Strategy reports record Q2 2025 earnings, detailing its innovative Bitcoin-backed credit products and strategy for amplified BTC returns.
On the Call
Shirish Jajodia @shirishjajodia: Corporate Treasurer and Head of Investor Relations at Strategy
Andrew Kang @AndrewKang: Executive Vice President & Chief Financial Officer at Strategy
Michael Saylor @saylor: Executive Chairman at Strategy
Phong Le @digitalphong: President & Chief Executive Officer at Strategy
Lance Vitanza: Research Analyst at TD Bank
Lyn Alden @LynAldenContact: Investment Strategy
Preston Pysh @PrestonPysh: Cofounder of The Investor’s Podcast Network, GP @ Ego Death Capital, Advisor at Primal and DeFi Technologies
Samson Mow @Excellion: CEO @ JAN3
Brian Dobson: Research Analyst at Clear Street
Jeff Walton @PunterJeff: VP of Bitcoin Strategy @ Strive Asset Management and MSTR True North Founder
Mark Palmer: Research Analyst at Benchmark
Timestamp Overview
[00:00:00 - 00:10:04] Q2 2025 Financial Highlights
- Strategy announced a record-breaking quarter with $14 billion in operating income, driven by Bitcoin’s price increase and a new accounting rule.
- A new metric, “Bitcoin per share,” was introduced to show how the company is increasing Bitcoin holdings for each share, creating more value for investors.
- The company has added more Bitcoin to its balance sheet every quarter since August 2020, now holding over $74 billion worth.
- The company has successfully raised $18.3 billion in just seven months, mainly through new and innovative financial products.
[00:10:04 - 00:18:40] The Growing Bitcoin Universe
- Michael Saylor highlights a very supportive political environment for Bitcoin, including positive signals from the White House and the SEC.
- Wall Street is increasingly embracing Bitcoin, with over 80 ETFs launched and $170 billion flowing into them.
- A “hyper-adoption” phase is underway, with 160 public companies now holding Bitcoin on their balance sheets, up from just two in 2020.
- Regulators are making it easier to invest in Bitcoin, allowing for things like in-kind ETF creation and loosening rules on options trading.
[00:18:40 - 00:31:20] Strategy’s Financial Products Explained
- Strategy acts like a refinery, turning the raw asset of Bitcoin into various financial products for different types of investors.
- It offers lower-risk products with guaranteed dividends (like STRF and STRC) for those who want steady income.
- It also offers higher-growth products (like STRK and MSTR common stock) for investors seeking higher returns who are comfortable with more risk.
- STRC, the latest product, is designed to be a high-yield savings account alternative, offering much higher interest than traditional banks with short-term risk.
[00:31:20 - 00:49:48] Amplifying Bitcoin: The MSTR Strategy
- Strategy aims to provide “amplified Bitcoin” returns, meaning its stock is designed to outperform holding Bitcoin directly.
- The company does this by using “intelligent leverage,” issuing its financial products to raise capital and buy more Bitcoin.
- This strategy increases the amount of Bitcoin per share, meaning as Bitcoin’s price rises, the value for MSTR shareholders grows even faster.
- Michael Saylor explains that higher leverage, combined with a rising Bitcoin price, can lead to returns that are many times that of Bitcoin itself.
[00:49:48 - 01:15:00] The Path to Becoming the World’s Largest Treasury
- Phong Le outlines the company’s goal to surpass companies like Amazon and Microsoft to become the world’s largest corporate treasury.
- The plan involves shifting from convertible bonds to perpetual preferred stock, which provides stable, long-term capital without the risk of looming debt payments.
- For the first time, Strategy issued official financial guidance, projecting a year-end operating income of $34 billion.
- The company believes its stock is significantly undervalued compared to other companies with similar earnings and performance.
[01:15:00 - 01:20:14] Core Principles & The Future
- The company reiterates its nine core principles, including buying and holding Bitcoin forever, prioritizing long-term value for MSTR shareholders, and treating all investors with transparency.
- Strategy will continue to innovate with new AI-generated financial instruments to disrupt traditional capital markets.
- A key goal is to promote the global adoption of Bitcoin as a treasury reserve asset for corporations and even nations.
- The presentation ends with a new, interactive Q&A format, reinforcing the company’s commitment to transparency.
[01:20:14 - 02:06:32] Live Q&A with Analysts
- Analysts asked about the risks of concentrating so much Bitcoin and competition from other companies adopting a Bitcoin strategy.
- The team discussed how their capital structure, now focused on preferred shares, is “bulletproof” and can withstand an 80% Bitcoin drawdown.
- They addressed the challenge of educating the market about their complex financial products, noting that the success of offerings like STRC is breaking through.
- The team explained their cautious approach to on-chain proof-of-reserves, citing security and market stability concerns but remaining open to future possibilities.
Notable Quotes
Digital Transformation of Capital
We aim to be the Amazon of capital markets. Right? Completely disrupt the business model.
Michael Saylor @Saylor
Company Valuation
On the one hand we are capitalized on the most innovative technology and capital assets in the history of mankind. On the other hand, we're possibly the most misunderstood and undervalued stock in the US.
