Strategy posts $19.5 billion Q3 net income as shareholders approve daily preferred dividends

Strategy (formerly MicroStrategy) reported third-quarter net income of $19.53 billion on Oct. 29, U.S. time, about seven times the $2.79 billion it earned a year earlier. Most of the profit came from unrealized gains on its bitcoin holdings.

Operating income for the quarter was $20.91 billion, which the company called the largest in its history. The gain on digital assets for the same quarter was also $20.91 billion, meaning nearly all of the operating income came from bitcoin's rise. Revenue from its core enterprise analytics software business fell 3% from a year earlier to $125.4 million, with a gross margin of 71%. After $419.6 million of preferred stock dividends, net income attributable to common stockholders was $19.12 billion.

Bitcoin gained 43% in three months

Based on Coinbase daily (UTC) closing prices, bitcoin rose about 43% from $58,524 on June 30 to $83,556 on Sept. 30. The company said its common stock (MSTR) gained 76% over the same period.

As of Oct. 25, Strategy held 848,517 BTC at a total acquisition cost of $64.02 billion, including fees, an average of $75,446 per coin. It has bought $14.33 billion of bitcoin so far this year, increasing its holdings by 26%. However, "BTC Yield," the company's key metric measuring the growth in bitcoin per share, stands at -3.7% for the year, meaning its share count grew faster than its bitcoin holdings over the period. The release also showed the company sold about $431.8 million of bitcoin this year to fund a portion of its preferred stock dividends and preferred stock buybacks. In an Oct. 26 filing, Strategy said it neither bought nor sold bitcoin and sold no common stock between Oct. 19 and 25.

Preferred dividends will accrue on weekends

At a special stockholder meeting on Oct. 28, a day before the earnings release, shareholders approved a proposal to make every day a dividend record date for four preferred stocks (STRF, STRC, STRK and STRD), with about 381.37 million votes for and about 2.24 million against. Starting Nov. 1 for STRC and Jan. 1, 2027 for the other three, every calendar day, including weekends and holidays, will be a record date, with dividends paid on the following business day. The company said in its filing that the total amount of dividends and the dividend rates will not change.

"Daily dividends are a natural step toward the tokenized, 24/7/365 financial system."

Phong Le, CEO of Strategy

The annualized STRC dividend rate was held at 12.00%, and dividends for the month of November total $1.00 per share. The company spent $2.04 billion this year repurchasing about 20.98 million STRC shares at an average price of $97.39. Its USD Assets, set aside to pay dividends and interest, stand at $5.07 billion, which the company said covers 3.4 years of dividend and interest obligations.

CFO Andrew Kang to step down Nov. 5

Chief Financial Officer Andrew Kang will step down on Nov. 5 and remain with the company in an advisory capacity through the end of the year. The company said in a filing that he is resigning for personal reasons and not because of any disagreement with the company. From Nov. 6 through year-end, CEO Phong Le will lead the finance organization, and on Jan. 1, 2027, Reza Virasteh, executive vice president of operations, will become CFO.

Bitcoin trades 2.8% above Strategy's average cost

Bitcoin fell early on Oct. 30 KST, when Binance suffered a major security incident. On Binance's hourly chart, it slid 3.7% from $81,270 at 2 a.m. KST to a low of $78,297 in the 5 a.m. hour. It later dropped as low as $76,500 in the 11 a.m. hour. Around 12:30 p.m. KST on Oct. 30, bitcoin traded in the $77,500 range on Coinbase, about 2.8% above Strategy's average cost.

At the same time, bitcoin traded around 105.1 million won on Upbit's Korean won market and around 105.15 million won on Bithumb. The kimchi premium (the gap between prices on Korean exchanges and global markets) stood at about 1.0% on Upbit relative to Binance.