Strategy Inc (MSTR): Results of Operations and Financial Condition
Strategy Inc (MSTR) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Contact: Strategy CJ (Chaitanya Jain) Head of Investor Relations ir@strategy.com Strategy Announces Second Quarter Financial Results; Currently Holds 843,775 Bitcoin; Now the Largest Institutional Holder Globally Digital Capital Highlights (as of July 26, 2026) ▪ 843
How this was made
The 30-second read
Why it matters
Traders can update positioning around MSTR’s bitcoin exposure, USD reserve coverage for preferred dividends and interest, and capital structure changes (convertible debt reduction). The reported net loss is heavily influenced by unrealized digital-asset valuation, so the market may reprice quickly with BTC moves.
Market read
Primary disclosure of updated BTC holdings, USD reserve coverage, and capital structure actions, plus Q2 loss metrics dominated by unrealized digital-asset moves.
What to watch
ATM proceeds and the STRC repurchase framework could be interpreted as liquidity management rather than value creation, and the objective to return STRC to $99-$100 may not be credible if BTC volatility persists.
Strategy Announces Second Quarter Financial Results; Currently Holds 843,775 Bitcoin; Now the Largest Institutional Holder Globally
Total revenues increased 6.9% year-over-year and gross profit increased, but the company reported an $8.33 billion operating loss and an $8.22 billion net loss following an $8.32 billion unrealized loss on digital assets.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | $122.4 million | – | 6.9% increase year-over-year |
| Gross profitGAAP | $81.6 million | – | – |
| Gross marginGAAP | 66.6% | – | – |
| Operating lossGAAP | $8.33 billion | – | – |
| Unrealized loss on the Company’s digital assetsGAAP | $8.32 billion | – | – |
| Net lossGAAP | $8.22 billion | – | – |
| Net loss per common share on a diluted basisGAAP | $24.45 per common share | – | – |
| Net loss attributable to common stockholdersGAAP | $8.62 billion | – | – |
| Dividends on preferred stockGAAP | $400.7 million | – | – |
| Cash and cash equivalentsGAAP | $1.71 billion | – | – |
| Short-term investmentsGAAP | $736.1 million | – | – |
| Bitcoin holdingsother | approximately 843,775 bitcoins | – | 25% growth year to date 2026 |
| Digital assets original cost basisother | $63.69 billion | – | – |
| Digital assets market valueother | $54.77 billion | – | – |
| Average cost per bitcoinother | approximately $75,476 | – | – |
| Market price per bitcoinother | approximately $64,915 | – | – |
| BTC Yieldother | 4.5% | – | – |
| BTC Gainother | 29,997 | – | – |
| BTC $ Gainother | $1.95 billion | – | – |
| BTC Hurdle ARRother | 10.8% | – | – |
| USD Reserveother | $3.75 billion | – | – |
Capital returns
- $1.0 billion MSTR repurchase program established; no repurchases to date.
- From July 20 through July 26, 2026, the Company repurchased 288,930 shares of STRC ($28.89 million aggregate notional) for approximately $25.00 million at an average price of $86.53 per share, an approximate 13.47% discount to the $100 per share stated amount.
- Approximately $975.00 million remains available under the $1.0 Billion Digital Credit Securities Repurchase Program.
- In May 2026, the Company repurchased $1.50 billion aggregate principal amount of its 0% Convertible Senior Notes due 2029 in negotiated transactions for approximately $1.38 billion in cash, an approximate 8% discount to par.
- The Company has sold approximately $218.4 million of bitcoin year to date 2026 to fund a portion of its preferred stock dividends.
- STRC issuances raised $7.53 billion year to date 2026.
- $1.06 billion in cumulative dividends paid on all preferred stock to date.
- Increased the dividend rate to 12.00% to support STRC trading near its $100 per share stated amount, and will maintain the 12.00% rate until STRC demonstrates sustained, healthy trading near $100 per share.
What drove it
- Total revenues for the second quarter of 2026 were $122.4 million, compared to total revenues of $114.5 million for the second quarter of 2025, a 6.9% increase year-over-year.
