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    MSTR
    Earnings call· Mar 2026(Q1 FY26)

    Strategy Q1 FY26 earnings call MSTR

    May 5, 2026 Source

    Executive summary

    Strategy Inc Q1 FY26 — Strong Capital Raises and Bitcoin Accumulation

    Strategy Inc. delivered a strong Q1 FY26, marked by significant capital raises and continued Bitcoin accumulation, solidifying its position as the largest corporate Bitcoin holder. Despite a substantial operating loss driven by Bitcoin's fair value decline, the company emphasized its long-term strategy of increasing Bitcoin per share and leveraging its digital credit product, Stretch, for efficient capital generation. Management signaled a more proactive and tactical approach to its capital stack, including a willingness to sell Bitcoin for optimization purposes, aiming to maximize shareholder value and navigate market conditions with increased optionality.

    Highlights

    5

    • Increased Bitcoin holdings to 818,334 BTC, representing 3.9% of total supply, with a market value of $64 billion as of May 4, 2026.

    • Raised $11.7 billion in capital year-to-date 2026, with 83% of April's equity issuances from digital credit (Stretch), reducing dilution.

    • Achieved 9.4% BTC yield year-to-date 2026, accelerating from 22.8% for the full year 2025, and increased Bitcoin per share by 18% YoY to 213,371.

    • Stretch SDRC grew to $8.5 billion outstanding in 9 months, trading $375 million daily, and maintained a stable price range of $99-$101 for the last 3 months.

    • Reported an unrealized fair value gain of approximately $8.3 billion in Q2 so far (as of May 1), reflecting Bitcoin price recovery.

    Concerns

    5

    • Reported an operating loss of $14.5 billion and a net loss of $12.8 billion in Q1 FY26, primarily due to a $14.5 billion decline in Bitcoin's fair value.

    • Bitcoin price declined 37% since October, contributing to a 45% drawdown in the market, impacting fair value.

    • Current USD cash reserve of $2.25 billion now covers 1.5 years of dividends and interest payments, down from over 2 years previously.

    • Funding dividends with equity below 1.22x mNAV is dilutive, costing shareholders an extra $290 million at 1x mNAV compared to selling Bitcoin.

    • The market is perceived as skeptical and pessimistic, with all credit instruments and equity considered undervalued by management.

    Guidance & targets

    5
    CategoryTargetConfidence
    Bitcoin per share growth
    Double in 7 years
    high materiality
    High
    Annualized BTC yield
    10%
    high materiality
    High
    Digital credit volume (Stretch)
    10% to 20% of coin reserves annually
    medium materiality
    Medium
    Stretch target price range
    $99 to $101
    low materiality
    High
    Bitcoin Annual Return Rate (ARR) for dividend coverage
    2.3% annually
    high materiality
    High

    Operational metrics

    119
    Total Bitcoin holdings
    818,334
    Q1 FY26

    As of May 4, 2026.

    Percentage of total Bitcoin supply
    3.9%
    Q1 FY26

    Represents 3.9% of all Bitcoin that will ever exist.

    Market capitalization
    $62 billion
    Q1 FY26

    Current market cap of Strategy Inc.

    Stretch SDRC outstanding
    $8.5 billion
    Q1 FY26

    Total value of Stretch SDRC outstanding.

    Capital raised year-to-date
    $11.7 billion
    YTD 2026

    Total capital raised so far in 2026.

    Operating loss
    $14.5 billion
    Q1 FY26

    Primarily driven by decline in Bitcoin's fair value.

    Net loss
    $12.8 billion
    Q1 FY26

    Primarily driven by decline in Bitcoin's fair value.

    Bitcoin per share
    213,371 per share18% YoY increase
    May 2026

    Increased from 181,030 per share in May 2025.

    BTC yield
    9.4%vs 22.8% for FY25
    YTD 2026

    Accelerating year-to-date compared to same point last year.

    BTC gain
    63,410 BTCvs 101,873 BTC for FY25
    YTD 2026

    Achieved about 62% of last year's full BTC gain in first 4 months.

    BTC dollar gain
    $5 billionvs $8.9 billion for FY25
    YTD 2026

    Dollar equivalent of BTC gain.

