Slide 1: Q3 2024 Financial Results
Q3 2024 Financial Results October 30, 2024 Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 2: Safe Harbor Statement
MicroStrategy Q3 2024 Earnings Call Safe Harbor Statement FORWARD-LOOKING STATEMENTS 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-look
Slide 3: Business Results
Business Results Phong Le, President & Chief Executive Officer Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 4: Bitcoin Highlights
Bitcoin Highlights Q3 2024 Bitcoin Holdings • Acquired 25,889 bitcoin since the end of Q2 2024 for ~$1.6B at average price of $60,839 252,220 • Current market value of bitcoin holdings ~$18B Acquired for a total cost of $9.9 billion, or • Largest corporate holder of bitcoin in the world $39,266 per
Slide 5: Bitcoin Treasury Company – Capital Structure
Bitcoin Treasury Company – Capital Structure MicroStrategy’s unique value proposition Bitcoin Treasury Company 1 Debt Equity Cash $4.3B in convertible debt $836M total excess cash $4.3B of equity issued outstanding on balance sheet invested Increase Bitcoin Holdings and Shareholder Value Note: As of
Slide 6: The Ultimate Question of Life, The Universe, and Everything…
What’s the answer to: The Ultimate Question of Life, The Universe, and Everything… According to The Hitchhiker's Guide to the Galaxy by Douglas Adams 6
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Slide 8: Capital Raising Target 2025-2027
Capital Raising Target 2025-2027 Billion Billion Billion Total Capital Equity Fixed Income 8
Slide 9: Capital Raising Target – Illustrative
Capital Raising Target – Illustrative 2025-2027 ($ in Millions) Equity Fixed Income 18,000 14,000 9,000 10,000 7,000 5,000 9,000 7,000 5,000 2025E 2026E 2027E Note: The breakdown shown across 2025-2027 is illustrative and may vary depending on the market conditions. 9
Slide 10: Software Highlights
Software Highlights Multi-cloud | Cloud-native | Marketplace ($ in Millions) Non-GAAP Subscription Billings(1) $32.4M Q3 2024 +93% YoY increase $41.3 $33.4 $32.4 $31.1 $23.1 $16.8 $17.7 $14.4 $13.7 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 (1) Please refer to the Appendix for a reconcili
Slide 11: Financial Results
Financial Results Andrew Kang, Senior Executive VP & Chief Financial Officer Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 12: Revenue, Cost Structure, and Operating Income
Revenue, Cost Structure, and Operating Income (1) • Loss from operations from software business for Q3 2024 was approximately $18.5M, which includes approximately $19M from non-cash stock-based compensation expense • Q3 non-GAAP adjusted income from software business was $0.9M ($ in Millions) Q3/23
Slide 13: Growth in Bitcoin Strategic Treasury Reserve
Growth in Bitcoin Strategic Treasury Reserve MicroStrategy has acquired additional bitcoin in every quarter since Q3 2020 Bitcoin Holdings (in ‘000s) 252.2 252,220 bitcoins held on balance sheet, acquired for a total cost of $9.9 billion, or $39,266 per bitcoin(1) 226.3 214.3 189.2 152.3 158.2 140.0
Slide 14: Bitcoin Holdings Market Value vs. Carrying Value
Bitcoin Holdings Market Value vs. Carrying Value • Market value of $18.3 billion and aggregate cost of $9.9 billion • Carrying value of $6.9 billion, net of ~$3 billion in cumulative impairment charges ($ in Billions) Carrying Value Market Value $18.3 $18.0 $16.0 $16.0 $15.2 $14.0 $14.0 $12.0 $10.0
Slide 15: Strong Capital Structure
Strong Capital Structure • Issued $1.01B convertible senior notes due 2028 and issued $1.1B shares of Class A common stock under ATM • Repaid $500M of senior secured notes due 2028 and released all collateral securing these notes • Significant reduction in annual fixed interest expenses to ~$35M fro
Slide 16: Principal Debt Maturities
Principal Debt Maturities • Total $4.3B debt outstanding at weighted average annual fixed interest rate of 0.8% $1,050M $1,010M $800M $800M $604M 2024 2025 2026 2027 2028 2029 2030 2031 2032 0.000% 0.625% 0.625% 0.875% 2.250% Senior Senior Senior Senior Senior Instrument(1) Convertible Convertible C
Slide 17: Impact of Intelligent Leverage
