Financial Analysis

Commitments and Contingencies (a) Commitments From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company assumes indemnity obligations for intellectual property infringement, as well as other obligations from time to time depending on arrangements negotiated with customers and other third parties. The conditions of these obligations vary. Thus, the overall maximum amount of the Companys indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its Consolidated Balance Sheets as of December 31, 2025 or December 31, 2024. The following table shows future minimum payments related to noncancelable purchase agreements with initial terms of greater than one year as of December 31, 2025 (in thousands): Year Purchase Obligations 2026 $ 69,000 2027 59,644 2028 27,473 2029 2030 Thereafter $ 156,117 (b) Contingencies Brazil Matter Following an internal review initiated in 2018, the Company disclosed its belief that its Brazilian subsidiary failed or likely failed to comply with local procurement regulations in conducting business with certain Brazilian government entities. In 2020 the Company …

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Employee Benefit Plan The Company sponsors a benefit plan to provide retirement benefits for its employees, known as the MicroStrategy 401(k) Savings Plan (the 401(k) Plan). Participants may make voluntary contributions to the 401(k) Plan of up to 75% (and prior to September 30, 2022, up to 50%) of their annual base pre-tax compensation, cash bonuses, and commissions not to exceed the federally determined maximum allowable contribution amounts. Participants may designate all or a portion of the 401(k) Plan elective deferral contributions as Roth elective deferral contributions instead of pre-tax elective deferral contributions. The 401(k) Plan permits for discretionary Company contributions. The Company makes a matching contribution to each 401(k) Plan participant in the amount of 50% of the first 12% of a participants contributions, up to a maximum of $5,000 per year. Further, all active participants become fully vested in the Companys matching contributions after completing four years of employment, vesting in 25% increments at the end of each year of employment with the Company. The Company made contributions to the 401(k) Plan totaling $1.6 million, $2.3 million, and $2.8 million during the years ended December 31, 2025, 2024, and 2023, respectively. …

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"(8) Long-term Debt The net carrying value of the Companys outstanding debt (in thousands) consisted of the following as of: December 31, 2025 2024 2027 Convertible Notes $ $ 1,041,352 2028 Convertible Notes 1,002,736 998,543 2029 Convertible Notes 2,982,316 2,975,037 2030A Convertible Notes 789,109 785,172 2030B Convertible Notes 1,989,115 2031 Convertible Notes 596,843 594,476 2032 Convertible Notes 790,113 787,417 Other long-term secured debt 39,923 9,678 Total $ 8,190,155 $ 7,191,675 Reported as: Current portion of long-term debt, net 31,313 517 Long-term debt, net 8,158,842 7,191,158 Total $ 8,190,155 $ 7,191,675 Convertible Senior Notes As of December 31, 2025, the following convertible notes were outstanding (the Outstanding Convertible Notes): $1.01 billion aggregate principal amount of 0.625% Convertible Senior Notes due 2028 (the 2028 Convertible Notes); $3.00 billion aggregate principal amount of 0% Convertible Senior Notes due 2029 (the 2029 Convertible Notes); $800.0 million aggregate principal amount of 0.625% Convertible Senior Notes due 2030 (the 2030A Convertible Notes); $2.00 billion aggregate principal amount of 0% Convertible Senior Notes due 2030 (the 2030B Convertible Notes); $603.7 million aggregate principal amount of 0.875% Convertible Senior Notes due 2031 (the 2031 Convertible Notes); and $800.0 million aggregate principal amount of 2.25% Convertible Senior Notes due 2032 (the 2032 Convertible Notes). Additionally, the Company also previously issued …

