Circle’s ARC Token Sale Boosts Earnings as USDC Yield Drops

Circle’s latest quarterly results highlight a business in transition: stablecoin reserve earnings are under pressure from lower yields, while newer initiatives are beginning to contribute meaningful revenue. In its third-quarter report, the company said it recorded $182 million in revenue from its ARC token presale, helping lift overall earnings despite softness in income tied to USDC reserves.

Circle diluted earnings per share of $0.84, compared with $0.64 a year earlier and versus analysts’ expectations of $0.42. Total revenue and reserve income rose 17% to $865 million, but management noted that without ARC presale revenue, revenue would have declined year over year. Circle shares were down 0.84% to $74.59 at 16:05 UTC on Nov. 4, according to Yahoo Finance.

Key takeaways

• ARC token presale revenue added $182 million in the quarter, materially offsetting declines in USDC reserve income.
• USDC reserve income fell 8% to $657.6 million as average reserve yields declined, even as USDC circulation rose 8% year over year.
• Circle’s stablecoin market share slipped to 27% by September, down 1.83 percentage points.
• Management is preparing for new revenue streams tied to the payments network and potential staking rewards as Arc moves toward proof of stake in 2027.

USDC reserve income faces a yield headwind

Circle’s established earnings engine remains the interest generated on reserves backing USDC. That model links revenue to market interest rates and to how much USDC is outstanding. In the reported quarter, the company saw growth in circulation—average supply increased 8% year over year—but the yield earned on reserves declined sharply.

Circle said its reserve return fell by 61 basis points to 3.5%. As a result, reserve income dropped 8% to $657.6 million. The decline reflects a broader pattern in rates: even though the Federal Reserve raised its benchmark range by 0.25 percentage points to 3.75%–4% in September, that level was still below the 4%–4.25% range used for comparisons from a year earlier.

Circle’s reserve return also edged up from 3.48% in the previous quarter, but year-over-year pressure remained the dominant factor. USDC ended September at $73.9 billion in circulation. At the same time, USDC’s share of the stablecoin market decreased by 1.83 percentage points to 27%, underscoring the competitive environment Circle is navigating.

Payments and Arc economics begin to matter

Circle has been expanding beyond simple reserve-based stablecoin economics. The company launched its payments network in May 2025, designed to connect financial institutions that settle cross-border payments with stablecoin-based rails. Separately, Arc—Circle’s blockchain for financial applications—moved onto public mainnet on Sept. 16, 2026. Circle’s ARC token is intended to support security and governance as Arc progresses toward proof of stake targeted for 2027, while transaction fees are paid in USDC.

In the quarter, revenue from an ARC token presale became the key differentiator. Circle reported $182 million in presale revenue, which contributed to the stronger headline results. Management’s own framing makes the risk and opportunity clear: excluding ARC presale revenue, Circle’s total revenue and reserve income fell to $683 million, down roughly 8% year over year. That suggests the near-term earnings picture is increasingly dependent on the timing of monetization from newer products rather than stablecoin reserve growth alone.

The company also reported adjusted results that help show where the base business sits. Circle said adjusted EBITDA rose 85% to $317 million, but it added that without ARC contribution, adjusted EBITDA would have been approximately $135 million, down 21% from $171 million a year earlier. In other words, the stablecoin reserve business remains meaningful, but its yield-driven limitations are showing through in the numbers.

Competition widens as other stablecoin models gain traction

Circle’s USDC franchise is not operating in a vacuum. The company pointed to a broader market in which alternative stablecoin structures and ecosystems are expanding. Open Standard’s Open USD, for example, was reportedly live on Solana by Sept. 30, with partners including Coinbase, Mastercard, Shopify, Stripe, and Visa. While Circle did not present market share changes beyond USDC’s figures, the presence of major financial and payments brands in rival stablecoin frameworks reinforces that stablecoin distribution and partnerships are becoming more contested.

One key difference among models is how reserve earnings are distributed. Circle’s USDC economics are tied to interest generated on reserves, whereas Open USD’s approach—based on descriptions of how reserve earnings are allocated to partners after a management fee—offers businesses another route to access stablecoins and share in the economics. For investors, this matters because it affects how easily stablecoin providers can broaden adoption without relying solely on organic growth in token balances.

What Circle says it will do next

Circle’s strategy, as reflected in management commentary, is to build interconnected “flywheels” across stablecoins, payments, and blockchain applications. Chief Executive Jeremy Allaire described the goal as creating multiple reinforcing growth loops, where new members, builders, and assets increase the value of the overall platform.

The company is also positioning additional revenue sources as Arc matures. Circle said it anticipates staking rewards after Arc transitions to proof of stake, targeting 2027. That could provide another stream of token-related economics, though the outcome depends on network development and the timing of technical milestones.

Payments-network monetization is also on the roadmap. Circle’s CFO, Jeremy Fox-Geen, said the company expected material CPN revenue in 2027, indicating that near-term payments income is still not the core driver of results. Instead, the current quarter’s upside largely came from ARC presale revenue, leaving a clear watch item for future filings: whether ongoing ARC-related activity converts into sustainable operating income rather than one-time contributions.

Circle additionally disclosed organizational adjustments, including a reduction affecting approximately 5% of employees. The company said this was intended to align its structure with its operating model and strategic priorities—an indicator that management is balancing investment in new initiatives with cost discipline.

Investors and market participants will likely focus next on two questions: how quickly Circle can translate Arc and the payments network into recurring revenue, and whether USDC reserve yield pressure eases as interest rate expectations evolve. The quarter shows both the fragility of the reserve-based model in a lower-yield environment and the potential for Circle’s newer products to reshape its earnings mix over time.