Circle Internet Group (CRCL) Earnings

Management highlights

### Competitive & Strategic Position - Global regulatory frameworks for stablecoins are advancing, with the U.S. Genius Act set to become effective in January 2027, creating legal standing for federally regulated digital dollars that underpins Circle's long-term growth. Circle holds over 55 licenses and registrations across major jurisdictions, a moat that would take competitors years to replicate. - The existing USDC network spans 35 blockchains, serves 185 countries, has over 15 partner banks, 150+ distribution partners, and thousands of integrating companies across all major fintech and financial sectors. ~70% of companies involved in new competing consortium stablecoin projects are already USDC network participants. Circle's strategic partnership with Coinbase has been renewed on existing terms, keeping USDC central to all Coinbase products. - Circle achieved a key regulatory milestone: approval for an OCC National Trust Bank Charter and a New York State Limited Purpose Trust Charter, creating a federally supervised infrastructure foundation for institutional digital asset services. Product Milestones - Stablecoins: USDC captured a new record 70% of global stablecoin transaction volume in June 2026, and growth in USDC circulation has decoupled from broader crypto market weakness, growing 19% YoY even as total crypto market cap declined 40% YoY. USDC holds 40% of open interest collateral for perpetual futures markets on major platforms, and the shift to trading tokenized real-world assets on these venues positions Circle well for future growth. - ARK Blockchain: Major strategic partnerships confirmed ahead of launch: DTCC will collaborate to bring tokenized securities to ARK starting with DTC-custodied assets, and BlackRock plans to deploy its product suite on ARK with native USDC integration. Over 100 leading global financial and technology partners are already prepared for public launch. - CPN Payments: Trajectory remains extremely strong, with annualized TPV growing 130% to $23 billion in the 30 days ending July 31, 2026, up from $15 billion at the end of Q2. Monetization of CPN will begin in the second half of 2026. - Agentic Finance: Circle is publishing a white paper and near-term roadmap for the agentic economy in the coming days. 99.3% of all agentic payments currently run on the USDC network, with over 900 paid services already available on Circle's agent marketplace. Internally, 86% of employees are weekly active AI/agent users, who have built over 1,100 AI apps in 2026, increasing product development velocity by several hundred percent. Financial Performance Summary - Total Q2 2026 revenue and reserve income was $701 million, up 7% YoY, driven by higher average USDC circulation, partially offset by a 66 basis point decline in reserve returns. Adjusted EBITDA grew 8% YoY to $143 million, with an adjusted EBITDA margin of 50%. Revenue-less distribution cost margin was 41.2%, up 3 percentage points YoY.

Guidance

- Circle reaffirms its long-term target of 40% compound annual growth for USDC through economic cycles, which is within the 27-77% CAGR range projected by third-party analysts for the total stablecoin market through 2030. - Full-year 2026 other revenue guidance has been raised to $310-$330 million, up from the prior range of $150-$170 million. The increase is primarily driven by the $242 million ARK token presale completed in Q2; ~$180 million of this revenue will be recognized in 2026 as product milestones are achieved, and this revenue flows directly to the bottom line. - Full-year 2026 revenue-less distribution cost margin guidance has been increased to 41.7%-43.7%, up from the prior 38%-40% range. Excluding the new ARK revenue, full-year margin is expected to land near the midpoint of the original guidance range. - Full-year 2026 adjusted operating expenses guidance remains unchanged at $570-$585 million, though management expects to land at the higher end of the range to sustain investment in high-growth strategic priorities.

