Strategy's Stride STRD Perpetual Preferred Stock IPO Backed by Bitcoin | Michael Saylor and Phong Le

Hello and thank you for your

consideration of strategy's announced

perpetual stride preferred stock.

Joining us from strategy is executive

chairman Michael Sailor and chief

executive officer Fong

Lee. Here you will find a summary of key

terms for the stride offering. Should

you have further questions, please reach

out to your representative at Barclays

Morgan Stanley TD or Mullis. With that,

I will turn over to Fong to begin the

presentation. Thank you, Matt. Thank you

everyone for joining our webinar today

and watching this recording. Uh we are

launching uh Stride the third of our

preferred offerings. Uh and we're doing

it in a very strong market environment.

As you can see here, strike since launch

uh at $80 has increased

29% in a period of about uh 4 months and

strife since launch has increased 22%

since launch. This is in comparison to

6.1% during the same time period as

strike for other preferreds and negative

4.6% for other preferred during the same

period as strife. So I think it's a

great market environment to be launching

our third uh perpetual preferred

offering. Uh especially if you look at

the last month uh we have seen both of

the perpetual preferred strike and

strife perform up 13% and 15%. Uh so

strong last month for each of these

offerings. Also, if you take a step back

and look at uh our annualized asset

performance of MSTR, uh we've seen 103%

returns over the last four years. That's

uh essentially double or almost double

the returns of Bitcoin, quadruple the

returns of the MAG sub uh and nearly 10

times the return of both the S&P 500 and

gold.

If you take a look at us uh over that

same period of time since the beginning

of the Bitcoin standard era uh we've

outperformed all major assets uh the big

tech uh the uh all assets against the

S&P 500 also

2885% returns since the beginning uh

when we adopted our Bitcoin strategy and

and one other view over the last three

months uh with a lot of change and

turbulence in the macroeconomic

environment and global markets

We've seen Micro Strategy uh beating

again the entire U Magnificent 7 and

many of the other indexes uh that we

compare ourselves to. Our convertible

bonds uh since we've issued them have

also performed well. In fact uh on a

blended basis have returned 65% which is

uh slightly better than the returns of

Bitcoin during that same period 59%.

And overall across uh multiple different

metrics that we measure ourselves uh

annualized return were number one versus

the S&P 500 in the options market uh

also number one uh against uh IBIT anus

crypto complex. We mentioned before the

Bitcoin standard error return 2885%.

We're the number two most volatile stock

against the S&P 500. Number six in terms

of open interest uh against all of the

stocks in the S&P 500. And when compared

to uh take our open interest as a

percentage of our market cap, we're

number one again versus the S&P 500. Uh

we're the largest corp holder of Bitcoin

in the world with $61 billion in Bitcoin

net asset value and our trading volume

compared to the S&P 500 we are number 10

uh against the S&P 500 and if you take a

look at that trading volume as a

percentage of our market cap 6% that

takes us up to number

three. So, we recently announced our

4242 billion uh capital plan and we're

happy to say that we're 36% complete on

that, 56% through our equity plan, $23.4

billion issued uh since we announced

this plan in October of 2024 and 16%

through our fixed income plan. And

that's what part of the reason we're

launching stride is on the strength of

strife and strike and to be able to

approach uh the target of the $42

billion. We think strife is uh quite

important. Uh another thing note is we

launched ATMs at the market uh uh

offerings for both Strike and Strife.

And to date uh we have raised $316

million in Strike for $9 million in a

short period of time of Strife. And so

we believe that there's uh enough

liquidity in the fixed income market uh

and in strike and strife that there's uh

this is an appropriate time to launch

stride and our intention is uh once uh

after we IPO stride we'll also at the

appropriate time launch an ATM on

stride.

Also, if you look at our year-to-ate

performance uh on BTC yield percentage

and BTC dollar gain, two KPIs that we

measure ourselves against, uh we

recently updated our BTC yield target to

25%. And year to date, uh nearly halfway

through the year, uh we're at 16.9%

uh BTC yield. uh the BTC dollar gain. We

have a $15 billion target. Uh and we're

also more than halfway through at $8

billion uh compared to our target of $15

billion uh nearly halfway through the

year. Uh in terms of our our current

debt structure and our coverage on that

debt, we have about $61 billion of total

Bitcoin asset value and $5 billion of

convertible debt that is currently out

of the money. Uh and so when we look at

it from that point of view, $61 billion

of Bitcoin net asset value and $5

billion of other money converts, we are

are well covered 12x coverage on that.

