Strategy Inc Common Stock Class A 2026 Q3 Earnings Call

Good afternoon, everyone, and thank you for joining us for Strategy's third quarter 2026 earnings webinar. I'm CJ, Head of Investor Relations at Strategy. Joining us today are Andrew Kang, Chief Financial Officer, Phong Le, President and Chief Executive Officer, and Michael Saylor, Founder and Executive Chairman. Thank you for joining us for Strategy's third quarter 2026. We'll begin with approximately 60 minutes of prepared remarks, starting with Andrew, followed by Phong and Michael. We'll then move to a 30-minute live Q&A. Before we begin, I'll briefly cover our safe harbor statement. Some of the information we provide in this presentation regarding our future expectations, plans, and prospects may constitute forward-looking statements.

Actual results may differ materially from these forward-looking statements due to various important factors, including fluctuations in the price of Bitcoin and the risk factors discussed under the caption "Risk Factors" in Strategy's quarterly report on Form 10-Q filed with the SEC on August 3rd, 2026, and the risks described in other filings that Strategy may make with the SEC. Except as required by law, we assume no obligation to update these forward-looking statements, which speak only as of today. With that, I will turn the call over to Andrew Kang, CFO of Strategy.

Thank you, CJ. Q3 was an exceptionally strong quarter across all parts of our business. We now hold 848,517 Bitcoin and recorded a record $21 billion fair value gain on our Bitcoin holdings in Q3. MSTR share price increased 76% during the quarter, and our market cap rose to $62 billion as of October 23rd. STRC's one-month volume-weighted average price was $99.27 as of the closing markets on October 23rd. As we speak today, we are just one penny away from par. Our combined Bitcoin and dollar reserves represent 49 years of interest and dividend coverage, strengthening the credit quality of our digital credit platform. Q3 marked our 25th consecutive quarter, more than six years, of building a consistent and ongoing track record of adding more Bitcoin to our balance sheet.

Since Q3 of 2020, our holdings have grown from approximately 38,000 Bitcoin to the 848,517 Bitcoin, accounting for 4% of all Bitcoin that will ever exist. Strategy remains the largest institutional holder of Bitcoin in the world. Our Bitcoin holdings exceed that of IBIT, that of the largest nation states, other ETFs, and all other major DeFi institutions. We aim to actively manage our holdings, along with our cash reserves, to benefit both our long-term common stock shareholders and our digital credit investors. The sheer scale of our reserves gives us a market-leading advantage to actively manage our strategy and goals through both bull and bear market cycles. Our treasury assets have grown from approximately $54 billion at the end of Q1 this year to $74 billion in this comparison.

That makes Strategy the seventh-largest treasury among S&P 500 companies when we include all cash and Bitcoin on our balance sheet. As you know, the number 21 has a great deal of significance for us. We all know that there will only ever be 21 million Bitcoin in existence. In this last quarter, we recorded an approximately $21 billion in fair value gain on our digital assets in the third quarter. We started Q3 with about 846,000 Bitcoin valued at approximately $50 billion. During the quarter, Bitcoin's price increased from approximately $58,700 to close around $83,600, adding $21 billion in value. We also added a net 1,666 Bitcoin during the quarter. As a result of the recent rally in Bitcoin price, at the end of Q3, we recorded a $20.9 billion fair value gain on digital assets, and ended September with over 847,600 Bitcoin worth approximately $71 billion.

For the third quarter, we reported a record $20.9 billion of operating income, $19.1 billion of net income, and $44.75 in diluted earnings per share. This was the highest operating and net income for any quarter in the history of the company. This milestone achievement for the company highlights the resilience and strength of our capital base and balance sheet, which allows us to weather the storm through bear markets, but also readies us for exponential growth in bull markets. Bitcoin per share has grown from approximately 56,600 sats at the end of 2020 to over 187,700 sats as of October 23rd, reflecting a CAGR of approximately 23% over that same period.

Year to date, Bitcoin per share is 3.7% lower as we effectively deployed and managed through our capital management framework with a focus on strengthening the underlying credit of our capital structure. As we enter the next stage of Bitcoin price appreciation, we will be further positioned with a stronger capital base and a more robust reserves to amplify BTC yield in the long term. We raised approximately $5.4 billion of total capital during Q3, bringing the total year to date capital raise to $21.2 billion. We raised $22.6 billion of capital in 2024 and $25.3 billion in 2025, importantly reflecting our effective and impactful access to the capital markets in both rising and falling Bitcoin cycles. During Q3, digital assets increased from $49.7 billion to $70.8 billion, reflecting Bitcoin price appreciation and the net addition of Bitcoin during the quarter.

