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MSTR · Forward model · Product support · Bear case

What has to happen in Product support

Model as of

This page changes Product support inside the complete MSTR model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

MSTR forward model
Horizon
Consolidated fair value $122.37 all other verticals held in this portfolio case
Final-quarter revenue $13M 11% of company revenue
Explicit segment contribution $53M EBITDA less segment capex, before corporate items

The software mix shift stalls without the support line stopping its fall. Subscription growth has already halved, from 13.8% sequentially in the March quarter to 6.8% in June, while product support fell 8.9% for a second consecutive quarter - so the two lines are no longer trading one for one and the total can decline. A lower exit multiple follows: a shrinking analytics business does not clear 9x. Read the result as a measurement, not a warning. This case moves fair value by well under a dollar, because a bear case on the software business is worth well under a dollar. The bear case that matters is a lower bitcoin price, and it is in the notes, not here.

Product support

Basis quarter$40M
Final quarter$13M
Implied CAGR−20%
Final revenue mix11%

The annuity being cannibalised. On-premise maintenance revenue has fallen in every quarter but two since March 2023, from $65.5m to $40.2m, and the decline is accelerating: 8.9% sequentially in each of the last two quarters against 1.8% and 0.9% a year earlier. Customers leaving this line mostly reappear in subscription services, which is why consolidated revenue has been flat while both lines moved violently. It carries the highest gross margin in the company at 86.0%, so its decline costs more profit than its revenue suggests - and it cannot fall at 9% a quarter forever, because what is left at the end is the on-premise core that will not move to cloud at any price.

Last four quarters
2025 Q3 $51M Reported
2025 Q4 $48M Estimated
2026 Q1 $44M Reported
2026 Q2 $40M Reported
Maintenance and technical support contracts on perpetually licensed on-premise deployments, printed on the income statement as "Product support"
Sequential growth −8.0%/qtr decaying toward −3.0% Last two quarters both printed -8.9%; trimmed because a run-off slows as the sticky core remains
Product support

Latest: $13M (2031Q2E)

Period Value
2023Q1 $65M
2023Q2 $66M
2023Q3 $67M
2023Q4 $65M
2024Q1 $63M
2024Q2 $62M
2024Q3 $61M
2024Q4 $58M
2025Q1 $53M
2025Q2 $52M
2025Q3 $51M
2025Q4 $48M
2026Q1 $44M
2026Q2 $40M
2026Q3E $37M
2026Q4E $34M
2027Q1E $31M
2027Q2E $29M
2027Q3E $27M
2027Q4E $25M
2028Q1E $24M
2028Q2E $23M
2028Q3E $21M
2028Q4E $20M
2029Q1E $19M
2029Q2E $18M
2029Q3E $17M
2029Q4E $17M
2030Q1E $16M
2030Q2E $15M
2030Q3E $15M
2030Q4E $14M
2031Q1E $13M
2031Q2E $13M

Assumptions & reasoning

  • Eleven quarters are printed on the face of a filing. The three marked estimated are fourth quarters derived as the 10-K full year less the nine months in that year's third-quarter 10-Q: 263,888 - 198,422, 243,805 - 185,440 and 204,225 - 155,728.
  • Highest gross margin in the company at 86.0% - $5,634 thousand of cost on $40,245 thousand of revenue - so each dollar lost here costs roughly 1.35x the gross profit of a dollar of subscription revenue.
  • The run-off is long-running rather than new, and the annual figures show it without any derivation at all: $266.5m in 2022, $263.9m in 2023, $243.8m in 2024, $204.2m in 2025.
  • The centred four-quarter moving-average test formally passes on this line - a signal of 0.0474 against a worst window spread of 0.0286 - and seasonality is still not applied. The apparent Q1 trough rests on two observations, 0.9878 and 0.9593, that are moving apart rather than repeating, which is an accelerating decline contaminating the ratio rather than an annual shape. Maintenance revenue is recognised ratably and no mechanism is disclosed.
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