Bitcoin Holdings and Strategy - As of February 13, 2026, the company held approximately 717,131 bitcoins, acquired at an aggregate purchase price of $54.5 billion, with an average purchase price of approximately $76,027 per bitcoin [29]. - The market price of one bitcoin on February 13, 2026, was reported at $68,734, indicating a potential unrealized loss on the company's bitcoin holdings [29]. - The bitcoin acquisition strategy involves using proceeds from capital raising transactions, including offerings of Class A common stock and preferred securities, to acquire bitcoin [23]. - The company actively manages its bitcoin holdings and capital structure to maintain long-term durability, liquidity, and flexibility [35]. - The company evaluates its bitcoin strategy continuously based on market conditions, capital structure, and anticipated cash resource needs [25]. - The company aims to generate value from its bitcoin holdings through innovative financial strategies, including the issuance of digital credit instruments [26]. - The company’s capital management strategy focuses on achieving accretive acquisitions of bitcoin while managing cost of capital and financial obligations [37]. - The company’s bitcoin strategy relies heavily on obtaining equity and debt financing, with all bitcoin purchases made using proceeds from such financings [123]. - The company expects to incur additional indebtedness and fixed charges as part of its bitcoin strategy, which may create liquidity risks if bitcoin prices decline [112]. - A significant decrease in the fair market value of bitcoin holdings could adversely affect the company's ability to satisfy financial obligations [112]. - The company has adopted ASU 2023-08 effective January 1, 2025, requiring bitcoin holdings to be measured at fair value, resulting in a cumulative-effect net increase to retained earnings of $12.75 billion [128]. - The company incurred $4.06 billion of cumulative impairment on its bitcoin holdings through December 31, 2024, reflecting the volatility of bitcoin prices [145]. - The concentration of bitcoin holdings limits risk mitigation and enhances the risks inherent in the company's bitcoin strategy [166]. Financial Performance and Risks - For the fiscal year ended December 31, 2025, the unrealized loss on digital assets was $5.40 billion, partially offset by a deferred tax benefit of $1.55 billion [110]. - The company experienced significant fluctuations in operating results, with quarter-to-quarter comparisons not indicative of future performance due to volatility in bitcoin prices [108]. - The cost basis of the bitcoin holdings was less than its fair market value as of December 31, 2025, but has since exceeded its fair market value, impacting deferred tax liabilities [111]. - The company’s enterprise analytics software business did not generate positive cash flow from operations for the fiscal year ended December 31, 2025 [112]. - The company is subject to potential tax liabilities that could materially affect its financial results, particularly if bitcoin is sold at prices above its cost basis [114]. - The price of bitcoin has historically been highly volatile, influencing the company's financial results and market price of listed securities, with significant declines impacting user and investor confidence [130]. - The company has experienced significant price fluctuations in bitcoin, which could adversely affect its business and financial condition [144]. - Future regulatory changes could impose significant costs or limit the company's ability to hold and transact in bitcoin [159]. Regulatory Environment - The laws and regulations applicable to bitcoin are evolving, with various U.S. federal and state agencies examining digital asset operations [70]. - The SEC approved the first U.S. spot bitcoin ETPs in January 2024, expanding access through regulated investment vehicles [59]. - The SEC approved the listing and trading of spot bitcoin ETPs, which began trading on January 11, 2024, with a trading volume of $4.6 billion on the first day [149]. - The company faces enhanced regulatory scrutiny due to its bitcoin strategy, especially with the increasing focus on anti-money laundering and compliance regulations [155]. - Future regulatory developments, such as the SEC's enforcement actions and new legislation like the GENIUS Act, could impose additional burdens on the company and affect bitcoin's price [135]. - Regulatory changes reclassifying bitcoin as a security could classify the company as an "investment company," imposing additional regulatory controls [181]. - The company does not comply with regulations applicable to investment companies, allowing broad discretion over its investment and cash management policies [183]. Market Conditions and Competition - The emergence of stablecoins and government-backed digital currencies could negatively impact bitcoin's price and market position [67]. - The emergence of alternative digital assets, including stablecoins and CBDCs, could negatively impact the price of bitcoin and the company's financial condition [168][169]. - The market for bitcoin is highly uncertain, influenced by factors such as institutional demand and the availability of alternative investment vehicles [139]. - The broader digital assets industry has faced high-profile bankruptcies and regulatory actions, negatively impacting the adoption rate and use of bitcoin [126]. - The company faces risks from potential changes in consumer preferences and competition from other digital assets that may offer better characteristics [131]. - The company acknowledges that significant legal, commercial, regulatory, and technical uncertainties surrounding digital assets could adversely affect bitcoin's price and the ability to transact [133]. Operational and Strategic Initiatives - The company established a USD Reserve of $2.25 billion as of February 13, 2026, to support dividend payments on preferred stock and interest on outstanding indebtedness [25]. - The company structured and issued five classes of Preferred Stock in 2025, providing differentiated economic exposure to its Class A common stock and bitcoin holdings [24]. - The company completed a 10-for-1 stock split of its class A and class B common stock on August 7, 2024, retroactively adjusting all applicable share and per share information [105]. - The company has established strategic partnerships with various third-party vendors, enhancing its sales and service coverage across regions and industries [87]. - The company’s AI-powered business intelligence platform, Strategy One, supports medium to large enterprise deployments and delivers real-time insights [80]. - The company’s generative AI capabilities automate and accelerate the deployment of AI-enabled applications, making advanced analytics accessible to non-technical users [79]. - The company’s marketing programs target technology and line-of-business executives across large global enterprises and mid-size organizations [89]. - The company’s competitive differentiators include a cloud-native architecture optimized for major hyperscalers, enhancing customer choice and ease of integration [81]. Employee and Compliance Matters - As of December 31, 2025, the company had a total of 1,539 employees, with 448 based in the United States and 1,091 internationally [98]. - The company is subject to various privacy and data protection laws, including the GDPR, which imposes significant compliance requirements and potential penalties [95]. - Changes in privacy laws and regulations could impose additional compliance costs and operational challenges, adversely affecting business performance [215][218]. - The company relies on skilled personnel for success, and losing key employees could materially affect business and financial condition [214]. Cybersecurity and Technology Risks - The company may face risks related to the custody of bitcoin, including loss of private keys and potential cyberattacks [178]. - Cybersecurity incidents related to AI integration could adversely affect the company's business and results of operations [195]. - The company has experienced software errors and security vulnerabilities in the past, which could lead to lost revenue and damage to its reputation, impacting future business performance [201]. - The integration of AI into enterprise analytics products may incur substantial costs and could result in reputational harm if AI tools produce inaccurate analyses [194]. - The company faces various risks in doing business with government entities, including procurement challenges and budgetary constraints, which could adversely impact demand for its offerings [209][210].

