Circle Q3 Profit Triples, Beating Estimates, on USDC Growth

Circle Internet Group (CRCL), issuer of the world's second-largest stablecoin, said third-quarter profit more than tripled as demand for USDC grew, boosting interest revenue on the assets held to back it.

Net income rose to $214 million, or 64 cents per share, while total revenue and reserve income more than doubled to $740 million. EPS beat expectations of 22 cents. While revenue grew along with increased demand for the stablecoin, it took a hit from the "96 bps decline in the reserve return rate," the company said.

CRCL shares slid as much as 8.6% in anticipation of another U.S. interest-rate cut when the Federal Reserve meets in December. Lower rates reduce the returns on the instruments held to back USDC. Prediction market Polymarket sees a 71% chance of rates being cut by the Federal Open Markets Committee, and the CME's Fedwatch tool puts the probability at 65%.

Circle has been at the forefront of the expansion of the stablecoin sector in the last year, having debuted on the New York Stock Exchange (NYSE) in June. Total USDC in circulation grew to $73.7 billion by the end of the quarter, more than double the year-earlier figure. Still, it lags behind market leader USDT, issued by Tether, which has a market cap of $183 billion.

"Circle continued to see accelerating adoption of USDC and our platform in the third quarter as we build the new Economic OS for the internet," co-founder and CEO Jeremy Allaire said in a release.

Circle’s results point to "strong execution and continued USDC adoption," ClearStreet analyst Owen Lau said, with revenue and profit well above expectations. He attributed the performance to a mix of higher revenue and lower expenses as well as a wider-than-expected margin on revenue less distribution costs.

Read more: Circle’s USDC Keeps Climbing; William Blair Reiterates Outperform After 3Q Results

Lau also highlighted the company’s improved full-year guidance, which included higher projected revenue from product lines outside of reserve income — a sign that efforts to diversify its business model may be gaining traction.

Circle unveiled plans for Arc, a layer-1 blockchain designed to provide stablecoin payments, FX and capital markets applications last quarter. More than 100 companies have joined the public testnet, Circle said in the earnings report.

USDC momentum building

While operating expenses are expected to rise, Lau noted that the company’s stablecoin ecosystem continues to expand, with initiatives like Arc and the Circle Payments Network showing early momentum.

"These efforts help position Circle for longer-term growth and broader use of USDC across financial and enterprise ecosystems," he wrote.

UPDATE (Nov. 12, 13:05 UTC): Adds paragraphs on growth of stablecoin markets and USDC in circulation, Circle's Arc update and Allaire quote.

UPDATE (Nov. 12, 13:32 UTC): Adds reaction from Clear Street analyst Owen Lau.

UPDATE (Nov. 12, 14:13 UTC): Restructures story.

UPDATE (Nov. 12, 15:21 UCT): Updates share price movement in third paragraph.