Strategy reports $20.91 billion operating income as bitcoin's rebound lifts holdings

Strategy, the software company turned bitcoin holder, reported $20.91 billion of operating income for the third quarter on Thursday, a figure that says far more about the price of bitcoin than about the business. Revenue from its software arm was $125.4 million, down 3% from a year earlier. Net income was $19.53 billion, or $44.75 a diluted share, against $2.79 billion a year earlier, according to its earnings release filed with the SEC at 4:03 p.m. ET.

For an investor, the point is simple: Strategy's earnings now rise and fall with bitcoin, and through the first nine months of 2026 the company is still in the red, with a net loss of $1.23 billion.

How the profit got there

Strategy records its bitcoin at fair value, which means it books a gain or loss each quarter as the market price of the coins it holds moves. In the third quarter that line, "gain (loss) on digital assets," was $20.91 billion. Operating income was $20.91 billion, about $2.6 million below the gain itself, because the software business and corporate costs roughly netted out. None of the gain is cash; the company would have to sell bitcoin to realize it.

The carrying value of its holdings rose to $70.82 billion at Sept. 30 from $49.67 billion at June 30, while the number of coins barely moved: about 847,666 bitcoin at quarter end, against 846,000 three months earlier (Figure 2). Its average cost was $75,437 a coin, for a total of $63.95 billion.

The release contains no non-GAAP measures; every figure here is GAAP and unaudited. Strategy has not yet filed its quarterly 10-Q.

What it bought, and sold

Strategy bought 7,218 bitcoin in the quarter for $588.1 million. It also sold 5,552 bitcoin with a cost of $582.4 million, the release shows, using the proceeds to fund $239.9 million of preferred dividends and $108.6 million of repurchases of its STRC preferred stock. It raised $5.41 billion, net, by selling common shares into the market during the quarter.

As of Oct. 25 it held about 848,517 bitcoin, valued at $68.90 billion at the Oct. 23 price of $81,200, the company said.

The CFO is leaving

Andrew Kang, executive vice president and chief financial officer, told the company he will resign effective Nov. 5, 2026. The 8-K says his "decision to resign is due to personal reasons and not the result of any disagreement" with the company. Phong Le will serve as principal financial officer from Nov. 6 through Dec. 31, and Shelley Khanna becomes chief accounting officer from Nov. 6, according to the filing. Effective Jan. 1, 2027, Reza Virasteh, the company's current Executive Vice President of Operations, "will assume the role of Executive Vice President & Chief Financial Officer and will serve as co-principal financial officer," along with Le, the 8-K says.

The objection

A $20.91 billion profit on $125.4 million of revenue invites the obvious reply: this is not earnings in any ordinary sense. The same accounting that produced it produced a $1.86 billion loss on digital assets over nine months, and the next quarter's number depends on where bitcoin closes on Dec. 31. The sale of 5,552 coins to help pay preferred dividends also cuts against the company's long-standing image as a holder that only buys.

The tell (Le Coin's view)

The quarter's most telling line is not the headline profit but the coin sales to service preferred stock. Strategy's preferred dividends are a recurring cash obligation that does not move with bitcoin; when bitcoin falls, they have to be paid anyway. Watch whether coin sales recur in the fourth quarter.

The vote

Shareholders at a special meeting on Oct. 28 approved amending the terms of all four of Strategy's preferred stocks to "permit daily dividends," according to the proxy and the 8-K's Item 5.07 results. Proposal 1 passed with 381,373,199 votes for, 2,236,551 against and 444,753 abstaining. A backup proposal to adjourn the meeting if needed passed 376,177,572 for, 7,249,982 against and 626,949 abstaining; no adjournment was required.

What changed: the amended certificate for STRC, a variable-rate preferred stock, becomes effective at 12:01 a.m. ET Nov. 1, 2026, and the amended certificates for STRF, STRK and STRD become effective at 12:01 a.m. ET Jan. 1, 2027, the filing says. Once the STRC certificate is effective, STRC will pay daily dividends with record dates on each calendar day from Nov. 1 through Nov. 30, 2026, each paid on the next business day, according to the filing. Upon the STRC certificate's effectiveness, the semi-monthly STRC dividend scheduled for Nov. 15 "will not be payable," the filing says.

Sources

1. Strategy Inc, Form 8-K (Items 2.02, 5.02, 7.01, 9.01), AccNo 0001050446-26-000047, Oct. 29, 2026, https://www.sec.gov/Archives/edgar/data/1050446/000105044626000047/mstr-20261026.htm
2. Strategy Inc, Ex. 99.1, "Strategy Announces Third Quarter Financial Results," Oct. 29, 2026, https://www.sec.gov/Archives/edgar/data/1050446/000105044626000047/mstr-20261029x8kxex9912.htm
3. Strategy Inc, Form 8-K (Items 3.03, 5.03, 5.07, 7.01, 8.01, 9.01), AccNo 0001193125-26-437776, Oct. 29, 2026, https://www.sec.gov/Archives/edgar/data/1050446/000119312526437776/mstr-20261028.htm
4. Strategy Inc, DEF 14A, AccNo 0001193125-26-413159, Oct. 5, 2026, https://www.sec.gov/Archives/edgar/data/1050446/000119312526413159/d503578ddef14a.htm

Holding the Corner.

Not financial advice.