MICROSTRATEGY Inc

(unaudited)

(1) Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying Consolidated Financial Statements of MicroStrategy Incorporated d/b/a Strategy (“Strategy,” “MicroStrategy” or the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year.

On July 11, 2024, the Company announced a 10-for-1 stock split of the Company’s class A common stock and class B common stock. The stock split was effected by means of a stock dividend to the holders of record of the Company’s class A common stock and class B common stock as of the close of business on August 1, 2024, the record date for the dividend. Shares held in treasury by the Company were not impacted by the stock split. The dividend was distributed after the close of trading on August 7, 2024 and trading commenced on a split-adjusted basis at market open on August 8, 2024. As a result of the stock split, all applicable share, per share, and equity award information has been retroactively adjusted in the Consolidated Financial Statements and Notes to Consolidated Financial Statements to reflect the stock split for all periods presented.

The Consolidated Financial Statements and Notes to Consolidated Financial Statements are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes in the Company’s accounting policies since December 31, 2024 except as discussed below within this footnote.

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(b) Digital Assets

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets (including the Company's bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective January 1, 2025 on a prospective basis, with a cumulative-effect adjustment to the opening balance of retained earnings. Prior periods were not restated. As a result, the Company’s financial results for the three months ended March 31, 2025 are not directly comparable to the financial results for earlier periods.

The adoption of ASU 2023-08 resulted in the following impacts as of January 1, 2025:

Although the Company continues to initially record its bitcoin purchases at cost, subsequent to the Company’s adoption of ASU 2023-08 on January 1, 2025, any increases or decreases in fair value are recognized as incurred in the Company's Consolidated Statements of Operations, and the fair value of the Company’s bitcoin is reflected within the Company's Consolidated Balance Sheets each reporting period-end. As a result of the adoption of ASU 2023-08, the Company no longer accounts for its bitcoin under a cost-less-impairment accounting model and no longer establishes a deferred tax asset related to bitcoin impairment losses. Instead, the Company establishes a deferred tax liability if the market value of bitcoin at the reporting date is greater than the average cost basis of the Company’s bitcoin holdings at such reporting date, and any subsequent increases or decreases in the market value of bitcoin increases or decreases the deferred tax liability. In determining the gain (loss) to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the specific bitcoin sold immediately prior to sale.

The U.S. enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022. Among other things, unless an exemption by statute or regulation applies, a provision of the IRA imposes a 15% corporate alternative minimum tax (“CAMT”) on a corporation with respect to an initial tax year and subsequent tax years, if the average annual adjusted financial statement income for any consecutive three-tax-year period preceding the initial tax year exceeds $1 billion. On September 12, 2024, the Department of Treasury and the Internal Revenue Service issued proposed regulations with respect to the application of the CAMT. For purposes of calculating the adjusted financial statement income, the Company will be required to ratably allocate the increase to the Company’s retained earnings over a four year period, from 2025 through 2028. When determining whether the Company is subject to CAMT and when calculating any related tax liability for an applicable tax year, the proposed regulations provide that, among other adjustments, the Company’s adjusted financial statement income must include this ratable amount in addition to any unrealized gains or losses reported in the applicable tax year. Accordingly, as a result of the enactment of the IRA and the Company’s adoption of ASU 2023-08 on January 1, 2025, unless the IRA is amended or the proposed regulations, when finalized, are revised to provide relief (or other interim relief is granted), the Company could become subject to CAMT in the tax years 2026 and beyond. If the Company becomes subject to the CAMT, it could result in a material tax obligation that the Company would need to satisfy in cash, which could materially affect its financial results, including its earnings and cash flow, and its financial condition.

(c) Redeemable Preferred Stock

In accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, the shares of 8.00% Series A Perpetual Strike Preferred Stock (“Perpetual Strike Preferred Stock”) and 10.00% Series A Perpetual Strife Preferred Stock (“Perpetual Strife Preferred Stock”) are classified within mezzanine equity, as certain events that could cause such shares to become redeemable are not solely within the control of the Company. The shares are initially recognized based on proceeds received, net of issuance costs, and are not accreted to their redemption value unless it becomes probable that the Perpetual Strike Preferred Stock and Perpetual Strife Preferred Stock will become redeemable. Refer to Note 9, Redeemable Preferred Stock for further discussion.

(d) Segment Reporting

The Company has adopted ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) for the year ended December 31, 2024, and for interim periods beginning January 1, 2025 as reflected in Note 12, Segment Information, to the Consolidated Financial Statements, including retroactive application to all prior periods presented. Refer to Note, 3 Recent Accounting Pronouncements in the Company’s financial statements as of and for the year ended December 31, 2024 for further discussion.

(2) Recent Accounting Standards

Income Taxes

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. In particular, on an annual basis, companies will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Companies will also be required to disclose, on an annual basis, the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions above a quantitative threshold. The standard is effective for the Company for annual periods beginning January 1, 2025 on a prospective basis, with retrospective application permitted for all prior periods presented. The Company will adopt ASU 2023-09 for the annual period ending December 31, 2025 and is currently evaluating the impact of this guidance on its disclosures.

(3) Digital Assets

The Company accounts for its digital assets, which are comprised solely of bitcoin, as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Otherand ASU 2023-08. The Company’s digital assets are initially recorded at cost. Subsequent to the Company’s adoption of ASU 2023-08 on January 1, 2025, bitcoin assets are measured at fair value as of each reporting period. The Company determines the fair value of its bitcoin in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market for bitcoin (Level 1 inputs). Changes in fair value are recognized as incurred in the Company's Consolidated Statements of Operations, within “Unrealized loss on digital assets”, within operating expenses in the Company’s Consolidated Statement of Operations.

Prior to the adoption of ASU 2023-08, the Company’s digital assets were initially recorded at cost, and subsequently measured at cost, net of any impairment losses incurred since acquisition. Impairment losses were recognized as “Digital asset impairment losses” in the Company’s Consolidated Statement of Operations in the period in which the impairment occurred. Gains (if any) were not recorded until realized upon sale, at which point they were presented net of any impairment losses in the Company’s Consolidated Statements of Operations.

The following table summarizes the Company’s digital asset holdings (in thousands, except number of bitcoins), as of:

The carrying value on the Company’s consolidated Balance Sheet at each period-end prior to the adoption of ASC 2023-08 represented the lowest fair value (based on Level 1 inputs in the fair value hierarchy) of the bitcoin at any time since their acquisition. Therefore, these fair value measurements were made during the period from their acquisition through December 31, 2024.

The following table summarizes the Company’s digital asset purchases, losses (gains) on digital assets as calculated after the adoption of ASU 2023-08 on January 1, 2025, and digital asset impairment losses as calculated prior to the adoption of ASU 2023-08 (in thousands, except number of bitcoins) for the periods indicated. The Company didnot sell any of its bitcoins during thethree months ended March 31, 2025 or 2024, respectively.

From time to time, the Company’s execution partners may extend short-term credits to the Company to purchase bitcoin in advance of using cash funds in the Company’s trading account, or allow the Company to make bitcoin purchases on a delayed settlement basis. Trade credits and delayed settlements, as applicable, are due and payable after the bitcoin purchases are completed. In the first quarter of 2025, certain bitcoin of the Company and MacroStrategy LLC (“MacroStrategy”), a wholly-owned subsidiary of the Company, and in 2024, certain bitcoin of MacroStrategy, were subject to a first priority security interest and lien in order to secure payments owed by the Company with respect to these arrangements. While trade credits or delayed settlements are outstanding, the Company may incur interest fees and be required to maintain minimum balances in its trading and custody accounts with such execution partners. As of March 31, 2025, the Company had no outstanding trade credits payable.

The vast majority of the Company’s assets are concentrated in its bitcoin holdings. Bitcoin is a digital asset, which is a novel asset class that is subject to significant legal, commercial, regulatory and technical uncertainty. Holding bitcoin does not generate any cash flows and involves custodial fees and other costs. Additionally, the price of bitcoin has historically experienced significant price volatility, and a significant decrease in the price of bitcoin would adversely affect the Company’s financial condition and results of operations. The Company’s strategy of acquiring and holding bitcoin also exposes it to counterparty risks with respect to the custody of its bitcoin, cybersecurity risks, and other risks inherent to holding a digital asset. In particular, the Company is subject to the risk that, if its private keys with respect to its digital assets are lost or destroyed or other similar circumstances or events occur, the Company may lose some or all of its digital assets, which could materially adversely affect the Company’s financial condition and results of operations.

(4) Contract Balances

The Company invoices its customers in accordance with billing schedules established in each contract. The Company’s rights to consideration from customers are presented separately in the Company’s Consolidated Balance Sheets depending on whether those rights are conditional or unconditional.

The Company presents unconditional rights to consideration from customers within “Accounts receivable, net” in its Consolidated Balance Sheets. All of the Company’s contracts are generally non-cancellable and/or non-refundable, and therefore an unconditional right generally exists when the customer is billed or amounts are billable per the contract.

Accounts receivable (in thousands) consisted of the following, as of:

Changes in the allowance for credit losses were not material for the three months ended March 31, 2025.

