Circle Q3 Revenue Hits $865M With $182M ARC Boost

ARC sales change Circle’s Q3 growth picture

Circle’s November 4 release attributed the jump in other revenue primarily to recognition of ARC presale revenue. It also attributed higher adjusted EBITDA to that revenue and lower distribution costs, partly offset by spending on new products.

Using rounded company figures, revenue excluding ARC fell about 7.7% against the year-earlier $740 million total. The $182 million contribution was roughly 21% of reported revenue. Those calculations describe the earnings mix; they are not a separate accounting restatement or a forecast.

The presentation also shows $135 million in adjusted EBITDA excluding ARC, compared with the reported $317 million. Token sales can therefore lift both the revenue line and this measure of profitability without demonstrating an equivalent increase in recurring customer activity.

Adjusted EBITDA excludes several expenses and should not be substituted for earnings under generally accepted accounting principles. Net income from continuing operations was $226 million, up 5%, a much smaller growth rate than the reported 85% rise in adjusted EBITDA.

The comparison has changed since Circle’s second-quarter results, when it reported $701 million in revenue and reserve income and $48 million in net income. Headline revenue has risen sequentially, while the Q3 total excluding ARC is below Q2. The difference makes the composition of future revenue especially relevant.

USDC reserve income falls despite higher average balances

USDC finished September with $73.9 billion in circulation. Circle reported quarter-end year-over-year growth rounded to zero, while average circulation rose 8% to $73.3 billion. A closing balance and a quarterly average measure different things, so those readings can coexist.

Reserve income fell 8% to $658 million. Circle cited a 61-basis-point annual decline in the reserve return rate, partly offset by the larger average USDC balance. A basis point is one hundredth of a percentage point.

The underlying economic tension is straightforward: more stablecoins outstanding can expand the assets generating reserve income, while lower returns on those assets can pull earnings in the other direction. Supply growth alone does not determine the revenue outcome.

Distribution costs also affect how much income Circle retains. Its earlier explanation of USDC partner costs and redemption terms detailed why reserve earnings are not all retained by the issuer. Gross reserve income consequently provides an incomplete picture of profitability.

For a sequential operating comparison, Circle’s August release reported $14.8 trillion in Q2 USDC onchain transaction volume. Q3 volume was $13.9 trillion, despite rising 49% against the year-earlier period. Annual growth and a sequential decline tell different stories about the pace of activity.

Transaction volume measures movement through the network. It is not the amount of USDC outstanding, Circle revenue, or necessarily retail payment spending. Treating those figures as interchangeable would overstate what the results establish.

Circle’s next test is revenue beyond token sales

The presentation classifies selective ARC sales as event-based revenue. Potential staking rewards are a separate future category, tied to the network’s planned proof-of-stake transition. That distinction limits how much recurring income can be inferred from this quarter’s token contribution.

Circle’s infrastructure expansion also predates this release. Its Tazapay acquisition agreement was already announced in September. Repeating the deal in quarterly highlights does not make it a newly completed acquisition or establish additional realized revenue from combining the businesses.

The next useful comparison will separate reserve earnings, customer-service and transaction revenue, and further ARC sales. Each responds to different drivers. A stronger total can coexist with pressure in an older revenue stream, as this quarter illustrates.

Broader sentiment remained cautious when checked November 5 at 00:04 UTC: Alternative.me’s Bitcoin Fear and Greed Index displayed 34, or Fear, versus 26 for its previous reading. It is a Bitcoin-focused sentiment measure, rather than an assessment of Circle’s accounts.

The results do not establish how much ARC sales revenue will recur next quarter. Future disclosures on the revenue mix, USDC balances and reserve returns will show whether operating growth broadens beyond the token contribution.