Circle(CRCL) - 2025 Q2 - Quarterly Results

Circle Q2 2025 Earnings Release Performance Highlights Circle's Q2 2025 saw strong USDC circulation and revenue growth, offset by an IPO-related net loss, alongside key strategic launches Q2 2025 Key Financial Metrics | Metric | Q2 2025 Value | Year-over-Year Change | | :--- | :--- | :--- | | USDC in Circulation | $61.3 billion | +90% | | Total Revenue and Reserve Income | $658 million | +53% | | Net Loss | $(482) million | - | | Adjusted EBITDA | $126 million | +52% | - The reported net loss of $482 million was significantly impacted by $591 million in non-cash charges related to the company's IPO. These charges consisted of $424 million for stock-based compensation and a $167 million increase in the fair value of convertible debt[5] - CEO Jeremy Allaire emphasized the successful IPO as a pivotal moment for both Circle and the broader adoption of stablecoins, noting accelerating interest from partners in the financial and internet sectors[4] - Key corporate developments include a successful $1.2 billion IPO, the launch of the Circle Payments Network, and the introduction of Arc, an open Layer-1 blockchain for stablecoin finance[5][6] Financial Results and Operating Indicators Q2 2025 revenue grew 53% to $658 million, with USDC circulation up 90%, but a $482 million net loss was driven by IPO expenses Key Financial Results and Operating Indicators Table Q2 2025 Financial Results vs. Q2 2024 | Key Financial Results | Q2 2025 | YoY Change | | :--- | :--- | :--- | | Total Revenue and Reserve Income | $658M | 53% | | Revenue Less Distribution Costs (RLDC) | $251M | 38% | | RLDC Margin | 38% | (408bps) | | Net Income (Loss) | $(482)M | NM | | Adjusted EBITDA | $126M | 52% | | Adjusted EBITDA Margin | 50% | 463bps | Q2 2025 Key Operating Indicators vs. Q2 2024 | Key Operating Indicators | Q2 2025 | YoY Change | | :--- | :--- | :--- | | USDC in Circulation (end of period) | $61.3B | 90% | | Average USDC in Circulation | $61.0B | 86% | | Reserve Return Rate | 4.1% | (103bps) | | Stablecoin Market Share (end of period) | 28% | 595bps | | Meaningful Wallets (end of period) | 5.7M | 68% | Detailed Financial Performance Reserve Income grew 50% to $634 million from 86% higher USDC circulation, with operating expenses including $424 million in IPO stock-based compensation - Reserve Income increased 50% YoY to $634 million, primarily due to an 86% growth in average USDC circulation, which was partially offset by a 103 bps decline in the reserve return rate[10] - Other Revenue grew significantly by 252% YoY to $24 million, driven by strong growth in Subscription and Services Revenue and Transaction Revenue[10] - Total Distribution, Transaction and Other Costs rose 64% YoY to $407 million, mainly due to increased distribution payments tied to higher USDC circulation and new strategic partnerships[10] - Operating Expenses were $577 million, which includes a substantial $424 million in stock-based compensation expenses related to the vesting of RSUs upon the IPO[10] Corporate & Commercial Highlights Circle completed a $1.2 billion IPO, launched CPN and Arc blockchain, expanded partnerships, and strengthened its regulated stablecoin position via the GENIUS Act Initial Public Offering (IPO) Circle completed a $1.2 billion IPO in June, selling 19.9 million shares at $31 for $583 million net proceeds - In June, Circle completed a $1.2 billion initial public offering. The company sold 19.9 million new shares at $31 per share, resulting in net proceeds of $583 million after underwriting discounts and before offering costs[6] Strategic Initiatives and Partnerships Circle launched the Circle Payments Network and Arc blockchain, showing strong momentum with 100+ institutions and expanded strategic industry partnerships - The Circle Payments Network (CPN), launched in May, shows strong early momentum with 100+ financial institutions in the pipeline and plans for expansion in H2 2025[10] - Circle introduced Arc, an open Layer-1 blockchain designed for stablecoin payments, FX, and capital markets, featuring USDC as the native gas token. A public testnet is expected in the fall[14] - The company announced new or expanded strategic partnerships with key industry players including Binance, Corpay, FIS, Fiserv, and OKX to broaden USDC adoption and integration[10][14] Regulatory Developments The GENIUS