRC is special because, as we pointed out, it's a variable monthly preferred. And so the stochcastic cost of that capital is it's hard to determine over 20 years, but you're not locking in a mispriced trade. And so I I have a lot more enthusiasm to sell a billion dollars of STRC at 11 a.5% than I have enthusiasm to sell a billion dollars of STRF at at 10%. Right. Uh so no, I think uh we're embriionic. I would say the you know, how do we fix it? It's a lendy effect. There's a lot of education. We have to go and educate the market. So, you could say part of it is we have to tell the story. And you could say part of it is uh people are just going to have to wait, right? Like a after we've been in the market for three years, they'll say, "Well, it's worked for three years." And so, I guess it's it's better than we thought it was. So, I think we'll be cons we'll be continually rerated up. I mean, the risk will be rated down and the opportunity will will be rated up as time goes by and we won't be sitting on our hands, right? We'll be out there communicating the message, displaying it. We'll, you know, partly we'll do it through publishing, partly we'll do it through investor outreach, partly we'll do it through partners. I think uh as our partners create compelling, you know, digital money products or the like, I think that's helpful. Um, and I think um I think if you if you just ask the question, how long will it take how long did it take before the market thought that Amazon had a good business, right? It took 10 years after they started doing what they were doing. And so you could be a pessimist and say it took 10 years for that. And how long did it take before Netflix was deemed to be good? The truth is Apple was mispriced and misunderstood for many, many years. So, so I think if you have a revolutionary business, I think that the market will be biased, skeptical because that's just what it is. It's going to be skeptical of the market was skeptical of Google, you know, Google, Amazon. The market was skeptical of Nvidia, skeptical of Apple, skeptical of whatever. It will be skeptical of digital credit, you know, and digital treasuries for a while. And then there'll be some point when it isn't and they'll just like Warren Buffett comes in and buys some apple and the stock price doubles and the multiples expand from 10 to you know PDS of 10 to PDS of 20 or 25 or 30. It'll happen at some point when we least expect it to happen, but we have to do all the hard work of performing, laying down the track record and educating the market and managing the risk of the business and and the like. And so that's what we're doing. I I I think if you want the optimistic observation, well, the fact that the market's willing to buy more of S that STRC is the most successful preferred stock in the world in the century. I think that's an indisha that maybe some people get it right. So, there are a lot of indicators that it's working and it's spreading fast and virally, but we still have a lot of work to do. >> Thank you, Jeff. Next, I'd like to invite Randy Biner from Texas Capital. Randy, go ahead. >> Yeah, thanks. Michael, I think this one is for you. Um, and hopefully you can hear me. Okay. Um the the question I have you know we talk about a lot the clarity act a lot and it's you know I think it's important for the broader crypto ecosystem more um and you know this bipartisan compromise is good news but for MSTR for Micro Strategy for your world you know what what would be the most important regulatory or policy change or impact I think you know I think we've talked about bank and insurance companies being lobbyed to you know recognize crypto as a statutory asset. Is is it something like that? And and the follow-up question in case you cover this along the way is did at this point with with so many arrows pointing in the right direction for crypto regulation and guard rails, do do the midterms matter that much? And for that matter, does the next presidential election matter much from from kind of a policy and um regulation perspective? >> Bitcoin's in a safe harbor. There's global consensus as digital capital. MSTR is sitting in a safe harbor. It's a publicly traded, well-known, seasoned issuer. Came public in 1998, governed by securities laws that, you know, date back a hundred years. STRC is in a safe harbor. It's a publicly traded preferred stock based on 100-year-old tax law, 100-year-old securities law, trading on, you know, the NASDAQ exchange, which has been around for who knows how long, longer than many of us have been alive. So, everything that we're doing is sitting in a zone of regulatory clarity. I don't think we need any change in a law or a rule in order to 10x or 100x. We we can probably be a 100x bigger from here without any change in any law or any rule. We're not asking or looking for anything. I think that clarity is pretty important to the dynamic and the balance of power with regard to token issuers, DeFi exchanges, stable coin issuers, crypto exchanges. And it and it determines the balance of power between the crypto industry, the NEO banks, and the regional banks and the systemic the big banks. And and so there's a lot of dynamics there that are almost too nuanced to get into right now. Um the significance to us is just uh ignorant skeptics will gloat if it slows down and and they will all flip to uninformed cheerleaders, you know, or acknowledgers if it passes, but there's not anything that we need. It's it's just going to change sentiment. Uh it's going to be a positive bullish sentiment as it goes through long-term. If I look at my laundry list of of of things that are good for Bitcoin and good for us, it's a second order, not a first order, but the second orders is the Basel rules to the extent that they're that they're upgraded to recognize Bitcoin as legitimate collateral and not haircut it. It would be positive for banking adoption and especially credit adoption because right now there's still a bit of haircut of it by the credit rating agencies and the very