Circle Internet Group (CRCL Quick QuoteCRCL - Free Report) reported first-quarter 2026 diluted EPS of 21 cents per share, beating the Zacks Consensus Estimate by 40%.

The company reported total revenues and reserve income of $694.1 million, up 20% year over year. Though the top line missed the Zacks Consensus Estimate by 2.93%.

CRCL Posts Revenue Mix Led by Reserve Income

Reserve income remained the core earnings engine, generating $652.5 million in the quarter, which accounted for 94.0% of total revenue and reserve income. The figure rose 17.0% year over year. The increase was supported by higher average USDC in circulation, while the reserve return rate declined year over year to 3.5%.

Other revenues were $41.6 million, up from $20.7 million reported in the year-ago quarter. Subscription and services revenues contributed $34.9 million, while transaction revenues totaled $6.7 million, showing that Circle’s non-reserve lines continued to scale alongside network activity.

Circle Sees USDC Activity Surge, Supporting Scale

Network usage accelerated meaningfully during the quarter, with USDC onchain transaction volume reaching $21.5 trillion, up 263% year over year. USDC mint and redeem volumes were also elevated, with $73 billion minted and $72 billion redeemed, reflecting higher turnover and liquidity needs.

Circle also highlighted broader stablecoin traction, noting that USDC represented 63% of stablecoin transaction volumes in the first quarter, based on Visa Onchain Analytics. The combination of rising activity and deeper integrations helped reinforce the company’s positioning as stablecoin infrastructure adoption broadened.

USDC in circulation grew 28% year over year to $77.0 billion at quarter’s end. Average USDC in circulation increased 39% year over year to $75.2 billion, partially offset by a 66-bps decline in the reserve return rate to 3.5%.

CRCL Absorbs Higher Distribution and Transaction Costs

Total distribution, transaction and other costs were $406.78 million, up 17% year over year, caused by higher distribution payments tied to reserve income. Even with those higher pass-through costs, revenue less distribution costs reached $287 million, up 24% year over year.

Profitability on that metric held up, with revenue less distribution costs margin at 41%, an improvement from the prior-year level.

Adjusted EBITDA increased 24% year over year to $151 million, reflecting the operating leverage Circle delivered on higher reserve income and a growing revenue base.

Circle’s Q1 Operating Details

On an adjusted basis, operating expenses were $136 million, up 32% year over year, reflecting higher investments in product development, distribution capacity and operating infrastructure.

While net income from continuing operations declined 15% to $55.2 million, Circle still produced positive operating income from continuing operations of $45 million.

CRCL Expands Product Set With Arc and Agent Stack

Circle leaned into strategic expansion initiatives during the quarter. Management highlighted a $222 million ARC Token presale raise at a $3 billion fully diluted network valuation, alongside the publication of the ARC Token whitepaper outlining governance, security and network operations for Arc.

The company also announced new “Agent Stack” capabilities, including tools such as Circle CLI, Agent Wallets and an Agent Marketplace, designed to enable developers and merchants to fund and monetize agent-driven activity in USDC. In payments, Circle expanded offerings with Managed Payments, aimed at allowing financial institutions to launch stablecoin payments without directly managing digital assets.

Circle’s Balance Sheet & Cash Flow Details

As of March 31, 2026, cash and cash equivalent balances were $1.52 billion, down slightly from $1.53 billion as of Dec. 31, 2025.

Total assets increased to $80.54 billion as of March 31, 2026, compared with $78.71 billion on Dec. 31, 2025.

As of March 31, 2026, CRCL has authorized 2.5 billion Class A shares and 500 million shares each for Class B and Class C. Additionally, the company held 4.6 million shares as treasury stock at cost.

Cash flow from operations was $21.1 million for the quarter and decreased 62.8% on a year-over-year basis.

Circle Affirms 2026 Targets for Growth and Margins

To frame expectations, management reaffirmed prior outlook metrics. Circle continues to target a multi-year, through-cycle USDC in circulation compound annual growth rate of 40%, underscoring confidence in long-term stablecoin adoption.

For 2026, the company maintained its other revenue outlook of $150-$170 million and guided for revenue less distribution costs margin of 38-40%. Adjusted operating expenses are expected to be between $570 million and $585 million, with management noting the outlook does not include future financial impacts of the ARC Token presale, Arc incentive programs, or future Arc revenue streams.

CRCL’s Zacks Rank & Stocks to Consider

Currently, Circle carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Finance sector are Bank of Nova Scotia (BNS Quick QuoteBNS - Free Report) , The Toronto Dominion Bank (TD Quick QuoteTD - Free Report) and Canadian Imperial Bank of Commerce (CM Quick QuoteCM - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of Nova Scotia shares have returned 4.6% in the year-to-date period. BNS is set to report its second-quarter fiscal 2026 results on May 27.

The Toronto Dominion Bank shares have gained 13.7% in the year-to-date period. TD is set to report its second-quarter fiscal 2026 results on May 28.

Canadian Imperial Bank of Commerce shares have appreciated 22.4% in the year-to-date period. CM is scheduled to report its second-quarter fiscal 2026 results on May 28.