Strategy Inc

Unknown Executive: Hello, everyone, and good evening. I'm C.J, Head of Investor Relations at Strategy. It's an honor to kick off Strategy's First quarter 2026 earnings webinar. I'll be your moderator today. We will start the call with a 60-minute presentation, starting with Andrew Kang, followed by Phong Le and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with Four Wall Street equity analysts and Four Bitcoin analysts. Before we proceed, I will read the safe harbor statement. Some of the information we provide in the presentation regarding our future expectations, plans and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in price of Bitcoin and the risk factors discussed under the caption, Risk Factors in Strategy's annual report on Form 10-K filed with the SEC on February 19, 2026, and the risks described in other filings that Strategy may make with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today. With that, I will turn the call over to Andrew Kang, the CFO of Strategy. Andrew Kang: Thank you, C.J. First off, I'd like to officially welcome C.J. Jane to his new role as Strategy's Head of Investor Relations. I also want to take a moment to thank Shirish Jajodia, our Corporate Treasurer, for helping establish and lead our IR function for the last 20 quarters as our team grows. I know he will strive to continue to provide transparent and relevant information to all of our shareholders and stakeholders. So welcome to C.J. Now turning to the quarter's results. We are off to a very strong start in 2026. We now hold 818,334 Bitcoin which is about 3.9% of all Bitcoin that will ever exist. That keeps the Strategy in a clear leadership position as the largest corporate Bitcoin holder in the world. Our market cap is now $62 billion, and Stretch SDRC has grown to $8.5 billion outstanding, showing strong market bit and investor demand and filling a gap that has existed for investors seeking stable price and attractive yields backed by Bitcoin. So far, in 2026, we raised about $11.7 billion of capital, giving us more flexibility to keep our Bitcoin position and creating long-term value for our shareholders. Turning to Q1 financial results. We reported an operating loss of $14.5 billion and a net loss of $12.8 billion. As you would expect, these results were primarily driven by the decline in Bitcoin's fair value during the quarter. And as these are largely noncash market-driven impacts tied to Bitcoin's quarter end price. Our underlying strategy remains unchanged, raised capital responsibly, buy and hold Bitcoin over the long term and grow Bitcoin per share for our shareholders. On Slide 8 here, Bitcoin per share increased from 181,030 per share in May 2025 to 213,371 per share in May 2026, which is roughly an 18% year-over-year increase. Year-to-date, we have delivered 9.4% BTC yield compared to 22.8% for the full year 2025, showing acceleration year-to-date compared to the same point last year. We've also generated 63,410 BTC gain so far in 2026 compared with 101,873 BTC for all of 2025, having already achieved about 62% of last year's full BTC gain in just the first 4 months of the year. In dollar terms, that represents approximately $5 billion of BTC dollar gain year-to-date versus $8.9 billion for the full year 2025. Since 2020, Bitcoin per share has grown to 213,371 per share as of May 2026, which is nearly a 4x increase since the beginning, delivering positive BTC yield every year across multiple market environments. In 2025, we delivered 22.8% BTC yield, and so far in 26, we've already added another 9.4%. We remain focused on consistently increasing the coin per share over time through our disciplined treasury operations of long-term conviction in Bitcoin. Here on Slide 11, our track record remains constant, having acquired additional Bitcoin in every quarter since 2020 across 108 separate acquisitions. As of May 4, we held over 818,000 Bitcoin for a total value of approximately $64 billion and a total acquisition cost of about $62 billion. Our average purchase price is approximately $76,000 per Bitcoin, and our holdings now represent, as I mentioned, 3.9% of all the Bitcoin that will ever exist. Turning here to the balance sheet. Digital assets ended the quarter at $51.6 million compared to $58.9 billion at year-end, having acquired 89,599 Bitcoin in Q1. The change reflects the lower price of Bitcoin at the end of the quarter versus at the end of last year. Cash and cash equivalents were $2.2 billion, which largely reflects our USD cash reserve. Regarding taxes, the change this quarter was driven by the quarter-end mark-to-market movement in Bitcoin. And as Bitcoin moved from an unrealized gain at the year-end to an unrealized loss at the end of Q1, our deferred tax liability of $1.9 billion shifted to a deferred tax asset. A full valuation allowance against that tax asset brought the net balance sheet tax closures to zero, which also resulted in a noncash tax benefit on the income statement, which partially offset the pretax loss for Q1. Long-term debt remained unchanged at $8.2 billion, while preferred equity increased to $9 billion, driven by strong Stretch issuance in the quarter. Overall, the balance sheet remains highly liquid and extremely well capitalized. At the end of Q4, the market value of our Bitcoin was approximately $59 billion, which is based on a Bitcoin price of about $87,500. During Q1, we recognized that unrealized fair value loss of about $14.5 billion. And despite Bitcoin price volatility, we continue to execute having purchased an additional 89,599 Bitcoin in the quarter for approximately $7.3 billion at an average price of about $80,900. We ended the quarter with a digital asset value of $51.6 billion based on a Q1 ending Bitcoin price of about 67,800. In Q2 so far, we are illustrating an unrealized fair value gain of approximately $8.3 billion as of May 1. We purchased an additional 56,235 Bitcoin quarter-to-date for approximately $4.1 billion at an average price of roughly $73,400 for that period. Those purchases benefiting from the increase in Bitcoin price adds approximately $300 million of positive fair value. And as of May 1, our Bitcoin held a market value of approximately $64 billion based on a Bitcoin price of $78.350. Bitcoin Reserve, implying an NAV of 1.27, which has expanded since the beginning of the year. We have $13.5 billion of preferred equity, representing 34% amplification and net leverage of 9% made up of the $8.2 billion of convertible debt. Strategy is building around Bitcoin as digital capital. We have approximately $58 billion of equity. You can see here large traditional banks operate with liabilities to asset ratios above 90%. Our ratio is a mirror 9%. That gives us a very different foundation made up of a very large equity base, substantial Bitcoin reserves and structurally lower balance sheet risk. We can issue Bitcoin back credit products to support investors with strong collateral and continue accumulating Bitcoin over the long term from a position of strength and durability. We have approximately $6 billion of net debt, which represents just 9.3% net leverage against our Bitcoin reserve, which is effectively a 10.8x BTC rating. Our strategy is based on a disciplined balance sheet construction, modest leverage, strong collateral and permanent capital to grow our Bitcoin over time. Our net leverage is lower than the average of the investment-grade S&P universe and lower than every major industry sector across most S&P 500 companies. At the current Bitcoin price, our reserve is valued as -- our Bitcoin reserve is valued at approximately $64 billion compared to $6 billion of net debt, which translates to the 10.8x BTC rating. The stress case on the right shows that even after a 91% Bitcoin price decline to roughly about $7,300 per Bitcoin, our Bitcoin reserve would still be sufficient to cover our net debt at a 1x BTC rating. Our USD cash reserve has remained consistent at $2.25 billion. And while the years of coverage has shifted down with the growth of Stretch this year, we believe the stable cash along with our Bitcoin reserves and ability to raise additional capital continues to provide us with the flexibility to continue supporting our dividends for the foreseeable future. On the next slide, the $64 billion of BTC reserves adds an additional 43 years of coverage. Another way to look at this at today's reserve size, Bitcoin would need to grow by only 2.3% annually for the reserve growth to cover our current obligations. If Bitcoin grows at or faster than the breakeven ARR here, the BTC reserve alone can support our dividends without requiring any additional capital. Before I turn it over to Phong's remarks, I'd like to highlight the amendment to Stretch that we have asked for your voting. We are proposing to move Stretch dividends from monthly to semimonthly with payments twice per month on the 15th and the last day of the month, while keeping the economics unchanged. Our goal is to make Stretch work better for investors by reducing reinvestment lag, improving liquidity, dampening the impact of a single monthly record date and helping Stretch trade more efficiently around the target price. Today, Strategy pays out 12 times per year with 1 payment at month end. Under the proposed amendment, Strategy would pay 24 times a year with payments around the 15th and the last day of the month. Again, total dividend economics are unchanged and payments would simply be about half the size and pay twice as often. Under the proposed change, there would be two record dates, one on the 15th and one at the end of the month with the related payment dates made on the next scheduled record date. If the vote is approved, the first record date would be June 30 and the first payment date would be July 15. The mechanics are pretty straightforward, same dividend economics, more frequent payments and a clear transition time line. We believe this change creates the highest frequency credit instrument in the world and makes a great product twice is better, and we look forward to your support. With that, I will turn it over to Phong. Phong Le: Thank you, Andrew. Thank you, everyone, for joining us on this evening's earnings call. I have a few updates to make on our capital markets on our equity, on our digital credit, and then I'll conclude with updates on our capital market strategy overall. If you had asked us at the beginning of the year, what was our target for the year in terms of capital markets raises, we would have said it was uncertain, and it really dependent on the success of the Stretch product. And I think 4 months in, we can say that Stretch has been more successful than we had expected at the beginning of the year. And one representation of that is the amount of capital that we've been able to raise for the company and ultimately for Bitcoin. And you'll see here, year-to-date 2026, we've raised $11.7 billion, as Andrew had mentioned, Notably, about half from issuances of our common equity, half from issuances of our preferred primarily Stretch and no longer are we issuing convertible debt to raise capital. How does that compare to the rest of the U.S. capital markets, equity capital markets, you'll see last year, we represented about 8% of the equity capital markets in the full year 2025. We're the largest issuer. And we are, again, this year, the largest issuer in the equity capital markets at 10% total, 6% of common equity -- 60%, notably of preferred equity. And we're doing what we said we would do and what we were trying to do, which was to shift our ATM more towards credit. And you see this even pronounced as we look at each month of the year 2026. We started in January with 20% of our equity issuances using digital credit, 88% using MSTR and we've largely flipped that number in April, with 17 using MSTR and 83% using digital credit, which, of course, is also less dilutive to our overall shareholders. Research analysts have been consistently supportive as we look to exit the Bitcoin barocycle that we're in, the average price target of all of the equity analysts covering strategy for Bitcoin is $138,000, which is about a 70% increase. The average MSTR price target is about $323 which is an 80% increase from current levels. So let's talk about digital equity and MSTR overall. We show this chart every quarter. You can find it on our website, strategy.com but this is our annualized asset performance since we adopted the Bitcoin standard. August 10, 2020 is when we look back to. We've outperformed Bitcoin by about 50%. Bitcoin has outperformed the MAG 7 by about 50%. And the MAG 7 has outperformed the S&P 500. So our ultimate objective is for our common to outperform Bitcoin by accreting Bitcoin per share. And based on this chart, we've continued to deliver on that performance. As Andrew mentioned, our Bitcoin per share is also accreting. That's our business objective ultimately. And we're at 9.4% Bitcoin per share increase so far this year. And you'll see that's also accelerated in the last month, right? We started off a little bit slow in January and February, 0.4% and 0.1% increase in the month of March with 3% and really increase doubled in the month of April with 6%. Last quarter on this call, we said our objective is to double Bitcoin per share in 7 years, doubling Bitcoin per share in 7 years implies about a 10% annualized BTC yield. And as I mentioned so far this year, we've increased 9.4%, our BTC yield. So we're well on to our annual target, and we've been happy with the success of Stretch so far this year. And ultimately, MSTR continues to be one of the most widely held equities around the world and the most widely held Bitcoin proxy in the world, and we're able to reach 1,400 institutions 927,000 retail accounts, 1,300 ETFs and funds. Over 100 million beneficiaries that share, nearly 4% of the Bitcoin in the world. So I don't think about this as concentrated amongst one company. a set of leaders, but really amongst 100 million people that we're sharing Bitcoin