Rights to consideration that are subject to a condition other than the passage of time are considered contract assets until they are expected to become unconditional and transfer to accounts receivable. Current contract assets included in “Prepaid expenses and other current assets” in the Consolidated Balance Sheets consisted of $2.7 million and $2.6 million, as of March 31, 2025 and December 31, 2024, respectively, related to performance obligations or services being rendered in advance of future invoicing associated with multi-year contracts and accrued sales and usage-based royalty revenue. In royalty-based arrangements, consideration is not billed or billable until the royalty reporting is received, generally in the subsequent quarter, at which time the contract asset transfers to accounts receivable and a true-up adjustment is recorded to revenue. These true-up adjustments are generally not material. Non-current contract assets included in “Deposits and other assets” in the Consolidated Balance Sheets consisted of $6.3 million and $6.8 million, as of March 31, 2025 and December 31, 2024, respectively, related to performance obligations or services being rendered in advance of future invoicing associated with multi-year contracts. During the three months ended March 31, 2025 and 2024, there wereno significant impairments to the Company’s contract assets, nor were there any significant changes in the timing of the Company’s contract assets being reclassified to accounts receivable.

Contract liabilities are amounts received or due from customers in advance of the Company transferring the software or services to the customer. In the case of multi-year service contract arrangements, the Company generally does not invoice more than one year in advance of services and does not record deferred revenue for amounts that have not been invoiced. Revenue is subsequently recognized in the period(s) in which control of the software or services is transferred to the customer. The Company’s contract liabilities are presented as either current or non-current “Deferred revenue and advance payments” in the Consolidated Balance Sheets, depending on whether the software or services are expected to be transferred to the customer within the next year.

The Company’s “Accounts receivable, net” and “Deferred revenue and advance payments” balances in the Consolidated Balance Sheets include unpaid amounts related to contracts under which the Company has an enforceable right to invoice the customer for non-cancellable and/or non-refundable software and services. Changes in accounts receivable and changes in deferred revenue and advance payments are presented net of these unpaid amounts in “Operating activities” in the Consolidated Statements of Cash Flows.

Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of:

During the three months ended March 31, 2025, the Company recognized revenues of $85.4 million from amounts included in the total deferred revenue and advance payments balances at the beginning of 2025. During the three months ended March 31, 2024, the Company recognized revenues of $80.8 million from amounts included in the total deferred revenue and advance payments balances at the beginning of 2024. For the three months ended March 31, 2025 and 2024, there were no significant changes in the timing of revenue recognition on the Company’s deferred balances.

The Company’s remaining performance obligation represents all future revenue under contract and includes deferred revenue and advance payments and billable non-cancellable amounts that will be invoiced and recognized as revenue in future periods. The remaining performance obligation excludes contracts that are billed in arrears, such as certain time and materials contracts. The portions of multi-year contracts that will be invoiced in the future are not presented on the balance sheet within accounts receivable and deferred revenues and are instead included in the following remaining performance obligation disclosure. As of March 31, 2025, the Company had an aggregate transaction price of $442.8 million allocated to the remaining performance obligation related to subscription services, product support, product licenses, and other services contracts. The Company expects to recognize $275.8 million within the next 12 months and the remainder thereafter.

(5) Long-term Debt

The net carrying value of the Company’s outstanding debt (in thousands) consisted of the following, as of:

Convertible Senior Notes

As of March 31, 2025, the following convertible notes were outstanding (the “Outstanding Convertible Notes”):

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$1.010 billion aggregate principal amount of 0.625% Convertible Senior Notes due 2028 (the “2028 Convertible Notes”);

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$3.000 billion aggregate principal amount of 0% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”);

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$800.0 million aggregate principal amount of 0.625% Convertible Senior Notes due 2030 (the “2030A Convertible Notes”);

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$2.000 billion aggregate principal amount of 0% Convertible Senior Notes due 2030 (the “2030B Convertible Notes”);

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$603.8 million aggregate principal amount of 0.875% Convertible Senior Notes due 2031 (the “2031 Convertible Notes”); and

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$800.0 million aggregate principal amount of 2.25% Convertible Senior Notes due 2032 (the “2032 Convertible Notes”).

Additionally, the Company also previously issued, in February 2021, the $1.050 billion aggregate principal amount of 0% Convertible Senior Notes due 2027 (the “2027 Convertible Notes”, and together with the Outstanding Convertible Notes, the “Convertible Notes”), all of which were redeemed or converted into the Company’s class A common stock during the three months ended March 31, 2025.

Each of the Convertible Notes were issued in a private offering. The Outstanding Convertible Notes are, and the 2027 Convertible Notes were, senior unsecured obligations of the Company ranking senior in right of payment to any of the Company’s indebtedness expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

The following table summarizes the key terms of each of the Convertible Notes (principal at inception, net proceeds, and issuance costs are each reported in thousands):

(1)

“Maturity Date” is the stated maturity date under each applicable indenture governing such notes, unless earlier converted, redeemed, or repurchased in accordance with their terms.

(2)

Holders may receive additional or special interest under specified circumstances as outlined under each applicable indenture governing the Convertible Notes.

(3)

For the Convertible Notes issued in 2024, interest payments begin on (a)September 15, 2024 for each of the 2030A Convertible Notes and the 2031 Convertible Notes, (b)December 15, 2024 for the 2032 Convertible Notes, and (c)March 15, 2025 for the 2028 Convertible Notes. The 2029 Convertible Notes issued in 2024 and the 2030B Convertible Notes issued in 2025 do not bear regular interest.

(4)

“Issuance Costs” reflect the customary offering expenses associated with each of the Convertible Notes. The Company accounts for these issuance costs as a reduction to the principal amount of the respective Convertible Notes and amortizes the issuance costs to interest expense from the respective debt issuance dates through the earlier of the “Maturity Date” or the “Date of Holder Put Option,” if applicable, at the “Effective Interest Rates” stated in the table.

(5)

“Date of Holder Put Option” represents the respective dates upon which holders of the 2028 Convertible Notes, 2029 Convertible Notes, 2030A Convertible Notes, 2030B Convertible Notes, 2031 Convertible Notes, and 2032 Convertible Notes each have a noncontingent right to require the Company to repurchase for cash all or any portion of their respective notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus any accrued and unpaid interest to, but excluding the repurchase date.

(6)

The “Initial Conversion Rate” is stated in shares of the Company’s class A common stock per $1,000 principal amount. The conversion rates are subject to customary anti-dilution adjustments. In addition, following certain events that may occur prior to the respective maturity dates or if the Company delivers a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its respective Convertible Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances as provided in each indenture governing the respective Convertible Notes.

(7)

The “Initial Conversion Price” is stated in dollars per share of the Company’s class A common stock.

(8)

Onor after the stated dates until the close of business on the second scheduled trading day immediately preceding the respective maturity dates, holders may convert the Convertible Notes at any time. Upon conversion of the Convertible Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s class A common stock, or a combination of cash and shares of class A common stock, at the Company’s election. For the 2027 Convertible Notes, the date presented is the date on which the Company delivered its notice of full redemption of the 2027

Convertible Notes, which resulted in the 2027 Convertible Notes being convertible at any time thereafter until 5:00pm New York City time, on February 20, 2025. See below under “Conversions and Redemption of Convertible Notes” for further information.

(9)

Prior to the respective dates, the Convertible Notes are convertible only under the following circumstances: (a) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2024 for the 2030A Convertible Notes and 2031 Convertible Notes, on September 30, 2024 for the 2032 Convertible Notes, on December 31, 2024 for the 2028 Convertible Notes, on March 31, 2025 for the 2029 Convertible Notes, or on June 30, 2025 for the 2030B Convertible Notes, if the last reported sale price of the Company’s class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the respective Convertible Notes on each applicable trading day; (b) during thefive business day period after anyfive consecutive trading day period (the “measurement period”) in which the “trading price” (as defined under each applicable indenture governing the respective Convertible Notes) per $1,000 principal amount of the respective Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s class A common stock and the applicable conversion rate on each such trading day; (c) in the case of the 2028 Convertible Notes, 2029 Convertible Notes, 2030A Convertible Notes, 2031 Convertible Notes and 2032 Convertible Notes, the Company calls any or all of such Convertible Notes for redemption, then a holder may surrender all or any part of such of its Convertible Notes as called for redemption for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; (d) in the case of the 2030B Convertible Notes, the Company calls any 2030B Convertible Notes for redemption, then the holders of such 2030B Convertible Note may convert such 2030B Convertible Notes at any time before the close of business on the second business day immediately before the related redemption date; and (e) upon occurrence of specified corporate events as described in each applicable indenture governing the respective Convertible Notes.

(10)

The Company may redeem for cash all or a portion of the Outstanding Convertible Notes at its option, on or after the stated dates, if the last reported sale price of the Company’s class A common stock has been at least 130% of the conversion price of the respective Convertible Notes then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. See below “Conversions and Redemption of Convertible Notes” subsection for information regarding the Company’s redemption of the 2027 Convertible Notes.

(11)

“Redemption Date” for the 2027 Convertible Notes is the date on which the Company redeemed all outstanding 2027 Convertible Notes.

If the Company undergoes a “fundamental change,” as defined in the respective indentures governing the Convertible Notes prior to maturity, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their respective Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the respective Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The respective indentures governing the Convertible Notes contain customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee of the respective Convertible Notes or the holders of at least 25% in principal amount outstanding of the respective Convertible Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the respective Convertible Notes to be due and payable.

