Circle Q1 revenue rose 20% year-on-year to $694 million, net profit decreased 15% year-on-year, USDC circulation increased 28% year-on-year｜Earnings Report Highlights

Stablecoin issuer Circle achieved revenue growth in the first quarter of 2026, but net profit declined. On May 11, Circle’s financial report showed that total revenue and reserve income for Q1 2026 were $694 million, up 20% year-over-year; however, net profit from continuing operations was $55 million, down 15% year-over-year. Adjusted EBITDA reached $151 million, up 24% year-over-year, indicating that profitability of core business continues to improve. Profit pressure mainly stems from a **76% surge in operating expenses**, particularly due to higher stock compensation and related payroll taxes after going public. Additionally, reserve yield declined by 66 basis points year-over-year, weighing on net profit. However, **USDC circulation increased 28% year-over-year to $77 billion, remaining the core driver of revenue growth.** In terms of business highlights, **Circle continues to advance the ARC Token ecosystem**, completing a $222 million presale; **launched the Agent Stack platform**, supporting AI-driven payment and wallet infrastructure. Furthermore, USDC on-chain transaction volume reached $21.5 trillion, up 263% year-over-year. **Revenue rises without profit increase; expenses are the key variable** In Q1 2026, Circle’s total revenue was $694 million, with reserve income at $653 million (accounting for 94%, up 17% year-over-year) as the core engine. This growth comes from a 39% year-over-year increase in average USDC circulation to $75.2 billion, but was partially offset by a 66 basis point drop in reserve yield to 3.5%. Other income (subscription, service, and transaction income) amounted to $41.63 million, doubling year-over-year with an increment of about $21 million, being the fastest-growing revenue segment and indicating Circle’s platform monetization capability continues to improve. Distribution and transaction costs were $407 million, up 17% year-over-year, basically in line with overall revenue growth. Net retention margin (RLDC Margin) rose to 41%, up 148 basis points year-over-year. Notably, **GAAP operating expenses increased 76% year-over-year to $242 million**, **mainly driven by significant increases in equity incentives and related payroll taxes post-IPO**—compensation-related expenses alone rose from $75.62 million to $138 million. **USDC Ecosystem: Platform retention rate rises sharply, strong growth in on-chain activity** By the end of the quarter, USDC circulation reached $77 billion, with a market share of 28%, down 62 basis points year-over-year, mainly due to changes in the competitive landscape. More structurally significant is the “USDC on Platform” metric—i.e., the USDC balance held within the Circle platform—which reached $13.7 billion at quarter-end, up 254% year-over-year. This balance's daily weighted ratio to total circulation averaged 17.2%, up 1,149 basis points year-over-year, showing that more holders opted to keep assets within the Circle ecosystem rather than transferring them to other platforms, providing strong support for sustained reserve income. On-chain data also showed robust performance. USDC minting totaled $73 billion in the quarter, up 38% year-over-year; redemptions were $72 billion, up 93% year-over-year, with redemption growth noticeably outpacing minting, reflecting a significant increase in two-way liquidity activity. The number of “active wallets” holding more than $10 in USDC rose to 7.2 million, up 47% year-over-year, showing continued expansion of the user base. According to Visa Onchain Analytics, USDC holds a 63% share in stablecoin on-chain transaction volume, maintaining a significant industry-leading position. **Strategic Breakthrough: ARC Ecosystem launch, Agent Stack enters AI agent economy** **The most strategically significant breakthrough this quarter was the formal launch of the ARC ecosystem.** Circle completed a $222 million presale of ARC tokens, corresponding to a fully diluted network valuation of $3 billion, and simultaneously released its white paper, clarifying ARC as the native coordination asset of the Arc network, with a core role in governance, security, and network operations. Investors include BlackRock, a16z crypto, Apollo Fund, ARK Invest, Intercontinental Exchange, Standard Chartered Ventures, SBI Group, etc., with top-tier institutional backing in both breadth and depth. Meanwhile, the launch of the “Agent Stack” product line **marks Circle’s official entry into the AI agent economy infrastructure field.** The product suite includes the Circle CLI command-line interface, Agent Wallets, and Agent Marketplace. Developers and merchants can use these to create and fund AI agents in multi-chain and multi-payment protocol environments and earn economic benefits, with USDC as the unified settlement asset. On the Circle Payment Network (CPN), using the previous 30 days’ activity as of March 31, annualized transaction volume reached $8.3 billion. In April, Circle further launched a “Managed Payments” custodial payment service, allowing financial institutions to quickly activate stablecoin payment capabilities without managing digital assets themselves, significantly lowering the entry barrier for traditional institutions. **Full-year guidance unchanged, ARC impact not yet included** Management reiterated full-year performance guidance: Multi-year compound growth rate target for USDC circulation is 40%; other income for fiscal year 2026 is projected to be $150-170 million; RLDC margin target range is 38-40%; adjusted operating expenses are expected to be $570-585 million. It should be noted that the above guidance does not include potential financial impacts from the ARC token presale, Arc incentive programs, or future Arc-related income streams. This means that, if the Arc ecosystem is successfully implemented, the company’s actual performance could see significant upside. 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