wood per share around the world. So let's talk about digital credit, our favorite topic so far this year. Look, the idea of preferred capital and preferred credit is not a new idea. And in fact, the industrial revolution was built on the railroads, which was built on digital credit -- sorry, built on analog credit through preferred capital. At that point in time, during the late 1800s, early 1900s, 20% to 40% of the capital structure around the world was preferred capital. What happened in the mid-1900s and the early 2000s is the rise of liquid debt markets, increased regulation, pushing preferred capital into what I would call niche use -- now as people are waking up to preferred capital and digital credit, especially, we're seeing a reemergence. And my knowledge here is we're preferred capital help build the railroads, which helped drive the industrial revolution. Now digital credit will help drive the digital railroads or the digital rails. It will drive the digital revolution, including the AI revolution. So we're excited about bringing this back to the forefront of the world. If you look at an overview here, we have 5 preferreds. We've mostly been focused on a Stretch so far this year. I think there's an opportunity for the remaining preferreds to start to perform as Bitcoin starts to perform. But Strategy is clearly the tip of the arrow as far as digital credit. And so that's what I'll talk about primarily. We're up to 11.5% dividend yield. Notably, we've kept this flat for the last 2 months, right? So we've increased the dividend yield from 9% to 11.5%, and now we're flat for the last 2 months because what we've seen is the volatility has started to decrease. The price has started to remain stable, and we've seen an increase in sharp ratio 2.53. So the notional value is up to $8.5 billion, and we're trading $375 million a day. And I'll share how that compares to other preferred equities and also common equities in general. The first thing I'll note is the rapid growth of Stretch, right? In just 9 months, we've raised $8.5 billion of capital. We had a running start with $2.8 billion. It slowed down, and it's really accelerated over the course of the last couple of months. Comparatively, this is one of the most successful financial instruments ever created in terms of capital inflows second only to IBIT compared to other products. has seen faster growth in terms of capital inflows and famous products like the iPhone or Google AdWords. So we're very proud of the acceleration of the product, and it means that we built something that is resonating with people in the U.S. and people around the world. Stretch is by far the largest tradable preferred in the world, right? We're nearly 2x the size of Wells Fargo's preferred. And you'll see here, what's interesting is almost all of these other preferreds save us and another one are bank preferred. So this has gone from being an industrialized product that's building the industrial revolution to a niche financial product, and we're excited to bring it back to being a major product in the world. The liquidity stretch, so this is the average 30-day average trading volume is 25x, the second largest preferred. So where Wells Fargo is about half our size is trading 125 of rig trading at $15 million versus $375 million. And what that means is with that liquidity, the turnover of the next best preferred, we're at 4.4%, 10x of what Wells Fargo is and some of these other products like Bank of America products. So -- we think we really found a new product category, digital credit based on an old product category, prefer capital, and we're excited about where this is going. Interestingly, and as we've pointed out before, Stretch is performing not just as one would expect in a bull market, but performing in a Bitcoin bear market. So while Bitcoin has gone down 37% since the beginning of October, now it's starting to rise again. We're seeing Stretch trade essentially near par and paying dividends that are increasing and then monthly and monthly. So we've increased the dividend, as I mentioned, from 9% to 11.5% and kept it steady at 11.5% for 2 months now going on 3 months while Bitcoin has been decreasing. And so with that, we've also seen the ATM velocity of stretches accelerated. And the ATM velocity is really the net inflows into the product. right? This is the demand of the product overall. And you'll see it notably in April, we had a week where we raised $1 billion and then the subsequent week, we raised $2.2 billion. And so we've seen tremendous demand coming into Stretch. And at the same time, we're seeing the volatility decrease. And so our target price range for Stretch is $99 to $101. We've actually seen it trading in a much tighter range -- and for the last 3 months, March, April, May, it sat in that price range for 100% of the time. I mentioned here, the deli liquidity is pretty significant, but it's also growing, right? So from $54 million to $120 million in January to $250 million in March to $360 million in April. So for those who are interested in getting into the product and size, if you're a corporate or if you're a large institution, you need to have confidence that when you need to trade in and out you need liquidity, our prior to showing that level of liquidity. I'll go through a series of analyses of sharp ratio because sharp ratio ultimately is a measure of the returns above the risk-free rate given the volatility of the instrument. And ultimately, if you're an investor, people are looking for high sharp ratios, right? So compared to traditional credit, junk bonds investment-grade bonds, bank preferreds, we outperformed pretty notably. Compared to traditional asset classes, the S&P 500, even Bitcoin, NASDAQ, et cetera, we also outperformed very notably. And then obviously, if you're looking for sharp ratio, a lot of folks go to the MAG equities, right? And Navidea is obviously saw on a hot tear because of the AI trade. Google runs essentially a digital monopoly and has been a very solid equity over the course of the last 20 years. Stretch has outperformed all of those and all of the MAG 7. Another place people typically go to find a high sharp ratio or hedge funds, right? Hedge funds are built with different strategies, different analyses, different quant strategies and typically, they are built to outperform the S&P 500 and with lower volatility. And here, what you'll see is looking at different hedge fund strategies to date notably and understandably early in its maturity is already outperforming these different hedge fund strategies, whether you're in multi-strat, whether you're a macro, equity arbitrage, et cetera. So we see a lot of benefits to this emerging category of digital credit, right, when compared to hedge funds, private credit, private equity. One is extremely liquid, right, to get these levels of returns and these levels are sharp ratio. Sometimes people subject themselves to 90-day lockups for hedge funds, 3 to 7 years or private credit to 10 years of private equity. We charge no fee, right? These other strategies often charge a management fee of 1% to 2% and a 10% to 20% carry, right, 2 and 20, if you will, right? Digital credit is homogenous. You know exactly what's behind it. It's Bitcoin. These other strategies are sometimes heterogeneous with many different asset groups assets grouped together, and we're making it very hard to ultimately assess the risk Ours is scalable through an ATM mechanism that allows people to buy the product and hedge funds and other strategies are discrete. We're accessible, traded via 4 letter ticker on the NASDAQ and now, interestingly, trading on many tokenized exchanges and tokenized products. The other ones are typically restricted to those who are credited institutional investors or high net worth individuals. And we're transparent, right? We disclose our performance, or holding through weekly 8-Ks and websites that update every 15 seconds. So one of the big questions as we have seen stretch perform over the last 4 months, essentially the year 2026, is what does this mean for our capital market strategy, right? And I'll introduce this topic and Michael will talk about it a lot, right? And so we said our objective is to double Bitcoin per share in 7 years through the success of digital credit. And so what does that mean? We sell digital credit, right? And we said that we target about 10% to 20% of the corn reserves annually in digital credit volume. And of course, we'll analyze that and assess that to see if that target makes sense, but that will generate amplification to our common stock, right, which should increase the Bitcoin per share in our common stock, which is ultimately our goal as we increase Bitcoin per share that allows MSTR to outperform at Con, which is what you've seen happen over the last 6 years, right? What allows us to flex these levers even better if our cost of credit goes down, right? If we're able to decrease the yield from 11.5% to lower for a variety of factors, if we're able to sell more stretch that increases amplification. And if our mNAV goes higher, and I'll talk a little bit about our NAV, but that also creates benefits for example, our cost of paying our dividend. What has happened in the last 4 months is we have increased optionality for Strategy of the company, right? We have more sources of capital and we have more uses of capital than we ever had before. And the success of stretch gives us options to do different things from a capital markets and treasury operations perspective to benefit our common shareholders. right? Our traditional sources of capital, sell MSTR, sell Stretch, right? We could sell our U.S. dollar reserve right to pay dividends, which we added in November. We also have Bitcoin that we have the opportunity and the option of selling. We can see our other press start to perform and sell those into the market. And we've talked in the past about also being able to potentially sell BTC or Bitcoin derivatives. What are our uses of capital? -- primarily today, we bought Bitcoin. We used Capital Pay, our U.S. dollar dividends, and we use capital to build up the U.S. dollar reserve. We have used capital in the past to pay down our convertible debt, our secured loans, our Bitcoin back loans. We continue to do that in the future. And then we could also use capital if we want to in the right time to retire any of our other right? So what does this really mean? This means we had 3 trades that we have executed. And really, before 2025, 2 trades, we sold MSTR. We bought Bitcoin. We sold MSTR, we bought U.S. dollars. Last year, we added Stretch in preferreds, and we sell Stretch and we bought Bitcoin. Now we're really seriously thinking about and contemplating I want to introduce the concept of a few more trades, right? Selling MSTR at the right end, whereas Bitcoin per share created to buy back debt. What does that mean? Considering retiring, potentially early some of our convertible notes using our common stock. Selling Stretch to buy U.S. dollars, right? We haven't done that much to date, but perhaps reserving part of our Stretch proceeds to build up our U.S. dollar reserve and then selling Stretch to buy back debt, right? You can see how that will be an accretive trade to Bitcoin per share because stretch inherently on sale is not dilutive in buying back future dilutive convertible shares. All right. And then the third sort of set of interesting trades that I sort of previewed on the last slide is selling Bitcoin, right? And this is a big sort of statement, but our ability to sell Bitcoin either to buy U.S. dollars or sell Bitcoin to buy debt if it's accretive to Bitcoin per share, right, is something that we would consider doing going forward. So how do we make these decisions? Ultimately, there are 2 sides of the same coin, if you will. One side is our equity performance, right? And to our common shareholders, the most important thing is to accrete Bitcoin per share. which results in higher BTC yield, which ultimately those together result in a higher BTC game, right, adding more Bitcoin and BTC gain on a dollar basis is the closest proxy to earnings per share. So those were the 3 KPIs we look to assess equity performance. On the risk side, the other side of the coin, right, we have a BTC rating, which is the amount that our debt and our leverage is overcollateralized by Bitcoin. We have an MSTR duration, which is the average duration of all of our instruments, right? And so if you look at our perpetual preferreds, they have the longest duration based on a calliduration basis, 10, 15 years out. And then we have our convertible debt, which has a shorter duration. So swapping longer duration for shorter duration, is a good trade for us, right? And then we have MSTR risk, right? And so the BTC rating and the MSTR rating together influence the total risk profile to the company. And so we'll talk through a little bit more about this framework later. A couple of things I want to note before I hand off to Mike. One is Bitcoin per share accretion is our primary goal. MNAB is an input, right? The threshold for Bitcoin per share accretion when selling our equity and buying Bitcoin is increasing over time, right? So where it used to be a 1x mNAV as we add debt and as we add preferred primarily to our structure, the breakeven increases. Right now, it's about 1.22x. That means at 1.22x or higher mNAV, it's accretive for us to sell MSTR and buy Bitcoin. Below 1.22x mNAV, it's actually more accretive for us to sell Bitcoin, right, and pay off our dividends than it is above 1x to 2x mNAV. And so that's a note, and we'll talk more about this, and we'll explain it further. But it's important port because I think there is a misconception that the breakeven point is 1.0x. Next thing I'll note, there are benefits to the way we bought Bitcoin and the holdings of Bitcoin that we have by cost basis here. And you'll have this here, taking $20,000 tranches here at 2000, 20 to 40, 40, 60, 68 and beyond, we bought Bitcoin at