Strategy Inc (formerly MicroStrategy Incorporated) (MSTR), Financial Analysis

1 Revenue & Business Model

• Storyline: a bitcoin treasury company funded through capital markets, with a software business attached. Since fair value accounting began on 1 Jan 2025, quarterly earnings track the bitcoin price; revenue comes only from software. Chapters 2 to 4 cover the three drivers: the bitcoin treasury, capital markets funding (common stock and preferred stock, which the company calls Digital Credit) and the software business.
• Two reportable segments from Q2 2026: Software, which earns all revenue, and Bitcoin, whose result is fair value changes, custody fees, financing items and related taxes; the chief operating decision maker uses net income. Q2 2026 segment net income: Software $3.7m against $30.4m, Bitcoin ($8.22bn) against $9.99bn.
• Software revenue FY2021 $510.8m to FY2025 $477.2m, a (1.7%) CAGR; TTM Q3 2026 $495.1m. Bitcoin fair value at 30 Sep 2026 was 143 times TTM revenue and 91.8% of total assets of $77.15bn.
• Regions (Q2 2026 Form 10-Q): United States $68.4m of Q2 2026 revenue (55.9%), EMEA $42.5m (34.7%), other $11.5m (9.4%); Germany exceeds 10% of revenue.
• Share classes at 30 Sep 2026: 402.3m Class A shares (one vote) and 19.6m Class B shares (ten votes, held mainly by Executive Chairman Michael Saylor); five listed preferred series: STRF, STRC, STRK, STRD on Nasdaq and STRE in Luxembourg.

2 Bitcoin Treasury: 849,327 BTC, Slower Buying and First Sales

• Holdings 847,666 BTC at 30 Sep 2026, +32.4% on 640,031 a year earlier; cost basis $63.95bn ($75,437 per BTC), fair value $70.82bn, so fair value exceeded cost by $6.88bn against $25.85bn a year earlier. Fair value per BTC was $83,552 against $114,378 (computed).
• Purchases slowed through 2026: 89,599 BTC bought in Q1 2026 and 85,296 in Q2, then 7,218 in Q3 for $588.1m. Sales: 1,395 BTC in Q2 and 5,552 in Q3 2026, mainly to fund preferred dividends and STRC buybacks; holdings dipped to 840,447 BTC on 9 Aug 2026 before rising to 849,327 on 1 Nov 2026.
• Results on digital assets: gains of $3.89bn in Q3 2025 and $20.91bn in Q3 2026, with losses of ($17.44bn), ($14.46bn) and ($8.32bn) in between; fair value fell below cost at 31 Mar and 30 Jun 2026.
• Company measures: BTC Yield 22.8% in FY2025, 9.4% in the first four months of 2026, 4.5% to 26 Jul and (3.7%) to 25 Oct 2026, as common stock was sold near or below NAV and bitcoin was sold.

How the bitcoin treasury sector is changing

• Bitcoin price: about $111,612 on 30 Oct 2025, $80,660 on 21 Nov 2025 (Strategy 8-K, 1 Dec 2025), $58,524 on 30 Jun 2026 (MARA Q2 2026 letter) and $81,200 on 23 Oct 2026 (Strategy Q3 2026 release).
• Large banks entered bitcoin services: Strategy's Q1 2026 release names Morgan Stanley, Goldman Sachs and Citi announcing bitcoin ETFs, trading, custody or lending services; its risk factors cite competition from spot bitcoin ETPs and other treasury companies.
• Other treasury companies slowed or merged: MARA held 35,577 BTC on 30 Jun 2026, 29% fewer than a year earlier, and bought none in Q2 2026; Strive merged with Semler Scientific and held 43,124 BTC on 30 Oct 2026.
• Mining economics: network hashrate peaked near 1.3 zettahash in late 2025 and was still declining in Aug 2026, per Twenty One Capital's CEO (8-K Ex 99.1, 31 Aug 2026).
• Funding rule tied to the premium: Strategy said in Dec 2025 it would issue common stock above 1x mNAV and sell bitcoin below 1x; it first sold bitcoin in the week of 26 to 31 May 2026 (32 BTC).

