Circle stock rises after quarterly revenue beats estimates in first earnings since blockbuster IPO

Yahoo

2 days ago

Circle (CRCL) stock jumped 2% in afternoon trading on Tuesday after the stablecoin issuer posted better-than-expected quarterly revenue for the first time since going public.
The company reported second quarter total revenue of $658 million, versus the $647 million analysts expected.
CEO Jeremy Allaire said the company's stablecoin, USDC (USDC-USD), was the "fastest-growing major stablecoin over the past year."
USDC in circulation grew 90% year-over-year to $61.3 billion at quarter end, and has grown an additional 6.4% to $65.2 billion as of Aug 10.
"Overall activity globally in the digital asset economy has been growing," Allaire told Yahoo Finance on Tuesday morning.
"We're continuing to see growth in the use of dollar digital currencies like USDC as a store of value around the world in cross-border settlements," he added. "Use cases continue to expand, and I think people are finding that this is an incredibly high utility, new form of money."
The company also announced ARC, a new blockchain network for stablecoin finance that will launch in the second half of the year.
"We wanted to create a way for institutions to pay fees on blockchains in a fast, predictable manner that would be simple from an accounting perspective and could deliver very low-cost and stable fees," CEO Jeremy Allaire said during the company's earnings call on Tuesday morning.
The stock is up roughly 480% from its IPO price of $31 per share as crypto-friendly legislation has lifted the sector.
Circle has been at the center of optimism over the stablecoin market following the passage of the GENIUS Act, legislation that creates guardrails and a framework for digital tokens backed by assets such as the US dollar.
Circle makes much of its money from interest income, specifically from short-term Treasury bills backing its stablecoin, USDC.
The company's reserve income increased 50% year over year to $634 million, primarily from an 86% growth in USDC stablecoin circulation.
Allaire indicated if the Fed reserve cuts interest rates and yields on short term treasuries decline, the growth of stablecoins will offset decline in rates.
"We believe that lower interest rates are going to be accelerative to the business, as money velocity picks up, as invested capital picks up, and as more people are putting money to use in the economy, this very high utility form of money will grow," said Allaire.
The company also shares part of its revenue with Coinbase (COIN), a major distribution partner.
Last month, Compass Point analyst Ed Engel flagged the risk of rising distribution costs as the company expands its network while continuing to share a portion of its interest income.
On Tuesday morning, Engel said Circle's gross profit margin guidance of 36% to 38% for fiscal year 2025 "slightly underwhelmed."
Engel said that forecast implies second half margins will come in below the first half of the year's 39%, writing "we would have expected higher gross margins in 2H25."
"While CRCL's lower margin guidance could be due to conservatism, CRCL's recent partnerships don't seem to benefiting the near-term margin outlook. As such, we reiterate our Sell rating and $130 PT," he wrote.
However, others on Wall Street saw the stock as a way for investors to participate in rising enthusiasm over stablecoins.
"CRCL is a global leader in stablecoins and is the purest stablecoin play in the public markets right now, and we anticipate further gains in the shares as the company creates new opportunities for itself and its partners," Seaport Research analyst Jeff Cantwell wrote last month.
The analyst has a Buy rating and price target of $280 on the stock.
Circle's results come as the overall market hovers near all-time highs and crypto rallies on expectations of Federal Reserve rate cuts and President Trump's push to include crypto in 401(k) plans.
Prior to the earnings release, Wall Street analysts had nine Buy, five Hold, and four Sell ratings on Circle stock.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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