    Bitcoin per share increase since inception
    Nearly 4x
    Since 2020 to May 2026

    Bitcoin per share grew to 213,371 per share from beginning of 2020.

    Bitcoin acquisition count
    108
    Since 2020

    Acquired additional Bitcoin in every quarter since 2020.

    Total Bitcoin value
    $64 billion
    May 4, 2026

    Based on Bitcoin price of $78,350.

    Total Bitcoin acquisition cost
    $62 billion
    May 4, 2026

    Cumulative acquisition cost.

    Average Bitcoin purchase price
    $76,000
    Cumulative

    Average price across all acquisitions.

    Digital assets value
    $51.6 billionvs $58.9 billion at year-end
    Q1 FY26 end

    Reflects lower Bitcoin price at quarter-end.

    Bitcoin acquired in Q1
    89,599 Bitcoin
    Q1 FY26

    Purchased at an average price of $80,900.

    Cash and cash equivalents
    $2.2 billion
    Q1 FY26 end

    USD cash reserve.

    Deferred tax liability/asset shift
    $1.9 billion
    Q1 FY26

    Driven by mark-to-market movement in Bitcoin from unrealized gain to unrealized loss.

    Long-term debt
    $8.2 billionunchanged
    Q1 FY26 end

    Remained unchanged.

    Preferred equity
    $9 billionincreased
    Q1 FY26 end

    Increased due to strong Stretch issuance.

    Bitcoin price at Q4 end
    $87,500
    Q4 FY25 end

    Market value of Bitcoin was $59 billion based on this price.

    Unrealized fair value loss
    $14.5 billion
    Q1 FY26

    Recognized during Q1.

    Q1 ending Bitcoin price
    $67,800
    Q1 FY26 end

    Digital asset value of $51.6 billion based on this price.

    Unrealized fair value gain
    $8.3 billion
    Q2 FY26 YTD

    As of May 1, 2026.

    Bitcoin acquired Q2 YTD
    56,235 Bitcoin
    Q2 FY26 YTD

    Purchased at an average price of $73,400.

    Bitcoin price as of May 1
    $78,350
    May 1, 2026

    Bitcoin held a market value of $64 billion based on this price.

    NAV implied by Bitcoin Reserve
    1.27xexpanded since beginning of year
    Q1 FY26 end

    Implied Net Asset Value.

    Preferred equity
    $13.5 billion
    Q1 FY26 end

    Represents 34% amplification.

    Net leverage
    9%
    Q1 FY26 end

    Made up of $8.2 billion of convertible debt.

    Equity
    $58 billion
    Q1 FY26 end

    Approximately $58 billion of equity.

    Liabilities to asset ratio (Strategy Inc.)
    9%vs >90% for traditional banks
    Q1 FY26 end

    Compared to traditional banks operating with liabilities to asset ratios above 90%.

    Net debt
    $6 billion
    Q1 FY26 end

    Represents 9.3% net leverage against Bitcoin reserve.

    BTC rating
    10.8x
    Q1 FY26 end

    Effectively a 10.8x BTC rating against Bitcoin reserve.

    Bitcoin price stress test
    $7,30091% decline
    Stress case

    Even after a 91% Bitcoin price decline, reserves would cover net debt at 1x BTC rating.

    USD cash reserve
    $2.25 billionconsistent
    Q1 FY26 end

    Remained consistent.

    Dividend coverage from USD reserve
    1.5 yearsshifted down from >2 years
    Q1 FY26 end

    Years of coverage for dividends and interest payments.

    Equity capital markets share (FY25)
    8%
    FY25

    Strategy Inc. represented 8% of the equity capital markets in 2025.

    Equity capital markets share (YTD 2026)
    10%
    YTD 2026

    Strategy Inc. is the largest issuer, with 60% of its share from preferred equity. (ASR error: 6% common, 60% preferred, total 10% implies 4% other, or 60% is a typo for 4% and 6% common is 60% of the 10% total, or 60% is the preferred share of the 10% total. Assuming 60% is preferred share of total issuance.)

