Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
On May 11, before the U.S. stock market opened, stablecoin issuer Circle officially announced its first-quarter 2026 financial results.
Financial results show that Circle's total revenue and reserve income for the first quarter amounted to $694 million, slightly below the market expectation of $715 million; EPS was $0.21, above the market expectation of $0.18; adjusted EBITDA was $151 million, a 24% year-over-year increase; net profit was $55 million, a 15% year-over-year decline.
Affected by the earnings report release, CRCL experienced significant volatility pre-market, with an initial pre-market gain of nearly 6% gradually eroded amid fluctuations. As of 22:00, after opening in U.S. trading, CRCL initially continued to drop sharply but quickly reversed direction, currently trading at $115.74, up 2.52% on the day.
Core Data Interpretation
As shown in the financial report, Circle’s total revenue and reserve income for this quarter amounted to $694 million, representing a 20% year-over-year increase but breaking the previous streak of consecutive quarterly growth ($579 million → $658 million → $740 million → $770 million → $694 million) and falling short of market expectations.
Circle attributes the slowdown in revenue growth to a decline in the Reserve Return Rate. On December 10, 2025, the Federal Reserve lowered the target range for the federal funds rate by 25 basis points to 3.5%-3.75%, thereby reducing the yield on Circle’s reserve assets, which are primarily U.S. Treasuries.
Despite relatively weak revenue, Circle's earnings report still reveals some optimistic local data.
First, Circle's other revenue (excluding reserve income) reached a new high of $42 million, showing a consecutive quarterly growth trend ($21 million → $24 million → $29 million → $37 million → $42 million).
As we outlined in our article today afternoon, “Earnings Report, Legislation, Fed... Circle Faces Three Major Tests This Week,” this means Circle’s revenue sources are becoming more diversified, with its platform services, API tools, and payment products generating substantial commercial returns, reducing its reliance on interest income.
Another key metric to note is RLDC Margin, which represents the profit margin after deducting distribution costs, reflecting the core business profitability excluding distribution expenses and widely regarded as Circle’s most critical profitability indicator. This quarter, Circle’s RLDC Margin reached 41%, marking four consecutive quarters of growth (36% ➡️ 39% ➡️ 40% ➡️ 41%), indicating that Circle’s control over distribution costs is becoming increasingly efficient.
Let’s take another look at expenses. Distribution and Transaction Costs remain Circle’s largest expense item, reaching $405 million this quarter, a 17% year-over-year increase. This expense is primarily tied to the USDC distribution agreement with Coinbase, which expires this August; how the contract is renewed—particularly whether the revenue share ratio is adjusted—will significantly impact Circle’s future expenses and profitability.
Excluding distribution costs, total operating expenses rose sharply from $138 million last year to $242 million, a year-over-year increase of 76%. The largest increase came from compensation expenses, which grew from $75.62 million to $138 million—nearly doubling—Circle explained this was primarily due to stock-based compensation and related taxes following the IPO.
Due to increased expenses, Circle's operating profit for this quarter declined from $92.94 million in the same period last year to $45 million; net income attributable to common shareholders decreased from $64.79 million last year to $55.25 million; earnings per share (EPS) were $0.23, and diluted EPS was $0.21.
Other operational highlights
In addition to core financial data, Circle disclosed several operational highlights in its Q1 earnings report.
The most critical data point is that the circulating supply of USDC reached $77 billion at the end of the first quarter, a 28% year-over-year increase, while at the same time, on-chain transaction volume for USDC in the first quarter reached an astonishing $21.5 trillion, a 263% year-over-year increase. Visa Onchain Analytics also shows that USDC accounted for 63% of total stablecoin transaction volume across the network in the first quarter.
The growth rate of trading volume far exceeds that of circulating supply, meaning each USDC is being transferred and utilized on-chain at a much higher frequency — USDC is not merely sitting statically in wallets, but is actively and frequently used in payments, DeFi, cross-border settlements, and other real-world applications.
Another key point is that Circle has disclosed that its payment network, Arc Network, has completed a $222 million ARC token presale, valuing the project at $3 billion, with investors including prominent institutions such as a16z, BlackRock, Intercontinental Exchange, Standard Chartered, and SBI. The newly disclosed ARC token whitepaper reveals that 60% of the tokens will be allocated to the ecosystem (token sales, developer grants, and network growth); 25% to Circle (protocol development, staking, and governance); and 15% to a long-term reserve (for strategic flexibility and economic stability).
During the subsequent earnings call, when asked how ARK tokens attributable to Circle would be accounted for, Circle co-founder and CEO Jeremy Allaire stated: "When the ARC tokens are created, these tokens will be recorded on Circle’s balance sheet at cost, which is zero. Subsequently, after Circle fulfills its obligations under the token presale agreement, we will recognize the value of these tokens as 'other income,' and this value will then be directly reflected in RLDC and adjusted EBITDA."
This also means that, in a future quarter, Circle’s financial revenue figures will appear “particularly strong” due to the inclusion of ARK token value.
In addition, Circle’s institutional payment service, Circle Payments Network (CPN), under the Circle brand, has an estimated annual transaction volume of $8.3 billion (projected based on 30-day data through March 31); in April, Circle launched its “Managed Payments” product to expand its payment offerings, enabling financial institutions to launch stablecoin payment services without having to manage digital assets themselves.
To prepare for the AI agent-driven future of business, Circle also announced the launch of Agent Stack, a suite of infrastructure services and tools designed for the AI agent economy, enabling autonomous AI agents with high-speed, low-cost financial services. Jeremy Allaire stated: “With the presale of the ARC token, the growing momentum of the Arc Network, and the launch of Agent Stack, we are building trusted infrastructure for AI-native economic activity and a more programmable internet finance system.”
Circle's new move
Amid the macro backdrop of fading high-yield dividends (following Waugh’s appointment as Fed Chair, who is expected to prioritize a “rate cuts + balance sheet reduction” strategy), Circle clearly seeks to avoid complete dependence on Fed interest rate policy, and has quietly shifted its focus toward diversified expansion into non-interest income streams.
Based on the details disclosed in this quarterly report, after rolling out services such as CPN, Managed Payments, Agent Stack, and Arc Network, Circle’s goal is no longer limited to being merely a “stablecoin issuer,” but rather to position USDC as the foundational dollar network for the internet era. Under this new vision, Circle’s services are no longer confined to exchanges or crypto-native users, but are expanding comprehensively into cross-border payments, enterprise settlement, and the AI agent economy.
Circle's ambition is clear: to transform USDC from a "static reserve asset" into "liquid economic blood." This may be the real grand strategy Circle is pursuing.