Circle’s Revenue Rises 17%, but ARC Token Sales Drive the Increase
ARC token sales contributed $182 million to Circle’s quarter. Excluding that line, revenue and reserve income fell even as average USDC circulation increased.
Circle reported a 17% increase in third-quarter revenue and reserve income to $865 million on November 4, but its latest disclosures show that ARC token sales supplied the difference between growth and decline. The $182 million contribution helped offset lower income from the reserves backing USDC, highlighting how a blockchain-network expansion is changing the stablecoin issuer’s earnings mix.
Without ARC token sales, the total was $683 million, compared with $740 million a year earlier. That is a decline of approximately 7.7%, calculated from Circle’s rounded figures. The comparison does not remove every unusual item from the accounts, but it makes clear that the headline growth rate cannot be read as an equivalent increase in the recurring reserve business.
More USDC, a lower return on reserves
Average USDC circulation increased 8% to $73.3 billion during the quarter. Reserve income nevertheless fell 8% to $658 million as the reserve return rate declined by 61 basis points. Circle ended September with $73.9 billion of USDC in circulation, broadly unchanged from a year earlier. An average balance and an end-of-period balance answer different questions and should not be substituted for each other.
The mechanism matters for investors in stablecoin issuers. Reserve income reflects both the amount backing tokens and the return earned on that backing. More circulating tokens can support revenue, but a lower realized reserve yield can offset the benefit. Activity across wallets and payment networks is therefore not a direct measure of the income retained by the issuer.
Distribution is another part of that calculation. Circle reported $412 million of distribution, transaction and other costs, down 8%. Its revenue after those costs was $453 million. Our earlier reporting on Circle’s revenue-sharing model explains why the income earned on reserves is not the same as the amount available to cover corporate expenses and profit.
The ARC contribution changes the earnings comparison
Adjusted EBITDA reached $317 million, up 85%, while net income from continuing operations rose 5% to $226 million. In its investor presentation, Circle separated adjusted EBITDA into $135 million excluding ARC sales and the $182 million token-sales contribution. On that presentation, the ex-ARC figure was below the year-earlier adjusted EBITDA of $171 million.
Circle’s stated 70% adjusted EBITDA margin also uses a specific denominator: revenue and reserve income after distribution, transaction and other costs. It is not adjusted EBITDA divided by the full $865 million top line. Comparing that percentage with another company’s conventional revenue-based margin without checking the definition would overstate how directly comparable the two measures are.
The token sale is a disclosed part of the quarter’s business, rather than an accounting error. The investment question is how much of the contribution can recur and at what cost. Selling tokens, earning payment fees and receiving future network rewards have different economic characteristics. Treating them as one undifferentiated growth engine would hide those differences.
Circle’s presentation describes token sales as event-based and distinguishes them from possible staking rewards after Arc moves to proof of stake. It also identifies 2.5 billion ARC tokens held by Circle, equal to 25% of the initial supply, with recognition linked to sale or distribution. Those holdings should not be added to current operating revenue simply because they exist.
A payment network still needs commercial adoption
The company reported $41.3 billion of annualized payment volume for Circle Payments Network. The presentation defines that annualized figure using the trailing 30 days at quarter-end. It is a run rate, rather than $41.3 billion actually processed over the quarter. This distinction is important when comparing a growing network with a mature payment business reporting full-period transaction totals.
Arc’s public mainnet began operating on September 16, before Wednesday’s earnings release. Circle’s agreement to acquire Singapore-based payments company Tazapay was announced in September as well. Tazapay says the transaction is expected to close in 2027, subject to regulatory approvals. These developments provide context for the financial results; neither is a newly completed acquisition or a blockchain launch that happened on November 4.
Tazapay’s role is particularly practical: connecting digital settlement with local currencies, banking partners and payout routes. Those connections can help a stablecoin payment reach a recipient who needs ordinary money in a bank account. TTN Finance’s coverage of Circle’s planned settlement pilot with ACI in Colombia examines a related effort to connect tokens with existing payment infrastructure.
Circle’s quarter therefore contains two distinct stories. The company is building additional financial infrastructure, while its established reserve-income business faced a lower return despite higher average circulation. Future results will show whether payment fees and network activity become a durable earnings contribution. For this quarter, the published breakdown gives investors a more demanding comparison than the headline 17% increase alone.