every price level. Below current price is about 80,000, we have an unrealized gain from a tax basis on that Bitcoin. Above 80,000, we have unrealized losses. If we were to sell Bitcoin, our objective would be to sell high-cost basis Bitcoin to capture some of those unrealized losses and to take some of those unrealized tax benefits, of which on our balance sheet, there's about $2.2 billion, right, estimated of tax benefits. So there is a tax benefit if we were to sell high cost basis Bitcoin as an example, right, to pay down some of our dividends over time. Amplification, we're currently at about 34% amplification. A portion of that, about 10% of that is driven by our convertible debt. The ability for us to increase amplification to the company is higher when we have a long-duration digital credit than it is when we have short duration convertible debt. So as the company starts to cycle over time from convertible debt to digital credit, we can take on more amplification with lower risk levels. And so we could see ourselves getting 50%, 60% amplification levels. Over time, and still feel like we have a high credit quality and a high risk quality to the company. And the last thing I'll share here before I get to some of our principles is the U.S. dollar reserve, right? We have built up the USD 2.25 billion reserve, which at that point, represented over 2 years of dividends and interest payments. And now we're with the same exact U.S. dollar reserve at about 1.5 years. Adding to the U.S. dollar reserve reduces Bitcoin per share, but improves the credit quality of the company. And so it's something that we'll continue to evaluate over time what's the right level of U.S. dollar reserve is. We feel like at a minimum, it should be $2.25 billion. But likely, as we grow our digital credit and stretch, we will want to add to this at a certain level. So I'll summarize what I shared here because hopefully, it addresses a lot of questions from our shareholders. How do we think about managing capital markets and our balance sheet. One, our objective is to create long-term value for MST, right? We want to increase Bitcoin per share, which will increase the price of the common equity and ultimately be better for our common shareholders. Two, we're going to continue to grow demand for Stretch. We've seen it to be a very popular product in the market and very beneficial to our balance sheet. It will continue to improve the features as we can, for example, moving the semi monthly dividends. Three, we are going to proactively reduce convertible debt based on market conditions and that could mean actively purchasing back through whatever means we think appropriate, some of the convertible debt before it comes due, right? Fourth, we're going to look at the Stretch demand and credit risk to determine the size of the U.S. dollar reserve. There's a natural market mechanism that as the U.S. dollar reserve in months to cover or years to cover decreases, the credit risk of stress goes up nominally and could decrease the demand. And so we will monitor that to decide what is the right U.S. dollar reserve size. Fifth, similarly, the amplification, the appropriate amplification for the company will also based on market conditions. Mike and I and Andrew and the entire team are looking literally every day. at what are the trays that are accretive to the claim per share. What are the trades that create the right equity accretion and what are the right trades that manage the credit risk at the right levels. And six, not necessarily most importantly, but maybe most notable, we will sell Bitcoin when it's advantageous to the company, right? We're not going to sit back and just say, we'll never sell the Bitcoin. We want to be net aggregators of Bitcoin, increasing our total Bitcoin, but more importantly, increasing our Bitcoin per share because we think that is what is going to be most accretive long term for MSTR and for the company. And with that, I will hand it over to Michael Saylor to complete the presentation. Michael Saylor: Thank you, Phong. I thought I'd elaborate on some of the things set up until now and just give you an overview of the BTC market and then our capital market strategy. Everything is based on digital capital and Bitcoin is digital capital, and that means global legitimate collateral, global property. So we keep track of Bitcoin as digital capital and the consensus in the market. What you can see here is the U.S. government has embraced it. All of our key financial regulators, the Head of Treasury, the Head of the SEC, the head of the CFTC and now the incoming head of the Fed are all digital assets, enthusiasts, innovators and Bitcoin believers, as is the President of United States, Donald Trump and the Vice President, JDate, along with many, many other covenant members. And I think that's a very important fact. There are a lot of bills still working their way through Congress. The most notable one right now is clarity. The real key here is that Bitcoin is a priority in the House and the Senate, on the Hill, at the White House and this bipartisan support and bipartisan agreement for Bitcoin's digital capital and for legislation that supports the adoption of Bitcoin's digital capital in the world. Really exciting a few months ago at our Bitcoin for Corporations conference. We saw major announcements by systemically important banks, Morgan Stanley, Citi TD, all with intent to integrate Bitcoin into their operations. This is something we only hoped for 3 or 4 years ago, and now it's a reality. And at the point that Bitcoin is integrated in the banking system, than its digital capital here to stay. You can just see the announcements across your ticker, right? Everywhere in the world, this is a global phenomenon. It turns out whatever happens in the U.S. and with the U.S. banks is spreading to Europe to the UAE to Hong Kong to South America, et cetera. I think you're going to see these announcements accelerate, but we've crossed the event horizon, and it's pretty clear that you can't put the genie back in the bottle. Bitcoin has arrived. We try to be systemic. So we track it, and we track the 15 largest or most systemically visible banks in the world, and we look at their embrace of Bitcoin as a creditworthy instrument, Will they trade it? Will they offer credit against it? Will they custody it? Will they handle the derivatives, et cetera. And what you can see here is that adoption has actually advanced since even last quarter, and everywhere in the world across all of these banks, they are active efforts to improve Bitcoin support. If you track the number of accounts that put Bitcoin access, you can see we're marching up into the high hundreds of millions, 840 million crypto exchange accounts, nearly 1 billion neo bank accounts, nearly 1 billion brokerage accounts, they all have access to some sort of Bitcoin derivative. ETFs, of course, continue to embrace Bitcoin. There's now been 125 ETFs with about $126 billion of capital. The capital flowing into these ETFs continues to accelerate. And as you can see, we were the first company to embrace Bitcoin, and now we're up to 194 public companies. We anticipate this will continue to grow. Lots and lots of IPOs. The public markets have embraced Bitcoin. And this is just an example of some of the notable companies that have come public just recently that have substantial Bitcoin exposure. The digital credit ecosystem has been a very pleasant surprise. It has grown very rapidly and has become very diverse. And the way that we know the digital credit is working is that companies and economic actors everywhere in the world that we've never met face-to-face are discovering this and they're building products and businesses around it. So -- right now, what we see is very enthusiastic support with retail investors, with corporate treasurers, with institutional investors, with crypto-native innovators and with Trafi innovators. So 5 different groups of capitalists, but they're all getting very heavily involved enthusiastically and rapidly. If we drill into retail, 80% of all STRC shares is held by retail as of our last check. This is an extraordinary fact. Normally, it's very difficult to get broad, deep retail support for a common stock or a public stock. And yes, we've been very pleasantly surprised. We're able to trace about 120,000 individual retail accounts. Word of mouth is spreading this. It's spreading virally. Based upon our studies, we see that anybody that buys SDRC is generally telling their friends, their family, their parents, their working associates about it, and it continues to spread word of mouth. You can also see Schwab is a big distribution channel. 23% of stretches held in Schwab accounts. Fidelity is a channel, Robin Hood is a channel, Morgan Stanley eater channels. BlackRock as a channel. Interestingly enough, Vanguard that won't let their investors buy Bitcoin natively. They actually are a channel for stretch. And so it's pretty exciting that we have wrapped Bitcoin into a credit instrument that is being distributed through all sorts of traditional finance channels to types of investors that otherwise would never be able to buy a Bitcoin itself or would never want to. We actually have traced stretch exposure, and we estimate that there are about 3 million households that are benefiting from Stretch right now. So think of it as powering a savings account for 3 million households. Phong mentioned about 100 million beneficiaries of MST while 3 million beneficiaries of SDRC in 8 months is a pretty good start to the race. Our ambition is to spread this to tens of millions and then hundreds of millions of people. So we're off to a good start, but we're just really enthusiastic about the retail support. We're also very enthusiastic about corporate support. Corporations unprompted by us. We didn't go and sell this to them. They just figured out that it was a good idea for them. But corporate treasurers and corporate CFOs with working capital have been allocating some of their treasury capital to Stretch. And -- this is a really pleasant development, and we're starting to think that there might be thousands of companies that might allocate some amount of their treasury capital to Stretch. And I've had a lot of experience selling BTC to corporations. What I found is that tends to be a Board-level decision. It goes all the way, the Board of Directors, the CEO has to be way behind it. And if 1 director on the Board has concerns the cycle slows down. But with STRC, it's not a board-level decision, it's more like a CFO-level decision. If the treasurer is enthusiastic, the CFO can greenlight it, they might or might not give the CEO a heads up. But this is a very different value proposition. It's maybe a 5-minute conversation with the CEO instead of a 2-hour conversation with the entire Board -- for that reason, we think that STRC really is Bitcoin for corporations, it's going to spread very rapidly now. The other thing that's very exciting is that SDRC is spread into credit indexes. BlackRock's PFF is a $14 billion credit ETF and Stretch is the #2 holding. VNX PFXF is another credit ETF, and strategies stretches also the #2 holding. And so imagine an instrument coming out of the blue didn't exist 12 months ago. And in less than 12 months, we've gone from nonexistent to #2. Next up, number one, we're enthusiastic about seeing stretch embedded in lots and lots of institutional credit indexes and lots of institutional credit funds. Third-party ETFs have been finding stretch, and they're building innovative ETFs. STRIVE is building a digital credit ETF, 21 shares created an ETF with Stretch and took it public in Europe. There's a number of ETF providers that are working with us that are in the pipeline right now. I think active discussions with 4 right now. And so we would think that over time, there'll be more ETFs to build SDRC into their fund offering. So here, I'd like to talk about digital money and digital yield. We start with digital capital. Bitcoin is 34 vol on a rolling 30-day average. It's 39% ARR. The 1-year trailing Bitcoin is almost 40%. So think of it as a 40-volt -- 40 ARR asset, raw economic energy. We split that asset into STRC, which is 3 vol, 11.5% yield. And then MSTR which is 71 vol, 59% ARR. So one is an amplified Bitcoin, we call digital equity, and the other one is damp digital credit. Now digital credit, we believe, is like the case of finance, right? It is the monetary fuel and is a universal monetary fuel. It's high grade, highly distilled. But from here, you can build all manner of products. And we see the Layer 3 as digital money and digital yield, neither of them would really be possible without digital credit. It's just too difficult to distill pure 0 vol 8% money from a 40-vol 40 AR asset, you have to crack it. You have to have a crypto reactor, and you have to have 50 billion, billions of dollars of equity capital to do it, and that's what we did to create Stretch. So a simple definition, digital money in our Lexicon is 0% volatility, daily liquid instruments built on digital credit, like 0 vol, 8% yield coin. And then digital yield, that's non-zero volatility or it might be illiquid. It might be a 3-month lockup 5x levered 35% yielding fund that loops digital money 4, 5, 6 times in order to get there. And so digital yield is a levered construct and digital money is the strip down construct. We think digital credit is programmable across lots of dimensions. So a lot of ways to add value to it. You can you can tokenize it, put it in a private fund, put in a public fund, put it in a bank account. You can deploy it on a crypto exchange on a neo bank. You can deploy it on a real bank, you can deploy it on a crypto network, you can program it to volatility of 0 or let it float up to a volatility of 10. You could program the liquidity to be continuous or daily or monthly, but you could also put in a quarterly lockup or an annual lockup in order to put more leverage on it or create a different