The other question we often get is is

what about the dividends? How do how do

we pay the dividends and what is the

ability to have coverage on the

dividends from our uh current uh stride

uh current strike and strife perpetual

uh preferred offerings. And as we add

stride to the complex, how does this

look? Well, if you take the same $61

billion of Bitcoin asset value, take

away the $5 billion uh of out of the

money converts, that's about $56 billion

of coverage. And with the needs that we

currently have in terms of of covering

the dividends for strides for strike

strike and eventually stride, we have

290 years of dividends uh that we can

pay using the Bitcoin that we have. Uh

and if Bitcoin was to decline by 75%, we

still have 37 years of preferred

dividend coverage using our Bitcoin

asset value. So we we think we have uh a

lot of coverage for uh the dividends and

potential dividends of our perpetual

preferred offerings. If you look at at

our total uh capital structure, I

mentioned the $61 billion uh of Bitcoin

value. That's one way to look at it. And

and looking at our uh complete debt

complex, uh you can see here uh we have

50 billion of that that that is

essentially unencumbered uh by any of

our debt. the entire $61 billion

unencumbered. But if you take out the

debt that we have, we still have 50

billion remaining. You look at it from

an equity perspective, currently our

market capitalization is about $112

billion. And taking away again the $10

billion or so debt, we still have $102

billion of equity uh to to cover uh uh

the debt that we have on hand. Uh the

final point I'll make or or the next

final point I'll make is is our

convertible bet, right? and and the risk

profile that the convertible debt uh

provides. And what I'll mention here uh

that I want to point out is that the $

8.2 billion convertible debt uh first of

all, some of it is fairly longdated all

the way out to 2032, which is 7 years

from now. Uh and secondly I'll point out

is the interest on the convertible debt

is really now 0.421%

421% uh on a weighted uh basis is our

average uh annual fixed interest rate

that we have for convertible debt.

Uh last thing is is you know a lot of

folks ask well how do we think about

what Bitcoin price uh might approach and

so what we have here is we've assembled

a view of all of our uh analysts uh and

what they uh project for Bitcoin price

in their different models right and you

can see here the average price

projection for 2025 is $161,000

uh 50% up from where we are today and as

you look out to 2026 225,000 the

three-year projections

257,000 and uh even one of our analysts

Bernstein looks uh at this 8 years out

2033

uh million Bitcoin price. So those are

some reference points that folks can

think about when they consider investing

in Stride uh and what might uh become of

Bitcoin and what might become of of

MSTR. Uh so with that I'm going to hand

it over to Mike who will go into more

detail uh with our new offering

Stride. I'm very excited to introduce

Stride to all of you today. Stride

represents our third preferred stock

that we have brought to the market so

far this

year. Stride is a preferred stock that

will yield 10% uh perpetual

non-cumulative dividend. It's a

quarterly cash dividend. It's nonallable

for life. It's going to be backed by

about sixx Bitcoin collateral coverage

at the current Bitcoin price. So, what

we refer to as a BTC rating of

six. Why are we bringing Stride to

market? Well, we're building out the

yield curve for Bitcoin back credit

instruments.

So, Strife is our senior perpetual

preferred and and uh for a Bitcoin

believer in Bitcoin back credit

instruments then Strife is is meant to

be something similar to an investment

grade. It will be it'll be the crown

jewel of our preferred stack and uh and

our aim is for Bitcoin credit investors

to view that as investment grade and

we'll work to overcolateralize that and

uh and to make sure that that is always

senior to every other uh preferred

instrument we bring to market.

