USDC adoption climbs as Circle reports strong revenue growth despite heavy losses

The latest Circle USDC earnings report, the company’s first since its June IPO, shows Q2 revenue surging to $658 million on soaring stablecoin adoption. However, hefty $482 million in IPO-related accounting charges pushed the USDC issuer into a net loss, highlighting a sharp contrast between top-line growth and bottom-line challenges.

The USDC issuer posted $658 million in Q2 revenue, exceeding analyst forecasts, yet booked a $482 million net loss tied to IPO related accounting costs.

USDC Demand Powers Circle USDC Earnings

According to the Aug. 12 results, Circle USDC earnings were fueled by a 53% year over year revenue jump, underpinned by higher interest rates and surging USDC usage.

Revenue from reserves increased 50% to $634 million, fueled by higher interest rates and growing demand for stablecoins. Earnings from subscription and transaction services also surged 252%, reaching $24 million.

By the end of the quarter, the total USDC in circulation stood at $61.3 billion, representing a 90% increase compared to the same period last year. Circle’s market share in fiat-backed stablecoins climbed to 28%, while on chain transaction volume soared over fivefold, approaching $6 trillion.

IPO Linked Charges Weigh on Circle USDC Earnings

Even with record adoption, Circle’s USDC earnings were hit by $591 million in IPO related non cash charges, which included $424 million in stock based compensation and $167 million from the revaluation of convertible debt.

This resulted in a $482 million net loss, compared to a $32.9 million profit in the same period last year.

Secondary Offering Hits Share Price

Investor sentiment took another hit when, shortly after releasing Circle USDC earnings, the company announced a secondary public offering of 10 million Class A shares. Although the offering aimed to improve liquidity, it raised concerns over potential share dilution, driving the stock down by more than 8% in after hours trading.

Strategic Moves to Strengthen Future Circle USDC Earnings

Circle is accelerating its payments infrastructure through the Circle Payments Network, introduced in May to facilitate near instant cross border settlements using USDC. The network now has four active payment corridors and more than 100 institutions in development.

The Aug. 12 unveiling of Arc, a new open Layer-1 blockchain for stablecoin finance, alongside partnerships with Binance, Corpay, FIS, Fiserv, and OKX, signals a push for deeper USDC integration into traditional finance potentially boosting future Circle USDC earnings.

Profitability and Market Outlook for Circle USDC Earnings

Regulatory support, including the GENIUS Act, continues to strengthen Circle’s U.S. presence. Adjusted EBITDA reached $126 million, up 52% year over year, though the profit margin fell to 38% from 42% due to higher distribution and transaction costs.

Analysts say the latest Circle USDC earnings confirm strong underlying growth but also highlight the challenges of navigating public market pressures so soon after an IPO.