Analyst Q&A: MSTR Q4 2025 Earnings Call

We are now going to proceed to the

interactive live Q&A section of our

webinar. I would like to welcome all our

Q&A guests and invite them to come on

video. We look forward to hearing your

questions. We will go one at a time and

I will call your names and you can

direct your questions to the management

team. So for the first question, I would

like to invite uh Lance Watenza, our

research analyst from TD.

>> Thank you all for taking the questions

and for the call. Um my question is

since the beginning of the year I can

count three weeks over which your

Bitcoin acquisitions have generated

negative slightly negative but negative

Bitcoin yield. Now I'm all in favor of

buying Bitcoin even when times are

tough. But shouldn't the goal be to

increase Bitcoin per share at all times

rather than just increasing the total

amount of Bitcoin that you that you own?

maybe you could just talk about the

strategy or the thinking that went into

those three particular weeks and what

that could mean going forward.

>> Yeah, we agree with you. Um we uh those

we we don't aim to reproduce those

weeks. the times that we've actually

done dilutive transactions on a Bitcoin

for share basis where um if you go back

to the crypto winner when we you know

when we had to recapitalize some toxic

debt on our balance sheet uh we took out

we took out debt either it was like

asset back loans or senior debt that had

EBITD do covenants that we felt were

crippling the company's growth prospects

and so so uh we didn't do it uh

enthusiastically, but we did it because

over the 10-year time frame, we knew we

needed to remove those toxic elements to

our balance sheet. Um if you look at

these three weeks uh when we took uh

actions that were somewhat diluted, they

all were generally associated with

building up the US dollar reserve. And

we did that in response to analysis and

feedback from the market and and some

reflexive uh uh concerns that we

wouldn't be able to pay the dividend if

uh the equity capital markets close to

us. So we wanted to get ahead of that

and address the credit quality. So the

reason we did it and the short answer is

we do it to improve the creditworthiness

of the company and if we felt that there

was a credit problem we would do it. Um

right now we feel that we've built the

US dollar reserve to the level where we

don't have a credit problem. We're good

for the next few years. We don't have

any of those other forms of debt, the

senior debt or the asset back lending.

So the balance sheet is is in much

better shape today. Going forward, we we

wouldn't, you know, we wouldn't

electively or or programmatically issue

equity to buy Bitcoin if it was going to

decrease Bitcoin per share, right? where

we're where we don't think that's a good

idea, we would only we would only take

those actions when we feel like it's

essential to defend the credit of the

company because if people lose

confidence in the credit then that will

ripple into losing confidence in the

equity and then losing confidence in the

business model in general. So, so, um,

it's a practical consideration.

Uh, but, uh, I don't think I don't think

we expect to see anything, um, of that

magnitude going forward because the

first $2.25 billion of US dollar reserve

was a big move. And just if I could just

get a followup question regarding that

$2.5 billion cash reserve. Um c could

you in theory could you use that if you

chose could you use that to redeem the

billion dollars of converts that are

putable in September of 27?

>> Yeah, we could we could use it for any

corporate purpose. We could use to pay

dividends. We could use it uh to meet um

a credit obligation. We could use it to

pay interest on a loan. We could use it

for whatever.

>> Thank you.

>> Great. Thank you, Lance. For the next

question, I would like to invite Tom Lee

from Funstrat and Bitmind.

>> Uh, hi. Uh, thank you everybody. Uh,

really useful presentation. I took a ton

of notes. Um, but I want to ask you a

two-part question. I apologize. It's two

parts. Um, on slide 53,

you talked about quantum vulnerability

of Bitcoin and

uh, and I apologize, I know it's getting

a little nerdy, but I know a lot of

people have questions about quantum

vulnerability because of course Bitcoin

could upgrade its network, but I know

there's three types of wallets that

remain quantum vulnerable. You know, one

is Satoshi because he used a

payto-public key, you know,

a really old wallet and then anyone

who's sent Bitcoin reveals their public

key. Um, and then as you know the

taproot wallets uh actually are are

somewhat quantum vulnerable. So I think

that's like 25 or 30% of all Bitcoin

wallets out there. So the part one

question is you I know Micro Strategy is

a security expert. You have so much

experience in security. could you give

us some idea of how Bitcoin and the core

developers might think about addressing

uh the quantum vulnerable wallets? But

the second part is that's a really a

small part of the story because there's

4.4 million there's only 4.4 million

wallets that have even $10,000 worth of

Bitcoin which means what whereas there's

almost a billion accounts globally that

have $10,000 of stocks, bonds or cash.

meaning the world hasn't really adopted

Bitcoin yet. And so, you know, as you

think about the rest of this year, could

you give us like what you think are some

milestones or road maps that further

drive Bitcoin adoption which in turn

help the price of Bitcoin?

