10-K: Strategy Inc Reports $5.4B Unrealized Bitcoin Loss in 2025

Strategy Inc, formerly MicroStrategy, reported a significant net loss of $3.85 billion for fiscal year 2025, driven by a $5.40 billion unrealized loss on its substantial bitcoin holdings, despite growth in subscription services revenue.

Summary

• Strategy Inc. (formerly MicroStrategy Incorporated) reported a net loss of $3.85 billion for the fiscal year ended December 31, 2025, compared to a net loss of $1.17 billion in 2024.
• The company recognized a $5.40 billion unrealized loss on digital assets for the year ended December 31, 2025, due to a decrease in the fair market value of its bitcoin holdings, partially offset by a $1.55 billion deferred tax benefit.
• As of December 31, 2025, Strategy Inc. held approximately 672,500 bitcoins with a fair market value of $58.85 billion and an average purchase price of $74,997 per bitcoin.
• As of February 13, 2026, bitcoin holdings increased to approximately 717,131 bitcoins, acquired at an aggregate purchase price of $54.5 billion and an average purchase price of approximately $76,027 per bitcoin. The market price of one bitcoin was $68,734 on this date, resulting in an aggregate fair market value of $49.3 billion.
• Total revenues increased by 3.0% to $477.2 million in 2025 from $463.5 million in 2024.
• Subscription services revenue grew by 64.5% to $175.7 million in 2025, while product licenses revenue decreased by 18.3% to $39.7 million and product support revenue decreased by 16.2% to $204.2 million.
• The company established a U.S. dollar reserve (USD Reserve) of $2.25 billion as of December 31, 2025, and February 13, 2026, to support dividend payments on preferred stock and interest on outstanding indebtedness.
• Strategy Inc. issued five classes of preferred stock (STRF, STRC, STRE, STRK, STRD) in 2025, raising $6.92 billion in net proceeds, and $1.98 billion from 2030B Convertible Notes.
• Total outstanding indebtedness as of December 31, 2025, was $8.25 billion, with an annual contractual interest expense of $36.2 million.
• The company adopted ASU 2023-08 on January 1, 2025, requiring bitcoin to be measured at fair value, resulting in a cumulative-effect net increase to retained earnings of $12.75 billion.
• Basic and diluted loss per share for 2025 was $15.23, compared to $6.06 in 2024.
• The company's name changed from MicroStrategy Incorporated to Strategy Inc. on August 11, 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the substantial net loss driven by bitcoin's fair value decline, which overshadows positive operational growth in subscription services and highlights the significant risks associated with the company's concentrated bitcoin strategy.

Positives

• Subscription services revenue increased significantly by 64.5% to $175.7 million in 2025, indicating successful migration of customers to cloud-based offerings and new customer acquisition.
• The company continues to be the world's first and largest Bitcoin Treasury Company, increasing its bitcoin holdings to approximately 717,131 bitcoins as of February 13, 2026.
• Establishment of a $2.25 billion USD Reserve provides liquidity to support dividend payments on preferred stock and interest on outstanding indebtedness, reducing immediate reliance on bitcoin sales.
• Effective internal control over financial reporting was maintained as of December 31, 2025, as affirmed by management and the independent registered public accounting firm.
• The company's capital markets strategy successfully raised significant capital through various preferred stock and convertible note offerings in 2025, totaling over $8.9 billion in net proceeds.

Negatives

• Strategy Inc. reported a substantial net loss of $3.85 billion for 2025, a significant increase from the $1.17 billion net loss in 2024.
• A $5.40 billion unrealized loss on digital assets was recognized in 2025, reflecting a decrease in bitcoin's fair market value during the year.
• The enterprise analytics software business did not generate positive cash flow from operations in 2025, and is not expected to do so in the next twelve months.
• Product licenses revenue decreased by 18.3% and product support revenue decreased by 16.2% in 2025, indicating a decline in traditional software sales and related support.
• Total operating expenses increased significantly to $5.77 billion in 2025 from $2.19 billion in 2024, primarily due to the unrealized loss on digital assets.
• Interest expense, net, increased to $65.0 million in 2025 from $61.9 million in 2024, reflecting increased indebtedness.
• The cost basis of bitcoin held as of February 13, 2026 ($76,027 per bitcoin) exceeds its fair market value ($68,734 per bitcoin), indicating a current unrealized loss position.

