Strategy Inc (MSTR) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining us for Strategy's Third Quarter 2026 Earnings Webinar. I'm CJ, Head of Investor Relations at Strategy. Joining us today are Andrew Kang, Chief Financial Officer; Phong Lee, President and Chief Executive Officer; and Michael Saylor, Founder and Executive Chairman. We'll begin with approximately 60 minutes of prepared remarks, starting with Andrew, followed by Phong and Michael. We'll then move to a 30-minute live Q&A. Before we begin, I'll briefly cover our safe harbor statement. Some of the information we provide in this 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 the price of Bitcoin and the risk factors discussed under the caption Risk Factors in Strategy's quarterly report on Form 10-Q filed with the SEC on August 3, 2026, and the risks described in other filings that Strategy may make with the SEC. Except as required by law, 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, CFO of Strategy.

Thank you, CJ. Q3 was an exceptionally strong quarter across all parts of our business. We now hold 848,517 Bitcoin and recorded a record $21 billion fair value gain on our Bitcoin holdings in Q3. MSTR share price increased 76% during the quarter, and our market cap rose to $62 billion as of October 23. STRC's 1-month volume-weighted average price was $99.27 as of the close of markets on October 23. And as we speak today, we are just $0.01 away from par. Our combined Bitcoin and dollar reserves represent 49 years of interest and dividend coverage, strengthening the credit quality of our digital credit platform. Q3 marked our 25th consecutive quarter, more than 6 years of building a consistent and ongoing track record of adding more Bitcoin to our balance sheet. Since Q3 of 2020, our holdings have grown from approximately 38,000 Bitcoin to 848,517 Bitcoin, accounting for 4% of all Bitcoin that will ever exist. Strategy remains the largest institutional holder of Bitcoin in the world. Our Bitcoin holdings exceed that of Bit, that of the largest nation states, other ETFs and all other major DeFi institutions. We aim to actively manage our holdings along with our cash reserves to benefit both our long-term common stock shareholders and our digital credit investors. The sheer scale of our reserves gives us a market-leading advantage to actively manage our strategy and goals through both bull and bear market cycles. Our treasury assets have grown from approximately $54 billion at the end of Q1 this year to $74 billion in this comparison. That makes strategy the seventh largest treasury among S&P 500 companies when we include all cash and Bitcoin on our balance sheet. As you know, the #21 has a great deal of significance for us. We all know that there will only ever be 21 million Bitcoin in existence. And this last quarter, we recorded an approximately $21 billion in fair value gain on our digital assets in the third quarter. We started Q3 with about 846,000 Bitcoin valued at approximately $50 billion. And during the quarter, Bitcoin's price increased from approximately $58,700 to close around $83,600, adding $21 billion in value. We also added a net 1,666 Bitcoin during the quarter. And as a result of the recent rally in Bitcoin price at the end of Q3, we recorded a $20.9 billion fair value gain on digital assets and ended September with over 847,600 Bitcoin worth approximately $71 billion. For the third quarter, we reported a record $20.9 billion of operating income, $19.1 billion of net income and $44.75 in diluted earnings per share. This was the highest operating and net income for any quarter in the history of the company. This milestone achievement for the company highlights the resilience and strength of our capital base and balance sheet, which allows us to weather the storm through bear markets, but also readies us for exponential growth in bull markets. Bitcoin per share has grown from approximately 56,600 stats at the end of 2020 to over 187,700 Sat as of October 23, reflecting a CAGR of approximately 23% over that same period. Year-to-date, Bitcoin per share is 3.7% lower as we effectively deployed and managed through our capital management framework with a focus on strengthening the underlying credit of our capital structure. As we enter the next stage of Bitcoin price appreciation, we will be further positioned with a stronger capital base and a more robust reserves to amplify BTC yield in the long term. We raised approximately $5.4 billion of total capital during Q3, bringing the total year-to-date capital raise to $21.2 billion. We raised $22.6 billion of capital in 2024 and $25.3 billion in 2025, importantly, reflecting our effective and impactful access to the capital markets in both rising and falling Bitcoin cycles. During Q3, digital assets increased from $49.7 billion to $70.8 billion, reflecting Bitcoin price appreciation and the net addition of Bitcoin during the quarter. Cash and short-term investments increased to just under $5.9 billion, including $5.8 billion of total USD assets at the end of Q3, which provides more than sufficient liquidity to meet our interest and dividend payments, strengthen our overall credit quality and provide liquidity for general Bitcoin treasury needs. Our preferred equity ended the quarter at $13.1 billion, down from the previous quarter with the execution of our stretch open market repurchase program. Common equity increased to $55.4 billion, bringing total equity to $68.5 billion, up $23.2 billion or 51% during the quarter. Our treasury assets as of October 23 were approximately $74 billion, consisting of $68.9 billion of Bitcoin and $5.1 billion in USD assets. After taking into account $6.7 billion of convertible debt and $13.3 billion of preferred stock at their notional amounts, our net reserve is approximately $53.9 billion or approximately $67.3 billion net of the out-of-the-money converts. Our NAV is currently 1.15x, amplification, 1.28x with a low net leverage of approximately 2.4% and our U.S. dollar assets provide 3.4 years of interest and dividends coverage at current payment obligations. We have approximately $6.7 billion of total convertible debt outstanding compared with the $69 billion of Bitcoin and USD $5.1 billion of U.S. dollar assets, representing a BTC rating of 42x. 4 of the 6 converts are currently trading above par for the 2 that are at the moment below par, the earliest put date remains significantly in the future and not until March 2028. We have substantial asset coverage and the staggered put maturity schedule gives us ample levers to effectively manage these obligations in the future. We now have 17 equity analysts covering us, all of which carry buy ratings, an average MSTR price target of approximately $248 and an average published Bitcoin target of approximately $111,000. I am pleased to announce that our shareholder proposal to move our preferred equity dividends to daily record and payment dates has been resoundingly approved by our shareholders. The final vote reflects 99.3% of approvals of votes cast in support of the amendment. Daily dividends for stretch will begin on November 1 record date with a November 2 payment date. Strife, Strike and Stride are scheduled to follow with a January 1 record date and a January 4 payment date. Dividends will accrue on every calendar day, including weekends and holidays with payment on the next business day. The overall annual dividend amounts remain unchanged and are not impacted as a result of this enhancement. Smaller, more frequent payments are designed to reduce volatility, improve liquidity, broaden investor demand and get cash to investors sooner. Calendar day accruals also make stretch and our preps better suited to the future of tokenized products and increasingly around-the-clock markets. Thank you to everyone who voted in favor of this change. And finally, as announced earlier today, I will be stepping down as Chief Financial Officer effective November 5 for personal reasons. It has been an honor to serve as Strategy's CFO for the past 4.5 years and to be part of such an extraordinary period of growth and innovation. I am extremely grateful to Michael, Phong and the Board for their trust and support. And to all of our employees, thank you for your hard work, perseverance and dedication. To the entire finance team, a special thank you. It has been a privilege to work alongside each of you, and I am incredibly proud of what we have accomplished together. To our shareholders, analysts and everyone who has joined us over these last 18 quarters, thank you for your time, your engagement and your support. It has meant a great deal to me. And for the last time as CFO, I will turn the call over to Phong.