Um, strike of course is a convertible

preferred. So it's partly uh dividend

bearing and partly it has a conversion

rate to MSTR common. Um, stride is

really targeted at the high yield

market. It's our high yield credit

instrument. And if you look at it on uh

this slide, you can see that uh one of

the benefits of stride is we expect it

to yield more than strife. We expect it

to be the highest yielding of the

preferred uh equities that we offer to

the market. Um and uh we also expect it

to be very long duration. So you can see

compared to uh high yield loans or high

yield bonds, this will be a longer

duration instrument because it's

perpetual with no call. And um compared

to strike or to strife, it should be a

higher yielding preferred instrument.

And of course, you could find um a long

duration US Treasury bond like a 30-year

Treasury bond, but our goal is to offer

a combination of long duration and high

yield for credit investors that are

looking for

that. If we look at it um charted

seniority versus volatility, you can see

our most senior instrument in our

capital structure is strife. And then

you can see the max next most senior

will be strike and then stride will be

third and then the and then of course

the junior uh security is our common

equity and of course on a volatility

curve we've constructed um the capital

structure so that our common equity is

going to be the most volatile. Uh and

that's important because people want to

build derivatives and options and the

like off of that volatile instrument. Uh

strike should be the second most

volatile. It has proven to be somewhat

less volatile than the equity but more

volatile than strife uh over the last

few months. Um we expect strife to be

the least volatile because it is senior

in the capital structure. it's the most

senior uh instrument uh and we would

think that stride will probably be

somewhat more volatile. Now, we can't be

quite sure about this uh until after

we've observed it in the market for some

amount of time. uh you know it's

possible that strife will become a a

much longer duration instrument and

there'll be volatility in the uh

interest rate markets in which case uh

that might actually have a bigger impact

on strife than stride but uh we also

think that um the impact of bitcoin

moving around will impact the credit

spreads and the and the expected risk of

all these instruments and that that

might have a greater impact on stride

than strife.

So this is this is our outlook right

now. Uh the one thing that uh that's

really important though just to observe

is that strife is senior, strike is

junior to strife, stride is junior to uh

to strike and MSTR is junior to all

three of these instruments.

Um here's a table that shows the three

instruments and and what you can see is

that so far we've uh we've got

outstanding notional uh a billion and 69

million of strike. Uh we've got about

899 million of notional strife

outstanding. This offering is targeted

to start with a $250 million uh notional

amount. Um the all three of these will

be listed are listed on NASDAQ. Strike

and strife were already already trading.

Stride should trade similar uh on NASDAQ

uh with the STRD ticker. Um they've all

got the same duration. You can see uh

the dividend of Stride is 10% par just

like Strife.

The primary difference is where strife

is cumulative, stride is

non-cumulative and uh where strife is uh

senior, stride will be junior. That

means uh strife will have the uh higher

BTC rating at all times. Stride will

have a lower BTC rating than strife and

strike. Uh, having said all that, a

5.9x BTC rating is a is a pretty large

amount of collateral coverage, almost 6x

over

collateralized. And

um, you can see the comparison. Fong

showed performance. What's extraordinary

and and what you pick up here is that

both Strife and Strike have traded up

more than 20% since their IPOs in the

same time period. a difficult

macroeconomic environment where other

preferred stocks have have traded down

approximately

5%. Stride represents the fourth gear in

our BTC engine and of course the point

of our engine is to generate BTC torque

uh via surgical management of our ATMs

uh in every single trading day. So uh

the lowest gear in our engine is the

common equity and the second gear is uh

strike. Uh strife represents uh the

third gear sorry stride represents the

third gear and strife will be the fourth

gear over time. And uh you can see uh

we're doing daily rebalancing of each of

these ATMs. We as we rebalance the

parameters of the ATMs, we let them run

minute minute by minute programmatically

uh and then we tend to uh work to

synchronize our BTC acquisition as we

raise capital in the capital markets.

And uh these uh four gears they give us

the ability to continuously generate BTC

yield and BTC gain uh over time in all

manner of market conditions.