Although the Convertible Notes contain embedded conversion features, the Company accounts for the Convertible Notes in their entirety as a liability because the conversion features are indexed to the Company’s class A common stock and meet the criteria for classification in stockholders’ equity and therefore do not qualify for separate derivative accounting.

Conversions and Redemption of Convertible Notes

On January 24, 2025, the Company delivered a notice of full redemption (the “2027 Redemption Notice”) to the trustee of the Company’s 2027 Convertible Notes for the redemption of all $1.05 billion in aggregate principal amount of the 2027 Convertible Notes then outstanding on February 24, 2025 (the “2027 Redemption Date”), at a redemption price equal to 100% of the principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to but excluding the 2027 Redemption Date, unless earlier converted. The Company elected to satisfy its conversion obligation with respect to the 2027 Convertible Notes by delivering solely shares of its class A common stock, together with cash in lieu of any fractional shares. Holders of the 2027 Convertible Notes requested to convert $1.050 billion in principal amount of the 2027 Convertible Notes for which the Company issued 7,373,528 shares of the Company’s class A common stock and paid a nominal amount of cash in lieu of fraction shares upon settlement of such conversion requests, in accordance with the terms and provisions of the indenture governing the 2027 Convertible Notes.

During the three months ended March 31, 2025, the Company received from certain holders of the 2031 Convertible Notes requests to convert an immaterial principal amount of the 2031 Convertible Notes, which the Company expects to settle in shares of class A common stock during the quarter ending June 30, 2025, in accordance with the terms and provisions of the indenture governing the 2031 Convertible Notes.

During the three months ended March 31, 2024, the Company received from certain holders of the Company’s 0.750% Convertible Senior Notes due 2025 (the “2025 Convertible Notes”) requests to convert an immaterial principal amount of the 2025 Convertible Notes, which the Company elected to settle in shares of class A common stock and cash in accordance with the terms and provisions of the indenture governing the 2025 Convertible Notes. The settlement was effected during the three months ended June 30, 2024. No shares of class A common stock were issued in respect of such conversions during the three months ended March 31, 2024. The 2025 Convertible Notes were previously redeemed or converted into the Company’s class A common stock in the third quarter of 2024 and werenot outstanding as December 31, 2024 or March 31, 2025.

Collective Convertible Notes Disclosures

As of March 31, 2025, the maximum number of shares into which the Outstanding Convertible Notes could have been potentially converted if the conversion features were triggered at the conversion rates then in effect based on the Outstanding Convertible Notes then outstanding on such date was:

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2028 Convertible Notes:5,513,489 shares;

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2029 Convertible Notes:4,461,600 shares;

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2030A Convertible Notes:5,341,600 shares;

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2030B Convertible Notes:4,614,400 shares;

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2031 Convertible Notes:2,594,314 shares; and

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2032 Convertible Notes:3,915,200 shares.

The 2028 Convertible Notes, 2030A Convertible Notes, 2031 Convertible Notes, and 2032 Convertible Notes were convertible at the option of the holders during the three months ended March 31, 2025. In addition, the 2027 Convertible Notes were convertible at the option of the holders during the three months ended March, 31, 2025 prior to their redemption. The Outstanding Convertible Notes may be convertible in future periods if one or more of the conversion conditions is satisfied during future measurement periods. As of March 31, 2025, the last reported sale price of the Company’s class A common stock for at least 20 trading days during the 30 consecutive trading days ending on, and including, March 31, 2025 was greater than or equal to 130% of the conversion price of each of the 2028 Convertible Notes, 2030A Convertible Notes and 2032 Convertible Notes on each applicable trading day. Therefore, the 2028 Convertible Notes, 2030A Convertible Notes, and 2032 Convertible Notes are convertible at the option of the holders of the respective Convertible Notes during the second quarter of 2025.

The Company did not receive conversion requests with respect to the Convertible Notes during the three months ended March 31, 2025 and 2024, except the conversion requests received with respect to the 2027 Convertible Notes and 2031 Convertible Notes during the three months ended March 31, 2025, as described above under “Conversions and Redemption of Convertible Notes”. Additionally, as described above under “Conversions and Redemption of Convertible Notes,” during the three months ended March 31, 2024, the Company received conversion requests with respect to an immaterial principal amount of the 2025 Convertible Notes.

As of March 31, 2025, and December 31, 2024, the net carrying value of the Convertible Notes was classified as a long-term liability in the “Long-term debt, net” line item in the Company’s Consolidated Balance Sheets.

The following is a summary of the Company’s Outstanding Convertible Notes outstanding as of March 31, 2025 (in thousands):

The following is a summary of the Company’s Convertible Notes outstanding as of December 31, 2024 (in thousands):

The fair value of the Convertible Notes is determined using observable market data other than quoted prices, specifically the last traded price at the end of the reporting period of identical instruments in the over-the-counter market (Level 2).

For thethree months ended March 31, 2025 and 2024, interest expense related to the Convertible Notes (including the 2025 Convertible Notes) was as follows (in thousands):

For the three months ended March 31, 2025, the Company paid $8.2 million in interest related to the Convertible Notes. The Company didnot pay any interest related to the Convertible Notes or 2025 Convertible Notes during the three months ended March 31, 2024. The Company hasnot paid any additional interest or special interest related to the Convertible Notes to date.

On June 14, 2021, the Company issued $500 million aggregate principal amount of 6.125% Senior Secured Notes due 2028 (the “2028 Secured Notes”) in a private offering. These notes, which were guaranteed by MicroStrategy Services Corporation, a wholly owned subsidiary of the Company (the “Subsidiary Guarantor”), bore a fixed interest rate of 6.125% per annum, payable semiannually, with a maturity date of June 15, 2028, unless earlier redeemed or repurchased in accordance with their terms and subject to a springing maturity feature described in the indenture governing the 2028 Secured Notes. The 2028 Secured Notes were secured by a first priority security interest in the Company's and the Subsidiary Guarantor’s assets, including bitcoins acquired by the Company or the Subsidiary Guarantor after June 14, 2021. The Company redeemed all 2028 Secured Notes on September 26, 2024, at a redemption price equal to $523.9 million, and all collateral securing the 2028 Secured Notes was released. For additional information about the 2028 Secured Notes, see Note 8 to the Company’s Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

For the three months ended March 31, 2024, interest expense related to the 2028 Secured Notes was as follows (in thousands):

The Company didnot pay any interest related to the 2028 Secured Notes during the three months ended March 31, 2024.

Other long-term secured debt

In June 2022, the Company, through a wholly-owned subsidiary, entered into a secured term loan agreement in the amount of $11.1 million, bearing interest at an annual rate of 5.2%, and maturing in June 2027. The loan is secured by certain non-bitcoin assets of the Company that are not otherwise serving as collateral for any of the Company’s other indebtedness. After monthly payments made under the terms of the agreement, the loan had a net carrying value of $9.6 million and $9.7 million as of March 31, 2025 and December 31, 2024, respectively, and an outstanding principal balance of $9.7 million and $9.8 million as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025 and December 31, 2024, $0.5 million and $0.5 million of the respective net carrying values were short-term and were presented in “Current portion of long-term debt, net” in the Consolidated Balance Sheets.

Maturities

The following table shows the maturities of the Company’s debt instruments outstanding as of March 31, 2025 (in thousands). The principal payments related to the 2028 Convertible Notes, 2029 Convertible Notes, 2030A Convertible Notes, 2030B Convertible Notes, 2031 Convertible Notes, and 2032 Convertible Notes are included in the table below as if the holders exercised their right to require the Company to repurchase all of the respective convertible notes on their respective Date of Holder Put Option.

(6) Commitments and Contingencies

(a) Commitments

From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company assumes indemnity obligations for intellectual property infringement or death, bodily harm, or damage to tangible personal property due to the Company’s personnel's gross negligence or willful misconduct in providing contracted services, as well as other obligations from time to time depending on arrangements negotiated with customers and other third parties. The conditions of these obligations vary. Thus, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its Consolidated Balance Sheets as of March 31, 2025 or December 31, 2024.

(b) Contingencies

Brazil Matter

Following an internal review initiated in 2018, the Company disclosed its belief that its Brazilian subsidiary failed or likely failed to comply with local procurement regulations in conducting business with certain Brazilian government entities.

In 2020 the Company learned that the Brazilian Federal Police were investigating alleged corruption and procurement fraud involving certain government officials, including a transaction that was part of the basis of the Company’s previously reported failure or likely failure of its Brazilian subsidiary to comply with local procurement regulations. To the best of the Company’s knowledge, this investigation was concluded in 2023. Neither employees of the Company’s Brazilian subsidiary nor the subsidiary itself were targets of the Federal Police investigation.

The Company’s Brazilian subsidiary voluntarily disclosed information from its 2018 internal review to Brazil’s General Superintendence of the Administrative Council for Economic Defense (“SG/CADE”), the Federal Comptroller General (“CGU”), and the Office of the Comptroller General of the State of São Paulo (“CGE-SP”). Following this voluntary disclosure and cooperation with these agencies, the Company’s Brazilian subsidiary signed leniency agreements with the SG/CADE in September 2020, with the CGU and the Federal General Attorney’s Office (“AGU”) in July 2024, and with the CGE-SP and the Office of the Attorney General of the State of São Paulo (“PGE-SP”) in April 2025.

