MICROSTRATEGY Inc
For the period ended Jun 30, 2025. Filed Aug 5, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 5, 2025
MSTR$128.93-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-05.
0000950170-25-063536
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0000950170-25-102209
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 175 previous paragraphs and 193 current paragraphs.
100 unchanged; 68 reworded; 23 added; 7 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Research and development expenses decreased $6.2 million for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a $4.0 million decrease in employee salaries primarily attributable to a decrease in average staffing levels, and a $1.9 million net decrease in share-based compensation expense primarily due to the forfeiture of certain awards.
Current report
The following table sets forth the unrealized (gains) losses on our digital assets for the three and six months ended June 30, 2025 and impairment losses on our digital assets for the three and six months ended June 30, 2024 (in thousands):
Current report
On July 4, 2025, the One Big Beautiful Bill Act was enacted in the U.S., introducing several changes to corporate taxation. These changes include modifications to capitalization of research and development expenses, limitations on deductions for interest expense, accelerated fixed asset depreciation, and adjustments to the international tax framework. We are currently evaluating the full impact of this legislation on our consolidated financial statements. Since the legislation was signed into law after June 30, 2025, its impacts are not included in our operating results for the six months ended June 30, 2025.
Current report
On May 22, 2025, we entered into the Original STRF Sales Agreement and filed a prospectus supplement for a new at-the-market equity offering program pursuant to which we may issue and sell shares of our STRF Stock, having an aggregate offering price of up to $2.1 billion. On July 7, 2025, we amended the Original STRF Sales Agreement to include an additional sales agent. As of June 30, 2025 and July 31, 2025, approximately $1.94 billion and $1.88 billion, respectively, of our STRF Stock remained available for issuance and sale pursuant to the STRF Sales Agreement. To the extent we make sales under the STRF Sales Agreement, we can use the net proceeds from such sales for general corporate purposes, including the acquisition of bitcoin and for working capital. See “—At-the-Market Equity Offerings” below.
Current report
On July 7, 2025, we entered into the STRD Sales Agreement and filed a prospectus supplement for a new at-the-market equity offering program pursuant to which we may issue and sell shares of our STRD Stock, having an aggregate offering price of up to $4.2 billion. As of July 31, 2025, approximately $4.18 billion of our STRD Stock remained available for issuance and sale pursuant to the STRD Sales Agreement. To the extent we make sales under the STRD Sales Agreement, we can use the net proceeds from such sales for general corporate purposes, including the acquisition of bitcoin and for working capital, and may also use the net proceeds to pay cash dividends on STRF Stock and STRD Stock. See “—At-the-Market Equity Offerings” below.
Current report
On July 31, 2025, we entered into the STRC Sales Agreement and filed a prospectus supplement for a new at-the-market equity program pursuant to which we may issue and sell shares of our STRC Stock, having an aggregate offering price of up to $4.2 billion. As of July 31, 2025, approximately $4.2 billion of our STRC Stock remained available for issuance and sale pursuant to the STRC Sales Agreement. To the extent we make sales under the STRC Sales Agreement, we can use the net proceeds from such sales for general corporate purposes, including the acquisition of bitcoin and for working capital, and may also use the net proceeds to pay cash dividends on shares of any class or series of our preferred stock, other than our STRC Stock, then outstanding. See “—At-the-Market Equity Offerings” below.
Current report
On June 10, 2025, we issued 11,764,700 shares of STRD Stock in a public offering registered under the Securities Act. In connection with such issuance, we filed the certificate of designations for the STRD Stock with the Secretary of State of the State of Delaware designating an aggregate of 11,764,700 shares of, and establishing the terms of, the STRD Stock. We received approximately $979.5 million of net proceeds, after deducting the underwriting discounts and commissions and our offering expenses, from the issuance of our STRD Stock in the initial public offering of STRD Stock. All net proceeds from the offering were used for general corporate purposes, including the acquisition of bitcoin and for working capital.
Current report
On July 29, 2025, we issued 28,011,111 shares of STRC Stock in a public offering registered under the Securities Act. In connection with such issuance, we filed the certificate of designations for the STRC Stock with the Secretary of State of the State of Delaware designating an aggregate of 28,011,111 shares of, and establishing the terms of, the STRC Stock. We received approximately $2.47 billion of net proceeds, after deducting the underwriting discounts and commissions and our offering expenses, from the issuance of our STRC Stock in the initial public offering of STRC Stock. All net proceeds from the offering were used for general corporate purposes, including the acquisition of bitcoin and for working capital.
Current report
declared regular dividends, if any, on our Preferred Stock, (in each case, to the extent declared by our board of directors or a duly authorized committee thereof), which, based on the number of shares of Preferred Stock outstanding as of June 30, 2025 (except as set forth below), would include:
Current report
o
Current report
$24.4 million in dividends payable each quarterly period on our STRK Stock;
Current report
o
Current report
$25.2 million in dividends payable each quarterly period on our STRF Stock;
Current report
o
Current report
$29.4 million in dividends payable each quarterly period on our STRD Stock; and
Current report
o
Current report
28,011,111 shares of STRC Stock were issued on July 29, 2025 resulting in $21.0 million in dividends payable each monthly period on the STRC Stock, assuming that the initial dividend rate of 9.00% remains unchanged.
Current report
On June 2, 2025, we announced that our board of directors declared quarterly cash dividends of approximately $2.00 per share payable on the STRK Stock, and approximately $2.64 per share payable on the STRF Stock. The calculation of the STRF Stock per share dividend amount reflected the quarterly dividend accrued from March 25, 2025, the issuance date of the STRF Stock.
