Circle Q3 2026 Earnings: Revenue Up 17%, but Without the ARC Token Sale It Fell 8%

Circle's total revenue and reserve income rose 17% to $864.9 million in the third quarter of 2026, and net income from continuing operations rose 5% to $226.0 million. One item explains the growth: $181.8 million of revenue from the presale of ARC, the token Circle minted for its new Arc blockchain, recognized in the quarter once the token was minted and distributed. Without it, revenue was $683.1 million, 7.7% less than a year earlier, by our computation. Circle's main business, earning interest on the reserves behind its USDC stablecoin, earned 7.5% less, because the Federal Reserve's rate cuts lowered the yield faster than USDC grew.

Reserve income fell as rates fell​

Reserve income was $657.6 million against $711.2 million a year earlier (10-Q). The 10-Q splits the $53.6 million decline in two: a 61-basis-point lower average yield cost about $106.5 million, and an 8.0% rise in average USDC in circulation added about $52.8 million. Circle's reserve return rate was 3.5%, against 4.2% a year earlier.

That is the business in one sentence: Circle holds about $73.5 billion of cash and short-term instruments for USDC holders, pays them no interest, shares much of what it earns with the partners that distribute USDC, and keeps the rest. Its revenue therefore moves with short-term interest rates as much as with demand for the token. A small business with cash in a sweep account has the same exposure on a much smaller scale: the income on idle cash falls when rates do, whatever else the business is doing.

The ARC presale made the quarter​

Other revenue was $207.3 million against $28.5 million. The 10-Q attributes the increase to "$181.8 million of revenue related to our ARC token presale." Circle sold ARC tokens to institutional investors in the June quarter and booked the proceeds as deferred revenue; its obligation was to mint and distribute the token and to move the Arc network to proof of stake. Circle minted the full supply of 10 billion ARC tokens on September 14 and launched Arc's public mainnet on September 16, and recognized $181.8 million of the presale revenue in the quarter. Other current liabilities, where the deferred presale revenue sat, fell to $73.5 million from $256.0 million in June.

The treemap shows where revenue goes. Distribution and transaction costs, $409.2 million, are by far the largest cost: most of it is paid to Coinbase and other partners that hold and distribute USDC, and the 10-Q says payments to Coinbase fell $30.0 million as reserve income fell. Compensation was $124.1 million and general and administrative expense $59.5 million. Depreciation and amortization, IT infrastructure and other income sit as labeled lines on Expenses:OtherNet.

The presale also flatters Circle's margin measure. Revenue less distribution, transaction and other costs, which Circle calls RLDC, was 52% of revenue, against 39% a year earlier. Without the ARC revenue, which carried no distribution cost, the same measure was about 40%, by our computation. Circle's full-year guidance for other revenue, $310 million to $330 million, includes the presale revenue, after $282.5 million in the first nine months.

Net income rose 5%, on a different mix​

Operating income from continuing operations was $208.3 million against $81.0 million. Net income rose less, to $226.0 million from $214.4 million, because last year's quarter had a $61.3 million tax benefit and $72.1 million of other income, against a $2.2 million tax charge and $19.9 million of other income this year. The ARC revenue is larger than the year-over-year rise in pre-tax income: $181.8 million against $75.2 million. We cannot say what the presale cost Circle to deliver, because the filing does not allocate costs to it.

Each row is one reported period: total revenue and reserve income as a negative credit, distribution and other costs as a debit and Equity:Adjustments as net income, negative for a loss. Revenue was $1,450.5 million for all of 2023, the year after rate rises lifted reserve yields, and was between $658 million and $771 million in each quarter from June 2025 to June 2026, before this quarter's $864.9 million. Distribution and other costs took between 58% and 62% of revenue in every quarter of 2025 and the first half of 2026, and 48% in this one, by our computation; the ARC revenue is why. The September 2025 quarter's $214.4 million of net income and the June 2025 quarter's $482.1 million loss, from stock compensation recognized at the IPO, show how far below-the-line items move Circle's bottom line.

USDC is the balance sheet​

A liability is a credit, so a larger balance plots as a deeper line. Deposits from stablecoin holders were $24,276.1 million at the end of 2023, $74,912.6 million at the end of 2025 and $73,451.1 million on September 30, against $73,574.9 million of cash segregated for them. The two lines dwarf Circle's own equity of $3,863.9 million. Reserve income is a function of this balance and the rate earned on it, and the balance has been roughly flat for four quarters.

The ledger was converted this quarter from its original full-dollar format onto the Open Ledger house chart, in millions with three decimals; every figure is unchanged, and the period file carries the filing captions.

What to watch in the fourth quarter​

• Rates. Every cut in short-term rates lowers the reserve return rate on about $73 billion; USDC circulation has to grow for reserve income to grow.
• Other revenue without ARC. The full-year guide implies $27.5 million to $47.5 million of other revenue in the fourth quarter, by our computation, back near the level before the presale.
• Distribution costs. Their share of revenue returns to its usual range once the presale revenue is out of the quarter.
• Tazapay. Circle agreed to acquire the Singapore-based cross-border payments company; the deal is expected to close in 2027, pending regulatory approvals.