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Redeemable Preferred Stock | 3 Months Ended
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Mar. 31, 2025
Equity [Abstract] |
Redeemable Preferred Stock | (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 |  |  | Perpetual Strife Preferred Stock |
Transfer Symbol on NASDAQ |  | STRK |  |  | STRF |
Issuance Date |  | February 5, 2025 |  |  | March 25, 2025 |
Initial Shares Issued |  | $ | 7,300,000 |  |  | $ | 8,500,000 |
Dividend Rate Per Annum |  |  | 8.00 | % |  |  | 10.00 | %
Dividend Payment Method |  | Cash, class A common stock, or a combination of both |  |  | Cash |
Dividend Payment Dates |  | Quarterly, if declared, in arrears on the last day of each calendar quarter |  |  | Quarterly, if declared, in arrears on the last day of each calendar quarter |
Net Proceeds |  | $ | 563,226 |  |  | $ | 710,873 |
Issuance Costs |  | $ | 20,774 |  |  | $ | 11,627 |
Conversion Privilege |  | Convertible to class A common stock at any time |  |  | None |
Initial Conversion Rate |  | 0.1 shares of class A common stock per share of preferred stock |  |  | n/a |
Public Offering Price |  | $80.00 per share |  |  | $85.00 per share |
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 per share 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 day period 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).

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