Circle released its financial results for the second quarter of 2026 before the U.S. stock market opened on Aug. 5. The company posted $701 million in total revenue and reserve income, up 7% year over year. Adjusted EBITDA was $143 million, up 8%, and diluted earnings per share came in at $0.18.
Net income was $48.2 million, compared with a loss of $482.1 million in the same period last year. Circle said the sharp improvement was mainly tied to a large one-time stock-based compensation charge recorded during its IPO in the second quarter of last year, which lifted the comparison base.
Against expectations, quarterly revenue came in below Wall Street consensus of about $713 million, marking the second straight quarter in which Circle missed on revenue after also falling short in the first quarter. Adjusted EPS of $0.18, however, was above the market estimate of $0.16.
Circle shares swung after the report. The stock rose more than 8% in premarket trading, then fell nearly 3% during the session before trimming losses. CRCL is down about 20% this year, with a current market capitalization of about $16 billion.
Reserve income remained the core earnings driver
According to the earnings filing, reserve income remained the main source of revenue in the quarter. Circle reported $668 million in reserve income for Q2, up 5% year over year. The increase was driven mainly by a 25% rise in average USDC in circulation, while a 66-basis-point decline in reserve yield offset part of that growth.
Other revenue totaled $34 million, up 41%, with growth attributed to subscription and services revenue.
On costs and profitability, total distribution, transaction and other costs were $412 million, up 1% from a year earlier. Operating expenses were $254 million, down 56%, with that decline also affected by the higher IPO-related stock compensation base in the prior-year quarter. Excluding that factor, adjusted operating expenses were $146 million, up 23%, with spending directed mainly to product development, infrastructure and AI capabilities.
For profitability metrics, revenue less distribution and transaction costs, or RLDC, was $289 million, up 15% year over year. RLDC margin was 41%, an increase of 302 basis points.
Compared with the first quarter, revenue edged up from $694 million. Adjusted EBITDA slipped from $151 million to $143 million, and diluted EPS fell from $0.21 to $0.18.
USDC circulation rose 19% year over year, on-chain volume reached $14.8 trillion
On core operating metrics, USDC ending circulation was $73.3 billion, up 19% from a year earlier. That figure was below the $77.0 billion recorded at the end of the first quarter and also below this year’s peak of nearly $80 billion. Average circulation in the quarter, by contrast, reached a record $76.5 billion. Reserve yield was 3.5%.
On-chain transaction volume reached $14.8 trillion, up 151% year over year, though that growth rate slowed from 263% in the first quarter. Circle put its stablecoin market share at 27%, down 66 basis points from a year earlier. Active wallets rose 24% to 7 million. USDC held within the Circle platform reached $12.4 billion, up 106% year over year and accounting for 17% of total circulation.
Among other digital assets, EURC grew 2.2x year over year, while USYC grew 10x, with assets under management above $3 billion.
Business updates: trust approvals, CPN, Agent Stack and Arc mainnet timing
On the operating side, Circle said it had received approval from the Office of the Comptroller of the Currency to establish Circle National Trust, a national trust bank. It also received approval from the New York Department of Financial Services to open Circle New York Trust, a digital asset trust company.
As of the end of the second quarter, CPN had reached $14.7 billion in annualized transaction volume over the prior 30 days, up 76% sequentially. A total of 175 financial institutions had registered, up 29% from the prior quarter.
In agent-related products, Circle said it launched Agent Stack in May 2026 after rolling out payment infrastructure for agents earlier in the first half. The company said the offering now has more than 900 paid services, and 99.3% of x402 agent payment volume is settled in USDC. Circle said it plans to release a broader agent product roadmap in the second half, including products that let agents earn revenue.
Arc blockchain is scheduled to launch its public mainnet on Sept. 16. Founding validator nodes include BlackRock, DTCC, Galaxy, Mastercard, Visa and Standard Chartered. Circle said BlackRock plans to deploy the BUIDL fund on Arc, while DTCC will tokenize custody assets on the network. New institutional integrations added during the quarter included BNY, Standard Chartered, Nium, JCB, Grupo Bind and Marex.
Wall Street views split before the report
Before the earnings release, Wall Street had already shown a clear divide on Circle’s valuation.
Morgan Stanley cut Circle to underweight from equal weight and slashed its price target to $38 from $106. Mizuho analysts last Friday assigned a neutral rating and lowered their target price to $45 from $50.