characteristic. You can program the yield from 5% up to 25% reasonably. Some people might go beyond that, but we think 5% to 25% is reasonable. And then you can convert the currency. You can create great British pounds or euros or yen or Swiss francs with digital credit starting from STRC. And so when you think about all these different forms, the question is, do you want to create a yield coin, like a digital money coin? Do you want to create a yield fund? Do you want to create an account, right? And depending upon what your assets are, if you're the biggest bank in Australia or if you're a Deutsche Bank, you probably would do it one way, but if you're a crypto exchange, you might do a different way. The math is pretty straightforward. You start with 11.5% performance in like 3 vol right now. If we're lucky, maybe we'll be able to get our vol to two or to a one handle. I mean that's the goal of our proposal to the shareholders. But I doubt seriously we get below 1.5 or a valve. One valve is sort of what publicly trading -- trade market funds look like right now. But getting to zero valve takes a bit of work. So -- so one approach to add value is to step it down, stripped of valve to 0 and maybe instead of 3 volve 11%, you offer volve vol, 8%. And that's a digital money. And the other approach is step it up, right? Lever it 3:1, pay 5% for the capital. And maybe you end up with something that's paying you like $35, you pay $10 on the capital and you get a 25% yielding levered yield fund. And these are all opportunities. We are not going to do it ourself. Our laser-like focus is make stretch the deepest, most liquid, most stable, least volatile, highest sharp ratio credit instrument in the world. And that's a mission. But what we think is their love crypto innovators, and you see right here on the screen, a lot of very impressive companies that are moving fast right now. Apex has had enormous success early on Saturn is doing the same thing. -- but Hermetica Kraken, Roam, Ando, Pendal spreads, strata, -- they're all doing very interesting things right now, and they're very innovative. And they're moving about 10x faster than the Triad complex normally moves on these sort of initiatives. But having said it, there's a lot of interesting TADF initiatives, things you can do in a traditional finance environment either with a private fund or a public fund, and we see those things happening as well. Eight weeks ago, there was no Stretch in the DFI industry. And in those 8 weeks, we have rapidly grown to something like $270 million of exposure. So this is just really extraordinary, the rate at which money is flowing. Sometimes money is flowing in at this complex $1 million an hour, $2 million an hour. It's starting to feel to me like we may very well see more than $1 billion of stretch enter the DFI industry in the near future. It's moving very fast and it's very dynamic. So let's speak about outlook and our vision. We are a structured finance company, and you can see here, we're taking raw capital, digital capital 40 ARR, $1.6 trillion market comp of Bitcoin. We are stripping we are stripping the currency risk. We are reducing the credit risk. We are reducing -- we are compressing the duration risk. We are distilling a yield, we are dampening volatility in order to create various instruments and our greatest product and bigger success right now is Stretch. As you can see, it's -- it's taking a 71-volt down to a 3-volt and we're targeting a 1 vol Some important items to be aware. The Bitcoin breakeven ARR. We calculate it all the time. It's very significant for this reason. If Bitcoin grows more than 2.3% a year that breakeven ARR, we can fund our dividends forever. We can fund our dividends forever without selling a single share of stock. It is a very critical point. If Bitcoin does not grow at all forever, we can fund the dividends for 43 years. We're very clear about this. You'll see we publish it on our website, and we updated every 15 seconds. So let's go to the next slide. Here, you see, this is our website. If you go to the credit tab. You're going to see we show you the Bitcoin Reserve. We show you the years of dividends. That's the years we have of coverage of Bitcoin appreciate 0% a year. And then we show you the Bitcoin breakeven ARR, 2.27%. It's updated every 15 seconds. So for those people that are wondering, what is the credit risk in all of these instruments, I encourage you to go the credit hub. You can go and you can type in, you can assume the Bitcoin price crashes to 30,000. You can change your Val outlook, you can change your ARR outlook. The model will recalculate all of the risk and credit spreads for every credit instrument and especially for STRC. And as I said, we're updating all of these things in real time, every 15 seconds. There's a misnomer. Some much people think, well, Bitcoin has to appreciate 11% or 11.5% for us to be successful or cover the dividend, not true, 2.3% or they think 30%. Now that's what we think it will do. The number that really matters is 2.27%, the big BTC breakeven ARR. Now it's important for another reason. The BTC breakeven AR is also the inflection point where Stretch issuance results in more Bitcoin being stacked by our company than the Bitcoin we use to pay dividends if we choose to pay dividends with Bitcoin. So this chart here, what it illustrates is that we don't have to sell a single share of stock. We could stop selling MST our common stock right now. We can fund the dividends with Bitcoin sales. And if Stretch issuance is greater than that BTC breakeven number, not only will we fund the dividends forever. We will increase the amount of Bitcoin that we hold forever at the same time. So you would say, well, how much is that? Well, you can see if we were to sell $1.5 billion of Stretch per year. We can sell Bitcoin, pay the dividends, buy more Bitcoin than we sell, grow our Bitcoin stack and generate Bitcoin yield. Now of course, we saw $1.5 billion of Bitcoin and like -- sorry, $1.5 billion in Stretch in 2 days a few weeks ago. So yes, I think we can definitely stay above that breakeven point. What you see here on this slide is that if we actually have Stretch issuance equal to 20%, that would equate to $12.8 billion of stretch sales this year. And we're kind of on the path of that if we look at the first 4 months of performance, we might exceed it, who knows, we might be less. But if we actually run at a 20% issuance rate, then the first order model shows or indicates that we generate a BTC yield of 17.7%. We accumulate an additional 144,000 Bitcoin, and that's after we pay all the dividends by selling Bitcoin. So again, -- the most important point here is there are occasionally some short narratives. People would say things like, well, if they sell the Bitcoin, that's bad for the business or it proves the business doesn't work or something. But -- we look at it as if you're a real estate development company and you bought land for $10,000 an acre and you sold it at $100,000 an acre and then you bought more land with the profit. or if you sold $100,000 an acre to pay some interest expense on debt that you used to buy more land, nobody would say that that's bad for the price of real estate and no one would say that, that proves business doesn't work. real estate development companies literally exist to buy land sheep and sell it expensively. We're like a Bitcoin development company. We buy it cheap. We sell it deer. Where do the dividends come from? Capital gains, fund credit dividends, right? That is the essence of the business. We invest in digital capital, Bitcoin. The capital gains from the investment fund the credit dividends. They will do it in perpetuity. If you -- if the capital appreciates at that breakeven rate. And it turns out that sometimes we will sell a Bitcoin derivative because it's in the best interest of the company but it's not necessary. This chart really illustrates that you can strip the business down to something very simple. You buy back coin with credit, you like it appreciate and then you sell Bitcoin to pay the dividend. And as long as you're issuing credit in excess of the breakeven point than this business works and grows forever. So how do we decide what to do? Because every single day, we've got a bunch of trading decisions Well, we have a very sophisticated equity and risk model. We calculate the benefits of the equity and the deltas to the risk for every single capital markets transaction. And that means we're making these decisions, not just every day, oftentimes every minute of every day based upon all the fluctuating prices of the trading pairs. Right now, our BTC rating corporately is about 3.3%. The duration of our liabilities is 10.9%. That's the stochastic duration. It's our estimate of of the stochastic duration of all the debt in the press. The risk that we've centered on works out to 88 basis points. And that works out to a fair credit spread of 61 basis points. 818 basis points of risk means that there's an 8% chance at the end of the duration of the liabilities that you're trading at a BTC rating of one. And 61 basis points is the credit spread, a rational investor needs to be paid to offset the risk. What you can see here is two things. First of all, the assumptions we plug into the model to estimate that center line risk is 10% BTC AR. We assume that Bitcoin will perform about at the level of the S&P 500 over the last 100 years. It's a fairly conservative, realistic view. And we plug in 40 vol. We assume that the asset will remain volatile add in for item. So we see that as two conservative estimates. But even with those estimates, what pops out is a credit spread of 61 basis points. The investment-grade credit spread is like 88. And so this is investment-grade credit even with very realistic pragmatic inputs. Let's delve a bit more into this. Here's the risk model. What you can see, of course, is that if you're a Bitcoin Max, you think Bitcoin is gone up 30% a year, there is no risk, right? The more bullish you are in Bitcoin, the more the risk drops away. If you're a tech investor and you think Bitcoin is as good as a MG-7 stock and it goes up 20% a year. The risk is fairly de minimis. If you're a trader and you think Bitcoin is no different than the S&P, well, then you're on that 10% ARR line. And then if you think that the ball stays constant, you've got that 818 basis points. If you're a skeptic and you think Bitcoin is going up 0% forever, the risk increases. And if you're a hater, a pessimist, and you just think that Bitcoin is going down at infant item. -- then the risk actually explodes, there's a lot of risk here, and you can see it in the model. We we'll show you risk numbers here with that realistic view as though you're an agnostic trader, you don't love Bitcoin, you just think it's just as good as any other equity capital asset that's diversified. You can see you can calculate the risk with various Bitcoin prices and you'll get the answer you would expect. Bitcoin price going up is good, Bitcoin going down is good. And on the next slide, you can see you can slice this with various assumptions about the outlook of Bitcoin as well. So let's look at some trades. If we decide to sell $1 billion of MSTR stock and buy $1 billion of Bitcoin. If you do that at less than 1.2 mNAV, when you do it at 1 mNAV, you can see it's dilutive. It's a minus 48 basis point yield. It cost the shareholders $310 million. For that reason, not very good idea. What you can see here is that as the mNAV goes to 2 or 2.25, it becomes a screamingly accretive deal; two, you make $457 million in gains on the trade. We've broken it down to basis points of yield. It's also another point, 57 basis points of BTC yields a lot of money. It's worth 1/3 of $1 billion. So it's not that complicated to see whether something is accretive or dilutive when you're swapping common for Bitcoin. You can also see here what it does to the credit risk. It improves our BTC rating, it decreases the risk. So whenever we're swapping MSTR for Bitcoin, it's credit positive. It's probably equity positive unless we're trading below that 1.22 breakeven. Now let's consider whether we want to use equity to pay the dividends or whether or not we want to use Bitcoin to pay the dividends. If we fund $1 billion of dividends with Bitcoin, it cost us $1 billion. It's $1 billion of cost to the shareholders. Look at the lowest line, you'll see it. It's a 12,763 Bitcoin loss, 156 basis points. And what you can see here is that's pretty comparable to funding the dividends with common equity at 1.22 mNAV. They are pretty much the same. If you fund the dividends with equity below that breakeven, it gets more expensive for the shareholders. It cost you an extra $290 million to fund it 1 mNAV. So you'd be better off to sell the Bitcoin than to sell the equity on this analysis if the equity is trading weak. On the other hand, if the equity is trading at 2 mNAV, then it only cost $535 million. So it's an 83 basis point hit instead of 156 basis point hit. So as you can see, we're always considering to us MSTR, to use BTC to fund obligations of the company. What you'll notice is if you do use equity, it doesn't change the credit metrics at all because you're expanding the capital base of the company. With Bitcoin, it may be less dilutive, but it does slightly increase the credit risk. It drives down the BTC rating, the risk goes up 13 basis points. That would equate to like a one basis point increase in the credit spread. Now what about funding the U.S. dollar reserve to the tune of $1 billion? What you can see is, well, it's a lot more efficient for the shareholders to fund it at a high mNAV like 2.25 or 2, then it is to fund it at a lower mNAV. And of course, it's constant to fund it at BTC. And that's the negative from the equity point of view. The positive from the credit point of view is it extends our duration dramatically, 160 days of duration. It decreases MSTR risk by 55 basis points and improves the