Circle Q3 EPS doubles estimates on $182M ARC token presale as USDC reserve income falls
In brief
- Circle's third-quarter diluted EPS was $0.84, versus analyst expectations of $0.42.
- ARC token presale contributed $182 million to Circle's third-quarter revenue.
- USDC reserve income fell 8% to $657.6 million as the reserve return dropped to 3.5%.
- Excluding ARC, revenue and reserve income fell roughly 8%, according to Cointelegraph's calculation.
- Circle expects staking rewards and material payments-network revenue in 2027.
What the ARC sale did to the numbers
Circle's total revenue and reserve income rose 17% to $865 million, according to its Q3 disclosures as reported by Cointelegraph. Adjusted EBITDA rose 85% to $317 million.
The presale did most of that work.
Take ARC out and the picture flips. By Cointelegraph's calculation, total revenue and reserve income excluding the presale came to $683 million (down roughly 8% year over year), and adjusted EBITDA was about $135 million, down 21% from $171 million. Circle shares were down 0.84% at $74.59 at 16:05 UTC on Nov. 4, according to Yahoo Finance.
USDC reserves are earning less
Circle's stablecoin business earns returns on the reserves backing USDC, so its income depends on interest rates and on how much USDC is outstanding. Average circulation rose 8% year over year, but the reserve return fell 61 basis points to 3.5% (it did edge up from 3.48% in the second quarter). Reserve income declined 8% to $657.6 million.
USDC ended September with $73.9 billion in circulation, while its share of the stablecoin market fell 1.83 percentage points to 27%. It's also facing new rivals. According to Cointelegraph's reporting, Open Standard's Open USD was live on Solana by Sept. 30, with Coinbase, Mastercard, Shopify, Stripe and Visa as founding partners, and it passes reserve earnings on to partners after taking a management fee.
Fees and staking are the bet
Arc, Circle's blockchain for financial applications, went live on public mainnet on Sept. 16. The ARC token is meant to support network security and governance as Arc moves toward proof of stake in 2027, while transaction fees are paid in USDC. Circle says it expects staking rewards once that switch happens, though it hasn't happened yet.
The other leg is the payments network Circle launched in May 2025 to connect financial institutions that settle cross-border payments with stablecoins. Circle has begun charging for some activity there, and CFO Jeremy Fox-Geen said on the earnings call, as reported by Cointelegraph, that the company expects material CPN revenue in 2027.
CEO Jeremy Allaire described the strategy as building connected networks, where growth in stablecoins, payments and blockchain apps reinforce one another.
"It is about multiple compounding flywheels on one platform. Every new member, every new builder, and every new asset makes the whole platform more valuable," Allaire said on the call, as reported by Cointelegraph.
Frequently asked questions
How much did the ARC token presale add to Circle's third-quarter results?
Circle recognized $182 million in revenue from the ARC presale. By Cointelegraph's calculation, total revenue and reserve income were $683 million without it, down roughly 8% year over year, compared with the reported $865 million. Adjusted EBITDA would have been about $135 million instead of $317 million.
Why is Circle's USDC reserve income falling?
Circle earns returns on the reserves backing USDC, so its income depends on interest rates and on how much USDC is outstanding. Average circulation rose 8% year over year, but the reserve return fell 61 basis points to 3.5%. As a result, reserve income declined 8% to $657.6 million.
Where does Circle expect new revenue to come from?
Circle expects staking rewards once its Arc blockchain moves to proof of stake, which it's targeting for 2027. It has also begun charging for some activity on its payments network, and CFO Jeremy Fox-Geen said on the earnings call, as reported by Cointelegraph, that the company expects material CPN revenue in 2027.
