Executive Summary

Q3 2025 revenue of $128.691M beat S&P Global consensus ($116.930M) while diluted EPS of $8.42 missed consensus ($9.67). Reported operating income was $3.891B and net income was $2.785B, driven by bitcoin fair value gains under ASU 2023-08 . Estimates from S&P Global.*
Software segment remained stable: subscription services revenue grew 65.4% YoY; total software revenues rose 10.9% YoY; gross margin was 70.5% vs 70.4% YoY .
Bitcoin KPIs: YTD BTC Yield 26.0% (target 30%), BTC $ Gain $12.9B (target $20B), holdings ~640,808 BTC as of Oct 26 (market value ~$70.9B at ~$110.6K/BTC) .
Guidance maintained: FY2025 Operating Income ~$34B, Net Income ~$24B, EPS ~$80 (assumes BTC ~$150K EOY). STRC dividend rate raised to 10.50% for November under a rules-based framework .
Call catalysts: S&P B- issuer rating expands institutional access; international preferred-credit expansion; ROC dividend guidance for “ten years or more”; mNAV issuance discipline; CAMT guidance removes unrealized BTC gains from AFSI, reducing tax overhang .

What Went Well and What Went Wrong

What Went Well

Revenue beat: Q3 revenue $128.691M vs $116.930M consensus; subscription services +65.4% YoY; total software revenue +10.9% YoY; gross margin 70.5% . Estimates from S&P Global.*
Capital markets execution: ~$5.1B net proceeds in Q3 and ~$89.5M in Oct (ATMs across common and preferred; July STRC IPO ~$2.5B) enabling BTC purchases and dividend funding .
Strategic positioning: S&P issued B- rating; management highlighted digital credit strategy and ROC dividends (tax-deferred), with international preferred products contemplated (CAD, EUR, JPY) .

What Went Wrong

EPS miss vs consensus: diluted EPS $8.42 vs $9.67; revenue beat offset by fair value-driven sensitivity and tax expense under ASU 2023-08 . Estimates from S&P Global.*
High fixed obligations vs operating cash flow: annual interest and dividends ~$689M; management reiterated reliance on capital markets and mNAV discipline to fund obligations (below 1x mNAV dilutive) .
Continued dependence on BTC price: unrealized digital asset gains/losses dominate GAAP results; management cautioned sensitivity and maintained guidance contingent on BTC ~$150K at year-end .

Financial Results

Revenue and EPS vs prior year, prior quarter, and estimates

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$116.071	$114.488	$128.691
Diluted EPS ($USD)	($1.72)	$32.60	$8.42

Vs estimates (Q3 2025): Revenue beat by ~$11.76M; EPS missed by ~$1.25. Estimates from S&P Global.*

S&P Global Consensus vs Actuals (Quarterly)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus ($USD Millions)	116.389	112.516	116.930
Revenue Actual ($USD Millions)	111.066	114.488	128.691
Primary EPS Consensus Mean ($)	(0.11)	6.757	9.673
Diluted EPS Actual ($)	(16.49)	32.60	8.42

Note: Values retrieved from S&P Global.*

Profitability and income statement highlights

Metric	Q3 2024	Q3 2025
Operating Income ($USD Billions)	($0.433)	$3.891
Net Income ($USD Billions)	($0.340)	$2.785
Gross Profit ($USD Millions)	$81.7; GM 70.4%	$90.7; GM 70.5%

Explanation: Operating and net income are dominated by unrealized fair value gains on bitcoin under ASU 2023-08 (Q3 unrealized gain ~~$3.891B) with related deferred tax expense (~~$1.086B) .

Segment breakdown (Software revenue, Q3 2025)

Segment	Revenue ($USD Millions)	YoY Change
Product Licenses	$17.373	—
Subscription Services	$45.972	+65.4% YoY
Product Licenses + Subscription Services	$63.345	+62.9% YoY
Product Support	$51.118	−16.2% YoY
Other Services	$14.228	−12.0% YoY
Total Software Revenues	$128.691	+10.9% YoY

KPIs (Bitcoin and Treasury)

KPI	Value	Context
BTC Yield (YTD)	26.0%	Target 30%
BTC Gain (YTD, BTC)	116,555	—
BTC $ Gain (YTD)	$12.9B (at ~$110,600/BTC on Oct 24)	Target $20B
BTC Holdings	~640,808 BTC (as of Oct 26)	Avg cost ~$74,032/BTC; market value ~$70.9B
Capital Raised	~$5.1B (Q3); ~$89.5M (Oct 1–26)	Includes STRC IPO ~$2.5B
Annual Interest + Dividends	~$689M	Interest ~$35M; preferred dividends ~$654M

Guidance Changes

Metric	Period	Previous Guidance (Q2 2025)	Current Guidance (Q3 2025)	Change
Operating Income	FY2025	~$34B	~$34B	Maintained
Net Income	FY2025	~$24B	~$24B	Maintained
Diluted EPS	FY2025	~$80	~$80	Maintained
BTC Yield	FY2025	30% target	30% target	Maintained
BTC $ Gain	FY2025	$20B target	$20B target	Maintained
STRC Dividend Rate	Nov 2025	10.25% (Oct)	10.50% (Nov)	Raised
STRC Dividend Framework	Ongoing	As introduced in Q2	Reaffirmed	Maintained
ROC Dividend Guidance	Multi-year	N/A	“Foreseeable future, ten years or more”	Introduced/reaffirmed