rating. Next, now what if we actually buy back one of the converts or some of the converts. You can see here, if we go and we sell $500 million of stretch to buy $500 million of convertible bond, we actually generate substantial BTC gains. We get a yield of anywhere from 22 basis points on the 2029 convert to 63 basis points of yield on the 2030 convert in the middle. So Why? Because different converts have different equity content in them. And so some converts are more dilutive to the common than others. And you can see here all the analytics, you can see the impact on the rating. You can see the impact on the risk. Generally, we'll stretch the duration will dramatically decrease the leverage, will slightly increase the risk and will, of course, generate massive BTC gains through this trade. You have to evaluate this, of course, every day because the price of all the converts will be changing every day. And so this is an illustrative of the model we use. So what have we actually sold Bitcoin to buy the common stock back? This is not something that we have considered before, but I'd like to illustrate it -- because what you can see here is that below 1.22 mNAV, it's actually extremely accretive to the investors to swap BTC for MSTR. And so if you have an irrational market, let's say, some crazy short sellers shorted our stock to 0.5 mNAV. Well, the most profitable trade in the entire model is to actually swap BTC for a common stock at a massive discount to mNAV, and you pick up 636 basis points of yield, massive amounts of BTC gain. And of course, the opposite is intuitive. If you're trading a high mNAV and you're swapping BTC for the stock, you're generating a dilution. So you won't see us swap BTC at a high mNAV, but you might see us swap at a low mNAV in the future. And you can see all of these trades, they have a small impact on risk, but it's fairly de minimis. It's primarily an equity dilution or accretion. And you can see we can swap BTC for MSTR. But here, another very powerful tool the company as is, we can swap STRC. We can sell credit to buy MSTR. So over time, as the business model becomes more well understood, the company has the ability to do its own levered buyout or LBO on his own common stock. We can create amplification. I'm not going to use the word leverage because leverage implies that you've got a debt obligation that comes due. Really, it's amplification on the equity. And if we wanted to amplify the returns of the equity, we would simply sell the credit and buy back to common equity. And of course, we get to take advantage of market mispricing. If the market perfectly prices everything, we don't have great arbitrage opportunities. I mean -- but you can see here, even if the equity was trading at 2M NAB, we can generate 85 basis points of yield by swapping $1 billion of credit for $1 billion of equity. But if the market trades down to 0.5 mNAV, we can generate 800 basis points of yield. So it starts to become pretty accretive, and this is an option in the future that we have as an operator. And of course, we can actually sell dollars to buy common equity. So you can see the impact of this. And of course -- probably one of the more expensive programs we have is to carry the U.S. dollar reserve. It's dilutive to the equity. It's equity negative, but it's credit positive. And you can see we do have the option if the equity were to trade to a discount to actually swap the dollars back for the common and it would be extremely profitable for the common stock shareholders to do that. So we've got some scenarios here. We can continue with our conventional strategy at 1x mNAV. So even if the stock was trading at a discount to breakeven we're selling credit and selling equity and we use the equity to fund the dividends and we hold the U.S. dollar reserve constant at 1.5 years. We would run a 10.6% BTC yield, and we would accrete up to 263,000 BTC per share or CTOs per share over the next 3 years. So you can see even if the market conditions aren't great, right, we have a business to deliver 10.6% yield. The duration would stretch out a bit. The risk would increase a bit, the fair credit spread, it looks like 94 basis points, but it's still just a shade off of investment grade. So that's a conservative case. Should the market continue, if we were a 1.22 mNAV. You can see that the yield expands to 12.2%. The credit metrics don't change, but this is really positive for the equity investors. So now here at 1.5 mNAV, you can see that the BTC goes to 13.4%. So you can see market sentiment and confidence in our ability to maintain this business, our belief in digital capital, belief in digital credit is going to drive an expansion of the MDA, which is going to actually drive an increase in the rate of accretion a bit point per share are going to drive the BTC yield up. It's going to drive bit line per share aggressively. And then at 2 mNAV, you see the BTC yield of this strategy gets you to 14.6%. So those are just different scenarios showing how market sentiment drives the business, but negative sentiment, it's a pretty good business. We'll double Bitcoin per share over 7 years and positive sentiment means that we will double Bitcoin per share faster. Now the company, as I said before, it can fund its dividends without selling any equity. We can fund the dividends by selling Bitcoin, and we can still grow Bitcoin Holdings continuously. So here's a scenario where what we do is we fund the dividends. We fund the USD reserve at 1.5 years. We do it by selling Bitcoin and you can see. We drive a 12.2% BTC yield. We go from the 670,000 BTC level to $850 million to $950 million to $1 million. So go through 1 million Bitcoin held on the balance sheet in the next 36 months, and we'll do that while funding all of our obligations with Bitcoin. You can see the impact. The impact that's measurable is a slight increase in credit risk and a slight increase in credit spread. But I think it would be a second order effect to the market. So this is interesting to keep in mind. Now what happens if we fix the U.S. dollar dividend and fund dividends with Bitcoin? Here, what we do is we just hold the dividend at $2.25 billion. And we pay all of our obligations by selling Bitcoin, and what you see is we get to a 14.7% BTC yield. Again, a slight increase in credit spreads, a slight increase in risk -- but this is without accessing the equity capital markets at all to drive the business. And we're looking at first order effects. We're not really showing the second order effect and the third order effect. There are tax credit advantages that are second order effect. There's reflexivity in the common stock itself. It might very well be that if people decided we weren't going to sell any common stock. They might actually decide that the rational map should go to 2 or 3 or 4. And so we can't really model those. What we can just illustrate here is that even the first order model, it's pretty clear that the company has the option to run on the Bitcoin engine or on the Bitcoin derivative engine. MSTR is a bit coin derivative and either of them are options. Here's a scenario where we just retire all the converts. And have we diverted 20% of the Stretch issuance to retire debt. We retire all the debt in the next 3 years. We'll go from $8.2 billion of debt to 0, net leverage goes to 0. The duration of our instruments goes up to 15 years. There's 114 basis points of credit spread on the digital credit, but there is zero leverage. And we run with a 12.4% yield, and we maintain this constant 1.5 year USD reserve. And so you can see that's kind of interesting as well and an option that's available to us. So here's a table that just shows all the various options. And of course, there's a lot of other things. We've got a sophisticated model. We can plug in any possible trade in any size on any day of the week. And rest assured, we're continuing -- or we're considering these every single day, and we're programming trading algorithms to trade all these instruments sometimes every single second. And so the key point that Phong made is the optionality in the business is expanding dramatically. You can see on the equity side, our assumptions are 30% BTC ARR, 20% stretch issuance, 11% dividend rate. On the credit side, we're much more pessimistic or conservative or you could call it realistic, if you want, 10% BTC ARR, high vol. If Bitcoin vol starts to fall as Bitcoin price appreciation accelerates, we have a lot of other options we can take advantage of. And rest assured, we'll jump on top of those. I thought I'd show one last slide of interest here, which is sometimes people have this misnomer. They think that we're borrowing money at 11.5%, and it's a fixed obligation. That's not correct. We're not borrowing money. When we sell $1 billion of Stretch, we're never paying it back. And so the first obligation is Stretch is a perpetual swap. It is not a loan. And the second observation is the cost of capital is not 11.5%. There is a stochastic cost of capital. What Stretch is, is a perpetual swap where the issuer agrees to pay SOFR plus a credit spread, a variable credit spread adjustable each month and then the issuer invests that in Bitcoin. So we are paying SOFR plus the credit spread. We are taking back the Bitcoin return. And the company, the issuer has a couple of very powerful options. One powerful option the company has is over time to reduce the credit spread. That is an option. And of course, the credit spread is probably at a high point when you're early in the industry when digital credit is not understood. But you would think after 3 years or after 6 years or after 9 years, the credit spreads will compress as confidence in Bitcoin grows, as confidence in stretch grows, as AUM grows, as confidence in the business model grows, the credit spread should compress. The second option is the company has the option to lower the dividend to a floor of SOFR. So as SOFR falls, when SOFR is 375 basis points, that's the floor. But if SOFR goes to 200 basis points, the company gained 175 basis points of additional optionality. SOFR has gone to 0 or 25 basis points in the past. So the fact that SOFR generally fluctuates between 500 basis points and 25 or 50 basis points on an 8-year cycle is a very important point. And when you consider those two options, the stochastic cost of capital for stretch has to be modeled as something less than 11.5%, maybe more than the long-term rate. If you imagine SOFR is 2% or 3%, and we have a 300 basis point credit spread 20 years out, that might be 6%. So somewhere between 6% and 11.5% gets you to like a blended rate of 875 basis points. So when we think about the cost of capital, we think that it's probably 875 basis points and the debt is never coming due. And I think that's an important point to make to the world, and it colors your thinking. And so with that, I'll just end with our capital markets principles. And I'll reiterate what Phong said, we're here to drive Bitcoin per share up, and we're doing everything we can to drive Bitcoin per share up. We think the best product and the best tool to do it is stretch. And it's clear the market is telling us that. And so we will focus laser-like on making stretch the best digital credit instrument. We do see a world where we're debt-free and sooner rather than later. We're going to adjust our amplification and our credit metrics and our U.S. dollar reserves and our use of proceeds based upon market feedback. We get market feedback every minute. We're literally staring at all these signals every minute. And of course, we're talking to every credit investor and every equity investor continuously. And again, with Bitcoin, the company has got more than $60 billion of Bitcoin and the Bitcoin market has $20 billion or more of daily liquidity. If we were to be boxed in by a troll or a cynic or a skeptic into agreeing that we're never going to sell the Bitcoin and we're never going to tap the liquidity, we would be impairing the asset, which accounts for 99% of the future of the company. So it's kind of like a real estate developer saying, I'm just never going to sell any real estate ever at any price. It's kind of a silly thing. If a wealthy person, if a billionaire sells $1 million or spends $1 million to make $1 billion, nobody says they're poor. And nobody would lament that spending a few million dollars is going to crash the U.S. currency either. I don't think that if we spend $100 million of Bitcoin or sell $100 million of Bitcoin to pay a dividend, I don't think it's going to negatively impact the Bitcoin network. I think it's probably good for the Bitcoin network. It definitely doesn't impair our business model. If anything, it just creates more optionality in second and third order effects. So the management team's practice is to run the company in the best interest of all the stakeholders. And that means there are 3 that we laser-like focus on. Whenever we're making a decision, we ask the question, is it good for the common equity MSTR. And we asked the second question, is it good for the creditors, especially STRC investors? And the third question we ask is, is it good for the capital investors, BTC investors? And we happen to believe that running our business in such a way as to commercialize digital credit in the most efficient fashion is the best thing we can do for Bitcoin and Bitcoin investors, the best thing we can do for digital credit investors and the best thing that we can do for our common equity investors. There is no conflict between those 3 goals because if we suboptimize to the benefit of one to the detriment of the other two, the entire machine doesn't work. And so when we balance the interest of the three, the more credit we sell, the higher the equity mNAV, the higher the equity mNAV, the more credit we can sell, the less the credit risk, the more Bitcoin we can buy, the better it is for Bitcoin. The better is for the price of Bitcoin, the less risky the credit is, the more profitable the