What to know:
- Bernstein retains its Outperform rating and $140 target after Circle’s Q2 profit beat.
- Circle posts $701 million Q2 revenue, with net income at $48 million and EPS at $0.18.
- Arc mainnet is set for September 16, with $180 million in 2026 presale revenue expected.
Circle gained renewed backing from Bernstein after reporting second-quarter earnings that beat forecasts. The research firm retained its Outperform rating and $140 price target. It said investor concerns did not reflect the company’s wider strategy.
Circle recorded second-quarter revenue of $701 million, up 7% from a year earlier. However, the figure came slightly below analyst expectations. Profit measures delivered a stronger result during the period.
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Bernstein Sees Circle Growth Beyond Reserve Income
Net income totaled $48 million, with earnings per share reaching $0.18. Both were higher than analyst expectations. Bernstein said the figures made the bearish case against the shares harder to support.
The stock closed near $63 before trading lower ahead of Thursday’s market opening. Shares have declined roughly 20% since the beginning of the year. Weakness has kept pressure on the stablecoin issuer’s valuation.
Investors focused on stablecoin competition and possible lower reserve income. Lower interest rates could reduce returns from assets backing USDC. Bernstein said those concerns overlooked other parts of the company’s expansion strategy.
Analysts pointed to Circle’s distribution reach and broader operating model. They said those strengths could support growth beyond interest-based earnings. The company’s payment and infrastructure activities formed part of Bernstein’s positive assessment.
Why Circle Expects Arc to Generate $180M in 2026 Revenue
In addition, Bernstein pointed out that Arc is another growth catalyst for Circle. The company is planning to release the public mainnet of its blockchain platform Arc on September 16. Analysts believe that market estimates do not account for several revenue channels associated with this network.
They include gas fees, staking, and ecosystem partnerships. Management expects to generate roughly $180 million in revenue from token presales in 2026. The market has not yet fully priced in this estimate.
Circle raised its guidance for revenue other than its reserve business for 2026. The company also improved its outlook for revenue less distribution cost margins. Both upgrades concerned revenues, which did not depend on returns on USDC reserves.
It expanded its infrastructure activities in the second quarter of the year. The company obtained clearance for operating as a national trust bank. It developed the Circle Payments Network and Arc along with significant founding validators.
What Circle’s $73.3B USDC Supply Means for Reserve Income
The Reserve income was the primary driver of revenue for the company. It accounted for around 95% of the total revenues. That concentration tied the business closely to interest earned from assets supporting its stablecoin reserves.
The USDC supply stood at $73.3 billion at the quarter end. Its supply decreased by 5% compared to the third month of the previous quarter. Nonetheless, it was still 19% higher than the supply a year back.
Mizuho took a more conservative approach to the situation. It pointed out reduced USDC supply, a 31% quarterly decline in transaction volumes, and margins. Bernstein reaffirmed its rating, citing payments, tokenized securities, regulation, and Arc.
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