Strategy Announces Fourth Quarter 2024 Financial Results; Holds 471,107 BTC

• 74.3% "BTC Yield" KPI achieved in FY 2024 and 2.9% in QTD 2025
• Revises annual BTC Yield target to a minimum of 15% for 2025
• Announces new "BTC Gain" and "BTC $ Gain" KPIs
• Announces an annual "BTC $ Gain" target of $10 billion for 2025

MicroStrategy^® Incorporated d/b/a Strategy™ (NASDAQ:MSTR) ("Strategy" or the "Company"), the largest corporate holder of bitcoin and the world's first Bitcoin Treasury Company, today announced financial results for the three-month period ended December 31, 2024 (the fourth quarter of its 2024 fiscal year).

"Earlier today, we announced that we are now Strategy, a new name that powerfully and succinctly conveys the universal and global appeal of our company. Strategy is at the cutting edge of innovation, championing the two most transformative technologies of the 21st century: Bitcoin and AI. We have completed $20 billion of our $42 billion capital plan, significantly ahead of our initial timelines, while leading the digital transformation of capital in the financial markets. Looking ahead to the rest of 2025, we are well-positioned to further enhance shareholder value by leveraging the strong support from institutional and retail investors for our strategic plan," said Phong Le, President and Chief Executive Officer.

"The fourth quarter of 2024 marked our largest ever increase in quarterly bitcoin holdings, culminating in the acquisition of 218,887 bitcoins acquired for $20.5 billion, since the end of Q3. We carried this strong momentum forward into Q1, raising an additional $584 million through the launch and upsize of the inaugural STRK convertible preferred offering which was supported by both institutional and retail investors. 2025 will take our evolution further with the introduction of the BTC $ Gain KPI and when we adopt fair value accounting for our bitcoin holdings with our Q1 results, transforming our financial results and bringing more transparency to the value generation and profitability of our treasury operations," said Andrew Kang, Chief Financial Officer.

On August 7, 2024, the Company completed a 10-for-1 stock split of the Company's class A and class B common stock. All prior period share and per share information presented herein has been retroactively adjusted to reflect the stock split.

Bitcoin Treasury Highlights

• "BTC Yield" KPI: For the full year 2024, the Company's BTC Yield was 74.3%. The Company is revising its 2025 target to achieve an annual BTC Yield of more than 15%. BTC Yield is a key performance indicator ("KPI") that the Company uses to help assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. See "Important Information about BTC Yield, BTC Gain and BTC $ Gain KPIs" in this press release for the definition of BTC Yield and how it is calculated.
• "BTC Gain" and "BTC $ Gain" KPIs: For the full year 2024, the Company's BTC Gain was 140,538. The Company's 2025 target is to achieve an annual BTC $ Gain of $10 billion. BTC Gain and BTC $ Gain are KPIs that the Company uses to assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. See "Important Information about BTC Yield, BTC Gain and BTC $ Gain KPIs" in this press release for definitions of BTC Gain and BTC $ Gain and how these metrics are calculated.
• Digital Assets: As of December 31, 2024, the carrying value of the Company's digital assets (comprised of approximately 447,470 bitcoins) was $23.909 billion. As of December 31, 2024, the original cost basis and market value of the Company's bitcoin were $27.968 billion and $41.789 billion, respectively, which reflects an average cost per bitcoin of approximately $62,503 and a market price per bitcoin of $93,390, respectively. On January 1, 2025, we adopted ASU 2023-08. ASU 2023-08 requires us to measure our bitcoin holdings at fair value in our statement of financial position, with gains and losses from change in the fair value of our bitcoin recognized in net income each reporting period. As a result of our adoption of ASU 2023-08, as of January 1, 2025, we are required to apply a cumulative-effect net increase to the opening balance of our retained earnings of $12.745 billion.
• At-the-Market Equity Offering Program: During the three months ended December 31, 2024, the Company issued and sold 42,308,443 shares of its class A common stock for aggregate net proceeds of approximately $15.1 billion. Between January 1, 2025 and February 2, 2025, the Company issued and sold an additional 6,487,654 shares of its class A common stock for aggregate net proceeds of approximately $2.4 billion. As of February 2, 2025, approximately $4.3 billion of the Company's class A common stock remained available for issuance and sale pursuant to its current at-the-market equity offering program.
• Issuance of 2029 Convertible Notes: In November 2024, the Company issued $3.0 billion aggregate principal amount of 0% Convertible Senior Notes due 2029 (the "2029 Convertible Notes") with an initial conversion price of $672.40 per share of class A common stock, for net proceeds of approximately $2.97 billion, after deducting the initial purchasers' discounts and commissions and estimated offering expenses.
• Issuance of Perpetual Strike Preferred Stock: In January 2025, the Company issued 7,300,000 shares of 8.00% Series A Perpetual Strike Preferred Stock (the "perpetual strike preferred stock"), at a public offering price of $80.00 per share for net proceeds of approximately $563.4 million, after deducting the underwriting discounts and commissions and estimated offering expenses. The perpetual strike preferred stock has a liquidation preference of $100 per share and accumulates cumulative dividends on the liquidation preference at a fixed rate of 8.00% per annum.
• Redemption and Conversions of 2027 Convertible Notes: On January 24, 2025, the Company announced that it delivered a notice of redemption (the "Redemption Notice") to the trustee of its 0.0% Convertible Senior Notes due 2027 (the "2027 Convertible Notes") for redemption of all $1.05 billion in aggregate principal amount of the 2027 Convertible Notes then outstanding on February 24, 2025 (the "Redemption Date"). As a result of the delivery of the Redemption Notice, at any time prior to 5:00 p.m., New York City time, on February 20, 2025, the 2027 Notes are convertible, at the option of the holders of the 2027 Notes, at the applicable conversion rate of 7.0234 shares of the Company's class A common stock per $1,000 principal amount (reflecting a conversion price of $142.38 per share). In the event that any holder delivers a conversion notice as provided in the indenture related to the 2027 Notes, the Company has elected to satisfy its conversion obligation with respect to each $1,000 principal amount of 2027 Notes by delivering solely shares of its class A common stock, together with cash in lieu of any fractional shares.
• Increase in Authorized Class A Common Stock and Preferred Stock. In January 2025, the Company's stockholders approved an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of class A common Stock from 330,000,000 to 10,330,000,000 and the number of authorized shares of preferred stock from 5,000,000 to 1,005,000,000.

