A Conversation with TD Cowen's Head of Research: Analyzing the Key to MSTR's Record-Breaking Q2 Earnings: $10 Billion in Net Revenue

Original title: In Q2 Earnings, MSTR Surges, and Coinbase Stumbles. But What's Next?

Moderator: Steven Ehrlich, Lead Writer, Unchained

Guests: Lance Vitanza, Managing Director and Head of Equity Research at TD Cowen;

Podcast Date: August 2, 2025

Compiled by: Fairy, ChainCatcher

Editor's Note:

On July 31, Strategy announced its second-quarter 2025 financial results, with record net revenue of $10 billion and earnings per share of $32.60.

In this conversation, host Steven Ehrlich and TD Cowen Head of Equity Research Lance Vitanza deeply analyzed the key points behind the financial report, covering Bitcoin holding strategies, capital structure adjustments, financing tool selection, and how key financial indicators (such as Bitcoin Yield and Bitcoin per share) reveal its growth potential.

Lance interprets Strategy's leading position in the wave of Bitcoin financialization from a research perspective, as well as its possible "demonstration effect" on the crypto vault track.

The following is the content of the conversation, compiled and organized by ChainCatcher.

Steven : What do you think is the most noteworthy highlight in Strategy’s second quarter financial report?

Lance: The most important thing for me is that the company raised its full-year Bitcoin revenue forecast from 25% to 30%. While I think this target is still conservative, it is already double what was expected at the beginning of the year.

It's rare for a company I follow to achieve its full-year target ahead of schedule and then raise it again just seven months into the year, which speaks volumes about its performance.

Steven : Why do you think they can do it?

Lance: First of all, the current regulatory environment is very favorable to Strategy and other Bitcoin vault companies.

We see several positive signals: the FASB revised accounting rules, and the White House also stated in a report that it will retain the preferential tax treatment of unrealized gains on crypto assets. This is one of the most favorable policy backdrops, and it is also reflected in the strong performance of Bitcoin prices.

Of course, this is also due to Strategy's own strategy. They are not only aggressive, but also highly creative and highly capable of execution. They precisely penetrate different capital markets, such as:

• About $8.5 billion was raised in the convertible bond market, $2 billion of which was issued this year;
• Successfully launched Strike for the preferred stock market;
• It then entered the high-rated preferred stock market and issued Strife;
• Recently, a new product for retail investors was launched to attract more funds.

Steven : They reported a $10 billion profit, but some questioned whether this was simply an inflated performance due to a change in accounting rules. What would the results be if they were able to measure profits at market value starting in 2020?

Lance: We have actually done some back-calculations, and the results are clear: the asset curve is always upward.

Even if the 2024 financial report is adjusted back to the new regulations, significant growth will be seen. As of yesterday, the company reported that Bitcoin-related income has exceeded $13 billion. This does not include the income from the issuance of additional shares. It is earned entirely through existing Bitcoin positions, which means that there is no dilution of shareholder equity.

By comparison, the full-year figure for 2024 was $12 billion, and now it has surpassed that figure in just the first seven months of 2025. More importantly, their new goal is to reach $20 billion for the full year, which is equivalent to doubling the figure.

So even without looking at the accounting change, the company did achieve very strong growth. The new accounting rules inflated the results, but they weren't the sole reason for the growth.

Steven : Strategy seems to be gradually exiting the convertible bond market. While their balance sheet is relatively healthy , they now appear to be actively repurchasing or cleaning up their debt. What are your thoughts? What does this mean for their future financing strategy?

Lance: I think this is a positive sign that Strategy is upgrading its capital market strategy.

In the past, they mainly raised funds through convertible bonds, but this market is dominated by arbitrage, with institutions buying bonds while shorting stocks to hedge risks.

But now, as companies grow, they can afford to turn to the preferred stock market, which offers more efficient capital appreciation, more favorable terms, and greater leverage.

This also provides a reference for other Bitcoin vault companies (PBTC). Many of these companies also started with convertible bonds in the early stages, but the ideal path should be to gradually shift to more stable and credit-advantaged financing channels like Strategy.

Steven : You mentioned convertible bonds as a suitable financing method for many crypto vault companies. Can you elaborate on this? What are the signs that these companies are ready to enter the preferred stock market? If these companies are still under significant debt pressure, what risks should investors be aware of?

Lance: First of all, to enter the preferred stock market, the company must be large enough.

Take Strategy, for example. They only started investing in Bitcoin in the fall of 2020, a mere four years ago, and their first preferred stock offering was in January of this year. By then, their market capitalization and Bitcoin holdings were already substantial, and their stock price performance was very strong.