    Equity issuance mix (January 2026)
    20% digital credit
    January 2026

    Started with 20% digital credit and 80% MSTR issuances. (ASR error: transcript says 88% MSTR, but 20%+88% > 100%. Assuming 80% MSTR for 100% total.)

    Equity issuance mix (April 2026)
    83% digital credit
    April 2026

    Flipped to 83% digital credit and 17% MSTR issuances, which is less dilutive.

    Average analyst price target (Bitcoin)
    $138,00070% increase
    Current

    Average price target from equity analysts covering Strategy Inc.

    Average analyst price target (MSTR)
    $32380% increase
    Current

    Average price target from equity analysts covering Strategy Inc.

    Bitcoin per share increase (January)
    0.4%
    January 2026

    Monthly increase in Bitcoin per share.

    Bitcoin per share increase (February)
    0.1%
    February 2026

    Monthly increase in Bitcoin per share.

    Bitcoin per share increase (March)
    3%
    March 2026

    Monthly increase in Bitcoin per share.

    Bitcoin per share increase (April)
    6%
    April 2026

    Monthly increase in Bitcoin per share.

    MSTR outperformance vs Bitcoin
    50%
    Since Aug 2020

    MSTR has outperformed Bitcoin since adopting the Bitcoin standard.

    Bitcoin outperformance vs MAG 7
    50%
    Since Aug 2020

    Bitcoin has outperformed the MAG 7 since Aug 2020.

    MSTR institutional accounts
    1,400
    Current

    Number of institutions holding MSTR.

    MSTR retail accounts
    927,000
    Current

    Number of retail accounts holding MSTR.

    MSTR ETFs and funds
    1,300
    Current

    Number of ETFs and funds holding MSTR.

    MSTR beneficiaries
    100 million
    Current

    Number of beneficiaries reached by MSTR holdings.

    Stretch dividend yield
    11.5%increased from 9%
    Current

    Dividend yield for Stretch, kept flat for the last 2 months.

    Stretch sharp ratio
    2.53
    Current

    Sharp ratio for Stretch.

    Stretch daily trading volume
    $375 million
    Daily average

    Average daily trading volume for Stretch.

    Stretch capital raised in 9 months
    $8.5 billion
    9 months

    Rapid growth of Stretch capital inflows.

    Stretch size vs Wells Fargo preferred
    Nearly 2x
    Current

    Stretch is nearly 2x the size of Wells Fargo's preferred.

    Stretch trading volume vs 2nd largest preferred
    25x
    Current

    Stretch trading volume is 25x the second largest preferred.

    Stretch turnover vs Wells Fargo preferred
    4.4%10x of Wells Fargo
    Current

    Stretch turnover is 10x that of Wells Fargo's preferred.

    Stretch ATM velocity (April)
    $1 billion in one week, $2.2 billion in subsequent week
    April 2026

    Net inflows into Stretch, showing tremendous demand.

    Stretch price range consistency
    100%
    Last 3 months (March, April, May)

    Stretch traded within its target price range for 100% of the time.

    Stretch daily liquidity growth
    $360 millionfrom $54M (Jan) to $120M (Feb) to $250M (Mar)
    April 2026

    Daily liquidity increased from $54 million in January to $360 million in April.

    mNAV breakeven for MSTR stock sale
    1.22xincreasing over time
    Current

    At or above this mNAV, it's accretive to sell MSTR and buy Bitcoin.

    Bitcoin cost basis tranche
    $20,000
    Historical

    Bitcoin acquired in $20,000 tranches (e.g., 20-40, 40-60, 60-80k).

    Unrealized tax benefits
    $2.2 billion
    Current

    Estimated tax benefits on the balance sheet from high-cost basis Bitcoin.

    Current amplification
    34%
    Current

    10% of current amplification is from convertible debt.

    Target amplification
    50-60%
    Future

    Target amplification levels with lower risk as company shifts to digital credit.

    Bitcoin ARR (rolling 30-day average)
    39%
    Rolling 30-day

    Bitcoin is 34 vol on a rolling 30-day average, 39% ARR.

    Bitcoin ARR (1-year trailing)
    40%
    1-year trailing

    Bitcoin's 1-year trailing ARR.

    Stretch volatility and yield
    3 vol, 11.5% yield
    Current

    Stretch is a damp digital credit instrument.