Sometimes all four of these uh gears

will be turning especially where if MNAV

is very high on the equity if uh if the

high yield markets are are very

accommodating if uh the more senior uh

credit me markets that we're positioning

strife in are accommodating and if

there's enthusiasm for convertible

preferred like strike we'll be selling

all four at the same time. Uh there'll

be periods when we won't be selling uh

or we won't be turning one of these

gears or two or three. Uh in extreme

circumstances, we might shut down the

entire engine and coast. But as a

practical matter, generally there's

probably one of one or more of these

gears that's going to be working and we

will be reacting to the capital markets

daily and minuteby minute as we operate

uh this BTC

machine. Um as you compare um these

instruments stride versus strife uh you

can see they're they're pretty similar

except that one is a senior and one is a

junior. You can see uh that the

effective yield of strife has fallen now

below 10%. because it is traded above

par. And you know, our our goal is with

Stride is just to create a higher

yielding instrument uh and one that will

appeal uh to investors that want the

higher yield. We would expect that as

the BTC rating of Strife increases uh

the credit spreads uh could improve and

we expect that as investors become more

comfortable for with our Bitcoin

collateral

uh then that will be beneficial and so

of course that's good uh over the long

run uh for our common equity. It gives

us a a more efficient mechanism and it

gives us a lower cost of capital, but

ultimately uh we'll have a lot more

flexibility to raise capital if we have

both of these instruments operating. Uh

if we weren't bringing Stride to market

if if this offering was simply a

secondary offering of Strife, we would

be um we would be undermining uh the

credit of Strife. And so probably the

effective yield would rather than

continue to climb it might be pressured

or held stable. So in fact we think we

think that it's better for the company

to allow the high yield stride at the

same time as as the senior strife. And

that gives us the ability to work uh

both ends of the yield curve at the same

time. Otherwise, there's not that much

difference between the two except for

the fact that u there's a cumulative

dividend right to strife and there are

enhanced governance features for strife

in the event that a dividend is missed.

Uh and those two things uh don't uh they

don't uh come along with

stride. This is a snapshot of our

capital structure and you can see uh

we've got the converts at the top of the

pyramid. their most senior with the

least risk. Uh then the crown jewel of

our preferred is strife. Uh we have

attached to it a $2.1 billion shelf

registration. Uh we expect uh to be very

judicious about how we uh exercise that

uh ATM. Um strike of course is is a

convertible preferred. So you have some

liquidation preferences. You have a

dividend and then you have a conversion

rate. Think of it as a Bitcoin

fellowship with a living stipend.

You know, for those who don't want the

volatility and uh and the leverage and

the common equity, this offers them the

chance to participate in the upside, but

uh with more principal protection and

and with that guaranteed uh dividend

stream or the constant dividend stream

that's that's uh geared at 8% of par.

Stride is our high yield instrument and

and um we're starting out uh with this

initial offering, but over time we're in

a position to put another ATM on it and

I would anticipate that at some point we

will attach a shelf registration and an

ATM to Stride.

Um then below Stride we have MSTR equity

and of course we have our BTC holdings.

Now if we think about how stride impacts

all parts of the capital

structure stride is improving the BTC

rating of the converts of strife and of

strike. So so the more stride that we

sell the more collateral there is uh for

those elements that are senior to it in

the capital structure. So in fact uh we

think that the market should perceive

that stride decreases the risk of the

convertible bonds decreases the risk of

strife decreases the risk of of strike.

It should be uh credit positive. Um if

we if we grow this enough uh it seems

like it would be a driver to the

compression of credit spreads of the

above three. And certainly our plan is

to improve the credit and improve the

performance of those three senior

instruments through delivering stride to

the market and growing uh growing the

stride um preferred equity base. Now if

you look below stride at the elements

that are junior to it, we think that

stride adds intelligent leverage to

MSTR.

Um, stride stride is a way for us to um

to raise additional capital uh without

diluting the common. So at it's quite

reasonable that stride could drive the

mnavs north. It could get us it could

get us to a higher mnav. Certainly our

plan is to use stride to drive the mnav

to two to three or to four or beyond.

And how would you do it? Well,

intelligent leverage and and the

intelligent leverage of stride is is uh

that we've got the leverage of a bond,

but the principle is not coming due. And

then of course we are incurring the

dividend obligation, but because it's

non-cumulative,

uh it's a much lower risk dividend uh

obligation than say a convertible bond.

a convertible bond principle does come

due and and whatever coupon is an

obligation and strife is much less uh

risky and much more intelligent leverage

than a bond because the principal

doesn't come due but the dividend is

cumulative and there are penalty

provisions and so it is a it is a more

risky uh uh form of leverage uh than

stride. stride uh gives us the ability

potentially to increase our leverage

ratio uh much higher than if we simply

relied on convertible bonds or strife.