So, the good news is: convertible bonds, if executed correctly, can indeed generate significant value. For many PBTC companies, starting with convertible bonds is a reasonable path; the key is execution. Whether a new wave of companies can replicate this success remains to be seen.

This is a track with ample market space. Michael Saylor himself has been actively supporting the development of other PBTCs. This is not competition, but a win-win situation.

The greater the number of PBTC, the more capital will be attracted to the entire market, which will also promote the deeper integration of Bitcoin into the global financial system. This is beneficial to Strategy, not a threat.

Steven : There's a new commitment in the financial report: no common stock will be issued if the MNAV (market-to-book value) ratio falls below 1. Is this practice common to other crypto vault companies? What are your thoughts on this commitment?

Lance: This isn't a completely new approach for Strategy. They've never issued common stock when the MNAV was below 1 before, and we never expected them to do so.

The real new commitment is that they will not issue additional common shares unless the MNAV exceeds 2.5 (a premium of more than 150%), except to pay dividends, interest, or general operating expenses. In other words, even if the MNAV reaches 2, they will not issue shares to buy Bitcoin.

They have previously issued large amounts of common stock when the MNAV was below 2.5 (or even below 2), so this is indeed a significant shift.

This does provide greater peace of mind for shareholders, but it also creates a new problem: if the current MNAV is only around 1.8, they will have to rely on other financing methods.

Given that they are no longer inclined to use convertible bonds, preferred stocks will become the main channel.

So far, their IPO performance has been strong, but the response to their ATM (at-the-market) offering has been mediocre, but this may change with the launch of their new floating rate preferred stock, STRC.

The trading volume of this new stock was very strong in its first week of listing on Nasdaq. It is possible to expand the issuance through ATM in the future. This ATM plan was also officially announced in their financial report yesterday.

Steven : They're starting to talk about two metrics more frequently: "Bitcoin per share" and "Bitcoin yield." Can you briefly explain the difference between these two and why the latter is more important?

Lance: In fact, these two indicators are closely related. The calculation of Bitcoin's yield itself is inseparable from "Bitcoin holdings per share."

The underlying data for the yield in our published research is actually the change in "Bitcoin per share." So I don't think "Bitcoin per share" is a completely new concept, it's just that they made it more prominent this time.

Assume that the company's Bitcoin holdings per share have increased by about 130% from the beginning of 2023 to now. In other words, if you hold one share, the corresponding Bitcoin now is 2.3 times what it was then, which is an amazing growth.

As for the "Bitcoin yield", for example, they now announce it as 25%, which means that the number of Bitcoins per share has increased by 25% compared to the past.

I personally don’t really care about the specific price per share; I’m more concerned with the growth rate of this number. Therefore, in comparison, I place more emphasis on the “Bitcoin yield” indicator.

Steven : What do you think of Strategy's ultimate goal? Is it healthy for a company to control such a large share of the Bitcoin industry when it's still in its "early stages"?

Lance: Strategy currently holds approximately 630,000 bitcoins, representing approximately 3% of the total 21 million bitcoins in existence. This percentage is based on the total supply and includes the 5% of bitcoins believed to be permanently lost.

From a broader perspective, the company still has a lot of room for growth in the future. But it is true that one day, the amount of Bitcoin they hold will reach a certain "limit," and further increases in holdings may affect Bitcoin's broader financial applications.

No one is sure what that tipping point will be, but my guess is that they have about a decade left to continue with their current strategy and continue increasing their holdings.

Our model predicts that by the end of 2027, they could hold around 4.3% of the total Bitcoin supply, about 1.3 percentage points more than today, with room for steady growth in the coming years.

Steven: Strategy has raised its full-year target due to strong execution of its Bitcoin strategy in the first six months. I saw you updated your model in your report this morning. Could you share your current year-end forecast?

Lance: Our current forecast is to achieve a Bitcoin yield of 32.1% for the entire year.

This figure is 2.1 percentage points higher than the company's current official target, and we believe it is very likely that the company will raise its target again, or even exceed expectations. Frankly, I think our 32.1% forecast is more likely to be upside than downside.

Our method for calculating "Bitcoin returns" differs slightly from theirs, as we base our calculations on the cost price at the time of purchase, rather than the market price at the end of the period. Therefore, our figures are more conservative and cannot be directly compared with the figures disclosed by the companies.

For reference, we forecast that the company will realize approximately $15.3 billion in Bitcoin revenue this year and roughly $16 billion over the next two years.

Different calculation methods would yield a range of estimates between $16 billion and $22 billion. We chose a more conservative approach, which we believe is more reasonable. However, there is no single correct answer.