(Bloomberg) — Circle Internet Group Inc. reported second-quarter revenue that missed Wall Street expectations after circulation of its stablecoin USDC fell from a peak amid a protracted slide in cryptocurrency markets.
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Revenue increased 7% to $701 million, below the $712 million average forecast of analysts surveyed by Bloomberg. Net income was $48 million, Circle said in a statement on Wednesday, higher than the $43 million analysts expected.
Circle’s shares have been among the most volatile in the NYSE Composite Index since the firm went public a little more than a year ago, whipsawing investors amid swings in crypto market sentiment and legislative uncertainty. The moves are intensified by the high-stakes evolution of stablecoins, which are morphing from their original use as crypto-market poker chips into mainstream mediums of exchange that promise merchants and consumers cheaper, more efficient payment systems.
“Our quarterly financial results reflect the current rate environment and a crypto market that has slowed — both are conditions outside our network,” Circle Chief Executive Officer Jeremy Allaire said in comments accompanying the results.
In a downgrade to “underweight” earlier this week, Morgan Stanley analysts pointed out a “confluence of tactical and structural headwinds” facing Circle. The analysts cut projections for the tokens in circulation for 2027 and 2028, saying stablecoin use in agentic commerce and payments may take longer to become meaningful, while competition is rising fast.
“The vast majority of USDC supply today is really driven by crypto activity,” Ed Engel, an analyst at Compass Point Research & Trading, said before the results were released. “While I think it makes sense that investors have gotten a lot more negative on Circle’s opportunity in payments, the opportunity for them in crypto hasn’t changed that much. Look, we are in a crypto bear market.”
The amount of USDC in circulation has fluctuated along with crypto prices. There was about $73.4 billion outstanding as of June 30, data compiled by Bloomberg show. That’s up from roughly $62 billion in the year-earlier period, but down from a peak of around $79.6 billion in March. Tether’s USDT stablecoin has about $183 billion of tokens in circulation.
Coinbase Global Inc.’s revenue-sharing agreement with Circle is expected to renew on the same terms in August, Coinbase executives said last week. Circle shares the revenue from what it earns on its stablecoin reserves with the largest US crypto exchange, which is an investor in the firm.
Analysts have also express concern that the recent agreement between Coinbase and popular futures exchange Hyperliquid could ultimately reduce Circle’s future revenue. Coinbase counts the USDC located on Hyperliquid as being on its platform.
“It starts to help [Coinbase] build up their platform,” Clear Street analyst Owen Lau said in an interview before the earnings release. “But it could be negative for Circle.”
Uncertainty around the passage of the Clarity Act, which would establish clearer US guidelines regulating crypto market structure, is weighing on the shares as well. While Circle’s stablecoin business is already safeguarded by another law passed last year, the Genius Act, the delayed bill is important for long-term health of Circle’s partners like Coinbase.
On the other hand, Circle has sold several hundred million tokens running on its own new blockchain, and those sales, when recognized — likely in the third quarter — could beef up the company’s income, Engel said.
Circle also recently bought nearly 1,000 patents from IBM, and it’s expected to leverage this purchase to go after rivals, Lau said.
“There’s still no sign that the market cap is recovering, that’s the most concerning part,” Lau said.
Shares of Circle are down around 62% in the past year, while the NYSE Composite Index is up about 20%.
–With assistance from Anna Irrera and Ryan Weeks.
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