In 2023, the SG/CADE launched a public administrative proceeding to investigate potentially anticompetitive conduct by various entities and individuals in Brazil based in part on the information voluntarily disclosed by the Company’s Brazilian subsidiary, which is also one of the defendants in the proceeding. If at the end of the proceeding, SG/CADE’s Tribunal confirms that the Brazilian subsidiary’s obligations under the leniency agreement it signed with SG/CADE have been fulfilled, the Brazilian subsidiary will receive full immunity from fines.

Pursuant to its leniency agreement with the CGU and the AGU, the Brazilian subsidiary (i) paid approximately BRL 6.16 million (equivalent to approximately $1.1 million) in July 2024, (ii) agreed to certain undertakings regarding its compliance program, and (iii) has been granted immunity from debarment and other sanctions. As a result of this leniency agreement, the CGU dismissed its pending administrative action against the Brazilian subsidiary over alleged procurement violations.

Pursuant to its leniency agreement with the CGE-SP and PGE-SP, the Brazilian subsidiary (i) paid approximately BRL 2.38 million (equivalent to approximately $406,000) in April 2025, and (ii) has been granted immunity from debarment and other sanctions.

The Company’s Brazilian subsidiary continues to cooperate with requests from government authorities related to the above matters. As of March 31, 2025, the Company remained unable to reasonably estimate a range of loss beyond the 2024 third quarter payment and April 2025 payment described above.

Various Legal Proceedings and Contingent Liabilities

The Company is also involved in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, management does not expect the resolution of these legal proceedings to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion.

(7) Income Taxes

The Company computes its year-to-date provision for (benefit from) income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for (benefit from) income taxes for discrete tax items recorded in the period. The estimated effective tax rate is subject to fluctuation based on the level and mix of earnings and losses by tax jurisdiction, foreign tax rate differentials, and the relative impact of permanent book to tax differences. Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter. As a result of these factors, and due to potential changes in the Company’s period-to-period results, fluctuations in the Company’s effective tax rate and respective tax provisions or benefits may occur. For thethree months ended March 31, 2025, the Company recorded a benefit from income taxes of $1.73 billion on a pretax loss of $5.94 billion, which resulted in an effective tax rate of 29.0%. For the three months ended March 31, 2024, the Company recorded a benefit from income taxes of $160.8 million on a pretax loss of $213.9 million, which resulted in an effective tax rate of 75.2%. During the three months ended March 31, 2025, the Company’s benefit from income taxes primarily related to the tax effect of the unrealized loss on digital assets. During the three months ended March 31, 2024, the Company’s benefit from income taxes primarily related to the (i) a tax benefit related to share-based compensation (including the income tax effects of exercises of stock options and vesting of share-settled restricted stock units) and (ii) a tax benefit from an increase in the Company’s deferred tax asset related to the impairment on its bitcoin holdings.

As of March 31, 2025, the Company had a valuation allowance of $0.5 million primarily related to the Company’s deferred tax assets related to foreign tax credits in certain jurisdictions that, in the Company’s present estimation, more likely than not will not be realized. As of March 31, 2025, the Company had deferred tax liabilities with respect to the unrealized gain on its bitcoin holdings of approximately $2.28 billion. The Company’sdeferred tax liabilities are partially offset by deferred tax assets, such as net operating losses and capitalized research and development costs. If the market value of bitcoin declines in future periods, the Company’s deferred tax liability with respect to the unrealized gain on its bitcoin holdings will decrease, and the Companymay be required to establish additional valuation allowances against its deferred tax assets. The Company will continue to regularly assess the realizability of deferred tax assets.

The Company records liabilities related to its uncertain tax positions. As of March 31, 2025, the Company had gross unrecognized income tax benefits, including accrued interest, of $10.3 million, of which $2.9 million was recorded in “Other long-term liabilities” and $7.4 million was recorded in “Deferred tax liabilities” in the Company’s Consolidated Balance Sheet. As of December 31, 2024, the Company had gross unrecognized income tax benefits of $10.2 million, including accrued interest, $2.9 million of which was recorded in “Other long-term liabilities” and $7.3 million of which was recorded in “Deferred tax assets, net” in the Company’s Consolidated Balance Sheet.

As of March 31, 2025 and December 31, 2024, the Company had income taxes payable of $6.7 million and $9.5 million, respectively, recorded in “Accounts payable, accrued expenses, and operating lease liabilities” in the Company’s Consolidated Balance Sheets.

(8) Share-based Compensation

Stock Incentive Plans

Prior to its expiration, the Company maintained the 2013 Stock Incentive Plan (as amended, the “2013 Equity Plan”), under which the Company’s employees, officers, and directors were awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock, restricted stock units, and other stock-based awards. In May 2023, the 2013 Equity Plan expired and no new awards may be granted under the 2013 Equity Plan, although awards previously granted under the 2013 Equity Plan will continue to remain outstanding in accordance with their terms.

The Company maintains the 2023 Equity Incentive Plan (as amended, the “2023 Equity Plan”) under which the Company’s employees, officers, directors, and other eligible participants may be awarded various types of share-based compensation, including options to purchase shares of the Company’s class A common stock, restricted stock units, performance stock units, and other stock-based awards. An aggregate of up to 19,327,030 shares of the Company’s class A common stock were authorized for issuance under the 2023 Equity Plan. As of March 31, 2025, there were 2,768,783 shares of class A common stock reserved and available for future issuance under the 2023 Equity Plan. The 2013 Equity Plan and the 2023 Equity Plan together are referred to herein as the “Stock Incentive Plans.”

Stock option awards

As of March 31, 2025, there were options to purchase 4,560,073 shares of class A common stock outstanding under the Stock Incentive Plans. The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for thethree months ended March 31, 2025:

Stock options outstanding as of March 31, 2025 are comprised of the following range of exercise prices per share (in thousands, except per share data and years):

An aggregate of 958,570 stock options with an aggregate grant date fair value of $30.2 million vested during the three months ended March 31, 2025. The weighted average grant date fair value of stock option awards using the Black-Scholes valuation model was $221.70 and $111.44 for each share subject to a stock option granted during thethree months ended March 31, 2025 and 2024, respectively, based on the following assumptions:

For the three months ended March 31, 2025 and 2024, the Company recognized approximately $6.6 million and $9.8 million, respectively, in share-based compensation expense from stock options granted under the Stock Incentive Plans. As of March 31, 2025, there was approximately $35.0 million of total unrecognized share-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted average vesting period of approximately 2.4 years.

Share-settled restricted stock units

As of March 31, 2025, there were 1,145,722 share-settled restricted stock units outstanding under the Stock Incentive Plans. The following table summarizes the Company’s share-settled restricted stock unit activity (in thousands) for the periods indicated:

During the three months ended March 31, 2025,104,170 share-settled restricted stock units vested having an aggregate grant date fair value of $11.4 million. During the three months ended March 31, 2024,60,020 share-settled restricted stock units having an aggregate grant date fair value of $3.2 million vested, and 18,890 shares were withheld to satisfy tax obligations, resulting in 41,130 issued shares. The weighted average grant date fair value of share-settled restricted stock units granted during thethree months ended March 31, 2025 and 2024 was $272.08 and $145.17, respectively, based on the fair value of the Company’s class A common stock.

For the three months ended March 31, 2025 and 2024, the Company recognized approximately $5.2 million and $4.7 million, respectively, in share-based compensation expense from share-settled restricted stock units granted under the Stock Incentive Plans. As of March 31, 2025, there was approximately $81.4 million of total unrecognized share-based compensation expense related to unvested share-settled restricted stock units, which the Company expects to recognize over a weighted average vesting period of approximately 3.2 years.

Share-settled performance stock units

As of March 31, 2025, there were 282,322 performance stock units outstanding under the 2023 Equity Plan. The following table summarizes the Company’s performance stock unit activity (in thousands) for the periods indicated:

The weighted average grant date fair value of performance stock units using the Monte-Carlo simulation model was $445.66 and $307.13 for each performance stock unit granted during thethree months ended March 31, 2025 and 2024, respectively, based on the following assumptions:

No performance stock units vested during thethree months ended March 31, 2025 and 2024. For the three months ended March 31, 2025 and 2024, the Company recognized approximately $0.7 million and $1.1 million, respectively, in share-based compensation expense from performance stock units granted under the 2023 Equity Plan. As of March 31, 2025, there was approximately $25.8 million of total unrecognized share-based compensation expense related to unvested performance stock units, which the Company expects to recognize over a weighted average vesting period of approximately 2.3 years.

Other stock-based awards and cash-settled restricted stock units

From time to time the Company has granted “other stock-based awards” and “cash-settled restricted stock units” under the 2013 Equity Plan. Other stock-based awards are similar to stock options, and cash-settled restricted stock units are similar to the Company’s share-settled restricted stock units, except in each case these awards are settled in cash only and not in shares of the Company’s class A common stock. Due to their required cash settlement feature, these awards are classified as liabilities in the Company’s Consolidated Balance Sheets and the fair value of the awards is remeasured each quarterly reporting period. For the three months ended March 31, 2025 and 2024, the Company recognized a reduction of approximately $1.1 million and expense of approximately $1.8 million in share-based compensation expense from other stock-based awards and cash-settled restricted stock units, respectively. As of March 31, 2025, there were no other stock-based awards or cash-settled restricted stock units outstanding and there was no unrecognized share-based compensation expense.