- Operating loss for the second quarter of 2026 includes an unrealized loss on the Company’s digital assets of $8.32 billion, compared to an unrealized gain on the Company’s digital assets of $14.05 billion for the second quarter of 2025.
- The company reported 4.5% BTC Yield, 29,997 BTC Gain, and $1.95 billion BTC $ Gain in 2026 YTD.
- The Company has board authorization to sell bitcoin to fund the USD Reserve, preferred stock dividends and interest expense, and repurchases of MSTR or Digital Credit Securities.
Concerns
- The $8.33 billion operating loss was driven by an $8.32 billion unrealized loss on digital assets.
- Gross margin was 66.6%, compared to a gross margin of 68.8% for the second quarter of 2025.
- Cash and cash equivalents were $1.71 billion as of June 30, 2026, compared to $2.21 billion as of March 31, 2026.
- The market value of the Company’s digital assets was $54.77 billion, while their original cost basis was $63.69 billion as of July 26, 2026.
- Net loss attributable to common stockholders reflected $400.7 million of dividends on preferred stock.
What to watch
- STRC trading relative to its $100 per share stated amount and the execution of regular and disciplined STRC repurchases while it trades below $100 per share.
- The 12.00% STRC dividend rate, which the Company said it will maintain until STRC demonstrates sustained, healthy trading near $100 per share.
- The use of the USD Reserve, which was $3.75 billion and represented approximately 2.1 years of coverage reserved for preferred-stock dividend payments and interest on outstanding indebtedness.
- Further ATM issuance following $8.41 billion of aggregate gross proceeds during the three months ended June 30, 2026 and $1.28 billion between July 1, 2026 and July 26, 2026.
- Bitcoin sales under the BTC Monetization Program after approximately $218.4 million of bitcoin sales year to date 2026.
Balance sheet and cash flow
- As of June 30, 2026, the Company had cash and cash equivalents of $1.71 billion, as compared to $2.21 billion as of March 31, 2026.
- As of June 30, 2026, the company had short term investments of $736.1 million; there were no short-term investments as of March 31, 2026.
- The Company reduced its aggregate principal amount of convertible notes outstanding from $8.21 billion to $6.71 billion.
- The Company has grown the USD Reserve to $3.75 billion, representing approximately 2.1 years of coverage reserved for preferred-stock dividend payments and interest on outstanding indebtedness.
- The Company received aggregate gross proceeds of approximately $8.41 billion during the three months ended June 30, 2026, and additional aggregate gross proceeds of approximately $1.28 billion between July 1, 2026 and July 26, 2026, from its ATM program.
- MSTR ATM sales generated $2,946.7 million of aggregate gross proceeds in Q2 FY 2026 and $1,276.0 million in Q3 FY 2026 QTD.
- STRC ATM sales generated $5,465.0 million of aggregate gross proceeds in Q2 FY 2026.
Analysis
Strategy reported $122.4 million of total revenues for the second quarter of 2026, up 6.9% year-over-year from $114.5 million. Gross profit increased to $81.6 million from $78.7 million, while gross margin declined to 66.6% from 68.8%. The filing does not provide segment revenue or a detailed explanation of the revenue increase or margin movement in the supplied text.
Reported earnings were dominated by digital-asset fair-value movement. The company recorded an $8.33 billion operating loss, including an $8.32 billion unrealized loss on digital assets, compared with $14.03 billion of operating income and a $14.05 billion unrealized gain on digital assets in the second quarter of 2025. Net loss was $8.22 billion, or $24.45 per common share on a diluted basis, versus net income of $10.02 billion, or $32.60 per common share on a diluted basis, in the prior-year period.
The bitcoin treasury remained central to the company’s financial position and capital strategy. As of July 26, 2026, digital assets comprised approximately 843,775 bitcoins, with an original cost basis of $63.69 billion and market value of $54.77 billion. The company reported 4.5% BTC Yield, 29,997 BTC Gain, and $1.95 billion BTC $ Gain in 2026 YTD, with the BTC $ Gain based on the July 27, 2026 bitcoin market price of $64,915.