3 Capital Markets: Common Stock, Digital Credit and Fewer Converts

• $25.3bn raised in FY2025 and $21.23bn in 2026 to 25 Oct. Q1 2026: common stock $5.30bn and STRC $2.07bn gross; Q2 2026: common $2.94bn and STRC $5.46bn; Q3 2026: common $5.41bn and no preferred stock.
• Preferred stock became the main fixed charge: liquidation preference $8.03bn at 31 Dec 2025, $15.46bn at 30 Jun 2026 and $14.11bn at 30 Sep 2026; quarterly preferred dividends $10.6m in Q1 2025 and $419.6m in Q3 2026. STRC alone was $10.49bn of notional at 30 Jun 2026 at a 12.00% rate.
• Buybacks of STRC below $100: 23,072,543 shares to 1 Nov 2026 for about $2.25bn; authorization raised from $1.0bn to $3.0bn between Jun and Oct 2026. STRC outstanding about 81.8m shares on 1 Nov 2026 (derived from filings).
• Convertible notes cut to $6.71bn from $8.21bn after $1.50bn of 2029 notes were bought for $1.38bn in May 2026; $5.91bn is puttable by holders from Sep 2027 to Sep 2028.
• US dollar reserve $4.79bn and cash pool $132.7m on 1 Nov 2026, against $1.44bn at launch on 1 Dec 2025; the Q2 2026 Form 10-Q puts annual preferred dividends plus interest at about $1.76bn.

How the market for bitcoin backed credit is changing

• Strategy as an equity issuer: about 8% of total US equity issuance in FY2025 per the company, the largest US issuer that year; five preferred IPOs in 2025 raised $5.5bn gross.
• Holders of Strategy preferred stock: $150m of STRC sat in corporate treasuries incl. Strive and Anchorage and over $270m in DeFi protocols (Q1 2026 release).
• Daily dividends spread: Strive began paying SATA dividends each business day on 16 Jun 2026; Strategy moved STRC to daily record dates on 1 Nov 2026.
• Tax treatment: Strategy expects preferred distributions to be return of capital for ten years or more, as it expects no earnings and profits.
• Credit rating: S&P Global rates Strategy B minus (Oct 2025), below investment grade.

4 Software: Subscription Up, Licences and Support Down

• Revenue $125.4m in Q3 2026, (2.5%), after +11.9% in Q1 and +6.9% in Q2 2026; 9M 2026 $372.1m, +5.0%. Gross margin 71.5% against 70.5% in Q3 2025.
• Mix moves to cloud subscriptions: subscription services $68.6m, +49.2%, 54.7% of revenue against 35.7%; product support $37.7m, (26.3%); product licences $3.8m, (78.0%); other services $15.3m, +7.7%. On premises licences entered end of support in Jan 2025, with full support ending 31 Dec 2026 (10-K FY2025).
• Profit: Software segment net income $3.7m in Q2 2026 against $30.4m in Q2 2025; management does not expect software cash flow to cover liquidity needs (10-Q Q2 2026).
• Management: from 1 Jan 2027 incoming CFO Reza Virasteh oversees software finances, with CEO Phong Le covering the bitcoin strategy (8-K Item 5.02, 29 Oct 2026).

How enterprise analytics software is changing

• Customers move to cloud subscriptions: in Q4 2025 subscription services grew 62.1% while product support fell 16.9% (Q4 2025 release); in Q3 2026 subscription services grew 49.2% and support fell 26.3%.
• AI in analytics: Strategy describes its software as AI powered enterprise analytics in its releases; the filings give no separate revenue for AI products.
• Competitor figures were not collected: listed analytics companies do not report a comparable segment in their SEC filings, so no competitor table is shown.

