Strategy (MicroStrategy) 2026 Q2 Earnings Call

We will start the call with a 60-minute presentation starting with Andrew Kang, followed by Phong Le, and then Michael Saylor. This will be followed by a 30-minute interactive Q&A session with four Wall Street equity analysts and four Bitcoin analysts. Before we proceed, I will read the safe harbor statement. Some of the information we provide in this presentation 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 fluctuations in the price of Bitcoin and the risk factors discussed under the caption Risk Factors in Strategy's quarterly report on Form 10-Q filed with the SEC on May 6th, 2026, and the risks described in other filings that Strategy may make with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today.

With that, I will turn the call over to Andrew Kang, CFO of Strategy. Thank you, CJ.

Thank you, CJ, and thank you all for joining our call today. Moving on to the first slide, we now hold 843,775 Bitcoin, representing approximately 4% of all Bitcoin that will ever exist. Bitcoin per share is currently 203,683 sats, which remains one of the cleanest measures of how we create long-term value for our shareholders. Our market cap is approximately $38 billion, and year to date, we have raised $17 billion of capital across common equity and digital credit. That capital gives us the strength to continue building our overall Bitcoin holdings, manage our capital structure, meet our dividend and interest obligations, and support the growth of our digital credit platform. On this slide, we show that we adopted Bitcoin as a treasury asset beginning in Q3 of 2020. We have accumulated more Bitcoin in every single quarter across 113 acquisitions.

Today we hold, again, 843,775 Bitcoin with a Bitcoin reserve value of approximately $55 billion. Our total acquisition cost is approximately $64 billion, and our average purchase price is roughly $75,000 per Bitcoin. Strategy is now the largest institutional holder of Bitcoin in the world. Our holdings are larger than the largest Bitcoin ETFs shown here. They are larger than the estimated holdings of any nation-state and larger than the major DeFi custody balances. That scale matters, and it reinforces Strategy's unique position in the digital assets market. We are not just participating in institutional Bitcoin adoption, we are leading it. Doing so as an operating company with access to the capital markets, a growing digital credit platform, and a long-term objective of increasing Bitcoin per share for our shareholders. Now turning to the balance sheet. Q2 reflected active execution across all of our operations and our capital structure.

Digital assets ended the quarter at $49.7 billion, having acquired a net 83,901 Bitcoin during the quarter, with the total balance sheet holdings now slightly lower due to the lower price of Bitcoin as of the end of Q2. Cash and short-term investments increased to $2.4 billion as of the quarter end, now even further to $3.75 billion current quarter to date. Now we hold over two years of dividend and interest coverage and also reflect our goal of continuing to replenish the USD reserve to support our digital credit instruments. Long-term debt declined from $8.2 billion to $6.7 billion, driven by the $1.5 billion repurchase of convertible debt, which we executed at an 8% discount in Q2. Preferred equity increased from $9 billion to $14.4 billion, driven by the strong issuance of STRC during Q2.

We began the quarter with just over 762,000 Bitcoin, with a market value of $51.6 billion. During that quarter, we accumulated more Bitcoin, adding a net 83,901 Bitcoin at an average price of approximately $75,500. At quarter end, we held 846,000 Bitcoin, and the quarter end Bitcoin price was approximately $58,700, resulting in a Q2 unrealized fair value loss of approximately $8.3 billion. After quarter end, we have seen a recovery in the market value of our Bitcoin holdings. Quarter to date through July 27th, we did sell 2,225 Bitcoin for approximately $135 million. With Bitcoin price increasing to approximately $65,000 per Bitcoin, we currently would reflect an estimated fair value gain of about $5.2 billion on our total holdings, and our digital assets balance sheet will have increased to approximately $54.8 billion.

As of July 27th, our total reserve, which includes our BTC reserve and our US dollar cash reserve, was $58.5 billion, with a net reserve of approximately $36.3 billion, which nets out our out-of-the-money convertible debt and preferred equity balances. Here, amplification calculated as our BTC reserve of approximately $58 billion divided by net reserves of $36 billion is over 1.5 times. Amplification represents our total Bitcoin as a multiple of reserves remaining after taking into account our debt and preferred claims. We have $15.4 billion of preferred equity outstanding and $6.7 billion of convertible debt outstanding, and a low net leverage of 5.4%, which reflects our debt less our cash reserves divided by our BTC reserve. At a current Bitcoin price of roughly $65,000, our approximately $55 billion of Bitcoin reserves provides an 18.5x BTC rating against our net debt of about $3 billion.