2021 ESPP

The Company also maintains the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). The purpose of the 2021 ESPP is to provide eligible employees of the Company and certain of its subsidiaries with opportunities to purchase shares of the Company’s class A common stock in 6-month offering periods commencing on each March 1 and September 1. An aggregate of 1,000,000 shares of the Company’s class A common stock has been authorized for issuance under the 2021 ESPP. During thethree months ended March 31, 2025,25,998 shares of class A common stock were issued in connection with the 2021 ESPP. As of March 31, 2025,476,404 shares of the Company’s class A common stock remained available for issuance under the 2021 ESPP.

For the three months ended March 31, 2025 and 2024, the Company recognized approximately $0.4 million and $0.4 million, respectively, in share-based compensation expense related to the 2021 ESPP. As of March 31, 2025, there was approximately $0.9 million of total unrecognized share-based compensation expense related to the 2021 ESPP, which the Company expects to recognize over a period of approximately 0.4 years.

Tax Benefits Related to Equity Plans

The following table summarizes the tax benefit related to the Company’s equity plans (in thousands) for thethree months ended March 31, 2025 and 2024:

(9) Redeemable Preferred Stock

The Perpetual Strike Preferred Stock and Perpetual Strife Preferred Stock discussed in this footnote below are classified within mezzanine equity, as certain events that could cause such shares to become redeemable are not solely within the control of the Company. Issuances of Perpetual Strike Preferred Stock and Perpetual Strife Preferred Stock are recognized based on proceeds received, net of issuance costs and shall not be accreted to its redemption value unless it is probable that the preferred will be become redeemable.

The following table summarizes the key terms and provisions from the initial preferred stock offerings. Net proceeds and issuance costs in the following table are reported in thousands.

Perpetual Strike Preferred Stock

On February 5, 2025, the Company issued 7,300,000 shares of Perpetual Strike Preferred Stock in a public offering at an offering price of $80 per share registered under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the issuance of Perpetual Strike Preferred Stock, the Company filed a Certificate of Designations (the “Strike Certificate of Designations”) with the Secretary of State of the State of Delaware designating an aggregate of 7,300,000 shares of, and establishing the terms of, the Perpetual Strike Preferred Stock.

On March 10, 2025, the Company entered into a sales agreement with agents pursuant to which the Company could issue and sell shares of its Perpetual Strike Preferred Stock though an at-the-market equity offering program (the “Strike ATM Offering”), pursuant to which the Company may issue and sell shares of its Perpetual Strike Preferred Stock having an aggregate offering price of up to $21 billion from time to time through the sales agents under the Strike ATM Offering. For more information about the Strike ATM Offering, see Note 11 “At-the-Market Equity Offerings – Perpetual Strike Preferred Stock ATM Offering.”

The Perpetual Strike Preferred Stock has a par value of $0.001 per share and a liquidation preference of $100 per share. The Perpetual Strike Preferred Stock ranks senior to the Company’s class A common stock and class B common stock, and junior to the Perpetual Strife Preferred Stock, with respect to the payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up. If the Company liquidates, dissolves or winds up, whether voluntarily or involuntarily, then the holders of the Perpetual Strike Preferred Stock will be entitled to receive payment for the liquidation preference of, and all accumulated and unpaid Regular Strike Dividends (as defined below) on, their Perpetual Strike Preferred Stock out of the Company’s assets or funds legally available for distribution to its stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, holders of the class A common stock, class B common stock or other junior stock. The Perpetual Strike Preferred Stock is junior to the Company’s existing and future indebtedness, junior to the Perpetual Strife Preferred Stock, structurally junior to the liabilities of the Company’s subsidiaries and subject to the rights and preferences of any other class or series of preferred stock then outstanding.

The Perpetual Strike Preferred Stock accumulates cumulative dividends (“Regular Strike Dividends”) at a rate per annum equal to 8.00% on the liquidation preference thereof (the “Regular Strike Dividend Rate”), and are payable when, as and if declared by the Company’s board of directors, out of funds legally available for their payment to the extent paid in cash, quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on March 31, 2025 (each, a “Regular Strike Dividend Payment Date”). Declared Regular Strike Dividends on the Perpetual Strike Preferred Stock are payable, at the Company’s election, in cash, shares of class A common stock or a combination of cash and shares of class A common stock. If the Company elects to pay any portion of a declared Regular Strike Dividend in shares of class A common stock, then those shares will be valued at 95%of the daily volume-weighted average price per share of class A common stock on the third trading day before the related Regular Strike Dividend Payment Date. However, the number of shares of class A common stock that the Company will deliver as payment for any declared Regular Strike

Dividend will be limited to a maximum number equal to the total dollar amount of the declared Regular Strike Dividend (including any portion thereof that the Company has elected to pay in shares of class A common stock) divided by the “floor price,” which initially is equal to $119.03 per share and is subject to customary anti-dilution adjustments. If the number of shares that the Company delivers is limited as a result of this provision, then the Company will, to the extent it is legally able to do so, declare and pay the related deficiency in cash.

If any accumulated Regular Strike Dividend (or any portion thereof) on the Perpetual Strike Preferred Stock is not paid on the applicable Regular Strike Dividend Payment Date (or, if such Regular Strike Dividend Payment Date is not a business day, the next business day), then additional Regular Strike Dividends (“Compounded Strike Dividends”) will accumulate on the amount of such unpaid Regular Strike Dividend, compounded quarterly at the Regular Strike Dividend Rate, from, and including, such Regular Strike Dividend Payment Date to, but excluding, the date the same, including all Compounded Strike Dividends thereon, is paid in full.

In certain cases where the Company has not declared and paid accumulated Regular Strike Dividends in full on the Perpetual Strike Preferred Stock, then, subject to limited exceptions, the Company will be prohibited from declaring or paying dividends on or repurchasing any shares of class A common stock, class B common stock or other junior securities.

Subject to certain limitations, holders of the Perpetual Strike Preferred Stock (the “Preferred Strike Stockholders”) will have the right to convert some or all of their shares of Perpetual Strike Preferred Stock on any business day into shares of class A common stock (together, if applicable, with cash in lieu of any fractional share of class A common stock) at the then-applicable conversion rate. The initial conversion rate is 0.1000 shares of class A common stock per share of Perpetual Strike Preferred Stock, which represents an initial conversion price of $1,000.00 per share of class A common stock, and is subject to customary anti-dilution adjustments.

The Company will have the right, at its election, to redeem all, and not less than all, of the Perpetual Strike Preferred Stock, at any time, for cash if the total aggregate liquidation preference of all Perpetual Strike Preferred Stock then outstanding is less than 25% of the aggregate liquidation preference of the Perpetual Strike Preferred Stock issued in the initial issuance of Perpetual Strike Preferred Stock (such a redemption, an “Strike Optional Redemption”). The redemption price for any Perpetual Strike Preferred Stock to be redeemed pursuant to an Strike Optional Redemption will be a cash amount equal to the liquidation preference of the Perpetual Strike Preferred Stock to be redeemed, plus accumulated and unpaid Regular Strike Dividends to, but excluding, the redemption date.

The Company will also have the right, at its election, to redeem all, and not less than all, of the Perpetual Strike Preferred Stock, at any time, for cash if a “Tax Event” (as defined in the Strike Certificate of Designations) occurs (such a redemption, a “Strike Tax Redemption”). The redemption price for any Perpetual Strike Preferred Stock to be redeemed pursuant to a Strike Tax Redemption will be a cash amount equal to (i) the greater of (1) the liquidation preference of the Perpetual Strike Preferred Stock to be redeemed; and (2) the average of the last reported sale prices per share of Perpetual Strike Preferred Stock for the five consecutive trading days ending on, and including, the trading day immediately before the date on which the Company sends the related redemption notice, plus (ii) accumulated and unpaid Regular Strike Dividends to, but excluding, the redemption date.

If a “Fundamental Change” (as defined in the Strike Certificate of Designations) occurs, then, subject to a limited exception, Preferred Strike Stockholders will have the right to require the Company to repurchase some or all of their shares of Perpetual Strike Preferred Stock at a cash repurchase price equal to the liquidation preference of the Perpetual Strike Preferred Stock to be repurchased, plus accumulated and unpaid Regular Strike Dividends, if any, to, but excluding the repurchase date. The Company has evaluated the probability of a redemption in connection with a Fundamental Change. Based on current facts and circumstances and the Company’s current and projected capital structure, management has determined that the occurrence of a Fundamental Change is remote. Accordingly, the Company concluded that accretion to the redemption value of the Perpetual Strike Preferred Stock is not required as of the reporting date.

The Perpetual Strike Preferred Stock has voting rights with respect to certain amendments to the Company’s certificate of incorporation or the Strike Certificate of Designations, certain business combination transactions and certain other matters. However, Preferred Strike Stockholders, as such, are not entitled to vote on an as-converted basis with holders of class A common stock on matters on which holders of class A common stock are entitled to vote.