Q4 2024 Software Business Highlights

• Revenues:
  • Total revenues were $120.7 million, a 3.0% decrease year-over-year.
  • Subscription Services Revenues were $31.9 million, a 48.4% increase year-over-year.
  • Product licenses and subscription services revenues were $47.2 million, a 18.3% increase year-over-year.
  • Product support revenues were $58.4 million, an 10.8% decrease year-over-year.
  • Other services revenues were $15.1 million, an 20.8% decrease year-over-year.
• Gross Profit: Gross profit was $86.5 million, representing a 71.7% gross margin, compared to $96.3 million, representing a gross margin of 77.3%, for the fourth quarter of 2023.

Other Q4 Financial Highlights

• Operating Expenses: Operating expenses were $1.103 billion, a 693.2% increase year-over-year. Operating expenses include impairment losses on the Company's digital assets, which were $1.006 billion, compared to $39.2 million in the fourth quarter of 2023.
• Loss from Operations and Net (Loss) Income: Loss from operations was $1.016 billion, compared to $42.8 million for the fourth quarter of 2023. Net loss was $670.8 million, or $3.03 per share on a diluted basis, as compared to net income of $89.1 million, or $0.50 per share on a diluted basis, for the fourth quarter of 2023.
• Cash and Cash Equivalents: As of December 31, 2024, the Company had cash and cash equivalents of $38.1 million, as compared to $46.8 million as of December 31, 2023, a decrease of $8.7 million.

The tables provided at the end of this press release include a reconciliation of the most directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP") to non-GAAP financial measures for the three and twelve months ended December 31, 2024 and 2023. An explanation of non-GAAP financial measures is also included under the heading "Non-GAAP Financial Measures" below. Additional non-GAAP financial measures are included in Strategy's "Q4 2024 Earnings Presentation," which will be available under the "Events and Presentations" section of Strategy's investor relations website at https://www.strategy.com/investor-relations.

Strategy Dashboard

Strategy today announced that it is launching a dashboard on its website, to be available at strategy.com, as a disclosure channel to provide broad, non-exclusionary distribution of information regarding the Company to the public. Some of the information distributed through the website dashboard may be considered material information. The website dashboard will include information regarding market data for our securities and bitcoin, BTC Yield, BTC Gain and BTC $ Gain KPIs, bitcoin purchases, bitcoin holdings, capital markets activity, and other related information. Investors and others are encouraged to regularly review the information that the Company makes public via the website dashboard.