Assumption: Guidance assumes BTC price ~$150K by Dec 31, 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Digital credit strategy (STRF/STRK/STRD/STRC)	Pref IPOs and ATMs; STRC framework introduced	Expanded narrative: volatility damping; yield extraction; “digital credit factory”	Scaling product suite
S&P B- issuer rating	Not rated earlier	Newly rated; opens larger pools of capital	Institutional access improving
Index eligibility (S&P 500)	Eligibility criteria referenced	Company now meets criteria; awaiting decision	Potential inclusion catalyst
International expansion of preferreds	Contemplated	Plan to issue native instruments (CAD/EUR/JPY)	Strategic growth vector
Funding preferred dividends and mNAV discipline	mNAV thresholds introduced	Clarified playbook if mNAV <1x; preserve ROC dividends via derivatives/high-basis BTC	Operational discipline
Tax/capital markets (CAMT, ROC dividends)	ASU 2023-08 adoption in Q1	CAMT interim guidance excludes unrealized BTC gains; ROC dividend guidance “10+ years”	Reduced tax overhang; recurring ROC

Management Commentary

“We now hold 640,808 Bitcoin… This marks our second consecutive quarter of significant positive GAAP earnings and over $8 billion in positive earnings in the last four quarters.” — Andrew Kang, CFO .
“We’re reaffirming our full year targets… operating income of $34 billion, net income of $24 billion, and diluted EPS of $80 per share, based on a BTC price outlook of $150,000.” — Andrew Kang, CFO .
“S&P issued a ‘B-’ credit rating for Strategy… we believe this will substantially expand the addressable market for our securities.” — Michael Saylor, Executive Chairman .
“Effective November 1, we’ll increase another 25 basis points our [STRC] dividend and will be at 10.5% on November 1, paid monthly.” — Phong Le, CEO .
“Our goal… give everybody something that’s competitive with the money market that pays you 10.4% that is tax-deferred.” — Michael Saylor on Stretch (STRC) .

Q&A Highlights

Dividend funding and mNAV path: Annual $689M fixed obligations; funding via ATMs when mNAV >1x, and via derivatives/high-basis BTC sales if below 1x—while preserving ROC tax treatment .
Marketing ROI for preferreds: Expanding distribution (brokerages, WM/RIAs) and digital marketing; minimal upfront spend with high inflow targets .
M&A posture: Focus on transparent, high-speed digital issuance and BTC acquisition; no near-term plans to acquire other BTC treasury companies .
International product design: Native currency preferreds on local exchanges to avoid FX risk; strong institutional interest expected .
Execution targets: To reach 30% BTC Yield, management cited need to raise ~$2B non-dilutively over 60 days; bullish on “credit factory” .

Estimates Context

Q3 2025: Revenue beat (~$128.691M vs $116.930M), EPS miss ($8.42 vs $9.67). Mixed headline with GAAP EPS sensitivity to BTC fair value and taxes . Estimates from S&P Global.*
Trajectory: Q1 miss on EPS (GAAP unrealized loss) vs consensus, Q2 large beat as BTC price rose, Q3 mixed (revenue beat/EPS miss). This underscores earnings volatility under ASU 2023-08 .

Key Takeaways for Investors

Near-term: Expect stock to react to the revenue beat but also to GAAP EPS miss; narrative hinges on BTC price path and capital markets execution (ATMs/pref issuance). Watch mNAV published thresholds and issuance cadence .
Medium-term: S&P B- rating and ROC dividends broaden institutional demand; international preferred products could materially expand capital access, amplifying BTC acquisition without traditional leverage .
Operating fundamentals: Subscription services momentum (+65% YoY) and stable ~70.5% gross margin show improving software mix, partially offset by declines in product support/other services .
Tax/regulatory: CAMT interim guidance removes risk of unrealized BTC gains triggering CAMT; management reiterates long-lived ROC dividend profile (“ten years or more”) .
Guidance is steady and explicitly tied to BTC ~$150K by year-end; model scenarios should stress-test BTC sensitivity to unrealized gains/losses and deferred tax liability swings .
Funding discipline: Annual interest+dividends are manageable relative to capital raised; issuance to fund dividends will follow mNAV discipline; below 1x scenarios include derivatives/high-basis BTC strategies to preserve ROC .
Catalysts: Potential S&P 500 inclusion, continued STRC rate adjustments, announced international preferred launches, and BTC macro drivers (ETF flows, bank custody/credit) .

* Estimates and consensus values retrieved from S&P Global.

Citations: Revenue, EPS, operating income, net income, gross margin: Software segment details and YoY: Bitcoin KPIs, holdings, market value: Capital markets proceeds and STRC IPO: Guidance (OI, NI, EPS, BTC KPIs) and assumptions: STRC dividend rate change and framework: CAMT guidance: S&P rating: Q&A references:

Strategy Inc (MSTR)·Q3 2025 Earnings Summary