equity is, there really are concentric flywheels here, feedback loop within feedback loop within feedback loop. And when we're in harmony, all three -- all of those feedback loops are working really well, and you can see that happening in the market. We monitor it. And in dish of everything working is when the mNAV is expanding and the equity is healthy and the equity is outperforming Bitcoin, when the volatility of Stretch is falling and liquidity is increasing, right, that is Endicia of the success of the credit and when Bitcoin prices appreciating and Bitcoin support and liquidity in the world is appreciating, that's indicative success of the capital. And so that's what we've been doing. That's what we're continuing to do, and we thank you for your support. Now I think we'll open it up for Q&A. Unknown Executive: Thank you, Michael. So before we jump into the Q&A, I'd like to just share with all our investors that we're organizing a special Q&A for retail investors next week on May 13. You can scan this QR code if you'd like to submit questions, we'll share the link on X and we'll share more details as well. With that said, let's turn into the Q&A. I'd like to invite all our guests to turn on the cameras, get ready to ask some tough questions. Let's get started. Pete Christiansen from Citi. Peter Christiansen: Michael, I just want to -- I was just hoping we just can take this call and how you've laid out, I think, both of these scenarios and think about like historically, I guess, I'm pointing to last year, at the end of last year that there was a false signal that strategy and was selling Bitcoin and it was taken negatively in the marketplace. Today, you outlined a lot of different optionality scenarios that, that strategy now has to optimize its capital stack. Should we take today's call as a signal to the market that, yes, strategy is willing to be more proactive with its capital stack, which may include the sale of Bitcoin, maybe for tax purposes or meaning for other optimization purposes, credit, what have you. Should we take today's call as a signal that yes, Strategy is going to be more tactical with its capital stack going forward? Michael Saylor: Yes, you should. I think the company got much healthier when we proactively began to utilize the equity ATM and we said it, we're going to do it. We're not ashamed of it. We'll probably do it again. And then when the company started proactively executing on the stretch the credit ATM, and we said we're going to -- we're not a shame , we're going to keep doing it. We think it's good. And we've got a plan for it. And now I think at this point to say we're turning on the BTC drive. We're not ashamed of it. We got $65 billion -- We have a $2.2 billion tax credit that's lying on the floor. We ought to go find a way to pick up the $2.2 billion, right? And just like with everything else, the more optionality we create and the more tools we have at our disposal, I think the better it is for the equity investors. We'll probably sell some Bitcoin to fund a dividend just to inoculate the market just to send the message that we did it look, the company is fine, the Bitcoin is fine. The industry is fine. The world didn't come to an end. And if you're a short seller and your thesis is the company has got to sell equity in order to fund the dividends. I would like nothing better than to rip your wings off. Unknown Executive: I'd like to invite Jeff Bak next. Unknown Analyst: Hello. First off, congrats to the team, particularly on Stretch's accelerated region. Hope part of this. Thanks for having me here. My question is focused on understanding how macro factors may influence the firm's Bitcoin acquisition strategy and particularly in the works to interest rates. As we all know, we're just about a few weeks away now from Kevin Wash's official inauguration and even though rate cuts odds are a little lower this year, Strategy now does have like an explicit growing interest rate sensitivity, right, as we just saw from the Sucat model. And so if hypothetically, we see interest rates being lowered, Stretch has this momentum that it will likely trade above par more aggressively, given the nature of like the floating rate dynamic. And now the company has like a really, really interesting fork. You can either one, issue more Stretch and push the price back down to par or you can actually use that moment to reduce the interest burden itself right on what's outstanding. And there's a healthy attention between these two things. I guess my question is, can you help us understand that risk framework a little better to calibrate that particular trade-off, right, lowering the coupon versus selling West TRC. It changes a little bit of the Bitcoin acquisition velocity, but it also cuts interest expenses, especially in that lower rate interest environment. And any specific like input parameters that you might say takes priority here in your calculation? Michael Saylor: I'll start and then Phong or Andrew may have some comments. So first of all, when the macro indicators are moving against us, we've got a headwind, everything slows down, right? And when we go to a restrictive monetary policy, that's bad for Bitcoin, that's really bad for Bitcoin. It's bad for risk assets. Bitcoin is risk asset squared. MSTR is risk assets cubed. So I feel like we're like tech cubed and big tech cubed, and Bitcoin is big tech squared in a risk-off environment, and you could see that. In a risk-on environment or a more accommodative monetary economy, I expect you'll see the opposite. I think Bitcoin will rally hard squared, our equity should rally as tech cubed. The credit presumably, we have more optionality if SOFR falls. Our bias is to grow the business responsibly, but as rapidly as we can and our bias is to grow Bitcoin. So if we have the ability to accelerate our capital raising, and we could twice as much capital in a risk-on or more a looser, more accommodating monetary policy, we will run the vehicle as hard as we can -- but we won't run it so hard that the capital structure doesn't keep up with it. So the circumstances under which we would slow down or want to throttle the credit would be if Bitcoin -- if we go to risk on and Bitcoin doesn't rally and our equity doesn't rally, but the credit rallies. So if the demand for the credit triples and somehow Bitcoin -- and Bitcoin doesn't react to the interest rate macro environment or MSTR doesn't. Then we might very well say, well, we're going to want to adjust the dividend rate down because we're getting too much demand for the credit. By the way, Jeff, I don't think that will happen, right? I think the likelihood that we go to a risk-on environment and Bitcoin doesn't rally is small. So then at Bitcoin rallies, then our capital stack and our collateral base expands and then we can accommodate more credit. So the rate of stretch issuance or credit sales is a function of the BTC growth rate or ARR. If Bitcoin grows 30%, we can expand credit aggressively. If we grow 50%, we could go faster. And then the second order is really the equity capital market's enthusiasm for our business model. So if the equity capital markets looked at our business and said, "Okay, we're going to run a BTC yield of 20% a year, and I'm going to give you a PD of 10. I'm going to give you a 200% premium in NAV and you're trading at 3x mNAV. Well, that would be better than we are right now. If the equity capital markets did that gave us a 10p to on BTC yield or BTC gain. Then of course, our optionality increases, we grow faster. And the countervailing view is, well, you've only been doing this for a year or 2 years, and so the Linde effect says, I'm only going to put a PD of 2 on that. And so if we get a PDF2, we could have a Bitcoin rally that gets us a collateral stack, but the equity doesn't go as fast, and that might govern the rate at which we run the credit engine. But the bottom line is if Bitcoin -- if the macro environment turns risk on and expands and Bitcoin rallies or equity rallies, it's go time. we're going to go and we're going to go with the credit. Like we're going to use the credit. Make no mistake about it. We want to see the mNAV -- the equity is undervalued. We want to see the mNAV expand to 2, 3, 4, 5 or 6. And nothing would make me happier than to rip the faces off of all the skeptics and the shorts and drive the equity to the moon. And I think -- the question you've got to ask yourself is, is this company going to sell $10 billion of stretch this year or $20 million or $40 million or $80 million, right? And the answer to how much we can sell responsibly is a function of where the Bitcoin price is and to a lesser extent, how the equity capital markets react. If the equity capital markets are accommodating and supportive and Bitcoin -- The company has a lot of tools to manage the BTC rating and the collateral coverage, and we can and we can add more equity capital. And you could see -- I just showed you, we can put equity capital in the market fast. We're the biggest equity issuer last year and this year. we could also take common equity out of the market if we decided to. What we're going to look at is -- we're going to look at the interest rate forward yield curve. We're going to look at how Bitcoin performs a Bitcoin keeps performing as big tech squared. We're going to look at the forward curve or the forward expectation curve of BTC. We're going to look at the forward vol curve, right? Bitcoin involve 40 or 35 is different than vol at 50 or vol at 20. When Bitcoin vol falls to 20 or 25, you can lever these things and still have investment grade. You can lever 2, 3, 4, 5x more and still of investment grade. So that's -- by the way, Bitcoin Vale being 30 right now is not the same as institutional credit investors expecting Bitcoin ball to be 30 for a decade, right? So the forward yield curve, the forward ball curve, the forward price curve, the forward equity curve, all that stuff gets discounted back and we get up and we ask ourselves the question, what is the rational thing to do. But at the end of the day, what we're wanting to do is to drive the mNAV to the sky and drive the Bitcoin price to the sky and to build Stretch into the biggest credit instrument in the world because the higher Stretch AUM we have the more liquidity. And if we can get to $1 billion of liquidity for STRC, the ball will keep coming off, adoption will expand and we get a network effect. So I think -- you know how Amazon gave like free shipping or shipping for $10 a month and everybody said you're losing money on that, and they lost money on that for a decade, and then 1 day, they just raised the price, and they were the only player in the world. They made a fortune and people thought, well, I guess that was a good idea. I think we would like -- if you gave me a choice, do I want to sell $500 billion of Stretch and pay 11%? Or do I want to solve $50 billion in pay 9? If you know me and the company, I think you can guess which of the two we want? At the end of the day, our long-term view is Bitcoin is going to go up more than 11%. It's going to go up 30%, and if we're wrong, it's 20%. 200 basis points won't make the difference one way or the other. But I'd rather think that if we gather an extra $100 billion of capital, I think the war to determine the future of the credit markets and the word in terms of the future of money is going to be fought and won with money. And so we're going to get the money. If we can do it in a responsible way, right? And at some point, if you have this perverse random situation where Bitcoin price is not reacting and MSTR is not reacting, but everybody -- I can't imagine that credit investors are more bullish on Bitcoin credit than equity investors or Bitcoin investments. But if you construct that cultured scenario, then maybe we would slow down the credit machine. But if equity investors are more bullish than capital investors and if capital or Bitcoin investors are more bullish than credit investors, then I think the entire system solves its own problems because we're probably not going to be able to keep up with the expansion of our BTC collateral stack. Phong Le: I'll add one short thing to this, Jeff. I think the scenario you lay out is in a maturation of the digital credit market, right, 5, 10 years out when digital credit is $3 trillion or $30 trillion on a $300 trillion market. We would run into this issue of how do you manage the demand for Stretch. I think 10 months into it. I think our issue is not so much are we an interest rate or are we paying or what is the Fed due to interest rates? I think the demand is going to be driven by awareness and marketing of the product right now. So I don't think that scenario is going to be much of an issue for the short term. Unknown Executive: Next, I'd like to invite Andrew Harte from BTIG. . Andrew Harte: Thanks for the question. I think the optionality in the business really came through clearly today. Maybe just shifting gears a bit. Earlier in the slide, Michael, you talked about Bitcoin being digital Capital and Micro Strategy being digital equity and Stretch being digital credit. Then you also talked about kind of innovators kind of building digital money down the road, you call it like a layer 3 in that example. I guess considering stretch is going to be the foundation or the building blocks for digital money at some point as the market continues to mature, I guess, what do you think that solution looks like? Are you having conversations with innovators who are out there looking to build on top of Stretch and create these digital money solutions? Phong Le: Can you hear me? Andrew Harte: Yes, I can hear you. Phong Le: You hear me fine. Okay. So I think you see it with Apex and Saturn and Hermetica and a lot of the token issuers that are creating these yield coins that are powered by Stretch. And so they are rapidly innovating. I think if you look at some of the DFI protocols that are offering 2x, 3x, 5x, 10x leverage and looping pedals of