5 Financial Analysis & Ratios

• Operating results are driven by bitcoin marks: operating loss FY2025 ($5.44bn) after a $5.40bn fair value loss; TTM Q3 2026 ($19.34bn) incl. a ($19.29bn) result on digital assets. Excluding the digital asset result, Q3 2026 operating income was ($2.6m) (computed).
• Net income TTM ($13.67bn); Q3 2026 net income $19.53bn after a $1.41bn tax provision; net income to common $19.12bn after $419.6m of preferred dividends and a $5.5m deemed contribution on STRC repurchases below carrying value.
• Cash flow: operating cash flow ($67.2m) in FY2025 and $9.9m in 1H 2026; bitcoin bought for $22.47bn in FY2025, recorded in investing activities. Q3 2026 and TTM cash flow are not available because the Q3 2026 Form 10-Q was not filed by 2 Nov 2026.
• Balance sheet at 30 Sep 2026: digital assets $70.82bn at fair value; cash and short term investments $5.91bn; debt $6.72bn, of which $1.05bn current as the 2028 notes carry a holder put on 15 Sep 2027; preferred stock in mezzanine equity $13.06bn (liquidation preference $14.11bn); deferred tax liabilities $1.40bn; stockholders' equity $55.44bn.
• Capital returns: no common dividend; a $1.0bn Class A repurchase program (29 Jun 2026) is unused; preferred dividends $381.4m in FY2025 and $1.05bn in 9M 2026; preferred repurchase authorization $3.0bn with $748.6m left on 1 Nov 2026.

Cost structure and profitability

• Software costs: gross margin 71.5% in Q3 2026 against 70.5%; FY2025 cost of revenue $149.4m, 31.3% of revenue, against $91.9m (18.0%) in FY2021 as cloud hosting replaced licences; R&D $93.9m (19.7%), sales and marketing $123.0m (25.8%), general and administrative $151.9m (31.8%).
• Operating result before bitcoin is near break even: operating income excluding the digital asset result ($2.6m) in Q3 2026 against about $0.0m in Q3 2025 (computed).
• Preferred dividends exceed software revenue: $419.6m in Q3 2026 against $125.4m of revenue; interest income of $47.1m against interest expense of $15.4m in Q3 2026 as cash balances rose.
• Taxes follow bitcoin marks: income tax benefit $1.68bn in FY2025; valuation allowances in Q1 and Q2 2026 kept Q2 2026 tax expense at $1.6m on an $8.2bn pretax loss; Q3 2026 tax provision $1.41bn on the gain.

6 MD&A & Management Commentary

Q3 2026 results release (8-K Ex 99.1 of 29 Oct 2026)

• Q3 2026 (29 Oct 2026): operating income $20.91bn incl. a $20.91bn gain on digital assets; net income $19.53bn and diluted EPS $44.75, against $2.79bn and $8.42 in Q3 2025. The release prices bitcoin at $81,200 on 23 Oct 2026, giving holdings a market value of $68.90bn against $64.02bn of cost.
• Bitcoin: 848,517 BTC on 25 Oct 2026, +26% year to date; $14.33bn of bitcoin bought and $431.8m sold in 2026 to fund preferred dividends and STRC buybacks; BTC Yield (3.7%) and BTC Gain (24,947) BTC year to date, both company measures.
• Capital: $21.23bn raised in 2026 to 25 Oct, incl. $5.41bn of at the market common stock sales in Q3 2026 and no preferred issuance in Q3; 20,980,508 STRC shares repurchased for about $2.04bn at an average $97.39; cumulative preferred dividends $1.48bn.
• Software: revenue $125.4m, (2.5%); subscription services $68.6m against $46.0m; gross margin 71.5% (release: 71%).
• Officers: CFO Andrew Kang leaves on 5 Nov 2026; CEO Phong Le acts as principal financial officer until Reza Virasteh becomes CFO on 1 Jan 2027; Shelley Khanna becomes Chief Accounting Officer on 6 Nov 2026.
• Q2 2026 (30 Jul 2026): operating loss ($8.33bn) incl. an ($8.32bn) loss on digital assets; net loss ($8.22bn), diluted EPS ($24.45); revenue $122.4m, +6.9%; convertible notes cut 18% to $6.7bn; first bitcoin sales to fund preferred dividends. The 8-K/A of the same day corrected the presentation of interest income (expense), net.
• No earnings call transcript was read for this report; management statements below come from the results releases filed as Exhibit 99.1.

