Stream STRE Perpetual Preferred Stock IPO | Euro-Denominated | Bitcoin | Michael Saylor & Phong Le

Hello everyone. Thanks for joining for

our stream investor presentation. My

name is Fong Lee. I'm the president and

CEO strategy and I'm joined by our

executive chairman, Michael Sailor.

I'll quickly walk through the highle

term sheet for stream. This is an SEC

registered uh security priced at 100

euro per share of stream. Uh this will

be senior to two of our other preferreds

strike stride and MSTR common stock and

junior to our other two preferred strife

stretch and our convertible debt. Stream

is perpetual and will pay at a dividend

rate of 10% perom.

Uh there are other uh dividend stoppers

dividend deferability liquidation

preference details that you can see

here. We plan on offering this uh and

listing it on the Euro MTF exchange in

Luxembourg.

Let me start with an overview of the

company. Uh Strategy is the first and

largest Bitcoin treasury company in the

world. We have 641,25

Bitcoin which is 3.1% of all Bitcoin

that will ever be in existence. Our

market cap's currently at around $77

billion, which makes us the 138th

largest publicly listed company in the

United States. And this year alone,

we've launched four preferreds in the

US. Strife, Strike, Stride, and Stretch.

And our most recent one, Stretch, STRC,

is the largest IPO so far in the US in

2025 at $2.5 billion. In year today,

we've raised nearly $20 billion of

capital. Uh, and those proceeds have

been used to buy Bitcoin. And that's

about 88% of what we raised in 2024. And

we have a couple months left to go this

year.

Every single quarter since we launched

our Bitcoin Treasury Company strategy in

Q3 2020, we bought Bitcoin, 85

acquisitions total. We intend to

continue buying Bitcoin into perpetuity.

Those

Bitcoin purchases have positioned us as

the fifth largest treasury in the US uh

compared to companies like Nvidia,

Amazon, Google, Microsoft. And we expect

that in about a year we may be the

second largest uh corporate treasury in

the US and our objective is in about 5

years to be the largest larger than

Birkshshire Hathaway larger than the mag

7.

Our strategy has been very successful.

Since the beginning of our Bitcoin

treasury company strategy, August 10th,

2020, we've seen 80% annualized return

uh on MSTR, making us one of the top

performing equities in the US. And more

interestingly, our performance has

outstripped that of Bitcoin by nearly

2x, which has been nearly 2x the

performance of the MAG 7, which has been

nearly 2x the performance of S&P 500. As

you look at the rest of the asset

classes here, we've outperformed bonds

by essentially infinity.

Uh, our access to the capital markets

has been quite robust. I'd mentioned

we've raised $19.8 billion so far this

year. We raised $22.6 billion. Last

year, what you'll see last year, we were

primarily focused on convertible debt as

our primary uh leverage instrument. This

year we've decreased our reliance on

convertible debt and we've really

amplified our securities by investing in

Bitcoin uh through uh raising of capital

through our preferred $6 billion so far

and that's going to be our primary way

that we raise capital on a go forward

basis.

So what are we? We're a Bitcoin backs

we're a company that issues Bitcoin back

securities, right? And for those who who

want access to Bitcoin with 50% return,

40 50% V, they can buy the underlying

Bitcoin. What we've done with MSTR is

through uh leverage and through

amplification create a higher volatility

and higher returns, 80% return, 70%

volatility. And that's been very

successful for us as you've seen uh with

the increase in our equity value. But

what we found is some investors don't

want more volatility and more returns

than Bitcoin. They want access to

Bitcoin, but they want lower volatility,

lower returns, and uh better downside uh

risk. And that's why we launched the

preferred this year. Four prefers. The

first one was strike, which is about a

billion dollars in market value at this

point in time and 30% ball, 9% yield.

You'll see we found instruments stride,

strife, stretch that reduce the

volatility profile. And so similar to an

oil refinery or oil company that

refineses oil and creates products like

kerosene, gasoline, jet fuel, uh

asphalt, lycra, spandex

strategy refineses oil, uh refineses

Bitcoin and creates Bitcoin back

securities.