And um if if strife does uh become or

emerge to be viewed as investment grade

then it'll be sitting at a very

different point in the yield curve and

it'll be uh it'll be in demand by a very

different set of credit investors and

stride will allow us to continue to

appeal to a different set of credit

investors uh even if stride does uh does

appreciate to investment grade credit

spreads.

Um, stride of course uh has another

impact on our equity. Um, when our when

the equity capital markets are strong,

Stride allows us to achieve a higher

MNAV. But uh when the equity capital

markets are weak, uh in the event that

say our MNAV is is less than two and

we're not enthusiastic about selling

equity, we could sell stride in order to

acquire Bitcoin until our MNAVs were to

appreciate to two, three, four, five. So

we can we can use stride in order to

support a much higher MNAV in lie of uh

using our equity ATM. Now in an extreme

case uh where the MNAV were to fall to

one or below one for the equity, Stride

gives us the option to actually sell

Stride and then buy our own stock back.

And so this is this is both uh an

intelligent form of leverage to drive up

the premium that our equity trades at

versus Bitco Bitcoin NAV and it's also a

a great defensive mechanism in case

there were an a market dislocation and

the common equity were trade below MNAV.

A very a straightforward strategy for us

to recover that would be to simply swap

the stride uh for the stride exposure

for the MSTR exposure um and capture you

know capture that difference. It's a

very easy way right uh for us to capture

uh the discount and monetize the

discount to the benefit of the common

stock shareholders when we trade below

MNAV in the same way that we monetize

the premium from time to time when we

trade uh at a substantial premium above

MNAV. And of course the last point worth

making is stride is very uh a creative

or or it's very bullish for BTC in

general because Stride is going to open

up a channel to the high yield markets

and that capital will flow from the high

yield markets uh into the Bitcoin

ecosystem and the more capital that

we're able to raise to buy Bitcoin uh

the more creative it is to Bitcoin and

the price of Bitcoin and of course that

feeds back to the value of our Bitcoin

assets which is uh beneficial to our

common equity, beneficial to the value

of the strike conversion rate and

beneficial uh to the BTC rating you know

and uh the collateral coverage for

stride for strike and for strife and of

course beneficial to the converts. So,

stride is an important part of the

capital uh pyramid and it and we view it

as being both accretive to all the major

elements of our capital structure but

also substantially derisking our capital

structure and and giving us one more

tool in our financial arsenal in order

to in order to either grow faster or to

fend off any short attack or or hostile

activist attack to manipulate our common

equity. Um here we can see the market

comparisons of preferred stocks. You can

see um preferred equity comparables

there. There's about $80 billion worth

of assets in these ETFs right now. on on

average preferred equities uh are

yielding 6 to 7%

uh and they've got a fee that ranges

anywhere from 40 basis points to 85

basis points. The high yield bond ETFs,

they generally have yields of seven to

eight

handle. And of course, uh the loan ETFs,

they have yields of seven or eight, they

all have fees. Of course, stride will

come without a fee. So, we're not going

to have a fee. And you know, assuming

that it comes at at or around par, it's

going to have a much higher yield than

any of these instruments. And so we're

we're optimistic about our opportunities

because they're already, as you can see,

tens of billions of dollars of capital

invested in instruments that uh that are

yielding substantially less with much

higher fees in the market

today. And as I said, Stride is uh

building on our ecosystem. And this

slide illustrates that strategy enables

a wide variety of securities all based

on

Bitcoin. If you want just uh baseline

Bitcoin exposure, you're going to buy

the spot Bitcoin ETFs like IBIT. Uh and

there's about $140 billion of spot

Bitcoin ETF in in the market worldwide

right now.

Um, our approach is we take advantage of

our Bitcoin reserves and we use them as

collateral in order to in order to

collateralize or back or provide

performance for a variety of securities.

uh our convertible bonds are providing

one sort of exposure with a credit

protection uh and a different uh flavor

of volatility, less volatility, more

credit protection. And as Fong showed,

the bonds are actually delivering upside

that is in excess of Bitcoin but with a

credit instrument.