    MSTR volatility and ARR
    71 vol, 59% ARR
    Current

    MSTR is an amplified Bitcoin, digital equity.

    Digital money target yield
    8%
    Target

    Target for 0 volatility, daily liquid instruments built on digital credit.

    Programmable yield range (digital credit)
    5% to 25%
    Programmable

    Reasonable range for programming digital credit yield.

    Stretch exposure in DFI industry
    $270 million
    8 weeks

    Rapid growth of Stretch exposure in the DeFi industry.

    Forecasted Stretch entry into DFI
    >$1 billion
    Near future

    Forecast for Stretch entering the DFI industry.

    Dividend coverage (0% Bitcoin growth)
    43 years
    Future

    Years of dividend coverage if Bitcoin does not grow at all.

    BTC rating (corporate)
    3.3%
    Current

    Corporate BTC rating.

    Duration of liabilities
    10.9%
    Current

    Stochastic duration of all debt and preferreds.

    Risk centered on
    88 basis points
    Current

    Estimated risk.

    Fair credit spread
    61 basis points
    Current

    Credit spread a rational investor needs to be paid.

    Risk of BTC rating of one
    8.18%
    End of duration

    818 basis points of risk means an 8.18% chance of BTC rating of one at end of duration. (ASR error: transcript says 8%, but 818 bps is 8.18%)

    Investment-grade credit spread
    88 basis points
    General

    Benchmark for investment-grade credit spread.

    Model assumption BTC ARR
    10%
    Model assumption

    Conservative, realistic view for model input.

    Model assumption Bitcoin volatility
    40 vol
    Model assumption

    Assumes Bitcoin remains volatile.

    Cost to shareholders (MSTR stock sale at <1.22 mNAV)
    $310 million
    Scenario

    Cost of selling $1 billion of MSTR stock to buy $1 billion of Bitcoin at 1 mNAV.

    Gains from MSTR stock sale (at 2-2.25 mNAV)
    $457 million
    Scenario

    Gains from selling $1 billion of MSTR stock to buy $1 billion of Bitcoin at 2-2.25 mNAV.

    Bitcoin loss from funding dividends with BTC
    12,763 Bitcoin
    Scenario

    Loss from funding $1 billion of dividends with Bitcoin.

    Extra cost to fund dividends with equity (at 1 mNAV)
    $290 million
    Scenario

    Extra cost compared to selling Bitcoin if equity is below 1.22 mNAV.

    Cost to fund dividends with equity (at 2 mNAV)
    $535 million
    Scenario

    Cost of funding dividends with equity at 2 mNAV.

    Credit risk increase (using Bitcoin for dividends)
    13 basis points
    Scenario

    Slight increase in credit risk and spread.

    Duration extension (funding USD reserve)
    160 days
    Scenario

    Extends duration and decreases MSTR risk by funding $1 billion USD reserve.

    Yield from Stretch sale to buy convertible bond
    22 to 63 basis points
    Scenario

    Yield varies by convertible bond (2029 vs 2030 convert).

    Yield from swapping BTC for MSTR (at <1.22 mNAV)
    636 basis points
    Scenario

    Extremely accretive to swap BTC for MSTR at a massive discount to mNAV.

    Yield from selling credit to buy MSTR (at 0.5 mNAV)
    800 basis points
    Scenario

    Highly accretive if market trades down to 0.5 mNAV.

    Yield from selling credit to buy MSTR (at 2 mNAV)
    85 basis points
    Scenario

    Yield generated even if equity trading at 2 mNAV.

    BTC yield (conventional strategy at 1x mNAV)
    10.6%
    Scenario (next 3 years)

    Scenario where equity and credit are sold, USD reserve constant at 1.5 years.

    BTC yield (conventional strategy at 1.22 mNAV)
    12.2%
    Scenario

    Yield expands with higher mNAV.

    BTC yield (conventional strategy at 1.5 mNAV)
    13.4%
    Scenario

    Yield expands with higher mNAV.

    BTC yield (conventional strategy at 2 mNAV)
    14.6%
    Scenario

    Yield expands with higher mNAV.