And what's that what that's done for us

is is the prefers that we've issued

because uh of their unique nature

because they're backed by Bitcoin

because they give access to Bitcoin with

different profiles. They've been

extremely liquid and extremely

accessible in the US market trading on

the NASDAQ. Right? You'll see here that

Strife Strike Stride trade on a a daily

basis about anywhere between 13 and $18

million a day. Stretch has been

extremely successful and was trade about

$72 million a day. That's 72x the

average US dollar listed preferred. And

if you look at the average Euro hybrid,

it's about that much more liquid too.

72x. And non-listed prefers in the US is

significantly more liquid, 720 times

more liquid. uh and so we expect that as

uh stream starts to trade uh in the

European market on the Luxembourg

exchange, our objective is to create

similar liquidity profiles that we have

in the US market.

If you look at our overall debt and

preferred equity structure here, we have

six convertible notes. As I mentioned,

uh we're reducing our reliance on these

convertible notes as our primary

mechanism to raise capital. uh and we'll

start to see these start to mature and

equidize over time. Four of them are

already in the money to uh should be in

the money uh by the time they mature.

And so our objective is to reduce our

reliance on convertible debt over time.

Uh and we'll increase our reliance here

on our preferred equity which you see

and we've on a performer basis include

stream in here assuming a€ 350 million

euro issuance.

Our

capital structure is quite robust. We

have $93 billion in enterprise value, 77

billion in market cap, and $71 billion

in Bitcoin asset value. Today, we have

about $ 8.2 billion of convertible debt,

which means they're about 1.1x levered

on our convertible debt. And we have

$7.1 billion of preferred debt. And we

use the term amplification here because

this isn't really leveraged as you would

traditionally think. There is a coupon

or a dividend payment, but these are

perpetual. These these are unique in

that they never come due. They they we

don't have to pay them back like we do a

convertible note that might have a

maturity of four, five, six years. These

never come due. And as a result, we use

the term amplification. This is a

hybrid. This is not traditional debt and

it looks more like equity. And with this

amplification, we're able to buy

Bitcoin, pay dividends over time, and

ultimately increase Bitcoin per share

and Bitcoin yield to our shareholders.

And you'll see here there's about $731

million of Proform annual dividend

interest. Although that may sound like a

large amount for some companies, for us

that's covered 97 years with our Bitcoin

net asset value.

This shows the $731 million of dividend

interest payments. Uh 5 uh70 million of

that is from our uh four cumulative

preferreds. And Stride, our most junior

security is non-cumulative and has uh

fewer protections to the shareholder. Uh

and so $125 million of those dividends

are non-cumulative and can be suspended

at any time. And you'll see at the top

of this structure is $35 million in

interest on our debt. We do intend to be

able to pay uh the dividends on these

preferred. We don't really intend to use

a non-cumulative feature. Uh but this

gives you a sense of the seniority and

our interest expense.

Another way to think of the $731

million. We get the question a lot. How

much coverage do we have on the $731

million? H how how much at risk are we

of not being able to pay the dividend

and the interest? And we think it's

pretty low. If you think about $731

million as a percentage, the last 12

months of total capital we've raised is

less than 2%. If you look at the last 12

months of equity we've raised, it's less

than 3%. And you look at it as the

year-to-ate 2025 operating income of the

business is less than 7%. And if we were

have to, which we wouldn't, raise uh all

of the dividends and interest for the

year in one day, that's about 25% of our

average daily trading volume.

One important feature of our preferreds

because of the unique structure of our

Bitcoin treasury business is what we

call rock dividends, return of capital.

The first four prefers that we issued in

the US uh have return of capital

treatment meaning as a company we

produce uh negative earnings and profits

from a tax basis and because it's

negative earnings and profits this is

return of capital which means that the

dividends are tax deferred uh until you

sell the underlying security. This is uh

in contrast to qualified dividends which

have a tax rate of 20 to 20 35%.