Thank you, Andrew. We will miss you, and I do appreciate your 4.5 years of service to strategy. You've seen the company through great times and also through a couple of bear markets with a steady hand, and I wish you well in the future. The plan going forward throughout the course of 2026 is for myself to step back into the CFO and Principal Financial Officer role. Starting in January 2027, we'll split the CFO role between our software and our Bitcoin businesses, which are quite different. Stepping into the Principal Financial Officer role covering our software business will be a long-time veteran of strategy, Reza Verosta, who currently runs operations reporting to me. and has previously been a part of the finance leadership team running FP&A. He knows our software business inside out and will do a great job overseeing that. The Principal Financial Officer of our Bitcoin business will be myself, and also, I'll continue to be the CEO of the company. Looking forward to wearing those dual hats and looking forward to continuing to lead with strong folks in our Bitcoin business that you're all familiar with. CJ here, who runs Investor Relations and Product; and Shirish, who runs our Treasury will report to me directly. And I think for all intents and purposes, the transition will be seamless to our shareholders, our investors, our analysts and our employees. And I'm looking forward to a bright future for the company. Speaking of bright futures, I will cover off on our digital equity strategy and our digital credit strategy with a recap of Q3 and 2026 year-to-date and why I believe we have a very bright next year ahead of us. And then I'll hand it over to Michael, who will cover our digital capital and Bitcoin overall outlook and just general strategy for the company. So first, let's talk about digital equity. We had what I would consider to be and what Andrew mentioned, a very strong Q3. I'll start with MSTR, our common equity has amplified Bitcoin. We are built to outperform Bitcoin, and we did exactly that in the return to a bull market in Q3. Bitcoin increased 43% over the course of the quarter. MSTR increased 76% -- in addition, we added 176,000 Bitcoin since the beginning of the year. So through a bear market cycle, we were able to significantly increase our Bitcoin, and that's more than 3x the second largest Bitcoin treasury company in the world added all in the course of 3 quarters. And it has allowed us to be the #7 ranked treasury in all of the S&P 500 peer set. As Andrew said, we raised $21 billion of capital year-to-date, another 21 number coincidentally. And we have the fourth largest issuer of capital in the U.S., again, in a Bitcoin bear market. We reduced our net leverage to 2.4%, down from 8.4% in Q2. our downside is really now well protected where Bitcoin could fall 78% to $18,000 before we are 1x covered for our liabilities by our Bitcoin value -- asset value. And our objective still stands. We're going to double Bitcoin per share over the course of the next 7 years, and we think we are on our way to that. So I feel very strong about MSTR and where we're able to go on a go-forward basis. As a reminder, digital equity, that's MSTR is a combination of 2 things: one, amplify Bitcoin. We're going to increase Bitcoin per share; and two, digital credit. And you've seen, stretch, stream, strike, stride and potential future innovation on top of that, for example, daily calendar day dividends. Our cap structure is really a volatility transformer, right? What do we do? We take digital capital, Bitcoin, which has a ball of 36. We reduced that ball in our digital credit stretch down to what is about 10% right now. We believe we can reduce that further down to potentially even 5% with a 12% dividend rate. And all of that excess ball and the excess returns gets accreted to our digital equity MSTR. That's basically the formula of the company and what we're able to do with Bitcoin, which is such a rare capital asset. We're the most -- among the most liquid stocks relative to our size and amongst the most liquid stocks in the S&P 500 universe. You'll see here, if we take a look at our options open interest as a percentage of our market cap, we're #2 in the S&P 500 universe and our daily traded volume as a percentage of market cap is also #2 in the S&P 500 universe. What does that mean? That means there's a lot of interest in what we are, which is an amplified Bitcoin company. And there still is a lot of interest in Bitcoin despite all of the attention that is growing towards AI and other related stocks. If you take away the market cap and don't look at us as a percentage of market cap, but just on total value, we are the #17 options open interest company amongst the S&P 500 universe, and we're #18 in terms of daily traded volume. And that's a pretty big deal for a company like ours, which has grown from about $1 million to over $1 billion to over $70 billion of market cap in the course of 6 years. Last year, we were the #1 equity issuer in the world. A year before, in 2024, we were the #2 equity issuer in the world. And this year, year-to-date, we're #4, raising $21 billion in the equity capital markets. Three AI companies are ahead of us, AI and space, SpaceX, AI and Search, Alphabet, AI and semiconductors, Intel. What does this tell you? It tells you that in any Bitcoin market, we're able to access the equity capital markets. And it also tells you that there is still significant interest in Bitcoin and digital assets, and we see a bright future for the category overall. If you take a comparison to the 2023, 2024 bull market, in that market, we outperformed Bitcoin significantly. That's the last real bull market we saw. During that 2-year period from 2023 through 2024, Bitcoin returned 454% MSTR returned 3.6x that, 1,897%. So as we believe we're entering another Bitcoin bull market, we believe because we're amplified Bitcoin, we have the potential to similarly outperform Bitcoin during the next year to 2 years. What's the difference between the previous bull market in 2023 and 2024 and what we expect to see in 2026, 2027 and beyond is we are a very different shaped company. The last bull market, we had 132,500 Bitcoin, of which 37% were encumbered by Bitcoin-backed loans. Now we have 848,500 Bitcoin, nearly 7x what we had before, and 0% of that Bitcoin is encumbered by any of our debt or our preferreds. We added 18,000 Bitcoin in the last bull market. We have since added about 200,000 Bitcoin in this market. The Bitcoin floor in the previous market was $18,000. This time around is $17,000. Our BTC rating was 0.9x, which actually meant we had less than 1x coverage on our liabilities. This time, we have 4.6x coverage on our liabilities. Our net leverage bottomed out at 110% in the past market, this time around 2.4%. And the USD duration that we had was 0. We didn't have any U.S. dollars on our balance sheet. And this time around, it's 3.4 years. So compared to the previous bear market to this bear market, we have strengthened the company significantly over the course of the last year. And what means as we exit the bear market into a bull market, we have a stronger balance sheet. And we think that creates even more opportunity for amplification and more opportunity for growth for our common equity over the course of the next couple of year bull run that we expect to see. Our Bitcoin reserve, as I mentioned, was $132,000, now it's $848,000, $2.2 billion versus nearly $70 billion, $0 in U.S. assets versus $5.1 billion now, no digital credit versus $13.3 billion now and a net leverage of 108% versus 24%. So what have we been doing for the last year? We've been building a fortress balance sheet so that as we enter a full cycle, we think we can outperform the last full cycle that we went through. Since the Bitcoin all-time high, Bitcoin has fallen 35%, while our holdings of Bitcoin rose 33%. So as Bitcoin price went down from $124,000 to $81,200, we've taken that opportunity to buy Bitcoin at a less expensive price and grow our Bitcoin holdings 33% to $849,000. So why do we think that there's an opportunity for MSTR to grow, not just because we believe that Bitcoin price is going to grow, but we think MSTR is the combination of 2 things, right? One is the net Bitcoin that we have on our balance sheet. And two, is the DTC dollar gain multiplied by whatever multiple you might attribute to that, which is really the functioning of our digital credit business. So we can grow Bitcoin per share, and we can grow MSTR through 2 levers essentially. One is through increase of Bitcoin price amplified to our common equity and increase of our digital credit business, which increases the Bitcoin gain, which can be ascribed a multiple. And we think those -- both of those components will start to take effect over the course of the next couple of years. What else happens during a bull market? Well, what else happens during a bull market is we see MNAV start to expand, right? The 2021 bull market saw MNAV median daily MNAV at 2.28, 2023, 2.57; 2024, 2.60. We currently sit at 1.15, but we see the potential for that to also grow over the course of the bull cycle. And as I mentioned before, ultimately, what is the goal? The goal is to double Bitcoin per share in 7 years through the use of digital credit. How does that work? And it's important to emphasize the interplay between digital