Earnings

Strategy's $19.53 Billion Quarterly Profit Includes A $4.60 Billion Tax Release, As Bitcoin Per Share Falls 11.9%

Strategy's 10-Q shows most common-stock proceeds went to dollar reserves and preferred buybacks, not bitcoin, in the third quarter.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Strategy's $19.53 Billion Quarterly Profit Includes A $4.60 Billion Tax Release, As Bitcoin Per Share Falls 11.9%

Strategy, which holds bitcoin as its main treasury asset and also sells AI-powered analytics software, reported $19.53 billion of third-quarter net income that includes a $4.60 billion tax valuation-allowance release. Its own yardstick for per-share bitcoin accretion fell 11.9% in the quarter, because most of the money it raised from common stock went to dollar assets and preferred-stock buybacks rather than bitcoin, according to a 10-Q filed Monday.

A tax release inside the record profit

The 10-Q says the bitcoin holdings' fair value rose back above their average cost basis during the quarter. That wiped out a deferred tax asset linked to earlier unrealized losses and freed the $4.60 billion allowance that had been booked in the first half of 2026 against U.S. federal and state deferred tax assets.

The prior quarter's filing had flagged this release as possible once bitcoin recovered above what the company paid. The company now records a $1.98 billion deferred tax liability on the unrealized gain, plus a $91.5 million deferred tax asset from capital losses on bitcoin sales.

The profit was driven by a $20.91 billion gain on digital assets, a non-cash item. Software revenue was $125.4 million, against $128.7 million a year earlier.

Bitcoin per share shrinks

Strategy's BTC Yield, the percentage change in bitcoin per diluted share, was negative 11.9% for the quarter and negative 3.7% for the nine months. A year earlier the figures were 6.2% and 25.9%.

The company cited three causes: more stock proceeds going to non-bitcoin uses, a bigger bitcoin balance at the start of the period, and share sales at thinner premiums to its underlying bitcoin. Assumed diluted shares rose to 451.6 million from 401.3 million at June 30.

Of $5.41 billion in total proceeds used in the quarter, only $588.1 million bought bitcoin, or 7,218 coins. The company also sold 5,552 bitcoin for $348.6 million, which funded $239.9 million of preferred dividends and $108.6 million of STRC repurchases.

Defending the preferred stock

STRC, a variable-rate preferred stock, traded as low as about $71 in June, the filing says. Strategy repurchased 13,930,173 shares for $1.34 billion in the quarter, at average prices that rose from $87.88 in July to $98.21 in September.

From October 1 to October 25 it bought another 7,050,335 shares for $700.9 million. The board raised the preferred repurchase authorization from $1.0 billion to $2.0 billion in September and $3.0 billion in October.

Dollar assets stood at $5.80 billion on September 30, made up of a $4.88 billion reserve and $0.92 billion of separate cash. By October 25 the reserve was $4.83 billion and the cash $0.24 billion. Strategy held about 847,666 bitcoin at quarter-end and about 848,517 on October 25.

Daily dividends begin

Stockholders approved daily dividend payments on four preferred series at an October 28 special meeting. The first daily record date for STRC was November 1, and the filing expects STRF, STRK and STRD to follow on January 1, 2027.

The company hopes daily payouts keep STRC near its $100 stated amount, yet it concedes it must have cash ready every business day and can promise neither stronger demand nor a firmer price.

The filing's stated aim is for STRC to trade near its $100 stated amount as daily dividends start; the company sets that against a $1.51 billion annual dividend and interest bill as of October 25.

Sources

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