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Circle Internet Group (CRCL) delivered an impressive beat on Q3 EPS and revenue, but shares are sharply lower despite the strong fundamentals. Net income surged by 202% yr/yr to $214 mln, while revenue jumped 66% to $739.8 mln, handily surpassing expectations. 

• The surge was fueled by exceptional growth in USDC stablecoin circulation, which doubled (+108% yr/yr) to $73.7 bln and drove market share expansion to 29%, up 643 bps.
• Revenue is generated primarily from interest income on short-term Treasury bills that back USDC. The reserve return rate was 4.15% for Q3, down 96 bps owing to lower SOFR, but dollar volumes were so high that net results were robust.
• A blemish on the report was RLDC margin, which slipped by 270 bps yr/yr to 39%, partially due to higher distribution costs to incentivize partners. Still, sequential margin improvement was noted from Q2, reflecting progress with higher-margin products and partners.
• The Arc Public Testnet launched with participation from over 100 major financial institutions and tech firms - including BlackRock, Visa, HSBC, AWS, and others - signaling strong industry support for CRCL’s enterprise-grade Layer-1 blockchain aimed at programmable finance and real-world economic activity.
• The Circle Payments Network (CPN) continues rapid expansion, with 29 financial institutions currently enrolled, 55 additional institutions undergoing eligibility review, and a pipeline of over 500 prospects.
• CRCL reaffirmed its ambitious long-term goal for USDC 40% CAGR in circulation. It raised FY25 Other Revenue guidance to $90-$100 mln (from $75-$85 mln), citing strong momentum in subscriptions and transaction fees.
• Adjusted operating expense guidance was also raised to $495-$510 mln (from $475-$490 mln), reflecting platform investment and new payroll tax treatments post-IPO.

Briefing.com Analyst Insight:

CRCL’s strong quarter demonstrates solid execution on platform and network expansion, highlighted by the Arc Public Testnet’s rapid institutional adoption and ongoing exploration of a native Arc Token. The Circle Payments Network (CPN) is scaling quickly, even as monetization remains a future focus. Margin compression and heightened expense guidance raise some concerns about sustainable earnings, especially if interest on reserves moderates from here. The sharp pullback in CRCL’s shares reflects both the cost ramp and skepticism about the durability of recent growth tailwinds. Ongoing validation of organic network growth and improved platform economics will be crucial for supporting the stock’s premium narrative going forward.