Current report
We declared and paid dividends of $32.6 million on the STRK Stock for the six months ended June 30, 2025 and $25.5 million on the STRF Stock for the six months ended June 30, 2025. As of June 30, 2025, there were no preferred stock dividends in arrears.
Current report
As contemplated by the prospectus supplement for the initial public offering of STRC Stock, on July 31, 2025, we announced that our board of directors declared monthly cash dividends of $0.80 per share payable on the STRC Stock. The calculation of the monthly dividend takes into account the dividend accrued from, but excluding, July 29, 2025, the issuance date of the STRC Stock. Payment will be made on August 31, 2025 (or, if such date is not a business day, the next business day) to stockholders of record of the STRC Stock at the close of business on August 15, 2025.
Current report
In June 2025, we entered into a loan agreement that provides for aggregate borrowings of up to $31.1 million, available in multiple tranches, and bearing interest, with respect to each tranche, at a variable rate equal to the one-year Secured Overnight Financing Rate plus 4.24%. The loan will mature in December 2026. As of June 30, 2025, the loan had a net carrying value of $15.8 million, and an outstanding principal balance of $16.07 million.
Current report
Non-GAAP income (loss) from operations
Current report
For the three and six months ended June 30, 2025, interest expense from the amortization of issuance costs of the Convertible Notes has been added back to the numerator in the GAAP diluted earnings per share calculation (as disclosed in Note 10, Basic and Diluted Earnings (Loss) per Common Share, to the Consolidated Financial Statements), and therefore the per diluted share effects of the amortization of issuance costs of the Convertible Notes have been excluded from the “Interest expense arising from amortization of debt issuance costs (per diluted share)” and “Income tax effects (per diluted share)” lines in the above reconciliation for the three and six months ended June 30, 2025.
Removed paragraphs (7)
Previous report
In the first quarter of 2024, we purchased bitcoin using $782.0 million of the net proceeds from our issuance of the 2030A Convertible Notes, $592.3 million of the net proceeds from our issuance of the 2031 Convertible Notes, $137.3 million of the net proceeds from our sales of class A common stock under our at-the-market offering program for our class A common stock (the “Common Stock ATM Program”), and Excess Cash.
Previous report
(e)
Previous report
The following table sets forth the unrealized losses (gains) associated with our digital assets (in thousands):
Previous report
On October 30, 2024, we entered into the October 2024 Sales Agreement and filed a prospectus supplement for an at-the-market equity offering program pursuant to which we could sell shares of class A common stock having an aggregate offering price of up to $21 billion. As of March 31, 2025, approximately $2.37 billion of our class A common stock remained available for issuance and sale pursuant to the October 2024 Sales Agreement. As of May 2, 2025, the October 2024 Sales Agreement has been substantially depleted and further at-the-market sales of class A common stock will be made under the May 2025 Sales Agreement.
Previous report
declared regular dividends on our Perpetual Strike Preferred Stock and Perpetual Strife Preferred Stock.;
Previous report
$9.2 million payments made in April 2025 related to the mandatory deemed repatriation transition tax (the “Transition Tax”) under the U.S. Tax Cuts and Jobs Act (the “Tax Act”); and
Previous report
Non-GAAP loss from operations
Reworded paragraphs (68)
Previous wording
During 2024 and 2025, we used proceeds from various capital raising transactions to purchase bitcoin. As of March 31, 2025, we held an aggregate of approximately 528,185 bitcoins.
Current wording
During 2024 and 2025, we used proceeds from various capital raising transactions to purchase bitcoin. As of June 30, 2025, we held an aggregate of approximately 597,325 bitcoins.
Previous wording
In the third quarter of 2024, we purchased bitcoin using $1.105 billion of the net proceeds from sales of class A common stock under the Common Stock ATM Program, $458.2 million of the net proceeds from our issuance of the 2028 Convertible Notes, and Excess Cash.
Current wording
In the third quarter of 2024, we purchased bitcoin using $1.11 billion of the net proceeds from sales of class A common stock under our at-the-market offering program for our class A common stock, $458.2 million of the net proceeds from our issuance of the 2028 Convertible Notes, and Excess Cash.
Previous wording
In the fourth quarter of 2024, we purchased bitcoin using $15.090 billion of the net proceeds from sales of class A common stock under the Common Stock ATM Program, and $2.974 billion of the net proceeds from our issuance of the 2029 Convertible Notes.
Current wording
In the fourth quarter of 2024, we purchased bitcoin using $15.09 billion of the net proceeds from sales of class A common stock under our at-the-market offering program for our class A common stock, and $2.97 billion of the net proceeds from our issuance of the 2029 Convertible Notes.
Previous wording
In the first quarter of 2025, we purchased bitcoin using $4.37 billion of the net proceeds from sales of our class A common stock under the Common Stock ATM Program, $1.99 billion of the net proceeds from our issuance of the 2030B Convertible Notes, $593.7 million of the aggregate net proceeds from the initial public offering of our Perpetual Strike Preferred Stock and sales of Perpetual Strike Preferred Stock under the at-the-market offering program for our Perpetual Strike Preferred Stock, and $710.0 million of the net proceeds from the issuance of our Perpetual Strife Preferred Stock in the initial public offering of Perpetual Strife Preferred Stock.
