Mark Palmer

Mark Palmer from Benchmark Company asked about the likely evolution of the digital asset treasury company industry, including potential shakeouts, consolidation, and opportunities for Strategy to leverage these dynamics.

Answer

Executive Chairman Michael Saylor explained that successful companies must add value and evolve, citing examples like Strive and Metaplanet pursuing digital credit. He anticipates thousands of companies launching, with many failing or evolving. Strategy, however, remains laser-focused on making STRC the premier digital credit instrument, viewing acquisitions as potential dilutive distractions that could undermine credit or distract management from this 'once-in-a-lifetime opportunity.'

Mark Palmer inquired about the likely evolution of the digital asset treasury company industry, including the number of players, potential shakeouts, and consolidation, and how these dynamics might present opportunities for Strategy.

Answer

Executive Chairman Michael Saylor explained that successful companies evolve and find niches, while those that merely hold Bitcoin without adding value might be acquired. He emphasized Strategy's laser focus on making STRC the premier digital credit instrument globally, aiming for low volatility and high yield. Saylor expressed skepticism about acquisitions for Strategy, viewing them as potential dilutive distractions that could undermine the credit of Stretch or distract management from their core mission.

Mark Palmer of The Benchmark Company LLC asked if Strategy would consider implementing a proof of reserves system to enhance investor trust, similar to what other crypto-related companies have done.

Answer

Executive Chairman Michael Saylor stated they are studying it but are cautious about the operational security risks and potential for market dislocation if routine custody movements are misinterpreted. CEO Phong Le and CFO Andrew Kang emphasized that as a long-standing public company with robust internal controls and Big Four auditors, they already provide a high degree of transparency and trust.

Mark Palmer from The Benchmark Company LLC inquired about the company's pipeline of altcoin projects moving toward commercialization and their potential revenue contribution, particularly looking ahead to 2026.

Answer

CFO Charles Yan highlighted that after strong Allele miner sales in H1 2025, the company will launch new altcoin mining products in H2 2025. He specifically mentioned that a new state-of-the-art Dogecoin miner is expected to complete testing in 2025 and enter mass production in 2026, positioning it as a key future contributor.

Mark Palmer inquired about the company's future revenue mix, specifically the contribution from Aleo versus Dogecoin miners, and asked about the revenue potential and rollout timing for the new Goldshell Byte dual miner.

Answer

CFO Chaowei Yan stated that while the company is optimistic about Dogecoin miners, future revenue will also come from Aleo and other new innovative miners. Executive Qianwen Wang clarified that Aleo miners would dominate H1 2025 revenue, with Goldshell Byte contributing more in H2, though precise percentages are difficult to forecast. Mr. Yan added that the Goldshell Byte addresses a key need for individual miners by allowing them to switch cryptocurrencies with swappable cards, which helps standardize hardware and lower the barrier to entry for new participants.

Mark Palmer from The Benchmark Company LLC asked about the company's capital deployment priorities, specifically how share buybacks fit into the mix versus other uses of capital, given the stock's valuation.

Answer

CFO James Cheng stated that management believes the shares are significantly undervalued, making buybacks a better use of capital than issuing equity. He confirmed they paused their ATM program and initiated a $30 million share repurchase program, under which 3.6 million ADSs have been bought back. Cheng noted that capital from operations is being prioritized for business needs and self-mining expansion, and the company is not planning any immediate fundraising.

Mark Palmer of The Benchmark Company asked about the company's capital deployment priorities, specifically how share buybacks fit into the strategy versus alternative uses of capital, given the current share price.

Answer

CFO Jin James Chang stated that management believes the shares are significantly undervalued, making buybacks a better use of capital than issuing equity at current levels. He confirmed they have paused their ATM program and have been actively repurchasing shares. He also noted that strong cash flow from operations is sufficient to fund business needs, reducing the immediate need for fundraising.

Mark Palmer asked for the portion of Extra Cash advances extended to existing users in Q2 and inquired about the expected trend in average advance size following the implementation of the mandatory fee structure.

Answer

CFO & COO Kyle Beelman confirmed that trends were consistent with prior quarters, with 95-96% of advances by unit and 97-98% by dollar volume going to existing customers. He noted that while Q2 performance was in line with expectations from testing the new fee structure, the primary driver for future increases in average origination size will be the rollout of the new CashAI V5.5 underwriting model.

Mark Palmer questioned the drivers behind the increased ExtraCash origination size, asking if it was due to returning customers or better underwriting for first-time borrowers. He also asked for the company's expectation of the regulatory environment following the U.S. elections.

Answer

Executive Kyle Beilman stated that the growth in average origination size is primarily driven by Cash AI's improved risk assessment for existing customers, who constitute over 95% of originations. Executive Jason Wilk commented on the election, stating that while they anticipate a more business-friendly environment, the company is confident in its position and prepared for litigation regardless of any administrative changes.

Mark Palmer questioned the process that led to the CoreWeave agreement, asking about the number of counterparties involved and if they remain potential tenants for the remaining capacity. He also asked for the timeframes associated with CoreWeave's options.

Answer

Executive Christopher Ferraro described a robust process involving an adviser that engaged multiple market participants. While not disclosing specific option timeframes, he stated they are not long-term past 2025, emphasizing the need for clarity to plan development and financing. He confirmed Galaxy remains in contact with other players for long-term campus expansion beyond the currently approved capacity.

Mark Palmer requested an update on the company's utility initiative, including the rollout timeline for its new technology, and asked about the M&A environment regarding seller valuation expectations.

Answer

CEO Greg Daily confirmed a fair assumption is that the utility technology rollout will begin in Q1 2025 and accelerate through the year. President Rick Stanford added that seller valuation expectations in the M&A market are becoming more rational. He noted the company has a strong pipeline of public sector deals and anticipates closing 3 to 5 acquisitions in fiscal 2025, with timing being a critical factor.

Mark Palmer asked about Pagaya's strategy for balancing expense control with necessary platform investments and the resulting implications for margins. He also inquired about the company's expectations for the post-election regulatory environment.

Answer

CEO Gal Krubiner and CFO Evangelos Perros emphasized the platform's inherent operating leverage, noting that significant revenue growth can be achieved without material increases in the current expense base. Gal Krubiner also commented on the post-election outlook, stating a belief that the regulatory environment will be more constructive, creating a tailwind for introducing Pagaya's technology to more financial institutions.

Mark Palmer asked about the benefits of the TASK Group acquisition beyond enabling international expansion for existing customers, specifically in terms of landing new, independent customers.

Answer

CEO Savneet Singh confirmed that the TASK platform has benefits beyond supporting existing customers abroad. He mentioned that TASK's reputation as a "very unique, very special" product is already leading to conversations with new brands. He also noted TASK's presence in adjacent markets like stadiums, which presents a future opportunity for PAR to explore.