Circle Internet Group reported first-quarter 2026 revenue of $694.1 million, up 20% year over year, with USDC in circulation reaching $77.0 billion and diluted EPS of $0.21 beating analyst estimates of $0.17. Those are the headline numbers a stablecoin issuer wants investors to see. The number that matters more: $405.4 million of that revenue — 58% of it — went straight back out the door as distribution and transaction costs before Circle kept a dollar. Reconstructing Circle's full financial history in a public double-entry ledger, from its 2022 pre-IPO filings through this quarter, makes that structural reality impossible to miss, and it also surfaced something the headline numbers don't show at all: fiscal 2025, the year Circle went public, was a net-loss year.
The Headline Numbers
| Metric | Q1 2026 | Q1 2025 | YoY |
|---|---|---|---|
| Revenue and reserve income | $694.1M | $578.6M | +20% |
| Distribution and transaction costs | $405.4M | $347.3M | +17% |
| Net income attributable to common stockholders | $55.3M | $64.8M | −15% |
| Adjusted EBITDA | $151.4M | — | +24%* |
| Diluted EPS | $0.21 | — | — |
| USDC in circulation (period end) | $77.0B | — | +28%* |
*YoY comparisons as disclosed in Circle's press release.
Revenue growth (+20%) comfortably outpaced net income, which actually fell 15% year over year — not because the core business weakened, but because operating expenses (compensation, G&A, IT infrastructure) all grew faster than revenue this quarter as Circle scales up as a newly public company. USDC supply growing 28% to $77.0 billion is the real demand signal here: more USDC in circulation means more reserve assets earning yield, which is Circle's primary profit engine.
Revenue Deep Dive: A Yield Business Wearing a Fintech Costume
Circle doesn't report product segments the way a diversified tech company does — its two revenue lines are reserve income (interest earned on the cash and short-term Treasuries backing USDC) and other revenue (a small, growing slice from platform services). Reserve income is 94% of the total:
| Line | Q1 2026 | % of Revenue |
|---|---|---|
| Reserve income | $652.5M | 94.0% |
| Other revenue | $41.6M | 6.0% |
| Total revenue and reserve income | $694.1M | 100% |
That concentration is the whole business model in one table: Circle is, economically, a money-market fund manager that happens to issue a token. Reserve income scales with two variables — how much USDC is in circulation, and prevailing interest rates on short-term Treasuries. USDC supply is growing (+28% YoY), which is the good news; but a meaningful chunk of that revenue is a rate bet Circle doesn't control. If the Fed cuts rates faster than USDC supply grows, reserve income compresses regardless of how well the product is doing.
The more important number doesn't appear as a labeled line item at all: distribution and transaction costs of $405.4 million, which is what Circle pays exchanges, wallets, and other partners to hold and distribute USDC. Against $694.1 million of revenue, that's a 58.4% payout rate. Circle's own disclosed metric for this — "RLDC," revenue less distribution costs — came in at $287 million, a 41% margin. That's the number that actually describes how much of Circle's revenue Circle gets to keep before touching any other expense line.
The Margin Story
| Metric | FY2023 | FY2024 | FY2025 | Q1 2026 |
|---|---|---|---|---|
| Revenue | $1,450M | $1,676M | $2,747M | $694M |
| Distribution costs as % of revenue | 49.6% | 60.3% | 60.5% | 58.4% |
| Net income (loss) | $268M | $156M | $(70)M | $55M |
| Net margin | 18.5% | 9.3% | (2.5)% | 8.0% |
Distribution costs jumped from half of revenue in FY2023 to roughly 60% from FY2024 onward, as USDC's distribution footprint widened — more places to hold and spend USDC means more partners taking a cut. Net margin has moved in the opposite direction, from 18.5% down to slightly negative for full-year FY2025, before recovering to 8.0% this quarter. The FY2025 net loss is not a revenue story — revenue grew 64% that year — it's an expense story, and a one-time one at that (see below).
The One Big Question: Was FY2025 Actually a Loss Year?
Yes — and this is easy to miss if you only read Circle's post-IPO, EPS-focused earnings releases, because FY2025 predates most sell-side coverage. Summing all four 2025 quarters: Q1 net income of $64.8M, a Q2 net loss of $482.1M, Q3 net income of $214.4M, and Q4 net income of $133.4M nets out to a full-year loss of roughly $70 million — in the same year Circle IPO'd, grew revenue 64%, and grew USDC supply double digits.