Conference Call

Strategy will be discussing its fourth quarter 2024 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. ET. The live Video Webinar and accompanying presentation materials will be available under the "Events and Presentations" section of Strategy's investor relations website at https://www.strategy.com/investor-relations. Log-in instructions will be available after registering for the event. An archived replay of the event will be available beginning approximately two hours after the call concludes.

About Strategy

MicroStrategy Incorporated d/b/a Strategy (NASDAQ:MSTR) is the world's first and largest Bitcoin Treasury Company. We are a publicly traded company that has adopted Bitcoin as our primary treasury reserve asset. By using proceeds from equity and debt financings, as well as cash flows from our operations, we strategically accumulate Bitcoin and advocate for its role as digital capital. Our treasury strategy is designed to provide investors varying degrees of economic exposure to Bitcoin by offering a range of securities, including equity and fixed-income instruments. In addition, we provide industry-leading AI-powered enterprise analytics software, advancing our vision of Intelligence Everywhere. We leverage our development capabilities to explore innovation in Bitcoin applications, integrating analytics expertise with our commitment to digital asset growth. We believe our combination of operational excellence, strategic Bitcoin reserve, and focus on technological innovation positions us as a leader in both the digital asset and enterprise analytics sectors, offering a unique opportunity for long-term value creation.

Strategy, MicroStrategy, and Intelligence Everywhere are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.

Non-GAAP Financial Measures

Strategy is providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of share-based compensation expense, (ii) non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share that exclude the impacts of share-based compensation expense, interest expense arising from the amortization of debt issuance costs related to Strategy's long-term debt, gains and losses on debt extinguishment, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude certain foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.

Strategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes a significant non-cash expense that Strategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impacts of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs related to Strategy's long-term debt, (iii) gains and losses on debt extinguishment, and (iv) related income tax effects. The third set of supplemental financial measures excludes changes resulting from certain fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. Strategy believes the use of these non-GAAP financial measures can also facilitate comparison of Strategy's operating results to those of its competitors.

Important Information About BTC Yield, BTC Gain and BTC $ Gain KPIs

BTC Yield is a key performance indicator ("KPI") that represents the percentage change, during a period, of the ratio between the Company's bitcoin holdings and its Assumed Diluted Shares Outstanding, where:

• "Assumed Diluted Shares Outstanding" refers to the aggregate of our Basic Shares Outstanding as of the end of each period plus all additional shares that would result from the assumed conversion of all outstanding convertible notes and convertible preferred stock, exercise of all outstanding stock option awards, and settlement of all outstanding restricted stock units and performance stock units. Assumed Diluted Shares Outstanding is not calculated using the treasury method and does not take into account any vesting conditions (in the case of equity awards), the exercise price of any stock option awards or any contractual conditions limiting convertibility of convertible debt instruments.
• "Basic Shares Outstanding" reflects the actual class A common stock and class B common stock outstanding as of the dates presented. For purposes of this calculation, outstanding shares of such stock are deemed to include shares, if any, that were sold under at-the-market equity offering programs or that were to be issued pursuant to options that had been exercised or restricted stock units that have vested, but which in each case were pending issuance as of the dates presented.

BTC Gain is a KPI that represents the number of bitcoins held by the Company at the beginning of a period multiplied by the BTC Yield for such period.

BTC $ Gain is a KPI that represents the dollar value of the BTC Gain calculated by multiplying the BTC Gain by the market price of bitcoin as of 4:00pm ET on the Coinbase exchange on the last day of the applicable period. The Company has selected 4:00pm ET on the last day of the applicable period as the date and time of determination of the market price of bitcoin solely for the purpose of facilitating this illustrative calculation.

The Company uses BTC Yield, BTC Gain and BTC $ Gain as KPIs to help assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. The Company believes these KPIs can be used to supplement an investor's understanding of the Company's decision of the manner in which it funds the purchase of bitcoin and the value created in a period by:

• in the case of BTC Yield, comparing the rate of change in the Company's bitcoin holdings as compared to the rate of change in the number of shares of its common stock and instruments convertible to common stock;
• in the case of BTC Gain, hypothetically expressing the change reflected in the BTC Yield metric as if it reflected an increase in the amount of bitcoin held at the end the applicable period as compared to the beginning of such period; and
• in the case of BTC $ Gain, further expressing that gain as a dollar value by multiplying that bitcoin-denominated gain by the market price of bitcoin at the end of the applicable period as described above.

