Company: MSTR
Filing Date: 2025-01-03
Form Type: DEF 14A
Source: 0001140361-25-000231
Chunk: 121

Company: Strategy Inc
Filing Date: 2025-01-03
Form: DEF 14A
Chunk 121
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, and entered into secured term loan agreements in March 2022 and June 2022. The embedded conversion features in each of the convertible notes are indexed to the Company’s class A common stock and meet the criteria for classification in stockholders’ equity, and therefore derivative accounting does not apply. The Company records the aggregate principal amount of each of its debt instruments as a liability on its Consolidated Balance Sheets, offset by the issuance costs associated with each instrument. The issuance costs are amortized to interest expense using the effective interest method over the expected term of each debt instrument.

<div align='center'>E-36</div>

TABLE OF CONTENTS

(n) Revenue Recognition The Company recognizes revenue using a five-step model:

| (i) | Identifying the contract(s) with a customer, |

| (ii) | Identifying the performance obligation(s), |

| (iii) | Determining the transaction price, |

| (iv) | Allocating the transaction price to the performance obligations in the contract, and |

| (v) | Recognizing revenue when, or as, the Company satisfies a performance obligation. |

The Company has elected to exclude taxes assessed by government authorities in determining the transaction price, and therefore revenue is recognized net of taxes collected from customers. The Company enters into non-cancellable nonrefundable orders with customers and does not have a history of granting returns or refunds and therefore does not have a reserve for future returns. Performance Obligations and Timing of Revenue Recognition The Company primarily sells goods and services that fall into the categories discussed below. Each category contains one or more performance obligations that are either (i) capable of being distinct (i.e., the customer can benefit from the good or service on its own or together with readily available resources, including those purchased separately from the Company) and distinct within the context of the contract (i.e., separately identifiable from other promises in the contract) or (ii) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. Aside from the Company’s term and perpetual product licenses, which are delivered at a point in time, the majority of the Company’s services are delivered over time. Product Licenses The Company sells different types of business intelligence software, licensed on a term or perpetual basis and installed either on premises or on a public cloud that is procured and managed by the customer. Although product licenses are sold with product support, the software is fully functional at the outset of the arrangement and is considered a distinct performance obligation.