Bitcoin Holdings and Performance - The company holds 713,502 bitcoins with a total cost of $54.26 billion, averaging $76,052 per bitcoin, and achieved a BTC yield of 22.8% for FY2025[1][9] - The average market price per bitcoin was approximately $83,740 as of January 30, 2026, reflecting a market value of $59.75 billion for the company's bitcoin holdings[1][10] - The company utilizes key performance indicators (KPIs) such as Bitcoin Per Share (BPS), BTC Yield, BTC Gain, and BTC $ Gain to assess its bitcoin acquisition strategy[26][28] - BPS represents the ratio of the company's bitcoin holdings to its Assumed Diluted Shares Outstanding, expressed in Satoshis[29] - BTC Yield measures the percentage change in BPS over a period, while BTC Gain reflects the number of bitcoins held multiplied by the BTC Yield[26][30] - The company may incur unrealized gains or losses based on changes in bitcoin market prices, affecting its financial statements[42] - The trading price of the company's class A common stock can deviate significantly from the market value of its bitcoin holdings, indicating that KPIs may not predict stock performance[31] - The company emphasizes that these KPIs are supplements to financial statements and should be used by sophisticated investors aware of their limitations[41] Financial Performance - The company reported a net loss of $12.4 billion for Q4 2025, or $42.93 per diluted share, compared to a net loss of $670.8 million, or $3.03 per diluted share, for Q4 2024[1][11] - Total revenues for Q4 2025 were $123.0 million, a 1.9% increase year-over-year, with subscription services revenues increasing by 62.1% to $51.8 million[1][11] - Total revenues for the three months ended December 31, 2025, were $122.989 million, a slight increase from $120.697 million in the same period of 2024, while total revenues for the twelve months ended December 31, 2025, reached $477.233 million, compared to $463.456 million in 2024, reflecting a year-over-year growth of approximately 2%[44] - Subscription services revenue for the three months ended December 31, 2025, was $51.758 million, up 62% from $31.931 million in the same period of 2024, and for the twelve months, it increased to $175.657 million from $106.776 million, representing a growth of 65%[44] - The net loss for the three months ended December 31, 2025, was $12.437 million, compared to a net loss of $670,811 in the same period of 2024, while the net loss for the twelve months was $3.848 million, compared to $1.167 million in 2024[44] - Basic loss per share for the three months ended December 31, 2025, was $(42.93), significantly higher than $(3.03) in the same period of 2024, indicating increased losses per share year-over-year[44] Assets and Liabilities - Total current assets as of December 31, 2025, were $2.564 billion, a substantial increase from $252.324 million as of December 31, 2024, primarily driven by a rise in cash and cash equivalents[47] - Digital assets held by the company increased to $58.854 billion as of December 31, 2025, compared to $23.909 billion in 2024, indicating a significant growth in digital asset holdings[47] - Total liabilities as of December 31, 2025, were $10.598 billion, up from $7.614 billion in 2024, reflecting an increase in long-term debt and other liabilities[47] - The company’s total stockholders' equity increased to $44.123 billion as of December 31, 2025, compared to $18.230 billion in 2024, reflecting a strong growth in equity position[47] Digital Asset Transactions - The company purchased a total of $7.66 billion in digital assets in Q1 2025, resulting in a balance of $35.63 billion by March 31, 2025[49] - By June 30, 2025, the balance of digital assets increased to approximately $42.40 billion, following additional purchases of $6.77 billion in Q2 2025[49] - The unrealized gain on digital assets reached $14.05 billion by June 30, 2025, indicating significant appreciation in asset value[49] - Digital asset purchases in Q3 2025 amounted to $4.95 billion, leading to a balance of approximately $47.35 billion by September 30, 2025[49] - The company reported an unrealized gain of $3.89 billion on digital assets by September 30, 2025, reflecting ongoing market strength[49] - In Q4 2025, digital asset purchases totaled $3.08 billion, resulting in a year-end balance of approximately $50.44 billion[49] - The total unrealized gain on digital assets was reported as $58.85 billion by December 31, 2025, despite a loss of $17.44 billion in unrealized gains during the quarter[49] - The company utilized proceeds from various stock offerings to fund digital asset purchases, including $4.37 billion from class A common stock sales in Q1 2025[49] - The cumulative effect of adopting ASU 2023-08 resulted in a significant adjustment to the carrying value of digital assets, increasing it to approximately $41.79 billion[49] Capital and Funding Activities - In FY2025, the company raised $25.3 billion, making it the largest equity issuer in the U.S., representing approximately 8% of total U.S. equity issuance[1][3] - The company executed five preferred equity IPOs in FY2025, raising a total of $5.5 billion in gross proceeds[1][4] - The company established a $2.25 billion USD Reserve, providing approximately 2.5 years of coverage for dividends and interest obligations[2][15] - The flagship Digital Credit instrument, STRC, has grown to $3.4 billion, with a current dividend rate of 11.25%[2][3] - The company expects distributions on preferred equity instruments to be treated as a nontaxable return of capital for the foreseeable future[2][21] - The company plans to maintain its USD Reserve to fund two to three years of dividends, subject to market conditions and liquidity needs[2][16] Research and Development - Research and development expenses for the twelve months ended December 31, 2025, were $93.860 million, down from $118.486 million in 2024, indicating a reduction in R&D spending[44] Accounting and Reporting Standards - The company has adopted Accounting Standards Update No. 2023-08, requiring it to measure bitcoin at fair value, which may lead to unrealized gains or losses not reflected in the KPIs[32]

Core Insights - The company, formerly known as MicroStrategy, has resumed significant Bitcoin purchases, acquiring nearly $1 billion worth of BTC for the second consecutive week [1] - The total Bitcoin holdings now amount to 671,268 BTC, valued at approximately $60 billion based on current prices [2] - The firm has faced a decline in stock value, with a 21% drop over the past month and a 53% decrease over the last six months [3] Bitcoin Purchases - The company purchased 10,645 Bitcoin last week for $980.3 million at an average price of $92,098 per coin, following a previous purchase of 10,624 BTC for $963 million [1] - The recent purchases mark the largest weekly acquisition since late July, indicating a renewed interest in Bitcoin [3] Financial Position - The company sold $989 million worth of stock last week to finance its Bitcoin purchases, including $882 million in Class A common stock and $82 million in Series A Perpetual Stride Preferred Stock [2] - A cash reserve of $1.4 billion was established to support dividends and avoid selling Bitcoin during downturns [4] Market Sentiment - Analysts have expressed concerns regarding the company's potential exclusion from MSCI indices, which could negatively impact its stock price [5] - Cantor Fitzgerald analysts have dismissed fears about the company's Bitcoin buying strategy during price dips as unfounded [4]