Current wording
In the first quarter of 2025, we purchased bitcoin using $4.37 billion of the net proceeds from sales of our class A common stock under our at-the-market offering program for our class A common stock, $1.99 billion of the net proceeds from our issuance of the 2030B Convertible Notes, $593.7 million of the aggregate net proceeds from the initial public offering of our STRK Stock and sales of STRK Stock under the at-the-market offering program for our STRK Stock, and $710.0 million of the net proceeds from the issuance of our STRF Stock in the initial public offering of STRF Stock.
Previous wording
In the second quarter of 2024, we purchased bitcoin using $756.0 million of the net proceeds from our issuance of the 2032 Convertible Notes and Excess Cash.
Current wording
In the second quarter of 2025, we purchased bitcoin using $5.19 billion of the net proceeds from sales under our at-the-market offering program for our class A common stock, $979.7 million of the net proceeds from our initial public offering of STRD Stock, $163.0 million of the net proceeds from the sales under the at-the-market offering program for our STRF Stock, and $438.0 million of the net proceeds from the sales under the at-the-market offering program for our STRK Stock.
Previous wording
Unrealized loss on digital assets and digital asset impairment losses have significantly contributed to our operating expenses. During the three months ended March 31, 2025, the unrealized loss on digital assets of $5,906 million represented 98.5% of our operating expenses. During the three months ended March 31, 2024, digital asset impairment losses of $191.6 million represented 66.3% of our operating expenses.
Current wording
Unrealized (gains) losses on digital assets and digital asset impairment losses have significantly contributed to our results of operations. During the three and six months ended June 30, 2025, the unrealized gain on digital assets of $14.048 billion and $8.14 billion, respectively, effectively offset our operating expenses, representing 100.7% and 102.3%, of our operating expenses, respectively. During the three and six months ended June 30, 2024, digital asset impairment losses of $180.1 million and $371.7 million, respectively, represented 64.1% and 65.2% of our operating expenses, respectively.
Previous wording
As of May 2, 2025, we held approximately 555,450 bitcoins that were acquired at an aggregate purchase price of $38.08 billion and an average purchase price of approximately $68,550 per bitcoin, inclusive of fees and expenses. As of May 2, 2025, at 4:00 p.m. Eastern Time, the market price of one bitcoin reported on the Coinbase exchange was $96,972.
Current wording
As of July 31, 2025, we held approximately 628,791 bitcoins that were acquired at an aggregate purchase price of $46.08 billion and an average purchase price of approximately $73,277 per bitcoin, inclusive of fees and expenses. As of July 31, 2025, at 4:00 p.m. Eastern Time, the market price of one bitcoin reported on the Coinbase exchange was $116,760.
Previous wording
Strategy is a pioneer in AI-powered business intelligence (BI), and a global leader in enterprise analytics solutions. We provide software and services designed to turn complex, chaotic data environments into rich, reliable, and convenient information feeds for our customers. Our vision is to drive growth and competitive advantage for our customers by delivering Intelligence Everywhere™.
Current wording
Strategy is a pioneer in AI-powered intelligence solutions delivering a comprehensive portfolio that addresses a wide spectrum of enterprise data challenges. We provide software and services designed to transform complex, fragmented data environments into unified reliable information ecosystems that drive insight and action across organizations worldwide. Our vision is to drive growth and competitive advantage for our customers by delivering Intelligence Everywhere™.
Previous wording
Our cloud-native flagship, Strategy One™, powers some of the largest analytics deployments in the world for customers spanning a wide range of industries, including retail, banking, technology, manufacturing, insurance, consulting, healthcare, telecommunications, and the public sector.
Current wording
Strategy One™, our cloud-native analytics platform, powers some of the largest business intelligence deployments in the world. It delivers visualization, reporting, and embedded analytics capabilities across retail, banking, technology, manufacturing, insurance, consulting, healthcare, telecommunications, and the public sector. Complementing this, Strategy Mosaic™ is a universal intelligence layer that enables organizations to achieve a single source of truth across their data. It provides enterprises with consistent definitions and governance across data sources, regardless of where that data resides or which tools access it. AI-assisted data modeling hastens data product creation, while its intelligent architecture promotes accelerated performance for all workloads.
Previous wording
Integral to the Strategy One platform are Generative AI capabilities that are designed to automate and accelerate the deployment of AI-enabled applications across the enterprise. By making advanced analytics accessible through conversational AI, Strategy One provides non-technical users with timely, actionable insights for decision-making.
Current wording
Integral to the Strategy portfolio are generative AI capabilities that are designed to automate and accelerate the deployment of AI-enabled applications across the enterprise. By making advanced analytics accessible through conversational AI, we provide non-technical users with timely, actionable insights for decision-making.
Previous wording
The analytics market is highly competitive and subject to rapidly changing technology and market conditions. Our ability to compete successfully depends on a number of factors within and outside of our control. Some of these factors include software quality, performance and reliability; the quality of our service and support teams; marketing and prospecting effectiveness, the ability to incorporate artificial intelligence and other technically advanced features; and our ability to differentiate our products.
Current wording
The AI and analytics markets are highly competitive and subject to rapidly changing technology and market conditions. Our ability to compete successfully depends on a number of factors within and outside of our control. Some of these factors include software quality, performance and reliability; the quality of our service and support teams; marketing and prospecting effectiveness, the ability to incorporate artificial intelligence and other technically advanced features; and our ability to differentiate our products.
