Circle’s $182 million crypto token sale masks revenue decline as USDC business weakens

Circle's $182 million ARC token presale drove its third-quarter earnings surprise even as its core USDC reserve income declined.

The stablecoin issuer reported adjusted EBITDA of $317 million, substantially exceeding Wall Street's $218 million consensus estimate and Clear Street's $220 million forecast.

However, the investment bank said the earnings beat was primarily driven by ARC token presale revenue, which exceeded its $90 million projection by $92 million. Excluding that contribution, Circle's adjusted EBITDA would have been approximately $135 million, down from $143 million in the preceding quarter.

The same divergence appeared in revenue. Circle reported a 17% increase in total revenue and reserve income to $865 million, but excluding the token presale would have left approximately $683 million, below the $740 million recorded a year earlier.

Its traditional reserve business remained under pressure despite growing stablecoin adoption. Reserve income fell 8% to $658 million as the average yield on USDC reserves declined by 61 basis points to 3.5%, offsetting an 8% increase in average circulation.

02 / How recognition changes the comparison

The Q3 2026 total includes the recognized ARC presale contribution.

Token-sale recognition lifted the quarterly total; it does not establish recurring Arc fee income.

Revenue subtraction is illustrative, not an adjusted profit measure. Presale gross proceeds differ from Q3 cash collections. Recognition reflects progress on obligations, not proof of recurring Arc network fees.

Sources and evidence

Sources

1. Circle Q3 2026 earnings release
2. Circle Q3 2026 Form 10-Q, Note 11

Supporting facts

• Circle reported Q3 2026 total revenue and reserve income of $865 million, up 17% year over year. [1]
• Circle reported Q3 2026 reserve income of $658 million, down 8% year over year. [1]
• Circle reported $207 million of other revenue in Q3 2026, including $182 million from the ARC token presale. [1]
• Subtracting approximately $182 million of recognized ARC presale revenue from Circle's Q3 2026 total leaves approximately $683 million, below Q3 2025's approximately $740 million total. [1] [2]
• Circle's Q3 filing says ARC presale proceeds were initially deferred and $181.8 million was recognized in Q3 as the company progressed in satisfying its performance obligation. [2]
• Circle's Q3 filing reports approximately $242.2 million in aggregate ARC token presale gross proceeds, of which $181.8 million was recognized as revenue and approximately $60.4 million remained deferred at September 30, 2026. [2]
• Recognition of ARC presale revenue does not by itself demonstrate recurring Arc network-fee income. [2] [1]

Method

USD millions. Filing inputs: total 864.888, presale recognized 181.8, prior-year total 739.759. Derived remaining revenue = 864.888 - 181.8 = 683.088. Deferred amount = 242.2 - 181.8 = 60.4. Bars use these inputs on a common zero-based scale; labels round to whole millions for the year comparison.

Scope

Revenue subtraction is illustrative, not an adjusted profit measure. Presale gross proceeds differ from Q3 cash collections. Recognition reflects progress on obligations, not proof of recurring Arc network fees.

Infographic by CryptoSlate

The weaker reserve performance reflects Circle's continued exposure to interest rates, which determine much of the income it earns from the assets backing USDC.

Clear Street also identified the presale's outsized contribution to Circle's profitability. Revenue less distribution costs reached $453 million, producing a 52.4% margin. Without ARC, that margin would have been approximately 39.7%, below the 41.2% recorded in the second quarter.

Circle's payments network expands ahead of US stablecoin regulations

Circle's financial results came as USDC adoption accelerated across global payment networks, giving the company a growing base of activity to monetize beyond its reserve business.

CEO Jeremy Allaire said USDC accounted for 79% of stablecoin transaction volume during the quarter, up from 66% a year earlier. Onchain transfers increased 49% to $13.9 trillion, while minting and redemptions reached a record $208 billion.

The growth was particularly pronounced in Circle Payments Network, which connects financial institutions for cross-border settlement. Annualized transaction volume reached $41.3 billion at the end of September, more than 15 times its year-earlier level, before exceeding $58 billion after the quarter ended.

Circle is expanding that infrastructure through its proposed acquisition of Tazapay, a cross-border payments provider that would extend its local payout capabilities. The transaction is expected to close in 2027.

The company is also positioning its Arc blockchain as infrastructure for institutional settlement and programmable payments. More than 100 institutions and applications participated in its public mainnet launch in September, while Circle reported that USDC settled 99.6% of payment volume on the x402 protocol.

These initiatives come ahead of the GENIUS Act's implementation in January, which Allaire expects to accelerate the adoption of regulated digital dollars.

Circle expects its payments network to generate material revenue in 2027, although management has yet to provide a formal forecast. Clear Street estimates that other revenue will decline to between $28 million and $48 million in the fourth quarter, reflecting the unusually large ARC contribution recognized in September.