If less than the full amount of accumulated and unpaid Regular Strike Dividends on the outstanding Perpetual Strike Preferred Stock have been declared and paid in respect of each of (i) four or more consecutive Regular Strike Dividend Payment Dates; and (ii) eight or more consecutive Regular Strike Dividend Payment Dates, then, in each case, subject to certain limitations, the authorized number of the Company’s directors will automatically increase by one (or the Company will vacate the office of one of its directors) and the holders of the Perpetual Strike Preferred Stock, voting together as a single class with the holders of each class or series of “Voting Parity Stock” (as defined in the Strike Certificate of Designations), if any, with similar voting rights regarding the election of directors upon a failure to pay dividends, which similar voting rights are then exercisable, will have the right to elect one director (a “Perpetual Strike Preferred Stock Director”) to fill such directorship at the Company’s next annual meeting of stockholders (or, if earlier, at a special meeting of the Company’s stockholders called for such purpose). If, thereafter, all accumulated and unpaid Regular Strike Dividends on the outstanding Perpetual Strike Preferred Stock have been paid in full, then the right of the holders of the Perpetual Strike Preferred Stock to elect any Perpetual Strike Preferred Stock Directors will terminate. Upon the termination of such right with respect to the Perpetual Strike Preferred Stock and all other outstanding Voting Parity Stock, if any, the term of office of each person then serving as a Perpetual

Strike Preferred Stock Director will immediately and automatically terminate (and, if the authorized number of the Company’s directors was increased by one or two, as applicable, in connection with such election, then the authorized number of the Company’s directors will automatically decrease by one or two, as applicable).

Dividends on Perpetual Strike Preferred Stock

On March 3, 2025, the Company announced that its board of directors declared a quarterly cash dividend of approximately $1.24 per share payable on the Company’s Perpetual Strike Preferred Stock for a total dividend payment of $9.2 million. Payment was made on March 31, 2025 to stockholders of record at the close of business on March 15, 2025. The calculation of this per share dividend amount was prorated to reflect the quarterly dividend accrued from February 5, 2025, the issuance date of the Perpetual Strike Preferred Stock.

Perpetual Strife Preferred Stock

On March 25, 2025, the Company issued 8,500,000 shares of Perpetual Strife Preferred Stock in a public offering (the “Strife Offering”) registered under the Securities Act. In connection with the issuance of Perpetual Strife Preferred Stock, the Company filed a Certificate of Designations (the “Strife Certificate of Designations”) with the Secretary of State of the State of Delaware designating an aggregate of 8,500,000 shares of, and establishing the terms of, the Perpetual Strife Preferred Stock.

The Perpetual Strife Preferred Stock accumulates cumulative dividends (“Regular Strife Dividends”) at a rate per annum equal to 10.00% (the “Regular Strife Dividend Rate”) of the stated amount of $100 per share (the “Strife Stated Amount”). Regular Strife Dividends are payable when, as and if declared by the Company’s board of directors, out of funds legally available for their payment, quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on June 30, 2025 (each, a “Regular Strife Dividend Payment Date”). Declared Strife Regular Dividends on the Perpetual Strife Preferred Stock are payable solely in cash. If any accumulated Regular Strife Dividend (or any portion thereof) on the Perpetual Strife Preferred Stock is not paid on the applicable Regular Strife Dividend Payment Date (or, if such Regular Strife Dividend Payment Date is not a business day, the next business day), then additional Regular Strife Dividends (“Compounded Strife Dividends”) will accumulate on the amount of such unpaid Regular Strife Dividend, compounded quarterly at the Compounded Strife Dividend Rate (as defined below), from, and including, such Regular Strife Dividend Payment Date to, but excluding, the date the same, including all Compounded Strife Dividends thereon, is paid in full. The “Compounded Strife Dividend Rate” applicable to any unpaid Regular Strife Dividend that was due on a Regular Strife Dividend Payment Date (or, if such Regular Strife Dividend Payment Date is not a business day, the next business day) will initially be a rate per annum equal to the Regular Strife Dividend Rate plus 100 basis points; provided, however, that until such Regular Strife Dividend, together with Compounded Strife Dividends thereon, is paid in full, such Compounded Strife Dividend Rate will increase by 100 basis points per annum for each subsequent Regular Strife Dividend period, up to a maximum rate of 18% per annum.

If the Company fails to declare a Regular Strife Dividend on or prior to the record date applicable to a Regular Strife Dividend Payment Date, such failure shall constitute the issuance of a notice of deferral. Upon issuance of such notice, the Company shall use its commercially reasonable efforts over the following 60-day period to sell class A common stock and/or other securities to raise proceeds in an amount sufficient to cover any deferred dividends that would have been due with respect to the applicable Regular Strife Dividend Payment Date, plus Compounded Strife Dividends thereon. In certain cases where the Company has not declared and paid accumulated Regular Strife Dividends in full on the Perpetual Strife Preferred Stock, then, subject to limited exceptions, the Company will be prohibited from declaring or paying dividends on or repurchasing any shares of Perpetual Strike Preferred Stock, class A common stock, class B common stock or other junior securities.

The Perpetual Strife Preferred Stock has a par value of $0.001 per share and initially has a liquidation preference of $100 per share, subject to adjustment as set forth below (the “Strife Liquidation Preference”). The Perpetual Strife Preferred Stock ranks senior to the Company’s class A common stock, class B common stock, and the Perpetual Strike Preferred Stock with respect to the payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up. If the Company liquidates, dissolves or winds up, whether voluntarily or involuntarily, then the holders of Perpetual Strife Preferred Stock will be entitled to receive payment for the Strife Liquidation Preference of, and all accumulated and unpaid Regular Strife Dividends and any Compounded Strife Dividends (each as defined below) on, their shares of Perpetual Strife Preferred Stock out of the Company’s assets or funds legally available for distribution to its stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, holders of the class A common stock, class B common stock, Perpetual Strike Preferred Stock or other junior stock. The Perpetual Strife Preferred Stock will be junior to the Company’s existing and future indebtedness, structurally junior to the liabilities of the Company’s subsidiaries and subject to the rights and preferences of any other class or series of preferred stock then outstanding.

The Strife Liquidation Preference of the Perpetual Strife Preferred Stock was initially $100 pershare of Perpetual Strife Preferred Stock; provided, however, that, effective immediately after the close of business on each business day after the date on which shares were issued in the initial public offering of the Perpetual Strife Preferred Stock (the “Strife Initial Issue Date”) (and, if applicable, during the course of a business day on which any sale transaction to be settled by the issuance of Perpetual Strife Preferred Stock is executed, from the exact time of the first such sale transaction during such business day until the close of business of such business day), the Strife Liquidation Preference per share of Perpetual Strife Preferred Stock will be adjusted to greatest of (i) the Strife Stated Amount; (ii) in the case of any business day with respect to which the Company has, on such business day or on any business day during the ten trading dayperiod preceding such business day, executed any sale transaction to be settled by the issuance of Perpetual Strife Preferred Stock, an amount equal to the Last Reported Sale Price (as defined in the Strife Certificate of Designations) per share of Perpetual Strife Preferred Stock on the trading day immediately before such business day; and (iii) the arithmetic average of the Last Reported Sale Prices per share of Perpetual Strife Preferred Stock for each trading day of the ten consecutive trading days immediately preceding such business day, provided, however, that, if applicable, the reference in this clause (iii) to ten will be replaced by such lesser number of trading days as have elapsed during the period from, and including, the Strife Initial Issue Date to, but excluding, such business day. Notwithstanding anything to the contrary in the preceding sentence, at all times before the first date on which the Company executes any sale transaction to be settled by the issuance of Perpetual Strife Preferred Stock (other than the Perpetual Strife Preferred Stock initially issued on the Strife Initial Issue Date), the Strife Liquidation Preference per share of Perpetual Strife Preferred Stock will be $100. For purposes of the definition of the Strife Liquidation Preference, references to the Company’s execution of any sale transaction to be settled by the issuance of Perpetual Strife Preferred Stock includes any resale of any shares of Perpetual Strife Preferred Stock that the Company or any of its subsidiaries have purchased or otherwise acquired.

The Company will have the right, at its election, to redeem all, and not less than all, of the Perpetual Strife Preferred Stock, at any time, for cash if the total number of shares of Perpetual Strife Preferred Stock then outstanding is less than 25% of the total number of shares of the Perpetual Strife Preferred Stock originally issued on the Strife Initial Issue Date and in any future offering of the Perpetual Strife Preferred Stock, taken together (such a redemption, an “Strife Optional Redemption”). The Company will also have the right, at its election, to redeem all, and not less than all, of the Perpetual Strife Preferred Stock, at any time, for cash if a “Tax Event” (as defined in the Strife Certificate of Designations) occurs (such a redemption, a “Strife Tax Redemption”). The redemption price for any Perpetual Strife Preferred Stock to be redeemed pursuant to an Strife Optional Redemption or a Strife Tax Redemption will be a cash amount equal to (i) the Strife Liquidation Preference of such share as of the business day before the Company sends the related redemption notice, plus (ii) accumulated and unpaid Regular Strife Dividends (plus any Compounded Strife Dividends thereon) on such share to, but excluding, the redemption date.

If a “Fundamental Change” (as defined in the Strife Certificate of Designations) occurs, then holders of the Perpetual Strife Preferred Stock will have the right to require the Company to repurchase some or all of their shares of Perpetual Strife Preferred Stock at a cash repurchase price equal to (i) the Strife Stated Amount plus (ii) accumulated and unpaid Regular Strife Dividends on such share to, but excluding, the Fundamental Change repurchase date for such Fundamental Change. The Company has evaluated the probability of redemption in connection with a Fundamental Change. Based on current facts and circumstances and the Company's current and projected capital structure, management has determined that the occurrence of a Fundamental Change is remote. Accordingly, the Company concluded that accretion to the redemption value of the Perpetual Strife Preferred Stock is not required as of the reporting date.