conservative uh regulated entities that they want a gatekeeper or they want a regulator to tell them it's okay. And so, so I think that at some point if you want an insurance company portfolio manager to buy the product without knowing what it is or why they bought it, then it would be beneficial for the Basel rules to evolve and get and get an embrace of Bitcoin as a legitimate asset. Right now, we're selling to informed investors that want to buy the best thing. And if you look at that market, if we just if we slurped up 10% of private credit, that's 370 billion right there. And and so we've got plenty of runway for the next decade. But my my wish if if uh you know if I had one wish is is uh for the Basel rules to be fixed and then for the world to recognize Bitcoin as legitimate collateral parapu to gold or to or or to other capital assets on banking balance sheets and regulated entities then it should spread faster through the banks as a reserve asset and through insurance companies and and the like. But but it's not not necessary to us. We could be a multi-t trillion dollar company and sell $400 billion of STRC and not have that fixed. >> You know, one thing I'll add, Randy, is is Stretch is already a rapidly accelerating product in the category of digital credit. uh and that is without clarity as it relates to tokenization of securities which I think will either be created through the passage of clarity or rulemaking by the SEC. Uh that will only accelerate things. So we showed $270 million of layer 2 tokenized stretch from companies like Apex and StockX by Kraken. those are sold outside the US, not in the US, right? And so when we get clarity, that'll only accelerate things and and we'll accelerate layer 2 development on top of Stretch and just accelerate digital credit overall. Uh so it's exciting to see what may come on something that's already an exploding asset class. >> That's great. >> Thank you, Randy. I was just saying saving the best for last. James Lavish. >> Thank you, CJ. Congratulations on your new role. Fong, Michael, Andrew, thank you for having me and uh allowing us to ask questions. So, but first, congratulations also on your success with Stretch. You know, I'm a believer in the digital uh credit world and I appreciate you all sharing the many levers that you can now use uh to create value for the common shareholders while protecting creditors. But on that with strategies uh energy and focus on stretch which you've said before uh is a security you landed on through iteration what do you see uh as the optimal future balance sheet structure for maximizing the accretion of value for common shareholders and would that include retiring most or all of the other debt and preferred currently outstanding and do you believe that that's ultimately necessary to attract more of the largest institutions to invest in stretch in lie of traditional yield generating securities. >> Yeah, we think we think uh we want to be debtree completely. So all six of the converts we make go away by either swapping them for stretch or swapping them for equity or swap or paying them off with cash. So I I think there's consensus on that. I think there's consensus that stretch is the killer strong credit instrument. I think the jury is still out on the other four credit instruments. They're all long duration credit instruments and and uh they represent important optionality for the company and they and so I think that our policy will be to retire the six convertible bonds to uh to promote and and to um to polish the jewel in the crown which is STRC and then to watch and nurture the other four and and improve them as we can and then observe whether or not they're material in generating demand. I I think right now you can imagine the company if if I was designing a a Bitcoin treasury company from a clean sheet of paper, the company would consist of one common equity, one monthly or you know or semionthly variable preferred equity and a big stack of Bitcoin and nothing else. Right? That's and that's my advice I give freely to anybody that ever asks me. The other things are interesting maybe but you know not necessary. We'll watch them. It's very difficult to create a publicly traded instrument like strife or stride or strike. So we won't retire it because it represents giving up billions of dollars of optionality. But on the other hand, what really is critical for us is is manage the common stock carefully to get the MNAV up and the premium up, manage the Bitcoin stack and then manage the, you know, the monthly variable rate preferred, the digital credit instrument. Those are the things that really matter. >> Thank you everyone. That brings us to the end of the Q&A session. I'd like to thank everyone for their questions and all the attendees for joining and listening to the earnings call. I'll hand it back to Fong for any closing remarks. >> Yeah, I want to first thank everybody for attending our earnings call. I know there's tens of thousands of you out there uh spending uh 2 hours and 15 minutes of your evening with us and uh we find that uh to be very gracious and flattering. Uh many of you are shareholders of our common MSTR and our perpetual preferred uh stretch. And as many of you know, we have a shareholder vote coming up uh that's due uh early June uh to primarily modify stretch to go from uh as Andrew mentioned a monthly uh dividend to a semionthly twice a month dividend. We believe this is beneficial to our shareholders. As we mentioned, one of our principles is to make stretch better and more attractive. So, we would appreciate you all voting uh early so that we can start to tabulate the votes. Uh and this is how you can do it. If you have additional questions on how to vote for stretch and for the common, you can also go to our website. Uh and with that, I really appreciate your time. Uh thank you for all the uh interest and the attention and we'll talk to you again. uh if not before then uh at at our next earnings call uh three months away. Thank you all. Hey, hey, hey.