Bitcoin Holdings and Strategy - The company held approximately 641,167 bitcoins as of October 30, 2025, with an aggregate market value of $68.28 billion based on a market price of $106,490 per bitcoin [186]. - The total bitcoin holdings increased from 447,470 bitcoins at December 31, 2024, to 640,031 bitcoins by September 30, 2025, reflecting a growth of 43% [179]. - The company purchased bitcoin using $4.37 billion from common stock sales, $1.99 billion from convertible notes, and $710 million from initial public offerings in the first quarter of 2025 [179]. - The company’s treasury strategy involves accumulating bitcoin as a primary reserve asset, with no specific target for the amount to hold [171]. - The company plans to fund further bitcoin acquisitions primarily through issuances of common stock and various fixed-income instruments [171]. - The company aims to increase its Bitcoin holdings through disciplined use of equity and credit markets, focusing on accretion to common shareholders [191]. - The company acquired 42,705 bitcoin during the three months ended September 30, 2025, increasing total holdings to 640,031 bitcoin, compared to 25,889 bitcoin in the same period of 2024 [204]. - For the nine months ended September 30, 2025, the company acquired 192,561 bitcoin, increasing total holdings to 640,031 bitcoin, compared to 63,070 bitcoin in the same period of 2024 [207]. - The company plans to continue pursuing its bitcoin strategy, incurring additional costs related to bitcoin advocacy and custodial fees [255]. Financial Performance and Revenue - Total revenues for the three months ended September 30, 2025, increased by 10.9% to $128,691,000 compared to $115,000,000 in the same period of 2024 [213]. - Subscription services revenues rose by 65.4% to $45,972,000 for the three months ended September 30, 2025, compared to $27,800,000 in 2024 [213]. - Product support revenues decreased by 16.2% to $51,118,000 for the three months ended September 30, 2025, compared to $61,015,000 in 2024 [213]. - Gross profit for the three months ended September 30, 2025, was $90,678,000, an increase of 11.0% from $81,722,000 in the same period of 2024 [213]. - The company recorded an unrealized loss on digital assets of $(3,890,847,000) for the three months ended September 30, 2025, compared to no unrealized gains in 2024 [214]. - The provision for income taxes for the nine months ended September 30, 2025, was $3.35 billion on a pretax income of $11.93 billion, resulting in an effective tax rate of 28.0% [222]. - The company reported a $9.1 billion increase in net income for the nine months ended September 30, 2025, despite a $13.4 million increase in changes in operating assets and liabilities [255]. Cash Flow and Capital Management - Net cash used in operating activities for the nine months ended September 30, 2025, was $(45,612) thousand, an increase of 27.7% compared to $(35,708) thousand in the same period of 2024 [254]. - Net cash used in investing activities surged to $(19,417,576) thousand, a 384.1% increase from $(4,010,904) thousand in the prior year, primarily due to a $15.4 billion increase in bitcoin purchases [254][257]. - Net cash provided by financing activities rose to $19,476,842 thousand, a 381.4% increase from $4,046,067 thousand in the previous year, driven by significant proceeds from stock sales [254][258]. - The company raised approximately $19.7 billion from capital markets activity during the nine months ended September 30, 2025, resulting in an increase of approximately 38.3 million shares in Assumed Diluted Shares Outstanding [207]. - The company completed four initial public offerings of preferred stock during the nine months ended September 30, 2025, raising a total of approximately $4.8 billion in net proceeds [243]. Market and Stock Performance - The market price of bitcoin increased from $63,463 as of September 30, 2024, to $114,378 as of September 30, 2025, contributing to the increase in BTC $ Gain [207]. - The Bitcoin Per Share (BPS) increased to 199,984 Satoshis, up from 190,100 Satoshis in the previous quarter, reflecting a growth in Bitcoin holdings faster than Assumed Diluted Shares Outstanding [202]. - Basic Shares Outstanding rose from 190,670 thousand shares as of June 30, 2024, to 287,109 thousand shares by September 30, 2025, an increase of 50.5% [265]. - Assumed Diluted Shares Outstanding increased from 221,670 thousand shares as of June 30, 2024, to 320,040 thousand shares by September 30, 2025, a rise of 44.4% [265]. - The company announced a capital plan to raise $84 billion in the medium-to-long term, including $42 billion of equity capital and $42 billion of fixed-income instruments [242]. Risks and Future Outlook - The company is exposed to market risks including fluctuations in bitcoin prices, foreign currency, and interest rates [281]. - The company does not anticipate needing to sell bitcoins to meet liquidity needs in the next twelve months, although it may engage in transactions as part of treasury management [241]. - S&P Global Ratings assigned a corporate credit rating of B- on October 27, 2025, which may affect the company's ability to obtain favorable financing terms [239]. - The company has adopted ASU 2023-08, requiring measurement of bitcoin at fair value, which may lead to unrealized gains or losses not reflected in traditional KPIs [273]. Employee and Operational Metrics - The total employee headcount as of September 30, 2025, was 1,546, an increase from 1,534 as of December 31, 2024 [229]. - The company has $8.24 billion in principal due upon maturity of long-term debt instruments [251]. - Total deferred revenue and advance payments decreased by $38.9 million as of September 30, 2025, compared to December 31, 2024, primarily due to a decrease in deferred product support revenue [225].

Financial Performance - Strategy reported a net income of $2.8 billion and diluted EPS of $8.42 for Q3 2025, marking the second consecutive quarter of significant positive earnings[4]. - Operating income for Q3 2025 was $3.9 billion, compared to an operating loss of $432.6 million in Q3 2024[12]. - Strategy's full-year guidance includes operating income of $34 billion, net income of $24 billion, and diluted EPS of $80 per share, based on a BTC price outlook of $150,000 at year-end[4][18]. - Total revenues for the three months ended September 30, 2025, were $128,691,000, an increase from $116,071,000 in the same period of 2024, representing a growth of 10.3%[51]. - Subscription services revenue reached $45,972,000 for the three months ended September 30, 2025, compared to $27,800,000 in 2024, marking a significant increase of 65.4%[51]. - The gross profit for the nine months ended September 30, 2025, was $246,511,000, slightly down from $247,460,000 in 2024, indicating a decrease of 0.4%[51]. - The net income for the three months ended September 30, 2025, was $2,785,024,000, compared to a net loss of $340,174,000 in the same period of 2024[51]. - Basic earnings per share for the three months ended September 30, 2025, were $9.30, compared to a loss of $1.72 in the same period of 2024[51]. Bitcoin Holdings and Valuation - The company increased its bitcoin holdings to 640,808 bitcoins, with a total cost of $47.44 billion, averaging $74,032 per bitcoin[6]. - Year-to-date BTC Yield achieved was 26.0%, with a