Circle Q3 Revenue Hits $865M Beating Expectations, USDC Transaction Volume Up 49% YoY
nashnova research
Circle posted $865 million in Q3 revenue, up 17% year-on-year, with net income beating estimates by nearly 1.5×—but the core driver was a $182 million one-time ARC token pre-sale, raising questions about earnings quality.
The beat looks big — where did the money actually come from?
Total revenue hit $865 million, topping consensus by roughly 11%. Net income reached $226 million — nearly 2.5× the Street estimate.
This means → the headline numbers are strong, but the mix tells a different story. Reserve income — Circle's bread-and-butter business of earning interest on assets backing USDC — fell 8% year-on-year. The real engine behind the beat was "other revenue," which surged 627%.
In plain terms = the legacy business shrank; a one-off big-ticket sale in the new business pulled the scorecard up.
The ARC token pre-sale — what is this "big ticket"?
Of the $207 million in other revenue, $182 million came from the ARC token pre-sale — nearly 90% of the line item.
ARC is the native token of Circle's new Arc blockchain — a Layer-1 network, meaning a standalone chain built from the ground up. Total supply: 10 billion tokens. The mainnet launched on September 16, with over 100 institutions onboarding on day one.
This means → this revenue is inherently one-time. A genesis token mint happens once; there will be no comparable inflow next quarter. Adjusted EBITDA margin hit 70%, but strip out this item and the improvement narrows sharply.
The core business — why is reserve income shrinking?
Reserve income came in at $658 million, down 8% year-on-year and declining for a second straight quarter (from $733 million two quarters ago).
The core reason: the reserve yield — the interest rate Circle earns by investing users' dollar deposits in Treasuries and similar low-risk assets — dropped 61 basis points to 3.5%. This reflects the broader rate-cutting cycle eating into stablecoin issuers' "passive income" model.
Average USDC in circulation grew 8% to $73.3 billion, partially offsetting the rate drag — but volume growth could not fully compensate for the price decline.
How fast is USDC adoption actually growing?
On-chain transaction volume reached $13.9 trillion, up 49% year-on-year. Active wallets holding more than $10 in USDC hit 7.3 million, up 16%.
Institutional deals are stacking up: Visa moved its USDC cross-border settlement from pilot to commercial deployment across 180+ countries. The SAP ecosystem began integrating USDC. Samsung Wallet now lets eligible U.S. users send USDC to bank accounts in 60+ countries.
Binance announced a $100 million equity investment in Circle, targeting USDC adoption in emerging markets. This means → USDC is accelerating its shift from a "crypto-native tool" to an embedded layer inside traditional financial infrastructure.
Acquisition, layoffs, full-year guidance — what comes next?
Circle signed a definitive agreement to acquire Tazapay, a Singapore-based cross-border payments platform with annualized payment volume exceeding $25 billion and local payout rails in 100+ markets. Expected close: 2027, pending regulatory approval.
The company also cut roughly 5% of its workforce, recording about $9.15 million in restructuring charges. In plain terms = expanding the footprint while trimming costs — a classic growth-phase restructuring.
Full-year guidance is unchanged: other revenue of $310–330 million, RLDC margin of 41.7%–43.7%, adjusted operating expenses of $570–585 million, and a medium-term target of 40% CAGR for USDC circulation.
What should investors watch most closely?
The ARC token pre-sale is a one-time event. Whether Circle can find new non-reserve revenue streams next quarter will determine if "other revenue" is a blip or a structural inflection.
Reserve income trajectory depends on a two-variable race: USDC circulation growth vs. the pace of rate cuts. If rates keep falling, circulation growth must accelerate just to hold this revenue line steady.
This reflects a pivotal transition window for Circle: from "stablecoin issuer earning passive spread income" to "platform company monetizing network effects and payment infrastructure." Whether that narrative holds up will become clear over the next two to three quarters.
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