Impact of Intelligent Leverage Bitcoin count increased at a faster pace than assumed diluted share count 252,220 23,510 20,764 189,150 12/31/2023 9/30/2024 12/31/2023 9/30/2024 (1) Total Bitcoin Assumed Diluted Shares Outstanding (in '000s) (1) Please refer to the Appendix for a definition of Assume
Slide 18: BTC Yield KPI Historical
BTC Yield KPI Historical BTC Yield is the % change period-to-period of the ratio between Bitcoin Holdings and Assumed Diluted Shares Outstanding ₿TC Yield % 47.3% 8.1% 7.3% 5.1% 3.7% 1.8% 2021 2022 2023 Q1 24 Q2 24 Q3 24 Note: “BTC Yield” is a KPI (key performance indicator) that represents the % ch
Slide 19: BTC Yield KPI Long Term Target
BTC Yield KPI Long Term Target BTC Yield is the % change period-to-period of the ratio between Bitcoin Holdings and Assumed Diluted Shares Outstanding • Annual BTC Yield Target revised upward from 4-8% to 6-10% ₿TC Yield % 17.8% New Target 6-10% 6-10% 6-10% 7.3% 1.8% 2022 2023 2024 YTD 2025E 2026E 2
Slide 20: Strategy & Bitcoin
Strategy & Bitcoin Michael Saylor, Executive Chairman Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 21: Bitcoin is still in the early stages of adoption as Digital Capital
Bitcoin is still in the early stages of adoption as Digital Capital Bitcoin: $1.4T Cars & Collectibles Total global asset value: $900T Gold Art Equities $16T $18T $6T $115T Real Estate Bonds Money $330T $300T $120T Source: Jesse Myers; https://www.onceinaspecies.com/ 21
Slide 22: Annualized Asset Performance Chart Over Four Years
Annualized Asset Performance Chart Over Four Years 105% 53% 28% 14% 10% 7% -5% MSTR Bitcoin Magnificent 7 S&P 500 Real Estate Gold Bonds Performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Source: FactSet as of October 29, 2024. 22
Slide 23: MicroStrategy vs. Top Performing Stocks in the S&P 500
MicroStrategy vs. Top Performing Stocks in the S&P 500 1,989% 1,526% 1,165% 704% 622% 560% 550% 518% 491% 459% MicroStrategy Super Micro NVIDIA Targa Arista Vistra Quanta Builders Eli Lilly Howmet Resources Networks Services FirstSource Aerospace Performance since August 10, 2020, when MicroStrategy
Slide 24: MSTR has outperformed BTC and M7 via Intelligent Leverage
MSTR has outperformed BTC and M7 via Intelligent Leverage 1989% Key Assets and Indices Big Tech Stocks 1165% 508% 174% 129% 126% 74% 71% 107% 107% 57% 35% 18% 21% -19% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Source: FactSet as of 4:00pm Eastern Time
Slide 25: MicroStrategy Performance Since Adoption of Bitcoin Strategy
MicroStrategy Performance Since Adoption of Bitcoin Strategy % of S&P 500 companies outperformed MSTR 1,989% 100% Bitcoin 508% 99% Magnificent 7 261% 95% S&P 500 74% 61% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Source: FactSet as of October 29, 2024.
Slide 26: MSTR is more volatile than any S&P 500 stock
MSTR is more volatile than any S&P 500 stock 108% 89% 84% 83% 74% 69% 67% 65% 62% 61% MicroStrategy Super Micro Moderna First Solar Palantir Vistra Intel Albemarle Humana Enphase Technologies Energy Source: FactSet as of October 29, 2024. Implied volatility for an at-the-money options contract with
Slide 27: MSTR Volatility = Liquidity & Options Open Interest
MSTR Volatility = Liquidity & Options Open Interest Top 10 performers: Comparing MicroStrategy to the Top stocks in the S&P 500 Options Open Interest ($B) Options Open Interest ($B) as % of Market Cap $362 103% 60% $182 48% $133 $120 34% $99 28% $70 24% 24% 22% 21% 19% $49 $47 $43 $40 NVIDIA Tesla A
Slide 28: MSTR Convertible Bonds Performance Since Issuance
MSTR Convertible Bonds Performance Since Issuance 224% 86% 90% 90% 67% 54% 47% 41% 2025 2027 2028 2030 2031 2032 Blended Bitcoin (1) Convert Convert Convert Convert Convert Convert Convert (1) Source: FactSet as of October 29, 2024. (1) Weighted average appreciation of the bonds and bitcoin from the
Slide 29: MicroStrategy = BTC Treasury Operations + BTC Reserves
MicroStrategy = BTC Treasury Operations + BTC Reserves Macro Economy MSTR Treasury Operations High volatility Securities High leverage 5-10x MSTR Options Issue Securities Technology Acquire Bitcoin 3.0x MSTX, MSTU Inflation Entropy Adjust Leverage Fund Dividends* 1.5x MSTR Equity Crypto 1.0x Spot BT
Slide 30: Energy Companies = Oil Refining Operations + Oil Reserves
