Q2 2024 MicroStrategy Inc Earnings Call

Shirish Jajodia: Hello, everyone, and good evening. I'm Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I'll be your moderator for MicroStrategy's 2024 Second Quarter Earnings Webinar. Before we proceed, I will read the Safe Harbor Statement.

Unknown Attendee: Hello everyone, and good evening.

Hello, everyone and good evening.

Shirish Jajodia: I am Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy.

Im sure you Judge Audia, Vice President of Investor Relations and Treasury at micro strategy.

Shirish Jajodia: I will be a moderator for MicroStrategy's 2024 second quarter earnings webinar.

Speaker Change: Winemaker, our Microstrategy 2024 second quarter earnings webinar.

Shirish Jajodia: Before we proceed, I will read the Safe Harbor statement. Some of the information we provide during today's call regarding our future expectations, plans, and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including the risk factors discussed in our most recent 10-Q file with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today.

Proceed.

Speaker Change: Read the Safe Harbor statement.

Shirish Jajodia: Some of the information we provide during today's call regarding our future expectations, plans, and prospects may constitute forward-looking statements. However, actual results may differ materially from these forward-looking statements due to various important factors, including the risk factors discussed in our most recent 10Q file with the SEC. We assume no obligation to update these forward-looking statements with SPEAK, but only as of today.

Speaker Change: Some of the information we provide during todays call regarding our future expectations plans and prospects may constitute forward looking statements.

Shirish Jajodia: Also, during today's call, we will refer to certain non-GAAP financial measures. Reconciliations showing GAAP versus non-GAAP results are available in our earnings release and presentation, which were issued today and are available on our website at microstrategy.com. I would like to welcome you all to today's webinar and let you know that we will be taking questions using the Q&A feature at the bottom of your screen. You can submit questions throughout the webinar, and Michael, Phong, or Andrew will answer questions at the end of the session.

Speaker Change: Actual results may differ materially from these forward looking statements due to these important factors, including the risk factors discussed in our most recent 10-Q filed with the SEC.

Speaker Change: We assume no obligation to update these forward looking statements, which speak only as of today.

Shirish Jajodia: Also, during today's call, we will refer to certain non-GAAP financial measures. Reconciliation showing gap versus non-gap results are available in our earnings release and presentation, which were issued today and are available on our website at microstrategy.com.

Speaker Change: Also during today's call, we will refer to certain non-GAAP financial measures reconciliation showing GAAP versus non-GAAP results are available in our earnings release and presentation, which were issued today and are available on our website at Microstrategy Dot com.

Shirish Jajodia: I would like to welcome you all to today's webinar and let you know that we will be taking questions using the Q&A feature at the bottom of your screen. You can submit questions throughout the webinar, and Michael, Phong, or Andrew will answer questions at the end of the session. Please be sure to provide your name and your company's name when submitting your questions.

Shirish Jajodia: Please be sure to provide your name and your company's name when submitting your question. Now, I will walk you through the agenda for today's call. First, Phong Le will cover the business and operational results for the second quarter of 2024. Second, Andrew Kang will cover the financial results for the second quarter of 2024. And then Michael Saylor will provide a strategic review and discuss recent Bitcoin market updates. And lastly, we will open up to Q&A. With that, I will turn the call over to Phong Le, President and CEO of MicroStrategy. Thank you, Shirish.

Speaker Change: I would like to welcome you all to today's webinar and let you know that you will be taking questions using the Q&A feature and the bottom of your screen.

Speaker Change: You can submit questions throughout the webinar and Michael Fang, our agile will answer questions at the end of the session.

Speaker Change: Be sure to provide your name and your company has named submitting your questions.

Shirish Jajodia: Now, I will walk you through the agenda for today's call. First, Phong Lee will cover the business and operational results for the second quarter of 2024. Second, Andrew Kang will cover the financial results for the second quarter of 2024. And then Michael Taylor will provide a strategic review and discuss recent Bitcoin market updates.

Speaker Change: Now I will walk you through the agenda for today's call.

Andrew Kang: Finally, we will cover the business and operational results for the second quarter of 2024 second Andrew Kang will cover the financial results for the second quarter of 'twenty 'twenty four and then Michael will provide a strategic review and discuss recent bitcoin market updates and lastly, we will open up to <unk>.

Shirish Jajodia: And lastly, we will open up to Q&A.

Speaker Change: Okay.

Shirish Jajodia: With that, I was done the call over to Phong Lee, President and CEO of MicroStrategy.

Michael: With that I will turn the call over to <unk>, President and CEO of Microstrategy.

Phong Le: Thank you, Sharish.

Phong Le: Hello, everyone. I'd like to welcome all of you to today's webinar. As we discussed in the last two quarters, MicroStrategy considers itself to be the world's first Bitcoin development company. We're a publicly traded operating company committed to the continued development of the Bitcoin network through our activities in the financial markets, advocacy, and technology innovation. As an operating business, we're able to use cash flows as well as proceeds from equity and debt financings to accumulate, which serves as our primary Treasury Reserve asset.

Speaker Change: Thank you <unk> Hello, everyone I would like to welcome all of you to today's webinar.

Phong Le: Hello, everyone. I'd like to welcome all of you to today's webinar. As we discussed in the last two quarters, MicroStrategy considers itself to be the world's first Bitcoin development company. We're a publicly traded operating company committed to the continued development of the Bitcoin network through our activities and the financial markets, advocacy, and technology innovation. As an operating business, we're able to use cash flows as well as proceeds from equity and debt financing to accumulate Bitcoin, which serves as our primary treasury reserve asset. We believe that the combination of our operating structure, Bitcoin strategy, and focus on technology innovation provides a unique opportunity for value creation.

Speaker Change: As we discussed in the last two quarters micro strategy considers itself to be the world's first bitcoin development company.

Speaker Change: We're publicly traded operating company committed to the continued development of the Big point network your activities in the financial markets advocacy and technology innovation as an operating business, we're able to use cash flows as well as proceeds from equity and debt financings to accumulate decline, which serves as our primary.

Speaker Change: Treasury Reserve asset, we believe that the combination of our operating structure Bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation.

Phong Le: We believe that the combination of our operating structure, Bitcoin strategy, and focus on technological innovation provides a unique opportunity for value creation. As an operating company, our software technology business remains our core revenue and cash flow generator. In addition, it also enables us to acquire Bitcoin through the use of excess cash or proceeds from equity capital raises or corporate debt capital raises. These capital market levers allow us to deploy intelligent leverage to increase our Bitcoin holdings in a manner that we believe has created shareholder victory. Since our adoption of our Bitcoin strategy, we've used three primary mechanisms to acquire more Bitcoin: Cash Flow from Software Operations.

Phong Le: Being an operating company, our software technology business remains our core revenue and cash flow generator. In addition, it also enables us to acquire Bitcoin through the use of excess cash or proceeds from equity capital raises or corporate debt capital raises. These capital market levers allow us to deploy intelligent leverage to increase our Bitcoin holdings in a manner which we believe has created shareholder value. Since our adoption of our Bitcoin strategy, we've used three primary mechanisms to acquire more Bitcoin. Coin. Cash flows from software operations. Since August 2020, we've invested $836 million of total cash on our balance sheet.

Speaker Change: Being an operating company our software technology business remains our core revenue and cash flow generator. In addition, it also enables us to acquire bitcoin through the use of excess cash or proceeds from equity capital raises or corporate debt capital raises these.

Speaker Change: These capital market lever is allow us to deploy intelligent leverage to increase our bitcoin holdings in a manner, which we believe has created shareholder value.

Speaker Change: Since our adoption of a bitcoin strategy. We've used three primary mechanism is to acquire more bitcoin.

Speaker Change: Cash flows for software operations.

Phong Le: Since August 2020, we've invested $836 million of total cash in our balance. Equity issues. We have issued $3.2 billion in equity in a manner that we believe to be accretive to existing shareholders, and Debt Finance. We have $3.8 billion in debt outstanding through the issuance of both senior secured notes and convertible bonds, and we have used the proceeds from these issuances principally to purchase. The blended cost of our outstanding debt is fixed at 1.6% annual.

Speaker Change: Since August 2020, we've invested $836 million of total cash on our balance sheet.

Phong Le: Equity issuances. We have issued $3.2 billion in equity in a manner that we believe to be appreciative to the existing shareholders. In debt financing, we have $3.8 billion in debt outstanding through the issuance of both senior, secure notes and convertible notes. We've used the proceeds from these issuances principally to purchase Bitcoin. The blended cost of our outstanding debt is fixed at 1.6 percent annually.

Speaker Change: Equity issuances, we have issued $3 $2 billion in equity in a manner that we believe to be accretive to existing shareholders.

Speaker Change: And debt financing, we had $3 $8 billion in debt outstanding through the issuance of both senior secured notes and convertible notes. We've used the proceeds from these issuances principally to purchase bitcoin.

Speaker Change: Our blended cost of our outstanding debt is fixed at one 6% annually.

Phong Le: Turning to the Bitcoin highlights for Q2 2024, MicroStrategy remains the largest corporate holder of Bitcoin in the world, now holding 226,500 bitcoins with a total Bitcoin market value at $15 billion as of yesterday. Since March 31, 2024, we acquired an additional $12,222 Bitcoin for a total purchase cost of $805 million, in average price of $65,882. Year-to-date, 2024, the price of Bitcoin has appreciated, spurred notably by the approval of the spot Bitcoin exchange traded products or ETPs, which has drawn considerable institutional attention. We believe the introduction and initial success of the spot Bitcoin ETPs evidences the maturation of Bitcoin as an institution-grade asset class with broader regulatory recognition and institutional adoption.

Phong Le: Turning to the Bitcoin highlights for Q2 2024, MicroStrategy remains the largest corporate holder of Bitcoin in the world, now holding 226,500 Bitcoins, with a total Bitcoin market value of $15 billion as of yesterday. Since March 31st, 2024, we acquired an additional 12,222 Bitcoin for a total purchase cost of $805 million, an average price of $65,882. Year to date, 2024, the price of Bitcoin has appreciated, spurred notably by the approval of the spot Bitcoin exchange traded products, or ETPs, which have drawn considerable institutional attention.

Speaker Change: Turning to the bitcoin highlights for Q2 2024 micro strategy remains the largest corporate holder of bitcoin and the world now holding 226500 bitcoins with a total bitcoin market value at $15 billion as of yesterday.

Speaker Change: Since March 31, 2024, we acquired an additional 12222 bitcoin for a total purchase cost of $805 million, an average price of $65882.

Speaker Change: Year to date 2020 for the price of Bitcoin is appreciated spurred notably by the approval of the spot Bitcoin exchange traded products or Etp's, which is drawing considerable institutional attention.

Phong Le: We believe the introduction and initial success of the SPOT Bitcoin ETPs evidence the maturation of Bitcoin as an institution-grade asset class with broader regulatory recognition and institutional adoption. We attended the Bitcoin 2024 conference in Nashville last week, and we saw tremendous support for the Bitcoin ecosystem from policymakers, bipartisan politicians, institutions, businesses, and individuals. It's very encouraging to see high-profile institutions and individuals showing interest in Bitcoin and starting to appreciate the importance of this asset class as a part of their portfolios.

Speaker Change: We believe the introduction and initial success at the spot Bitcoin Etp's evidences that maturation of bitcoin as an institution grade asset class with broader regulatory recognition and institutional adoption.

Phong Le: We attended the Bitcoin 2024 conference in Nashville last week, and we saw tremendous support for the Bitcoin ecosystem from policymakers, bipartisan politicians, institutions, businesses, and individuals. It's very encouraging to see high-profile institutions and individuals showing interest in Bitcoin and starting to appreciate the importance of this asset class as a part of their portfolios. MicroStrategy remains highly committed to our Bitcoin strategy with a long-term focus.

Speaker Change: We attended the Bitcoin 2024 conference in Nashville last week, and we saw tremendous support for the bitcoin ecosystem from policymakers bipartisan politicians institutions businesses and individuals.

Speaker Change: It's very encouraging to see high profile institutions and individuals showing interest in bitcoin and starting to appreciate the importance of this asset class as a part of their portfolios.

Phong Le: MicroStrategy remains highly committed to our Bitcoin strategy with a long-term focus; Michael will further elaborate later with his thoughts and takeaways from the Bitcoin 2024 conference. On the capital markets front, we made significant progress towards the advancement of our Bitcoin development company, Shred. In June, we raised $800 million through 2032 maturity convertible notes, called for a redemption of our $650 million 2025 convertible notes, announced a 10 to 1 stock split, and announced a $2 billion at the market or ATM equity offering prologue.

Speaker Change: Microstrategy remains highly committed to our bitcoin strategy with a long term focus Michael will further elaborate later with his thoughts and takeaways from the Bitcoin 2024 conference.

Phong Le: Michael will further elaborate later with his thoughts and takeaways from the Bitcoin 2024 conference. On the capital markets front, we made significant progress towards the advancement of our Bitcoin development company strategy. In June, we raised $800 million through 2032 maturity convertible notes, called for a reduction of our $650 million 2025 convertible notes, announced a 10-to-1 stock split, and announced a $2 billion at-the-market or ATM equity offering program.