So with regard to the first the quantum

question, I I don't think it's

appropriate for us to advocate uh a

particular

u solution or a particular approach nor

a particular time frame. I think that

our role is to support all of the

various communities and facilitate the

evolution of consensus about what should

be done, how it should be done, when it

should be done. And I think that uh if

you accelerate those and pressurize

those processes, you end up solving a

bunch of problems that don't exist in a

way that maybe are iatrogenic.

So um we don't have uh a particular

set of uh of policy points that we wish

to advocate right now. Nor do I think

it's really responsible or appropriate

for us to do that. Um I think that uh I

think that that will be emergent uh you

know exactly what should be done when by

the way it's not it's not clear anything

should be done ever. It's it's quite

possible we'll actually pop out. You

remember, you know, the world was going

to, you know, end in climate change,

death, you know,

26 years ago when 26 years went by and

none of those things happened. We were

going to, you know, Bitcoin was going to

boil the ocean, use all the energy on

Earth as late as 2018 and that never

happened.

It's possible that whatever happens in

the quantum domain will actually improve

the security of the Bitcoin network

inadvertently before we have to even

discuss a protocol change. So I I don't

think there's any particular policies uh

to be advocating right now other than to

support all the various communities and

facilitate consensus at the right time

to do the right things. Um

the second topic is is really what are

the catalysts for uh for Bitcoin price

to improve. Look I I think the the

fundamental catalyst

are regulatory support. We have a very

we have the most constructive

constructive set of financial regulators

in the history of the industry right

now. the head of the Fed, the head of

the Treasury, the head of the CFTC, the

head of the SEC, and the White House has

a digital assets ZAR, right? Those five

things are massive bull flags. They're

all very positive and and generally you

would expect that something good will

come probably out of the CFTC or the SEC

as they are constructive about

facilitating financial companies uh to

innovate in the digital asset space.

Right? I I I would been skeptical about

that two years ago. But I think I think

for you to be skeptical about their

support for digital innovation today

would be would be ignoring all the words

from everybody in those positions. And I

think that the second the second

catalyst will be banking adoption. the

formation of the banking credit networks

as as uh the large banks and as as

companies like Schwab they start to

allow you to trade Bitcoin custody cryp

uh Bitcoin borrow against Bitcoin

um they're going to legitimize the asset

and they're going to decrease the

volatility of the asset. They're going

to improve the uh usefulness of the

asset. You know, you're you're aware of

the announcement of the Black Rockck

Bitcoin volatility income fund that came

like about a week ago where they said

they were going to sell volatility or

generate income. And there's a lot of

people that speculate that will decrease

the volatility of Bitcoin and and put

more uh a more stable floor into the

asset. So I think the actions by big

finance, the actions by the big banks

and the actions by the financial

regulators

are the fundamentals. I mean those are

the fundamental things. And if you were

to light a candle and pray, you know, to

the gods of the cryptosphere, you know,

you would say, I want pro- digital

assets regulators. I want pro- digital

assets banks. And I want pro- digital

assets financial innovations like Black

Rockck's bringing to the market like

like we're bringing to the market right

you know like STRC

but fundamentally the industry is going

to move forward because of enlightened

regulation

uh engaged thoughtful banking and then

innovative finance and that's what we're

doing and that's what we see right now.

>> Thank you, Tom. For the next question, I

would like to invite Pete Christensen

from City.

>> Thank you. Uh, good evening. Um,

Michael, I want to talk about uh events

of the last week. On Friday, the

president uh presented his nominee for

next Fed chair, which uh exacerbated

volatility across a number of asset

classes, including Bitcoin. Uh the good

news is uh Kevin Worsh is on the tape uh

noting that uh Bitcoin is is the new

gold. So so so that's good. But I guess

uh my question is uh how would

strategies capital allocation

framework or possibly if it would change

if the next Fed chair is is perceived to

be less independent perhaps maybe more

tolerant of fiscal dominance?

um that may raise Bitcoin prices

shortterm, but longer term it may

introduce increased rate volatility

which may be a challenge on the funding

side. I'm just curious if you have any

perspectives on uh how that might change

the capital allocation framework for

strategy. Thank you.

