Circle (CRCL) Stock: Stablecoin Growth Drives Triple-Digit Profit Gain in Q3

TLDR

• Circle reported 66% revenue jump to $740 million in Q3, driven by USDC stablecoin growth and reserve income
• Net profit tripled to $214.4 million compared to $71 million a year earlier, with earnings per share beating expectations at $0.64
• USDC circulation more than doubled to $73.7 billion as stablecoin adoption grows among traditional financial firms
• Stock fell 3-5.5% despite strong earnings due to raised operating expense forecast of $495-$510 million
• Company launched Arc blockchain platform to diversify revenue streams beyond reserve income as rate cuts loom

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Circle Internet Group posted a 66% revenue increase for the third quarter, reaching $740 million. The New York City-based company’s growth came from higher reserve income tied to its USDC stablecoin.

The digital token issuer saw net profit jump 202% year-over-year to $214.4 million. Last year’s third quarter profit stood at $71 million.

Earnings per share hit $0.64, beating analyst expectations of $0.22. The beat represents one of the stronger performances in the digital asset sector this quarter.

Circle Internet Group, CRCL

USDC circulation more than doubled from a year earlier. The stablecoin reached $73.7 billion in circulation during the reporting period.

Circle earns reserve income by investing the fiat reserves backing USDC. These reserves consist of low-risk assets like U.S. dollars and Treasuries.

The Genius Act, enacted earlier this year under the Trump administration, created a regulatory framework for dollar-backed stablecoins. This legislation aims to make digital payments safer and more secure.

Operating Costs Rise

Despite the strong financial results, CRCL shares dropped 3-5.5% in trading. The decline came after Circle raised its annual adjusted operating expense forecast.

The company now expects operating expenses between $495 million and $510 million. Management cited platform development investments and higher payroll taxes as reasons for the increase.

Earnings before interest, taxes, depreciation and amortization reached $166 million. This marked a 78% increase from the prior year period.

Traditional financial firms are rolling out new stablecoin offerings. Regulators worldwide are moving toward clearer rules for digital tokens.

Revenue Diversification Plans

Circle faces pressure on reserve income as interest rate cuts approach. The company is working to diversify its revenue streams to offset this challenge.

Earlier this year, Circle launched Arc, a public blockchain built for stablecoin transactions. The platform targets cross-border settlements, merchant payments and decentralized finance integrations.

The stablecoin market is gaining traction globally. Both established financial institutions and newer fintech companies are entering the space.

Circle’s USDC ranks as the world’s second-largest stablecoin by market value. The token competes with other dollar-backed digital currencies in the growing market.

The company’s third-quarter performance reflects broader adoption trends. More users are turning to stablecoins for payments and transfers.

Total revenue and reserve income for the quarter reached $740 million, up from $446 million a year earlier. This represents a 103% increase year-over-year.

CRCL shares traded at $98.30 on Tuesday before falling further in pre-market trading Wednesday. The stock dropped roughly 3.5% in early trading following the earnings announcement.

Circle’s Q3 results show USDC circulation doubled to $73.7 billion while net profit tripled to $214.4 million despite stock declining on expense guidance.

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