BTC $ Gain of $12.9 billion, reaffirming full-year targets of $20 billion BTC $ Gain and 30% BTC Yield[4][6]. - Strategy's digital assets had a market value of approximately $70.9 billion as of October 26, 2025, reflecting significant appreciation in bitcoin prices[12]. - Digital assets held by the company increased to $73,205,725,000 as of September 30, 2025, up from $23,909,373,000 at the end of 2024, reflecting a growth of 213.5%[53]. - The market value of Bitcoin holdings is calculated by multiplying the current market price of Bitcoin by the total number of Bitcoins held, referred to as Bitcoin NAV[48]. - The company reported an unrealized gain on digital assets of $14,047,514,000 by March 31, 2025, indicating a positive trend in asset valuation[57]. - The bitcoin market is characterized by significant volatility, and the actual fair market value may differ materially from reported values due to market manipulation risks[62]. Capital and Investment Activities - The company has raised $20 billion year-to-date through its capital markets platform, enhancing its position as a leading issuer of digital credit[3]. - The company received aggregate net proceeds of approximately $5.1 billion during Q3 2025 from various stock offerings[12]. - The company reported a net cash used in investing activities of $19,417,576,000 for the nine months ended September 30, 2025, compared to $4,010,904,000 in 2024, indicating a significant increase in investment activities[55]. - In Q1 2025, the company purchased bitcoin using $4.37 billion from its class A common stock offering, $1.99 billion from convertible senior notes, and other proceeds totaling $7.66 billion[57][58]. - In Q2 2025, the company acquired additional bitcoin using $5.19 billion from stock offerings and other proceeds, totaling $6.77 billion in purchases[58]. - In Q3 2025, bitcoin purchases amounted to $4.95 billion, funded by various stock offerings, including $2.47 billion from a new preferred stock offering[59]. Dividend and Shareholder Information - Strategy's STRC dividend rate was increased to 10.50% for November 2025, up from 10.00% in September 2025[3][14]. - The company has historically not paid dividends on its Class A common stock, and ownership of its securities does not represent an ownership interest in the Bitcoin held[44]. - The company may issue shares of Class A common stock to pay dividends on preferred stock, potentially increasing Assumed Diluted Shares Outstanding without corresponding increases in Bitcoin holdings[43]. Strategic Initiatives - The company is actively laying the groundwork for credit securities in international jurisdictions, aiming to become a dominant credit issuer globally[3]. - Strategy Inc. is the world's first and largest Bitcoin Treasury Company, adopting Bitcoin as its primary treasury reserve asset[31]. - The company uses Bitcoin Per Share (BPS) as a key performance indicator, representing the ratio of Bitcoin holdings to Assumed Diluted Shares Outstanding, expressed in Satoshis[33]. - BTC Yield measures the percentage change in BPS from the beginning to the end of a period, helping assess the company's strategy of acquiring Bitcoin[34]. - The company has adopted Accounting Standards Update No. 2023-08, requiring it to measure Bitcoin at fair value, which may result in unrealized gains or losses not reflected in BPS or BTC metrics[39]. - The company's ability to maintain BPS or achieve positive BTC metrics may depend on various factors, including Bitcoin prices and financing availability[45]. - The trading price of the company's Class A common stock can deviate significantly from the market value of its Bitcoin holdings[37]. - The company maintains a strategy dashboard on its website to provide broad distribution of information regarding market prices and key performance indicators[29].

Bitcoin Holdings and Strategy - The company held approximately 597,325 bitcoins as of June 30, 2025, with an aggregate purchase price of $42.40 billion and an average purchase price of approximately $70,982 per bitcoin[188]. - The total carrying value of bitcoin holdings increased to $64.36 billion by June 30, 2025, reflecting market volatility[188]. - The company’s treasury strategy involves accumulating bitcoin as a primary reserve asset, funded through equity and debt financing[176]. - As of September 30, 2024, the company held 252,220 bitcoins with a carrying value of $39.266 billion[188]. - The company plans to continue accumulating bitcoin without a specific target, monitoring market conditions for further acquisitions[179]. - The company held approximately 597,325 bitcoins, valued at $73.42 billion based on the market price as of July 31, 2025[240]. - The company purchased $14.43 billion of bitcoin during the six months ended June 30, 2025, using net proceeds from various convertible notes and stock offerings[267]. - The company plans to continue pursuing its bitcoin strategy, incurring additional costs related to bitcoin advocacy and custodial fees[266]. Financial Performance - Total revenues for Q2 2025 were $114.5 million, a slight increase from $111.4 million in Q2 2024, while total revenues for the first half of 2025 were $225.6 million, down from $226.7 million in the same period last year[197]. - Subscription services revenues increased by 69.5% to $40.8 million in Q2 2025, compared to $24.1 million in Q2 2024, and grew by 65.6% to $77.9 million for the first half of 2025, up from $47.0 million in the prior year[205][206]. - Product licenses revenues decreased by 22.7% to $7.2 million in Q2 2025, down from $9.3 million in Q2 2024, and fell by 35.0% to $14.4 million for the first half of 2025, compared to $22.2 million in the same period last year[205]. - Product support revenues declined by 15.6% to $52.1 million in Q2 2025, down from $61.7 million in Q2 2024, and decreased by 15.9% to $104.6 million for the first half of 2025, compared to $124.4 million in the prior year[207]. - The company reported an unrealized gain on digital assets of $(14.0) billion in Q2 2025, impacting operating results significantly[197]. - The company’s operating expenses for Q2 2025 were $(13.95) billion, reflecting significant impairment losses on digital assets[197]. - Non-GAAP income from operations for Q2 2025 was $14,047,732, compared to a loss of $179,653 in Q2 2024, reflecting a significant improvement[285]. - Non-GAAP net income attributable to common stockholders for Q2 2025 was $9,946,587, up from a loss of $136,058 in Q2 2024[287]. Employee and Compensation Information - The company had a total of 1,512 employees as of June 30, 2025, a decrease from 1,534 employees at the end of 2024 and 1,839 employees a year earlier[200]. - Share-based compensation expense decreased by $4.9 million to $15.7 million in Q2 2025 compared to the same period in 2024, and decreased by $10.9 million to $27.6 million for the first half of 2025[201]. - Share-based compensation expense for Q2 2025 was $15,742, down from $20,621 in Q2 2024, indicating a reduction in non-cash expenses[287]. Revenue and Expense Trends - Digital asset impairment losses for the three months ended June 30, 2024, were $180.1 million, representing 64.1% of operating expenses[190]. - Product support revenues decreased by $9.7 million (15.5%) and $19.8 million (15.5%) for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year[209]. - Total consulting revenues decreased by $1.6 million (10.3%) and $3.7 