>> We try to be very reactive to market

signals. So, so for example, when our

equity trades weak, we don't sell it.

when our credit instruments are underper

are trading weak and when the cost of

credit is too high we don't sell them uh

you know the most obvious is STRC if it

trades below 100 we don't sell it so in

in periods where the marketplace loses

confidence in our particular credit

instruments we simply wait and you know

in periods when you know when the MNAV

of the equity explodes to three or three

and a half, we might sell a billion

dollars a day, right? So, when the when

uh the capital markets are enthusiastic

about either the equity or the credit,

we react to them. And you know, it's

it's above our pay grade to set

financial policy. It's even above our

pay grade to interpret like the the

financial policy like sometimes

sometimes the you know the macroeconomy

has one set of numbers and you would

think it's good for Bitcoin but it's bad

for Bitcoin or another time you would

say well if he you know they do this

that should be good for us and it's not

good for us and then other times it's

the opposite. Um, well, I think the nice

thing about our business is we have the

option to do nothing and we have a set

of disciplined capital markets programs.

They they've moved from being uh

discreet where it's like, well, we got

to do a deal this quarter. What's the

deal we're going to do in Q3? Uh, and

we've moved from discrete 144A capital

markets programs to continuous ATM type

programs. And with the ATMs, you know,

if if the market thinks, you know, that

uh the cost of capital on an instrument

like STRF should be 11%, well, we just

don't want to sell it. So, we think it

ought to go to 8%. So when you know when

the market takes ST str S str S str S

str S str S str S str S str S str S str STRF to 140 or or whatever the price it

is that we think is fair then we will be

open to issuing more and when the market

is is bearish on those instruments we

don't and the good thing about the

business is if you think if you think

Bitcoin is going to grow fill in a

number 30% a year then our option is

just do nothing and we're a a company

that's a 4550$50 billion company growing

30% a year. So that's our default. Our

default if you think Bitcoin's only

going to grow 10 or 20% a year, our

default is we just do nothing and we

grow at the rate of Bitcoin and we're

okay with that. And then if we think

that there's something very accretive

that's uh that's going to be good for

the shareholders then we will

participate and we can participate you

know in size a million a day 100 million

a day a billion a day

you know and and the truth is you know

Pete sometimes we get up in the morning

and we s we basically set up our

programs and and we think well

nothing's going to happen today and then

five minutes before the market closes, a

lot of stuff happens like it it can

literally change in 60 seconds and and

again that's that's uh beyond you know

our control. We can't control how the

markets will interpret all these things.

What we can do is set up a rational set

of creditru structures so that we only

issue credit when we think it's in the

best interest of the company and we only

issue equity when it's in the best

interest of the company.

>> Thank you, Michael. Fair and helpful

comments.

>> Thank you, Pete. Uh for the next

question, I would like to invite Lynn

Alden from Lynn Alden Investment

Strategy.

>> Thank you for the opportunity. uh given

the popularity of uh STRC uh my

questions focused on that. Uh the

company established that USD reserve uh

which I think shored up the confidence

of the of these products and make them

more attractive. Uh right now the USD

reserve is um on the website 30 months

of coverage uh compared to the dividends

of the preferred. Uh the other

preferreds are fixed dividends. uh STRC

is a variable dividend which uh

introduces some degree of uncertainty

around how many months of coverage there

are for the the total amount of uh

dividends payable. Um do you have any

kind of views on what you think is an

appropriate minimum uh reserve relative

to to uh months of dividend coverage? Um

or do you have a kind of a maximum that

you'd be willing to pay on a dividend

for uh STRC? Um and then a related

question is uh we are seeing some kind

of early financial products that are uh

out in the market that are looking to

potentially leverage STRC

um given the the goal of low volatility

and and high yield. Um are you are you

monitoring the space for leverage built

on top of that as it as it could

contribute to um spikes of volatility

should there be an issue in in uh the

market? Uh, and do you have any are you

would you encourage that kind of thing

or would you dissuade um leverage from

from building on top of that uh uh

increasingly kind of popular product?

Thank you.

>> I I can start. Lynn, thanks for the

question. Uh first uh we said that we

target two to three years uh of uh

dividend coverage uh with our US dollar

reserve. So we wouldn't want it to go

below two years. I think three years

would be pretty high. Um, and as far as

whether we think there's a cap to the

stretch rate, you know, we're pretty

early on and we're sort of trying to

understand what happens every single

month at the end of the month. And

that's why we have our guidance that we

have, right? It's at 11 and a quarter.