Previous wording
The following table sets forth certain operating highlights (in thousands) for the three months ended March 31, 2025 and 2024:
Current wording
The following table sets forth certain operating highlights (in thousands) for the three and six months ended June 30, 2025 and 2024:
Previous wording
In addition, we base our operating expense budgets on expected revenue trends and strategic objectives. Many of our expenses, such as interest expense on debt, declared dividends on our preferred stock, tax liabilities, office leases and certain personnel costs, are relatively fixed. We may be unable to adjust spending quickly enough to offset any unexpected shortfall in our cash flow. Accordingly, we may be required to take actions to pay expenses, such as selling bitcoin or using proceeds from equity or debt financings, some of which could significantly impact our operating results in any period. We therefore believe that period-to-period comparisons of our operating results may not be a good indication of our future performance.
Current wording
In addition, we base our operating expense budgets on expected revenue trends and strategic objectives. Many of our expenses, such as interest expense on debt, declared dividends on our STRK Stock, STRF Stock, STRD Stock and STRC Stock (hereinafter collectively referred to as “Preferred Stock”), tax liabilities, office leases and certain personnel costs, are relatively fixed. We may be unable to adjust spending quickly enough to offset any unexpected shortfall in our cash flow. Accordingly, we may be required to take actions to pay expenses, such as selling bitcoin or using proceeds from equity or debt financings, some of which could significantly impact our operating results in any period. We therefore believe that period-to-period comparisons of our operating results may not be a good indication of our future performance.
Previous wording
As of March 31, 2025, we had a total of 1,483 employees, of whom 431 were based in the United States and 1,052 were based internationally. The following table summarizes employee headcount as of the dates indicated:
Current wording
As of June 30, 2025, we had a total of 1,512 employees, of whom 469 were based in the United States and 1,043 were based internationally. The following table summarizes employee headcount as of the dates indicated:
Previous wording
The $6.0 million decrease in share-based compensation expense during the three months ended March 31, 2025, as compared to the same period in the prior year, was primarily due to the forfeiture of certain stock awards and certain awards that became fully vested, partially offset by the grant of additional awards under the Stock Incentive Plans. As of March 31, 2025, we estimated that an aggregate of approximately $143.1 million of additional share-based compensation expense associated with the Stock Incentive Plans and the 2021 ESPP will be recognized over a remaining weighted average period of 2.8 years.
Current wording
The $4.9 million decrease in share-based compensation expense during the three months ended June 30, 2025, as compared to the same period in the prior year, was primarily due to the forfeiture of certain stock awards and certain awards that became fully vested, partially offset by the grant of additional awards under the Stock Incentive Plans. The $10.9 million decrease in share-based compensation expense during the six months ended June 30, 2025, as compared to the same period in the prior year, was primarily due to the forfeiture of certain stock awards and certain awards that became fully vested, partially offset by the grant of additional awards under the Stock Incentive Plans. As of June 30, 2025, we estimated that an aggregate of approximately $126.2 million of additional share-based compensation expense associated with the Stock Incentive Plans and the 2021 ESPP will be recognized over a remaining weighted average period of 2.7 years.
Previous wording
Comparison of the three months ended March 31, 2025 and 2024
Current wording
Comparison of the three and six months ended June 30, 2025 and 2024
Previous wording
Product licenses revenues. Product licenses revenues decreased $5.7 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to an overall decrease in the volume and average size of deals. Our product licenses revenues may continue to experience declines in future periods as we continue to promote our cloud offering to new and existing customers.
Current wording
Product licenses revenues. Product licenses revenues decreased $2.1 million and $7.8 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to an overall decrease in the volume and average size of deals. We expect our product licenses revenues to continue to experience declines in future periods as we continue to promote our cloud offering to new and existing customers.
Previous wording
Subscription services revenues. Subscription services revenues are derived from our Cloud subscription service and are recognized ratably over the service period in the contract. Subscription services revenues increased $14.1 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to conversions to cloud-based subscriptions from existing on-premises customers (including a larger number of conversions for International customers), a net increase in the use of subscription services by existing customers, and sales contracts with new customers. We expect our subscription services revenues to continue to grow in future periods as we continue to promote our cloud offering to new and existing customers.
Current wording
Subscription services revenues. Subscription services revenues are derived from our Cloud subscription service and are recognized ratably over the service period in the contract. Subscription services revenues increased $16.7 million and $30.9 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to conversions to cloud-based subscriptions from existing on-premises customers, a net increase in the use of subscription services by existing customers, and sales contracts with new customers. We expect our subscription services revenues to continue to grow in future periods as we continue to promote our cloud offering to new and existing customers.
Previous wording
Product support revenues are derived from providing technical software support and software updates and upgrades to customers. Product support revenues are recognized ratably over the term of the contract, which is generally one year. Product support revenues decreased $10.2 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to certain existing customers converting from perpetual product licenses with separate support contracts to our subscription services offerings. Our product support revenues may experience declines in future periods as we continue to promote our cloud offering to new and existing customers.
Current wording
Product support revenues are derived from providing technical software support and software updates and upgrades to customers. Product support revenues are recognized ratably over the term of the contract, which is generally one year. Product support revenues decreased $9.7 million and $19.8 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to existing customers converting from on-premises product licenses with support contracts to our Cloud subscription services offerings and non-renewals of existing support contracts. We expect our product support revenues to experience declines in future periods as we continue to promote our cloud offering to new and existing customers.
Previous wording
Consulting revenues. Consulting revenues are derived from helping customers plan and execute the deployment of our software. Consulting revenues decreased $2.1 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a decrease in demand for consulting services.
Current wording
Consulting revenues. Consulting revenues are derived from helping customers plan and execute the deployment of our software. Consulting revenues decreased $1.6 million and $3.7 million for the three and six months ended June 30, 2025, respectively, as compared to the same period in the prior year, primarily due to a decrease in demand for consulting services.
