Bitcoin Holdings and Strategy - As of June 30, 2025, the company held approximately 597,325 bitcoins, with an aggregate purchase price of $42.40 billion and an average purchase price of approximately $70,982 per bitcoin [188]. - The company purchased bitcoin using $5.19 billion from sales under its at-the-market offering program for class A common stock in the second quarter of 2025 [187]. - The company’s bitcoin strategy includes issuing debt or equity securities to fund bitcoin purchases, with no specific target for the amount of bitcoin to hold [179]. - The company’s treasury reserve assets consist of cash assets exceeding working capital requirements and bitcoin as the primary reserve asset [181]. - The company held approximately 597,325 bitcoins, valued at $73.42 billion based on market price, indicating significant liquidity potential [240]. - The company does not anticipate needing to sell bitcoin to meet short-term liquidity needs but may do so as part of treasury management operations [263]. - The company incurred additional costs related to bitcoin advocacy and custodial fees as part of its ongoing bitcoin strategy [266]. Financial Performance - Total revenues for Q2 2025 were $114.5 million, a slight increase of 2.3% compared to $111.4 million in Q2 2024 [197]. - Subscription services revenues increased by 69.5% to $40.8 million in Q2 2025 from $24.1 million in Q2 2024, driven by conversions to cloud-based subscriptions [206]. - Product licenses revenues decreased by 22.7% to $7.2 million in Q2 2025 from $9.3 million in Q2 2024, attributed to a decline in deal volume and size [205]. - Product support revenues fell by 15.6% to $52.1 million in Q2 2025 from $61.7 million in Q2 2024, reflecting a decrease in both domestic and international markets [207]. - Gross profit for the first half of 2025 was $155.8 million, down from $165.7 million in the same period of 2024 [197]. - Operating expenses for the first half of 2025 totaled $7.95 million, significantly reduced from $569.7 million in the first half of 2024 due to changes in accounting for 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 recovery [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]. Cash Flow and Financing Activities - Net cash used in operating activities increased by 809.4% to $(37,302) thousand for the six months ended June 30, 2025, compared to $5,258 thousand in the same period of 2024 [265]. - Net cash used in investing activities rose by 493.6% to $(14,457,699) thousand, primarily due to a $12.00 billion increase in bitcoin purchases [267]. - Net cash provided by financing activities increased by 491.6% to $14,504,460 thousand, driven by a $9.51 billion increase in net proceeds from the sale of class A common stock [268]. - The company issued 7,300,000 shares of STRK Stock on February 5, 2025, raising approximately $563.2 million in net proceeds for general corporate purposes, including bitcoin acquisition [246]. - The company issued 28,011,111 shares of STRC Stock on July 29, 2025, raising approximately $2.47 billion in net proceeds for general corporate purposes [250]. - Total net proceeds from at-the-market equity offerings reached $5,858,518 thousand for the three months ended June 30, 2025 [282]. Tax and Liabilities - 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]. - The company had deferred tax liabilities of approximately $6.31 billion related to unrealized gains on bitcoin holdings as of June 30, 2025 [229]. Market and Economic Risks - The company anticipates continued significant exposure to market price changes in bitcoin, foreign currency fluctuations, and interest rate risk [288]. - 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]. - The company is exposed to interest rate risk through its STRC Stock, which has a variable dividend rate initially set at 9.00% per annum [294]. - An increase of 0.50% in the regular dividend rate on STRC Stock would result in an additional monthly dividend accrual of approximately $1.2 million [295]. Employee and Operational Changes - The company had a total of 1,512 employees as of June 30, 2025, a decrease from 1,839 employees a year earlier [200]. - Share-based compensation expense decreased by $4.9 million in Q2 2025 compared to Q2 2024, primarily due to forfeitures and vesting of stock awards [201]. - 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, compared to the same periods in the prior year [219][220]. - Sales and marketing expenses decreased by $6.5 million (9.6%) for the six months ended June 30, 2025, compared to the same period in the prior year [218]. - General and administrative expenses increased by $6.3 million (8.8%) for the six months ended June 30, 2025, compared to the same period in the prior year [221].
MicroStrategy Inc Series A Pfd(STRK) - 2025 Q2 - Quarterly Report