Strategy Posts Record Net Income of $19.53 Billion in Third Quarter
Key Facts
Strategy reported net income of $19.53 billion and diluted earnings per share of $44.75 for the three months ended September 30, 2026, on October 29. The company said operating income reached $20.91 billion, including a gain of the same amount on its digital assets. A year earlier, net income was $2.79 billion and diluted earnings per share were $8.42, while operating income came to $3.89 billion. Net income attributable to common shareholders was $19.12 billion after accounting for $419.6 million in preferred stock dividends. The figures reflect the growing impact of revaluing bitcoin holdings on quarterly results, alongside a decline in business revenue.
By contrast, quarterly revenue fell 3% to $125.4 million from $128.7 million in the third quarter of 2025. Gross profit was $89.6 million, compared with $90.7 million a year earlier. But the gross margin rose to 71% from 70% in the comparable period. These figures point to a different trajectory from the jump in net income, as growth in the reported result remained tied to the digital asset gain included in operating income. Chief Financial Officer Andrew Kang described operating income, which the statement put at about $21 billion, as "the largest in Strategy's history."
The company said its holdings totaled about 848,517 bitcoin as of October 25, up 26% since the start of 2026. It put their original cost at $64.02 billion and their market value at $68.90 billion, with an average purchase cost of about $75,446 per coin. It estimated bitcoin purchases since the start of the year at about $14.33 billion. But the company's published internal performance measures showed BTC Yield down 3.7% year to date, with BTC Gain negative at 24,947 bitcoin and BTC $ Gain negative at $2.03 billion. Strategy said these metrics are limited in purpose and should not be understood as measures of financial performance, valuation or liquidity.
On liquidity, cash and cash equivalents totaled $2.50 billion on September 30, compared with $1.71 billion on June 30. Short-term investments rose to $3.40 billion from $736.1 million over the same comparison period. The company said it generated net proceeds of about $5.41 billion from at-the-market program sales during the quarter, then added $58.7 million between October 1 and 23. Its dollar-denominated assets also totaled $5.07 billion as of October 25, which it estimated would cover 3.4 years of preferred stock dividend and interest obligations. Kang cited these figures in the context of the company's financing, saying it had raised $21 billion in equity capital since the start of the year and increased its bitcoin holdings by 26%.
Strategy had estimated in an October 5 filing that the deferred tax expense related to the quarter would be about $1.88 billion. In the same filing, it estimated a tax benefit of about $4.12 billion from the reversal of a deferred tax asset and its related valuation allowance. In the second quarter, the company recorded an operating loss of $8.33 billion, including an unrealized loss of $8.32 billion on its digital assets. The shift from an unrealized valuation loss in the second quarter to a digital asset gain in the third quarter underscores the impact of changing holding values on Strategy's quarterly results. Across the market in the third quarter, the company said MSTR shares rose 76%, compared with a 43% increase in bitcoin's price.
In management and financing changes, Andrew Kang will leave his role as chief financial officer on November 5, but remain an adviser through December 31. Reza Verasteh will take over the role effective January 1, 2027. The company had announced that shareholders approved on October 28 the conversion of fixed preferred stock dividends to daily dividends. Daily dividends on STRC will begin on November 1, 2026, while they will begin on STRF, STRK and STRD on January 1, 2027. Chief Executive Officer Phong Le said the change allows dividends to accrue during holidays and weekends.