ARC Token Presale Boosts Circle's Q3 Results While USDC Reserve Returns Decline
Third-quarter earnings at Circle received a significant boost from ARC token presale revenue, even as income from USDC reserves decreased, underscoring the company's strategic expansion into blockchain services and payment solutions.
Circle's third-quarter financial performance received its most significant lift from initiatives beyond its core stablecoin operations, with the firm booking $182 million in revenue from the presale of its ARC token, a contribution that helped counterbalance declining returns from the reserve assets supporting USDC, its primary stablecoin product.
The firm posted diluted earnings per share of $0.84, representing an increase from the $0.64 recorded in the same period last year. Combined revenue and reserve income climbed 17% to reach $865 million. Excluding the contribution from the ARC token presale, the company's revenue would have registered a year-over-year decline.
Trading at 16:05 UTC on Nov. 4, Circle shares declined 0.84% to $74.59, based on data from Yahoo Finance.
The financial results illustrate a strategic pivot at Circle. While its core stablecoin operations generate returns from reserves that back USDC, with income linked to prevailing interest rates and token circulation volumes, its emerging business lines are focused on generating revenue from the payment activities and financial services that these digital currencies facilitate.
USDC Reserve Returns Face Pressure From Declining Yields
In May 2025, Circle introduced its payments network designed to enable financial institutions to settle cross-border transactions using stablecoins. The company's blockchain platform for financial applications, Arc, became operational on public mainnet on Sept. 16, 2026. The blockchain's native ARC token is designed to facilitate network security and governance functions as Arc transitions toward a proof-of-stake consensus mechanism in 2027, with USDC serving as the currency for transaction fees.
This new revenue stream emerged at a time when declining yields on reserves overshadowed the expansion in USDC circulation. While average circulation grew 8% compared to the prior year, the reserve return dropped 61 basis points to reach 3.5%. Income from reserves decreased 8% to $657.6 million.
Interest rate levels were below those from the previous year, notwithstanding a Federal Reserve rate increase implemented in September. The central bank raised its benchmark range upward by a quarter percentage point to 3.75%–4% during September, though this remained under the 4%–4.25% range that was in effect one year prior. While Circle's reserve return showed a modest increase from the 3.48% recorded in the second quarter, the earnings headwind stemmed from the lower comparative yield on a year-over-year basis.
USDC circulation totaled $73.9 billion at the end of September, while its portion of the overall stablecoin market contracted by 1.83 percentage points to 27%.
The competitive landscape is simultaneously intensifying. By Sept. 30, Open Standard's Open USD had launched on Solana, with founding partners including Coinbase, Mastercard, Shopify, Stripe and Visa. This stablecoin framework allocates reserve earnings to participating partners following the deduction of a management fee, providing businesses with an alternative pathway to stablecoin access and a stake in the underlying economics.
Breakdown of Circle's Revenue Sources
The ARC presale fundamentally altered Circle's earnings composition. When ARC presale revenue is excluded from the calculations, total revenue and reserve income stood at $683 million, representing approximately an 8% decline year over year. Reported adjusted earnings before interest, taxes, depreciation and amortization surged 85% to $317 million. Stripping out the ARC contribution, adjusted EBITDA came in at approximately $135 million, down 21% from the $171 million recorded in the comparable period last year.
The company expects to generate staking rewards following Arc's transition to a proof-of-stake consensus model, which is targeted for implementation in 2027. This would establish an additional revenue stream, though it continues to be contingent on the network's ongoing development trajectory.
Additionally, Circle has begun implementing fees for certain activities on its payments network. During the earnings call, Chief Financial Officer Jeremy Fox-Geen indicated that the company projected material CPN revenue beginning in 2027. Chief Executive Jeremy Allaire characterized Circle's strategic approach as constructing interconnected networks, where expansion across stablecoins, payments and blockchain applications creates mutually reinforcing growth dynamics.
This is not just about payments, and it is not just about digital dollars. It is about multiple compounding flywheels on one platform. Every new member, every new builder, and every new asset makes the whole platform more valuable.
Jeremy Allaire, Circle CEO
The organization is simultaneously making adjustments to its headcount. The earnings materials disclosed a workforce reduction impacting approximately 5% of employees, a move Circle indicated was designed to better align its organizational structure with its operational model and core strategic priorities.