Circle beat earnings but missed on revenue, sending stock down 3% in early trade

Circle's second-quarter results delivered a peculiar punch. The USDC issuer crushed profit expectations with 18 cents earnings per share against a 16-cent consensus, yet shares tanked 3% in premarket trading once the revenue number dropped. Revenue landed at $701 million, up 7% year-over-year but nowhere near the $712 million to $718 million analyst estimates.

Net income from continuing operations hit $48 million. Adjusted EBITDA came in at $143 million, an 8% jump. But Wall Street had already priced in something better.

The interest rates squeeze

Reserve income tells the real story. Circle pulled in $668 million for the quarter, up 5% from last year. The catch: the reserve return rate dropped 66 basis points year over year. More dollars in reserves, fewer cents earned on each one. That's what happens when the Fed sits on rates. USDC circulation hit $73.3 billion, a solid 19% increase, but each stablecoin sits in a lower-yield environment.

Volume growth masks circulation slowdown

Onchain tells a different story entirely. Transaction volume jumped 151% year over year to $14.8 trillion. USDC is moving faster through the system, turning over far more frequently even as new supply growth slowed. This suggests institutions are using the stablecoin more aggressively for actual settlement, not just accumulation.

Circle also used the earnings call to spotlight Arc, its Layer-1 blockchain launching its public mainnet on September 16, 2026. BlackRock, DTCC, Visa, and Mastercard are signing on as founding validators. Over 100 ecosystem builders are already coding for it. The Circle Payments Network continues recruiting institutional players as the company pushes beyond pure stablecoin issuance.

One footnote: last year's net income figures carried IPO-related stock-based comp costs, which makes this quarter's profitability look artificially stronger on a relative basis. Investors should keep that base effect in mind when comparing the numbers.

This material is for information purposes only and does not constitute financial or investment advice.