million (11.8%) for the three and six months ended June 30, 2025, respectively, primarily due to decreased demand for consulting services[210]. - Total other services revenues decreased by $1.9 million (11.8%) and $4.4 million (13.4%) for the three and six months ended June 30, 2025, respectively[210]. - Total cost of revenues increased by $4.8 million (15.6%) and $8.8 million (14.4%) for the three and six months ended June 30, 2025, respectively[212]. - Research and development expenses decreased by $6.2 million (20.6%) and $11.0 million (18.5%) for the three and six months ended June 30, 2025, respectively[219]. - General and administrative expenses increased by $0.4 million (1.0%) for the three months ended June 30, 2025, and by $6.3 million (8.8%) for the six months ended June 30, 2025[221]. - Sales and marketing expenses decreased by $0.6 million (1.6%) for the three months ended June 30, 2025, and by $6.5 million (9.6%) for the six months ended June 30, 2025[218]. Tax and Interest Expenses - The provision for income taxes for the six months ended June 30, 2025, was $2.26 billion on a pretax income of $8.06 billion, resulting in an effective tax rate of 28.0%[228]. - Interest expense, net increased by $2.4 million for the three months ended June 30, 2025, totaling $17.9 million compared to $15.5 million in the same period of 2024[224]. - For the six months ended June 30, 2025, interest expense, net rose by $7.7 million to $35.0 million from $27.3 million in the prior year[225]. - Interest expense from amortization of debt issuance costs was $13 for Q2 2025, significantly lower than $3,842 in Q2 2024, reflecting improved financial management[287]. Equity and Financing Activities - The company entered into a sales agreement for an at-the-market equity offering program with an aggregate offering price of up to $21.0 billion[241]. - The company entered into the STRK Sales Agreement with an aggregate offering price of up to $21.0 billion, with approximately $20.52 billion and $20.45 billion of STRK Stock available for issuance as of June 30, 2025, and July 31, 2025, respectively[242]. - The company amended the Original STRF Sales Agreement to include an additional sales agent, with an aggregate offering price of up to $2.1 billion, and approximately $1.94 billion and $1.88 billion of STRF Stock available for issuance as of June 30, 2025, and July 31, 2025, respectively[243]. - The STRD Sales Agreement allows for an aggregate offering price of up to $4.2 billion, with approximately $4.18 billion of STRD Stock available for issuance as of July 31, 2025[244]. - The STRC Sales Agreement has an aggregate offering price of up to $4.2 billion, with approximately $4.2 billion of STRC Stock available for issuance as of July 31, 2025[245]. - The company issued 7,300,000 shares of STRK Stock, generating approximately $563.2 million in net proceeds, all used for general corporate purposes[246]. - The issuance of 8,500,000 shares of STRF Stock resulted in approximately $710.9 million in net proceeds, also used for general corporate purposes[247]. - The company received approximately $979.5 million from the issuance of 11,764,700 shares of STRD Stock, with proceeds allocated for general corporate purposes[249]. - The issuance of 28,011,111 shares of STRC Stock generated approximately $2.47 billion in net proceeds, utilized for general corporate purposes[250]. - The company declared quarterly cash dividends of approximately $2.00 per share on STRK Stock and $2.64 per share on STRF Stock[253]. - The company announced a capital plan to raise $84 billion in the medium-to-long term, including $42 billion of equity capital and $42 billion of fixed-income instruments[262]. Cash Flow and Investments - Net cash used in operating activities increased by $42.6 million for the six months ended June 30, 2025, compared to the same period in the prior year, primarily due to a $5.96 billion increase in net income[266]. - Net cash used in investing activities rose by $12.02 billion for the six months ended June 30, 2025, mainly due to a $12.00 billion increase in bitcoin purchases[267]. - Net cash provided by financing activities increased by $12.05 billion for the six months ended June 30, 2025, driven by a $9.51 billion increase in net proceeds from the sale of class A common stock[268]. - Total net proceeds from at-the-market equity offerings reached $10.29 billion for the six months ended June 30, 2025, compared to $137.15 million in the prior year[282]. - The company incurred $17.23 million in interest payments to holders of Convertible Notes during the six months ended June 30, 2025, up from $2.4 million in the same period of the previous year[272]. International Operations and Currency Impact - International revenues accounted for 43.0% of total revenues in Q2 2025, slightly up from 42.8% in Q2 2024, highlighting the importance of foreign markets[290]. - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 5.2% as of June 30, 2025[293]. - If average exchange rates had changed unfavorably by 10%, revenues for the six months ended June 30, 2025 would have decreased by 3.8%[293].

Financial Performance - Record Net Income of $10.0 billion and Diluted EPS of $32.60 for Q2 2025, with Operating Income of $14.0 billion[3] - FY2025 guidance includes Operating Income of $34 billion, Net Income of $24 billion, and Diluted EPS of $80 per share, based on a BTC price outlook of $150,000[3] - The net income for the three months ended June 30, 2025, was $10,020,846, compared to a net loss of $102,559 for the same period in 2024[52] - The net income attributable to common stockholders for Q2 2025 was approximately $9.97 billion, a significant increase from a loss of $102.56 million in Q2 2024[66] - For the three months ended June 30, 2025, MicroStrategy reported a non-GAAP income from operations of approximately $14.05 billion, compared to a loss of $200.27 million in the same period of 2024[65] Bitcoin Holdings and Strategy - Bitcoin holdings increased to 628,791 bitcoins, with a total cost of $46.07 billion, averaging $73,277 per bitcoin year-to-date[5] - The company has adopted Bitcoin as its primary treasury reserve asset, strategically accumulating Bitcoin through equity and debt financing, as well as operational cash flows[27] - The company plans to continue purchasing Bitcoin, utilizing proceeds from stock offerings and other financing methods, with $5.19 billion allocated in Q2 2025 alone[60][64] - MicroStrategy's Bitcoin holdings increased from 226,331 Bitcoins in June 2024 to 597,325 Bitcoins by June 2025[61] - The average purchase price per Bitcoin increased from $36,798 in June 2024 to $70,982 in June 2025[57][61] Revenue and Growth - Subscription Services Revenues increased by 69.5% year-over-year to $40.8 million, while total revenues rose by 2.7% to $114.5 million[10] - Total revenues for the three months ended June 30, 2025, were $114,488,000, compared to $111,442,000 for the same period in 2024, representing a 2.8% increase[52] - Total current deferred revenue and advance payments as of June 30, 2025, amounted to $214,251,000, compared to $204,837,000 in the previous year, indicating an increase of about 4.9%[69] - Deferred subscription services revenue for Q2 2025 was $111,564,000, up from $71,189,000 in Q2 2024, reflecting a growth of approximately 57%[69] Asset Management - Digital assets held by the company increased to $64,362,798,000 as of June 30, 