Previous wording
Education revenues. Education revenues are derived from the education and training that we provide to our customers to enhance their ability to fully utilize the features and functionality of our software. These offerings include self-tutorials, custom course development, joint training with customers’ internal staff, and standard course offerings, with pricing dependent on the specific offering delivered. Education revenues decreased $0.4 million for the three months ended March 31, 2025, as compared to the same periods in the prior year.
Current wording
Education revenues. Education revenues are derived from the education and training that we provide to our customers to enhance their ability to fully utilize the features and functionality of our software. Education revenues did not materially change for the three and six months ended June 30, 2025, as compared to the same periods in the prior year.
Previous wording
Cost of product licenses revenues. Cost of product licenses revenues consists of referral fees paid to channel partners, the costs of product manuals and media, and royalties paid to third-party software vendors. Cost of product licenses revenues increased $0.4 million for the three months ended March 31, 2025, as compared to the same period in the prior year.
Current wording
Cost of product licenses revenues. Cost of product licenses revenues consists of referral fees paid to channel partners, the costs of product manuals and media, and royalties paid to third-party software vendors. Cost of product licenses revenues did not materially change for the three and six months ended June 30, 2025, as compared to the same periods in the prior year.
Previous wording
Cost of subscription services revenues. Cost of subscription services revenues consists of equipment, facility and other related support costs (including cloud hosting infrastructure costs), and personnel and related overhead costs. Cost of subscription services revenues increased $5.8 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a $6.4 million increase in cloud hosting infrastructure costs, which is a result of the increased usage by new and existing cloud subscription services customers, offset by decreased personnel costs due to headcount reductions and change in the mix between domestic employees and international employees with lower average personnel costs.
Current wording
Cost of subscription services revenues. Cost of subscription services revenues consists of equipment, facility and other related support costs (including cloud hosting infrastructure costs), and personnel and related overhead costs. Cost of subscription services revenues increased $6.3 million for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a $6.0 million increase in cloud hosting infrastructure costs, which is a result of the increased usage by new and existing cloud subscription services customers. Cost of subscription services revenues increased $12.2 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a $13.2 million increase in cloud hosting infrastructure and service costs, which is a result of the increased usage by new and existing cloud subscription services customers, partially offset by a $1.5 million decrease in personnel costs due to headcount reductions and changes in the mix between domestic employees and international employees with lower average personnel costs.
Previous wording
Cost of product support revenues. Cost of product support revenues consists of personnel and related overhead costs. Cost of product support revenues decreased $1.2 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a decrease in personnel costs due to headcount reductions.
Current wording
Cost of product support revenues. Cost of product support revenues consists of personnel and related overhead costs. Cost of product support revenues decreased $0.9 million for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a decrease in personnel costs due to headcount reductions. Cost of product support revenues decreased $2.1 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a $1.3 million decrease in share-based compensation expense primarily attributable to the forfeiture of certain awards and a decrease in personnel costs of $0.5 million due to headcount reductions.
Previous wording
Cost of consulting revenues. Cost of consulting revenues consists of personnel and related overhead costs. Cost of consulting revenues decreased $1.2 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a decrease in personnel costs of $1.9 million due to headcount reductions, partially offset by a $0.7 million increase in billable hours from outside contractor labor costs.
Current wording
Cost of consulting revenues. Cost of consulting revenues consists of personnel and related overhead costs. Cost of consulting revenues decreased $1.1 million for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a decrease in personnel costs of $1.9 million due to headcount reductions, partially offset by a $0.8 million increase in billable hours from outside contractor labor costs. Cost of consulting revenues decreased $2.3 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a decrease in personnel costs of $3.8 million due to headcount reductions, partially offset by a $1.5 million increase in billable hours from outside contractor labor costs.
Previous wording
Cost of education revenues. Cost of education revenues consists of personnel and related overhead costs. Cost of education revenues did not materially change for the three months ended March 31, 2025, as compared to the same periods in the prior year.
Current wording
Cost of education revenues. Cost of education revenues consists of personnel and related overhead costs. Cost of education revenues did not materially change for the three and six months ended June 30, 2025, as compared to the same periods in the prior year.
Previous wording
Sales and marketing expenses decreased $5.9 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a $2.4 million decrease in employee salaries and related benefits primarily attributable to a decrease in average staffing levels and a $3.5 million net decrease in share-based compensation expense primarily attributable to the forfeiture of certain awards.
Current wording
Sales and marketing expenses did not materially change for the three months ended June 30, 2025, as compared to the same period in the prior year and decreased $6.5 million for the six months ended June 30, 2025, as compared to the same period in the prior year. The six month decrease was primarily due to (i) a decrease of $3.8 million in employee salaries and related benefits primarily attributable to a decrease in average staffing levels, and (ii) a $5.2 million net decrease in share-based compensation expense primarily attributable to the forfeiture of certain awards, partially offset by (iii) an increase in expense of $2.4 million due to a reduction in capitalized commissions.
Previous wording
Research and development expenses decreased $4.8 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to (i) a $4.0 million decrease in employee salaries and bonuses primarily attributable to a decrease in average staffing levels, and (ii) a $3.9 million net decrease in share-based compensation expense primarily due to the forfeiture of certain awards, partially offset by a (iii) a $3.1 million increase in severance costs due to headcount reductions.
Current wording
Research and development expenses decreased $11.0 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to (i) a $9.2 million decrease in employee salaries and bonuses primarily attributable to a decrease in average staffing levels, and (ii) a $5.8 million net decrease in share-based compensation expense primarily due to the forfeiture of certain awards, partially offset by a (iii) a $3.4 million increase in severance costs due to headcount reductions.
