CryptoSlate
Circle's $182 million ARC token presale drove its third-quarter earnings surprise, while income from the reserves backing USDC fell. Total revenue and reserve income rose 17% to $865 million, but excluding ARC sales would have left about $683 million, down from $740 million a year earlier. Adjusted EBITDA of $317 million beat Wall Street's $218 million consensus estimate.
Why it matters
Reserve income fell 8% to $658 million as the average yield on USDC reserves dropped 61 basis points to 3.5%, offsetting an 8% rise in average circulation. The figures show how interest rates affect Circle's core earnings even as its stablecoin sees more use.
CEO Jeremy Allaire said USDC accounted for 79% of stablecoin transaction volume in the quarter, up from 66% a year earlier. USDC onchain transfers rose 49% to $13.9 trillion, while minting and redemptions reached a record $208 billion.
Market impact
Clear Street said the earnings beat was primarily driven by ARC presale revenue, which exceeded its forecast by $92 million. Excluding ARC, adjusted EBITDA would have been approximately $135 million, down from $143 million in the preceding quarter.
The bank expects other revenue to normalize to between $28 million and $48 million in the fourth quarter. Circle's payments network surpassed $58 billion in annualized transaction volume after the quarter, but the company does not expect it to generate material revenue until 2027.
Frequently asked questions
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How did ARC sales affect Circle's third-quarter revenue?
Circle reported $865 million in total revenue and reserve income. Excluding $182 million in ARC presale revenue, the figure would have been approximately $683 million, compared with $740 million a year earlier.
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Why did Circle's USDC reserve income fall?
The average yield on USDC reserves fell 61 basis points to 3.5%, offsetting an 8% increase in average circulation. Reserve income declined 8% to $658 million.
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How much would Circle's adjusted EBITDA have been without ARC?
Clear Street estimated adjusted EBITDA would have been approximately $135 million without ARC, down from $143 million in the preceding quarter. The reported figure was $317 million.
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How did USDC transaction activity change during the quarter?
USDC onchain transfers rose 49% to $13.9 trillion. CEO Jeremy Allaire said USDC accounted for 79% of stablecoin transaction volume, up from 66% a year earlier.
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When does Circle expect material revenue from its payments network?
Circle expects its payments network to generate material revenue in 2027. The network surpassed $58 billion in annualized transaction volume after the quarter.
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