Um, BMAX is an example of an ETF uh that

is buying those micro strategy or MSTR

back uh convertible bonds. Strike,

Stride, Strife, uh, they're all

intermediate in the capital structure.

If you want a convertible preferred

that's a slightly lower delta instrument

that's got a dividend, then you could

buy Strike. Stride will be our high

yield fixed preferred. Strife will be

our our senior, you know, targeted to be

investment grade uh fixed preferred. Um

and uh then you can see at the bottom of

this stack, you've got Misti, IMIST, and

MST. These are actually examples of ETFs

that are simply selling volatility.

They're they're attempting to generate

the highest possible yield, selling

volatility all the time. uh above MSTR

or MSTX, MSTU,

MSTZ. These are examples of 2X uh lever

derivatives. Uh they're they're they're

2x long MSTR or 2x short MSTR to provide

more volatility uh more performance. And

of course, if you want more than 2x, you

would go to the options market uh which

is uh quite substantial right now. Uh

what makes our company

unique is that we have this very liquid,

very volatile um reasonably well

understood, durable,

credible equ BTCbacked equity instrument

that is the MSTR common equity and it is

the core amino acid or a building block

for building these high volatility high

lever securities in the options markets

and the ETFs markets And it's also uh

the building block we use uh to create

uh convertible preferred uh or and to

generate income uh or to generate cash

flow to pay dividends for uh fixed

preferred like STRD or

STRF and um and so uh we have emerged as

unique in that way. Um I will emphasize

again uh what makes this possible is uh

our substantial Bitcoin reserves

580,955 BTC right now. Uh you know

there's a tendency to think well those

reserves aren't doing anything. Well

they're definitely doing something. Uh

the reserves are what collateralize the

preferreds. They collateralize the

bonds. uh the reserves are generating

the performance, they're generating the

volatility and the liquidity for the

common equity. So, we like their role in

that and our ability to um to issue uh

certain amounts of preferred. If if we

want to issue a uh a preferred stock

with a BTC rating of 10, then obviously

uh with $61 billion worth of Bitcoin,

you could see that we would be capped at

no more than $6

billion worth of that instrument,

assuming there was nothing senior to it.

So the size of our reserves will

ultimately control the amount and the

rate at which we can issue other

securities. And of course you know as

Bitcoin grows the value of the reserves

grow and that gives us more flexibility

with uh the issuance of our various

preferred

instruments and

um that

uh is has to be put in context versus

the entire rest of the S&P 500. Um as

you can see right now if you take the

S&P index and you uh extract the

financial services companies then

strategy is number 11 in terms of

treasury side. So we have uh grown

rapidly up the treasury stack. What is

unique about us not not just the rate at

which we're going our treasury and not

just the absolute size of the treasury.

What is unique is that our treasury is

is $61 billion of digital capital.

Right? We are

substantially all with

99.9% Bitcoin which means our treasury

has Bitcoin performance and our treasury

has Bitcoin

volatility and that means that we can

create this equity and these preferred

equities and we can absorb and either

damp or amplify

uh as we choose the uh volatility.

and the performance of BTC and that's

fairly unique and uh that makes us uh

positively polarized capital. We're

attracting capital at a fairly rapid

rate right now and we expect we'll

continue to climb up this treasury

ladder um you know in due course.

Slide 30 uh underscores our view toward

credit and credit risk and and so we

have created a metric called BTC risk.