the world and the like. I think they're also innovating pretty rapidly. We don't know the final shape. I think there's 1,000 different combinations of digital money and digital yield. I think there's a different -- for example, there's a different currency in every country. I think you can create various yield coins in different currencies. I think that I think that in Australia, you can deploy it via a regulated bank or by a token that can sell in Australia or via an ETF, taken public in Australia or via private fund in Australia. So when you take the combination of currencies and platforms and containers. The sky's the limit. But what I do notice is the people that seem to be moving the fastest and the most enthusiastically right now are the D5 players. And it's people that are launching stable coins that have to compete with tether and circle. And the issue is, how do I convince people to put AUM or put capital into my stable coin. And I need to create either a digital monetary a yield coin, 0 vol, 8% yielding. I mean that's kind of compelling or I need to create like a 25% ARR stake -- lock up your money for a month, and I'll give you 25% on 3 or 4 turns on the capital or something. And Obviously, the market's going to decide who it trusts and is going to decide what form of that it wants to buy, and it votes with its money, and you can literally watch the money flowing every hour in that system. I think you'll see some ETF players, but they'll come slower because they're a little bit more -- there's more regulatory friction there. And we hold out hope that we'll see a neo bank offer a digital yield account. There's no reason why the a bank or any neo bank that is a mobile up couldn't just say, "Hey, what does give you 8% on your money in this yield account if you want it." Each one of these things, it's a different counterparty, a different platform, a different regulatory container. What I would say is we had none of these conversations going on 8 weeks ago or 12 weeks ago, and now I see like 3 dozen, like 3 dozen initiatives. And so I think there's Cambrian explosion and Check back in, in 12 more weeks, I think we'll have some exciting news and some exciting partners. But just watch my ex feed because I retreat some of the more interesting digital yield, digital money offerings that are literally happening. A lot of times, people are inventing stuff and I'm finding out at the same time you are, but the market is evolving in real time right now. Unknown Executive: Next, I'd like to invite Eric Balchunas. Unknown Analyst: Yes. Thank you for having me today. Great presentation. My question is maybe a little more philosophical. I think it impacts the price in the future, but it's about the changing ownership and identity of Bitcoin. So according to River, in the past 16 months, you've had businesses buying 560,000 Bitcoin, ETFs bought another 208,000. Governments bought 160,000. So that's 1 million total bit quote by those entities. Meanwhile, individuals sold 730,000 Bitcoin. Some have called this a silent IPO, and it's arguably the reason for that 45% drawdown. This changing ownership is being reflected, I think, at the recent Bitcoin conferences where you see an increasing number of suit corners, as some have called them, which you highlighted in the slide on the government and the banks. And I've noticed it's made some of the native bit corners a little uncomfortable and conflicted regarding the original mission given it was made to bypass governments and banks. To me, it feels like Facebook 10 years ago, when everyone's parents joined, some people left the platform, although the user base did grow from $1 billion to $3 billion since then. And I just want to get your read on this transition and the sort of mainstream vacation of Bitcoin and how important it is to keep the original base of investors, keep them along for the ride and keep the sort of Cipher punk edge of Bitcoin as it goes more mainstream and gets adopted by companies, asset managers, governments and boomers in general. Maybe it doesn't matter given the size of the institutional advisory market, for that price, maybe hitting $1 million, but maybe it does. Just curious your thoughts. Phong Le: I'll make a quick point. Since we got in the space, there's been something like call it, $1.4 trillion of wealth created for people other than the sup corners. So I don't know who got the money, but there's certainly 80. I think we can trace 4% to BlackRock investors, and they must have 50 million to 100 million beneficiaries. You can trace almost 4% to our investors. We've got 100 million beneficiaries. So if you look at the corporates, they're representing thousands of institutions and tens of millions of investment accounts and hundreds of millions of beneficiaries. And the network is decentralizing. It is distributing through them and it is maturing through them and finding its way into retiree accounts and insurance beneficiaries and trust funds and 3-year-old trust fund babies. Everybody in the world is getting exposure now. But when everybody criticizes the centralization of the network, I note that 85% of the network is held by others. It's held by the crypto OGs. And we don't know how many people that is, but it's almost certainly represents fewer beneficiaries than beneficiaries that rely upon BlackRock ETF or a common public stock. So the corporations have been spreading exposure to Bitcoin by an order of magnitude or orders of magnitude right now. I do think that -- if you ask, well, who owns the $1 trillion of Bitcoin that's not public. And the Chinese, they're Chinese, they are Russians, they're Americans, they're Europeans or South Americans or Ukrainians, they When you wonder who's selling it, well, it's $1 trillion of capital held by crypto OGs that are unbanked, maybe they're selling it because the currency in a row crash, maybe they're selling it because of some fear of some Chinese government memo. If the Chinese mind half a Bitcoin in the first like 15 years, is kind of impossible that there aren't a lot of people with Bitcoin in China, you would figure since they mined a great deal of it. So I think, generally, the industry is maturing. It's rotating from the crypto OGs, but they're not going away, right? We spent $62 billion to get to less than 4%, it's pretty expensive to not get to the other 96%. And if you look at all the money that BlackRock and us put in this together, right, the $150 billion or $200 billion of capital that flowed from the institutions, it didn't get 90% of the network. So 90% of the network is still in global crypto OG hands. And I meet people -- I go everywhere in the world. I'll walk down the beach and there's someone that's like slapping me on the back, thanking me for making them a lot of money, right? And it's because literally, people that you will never know who they are, and they will never announce it they're sitting on $1.2 trillion of capital gains right now in the crypto ecosystem. So I guess what I'm saying is I'm not worried that the crypto ethos is being squashed people with $1 trillion probably have a lot of power to do whatever they're going to do and they're continuing to do it. The Bitcoin network is still highly decentralized. The miners are decentralized. This is a global phenomenon. If anything, what's happening is the corporates are just powering up the network. We're the people that invest the $100 billion or $200 billion of capital to drive the price from 10,000 to 80,000 or from 10,000 to 100,000. But when we do it, 90% of the gain goes to other crypto actors and they power the entire decentralized digital economy. And -- good for them. That's good. They'll do whatever they're going to do. I think that if you want to -- I don't use the analogy, it's like Facebook when your parents came along. I used the analogy -- it's like the Internet when it used to be a girl or a dude in a dorm posted their blog on their web page and then all of a sudden, Amazon started selling hundreds of billions or trillions of dollars of products on the Internet, right? It's just we started doing business with digital assets. And ultimately, the killer app, a Bitcoin that we see is digital credit. And the way you know it's a good app is when someone wants to buy $1 billion of your product today, right? That's -- I mean everybody in the entire crypto ecosystem is always dreamed about, let's invent the killer app. And a good product is something that people will buy $1 billion a day of and there aren't that many in the history of the world and we found one. So I think that the networks are going to grow. We're going to power it up. You're going to see an explosion of all the other crypto ideas. Whatever crypto idea didn't catch fire over the past decade. Now they've got 10x as much money and opportunity to catch fire. And some of them will and the ones that don't won't because the market doesn't want them. But the industry is -- the number is evolving in every direction simultaneously. And I would take issue with anybody that ever said it's centralizing. It's absolutely not. It's decentralizing -- the truth of the matter today is that there's a lot of people with money and power and influence in the world that are going to support this network and defend this network because of the success of all the corporations, whether it's coin base or whether it's BlackRock or whether it's strategy, right? And if you're going to lobby for things that are good for digital assets, in Washington, D.C. It's not going to be a Chinese crypto synonymous billionaire hiding off the grid that's going to do that lobbying right? So the $1 trillion of crypto OG money is not going to fix the accounting, fix the tax code, fix the banking system and build the technologies that actually commercialize these apps to 1 billion people. They're not going to give a bank account, a 1 billion people that pays them 10%, and they're not going to put the crypto OGs are not going to put Bitcoin on every iPhone, in every Android phone in the world. That's going to be corporate actors. And so the corporations are doing their part, the crypto OGs did their part. Everybody is in the system. There's tension, it's healthy tension. We welcome the healthy tension. It's what -- the global -- the fact that someone is going to sell Bitcoin because they're in Iran and some missiles got launched, right? That's a feature, not a bug. It's just -- people are trading based upon things that have nothing to do with the way Wall Street trades the S&P Index. And I think that's what makes Bitcoin special, and that's why we welcome it as global digital capital. Unknown Executive: Next, we'll invite Ramsey El-Assal from Cantor. Ramsey El-Assal: Michael, you mentioned that a Bitcoin volatility were to fall as the asset price accelerates, You'd have some options and cards to play to preserve the attractiveness of the model. I'm just wondering if you can kind of elaborate a little further on what you meant there. And then completely separately, I was wondering if you could just give us a quick update on the BTC security initiative. How has that been received? And has there been any developments on the quantum risk topic worth calling out? Michael Saylor: I'll answer the first. I'll let Phong answer the second. If you go to our credit tab on our website and you type in a vol of like 40 and you have a BTC rating at 3, stuff starts to look sort of investment grade. When the vol falls to 30, you can have a BTC rating of 1.5 and it looks investment-grade. When the vol falls below 30, your amplification can triple quadruple. And so as the vol falls, the credit risk falls. So I think that the forward volatility curve changes the view of credit investors and it's going to create more demand amongst more traditional credit investors, and it's -- it's also going to change the view of banking regulators and credit rating agencies and the like. So -- there's a certain gift here or a certain -- one is the word like Nuance. If the vol is high, it's equity positive, today, I think on CNBC at like 350, they said the largest options trade in the entire market in the entire stock market today was an MSTR options trade. Someone traded hundreds of millions of our options today in the market. Number one, of all companies in the entire United States, that's because of the vol. So when vol is high, it feeds the equity market, and that's good and its equity positive. When the vol falls, it won't be so good for the equity, but it's very credit positive. And the -- the conclusion you come to is, is you're going to get performance through volatility on the vol side, and you're going to get performance through more amplification and more intelligent leverage as the vol falls. And of course, the entire asset class is going to expand and people's view of it is going to improve as the vol develop -- as the vol falls. I do think, over time, over the long time for Horizon, if the assets 40 ARR, 40 vol, it's reasonable for it to eventually mature to be 20 ARR 20 vol. I mean, it's just kind of common sense that as it gets bigger and it gets more liquid, the law of large numbers and the inertia of the market and its relative size to all the other post capital dimple. I think it will always be more volatile than the S&P and always be more useful. But I think that if you're a credit issuer and a credit investor, you just want to be sensitive to it. And certainly, right now, the single #1 issue in the entire market is what is your forward volatility curve for Bitcoin? Because if you think that Bitcoin is a 30-vol asset, everything we sell is investment grade and it should be priced double or triple what it is. If that's what you think or view of volatility will control how much of this you want if the ball starts to fall, there's just no reason why there shouldn't be a 10x bid on all this stuff. And then you might decide rather than levering at 3:1, you lever it right, or something so it will change the behavior of all the downstream players as the