Circle Q3 2026 Earnings: ARC Token Presale Lifts Operating Profit

Circle (NYSE: CRCL) reported Q3 fiscal 2026 total revenue and reserve income of $864.9 million, up 17% year over year, while diluted EPS rose to $0.84 from $0.64. For the quarter ended September 30, net income from continuing operations increased 5% to $226.0 million and adjusted EBITDA grew 85% to $317 million, aided by ARC token presale revenue and lower distribution costs even as reserve income declined.

Core Earnings Data

The revenue mix changed materially during the quarter. Reserve income fell 8% to $657.6 million, but other revenue jumped 627% to $207.3 million, primarily because Circle recognized $182 million from the ARC token presale.

Profit conversion improved at the operating level: revenue less distribution costs rose 55%, and operating income more than doubled. However, the net income margin contracted 285 basis points to 26%, reflecting less favorable below-the-line items than a year earlier.

Revenue less distribution costs is a company-defined measure. Adjusted EBITDA is non-GAAP, and the prior-year amount shown is approximately implied by the reported growth rate.

Business and Operating Performance

USDC Activity Grew Despite Lower Reserve Yields

Average USDC in circulation increased 8% to $73.3 billion, partially cushioning the effect of a 61-basis-point decline in the reserve return rate to 3.5%. End-of-period USDC circulation was flat at $73.9 billion, showing that the higher quarterly average did not translate into year-over-year growth at the closing date.

USDC onchain transaction volume increased 49% to $13.9 trillion. Separately, USDC on Circle’s platform reached $13.9 billion, up 36%, while its daily weighted average share increased 462 basis points to 18.1%. Stablecoin market share rose 183 basis points to 27%, and meaningful wallets grew 16% to 7.3 million.

Arc and Payments Infrastructure Expanded

Circle launched the Arc public mainnet on September 16 with more than 100 institutional and ecosystem builders. It also completed the genesis mint of 10 billion ARC tokens, which are intended to support network security, utility, and governance as Arc works toward a proof-of-stake transition in 2027.

Circle Payments Network reached $41.3 billion in annualized total payment volume. The company also agreed to acquire Tazapay, which brings more than $25 billion in annualized payment volume, over 60 banking and fintech partners, and payout coverage across more than 100 markets. The transaction is expected to close in 2027, subject to regulatory approval.

ARC Presale and Lower Distribution Costs Lifted Operating Profit, but Net Income Lagged

GAAP operating income rose from $81.0 million to $208.3 million. The $182 million ARC token presale accounted for about 88% of quarterly other revenue, while total distribution, transaction, and other costs declined 8% to $411.6 million, mainly because of lower distribution payments.

Operating expenses still increased 16%, driven by higher general and administrative costs, depreciation and amortization, IT infrastructure, and marketing, partially offset by lower stock-based compensation. Adjusted operating expenses increased 13% to $139 million as Circle continued investing in new products.

These operating gains did not fully reach the bottom line. Other income declined to $19.9 million from $72.1 million, while the current quarter included a $2.2 million tax expense compared with a $61.3 million tax benefit a year earlier. As a result, operating income rose 157% and adjusted EBITDA grew 85%, but net income increased only 5%.

Balance Sheet

Circle ended September with $1.70 billion of cash and cash equivalents, up from $1.53 billion at December 31, 2025. It separately reported $1.02 billion of cash segregated for corporate-held stablecoins and $73.57 billion segregated for the benefit of stablecoin holders, against $73.45 billion of deposits from stablecoin holders.

Total stockholders’ equity increased to $3.86 billion from $3.33 billion at year-end. Convertible debt declined to zero from $36.8 million at December 31.

Earnings Guidance

Management left all disclosed guidance unchanged. The FY2026 other revenue and revenue-less-distribution-cost margin ranges include recognized ARC token presale revenue, which is important when comparing guidance with the economics of the reserve business.

Management Commentary

CEO Jeremy Allaire characterized institutional adoption as the central operating theme. Management highlighted Visa’s move from stablecoin-prefunding pilots to commercial deployment, Tereina’s integration of USDC and EURC into enterprise payment workflows, and Binance’s expanded partnership and announced $100 million equity investment. Circle also presented Arc as infrastructure for institutions building financial applications onchain.

Recent Insider Transactions

According to the supplied insider-transactions data, Circle insiders recorded 2,524,357 shares in the page’s purchases category across 34 transactions over the previous six months, compared with 2,454,649 shares sold across 45 transactions. That produced a net increase of 69,708 shares, equal to 1.2% of the reported 5.69 million insider shares held.

The 10 most recent entries consisted of seven sales and three derivative-security conversions. None was identified as an open-market purchase, and the transactions should not by themselves be interpreted as statements about Circle’s prospects.

Risks Investors Need to Watch

• Reserve income remains sensitive to yields. A 61-basis-point decline in the reserve return rate outweighed 8% growth in average USDC circulation, causing reserve income to fall 8%.
• Quarterly profit depended heavily on ARC token revenue. The $182 million presale contribution drove most of the increase in other revenue and supported adjusted EBITDA. The release did not provide a comparable future contribution.
• End-of-period USDC circulation was flat. This contrasts with Circle’s unchanged target of 40% through-cycle CAGR, making circulation growth and competitive pressure from other stablecoins important indicators.
• Arc and Tazapay introduce execution and regulatory exposure. Arc faces adoption, technology, governance, token, and legal risks, while the Tazapay acquisition remains subject to regulatory approvals and is not expected to close until 2027.
• Operating costs are rising. Spending increased across administration, infrastructure, depreciation, and marketing, so continued investment could pressure margins if revenue growth does not keep pace.

Summary

Circle’s Q3 2026 operating profit and adjusted EBITDA expanded much faster than net income, mainly because of ARC token presale revenue and lower distribution costs. The underlying reserve business faced pressure from a lower reserve return rate, although USDC transaction activity, platform balances, market share, and wallets increased. The main items to monitor are USDC circulation and reserve yields, the sustainability of non-reserve revenue, Arc’s adoption, and spending against the company’s unchanged guidance.