Uh or interest income what you might get

from a bond or a money market or a bank

account which has 37 to 55% tax rates

when you add in the tax uh effect of

both the federal taxes, state taxes and

local taxes. So we don't expect for the

foreseeable future 10 years or more to

produce positive ENTP. In fact, we'll

run our business to have negative ENTP

which means that the rock dividend

guidance that we're providing will be

for greater than 10 years out and a US

investor can expect that the rock

dividends will continue for the

foreseeable future for all of our

preferred including this new one stream.

If you're a European investor, we're

working with uh the local uh regulatory

bodies to see if we can get similar

treatment in Europe. And it's something

that uh we think is important we'll

pursue.

Those rock dividends really result in uh

a scalable tax efficient fixed income

generator. Our Bitcoin treasury model

which is unique to strategy and unique

to a company to capitalize on Bitcoin

may be the most taxefficient company in

the world. What does that mean? We issue

digital equity and digital credit like

stream and like MSTR and the proceeds

from issuing that equity and credit is

tax deferred. We can then purchase

Bitcoin which sits on our balance sheet.

any appreciation on that Bitcoin, as

long as we don't sell our Bitcoin, which

we don't intend to do, is tax deferred.

And we're able to pay dividends, rock

dividends on that credit, and that is

also tax deferred. So, we have a triple

tax deferred model.

So, with that, I'm going to pass this

over to our executive chairman, Michael

Sailor, to tell you more about stream.

>> Thank you, Paul.

Um I'm delighted to introduce stream to

all of you today. Um we are in the

business of creating digital credit and

so strategy could be thought of as a

digital credit factory.

In essence, what we're doing is is

accumulating a large pool of digital

capital, Bitcoin, and then we create

credit instruments that create US dollar

yield like stretch and strife and stride

and strike. And the credit investors get

those rock dividends. So, they're tax

deferred dividends. Now, it's a

perpetual swap because our equity

investors want BTC yield. So when we

sell the credit, we invest it in Bitcoin

and we generate more Bitcoin per share.

That's what we call BTC yield. And as we

hold that Bitcoin, it appreciates in

value. And my long-term forecast over

the next 20 years is approximately 30% a

year ARR.

So as it appreciates in value, it

appreciates tax deferred. And the result

is we generate tax deferred earnings for

the equity investors while we're

generating tax deferred dividends for

the credit investors.

That is the digital credit factory. Now

stream is the first digital credit

instrument we've created for the

European market. And whereas all of our

other credit instruments generated USD

yield, stream is going to generate euro

yield.

So what is it? Uh STRE is a

Eurodenominated

perpetual preferred security offering a

fixed 10% dividend.

Now that's very comparable to Strife

STRF

uh except instead of being $100 par

value, it's a hundred euros par value.

Um stream will uh come out of the gate

with a 5.6xb 6x BTC rating. That means

for every one

uh in stream we issue, we'll have 5.6

euros in collateral in the form of

Bitcoin. Um it will be listed on the

Luxembourg stock exchange. It will pay a

quarterly cash dividend. Um and um and

uh similar to Strife, it does have

protections. If if we were to miss a

dividend, there's a penalty clause and

step up provisions and the dividend

rate. And uh and so we've um we've

worked to create in essence a euro

version of STRF

for uh European investors.

Uh we've compared the two instruments

here on uh slide 23.

You can see we have about 1.2 billion of

Strife outstanding. We're targeting 350

million euros of Stream. Uh Stripe's on

the NASDAQ, Streams on the Euro MTF.

They're both fixed dividends. That means

that uh they may trade above par. Strife

is traded above par. So that so the

price will fluctuate uh causing the

effective yield to fluctuate each day.

Uh they're both cumulative preferreds.

They both have the escalating dis

dividend protection feature. The

effective yield of strife right now is

9.2% because it trades above par. Uh the

duration of both instruments is

perpetual.

So if you're looking for a 10% dividend

yield forever perpetually, then stream

is a very interesting instrument. Um

stream is going to be senior to strike,

senior to stride, senior to the common

stock. Uh it will be junior to our debt

instruments, strife and stretch.

