Key Points
- Circle recognized $182 million in revenue from its ARC token presale, helping drive diluted earnings per share to $0.84, compared with $0.64 a year earlier.
- USDC reserve income declined 8% to $657.6 million as the average reserve return fell 61 basis points to 3.5%, despite an 8% increase in average USDC circulation.
- Circle is expanding into payments and blockchain infrastructure, with potential staking rewards from Arc and material payments-network revenue targeted for 2027.
Circle’s third-quarter results highlighted the growing importance of revenue diversification as lower interest rates and intensifying stablecoin competition put pressure on its established business model. The company benefited from a substantial contribution from its ARC token presale, which helped lift reported earnings even as income generated by USDC reserves declined.
The results illustrate Circle’s effort to evolve beyond a stablecoin issuer into a broader financial infrastructure provider. Payments services, blockchain applications, and potential staking rewards are expected to complement reserve income, reducing the company’s reliance on interest earned from the assets backing USDC.
ARC Token Presale Provides a Significant Earnings Boost
Circle reported diluted earnings per share of $0.84 for the third quarter, up from $0.64 in the corresponding period a year earlier and twice analysts’ expectations of $0.42.
Total revenue and reserve income increased 17% to $865 million. However, the headline growth was substantially influenced by $182 million in revenue recognized from the ARC token presale. Excluding that contribution, total revenue and reserve income would have declined approximately 8% year over year to $683 million.
The difference was also reflected in adjusted earnings before interest, taxes, depreciation and amortization. Reported adjusted EBITDA increased 85% to $317 million, but excluding the ARC contribution, it would have been approximately $135 million, down 21% from $171 million a year earlier.
Circle’s results therefore present two distinct financial trends: stronger reported earnings supported by a new blockchain-related revenue stream, and weaker performance in its underlying reserve-income business.
Circle shares were trading at $74.59, down 0.84% at 4:05 p.m. UTC on November 4, according to the figures cited in the earnings coverage.
Lower Reserve Yields Pressure USDC Income
Circle’s established business model remains closely tied to the returns generated by reserves backing USDC. As interest rates decline, the company faces pressure on reserve income unless growth in stablecoin circulation compensates for lower yields.
Average USDC circulation increased 8% year over year during the third quarter, but the average reserve return declined by 61 basis points to 3.5%. Consequently, reserve income fell 8% to $657.6 million.
The Federal Reserve’s September rate increase did not reverse the broader year-over-year decline in yields. The central bank raised its benchmark interest rate by 25 basis points to a range of 3.75%–4%, compared with the 4%–4.25% range established a year earlier.
Circle’s average reserve return did improve slightly from 3.48% in the second quarter, but the annual comparison continued to reflect the effect of lower interest rates.
USDC ended September with $73.9 billion in circulation. Nevertheless, its share of the stablecoin market declined by 1.83 percentage points to 27%, indicating that expansion in the overall business has not eliminated competitive pressure.
Payments and Blockchain Infrastructure Expand Circle’s Business Model
Circle is developing additional revenue sources through its payments network and Arc blockchain. Launched in May 2025, the Circle Payments Network connects financial institutions using stablecoins to facilitate cross-border payment settlement.
Arc, Circle’s blockchain designed for financial applications, went live on public mainnet on September 16, 2026. Its native ARC token is intended to support network security and governance as the platform moves toward a proof-of-stake model targeted for 2027. Transaction fees on the network are paid in USDC.
The planned transition could create another source of income through staking rewards. However, this opportunity remains dependent on Arc’s development and implementation of its proof-of-stake structure.
Circle is also beginning to monetize activity through its payments network. Chief Financial Officer Jeremy Fox-Geen said the company expects material revenue from the Circle Payments Network in 2027.
Chief Executive Jeremy Allaire described the strategy as building interconnected networks in which stablecoin adoption, payments activity, and blockchain applications reinforce one another. The objective is to generate multiple sources of economic activity across a shared financial infrastructure platform rather than depend primarily on reserve returns.
Stablecoin Competition Adds Pressure to Revenue Diversification
Circle’s expansion comes as competitors explore different ways to distribute stablecoin economics and attract institutional partners.
Open Standard’s Open USD was live on Solana by September 30, with Coinbase, Mastercard, Shopify, Stripe, and Visa among its founding partners. Its model distributes reserve earnings to partners after deducting a management fee, offering businesses an alternative approach to accessing stablecoins and participating in their associated economics.
Such arrangements could increase competitive pressure on established issuers by giving payment companies and financial institutions greater incentives to support alternative stablecoin ecosystems.
Circle’s strategy therefore involves more than increasing USDC circulation. It must also expand the services and infrastructure surrounding its stablecoin to maintain its competitive position and develop revenue streams that are less sensitive to interest-rate movements.
The company is also adjusting its internal operating structure. Its earnings disclosures included a workforce reduction affecting approximately 5% of employees, which Circle said was intended to align its organization with its operating model and strategic priorities.
Outlook
Circle’s third-quarter performance demonstrates both the opportunities and limitations of its expanding business model. The ARC presale provided a substantial earnings contribution, but the decline in reserve income highlights the vulnerability of its core stablecoin economics to lower yields and changing market conditions.
The next phase of the strategy will depend on whether Circle can convert its payments network and Arc ecosystem into recurring sources of revenue. The planned 2027 proof-of-stake transition and expected growth in payments-network income represent important milestones, although neither should yet be treated as an established contribution to earnings.
For investors, the key indicators will include USDC circulation and market share, reserve returns, payments-network monetization, and the development of Arc’s staking model. Circle’s ability to establish a more balanced revenue mix could become increasingly important as stablecoin competition intensifies and interest-rate conditions continue to influence its traditional income base.
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