Speaker Change: On the capital markets front, we made significant progress towards the advancement of our Bitcoin development company strategy in June we raised $800 million through 2032 maturity convertible notes called for redemption of our $650 million 2025 convertible notes announced 10 to one stock split and announced it to bill.

Speaker Change: At the market or ATM equity offering program.

Phong Le: Andrew will further provide details on our capital markets and Bitcoin purchase activity for this quarter. As a Bitcoin development company, we have the unique ability to access the capital markets to create intelligent leverage. During the first and second quarter of 2024, our total Bitcoin holdings increased by 13.3% and 5.6%, respectively. During the same periods, our assumed deluded shares outstanding increased by only 4.8% and 1.8%, respectively. When we refer to assumed deluded shares outstanding, we're assuming all outstanding convertible notes are fully converted at their respective conversion prices, all outstanding options are fully exercised, and all restricted stock units and performance stock units fully vest.

Phong Le: Andrew will further provide details on our capital markets and Bitcoin purchase activity for this quarter. As a Bitcoin development company, we have the unique ability to access the capital markets to create intelligent leverage. During the first and second quarters of 2024, our total Bitcoin holdings increased by 13.3% and 5.6%, respectively. During the same periods, our assumed diluted shares outstanding increased by only 4.8% and 1.8%, respectively.

Speaker Change: Andrew will further provide details on our capital markets and bitcoin purchase activity for this quarter.

Andrew Kang: As a bitcoin development company, we have the unique ability to access the capital markets to create intelligent leverage during the first and second quarter of 2024 hour total Bitcoin holdings increased by 13, 3% and five 6% respectively.

Speaker Change: During the same periods, our assumed diluted shares outstanding increased by only four 8% and one 8% respectively.

Phong Le: When we refer to diluted shares outstanding, we're assuming all outstanding convertible notes are fully converted at their respective conversion prices, all outstanding options are fully exercised, and all restricted stock units and performance stock units fully vest, in each case without regard to exercise or conversion price or vesting or other contractual conditions. Our opportunistic use of leverage and excess cash to acquire Bitcoin, as well as our strategic execution of our capital markets, and finance, resulted in incremental value creation for our shareholders.

Speaker Change: When we refer to assumed diluted shares outstanding were suing all outstanding convertible notes are fully converted at their respective conversion prices. All outstanding options are fully exercised at all restricted stock units and performance stock units fully versed in each case without regard to exercise or conversion price.

Phong Le: In each case, without regard to exercise or conversion price or investing or other contractual conditions.

Speaker Change: Our vesting or other contractual conditions.

Phong Le: operations. Our opportunistic use of leverage and excess cash to acquire Bitcoin, as well as our strategic execution of our capital markets, finances, resulted in an incremental value creation for our shareholders. Our objective is to accumulate Bitcoin holdings at a faster rate than we usually share. And we believe we have a demonstrated track record of doing so.

Speaker Change: Our opportunistic use of leverage in excess cash to acquire bitcoin as well as our strategic execution of our capital markets financing.

Speaker Change: It resulted in the incremental value creation for our shareholders.

Phong Le: Our objective is to accumulate Bitcoin holdings at a faster rate than we issue shares, and we believe we have a demonstrated track record of doing that. To assess our performance in achieving this strategic objective, we're introducing a new key performance indicator, which we refer to as BTC yield. We define BTC yield as the period-to-period percentage change in the ratio of our total Bitcoin holdings to our assumed diluted shares outstanding. We use this KPI to help assess the achievement of our strategic objective and to evaluate capital allocations.

Speaker Change: Our objective is to accumulate quite holdings at a faster rate than we issue shares and we believe we have a demonstrated track record of doing so.

Phong Le: To assess our performance and achieving a strategic objective, we're introducing a new key performance indicator, which we refer to as BTC yield. We define BTC yield as the period-to-period percentage change and the ratio of our total Bitcoin holdings to our assumed deluded shares outstanding. We use this KPI to help assess the achievement of our strategic objective and for evaluating capital allocation decisions. If we increase our total Bitcoin holdings over a given period at a faster pace than we increase our assumed deluded share outstanding, we achieve a positive Bitcoin yield. I should note here that Bitcoin yield is not equivalent to yield in the traditional financial context.

Speaker Change: To assess our performance and achieving the strategic objective, we're introducing a new key performance indicator, which which we refer to as BTC yield.

Speaker Change: We define BTC yield as the period to period percentage change in the ratio of our total bitcoin holdings to our assumed diluted shares outstanding.

Speaker Change: We use these kpis to help assess the achievement of our strategic objective and for evaluating capital allocation decisions.

Phong Le: If we increase our total Bitcoin holdings over a given period at a faster pace than we increase our assumed diluted share of outstanding, we achieve a positive Bitcoin yield. I should note here that Bitcoin yield is not equivalent to yield in the traditional financial context. It's simply just a measure of the percentage change period-to-period in the ratio of our Bitcoin holdings to our assumed diluted shares outstanding. The historical performance of this KPI is shown on this slide.

Speaker Change: If we increase our total bitcoin holdings over a given period at a faster pace than we increase our assumed diluted shares outstanding we achieve a positive bitcoin yields.

Speaker Change: I should note here that bitcoin yield is not equivalent to yield in the traditional financial context, it's simply just a measure of the percentage change period to period and the ratio of our Bitcoin holdings to our assumed diluted shares outstanding.

Phong Le: It's simply just a measure of the percentage change period to period in the ratio of our Bitcoin holdings to our assumed deluded shares outstanding. In addition, when we use Bitcoin yield, we consider the various limitations of the sales metric, including that it seems that all indebtedness will be refinanced or, in the case of our convertible nodes, converted into shares as common stock at their respective conversion prices. And it does not take into account debt and other liabilities. Although Bitcoin yield is not actually a yield in the traditional finance context, we internally think about this metric as some might think about a bond yield or yield on another financial instrument.

Speaker Change: In addition, when we use bitcoin yield we consider the various limitations of this metric including that as soon as that all indebtedness will be refinanced or in the case of our convertible notes converted into shares of common stock at their respective conversion prices and it does not take into account debt and other liabilities, although bitcoin yield is not.

Speaker Change: Actually a yield in the traditional finance context, we internally think about this metric is semi think about our bond yield our yield on another financial instrument.

Phong Le: It's obviously an imperfect analogy, but we look to the metric to help us assess how we are doing on using our capital most efficiently to increase our Bitcoin holdings over time.

Speaker Change: That's obviously, an imperfect analogy, but we looked at our metric to help us assess how we are doing.

Speaker Change: And using our capital most efficiently to increase our bitcoin holdings overtime.

Phong Le: The historical performance of this KPI is shown on this slide. We achieve an annual Bitcoin yield of 47.3% in 2021, 1.8% in 2022, and 7.3% in 2023. We've achieved quarterly Bitcoin yield of 8.1% in Q1 and 3.7% in Q2, surpassing the annual Bitcoin yield in 2023 as of the year-to-date 2024. We're able to achieve this through the acquisition of Bitcoin using our excess cash flows and proceeds from debt and equity financing, which we believe are creative to shareholders. Management uses Bitcoin yield to evaluate capital allocation decisions and to measure the achievement of our Bitcoin strategy.

Speaker Change: The historical performance of this kpis as shown on this slide we achieve an annual bitcoin yield of 47, 3% in 2020, 118% in 2020, 273% in 2023.

Phong Le: We achieved an annual Bitcoin yield of 47.3% in 2021, 1.8% in 2022, and 7.3% in 2023. We've achieved quarterly Bitcoin yields of 8.1% in Q1 and 3.7% in Q2, surpassing the annual Bitcoin yield in 2023 as of the year today, 2024. We're able to achieve this through the acquisition of Bitcoin using our excess cash flows and proceeds from debt and equity finance, which we believe were accretive to shareholders. Building on our previous discussion, we have a clear strategy to enhance our Bitcoin holdings and deliver a positive annual Bitcoin yield. Today, we are announcing our target to achieve a Bitcoin yield of 4% to 8% per year for the next three years, in 2025, 2026, and 2027.

Speaker Change: We've achieved quarterly big point yield of eight 1% in Q1, and three 7% in Q2, surpassing the annual bitcoin yield in 2023 as of the year to date 2024.

Speaker Change: We're able to achieve this through the acquisition of bitcoin using our excess cash flows and proceeds from debt and equity financings, which we believe were accretive to shareholders.

Speaker Change: Management uses bitcoin yield to evaluate capital allocation decisions and to measure the achievement of our bitcoin strategy our strategy of acquiring bitcoin in a manner, we believe to be accretive to shareholders, thereby achieving bitcoin yield sets us apart from institutional bitcoin investment options that charge a management fee it would be.

Phong Le: Our strategy of acquiring Bitcoin in a manner we believe to be accrued to shareholders, thereby achieving Bitcoin yield, sets us apart from institutional Bitcoin investment options that charge management fees and would therefore achieve a negative Bitcoin yield as we measure it. Building on our previous discussion, we have a clear strategy to enhance our Bitcoin holdings and deliver a positive annual Bitcoin yield.

Speaker Change: Therefore, achieving negative bitcoin yield as we measure it.

Speaker Change: Building on our previous discussion, we have a clear strategy to enhance our bitcoin holdings and deliver a positive annual bitcoin yield today, we are announcing our target to achieve a bitcoin yield of 4% to 8% per year for the next three years and 2025 2026 and 2027.

Phong Le: Today, we are announcing our target to achieve a Bitcoin yield of 4-8% per year for the next three years: in 2025, 2026, and 2027. Our approach includes accumulating more Bitcoin holdings by one, using the organic access cash flows generated by our software business; two, using proceeds from equity offerings when we believe accretive; and three, responsibly using the intelligent leverage framework with a risk-managed approach. We will continue to use the full spectrum of financing options and also explore creative capital market transactions and untapped pools of capital to execute the strategy effectively and prudently. By sharing our three-year KPI targets, we're reinforcing our goal of achieving consistent positive Bitcoin yield over time.

Speaker Change: Our approach includes accumulating more bitcoin holdings by one using the organic excess cash flows generated by our software business to using proceeds from equity offerings. When we believe accretive and three responsibly using the intelligent leverage framework within risk managed approach.

Speaker Change: We will continue to use the full spectrum of financing options and also explore creative capital market transactions and untapped pools of capital to execute the strategy effectively and prudently.

Phong Le: By sharing our three-year KPI targets, we're reinforcing our goal of achieving consistent positive Bitcoin yield over time. We pride ourselves on being at the forefront of institutional Bitcoin adoption. As we look into the future, we anticipate that our ability to consistently achieve positive Bitcoin yield will become a crucial benchmark for investors to assess our execution of our strategy. The strong growth in our subscription services revenue is driven by both existing customer migrations to the cloud and new customer awareness. I'll now turn the call over to Andrew to discuss our financials for the quarter in further detail.

Speaker Change: By sharing our three year Kpis targets, we're reinforcing our goal of achieving consistent positive bitcoin yield over time.

Phong Le: We pride ourselves on being at the forefront of institutional Bitcoin adoption, and as we look into the future, we anticipate that our ability to consistently achieve positive Bitcoin yield will become a crucial benchmark for investors to assess our execution of our strategy.

Speaker Change: We pride ourselves on being at the forefront of institutional bitcoin adoption as we're looking at the future. We anticipate that our ability to consistently achieve positive bitcoin yield will become a crucial benchmark for investors to assess our execution of our strategy.

Phong Le: Turning to the software business, MicroStrategy is also positioned as the world's largest, independent, publicly traded business intelligence company. In the second quarter of 2024, we continued our shift towards our cloud offering, resulting in subscription services revenue at $24 million, an increase of 21% year over year. The strong growth in our subscription services revenue was driven by both existing customer migrations to the cloud and new customer wins. Our customer renewal rates continued to remain high, and our non-GAAP subscription billings remain strong. Overall, we see strong demand for our cloud platform in Q2. It was a particularly strong quarter for customers migrating to cloud.

Speaker Change: Turning to the software business micro strategies also position as the worlds largest independent publicly traded business intelligence company and.

Speaker Change: In the second quarter of 2024, we continued our shift towards our cloud offering resulting in subscription services revenue of $24 million, an increase of 21% year over year.

Speaker Change: Strong growth in our subscription services revenue was driven by both existing customer migrations to the cloud and new customer wins or customer renewal rates continue to remain high and our non-GAAP subscription billings remained strong.

Speaker Change: Overall, we see strong demand for our cloud platform in Q2 was a particularly strong quarter for customers migrating to cloud. Our objective continues to be growing cloud revenue by migrating customers to cloud while maintaining profitability.

Phong Le: Our objective continues to be growing cloud revenue by migrating customers to cloud while maintaining profitability.

Phong Le: And our MicroStrategy World User Conference held in Las Vegas in May 2024, we showcased how MicroStrategy won with AI can create more innovative, competitive, high-performing organizations. In our keynote address, we highlighted how some of the biggest brands in the world, including organizations like Glory, Bear, and the U.S. Department of State, leverage our platform to successfully utilize their data and combat the big data, stupor, and applications problem. We unveiled auto-express to offer an easy and insightful way to engage with MicroStrategy AI, allowing users to build their own standalone AI BI bottom without a single line of code.

