Circle Internet Corp. (Circle) will release its fiscal year 2025 third-quarter earnings report before the U.S. market opens on November 12. The market is focused on the income driven by reserve interest and the profit recovery path after one-time expenses, as well as the sustained revenue growth driven by the circulation of USDC and the advancement of the payment network.

According to data from the Tiger International APP, Circle's third-quarter revenue is projected to be $699 million, and adjusted earnings per share (EPS) are forecasted to be $0.21.

Market Projections

The market consensus expects third-quarter total revenue of approximately $699 million, adjusted EPS of about $0.213, and EBIT of around $53.12 million. Based on the company's previous communication on operational pacing, attention is on the recovery of gross and net margins after the dissipation of one-time IPO costs. This quarter’s forecast information indicates: revenue is expected to be $699 million, adjusted EPS is expected to be $0.213, and EBIT is projected to be $53.12 million. The company's current main highlights are centered around "reserve interest" income, with an expected income of about $634 million, accounting for approximately 96%, driven by the expansion of USDC volume and the interest rate environment. The most promising existing business for future development is the combination of the USDC ecosystem and the payment network: last quarter’s total revenue and reserve income were $658 million, with USDC circulation up approximately 90% year-over-year to $61.3 billion, and in early August, it rose to $65.2 billion month-over-month, indicating the synergies between reserve interest and network application volume.

Previous Quarter Review

Last quarter's earnings report showed: revenue of $658 million (approximately 53% year-over-year growth), a gross margin of -38.33%, a net loss attributable to shareholders of -$482 million (impacted by IPO-related non-cash expenses, representing a quarter-on-quarter increase of -844.08%), a net margin of -73.26%, and adjusted EPS of $1.02 (significantly beating consensus estimates). The key progress in the company was the expansion of USDC volume and ecosystem, with distribution costs growth and one-time expenses causing substantial pressure on GAAP profits. The main business breakdown shows "reserve interest" income of about $634 million, accounting for about 96%, and "others" income of about $23.8 million, accounting for about 4%, synchronously rising with the increase in USDC volume.

This Quarter’s Outlook

Resilience of revenue driven by reserve interest

• The growth in USDC volume has expanded the pool of interest-bearing assets, with total revenue and reserve income of $658 million last quarter, of which reserve income was about $634 million. The core driver remains the approximately 90% year-over-year increase in USDC volume and the structure of the fund's duration. If the federal funds rate stays in a high range, reserve earnings will continue to support revenue this quarter. However, the reserve yield had once dropped to about 4.1% year-over-year, and the uncertainty of the interest rate trajectory will affect revenue elasticity.

• Last quarter, distribution and transaction expenses increased approximately 64% year-over-year to about $407 million, with the RLDC margin falling from about 42% to about 38%. The pressure on expenses is a critical variable for margin recovery. This quarter, it is necessary to observe whether partner revenue-sharing terms are optimized and whether the balance between high growth and expense scale can be improved.

• Considering the forecast total revenue of about $699 million and EBIT of about $53.12 million, the market implies that after one-time costs subside, operating margins will gradually recover, but distribution costs remain high. If USDC adoption continues to increase, revenue is expected to grow, and efficiency improvements in expenses will determine profit flexibility.

USDC ecosystem expansion and payment network implementation

• Last quarter revealed that USDC circulation reached $61.3 billion at the end of the quarter and further increased to $65.2 billion in early August, with a market share rising to about 28%. The growth of wallet numbers and platform usage rate validates ecosystem penetration. If the weighted share within the platform increases, it will enhance the company's monetization efficiency from transactions and interest.

• The advancement of the CPN payment network and the Arc blockchain aims to transition from "single stablecoin issuance" to "payment and settlement infrastructure." Existing payment corridors and hundreds of institutions waiting to connect indicate potential commercial progress this quarter, potentially adding subscription and service revenue, improving the concentration of the revenue structure.

• Risks include intensifying competition from traditional financial institutions and other stablecoins, and rising expenses due to partner expansion in the short term. If milestones for Arc testing and CPN commercialization are achieved, it will support diversified and more stable non-interest income for future quarters.

Profit margin recovery and stock price sensitivity

• Last quarter's GAAP net loss was -$482 million, mainly due to IPO-related non-cash expenses. As one-time costs recede, net margin and gross margin improvement this quarter are key market observation points. The forecasted EPS of $0.213, if matched with the adjusted figures and operating profit, indicates recovery in operational profitability.

• Stock issuance and shareholder selling dynamics led to stock volatility post-earnings report last quarter. This quarter, management’s statements on capital actions and expense discipline will determine market revaluation of profit margins and equity dilution. If operational cash flow and RLDC margin continue to improve, the stock’s sensitivity to short-term financing actions will decrease.

• In the context of fluctuating interest rate expectations and competitive landscape, the increase in USDC adoption and adoption rate within the platform is key to long-term margin improvement; if the payment network brings recurring revenue from subscriptions and settlements, revenue and profit volatility will decrease.

Analyst Opinions

Reports from Reuters and multiple financial media indicate a predominantly positive outlook from sell-side and research institutions. Seaport Research analyst Jeff Cantwell said, "Circle is the global leader in the stablecoin field, currently the purest stablecoin in the public market. As the company continually creates new opportunities for itself and its partners, we expect its stock price to rise further." His core argument is based on the structural expansion of USDC volume, relatively stable reserve interest income, and the implementation of payment and infrastructure strategies. Zacks Investment Research analysts noted that the company "is striving to become a mainstay in the US stablecoin market," emphasizing compliance and ecosystem expansion as medium to long-term competitive advantages. Market concerns mainly focus on rising distribution costs and stock price disturbances caused by short-term financing activities, but the bulls believe these are temporary adjustments, with the core growth logic unchanged. Based on various opinions and last quarter’s data, the mainstream view leans towards continued revenue driven by USDC volume and networking layout, with improved expense efficiency likely leading to better GAAP performance this quarter.

This content is generated based on tiger AI data and is for reference only.