When the Company uses these KPIs, management also takes into account the various limitations of these metrics, including that they do not take into account debt, preferred stock and other liabilities and claims on company assets that would be senior to common equity and that they assume that all indebtedness will be refinanced or, in the case of the Company's senior convertible debt instruments and convertible preferred stock, converted into shares of common stock in accordance with their respective terms.

Additionally, BTC Yield is not, and should not be understood as, an operating performance measure or a financial or liquidity measure. In particular, BTC Yield is not equivalent to "yield" in the traditional financial context. It is not a measure of the return on investment the Company's shareholders may have achieved historically or can achieve in the future by purchasing stock of the Company, or a measure of income generated by the Company's operations or its bitcoin holdings, return on investment on its bitcoin holdings, or any other similar financial measure of the performance of its business or assets.

BTC Gain and BTC $ Gain are not, and should not be understood as, operating performance measures or financial or liquidity measures. In particular, BTC Gain and BTC $ Gain are not equivalent to "gain" in the traditional financial context. They also are not measures of the return on investment the Company's shareholders may have achieved historically or can achieve in the future by purchasing stock of the Company, or measures of income generated by the Company's operations or its bitcoin holdings, return on investment on its bitcoin holdings, or any other similar financial measure of the performance of its business or assets. It should also be understood that BTC $ Gain does not represent a fair value gain of the Company's bitcoin holdings, and BTC $ Gain may be positive during periods when the Company has incurred fair value losses on its bitcoin holdings.

The trading price of the Company's class A common stock is informed by numerous factors in addition to the amount of bitcoins the Company holds and number of actual or potential shares of its stock outstanding, and as a result, the market value of the Company's shares may trade at a discount or a premium relative to the market value of the bitcoin the Company holds, and neither BTC Yield, BTC Gain nor BTC $ Gain are indicative or predictive of the trading price of the Company's securities.

As noted above, these KPIs are narrow in their purpose and are used by management to assist it in assessing whether the Company is using equity capital in a manner accretive to shareholders solely as it pertains to its bitcoin holdings.

In calculating these KPIs, the Company does not take into account the source of capital used for the acquisition of its bitcoin. The Company notes in particular, it has acquired bitcoin using proceeds from the offering of its 6.125% Senior Secured Notes due 2028 (which the Company has since redeemed), which were not convertible to shares of the Company's common stock, as well as from the offerings of its convertible senior notes, which at the time of issuance had, and may from time-to-time thereafter have, conversion prices above the current trading prices of the Company's common stock, or as to which the holders of such convertible notes may not then be entitled to exercise the conversion rights of the notes. Such offerings have had the effect of increasing the BTC Yield, BTC Gain and BTC $ Gain without taking into account the corresponding debt. Conversely, if any of the Company's convertible notes mature or are redeemed without being converted into common stock, the Company may be required to sell shares in quantities greater than the shares such notes are convertible into or generate cash proceeds from the sale of bitcoin, either of which would have the effect of decreasing the BTC Yield, BTC Gain and BTC $ Gain due to changes in the Company's bitcoin holdings and shares in ways that were not contemplated by the assumptions in calculating BTC Yield, BTC Gain and BTC $ Gain, respectively. Accordingly, these metrics might overstate or understate the accretive nature of the Company's use of equity capital to buy bitcoin because not all bitcoin may be acquired using proceeds of equity offerings and not all issuances of equity may involve the acquisition of bitcoin.

In addition, we are required to pay dividends with respect to our perpetual strike preferred stock in perpetuity. We could pay these dividends with cash or by issuing shares of class A common stock. If we issue shares of class A common stock in lieu of paying dividends in cash, or if we issue shares of class A common stock for cash to fund the payment of dividends in cash, then we would experience an increase in our Assumed Diluted Shares Outstanding without a corresponding increase in our bitcoin holdings and a decrease in BTC Yield, BTC Gain and BTC $ Gain for the period in which such issuance of shares of class A common stock occurred.

The Company has historically not paid any dividends on its shares of class A common stock, and by presenting these KPIs the Company makes no suggestion that it intends to do so in the future. Ownership of the Company's securities, including its class A common stock and preferred stock, does not represent an ownership interest in the bitcoin the Company holds.

