Circle reported $865 million in third-quarter revenue and reserve income, up 17% year over year, while adjusted EBITDA reached $317 million and beat Wall Street expectations. But a $182 million contribution from its ARC token presale boosted the results: excluding that amount as a simple comparison, quarterly revenue was about $683 million, below the $740 million reported a year earlier. The company’s core reserve business remains under pressure.
ARC presale lifts reported earnings
Circle’s adjusted EBITDA exceeded the $218 million market consensus and Clear Street’s $220 million forecast. Clear Street said the outperformance was driven mainly by ARC presale revenue, which came in $92 million above its estimate. Excluding that contribution, adjusted EBITDA would have been about $135 million, down from $143 million in the second quarter.
The revenue figures show a similar contrast. Circle reported total revenue and reserve income of $865 million; a simple subtraction of the ARC presale contribution puts the figure at about $683 million. This is an illustration of the presale’s effect on the quarterly total, not a company-reported adjusted profit measure.
Nor does the total presale revenue necessarily equal cash received during the third quarter. Revenue recognition reflects progress in meeting the relevant performance obligations and does not establish that the Arc network has begun generating sustainable, recurring transaction-fee revenue.
Clear Street estimated Circle’s revenue after distribution costs at $453 million, implying a margin of 52.4%. Excluding ARC, the margin would have been about 39.7%, below the 41.2% recorded in the second quarter. The presale therefore lifted both reported revenue and the quarter’s apparent profitability.
USDC activity grows as reserve yields fall
Circle’s traditional reserve business declined despite broader USDC use. Reserve income fell 8% year over year to $658 million in the third quarter. The average yield on USDC reserves dropped 61 basis points to 3.5%, offsetting part of the support from an 8% increase in average USDC circulation. Because returns on reserve assets are sensitive to interest-rate changes, market rates remain an important driver of Circle’s core income.
CEO Jeremy Allaire said USDC accounted for 79% of stablecoin transaction volume in the quarter, up from 66% a year earlier. On-chain transfer volume rose 49% year over year to $13.9 trillion, while USDC minting and redemption reached a record $208 billion.
The increase in activity gives Circle greater scale as it builds businesses beyond reserve income. But the transaction figures do not, by themselves, offset the financial impact of lower reserve yields.
Payments network expands as ARC revenue normalizes
Circle Payments Network connects financial institutions for cross-border settlement. Its annualized transaction volume reached $41.3 billion as of the end of September, more than 15 times the level a year earlier. After the quarter ended, annualized volume climbed above $58 billion. Circle also plans to acquire cross-border payments provider Tazapay to expand local payout capabilities; the deal is expected to close in 2027.
The company is also developing the Arc blockchain, which it describes as infrastructure for institutional settlement and programmable payments. Circle said more than 100 institutions and applications participated when Arc’s public mainnet launched in September. USDC accounted for 99.6% of payment volume settled through the x402 protocol.
These businesses are still expanding. Circle expects its payments network to generate meaningful revenue in 2027, but management has not issued formal guidance.
The expansion is unfolding as US stablecoin regulations approach implementation. Allaire expects the GENIUS Act to support adoption of regulated digital dollars when it enters the implementation phase in January. Meanwhile, Clear Street estimates that Circle’s other revenue could fall to $28 million to $48 million in the fourth quarter as the high base from ARC presale revenue recognized in September fades. Results in subsequent quarters should show more clearly whether payments and other businesses can offset pressure on reserve income and the expected decline in presale revenue.