01—Abstract
Summary
Summary of the 10-Q filed November 3, 2025. Cited figures are marked; the original filing is the authoritative source.
Strategy Inc (filed as Strategy Inc; previously MicroStrategy Incorporated) reported net income of $2.79 billiona for the three months ended September 30, 2025 and $8.59 billion for the nine months, driven almost entirely by a $3.89 billion and $12.03 billion unrealized gain on digital assets, respectively.
Operating results from the software business were modest: total revenues were $128.7 millionb for the quarter (up from $116.1 million) and $354.2 million for the nine months (up from $342.8 million), while product support revenue declined. Following adoption of ASU 2023-08 on January 1, 2025, bitcoin is carried at fair value, so the balance sheet shows digital assets of $73.21 billion against 640,031 bitcoins held at September 30, 2025, compared with $23.91 billion at year-end 2024. The balance sheet also shows substantial growth in capital structure.
Long-term debt, net, was $8.17 billionc, mezzanine equity (perpetual preferred stock: STRF, STRC, STRK and STRD) was $5.79 billion, and deferred tax liabilities rose to $6.95 billion, reflecting the tax effect of the bitcoin gain. The company raised $5.09 billion in net proceeds from capital markets activity in the third quarter, and dividends paid on preferred stock totaled $139.8 million for the quarter. The company reports that it no longer expects to be subject to the 15% CAMT due to unrealized bitcoin gains, following Treasury interim guidance issued September 30, 2025.
Investors should note that results are highly sensitive to bitcoin's market price, the company's preferred stock dividend obligations are recurring and cash-based, and its reliance on capital markets to fund both dividends and bitcoin purchases continues. S&P Global Ratings assigned a corporate credit rating of B- on October 27, 2025, after the period end, and the filing notes that a Delaware class action (Dodge) challenges the STRK amendment.
02—Key points
Key Highlights
- Net income of $2.79 billion for Q3 2025 (vs. net loss of $340.2 million in Q3 2024), primarily from a $3.89 billion unrealized gain on digital assets; nine-month net income was $8.59 billion.
- Digital assets carried at $73.21 billion at September 30, 2025, holding 640,031 bitcoins, up from $23.91 billion and 447,470 bitcoins at December 31, 2024.
- Total revenues were $128.7 million for Q3 2025 (up 10.9%) and $354.2 million for the nine months (up 3.4%), with subscription services growing while product support declined 16.2% in Q3.
- Long-term debt, net, of $8.17 billion, and mezzanine equity of $5.79 billion from four perpetual preferred stock series (STRF, STRC, STRK, STRD).
- Deferred tax liabilities of $6.95 billion, with a deferred tax liability of approximately $7.43 billion tied to the unrealized gain on bitcoin holdings.
- Net proceeds of $5.09 billion from capital markets activity in Q3 2025, including $2.47 billion from the STRC preferred IPO; preferred dividends paid totaled $139.8 million in the quarter.
- Subsequent events include purchases of about 1,137 bitcoins for $130.7 million from October 1 to October 30, 2025, and an increase in the STRC monthly dividend rate to 10.50% effective November 1, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 3, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $128.69M$116.07M | +10.9% |
| Cost of Revenue | $38.01M$34.35M | +10.7% |
| Gross Profit | $90.68M$81.72M | +11.0% |
| R&D Expenses | $22.60M$33.30M | −32.1% |
| Operating Expenses | -$3.80B$514.30M | −838.9% |
| Operating Income | $3.89B-$432.58M | +999.4% |
| Net Income | $2.79B-$340.17M | +918.7% |
| EPS (Basic) | $9.30$-1.72 | +640.7% |
| EPS (Diluted) | $8.42$-1.72 | +589.5% |
| Shares Outstanding (Basic) | 284.38M197.27M | +44.2% |
| Shares Outstanding (Diluted) | 315.39M197.27M | +59.9% |
05—Questions
Frequently Asked Questions
Why did the company report such a large net income when its software business is small?
Net income is driven mainly by the fair value accounting for bitcoin under ASU 2023-08, adopted January 1, 2025. The unrealized gain on digital assets was $3.89 billion for Q3 2025 and $12.03 billion for the nine months, which flows through operating income. Software revenues were $128.7 million for the quarter, so the gain is far larger than the operating business results.
How much bitcoin does the company hold and what is its market value?
At September 30, 2025, the company held approximately 640,031 bitcoins with a carrying value of $73.21 billion. As of October 30, 2025, it held approximately 641,167 bitcoins, all unencumbered, with an aggregate market value of $68.28 billion based on a price of $106,490 per bitcoin on Coinbase.
What are the company's preferred stock obligations?
The company has four outstanding series of perpetual preferred stock: STRF (10.00%), STRC (variable rate, increased to 10.25% and then to 10.50% for November 2025), STRK (8.00%, convertible into class A common stock), and STRD (10.00%). Dividends are cumulative for STRF, STRC and STRK and paid in cash, except that STRK may be paid in cash or class A common stock. Quarterly dividends paid in Q3 2025 totaled $139.8 million across the series.
What risks does the filing highlight for investors?
The filing highlights bitcoin price volatility, with bitcoin having traded below $60,000 and above $120,000 in the 12 months before September 30, 2025; reliance on capital markets to fund preferred dividends and interest; custody and private key risks; and deferred tax liabilities that could require additional valuation allowances if bitcoin declines. It also notes that S&P assigned a B- corporate credit rating on October 27, 2025, and that a Delaware class action challenges the STRK amendment.
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