Speaker Change: At our Microstrategy World user conference held in Las Vegas in May 2024, we showcased on Microstrategy, one with AI can create more innovative competitive high performing organizations.

Speaker Change: And our keynote address we highlighted how some of the biggest brands in the world and Kate including organizations like Glory, Bayer and the U S Department of state leverage our platform to successfully utilized the Baird data and combat the big data stupor and application sprawl.

Speaker Change: Unveiled auto express to offer an easy and insightful way to engage with Microstrategy, AI, allowing allowing users to build their own standalone AI by Bob without a single line of code.

Phong Le: Earlier this year, MicroStrategy 1 became available on the Google Cloud Marketplace, in addition to prior deployments on Azure and AWS, allowing enterprises to easily find and deploy this cloud-native platform. Customers can benefit from a wide range of innovative, first-to-market AI-powered functionality, powered by the Azure Open AI LLM. Transitioning our customer base to the technology of the feature remains a key focus, and our hyper-scaler partners are a key part of this migration. As customers and prospects move to the cloud to power their AI-driven digital transformations, we expect to continue to see a decrease in product license revenues and support revenues, which will be offset by increases in subscription services revenue.

Speaker Change: Earlier this year micro strategy, one became available on the Google Cloud marketplace, and addition of prior deployments on Azure and AWS, allowing enterprises to easily find and deploy this cloud native platform.

Speaker Change: Customers can benefit from a wide range of innovative first to market AI powered functionality.

Speaker Change: <unk> by the Azure open AI.

Speaker Change: Transitioning our customer base to the technology of the future remains a key focus in our Hyperscale or partners are a key part of this migration.

Speaker Change: As customers and prospects move to the cloud to power their AI driven digital transformations, we expect to continue to see a decrease in product license revenues and support revenues, which will in part be offset by increases in subscription and services revenues.

Phong Le: News. This will be most pronounced in the balance of 2024. This may result in a decrease in total recognized revenue in the short term, but in the long run, we expect it to be more than offset by increases in the subscription services revenue. Additional benefits include more engaged customers using our very latest software, higher retention rates, and ultimately growing and recurring in overall revenues.

Speaker Change: This will be most pronounced in the balance of 2024. This may result in a decrease in total recognized revenue in the short term, but in the long run we expect it to be more than offset by increases in subscription services revenue.

Speaker Change: Additional benefits include more engaged customers using our very latest software higher retention rates and ultimately growing and recurring in overall revenues.

Andrew Kang: I'll now turn the call over to Andrew to discuss our financials for the quarter in further detail.

Speaker Change: I'll now turn the call over to Andrew to discuss our financials for the quarter in further detail.

Andrew Kang: Thank you, Phong. I'll continue with the recap of our software financial results, and then I'll move on to our Bitcoin strategy. Total revenues for the second quarter were 111.4 million, down 7% year-over-year. Consistent with recent quarters, the overall revenue trend reflects the transition of our business from on-premise to cloud. As we migrate customers to cloud, we shift upfront product license revenues to subscription services revenues, which are recognized radically over the life of a contract. As a result, we fully expect product license revenues, along with support revenues, to decline, both of which were down 40% and down 7% respectively year-over-year.

Andrew Kang: Thank you Paul.

Andrew Kang: Ill continue with the recap of our software financial results and then I'll move on to our <unk> strategy.

Andrew Kang: Total revenues for the second quarter were $111.4 million, down 7% year-over-year, and more robust or faster cloud migrations will have a larger but temporary reduction in upfront revenues, which is what we saw in last quarter's results. This acceleration last quarter makes up for the lower-than-expected cloud contracts we closed in Q1, meets and beats last year's quarterly targets, and directly reflects the transition starting to take shape. While we'll see the initial benefits of last quarter's strong cloud migrations flow through revenue beginning next quarter, the lower product license bookings in 2024 will result in lower than expected recognized revenue for the full year by somewhere between four and five percent.

Andrew Kang: Total revenues for the second quarter were 111 $4 million down 7% year over year.

Andrew Kang: Consistent with recent quarters. The overall revenue trend reflects the transition of our business from on premise to cloud as we migrate customers to the cloud shift upfront product license revenues to subscription services revenues, which are recognized ratably over the life of the contract.

Andrew Kang: As a result, we fully expect product license revenues, along with support revenues the decline both of which were down 40% and down 7% respectively year over year.

Andrew Kang: What isn't immediately seen through reported revenue is that we are building up stronger, more durable cloud recurring revenue that comes in over time, which is consistent for any on-prem decline transition. And more robust or faster cloud migrations will have a larger but a temporary reduction in upfront revenues, which is what we saw in last quarter's results. The cloud contract booked in Q2, where the strongest single quarter bookings we have seen to date, more than double Q1 or any prior quarter of that matter. This acceleration last quarter makes up for the lower than expected cloud contracts we've closed in Q1, meets and beats last year's quarter targets, and directly reflects the transition starting to take shape.

Andrew Kang: What isn't immediately seen through reported revenue is that we are building up a stronger more durable cloud recurring revenue that comes in over time, which is consistent for any on prem to cloud transition.

Speaker Change: And more robust are faster cloud migrations will have a larger but temporary reduction upfront revenues, which is what we saw in last quarter's results.

Andrew Kang: The cloud contracts booked in Q2 were the strongest single quarter bookings, we have seen to date.

Speaker Change: Other than double Q1, or any prior quarter for that matter.

Andrew Kang: This acceleration last quarter it makes up for the lower than expected cloud contracts, we closed in Q1.

Andrew Kang: Meets and beats last year's quarters targets.

Andrew Kang: Directly reflects the transition starting to take shape.

Andrew Kang: While we'll see the initial benefits of last quarter's strong cloud migrations close to revenue beginning next quarter, the lower product license bookings in 2024 will result in lower-than-expected recognized revenue for the full year by somewhere between 4 and 5%. Overall, total annual revenues have been generally flat in the past couple of years, but with our transition beginning to take shape in the first half of this year, we expect to see similar patterns in total revenue going forward as we execute on our transformation. This year and potentially in 2025 should reflect the transition point in our long-term strategy and exiting the next 12 to 18 months, which is starting total revenues begin to grow again.

Andrew Kang: While we will see the initial benefits of last quarter's strong cloud migrations closed the revenue beginning next quarter.

Andrew Kang: Lower product license bookings in 2024 will result in lower than expected recognize revenue for the full year by somewhere between 4% and 5%.

Andrew Kang: Overall total annual revenues have been generally flat in the past couple of a couple of years, but with our transition beginning to take shape in the first half of this year, we expect to see similar patterns and total revenue going forward as we execute on our transformation.

Andrew Kang: This year and potentially in 2025 should reflect the transition point in our long-term strategy, and exiting the next 12 to 18 months, we should start seeing total revenues begin to grow again. Non-GAAP subscription billings, which represent cloud revenues in the quarter, along with just the next 12 months of deferred subscription services revenues, grew by 45% last quarter to $33.4 million. Q2 subscription services revenues increased 21% year-over-year, which represents the recognized revenue from previously booked cloud contracts, and now make up approximately 22% of total revenue.

Andrew Kang: This year and potentially in 2025 should reflect the transition point in our long term strategy and exiting the next 12 to 18 months, we should start seeing total revenue to begin to grow again.

Andrew Kang: Non-GAAP subscription billings, which represent cloud revenues in the quarter, along with just the next 12 months of deferred subscription services revenues, grew by 45% last quarter to 33.4 million dollars, our fourth straight year of quarterly double-digit growth. Q2 subscription services revenues increase 21% year-over-year, which represents the recognized revenue from previously booked cloud contracts. Now, make up approximately 22% of total revenue.

Andrew Kang: non-GAAP non-GAAP subscription billings, which represent in cloud revenues in the quarter along with just the next 12 months of deferred subscription services revenues grew by 45% last quarter to $33 4 million.

Andrew Kang: Our fourth straight year of quarterly double digit growth.

Andrew Kang: Q2 subscription and services revenues increased 21% year over year, which represent the recognized revenue from previously booked cloud contracts now make up approximately 22% of total revenues.

Andrew Kang: So, subscription services revenues are now larger than our product license revenues and will continue to grow each quarter, while product license will decline further from here on now. In Q1, that we enhanced our reported numbers to break out our quarterly results into two categories. First, the software business category reflects income or loss from operations related specifically to our BI business. The corporate and other category represents the non-software related areas associated with our digital asset holdings, which include impairment charges and other related third-party costs. While we continue to operate under one reportable operating segment, we believe the breakout of our operating results into these two categories provides more transparency with respect to the performance of our software business, while isolating the impacts related to changes in Bitcoin price.

Andrew Kang: Subscription services revenues are now larger than our product license revenues and will continue to grow each quarter, while product license revenues will decline further from here on out. In Q1, we enhanced our reported numbers to break out our quarterly results into two categories. First, the software business category reflects income or loss from operations related specifically to our BI business.

Andrew Kang: Subscription services revenues are now larger than our product license revenues and we will continue to grow each quarter, while product license will decline further from here on now.

Andrew Kang: In Q1.

Andrew Kang: We enhanced our reported numbers to break out our quarterly results into two categories.

Andrew Kang: First the software business category reflects income or loss from operations related specifically to RBI business.

Andrew Kang: The corporate and other category represents the non-software-related areas associated with our digital asset holdings, which include impairment charges and other related third-party costs. While we continue to operate under one reportable operating segment, we believe the breakdown of our operating results into these two categories provides more transparency with respect to the performance of our software business while isolating the impacts related to changes in Bitcoin. In Q2, software business revenues were $111 million, as I mentioned a moment ago.

Andrew Kang: Corporate and other category. It represents the non software related areas associated with our digital asset holdings, which included impairment charges and other related third party costs.

Andrew Kang: While we continue to operate under one reportable operating segment, we believe that breakout of our operating results and Tvs to categories provides more transparency with respect to the performance of our software business, while isolating the impacts related to changes in bitcoin price.

Andrew Kang: In Q2, software business revenues were $111 million that I mentioned a moment ago, while cost of revenues were $31 million of 14% compared to Q2 of last year. The increase was in part due to higher cloud hosting costs, which is a direct result of our growing cloud business, as well as costs associated with setting up and enhancing customer success function. Software business operating expenses were $99 million of 4% compared to Q2 of last year. Higher G and A is quarter was related to higher stock base comp, legal consulting and other advisory costs, as well as higher employer paid payroll taxes, in connection with employee stock option exercises in the second quarter.

Andrew Kang: In Q2 software business revenues were up $111 million that I mentioned, a moment ago, while cost of revenues were $31 million up 14% compared to Q2 of last year.

Andrew Kang: While cost of revenues was $31 million, up 14% compared to Q2 of last year, the increase was in part due to higher cloud hosting costs, which is a direct result of our growing cloud business, as well as costs associated with setting up and enhancing customer success functions. Software business operating expenses were $99 million, up 4% compared to Q2 of last year.

Andrew Kang: The increase was in part due to higher cloud hosting costs, which is a direct result of our growing cloud business as well as costs associated with setting up enhancing customer success.

Andrew Kang: Customer success function.

Andrew Kang: Software business operating expenses were $99 million up 4% compared to Q2 of last year.

Andrew Kang: Higher G&A this quarter was related to higher stock-based comps, legal consulting, and other advisory costs as well as higher employer-paid payroll tax in connection with employee stock option exercises in the second quarter. However, overall operating expenses were also offset by lower costs in sales and marketing, consistent with recent quarters, as we maintain strong discipline in expense and cost. Non-cash, stock-based compensation expense in Q2 was $20.6 million, up 33% year-over

Andrew Kang: Higher G&A this quarter was related to higher stock based comp.

Andrew Kang: Legal consulting and other advisory costs as well as higher employer paid payroll taxes in connection with employee stock option exercises in the second quarter.

Andrew Kang: However, overall operating expenses were also offset by lower costs and sales and marketing, consistent with recent quarters as we maintain strong discipline and expense and cost management. Non-tash stock base compensation expense in Q2 was $20.6 million, of 33% year over year. An overall non-GAAP operating income or profit from the software business category was $1.9 million.

Andrew Kang: However, overall operating expenses were also offset by lower costs in sales and marketing.

Andrew Kang: System with recent quarters as we maintained strong discipline in expense and cost management.

Andrew Kang: Noncash stock based compensation expense in Q2 was $26 million up 33% year over year.

Andrew Kang: And overall non-GAAP operating income or profit from the software business category was $1 9 million.

Andrew Kang: Lastly, the corporate and other operating expense category for the quarter was $182 million compared to $25 million in Q2 of last year. $180 million, of which was due to Bitcoin impairment in the last quarter.

Andrew Kang: And overall non-GAAP operating income or profit from the software business category was $1.9 million. Lastly, the corporate and other operating expense category for the quarter was $182 million compared to $25 million in Q2 of last year, $180 million of which was due to Bitcoin impairment in the last quarter. Now, turning to our Bitcoin strategy. We had another extremely successful quarter of adding more Bitcoin to our balance sheet as we acquired 12,053 Bitcoins in the second quarter.

Andrew Kang: Lastly, the corporate and other operating expense category for the quarter was $182 million compared to $25 million in Q2 of last year.

Andrew Kang: $188 million of which was due to bitcoin impairment in the last quarter.