credit and digital equity. If we can sell digital credit by selling stretch at $100 into the market, right, that generates amplification to the company, right? It means that we are able to buy Bitcoin and pay 12% on that digital credit and accrete all the benefits of a greater than 12% gain, which generates amplification. The amplification increases Bitcoin per share and the increase in Bitcoin per share allows the common equity to outperform Bitcoin over time. What are the levers? Levers are lower cost of credit, which we look at very closely. The levers are higher digital credit sales, which we think we'll be able to turn on again soon. And third lever is a higher NAV. So let's talk about digital credit. I talked about MSTR, digital equity. Now let's talk about digital credit and our 5 instruments that we have. The first, the ecosystem is scaling really fast. We're really still only 22 months into digital credit. We have 6 issuers, right, not just ourselves in a $16 billion market. Stretch is returning to health. It's trading between $99 and $100 per our commitment. And today, stretch closed at $99.99. We strengthened our U.S. dollar coverage. We've heard from our shareholders of our digital credit. That's important, grew the digital U.S. dollar assets from $2.5 billion to double to $5 billion. And we're supporting our digital credit securities stretch. We repurchased $2 billion of stretch, and we have $957 million capacity remaining. And of course, yesterday, daily dividends were approved for stretch, which takes effect November 1 and Stripe, Strike and Stride, which should take effect January 1, and we're excited about that innovation. And we're continuing to improve our credit profile, which I'll talk through in a little bit. So how do you think about digital credit? One thing to think about is digital credit is really a combination and alloy of Bitcoin in U.S. dollars. So much like when you take iron and you combine it with Chromium, we created an alloy stainless steel, which is stronger, which is lighter, which is better than the combination of the 2. Bitcoin with 46 years of coverage and dollars with 3.4 years of coverage creates a 60%, 40% alloy called digital credit. That's what digital credit is. It's ultimately a better version for certain shareholders of Bitcoin and of U.S. dollars and the sum is stronger than the parts. This market, as I mentioned, scaled to $16 billion in 20 months, and it's still fairly nascent and early. It is a brand-new product never seen before in the history of capital markets, and we're pretty excited to see others come into the market. I'd mentioned our 5 IPOs that we did last year, and Strive has since IPO-ed Seta and recently SAS 2 great additional great products. MetiPlanet has announced that they plan to issue digital credit. BMNP, which is an Ethereum-based digital credit instrument was launched earlier this year. Chad, which is the Solana-based digital credit instrument was also launched earlier this year. More was launched, and we'll see other products start to launch and Layer 2 products start to build on top of this. It is early, but it is very promising to see the digital credit ecosystem start to build out. And why is digital credit attractive? Well, if you look at the market today, there's been a lot of talk about AI private credit. Yields aren't bad at 10%, but they are opaque instruments, and they're not nearly comparable in terms of the yields that you can get on a tax equivalent basis with other forms of digital credit like the ones we've issued. And of course, worse than private credit are junk bonds, bank preferreds, investment grade, mortgage-backed, et cetera, other instruments in terms of lower yields and different risk return profiles. As tax rates start to go up, both at the municipal level and the state level, you'll start to see that digital credit becomes even more attractive because it is a return of capital instrument. What does that mean? The return of capital means that the taxes on the dividends are tax deferred. So rather than paying taxes, it lowers the cost basis as long as you don't sell the underlying instrument. And so you can have a tax deferred status for as long as 10 years. That compares to qualified dividends, which might pay a 20% to 35% tax. So $100 of dividends to stretch and digital credit stays at $100, $100 of dividends on a qualified dividend instrument becomes $65 to $80 and $100 $100 of interest in earnings on a taxable interest instrument like a money market becomes half of that when taxes are taken out. So this is one of the reasons that we think digital credit is a superior instrument. We spent a lot of time thinking about after the downturn of Q2 to stretch and some of our digital credit instruments and how to improve our digital credit. And we put a capital framework in place, and we spoke about that at length on our previous earnings call. We built up a U.S. dollar reserve that is a minimum of 1 year of dividends and interest and now is 3 years of dividends and interest. We said that we would monetize Bitcoin for the purposes of funding the U.S. dollar reserve, servicing our debt and interest obligations and repurchasing securities. We sold a little bit of Bitcoin as a result of that, but a fraction of the Bitcoin we hold. We began a digital credit repurchase program, and we spent about $2 billion buying back stretch, and we have $957 million remaining authorized. We put in an MSTR repurchase program of $1 billion, of which we have used none of it so far. And we said we're going to keep the stretch dividend right around 12%. We're not really going to increase it because we don't think that it will drive more demand for the product in a material way. And we don't think it's best for our common shareholders to increase the dividend obligations associated with stretch. The sixth pillar that we added over the course of the last quarter is we added USD cash, and we added 242 -- which is currently at about $242 million. So what's the point of the USD cash? I'll start with the point of the USD reserve. It is designed to support the preferred dividends and debt interest. In fact, it is reserved and set aside explicitly for the purpose of paying dividends and interest. The U.S. dollar cash balance about half a year of USD duration previously. Now we have 3.5 years of USD duration. And we think that's quite important. USD strength is a new metric that we put in place and USD strength is the USD duration as a percentage of the blended duration of our perpetual preferred instruments and our convertible instruments. And what you see there is the USD strength gives basically an estimate of how much USD we have to pay dividends over the McCoy duration of our instruments, and that's increased from 6% to 40%. So we think these are both very strong metrics, and it shows the strength of our credit and the investment attractiveness of our credit. What else have we done? We've paid dividends, 40 dividends over the last 2 years. We intend to continue to pay all of our dividends across all of our instruments. We think it's important to do so to drive confidence in the digital credit instruments, which ultimately drives confidence in digital equity and MSR. We introduced some of these metrics last quarter, and I want to reemphasize these metrics because they're quite important ones. And they're good ones to think about how does digital credit and digital equity interplay and how does Bitcoin ARR impact it. I'll first start with the hurdle ARR, 10.6%. You might say, why is it not 12% the same as the stretch dividend rate? Well, the hurdle ARR blends all of our instruments together. And as long as we see Bitcoin go up more than 10.6%, what that means that all of the accretion above the 10.6% goes to our equity, right? And so that's what we saw happen in Q3 where Bitcoin went up significantly and the equity saw the accretion above and beyond the hurdle ARR. And that is one of the reasons we are able to produce amplified Bitcoin through our common equity. And then the second ARR is the breakeven ARR. This says that as long as we see 2.2% increase in Bitcoin price on an annual basis, we'll be able to satisfy our dividend and interest obligations. If we were to want to, just by selling the Bitcoin that we accrete the Bitcoin value we accrete the 2.2%. And that means into eternity, we'll be able to continue to pay dividends and interest, which means that the digital credit works, but it may mean that the equity could underperform Bitcoin because we're not over our hurdle ARR. The last ARR is our floor ARR, 17.4% -- if we see Bitcoin going down at 17.4% a year, what that will mean is the ability to cover our credit and our debt goes down to 1x. And so at that point, the credit will get stressed below 17.4% ARR, and it means we may want to consider other different structures for the business. So how do we think about these 2.2% breakeven ARR, 10.6% hurdle ARR, negative 17.4% Bitcoin floor ARR. If we look historically, and we look at every 4-year window back to 2015, Bitcoin has experienced a rolling 4-year ARR on average of 42.7%, which is pretty incredible, the returns of Bitcoin over the last 10 years. But more importantly, Bitcoin has beaten the 2.2% breakeven ARR in every single 4-year window during that period, right? So that breakeven ARR, our ability to pay our interest and dividends