Capital formation was substantial. The company received approximately $8.41 billion of aggregate gross proceeds through its ATM program during the three months ended June 30, 2026, including $2,946.7 million from MSTR and $5,465.0 million from STRC. It also reported additional aggregate ATM gross proceeds of approximately $1.28 billion between July 1, 2026 and July 26, 2026. In May 2026, Strategy repurchased $1.50 billion aggregate principal amount of its 0% Convertible Senior Notes due 2029 for approximately $1.38 billion in cash, reducing aggregate principal amount outstanding from $8.21 billion to $6.71 billion.
Liquidity and preferred-security management are key areas of focus. Cash and cash equivalents were $1.71 billion as of June 30, 2026, down from $2.21 billion as of March 31, 2026, while short-term investments were $736.1 million. The company said its USD Reserve had grown to $3.75 billion, representing approximately 2.1 years of coverage for preferred-stock dividends and interest. It repurchased STRC at a discount to stated amount, had approximately $975.00 million remaining under its Digital Credit Securities Repurchase Program, and had made no repurchases under its $1.0 billion MSTR repurchase program.
Management, verbatim
In the second quarter of 2026, Strategy strengthened its balance sheet while navigating a meaningful bitcoin price decline. We grew our bitcoin holdings by 11% to 846,000 bitcoin, reduced our convertible debt by 18% to $6.7 billion, increased our USD Reserve by 12% to $2.4 billion, and grew Bitcoin Per Share by 5%.
Phong Le, President and Chief Executive Officer
Strategy's USD Reserve currently stands at $3.75 billion, which is enough to cover our existing preferred dividend payments and interest obligations for more than 2.1 years. We've also built a track record of 18 months of consecutive dividend payments, having never missed a dividend despite the recent deep drawdown in bitcoin price.
Andrew Kang, Chief Financial Officer
In the midst of this phase of muted bitcoin sentiment and market skepticism, we continue to evolve our business model and establish Digital Credit as a new asset class.
Michael Saylor, Founder and Executive Chairman
Not in the filing
stated, not guessed- Segment revenue, segment year-over-year changes, segment sequential changes, and segment drivers
- Non-GAAP revenue, gross profit, operating income, net income, EPS, and reconciliations
- Operating cash flow
- Free cash flow
- Revenue, gross-margin, operating-expense, tax-rate, EPS, or other financial outlook guidance
- Prior-quarter total revenue, gross profit, gross margin, operating loss, net loss, and EPS
- Prior-year cash and cash equivalents and short-term investments
- A full income statement, balance sheet, cash flow statement, and detailed software-business operating metrics in the supplied filing text
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC Form 8-K (Item 2.02) with Q2 2026 financial results and treasury/capital-markets updates for Strategy Inc.
Ticker impact
Strategy reports Q2 results and balance-sheet actions, including bitcoin holdings of ~846,000 BTC and a reduced convertible debt balance to $6.7B.
Moderate two-way reaction risk, with upside if investors focus on reserve coverage and disciplined repurchase framework, and downside if they focus on the large unrealized digital-asset loss driving net loss.
The filing contains multiple concrete datapoints (BTC holdings, USD reserve, debt reduction, repurchase framework, and reported net loss driven by unrealized digital-asset moves). However, it does not provide new forward guidance beyond the stated STRC trading objective and repurchase intent, so follow-through may depend on BTC price direction.
Market effects
Reinforces the bitcoin treasury model narrative, highlighting reserve coverage and structured repurchase intent as key investor focus areas for BTC-linked equities.
Limited direct regional spillover beyond US-listed crypto-treasury peers.
Global relevance mainly through BTC price sensitivity and how treasury holders manage debt and liquidity during drawdowns.
Counterpoint
The headline balance-sheet improvements may be less important than the reported $8.32B unrealized digital-asset loss, implying equity performance remains dominated by BTC mark-to-market.
Key entities
- issuerStrategy Inc
Reports Q2 2026 operating and net loss, bitcoin holdings, USD reserve, ATM proceeds, and convertible note repurchases.
- equity instrumentSTRC
Preferred/stock dividend and repurchase framework referenced, including a stated objective for STRC trading near $99-$100.
- debt instrument0% Convertible Senior Notes due 2029
Company repurchased $1.50B principal for about $1.38B cash, reducing outstanding principal to $6.71B.