Segment performance

1. Stablecoin Segment: Ended Q2 2026 with $73.3 billion of USDC in circulation, up 19% YoY; average USDC circulation reached an all-time high of $76.5 billion. USDC held within Circle's platform infrastructure increased 106% YoY to $12.4 billion, representing 17% of total circulation. USDC reached ~70% of global stablecoin transaction volume in June 2026, up from 36% in Q2 2025. EURC, the world's largest digital euro stablecoin, grew 2.2x YoY. USYC, the world's largest tokenized money market fund, grew 10x YoY to over $3 billion in assets. Daily average USDC minting and redemption volume hit $1.9 billion, up 105% YoY; daily average on-chain transaction volume reached $163 billion, up 151% YoY. Total annualized transactional volume with USDC grew 151% YoY to nearly $15 trillion. This segment generated reserve revenue which contributed ~95.1% of total Q2 2026 revenue. 2. Payments Segment (Circle Payment Network - CPN): At the end of Q2 2026, trailing 30-day annualized total payment volume (TPV) reached nearly $15 billion, with strong YoY and QoQ growth. As of July 31, 2026, trailing 30-day annualized TPV grew 130% to $23 billion since the last earnings report. The network reached 175 financial institutions, up 30% QoQ, and is currently active in 58 countries. 3. Blockchain Infrastructure & Developer Segment (ARK): The ARK mainnet is scheduled to launch September 16, 2026. A $242 million ARK token presale was completed in Q2 2026. Prior to mainnet launch, $3 billion in assets were already onboarded, 100+ partners are active on the private mainnet, and the testnet processed over 500 million transactions across nearly 3 million wallets with near-perfect uptime. 4. Agentic Finance Segment: Currently handles 99.3% of all agentic payments via the USDC network and X402 protocol, with over 900 paid services listed in the company's curated agent marketplace. Other revenue (all non-reserve segments combined) hit $34 million in Q2 2026, up 140% YoY, contributing ~4.9% of total Q2 revenue.

Risks & headwinds

- Broader digital asset market weakness has reduced trading activity, DeFi collateral demand, and market maker balances, which has impacted near-term revenue from some blockchain integration partnerships and led to QoQ declines in some revenue lines. - Final passage of U.S. stablecoin regulation (the Clarity Act) is still pending resolution of outstanding legislative issues, and it is unclear if the bill will be finalized in the current congressional session or a future one. - New competing stablecoin projects led by industry consortia create increased competitive pressure for distribution and market share, though management notes most participating firms are already part of the USDC network. - There is inherent lumpiness in subscription and other revenue from third-party blockchain partnerships, which can lead to quarter-over-quarter volatility in non-reserve revenue.

Analyst Q&A

• Q: An analyst asks how Circle will compete for USDC distribution in a market where shared reserve income has become expected, given Circle's existing relationship with Coinbase, referencing the new Hyperliquid partnership as an example of flexible collaboration. /

  A: Circle already has distribution incentive agreements with over 150 partners, and often collaborates with Coinbase on these arrangements. Coinbase is aligned with Circle on growing USDC to be the global leading stablecoin, and most companies involved in competing consortium projects are already USDC network participants. Circle has the flexibility to enter win-win distribution agreements with major new partners to grow USDC adoption, and management is confident in Circle's existing leading network position.

• Q: An analyst asks if the Hyperliquid arrangement, where Circle and Coinbase share revenue, is a one-off deal and requests financial details. /

  A: Hyperliquid chose USDC over competing stablecoin projects because of its unmatched liquidity, network effects, regulatory standing, and institutional preference. As a high-growth venue where ~75% of volume is now tokenized real-world assets, it is a strategically important distribution partnership that drives broader network adoption. At the end of Q2, ~90% of Hyperliquid's USDC is held on Coinbase's platform and ~10% is held on Circle's platform; management declined to comment on additional details of the revenue sharing arrangement.

• Q: An analyst asks why Circle chose to prioritize ARK over other blockchain partnership revenue, and what that means for future subscription services revenue. /

  A: Management views ARK as a potentially larger long-term opportunity than USDC itself, as it is a new economic operating system for on-chain financial, economic, and agentic activity. ARK provides multiple high-margin revenue streams, and its adoption compounds growth for USDC, transaction revenue, and other Circle business lines. Third-party blockchain integration services remain a priority to ensure USDC is available where users need it, and there is inherent lumpiness to this revenue line from upfront contract fees; the impact of the strategic shift is reflected in the updated full-year other revenue guidance.

• Q: An analyst asks for the second half 2026 roadmap for agentic products and when revenue from agentic commerce will become material. /

  A: Circle will publish a full detailed roadmap and white paper in the coming days. Key product launches in H2 2026 will add agent identity, automated discovery, and reputation systems, plus simple monetization tools for agent builders, all built on open standards. Direct revenue will come indirectly through higher USDC adoption, transaction volume, and ARK infrastructure usage, with material growth expected over the medium to long term as the agentic economy scales.

• Q: An analyst asks whether Circle has an inherent advantage in the X402 agentic payment protocol, given USDC's current 99% market share. /

  A: Circle was an early founding design partner for the X402 protocol, which is optimized for fast, low-cost on-chain payments ideal for small agentic transactions. Powerful network effects, USDC's existing 70% share of stablecoin payment volume, and first-mover position in agentic infrastructure give Circle a strong right to win, and management is working to embed USDC as the default form of money in the agentic economy.