Circle Q2 2026 earnings: USDC growth cushions lower reserve yields

Circle (NYSE: CRCL) reported Q2 fiscal 2026 total revenue and reserve income of $701.3 million for the quarter ended June 30, up 7% from $658.1 million, while diluted EPS was $0.18 versus a $4.48 loss a year earlier. Net income from continuing operations reached $48.2 million, largely because the prior-year quarter included substantial IPO-related stock-based compensation, while adjusted EBITDA rose 8% to $143 million.

Core financial results

Reserve income increased 5% to $667.7 million as average USDC in circulation grew 25% to $76.5 billion. That benefit was partially offset by a 66-basis-point decline in the reserve return rate to 3.5%. Other revenue increased 41% to $33.6 million, reflecting growth in subscription and services revenue.

The change in GAAP profitability was more pronounced than the underlying revenue growth. Operating expenses fell 56% because compensation expense declined sharply from the IPO-affected prior-year quarter, helping Circle move from an operating loss to an operating profit.

Adjusted EBITDA and adjusted operating expenses are non-GAAP measures. Circle calculates adjusted EBITDA margin using revenue less distribution, transaction and other costs as the denominator.

USDC and platform performance

USDC activity continued to expand across several measures. Quarter-end circulation rose 19%, onchain transaction volume increased 151%, and meaningful wallets grew 24%. However, stablecoin market share declined by 66 basis points to 27%, indicating that Circle’s circulation growth did not translate into market-share gains during the quarter.

Circle Payments Network also expanded. Its trailing-30-day annualized transaction volume reached $14.7 billion at quarter-end, up 76% sequentially, while enrolled financial institutions increased 29% to 175. These figures are annualized run-rate and enrollment metrics rather than quarterly revenue.

Circle highlighted expanded USDC access or use cases involving BNY, Standard Chartered, JCB, Nium, Marex, Grupo Bind, and Kakao Group. The company also received federal approval to establish Circle National Trust and New York approval for a limited-purpose trust company focused on digital assets.

Better distribution economics did not prevent adjusted margin compression

Total distribution, transaction and other costs increased only 1% to $412.5 million while total revenue and reserve income rose 7%. As a result, revenue less distribution costs increased 15% and the corresponding margin improved by 302 basis points to 41%.

That improvement did not carry through to the adjusted EBITDA margin, which fell 329 basis points to 50%. Adjusted operating expenses increased 23% to $146 million as Circle continued investing in product development, infrastructure, and AI capabilities. Adjusted EBITDA still grew 8%, but more slowly than revenue less distribution costs because of those investments.

GAAP operating expenses moved in the opposite direction, falling to $254.5 million from $576.7 million. Compensation expense declined to $134.0 million from $503.4 million, primarily reflecting the absence of the prior-year IPO-related stock-based compensation impact. Consequently, the $530 million year-over-year improvement in net income should be viewed separately from the more moderate 8% growth in adjusted EBITDA.

Balance sheet and liquidity

Corporate cash and cash equivalents increased to $1.73 billion at June 30, 2026, from $1.53 billion at December 31, 2025. Convertible debt declined to zero from $36.8 million, while total stockholders’ equity rose to $3.51 billion from $3.33 billion.

Investors should distinguish corporate liquidity from assets segregated for stablecoins. Circle reported $73.16 billion of cash segregated for stablecoin holders and $72.93 billion of corresponding stablecoin-holder deposits at quarter-end; these amounts are not equivalent to unrestricted corporate cash.

Guidance

Circle maintained its multi-year expectation for 40% compound annual growth in USDC circulation and left adjusted operating expense guidance unchanged. It substantially raised its FY2026 other-revenue and RLDC-margin ranges, with both revised figures explicitly incorporating recognized Arc Token presale revenue.

Because Arc Token presale revenue is included in the revised other-revenue and margin outlook, the composition of revenue will be important when comparing future results with this guidance.

Management perspective

Co-founder, CEO, and Chairman Jeremy Allaire said the quarter reflected a lower rate environment and slower crypto market activity, while pointing to institutional USDC adoption and upcoming product initiatives as signs of broader network development.

Arc had more than 100 ecosystem and institutional builders, and Circle scheduled its public mainnet launch for September 16, 2026. The announced validator group included BlackRock, DTCC, Mastercard, Standard Chartered, Visa, and other financial institutions. Circle also said BlackRock, BNY, DTCC, and Standard Chartered were building or exploring Arc integrations involving tokenized assets, custody, stablecoin access, foreign exchange, and repo infrastructure.

Recent insider transactions

The supplied insider data shows several executive and director sales in early July, alongside derivative-security conversions. Its six-month summary reported 3.50 million shares classified as purchases and 2.68 million as sales, for net purchases of 827,084 shares across 103 transactions. Conversions should be distinguished from open-market purchases or sales when interpreting this summary.

These disclosures establish the transaction details but do not, by themselves, indicate insiders’ views about Circle’s prospects.

Risks investors should monitor

• Interest-rate sensitivity: The reserve return rate declined 66 basis points, limiting reserve-income growth to 5% even as average USDC circulation increased 25%. Further rate declines could continue to weigh on reserve income.
• Competitive pressure: USDC circulation grew, but Circle’s stablecoin market share fell 66 basis points to 27%. Continued share losses could reduce the financial benefit of broader stablecoin-market expansion.
• Investment spending: Adjusted operating expenses rose 23%, contributing to a 329-basis-point decline in adjusted EBITDA margin despite improved distribution economics.
• Arc execution and revenue mix: The raised other-revenue and RLDC-margin guidance includes recognized Arc Token presale revenue. Arc’s launch, adoption, regulatory treatment, and operating performance therefore have increased relevance to the outlook.

Summary

Circle’s Q2 2026 results showed continued expansion in USDC circulation, transaction activity, and institutional participation, but lower reserve yields limited reserve-income growth. GAAP profitability improved mainly because the prior-year IPO-related compensation burden did not recur, while higher adjusted spending narrowed the adjusted EBITDA margin. The main issues to monitor are interest-rate sensitivity, USDC market share, the return on product investment, and the contribution of Arc Token presale revenue to the raised FY2026 outlook.