Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
Before the U.S. market opened on May 11th, stablecoin issuer Circle officially released its first-quarter 2026 financial report.
The financial report data shows, Circle's total revenue and reserve income for the first quarter were $694 million, slightly below the market expectation of $715 million; EPS was $0.21, higher than the market expectation of $0.18; adjusted EBITDA was $151 million, a year-on-year increase of 24%; net profit was $55 million, a year-on-year decrease of 15%.
Influenced by the earnings release, CRCL experienced significant volatility in pre-market trading. A nearly 6% pre-market gain was gradually erased amid fluctuations. As of 22:00, CRCL saw further substantial declines after-hours, but then quickly rebounded from losses to gains, temporarily reported at $115.74, representing a daily increase of 2.52%.
Interpretation of Core Data
As shown in the report, this quarter Circle's total revenue and reserve income was $694 million, representing a 20% year-on-year increase. However, this broke the previous consecutive quarterly growth trend ($579M ➡️ $658M ➡️ $740M ➡️ $770M ➡️ $694M) and also failed to meet market expectations.
Circle attributed 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 compressing the yield on Circle's reserve assets, which are primarily U.S. Treasuries.
Despite the relatively weak revenue, Circle's financial report still revealed some locally optimistic data points.
First, Circle's other revenue (excluding reserve income) hit a record high of $42 million, showing a consecutive quarterly growth trend ($21M ➡️ $24M ➡️ $29M ➡️ $37M ➡️ $42M).
As we mentioned in this afternoon's article "Earnings Report, Legislation, Federal Reserve... Circle Faces Three Major Tests This Week," this indicates that Circle's revenue sources are becoming more diversified. Its platform services, API tools, and payment products are generating substantial commercial returns, and its reliance on interest income is decreasing.
Another noteworthy data point is the RLDC Margin, which is the profit margin after subtracting distribution costs from revenue. This reflects the core business profitability after deducting distribution expenses and is widely regarded as Circle's most critical profitability indicator. This quarter, Circle's RLDC Margin reached 41%, achieving growth for four consecutive quarters (36% ➡️ 39% ➡️ 40% ➡️ 41%). This means Circle's control over distribution costs is becoming more efficient.
Now, let's look at the expenditure situation. Distribution and Transaction Costs remain Circle's largest expense item, reaching a high of $405 million this quarter, a year-on-year increase of 17%. This expense is primarily linked to the USDC distribution contract with Coinbase. This contract is set to expire in August this year, and how it is renewed (mainly whether the revenue-sharing ratio will be adjusted) will significantly impact Circle's subsequent expenditures and profit situation.
Excluding distribution costs, Total Operating Expenses also surged from $138 million last year to $242 million, a year-on-year increase of 76%. The most significant increase came from Compensation expenses, which rose from $75.62 million to $138 million, almost doubling — Circle explained this was mainly due to stock-based compensation expenses and related taxes following the IPO.
Affected by the sharp increase in expenditures, Circle's operating profit for this quarter fell to $45 million from $92.94 million in the same period last year; net profit attributable to common shareholders decreased from $64.79 million last year to $55.25 million; Earnings Per Share (EPS) was $0.23, diluted to $0.21.
Other Operational Highlights
In addition to core financial data, Circle also disclosed several operational highlights in the Q1 report.
The most critical data point is that USDC's circulation at the end of the first quarter reached 77 billion tokens, a year-on-year increase of 28%. However, simultaneously, the on-chain transaction volume of USDC in the first quarter reached a staggering $21.5 trillion, a year-on-year increase of 263%. Data analysis from Visa Onchain Analytics also shows that USDC accounted for 63% of the total stablecoin transaction volume in the network during the first quarter.
The growth rate of transaction volume far exceeds that of circulation volume, meaning the frequency at which each USDC token is transferred and used on-chain has significantly increased — USDC is not sitting statically in wallets but is being genuinely and frequently used for payments, DeFi, cross-border settlements, and other scenarios.
Another key highlight is that Circle also disclosed that its payment network Arc Network has completed a $222 million ARC token pre-sale, with a valuation as high as $3 billion. Investors include prominent institutions like a16z, BlackRock, Intercontinental Exchange, Standard Chartered, SBI, etc. The ARC token whitepaper disclosed today shows that 60% of the tokens will be allocated to the ecosystem (token sales, developer grants, network growth); 25% will be allocated to Circle (protocol development, staking, and governance); 15% will be allocated to long-term reserves (strategic flexibility and economic stability).
Furthermore, the estimated annual transaction volume (projected based on 30-day data as of March 31st) for Circle's institutional-focused payment service, Circle Payments Network (CPN), has also reached $8.3 billion; in April, Circle also launched the "Managed Payments" product to expand its payment offerings. This product allows financial institutions to initiate stablecoin payment businesses without managing digital assets themselves.
To prepare for the AI Agent-driven commercial future, Circle also announced the launch of Agent Stack. This is a suite of infrastructure services and tools for the AI Agent economy, designed to provide high-speed, low-cost financial service capabilities for autonomously operating AI Agents. Circle co-founder and CEO Jeremy Allaire's vision regarding this is expressed as: "With the pre-sale of the ARC token, the accumulation of momentum for the Arc Network, and the launch of the Agent Stack, we are building trusted infrastructure for AI-native economic activity and a more programmable internet financial system."
Circle's New Game Plan
Against the macro backdrop of the ebbing high-interest dividend (Warsh is expected to advocate a "rate cut + balance sheet reduction" strategy upon succeeding as Fed Chair), Circle clearly does not want to be entirely subject to the Federal Reserve's interest rate policy. Its strategic focus has quietly shifted towards the diversified expansion of non-interest income.
Judging from the details disclosed in this quarterly report, after successively launching services like CPN, Managed Payments, Agent Stack, and Arc Network, Circle's goal is no longer merely to be a "stablecoin issuer." Instead, it is attempting to build USDC into the underlying dollar network for the Internet era. Under this new vision, Circle's service targets are no longer limited to exchanges or crypto-native users but are extending into cross-border payments, corporate settlements, and even the AI Agent economy.
Circle's ambition is already quite clear: to completely transform USDC from a "static reserve asset" into "flowing economic lifeblood." This is perhaps the grand strategy that Circle truly wants to execute.