BTC risk is the probability of being

under collateralized on a BTC basis over

a given time horizon. So if you use a

one-year time horizon in this case and

you know if you were 3x uh had a BTC

rating of three and v was 60 then you

could see there'd be a 6.29%

29% risk uh over you know at the end of

one year you would be under

collateralized you can see the risk

increases as the wall increases and the

risk

decreases as the BTC rating increases

and this you know makes sense if I have

$10 for every $1 of a liability then the

likelihood that BTC trades down 90

uh% is fairly low um you can see even at

a 70 that pops up on our chart here at

16 basis points. Um if you take this

structure, if you calculate BTC rating

and then you apply statistical modeling

and uh and then you then you apply the

duration of the credit instrument, uh

you can start to develop a very uh

specific uh precise BTC risk for every

credit instrument uh for every given

duration. And so you can see on this

slide, we've laid out the capital

structure of strategy as of March 16th,

2025. And um this is just before the

Strife launch. And um you can see for

the Bitcoin price at the time and a 50 V

and assuming you were a skeptic and you

assumed a 0% BTC ARR we calculated uh

the BTC risk of this entire structure

and we calculate the BTC credit of this

structure and you can see our our uh

securities range from a rating of 41 all

the way down to

4.6. Now let me fast forward uh to May

30th and this is the capital structure

today uh or as of this

deal. The BTC price has changed the

volatility input still 50%. Um the

outlook is still skeptical. We're

assuming 0% ARR over the next decade for

Bitcoin.

But you can see that uh the BTC risk

numbers fall dramatically for the bonds

um anywhere from 0 to 7%. And that means

the BTC credit numbers fall

dramatically. And of course you can

calculate the market credit spread that

is how are the bonds priced right now

and then you can calculate the premium

and you can see that in some cases there

are large premiums um you know in some

cases there are small premiums. So uh

the market sets the price. Um this model

implies a certain BTC credit. Um and if

you believe the model then there's a

spread premium. And of course you can

calculate the same thing for strife and

for strike. And um uh the most important

observation from this page is that all

of these instruments trade with a spread

premium. That is to say, the BTC credit

uh is lower than the market credit

spread. And that means the market

doesn't uh doesn't appreciate Bitcoin as

collateral the way that you might if you

embrace this BTC statistical

model. Now, if you're a Bitcoin

maximalist

uh and you believe that Bitcoin was

going to appreciate 30% a year,

ARR, that changes your view of risk uh

dramatically because you can see even

plugging in the same volatility and the

same Bitcoin price, if your outlook is

bullish, then the risk of all the bonds

collapses to less than 1% collapses to

0% rounded, you know, to the nearest

energy percentage. uh the risk on the

preferred also collapses to 1%. Of

course, the BTC credit falls to just a

handful of basis points. Of course, the

market credit spreads stay the same and

you can see the spread premiums

dramatically expand and um and so for a

skeptic uh you might uh you might price

these bonds much lower if you're a

Bitcoin believer than these these uh

preferred instruments and these

convertible instruments would

potentially be much more valuable to

you if you don't want to embrace um a

Bitcoin fact credit model if you're not

interested in using BTC V BTC AR BTC

um rating in order to drive to um a BTC

credit number. Another way to do this is

to to utilize the Bloomberg corporate uh

default risk model. And so we actually

created that here and we're showing you

the results of that for MSTR. And of

course it's driven uh it's driven by

volatility. And you can see that as the

volatility of MSTR falls, we we move

from a high yield um rating to more of

an investment grade type rating here. Of

course, you can go ahead and plug in

your own number and decide how what what

kind of risk would be appropriate. Uh

this shows a five-year um probability of

default.

Um coming back uh to the question of how

do we pay the dividends, you can see

here that

um Bitcoin has traded 54 uh billion

dollar average trading volume over the

past 30 days. So so BTC is very very

liquid. MSTR's average trading volume is

about $5.6 billion a day. So not as

liquid as BTC but an extremely liquid

instrument. Our annual fixed obligations

about 235 million. You have to compare

that to the equity we've raised so far

year to date that's 9.1 billion. And so

the total fixed obligations we have as a

percent of daily trading volume 4% 4.2%

2% uh as a percent of the last uh 12

months equity that we've raised about 90

basis points and as a percentage of the

last 12 month trading volume of MSTR uh

two basis points. So we feel confident

uh that we should be able to uh raise

the capital in order to pay these

dividends uh without stressing any part

of our capital

structure. Slide 36 illustrates uh the

credit spread of traditional bonds. Uh

we're currently um we're currently

engaged in a process of um of educating

the market about the creditworthiness of

Bitcoinbacked credit instruments and um

and Bitcoin backed credit instruments

are a fairly new thing. Uh the

traditional market is very familiar with

uh

fiatbacked uh credit instruments. And as

you can see here, normally credit

spreads for investment grade are

anywhere from 30 to 125 basis points.