Andrew Kang: Now, turning to our Bitcoin strategy. We have another extremely successful quarter of adding more Bitcoin to our balance sheet as we acquired 12,053 bitcoins in the second quarter. As of July 31st, the company held a total of 226,500 bitcoins acquired for an aggregate cost of $8.3 billion or approximately $36,800 for coins. Currently, we hold 175,721 unencumbered bitcoins at macro strategy. The wholly owned subsidiary of MicroStrategy, which represents 78% of our total holdings or $11.4 billion in current market value, all of which are currently unrestricted and unencumbered. The Bitcoin we acquired using proceeds from our convertible notes offering in Q2 are held at MicroStrategy, the parent, and serve as collateral securing our 2028 senior secured notes.

Andrew Kang: And as of July 31st, the company held a total of 226,500 Bitcoins acquired for an aggregate cost of $8.3 billion, or approximately $36,800 per quarter. Currently, we hold 175,721 unencumbered bitcoins at MacroStrategy, the wholly owned subsidiary of MicroStrategy, which represents 78% of our total holdings or $11.4 billion in current market value, all of which are currently unre During Q2, we added 11,931 bitcoins to MicroStrategy's holdings at an aggregate purchase price of $786 million using net proceeds from our convertible note issue.

Andrew Kang: Now turning to our <unk> strategy.

Andrew Kang: We had another extremely successful quarter of adding more bitcoin to our balance sheet as we acquired 12053, bitcoin and the second quarter and as of July 31. The company held a total of 226500 coins acquired for an aggregate cost of $8 $3 billion or.

Andrew Kang: Similarly $36800 per client.

Andrew Kang: Currently we hold 175721 unencumbered bitcoins at macro strategy. The wholly owned subsidiary of micro strategy, which represents 78% of our total holdings or 11 4 billion.

Andrew Kang: And current market value all of which are currently unrestricted and unencumbered.

Andrew Kang: The bitcoin, we acquired using proceeds from our convertible notes offering in Q2 are held at micro strategy, the parent and serve as collateral securing our 2028 senior secured notes.

Andrew Kang: During Q2, we added $11,931 BTC to MicroStrategy's holdings at an aggregate purchase price of $786 million, using net proceeds from our convertible note issuance. Additionally, Bitcoin's purchase using excess cash from the software business are also held at MicroStrategy's apparent, which also serve to collateralize our 2028 senior secured notes. During Q2, we added 122 BTC to MicroStrategy's holdings at an aggregate purchase price of $8 million from excess cash. Since the end of Q2, we added an additional 169 BTC to MicroStrategy holdings at an aggregate purchase price of $11.9 dollars, also using proceeds from excess cash. As of July 31st, 50,779 BTC are held at MicroStrategy, or $3.3 billion in current market value.

Andrew Kang: During Q2, we added 11931, bitcoins and micro strategies holdings at an aggregate purchase price of $786 million.

Andrew Kang: Using net proceeds from our convertible note issuance.

Andrew Kang: Additionally, bitcoins purchased using excess cash from the software business are also held at MicroStrategy, the parent, which also serves to collateralize our 2028 senior secured notes. The commitment to our Bitcoin strategy remains stronger than ever. We have added Bitcoin to our treasury in every quarter since August 2020.

Andrew Kang: Additionally, bitcoins purchased using excess cash from the software business are also held that micro strategy. The parent which also served to collateralize, our 2028 senior secured notes.

Andrew Kang: During Q2, we added 122 big coins to micro strategies holdings at an aggregate purchase price of $8 million.

Andrew Kang: From excess cash.

Andrew Kang: Since the end of Q2, we added an additional 169 bitcoins to micro strategy holdings at an aggregate purchase price of 11 $9 also using proceeds from excess cash.

Andrew Kang: As of July 31.

Andrew Kang: <unk> thousand 779 declines are held at micro strategy or $3 3 billion and current market value.

Andrew Kang: The commitment to our Bitcoin strategy remains stronger than ever. We added Bitcoin to our treasury in every quarter since August 2020, and as a result, MicroStrategy remains the largest corporate holder of Bitcoin in the world. As we continue to champion Bitcoin as a strategic Treasury Reserve asset, we are deeply encouraged by the growing number of both public and private companies that are adopting the Bitcoin standard to help grow shareholder value. As of June 30th, 2024, the market value of our Bitcoin holdings was $14 billion and an aggregate cost of $8.3 billion equals to an average purchase price of approximately $36,800.

Andrew Kang: The commitment to our bitcoin strategy remained stronger than ever we have added bitcoin to our treasury in every quarter since August 2020, and as a result micro strategy remains our largest corporate older a bitcoin in the world.

Andrew Kang: And as a result, MicroStrategy remains the largest corporate holder of Bitcoin in the world. As we continue to champion Bitcoin as a strategic treasury reserve asset, we are deeply encouraged by the growing number of both public and private companies that are adopting the Bitcoin standard to help grow shareholder value. We fully plan to adopt the new FASB accounting rule, which requires fair value treatment for Bitcoin holdings by Q1 of next year.

Andrew Kang: As we continue to champion bitcoin as a strategic Treasury Treasury reserve asset we are deeply encouraged by the growing number of both public and private companies that are adopting the bitcoin standard to help grow shareholder value.

Andrew Kang: As of June 32020 for the market value of our <unk> holdings was $14 billion.

Andrew Kang: At an aggregate cost of $8 3 billion equal to an average purchase price of approximately $36800.

Andrew Kang: This is in contrast to the carrying value of our Bitcoin holdings of $5.7 billion as of the last day of the quarter.

Andrew Kang: This is in contrast to the carrying value of our Bitcoin holdings of $5 7 billion as of the last day of the quarter.

Andrew Kang: We fully plan to adopt the new FASB accounting rule, which requires fair value treatment for Bitcoin holdings by Q1 of next year, when the rule takes effect. At which time we will realize the benefit of the significant difference between the market value and the carrying value of our balance sheet.

Andrew Kang: We fully plan to adopt the new FASB accounting rule, which requires fair value treatment or bitcoin holdings by Q1 of next year when the rule takes effect.

Andrew Kang: At which time, we will realize the benefit of the significant difference between the market value and the carrying value of our balance sheet.

Andrew Kang: Now, turning to our capital markets activities. Since the inception of our Bitcoin strategy, we have issued $4.4 billion of debt through senior secured notes and convertible notes. We now have $3.8 billion of outstanding debt with a very low blended interest rate of approximately 1.6 percent, with staggered maturities over several years starting on February 20th, 2027, through June 2032. Intelligent leverage remains a key component of our active capital allocation strategy, which, when deployed in a thoughtful manner, enables us to add more Bitcoin to our treasure your reserve at an attractive cost, and with a disciplined approach to maximizing BTC yield.

Speaker Change: Now turning to our capital markets activities since.

Speaker Change: Since the inception of our Big point strategy, we have issued $4 $4 billion of debt. The senior secured notes and convertible notes. We now have $3 8 billion of outstanding debt with a very low blended interest rate of approximately one 6% with staggered maturities over several years starting in February 2000.

Andrew Kang: We now have $3.8 billion of outstanding debt, with a very low blended interest rate of approximately 1.6%, with staggered maturities over several years, starting in February 2027 through June 2032. We issued $800 million of convertible notes due in June 2032 at an annual interest rate of 2.25%, with a conversion premium of 35%.

Andrew Kang: 27.

Andrew Kang: <unk> 2032.

Andrew Kang: Intelligent leverage remains a key component of our active capital allocation strategy, which when deployed in a thoughtful manner enables us to add more bitcoin to our treasury our reserve at an attractive cost.

Andrew Kang: And with a disciplined approach to maximizing BTC yield.

Andrew Kang: Continuing with the momentum from the two convertible notes financing to March, our recent convert in June was upsized and well received by the market. We issued $800 million of convertible notes due June 2032 at an annual interest rate of 2.25 percent, with a conversion premium of 35 percent, and a conversion price of approximately $2,000 in $2,043 per share. As in the past, the net proceeds from the new convert were used to acquire additional Bitcoin into our Treasury reserve. We will continue to actively manage our existing liabilities. To that end, we called for redemption of our $650 million 2025 convertible notes.

Andrew Kang: Continuing with the momentum from the two convertible note financings in March our recent convert in June was Upsized and well received by the market.

Andrew Kang: We issued $800 million of convertible notes due June 2032 at an annual interest rate of 225% with a conversion premium of 35% and a conversion price of approximately two.

Andrew Kang: $2043 per share.

Andrew Kang: As in the past the net proceeds from the new convert were used to acquire additional bitcoin into our Treasury reserve.

Andrew Kang: We will continue to actively manage our existing liabilities and to that end, we called for redemption of our $650 million 2025 convertible notes.

Andrew Kang: As the notes were substantially in the money, holders of those notes converted substantially all of the notes into shares of our classic common stock prior to the redemption date. Our 2025 notes traded up over 300% from time of issuance, resulting in an extremely successful investment for our bond investors and partners. In addition to raising debt, we continue to demonstrate a solid track record of issuing equity in a manner that is accrued at the shareholders.

Andrew Kang: The notes were substantially in the money holders of those notes converted substantially all of the notes into shares of our class a common stock.

Andrew Kang: Fear to the redemption date.

Andrew Kang: Our 2025 notes traded up over 300% from time of issuance, resulting in extremely successful investment for our bond investors and partners.

Andrew Kang: In addition to raising debt, we continue to demonstrate a solid track record of issuing equity in a manner that is accretive to shareholders.

Andrew Kang: Today, we announced that we filed a new shelf registration for a $2 billion asset market or ATM equity offering. We will remain extremely disciplined in the use of both the ATM and other capital markets activities, executing on them when we believe it will achieve the most Bitcoin yield. Our overall capital allocation strategy continues to be focused on increasing our total bitcoins at a rate faster than we issue new shares, which results in higher BTC yields. As Fong mentioned earlier, we are targeting an annual BTC yield of 4 to 8% in each of 2025, 2026, and 2027.

Andrew Kang: We announced that we filed a new shelf registration for a $2 billion aftermarket or ATM equity offering.

Andrew Kang: We will remain extremely disciplined in the use of both the ATM and other capital markets activities executing on them. When we believe it will achieve that most bitcoin yields.

Andrew Kang: Our overall capital allocation strategy continues to be focused on increasing our total big coins at a rate faster than we issue new shares which results in higher BTC yield.

Speaker Change: As <unk> mentioned earlier, we are targeting an annual BTC yield of 4% to 8% in each of 2025 2026 and 2027.

Andrew Kang: Having exceeded that already in 2024, we believe those targets are achievable and also provide transparency in reinforcing our goal of consistent, positive BTC yield over time, further differentiating Micro Strategies' value proposition.

Andrew Kang: Having exceeded that already in 2024, we believe those targets are achievable and also provide transparency in reinforcing our goal of consistent, positive BTC yield over time, further differentiating MicroStrategy's value prop. Lastly, we also announced a 10-for-1 stock split of MicroStrategy's Class A common stock and Class B common stock affected as a stock dividend. We actively monitor the capital markets and evaluate liability management opportunities to manage our debt and interest. As Phong said earlier, we believe that the combination of our operating structure, Bitcoin strategy, and focus on technological innovation provides a unique value proposition for shareholders when compared to other forms of Bitcoin exposure.

Speaker Change: Having exceeded that already in 2024, we believe these targets are achievable and also provide transparency and reinforcing our goal of consistent positive BTC yield overtime further differentiating micro strategies value proposition.

Andrew Kang: Lastly, we also announced a 10-per-1 stock split of Micro Strategies, Class A common stock and Class B common stock, affected as a stock dividend. This will lead to better accessibility for our investors and employees and greater lives in our options activity. The shares are expected to be distributed after the close of trading on August 7, 2024, and trading is expected to commence on an explicit adjusted basis at the market open on August 8, 2024. The stock dividend will not have any impact on the voting and other rights of stockholders.

Andrew Kang: Lastly, we also announced a 10 for one stock split of Microstrategy class, a common stock and class B common stock effected as a stock dividend. This will lead to better accessibility for our investors and employees and greater liquidity in our stock as well as well as in our options activity.

Speaker Change: The shares are expected to be distributed after the close of trading on August seven 2024, and trading is expected to commence on a split adjusted basis at the market open on August eight 2024.

Speaker Change: The stock dividend will not have any impact on the voting and other rights of stockholders.

Andrew Kang: The next slide lays out our debt maturity profile. As you can see, the conversion of the convertible notes to 2025 has moved the nearest debt maturity out to 2027. We actively monitor the capital markets and evaluate liability management opportunities to manage our debt and interest expense, as well as opportunities to raise additional future financing.

Andrew Kang: The next slide lays out our debt maturity profile as you can see the conversion of the convertible notes due 2025.

Andrew Kang: As move to them has moved our nearest debt maturity out to 2027.

Andrew Kang: We actively monitor to the capital markets and evaluate liability management opportunities to manage our debt and interest expense as well as opportunities to raise additional future financings.

Andrew Kang: MicroStrategy has demonstrated a strong track record of applying a disciplined approach to navigate through volatile times in the Bitcoin market, and we believe we have established significant credibility to execute on our strategic goal of generating value for our shareholders. As far as that earlier, we believe that the combination of our operating structure, Bitcoin strategy, and focus on technology innovation provides a unique value proposition for shareholders when compared to other forms of Bitcoin exposure.