through Bitcoin increases historically has occurred every single day in that 4-year window. And we put another metric in here, which is the expansion of the U.S. monetary supply, M2 supply, which has been 1.9% on a 4-year annualized growth basis. And it's interesting to see how Bitcoin 4-year ARR has moved roughly with that M2 monetary supply, as you might expect. We have 2 pages on our website that I thought would be useful to go through. If you ever go to strategy.com and go to the credit page, you can see these 2 analyses. And these are important analyses because what I would state is early on in the development of digital credit, people have a hard time understanding what is the risk, what are the credit spreads and how do these ARRs come into play. And so let me explain the first page on our credit tab at our website, which really goes through the credit analysis of our different instruments, our convertible bonds and our preferred stock. So to analyze the credit, there are a couple of assumptions that we make, and you can change these assumptions on the page. First, we assume the current Bitcoin price right around $81,200 as of the end of last Friday. the U.S. dollar assets we have and then you enter 2 additional things, which is the Bitcoin volatility and the Bitcoin ARR. Here, we decided to be conservative and put 10% in. Recently, JPMorgan released a study that ascribed a 10% Bitcoin ARR. So we thought that would be a reasonable input point and 40% Bitcoin volatility is what we've seen historically over the course of the last 4 years. When we enter those things in and we run the analysis, what are we looking for? First thing is we look at what is the BTC rating, right? What is the coverage that we have over the existing notional value of our preferred stock and our debt. And if you go down to the most junior instrument stride, it means we have 4.6x coverage of Bitcoin over our preferreds and our debt. right? So what is the risk that, that BTC rating goes to 1? What is the risk that we will only have Bitcoin, right, to cover 1x all of these instruments. And the risk that occurs at the end of the McCully duration for our most junior instrument is 6%. If you want to play around the model and put a 20% Bitcoin ARR in there, you'll see it's quite sensitive to that. And that actually takes the risk, the BTC risk of an instrument like SRD down to roughly 1.5%, right? With that risk, we can impute then a credit spread for each of these instruments. And you'll see the most junior instrument Stride has a credit spread of 86, stretch has 54 basis points. In all of these cases, they're investment-grade instruments with that level of BTC credit. right? And the last thing we provide here is the BTC floor, right? And this one makes probably more common sense. We're at $17,662, that basically means that our Bitcoin stack will be valued at equal to our cumulative notional of all of our debt minus our U.S. dollar assets and our price. But the big picture here is if you look at these instruments on a Bitcoin risk and credit basis, they are very low-risk instruments. Then we have another page says, well, how do you equate this to a price, right? And what is potentially a reasonable modeled price or a derived price for these instruments? And you'll very quickly understand that if you take a look at the effective yield of these instruments, right, and you look at something like Stretch, which has a 12% effective yield, SRD, which has a 14.35% effective yield. You take out the risk-free yield, you'll see a market spread for these instruments that is much greater than the BTC credit spread that we were able to, right? And if you were to take that differential, you might be able to derive a much higher price for these instruments. What's the reason for showing this model? The reason for showing this model is, one, Bitcoin risk is not well understood and not well modeled today. So we thought it would be good to provide a transparent way to look at this. And two, probably more importantly, is we are early in the world of digital credit. Early in digital credit. We're a couple of years into the products. It will probably take another year or 2 years for the market to understand, but we think there's a lot of opportunity in digital credit. And if you just take a step back, right, Stretch is a 12% now daily dividend instrument, which is 4 to 5x collateral covered. And we think it's a great option for folks out there. It has shown the ability to go through a Bitcoin bear cycle, and we're fairly bullish on this market going forward. So let me deep dive into stretch and talk a little bit more about that. Highlights of stretch as of October 2026. I mentioned a 12.1% effective yield, $160 million of trading liquidity. It is still the most traded preferred in the entire global capital markets by a lot. The volatility is starting to come down to 10%. I believe we can get it below 10%, potentially approaching and below 5%. And I mentioned the U.S. dollar strength. Even after buying back $2 billion of stretch, it's still $8.4 billion of notional, very large liquid perpetual preferred instrument. And the $8.4 billion of notional is backed by $5.1 billion of U.S. dollar assets, $69 billion Bitcoin reserved, 46 years of dividend and interest payments between our U.S. dollar assets and our Bitcoin reserve. Look, we recognize that stretch had a pretty significant dislocation at the end of June. The price went down to about $75. What I'd say is the company is committed to taking actions and we took actions to get it back within its target range. Not only did we get it back within its target range, we've got it back to nearly par $99.99, and we're committed to continuing to drive the instrument to trade at a range that we think is equivalent to what we think the product is valued at. What did we do? We introduced a new capital framework. We raised the dividend rate to 12%. We went to semi-monthly dividend payments now to daily dividend payments. And we increased the U.S. dollar assets, and we started buying some stretch back. Interestingly, we started to understand a little bit more the investor base behind stretch. In the past, we've talked about 80% retail, 20% institutional ownership as of 3/17/26. But we realized that part of this retail looks a lot more like an institutional long-time holder than a retail potentially fast money investor. High net worth individuals, meaning folks with over $1 million in stretch represent 24% of the total stretch investment base. And what we've seen happen over the course of the last 6 months, institutional increased from 21% to 23%, nearly doubled their holdings. But probably more interesting is the high net worth individuals increased from 24% to 29% and more than doubling their holdings. And it's important for us to look at that and it's important for us to understand that market because we think that's where potential growth is and very solid growth. Speaking of institutional holders, we are now the largest holding in the largest preferred ETF in the world by BlackRock. We represent 3.49% of PFF. If we look at BAX, the sixth largest preferred index in the world or ETF in the world. We're also the largest there and 7.58% of the weight of the total index. Mike will talk more about this. People are building on top of stretch. So the ecosystem are not just owners of stretch. It's not just ETFs, but it's an entire ecosystem of companies in the DeFi space, stable coins, in the tokenization space, funds and ETPs, cash and yield accounts and corporate treasuries who are building at top of stretch. And this is our market, right? The market obviously includes retail, but high net worth individuals, institutions like this are going to build products on top of stretch and will cause it to grow from $8.5 billion to tens of billions, if not hundreds of billions over time. That's our objective. By growing a stretch, we'll be able to grow MSTR and the cycle, the virtuous cycle continues. As Andrew said, thank you to all of the folks who voted positively to move stretch to daily dividends. The calendar day accrual here is a pretty big deal, right? People will start to realize the benefits as digital credit and digital transformation of capital markets occurs. We think that's going to start happening this year, right? Bitcoin already trades 24/7. We see equities moving in that direction. You're going to start seeing the NASDAQ move to 7-day trading towards the end of this year. Tokenization is going to accelerate that even faster, especially in the U.S. with innovation exemptions that have been put forth by the SEC. We expect that market to grow very fast, too. And what are you going to build on top of? What are your tokenized securities. Some of them may partner with or build on top of products like stretch. Last thing I'll leave it with before I hand it over to Michael is Strategy World. 2027 is going to be back in Orlando next year, March 29 to April 1. And I invite everybody to join us there. We're going to have an awesome time. We'll run our Strategy Software Conference alongside our Bitcoin for Corporations Conference. alongside the True North conference, and it will be a great time. So we'll speak to you before then at our 2026 Q4 earnings call. But go ahead and register, and I hope to see you all in person. And with that, I will hand it over to Michael Saylor.