And um you know, as your you know, as

your uh credit rating falls, you know,

these credit spreads increase to uh to

much larger numbers. Um we're confident

over time that we will persu persuade

some investors uh that our Bitcoin uh

believers to start to think uh more

seriously about Bitcoin uh as

collateral. And as they start to embrace

BTC ratings and BTC risk and BTC credit

metrics, then we expect that our fixed

income instruments and our our

preferreds will be rerated by the

marketplace. And so there is there is

upside and and uh we're

enthusiastic about our education efforts

to get the market uh to view us as uh an

investment grade company uh issuing some

instruments that are investment grade

type instruments or comparable to

investment grade type instruments.

On slide 37, you can see why we believe

this uh because uh the lowest

collateralized instrument we have is

going to be six times over

collateralized and the highest uh

seniority instrument is 60 times over

collateralized. And if you look at the

conventional capital markets, there is

no rated US company that is more than

three times over collateralized on their

fixed income

securities. And so in this particular

case, we think that we're pioneering a

new area uh super overcolateralized

credit instruments. Uh and so they're

not rated right now and the credit

rating agencies have not embraced

Bitcoin as collateral. But clearly this

is the opportunity for our common equity

shareholders and for our fixed income

investors and and and this is an

opportunity for uh for the the market

and the industry in general and uh you

can see uh we have good reason to be

optimistic based upon this table.

So uh let me end with the thought that

um stride it's going to be driven by BTC

coverage. As the price of Bitcoin

appreciates the BTC rating is going to

appreciate that means the credit risk

perceived in the instrument should

decrease. That means that the credit

spread should compress. of the credit

spread compresses then stride can trade

up from uh from whatever level we

initially uh sell it at. So that would

be credit positive for stride. We think

that uh because it's a very long

duration instrument if interest rates

fall if sofur falls um over time that

could be very beneficial to stride

because we have a long duration uh fixed

dividend and then of course as bitcoin

volatility changes uh an increase in

volatility of BTC uh would increase the

risk but a decrease in volatility of BTC

uh would of course decrease the BTC risk

and that should be credit positive for

this instrument should should compress

credit spreads over time. Um our belief

is Bitcoin has been growing 50 to 60% a

year and over the course of 20 to 30

years. Uh my belief is Bitcoin grows

about 29% a year over the course of 20

years and uh as it as it decelerates

from its 50 or 6 50 55% growth rate down

to say

20%. We think that the volatility at

least I believe the volatility of

Bitcoin will also decelerate and and

should fall from 55

uh down toward the 20 level. And of

course it'll take two two decades for

that to happen. But over time as as

Bitcoin emerges as as an institutional

grade asset class, it's very reasonable

that its performance begins to converge

on on the S&P index or some equity

capital markets number and it's

reasonable that the volatility begins to

converge in the same way. So whatever

happens

uh the important thing is that um in a

high volatility environment that is very

uh that is equity positive for us.

Higher volatility increases the value of

our equity instruments and the

derivatives and the options that trade

above the Bitcoin baseline. And then and

that gives us the option to strip the

volatility to sell the credit

instruments. And on the other hand, in a

lower volatility environment, um we have

um more creditworthy instruments and so

it's reasonable that we could increase

our leverage ratio. And so the company

is uh pretty well positioned to either

run with a lower leverage leverage ratio

on a high ball environment or a higher

leverage ratio in a lower ball

environment. And we can tune this over

time in order to ensure that we reach

optimal performance uh with our uh with

our equity and with all of these other

instruments. And uh I will just end just

reiterating the terms. It's pretty

straightforward. $100 par, 10% uh

dividend at par junior to the other

preferreds.

Um our appendix has uh you know has some

nice uh details on our assumed fully

diluted share account and also uh

there's a more detailed explanation of

how we view BTC yield BTC gain BTC

dollar gain and also uh how we deal how

we view BTC rating BTC risk BTC credit

metrics etc. So if you have questions

about that, feel free uh to read uh the

details in the appendix. And uh we thank

all of you for your time today and for

your interest in this offering.