Speaker Change: Microstrategy has demonstrated a strong track record of applying a disciplined approach to navigate through volatile times and the bitcoin market and we believe we have established significant credibility to execute on our strategic goal of generating value for our shareholders. As <unk> said earlier, we believe that the combination of our operating structure.

Speaker Change: Bitcoin strategy and focus on technology innovation provides a unique value proposition for shareholders when compared to other forms of bitcoin exposure.

Andrew Kang: Thank you for your time today and for your continued support of MicroStrategy.

Andrew Kang: Thank you for your time today and for your continued support of MicroStrategy. I'll now turn the call over to Michael for his remarks. Thank you, Andrew, and thank you to all of our audience for being with us here today.

Andrew Kang: Thank you for your time today and for your continued support of Microstrategy I'll now turn the call over to Michael for his remarks.

Michael Saylor: I'll now turn the call over to Michael for his remarks.

Andrew Kang: Yeah.

Michael Saylor: Thank you, Andrew. And thank you to all of our shareholders for being with us here today.

Michael Fang: Thank you Andrew and thank you to all of our shareholders for being with us here today.

Michael Saylor: I'd like to give a few thoughts on Bitcoin, the macro environment, and micro strategies operations. So I'm going to start with the Bitcoin Point Conference 2024. It was extraordinary. And what was very clear is that Bitcoin has entered the political conversation. Governors, senators, House members, and presidential candidates were all in attendance at the conference. There was a there was a lumbus bill presented at the conference. Robert F. Kennedy made some very interesting commitments at the conference. Donald Trump made some very interesting commitments at the conference four years ago. All of this was inconceivable. So we've come a long way in the past four years.

Michael Fang: I'd like to give a few thoughts on bitcoin, the macro environment and micro strategies.

Speaker Change: Operations, So I'm going to start with the Bitcoin conference 2024.

Speaker Change: It was extraordinary and and what was very clear is that <unk> has entered the political conversation Governor Senators House members in presidential candidates were all in attendance at the conference.

Speaker Change: There was a there was a law Ms Bell presented at the conference Robert F. Kennedy made some very interesting commitments at the conference.

Michael Fang: Donald Trump made some very interesting commitments.

Speaker Change: Conference.

Andrew Kang: Four years ago. All of this was inconceivable so we've come a long way in the past four years.

Michael Saylor: Bitcoin has also entered the corporate conversation. During the conference, Marathon announced that they're adopting a full HODL strategy. They acquired additional Bitcoin on their balance sheet, and they announced they're not going to sell Bitcoin from their mining activities. Somewhere Scientific was there at the conference, speaking.

Michael Saylor: Bitcoin has also entered the corporate conversation. During the conference, Marathon announced that they're adopting a full hodl strategy. They acquired additional Bitcoin on their balance sheet, and they announced they're not going to sell Bitcoin from their mining activities. Somewhere scientific was there at the conference speaking. We have companies like Meta Planet that are very, very vocally adopting a Bitcoin standard. So lots of conversations and lots of Main Street, Wall Street, and Capitol Hill participants in Nashville. There's a growing consensus that digital private property is a right, and it's a natural right. Likewise, a right to self-custody is rippling throughout all of these speakers and throughout the public discussion, the public forums. There's also growing enthusiasm toward building a strategic Bitcoin reserve at various levels.

Andrew Kang: Bitcoin has also entered the corporate conversation.

Speaker Change: During the conference Marathon announced that they are adopting a full hurdle strategy. They acquired additional bitcoin on their balance sheet and they announced they're not going to sell that coin from their mining activities.

Speaker Change: Some of our scientific was there at the conference speaking we have companies like meta planet that are very very vocally adopting a bitcoin standard.

Michael Saylor: We have companies like MetaPlanet that are very, very vocally adopting a Bitcoin standard. So there are lots of conversations and lots of Main Street, Wall Street, and Capitol Hill participants in Nashville. There's a growing concentric, there's a growing consensus that it is a right and it's a natural right. Likewise, a right to self-custody is rippling throughout all of these speakers and throughout the public discussion, the public forums, at various levels.

Speaker Change: So lots of conversations and lots of main Street Wall Street.

Michael Fang: On capital Hill participants and Nashville.

Speaker Change: There is a growing concern.

Speaker Change: There's a growing consensus.

Andrew Kang: That.

Andrew Kang: Digital private property.

Andrew Kang: As of right and it's a natural right.

Andrew Kang: Likewise.

Andrew Kang: Right to self cost city is rippling throughout.

Speaker Change: All of these speakers.

Speaker Change: And throughout the public.

Speaker Change: Discussion of the public forums.

Speaker Change: There is also growing enthusiasm.

Speaker Change: Toward building a strategic bitcoin reserved.

Michael Saylor: The Lummis bill is a bill to create a strategic Bitcoin reserve for the United States government that was announced at the conference and just rolled out or presented yesterday. The Trump speech was a milestone. He reaffirmed the right to self-custody and also quite salient was a note that even though they were valuable, even sports teams, they would sell them. And yet, what won't they sell? A National Park?

Speaker Change: At various levels.

Michael Saylor: The Lumis bill is a bill to create a strategic Bitcoin reserve for the United States government. That was announced at the conference and just rolled out or presented yesterday.

Speaker Change: The <unk> Bill is a bell to create a strategic bet coin reserve for the United States Government that was announced at the conference and just just rolled out or presented yesterday.

Michael Saylor: The Trump speech was a milestone. He reaffirmed the right to self-custody, and also quite salient was a note that his policy would be to not sell Bitcoin. And it turns out that the idea of not selling Bitcoin elevates Bitcoin to be the apex property of the nation as well as the apex investment asset. If the federal government were to seize a building, a farm, a portfolio, a big tech stock, you're a bunch of ETFs, gold, diamonds, watches, cars, jets, and yachts. Even though they were valuable, even sports teams, they would sell it. And yet, what won't they sell?

Speaker Change: The Trump's speech was a milestone.

Speaker Change: Hey, reaffirmed our right to self custody and also quite salient was a note that.

Speaker Change: His policy would be to not sell bitcoin and it turns out that the idea of not selling bitcoin elevate spec coin to be the apex property of the nation as well as the apex and investment asset.

Speaker Change: If the federal government were to seize a building a farm a portfolio of big Tech stocks.

Speaker Change: A bunch of Etf's gold diamonds, and watches cars jets and yachts.

Speaker Change: Even though they were valuable even sports teams they would sell it and yet what won't they sell.

Michael Saylor: National Parks and Bitcoin, two very exciting things. So, so Bitcoin has really entered the global geopolitical conversation, and Bitcoin Nashville punctuated that.

Speaker Change: <unk> parks.

Speaker Change: Bitcoin two very exciting thing. So so bitcoin is really entered the global geopolitical conversation and bitcoin Nashville punctuated that.

Michael Saylor: We can go to the next slide. We're still early in Bitcoin, but it's worthwhile to make some points about the macro outlook. You know, as you can see, Bitcoin is it's a 1.3 trillion dollar asset class that makes it one of the 10 most valuable assets in the world. A spot or position to achieve in 15 years with no marketing and no management team and no corporate sponsor. It's quite amazing. And people are beginning to realize just how extraordinary that is. But as you can see, mapped against the map of global wealth, there are many, many different types of global wealth maps.

Michael Saylor: We can go to the next slide. You know, as you can see, Bitcoin is a $1.3 trillion asset class that makes it one of the 10 most valuable assets in the world, a spot or position it achieved in 15 years with no marketing and no management team and no corporate sponsor. It's quite amazing.

Speaker Change: We can go to the next slide.

Speaker Change: Okay.

Speaker Change: We're still early in bitcoin.

Speaker Change: It's worthwhile to make some points about the macro outlook.

Speaker Change: As you can see bitcoin is it's a one three trillion dollar asset class that makes it wanted to 10, most valuable assets in the world are spot our position and achieved.

Speaker Change: In 15 years with no marketing and no management team and no corporate sponsor to <unk>.

Speaker Change: Quite amazing and people are beginning to realize just how extraordinary that is.

Michael Saylor: And people are beginning to realize just how extraordinary that is. But as you can see, mapped against a map of global wealth, and there are many, many different types of global wealth maps you could generate; this is one of them. You can see it's not 1% of the global wealth in the world. There's a trend, there is, on the Bitcoin side, an institutional adoption trend. We're approaching 40 Bitcoin spot ETFs now, and each one of them is solving the problems of compliance, capital controls, and convenience, and custody in Australia, in Hong Kong, in Switzerland, in Brazil, and in the United States.

Speaker Change: But as you can see mapped against the map a global well and there are many many different types of global Walt maps you could generate this is one of them and you can see it's not 1% of the global wealth in the world.

Michael Saylor: You could generate. This is one of them. You can see it's not 1% of the global wealth in the world. There's a trend. There's on the Bitcoin side an institutional adoption trend. We're approaching 40 Bitcoin spot ETFs now. And each one of them is solving the problem of compliance, capital controls, and convenience, and custody in Australia and Hong Kong and in Switzerland and Brazil and the United States and Canada, etc. So those ETFs are not just the marketing distributors of Bitcoin, but they're also the custodians and the compliance managers of Bitcoin. And that's how to having a pretty big effect.

Speaker Change: And there is a trend there as there is on the bitcoin side and institutional adoption trend, we're approaching 40 <unk> spot Etf's now.

Speaker Change: And each one of them is solving the problem of compliance capital controls and convenience and cost city, and Australia, and Hong Kong, and Switzerland, and Brazil.

Speaker Change: In the United States, and Canada et cetera. So those etfs are not just the marketing.

Speaker Change: Distributors are bad client, but theyre also the custodians and that compliance managers of bitcoin and thats, having a pretty big effect.

Michael Saylor: There's also a digital transformation taking place, and all of us in the investment community notice it. It was it was present in Meta's stock performance in the last day. You can see the impact on Microsoft. You can see the impact on all big tech companies. What's very clear is that AI is going to drive a profound increase in productivity. It's going to provide drive profound new products. We can see cars driving themselves. We can see a future of autonomous robots. We can see a future of AI replacing search. And now you just ask the question; you get the answer.

Speaker Change: There is also a digital transformation taking place in all of us and the investment community notice it.

Speaker Change: It was present in matters stock performance in the last day, you can see the impact on Microsoft you can see the impact on all Big Tech companies.

Speaker Change: That's very clear and that is that AI is going to drive a profound increase in productivity, it's going to provide drive profound new products, where we can see cars driving themselves. We can see a future of autonomous robots, we can see a future.

Michael Saylor: We can see cars driving themselves, we can see a future of autonomous robots, we can see a future... MicroStrategy likes to keep track of its performance. This chart is as of yesterday, when the market closed. So as we look at the trend yesterday, this is over about four years from August 10th, 2020. S&P and NASDAQ are up 60 and 64%, respectively, meaning 60% is effectively the traditional institutional cost of capital for mainstream investors. And, and, you know, it works out to, you know, divide by four, you know, 12.

Speaker Change: <unk> AI, replacing search and now you just asked the question you get to answer and then you ask the AI to do the thing for you and it does it in and in the last 12 months, it's gotten to the point where <unk>.

Michael Saylor: And then you ask the AI to do the thing for you. And it does it. And in the last 12 months, it's gotten to the point where even non-technical users' eyebrows are raised. And they can extrapolate over the next 10 years and see that this is going to have a profound impact on capital creation. Clearly, the big winners in the corporate world are going to be the big tech companies that can take advantage of AI to create products. And the market is very enthusiastic about Meta because they can deliver an intelligent AI offering to billions and billions of people instantly.

Speaker Change: Even non technical users eyebrows or raise and they can extrapolate over the next 10 years and see that this is going to have a profound impact on capital creation clearly the big winners in the corporate world are going to be the big Tech companies that can take advantage of AI.

Speaker Change: To create products in the market is very enthusiastic about matter because they can deliver an intelligent AI offering to billions and billions of people instantly.

Michael Saylor: You know, and stopping the case, the macro wins, they favor equity and especially big tech equity, and they favor digital capital, which is what Bitcoin is over the 20th century physical and financial assets. You can imagine that the big tech companies, they're not going to need so much material or labor intensive assets, and they're going to want high high speed digital assets. And you know, we've got a number, a handful of trillion dollar companies; there's going to be a lot more trillion dollar companies, and those trillion dollar companies are going to generate capital at an enormous rate, and there's going to be a pressure to put that capital somewhere, and Bitcoin has emerged as the primary global digital capital asset.

Speaker Change: And that being the case, the macro lands, they favor equity and especially big Tech equity and they favor digital capital, which is what that coin is.

Speaker Change: Over the 20th century, physical and financial assets, you can imagine that the that the big Tech companies they are not going to need.

Speaker Change: So much material or labor intensive assets and theyre going to want high high speed digital assets and we've got a number a handful of trillion dollar companies theres going to be a lot more trillion dollar companies and Australia dollar companies youre going to generate capital in an enormous right and theres going to be.

Speaker Change: To put that capital somewhere and bitcoin has emerged as the primary global digital capital asset and so the macro trends are very good.

