Author: Chloe, ChainCatcher
Circle announced its first-quarter 2026 earnings pre-market, reporting double-digit year-over-year revenue growth, alongside the disclosure that its new blockchain, Arc, completed a $222 million pre-sale at a $3 billion valuation. Although net income declined 15% year-over-year due to increased stock-based compensation and operational investments, market attention remained focused on the long-term narrative surrounding Arc and AI agent payments. CRCL shares surged nearly 16% on the day, closing at $131.76, the highest level since mid-March.
USDC reaches new all-time scale, with on-chain transaction volume up 263% year-over-year
Circle's total revenue and reserve earnings for the first quarter reached $694 million, a 20% year-over-year increase. Among these:
Reserve Income: $653 million, up 17% year-over-year, primarily driven by a 39% year-over-year increase in average USDC circulation, partially offset by a 66-basis-point decline in reserve yield (down to 3.5%).
Other Revenue: $42 million, approximately doubling year-over-year, reflecting strong growth in subscription, service, and transaction revenue.
Net income from continuing operations: $55 million, a 15% year-over-year decline, primarily due to increased stock-based compensation and related payroll taxes following the IPO, as well as investments in products, distribution, and operational infrastructure.
Adjusted EBITDA: $151 million, up 24% year-over-year; adjusted EBITDA margin of 53%.
Notably, revenue and net profit both fell short of Wall Street analysts’ expectations prior to the earnings report. According to Bloomberg, sell-side analysts had forecasted revenue of approximately $720.8 million and a reserve yield of 3.56%, neither of which was met; however, adjusted EBITDA of $151 million exceeded the market expectation of $137.9 million, providing some support. Nevertheless, this also signals that the interest rate environment will be one of Circle’s most critical external variables going forward.
Additionally, on the operational side, USDC's circulating supply reached $77 billion, a 28% year-over-year increase; first-quarter on-chain USDC transaction volume reached $21.5 trillion, a 263% year-over-year increase, reflecting a significant rise in the usage density of stablecoins as a medium for payments and settlements.
According to Visa Onchain Analytics data, USDC accounted for 63% of stablecoin transaction volume in the first quarter; meanwhile, Circle’s USYC has become the world’s largest tokenized money market fund as of May 7. Other key operational metrics include USDC’s end-of-period “platform retention” amount of $13.7 billion, a 254% year-over-year increase; 7.2 million “active wallets” holding more than $10 in USDC, a 47% year-over-year increase; and a stablecoin market share of 28%, down 62 basis points year-over-year, directly reflecting competitive pressure from Tether and other rivals.
The public blockchain Arc has completed a token financing round of $222 million with an impressive lineup of investors.
Circle also announced Arc, its Layer 1 blockchain for institutional finance, whose native token ARC has completed a $222 million pre-sale, achieving a fully diluted network valuation of $3 billion. According to crypto asset data platform RootData, the funding round was led by a16z with $75 million, with participation from over ten institutions including BlackRock, Apollo Funds, Intercontinental Exchange (ICE), Standard Chartered Ventures, ARK Invest, and Bullish.
Circle CEO Jeremy Allaire stated that the company is transitioning from a stablecoin issuer to a broader internet platform company, entering the operating system and application businesses. Regarding token allocation, Circle holds 25% of the initial 10 billion supply, 60% is allocated to network builders and participants, and 15% is reserved for long-term reserves.
It is noteworthy that Circle stated this financial forecast does not include the financial impact of the ARC Token presale, the Arc incentive program, or future Arc-related revenue.
Reaffirming the previously announced annual guidance, with no adjustments made.
Additionally, Circle is launching a suite of “Agent Stack” products, including Circle CLI (command-line interface), Agent Wallets, and Agent Marketplace, enabling developers and merchants to build, fund, and monetize AI agent-driven activities using USDC across multiple blockchains and payment protocols.
The financial report revealed that, as of March 31, the Circle Payments Network (CPN) had a transaction volume of $8.3 billion, annualized based on 30-day activity. The newly launched Managed Payments in April enables financial institutions to offer stablecoin payment services without having to manage digital assets themselves.
The new enterprise use cases for USDC include: Kyriba integrating USDC into corporate treasury systems and Polymarket expanding the use of USDC as a core collateral and settlement asset.
Finally, for the full-year 2026 outlook, Circle has chosen to reaffirm its previously disclosed guidance without any upward or downward revision. Specifically, USDC circulation is still expected to maintain a 40% compound annual growth rate (CAGR) over the multi-year cycle; other revenue for FY2026 is projected to range between $150 million and $170 million; RLDC profit margin is anticipated to fall between 38% and 40%; and adjusted operating expenses are forecasted at $570 million to $585 million.
Similarly, this guidance does not incorporate the financial impact of the ARC Token presale, the Arc incentive program, or future revenue related to Arc, meaning that subsequent figures could still be revised upward if the Arc ecosystem launches successfully.
Most Wall Street analysts have given bullish ratings.
After the earnings report, CRCL surged approximately 16% on the day, closing at $131.76, its highest level since March 18, with a year-to-date gain of 66% and a market cap rebounding to approximately $35 billion.
Wall Street analysts are generally optimistic about Circle’s stock performance over the next 12 months and beyond. According to consensus target prices compiled by TipRanks, the average target is $138.50, with Citi’s Peter Christiansen setting a 12-month target of $243 and Bernstein’s Gautam Chhugani setting a target of $190. Along with 10 other analysts, all have issued a “Buy” rating.
However, analysts still have reservations about short-term execution risks. Owen Lau of Clear Street noted that while the narratives around Arc and Agent Stack are compelling, “they are not yet substantive businesses.” John Todaro of Needham & Co. highlighted that recent hacks of DeFi protocols could indirectly impact USDC use cases: “What if funds leave DeFi—how would that affect Circle’s business?” Andrew Jeffrey of William Blair believes CRCL’s short-term price volatility will remain elevated, but emphasized that Circle holds significant advantages in “stablecoin commerce,” with multiple catalysts advancing simultaneously.
It is evident that Circle’s financial report reveals a stablecoin business still expanding rapidly, yet facing compressed unit economics due to pressure from interest rates and distribution costs. The market’s willingness to reward a 16% single-day price increase reflects an expectation that Arc blockchain, the ARC token economy, and AI agent payments will, over the medium to long term, reposition Circle from a stablecoin issuer to a “network financial operating system,” unlocking second and third growth curves beyond its existing USDC spread model.
The market’s next focus may be on the Arc mainnet launch timeline, market adoption of the ARC token after its public circulation, and the impact of the subsequent implementation of the U.S. GENIUS Act and Clarity Act on the overall stablecoin competitive landscape.