The Perpetual Strife Preferred Stock has voting rights with respect to certain amendments to the Company’s certificate of incorporation or the Strife Certificate of Designations, certain business combination transactions and certain other matters. The Company additionally may not create or issue any class or series of stock that ranks senior to the Perpetual Strife Preferred Stock with respect to the payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up without the consent of the holders of Perpetual Strife Preferred Stock representing at least a majority of the combined outstanding voting power of the Perpetual Strife Preferred Stock, and any voting parity stockholders. However, holders of Perpetual Strife Preferred Stock are not entitled to vote with holders of class A common stock on matters on which holders of class A common stock are entitled to vote.

If (in each case, subject to the Strife Certificate of Designations) less than the full amount of accumulated and unpaid Regular Strife Dividends on the outstanding Perpetual Strife Preferred Stock have been declared and paid by the following Regular Strife Dividend Payment Date in respect of each of (i) four or more consecutive Regular Strife Dividend Payment Dates; and (ii) eight or more consecutive Regular Strife Dividend Payment Dates, then, in each case, subject to certain limitations, the authorized number of the Company’s directors will automatically increase by one (or the Company will vacate the office of one of its directors) and the holders of the Perpetual Strife Preferred Stock, voting together as a single class with the holders of each class or series of “Voting Parity Stock” (as defined in the Strife Certificate of Designations) with similar voting rights regarding the election of directors upon a failure to pay dividends, which similar voting rights are then exercisable, will have the right to elect one director (a “Preferred Strife Stock Director”) to fill such directorship at the Company’s next annual meeting of stockholders (or, if earlier, at a special meeting of the Company’s stockholders called for such purpose). If, thereafter, all accumulated and unpaid Regular Strife Dividends on the outstanding Perpetual Strife Preferred Stock have been paid in full, then the right of the holders of the Perpetual Strife Preferred Stock to elect any Preferred Strife Stock Directors will terminate. Upon the termination of such right with respect to the Perpetual Strife Preferred Stock and all other outstanding Voting Parity Stock, if any, the term of office of each person then serving as a Preferred Strife Stock Director will immediately and automatically terminate (and, if the authorized number of the Company’s directors was increased by one or two, as applicable, in connection with such election, then the authorized number of the Company’s directors will automatically decrease by one or two, as applicable).

(10) Basic and Diluted Loss per Common Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average common stock outstanding during the respective period. Net loss attributable to common stockholders is computed by deducting both the dividends declared in the period on the Perpetual Strike Preferred Stock and the Perpetual Strife Preferred Stock and the dividends accrued for the period on the Perpetual Strike Preferred Stock and the Perpetual Strife Preferred Stock from net loss. As of March 31, 2025, the aggregate and per share cumulative preferred dividends payable in arrears on the Perpetual Strife Preferred Stock were $1.4 million and $0.17, respectively. As of March 31, 2025, there wereno cumulative preferred dividends payable in arrears on the Perpetual Strike Preferred Stock.

The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock haveone vote per share while holders of class B common stock haveten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per common share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock.

The Company has two classes of preferred stock outstanding: Perpetual Strike Preferred Stock and Perpetual Strife Preferred Stock. Holders of the Company’s preferred stock do not have voting rights, except for rights to appoint a director to the Company’s board upon certain failures to pay dividends on preferred stock, and have rights to dividends and other rights as discussed in Note 9, Redeemable Preferred Stock, to the Consolidated Financial Statements. Additionally, each share of the Perpetual Strike Preferred Stock is convertible at any time, at the option of the holder, into 0.1 shares of class A common stock.

The impact from potential shares of common stock on the diluted earnings per common share calculation are included when dilutive. Potential shares of class A common stock issuable upon the exercise of outstanding stock options, the vesting of restricted stock units and performance stock units considered probable of achievement, and in connection with the 2021 ESPP are computed using the treasury stock method. Potential shares of class A common stock issuable upon conversion of the Convertible Notes and upon conversion of the Perpetual Strike Preferred Stock are computed using the if-converted method. In computing diluted earnings per common share, the Company first calculates the earnings per incremental share (“EPIS”) for each class of potential shares of common stock and ranks the classes from the most dilutive (i.e., lowest EPIS) to the least dilutive (i.e., highest EPIS). Basic earnings per common share is then adjusted for the effect of each class of shares, in sequence and cumulatively, until a particular class no longer produces further dilution. The following table sets forth the computation of basic and diluted loss per common share (in thousands, except per share data) for the periods indicated:

(1)

Basic and fully diluted loss per common share for class A and class B common stock are the same.

For thethree months ended March 31, 2025 and 2024, the following weighted average shares of potential class A common stock were excluded from the diluted loss per common share calculation because their impact would have been anti-dilutive (in thousands).

(11) At-the-Market Equity Offerings

Common Stock ATM Offerings

From time to time, the Company has entered into sales agreements with agents pursuant to which the Company could issue and sell shares of its class A common stock through at-the-market equity offering programs (the “Common Stock ATM Offerings”). Pursuant to these agreements, the Company agreed to pay the sales agents commissions for their services in acting as agents with respect to the sale of shares through the Common Stock ATM Offerings and also agreed to provide the sales agents with reimbursement for certain incurred expenses and customary indemnification and contribution rights. The following table summarizes the terms and provisions of each sales agreement, and each Common Stock ATM Offering that was active during thethree months ended March 31, 2025 and the year ended December 31, 2024. The maximum aggregate offering price and cumulative net proceeds (less sales commissions and expenses) for each Common Stock ATM Offering in the following table are reported in thousands.

(1)

As of May 2, 2025, the cumulative shares sold under the October 2024 Sales Agreement was 58,384,669 and the cumulative net proceeds received from shares sold under the October 2024 Sales Agreement was $20.97 billion. Refer to Note 14, Subsequent Events, for further discussion.

The following table summarizes the sales activity of each sales agreement that was active during 2024 or 2023 for the periods indicated. The net proceeds (less sales commissions and expenses) for each Common Stock ATM Offering in the following table are reported in thousands.

The sales commissions and expenses related to each of the above Common Stock ATM Offerings are considered direct and incremental costs and are charged against “Additional paid-in capital” on the Consolidated Balance Sheet in the period in which the corresponding shares are issued and sold.

Perpetual Strike Preferred Stock ATM Offering

On March 10, 2025, the Company entered into a sales agreement (the “Strike Sales Agreement”) with multiple sales agents (each a “Strike Agent” and collectively the “Strike Agents”), pursuant to which the Company may issue and sell shares of its Perpetual Strike Preferred Stock, having an aggregate offering price of up to $21.0 billion (the “Strike ATM Shares”), from time to time through the Strike Agents (the “Strike ATM Offering”).

Subject to the terms and conditions of the Strike Sales Agreement, the Strike Agents may sell the Strike ATM Shares in amounts and at times to be determined by the Company by any method that is deemed an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act or any other method permitted by law.

The Company or the Strike Agents may suspend or terminate the Strike ATM Offering upon notice to the other parties and subject to other conditions.

The Company has agreed to pay the Strike Agents’ commissions for their respective services in acting as agents in the sale of the Strike ATM Shares in the amount of up to 2.0% of the aggregate gross proceeds it receives from each sale of its Strike ATM Shares pursuant to the Strike Sales Agreement.

During the three months ended March 31, 2025, the Company sold an aggregate of 349,907 Strike ATM Shares under the Strike ATM Offering, for aggregate net proceeds to the Company (less sales commissions) of approximately $30.4 million. As of March 31, 2025, approximately $20.97 billion of Strike ATM Shares remained available for issuance and sale pursuant to the Strike ATM Offering.

(12) Segment Information

The Company hasone 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 unrealized gain or loss on digital assets, 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. Beginning in 2025, the Company has dedicated certain corporate resources to its bitcoin strategy. These costs, including related Share-based compensation expense are included within the “Corporate resources” and the “Share-based compensation expense” segment expense line items to better align with their activities and utilization.

The Company’s chief operating decision maker (“CODM”), is the Company’s Chief Executive Officer, who manages the entity on a consolidated basis. The CODM uses “net income (loss)” to assess the profitability of the software business by comparing actual to budgeted results on a monthly basis. In doing so, he focuses on “controllable costs” across main functions of the Software Business and will allocate personnel and budget accordingly to maximize potential profitability. The CODM also uses “net income (loss)” to understand the impact from income taxes and debt-related items for general tax and liquidity planning purposes.

The following tables present (for each of the Software Business segment and Corporate & Other category, and on a consolidated basis) the Company’s revenues and significant expenses regularly provided to the CODM, reconciled to net (loss) income (in thousands) for each of the periods presented. Total segment assets (in thousands) provided to the CODM are also disclosed in the tables below for each period presented.

