Circle Q1 Earnings: $21.5 Trillion USDC Volume Fails to Stop 15% Profit Drop as Investors Panic

Circle Internet Group (CRCL) reported a 263% surge in USD Coin (USDC) on-chain transaction volume to $21.5 trillion in Q1 2026, while net income from continuing operations fell 15% to $55 million.

The drop in reported profit largely reflects post-IPO stock-based compensation and continued investment in the company’s new Arc network and Agent Stack rather than operational weakness. Adjusted EBITDA still grew 24% to $151 million.

On-chain Volume Sets a New Record

USDC onchain transaction volume grew 263% year over year to $21.5 trillion in the first quarter, the standout metric in Circle’s earnings release. The token captured 63% of all stablecoin transaction volumes during the period, according to Visa Onchain Analytics.

USDC on Platform climbed 254% year over year to $13.7 billion, representing 17.2% of total USDC supply at quarter-end. Meaningful wallets holding more than $10 in USDC rose 47% to 7.2 million.

Enterprise integrations support the read that USDC activity is shifting toward programmable use cases. Kyriba embedded USDC into corporate treasury workflows during the quarter. Polymarket continued to scale USDC as core settlement collateral.

Profit Falls 15% as Circle Funds the Next Layer

Net income from continuing operations declined to $55 million in Q1 2026, down from $65 million in the prior-year quarter. The 15% slide came despite a 20% revenue increase to $694 million.

The squeeze came from compensation expenses. Stock-based compensation jumped to $51.8 million, roughly four times the $12.7 million booked in Q1 2025, driven by post-IPO equity awards and related payroll taxes.

Operating expenses overall rose 76% to $242 million as Circle invested in product, distribution, and infrastructure. Adjusted Operating Expenses, which strip out the stock-based items, grew 32% to $136 million.

Adjusted EBITDA tells a different story. The non-GAAP measure grew 24% to $151 million, reflecting underlying operating strength once stock-based items and one-off charges are stripped out. Reserve Income rose 17% to $653 million.

ARC Token Raise Funds Circle’s Layer-1 Pivot

Circle disclosed a $222 million ARC token presale at a $3 billion fully diluted valuation. The whitepaper, published Monday, details how the token will support governance, security, and network operations on Arc.

The presale signals Circle plans to channel stablecoin revenue into seeding a Layer-1 ecosystem rather than rely on third-party rails.

The Agent Stack pairs Circle CLI, Agent Wallets, and an Agent Marketplace with the existing Nanopayments product on Circle Gateway.

The toolkit is purpose-built for autonomous agents transacting in USDC across chains and payment protocols.

“Circle’s first quarter reflected strong execution against a much bigger opportunity: the rapid convergence of AI platforms and economic operating systems into a new internet stack,” said Allaire, Circle Co-Founder, Chief Executive Officer, and Chairman.

A Stablecoin Market Splitting in Two

Notwithstanding, Tether remains the volume king of stablecoin supply at roughly $189 billion as of this writing, supported by demand on Tron, Binance Smart Chain, and emerging-market payment corridors.

The company reported $1.04 billion in Q1 net profit and excess reserves of $8.23 billion through its BDO Italia attestation.

Meanwhilem, Circle’s stablecoin market share slipped 62 basis points year over year to 28%.

Even so, USDC overtook USDT in adjusted onchain volume during Q1, according to Mizuho Financial Group research that filters out wash and arbitrage flows.

Circle reaffirmed multi-year USDC growth guidance of roughly 40% compound annual growth, with FY 2026 adjusted operating expenses projected between $570 million and $585 million.

The June Form 10-Q filing and Arc’s mainnet timeline should reveal whether Q1’s onchain-utility advantage is widening.

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