What Circle Internet Group’s Third-Quarter Earnings Reveal
Circle Internet Group disclosed its third-quarter earnings and updates on the expansion of its USDC, CPN, Arc, and AI-powered automated payment businesses. Based on figures reported by Asia Business Daily Securities, the key issue for investors is not revenue growth itself, but how far the company is shifting from reliance on interest income from reserve assets toward a genuine payment network.
Circle Internet Group’s third-quarter revenue rose 17% year over year to $865 million, while adjusted EBITDA increased 85% to $317 million. The headline growth rates appear strong. However, investors need to account for the inclusion of $182 million in Arc token presale revenue.
Earnings Tell a Different Story Excluding Arc Revenue
Arc is Circle Internet Group’s blockchain network. Excluding Arc token presale revenue, the company’s third-quarter revenue fell 8% year over year to $683 million, while adjusted EBITDA declined 21% to $135 million. Separating this one-off revenue from the underlying profitability of the existing business shows that earnings are actually trending toward a slowdown.
The decline in yields on USDC reserve assets was a key factor. Average USDC in circulation increased 8% to $73.3 billion in the third quarter, but the yield on reserve assets fell by 0.61 percentage points. As a result, Circle Internet Group’s third-quarter interest income declined 8% to $658 million. Growth in circulation was not enough to offset the lower yield.
On-Chain Usage Outpaced Growth in USDC Circulation
USDC is a dollar-backed stablecoin used for on-chain transfers and payments. Third-quarter USDC on-chain transfer volume rose 49% year over year to $13.9 trillion, outpacing the overall market’s 26% growth over the same period. Its share of transfer volume also climbed 13 percentage points from a year earlier to 79%.
These figures indicate that usage flows are growing faster than outstanding balances. If increased real-world usage leads to higher circulating balances, it would also broaden the base for interest income generated from reserve assets. Samsung Securities analyst Hong Jin-hyun said this connection could materialize as regulatory uncertainty surrounding stablecoins eases and their integration with corporate financial systems expands.
CPN Reaches $41.3 Billion as Monetization Becomes the Next Test
CPN is Circle Internet Group’s business-to-business payment network. Its annualized payment volume reached $41.3 billion in the third quarter, rising 15.2-fold year over year and 2.8-fold from the previous quarter. The number of participating financial institutions also increased 4.4-fold from a year earlier to 205.
Concurrent growth in payment volume and participating institutions demonstrates that the network’s reach has expanded. Circle Internet Group also signed an agreement to acquire Singapore-based business-to-business payments provider Tazapay. Samsung Securities expects new businesses to begin making a meaningful contribution to earnings in 2027. However, because CPN’s fee rate and fee revenue have not been disclosed, higher payment volume cannot yet be directly translated into profit growth.
AI-Powered Automated Payments: Focus on Transaction Scale, Not Share
Circle Internet Group aims to build an agent stack by the first quarter of 2027 that will allow AI agents to search for services, enter into contracts, and automatically settle payments in USDC. USDC currently accounts for 99.6% of related x402 payment value, while there are approximately 2,800 agent-service endpoints.
The high settlement share means USDC is being used as the primary instrument in this payment flow. For investors, the decisive issue is not the share itself, but whether endpoint growth translates into higher payment volume and repeat usage. Because the required investment and revenue model have not been disclosed, there is insufficient basis at this stage to price in an early earnings contribution from AI-powered automated payments.
Metrics Circle Internet Group Investors Should Monitor
- Strength of the existing business: Investors should check whether revenue and adjusted EBITDA recover in the next earnings report after separating out Arc token presale revenue.
- Rates and interest income: Analyst Hong Jin-hyun said the Federal Reserve’s 25bp increase in the benchmark interest rate in September could lead to sequential improvements in reserve yields and interest income from the fourth quarter.
- Payment-network monetization: If CPN payment volume and the number of participating financial institutions continue to increase, the next metrics to watch will be the fee rate and fee revenue.
- Execution in AI-powered automated payments: Alongside the target of completing the agent stack by the first quarter of 2027, investors should monitor USDC’s share of x402 payment value and whether the number of endpoints continues to expand.
What Separates the Bull and Bear Cases
In the bullish scenario, growth in USDC on-chain transfers leads to higher circulating balances, while CPN expands not only its payment volume but also its fee revenue. If this trajectory is confirmed, Circle Internet Group’s revenue sources would broaden beyond reserve-asset management into payments, blockchain infrastructure, and AI-powered automated payments.
On the other side, revenue and adjusted EBITDA declined after excluding Arc presale revenue. If CPN monetization is delayed or yields on USDC reserve assets weaken again, growth from new businesses may fail to offset the slowdown in the existing business. Next quarter, investors should assess earnings excluding Arc, USDC circulation and interest income, and any disclosure of CPN fee revenue alongside the headline earnings figures.
This article was automatically summarized and analyzed based on the original news report. View the original article (Asia Business Daily Securities)