Act established a federal regulatory framework for payment stablecoins, strengthening Circle's position as a leading regulated issuer - The GENIUS Act was signed into law, establishing a federal regulatory framework for payment stablecoins. This development is seen as strengthening Circle's position as a leading regulated issuer, as the act codifies many of Circle's long-standing compliance practices[10] Forward Outlook Circle projects a multi-year 40% CAGR for USDC circulation, with FY 2025 guidance for Other Revenue at $75-$85 million and Adjusted Operating Expenses at $475-$490 million Company Guidance | Key Indicator | Period | Outlook | | :--- | :--- | :--- | | USDC in Circulation | Multi-year through cycle | 40% CAGR | | Other Revenue | FY 2025 | $75-$85M | | RLDC Margin | FY 2025 | 36-38% | | Adjusted Operating Expenses | FY 2025 | $475-490M | Financial Statements Total assets reached $64.2 billion by June 30, 2025, driven by stablecoin holdings, with Q2 2025 reporting a $482.1 million net loss due to $503.4 million in IPO compensation expense Condensed Consolidated Balance Sheets Total assets grew to $64.15 billion by June 30, 2025, driven by cash for stablecoin holders, with total liabilities at $61.78 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $64,153,508 | $45,834,409 | | Cash and cash equivalents segregated for stablecoin holders | $61,365,920 | $43,918,572 | | Total Liabilities | $61,782,677 | $44,124,115 | | Deposits from stablecoin holders | $61,101,523 | $43,727,363 | | Total Stockholders' Equity | $2,370,831 | $570,529 | Condensed Consolidated Statements of Operations Q2 2025 total revenue was $658.1 million, but a $482.1 million net loss resulted from $503.4 million in compensation expenses, contrasting with Q2 2024's net income Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue and reserve income | $658,078 | $430,030 | | Total distribution, transaction and other costs | $406,942 | $248,377 | | Total operating expenses | $576,718 | $131,407 | | Compensation expenses | $503,392 | $67,604 | | Operating income (loss) | $(325,582) | $50,246 | | Net income (loss) | $(482,100) | $32,923 | | Earnings (loss) per share, basic and diluted | $(4.48) | $0.00 | Quarterly Results of Operations Quarterly revenue and reserve income trended upward, reaching $658 million in Q2 2025, with RLDC at $251 million and a 38% RLDC Margin Quarterly Revenue and Margin Trend (in millions) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue and Reserve Income | $658 | $579 | $435 | $446 | $430 | | RLDC | $251 | $231 | $131 | $188 | $182 | | RLDC Margin | 38% | 40% | 30% | 42% | 42% | Non-GAAP Financial Measures and Reconciliations Circle uses non-GAAP measures; Q2 2025 Adjusted EBITDA was $125.8 million, reconciled from a $482.1 million net loss by excluding $435.0 million in stock-based compensation Reconciliation of Adjusted EBITDA to Net Income Q2 2025 Adjusted EBITDA was $125.8 million, reconciled from a $482.1 million net loss by adding back $435.0 million in stock-based compensation and $167.7 million in fair value changes Q2 2025 Adjusted EBITDA Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net income (loss) from continuing operations | $(482,100) | | Stock-based compensation expense | $434,966 | | Change in fair value of convertible debt, etc. | $167,724 | | Other adjustments (Depreciation, taxes, etc.) | $5,243 | | Adjusted EBITDA | $125,833 | Reconciliation of Adjusted Operating Expenses to Operating Expenses Q2 2025 Adjusted Operating Expenses were $128.2 million, derived from $576.7 million in GAAP operating expenses by excluding $435.0 million in stock-based compensation and other non-cash items Q2 2025 Adjusted Operating Expenses Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Operating expenses | $576,718 | | Less: Stock-based compensation expense | $(434,966) | | Less: Depreciation and amortization expense | $(14,209) | | Less: Digital asset (gains) losses | $693 | | Adjusted Operating Expenses | $128,236 | FY 2025 Forward Outlook Reconciliation for Adjusted Operating Expenses (in millions) | Line Item | Low | High | | :--- | :--- | :--- | | Operating expenses | $1,150 | $1,190 | | Less: Stock-based compensation expense | $(556) | $(571) | | Less: Depreciation and amortization | $(70) | $(80) | | Less: Other adjustments | $(49) | $(49) | | Adjusted Operating Expenses | $475 | $490 |