2025, from $23,909,373,000 at the end of 2024[54] - The company's total assets reached $64,773,415,000 as of June 30, 2025, compared to $25,843,685,000 at the end of 2024[54] - The company’s Bitcoin NAV is calculated by multiplying the current market price of Bitcoin by the total number of Bitcoins held, though it is not equivalent to traditional net asset value metrics[49] Unrealized Gains and Market Risks - The company recorded an unrealized fair value gain on digital assets of $14.0 billion in Q2 2025[11] - The company reported a significant unrealized gain on digital assets of $14,047,514,000 in Q2 2025, compared to an impairment loss of $180,090,000 in Q2 2024[73][74] - The company has acknowledged the volatility and potential market manipulation risks associated with Bitcoin, which may affect the actual fair market value of its holdings[62] Corporate Governance and Financial Measures - The company provides non-GAAP financial measures, including non-GAAP loss from operations and non-GAAP net loss attributable to common stockholders, to help evaluate business performance[29] - The company has historically not paid any dividends on its class A common stock, and there is no indication of future dividend payments[45] - The company anticipates no change in the dividend rate if the stock price remains between $99.00 and $100.99, with potential minor adjustments based on market conditions[31] - The company’s ability to maintain or achieve positive KPIs may depend on various factors, including Bitcoin price fluctuations and financing availability[46] Operational Costs and Management - Operating expenses for the three months ended June 30, 2025, were significantly impacted by an unrealized gain on digital assets of $(14,047,514,000)[52] - Share-based compensation expense for Q2 2025 was $12,543,000, compared to $20,621,000 in Q2 2024, showing a reduction of approximately 39%[73][74] - The company plans to continue focusing on its software business while managing costs associated with its bitcoin strategy to maximize profitability[71]

Bitcoin Holdings and Financial Impact - As of March 31, 2025, the company held approximately 528,185 bitcoins, with an aggregate purchase price of $35.63 billion and an average purchase price of approximately $67,457 per bitcoin [193]. - The total bitcoin holdings increased from approximately 189,150 bitcoins at December 31, 2023, to 528,185 bitcoins by March 31, 2025 [190]. - As of December 31, 2024, the company reported a carrying value of $23.91 billion for its bitcoin holdings, with impairment losses totaling $4.06 billion [186]. - The average market price of bitcoin at the end of March 31, 2025, was reported at $76,555, with a market value of the bitcoin holdings at approximately $40.44 billion [190]. - The company held approximately 528,185 bitcoins as of March 31, 2025, with an aggregate market value of $53.86 billion as of May 2, 2025 [236][238]. - The company is exposed to market price changes in bitcoin, which is a highly volatile asset [277]. Financial Performance - Total revenues for the three months ended March 31, 2025, were $111.1 million, a decrease of 3.4% compared to $115.2 million in the same period in 2024 [199]. - Product licenses revenues decreased by 43.8% to $7.3 million, down from $12.9 million year-over-year, primarily due to a decrease in deal volume and size [207]. - Subscription services revenues increased by 61.6% to $37.1 million, compared to $23.0 million in the prior year, driven by conversions from on-premises to cloud-based subscriptions [208]. - Product support revenues decreased by 16.2% to $52.5 million, down from $62.7 million, as customers transitioned to subscription services [209]. - Operating expenses surged to $5.998 billion, primarily due to an unrealized loss on digital assets of $5.9 billion, compared to $288.9 million in the previous year [199]. - The company reported a loss from operations of $5.9 billion for the three months ended March 31, 2025, compared to a loss of $203.7 million in the same period in 2024 [199]. Capital Structure and Financing - The company engaged in significant capital raising transactions, including $18.065 billion from sales of class A common stock in Q4 2024 to purchase additional bitcoin [188]. - The company has approximately $21.0 billion of class A common stock available for issuance under the May 2025 Sales Agreement [239]. - The company issued 7,300,000 shares of Perpetual Strike Preferred Stock on February 5, 2025, raising approximately $563.2 million in net proceeds [242]. - The company has long-term debt obligations totaling $8.22 billion, with various coupon interest payments due semi-annually [246]. - The company expects to use proceeds from equity or debt financing to meet short-term liquidity needs, as cash and cash equivalents may not be sufficient [249]. - The company announced a capital plan to raise $84 billion, including $42 billion in equity capital and $42 billion in fixed-income instruments [254]. Cash Flow and Liquidity - Net cash used in operating activities was $(2,389) thousand for Q1 2025, a decrease of 108.4% compared to $28,587 thousand in Q1 2024 [255]. - Net cash used in investing activities increased by $6.030 billion in Q1 2025, primarily due to a $6.022 billion increase in bitcoin purchases [257]. - Net cash provided by financing activities increased by $6.046 billion in Q1 2025, driven by a $4.263 billion increase in net proceeds from the sale of class A common stock [259]. - The company anticipates that its long-term cash requirements will not be satisfied solely by cash generated from operations, necessitating potential refinancing or asset sales [250]. Employee and Operational Metrics - As of March 31, 2025, the total employee headcount was 1,483, a decrease from 1,851 in the same period in 2024 [202]. - Share-based compensation expense decreased by $6.0 million to $11.8 million for the three months ended March 31, 2025, compared to $17.8 million in the prior year [203]. - Sales and marketing expenses decreased by $5.9 million to $27.532 million for the three months ended March 31, 2025, representing a 17.7% decline, mainly due to reduced employee salaries and share-based compensation [218]. - Research and development expenses decreased by $4.8 million to $24.423 million for the three months ended March 31, 2025, a 16.3% decrease, primarily due to lower employee salaries and bonuses [219]. Tax and Regulatory Considerations - The company recorded a benefit from income taxes of $1.73 billion on a pretax loss of $5.94 billion, resulting in an effective tax rate of 29.0% for the three months ended March 31, 2025 [228]. - Deferred tax liabilities related to unrealized gains on bitcoin holdings were approximately $2.28 billion as of March 31, 2025 [229]. - The adoption of ASU 2023-08 is expected to increase the volatility of the company's financial results due to the recognition of unrealized gains or losses from digital assets [221]. Future Outlook - The company expects subscription services revenues to continue to grow as it promotes its cloud offerings to new and existing customers [208]. - The company anticipates that international revenues will continue to represent a significant portion of total revenues [279]. - The company expects interest expense for future periods in 2025 to decrease compared to the same period in 2024 due to a more favorable average interest rate on outstanding debt [225].