The Company determines its KPI targets based on its history and future goals. The Company's ability to achieve positive BTC Yield, BTC Gain, or BTC $ Gain may depend on a variety of factors, including its ability to generate cash from operations in excess of its fixed charges and other expenses, as well as factors outside of its control, such as the price of bitcoin, and the availability of debt and equity financing on favorable terms. Past performance is not indicative of future results.

Investors should rely on the financial statements and other disclosures contained in the Company's SEC filings. These KPIs are merely supplements, not a substitute. They should be used only by sophisticated investors who understand their limited purpose and many limitations.

Forward-Looking Statements

This press release may include statements that may constitute "forward-looking statements," including estimates of future business prospects or financial results, our targets relating to our BTC Yield, BTC Gain and BTC $ Gain, and statements containing the words "believe," "estimate," "project," "expect," "will," or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the "Company") to differ materially from the forward-looking statements. Factors that could contribute to such differences include: fluctuations in the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price of bitcoin below the value at which the Company's bitcoins are carried on its balance sheet; the availability of debt and equity financing on favorable terms; gains or losses on any sales of bitcoins; changes in the accounting treatment relating to the Company's bitcoin holdings; changes in securities laws or other laws or regulations, or the adoption of new laws or regulations, relating to bitcoin that adversely affect the price of bitcoin or the Company's ability to transact in or own bitcoin; the impact of the availability of spot exchange traded products for bitcoin and other digital assets; a decrease in liquidity in the markets in which bitcoin is traded; security breaches, cyberattacks, unauthorized access, loss of private keys, fraud or other circumstances or events that result in the loss of the Company's bitcoins; impacts to the price and rate of adoption of bitcoin associated with financial difficulties and bankruptcies of various participants in the digital asset industry; the level and terms of the Company's substantial indebtedness and its ability to service such debt; the extent and timing of market acceptance of the Company's new product offerings; continued acceptance of the Company's other products in the marketplace; the Company's ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; customers continuing to shift from a product license model to a cloud subscription model, which may delay the Company's ability to recognize revenue; fluctuations in tax benefits or provisions; changes in the market price of bitcoin as of period-end and their effect on our deferred tax assets, related valuation allowance, and tax expense; other potentially adverse tax consequences, including the potential taxation of unrealized gains on our bitcoin holdings; competitive factors; general economic conditions, including levels of inflation and interest rates; currency fluctuations; and other risks detailed in the Company's registration statements and periodic and current reports filed with the Securities and Exchange Commission ("SEC"). The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this release.

Excess Cash refers to cash in excess of the minimum Cash Assets that MicroStrategy is required to hold under its Treasury Reserve Policy, which may include cash generated by operating activities and cash from the proceeds of financing activities. Cash Assets refers to cash and cash equivalents and short-term investments.

The amounts reported as "Market Value" in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported on the Coinbase exchange (MicroStrategy's principal market for bitcoin) in each scenario defined above multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period. Bitcoin and bitcoin markets may be subject to manipulation and the spot price of bitcoin may be subject to fraud and manipulation. Accordingly, the Market Value amounts reported above may not accurately represent fair market value, and the actual fair market value of MicroStrategy's bitcoin may be different from such amounts and such deviation may be material. Moreover, (i) the bitcoin market historically has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks that are, or may be, inherent in its entirely electronic, virtual form and decentralized network and (ii) MicroStrategy may not be able to sell its bitcoins at the Market Value amounts indicated above, at the market price as reported on the Coinbase exchange (its principal market) on the date of sale, or at all.

MICROSTRATEGY INCORPORATED

SEGMENT INFORMATION

(in thousands, unaudited)

MicroStrategy has one reportable operating segment, the "Software Business," which is engaged in the design, development, marketing, and sales of the Company's enterprise analytics software platform through cloud subscriptions and licensing arrangements and related services (i.e., product support, consulting, and education). The "Corporate & Other" category presented in the following tables is not considered an operating segment. It consists primarily of costs and expenses related to executing the Company's bitcoin strategy and includes the impairment charges and other third-party costs associated with the Company's bitcoin holdings, net interest expense primarily related to long-term debt obligations (the net proceeds of which were primarily used to purchase bitcoin), and income tax effects generated from the Company's bitcoin holdings and related debt issuances. Segment assets allocated to the Corporate & Other category are the Company's digital assets and deferred tax assets related primarily to digital asset impairment losses and interest expense.

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Strategy

Shirish Jajodia

Corporate Treasurer

[email protected]