(1)

Significant expenses regularly provided to the CODM include both: (i) costs that the CODM considers to be “controllable”, for which the Company can manage future expense via the budgeting process (e.g. salaries, commissions, travel and entertainment expenses, third party-service provider fees, etc.), and that support each specific function of the Software Business (i.e. sales and marketing, maintenance, consulting, cloud, technology, and corporate resources) and (ii) costs that the CODM considers to be “non-controllable”, for which future expenses are primarily outside the Company’s control, such as losses (gains) on digital assets, digital asset impairment, and custody fees, share-based compensation expense, and employer payroll taxes related to the exercise or vesting of certain awards under the Stock Incentive Plans.

(2)

Other segment items for the Software Business are primarily related to foreign currency transaction gains and losses, costs supporting the Company’s education function, one-time corporate initiatives, and certain expenses that are not easily allocable to specific functions. Other segment items for the Corporate & Other category are primarily related to third-party consulting and advisory fees.

(3)

Interest expense, net is substantially related to interest expense on the Company’s long-term debt arrangements, the proceeds from which were primarily used to purchase bitcoin.

(4)

Income tax effects allocated to the Corporate & Other category are related solely to transactions involving the Company’s bitcoin or debt, including unrealized losses on digital assets, digital asset impairment losses, interest expenses, gains and losses on debt extinguishments, share-based compensation expense, corporate resources (including personnel costs), and other third-party expenses.

(5)

Due to the adoption of ASU 2023-08, segment assets allocated to the Corporate & Other category for the three months ended March 31, 2025, included only the Company’s digital assets. For the three months ended March 31, 2024, segment assets included the Company’s digital assets and deferred tax assets primarily related to digital asset impairment losses and interest expense.

The following table presents total revenues and long-lived assets (in thousands) according to geographic region. Long-lived assets are comprised of right-of-use assets and property and equipment, net. The Corporate & Other category disclosed above is included within the U.S. region.

The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America, the Asia Pacific region, and Canada. For the three months ended March 31, 2025, Germany accounted for 10% or more of total consolidated revenues. For the three months ended March 31, 2024, no country accounted for 10% or more of total consolidated revenues.

For the three months ended March 31, 2025 and 2024, no individual customer accounted for 10% or more of total consolidated revenues.

(13) Related Party Transactions

Saylor Indemnification Agreements

On June 24, 2022, concurrently with binding directors and officers (“D&Os”) liability insurance policies (the “Initial Commercial Policies”) with several third-party carriers, the Company and Michael J. Saylor, the Company’s Chairman of the Board of Directors and Executive Chairman, entered into (i) an indemnification agreement (the “Excess Agreement”) for Mr. Saylor to provide $10 million in excess indemnity coverage payable only after the exhaustion of the Initial Commercial Policies, and (ii) an indemnification agreement (the “Tail Agreement”) for Mr. Saylor to provide $40 million in indemnity coverage for claims made at any time based on actions or omissions occurring prior to the inception date of the Initial Commercial Policies. The Company paid Mr. Saylor $600,000 for a one-year term under the Excess Agreement, and$150,000 for a 90-day term under the Tail Agreement. At the option of the Company, the Company was permitted to extend the term under the Tail Agreement for up to a total of twenty-three additional 90-day periods, for $150,000 per additional 90-day term. The Company elected to extend the term of the Tail Agreement for three consecutive additional 90-day periods and paid Mr. Saylor $150,000 for each extension.

On August 30, 2022, the Company bound additional D&O liability insurance policies (the “Excess Commercial Policies”) with third-party carriers for excess coverage payable only after the exhaustion of the Initial Commercial Policies. Effective as of the same date, the Company and Mr. Saylor executed an amendment (the “Amendment”) to the Excess Agreement to limit Mr. Saylor’s obligation to provide indemnification under the Excess Agreement to claims made during the term of the Excess Agreement which arise from wrongful acts occurring upon or after the commencement of the Excess Agreement but prior to the effective date of the Amendment. In connection with the Amendment, Mr. Saylor refunded $489,863 to the Company, representing the pro rata portion of the $600,000 originally paid by the Company to Mr. Saylor under the Excess Agreement attributable to the period from the date of the Amendment through the end of the original term of the Excess Agreement.

On June 12, 2023, the Company bound new D&O liability insurance policies (the “2023 Commercial Policies”) with third-party carriers that provide coverage substantially equivalent to the aggregate coverage provided under the Initial Commercial Policies and the Excess Commercial Policies for a policy period running from June 12, 2023 through June 12, 2024 except that the 2023 Commercial Policies also provide coverage for claims made with respect to wrongful acts or omissions occurring prior to the binding of the Initial Commercial Policies subject to exclusions with respect to claims previously noticed to and accepted by an earlier D&O insurer, claims related to acts or omissions giving rise to such claims, and demands, investigations, suits or other proceedings entered against an insured prior to June 24, 2022, as well as future interrelated wrongful acts.

On June 12, 2023, the Company entered into a new indemnification agreement with Mr. Saylor (the “2023 Tail Agreement”) pursuant to which Mr. Saylor agreed to provide coverage that is similar to the coverage provided under the Tail Agreement, but only for matters excluded from coverage under the 2023 Commercial Policies for an initial one-year term for a payment of $157,000. Pursuant to the terms of the 2023 Tail Agreement, the Company has elected to extend the term of the 2023 Tail Agreement for a period ofone-year commencing on June 12, 2024, and has paid Mr. Saylor $157,000 during the three months ended June 30, 2024. The Company may elect, at its option, to extend the term under the 2023 Tail Agreement for up to a total ofthree additionalone-year periods, for $157,000 per additional one-year term.

The Excess Agreement, Tail Agreement and other related party transactions between the Company and Mr. Saylor are described more fully in Note 17 to the Consolidated Financial Statements of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Allocation Agreements

On August 31, 2022, the District of Columbia (the “District”), through its Office of the Attorney General, filed a civil complaint in the Superior Court of the District of Columbia naming as defendants (i) Michael J. Saylor, the Chairman of the Company’s Board of Directors and the Company’s Executive Chairman, in his personal capacity, and (ii) the Company. The District sought, among other relief, monetary damages under the District’s False Claims Act for the alleged failure of Mr. Saylor to pay personal income taxes to the District over a number of years together with penalties, interest, and treble damages. The complaint alleged in the sole claim against the Company that it violated the District’s False Claims Act by conspiring to assist Mr. Saylor’s alleged failure to pay personal income taxes. On May 31, 2024, the District, Mr. Saylor, and the Company stipulated to the entry of a Consent Order and Judgment (“Consent Order”) with the court pursuant to which the District, upon receipt of all amounts due under the Consent Order, released Mr. Saylor and the Company from all claims and liabilities that the District asserted, could have asserted, or may assert in the future based on the conduct described in the complaints filed in the case.

In connection with the Consent Order, on May 31, 2024, the Company and Mr. Saylor entered into an agreement pursuant to which Mr. Saylor and the Company agreed that Mr. Saylor would pay $40,000,000 due to the District to settle the case and resolve the litigation with the District. Pursuant to a separate agreement between Mr. Saylor and the Company, Mr. Saylor paid this settlement amount to the District in full and the Company is not obligated to make any contribution to the settlement payment. On July 15, 2024, Mr. Saylor and the Company entered into a separate agreement with counsel to Tributum, LLC, the relator in the case (“Relator”), to resolve the amount due to such counsel in satisfaction of Relator’s claims for statutory expenses, attorneys’ fees and costs. Pursuant to the separate agreement between Mr. Saylor and the Company, Mr. Saylor paid this settlement amount in full and the Company is not obligated to make any contribution to this settlement payment.

(14) Subsequent Events

Digital asset purchases

Since March 31, 2025, through May 2, 2025, the Company has purchased approximately 27,265 bitcoins for $2.45 billion, or approximately $89,710 per bitcoin.

At-the-market equity offerings

During the period between March 31, 2025 and May 2, 2025, the Company sold an aggregate of 7,088,537 shares of its class A common stock under the sales agreement (the “October 2024 Sales Agreement”), dated as of October 30, 2024, by and among the Company, TD Securities (USA) LLC, Barclays Capital Inc., The Benchmark Company, LLC, BTIG, LLC, Canaccord Genuity LLC, Cantor Fitzgerald & Co., Maxim Group LLC, Mizuho Securities USA LLC, and SG Americas Securities, LLC, for aggregate net proceeds to the Company (less sales commissions) of approximately$2.36 billion. As of May 2, 2025, the October 2024 Sales Agreement has been substantially depleted and terminated by its terms.

On May 1, 2025, the Company entered into a sales agreement (the “May 2025 Sales Agreement”) and filed a prospectus supplement for a new at-the-market equity offering program pursuant to which the Company may sell shares of class A common stock having an aggregate offering price of up to $21.0 billion, from time to time, through TD Securities (USA) LLC, The Benchmark Company, LLC, BTIG, LLC, Canaccord Genuity LLC, Cantor Fitzgerald & Co., Mizuho Securities USA LLC, Santander US Capital Markets LLC, and SG Americas Securities, LLC, as sales agents.

As of May 2, 2025,$21.0 billion of shares of the Company’s class A common stock remained available for issuance and sale pursuant to the May 2025 Sales Agreement.

During the period between March 31, 2025 and May 2, 2025, the Company sold an aggregate of 1,101,674 Strike ATM Shares under the Strike ATM Offering, for aggregate net proceeds to the Company (less sales commissions) of approximately $97.05 million. As of May 2, 2025, approximately $20.87 billion of Strike ATM Shares remained available for issuance and sale pursuant to the Strike ATM Offering.