Bitcoin Holdings and Strategy - In 2024, the company purchased approximately 258,320 bitcoins at an aggregate purchase price of approximately $22.073 billion, averaging $85,447 per bitcoin[32]. - As of December 31, 2024, the company held $23.909 billion in digital assets, consisting of approximately 447,470 bitcoins, with cumulative impairment losses of $4.059 billion[35]. - Between January 1, 2025, and February 14, 2025, the company acquired approximately 31,270 bitcoins for an aggregate price of $3.165 billion, averaging $101,225 per bitcoin[32]. - As of February 14, 2025, the company held approximately 478,740 bitcoins, acquired at a total cost of $31.134 billion, with an average purchase price of approximately $65,033 per bitcoin[36]. - The company has not sold any bitcoins during 2023 or 2024, indicating a long-term holding strategy[32]. - The company’s bitcoin strategy includes the potential to sell bitcoin for corporate purposes or tax benefits, depending on market conditions[30]. - The company believes bitcoin serves as a store of value and a potential hedge against inflation due to its limited supply[56]. - The company has significant holdings in bitcoin and plans to continue making significant future purchases, which could lead to fluctuations in financial results[102]. - The company plans to purchase additional bitcoin in future periods, anticipating that the proportion of total assets represented by bitcoin holdings will increase[144]. Custody and Security - The company holds substantially all of its bitcoin in custody accounts at U.S.-based custodians, diversifying risk exposure across multiple custodians[52]. - Custodians are selected based on strict security protocols, including offline storage of private keys to mitigate risks associated with cyberattacks[53]. - The company conducts ongoing due diligence reviews of custodians, including obtaining Services Organization Controls reports to monitor the safekeeping of bitcoin[54]. - Contracts with custodians are designed to protect the company's property interest in bitcoin from claims by the custodian's creditors in case of bankruptcy[55]. - The company faces risks related to the custody of its bitcoin, including potential loss or destruction of private keys and reliance on regulated custodians[166]. - Insurance covering bitcoin holdings only accounts for a small fraction of the total value, with no guarantee of coverage for losses[167]. - Security breaches or cyberattacks could result in the loss of bitcoin holdings, materially affecting the company's financial condition and operational results[162]. - The company’s bitcoin strategy exposes it to counterparty risks, particularly concerning custodians, highlighted by recent high-profile bankruptcies in the digital asset industry[174]. Financial Performance and Risks - The company reported a net loss of $1.790 billion for the fiscal year ended December 31, 2024, primarily due to digital asset impairment losses[103]. - Outstanding indebtedness as of December 31, 2024, was $7.274 billion, with an annual contractual interest expense of $35.1 million[105]. - The company had $1.525 billion in deferred tax assets, primarily related to bitcoin impairment, which could impact net income if a valuation allowance is established[104]. - The company expects to incur additional indebtedness and fixed charges as part of its bitcoin strategy, which may create liquidity risks if bitcoin values decline[105]. - The concentration of assets in bitcoin limits the company's ability to mitigate risks associated with a more diversified portfolio[120]. - The company faces counterparty risks related to custodians of its bitcoin holdings, which could impact access to assets in case of custodian insolvency[123]. - The broader digital assets industry is subject to risks that may negatively impact the adoption rate, price, and use of bitcoin[124]. - The company incurred $4.059 billion of cumulative impairment on its bitcoin holdings through December 31, 2024, reflecting the volatility of bitcoin prices[140]. - The price of bitcoin has historically been subject to dramatic fluctuations, indicating a high level of volatility[139]. - The company’s historical financial statements do not fully reflect the potential variability in earnings from holding or selling significant amounts of bitcoin[138]. Regulatory Environment - Regulatory frameworks for bitcoin and digital assets are evolving, with various U.S. agencies examining the operations of digital asset networks[62]. - The CFTC considers bitcoin a commodity, while the SEC does not classify it as a security under federal laws, although this is not an official policy[64][65]. - Regulatory actions, such as the SEC's enforcement against major participants in the bitcoin ecosystem, could adversely affect the price and market perception of bitcoin[132]. - The company may become subject to the corporate alternative minimum tax (CAMT) starting in the 2026 tax year if its average annual adjusted financial statement income exceeds $1 billion[108]. - The effective tax rate under the Global Intangible Low-Taxed Income (GILTI) regime will increase from 50% to 37.5% beginning in fiscal year 2027, impacting the company's income tax liability[113]. - Increased regulatory focus on digital assets following the FTX collapse may impose significant costs or limit the company's ability to hold and transact in bitcoin[152]. - Regulatory changes reclassifying bitcoin as a security could classify the company as an "investment company," imposing additional regulatory controls[170]. Market Dynamics and Competition - The company faces competition for capital from various entities, including ETPs, bitcoin miners, and other digital asset service providers, which may impact financing costs for bitcoin purchases[51]. - The analytics market is highly competitive, with major competitors including IBM, Microsoft, Oracle, Salesforce, and SAP, impacting the company's ability to maintain demand for its offerings[85]. - The emergence of alternative digital assets, including stablecoins and CBDCs, could negatively impact the price of bitcoin, which may adversely affect the company's financial condition and operating results[158][160]. - The SEC's approval of spot bitcoin ETPs and potential regulatory scrutiny could materially affect the market price of the company's listed securities[148][149]. - The trading price of the company's class A common stock may be viewed as an alternative to ETPs, potentially leading to decreased demand for its shares[147]. Employee and Operational Changes - As of December 31, 2024, the total employee headcount was 1,534, a decrease from 1,934 in 2023 and 2,152 in 2022, reflecting a reduction of approximately 20.7% year-over-year[91]. - The enterprise analytics software business did not generate positive cash flow from operations for the year ended December 31, 2024[105]. - The company has established strategic partnerships with various third-party vendors to extend sales and service coverage across regions and industries[80]. - The company relies on skilled personnel, and losing key employees could adversely affect business operations and financial condition[201]. Accounting and Reporting Changes - The adoption of ASU 2023-08 on January 1, 2025, will require the company to measure its bitcoin holdings at fair value, resulting in a cumulative-effect net increase to retained earnings of $12.745 billion[107]. - The adoption of ASU 2023-08 is expected to increase the volatility of financial results and affect the carrying value of bitcoin on the balance sheet[125]. - A cumulative-effect adjustment of $12.745 billion was applied to the opening balance of retained earnings as of January 1, 2025, due to the adoption of ASU 2023-08[141]. - The company expects increased volatility in its financial results due to the adoption of ASU 2023-08, which may lead to greater losses or gains compared to prior periods[142]. Legal and Compliance Risks - The company faces potential infringement liability due to third-party software use, which could adversely affect its business and financial condition[185]. - Compliance with complex government contracting requirements is essential, as non-compliance could lead to penalties and contract terminations[199]. - Changes in privacy laws and regulations could impose substantial costs and affect the company's ability to operate in certain jurisdictions[208]. - Any systems failure or security breach related to personal data could result in significant liabilities and impact the company's reputation[206]. Stock and Equity Transactions - The company has issued $18.970 billion of class A common stock through at-the-market equity offering programs between January 1, 2024, and February 14, 2025[220]. - The company has filed a prospectus for a new equity offering program with an aggregate offering price of up to $21 billion[220]. - The company may issue additional class A common stock with an aggregate offering price of up to $4.168 billion under the October 2024 Sales Agreement[221]. - As of February 4, 2025, Michael J. Saylor owns 19,616,680 shares of class B common stock, representing approximately 45.2% of the total voting power[216]. Miscellaneous Risks - Business disruptions from geopolitical tensions or natural disasters could materially affect operating results and internal controls[195]. - The company has experienced software errors and vulnerabilities in the past, which could lead to lost revenue and damage to reputation[188]. - The integration of artificial intelligence into the company's analytics offerings may incur substantial costs and could result in reputational harm if AI tools produce biased or inaccurate analyses[181]. - Cybersecurity incidents related to AI integration could adversely affect the company's business and results of operations[182]. - The shift from product licenses to cloud subscriptions may lead to higher attrition rates and affect revenue recognition timing[177].