Michael Saylor: And so the macro trends are very good; there's going to be increasing excitement.

Speaker Change: There is going to be increasing excitement as this trend continues we can go to the next slide.

Michael Saylor: As this trend continues, we can go to the next slide. MicroStrategy life ski park of its performance, this chart is as of yesterday market close. So as we look at the trend yesterday, this is over about four years from August 10, 2020, to close of market July 31st, 2024. And what you can see is that traditional financial capital that is bonds, they're not performing well. There's definitely a lot more money in the system, but bonds are minus 18%. So ver is not keeping up. Gold is underperforming the general cost of capital. S&P and NASDAQ up 60% and 64% respectively; that 60% is effectively the institutional traditional cost of capital for mainstream investors.

Michael Saylor: Microstrategy likes to keep track of its performance. This chart is as of yesterday market close.

Speaker Change: So as we look at look at the train yesterday. This is over about four years from August 10th 2020.

Speaker Change: To close of market July 31, 2024, and what you can see is that traditional financial capital that is bonds that are not performing well, there's definitely a lot more money in the system, but bonds or minus 18% silver is not keeping up gold is underperforming.

Speaker Change: The general cost of capital.

Speaker Change: S&P in NASDAQ up 60, and 64% respectively.

Speaker Change: 60% is effectively the institutional traditional cost of capital for mainstream investors.

Michael Saylor: And you know, it works out to, you know, divide by four, you know, 12, you know, 11, 12, 13% compounding per year. Bitcoin has dramatically outperformed; that Bitcoin is up 442% over that same timeframe. MicroStrategy's objective is, you know, was initially to escape the malaise of being a non-big tech company. And then it was to track the Bitcoin index. And now it has become to outperform Bitcoin. And we're proud to say that we've managed to achieve 1200 6% return for our shareholders versus the Bitcoin 442% over that time period. Now clearly, we have done that through the use of intelligent leverage and taking advantage of our operating flexibility, and Andrew laid out some of our metrics, especially BTC yield.

Speaker Change: And it works out to <unk>.

Speaker Change: Divide by four.

Speaker Change: 12.

Speaker Change: 11, 12, 13% compounding per year.

Cohen: Cohen has dramatically outperformed that bitcoin is up 442% over that same timeframe.

Michael Saylor: MicroStrategy's objective, you know, was initially to escape the malaise of being a not-big tech company. And then it was to track the Bitcoin index. And now it has become to outperform Bitcoin. And we're proud to say that we've managed to achieve 1206%.

Speaker Change: Micro strategies objective.

Speaker Change: <unk> was initially to escape the malaise of being a non big Tech company and then it wise to track the Bitcoin index and now it has become to outperform that coin.

Speaker Change: We're proud to proud to say that we've managed to achieve 206%.

Speaker Change: Turn for our shareholders versus the <unk>, 442% over that time period.

Speaker Change: Now clearly we have done that through the use of intelligent leverage and taken advantage of our operating flexibility.

Speaker Change: And Fong and Andrew laid out.

Speaker Change: Some of our metrics, especially BTC yield and you can see a company that can generate.

Michael Saylor: And you can see a company that can generate a BTC yield or some intelligent leverage has a decent chance about performing Bitcoin. We've also compared ourselves not just to main asset classes, but we compare ourselves to big tech stocks. And as you can see, big tech stocks that are labor intensive and energy intensive and capital intensive and have a lot of friction in the operations, shipping, and energy intensive. They've struggled more, and you see Amazon is up 19%. You can see Meta, Apple, Microsoft, Google, Tesla; they all look extraordinarily strong. They've all outperformed the NASDAQ.

Speaker Change: Ah BTC yield or some intelligent leverage has a decent chance of outperforming that coin.

Speaker Change: We are also comparing ourselves not just the main asset classes, but we compare ourselves to big Tech stocks and as you can see big Tech stocks that are labor intensive and energy intensive.

Michael Saylor: And as you can see, big tech stocks that are labor intensive and energy intensive and capital intensive and have a lot of friction in the operations, shipping, and energy intensive, they've struggled more. And you can see Amazon is up 19%. You can see Meta, Apple, Microsoft, Google, Tesla, they all look extraordinarily strong. They've all outperformed the NASDAQ. And those are typically on the tip of people's tongues as the great, strong, big tech performers. And, of course, there's one standout, which is NVIDIA.

Speaker Change: And capital intensive and and and have a lot of friction in the operations shipping and energy intensive they've struggled more than you see Amazon is up 19%.

Michael Saylor: You can see meta Apple Microsoft Google Tesla, They all look extraordinarily strong they've all outperformed the NASDAQ and those are typically on the tip of People's tongues as as the great strong baked tack performers clinical.

Michael Saylor: And those are typically on the tip of people's tongues as the great strong big tech performers. That, of course, there's one standout, which is Nvidia. An Nvidia has captured the great majority of the AI productivity boost and excitement and enthusiasm. And, you know, as I pointed out to people, if you are one of millions and millions of companies, and you can copy big tech and copy Apple or Meta or Google or Microsoft or the like, you should. But, of course, it's very difficult to do. You could try to copy Nvidia, but as you can see from the chart, even Google, Microsoft, Apple, and Meta are struggling to copy Nvidia.

Speaker Change: And of course, Theres, one stand out which is in video.

Michael Saylor: And NVIDIA has captured the great majority of the AI productivity boost, excitement, and enthusiasm. And, as I pointed out to people, if you are one of millions and millions of companies and you can copy big tech and copy Apple or Meta or Google or Microsoft or the like, you should. But, of course, it's very difficult to do.

Speaker Change: And Nvidia has captured the great majority of the AI productivity boost and excitement and enthusiasm and.

Speaker Change: As I pointed out to people.

Speaker Change: We're one of millions and millions of companies and you can copy big Tech and copy Apple, our meta or Google or Microsoft or or the like you should but of course it is very.

Speaker Change: Difficult to do.

Michael Saylor: You could try to copy NVIDIA, but as you can see from the chart, even Google, Microsoft, Apple, and Meta are struggling to copy NVIDIA. Everybody in the world is asking the question, how do we copy NVIDIA? And what do we do when this run ends? And I'm proud to say MicroStrategy is outperforming NVIDIA over these four years, right? 1206 versus 948. And I'll make the point that we make often, which is that it's not obvious to me how any company copies NVIDIA. It's very straightforward to copy MicroStrategy.

Speaker Change: You could try to copy Nvidia, but as you can see from the chart, even Google Microsoft Apple and matter are struggling to copy Nvidia everybody in the world is asking the question.

Michael Saylor: Everybody in the world is asking the question, how do we copy Nvidia and what do we do when this run ends? And, you know, I'm proud to say MicroStrategy is outperforming Nvidia over this four years, right? 1206 versus 948. And, I'll make the point that we make often, which is, it's not obvious to me how any company copies Nvidia. It's very straightforward to copy MicroStrategy. We've published our corporate playbook. We're happy to explain it to anybody. We do have some companies that are starting to copy us now, and we couldn't be pleased or more happier about that.

Michael Saylor: Do we copy Nvidia in and why do we do when this Ron ends and I'm proud to say micro strategies outperforming Nvidia over this four years right 12 O six versus $9 48.

Speaker Change: <unk>.

Speaker Change: And I'll make the point that we make often which is it's not obvious to me how any company copies Nvidia.

Speaker Change: It's very straightforward to copy micro strategy, we published our corporate playbook, we're happy to explain it to anybody we do have some companies that are starting to starting to copy us now and we couldnt be pleased on more happier about that.

Michael Saylor: We've published our corporate playbook. We're happy to explain it to anybody. We do have some companies that are starting to copy us now, and we couldn't be happier about that. So, we think the Bitcoin strategy is the way to go. What we're doing is taking advantage of digital capital. NVIDIA is being boosted by digital intelligence.

Michael Saylor: So, we think the Bitcoin strategy is the way to go. What we're doing is taking advantage of digital capital, and Nvidia is being boosted by digital intelligence. And clearly, every company is going to be profoundly impacted by digital intelligence on their P&L. They can use it to cut their costs, or they can use it to create breakthrough new products, revolutionary products, revolutionary new services, or just dramatically increase the quality of their products and services. And so, of course, every management team is thinking, how do I improve my operations by plugging digital intelligence into my P&L?

Speaker Change: So.

Speaker Change: We think the bitcoin strategy is the way to go what we're doing is taking advantage of digital capital Nvidia is being boosted boosted by digital intelligence.

Michael Saylor: And clearly, every company is going to be profoundly impacted by digital intelligence on their P&L. They can use it to cut their costs. You should also plug digital capital into your balance sheet. And as you look at the chart below, you can see most companies are capitalized on bonds, and bonds have lost 18% for the past four years. And you can see just how much of a game changer it is when you just look at the MicroStrategy results.

Speaker Change: And clearly every company is going to be profoundly impacted by digital intelligence on their P&L. They can use it to cut their cost.

Speaker Change: Or they can use it to create breakthrough new products revolutionary products Revolutionary New services or just dramatically increase the quality of their products and services and so.

Michael Saylor: Of course every.

Speaker Change: Every management team is thinking how do I improve my operations by plugging digital intelligence and to my P&L.

Michael Saylor: But, our message is you should also plug the digital capital into your balance sheet. And as you look at the chart below, you can see that most companies are capitalized on bonds, and bonds are minus 18% for the past four years. And, if they were rather capitalized on Bitcoin, which is plus 442%, that would be a game changer to every company, every public company, every private company. And you can see just how much of a game changer it is when you just look at the MicroStrategy results, but we think it's pretty clear if you have a healthy business, digital capital is going to make it even better.

Michael Saylor: But our message is you should also plug a digital capital into your balance sheet and as you look at the chart below you can see most companies are capitalized on bonds in bonds or minus 18% for the past four years.

Speaker Change: And if they were rather capitalized on bitcoin, which is plus 442%.

Michael Saylor: That would be a game changer to every company every public company every private company.

Budd: And you can see just how much of a game changer. It is when you just look at the micro strategy results Budd, but we think it's pretty clear if you have a healthy business digital capital is going to make it even better and if you have a cash cow business or have you have a business, which is not growing as fast as big Tech and Fang stocks.

Michael Saylor: But we think it's pretty clear if you have a healthy business, digital capital is going to make it even better. And if you have a cash cow business, or if you have a business which is not growing as fast as big tech and penny stocks, then digital capital in the form of Bitcoin is going to save it. First, we'll take advantage of our advantageous corporate structure. We're an operating company. That means we have permanent Bitcoin capital, and it also means that we have operational flexibility, and our objective is to outperform spot Bitcoin ETPs and their trust companies.

Michael Saylor: And if you have a cash cow business or if you have a business, which is not growing as fast as big tech and FANG stocks, then digital capital, in the form of Bitcoin, is going to save it.

Michael Saylor: Then digital capital in the form of Bitcoin is going to save it.

Michael Saylor: And so, we will continue to pursue a Bitcoin strategy, and every quarter will keep track of this result.

Michael Saylor: And so we will continue to pursue a bitcoin strategy and.

Michael Saylor: And every quarter, we'll keep track of this result now.

Michael Saylor: Now we go to the next slide. MicroStrategy is a Bitcoin development company. So, you know, how do we, how do we contend or intend to move forward? Well, first, we'll take advantage of our advantageous corporate structure. We're an operating company. That means we have permanent Bitcoin capital. And it also means that we have operational flexibility. And our objective is to outperform spot Bitcoin ETPs, their trust companies. They don't have permanent bitcoin capital. They have to redeem when someone presents the shares for redemption. And they don't have, therefore, that permanent capital base that they can lever.

Speaker Change: Now we go to the next slide.

Michael Saylor: Microstrategy as a bitcoin development company so.

Speaker Change: How do we how do we contain our intend to move forward well.

Michael Saylor: First we will take advantage of our advantageous corporate structure, we're an operating company that means we have permanent bitcoin capital.

Michael Saylor: And it also means that we have operational flexibility.

Michael Saylor: And our objective is to outperform spot bitcoin ETP is their trust companies. They don't have permanent bitcoin capital they have to redeem on someone presents the shares for redemption and and they don't have therefore that permanent capital base that they can lever they don't have.

Michael Saylor: They don't have permanent Bitcoin capital. They have to redeem when someone presents the shares for redemption, and they don't, therefore, have that permanent capital base that they can lever. They don't have the operating flexibility that an operating company has.

Michael Saylor: They don't have the operating flexibility that an operating company has. So, the key for us to outperform is to responsibly use that capital and responsibly use our operational flexibility. We also are using our ability to develop software to generate cash flows, to build our brand and to make Bitcoin successful. We will use our cash flows that we generate in the operating business in order to acquire Bitcoin. And of course, capital markets is a very important part of our strategy. This last quarter is, as Andrew noted, we use the combination of debt issuance and then convertible issuance and convertible redemption and cash purchases in order to create BTC yield and in order to acquire Bitcoin.

Michael Saylor: The operating flexibility that an operating company has.

Michael Saylor: So the key for us to outperform is to responsibly use that capital and responsibly use our operational flexibility. We will use the cash flows that we generate in the operating business in order to acquire Bitcoin. And of course, capital markets are a very important part of our strategy. This last quarter, as Andrew noted, we used a combination of debt issuance, and then convertible issuance and convertible redemption, and cash purchases, in order to create BTC yield and to acquire Bitcoin. We can go to the next slide now.

