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 reported unrealized gains on digital assets of $3.89 billion for the three months ended September 30, 2025, and $12.03 billion for the nine months ended September 30, 2025[182]. - 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 average purchase price per bitcoin increased from $62,503 at December 31, 2024, to $73,983 at September 30, 2025[184]. - The company’s strategy involves capital raising through debt and equity to fund bitcoin acquisitions, with no specific target for total bitcoin holdings[171]. - The company’s bitcoin strategy includes potential periodic sales for corporate purposes and tax benefits, alongside exploring income-generating strategies using bitcoin holdings[172]. - 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 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]. - As of September 30, 2025, the company had deferred tax liabilities of approximately $7.43 billion related to unrealized gains on bitcoin holdings[223]. - The company held approximately 640,031 bitcoins with a carrying value of $73.21 billion as of September 30, 2025[282]. Financial Performance - Total revenues for the three months ended September 30, 2025, increased by 10.9% to $128.7 million compared to $116.1 million in the same period of 2024[213]. - Subscription services revenues rose by 65.4% to $46.0 million for the three months ended September 30, 2025, compared to $27.8 million in the same period of 2024[213]. - Product support revenues decreased by 16.2% to $51.1 million for the three months ended September 30, 2025, compared to $61.0 million in the same period of 2024[213]. - Gross profit for the three months ended September 30, 2025, was $90.7 million, an increase of 11.0% from $81.7 million in the same period of 2024[213]. - The company recorded a provision for income taxes of $3.35 billion on a pretax income of $11.93 billion for the nine months ended September 30, 2025, resulting in an effective tax rate of 28.0%[222]. - The company achieved BTC Gain of 31,058 and 115,956 for the three and nine months ended September 30, 2025, respectively, compared to 11,535 and 33,657 in the prior year[207]. - BTC $ Gain was approximately $3.552 billion and $13.263 billion for the three and nine months ended September 30, 2025, respectively, compared to approximately $732.0 million and $2.136 billion in the prior year[207]. - 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]. Capital Raising and Expenses - The company sold 5,712,041 shares of Class A common stock in the three months ended September 30, 2025, generating net proceeds of $2,199,360 thousand[194]. - The total net proceeds from all equity offerings for the nine months ended September 30, 2025, amounted to $17,633,587 thousand[194]. - The company has issued a total of $1,984,852 thousand in net proceeds from its 2030B Convertible Notes during the nine months ended September 30, 2025[199]. - Approximately $5.1 billion was raised from capital markets activity during the three months ended September 30, 2025, with $2.3 billion from STRK ATM and Common Stock ATMs, increasing Assumed Diluted Shares Outstanding by 5.8 million to approximately 320.0 million[205]. - 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]. - The company has long-term debt obligations totaling $8.24 billion, with semi-annual coupon interest payments of $17.3 million due for outstanding convertible notes[251]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $(45,612) thousand, a 27.7% increase from $(35,708) thousand in the same period of 2024[254]. - Net cash used in investing activities increased by 384.1% to $(19,417,576) thousand for the nine months ended September 30, 2025, compared to $(4,010,904) thousand in 2024[254]. - Net cash provided by financing activities rose by 381.4% to $19,476,842 thousand for the nine months ended September 30, 2025, compared to $4,046,067 thousand in the prior year[254]. - Net cash provided by financing activities increased by $15.4 billion for the nine months ended September 30, 2025, primarily due to a $10.6 billion increase in net proceeds from the sale of class A common stock[258]. Market and Risk Factors - The company is exposed to market risks including fluctuations in bitcoin prices, foreign currency, and interest rates, which could materially affect actual results[281]. - Bitcoin has traded between $60,000 and $120,000 in the 12 months preceding September 30, 2025, indicating high volatility[282]. - A 10% adverse change in foreign currency exchange rates would have decreased reported cash and cash equivalents by 4.4% as of September 30, 2025[286]. - If average exchange rates had changed unfavorably by 10%, revenues for the nine months ended September 30, 2025 would have decreased by 3.8%[286]. - The company does not believe its interest rate risk exposure via STRC Stock is material as of October 30, 2025[288]. Dividends and Shareholder Returns - Total dividends paid for the three months ended September 30, 2025, amounted to $139.8 million, with no dividends paid during the same period in 2024[249]. - The board of directors increased the monthly regular dividend rate on STRC Stock from 10.00% to 10.25%, effective October 1, 2025, with a cash dividend of $0.854166667 per share payable on October 31, 2025[252]. - The regular dividend rate on STRC Stock was increased from 10.25% to 10.50% per annum effective November 1, 2025[287]. - 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[288]. 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 transition from on-premise perpetual licenses to cloud subscriptions is expected to continue impacting revenue recognition and cash flows, with product license revenues declining[211]. - Deferred revenue and advance payments represent amounts received before services are transferred, with revenue recognized in the period control is transferred to the customer[211]. - Total deferred revenue and advance payments decreased by $38.9 million as of September 30, 2025, compared to December 31, 2024, primarily due to decreased deferred product support revenue[225].
MicroStrategy Inc Series A Pfd(STRK) - 2025 Q3 - Quarterly Report