Circle shares jump 10% as Q2 earnings beat offsets revenue miss

Circle shares rose about 10% in premarket trading Wednesday after the stablecoin issuer beat profit estimates, posting adjusted EPS of 18 cents versus the 16-cent consensus, even as revenue of $701 million missed the $712 million forecast.

"Our quarterly financial results reflect the current rate environment and a crypto market that has slowed," CEO Jeremy Allaire said in a statement. "But the institutions using USDC today, like BlackRock, BNY and Standard Chartered aren't piloting, they are expanding."

Revenue and reserve income rose 7% from a year earlier to $701 million, while net income from continuing operations reached $48 million, topping estimates of $43 million. Adjusted EBITDA climbed 8% to $143 million. USDC circulation reached $73.3 billion at the end of June, up 19% year over year but down from its 2026 peak of nearly $80 billion. Onchain transaction volume rose 151% to $14.8 trillion during the quarter.

The report offered the clearest update yet on Arc, Circle's layer 1 blockchain scheduled to launch its public mainnet on Sept. 16. More than 100 ecosystem and institutional builders are developing on Arc, with founding validators including BlackRock, DTCC, ICE, Mastercard, Visa, Standard Chartered, Galaxy and MoneyGram. BlackRock plans to deploy its BUIDL tokenized U.S. Treasury fund on the network, while DTCC is building infrastructure to tokenize securities held at its depository.

Circle also reported continued momentum for its Circle Payments Network, which reached $14.7 billion in annualized transaction volume over the trailing 30 days, up 76% from the previous quarter, with 175 financial institutions now participating.

The company recently obtained approval from the U.S. Office of the Comptroller of the Currency to establish Circle National Trust, making it a stablecoin issuer with a federal trust bank charter under federal oversight.

The earnings come after Morgan Stanley slashed its price target on Circle by 64% from $106 to $38 with an Underweight rating, citing slowing USDC adoption and weaker reserve income prospects. The stock fell more than 4.5% to trade at $59.67 following the downgrade before the earnings release.

Circle's first-quarter results showed revenue and reserve income rose 20% to $694 million, but net income fell 15%. The reserve return rate fell to 3.5% in Q1, down 66 basis points year over year. Management guided to a 38-40% RLDC margin for 2026, with adjusted operating expenses of $570-$585 million.

The earnings beat and Arc's institutional backing suggest Circle's strategy of building blockchain infrastructure for tokenized assets is gaining traction with major financial institutions. However, the revenue miss and slowing USDC circulation from its peak indicate the company still faces headwinds from lower reserve yields and increased competition in the stablecoin market. The Sept. 16 Arc mainnet launch will be a key test of whether Circle can convert its institutional partnerships into meaningful transaction volume.

This article is for informational purposes only and does not constitute investment advice.