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Share-based Compensation Stock Incentive Plans On May 24, 2023, the Companys stockholders approved the Companys 2023 Equity Plan, which became effective as of such date. No awards may be granted under the 2023 Equity Plan more than 10 years after the 2023 Equity Plans effective date. No new awards will be granted under the Companys 2013 Equity Plan, though awards previously granted under the 2013 Equity Plan remain outstanding in accordance with their terms. Under the Stock Incentive Plans, the Companys employees, officers, directors, and other eligible participants may be (with respect to the 2023 Equity Plan) and have been (with respect to both the 2023 Equity Plan and the 2013 Equity Plan) awarded various types of share-based compensation, including options to purchase shares of the Companys class A common stock, restricted stock units, and other stock-based awards. Additionally, under the 2023 Equity Plan, awards may be and have been granted that are subject to the achievement of one or more performance measures established by the Companys Board or a duly authorized committee thereof. Any shares issued under the Stock Incentive Plans may consist in whole or in part of authorized but unissued shares or treasury shares. On January 21, 2025, the Companys stockholders approved the 2024 Plan Amendment. The 2024 Plan Amendment amended the 2023 Equity Plan to provide that, beginning on December 20, 2024, each non-employee director who is newly appointed to the Board shall automa …

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"Income Taxes Income before Income Tax Expense Domestic and Foreign U.S. and international components of (loss) income before income taxes (in thousands) were comprised of the following for the periods indicated: Years Ended December 31, 2025 2024 2023 U.S. $ (5,578,372) $ (1,966,444) $ (157,810) Foreign 52,418 32,098 33,285 Total $ (5,525,954) $ (1,934,346) $ (124,525) The (benefit from) provision for income taxes (in thousands) consisted of the following for the periods indicated: Years Ended December 31, 2025 2024 2023 Current: Federal $ 24 $ (5,202) $ 2,774 State 708 72 3,376 Foreign 5,417 5,368 9,146 $ 6,149 $ 238 $ 15,296 Deferred: Federal $ (1,116,016) $ (505,359) $ (374,800) State (569,751) (262,441) (194,374) Foreign 1,816 (123) 232 $ (1,683,951) $ (767,923) $ (568,942) Total Income tax expense (benefit) Federal $ (1,115,992) $ (510,561) $ (372,026) State (569,043) (262,369) (190,998) Foreign 7,233 5,245 9,378 Total benefit $ (1,677,802) $ (767,685) $ (553,646) Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate The benefit from or provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to the Companys loss before income taxes as follows for the periods indicated. Below is a tabular rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 (in thousands): December 31, 2025 $ % U.S. Federal Statutory Tax Rate $ (1,160,450) 21.0 % …

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Leases The Company leases office space in the United States and foreign locations under operating lease agreements. Office space is the Companys only material underlying asset class under operating lease agreements. The Company has no material finance leases. Under the Companys office space lease agreements, fixed payments and variable payments that depend on an index or rate are typically comprised of base rent and parking fees. Additionally, under these agreements the Company is generally responsible for certain variable payments that typically include certain taxes, utilities and maintenance costs, and other fees. These variable lease payments are generally based on the Companys occupation or usage percentages and are subject to adjustments by the lessor. The Companys ROU asset and total lease liability balances were $47.0 million and $57.4 million, respectively, as of December 31, 2025, and $54.6 million and $66.8 million, respectively, as of December 31, 2024. The Companys most significant lease is for its corporate headquarters in Northern Virginia. The ROU asset and total lease liability balances related to the Companys corporate headquarters lease were $37.1 million and $46.8 million, respectively, as of December 31, 2025, and $42.8 million and $54.6 million, respectively, as of December 31, 2024. The lease agreement for the Companys corporate headquarters location is set to expire in December 2030, with an option for the Company to extend the term for an additional f …

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Recent Accounting Standards In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03). ASU 2024-03 requires specified information about certain costs and expenses be disclosed in the notes to the financial statements, including the expense caption on the face of the income statement in which they are disclosed, in addition to a qualitative description of remaining amounts not separately disaggregated. Entities will also be required to disclose their definition of selling expenses and the total amount in each annual period. The standard is effective for the Company for annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with updates applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures. In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Intangibles: Goodwill and OtherInternal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40) (ASU 2025-06) to modernize the accounting for software costs under Subtopic 350-40, IntangiblesGoodwill and OtherInternal-Use Software (referred to as internal-use software). Upon adoption, the Company will be required to account for internal-use software under the updated capitalization criteria. The stand …

