On November 4, Circle Internet Group (NYSE: CRCL) saw its stock price increase by $1.25, or 1.66%, to $76.47 at 2:55 p.m. EST, driven by a surge in earnings. This growth was largely fueled by revenue generated from the presale of ARC tokens, which offset declining income from stablecoin reserves. As the company continues to expand its payments infrastructure, a significant portion of its quarterly growth can be attributed to the sale of tokens linked to its new blockchain.
Financial Performance
According to Circle’s third-quarter release, the company reported a total revenue and reserve income of $865 million, representing a 17% increase. Net income from continuing operations saw a 5% rise to $226 million, while adjusted EBITDA jumped 85% to $317 million. It is essential to note that these measures of profitability differ, with adjusted EBITDA excluding certain costs such as equity compensation, depreciation, and restructuring.
The company experienced an 8% decline in reserve income to $658 million, which can be attributed to a 61 basis point decrease in the reserve return rate to 3.5%. Despite this, the average circulation of USDC increased by 8% to $73.3 billion. However, the quarter-end circulation remained unchanged from the previous year at $73.9 billion. Circle reported a 27% market share in qualifying dollar-backed stablecoins, based on its definition.
Other revenue streams reached $207 million, with $182 million recognized from the ARC presale. The company’s adjusted EBITDA margin of 70% is calculated using revenue after distribution costs, and should not be confused with a margin on total revenue and reserve income. The quarterly filing revealed a nine-month operating cash flow of $523.0 million, up from $293.0 million in the previous year, primarily due to $242.2 million in presale proceeds.
The calculation of operating cash flow after investments, which includes presale proceeds, yields $435.008 million. This figure is obtained by subtracting $57.535 million in capitalized software and $30.435 million in long-lived asset purchases from $522.978 million in operating cash flow. As of September-end, the company held $1.700 billion in cash and equivalents, with an additional $1.016 billion segregated for corporate-held stablecoins and $73.575 billion for stablecoin holders to back customer obligations. Convertible debt was fully converted into shares, and Class A shares increased to 237.1 million from 223.6 million at the end of December, while Class B shares also saw an increase.
Expansion and Valuation
Circle’s expansion plans remain a key aspect of its investment case. On October 16, Chief Executive Jeremy Allaire stated that the company intends to enter approximately 40 emerging and developing markets, with its pending Tazapay acquisition expected to close in 2027, subject to regulatory approvals. This move aims to extend Circle’s financial technology business beyond the issuance of stablecoins.
Analyst views on the company’s prospects are divided. Morgan Stanley reduced its target price to $34 from $37 and maintained an Underweight rating on November 2, while Needham increased its target price to $134 from $130 and reiterated a Buy rating on October 21. Mizuho retained its Underperform rating and cut its target price to $43 from $45 on October 27, citing concerns that AI assistants could direct customers towards higher-yielding alternatives, potentially reducing reserve revenue.
Stock Analysis reported that Wells Fargo has a provider-classified Buy rating with a $115 target price as of November 2, and Susquehanna has a provider-classified Hold rating with a $92 target price as of October 19. On November 4, Stock Analysis calculated Circle’s forward P/E at 60.71, compared to 69.38 at the end of 2025 and 10.25 for PayPal (Nasdaq: PYPL). However, this comparison is limited due to differences in business models and earnings assumptions.
Circle’s payments expansion faces challenges from lower reserve yields, distribution economics, and shareholder dilution. The token presale has strengthened the company’s liquidity, but its contribution makes it more difficult to assess recurring earnings. As a result, confidence in the company’s 12-month outlook through November 2027 is low. Key areas to monitor include USDC balances, reserve yields, revenue and cash generation excluding token sales, and the execution of the Tazapay acquisition.