TD Cowen took the opposite stance, initiating coverage with a buy rating and an $82 target. Analyst Bryan Bergin said the market may be underestimating Circle’s potential to expand from a stablecoin issuer into a broader financial infrastructure platform.
Earnings call: Coinbase agreement renewed, Hyperliquid revenue sharing to show up from Q3
On the earnings call, co-founder and CEO Jeremy Allaire said Circle’s distribution agreement with Coinbase had been renewed on existing terms, and USDC would remain embedded as a core asset across Coinbase products.
Addressing competition in distribution, Allaire said Circle and Coinbase had jointly reached a revenue-sharing arrangement with Hyperliquid. As of quarter-end, about 90% of Hyperliquid’s USDC was held on Coinbase’s platform and about 10% on Circle’s platform. He said the impact would begin to be reflected in the third quarter.
Open USD competition drew analyst attention
Competition was one of the central topics in the Q&A section of the call.
On June 30, Open Standard announced plans to launch Open USD, a revenue-sharing stablecoin, together with more than 140 institutions including Visa, Mastercard, Stripe, BlackRock and Coinbase. The product is designed around zero minting and redemption fees and a model in which most reserve income is distributed to partners.
On the day of that announcement, Circle shares at one point fell 17%, as the market weighed the possible effect on USDC’s reserve-income-based model.
Citi analyst Pete Christensen asked how Circle would compete for distribution channels as reserve-income sharing becomes more common across the industry, especially given Circle’s existing economics with Coinbase.
Allaire said Circle has signed distribution partnerships with more than 150 companies and often works with Coinbase on joint distribution efforts. He pointed to the Hyperliquid revenue-sharing arrangement as one example.
He added that about 70% of companies that have expressed interest in such alliance projects are already partners in the Circle network. Circle also announced on the day of earnings that Visa and Mastercard would expand their roles as key infrastructure partners for Arc.
Arc testnet and ARC token presale details
On Arc, Allaire said the testnet has processed more than 500 million transactions across nearly 3 million wallets with almost zero downtime. He also said Arc’s potential may exceed that of USDC itself.
As for token economics, Circle said that by the end of the second quarter, ARC presales had raised about $242 million in total. The company sold 807.5 million tokens at a uniform price of $0.30 each, implying a fully diluted valuation of about $3 billion.
The two presale rounds have both been completed. The first round in May sold 740 million tokens for about $222 million. The second round, which closed at the end of June, added 67.5 million tokens for about $20.25 million.
a16z crypto led with about $75 million. Other participants included BlackRock, Apollo, ICE, SBI, Janus Henderson, Standard Chartered Ventures, ARK Invest, Haun Ventures and Bullish.
For allocation, Circle received 25% of the initial 10 billion token supply, to operate validator nodes and earn staking income. Another 60% was allocated to network builders and users, and 15% was placed into long-term reserves.
Policy, AI agents, market structure and capital return comments
On policy, Allaire said the CLARITY Act is being discussed on a bipartisan basis and could move forward in the Senate this week. He also said the previously passed Genius Act will take effect in January 2027.
Agent economics was another focus on the call. Allaire said Cloudflare has announced support for x402 and USDC agent wallets. Within Circle, 86% of employees use AI tools every week, and the company has released more than 1,100 AI applications this year.
Management also discussed shifts in market structure. Last week, nearly 75% of trading volume on Hyperliquid came from real-world assets. USDC accounts for 40% of collateral on Binance and Hyperliquid perpetual contracts. In prediction markets, Polymarket spot trading volume has grown more than 8x year over year, and the platform is a strategic USDC distribution partner.
Chief Financial Officer Jeremy Fox-Geen also said Circle has no near-term plan for a quarterly dividend. He added that the addressable money market is about $120 trillion, with roughly $60 trillion of that in non-interest-bearing funds.
Full-year guidance raised for other revenue and RLDC margin
Fox-Geen said about $180 million in presale revenue is expected to be recognized in 2026 and has already been included in the raised guidance. Once recognized, it will flow directly into net income.
Circle raised its full-year guidance for other revenue to $310 million-$330 million from the prior range of $150 million-$170 million. The increase includes recognized ARC token presale revenue.
It also raised full-year RLDC margin guidance to 41.7%-43.7% from 38%-40%. Excluding Arc-related revenue, the figure would be close to the midpoint of the prior range.
Full-year adjusted operating expense guidance was left unchanged at $570 million-$585 million, with the company expecting to land toward the high end of the range.
For USDC circulation, Circle maintained its multi-year target of 40% compound annual growth.