10-Q · August 3, 2026
Revenue rose to $122.368 million from $114 million in the prior-year quarter, but profitability was overwhelmed by bitcoin-related fair-value volatility: the company reported an $8.22 billion net loss and diluted EPS of…
Earnings analysis · 10-Q
MSTR earnings analysis
Filed November 2, 2026 · Our reading of the company's report
The latest report
Q3 2026 showed improving revenue and free cash flow, with revenue of $125.4 million, gross margin of 67.1% and free cash flow of $13 million. Reported EPS of $44.75 benefited materially from a $20.91 billion…
Read full summary
Q3 2026 showed improving revenue and free cash flow, with revenue of $125.4 million, gross margin of 67.1% and free cash flow of $13 million. Reported EPS of $44.75 benefited materially from a $20.91 billion digital-asset gain, making earnings quality and period-to-period comparability highly volatile. Liquidity was substantial at $5.91 billion, but the company remains dependent on capital markets, bitcoin monetization and securities issuance to support approximately $6.75 billion of debt and recurring preferred-stock obligations. Sentiment is neutral because operating trends improved modestly, while bitcoin exposure, leverage and discretionary dividend funding remain significant risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $44.75
What stood out
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Revenue grew sequentially and year over year
Revenue was $125.4 million, up approximately 2.8% from $122 million in the prior quarter and approximately 12.9% from $111 million in Q3 2025. Reported EPS was $44.75 versus consensus of $22.61, a 97.9% beat.
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Gross margin improved sequentially
Gross margin was 67.1%, up 50 basis points from 66.6% in the prior quarter but down 230 basis points from 69.4% in Q3 2025. Operating margin was negative 12.0%, an improvement from negative 13.9% year over year.
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Free cash flow turned positive
The company reported $13 million of free cash flow, compared with negative $11 million in Q3 2025 and negative $28 million in Q4 2024, indicating a substantial improvement in cash generation.
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Large liquidity reserve
As of September 30, 2026, cash, cash equivalents, certificates of deposit and investments maturing within one year totaled approximately $5.91 billion, including $5.80 billion of USD Assets.
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Formal liquidity reserve policy
Management adopted a USD Reserve policy requiring a minimum reserve equal to at least 12 months of expected annual preferred-stock dividend payments and interest obligations.
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Bitcoin gain drove earnings volatility
The company recognized a $20.91 billion gain on digital assets in Q3 2026 after digital-asset losses of $14.46 billion in Q1 and $8.32 billion in Q2, highlighting the substantial earnings contribution from bitcoin valuation changes.
What to watch
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Debt service depends on external liquidity
Outstanding indebtedness was approximately $6.75 billion as of September 30, 2026, and management states that software operations are not expected to generate sufficient cash flow to satisfy financial obligations or liquidity needs over the next 12 months.
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Preferred dividends create cash burden
The STRC dividend rate was 12.00% per annum. A 50-basis-point increase would raise aggregate annual dividend obligations by approximately $45.3 million, increasing recurring cash requirements.
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Bitcoin valuation swings distort earnings
Digital-asset results remain highly volatile: the company recorded losses of $14.46 billion and $8.32 billion in Q1 and Q2 2026, followed by a $20.91 billion gain in Q3. Unrealized gains do not generate cash, creating a risk of weak liquidity despite reported net income.
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Liquidity policies are discretionary
Management states that the company may need to use USD Assets, sell bitcoin, issue common or preferred stock, or incur additional debt to meet fixed obligations. The USD Reserve policy targets only 12 months of expected dividend and interest obligations and may be modified, suspended or terminated.
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Bitcoin price remains highly volatile
Bitcoin traded below $60,000 and above $125,000 on Coinbase during the 12 months preceding September 30, 2026. A substantial decline could impair asset values, financing access and the ability to use bitcoin as a liquidity source.
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Potential MSCI exclusion could pressure shares
The company identifies a new index-related risk: MSCI announced eligibility criteria for companies classified as non-operating companies on October 15, 2026, and the company expects exclusion from the MSCI Global Investable Market Indexes in the November 2026 review.
Management's outlook
The 10-Q does not provide quantitative revenue or EPS guidance. Management discusses liquidity and capital resources but does not provide numeric forward operating guidance.
Earlier filings 4
10-Q · May 6, 2026
MicroStrategy (MSTR) reported Q1 2026 results, with revenues of $124.3 million, slightly missing expectations of $124.97 million, while EPS of -$38.25 significantly fell short of the -$15.87 estimate. The company…
10-K · February 19, 2026
Strategy Inc (formerly MicroStrategy) presents a dual business: an AI-powered enterprise analytics software platform and an active bitcoin treasury strategy. The company is the largest corporate bitcoin holder…
10-Q · November 3, 2025
Strategy Inc. (MSTR) reported Q3 revenue of $128,691 (in thousands), up from $116,071 in Q3 2024, with gross profit of $90,678 and a swing to operating income of $3,890,842 driven by an unrealized digital asset gain of…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.