Thank you, Phong. And I want to thank all of our shareholders for being with us today. I'm going to say a few words about Bitcoin and digital capital and the way the ecosystem is evolving. So we feel like we're entering a bull market. We bounced off the 200-week moving average. Bitcoin's dominance is growing. Institutional demand is back. the banks are embracing Bitcoin. We feel like digital credit and banking credit could absorb all the new supply. And strategy is leading on chain. We're the most tokenized company in the digital assets ecosystem. This chart tells the story. Bitcoin has traded above a 21% premium for 78% of its history. So we look at the 200-week moving average as the base of support. And we've gone through about a 1-year bear market. We would think that we should see 2 or 3 years of a bull market at this point. We're only about less than 24 months, 18 months or so from the next halving. The halving will be a big deal, but there are a lot of other factors that are driving this. One thing that's very auspicious for Bitcoin is that Bitcoin market cap dominance is growing consistently through the cycle. It's about 67% of the market cap of all the crypto capital assets in the world. And so Bitcoin is 2/3. Everything else is the last 1/3. It's pretty clear that Bitcoin is the digital capital network, the dominant digital capital network in the world. It will not be displaced. And that's an important thing we can build upon. The structural catalyst for Bitcoin adoption, fiscal debasement, the money supply is going to expand, bank adoption, digital credit, capital flows from institutions, tokenization, the AI disruption, which ultimately is going to drive capital into Bitcoin. And as I mentioned, the Bitcoin halving coming up in 2028. Here, you can see the capital flows and capital returned to Bitcoin ETFs in Q3 to the tune of about $6.3 billion of inflows. We thought that was very auspicious. This chart structurally tells a story -- and the story it tells is that the government is running deficit financing. And that being the case, the money supply is going to have to expand sometime in the coming few years. There's no reasonable opportunity to do anything other than monetize the debt. So we have cheaper sovereign debt that's going to be refinanced at a higher interest rate. Either the interest rates have to come down or the balance sheet of the Fed has to expand. We don't know when this will happen or how it will happen, but this chart illustrates that it's going to need to happen. In the aftermath of the stall of the clarity bill in D.C., we got favorable regulations and favorable guidance coming out of Treasury, the SEC and the CFTC. The treasury guidance was very positive for digital currency. The SEC guidance was very positive for digital securities and the CFTC guidance was very positive for digital derivatives and digital commodities and digital exchanges. So this is all very digital assets positive news, and it's all happened just this quarter. We track banking adoption very closely. We look at all the major banks and the degree to which they custody crypto assets, the degree to which they extend credit, whether or not they deal with Bitcoin derivatives or wrap Bitcoin or the actual native Bitcoin and whether they underwrite it and also their stance on it. And the stance of the banks has just turned positive and has been consistently getting better. If you look at this chart, we can see we're at a 9% banking adoption December 2023. We are 24% in December of '25. We're now at 34%. We'll continue to track this, but the banks have all the money. And this is a monetary revolution. And the most important thing for Bitcoin success is that it be legitimized as a capital asset by the financial institutions of the world and that we create credit on top of it. If we take a look at the major banks, we can see very positive moves by Morgan Stanley, Citigroup, Deutsche Bank, Standard Chartered, Banco Santander, lots of broader digital assets momentum across the board as it relates to stable coins, tokenized securities and the like. This has the effect of derisking the asset class, accelerating institutional adoption of the asset class, sending a signal to conservative and traditional investors that it's okay to allocate to the asset class. And all of those things are just very positive for Bitcoin. So how much capital do we need in order to drive the Bitcoin price? Each week, there's about $256 million of natural Bitcoin produced by Bitcoin miners available for sale. It's 450 Bitcoin a day, we're up about $37 million a day. If you have $37 million, you can buy it all. After the halving coming around April of 2028, that $37 million a day of supply will become $18 million of supply. That means that right now, $13 billion a year buys all the Bitcoin produced in a matter of less than 2 years, $6.7 billion would buy all the Bitcoin produced. So if you imagine the impact on the commodity price, if you knew that the production of oil was going to be cut in half or the production of gold was going to be cut in half or soybeans or natural gas or anything, that would create a price shock. If you look at the amount of Bitcoin that's produced and you consider that number, $260 million a week. And then you consider that U.S. banks are creating $17 billion of credit in the same time period. The banks are creating incredible amounts of credit. Largely, this asset class has been unbanked for its history. And you can see that as it permeates the banking system, as the banks create credit, then that's the equivalent of buying that much or taking that much Bitcoin out of production. And so ultimately, the creation of bank credit is what drives the prices of equities up. Bank credit drives the prices of real estate up. Bank credit drives the prices of sports team franchises up and trophy assets like paintings. If the bank will lend against it, the prices will appreciate. When you have to pay cash, that depresses prices. And so the main cycle driver here is going to be the creation of bank credit. And you can see the order of magnitude here. And it just doesn't take that much credit in order to absorb the entire natural supply, then the price has to move up in order to find a willing seller at a higher price. As I've said, tokenization is accelerating. Strategy is the most tokenized company on chain. We didn't do anything for this to happen. This happened because we just happen to have securities that are ideal for tokenizing, right, either amplified Bitcoin or digital credit. Both of those are correlated to Bitcoin, but you can trade them one way or the other against the Bitcoin 24/7, 365. So these are very valuable in the DeFi ecosystem and the digital asset system. And of course, one thing that DeFi does very well is it creates leverage and it allows you to say, lever something 2x or 3x or 4x under very flexible credit terms. The thing that you would want to lever would be a stable, highly liquid, low volatility, high-yielding instrument like digital credit. Levering tokenized money markets at the cost of tokenized money markets doesn't really provide you much of an effective yield. But if something pays 8%, 9%, 10%, 11%, 12% and you can borrow money at 4% and you start to put 1, 2, 3 or 4 turns on it, then you can create digital income. And so digital credit is a building block for digital income. And by using anywhere from 2 to 4x leverage, and using stablecoins and the global marketplace, you can see how you could create a fund that pays 5%, 10%, 15% or 20% in yen, euros, pounds or dollars as you like and you can just program up and program it down. And so clearly, tokenization is interesting and the market is very innovative, and we expect to be participants in it. This gives you another snapshot and explains why tokenization is so powerful. When you tokenize a security, it starts to trade 24/7, 365. It also starts to trade globally. It's trading in Singapore or Hong Kong or Asia or Africa or South America. It also becomes programmable. And so you can tranche it, slice it, amplify it, deamplify it. The settlement goes from T+1 to nearly instantaneous. You can apply your artificial intelligence, your agentic finance to it. Agents want to do 1,000 things in the weekend, whereas your bank doesn't want to do anything on the weekend. And generally, high-speed trading in a TradFi world is moving money around once or twice a week. And of course, in the tokenized world, that might be once or twice an hour. And who knows, it might become faster than that. You can also -- it's also possible to compose very interesting different products. So product innovation accelerates. -- tranching risk, creating yield, converting currency, hedging, plugging into perpetuals, -- all of these things are interesting. And a lot of traditional finance markets, you can't innovate at all. It's just literally not allowed to create many of these financial products. In other cases, it would take 6 months to 3 years to get approval to issue the product. And so TradFi markets are crippled and conventional and slow and inefficient -- and they're also beset with all sorts of capital controls that slow down the motion of money. In the tokenized markets, these -- to say this stuff happens 10x as fast is probably an understatement. Innovation can happen 100x to 1,000x as fast and the money can move 1,000x orders of magnitude quicker. And of course, what does this mean? It means the tokenized economy is delivering better financial products, like who in Japan is getting an offer of 15% yield in yen, nobody, right? You can deliver better financial products with different characteristics, orders of magnitude quicker and you can make them easier. to deliver. And so we actually think that the nexus of innovation is going to be in the tokenized economy. And we think a lot about how do we optimize our securities to be ideal for tokenizing. One obvious thing is you make it pay a daily dividend because people can