Previous wording
General and administrative expenses increased $5.9 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to (i) a $3.4 million increase in bitcoin custody fees; (ii) a $3.4 million increase related to various bitcoin advocacy initiatives, including political contributions and sponsorships; (iii) a $1.6 million increase in costs related to special shareholder meeting; and (iv) a $1.9 million net increase in share-based compensation expense primarily attributable to the grant of additional awards under the Stock Incentive Plans, partially offset by certain awards that became fully vested, partially offset by (v) a $4.7 million decrease due to employer payroll taxes for the first quarter of 2024 related to stock options exercised during that quarter; and (vi) a $1.1 million decrease in legal, and professional fees.
Current wording
General and administrative expenses did not materially change for the three months ended June 30, 2025, as compared to the same period in the prior year, and increased $6.3 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to (i) a $6.9 million increase in bitcoin custody fees; (ii) a $3.4 million increase related to various bitcoin advocacy initiatives, including political contributions and sponsorships; (iii) a $2.7 million increase in increased public filing costs; (iv) a $1.5 million increase in bonus and other employee benefit costs; (v) $1.3 million net increase in share-based compensation expense primarily attributable to the grant of additional awards under the Stock Incentive Plans; and (vi) a $1.1 million increase in bad debt, partially offset by (vii) a $6.5 million decrease due to employer payroll taxes for stock options exercised in 2024; and (viii) a $4.3 million decrease in legal and professional fees.
Previous wording
Losses (gains) associated with digital assets Upon adoption of ASU 2023-08 on January 1, 2025, any subsequent increases or decreases in fair value are recognized as incurred in the Consolidated Statements of Operations, and the fair value of our bitcoin is reflected within the Consolidated Balance Sheets each reporting period-end. Since adopting ASU 2023-08, we are no longer required to account for our bitcoin under a cost-less-impairment accounting model and no longer establish a deferred tax asset related to bitcoin impairment losses. Instead, we establish a deferred tax liability if the market value of bitcoin at the reporting date is greater than the average cost basis of our bitcoin holdings at such reporting date, and any subsequent increases or decreases in the market value of bitcoin will increase or decrease the deferred tax liability.
Current wording
(Gains) losses associated with digital assets and digital asset impairment losses Upon adoption of ASU 2023-08 on January 1, 2025, any subsequent increases or decreases in fair value are recognized as incurred in the Consolidated Statements of Operations, and the fair value of our bitcoin is reflected within the Consolidated Balance Sheets each reporting period-end. Since adopting ASU 2023-08, we are no longer required to account for our bitcoin under a cost-less-impairment accounting model and no longer establish a deferred tax asset related to bitcoin impairment losses. Instead, we establish a deferred tax liability if the market value of bitcoin at the reporting date is greater than the average cost basis of our bitcoin holdings at such reporting date, and any subsequent increases or decreases in the market value of bitcoin will increase or decrease the deferred tax liability.
Previous wording
We did not sell any of our digital assets during the three months ended March 31, 2025 or 2024. As a result of our adoption of ASU 2023-08, we may incur greater losses during periods when we previously would have incurred smaller losses or no losses because we had already impaired the carrying value of our bitcoin to a low price observed during a prior period, and we may also incur gains during periods when the market value of bitcoin rises, as compared to periods prior to January 1, 2025, when we would not have incurred any gains under similar circumstances. Accordingly, due in particular to the volatility in the price of bitcoin, we expect the adoption of ASU 2023-08 to increase the volatility of our financial results. Additionally, as a result of ASU 2023-08 requiring a cumulative-effect adjustment to our opening balance of retained earnings as of January 1, 2025 and not permitting retrospective restatement of prior periods, our future results will not be comparable to results from periods prior to our adoption of the guidance.
Current wording
We did not sell any of our digital assets during the three and six months ended June 30, 2025 and 2024.
Previous wording
Interest expense, net, increased $5.2 million for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily as a result of (i) interest incurred related to the 2032 Convertible Notes (which were issued in June 2024), (ii) interest incurred related to the 2030A Convertible Notes and 2031 Convertible Notes (which were each issued in March 2024), (iii) interest incurred related to the 2028 Convertible Notes (which were issued in September 2024), (iv) issuance costs related to the 2029 Convertible Notes (which were issued in November 2024), and (v) issuance costs related to the 2030B Convertible Notes (which were issued in February 2025), partially offset by (vi) the 2025 Convertible Notes having been converted or redeemed in their entirety in July, 2024, (vii) the 2027 Convertible Notes having been converted or redeemed in their entirety in January 2025 and (viii) the 2028 Secured Notes having been redeemed in their entirety in September 2024.
Current wording
Interest expense, net, increased $2.4 million for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily as a result of interest incurred related to new Convertible Notes issued subsequent to June 2024 partially offset by reductions in interest expense due to the 2025 Convertible Notes having been converted or redeemed in their entirety in July 2024, the 2027 Convertible Notes having been converted or redeemed in their entirety in January 2025 and the 2028 Secured Notes having been redeemed in their entirety in September 2024.
Previous wording
Interest expense for future periods in 2025 is expected to decrease compared to the same period in 2024 as a result of a more favorable average interest rate on outstanding debt as of March 31, 2025. Refer to Note 5, Long-term Debt, to the Consolidated Financial Statements for further information.