In an extreme stress case, as you can see here in the middle of the slide, even with a 95% Bitcoin price decline to roughly $4,000 per Bitcoin, our converts would remain fully covered at a 1.0x BTC rating. Over time, our plan remains to equitize, repay, or refinance existing convertible debt while continuing to maintain strong collateral coverage. As we demonstrated in Q2, we believe the market remains open to all of these options. We plan to remain patient, monitor the market conditions, and continue to focus on the overall liability management of our outstanding debt. Turning to the Q2 financial results. We reported an operating loss of $8.3 billion, a net loss of $8.6 billion, and an EPS of negative $24.45 per share. These results were driven by the quarter-end non-cash fair value mark-to-market of our Bitcoin holdings.

Our focus remains on the long-term drivers we can control, which include capital allocation, balance sheet strength, the strengthening of our digital credit instruments, and increasing Bitcoin per share over the long term. I mentioned earlier, quarter to date, with Bitcoin price having increased to closer to $65,000, our current fair value mark-to-market of our holdings would reflect about a $5.2 billion gain. Turning to our Bitcoin KPIs. As of July 26th, Bitcoin per share was 203,683 sats compared to about 191,904 sats in July of 2025, which is an increase of about 6% year-over-year. Year to date, BTC Yield is currently 4.5% compared to about 22.8% for the full year 2025. BTC Gain is approximately 30,000 Bitcoin year to date, which is about 30% of last year's full year gain.

In dollar terms, BTC dollar gain is approximately $2 billion year to date compared to about $8.9 billion for the full year 2025. Despite the significant drawdown in BTC price year-over-year, we continue to execute positive performance across all of our core KPIs. Since 2020, our Bitcoin per share has increased from approximately 46,000 sats to 203,000 sats, which is more than a 4x increase over that period. In 2006, we have delivered, as I mentioned, 4.5% BTC Yield year to date. As you can see here, historical annual BTC Yield performance does move sort of in conjunction with Bitcoin price. In Bitcoin bear markets like we saw in 2022 and 2023, BTC Yield was lower than the bull market years of 2024 and 2025.

That being said, BTC Yield this year does have the potential to outperform the prior bear market if BTC price improves and through the support and strengthening of our digital credit instruments. On this slide, we show here in Q2, within Q2, Bitcoin per share increased from approximately 201,170 sats at the end of Q1 to approximately 210,824 sats at the end of Q2. Despite the lower price of Bitcoin and the overall market volatility in Q2, the quarter's BTC Yield of 5% outperformed the Q1 BTC Yield of 3.2%. We are continuing to make good progress. Lastly, I will end with a quick snapshot on the most recent view from our equity analysts. We added two new covering analysts from Barclays and Siebert for a total coverage of now 16.

Across the firms shown here, the average analyst Bitcoin price target, for those that have one, is approximately $98,000. The average MSTR price target is approximately $296, and all with corresponding buy ratings. While we do not endorse any third-party forecasts, it's important to note that the banks are increasing their engagement with Bitcoin, with digital capital, and with the focus on Strategy's role within that market. I think the growth also reflects the deep and growing demand from investors as well for independent institutional views on Bitcoin strategy and digital credit, and it helps deepen investor understanding of our business model, our capital structure, and the long-term value we are pursuing for our shareholders. With that, thank you all for your time, and I will turn it over to Phong for his remarks.

Thank you, Andrew. Thank you everyone for joining us this evening. I'm going to provide an update on our capital markets strategy and our capital markets programs. Before I go into some of those details, I do also want to recap Q2 2026. We acknowledge that it was an up and down quarter for Bitcoin, our common equity and our preferred have gone down in that period of time. If I look at the key metrics that we look at for performance and health of the business, things are generally speaking positive. Our Bitcoin holdings over the course of the quarter increased 11%, from 762,099 Bitcoin to 846,000 Bitcoin. We reduced our debt outstanding from $8.2 billion to $6.7 billion. On a net debt basis, we reduced it even more. This was down 18%. Our USD Reserve is up from $2.1 billion to $2.4 billion at the end of Q2, as Andrew noted, we're now at $3.75 billion.

That's a 12% increase quarter-over-quarter. Our Bitcoin per share, potentially our most important of our metrics, went from 201,170 Satoshis to 210,824 Satoshis, a 5% increase. Many of these metrics show health in the overall business. How were we able to do that? Three months ago in our earnings call, we said that we were adding engines to the Strategy playbook, if you will. We went from one-way capital issuance, buying Bitcoin through active issuance of MSTR, of our preferreds and our convertibles, to what we call active capital management. We're able to sell MSTR to buy Bitcoin, US dollars, debt, prefs.