actually take action every day of the year, including holidays in the tokenized economy, they can't in the TradFi economy. Why does on-chain Capital gravitate toward us? Well, stablecoins offer 0% yield. STRSC, right, has a par value of $100. It is targeted to be stable versus the dollar, and it is 12% dividend. And of course, Bitcoin holders are seeking upside, but tokenized MSTRs amplify Bitcoin. A lot of people ask about AI. Anyone that's used it know that it's disruptive and transformational to just about everything in the world. It's eroding moats. So AI will erode moats. What moats? Well, clearly, it writes software faster. It delivers services better. It creates media. It's going to provide legal consultation, education services. It transforms services. It transforms operation. It transforms the products themselves. It makes the products better and more intelligent. It changes the nexus where you deliver products. Lots of industries are affected. Some are extremely affected. On the other hand, what is it that the robots and the bots can't create -- they're not very good at creating land. They're not very good at creating an acre in Palm Beach. They're not very good at creating commodities, especially scarce commodities. And of course, the scarcest of all commodities is Bitcoin. Bitcoin is the greatest of commodities, and it is the great and the only digital scarcity. So as the market evolves and absorbs AI, what you can expect is lots of companies are going to get dematerialized and demonetized and degraded by AI. Lots of products and services will be transformed. Many will go away. There will be magical products that will emerge, self-driving cars, intelligent robots, -- you will see web -- someone will probably figure out how to provide medical, legal, accounting, financial advice to 1 billion people for the -- a little bit more than the cost of the compute. So lots of things will transform. -- lots of wealth will be created, but that wealth has to flow somewhere. It's going to flow into trophy assets, trophy real estate, products that you can't manufacture with a robot or a bot. And of course, if I do want to transfer and preserve capital, move it across time and space, then the best way to do it is with digital capital, and that's what Bitcoin is. So we see Bitcoin as the winner. We see lots of chaos and disruption everywhere else in the economy. But ultimately, the world will be wealthier. There will be explosion in productivity. And the quality of living of the consumer should increase over time. There'll just be massive disruption in careers, products, services, corporations as we get there. This chart really shows a very important idea. if you're buying semiconductors that provide intelligence, they're 650x cheaper this year than they were 3 years ago. So there's a -- so semiconductors are a depreciating asset. We learned this in the Bitcoin mining business, where it turned out to be a much better idea to buy $1 billion of Bitcoin than $1 billion of Bitcoin mining rigs. And that's because there's a massive -- a very rapid depreciation cycle on hardware to provide any particular service, whether it's security or intelligence. So digital intelligence is going to increase abundance, but it's not going to increase the amount of Bitcoin. Bitcoin is scarce, lots of other things. Intelligent is not going to be scarce. Anything that you can create with intelligence is not going to be scarce. It's going to be quite abundant. And so it makes sense to capitalize a company on Bitcoin, the appreciating asset, not the Bitcoin mining rig, the depreciated asset. It makes sense to capitalize on something scarce and not something which is depreciating. And so I think that the market will start to realize that. This is why, for example, digital credit backed by Bitcoin is a much better idea than private credit backed by high-performance compute data centers because you can see the hardware in the data center is depreciating. It's a very competitive market. It's going to continue to be competitive. And on the other hand, Bitcoin is going to become less competitive. There's only 900,000 Bitcoin left to come in the next 100 years. And so even as we exponentially increase the availability of intelligence and everything related to it, we're going to exponentially decrease the availability of digital capital and everything related to it is just going to appreciate. People ask about quantum computing. Are we ready for it? Are we ready for AI hacks and the like? The answer is the industry takes all these things very seriously. We have a Bitcoin security consortium. It has the major holders and the major businesses providing economics products and services related to Bitcoin in it. companies like Coinbase, like Anchorage, like Fidelity, like Galaxy, like Blockstream like Block, like BlackRock, like Arc. We meet regularly. We support Bitcoin-related security research. We coordinate. And our focus is on making sure that we contribute to the stability and the security of the overall protocol. We'll continue to do that. There have been dozens and dozens of things people have been concerned about with regard to the network over the past 15 years. Over the coming 10 or 15 years, I'm sure there'll be another few dozen things that will pop up. as they pop up, some of them are real, some of them are just FUD. And as they evolve in consensus forms that it makes sense to address them, then we're ready and able to do so. And I think this is functioning in order to provide comfort to any Bitcoin investor that all the companies in this industry take security seriously, and we're engaged and coordinating. Future outlook. Bitcoin is 10 basis points of the world's capital assets. You can see it's de minimis 0.1%. We expect over time that it will grow to be 1%, and then it may grow to be a few percent. But you can see Bitcoin only needs to be a few percent of the world's assets to be extraordinarily successful. And the thing that's going to drive that growth is institutional adoption, Bitcoin, the legitimization of the asset class, the creation of credit, the creation of equity and other instruments on top of Bitcoin, the applications of Bitcoin. We're headed toward a $100 trillion industry. That's where we think we'll get to. And $100 trillion when we get there, may still only be single digits of global wealth. And so it will be a part of the capital structure of the world, but $100 trillion is a lot of money. What are the applications? Bitcoin is digital capital. Digital equity built on top of it is the second application. Digital credit instruments, as we've talked about, is a third application. Digital debt, debt instruments based on Bitcoin, a fourth application. Digital currency, stable digital assets that are backed by Bitcoin will be a fifth application. Digital money, something that's a stable currency equivalent that's paying you yield is another major application. Digital derivatives, perpetual futures, crypto derivatives, all flavors of options and perpetual contracts, another application. And then digital collateral, the capital that we embed into our robots that we embed into our agents that we embed into exchanges that we use as financial infrastructure for all digital commerce. All of these are very compelling applications, and they all require digital capital and therefore, Bitcoin in order to function effectively. I think it's reasonable to consider 2 other industries when we look at the way the Bitcoin industry will grow. If we start with oil, the oil industry had a first application, it was kerosene and people use kerosene for light. The original application of oil was reading lamps at night. And it provided a utilitarian value to the middle class such that they could afford light at night. because before that, you're looking at whale oil and whale oil was absenely expensive compared to kerosene. Eventually, though, that light application was displaced by electricity. It was obsolesce and the oil industry moved on to gasoline and then fuel oil and then heating oil, jet fuels. of course. And of course, it fueled cars that didn't exist when it was invented. It fueled planes that didn't exist when we first discovered kerosene. And then we saw plastics and fertilizer and asphalt and then we had lubricants and synthetic and then we had fabrics, nylon and polyester and licra. And then it became a feedstock to pharmaceuticals and cosmetics and even food and coatings. And so if you think about all the applications of oil, they're everywhere, all around us, and they all started with kerosene. And the entire industry was a bunch of very innovative companies that figure out how to crack a barrel of oil into all of those different things and sell it to all of those different downstream manufacturers or service providers. Now we take electricity, it's a similar story. The first application was the electric light bulb that was the killer app. But eventually, electricity drove motors and factories and refrigerators and air conditioners and radio and television and telephones and computers and Internet, data centers, electric vehicles. And of course, now it's AI, things for us. And when they started with a light bulb, nobody ever thought that eventually we would have Starlink and the AI to be thinking for us. But it's a very logical evolution. And when we look at Bitcoin, the first application was peer-to-peer cash. okay, how do I buy a pizza with 10,000 Bitcoin or buy 2 pizzas with 10,000 Bitcoin. But it's a mistake to think that the industry stays mired in that one first use case. That would be like electricity just sticking with light bulbs and oil sticking with kerosene, right? What we see evolving is digital capital, digital equity, digital credit, digital debt, digital currency, digital money. That creates digital income. You want 20% in yen, euros, pounds, dollars, pick your currency, digital derivatives, a 10x perpetual, right? Digital collateral. How do I actually put this collateral