Current wording
Interest expense for future periods in 2025 is expected to increase compared to the same periods in 2024 as a result of increased debt outstanding as of June 30, 2025. Refer to Note 5, Long-term Debt, to the Consolidated Financial Statements for further information.
Previous wording
For the three months ended March 31, 2025, other expense, net, of $3.9 million was comprised primarily of foreign currency transaction net losses. For the three months ended March 31, 2024, other income, net, of $1.7 million was comprised primarily of foreign currency transaction net gains.
Current wording
For the three and six months ended June 30, 2025, other expense, net, of $8.3 million and $12.2 million, respectively, was comprised primarily of foreign currency transaction net losses. For the three and six months ended June 30, 2024, other income, net, of $0.7 million and $2.4 million, respectively, was comprised primarily of foreign currency transaction net gains.
Previous wording
We recorded a benefit from income taxes of $1.73 billion on a pretax loss of $5.94 billion that resulted in an effective tax rate of 29.0% for the three months ended March 31, 2025, as compared to a benefit from income taxes of $160.8 million on a pretax loss of $213.9 million that resulted in an effective tax rate of 75.2% for the three months ended March 31, 2024. 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, our 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 our deferred tax asset related to the impairment on our bitcoin holdings.
Current wording
We recorded a provision for income taxes of $2.26 billion on a pretax income of $8.06 billion that resulted in an effective tax rate of 28.0% for the six months ended June 30, 2025, as compared to a benefit from income taxes of $273.3 million on a pretax loss of $428.9 million that resulted in an effective tax rate of 63.7% for the six months ended June 30, 2024. During the six months ended June 30, 2025, our provision for income taxes primarily related to the tax effect of the unrealized gain on digital assets. During the six months ended June 30, 2024, our benefit from income taxes primarily related to (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 our deferred tax asset related to the impairment on our bitcoin holdings.
Previous wording
As of March 31, 2025, we had a valuation allowance of $0.5 million primarily related to our deferred tax assets related to foreign tax credits in certain jurisdictions. As of March 31, 2025, we had deferred tax liabilities with respect to the unrealized gain on our bitcoin holdings of approximately $2.28 billion. Our deferred 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, our deferred tax liability with respect to the unrealized gain on our bitcoin holdings will decrease, and we may be required to establish additional valuation allowances against our deferred tax assets. Such increases in valuation allowances could materially and adversely affect net income in periods in which such charges are incurred. We routinely consider actions necessary to preserve or utilize tax attributes. We will continue to regularly assess the realizability of deferred tax assets.
Current wording
As of June 30, 2025, we had a valuation allowance of $0.5 million primarily related to our deferred tax assets related to foreign tax credits in certain jurisdictions. As of June 30, 2025, we had deferred tax liabilities with respect to the unrealized gain on our bitcoin holdings of approximately $6.31 billion. Our deferred 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, our deferred tax liability with respect to the unrealized gain on our bitcoin holdings will decrease, and we may be required to establish additional valuation allowances against our deferred tax assets. Such increases in valuation allowances could materially and adversely affect net income in periods in which such charges are incurred. We routinely consider actions necessary to preserve or utilize tax attributes. We will continue to regularly assess the realizability of deferred tax assets.
Previous wording
The U.S. enacted the IRA in August 2022. Among other things, unless an exemption by statute or regulation applies, a provision of the IRA imposes a 15% 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. Due to our adoption of ASU 2023-08 as of January 1, 2025, we were required to recognize a cumulative-effect adjustment of $12.75 billion to the opening balance of our retained earnings as of January 1, 2025. We will additionally be required to recognize unrealized gains or losses from changes in the fair value of digital assets in future reporting periods as income or losses. For purposes of calculating the adjusted financial statement income, we will be required to ratably allocate this increase to our retained earnings over a four year period, from 2025 through 2028. When determining whether we are subject to CAMT and when calculating any related tax liability for an applicable tax year, the proposed regulations provide that, among other adjustments, our 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 our 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), we could become subject to CAMT in the tax years beginning in 2026 and beyond. As the taxes to which we are subject will depend in significant part on the future price of bitcoin and the size of our bitcoin holdings, we are not able to estimate the impact of CAMT on our future income tax expense. See “Risk Factors—Risks Related to Our Business in General—We may have exposure to greater than anticipated tax liabilities, including the potential taxation of unrealized gains on our bitcoin holdings.”
Current wording
The U.S. enacted the IRA in August 2022. Among other things, unless an exemption by statute or regulation applies, a provision of the IRA imposes a 15% CAMT on a corporation with respect to an initial tax year and subsequent tax years, if the average annual adjusted financial statement income (“AFSI”) for any consecutive three-tax-year period preceding the initial tax year exceeds $1 billion. On September 12, 2024, the Department of the Treasury and the IRS issued proposed regulations with respect to the application of the CAMT. On June 2, 2025, the IRS published Notice 2025-27, which signaled that the IRS plans to issue additional interim guidance on how unrealized gains and losses on certain investment assets reported for financial statement purposes should be taken into account for purposes of determining AFSI. On July 30, 2025, a White House working group established by President Trump in January 2025 published a report on strengthening American leadership in digital financial technology, which called for the Department of the Treasury and the IRS to publish guidance addressing the determination of AFSI with respect to financial accounting for unrealized gains and losses on investment assets other than stock and partnership interests. Due to our adoption of ASU 2023-08 as of January 1, 2025, we were required to recognize a cumulative-effect adjustment of $12.75 billion to the opening balance of our retained earnings as of January 1, 2025. We will additionally be required to recognize unrealized gains or losses from changes in the fair value of digital assets in future reporting periods as income or losses. For purposes of calculating the AFSI, we will be required to ratably allocate this increase to our retained earnings over a four year period, from 2025 through 2028. When determining whether we are subject to CAMT and when calculating any related tax liability for an applicable tax year, the proposed regulations provide that, among other adjustments, our AFSI 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 our 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), we expect, given the magnitude of our unrealized gain on digital assets as of June 30, 2025, that we would become subject to CAMT in the tax years beginning in 2026 and beyond. As the taxes to which we would be subject will depend in significant part on the future price of bitcoin and the size of our bitcoin holdings, we are not able to estimate the impact of CAMT on our future income tax expense. See “Risk Factors—Risks Related to Our Business in General—We may have exposure to greater than anticipated tax liabilities.”
