Strategy (STRC) risk factors, 2025 10-K

Risks Related to Our Business in General

1. 01For many reasons, including those described below, our operating results, revenues, and expenses have varied in the past and may vary significantly in the future from quarter to quarter. These fluctuations could have an adverse effect on the market price of our listed securities
2. 02increases or decreases in our unrecognized tax benefits
3. 03We may not be able to regain profitability in future periods
4. 04A significant decrease in the market value of our bitcoin holdings could adversely affect our ability to satisfy our financial obligations
5. 05We may have exposure to greater than anticipated tax liabilities

Risks Related to Our Bitcoin Strategy and Holdings

1. 06Our bitcoin strategy exposes us to various risks, including risks associated with bitcoin
2. 07Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty
3. 08in China, the People’s Bank of China and the National Development and Reform Commission have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal within the country
4. 09The price of bitcoin has historically been subject to dramatic price fluctuations and is highly volatile. In December 2023, the FASB issued ASU 2023-08, which we adopted as of January 1, 2025
5. 10permitting retrospective restatement of prior periods, our future results will not be comparable to results from periods prior to our adoption of the guidance
6. 11The availability of spot ETPs for bitcoin and other digital assets may adversely affect the market price of our listed securities
7. 12Our bitcoin strategy subjects us to enhanced regulatory oversight
8. 13The concentration of our bitcoin holdings enhances the risks inherent in our bitcoin strategy
9. 14significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure
10. 15Our bitcoin strategy exposes us to risk of non-performance by counterparties

Risks Related to Our Enterprise Analytics Software Business Strategy

1. 16We derive revenue from a single software platform and related services as well as revenue from our installed customer base
2. 17Our deferred revenue and advance payments totaled $242.9 million as of December 31, 2024. The timing and ultimate recognition of our deferred revenue and advance payments depend on various factors, including our performance of various service obligations

Risks Related to Our Technology and Intellectual Property

1. 18Third parties may claim we infringe their intellectual property rights
2. 19require us to satisfy indemnification obligations to our customers or channel partners
3. 20Our intellectual property is valuable, and any inability to protect it could reduce the value of our offerings and brand

Risks Related to Our Operations

1. 21Budgetary Constraints and Cycles. Public sector funding reductions or delays adversely impact demand and payment for our offerings
2. 22violate any consent order that we reach with the FTC, we may be subject to additional fines and compliance requirements. We face risks of similar enforcement from State Attorneys General and, potentially, other regulatory agencies

Risks Related to Our Listed Securities Generally

1. 23The market price of our class A common stock has been and may continue to be volatile
2. 24general economic conditions and slow or negative growth of related markets, including as a result of war, terrorism, infectious diseases (such as COVID-19), natural disasters and other global events, and government responses to such events
3. 25$3.000 billion in aggregate principal amount of 0% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”)
4. 26the effect, if any, that future issuances and sales of our securities will have on the market price of our listed securities

Risks Relating to Our Series A Perpetual Strike Preferred Stock

1. 27contractual restrictions on our ability to pay dividends
2. 28certain tender or exchange offers
3. 29Our series A perpetual strike preferred stock has only limited voting rights
4. 30perpetual strike preferred stock until and unless we first pay accumulated dividends in full on such dividend senior stock. The issuance of any dividend senior stock in the future would also have the effect of further subordinating our class A common stock
5. 31The tax rules applicable to “fast-pay stock” could result in adverse consequences to holders of perpetual strike preferred stock
6. 32We do not believe that our previously issued series A perpetual strike preferred stock is fast-pay stock
7. 33For example, notwithstanding our intent not to issue any Additional Shares that are fast-pay stock, the IRS could assert that such Additional Shares constitute fast-pay stock, particularly if they are issued at a premium to their liquidation preference
8. 34Provisions of our series A perpetual strike preferred stock could delay or prevent an otherwise beneficial takeover of us
9. 35Holding series A perpetual strike preferred stock does not, in itself, confer any rights with respect to our class A common stock