Risks

• Operating results, revenues, and expenses may fluctuate significantly due to bitcoin price volatility, sales of bitcoin, tax liabilities, regulatory developments, and fixed dividend/interest obligations.
• Inability to regain profitability in future periods, especially with significant unrealized losses on digital assets, could materially adversely affect financial condition.
• A significant decrease in the fair market value of bitcoin holdings could adversely affect the ability to satisfy financial obligations or liquidity needs, potentially requiring bitcoin sales at unfavorable prices.
• Exposure to greater than anticipated tax liabilities, including potential CAMT if current guidance changes, or significant tax liabilities from realized bitcoin gains.
• Bitcoin is a highly volatile asset, and fluctuations in its price have and will continue to influence financial results and the market price of listed securities.
• Bitcoin and other digital assets are novel and subject to significant legal, commercial, regulatory, and technical uncertainty, which could adversely affect bitcoin's price and the ability to hold or transact in it.
• Historical financial statements prior to March 31, 2025, are not comparable to future periods due to the adoption of ASU 2023-08, increasing volatility in reported earnings.
• Increased availability of alternative ways to gain exposure to bitcoin (e.g., spot bitcoin ETPs) may adversely affect the market price of listed securities.
• The bitcoin strategy subjects the company to enhanced regulatory oversight, potentially leading to increased compliance costs or restrictions on bitcoin-related transactions.
• Bitcoin trading venues may experience fraud, security failures, or operational problems, leading to loss of confidence in bitcoin and adversely affecting its value.
• Concentration of assets in bitcoin limits risk mitigation and enhances the impact of price declines.
• Bitcoin holdings are less liquid than cash and cash equivalents and may not serve as a source of liquidity to the same extent.
• Security breaches, cyberattacks, or loss/destruction of private keys could result in the loss of some or all bitcoin holdings.
• Risks relating to the custody of bitcoin, including limited insurance coverage and potential treatment as unsecured creditor in custodian insolvency.
• Regulatory reclassification of bitcoin as a security could lead to classification as an investment company, imposing significant regulatory controls.
• The company is not subject to legal and regulatory obligations that apply to investment companies or investment advisers, which may expose investors to different risks.
• Risk of non-performance by counterparties in the bitcoin strategy, including custodians and trade execution partners.
• Revenue is derived from a single software platform and related services, primarily from an installed customer base, making the company vulnerable to declines in demand or adoption.
• Integration of artificial intelligence into product offerings and operations could result in reputational harm, legal liability, or competitive disadvantage.
• Third parties may claim infringement of intellectual property rights, leading to costly litigation or operational changes.
• Changes in third-party software or systems or new industry standards could materially adversely affect the operation and demand for existing software.
• Undetected errors, bugs, or security vulnerabilities in software could reduce demand and lead to litigation.
• Inability to protect intellectual property could reduce the value of offerings and brand.
• Obligation to disclose proprietary source code to customers may limit IP protection and reduce support service renewals.
• Inability to develop and release new software product offerings or enhancements in a timely and cost-effective manner.
• Business disruptions (geopolitical tensions, natural disasters, cyberattacks) could materially adversely affect operating results or internal controls.
• Risks in doing business with U.S. and foreign governments, including procurement challenges, budget constraints, contract termination, and compliance requirements.
• Inability to recruit or retain skilled personnel, or loss of Michael J. Saylor's services, could materially adversely affect the business.
• Changes in privacy laws or non-compliance could lead to significant liabilities and harm the business.
• Cybersecurity attacks or security breaches on customer data, networks, or cloud environments could harm reputation, reduce demand, and incur liabilities.
• The market price of Class A common stock has been and may continue to be volatile, influenced by bitcoin price and other factors unrelated to traditional software fundamentals.
• A class action lawsuit and other legal proceedings could distract management, harm reputation, and result in substantial costs.
• Michael J. Saylor's significant voting power (40.1% as of December 31, 2025) gives him substantial influence over stockholder matters and could impede third-party acquisitions.
• Provisions in the charter, by-laws, and Delaware law may have anti-takeover effects.
• Future sales or perception of future sales of securities could depress the price of listed securities.
• Exclusive forum provision in by-laws could limit stockholders' ability to obtain a favorable judicial forum.
• Exclusion from major market indices could adversely affect trading price and liquidity of Class A common stock.
• Downgrades in credit ratings could reduce access to funding sources.
• In liquidation, preferred stock and common stock claims are junior to indebtedness, potentially leading to loss of investment.
• Insufficient funds or regulatory/contractual restrictions may prevent payment of cash dividends on preferred stock.
• Limited voting rights of preferred stock may not afford meaningful protections.
• Future issuance of preferred stock ranking equally or senior to existing series could dilute rights of current holders.
• Holders of preferred stock may be treated as receiving deemed distributions and subject to tax even without cash distribution.
• Tax rules applicable to fast-pay stock could result in adverse consequences to preferred stock holders.
• Future issuance of Additional Shares with an adverse tax profile could subject holders of previously issued preferred stock to adverse consequences.
• Provisions of preferred stock could delay or prevent an otherwise beneficial takeover.
• Accounting method for preferred stock may result in lower reported net earnings attributable to common stockholders and lower diluted EPS.
• The right to unilaterally reduce the regular dividend rate of STRC Stock could cause its trading price or value to decrease.
• Unsuccessful attempts to adjust STRC Stock dividend rate to maintain its trading price near $100 per share.
• Currency exchange rate fluctuations and Euro-related risks may adversely affect the ability to pay dividends on, and the value of, STRE Stock.
• Reliance on Euroclear and Clearstream for STRE Stock transfers, payments, and communication.
• Limited trading market for STRE Stock on the Luxembourg Stock Exchange's Euro MTF may adversely affect liquidity and trading price.
• Future sales or dilution of Class A common stock could depress its market price and the value of STRK Stock.
• Not all events adversely affecting STRK Stock value will result in conversion rate adjustments.
• Recent and future regulatory actions or market conditions may adversely affect convertible arbitrage trading strategy for STRK Stock.
• Holding STRK Stock does not confer rights with respect to Class A common stock.
• Dividends on STRD Stock are discretionary and non-cumulative, meaning holders may not receive them.
• High level of indebtedness could adversely affect ability to raise additional capital.
• Inability to service indebtedness could lead to default, bankruptcy, or liquidation.
• Inability to raise funds for cash settlements or repurchases of convertible notes, or future debt limitations on such actions.
• Incurring substantially more indebtedness in the future could exacerbate risks related to indebtedness.