The Q2 2025 loss is entirely explainable and entirely non-recurring: compensation expense spiked to $503.4 million that quarter, roughly 6-7x every other quarter in this dataset ($61–139 million elsewhere), consistent with IPO-triggered equity compensation — RSUs that vest immediately upon a public listing typically hit the income statement as a single enormous non-cash charge the quarter the IPO closes. Strip that one quarter out and Circle's underlying 2025 net income would have been comfortably positive and growing.
The lesson for anyone modeling Circle going forward: don't extrapolate from FY2025's blended full-year numbers, and don't expect this specific charge to repeat. Q1 2026's return to an 8.0% net margin — in line with FY2024's normalized run rate — is the more representative baseline than anything in FY2025's income statement.
Tracking a Stablecoin Issuer in Plain Text
A stablecoin issuer's core promise — every USDC in circulation is backed by reserves you can independently verify — makes it a natural fit for Beancount, a plain-text double-entry accounting format where every debit has a matching credit and the books either balance or they don't. Circle's own balance sheet essentially mirrors this: "cash and cash equivalents segregated for the benefit of stablecoin holders" is booked as a real asset ($76.9 billion this quarter), matched almost one-for-one against "deposits from stablecoin holders" as a real liability ($76.8 billion) — the reserve backing made explicit as two sides of the same entry:
2026-04-01 balance Assets:Current:CashSegregatedStablecoinHolders 76,893,681,000 USD
2026-04-01 balance Liabilities:Current:DepositsFromStablecoinHolders -76,778,530,000 USDRebuilding this ledger also surfaced a structural bug worth naming: the balance sheet had been recorded as a fresh absolute-value transaction every single period back to FY2023, each one stacking on top of whatever the previous quarter's snapshot plus cash flows had already accumulated — compounding every quarter instead of every year. Cumulative stablecoin-holder cash had drifted to a fictional $338 billion against the real ~$75 billion by late 2025. That's now fixed with pad/balance directives checked against the actual S-1, 10-Q, and 10-K filings for all eleven periods in the ledger below, so every historical figure reconciles to the primary source, not just this quarter's.
The Multi-Year Arc
| Period | Revenue | Distribution Cost % | Net Income (Loss) | USDC-Backing Cash (period end) |
|---|---|---|---|---|
| FY2023 | $1,450M | 49.6% | $268M | $24.3B |
| FY2024 | $1,676M | 60.3% | $156M | $43.9B |
| FY2025 | $2,747M | 60.5% | $(70)M | $75.1B |
| Q1 2026 (quarter) | $694M | 58.4% | $55M | $76.9B |
USDC-backing cash — the clearest read on real-world adoption, since it's a direct proxy for USDC supply — has more than tripled since the end of FY2023. Revenue has grown even faster, nearly doubling in FY2025 alone. The bottleneck isn't demand; it's how much of each new dollar Circle keeps once distribution partners take their share.
The Verdict: Bull vs. Bear
Bull Case
- USDC-backing cash grew from $24.3B to $76.9B in roughly two years — real, compounding stablecoin adoption, not a one-quarter spike.
- RLDC margin (41% in Q1 2026) is the cleanest read on unit economics and is trending in the right direction as the business scales.
- The FY2025 net loss was a one-time, non-cash, IPO-triggered compensation charge, not an operating problem — normalized net margin (8–9%) has already reasserted itself.
- Diluted EPS beat analyst estimates by over 23% this quarter, and adjusted EBITDA grew 24% YoY.
- Convertible debt was fully retired by Q1 2026 — the balance sheet is delevering, not levering up.
Bear Case
- 58–60% of revenue has gone to distribution partners every year since FY2024 — Circle doesn't control that ratio unilaterally, and it hasn't improved.
- Reserve income (94% of revenue) is a direct function of short-term interest rates Circle has zero control over; a Fed easing cycle compresses the top line with no offsetting lever.
- Net margin has been volatile enough (18.5% → 9.3% → −2.5% → 8.0%) that a "normal" quarter is still hard to define with only a few post-IPO quarters of data.
- Other revenue — the only line item Circle actually controls the economics of — is still just 6% of the total.
- A newly-appearing noncontrolling interest as of Q4 2025 signals a new consolidated entity whose economics aren't yet well understood from public disclosures alone.
Our Take: Circle's growth is real and the reserve-backing math checks out to the dollar, but this is an interest-rate-and-distribution-cost pass-through business dressed in fintech language. The number to watch every quarter isn't revenue — it's RLDC margin, because that's the only line that isolates what Circle actually controls.