Michael Saylor: So the key for us to outperform is to responsibly use that capital and responsibly use our operational flexibility.

Speaker Change: We also are using our ability to develop software to generate cash flows to build our brand and to make bitcoin successful.

Michael Saylor: We would use our cash flows that we generate in the operating business in order to acquire bitcoin and <unk>.

Michael Saylor: <unk> capital markets is a very important part of our strategy.

Michael Saylor: This last quarter is as Andrew noted we.

Andrew Kang: We used a combination of of debt issuance and then.

Michael Saylor: Convertible issuance and convertible redemption and and cash purchases.

Michael Saylor: In order to.

Michael Saylor: Great DTC yield and in order to acquire a bitcoin.

Michael Saylor: We can go to the next slide now. The world is full of Bitcoin investors and especially Bitcoin maxi investors. They like Bitcoin and they would like to find a way to outperform Bitcoin spot ETFs and they'd like to find a way to get more Bitcoin per share. And so we've created this KPI BTC yield. We focus on it. Right. If we have a chance to do a deal which would not have a BTC yield for us, it looks like a bad deal. And when we see a deal that generates a good, a very substantial BTC yield, well, we like that deal.

Michael Saylor: We can go to the next slide now.

Michael Saylor: Okay.

Michael Saylor: The world is full of Bitcoin investors, and especially Bitcoin maxi investors. They like Bitcoin, and they would like to find a way to outperform Bitcoin spot ETFs, and they'd like to find a way to get more Bitcoin per share. And so we've created this KPI BTC yield, and we focus on it. As I've said, we've got operating flexibility, we've got Bitcoin capital, we also have credibility in the capital markets, and we have experience in the capital markets.

Speaker Change: The World is full.

Michael Saylor: <unk> bitcoin.

Michael Saylor: Investors, and especially bitcoin maxi investors, they liked that coin and they would like to find a way to outperform big coin spot Etfs and they like to find a way to get more bitcoin per share.

Michael Saylor: And so we've created this kpis BTC yield we focus on it.

Speaker Change: Right, if we have a chance to do a deal which would.

Speaker Change: Not have a BTC yield for us it looks like a bad deal.

Michael Saylor: And when we see a deal that generates a good a very substantial BTC yield while we like that deal.

Michael Saylor: You can see what we've done year to date: 12.2% BTC yield. We are going to run the business such that we can generate a consistent ongoing BTC yield. As I've said, we've got operating flexibility. We've got Bitcoin Capital. We also have credibility in the capital markets, and we have experience in the capital markets. So we'll be continually evaluating various options. And when we see a chance to generate BTC, we'll move forward. And if the market isn't offering us something we find compelling, then we'll take our time.

Michael Saylor: You can see what we've done year to date 12, 2% BTC yield.

Michael Saylor: Okay.

Michael Saylor: We are going to run the business such that we can generate a consistent ongoing BTC yield.

Michael Saylor: <unk>.

Michael Saylor: As I've said, we've got operating flexibility we have.

Michael Saylor: Bitcoin capital.

Michael Saylor: You also have credibility in the capital markets and we have experienced in the capital markets. So we will be continually evaluating various options.

Michael Saylor: So we'll be continually evaluating various options, and when we see a chance to generate BTC, we'll move forward. And if the market isn't offering us something we find compelling, then we'll take our time. And with that, I'd like to thank everybody for their support, and I suppose we can move on to the Q&A. Thank you, Michael. We are now going to jump into questions. And The first question is for Michael.

Michael Saylor: And when we see a chance to generate BTC and will move forward and.

Michael Saylor: And if the market isn't offering us something we find compelling then we will take our time.

Shirish Jajodia: And with that, I'd like to thank everybody for their support. And I suppose we can move on to the Q&A.

Michael Saylor: And with that I'd like to thank everybody for their support and I suppose we can move on to the Q&A.

Michael Saylor: Thank you, Michael. We are now going to jump into questions. And the first question is for Michael. MicroStrategy's equity premium to its Bitcoin holdings has remained healthy for the past few months, despite the Bitcoin price swings and board directions. Would you attribute this to your ability to achieve positive BTC yields? Yeah, I think that long-term Bitcoin holders, and Bitcoin really is the longest duration asset. People that believe in Bitcoin are thinking this is the apex property that you do not sell your Bitcoin. So when you have an investment in Bitcoin, you're not thinking about holding it for a short period of time and flipping it.

Michael Saylor: Thank you Michael we are now going to jump into questions.

Michael Saylor: Okay.

Speaker Change: And our first question is for Michael.

Michael Saylor: MicroStrategy's equity premium to its Bitcoin holdings has remained healthy over the past few months, despite the Bitcoin price swings in both directions. Yeah, I think that long-term Bitcoin holders and Bitcoin really is the longest-duration asset. People that believe in Bitcoin are thinking this is the apex property that you do not sell your Bitcoin for.

Speaker Change: Micro strategies equity premium to <unk> holdings has remained healthy throughout the past few months, despite the big bitcoin price swings in both directions.

Speaker Change: What do you attribute this to your ability to achieve positive <unk>.

Michael Saylor: Yes.

Michael Saylor: Yes.

Michael Saylor: Think that long term bitcoin holders and bitcoin really is the longest duration asset people that believe in bitcoin are thinking. This is the apex property that you do not sell your bitcoin. So when you have an investment in bitcoin youre not thinking about holding it for a short period of time and flipping it.

Michael Saylor: So when you have an investment in Bitcoin, you're not thinking about holding it for a short period of time and flipping it. You know, our equity is based upon their assumptions about the risk and their assumptions about the Bitcoin market and their holding period. And they'll make assumptions about what kind of BTC we can generate and how important that is. And then they'll put a multiple on it. But I know that in the debt or fixed income market, you know, if you have a 30 year swap and interest or a long-dated treasury bond and the interest rates move up, then the bond can trade down, and if the interest rates move down, the bond can trade up, and normally you'll multiply the interest rate change and basis points by a duration number. And it can be long; it can get to 10 to 20, depending upon the bond.

Michael Saylor: Now, when you think about holding something for 30 years or 40 years, if you have a vehicle like a closed-in fund that charges 250 basis points as a fee, that looks like a negative BTC yield of 2.5%. We have experience with those sort of things, and we've seen they trade at a discount to net asset value. Closed-in funds with a long fee that you're going to, on an asset you're going to hold forever, they start to look like a multiple of the negative BTC yield. And on the other hand, if we can get away from that, and we can create the opposite, but a positive BTC yield, we expect, over time, investors are going to say, how much does it cost me, or how much do I benefit from holding my capital in debt, closed-in fund, versus that ETF, versus that operating company.

Michael Saylor: Now when you think about holding something for 30 years or 40 years.

Michael Saylor: If you have a handful like a closed end fund that charges 250 basis points as a fee that looks like a negative BTC yield of two 5%.

Michael Saylor: We have experienced with those sort of things and we've seen they trade at a discount to net asset value closed end funds with a long fee that youre going to on an assay going to haul forever. They.

Michael Saylor: Start to look like a multiple of the negative.

Michael Saylor: The negative BTC yield and on the other hand, if you can if we can get away from that and we can create the opposite but a positive BTC yield we expect over time investors are going to say how much does it cost me or how much do I benefit from holding my capital.

Michael Saylor: And that closed end fund versus that ETF versus that operating company.

Michael Saylor: All things equal, I'd rather of a company that generates plus 250 basis points a year instead of minus 250 basis points a year. The market is going to value our equity based upon their assumptions about the risk and their assumptions about the Bitcoin market and their holding period. And there will make assumptions about what kind of BTC we can generate, and how important that is, and then they'll put a multiple on it. But I know that in the debt or fixed income market, if you have a 30-year swap and interest or a long dated treasury bond, and the interest rates move up, then the bond can trade down, and if the interest rates move down, the bond can trade up.

Michael Saylor: All things equal I'd, rather have a company that generates plus 250 basis points a year instead of minus 250 basis points a year.

Michael Saylor: <unk> is going to is going to value.

Michael Saylor: Our our equity based upon their assumptions about the risk in their assumptions about the bitcoin market and Theyre holding period and they all make assumptions about what kind of BTC or we can generate and how important that is and then they'll put a multiple on it.

Michael Saylor: But I know that.

Michael Saylor: And the debt our fixed income market.

Michael Saylor: You have a law of 30 year swap and interests or long dated treasure.

Michael Saylor: Treasury bond and the interest rates move up.

Michael Saylor: Then the bond can trade down as interest rates moved down the bond can trade up than normal youre multiply the interest rate change in basis points by a duration number on it.

Michael Saylor: And normally, you'll multiply the interest rate change and basis points by a duration number, and it can be long. You can get to 10 to 20, depending upon the bond. And in the equity business, people will look at earnings per share per year, or they'll look at whatever accretion they'll get each year, and they'll put a PD multiple on it. If they're enthusiastic, they'll put a high multiple; and if they're skeptical, they'll put a low multiple. So I think that we're trading at a premium to net asset value based upon our shareholders' belief that we can outperform the ETFs that don't have any operating flexibility, and they've been pleased with our capital markets activity, and they've been pleased with our strategy of acquiring Bitcoin by various methods, and that represents a differentiated investment for them.

Michael Saylor: And in the equity business, people will look at earnings per share per year, or they'll look at whatever accretion they'll get each year, and they'll put a PDE multiple on it. If they're enthusiastic, they'll put a high multiple, and if they're skeptical, they'll put a low multiple. So I think that we're trading at a premium to net asset value based upon our shareholders' belief that we can outperform the ETFs that don't have any operating flexibility.

Michael Saylor: It can be long duration can get to 10 to 20, depending upon the bond and in the equity business people will look at earnings per share per year or they will look at whatever whatever accretion now get each year and they'll put a PDE multiple on it.

Michael Saylor: If theyre enthusiastic they will put a high multiple loans. They are skeptical that they'll put a low multiple so I think that.

Michael Saylor: We're trading at a premium to net asset value based upon our shareholders' belief that we can outperform the etfs that don't have any operating flexibility and <unk> been pleased with our capital markets activity and they have been pleased with our strategy of acquiring bitcoin by various methods.

Michael Saylor: And they've been pleased with our capital markets activity, and they've been pleased with our strategy of acquiring Bitcoin by various methods. And that represents a differentiated investment for them. So I think that the BTC yield is a useful metric to consider. I think that investors will end up deciding what they think over the next decade. But a Bitcoin development company should be able to outperform the Spot Bitcoin ETF in the form of a trust if the management team is prudent and takes their measures. Thank you, Michael. The next question is for Phong.

Michael Saylor: And that represents a differentiated investment for them so.

Michael Saylor: So I think that the BTC yield is a useful metric to consider.

Michael Saylor: I think that I think that the.

Michael Saylor: The BTC yield is a useful metric to consider.

Michael Saylor: I think that the investors will end up deciding what they think over the next decade, but a Bitcoin development company should be able to outperform spot Bitcoin ETF in the form of a trust. If the management team is prudent in their measures.

Michael Saylor: I think that the investors will end up deciding what they think over the next decade.

Michael Saylor: Good.

Michael Saylor: A bitcoin development company.

Michael Saylor: Be able to outperform spot that coin ETF in the form of a trust if the management team as is prudent and their measures.

Michael Saylor: Thank you, Michael.

Phong Le: Thank you Michael next question of smartphone and.

Phong Le: Next question is for Phong. On the software side, how did you feel about the Q2 cloud conversions relative to your expectations? And how should we think about the rest of the year with respect to your cloud migrations and the AI-related partnerships?

Phong Le: On the software side, how did you feel about the Q2 cloud conversions relative to your expectations? And how should we think about the rest of the year with respect to your cloud migrations and the AI-related partnerships? Thanks, Shirish.

Phong Le: On the software side.

Speaker Change: How did you feel about the Q2 cloud conversions relate to.

Phong Le: Relative to your expectations and how should we think about the rest of the year with respect to your cloud migrations and the AI related partnerships.

Phong Le: Thanks, Shirish. We had in Q2 the largest cloud bookings quarter, including conversions that we've had in the history of the company and by about twofold, a little bit more than twofold. So the conversions are accelerating, which is great. It's going to help our long-term ARR and our long-term recognized revenue. But, as Andrew mentioned, it depresses short-term recognized revenue because it doesn't show up and get recognized in the quarter. It gets recognized radically over the course of the year. So we had a really good quarter in terms of cloud conversions, and of course that helps with the overall health of the business.

Phong Le: We had in Q2 the largest cloud booking this quarter, including conversions, that we've had in the history of the company by about two-fold, a little bit more than two-fold. So the conversions are accelerating, which is great. It's going to help our long-term ARR and our long-term recognized revenue. But, as Andrew mentioned, it depresses short-term recognized revenue because it doesn't show up and get recognized in the quarter. It gets recognized readily over the course of the year.

Phong Le: Thanks.

Phong Le: We had in Q2.

Phong Le: The largest cloud bookings quarter, including conversions that we've had in the history of the company.

Phong Le: And by about twofold, a little bit more than twofold. So the conversions are accelerating which is great.