Future Outlook

Strategy Inc. intends for its bitcoin strategy to remain adaptable, continuously evaluating market conditions, financing opportunities, liquidity needs, and capital structure. The company plans to continue accumulating bitcoin and exploring additional financial innovation opportunities, including new financing structures and strategies to generate income from its bitcoin holdings. The enterprise analytics software business is expected to continue its transition from on-premises product licenses to cloud-based subscriptions, with full support for on-premises licenses ending December 31, 2026. The company does not expect its enterprise analytics software business to generate sufficient cash flow from operations to satisfy its financial obligations or liquidity needs over the next twelve months, relying instead on capital raising and its USD Reserve.

Management Comments

• "We believe that bitcoin is a financial and technological innovation and represents a compelling long-term treasury reserve asset due to its scarcity, durability, and global liquidity."
• "We view our bitcoin holdings as long-term holdings and expect to continue to accumulate bitcoin."
• "We intend for our bitcoin strategy to remain adaptable."
• "We believe our combination of active bitcoin-focused capital management and a scaled operating software business positions us for long-term value creation across both digital asset and enterprise analytics markets."
• "Our objective is to maintain a capital structure that supports continued bitcoin accumulation, enables us to generate value from our bitcoin holdings, positions us to satisfy our financial obligations and provides resilience across market cycles."
• "We intend to satisfy our financial obligations and liquidity needs, including repayment of principal and payment of interest on our debt and cash dividends on our preferred stock, primarily through proceeds from sales of our class A common stock under our ATM."
• "Our current intention, which is subject to change in our sole and absolute discretion, is to adjust the monthly regular dividend rate per annum on our STRC Stock in such a manner as we believe will maintain STRC Stock's trading price at or close to its stated amount of $100 per share."
• "The Company does not believe that there are currently any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition."

