Key Takeaways:
Circle Internet Group reported Q2 revenue and reserve income of $701 million, up 7% year-over-year, while diluted EPS of $0.18 missed the $0.22 consensus by 18.2%.
"Our quarterly financial results reflect the current rate environment and a crypto market that has slowed — both are conditions outside our network," Jeremy Allaire, co-founder and CEO at Circle, said.
Reserve income rose 5% to $668 million, driven by 25% growth in average USDC circulation, partially offset by a 66-basis-point decline in the reserve return rate. Other revenue climbed 41% to $34 million. Net income swung to $48 million from a $530 million loss a year earlier, helped by lower stock-based compensation after the IPO. Adjusted EBITDA grew 8% to $143 million.
USDC in circulation reached $73.3 billion at quarter end, up 19% year-over-year, while onchain transaction volume hit $14.8 trillion, up 151%. The stablecoin held its $1 peg throughout the quarter, according to CoinGecko data.
The earnings miss came as USDC posted the largest absolute outflow among major stablecoins in Q2, according to CoinGecko, and competition from yield-bearing digital assets continues to pressure reserve yields. Circle's reserve return rate fell to 3.5% in Q1, down 66 basis points year-over-year. Management guided adjusted operating expenses of $570 million to $585 million for 2026 and an RLDC margin of 38 percent to 40 percent.
Circle's CPN network reached $14.7 billion in annualized transaction volume, up 76% quarter-over-quarter, with 175 financial institutions enrolled. The Agent Stack, launched in May, now hosts more than 900 paid services, with 99.3% of x402 agent-payment volume settling in USDC.
Institutional partnerships expanded during the quarter. BNY added USDC minting and redemption to its Digital Asset Custody platform, Standard Chartered launched integrated USDC access for institutional clients, and BlackRock is expected to deploy its BUIDL fund on Arc. The founding validator cohort for Arc includes BlackRock, DTCC, Mastercard, Visa, Standard Chartered and ICE.
Circle also received final approval from the U.S. Office of the Comptroller of the Currency to establish Circle National Trust, making it one of the first stablecoin issuers with a federal bank charter. The New York Department of Financial Services approved Circle New York Trust as a digital asset-focused limited purpose trust company.
The broader stablecoin market faces intensifying competition as yield-bearing digital assets and new entrants challenge USDC's position. The GENIUS Act, signed into U.S. law, is reshaping the payment stablecoin ecosystem, and Circle's federal trust bank charter positions it to manage the USDC Reserve directly. The company operated 7 million Meaningful Wallets at quarter end.
The stock fell 4.9% on the day as investors weighed the EPS miss against network growth. Wall Street consensus stands at 12 buy and 16 hold ratings, with a median price target of $122. The Arc mainnet launch on Sept. 16 and the trust bank charter's operational rollout will be the next events to watch for the stablecoin issuer.
This article is for informational purposes only and does not constitute investment advice.
