Executive summary
- MicroStrategy bitcoin leverage and software core business 2025: Strategy (formerly MicroStrategy) is a hybrid entity – the largest public corporate holder of bitcoin while retaining a smaller but growing enterprise-software franchise; investors buy exposure to both assets with very different risk/return drivers.
- Bitcoin balance sheet scale: Strategy held 640,031 BTC as of September 29, 2025, acquired at an aggregate purchase price of roughly $47.35 billion and an average cost near $73,983 per coin; recent acquisition cadence remains active but variable.
- Q2 2025 financials: reported total revenue $114.5 million with a 2.7% YoY revenue increase; gross margin ~68.8% and diluted EPS of $32.60 driven largely by an unrealized $14.0 billion fair-value gain on digital assets under new accounting.
- Balance-sheet & capital markets: the company uses equity and preferred issuances and ATM programs to fund bitcoin accumulation; cash and equivalents remain small relative to digital-asset exposure, creating leverage and reliance on capital markets access.
- Verdict: MicroStrategy bitcoin leverage and software core business 2025 offers asymmetric outcomes – a software franchise with modest recurring revenue and reasonable margins, and a treasury leveraged to bitcoin price moves; investors must treat MSTR as a bitcoin-express play with residual software optionality and explicit capital-markets risk.
Summary fundamentals
- Latest quarter total revenue (Q2 2025): $114.5 million.
- YoY revenue % (Q2 2025): +2.7% versus Q2 2024.
- Latest quarter diluted EPS (Q2 2025): $32.60 per diluted share.
- YoY EPS %: swung from a net loss per share of $0.57 in Q2 2024 to +$32.60 in Q2 2025 (reflects accounting for fair-value gains on bitcoin).
- Gross margin (Q2 2025): gross profit $78.7 million, gross margin 68.8%.
- Debt-to-equity: Strategy maintains significant issued preferred and debt-like preferred instruments combined with equity issuances; cash and cash equivalents were $50.1 million as of June 30, 2025 – balance-sheet leverage is concentrated in the company’s capital markets instruments and contingent on asset-price gains.
- Market cap (recent snapshot, Sep 30, 2025): approximately $95–96 billion.
Detailed fundamental analysis
Business model split: treasury company vs software vendor
MicroStrategy’s public identity shifted in 2025 when it formally rebranded to Strategy Inc.; the business now publicly describes itself as a Bitcoin Treasury Company while continuing to operate its long-standing enterprise-software business (product licenses, subscriptions, support). The two cash engines have separate economics:
- Bitcoin treasury: scale economics arise from holding a large, appreciating (or depreciating) crypto position that flows through net income under fair-value accounting (ASU 2023-08). Gains or losses on digital assets now dominate quarterly income volatility.
- Software operations: product licenses, subscription services and support remain recurring but comparatively small. Q2 subscription revenue accelerated (subscription services +69.5% YoY) while product support declined – a typical transition toward subscription monetization.
Revenue trends and margin drivers
- Software revenue growth is modest but positive: total software revenue of $114.5 million in Q2 2025 with subscription services contribution rising materially, indicating product-to-SaaS migration that supports higher recurring revenue and predictability. Gross margins for software were ~68.8% in Q2 2025.
- Bitcoin fair-value gains are episodic and dominate reported profitability. Q2 2025 recorded an unrealized digital-asset gain of $14.0 billion, which converted to $10.02 billion net income for the quarter. This illustrates how income volatility is now primarily a function of bitcoin price movement, not software operating performance.
Balance-sheet strength and liquidity profile
- Cash and equivalents were only $50.1 million at June 30, 2025, while the company reported substantial proceeds from ATM programs and preferred offerings that funded bitcoin purchases; remaining ATM capacity and preferred issuance programs provide flexible capital but create execution and dilution risk if markets tighten.
- Strategy discloses available ATM capacity (e.g., approximately $17.0 billion available under common stock ATM as of July 29, 2025) and substantial preferred-stock issuance programs used to raise liquidity and fund bitcoin acquisitions – reliance on capital markets access is a structural risk.
Valuation multiples and market pricing
- Reported market capitalization near $95–96 billion reflects a large premium over software comparables; this premium is driven by investors valuing the embedded bitcoin stake and future expected appreciation rather than traditional software multiples. Trailing and forward P/E metrics become opaque given fair-value accounting and the company’s dependence on bitcoin prices.
Momentum & technical snapshot
- RSI(14): recent readings vary by provider; Investing.com reported RSI(14) ≈ 63.09 as of early October 2025.
- MACD status: Investing.com shows MACD positive (MACD 7.40 vs signal line), indicating upward momentum at that timestamp.
- 50-day & 200-day SMA positions: 50d around $323 and 200d near $333 per investing.com technicals; price has traded both above and below these averages in recent weeks, indicating elevated volatility.
- 1-month return vs Nasdaq: TradingView reported a 1-month return of +4.64% for MSTR vs Nasdaq Composite +5.6% (September 2025), underlining correlated but sometimes divergent moves with the tech benchmark.
- Average daily volume: Yahoo Finance showed 3-month average volume ~11.51M shares; with price in the low-to-mid-$300s this implies substantial daily dollar volume and options liquidity.
Peer comparison
MicroStrategy sits at an unusual intersection; compare peers in two vectors.
Bitcoin-leveraged peers (primary comparables for treasury exposure)
- Marathon Digital Holdings (MARA): bitcoin miner with Q2 2025 revenues and bitcoin holdings reported; revenue growth and profitability tied to mining hash rate and BTC price dynamics. Marathon reported Q2 revenue growth and increased holdings (Q2 revenue $238M; BTC holdings ~49,951).