Industry Context

StockSavvy.ai notes that Strategy Inc.'s dual strategy of being a Bitcoin Treasury Company and an AI-powered enterprise analytics software provider positions it uniquely in both the volatile digital asset market and the competitive software industry. The significant unrealized loss on bitcoin holdings in 2025 highlights the inherent volatility of digital assets, a trend observed across the broader crypto market. The growth in subscription services revenue for its analytics software, while positive, is overshadowed by the digital asset performance, indicating the dominant influence of its bitcoin strategy on overall financial results. The company's proactive capital raising through diverse preferred stock instruments reflects an innovative approach to funding bitcoin acquisitions and managing its capital structure, differentiating it from pure-play bitcoin investment vehicles like spot ETPs, which have recently gained regulatory approval and increased competition for investor capital. The emphasis on AI in its software offerings aligns with broader industry trends towards intelligent automation and data-driven insights.

Comparison to Industry Standards

• Strategy Inc.'s net loss of $3.85 billion in 2025, primarily due to bitcoin's fair value changes, contrasts sharply with traditional software companies that typically focus on consistent profitability and cash flow from operations. For example, a mature software company like Microsoft or Oracle would rarely report such a large net loss driven by asset revaluation, instead focusing on steady earnings growth and operational efficiency.
• The company's bitcoin holdings of 717,131 bitcoins as of February 13, 2026, make it the largest corporate holder globally, a strategy unparalleled by most publicly traded companies. This concentration in a single, volatile asset class is a significant deviation from conventional corporate treasury management, which typically prioritizes diversification and capital preservation in less volatile assets.
• The 64.5% growth in subscription services revenue is strong and competitive within the enterprise software industry, where companies like Salesforce and Adobe consistently report robust cloud revenue growth. However, this positive operational performance is currently overshadowed by the bitcoin strategy's financial impact.
• The decline in product licenses and product support revenue reflects a broader industry trend of shifting from on-premises software to cloud subscriptions, a transition many legacy software providers have navigated. Strategy Inc.'s end-of-support cycle for on-premises licenses by December 31, 2026, is a clear move towards a cloud-first model, similar to industry leaders.
• The establishment of a $2.25 billion USD Reserve for dividend and interest payments is a unique capital management approach, necessitated by the company's leveraged bitcoin strategy. This differs from companies with stable operational cash flows that fund such obligations directly from business profits.

Corporate Governance

Legal Proceedings

• A purported class action lawsuit was filed on July 21, 2025, by David Dodge against the Company and its Board in the Court of Chancery of the State of Delaware, alleging violations of the Delaware General Corporation Law (DGCL) and breach of fiduciary duty related to the STRK Amendment. The plaintiff seeks, among other things, an order deeming the STRK Amendment ineffective and awarding unspecified damages.
• The company's Brazilian subsidiary was involved in an internal review and subsequent investigation by Brazilian Federal Police regarding alleged corruption and procurement fraud. Leniency agreements were signed with SG/CADE (September 2020), CGU and AGU (July 2024), and CGE-SP and PGE-SP (April 2025). Payments of approximately $1.1 million in July 2024 and $0.4 million in April 2025 were made, and the company received immunity from debarment and other sanctions from some agencies.
• Michael J. Saylor and the company were subject to a civil complaint by the District of Columbia alleging failure to pay personal income taxes. A Consent Order and Judgment was stipulated on May 31, 2024, with Mr. Saylor paying a $40 million settlement in full, and the company not obligated to contribute.

Related Party Transactions

• Michael J. Saylor, Chairman of the Board and Executive Chairman, provided indemnification coverage to the company's directors and officers (D&Os) through a series of agreements, including the 2023 Tail Agreement, which covered Excluded Claims for $157,000 for a one-year term and was extended in June 2024 for the same amount. The 2023 Tail Agreement was not extended beyond its June 2025 expiration as new commercial D&O policies were deemed sufficient.
• Mr. Saylor paid a $40 million settlement to the District of Columbia in full to resolve a civil complaint against him and the company, with the company not obligated to contribute.
• Mr. Saylor also paid in full the settlement amount to counsel for Tributum, LLC, the relator in the District of Columbia case, with the company not obligated to contribute.
• The company permits Mr. Saylor personal use of company aircraft, tickets to events, and corporate facilities under Corporate Development Programs, with associated tax gross-ups subject to certain caps.
• The company makes available to Mr. Saylor perquisites not generally available to other executive officers, including services of one or more drivers (capped at $100,000 annually excluding tax gross-ups), subleasing of a standard cubicle at headquarters to Aeromar Management Company, LLC (wholly owned by Mr. Saylor), use of assistants for personal matters, and a security program (capped at $2,000,000 annually including tax gross-ups).
• Mr. Saylor is permitted personal use of the website Michael.com, which is owned and maintained by the company.

