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].
MicroStrategy Inc Series A Pfd(STRD) - 2025 Q2 - Quarterly Report