Andrew Kang: It's going to help our long term <unk>.

Andrew Kang: And our long term recognized revenue.

Phong Le: But as Andrew mentioned, it depresses short term recognize revenue because it doesn't show up and get recognized in the quarter gets recognized ratably over the course of the year. So we had a really good quarter in terms of cloud conversions and of course that helps with the overall health of the business, but the other thing. It does is it accelerates the <unk>.

Phong Le: So we had a really good quarter in terms of cloud conversions, and of course, that helps with the overall health of the business. But the other thing it does is accelerates the adoption of AI because our AI products are only available in the cloud. And so we also saw a big uptick in the purchase and use of AI in the second quarter. And I think that's going to start to accelerate, also.

Phong Le: But the other thing it does is it accelerates the adoption of AI because our AI products are only available in the cloud. And so we also saw a big uptick in the purchase and the use of AI in the second quarter. And I think that's going to start to accelerate also. And so we'll see nice adoption and usage of our first market AI products. So both of those are our positive trends in the business and good well overall.

Phong Le: The option of AI, because our AI products only available in the cloud and so we also saw a big uptick in the a and the <unk>.

Phong Le: Purchase and the use of AI in the second quarter.

Phong Le: And I think thats going to start to accelerate also and so we will see nice adoption and usage of our first to market AI products. So both of those are positive trends in the business and bode well overall.

Phong Le: And so we'll see nice adoption and usage of our first-to-market AI products. So both of those are positive trends in the business and bode well overall. Thanks, Phong.

Phong Le: Thanks.

Michael Saylor: Next question is again for Michael. How does management decide between raising proceeds from debt or equity issuances, and whether to use the convertible debt or ATM equity issuances, and how do we think about different options? Well, we have lots of options. We, um... You know, we have options including cash purchases, straight debt, convertible debt, equity, or other types of operational measures that might generate income that we can use to acquire Bitcoin.

Phong Le: Thanks, Paul next question is again for Michael.

Michael Saylor: Next question is again for Michael. How does management decide between raising proceeds from debt or equity assurances and whether to use the convertible debt or ATM equity assurances? And how do we think about different options? Well, we have lots of options. We have options including cash purchases, straight debt, convertible debt, equity, or other types of operational measures that might generate income that we can use to acquire Bitcoin. We're continually evaluating the capital markets and the relationship between the options market, the futures market, the Bitcoin spot market, our equity market, and then developments in our business.

Michael Saylor: How does management decide between raising proceeds from debt or equity issuances and whether to use the convertible debt or ATM equity issuances and how do we think about different options.

Michael Saylor: Okay.

Michael Saylor: Well, we have lots of options.

Michael Saylor: We.

Michael Saylor: We have options, including cash purchases.

Michael Saylor: Trade debt convertible debt equity or other types of operational measures.

Michael Saylor: That might might generate income that we can use to acquire bitcoin.

Michael Saylor: We're continually evaluating the capital markets and the relationship between the options market, the futures market, the Bitcoin spot market, our equity market, and then developments in our business. And then opportunities we have from various counterparties all go into the mix this year. You know, we did acquire Bitcoin with equity issuance, and we thought that that was extremely accretive. Then we did a debt offering and a convertible debt offering. That was extremely acquisitive.

Michael Saylor: We're continually evaluating the capital markets and.

Michael Saylor: The relationship between the options market the futures market, the bitcoin spot market or equity market and then developments in our business and then and then opportunities we have from various counterparties all go into the mix.

Michael Saylor: And then opportunities we have from various counter parties all go into the mix.

Michael Saylor: This year, we did acquire Bitcoin with equity issuance, and we thought that that was extremely creative. Then we did a debt offering and a convertible debt offering that was extremely creative. It turns out that the next week the Bitcoin market surge and the convertible market surge and the equity market surge and we could do another convert offering. That was literally a decision-making process that took place over a matter of days. And so sometimes, in days, we'll move when the market offers an opportunity. Then we went ahead and redeemed the 25 note that was in response to the capital markets.

Michael Saylor: This year.

Beth Cohen: We did acquire Beth Cohen with equity issuance and we thought the dollars extremely accretive than we did.

Michael Saylor: A debt offering and a convertible debt offering that was extremely accretive.

Michael Saylor: It turns out that the next week, the Bitcoin market surged, and the convertible market surged, and the equity market surged, and we could do another crowdfunding offering. That was literally a decision-making process that took place over a matter of days. And so sometimes in a few days, we'll move when the market offers an opportunity. Then we went ahead and redeemed the 25 note. That was in response to the capital markets. The next debt deal in Q2 was also in response to the capital markets.

Speaker Change: It turns out that the next week.

Michael Saylor: Coin market surge and then convertible market surge in the equity market search and we could do another convert offering that was literally a decision making process that took place over a matter of days and so sometimes in days will move when the market offers an opportunity there.

Michael Saylor: And then we.

Michael Saylor: We went ahead and redeemed 25 note that was in response to the capital markets.

Michael Saylor: The next debt dealing Q2 was in response to the capital markets. We're always going to consider things like the duration of the deal; we consider the nature of the pricing of the deal. We didn't really choose to pursue equity so much in Q2 as we did in Q4 of last year or early Q1, just because the markets are shifting. And the relationship between Bitcoin, the options market, the convertible debt market, the fixed income market, the equity market, those are all changing. They literally change. To say they change every quarter is a reasonable statement, but sometimes they change week by week and month by month.

Michael Saylor: The next debt deal in Q2 was a response to the capital markets.

Michael Saylor: We consider things like the duration of the deal. We consider the nature of the pricing of the deal. We didn't really choose to pursue equity so much in Q2 as we did in Q4 of last year or early Q1, just because the markets are shifting. And the relationship between Bitcoin, the options market, the convertible debt market, the fixed income market, the equity market, those are all changing. They literally are changing.

Michael Saylor: We're always scanning we consider things like the duration of the deal we consider the nature of the pricing of the deal we.

Michael Saylor: We didn't really choose to pursue equity so much in Q2 as we did in Q4 of last year or early Q1, just because the markets are shifting and the relationship between bitcoin the options market that convertible debt market the fixed income market.

Michael Saylor: The equity market those are all changing they literally change.

Michael Saylor: You know, to say they change every quarter is a reasonable statement, but sometimes they change week by week and month by month. So I think the great situation we're in is that we don't have to do anything quarter by quarter. We can afford to take a quarter off. But we can also, like in Q1, do an ATM deal, a convertible debt deal, a second convertible debt deal, and a cash purchase. And we can use all four different things, and we can do that in a hurry.

Michael Saylor: To say they change every quarter as is a reasonable statement, but sometimes they change week by week and month by month.

Michael Saylor: So I think the great situation we're in is that we don't have to do anything quarter by quarter; we can afford to take a quarter off. But we can also, like in Q1, we can do an ATM deal, a convertible debt deal, a second convertible debt deal, and a cash purchase, and we can use all four different things, and we can do that in a hurry. So we tend to let the capital markets drive our decision making by keeping an open mind of being flexible.

Michael Saylor: So I think.

Michael Saylor: The great situation we're in.

Michael Saylor: Is that we don't have to do anything quarter by quarter.

Michael Saylor: Can afford to take a quarter off.

Michael Saylor: But we can also.

Michael Saylor: Like in Q1, we can do in <unk>.

Speaker Change: ATM deal a convertible debt deal a second convertible debt deal and a cash purchase and we can use off all in all for different things and we can do that in a hurry. So we tend to let the capital markets drive our decision making.

Michael Saylor: So we tend to let the capital markets drive our decision making by keeping an open mind to being flexible. And, you know, what we wanted to do was give our shareholders a useful KPI that helps them understand how we think about a deal that's a good deal to do. We think if we can generate BTC yield, you know, and a substantial BTC yield, then we will probably entertain it. If the market is offering us a proposition that looks like a de minimis yield or no yield, or negative yield, obviously, we just pass on that.

Michael Saylor: By keeping an open mind and being flexible.

Michael Saylor: And you know what we wanted to do was give our shareholders a useful KPI that helps them understand how we think about a deal that's a good deal to do. We think if we can generate BTC yield, you know, and a substantial BTC yield, then probably will entertain it. If the market is offering us a proposition that looks like a diminimacy yield or no yield or negative yield. Obviously, we just pass on that.

Michael Saylor: And what.

Michael Saylor: What we wanted to do.

Michael Saylor: <unk> give our shareholders a useful kpis that helps them understand how we think about a deal that is a good deal to do we think if we can generate BTC yield.

Michael Saylor: And a substantial BTC yield then probably we'll entertain it.

Michael Saylor: If the market is offering us a proposition that looks like a de minimus yield or no yield or negative yield obviously, we just pass on that.

Michael Saylor: Thank you, Michael.

Michael Saylor: Thank you Michael.

Andrew Kang: I think we have time for one last question, and this is for Andrew. How do you think about any incremental leverage capacity and interest expense capacity given the increased overall interest expense related to the operating cash flows from software business. Thanks, Shreece, for the question. Because I start by saying, you know, we actively manage and forecast our cash. And at the moment, you know, we forecast adequate cash to service our existing debt based on the overall software revenues, which continue to remain durable. And as we mentioned before, we're building stronger ARR as we transition to the cloud.

Michael Saylor: Thank you, Michael. I think we have time for one last question, and this is for Andrew.

Speaker Change: I think we have time for one last question.

Andrew Kang: This is for Andrew.

Andrew Kang: How do you think about any incremental leverage capacity and interest expense capacity given the increased overall interest expense related to the operating cash flows from the software business? Thanks, Shirish, for the question. I guess I'd start by saying, you know, we actively manage and forecast our cash. And at the moment, we forecast adequate cash to service our existing debt based on the overall software revenues, which continue to remain durable. And as we mentioned before, we're building stronger ARR as we transition to the cloud. We also manage our cash after taking into account a fully funded software business, as well as as well as our.

Andrew Kang: How do you think about the incremental leverage capacity and interest expense capacity given the increased <unk>.

Andrew Kang: Interest expense related to the operating cash flows from software business.

Andrew Kang: Thanks for the question.

Andrew Kang: I guess I'd start by saying, we actively manage and forecast our cash.

Andrew Kang: And at the moment, we forecast adequate cash to service our existing debt based on the overall software revenues, which continue to remain durable and as soon.

Andrew Kang: As we mentioned before were building.

Andrew Kang: Stronger.

Andrew Kang: As we transition to the cloud.

Andrew Kang: We also manage our cash after taking into account if fully funded software business as well as our debt service needs. So we take the full picture when we're thinking about incremental debt and interest expense. And, you know, I just would say we manage it extremely carefully. And keep in mind, too, we also have additional sources of liquidity available to us, as Michael mentioned, via the capital markets, if needed. And we continually assess various liability management opportunities across the debt stack that kind of gives us a profile of our needs as well as our capacity. So overall, I'd say we feel very comfortable with our ability to service the best.

Andrew Kang: We also manage our cash after taking into account.

Andrew Kang: Fully funded software business as well as adults as well as our.

Andrew Kang: Michael Saylor, Phong Le, Andrew Kang, Shirish Jajodia, MicroStrategy Inc. Michael Saylor, Phong Le, Andrew Kang, Shirish Jajodia, MicroStrategy Inc. Great, thanks Andrew. So, thank you everyone for your questions, and this concludes the Q&A portion of the webinar. I will now hand over the call to Phong for his final closing remarks. I want to thank everyone for their time today and appreciate all of your support, and I look forward to seeing everybody again next quarter. Thanks. Goodbye.

Andrew Kang: Debt service needs and so.

Phong Le: We take the full picture.

Speaker Change: When we're thinking about incremental debt and interest expense.

Speaker Change: Let's say, we manage that extremely carefully.

Speaker Change: And keep in mind too.

Speaker Change: We also have additional sources of liquidity.

Speaker Change: Available to us as Michael mentioned at the capital markets if needed.

Phong Le: And we.

Speaker Change: Continually assess various liability management opportunities across the debt stack.

Speaker Change: That kind of gives us.

Speaker Change: <unk> of our needs as well as our capacity.

Speaker Change: So overall I'd say.

Speaker Change: We feel very comfortable with our ability to service the debt.

Phong Le: And we.

Andrew Kang: And, you know, we'll continue to be active in ways that will continue to generate that BTC yield KPI that we announced earlier today.

Speaker Change: We will continue to be active.

Speaker Change: In ways that will continue to.

Andrew Kang: Generate BTC yield.

Phong Le: Kpis that we announced earlier today.

Shirish Jajodia: Great. Thanks, Andrew.

Phong Le: Great. Thanks, Andrew.

Shirish Jajodia: So, thank you, everyone, for your questions, and this concludes the Q&A portion of the webinar.

Speaker Change: So thank you everyone for your questions and this concludes the Q&A portion after <unk> I will now hand over to Carl to fund for final closing remarks.

Phong Le: I will now hand over the call to Phong for final closing remarks. I want to thank everyone for their time today, and appreciate all of your support, and I look forward to seeing everybody again next quarter. Thanks.

Andrew Kang: I want to thank everyone for their time today and appreciate all of your support and I look forward to seeing everybody again next quarter. Thanks.

Andrew Kang: Good.