Strategy IncMSTR
Strategy Inc Earnings Per Share Disclosure
Basic and Diluted (Loss) Earnings per Share
Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common stock outstanding during the respective period. Net income (loss) attributable to common stockholders is computed by deducting both the dividends declared in the period on the Company’s redeemable preferred stock and the dividends accrued for the period on the Company’s redeemable preferred stock, if any, from net income (loss).
The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have ten votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per common share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock.
As of December 31, 2025, the Company had five series of preferred stock outstanding: STRF Stock, STRC Stock, STRE Stock, STRK Stock, and STRD Stock. Holders of the Preferred Stock do not have voting rights, except for rights to appoint a director to the Company’s Board upon certain failures to pay dividends on STRF Stock and STRK Stock, and have rights to dividends and other rights as discussed in Note 12, Redeemable Preferred Stock, to the Consolidated Financial Statements. Additionally, each share of the STRK Stock is convertible at any time, at the option of the holder, into 0.1 shares of class A common stock.
The impact from potential shares of common stock on the diluted earnings per common share calculation are included when dilutive. Potential shares of class A common stock issuable upon the exercise of outstanding stock options, the vesting of restricted stock units and performance stock units considered probable of achievement, and in connection with the 2021 ESPP are computed using the treasury stock method. Potential shares of class A common stock issuable upon conversion of the Convertible Notes and upon conversion of the STRK Stock are computed using the if-converted method. In computing diluted earnings per common share, the Company first calculates the earnings per incremental share (“EPIS”) for each class of potential shares of common stock and ranks the classes from the most dilutive (i.e., lowest EPIS) to the least dilutive (i.e., highest EPIS). Basic earnings per common share is then adjusted for the effect of each class of shares, in sequence and cumulatively, until a particular class no longer produces further dilution.
The following table sets forth the computation of basic and diluted (loss) earnings per share (in thousands, except per share data) for the periods indicated:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Numerator: | |||||||||||||||||
| Net (loss) income - Basic | $ | (3,848,152) | $ | (1,166,661) | $ | 429,121 | |||||||||||
| Dividends on perpetual preferred stock | (381,367) | — | — | ||||||||||||||
| Net (loss) income attributable to common shareholders | $ | (4,229,519) | $ | (1,166,661) | $ | 429,121 | |||||||||||
| Effect of dilutive shares on net (loss) income: | |||||||||||||||||
| Interest expense on 2025 Convertible Notes, net of tax | — | — | 5,648 | ||||||||||||||
| Interest expense on 2027 Convertible Notes, net of tax | — | — | 2,874 | ||||||||||||||
| Net (loss) income - Diluted | $ | (4,229,519) | $ | (1,166,661) | $ | 437,643 | |||||||||||
| Denominator: | |||||||||||||||||
| Weighted average common shares of class A common stock | 258,020 | 172,909 | 117,066 | ||||||||||||||
| Weighted average common shares of class B common stock | 19,640 | 19,640 | 19,640 | ||||||||||||||
| Total weighted average shares of common stock outstanding - Basic | 277,660 | 192,549 | 136,706 | ||||||||||||||
| Effect of dilutive shares on weighted average common shares outstanding: | |||||||||||||||||
| Stock options | — | — | 4,613 | ||||||||||||||
| Restricted stock units | — | — | 546 | ||||||||||||||
| Performance stock units | — | — | 130 | ||||||||||||||
| Employee stock purchase plan | — | — | 5 | ||||||||||||||
| 2025 Convertible Notes | — | — | 16,332 | ||||||||||||||
| 2027 Convertible Notes | — | — | 7,330 | ||||||||||||||
| Total weighted average shares of common stock outstanding - Diluted | 277,660 | 192,549 | 165,662 | ||||||||||||||
| (Loss) earnings per share: | |||||||||||||||||
| Basic (loss) earnings per share (1) | $ | (15.23) | $ | (6.06) | $ | 3.14 | |||||||||||
| Diluted (loss) earnings per share (1) | $ | (15.23) | $ | (6.06) | $ | 2.64 | |||||||||||
(1)Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same in 2024 and 2025.
The following weighted average shares of potential class A common stock were excluded from the diluted (loss) earnings per share calculation because their impact would have been anti-dilutive (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock options | 4,186 | 6,926 | 5,896 | ||||||||||||||
| Restricted stock units | 968 | 1,647 | 297 | ||||||||||||||
| Performance stock units | 568 | 585 | — | ||||||||||||||
| Employee stock purchase plan | 18 | 16 | 52 | ||||||||||||||
| 2025 Convertible Notes | — | 4,998 | — | ||||||||||||||
| 2027 Convertible Notes | 709 | 7,330 | — | ||||||||||||||
| 2028 Convertible Notes | 5,513 | 1,558 | — | ||||||||||||||
| 2029 Convertible Notes | 4,462 | 497 | — | ||||||||||||||
| 2030A Convertible Notes | 5,342 | 4,358 | — | ||||||||||||||
| 2030B Convertible Notes | 3,961 | — | — | ||||||||||||||
| 2031 Convertible Notes | 2,594 | 2,046 | — | ||||||||||||||
| 2032 Convertible Notes | 3,915 | 2,108 | — | ||||||||||||||
| Convertible preferred stock - STRK | 1,041 | — | — | ||||||||||||||
| Total | 33,277 | 32,069 | 6,245 | ||||||||||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 12, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 7, 2018 | |
| 2016 | Feb 10, 2017 | |
| 2015 | Feb 26, 2016 | |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.