Could we take it to 12 potentially? Uh,

but it's going to be a function of how

do we keep the price within a tight

range right around that $100? And also a

function of of what happens to interest

rates in general. Um, but I don't think

we have a cap right now. We're just

going to have to see how this instrument

plays out over time. Um, so that's the

answer uh on on on stretch overall. Um,

and your second question, remind me.

>> Uh, the second question was around uh

we're seeing kind of early um products

potentially looking to lever it up for

for um other customers. Do do you do you

perceive issues in that? Are you

monitoring it? Uh would you encourage or

or dissuade uh that type of activity? I

think anytime people create products on

top of stretch, right, there's some

products that we've seen like Buck that

have been issued that are they're not

lever products, but they're actually

reducing the volatility down to about

zero. Uh, and they're actually showing

daily acrals as opposed to monthly

acruals. So, I think those are positive.

I think the extent people are going to

build levered products, one, we can't

really, you know, we're not going to

stop them. And I think it leverage adds

liquidity adds a certain extent uh

interest in stretch and we'll see how it

plays out over time but I don't

necessarily think that's a bad thing.

>> Thank you for the clarifications.

>> Okay. So we can move on to the next

question. For that I would like to

invite Mark Bmer from Benchmark.

>> Thank you. Uh a couple of questions. Uh

first of all, um we have seen over the

last year um a tremendous number of new

digital asset treasury companies formed.

Uh many of them focused on accumulating

Bitcoin, others on accumulating other uh

crypto tokens. Um what is your take on

uh how this industry is likely to evolve

in terms of the number of players

whether there's going to be a shakeout

um if there is a shakeout will there be

consolidation and most importantly uh

what could this all mean for strategy uh

as it unfolds are there opportunities uh

for the company uh to take advantage uh

of that dynamic

>> you know I I think every business has to

have an operating model that works that

adds value uh if it's going to grow and

prosper. So uh one one model is just to

provide Bitcoin exposure if people in

the country in question can't get it any

other way. There are a lot of people in

the UK that bought our our stock for

four years because they just couldn't

buy Bitcoin any other way. So if there's

a value proposition, you know, in Brazil

or in, you know, in France or wherever,

then maybe just you can be a simple a

simple Bitcoin holder. I think uh I

think another value proposition is issue

digital credit. And you can see that

Strive and um and MetaPlanet have both

pursued digital credit. If you're good

at it, you know, by the way, you can do

digital credit and not be good at it,

right? If you take on debt you can't pay

back, right? then that that doesn't help

the company, that hurts the company. But

if you're good at digital credit, that

could be another case. You know, a third

a third would be anything that uses

capital, right? So, if these companies,

you know, if they want to generate

Bitcoin yield, they're going to have to

find some way uh to generate a benefit

from the capital, right? You could

underwrite insurance. You could you

could support uh trading or derivatives

trading by posting it as collateral. You

could engage in derivatives trading,

right? You could literally become a, you

know, a public company with a lot of

capital that trades in the digital

derivatives market, you know, posting

your Bitcoin as the collateral to take

the trade and sell the volatility. Uh

it's a different business model. What do

I think? I I think there's thousands of

companies to get launched. Uh many don't

succeed. Some will fail. Some get

launched doing one thing and then they

evolve into something different. Like

look at our company. We evolved. You

know, in fact, you could argue that the

most successful companies evolve through

two, three, four stages in their life

cycle. I mean, Apple didn't start out as

a phone company for sure. And I think

Elon maybe he ends up being a robot

company and not a car company, right, at

Tesla. So, I think that I think that the

winners will evolve and they'll find a

niche. And I think that the ones that

don't evolve, if if you're just a

holding company holding Bitcoin, not

doing anything with it, you know, might

you get bought up? Yeah, you might get

you might get bought. And would that be

good for you? You're a lot better off,

you know, if you have something people

want to buy. For example, Sears, you

know, had a future because they had a

lot of real estate that somebody wanted

to own. And if they didn't own the real

estate, it would have been a much worse

situation for them. So I so I think that

uh you're going to see all sorts of

examples now and and uh presumably

thousands and thousands of of companies

get launched and they all do different

things and we're very embionic early on

like in the first year two years 50

years from now right I mean the debate

will be who's the best Bitcoin backed

insurance company right but but 20 30 40

years from now and and that company

doesn't even exist right now but on the

other hand what about us. Are they

opportunities for us? Well, you know,

they were an opportunity for Strive.