- Riot Platforms (RIOT): another large publicly listed miner; Q2 2025 highlighted record net income tied to bitcoin price and mining execution. Both miners carry operational leverage to BTC price rather than direct balance-sheet treasury exposure.
Metrics to compare: growth (miners often post higher revenue seasonality), gross margins (miners’ margins depend on hash cost and BTC price), D/E (miners finance hardware and operations), forward P/E (miners often trade on NAV/bitcoin exposures).
Software peers (enterprise analytics & data-platform comparables)
- Palantir Technologies (PLTR): AI and data-analytics software with accelerating revenue (Q2 2025 revenue ~$1.0B, +48% YoY) and sizable operating margins, representing a software growth comparator for MicroStrategy’s remaining BI business.
- Salesforce (CRM): larger CRM/software peer with subscription revenue scale and high gross margins; useful benchmark for subscription transition economics even if enterprise focus differs. Salesforce reported Q2 FY26 revenue $10.2B and non-GAAP operating margin in the mid-30s.
Comparison takeaway: software peers trade at traditional SaaS multiples and justify premiums on stable recurring ARR – MicroStrategy’s software business shows healthy subscription growth but is small relative to the company’s bitcoin balance sheet and therefore does not drive the same valuation multiple.
Latest earnings highlights & management guidance
- “Operating income for Q2 2025 was approximately $14.03 billion, which includes an unrealized gain on the company’s digital assets of $14.0 billion.”
- “Total revenues were $114.5 million; product licenses and subscription services revenues were $48.0 million, up 43.9% YoY.”
- Guidance: FY2025 guidance published assumes a year-end BTC price of $150,000 and projects operating income ~$34 billion and diluted EPS ~$80 per share – a plan explicitly sensitive to bitcoin price.
(Each quote reproduced verbatim from the company release is cited to the Q2 2025 press release.)
Strategic moves, catalysts & risks (from filings/news)
Strategic moves & catalysts
- Capital markets toolkit: Strategy has expanded its capital instruments (multiple preferred series STRK/STRF/STRD/STRC) and ATM programs to monetize investor demand and fund bitcoin purchases; this provides near-term capacity to grow the bitcoin balance sheet but creates dilution and dividend obligations.
- Active acquisition cadence: the company continued incremental purchases (e.g., 196 BTC on Sept 29, 2025) and periodically raises equity via ATM offerings to fund buys, tying acquisition speed to market access and pricing.
Risks flagged in filings and press
- Accounting & earnings sensitivity: adoption of fair-value accounting for bitcoin (ASU 2023-08) means unrealized gains/losses hit net income each period, creating high earnings volatility and complicating standard valuation metrics.
- Funding and dilution risk: funding bitcoin purchases through perpetual preferred stock and ATM common issuance can dilute common shareholders and add dividend obligations; if capital markets tighten, the company’s acquisition model weakens.
- Concentration & custody risk: large concentrated holdings create single-name risk (loss or theft of keys, custodial failure); SEC and regulatory changes in crypto markets could affect valuation and operations.
Valuation & scenario analysis
Valuation must separate software valuation from bitcoin treasury value and the capital structure overlay.
Valuation building blocks
- Treasury NAV: multiply current BTC price by 640,031 BTC to estimate gross crypto value; then adjust for acquisition cost, preferred obligations, and other liabilities to derive equity NAV. Public sources list aggregate purchase price ~$47.35B and reported holdings of 640,031 BTC (Sep 29, 2025).
- Software franchise value: value using a modest software multiple (EV/Revenue or P/S) applied to trailing software revenue ($114.5M quarterly; roughly $460M annualized) – even generous SaaS multiples will amount to a small fraction of total market cap given the bitcoin stake scale.
Scenarios
- Conservative (BTC decline / funding strain): assume bitcoin falls 40% from current levels; NAV compresses materially, preferred dividends and ATM issuance continue to create dilution – implied downside 40–70% from current market price depending on leverage and issuance pace. Rationale: heavy dependence on capital markets and sharp BTC drawdown.
- Base (BTC stable to modestly higher): bitcoin appreciates 10–30% over 12 months; software revenue grows low double digits; market values the company at a NAV discount of ~0–20% due to dilution risk – implied modest upside 10–30%.
- Optimistic (BTC rallies / lower dilution): bitcoin doubles over 12–24 months and the company limits equity issuance while scaling preferred products; NAV expansion could generate 50–150%+ upside, but this relies on successful capital markets access and sustained BTC appreciation.
Price targets depend on assumptions about BTC trajectory and issuance behavior; treat scenario outputs as ranges, not precise targets.
Trading checklist & signals
Momentum trader rules
- Entry: initiate only when technicals align with BTC trend (MSTR price above 50d SMA and MACD positive) and BTC spot trend confirms (price above 50d SMA). Prefer high daily volume (>10M shares) to reduce execution cost.
- Exit / stop: hard stop at 12–18% adverse move for short-term trades; if bitcoin drops >20% intramonth with correlated stock weakness, reduce size or hedge with short BTC futures/options.
- Sizing: limit single-name swing trades to 0.5–1% of portfolio due to high volatility and event risk.
Longer-term investor checklist
- Confirmatory indicators: (1) review recent ATM issuance and preferred offering cadence; (2) quantify BTC per share and trend; (3) check software ARR growth and subscription mix; (4) model potential dilution from outstanding ATM capacity.
- Stop / sizing: treat MSTR position as a thematic overweight to bitcoin rather than pure software allocation; common practice is to limit exposure to no more than 2–5% of total portfolio unless investor appetite for BTC beta is high.
- Rebalancing trigger: reduce exposure if market NAV premium compresses below pre-set threshold (e.g., EV/NAV <1) or if capital markets access tightens materially.