Management and CFO commentary

• CFO Andrew Kang, Q3 2026 release (29 Oct 2026): Q3 operating income of $21bn the largest in company history; $21bn of equity raised and bitcoin holdings up 26% year to date; announced his departure after four and a half years as CFO.
• CFO, Q2 2026 release (30 Jul 2026): US dollar reserve of $3.75bn covers dividends and interest for more than 2.1 years; 18 months of consecutive dividend payments; BTC Hurdle ARR of 10.8% given as the current effective cost of credit.
• CFO, 2029 note repurchase release (26 May 2026): called the repurchase equity and credit positive; plans to rebuild the cash reserve through common stock sales and other sources.
• CFO, Q1 2026 release (5 May 2026): over $13.5bn of preferred equity outstanding; 23 consecutive distributions paid on time and in full, over $693m since early 2025; BTC Yield 9.4% in the first four months of 2026.
• CEO Phong Le and Executive Chairman Michael Saylor, Q3 2026 release: US dollar assets $5.1bn and 3.4 years of coverage; $2.0bn of STRC repurchased; daily dividends approved; Saylor puts Digital Credit at $16bn of notional with an 84% Strategy share and bitcoin 21% above its 200 week moving average.
• CEO, Q2 2026 release: holdings up 11% to 846,000 BTC in Q2; convertible notes down 18% to $6.7bn; objective of STRC trading at $99 to $100, with repurchases below $100.
• CEO, Q4 2025 release (5 Feb 2026): $25.3bn raised in 2025; 2026 focus on growing STRC to raise bitcoin per share.

7 Peer Valuation & Sector Summary

• Sector: bitcoin treasury companies and bitcoin backed preferred stock. Strategy held 849,327 BTC on 1 Nov 2026, about 4.0% of the 21 million maximum supply (computed). Saylor (Q3 2026 release) puts listed Digital Credit at $16bn of notional across ten securities, with 84% issued by Strategy.
• Like for like operating ratios do not fit: Strategy's TTM operating loss of ($19.34bn) is 39 times its software revenue; the comparable measures are bitcoin held, mNAV and preferred coverage. Coinbase is the only peer with a full row; its TTM revenue fell 26.6% and its operating margin was 3.6%.
• Holdings against peers: Strategy 849,327 BTC against Strive 43,124 (30 Oct 2026), MARA 35,577 (30 Jun 2026, (29%) year on year), Coinbase 17,954 held for investment (30 Sep 2026) and Riot 11,380 (30 Jun 2026).
• Valuation (computed): enterprise value incl. preferred stock $71.05bn against bitcoin NAV $66.04bn, mNAV 1.08x on 2 Nov 2026 and 1.12x on 30 Sep 2026; Strategy's Dec 2025 update stated 1.2x on 28 Nov 2025 on its own definition.

8 Material Events & Contracts

• 76 Forms 8-K from 3 Nov 2025 to 2 Nov 2026: about one a week on bitcoin purchases and sales, at the market sales and STRC buybacks; four results releases (one Form 8-K/A); monthly STRC rate notices; the STRE offering; the Omnibus Sales Agreement and its Mar 2026 expansion; the 2029 note repurchase; the capital framework; the annual meeting and the Oct 2026 special meeting; officer changes.
• Weekly filings over twelve months: 215,468 BTC bought for $17.39bn and 6,948 BTC sold for $431.8m; holdings rose from 640,808 to 849,327 BTC.
• Officer changes: Chief Accounting Officer Jeanine Montgomery retired on 30 Jun 2026; CFO Andrew Kang resigns effective 5 Nov 2026 and remains an adviser to 31 Dec 2026; Reza Virasteh becomes CFO on 1 Jan 2027.

9 Ownership, Voting Power & Annual Meeting

• Voting control: Class B shares carry ten votes each and are held mainly by Michael Saylor; on 30 Sep 2026 share counts Class B holds 32.8% of voting power with 4.7% of shares (computed).
• 2026 annual meeting (8 Jun 2026, virtual): all eight directors elected, Michael Saylor with 321.9m votes for and 16.8m withheld, Carl Rickertsen the lowest at 306.1m for and 32.6m withheld; KPMG ratified; say on pay approved with 327.7m for; the Jul 2025 STRK amendment ratified under DGCL Section 204 with 35.3m votes against; STRC semi monthly dividends approved by common and STRC holders.
• Special meeting (28 Oct 2026): daily dividend record dates for STRF, STRC, STRK and STRD approved with 381.4m votes for and 2.2m against.
• Insiders, Forms 4 of the last 12 months (70 filings): no large open market purchases of MSTR. Director Jarrod Patten exercised options at $18.236 and sold 450 to 1,950 shares at a time at $92 to $171, e.g. 2,800 shares on 8 and 9 Oct 2026 at $150.54 to $158. CEO Phong Le bought 11,000 STRC at an average $90.80 (about $1.0m) on 22 Jun 2026; General Counsel Thomas Chow bought 100 STRC and 11 STRK on 16 Jun 2026. Totals of insider buying and selling are not given as the Form 4 result set was truncated.