    BTC yield (fund dividends by selling Bitcoin)
    12.2%
    Scenario (next 36 months)

    Scenario where dividends are funded by selling Bitcoin, but holdings still grow.

    Bitcoin holdings (scenario)
    $850 million to $950 million to $1 million
    Scenario (next 36 months)

    Projected Bitcoin holdings in a scenario where dividends are funded by selling Bitcoin. (ASR error: likely meant 850k, 950k, 1M Bitcoin)

    BTC yield (fixed USD dividend, fund with Bitcoin)
    14.7%
    Scenario

    Scenario where USD dividend is fixed at $2.25 billion and funded by selling Bitcoin.

    BTC yield (retire converts with Stretch)
    12.4%
    Scenario

    Scenario where 20% of Stretch issuance is diverted to retire all debt over 3 years.

    Model assumption equity side BTC ARR
    30%
    Model assumption

    Assumption for equity side of the model.

    Model assumption equity side Stretch issuance
    20%
    Model assumption

    Assumption for equity side of the model.

    Model assumption equity side dividend rate
    11%
    Model assumption

    Assumption for equity side of the model.

    Model assumption credit side BTC ARR
    10%
    Model assumption

    Conservative assumption for credit side of the model.

    Stochastic cost of capital (Stretch)
    875 basis pointsless than 11.5%
    Long-term blended rate

    Blended rate considering SOFR and credit spread, with debt never coming due.

    SOFR floor
    375 basis points
    Current

    Floor for SOFR, with potential for additional optionality if SOFR falls.

    SOFR fluctuation range
    25-500 basis points
    8-year cycle

    Historical fluctuation range for SOFR.

    Future credit spread (20 years out)
    300 basis points
    20 years out

    Hypothetical credit spread, leading to a 6% blended rate with 3% SOFR.

    Bitcoin market daily liquidity
    $20 billion
    Daily

    Daily liquidity of the Bitcoin market.

    Wealth created (since Strategy Inc. entered space)
    $1.4 trillion
    Since Strategy Inc. entered space

    Estimated wealth created for people other than 'sup corners'.

    Bitcoin network holdings (crypto OGs)
    85%
    Current

    85% of the Bitcoin network is held by crypto OGs.

    Institutional capital flow (Bitcoin)
    $150 billion to $200 billion
    Historical

    Capital flowed from institutions into Bitcoin, but did not acquire 90% of the network.

    Crypto OG capital held
    $1 trillion
    Current

    Estimated capital held by crypto OGs.

    Private credit market size
    $370 billion
    Current

    10% of this market would be $37 billion.

    Risks & headwinds

    6
    Decline in Bitcoin's fair valueQ1 FY26

    $14.5 billion operating loss and $12.8 billion net loss in Q1 FY26

    Mitigation: Long-term strategy of capital raises and Bitcoin accumulation; willingness to sell Bitcoin for tax optimization.

    Bitcoin price volatility and drawdownSince October (past)

    Bitcoin declined 37% since October, leading to a 45% drawdown

    Mitigation: Disciplined balance sheet construction, modest leverage, strong collateral, and permanent capital to grow Bitcoin over time; use of sophisticated equity and risk models for tactical decisions.

    Restrictive monetary policyFuture

    Bad for Bitcoin (risk asset squared) and MSTR (risk asset cubed)

    Mitigation: Bias to grow responsibly but rapidly; will run the vehicle as hard as possible in accommodative environments, but slow down if capital structure cannot keep up.

    Dilution from equity issuance at low mNAVOngoing

    Selling MSTR stock at 1 mNAV to buy Bitcoin costs shareholders an extra $310 million (48 bps yield loss) compared to selling Bitcoin

    Mitigation: Company considers selling Bitcoin to fund dividends if equity is trading weak (below 1.22x mNAV) to avoid dilution.

    Market skepticism and undervaluationOngoing

    All credit instruments and equity are considered undervalued; STRF would be trading at $200/share if market agreed with internal valuation

    Mitigation: Continuous education of the market, demonstrating performance, laying down a track record, and managing business risk; belief that market will eventually re-rate the company.