into my prediction market exchange, into my commodities exchange? How do I -- it's an ideal collateral to fuel every financial application in the world. Digital identity. You can use Bitcoin to create digital identity with public-private keypairs. Digital authentication follows next and then digital commerce. And so Bitcoin is the basis of a whole set of digital applications, great ideas, outgrow their first use case. We won't be a $100 trillion industry based upon swapping Bitcoin for pizza. We will become a $100 trillion industry based upon hundreds or thousands of products created by thousands of companies, all to solve a different problem in the world of digital finance and digital commerce. And we're very enthusiastic to be part of that, but we expect many other companies to follow in our footsteps. And that takes us to Bitcoin treasury companies. There are 4 issuers of digital credit right now. They've issued 13 securities that are all based on Bitcoin. Those BTC treasury companies like Strive, like MetapPlanet, like Smarter Web, those treasury companies have acquired 220,000 Bitcoin this year. That works out to 165% of all the Bitcoin mined this year. So the BTC treasury companies are buying 1.6 Bitcoin for every Bitcoin created by a Bitcoin miner. You see a supply shock forming. It's right here in front of our eyes. As the BTC treasury industry grows, their demand for Bitcoin grows, that drives up the price of the Bitcoin, driving up the value of their reserves, improving their credit, improving their equity, allowing to raise more capital. buying more Bitcoin, growing the industry, allowing them to create new innovative products like Seta, like SAS, like more, like Stretch Paying Daily. There will be a continual set of new products. Those products will serve new investor bases. They will broaden the investor base that attracts liquidity, that legitimizes the industry that will legitimize digital credit, that will legitimize digital equity, that will legitimize digital capital. We're not competitors. We're cooperators. We're all cooperating in a virtuous cycle and a virtuous relationship in order to strengthen digital capital, digital credit, digital equity and every other digital product or service that is backed by Bitcoin. And I laid out a dozen, there will be hundreds of thousands. We're very early on in this industry's development. You can see, if you look at this graph of issuers, multiple issuers just make the category more investable. There are a lot of investors they can only have up to 5% exposure in issue or 2% or 1%. So if there are 3 issuers, they'll have 15% exposure. But if there's 1 issuer, they'll have 5% exposure. So we need multiple companies in order to diversify the risk in order to allow all of the capital investors to comply with their mandates and manage risk per their risk models and -- and so issuers are critical to growing the industry, but also issuers create innovations. The issuers -- like we're not in a position to create a digital credit instrument in pounds, but Smarter Web is. We weren't in a position to create a daily dividend, but Stryve was. And so new issuers will be able to do different things. MetaPlanet is creating new innovative instruments for the Japanese market. We're not in a position to do that. So all of us are working together in order to grow the global market. And as securities begin to get tokenized, then that will make it easier for all of the global players to participate in other markets and to innovate in a more rapid fashion. I see this as very auspicious for the space. We can expect that AI is going to continue to push the boundary. It's pushing the boundaries of mathematics. It's pushing the boundaries of physics. It will push the boundaries of finance. We have designed all of our major credit instruments using AI. AI is critical for investors to understand them. It's critical to the models for pricing them. It's critical to solving the product design, the securities, the legal issues, et cetera. I think that the growth of AI is very auspicious to the growth of digital finance, and we just see this as a big plus for the industry in general. So at this point, we have instruments for every time horizon. What I would say is if you don't need your money for 4 years and you're an equity investor and you believe in digital credit or you want amplified Bitcoin exposure or you have to buy an equity instrument, you would buy digital equity like MSTR. If you don't need your money for 4 years and you want to invest in something without counterparty risk, you would buy digital capital, you'll buy the Bitcoin. If you're willing or you need to buy it in an exchange-traded wrapper, you'll buy an ETF like Bid. That's fine. There are many people that are credit investors. And if you're a credit investor and you have a long time horizon, like more than 4 years, maybe you want to put a piece of credit in a retirement portfolio or a trust, a family trust and you want to hold it for 30 years. Well, then we have instruments like Stripe, Stream, Strike Stride, SATS. All of these are long-duration perpetual credit instruments. They'll pay you a fixed dividend at par, whatever that dividend is 10% or the like. And you can lock in that yield for a decade or 20 years or 30 years. And that makes total sense if you've got that time horizon and you don't need the money back in the next few months or few years. You will probably absorb a bit more volatility in order to get that duration, but it's like holding a 20- or 30-year bond, a government bond as opposed to holding a 1-month or 3-month T-bill. And so those perpetual instruments meet a need in the market. If you don't -- if you have money to invest for 4 months to 4 years, -- we would say you're a treasury credit or shorter duration digital credit investor and there are instruments like STRC, what we offer or SDA, what Strive offers. And that's for a shorter duration investor. If STRC falls off of par or breaks below par, then the company is going to use all of its capital and its best efforts to return it to par as soon as it can. And I don't think we would ever represent, for example, that we could do it in 4 days or 4 weeks because that might be pushing the edge of the envelope. But you can see that here in 4 months, we've shown that we can -- and we think that it's a general reasonable expectation that the company will return STRC to par within 4 months if it were to lose or fall below par and out of our trading range. And we would do that by buying it back. We would do it by adjusting our cash balances. We would do it by adjusting our capital structure, et cetera, whatever we needed to do that we thought was rational at the time. Now if you need your money back in the next 4 months, maybe you have money and you want to invest it to get some yield, but you need it back in 5 days. You're a money market investor, and we would recommend that you put your money in a money market. Right now, money markets pay SOFR or something like that. We don't have a digital credit product that is for people that want to invest money for 0 to 4 months. But partners are generating and innovating. And in the digital asset space, people are creating digital money type instruments. And over time, I expect that Bitcoin treasury companies will create digital money type instruments that will meet this need. And so that's an opportunity for all of us that we're very enthusiastic about. What are we? Well, we are emerging as the Central Bank of the crypto economy. At this point, we're the best capitalized public entity in the crypto space. We have about $74 billion of capital right now. That would put us 56 against -- as the 56th largest central bank in the world. And we're moving up these rankings at a rapid rate. We will continue to grow. And our job is to bridge the TradFi market with the DeFi market, the Bitcoin, the BTC market with the fiat USD type market. And so we will -- and we expect that we will bridge the gap between Bitcoin and stablecoins, between capital and credit, between TradFi and DeFi, and we will work to strip volatility from Bitcoin for people that don't want V, and we will amplify volatility for derivatives traders or equity investors that want more vol. We will extract yield, we will manage risk. And we will convert currencies, right, converting BTC into a USD instrument or a euro instrument or something similar. So it's a very powerful business. We think that if you want to do this, you need a tower of capital, in this case, $74 billion. We think it's a big -- it's a very defensible moat if someone wanted to invest $100 billion or $200 billion or maybe even more than that in order to compete with us, they would have to buy that much Bitcoin. And if someone went into the market and tried to buy $200 billion of Bitcoin right now, it's quite likely that our credit spreads would compress, demand for our credit would explode, our equity premiums would expand, demand for our equity would explode. The price of Bitcoin would appreciate, our reserves would appreciate. And our overall company would grow faster than they could buy Bitcoin, probably much faster. So it's very difficult for anyone else to displace us in this position because we've established this large defensible Bitcoin holding. We intend to use those reserves substantial BTC reserves and substantial USD reserves in order to create the digital credit, which bridges all the global markets, the global credit markets, all the currency markets with the crypto markets, with other forms of capital and with the traditional finance markets. We think it's a great business opportunity. It needs to be done. And you can already see based upon our success raising capital in the TradFi market and our success tokenizing our securities in the DeFi markets that we're making great progress toward this ultimate vision. And with that, we're ready for Q&A, and we look forward to answering your questions. Thank you for staying with us.

