How MicroStrategy Pays Interest On Its Debt?

How MicroStrategy Pays Interest On Its Debt?

The short answer is that MSTR finances its debt service via a mixture of:

➖ Software business cashflow
➖ Existing reserves & short-term investments
➖ Capital market instruments, such as issuing new equity or debt
➖ Asset liquidation (Bitcoin sales)

MSTR's annual coupon payments are not that, summing up to ≈$40M/year. The convertible bonds that they issue come with small coupons, so relatively small interest payments.

More specifically, here is how MicroStrategy's outstanding outstanding convertible bond maturity, principal, coupon rate and total yearly interest look like:

2028 | $1.01B @ 0.625% | $6.3M
2029 | $3.0B @ 0% | $0M
2030A | $0.8B @ 0.625% | $5M
2030B | $2.0B @ 0% | $0M
2031 | $0.604B @ 0.875% | $5.3M
2032 | $0.8B @ 2.25% | $18M

(Format: <year> | <principal> @ <coupon> | <anual interest>)

If you sum up the interest payments you’ll get ≈$34.6M/year in total. I mentioned ≈$40M/year previously, because besides convertible bond interest, MSTR also pays interest on various other loans.

The yearly revenue of MSTR's software services business is almost 500M/year. Just that revenue is more enough to finance the interest payments on their debt.