Previous wording
The portions of multi-year contracts that will be invoiced in the future are not presented on the balance sheet in “Accounts receivable, net” and “Deferred revenue and advance payments” and instead are included in the remaining performance obligation disclosure below. Total deferred revenue and advance payments decreased $23.3 million as of March 31, 2025, as compared to December 31, 2024, primarily due to (i) a decrease in deferred revenue from subscription services contracts, (ii) a decrease in deferred product support revenue due to the timing of product support renewals and an increase in conversions from on-premises to subscription services contracts, and (iii) decreases in deferred other services revenue and deferred product licenses revenues. Total deferred revenue and advance payments decreased $2.8 million as of March 31, 2025, as compared to March 31, 2024, primarily due to (i) a decrease in deferred product support revenue from an increase in conversions from on-premises to subscription services contracts, partially offset by (ii) an increase in deferred revenue from subscription services contracts.
Current wording
The portions of multi-year contracts that will be invoiced in the future are not presented on the balance sheet in “Accounts receivable, net” and “Deferred revenue and advance payments” and instead are included in the remaining performance obligation disclosure below. Total deferred revenue and advance payments decreased $24.5 million as of June 30, 2025, as compared to December 31, 2024, primarily due to (i) a decrease in deferred product support revenue due to the timing of product support renewals and an increase in conversions from on-premises to subscription services contracts, partially offset by (ii) an increase in deferred subscription services revenue due to the timing of cloud renewal contracts, and (iii) an increase in deferred revenue from new subscription service contracts. Total deferred revenue and advance payments increased $7.6 million as of June 30, 2025, as compared to June 30, 2024, primarily due to (i) an increase in deferred revenue from new subscription services contracts, partially offset by (ii) a decrease in deferred product support revenue from existing customers migrating from on-premises to subscription services contracts.
Previous wording
Our 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. As of March 31, 2025, we 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. We expect to recognize approximately $275.8 million of the remaining performance obligation over the next 12 months and the remainder thereafter. However, the timing and ultimate recognition of our deferred revenue and advance payments and other remaining performance obligations depend on our satisfaction of various performance obligations, and the amount of deferred revenue and advance payments and remaining performance obligations at any date should not be considered indicative of revenues for any succeeding period.
Current wording
Our 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. As of June 30, 2025, we had an aggregate transaction price of $470.6 million allocated to the remaining performance obligation related to subscription services, product support, product licenses, and other services contracts. We expect to recognize approximately $278.5 million of the remaining performance obligation over the next 12 months and the remainder thereafter. However, the timing and ultimate recognition of our deferred revenue and advance payments and other remaining performance obligations depend on our satisfaction of various performance obligations, and the amount of deferred revenue and advance payments and remaining performance obligations at any date should not be considered indicative of revenues for any succeeding period.
Previous wording
Our principal sources of liquidity are cash and cash equivalents and on-going collection of our accounts receivable. Cash and cash equivalents may include holdings in bank demand deposits, money market instruments, certificates of deposit, and U.S. Treasury securities. As of March 31, 2025 and December 31, 2024, the amount of cash and cash equivalents held by our U.S. entities was $32.6 million and $8.8 million, respectively, and by our non-U.S. entities was $27.7 million and $29.3 million, respectively. We earn a significant amount of our revenues outside the United States. We did not repatriate any foreign earnings and profits during the three months ended March 31, 2025 and the three months ended March 31, 2024.
Current wording
Our principal sources of liquidity are cash and cash equivalents and on-going collection of our accounts receivable. Cash and cash equivalents may include holdings in bank demand deposits, money market instruments, certificates of deposit, and U.S. Treasury securities. As of June 30, 2025 and December 31, 2024, the amount of cash and cash equivalents held by our U.S. entities was $14.7 million and $8.8 million, respectively, and by our non-U.S. entities was $35.4 million and $29.3 million, respectively. We earn a significant amount of our revenues outside the United States. We did not repatriate any foreign earnings and profits during the three and six months ended June 30, 2025 and 2024.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Interest expense, net, increased $7.7 million for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily as a result of interest incurred related to the new Convertible Notes issued subsequent to June 2024 partially offset by reductions in interest expense due to the 2025 Convertible Notes having been converted or redeemed in their entirety in July 2024, the 2027 Convertible Notes having been converted or redeemed in their entirety in January 2025 and the 2028 Secured Notes having been redeemed in their entirety in September 2024.
Current report — wording carried from elsewhere
2025, based on the market price of one bitcoin as reported on the Coinbase exchange as of 4:00 p.m. Eastern Time. As discussed further below, although we do not anticipate needing to use our bitcoin to meet our obligations in the next twelve months, we believe our substantial bitcoin holdings can serve as a source of liquidity, if necessary. See “—Availability of Bitcoin for Liquidity” below.