Thank you, Michael. I'd like to welcome all our Q&A guests and invite them to come on video. We look forward to hearing your questions. We go one at a time. I'll call your names and you can direct your questions to the management team. For the first question, I would like to invite Andrew Harte, Director and Fintech Analyst at BTIG.

Good work this quarter. So Slide 26 frames the stronger balance sheet today compared to the previous bull market. And Phong, you talked about the balance sheet enabling strategy to take better advantage of a bull market with increased optionality. So I would love to hear what exercising that optionality looks like? And what are the key differences in how you plan to manage the business in the next bull market versus the prior ones?

Well, I can start, and I'm sure some others can join in. The big difference is, one, our Bitcoin balance is almost 7x larger is fully unencumbered. We have U.S. dollar balance and all of those things allow us to issue additional credit, which we weren't able to do before, right? Before, we were relying on primarily leverage through convertible bonds. We've talked at length why we think that it is inferior. One is there's just a limit to the size of the market of convertible notes. It's a less liquid market. It's over the counter, means retail can't participate. Amplifying the company through perpetual preferreds is far superior, and now we're able to do that on the back of nearly $70 billion of value in Bitcoin, which means that if we wanted to, we could raise $10 billion, $20 billion, $30 billion through perpetual preferreds, which if we pay 10%, 11% out at and Bitcoin goes up 30%, 40%, that creates amplification for the company and it grows the equity. So that's the big difference is we're a much larger company, and we have now a new strategy, which is digital credit. And Mike mentioned, that's just issuing digital credit ourselves, then there will be companies in the DeFi space and the TradFi space building products on top of digital credit. No one is building products on top of our convertible notes, right? Now we've got DeFi. We've got traditional finance companies that over time will issue stable coins. They'll produce returns, putting digital credit behind it. So I think the opportunity is pretty tremendous over the course of the next 1, 2, 3 years.

Yes. The point I'd make is you need a lot of capital in order to create a lot of credit. And so if you have a lot of capital, like we could create $10 billion, $20 billion, $30 billion of digital credit right now with our existing capital structure without raising any more equity capital and without Bitcoin appreciating. So we have a lot of credit capacity on the balance sheet now. And of course, we can create different types of credit. Are you creating BTC 5-rated credit, BTC II rated credit, right? The amount of risk in the credit and the amount of volatility in the credit is important to various types of investors. So one type of credit we're very interested in is digital money. How do you create 0 volatility digital credit? And of course, you need a lot of capital to create 0 volatility digital credit. You need a lot of capital to create of all 5. And so we think that we have -- we are using our capital as a very powerful asset, and we're positioned for the next bull run, but the company's optionality is quite powerful now because we don't have to rely upon Bitcoin to do the heavy lifting or the equity to do the lifting. We could use our balance sheet to do the heavy lifting right now. And that means we can meet a certain credit obligation or we can sell a certain type of credit to a credit investor or we can create new forms of credit with different volatility and risk profiles and different liquidity profiles as well that will also tap in and activate new markets. And so we're excited about that.

Thank you, Andrew. Next, I'd like to invite [ King Hoi ], Founder and CEO of Treasury.

I have 2 questions, if I may, one about equity and one about credit. On the equity side, you sold more than $5 billion of equity this quarter through ATM and the majority of that went into raising the cash balance and into buying back SCRC. And it's clearly needed to stabilize the capital structure, which you've done. Now that is the case, I would love to get maybe some guidance or ladder even about how you think about where the equity ATM is accretive so where you would really switch it on again to buy Bitcoin. And on the other hand, if the MAV stays sort of where it is or lower, where at which point it would make sense to actually sell SCRC, assuming it goes above par again to buy back actually MSCR itself? And then on the credit side, if I may, clearly, you've done a great job over the quarter, stabilizing SCRC, bringing back very close to par, below par. And actually, it surprised me a little bit why it hasn't been a bit stronger given the buybacks you've done, the cash you've raised. And I was wondering from your conversations with credit investors, institutional investors, what is it that would make them really buy this in size? Is it the coupon? Is it the cash balance? Is it some structural features? What would make it happen? And what would get us to $100 billion or $1 trillion kind of asset, right? Is there sort of a key feature that will allow it to happen from where we're sitting now?

I can start, and you put like 5 questions in there, King, so I'll try to get to all of them. The first question, what takes Stretch to stabilize at par? And why didn't it happen faster? First, I'll say is stretch went from a $2.5 billion IPO to $10.5 billion in the course of about 8 months. You might be able to argue that we overcharged it, right? And we brought in some capital that wasn't the most healthy. And so I think it overcharged, dislocated from par went down to $75, money exited, money looking for accretive principal growth entered, and we had to go through a cycling of the instrument. And so it ended up taking from June to now about 4 months to do. I think we'll be at par as to get par pretty closely. But I don't think 4 months is unreasonable in an instrument that grew that fast. So that's one. Two, how do we want to buy Bitcoin. The primary way to acquire Bitcoin is by issuing digital credit, STRC or other instruments that start to grow over time or other digital credit instruments. And when we raise $1 billion to $2 billion a month on a stretch, I think one thing we'll likely do this time is we'll put some of that into the U.S. dollar reserve, and we'll use the remaining to buy Bitcoin. And then the idea would be to issue equity above 1x NAV or greater to pay the dividends and interest on the digital credit, right? But the primary way to buy Bitcoin is by issuing digital credit, put into Bitcoin, pay a 12% dividend and get the returns on Bitcoin of 30%, 40%. Will we use MSTR to -- will we issue MSTR to buy Bitcoin, Perhaps, right, if the MAV starts to expand aggressively and we see an opportunity. But the primary way to accrete Bitcoin to the company to create amplification and increase Bitcoin per share is going to be through digital credit.

Thank you, King. Next, I'd like to invite [ Alex Thorn ], Managing Director and Head of Research at Galaxy.