volume increases or is it changes? Okay. So Phong, do you want to talk about security? Phong Le: Yes, Ramsey, we started to bring together a group of folks calling at the Bitcoin security program or counsel. And the objective is to bring together institutions that represent custodians, exchanges, large Bitcoin treasury companies who have a vested interest in the success of Bitcoin and share combined point of view on what is the potential risk and time horizon of quantum, what activities are underway in the development community? How do we get to consensus. And so likely in the next month or so, we'll share who's in that group. And what is our combined point view. Right now, I'd say there is a lot of divergent point of views, and I thought it would be useful to those who are interested in the success of Bitcoin bring them together. And so you'll hear from the Bitcoin security program likely in the next month or so. Unknown Executive: Next, Jeff Walton. Unknown Analyst: And very appreciative of your leadership, and I've got a bit of a 2-parter here. So you spent a lot of the presentation talking about risk of the credit instruments. You've created a really unique arbitrage surface between all of the different instruments and a really unique incentive structure. It's resulted in people buying and selling the instruments right below par on SDRC and some of the other instruments. So first question is -- do you find that the market agrees with you? This is kind of in line with the answer to the last question on forward-looking volatility there. Do you find that the market agrees with you and the instruments are trading in tandem with each other what's the biggest hurdle in communicating that relative risk profile? And then part 2 is what is the biggest hurdle in accelerating the adoption of the digital credit instruments into the future? Michael Saylor: Well, I think all the credit instruments are undervalued. So no, the market doesn't agree with us. If the market agreed with us, then STRF would be trading $200 a share right now, not where it is. So I think all of the -- I think the equity is trading weak. I think it's undervalued. I think all the credit instruments are undervalued. I think all the bond instruments are way undervalued. So I would say the market is much more skeptical and biased pessimistically than we are -- and that's why, for example, we're not selling STRF, SDRD, SDRK,STRE. And we don't really have much interest in selling MSTR. We think all of those assets are undervalued. The STRC is special because as we pointed out, it's a variable monthly preferred. And so the cast cost of that capital is, is hard to determine over 20 years, but you're not locking in a missense trade. And so I have a lot more enthusiasm to sell 1 billion of STRC at 11.5%, and I have enthusiasm to sell $1 billion of STRF at 10%, right? So -- No, I think we're embryonic. I would say, how do we fix it? It's a lending effect. There's a lot of education. We have to go and educate the market. So you could say part of it is we have to tell the story, and you could say part of it is people are just going to have to wait, right? Like after we've been in the market for 3 years, they'll say, well, it's worked for 3 years. And so I guess it's better than we thought it was. So I think we'll be continually rerated up. I mean the risk will be rated down and the opportunity will be rated up as time goes by -- and we won't be sitting on our hands, right? We'll be out there communicating the message, displaying it. Well partly, we'll do it through publishing. Partly, we'll do it through investor outreach. Partly, we'll do it through partners. I think as our partners create compelling digital money products or the like, I think that's helpful. And I think if you just asked the question, how long will it take -- how long did it take before the market thought that Amazon had a good business, right? It took 10 years after they started doing what they were doing. And so you could be a pessimist and say, it took 10 years for that and how long did it take before Netflix was deemed to be good? The truth is Apple was mispriced and misunderstood for many, many years. So I think if you have a revolutionary business, I think that the market will be bias skeptical because that's just what it is. It's going to be skeptical. The market was skeptical of Google. Google -- the market was skeptical of NVIDIA, skeptical of ample, skeptical of whatever. It will be skeptical of digital credit and digital treasuries for a while. And then there'll be some point when it isn't, and just like Warren Buffett comes in and buy some apple and the stock price doubles and the multiples expand from 10 to PDs of 10 to PDs of 20 or 25 or 30. It will happen at some point when we least expect it to happen, but we have to do all the hard work of performing, laying down the track record and educating the market and managing the risk of the business and the like. And so that's what we're doing. I think if you want the optimistic observation, well, the fact that the market is willing to buy more of that SDRC is the most successful preferred stock in the world in the century, I think that's an indicia that maybe some people get it, right? So there are a lot of indicators that it's working and it's spreading fast and virally, but we still have a lot of work to do. Unknown Executive: Thank you, Jeff. Next, I'd like to invite Randy Binner from Texas Capital. Unknown Analyst: Michael, I think this one is for you. And hopefully, you can hear me okay. The question I have is we talked about a lot of the Clarity Act a lot, and it's -- I think it's important for the broader crypto ecosystem or this bipartisan compromises good news. But for MSTR for Micro Strategy, for your world, what would be the most important regulatory or policy change or impact? I think I think we've talked about bank and insurance companies being lobby recognize crypto as a statutory asset. Is it something like that? And the follow-up question, in case you covered this along the way is did -- at this point, with so many arrows pointing in the right direction for crypto regulation and guardrails, do the midterms matter that much? And for that matter, does the next presidential election matter much from kind of a policy and regulation perspective? Michael Saylor: Bitcoin is in a safe harbor, there's global consensus is digital capital. MSTR is sitting in a safe harbor. It's a publicly traded well-known seasoned issuer came public in 1998, governed by securities laws that date back 100 years. STRC is in a safe harbor. It's a publicly traded preferred stock based on a 100-year old tax law, 100-year-old securities law trading on the NASDAQ exchange, which has been around for who knows how long, longer than many of us have been alive. So everything that we're doing is sitting in a zone of regulatory clarity. I don't think we need any change in a law or a rule in order to 10x or 100x. We can probably be 100x bigger from here without any change in any law or any rule, we're not asking or looking for anything. I think that clarity is pretty important to the dynamic and the balance of power with regard to token issuers, DFI exchanges, stable coin issuers, crypto exchanges. And it determines the balance of power between the crypto industry, the neo banks and the regional banks and the systemic, the big banks. And so there's a lot of dynamics there. There are almost 2 nuance to get into right now. The significance to us is just ignorant skeptics will gloat if it slows down and they will all flip to uninformed share leaders or acknowledges if it passes, but there's not anything that we need. It's just going to change sentiment. It's going to be a positive bullish sentiment as it goes through. Long term, if I look at my laundry list of things that are good for Bitcoin and good for us, it's a second order, not a first order, but the second owners is the Basel rules to the extent that they're upgraded to recognize Bitcoin as legitimate collateral and not haircut it, it would be positive for banking adoption and especially credit adoption because right now, there's still a bit of haircutting of it by the credit rating agencies and the very conservative regulated entities that they want a gatekeeper or they want a regulator to tell them it's okay. And so -- so I think that at some point, -- if you want an insurance company portfolio manager to buy the product without knowing what it is or why they bought it, then it would be beneficial for the Basel rules to evolve and get an embrace of Bitcoin as a legitimate asset. Right now, we're selling to informed investors that want to buy the best thing. And if you look at that market, if we just -- if we slurped up 10% of private credit, that's $370 billion right there. And so we've got plenty of runway for the next decade, but my wish -- if I had one wish is for Basel rules to be fixed and then for the world to recognize Bitcoins legitimate collateral parapsuto gold or to other capital assets on banking balance sheets and regulated entities, then it should spread faster through the banks as a reserve asset and through insurance companies and the like. But it's not necessary to us. We could be a multitrillion dollar company and sell $400 billion of STRC and not have that fixed. Phong Le: One thing I'll add, Randy, is stretch is already a rapidly accelerating product in the category of digital credit. And that is without clarity as it relates to tokenization of securities, which I think will either be created through the passage of clarity or rulemaking by the SEC. That will only accelerate things. So we showed $270 million of layer 2 tokenized stretch from companies like APIC and StockX by Kraken. Those are sold outside the U.S., not in the U.S., right? And so when we get clarity, that will only accelerate things and will accelerate Layer 2 development on top of stretch and just accelerate digital credit overall. So it's exciting to see what may come on something that's already an exploding asset class. Unknown Executive: I was just saving the best for last, James Lavesh. Unknown Analyst: Thank you, C.J. Congratulations on your new role. Phong, Michael, Andrew, thank you for having me in allowing us to ask questions. So -- but first, congratulations also on your success with Stretch. I'm a believer in the digital credit world. And I appreciate you all sharing the many levers that you can now use to create value for the common shareholders while protecting creditors. But on that, with Strategy's energy and focus on Stretch, which you've said before is the security you landed on through iteration. What do you see as the optimal future balance sheet structure for maximizing the accretion of value for common shareholders? And would that include retiring most or all of the debt and preferreds currently outstanding? And do you believe that, that's ultimately necessary to attract more of the largest institutions to invest in Stretch in lieu of traditional yield-generating securities? Michael Saylor: Yes. We think we want to be debt-free completely. So all 6 of the converts, we make go away by either swapping them for a Stretch or swapping them for equity or paying them off with cash. So I think there's consensus on that. I think there's consensus that Stretch is the killer strong credit instrument. I think the jury is still out on the other 4 credit instruments. They're all long duration, credit instruments, and they represent important optionality for the company. And they -- and so I think that our policy will be to retire the 6 convertible bonds to promote and to polish the jewel in the crown, which is SDRC and then to watch and nurture the other 4 and improve them as we can and then observe whether or not they're material in generating demand. I think right now, you can imagine the company -- if I was designing a Bitcoin treasury company from a clean sheet of paper, the company would consist of one common equity one monthly or semi-monthly variable preferred equity and a big stack a bit coin and nothing else, right? And that's my advice. I give freely do bit of or ask me. The other things that are interesting, maybe but not necessary, we'll watch them. It's very difficult to create a publicly traded instrument like Stripe or Stride or strike. So we won't retire it because it represents giving up billions of dollars of optionality. But on the other hand, what really is critical for us is manage the common stock carefully to get the mNAV up and the premium up manage the Bitcoin stack and then manage the monthly variable rate preferred, the digital credit instrument. Those are the things that really matter. Unknown Executive: Thank you, everyone. That brings us to the end of the Q&A session. I'd like to thank everyone for their questions and all the attendees for joining and listening to the earnings call. I'll hand it back to Phong for any closing remarks. Phong Le: Yes. I want to first thank everybody for attending our earnings call. I know there's tens of thousands of you out there spending 2 hours and 15 minutes of your evening with us. And we find that to be very gracious and flattering. Many of you are shareholders of our common MSTR and our perpetual preferred stretch. And as many of you know, we have a shareholder vote coming up that's due early June to primarily modify Stretch to go from, as Andrew mentioned, a monthly dividend to a semi-monthly, twice-a-month dividend. We believe this is beneficial to our shareholders. As we mentioned, one of our principles is to make stretch better and more attractive. So we would appreciate you all voting early so that we can start to tabulate the votes. And this is how you can do it. If you have additional questions on how to vote for Stretch and for the common, you can also go to our website. And with that, I really appreciate your time. Thank you for all the interest and the attention, and we'll talk to you again, if not before, then at our next earnings call 3 months away. Thank you all.