Stakeholder Impact

• **Shareholders (Class A Common Stock)**: Experienced significant dilution from equity offerings and face substantial volatility due to the company's bitcoin strategy. The large net loss and unrealized bitcoin losses directly impact shareholder equity. Michael J. Saylor's significant voting control limits their influence over corporate matters. The availability of spot bitcoin ETPs may divert investor interest, potentially impacting the stock price.
• **Preferred Stockholders**: Receive fixed or variable dividends, but face risks of non-payment if the company lacks sufficient funds or due to regulatory/contractual restrictions. Their claims are senior to common stockholders in liquidation but junior to debt. Certain preferred stock (STRK) offers conversion rights, while others (STRD) have non-cumulative dividends, increasing risk of missed payments.
• **Employees**: Benefit from equity compensation programs (stock options, RSUs, PSUs, ESPP) designed to align interests with company performance. However, significant headcount reductions in sales, marketing, and R&D in 2025 indicate potential job insecurity. The company's focus on attracting and retaining skilled personnel is crucial for its software business.
• **Customers (Enterprise Analytics Software)**: Benefit from AI-powered analytics solutions and a transition to cloud-native platforms. The end-of-support for on-premises licenses by December 31, 2026, requires migration, which could be disruptive but also offers enhanced cloud capabilities. Cybersecurity measures are critical for protecting customer data.
• **Creditors**: The company's substantial indebtedness ($8.25 billion) and fixed interest payments pose a risk. While the USD Reserve is intended to support payments, a significant decline in bitcoin value could impair the company's ability to service debt, potentially leading to default. Debt holders rank senior to all equity holders in liquidation.
• **Regulatory Authorities**: The company's bitcoin strategy subjects it to enhanced regulatory oversight, particularly concerning digital assets and potential reclassification as an investment company. Compliance with evolving U.S. and foreign regulations (e.g., GENIUS Act, CLARITY Act, Data Security Program Rule) impacts operations and costs.

Next Steps

• Continue to accumulate bitcoin as part of the bitcoin strategy.
• Evaluate other potential financial innovation opportunities to generate income streams or funds using bitcoin holdings.
• Manage the USD Reserve, potentially increasing, reducing, or reallocating amounts based on market conditions and liquidity needs.
• Deploy assets from the USD Reserve into USD-denominated and/or USD-referenced assets.
• Periodically sell bitcoin for general corporate purposes, tax/accounting benefits, or to satisfy financial obligations.
• Continue to issue additional equity and debt securities under the Omnibus Sales Agreement to fund bitcoin acquisitions and liquidity needs.
• Seek common stockholder ratification of the STRK Amendment to the STRK Stock certificate of designations.
• Continue the transition of enterprise analytics customers from on-premises product licenses to cloud-based subscription offerings, with full support for on-premises licenses ending December 31, 2026.
• The U.S. Senate is considering its own legislation to establish a framework for digital asset markets.

Key Dates

Recommendation

Strategy Inc. presents a complex investment profile. The substantial unrealized loss on bitcoin holdings in 2025 and the continued reliance on capital raises to fund operations and debt obligations highlight significant financial volatility and risk. While the company's enterprise analytics software business shows promising growth in subscription services, its financial impact is currently overshadowed by the bitcoin strategy. The establishment of a USD Reserve is a positive step for liquidity management, but the overall concentration in a highly volatile asset like bitcoin, coupled with evolving regulatory scrutiny and potential tax liabilities, creates considerable uncertainty. A 'hold' recommendation is appropriate for seasoned investors who understand and are comfortable with the high-risk, high-reward nature of this dual strategy, acknowledging the potential for both significant upside from bitcoin appreciation and substantial downside from price declines and operational challenges. New investors should approach with extreme caution due to the inherent volatility and unique business model.

Keywords

Bitcoin Treasury Company, Digital Assets, Preferred Stock, Convertible Notes, Enterprise Analytics Software, AI-powered Solutions, SEC Filing, Financial Results, Market Volatility, Capital Markets, Corporate Governance, Risk Management, STRF Stock, STRC Stock, STRE Stock, STRK Stock, STRD Stock, USD Reserve, Liquidity, Cybersecurity, Regulatory Oversight, Shareholder Action, Michael J. Saylor, Nasdaq Global Select Market