01—Abstract
Summary
Summary of the 10-Q filed May 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Strategy Inc reported a net loss of $12.54 billiona for the quarter ended March 31, 2026, compared with a net loss of $4.22 billion a year earlier.
The loss was driven almost entirely by an unrealized loss on digital assets of $14.46 billionb, partly offset by a $1.92 billion income tax benefit. Revenues rose to $124.3 million from $111.1 million, with subscription services up to $58.9 million from $37.1 million while product support declined. Bitcoin holdings grew to 762,099 bitcoins at March 31, 2026 (cost basis $57.69 billion, fair value $51.65 billion), and as of April 26, 2026 the company held approximately 818,334 bitcoins with an aggregate market value of $64.04 billion.
Funding came mainly from equity. The company raised $7.36 billionc net through at-the-market offerings, including $5.29 billion from class A common stock and $2.06 billion from STRC Stock, and used it to buy $7.25 billion of bitcoin. Preferred dividends paid rose to $229.5 million, and dividends on preferred stock were $229.5 million for the quarter.
Total debt principal was about $8.25 billiond, and cash and cash equivalents were $2.21 billion, of which $2.14 billion was held in the USD Reserve. The filing states the software business is not expected to generate enough cash to cover liquidity needs, so the company relies on the USD Reserve, bitcoin sales, equity and debt financing.
The filing also records a deferred tax valuation allowance of $2.23 billion on domestic net deferred tax assets, and it discloses that the company may sell bitcoin if other liquidity sources are insufficient. Stockholders' equity declined to $36.65 billion from $44.12 billion, and the preferred stock in mezzanine equity increased to $8.98 billion.
02—Key points
Key Highlights
- Net loss of $12.54 billion, or $(38.25) per common share, versus a net loss of $4.22 billion in the prior-year quarter, driven by a $14.46 billion unrealized loss on digital assets.
- Total revenues of $124.3 million, up 11.9% from $111.1 million, led by subscription services revenue of $58.9 million (up from $37.1 million); product support revenue fell to $44.2 million from $52.5 million.
- Bitcoin holdings rose to 762,099 bitcoins at March 31, 2026 (fair value $51.65 billion versus cost basis $57.69 billion), and reached approximately 818,334 bitcoins by April 26, 2026 (market value $64.04 billion at $78,258 per bitcoin).
- Acquired 89,599 bitcoins during the quarter for $7.25 billion, funded mainly by $5.29 billion of class A common stock ATM proceeds and $2.06 billion of STRC Stock ATM proceeds.
- Recorded a $1.92 billion income tax benefit, including a $2.23 billion valuation allowance against domestic net deferred tax assets, reflecting the company's estimate that these assets more likely than not will not be realized.
- Preferred stock in mezzanine equity grew to $8.98 billion, with $229.5 million of cash preferred dividends paid in the quarter; total debt principal was about $8.25 billion, and the USD Reserve held $2.14 billion at March 31, 2026.
- Stockholders' equity fell to $36.65 billion from $44.12 billion, and the filing states the software business is not expected to generate sufficient cash to meet liquidity needs over the next twelve months.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed May 6, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $125.43M$128.69M | −2.5% |
| Cost of Revenue | $35.79M$38.01M | −5.8% |
| Gross Profit | $89.63M$90.68M | −1.2% |
| R&D Expenses | $24.06M$22.60M | +6.5% |
| Operating Expenses | -$20.82B-$3.80B | −447.9% |
| Operating Income | $20.91B$3.89B | +437.4% |
| Net Income | $19.53B$2.79B | +601.4% |
| EPS (Basic) | $47.78$9.30 | +413.8% |
| EPS (Diluted) | $44.75$8.42 | +431.5% |
| Shares Outstanding (Basic) | 400.15M284.38M | +40.7% |
| Shares Outstanding (Diluted) | 428.05M315.39M | +35.7% |
05—Questions
Frequently Asked Questions
Why was the net loss so large this quarter?
The loss was primarily due to an unrealized loss on digital assets of $14.46 billion, reflecting a decline in bitcoin's fair value to $67,773 per bitcoin at March 31, 2026 from $87,515 at December 31, 2025. This was partly offset by a $1.92 billion income tax benefit.
How is the company funding its bitcoin purchases and obligations?
During the quarter it raised $7.36 billion net through at-the-market offerings of class A common stock and preferred stock, primarily STRC Stock, and used the proceeds to buy bitcoin and pay preferred dividends. The filing states it expects to meet liquidity needs through the USD Reserve, bitcoin sales, and additional equity or debt financings.
What are the main risks to bitcoin-related earnings and liquidity?
The filing notes that bitcoin is highly volatile and that changes in its fair value materially affect results under ASU 2023-08. It also states the company may sell bitcoin for liquidity if the USD Reserve is depleted and financing is unavailable, and that such sales could occur below cost basis.
What changed in the tax position?
The company reversed a $2.42 billion deferred tax liability on unrealized bitcoin gains, recorded a $1.73 billion deferred tax asset for unrealized bitcoin losses, and established a $2.23 billion valuation allowance against domestic net deferred tax assets that it does not expect to realize.
06—Continue