Strive did the deal with similar and

they closed it quickly and they were

able to build their capital base pretty

rapidly. So, that's you know, we see

examples of that. There probably will be

some mergers and acquisitions of other

companies uh in various space if they

put together their various assets in a

synergistic way. Um our our business is

laser-like monomomaniacally focused on

one thing right now. Uh we want to make

stretch S strc the premier credit

instrument in the digital world. The

best digital credit in the world and

maybe the best credit in the world. If

we can create a product that trades with

less than, you know, five vault that

pays you 10% dividend with a stable, you

know, $100 value and we pay a rock

dividend. The question is who would want

that? It's like everybody would want

that. Why? I mean, why wouldn't you want

like what's the demand for that? It's

infinite. Like it so effective. If

Stretch works, it's the ideal product

and the company that can create treasury

credit based on digital capital has the

ideal business model. And so we we

generally won't get distracted, right?

The the number one risk for us is a

dilutive distraction, right? Everything

else on our capital structure that that

undermines the credit stretch, you know,

is a question mark, right? So you have

to be thinking about that and then

anything we might do that looks that

looks complicated or risky or different

would in anything that introduces a

question in the in the mind of the

stretch investor can we pay the dividend

that's going to be deemed negative you

know anything that introduces a question

in the equity investor's mind can you

outperform Bitcoin so generally

generally we're pretty skeptical on

acquisitions because they take a long

time And then you might acquire

something that you didn't want that you

have to divest and then everybody wants

to talk about how and why and how long

it takes and and so I I don't think I

wouldn't say it's not a good strategy

for other companies and other investors.

There are other companies and other

investors for which it's a great

opportunity for them and they can make a

lot of money and they will pursue it and

God bless them. uh for us we believe

we've stumbled upon uh maybe the most

promising product STRC you know after 20

capital markets transactions and all

sorts of credit instruments we think we

found the best one for us and for the

credit investor and we've and we think

we found a great business model right

the treasury company if you can generate

return of capital dividend scalably and

scale up the issuance of treasury credit

you've got may be one of the most

efficient business models in the world

and one of the most compelling products

in the world. So we don't want to do

anything that would dilute that focus,

undermine the credit of the balance

sheet or distract the management team

from what we see as a once in a lifetime

opportunity.

>> Great. Thank you. For the next question,

I would like to invite Larry Leopard

from Equity Management Associates.

>> Yeah. Hi, thank thanks for having me on

guys. Um, first off, two great things in

my view came out of the call. One, the

whole guidance on the STRC rate. I mean,

that's that's brilliant. Um, really love

it and it's going to help people like me

who are buying STRC, you know, is kind

of um, you know, a solid retirement type

of asset to understand where it's going.

I have a question related to that, but

I'd like to put it to the end. The

second thing that I thought was really

important was the notion that we're

going to upgrade, you're going to

upgrade and play a leadership role in

the technical direction of Bitcoin. I

think that's fabulous and um a great way

of addressing all the FUD around

quantum, which I think is probably

scared off a few of the the bigger

institutions who are looking at it.

They're kind of saying, "Hey, who

controls this whole thing?" Um just back

to first principles. I want to just kind

of run through how I look at this and

see if you as a management team agree.

Um I'm a value investor. I look for

asymmetry and uh in my view right now

Micro Strategy is the most asymmetric

value investment in the world and most

people don't understand it. And it's

it's kind of stunning to me. My partner

David Foley and I, we did a a model.

We've done several models and we've

looked at it and said, you know, if

Bitcoin stays at $50,000 for four or

five years, you can't break this

company. It's it's it's unbreakable. I

mean the dilution we calculate the

dilution would maybe be 15 or 20%. So

the downside case here in our view is is

really covered you know as a result of

the fact that the debt's unsecured and

the the interest rate on it is very very

low. Some of it's convertible as we all

know and the preferred is really equity.

So um to me you know you've got an

unbelievable situation. I think a lot of

people listening this call are kind of

wondering hey what's going on with the

stock price? What's going on with

Bitcoin? My view on that is just that

what's going on with Bitcoin is

liquidity is really tight and you know

this is what's going to drive the big

print at sometime relatively soon and

it's also what's driving the stock

market down and Bitcoin has always been

kind of a leading indicator of where you

know how much liquidity is out there and

and so you know things are tight right

now and you see it you know gold's

getting hit, silver's getting hit, all

the sound money assets are getting hit

but we know the debasement trade is

alive and well because gold and silver

have just been on a tear.