Cash and short-term investments increased to just under $5.9 billion, including $5.8 billion of total USD assets at the end of Q3, which provides more than sufficient liquidity to meet our interest and dividend payments, strengthen our overall credit quality, and provide liquidity for general Bitcoin treasury needs. Our preferred equity ended the quarter at $13.1 billion, down from the previous quarter with the execution of our Stretch open market repurchase program. Common equity increased to $55.4 billion, bringing total equity to $68.5 billion, up $23.2 billion, or 51% during the quarter. Our treasury assets as of October 23rd were approximately $74 billion, consisting of $68.9 billion of Bitcoin and $5.1 billion in USD assets. After taking into account $6.7 billion of convertible debt and $13.3 billion of preferred stock at their notional amounts, our net reserve is approximately $53.9 billion, or approximately $67.3 billion net of the out-of-the-money converts.

Our NAV is currently 1.15x, amplification 1.28x, with a low net leverage of approximately 2.4%. Our USD assets provide 3.4 years of interest and dividends coverage at current payment obligations. We have approximately $6.7 billion of total convertible debt outstanding, compared with the $69 billion of Bitcoin and $5.1 billion of USD assets, representing a BTC Rating of 42x. Four of the six converts are currently trading above par. For the two that are at the moment below par, the earliest put date remains significantly in the future, not until March 2028. We have substantial asset coverage and the staggered put maturity schedule gives us ample levers to effectively manage these obligations in the future. We now have 17 equity analysts covering us, all which carry buy ratings, an average MSTR price target of approximately $248, and an average published Bitcoin target of approximately $111,000.

I am pleased to announce that our shareholder proposal to move our preferred equity dividends to daily record and payment dates has been resoundingly approved by our shareholders. The final vote reflects 99.3% of approvals of votes cast in support of the amendment. Daily dividends for Stretch will begin on November 1st record date with a November 2nd payment date. Strife, Strike, and Stride are scheduled to follow with a January 1st record date and a January 4th payment date. Dividends will accrue on every calendar day, including weekends and holidays, with payment on the next business day. The overall annual dividend amounts remain unchanged and are not impacted as a result of this enhancement. Smaller, more frequent payments are designed to reduce volatility, improve liquidity, broaden investor demand, and get cash to investors sooner.

Calendar day accruals also make Stretch and our pref's better suited to the future of tokenized products and increasingly around-the-clock markets. Thank you to everyone who voted in favor of this change. Finally, as announced earlier today, I will be stepping down as Chief Financial Officer effective November 5th for personal reasons. It has been an honor to serve as Strategy CFO for the past four and a half years, and to be part of such an extraordinary period of growth and innovation. I am extremely grateful to Michael, Phong, and the board for their trust and support. To all of our employees, thank you for your hard work, perseverance, and dedication. To the entire finance team, a special thank you. It has been a privilege to work alongside each of you, and I am incredibly proud of what we have accomplished together.

To our shareholders, analysts, and everyone who has joined us over these last 18 quarters, thank you for your time, your engagement, and your support. It has meant a great deal to me. For the last time as CFO, I will turn the call over to Phong.

Thank you, Andrew. We will miss you, and I do appreciate your 4 and a half years of service to Strategy. You've seen the company through great times and also through a couple bear markets with a steady hand, and I wish you well in the future. The plan going forward throughout the course of 2026 is for myself to step back into the CFO and Principal Financial Officer role. Starting in January 2027, we will split the CFO role between our software and our Bitcoin businesses, which are quite different. Stepping into the Principal Financial Officer role covering our software business will be a longtime veteran of Strategy, Reza Virasteh, who currently runs operations reporting to me and has previously been a part of the finance leadership team running FP&A. He knows our software business inside out and will do a great job overseeing that.

The Principal Financial Officer of our Bitcoin business will be myself, and also I will continue to be the CEO of the company. Looking forward to wearing those dual hats and looking forward to continuing to lead with strong folks in our Bitcoin business that you are all familiar with. CJ here, who runs investor relations and product, and Shirish, who runs our treasury, will report to me directly. I think for all intents and purposes, the transition will be seamless to our shareholders, our investors, our analysts, and our employees. I am looking forward to a bright future for the company. Speaking of bright futures, I will cover off on our digital equity strategy and our digital credit strategy with a recap of Q3 and 2026 year to date, and why I believe we have a very bright next year ahead of us.