Bitcoin Holdings and Strategy - As of September 30, 2024, the company held approximately 252,220 bitcoins, with a carrying value of $6,850,879,000[137]. - The total original cost basis of bitcoin holdings was $9,903,699,000, with impairment losses amounting to $3,052,820,000[139]. - The average purchase price per bitcoin held as of September 30, 2024, was $39,266[139]. - In Q3 2024, the company purchased bitcoin using $1.105 billion from the sale of class A common stock and $458.2 million from the issuance of convertible notes[142]. - The company’s bitcoin strategy includes funding acquisitions primarily through equity and fixed-income instruments, with no specific target for total bitcoin holdings[135]. - The market value of bitcoin held at the end of Q3 2024, using the highest market price, was approximately $17,006,630,000[145]. - The company has engaged in various capital raising transactions to fund bitcoin purchases, totaling $1.214 billion in Q4 2023 and $793.8 million in Q2 2024[141][142]. - The company’s treasury reserve policy emphasizes bitcoin as the primary reserve asset, supplemented by cash and cash equivalents exceeding working capital needs[138]. - The company held approximately 252,220 bitcoins as of October 30, 2024, with an aggregate purchase price of $9.904 billion, averaging $39,266 per bitcoin[149]. - The market price of one bitcoin was $71,812.70 as of October 30, 2024[149]. - The company may incur significant digital asset impairment losses in the future, with at least $18.9 million incurred during the fourth quarter of 2024 on bitcoin holdings[182]. - As of September 30, 2024, the company held approximately 252,220 bitcoins, all unencumbered, and does not anticipate needing to sell any bitcoins within the next twelve months to meet working capital requirements[199]. Financial Performance - Total revenues for the three months ended September 30, 2024, were $116.1 million, a decrease of 10.3% from $129.5 million in 2023[156]. - Product licenses revenues decreased by 53.9% to $11.1 million for the three months ended September 30, 2024, compared to $24.0 million in 2023[164]. - Subscription services revenues increased by 32.5% to $27.8 million for the three months ended September 30, 2024, compared to $21.0 million in 2023[165]. - Product support revenues decreased by 8.7% to $61.0 million for the three months ended September 30, 2024, compared to $66.9 million in 2023[166]. - Total operating expenses for the three months ended September 30, 2024, were $514.3 million, significantly higher than $128.0 million in 2023[156]. - Digital asset impairment losses for the three months ended September 30, 2024, were $412.1 million, representing 80.1% of operating expenses, compared to $33.6 million (26.2%) in the same period of 2023[148]. - Non-GAAP loss from operations for the three months ended September 30, 2024, was $413,205,000, compared to a loss of $8,441,000 in the same period of 2023[220]. - Non-GAAP net loss for the three months ended September 30, 2024, was $307,796,000, compared to a loss of $127,666,000 in the same period of 2023[223]. - General and administrative expenses increased by 21.3% to $104.300 million for the nine months ended September 30, 2024, compared to $85.959 million in 2023[228]. Revenue Breakdown - Other services revenues decreased by 8.0% to $16,169,000 for the three months ended September 30, 2024, compared to $17,583,000 in the same period of 2023[168]. - Total consulting revenues fell by 7.1% to $15,489,000 for the three months ended September 30, 2024, down from $16,676,000 in the prior year[168]. - Total other services revenues for the nine months ended September 30, 2024, decreased by 13.3% to $49,162,000 compared to $56,714,000 in the same period of 2023[168]. - Consulting revenues decreased by $1.2 million for the three months ended September 30, 2024, primarily due to decreased demand for domestic consulting services[168]. - Education revenues did not materially change for the three and nine months ended September 30, 2024, compared to the same periods in the prior year[169]. - Product licenses revenues for the nine months ended September 30, 2024, decreased by 41.5% to $33.311 million compared to $56.979 million in the same period of 2023[228]. - Subscription services revenues increased by 25.5% to $74.846 million for the nine months ended September 30, 2024, up from $59.662 million in 2023[228]. - Product support revenues decreased by 6.5% to $185.440 million for the nine months ended September 30, 2024, compared to $198.422 million in 2023[228]. Expenses and Impairments - The company reported digital asset impairment losses of $39,238,000 in Q3 2024[139]. - Digital asset impairment losses for the three months ended September 30, 2024, were $412.1 million, a 1127.9% increase from $33.6 million in the same period of 2023; for the nine months ended September 30, 2024, losses were $783.8 million, up 923.1% from $76.6 million[182]. - Interest expense, net, increased by $7.1 million and $8.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year, primarily due to new convertible notes issued in 2024[183]. - A loss of $22.9 million on debt extinguishment was recorded for the three and nine months ended September 30, 2024, resulting from the redemption of the 2028 Secured Notes[185]. - Other expense, net, was $5.0 million and $2.6 million for the three and nine months ended September 30, 2024, respectively, primarily due to foreign currency transaction net losses[187]. Cash Flow and Financing Activities - The company reported a net cash used in operating activities of $(35.7) million for the nine months ended September 30, 2024, compared to $11.5 million for the same period in 2023, representing a 409.8% decrease[201]. - Net cash used in investing activities increased by $3.320 billion for the nine months ended September 30, 2024, primarily due to a $3.320 billion increase in purchases of bitcoins, totaling $4.008 billion during this period[203]. - Net cash provided by financing activities increased by $3.370 billion for the nine months ended September 30, 2024, largely due to a $3.160 billion increase in long-term debt proceeds compared to the prior year[204]. - The company has approximately $891.3 million of class A common stock available for issuance under its August 2024 Sales Agreement, and filed a prospectus for a new equity offering program with an aggregate offering price of up to $21 billion on October 30, 2024[194]. - The company may utilize proceeds from the sale of class A common stock, with $891.3 million available as of the date of the report, for potential debt repurchases or prepayments[211]. - The company terminated the November 2023 Sales Agreement on July 31, 2024, and initiated a new sales agreement on August 1, 2024, allowing for the sale of up to $2.0 billion in class A common stock[213]. Tax and Deferred Revenue - The company recorded a benefit from income taxes of $411.8 million on a pretax loss of $907.6 million for the nine months ended September 30, 2024, resulting in an effective tax rate of 45.4%[188]. - Total current and non-current deferred revenue and advance payments decreased by $45.9 million as of September 30, 2024, compared to December 31, 2023, primarily due to a decrease in deferred product support revenue[192]. - As of September 30, 2024, the remaining performance obligation was $380.5 million, with approximately $237.1 million expected to be recognized over the next 12 months[193]. - The effective tax rate may fluctuate due to changes in domestic and foreign earnings and losses, as well as material discrete tax items[188]. Employee and Operational Metrics - As of September 30, 2024, the total employee headcount was 1,637, a decrease from 1,984 in the same period of 2023[158]. - Share-based compensation expense increased by $2.6 million for the three months ended September 30, 2024, compared to the same period in the prior year, totaling $19.4 million[159]. - Research and development expenses rose by 12.3% to $33,301,000 for the three months ended September 30, 2024, up from $29,660,000 in the prior year[178]. - General and administrative expenses increased by 14.7% to $33,505,000 for the three months ended September 30, 2024, compared to $29,223,000 in the same period of 2023[180]. - Sales and marketing expenses decreased by 0.5% to $35,414,000 for the three months ended September 30, 2024, down from $35,606,000 in the prior year[176]. Currency and International Revenue - International revenues accounted for 44.9% of total revenues for the three months ended September 30, 2024, compared to 44.5% in 2023[233]. - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 4.5% as of September 30, 2024[236]. - Revenues for the nine months ended September 30, 2024, would have decreased by 3.9% if average exchange rates had changed unfavorably by 10%[236]. - The company anticipates that international revenues will continue to account for a significant portion of total revenues[233].