Here you can see an illustrative pricing

framework

with strife at 109 right now. That gets

you to a 920 basis point effective

yield. You can see that that really

looks like 300 basis points of spread.

That's the US corporate high yield

spread and a 250 basis point incremental

spread above the high yield rate in the

US after accounting for the 10-year US

swap rate. Now, if you were to apply the

same spreads in in the stream

instrument, well, the European 10ear

swap rate is 260 basis points.

The panuropean high yield spread is 280

basis points. So tacking on another 250

basis points of incremental spread

implies that the par value for stream or

the par yield would be 7.9%.

That means that if stream were to trade

at par with strife it would be 127

versus a par value of hundred euros.

um if we discount it and it's poss it's

quite likely we will discount it for

this deal um because it's an IPO and

because stream is junior to Strife then

you can see that at par value for

example that represents a 21% discount

that would be a 210 basis point premium

over the parody value.

Let's take another look at that.

Um you can see the historic 10-year swap

rates of the US dollar versus the euro.

And of course for the most part over the

past three years um the US swap rate has

been higher than the European swap rate.

It's 366 basis points versus 264 basis

points. So there's about a 1%

difference. And of course, if we look at

the swaps curve all the way from a

two-year duration to a 50-year duration,

the story is consistently the US dollar

swaps curve is just higher than the

European swaps curve. You can see the

difference between European high yield

and US high yield.

And you see that the illustrative stream

uh spread over the swaps rate is 530

basis points. So we think that stream

looks very attractive you know versus

European high yield and looks very

attractive versus the European risk-free

rate as well. Now we've done some other

comps here you can see the uh comparable

ETFs in the European market

and [snorts] you can see uh the

effective yields for these ETFs are

anywhere from 3.3 to 6.6%.

They've got expense ratios of 39 basis

points to 50 basis points. The tax, the

US tax equivalent yield would be

anywhere from 3.3 to 6.6.

And of course, stream, it's a 10%

effective yield if it comes at par. And

of course, there's no expenses. We don't

charge expense ratios for any of our

credit instruments. And if you're a US

taxpayer with a 37%

federal tax rate, the tax equivalent

yield for stream would be 15.9%.

So it looks to be two times as good on

an effective yield basis and perhaps

three times as good on or three to four

times as good on a tax equivalent yield

basis versus other ETFs in the

marketplace.

If we look at the broader credit indexes

in Europe, the panuropean aggregate is

$19.6 trillion with 9,800 members. The

effective yield is 3.1%. The maturity is

8 years. And of course, you can see all

these effective yields. They're 2 to 3%

for the investment grade. For the high

yield or 5.3 to 5.7%.

uh stream of course is going to be 10%

effective yield and almost 16% US tax

equivalent yield. So again two to three

or two to four times more yield

depending upon your tax situation. And

the other thing worth pointing out is

the maturity. You know a lot of times

the maturity on high yield instruments

is shorter like four years. A lot of

instruments are callable or

refinancable.

uh stream isn't callable by us. So it's

a 10.3y

year effective maturity. So if you're a

long duration credit investor, this is

uh 10% effective yield for you know for

the maui duration of 10.3 years. But

that's it's pretty compelling. Um

we'll take a look at hybrids uh in the

European market. You can see a bunch of

B-rated hybrids. The liquidity of these

instruments is a million euros a day. We

expect stream to be much more liquid. If

it has the same liquidity profile as

Strife, it'll be five times more liquid.

Uh the duration of those instruments is

three to five years. Stream will be 10.

The effective yield of those instruments

is a five or a six handle for the most

part. Stream will be 10. The tax

equivalent yield of stream again 15.9%

for a US equivalent taxpayer.

Um, so we think that stream represents a

a pretty compelling credit offering

in the European high yield markets

and uh, you know, it's so compelling on

a on a duration effective yield and tax

equivalent basis. I mean the question

really becomes you know what's the

catch? What's the risk? Um well here you

got a you've got one screen you can see

that stream is affect on a tax

equivalent basis is twice as good as the

next best thing private credit you know

and uh you know money markets in Europe

are 1.5%

uh and so stream is uh stream is going

to be the digital credit instrument in

Europe and uh and it should actually

cause people to reset their expectations

about what is a decent yield for a

credit instrument.

