Circle Internet Group (CRCL) shares plunged 12.2% on November 12 despite reporting blockbuster results for the fiscal third quarter. The largest USDC stablecoin issuer’s total revenues jumped 66% year-over-year to $740 million, beating the consensus estimate of $706.70 million. Similarly, earnings per share (EPS) of $0.64 easily surpassed expectations of $0.22.
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Notably, USDC circulation rose 108% year-over-year to $73.7 billion, underscoring Circle’s strong execution and continued USDC adoption.
Importantly, Circle shares may have fallen as investors expect another interest rate cut in December 2025, which could reduce revenue from securities backing USDC. A large portion of Circle’s interest income is earned on low-risk U.S. Treasury bills held as reserves. If interest rates fall further, the yield on these securities will decrease, reducing Circle’s interest income.
Further Details of Circle’s Q3 Results
During Q3, Circle’s Revenue Less Distribution Costs (RLDC) increased 55% year-over-year to $292 million, while RLDC margin was 39%. Total Distribution, Transaction and Other Costs of $448 million increased 74% compared to the prior year period. RLDC is an important metric, as it shows how much revenue the company actually keeps after sharing and operational expenses.
Circle pays distribution costs primarily to its distribution partners, with a major recipient being crypto exchange Coinbase Global (COIN). These costs relate to revenue-sharing agreements tied to USDC circulation and interest income.
During Q3, Circle minted $79.7 billion worth of USDC, a 128% increase from the prior-year period. It maintained a 29% stablecoin market share, trailing Tether’s 62%.
Circle Updates FY25 Guidance
Based on the continued business momentum, Circle raised its outlook for certain parameters for fiscal 2025. USDC in circulation is expected to grow at a 40% compound annual rate.
Other revenue is now projected to be in the range of $90 million to $100 million, mainly due to higher subscription and services revenue in Q3.
The company expects an RLDC margin of about 38% and slightly higher adjusted operating expenses of $495 million to $510 million.
Circle also launched the Arc Public Testnet on October 28, with more than 100 companies joining. Arc is Circle’s blockchain designed to help developers and businesses build on-chain financial applications. The company is considering an Arc token to incentivize participation in the network.
Is CRCL Stock a Buy?
Analysts remain divided on Circle’s long-term outlook. On TipRanks, CRCL stock has a Moderate Buy consensus rating based on eight Buys, five Holds, and three Sell ratings. The average Circle Internet price target of $166.19 implies 92.6% upside potential from current levels.