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"Related Party Transactions Saylor Indemnification Agreements Commencing in June 2021, Michael J. Saylor, the Companys Chairman of the Board and Executive Chairman, provided indemnification coverage to the Companys directors and officers (D&Os) through a series of indemnification agreements. These agreements were initially executed for applicable periods in which the Company determined not to obtain commercial D&O insurance policies and later to cover claims not insured under the Companys commercial D&O liability policies. The Company determined that having indemnity coverage from Mr. Saylor was in the best interest of the Company. In June 2023, the Company bound new commercial D&O liability insurance policies (the 2023 Commercial Policies) providing $40 million in aggregate coverage for a one-year term, but those policies excluded (i) claims previously noticed to and accepted by an earlier D&O insurer, (ii) claims related to acts or omissions giving rise to such claims, and demands, investigations, suits or other proceedings entered against an insured prior to June 24, 2022, and (iii) future interrelated wrongful acts (collectively, the Excluded Claims). Concurrently, the Company entered into a new indemnification agreement with Mr. Saylor (the 2023 Tail Agreement), pursuant to which he agreed to cover the Excluded Claims for $157,000 for an initial one-year term, with options to extend for additional one-year periods. The Company elected to extend the 20 …

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Segment Information The Company has one reportable operating segment, the Software Business, which is engaged in the design, development, marketing, and sales of the Companys enterprise analytics software platform through cloud subscriptions and licensing arrangements and related services (i.e., product support, consulting, and education). The Corporate & Other category presented in the following tables is not considered an operating segment. It consists primarily of costs and expenses related to executing the Companys bitcoin strategy and includes the unrealized losses, impairment charges and other third-party costs associated with the Companys bitcoin holdings, net interest expense primarily related to long-term debt obligations (the net proceeds of which were primarily used to purchase bitcoin), and income tax effects generated from the Companys bitcoin holdings and related debt issuances. Beginning in 2025, the Company has dedicated certain corporate resources to its bitcoin strategy. These costs, including related Share-based compensation expense are included within the Corporate resources and the Share-based compensation expense segment expense line items to better align with their activities and utilization. The Companys chief operating decision maker (CODM) is the Companys Chief Executive Officer, who manages the entity on a consolidated basis. The CODM uses net income (loss) to assess the profitability of the software business by comparing actual to budgeted resu …

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"Summary of Significant Accounting Policies (a) Basis of Presentation On August 11, 2025, the Company filed with the Secretary of State of the State of Delaware an amendment to its Second Restated Certificate of Incorporation (as amended and supplemented to date, its Certificate of Incorporation), to effect a change of its name from MicroStrategy Incorporated to Strategy Inc. On July 11, 2024, the Company announced a 10-for-1 stock split of the Companys class A common stock and class B common stock. The stock split was effected by means of a stock dividend to the holders of record of the Companys class A common stock and class B common stock as of the close of business on August 1, 2024, the record date for the dividend. Shares held in treasury by the Company were not impacted by the stock split. The dividend was distributed after the close of trading on August 7, 2024 and trading commenced on a split-adjusted basis at market open on August 8, 2024. As a result of the stock split, all applicable share, per share, and equity award information has been retroactively adjusted in the Consolidated Financial Statements and Notes to Consolidated Financial Statements to reflect the stock split for all periods presented. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. The accompanying Consolidated Financial …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Subsequent Events Dividends on Preferred Stock On February 2, 2026, the Company paid an aggregate $30.9 million of cash dividends on STRC Stock, representing a cash dividend per share of $0.916666667 and a dividend rate of 11.00% per annum. On January 31, 2026, the Company declared a monthly cash dividend of $0.9375 per share payable on STRC Stock on February 28, 2026 (or, if such day is not a business day, the next business day) to stockholders of record as of 5:00 p.m., New York City time, on February 15, 2026. The cash dividend for the month ending February 28, 2026 represents a dividend rate of 11.25% per annum. Bitcoin Holdings As of February 13, 2026, the Company held approximately 717,131 bitcoins with an aggregate fair market value of $49.3 billion (based on the market price of $68,734 of one bitcoin as reported on the Coinbase exchange as of February 13, 2026, 4:00 p.m. Eastern Time).

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