Annual meeting remarks

• No transcript or recording of management remarks at the 8 Jun 2026 meeting was found; the filings give only vote results (8-K Items 5.07 and 8.01).

10 Risk Factors

• Item 1A of the FY2025 Form 10-K holds 68 risk factors against 61 in FY2024 (32,896 words against 25,995); 7 of the 9 added factors sit in the preferred stock group. The Forms 10-Q for Q1 and Q2 2026 restate Item 1A in full; the Q3 2026 Form 10-Q was not filed by 2 Nov 2026.

How risk factors changed

• Comparison: 10-K FY2025 filed 19 Feb 2026 acc 0001050446-26-000020 against 10-K FY2024 filed 18 Feb 2025 acc 0000950170-25-021814.
• STRC is named in 14 risk factors in the FY2025 10-K against 0 a year earlier, when STRC had not been issued
• Preferred Stock appears in 18 risk factors against 1 a year earlier, with 7 of the 9 added factors in the preferred stock group
• US dollar reserve is named in 6 FY2025 risk factors; the reserve did not exist in the FY2024 10-K
• Total Item 1A length rose 27% from 25,995 to 32,896 words and factor count from 61 to 68
• Convertible Notes are named in 4 factors against 6, in line with debt falling to $6.7bn by May 2026

11 Stock Price, Scenarios & Sensitivity

• MSTR traded at $132.37 on 2 Nov 2026, 51.0% below the 52 week high of $270.36 and 61.8% above the low of $81.81; month end close $153.09 in Sep 2026 and $130.51 in Oct 2026.
• Valuation (computed): market value $56.06bn on 423.5m shares; enterprise value incl. preferred stock $71.05bn; bitcoin NAV $66.04bn at a spot price of $77,752; mNAV 1.08x; 1.01x book value. P/E is not meaningful after a TTM net loss of ($13.67bn).
• Scenario model: a revenue and P/E model does not describe Strategy, as software revenue is under 1% of bitcoin NAV. Value per share in FY2029 = (mNAV times bitcoin NAV less debt and preferred stock plus cash) divided by shares, with debt, preferred and cash held at Nov 2026 levels (net claims $14.99bn). Inputs are illustrative, not forecasts.

Critical factors and core assumptions

• Method: value per share in FY2029 = (bitcoin price times bitcoin held, which gives bitcoin NAV, times mNAV, less debt of $6.75bn and preferred stock of $13.15bn, plus US dollar reserve and cash of $4.92bn) divided by the share count of each case; debt, preferred stock and cash are held at their Nov 2026 levels (net claims $14.99bn). mNAV here is enterprise value to bitcoin NAV, computed for this report.
• Base: bitcoin NAV $66.04bn on 2 Nov 2026 (849,327 BTC at $77,752); net claims of $14.99bn (debt principal $6.75bn plus preferred notional $13.15bn less $4.92bn of US dollar reserve and cash) held constant; 423.5m shares today.
• Best case: bitcoin $200,000 (about 37% a year), 1,000,000 BTC held, mNAV 1.5x, 480m shares; premium to NAV returns and supports accretive common and STRC issuance.
• Base case: bitcoin $120,000 (about 16% a year), 900,000 BTC, mNAV 1.1x, 460m shares; holdings grow slowly as capital goes partly to dividends and buybacks.
• Worst case: bitcoin $50,000, below the average cost, 850,000 BTC, mNAV 0.8x, 430m shares; bitcoin sold to fund dividends and note puts.
• Common to all cases: preferred dividends stay cash paid at current rates (STRC 12.00%); software revenue stays near $0.5bn a year; no change to fair value accounting or tax treatment of unrealized gains; no common dividend.

Scenarios, three years forward

Sensitivity analysis

Disclaimer

This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 2 November 2026.

Sources

All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Management statements are taken from the results releases filed as Exhibit 99.1; no earnings call transcript was used. mNAV and the scenario values are computed for this report from filed figures and market prices.