Phong Le @digitalphong
Financial Products
The wild card here, Jeff, is I think that STRC is our iPhone moment.
Michael Saylor @Saylor
Investor Education
We're selling a bitcoin backed preferred to people that have never heard of bitcoin, that don't even know what bitcoin is. And we're even selling it to people that are afraid of bitcoin.
Michael Saylor @Saylor
Capital Plan
I could see a place, be in a place in three to five years where we could surpass Berkshire Hathaway's $348 billion of capital and us having the largest capital base in the world based on bitcoin.
Phong Le @digitalphong
Arbitraging Capital
You're arbitraging the difference between bitcoin's annualized, you know, return of, call it 45% versus the 10% that you're paying out in the preferred market for a 35% Delta.
Preston Pysh @PrestonPysh
Bear Market Resilience
We did survive the 80% drawdown with a much weaker capital structure. So this capital structure is bulletproof compared to that one.
Michael Saylor @Saylor
Leverage & Volatility
If you take that credit model I showed you and you crank in 20 vol... you can go to 90% leverage because the credit looks like investment grade at 90% leverage.
Michael Saylor @Saylor
Product Innovation
We're using AI to come up with ideas that nobody has before. We're disrupting the traditional capital markets, we're disrupting the preferred markets.
Phong Le @digitalphong
Questions & Answers
Question 1: At what point does Strategy’s concentration of Bitcoin holdings impede the broader adoption of Bitcoin?
Answer: Michael Saylor believes Strategy is accelerating, not impeding, adoption by creating new ways for capital to enter the ecosystem. He states that the harder they try to acquire Bitcoin, the more valuable it becomes, which encourages decentralization and innovation elsewhere. He argues a large treasury is necessary to offer investment-grade credit products to institutions like pension funds.
Question 2: Are you worried you’ve been too successful in encouraging other public companies to adopt a Bitcoin treasury, creating competition?
Answer: Phong Le stated that more Bitcoin treasury companies are positive because they increase market knowledge and analyst coverage, which helps with MSTR’s own valuation. Since all these companies are buying Bitcoin, it drives the price up, benefiting everyone. Michael Saylor added that they aren’t competing with each other, but rather with “20th-century credit instruments,” and there is a multi-hundred-trillion-dollar market to disrupt.
Question 3: How are you stress-testing your capital structure for a potential Bitcoin bear market, especially regarding your ability to issue new capital?
Answer: Michael Saylor explained that by shifting from convertible debt to perpetual preferred equity, the company removes the risk of principal payments coming due. He stated their current structure is “bulletproof” and could survive an 80% drawdown without missing a dividend payment, and could even manage a 90-95% drawdown by possibly suspending some dividends temporarily.
Question 4: How effective are the preferred shares at generating yield during a sideways “crab market” for Bitcoin?
Answer: Michael Saylor explained that a sideways market has a silver lining: it lowers Bitcoin’s volatility. Lower volatility significantly de-risks their credit models, making their financial products even more attractive and potentially turning high-yield offerings into investment-grade ones. He believes the primary driver of their credit strategy is educating the market, which is a more significant factor than near-term price action.
Question 5: What is the next area of regulatory improvement you would like to see for the digital asset space?
Answer: Michael Saylor’s top priority would be for regulators to clarify the taxonomy of digital assets—clearly defining what constitutes a digital commodity, a digital security, and a digital token. He believes this clarity would unleash a wave of innovation across the entire crypto industry.
Question 6: What feedback have you received from the buy-side on your recent offerings, and what future securities might you offer?
Answer: Andrew Kang noted that with each new offering, institutional and retail demand has grown as the market becomes more educated. He mentioned that future opportunities include taking existing product structures international into different currencies and building out the middle of their yield curve (e.g., 3, 5, or 7-year credit instruments).
Question 7: What steps are you taking to overcome the education burden and explain your strategy to institutional investors who may see your preferred issuances as a perpetual drag?
Answer: Phong Le described the education process as a “knockdown, drag-out” effort that gets easier with each successful offering, pointing to the speed at which STRC was launched compared to the first preferred. Michael Saylor added that creating a compelling, simple product (like a high-yield savings account alternative) is key, as is building distribution channels with banks and creating educational content like open-sourcing their credit models.
Question 8: Would proof-of-reserves be a sensible element to add to your strategy to gain incremental trust from investors?
Answer: Michael Saylor stated that the company is studying it but is cautious. He expressed concern that publicizing wallet movements for routine custody reshuffling could create massive, unnecessary market dislocation and panic. The team emphasized that as a public company with robust internal controls and Big Four auditors, they already offer a high degree of transparency and security.
Question 9: How does the team now think about future leverage ratios, given the new preferred leverage characteristics and the goal of retiring convertible bonds?
Answer: Michael Saylor explained that the 20-30% leverage target was appropriate for a capital structure with convertible bonds. As they shift to preferred equity (which never comes due), it’s reasonable to consider higher leverage, potentially in the 30-50% range. The exact target will evolve and depend on factors like Bitcoin’s volatility, institutional adoption, and the specific terms of the credit instruments they issue.