Last night, stablecoin USDC issuer Circle released its Q2 financial results.

As its first earnings report since going public, the data provides the market with crucial insights to assess the true value of this "first stablecoin stock." By delving into key financial metrics, we can gain a clearer picture of Circle’s growth drivers and underlying challenges.

USDC’s Strong Expansion, But a Monolithic Revenue Structure

From the disclosed financial data, the following metrics deserve close attention.

Core Business Metrics: USDC’s Robust Growth

First, the most striking aspect of the report is the dual growth in USDC’s circulating supply and market share.

By the end of Q2, USDC’s circulating supply reached $61.3 billion, surging 90% year-over-year (YoY) and 49% year-to-date (YTD). As of August 10, this figure had climbed further to $65.2 billion, demonstrating sustained growth momentum. In terms of stablecoin market share, USDC has solidified its position as the second-largest stablecoin, holding approximately 28% of the market.

Second, USDC’s transaction activity has experienced explosive growth.

On-chain USDC transaction volume hit $5.9 trillion, skyrocketing 540% YoY. This surge not only reflects the rapid expansion of USDC’s use cases but also signals a broader trend in the stablecoin ecosystem—transitioning from a mere store of value to a payment and settlement tool.

Financial Performance: Strong Revenue Growth but Structural Imbalance

The report shows that Q2 total revenue reached $658 million, up 53% YoY, with:

• Reserve interest income: $634 million (96.4% of total), up 50% YoY

• Subscription and service income: $24 million (3.6% of total), up 252% YoY

This revenue structure highlights Circle’s heavy reliance on reserve interest income. Although subscription and service revenue grew by 252%, its absolute value remains negligible.

Circle’s profitability is highly dependent on the high-interest-rate environment set by the Federal Reserve, making this single revenue source its biggest operational risk. Once the Fed enters a rate-cutting cycle, Circle’s earnings will face severe challenges.

Another easily overlooked point is that massive IPO-related expenses masked the company’s actual operational performance.

At first glance, Circle reported a net loss of $482 million in Q2. While this figure appears staggering, a closer look reveals:

• Total IPO-related non-cash expenses: $591 million

  • Stock-based compensation: $424 million

  • Convertible debt fair value adjustment: $167 million

Excluding these IPO costs, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at $126 million, up 52% YoY.

In other words, after stripping out IPO-related expenses, Circle’s core operations remain robust. This adjusted profitability metric explains why the stock price rose instead of falling after the earnings release.

Selling Pressure Amid High Valuation

On the same day as the earnings report, Circle announced a secondary offering of 10 million shares.

At the closing price of $163.21, this offering would raise $1.63 billion. Compared to its IPO price of $31, early investors are looking at returns exceeding 426%, cashing out over $1 billion.

Notably, Circle’s CEO, Allaire, has already sold 357,800 shares but retains 23.9% of voting power.

Key Takeaways from the Earnings Report

The data shows that USDC’s network effects are accelerating. However, Circle also faces significant challenges:

• Overdependence on interest rate conditions

• Rising competition (e.g., PayPal’s PYUSD)

• Regulatory uncertainty

The Q2 report provides a basis for assessing whether Circle is overvalued, but the final judgment will depend on its performance in future quarters—especially its ability to adapt to shifting interest rate environments.

Strategic Transformation: Circle’s Path to Diversification

Circle’s Q2 earnings call and disclosed strategic initiatives outline its shift from a stablecoin issuer to a comprehensive financial infrastructure provider—a move that directly addresses its monolithic revenue structure.

Circle announced plans to launch Arc, a proprietary blockchain, in the second half of 2025. According to official disclosures, Arc is an open public chain designed for stablecoin finance, with USDC as its native gas token, focusing on payments, forex, and other use cases.

Interestingly, stablecoin giants seem to be converging on the same path:

• Tether (USDT issuer): Developing Stable

• Stripe + Paradigm: Launching Tempo

• OKX: Upgrading X Layer to enter the payment chain race

In this competition, Circle holds clear advantages:

• Over Tether: Stronger compliance, with the Trump administration’s GENIUS Act clearing policy hurdles.

• Over Stripe: USDC’s 24% market share and network effects, plus trust from over 1,800 institutional clients.

The deeper business logic behind Arc is addressing Circle’s biggest weakness—overreliance on interest income.

Currently, 96% of Circle’s revenue comes from Treasury interest on USDC reserves. This dependency could become fatal in a rate-cutting cycle. By controlling blockchain infrastructure, Circle can capture on-chain transaction fees, introduce staking rewards, reduce reliance on third-party chains, and cut rising distribution costs.

Expanding Partnerships

Beyond Arc, Circle highlighted deeper collaborations with Binance, FIS, and Corpay in its earnings call, including:

• Promoting Circle’s wallet tech with Binance and using tokenized market fund USYC for institutional trading.

• Integrating USDC with Corpay’s global forex services for 24/7 settlements.

• Partnering with FIS to enable US financial institutions to offer domestic and cross-border USDC payments via FIS’s Money Movement Hub.

Circle also mentioned partnerships with OKX and Fiserv in its report.

Conclusion

Circle’s Q2 earnings paint a picture of a company at a critical inflection point. It is both a leader in the stablecoin space, riding USDC’s network effects, and a fintech firm facing structural challenges that demand a business model overhaul before interest rates decline.

As one of this year’s stock market stars, Circle has earned its spotlight. But beneath the "first stablecoin stock"光环, investors must remain清醒 about its challenges. The transition from a pure-play stablecoin issuer to a global digital financial infrastructure provider is fraught with uncertainties. Whether Circle can sustain its post-IPO 10x stock surge remains to be seen.