    Quantum risk to Bitcoin securityLong-term

    Unquantified, but a topic of concern for the Bitcoin community

    Mitigation: Forming a Bitcoin security program/council with institutions, custodians, and exchanges to assess risks and develop consensus on mitigation strategies.

    Q&A highlights

    6

    Is today's call a signal that Strategy will be more proactive and tactical with its capital stack, including potentially selling Bitcoin for optimization or tax purposes?

    Yes, the company will be more tactical, leveraging all available tools including the Bitcoin ATM. Management intends to sell some Bitcoin to fund dividends to demonstrate the viability of the model and 'inoculate the market' against short-seller narratives.

    “Yes, you should. I think the company got much healthier when we proactively began to utilize the equity ATM and we said it, we're going to do it. We're not ashamed of it. We'll probably do it again. And then when the company started proactively executing on the stretch the credit ATM, and we said we're going to -- we're not a shame , we're going to keep doing it. We think it's good. And we've got a plan for it. And now I think at this point to say we're turning on the BTC drive. We're not ashamed of it. We got $65 billion -- We have a $2.2 billion tax credit that's lying on the floor. We ought to go find a way to pick up the $2.2 billion, right? And just like with everything else, the more optionality we create and the more tools we have at our disposal, I think the better it is for the equity investors. We'll probably sell some Bitcoin to fund a dividend just to inoculate the market just to send the message that we did it look, the company is fine, the Bitcoin is fine. The industry is fine. The world didn't come to an end. And if you're a short seller and your thesis is the company has got to sell equity in order to fund the dividends. I would like nothing better than to rip your wings off.”

    asked by Peter Christiansen · answered by Michael Saylor

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Capital Allocation and Balance Sheet Management

    Strategy Inc. is evolving its capital markets strategy, moving beyond traditional equity and convertible debt issuances towards digital credit, primarily through its Stretch product. The company aims to proactively manage its balance sheet, including potentially retiring convertible debt early and optimizing its USD cash reserves. A key focus is to increase Bitcoin per share, which is seen as the primary driver of long-term value for common shareholders, while also managing credit risk and maintaining a strong collateral base.

    02

    Evolution of Digital Credit and Stretch Performance

    The Stretch product has exceeded expectations, raising $8.5 billion in 9 months and becoming the largest tradable preferred instrument globally, with daily trading volumes of $375 million. Its high liquidity and strong sharp ratio (2.53) have outperformed traditional credit and asset classes, including MAG 7 equities and hedge funds. The company is proposing to amend Stretch dividends from monthly to semi-monthly to enhance investor experience and liquidity, reflecting its commitment to continuous product improvement.

    03

    Bitcoin as Digital Capital and Market Adoption

    Management views Bitcoin as global digital capital, with increasing institutional adoption from major banks like Morgan Stanley and Citi, and growing interest from corporate treasurers. The company tracks systemic banks' embrace of Bitcoin as a creditworthy instrument and notes the rapid growth of Bitcoin-related ETFs. Strategy Inc. believes this mainstreaming of Bitcoin, facilitated by products like Stretch, is crucial for its long-term growth and widespread acceptance, despite some skepticism from early adopters.

    04

    Optionality in Capital Markets Transactions

    Strategy Inc. employs a sophisticated equity and risk model to evaluate capital markets transactions daily, considering the impact on Bitcoin per share accretion and credit risk. The company highlighted scenarios such as selling MSTR stock to buy Bitcoin, using Bitcoin to fund dividends, funding USD reserves, and buying back convertible bonds with Stretch proceeds. This expanded optionality allows for tactical decisions to optimize the capital structure and enhance shareholder value, even considering selling Bitcoin when advantageous for tax or other strategic purposes.

    05

    Future of Digital Money and Yield

    The company envisions Stretch as a foundational layer for future digital money and digital yield products. It is actively engaging with innovators in the DeFi space and traditional finance to build new instruments on top of Stretch, such as 0-volatility, 8% yield coins or levered yield funds. The rapid growth of Stretch exposure in the DeFi industry ($270 million in 8 weeks) underscores the potential for a 'Cambrian explosion' of new financial products built on digital credit, with a forecast of over $1 billion entering DeFi soon.

    AI-generated summary of the company’s earnings call. Not investment advice.