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].
MicroStrategy Inc Series A Pfd(STRD) - 2025 Q3 - Quarterly Report