Bitcoin technology integration efforts continue. I think it’s another bullish trend. The development of lightning continues, and the activity of corporations to integrate the Bitcoin protocol and the base layer of Bitcoin, as well as integrate with lightning, are positive and auspicious and they continue. And I think that as time goes on, we’re just going to see more and more technology initiatives that’ll be beneficial in creating utility for Bitcoin throughout the entire retail community and business community. And then, I will end my thoughts with the observation that mainstream awareness seems to be reaching new heights for Bitcoin. We have the likes of Larry Fink referring to it as a Flight to Quality. We have Druckenmiller noting that it’s a legitimate asset embraced by an entire generation and lamenting that he doesn’t own more of it or own it.
We have Mohammed El-Erian on television noting that Bitcoin is being viewed now as a safe haven asset. We have a lot of coverage of Bitcoin in television, on television networks, news networks, and also through mainstream media that should continue to grow. As that coverage increases, that combined with increasing availability of Wall Street analyst coverage and new voices emerging in the community, like Fidelity with their analysis of Bitcoin, all of those new voices and new interest is driving education of a new generation of investors. I think we can expect more of that during the coming 12 months. And all of these things together just create a virtual cycle. And as they drive Bitcoin awareness, they should drive Bitcoin investment and that should drive more news and that should drive more awareness and that should catalyze more and more firms to take an interest in supporting Bitcoin or investing in Bitcoin.
And so with that, I will go ahead and end my review, and we can move on to Q&A.
A – Shirish Jajodia: Thank you, Michael. We are now going to jump right into questions. And the first question is for Michael. The 10-Q discloses that Michael entered into a 10B51 plan to exercise MicroStrategy stock options. Can you please provide further color on the plan and the thought process?
Michael Saylor: Sure, yes, thanks for that question. I was granted a stock option in 2014 with respect to 400,000 shares, which is going to expire next April if I don’t exercise it by then. For almost a decade now at my request, the company has only paid me a $1 salary and I’ve chosen not to be eligible for any cash bonuses. Exercising this option will allow me to address some financial obligations as well as to acquire additional Bitcoin for my personal account. Under my trading plan, I plan to exercise and sell 5,000 shares on each trading day beginning on January 2nd, 2024 and ending on April 25th, subject to a minimum price condition. This means the sale will take place over almost four months. If you’d like more details about the plan, I would refer you to the 10-Q. I continue to be optimistic about MicroStrategy’s prospects and should note that my equity stake in the company after these sales will remain very significant.
Shirish Jajodia: Thanks, Michael. The next question is also for Michael. What is management’s view on the impacts to the Bitcoin ecosystem at large if a spot Bitcoin ETF is approved? And what is management’s view on the potential impact to MicroStrategy?
Michael Saylor: I think that it’s a catalytic event, a big milestone in the institutional adoption of Bitcoin as an asset class. So I think it’s going to be very, very auspicious for the asset. I think it will usher in a new generation of analysts. It’ll usher in a lot more Bitcoin awareness. It will simplify the process of acquiring and holding Bitcoin and allocating to Bitcoin by an order of magnitude. And I think it will create a constructive competition because all of these various ETF vendors will all be competing for asset share. And as they do it, it’ll be in their best interest to communicate and educate all of their clients on Bitcoin. So I think it’s very good for the ecosystem. I think it’s complimentary as a way to participate in many other ways.
There are already participants in the ecosystem that take different strategies. For example, Block has taken a very technology-focused strategy and they’re very interested in integrating into their products like Cash App. MicroStrategy has assumed a Bitcoin strategy which consists of acquiring and holding the underlying asset. I think other companies have offered options type strategies and trading strategies. There are going to be a class of investors that will welcome the ability to hold the spot product through an ATP wrapper. And so, I think it’s generally good for the ecosystem. As for MicroStrategy, I think it’s going to be good for our company as well as our shareholders because it will expand the overall ecosystem. None of these ETP companies will be operating companies themselves.
So they’re not really pursuing our strategy of intelligent leverage as an operating company. They’ll be pursuing various ETF and ETP type strategies. And overall that means that it should expand the entire asset class to the benefit of all participants.
Andrew Kang: Thanks, Michael. I think Shirish had a connection issue, so I’ll read the next question we have. This one is for Phong. How should we be thinking about the AI partnerships with Microsoft and their monetization? Can you shed some color on the impact of AI offerings on margin?
Phong Le: Yes, thanks, Andrew. So one of the ways we were able to be first to market with our AI BI offering is we fully embedded Microsoft Azure’s OpenAI product through a partnership with Microsoft. And it provides several benefits to prospects and customers. One is they don’t need to bring their own LLM, which if you’re a large enterprise, you may not know exactly where to go, how to go do that. And so we’ve integrated it fully. The second is as of now, Azure OpenAI which drives technologies like ChatGPT is the superior LLM in the market. And so it’s something that people are familiar with and know how to work with. And the third, we carry with it a lot of the privacy and security capabilities of Azure OpenAI too. That’s our sort of first entree into the market.
