01—Abstract
Summary
Summary of the 10-Q filed August 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Strategy Inc (formerly MicroStrategy Incorporated, filed as MicroStrategy Incorporated) reported its 10-Q for the quarter ended June 30, 2025.
The company's results were dominated by fair-value accounting for its bitcoin holdings following its January 1, 2025 adoption of ASU 2023-08. Net income for the three months ended June 30, 2025 was $10.02 billiona, driven by a $14.05 billion unrealized gain on digital assets, while the six-month net income was $5.80 billion after an $8.14 billion unrealized gain for the period. Total revenues were $114.5 million for the quarter, down from $111.4 million a year earlier on a pure-revenue basis only modestly higher, with product licenses and product support revenues declining while subscription services grew 69.5% year over year.
Digital assets rose to a carrying value of $64.36 billionb, representing approximately 597,325 bitcoins held at June 30, 2025. The balance sheet shifted substantially toward bitcoin and capital raised through securities issuance. Long-term debt, net, increased to $8.16 billion, including the new 2030B Convertible Notes issued in February 2025, and total mezzanine equity from three perpetual preferred series (STRK, STRF, STRD) reached $2.89 billion.
Deferred tax liabilities rose to $5.87 billionc, primarily tied to the unrealized bitcoin gain. Operating cash flow was negative $37.3 million for the six months, while investing outflows of $14.46 billion were funded largely by $14.50 billion of net financing inflows, including $9.66 billion from common stock public offerings and $2.95 billion from preferred stock offerings.
The filing also flags material risks for investors: potential exposure to the corporate alternative minimum tax beginning in 2026 if current rules are not amended, pending shareholder class and derivative lawsuits relating to the ASU 2023-08 impact and a Delaware action concerning the STRK amendment, and the company's statement that its enterprise analytics software business did not generate positive operating cash flow in the quarter. Subsequent to quarter end, the company disclosed purchases of approximately 31,466 bitcoins for $3.68 billiond in July 2025 and a new STRC preferred stock offering that raised approximately $2.47 billion net.
02—Key points
Key Highlights
- Net income of $10.02 billion for Q2 2025 versus a net loss of $102.6 million in Q2 2024, primarily reflecting a $14.05 billion unrealized gain on digital assets under ASU 2023-08.
- Total revenues of $114.5 million for Q2 2025 versus $111.4 million in Q2 2024; subscription services revenue rose to $40.8 million from $24.1 million, while product support revenue fell to $52.1 million from $61.7 million.
- Digital asset carrying value reached $64.36 billion at June 30, 2025, holding approximately 597,325 bitcoins, compared with $23.91 billion and 447,470 bitcoins at December 31, 2024.
- Long-term debt, net, totaled $8.16 billion at June 30, 2025, including the 2030B Convertible Notes issued in February 2025 ($2.00 billion principal) and the 2029 and 2028 Convertible Notes.
- Financing inflows of $14.50 billion in the first six months of 2025 included $9.66 billion of common stock offering proceeds and $2.95 billion of preferred stock proceeds, funding $14.43 billion of bitcoin purchases.
- Deferred tax liabilities increased to $5.87 billion, and the company expects to become subject to the corporate alternative minimum tax in 2026 and beyond absent legislative or regulatory relief.
- Subsequent events include July 2025 bitcoin purchases of approximately 31,466 bitcoins for $3.68 billion and the July 29, 2025 public offering of 28,011,111 STRC preferred shares generating approximately $2.47 billion of net proceeds.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed August 5, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $114.49M$111.44M | +2.7% |
| Cost of Revenue | $35.75M$30.93M | +15.6% |
| Gross Profit | $78.74M$80.51M | −2.2% |
| R&D Expenses | $24.07M$30.31M | −20.6% |
| Operating Expenses | -$13.95B$280.78M | −5069.4% |
| Operating Income | $14.03B-$200.27M | +7106.4% |
| Net Income | $10.02B-$102.56M | +9870.8% |
| EPS (Basic) | $36.23$-0.57 | +6456.1% |
| EPS (Diluted) | $32.60$-0.57 | +5819.3% |
| Shares Outstanding (Basic) | 275.24M178.61M | +54.1% |
| Shares Outstanding (Diluted) | 306.76M178.61M | +71.8% |
05—Questions
Frequently Asked Questions
How did the bitcoin accounting change affect reported earnings this quarter?
Following the adoption of ASU 2023-08 on January 1, 2025, bitcoin is measured at fair value each period, with changes recognized in the income statement. For Q2 2025 the company recorded a $14.05 billion unrealized gain on digital assets, which drove net income of $10.02 billion. Prior periods were not restated, so the filing states that 2025 results are not directly comparable to 2024.
What was the company's operating performance excluding bitcoin fair value changes?
Excluding the unrealized gain, the company's operating expenses are presented in the filing as sales and marketing of $33.7 million, research and development of $24.1 million, and general and administrative expenses of $36.5 million for Q2 2025. The filing states that the enterprise analytics software business did not generate positive cash flow from operations in the quarter.
What are the main risks tied to the company's debt and preferred dividend obligations?
As of July 31, 2025, the filing reports $8.24 billion of outstanding indebtedness and $6.3 billion of aggregate notional preferred stock, with annual regular dividends of $568.03 million, including the STRC dividend assuming a 9.00% rate. The company states it expects to fund these obligations primarily through equity and debt financings and may need to sell bitcoin if financing is unavailable.
What is the potential tax exposure from holding bitcoin?
The company recorded deferred tax liabilities of approximately $6.31 billion related to unrealized bitcoin gains as of June 30, 2025. The filing states it expects to become subject to the 15% corporate alternative minimum tax beginning in 2026 under current rules, which could create a material cash tax obligation unless the IRA is amended or proposed regulations are revised.
What legal proceedings are pending against the company?
The filing describes a securities class action filed May 16, 2025 (Hamza), two shareholder derivative actions (Parmar and Chen), and a Delaware class action filed July 21, 2025 (Dodge) alleging the STRK amendment required a stockholder vote. The company states it intends to vigorously defend these matters and cannot predict the outcome or estimate a range of loss.
06—Continue