Circle shares fall as revenue miss overshadows quarterly profit beat

Circle Internet Group beat Wall Street’s profit expectations and still managed to disappoint. The USDC stablecoin issuer reported second-quarter revenue and reserve income of $701 million, a 7% year-over-year increase that nonetheless landed well below analyst estimates in the $712 million to $718 million range.

Shares fell roughly 3% in premarket trading, erasing an earlier pop that came when the profit numbers hit the tape. Adjusted earnings per share of 18 cents topped the 16 cents consensus, and net income from continuing operations came in at $48 million.

The interest rate problem

Reserve income hit $668 million for the quarter, up 5% from a year earlier. That sounds fine until you notice the reserve return rate dropped by 66 basis points year over year. Circle is holding more reserves than ever but earning less on each dollar.

USDC circulation stood at $73.3 billion at quarter’s end, a robust 19% jump from the same period last year. Adjusted EBITDA came in at $143 million, an 8% year-over-year increase that beat estimates.

Onchain activity tells a different story

Onchain transaction volume surged 151% year over year to $14.8 trillion. Transaction volume more than doubled while circulation grew only 19%, meaning each dollar of USDC is turning over far more frequently.

Arc blockchain and the diversification play

Circle used the earnings release to highlight its Arc Layer-1 blockchain, which is scheduled to launch its public mainnet on September 16, 2026. The validator lineup for Arc includes BlackRock, DTCC, Visa, and Mastercard as founding validators. More than 100 ecosystem builders are already developing on the network.

The Circle Payments Network, another initiative aimed at expanding beyond pure stablecoin issuance, continues to add institutional collaborators.

What this means for investors

The net income figure of $48 million reflects an important year-over-year comparison quirk. Last year’s numbers were impacted by IPO-related stock-based compensation costs, making the current quarter’s profitability look stronger on a relative basis. Investors parsing the fundamentals should keep that base effect in mind.

Reserve income still accounts for the vast majority of revenue, and interest rates remain the single biggest variable in Circle’s earnings story.

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