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Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

On May 11, before the US stock market opened, stablecoin issuer Circle officially released its first-quarter 2026 earnings report.

The financial data shows that Circle's total revenue and reserve income for the first quarter amounted to $694 million, slightly below the market expectation of $715 million; EPS was $0.21, higher than the market estimate of $0.18; Adjusted EBITDA was $151 million, a 24% year-over-year increase; Net profit was $55 million, down 15% year-over-year.

Following the earnings release, CRCL experienced significant pre-market volatility, with an initial gain of nearly 6% gradually eroding during fluctuations. As of 22:00, CRCL continued to decline sharply in after-hours trading but quickly reversed its losses, last trading at $115.74, up 2.52% for the day.

Key Data Breakdown

As shown in the report, Circle's total revenue and reserve income for the quarter was $694 million, a 20% increase year-over-year, but this interrupted the growth trend seen over several consecutive quarters ($579M → $658M → $740M → $770M → $694M) and fell short of 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 top-line revenue, Circle's earnings report still revealed some encouraging data points.

First, Circle's Other Revenue, excluding Reserve Income, reached a new high of $42 million, showing a growth trend over consecutive quarters ($21M → $24M → $29M → $37M → $42M).

As we mentioned in this afternoon's article "Earnings, Legislation, Fed... Circle Faces Three Major Tests This Week," this signifies that Circle's revenue sources are becoming more diversified. Its platform services, API tools, and payment products are generating substantial commercial revenue, reducing its reliance on interest income.

Another noteworthy metric is the RLDC Margin, which represents the profit margin after deducting distribution costs from revenue. This reflects the profitability of core business activities after distribution expenses and is widely considered 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 indicates that Circle's control over distribution costs is becoming more efficient.

Let's look at the expenses. Distribution and Transaction Costs remain Circle's largest expenditure, amounting to $405 million this quarter, a 17% increase year-over-year. This portion of expenditure 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 regarding potential adjustments to the revenue-sharing ratio) will significantly impact Circle's future expenses and profit status.

Excluding distribution costs, Total Operating Expenses surged from $138 million last year to $242 million, a substantial year-over-year increase of 76%. The primary driver of this increase was Compensation expenses, which nearly doubled from $75.62 million to $138 million. Circle explained that this was mainly due to the impact of stock-based compensation expenses related to the IPO and associated taxes.

Affected by the surge in expenses, Circle's operating profit for the quarter declined to $45 million, down from $92.94 million in the same period last year. Net profit attributable to common shareholders fell to $55.25 million from $64.79 million a year earlier. Earnings per share (EPS) were $0.23, or $0.21 on a diluted basis.

Other Operational Highlights

Beyond the core financial data, Circle also disclosed several operational highlights in its Q1 earnings report.

The most critical piece of data among them is that USDC's circulating supply reached 77 billion tokens at the end of the first quarter, a 28% year-over-year increase. However, simultaneously, USDC's on-chain transaction volume in the first quarter reached an astonishing $21.5 trillion, a 263% year-over-year increase. Data analysis from Visa Onchain Analytics also indicates that USDC accounted for 63% of total stablecoin transaction volume across the network in the first quarter.

The growth rate of transaction volume significantly outpaces the growth rate of circulating supply, meaning each USDC token is being transferred and utilized on-chain with much higher frequency. USDC is not statically sitting in wallets but is being genuinely and frequently used in applications like payments, DeFi, and cross-border settlements.

Another key point is that Circle also disclosed that its payment network, Arc Network, has completed a $222 million presale of ARC tokens, achieving a valuation of $3 billion. Investors include prestigious institutions such as a16z, BlackRock, Intercontinental Exchange, Standard Chartered, and SBI. The ARC token whitepaper released today reveals that 60% of the tokens will be allocated to the ecosystem (token sales, developer grants, network growth); 25% will go to Circle (protocol development, staking, and governance); and 15% will be allocated to a long-term reserve (strategic flexibility and economic stability).

Additionally, the estimated annual transaction volume for Circle's institutional payment service, Circle Payments Network (CPN), has reached $8.3 billion (extrapolated from the 30-day data ending March 31); In April, Circle launched the "Managed Payments" product to expand its payment offerings, allowing financial institutions to initiate stablecoin payment services without managing digital assets themselves.

To address the AI agent-driven commercial future, Circle also announced the launch of Agent Stack, a set of infrastructure services and toolkits designed for the AI agent economy, aiming to provide high-speed, low-cost financial service capabilities for autonomously operating AI agents. Jeremy Allaire, Co-founder and CEO of Circle, stated his vision: "With the presale of ARC tokens, the accumulation of Arc Network's momentum, and the launch of Agent Stack, we are building trusted infrastructure for AI-native economic activity and a more programmable internet financial system."

Circle's New Strategic Game

Against the macroeconomic backdrop of receding high-interest-rate dividends (with Warsh expected to prioritize "rate cuts + balance sheet reduction" upon succeeding as Fed Chair), Circle is clearly unwilling to remain entirely subject to the Fed's interest rate policy. Its strategic focus has quietly shifted towards diversified expansion of non-interest income.

Based on the details disclosed in this quarter's report, following the successive launches of services like CPN, Managed Payments, Agent Stack, and Arc Network, Circle's goal is no longer just to be a "stablecoin issuer." Instead, it is attempting to transform USDC into the foundational dollar network for the internet era. Under this new vision, Circle's target audience is no longer limited to exchanges or crypto-native users but is comprehensively expanding into cross-border payments, enterprise settlements, and even the AI agent economy.

Circle's ambition is now crystal clear: to completely transform USDC from a "static reserve asset" into "flowing economic lifeblood." This might be the grand strategy Circle is truly aiming to execute.