And this reminds me very much of 2020

when gold and silver led first and

Bitcoin followed harder. You know,

Bitcoin went up 6x in October of 2020

after gold had gone up 45%. You know,

when Paul pivoted and then co came

along. So, you know, to me what's going

to happen here is this thing is going to

be, you know, a two bagger, five bagger,

10bagger, and most people don't really

understand it. And I you know the reason

that's the case is is kind of

said where he said you know commodities

are a very very hard business to invest

in because they have long cycles and the

average investor you know who's being

marked quarter to quarter month to month

year to year can't show long time

preference he didn't use those words but

he was essentially saying the same thing

which is safe's point and you know if

you have the long time preference you

realize this is a commodity that has a

fixed supply you know the the you know

the asymmetry it's just it's absolutely

blowing my mind. So I just want to say

congrats for all you're doing and I I

think it's you know a no-brainer that

this is going to be outstanding upside

investment. I do have one specific

question related to the stretch product

and that is this um you know you're

going to adjust it. Okay so maybe you

have to adjust it in a while to get more

people to buy it. Fine. At some point

this is going to be a fabulous product.

Everybody's going to want it. And if you

kind of set the price at 100, is it

could it ever adjust down? I mean, I'm

buying it and I'll probably gift it to

my kids because the tax basis will be

zero and I'll never sell it. Um, would

the be could you think about setting a

lower boundary on the yield? You know, I

mean 11% that's attractive. 9 8 7 those

are all attractive. If it got so

attractive that the yield on it started

to go down to 54 321, you know, that

would be I mean people looking at buying

it thinking long long term might wonder,

huh, is there is there a boundary below

which this thing can fall and we'd be

better we'd be more comfortable buying

it if we knew there was such a boundary

on the yield.

>> Yeah, I I go ahead.

>> I can start, Larry. And and and we agree

with all your points. I think there's a

a a significant misunderstanding of the

leverage on the balance sheet and how

we're going to service our convertible

debt over time and and these ideas that

if you know Bitcoin price goes below our

cost basis that becomes an issue. And as

I stated, you know, Bitcoin needs to go

down to $8,000 a coin and sit there for

5 years up until 2032 before we really

have a problem uh being able to satisfy

the convertible note. So, so thank you

for pointing that out on on on the on on

on the rate on stretch, right? Uh right

now, you know, technically the bottom of

the rate would be sofur, but uh we think

of the fact that we we get capital from

stretch, we put it into bitcoin and

bitcoin is going to go up on average 30%

a year. So, anything that we pay less

than call it 20% is accretive to our

shareholders. So, uh, I don't think it's

something where you should sit there and

think that we're going to drive it down

to sulfur, right? If if stretch price

goes to 100 and sits at 100, we might

take it down a couple percentage points,

but I I don't think, you know, and

obviously it depends on where silver

goes, but I don't think it's something

that someone should think we're going to

pull the rug out from under folks and

drive it down to one.

>> Yeah, I think I think stating that

publicly to, you know, people who are

buying stretch would be important just

so people understand. And if you were to

say something along the lines of we're

not going to let it go below a seven or

something because it's going to get to

be really popular at some point in time

and and those of us who are buying it

are buying it with multi-deade time

frames, right?

>> Yeah. Another point to make is we we we

can't lower the rate more than 25 basis

points a month. So we're always going to

be very incremental and we would only

lower the rate when in such a way that

we thought it would stay in that zone of

99 to 101. Like we want to we want to

keep it targeted 100. So you know you

you might [clears throat] you might 5

years from now find out that the

rational credit spreads that the market

assigns us or 300 basis points instead

of 600.

and that people would like to buy this

thing at 400 basis points over sulfur

maybe, but we would very gradually get

there and we would still expect STRC to

be trading around 100. And so we're not

we're we're not looking to do anything

that is jarring to the price. We want it

we want the price to be stable. As a

practical matter, the reason that we

would lower the dividend rate would be

we had such an avalanche of demand. and

we had too much demand and people want

to buy infinite and we don't want to

sell infinite because we'll drive the

BTC rating of STRC down, right? Like

like if hypothetically someone said, "I

want to buy a hundred billion dollars of

STRC tomorrow." You can see how we don't

want to sell it because right because

then that's reflexive and that would

undermine the credit quality and that

would increase the volatility and that

you know that kind of works against

everything. So luckily for us, you know,

and practically that's not going to

happen, right? Like, you know, they say,

you know, it's good that we have time

because otherwise everything would would

take place at the same time, right? All

at once. All at once.