Energy Companies = Oil Refining Operations + Oil Reserves Global Energy Oil Refining Operations Oil Products More Refined Jet Fuel Refine Petrochemicals Technology Prospect and Drill Gasoline Inflation Entropy Extract and Transport Sales and Distribution Diesel Crude Oil Liquefied Petroleum Gas Oil
Slide 31: MicroStrategy Securities and the Capital Markets
MicroStrategy Securities and the Capital Markets Type of Security Type of Investment Strategies 1.5x Equity Bitcoin, Magnificent 7, Options, Derivatives 0.75x Bitcoin, Equity Index, Arbitrage, Hedge Funds, Convertible Alternatives 0.5x Preferred Stocks, High-Yield, Private Credit, Dividend* Real Est
Slide 32: BTC Yield KPI Long Term Target
BTC Yield KPI Long Term Target BTC Yield is the % change period-to-period of the ratio between Bitcoin Holdings and Assumed Diluted Shares Outstanding ₿TC Yield % 17.8% 6-10% 6-10% 6-10% 7.3% 1.8% 2022 2023 2024 YTD 2025E 2026E 2027E Note: “BTC Yield” is a KPI (key performance indicator) that repres
Slide 33: The World’s Largest ATM Equity Offering is to Buy Bitcoin
The World’s Largest ATM Equity Offering is to Buy Bitcoin 33
Slide 34: Our BTC Principles
Our BTC Principles 5 Acquire BTC continually while achieving positive BTC Yield. 1 Buy and Hold BTC indefinitely, exclusively, securely. 6 Grow rapidly & responsibly subject to market dynamics. 2 Prioritize MSTR common stock long-term value creation. 7 Issue innovative fixed income securities backed
Slide 35: Appendix
Appendix Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 36: Revenue and Billings
Revenue and Billings Q3 2024 ($ in Millions) Total Revenues Non-GAAP Subscription Billings(1) Subscription Services Revenues Q3 2024 +93% YOY increase Q3 2024 +32% YOY increase $116.1M Q3 2024 Total Revenues $27.8 $41.3 10% YoY decrease $23.0 $24.1 $33.4 $32.4 $21.5 $21.0 14% 9% $16.8 $17.7 24% 53%
Slide 37: Current Bitcoin Holdings
Current Bitcoin Holdings 100% of our total bitcoin holdings became unencumbered upon full redemption of the $500M 2028 senior secured notes on September 26, 2024 252,220 252,220 70% 175,721 252,220 100% 30% 76,500 As of September 19, 2024 As of September 30, 2024 Restricted Bitcoin Unrestricted Bitc
Slide 38: MicroStrategy – Bitcoin Treasury Company
MicroStrategy – Bitcoin Treasury Company Unique value proposition versus Spot Bitcoin ETPs MicroStrategy Spot Bitcoin ETPs Operating company Trust company 1 Company Structure Active control over capital structure Limited control over capital structure No management fee Non-zero management fee Abilit
Slide 39: Basic and Assumed Diluted Shares Outstanding Calculation
Basic and Assumed Diluted Shares Outstanding Calculation 6/30/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 3/31/2024 6/30/2024 9/30/2024 Total Bitcoin Holdings - 70,470 124,391 132,500 189,150 214,278 226,331 252,220 Shares Outstanding (in '000s) (1) Class A 76,510 76,230 93,220 95,850 149,041 1
Slide 40: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 2024 Reconciliation of GAAP to non-GAAP income (loss) from operations Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Revenues $125.4 $132.6 $121.9 $120.4 $129.5 $124.5 $115.2 $111.4 $116.1 Cost of Revenues $25.4 $26.7 $27.9 $27.1 $26.7 $28.2 $30.0 $
Slide 41: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 2024 Reconciliation of non-GAAP operating expenses Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 GAAP Operating Expenses $93.9 $299.5 $114.3 $120.0 $128.0 $139.0 $288.9 $280.8 $514.3 Share-Based Compensation (1) $15.8 $15.9 $16.5 $14.4 $15.6 $18.5
Slide 42: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 2024 Reconciliation of total non-GAAP expenses 42
Slide 43: Important Information About BTC Yield KPI
Important Information About BTC Yield KPI BTC Yield is a key performance indicator (“KPI”) that represents the % change period-to-period of the ratio between our bitcoin holdings and our Assumed Diluted Shares Outstanding. Assumed Diluted Shares Outstanding refers to the aggregate of our actual shar
Slide 44: Additional Information
Additional Information MicroStrategy is not an exchange traded product (“ETP”) or an exchange-traded fund (“ETF”) registered under the Investment Company Act of 1940, as amended, is not subject to the same rules and regulations as an ETP or an ETF, and does not operate as an ETP or ETF. In particula