In order to help you understand or

assess the risk, uh we've included our

credit model here in the presentation.

Um the thing about digital credit is you

can do a digital credit risk assessment

in real time. If you go to our website,

strategy.com,

there's a credit tab and in that credit

tab, we have our capital structure

and every 15 seconds, we feed in the

current BTC price. We feed in the

rolling BTC volatility and we give you

the ability to put in your own forecast

for the next 10 years of volatility and

your own forecast for the next 10 years

of BTC ARR. How will it perform? So

if we take a standard statistical model

and we plug in a price of volatility

forecast and an ARR forecast, we can

arrive at a risk that you will be under

collateralized

at the end of the duration. And so we

call that BTC risk. Um you can see here

if you assume Bitcoin is going up 0%

forever, that's 0% BTC AR, you're a

skeptic. And if you think that Bitcoin

is going to remain volatile,

44% V is the rolling yearly. It's a

rolling uh 12 month volatility or

looking back the average volatility of

the last 12 months of Bitcoin. And you

plug in the current price about 110,000.

Well, you can see that the risk for

these credit instruments in the

preferred stack range from 26 to 35%

that you'll be under collolateralized at

the end of the duration. You can extract

a credit spread that offsets that risk a

fair credit spread. That would be our

BTC credit number. And you can see that

fair credit spread is anywhere from 270

basis points to 397 basis points. Now we

have plugged in the market credit spread

and uh you can see the spread premium

here and of course even if you're a

skeptic there's a very large spread

premium over the market credit spread

for these instruments. So that's the

first interesting observation.

Now what happens if I assume that

Bitcoin will go up 10% a year? If you

think Bitcoin is going to perform like

the S&P index, well, you can see this

entire credit model shifts dramatically

and now the risk uh fall into the 8 to

12% level. The credit spreads on the on

the preferred instruments fall to 77 to

126 basis points. And of course, the

market credit spreads uh haven't

changed, but the spread premium gets to

be pretty large.

And of course the final slide is

what happens if Bitcoin appreciates at

10% a year and the volatility continues

on its downward trajectory. About 5

years ago Bitcoin ball was about 85% and

it fell from 85 to 75 to 65 to 55 to 45

over the past 5 years. So as the asset

class matures and the volatility

decreases you could imagine that on

average over the next decade it would be

a 30 vol and a 10% a

uh if you have that outlook what you can

see is that the risk becomes quite minor

and all of these instruments look

investment grade right the you know all

the risk on the the bonds go to

effectively dimminimous and then the

risk on the preferreds go to anywhere

from four to 13 basis point fair credit

spreads. So the market right now

misunderstands

uh the actual credit risk involved with

these instruments and they're fairly

skeptical on Bitcoin as collateral. So

that means that the spread premiums are

quite wide.

But if you are a credit investor and if

you have a positive outlook toward

Bitcoin, you can see there's an

opportunity here because as Bitcoin

appreciates in price, the BTC ratings

will increase. As the Bitcoin volatility

decreases, the the BTC risk will

decrease. And of course, as Bitcoin

performs, then this asset class matures.

So, um these are all very credit

positive things for the asset uh class

and digital credit in general. So, with

that, um we've got a few more uh slides

in the deck. They go over the definition

of all of our KPIs and they explain all

of the metrics used in the presentation.

So feel free to peruse that if you like.

Um I'll just summarize uh with the big

picture which is we think that um stream

is a pretty compelling digital credit

instrument. It's the first digital

credit we've offered in the European

market. And um you can see here uh

because we're raising capital in

perpetuity and investing it in Bitcoin

in perpetuity, we can pay higher

effective yields which are to the

benefit of the credit investor and we

can pride those yields in in a rock

dividend which is to the benefit of the

credit investor as well. So, I

appreciate your time and attention to

this today and uh we'll look forward to

answering any questions you might have

as you look further at our offering.