>> We don't want stuff to happen all at

once. So, it will happen progressively.

We'll be very thoughtful about it. Our

goal is always for it to be extremely

compelling to to attract tra attract

capital. And at the point where we feel

like we've got too much capital, it

would be a circumstance, Larry, where

where uh there was massive success of

STRC and Bitcoin was lagging and and

MSTR equity premium was lagging and

there's that weird situation where it's

it's hard for the company to increase

its collateral base in order to back the

credit and then we would say we have too

much demand for the credit so we need to

click it down. But if there's over

demand for the credit,

>> it would still be pegged at 100 when we

when we and we take it down 25 basis

points. And so we're we're going to

responsibly manage this so as to

minimize volatility, maximize stability.

And you know, in all likelihood, it's

going to be excessively compelling in

terms of dividend rate for quite a while

because even though you believe in

Bitcoin as collateral and I believe in

Bitcoin as collateral, we've got a lot

of work to do with credit rating.

agencies and the Basel rules and

traditional finance establishment before

they recognize it as being good

collateral and and as long as they don't

then that means probably the spreads are

going to stay pretty compelling.

>> Fair enough. Thank you very much. Really

appreciate it.

>> Thank you. For [clears throat] the next

question, can we have Andrew Hart from

BTI?

>> Hey, uh thanks for taking my question.

So, it'd be great to hear some examples

of some of the doors that have been open

uh since strategy got a credit rating um

back in the fall. You know, I think it's

open potentially opened doors to pension

funds, insurance companies, and other

really large institutional investors.

And you, you know, Michael, before we

got on this webcast, you said something

like times today that we're seeing with

Bitcoin is when people are looking for

insight and leadership. So, I guess who

better to ask, right? What is your

expectation for uh conversations with

these new potential investors with these

really large pools of capital? If you

could also shed some light on how the

conversations today uh since you've

gotten that credit rating uh have

evolved. Thanks.

>> Sorry, go ahead Andrew.

>> I was going to start and B please jump

in. Um look, Andrew, thank you for the

question. Um I think uh the process with

the the rating agencies uh is was a uh

was a was an excellent process. I think

we've noted that you know we've had a

credit rating in the past. Um it was

more based on the legacy business. This

is the first time a Bitcoin treasury

company uh with with a a framework

specific to that uh was rated by a major

credit agency. Um I think overall um the

the reaction has been what we had

expected right like um there is now a a

public uh profile that investors can

look to it is opening up um I think

interest I think uh it's still early

though right you know I think a lot of

us that have been in these types of

markets know that the credit credit

rating agencies take time uh to develop

uh I think we noted earlier in the

presentation that uh we believe we've

made uh strides since uh the the launch

of the relaunch of the rating that we'll

continue to make progress. Um I think uh

there's more to do in that sense and

there you know it sort of created a

little bit of a um a floor so to speak

because everything we do here will be

incrementally increasing uh the the

capital base. It'll um increase our

ability to um strengthen our balance

sheet. Um, and so I think in the long

run uh it may be it may take longer uh

than it would take uh you know a

near-term action but uh I think that

there's possible upside. I think that

will continue to drive more in large

institutional demand. Um and to answer

your question I think that the reaction

from uh the investor base has been net

positive. Um and certainly the the cash

reserve has added on to that as well.

>> Thanks Andrew.

>> Do you want to cover the second question

around just general Bitcoin?

>> Just restate the question again.

>> Oh, uh I was wondering how the

conversations you've had with these

really large uh pools uh really large

investors have come along. And then you

know before we got on you said times

like this is when people are looking for

insight and leadership. And so as you

continue to have those conversations

with people that are new to Bitcoin, you

know, what do you tell them in a in in a

day like today?

>> Um I I think we've got an unprecedented

number of invitations to financial

conferences and and meetings with with

investors in general. And I think that

the amount of interest in this topic

explodes and when the volatility

explodes, you know, the engagement

explodes. What what I would tell them is

is the same. We've kind of said for a

while, Bitcoin's capital investment,

your time horizon needs to be minimal

four years. I would actually say look at

the moving four year, the simple

moving 200E average. the 200 week simple

moving average or the four-year average.

