The short version
- Circle earnings beat estimates in Q3, with $865 million of revenue and $0.84 a share against the roughly $788 million and $0.37 analysts expected.
- $182 million of that was ARC token presale money, so without it revenue fell to $683 million from $701 million in Q2, as average USDC shrank to $73.3 billion.
- Next: the webcast at 13:00 UTC (8:00 a.m. in New York) and CRCL’s first trades after the open. We’ll post the reaction on Base Camp on X.
Circle earnings beat Wall Street by a wide margin on Wednesday, and the ARC token did most of the work. Circle booked $865 million of revenue in the third quarter against about $788 million expected, and $182 million of that was presale money for its new ARC token.
Take the presale out and the quarter looks very different. USDC, the business that pays for almost everything at Circle, brought in less than it did in Q2.
Circle posted the highlights of its Q3 results on X before the US open:
Results are out for Q3, which brought platform milestones and strong financial results.
→ Arc Mainnet launched Sept 16 with 11 founding validators and 100+ apps
→ CPN annualized TPV grew 15.2x YoY, with 205 financial institutions enrolled
→ Announced the planned acquisition
Circle Earnings Beat: How Q3 Compared With Estimates
The Circle Q3 results beat by even more on profit. Circle earned $226 million, or $0.84 a diluted share, against an estimate of about $0.37. A year ago, Q3 brought in $214 million on less revenue, so net income rose 5%.
The line that moved is other revenue: $207 million, up from $34 million in Q2. Circle’s earnings release says $182 million of it came from the ARC presale, the 807.5 million tokens it sold at $0.30 each to investors including a16z crypto, BlackRock and Apollo.
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Without ARC, Circle Revenue Fell to $683M
Strip out the presale and Circle brought in $683 million, down from $701 million in Q2 and $740 million a year ago. That is below the roughly $720 million we expected from USDC alone in our preview.
Reserve income, the interest on the cash and T-bills behind USDC, was $658 million. Average USDC fell to $73.3 billion from $76.5 billion in Q2, and the reserve return rate stayed at 3.5%. Our preview expected about 3.7% after the Fed’s September hike, so higher T-bill yields did not reach Circle’s books this quarter.
We flagged that gap on Monday, before the numbers:
Circle expects $788M in Q3 revenue, but USDC shrank 4%
• USDC-driven revenue estimated at ~$720M
• $242M in ARC presale funds could bridge the gap
• Recognition timing could make or break the earnings beat
basecamp.markets/circle-earning…
The rest of the business shrank too. Other revenue without the presale was about $25 million, against $34 million in Q2.
SIDE TRAIL: Circle Earnings Preview: USDC Shrank in Q3. Can $242M of ARC Token Money Fill the Gap?
What Circle Kept After Paying Partners
Circle paid partners such as Coinbase $412 million, the same as in Q2. That left $453 million of revenue less distribution costs, a 52% margin against 41% in Q2.
Most of that jump is the presale again, because token money comes with no partner payout. Without it, Circle kept about $271 million, down from $289 million in Q2. Adjusted EBITDA came in at $317 million, up 85% from a year ago.
CRCL Stock and What Comes Next
CRCL stock traded slightly higher before the bell at the time of writing, after closing Tuesday at $75.22. The stock has a habit of big report-day moves, so the open matters more than pre-market trading.
Three things are worth watching after the webcast at 13:00 UTC (8:00 a.m. in New York):
- The rest of the presale. Circle has now counted $182 million of the roughly $242 million it raised. Its unchanged full-year target of $310 million to $330 million of other revenue leaves only $28 million to $48 million for Q4.
- A smaller USDC. Circle ended September with $73.9 billion in circulation. DefiLlama’s USDC tracker shows about $70.9 billion now, so Q4 reserve income starts from a lower base.
- The CFO. Jeremy Fox-Geen said in September he will step down by the end of December. The release names no successor.
TRAIL MAP: Stablecoin Supply Falls to $301.6B as USDC Loses $4.15B in a Month
The Circle earnings beat is real, but a one-off token sale did it. The quarter that shows whether USDC can grow again is Q4, when there is little presale money left to count.
TheCryptoMonk has been trading since 2017 and reads the market from the top down. The focus is macro and the high timeframes: where stocks, rates and liquidity are heading, and what the weekly and monthly charts say about Bitcoin. Short-term noise matters less than the bigger trend.
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