And I would invest like with a four-year

DCA, you know, uh, dollar cost averaging

type approach if you're going to invest

in Bitcoin. And you really want to have

the intent to hold the product, hold the

asset for a decade. And if you can't

stomach a if you can't wait a decade

with no cash flow and if you can't stand

the volatility then I would say uh you

ought to buy the credit. If you believe

if you believe in digital assets or

digital capital or you believe in

Bitcoin, but you can't stand to wait for

a decade and take the vault, you should

buy the credit be and just take the 11%

tax deferred, you know, with much much

less volatility and with someone else

stomaching

uh the pain for you. Uh and so I think

it's kind of simple, right? you're you

either don't believe in Bitcoin at all

and then you don't want the credit or

the capital or you know or you believe

in Bitcoin as a maxi and you want the

equity because you want 2x Bitcoin or

you want Bitcoin as uh you know as

sovereign censorship resistant long-term

store of value to give to your great

grandkids you know who may be living in

a country you don't even live in right

now and you want to sell custody then

you buy the Bitcoin or you just think

all this stuff looks really good, but um

you need the money back in September,

then you think about the credit, right?

And and specifically the treasury credit

because the other credit instruments are

too complicated. So, so I would say

we're we're really at this point

pitching uh the credit treasury credit

as the first step in a Bitcoin journey

for a tra traditional or conventional

investor who believes in digital assets.

>> Thank you, Michael.

>> And we're pitching it to a lot of people

like we're talking to a lot, right?

There's a lot of conversations and and

if anything, right, the volatility right

here is the kind of the reason why you

might want to have a product like STRC.

If you're wondering like what's the

justification, well, just look at the

two charts next to each other and you

figure out why you might want the credit

instrument.

>> Great. And for the last question here, I

would like to invite Dan Hillary from

Buck.

Hi Shares, thanks for having me on guys.

Um, so my question is as follows. The

deequitization of the convertible notes

has seemed to be a bit of a headwind for

the cost of capital across all the

preferred equities. And if MSTR

continues to trade below the convertible

note conversion price, how many months

before the put date would you guys

consider refinancing or retiring the

converts at a discount in order to lower

digital credit instruments?

You know, Dan, we went through this in

2022 during Bitcoin winter and our

converts were at some point in time

trading at $35 uh uh you know, each and

and we

>> It means 35 cents or 40 cents on the

dollar.

>> 35 cents on the dollar. and and

>> you know we had considered whether it

made sense to you know call to to buy

some of those back and and it never

really made a lot of sense especially if

you live in a world where you think

Bitcoin price is going to go up. Um so

the converts aren't really this big

overhang for us and and as I mentioned

you need Bitcoin price to go down to

$8,000 and sit there for 5 6 years

before it really becomes a problem. So,

it's not really something that we think

about a lot of of whether we're going to

buy back any of the converts or if we're

going to do something early with them

right now.

>> Yeah, I would say a year before we have

a put event or a year before we have a

redemption event, we certainly look at

it. We look and we look at the

statistical likelihood of anything and

then we evaluate whether or not it makes

sense to refinance or hedge or mitigate

anything. And if we were to do it, we

would want to do it 6 months before the

event took place. So, but but you know,

right now we're still far out of that

window and it's not clear there's any

event. The last time I you know, I

looked at one of our our puts, you know,

it was the one that was coming due

earliest, the the bond was already above

par and so there is no risk to it. So

when we get to a certainly when you're

more than one year out, it's all

hypothetical worrying about something

that's unlikely to ever happen. When you

get to one year out, you have to

consider whether there's a risk and then

yeah, we're certainly not going to wait

till one month before before we deal

with the risk. We wouldn't wait till the

last few weeks or the last few months.

We would probably do it with a few

quarters buffer at at the latest which

means we start thinking about a year

before.

>> Great. Uh thank you everyone. This

concludes the Q&A portion of the

webinar. I would like to thank all the

guests for their questions and all the

attendees for tuning in live. We had

over 3,000 people join us live on Zoom

webinar, over 4,000 people on YouTube

live stream and over 180,000 views on X

liveream.

Uh so this should be one of the most

viewed uh earnings call uh in our

history. So appreciate all your interest

and curiosity and thank you. I would

like to now turn the call over to Fong

for final closing remarks.

Look, uh, I want to echo everyone's

thoughts. Thank you for the analysts for

joining us. Thank you for everybody for

dialing into the call and listening. Uh,

and thanks for those who are joining us

online. I invite you all to join us in

Las Vegas February 23rd, 25th at