EPS of 0.84 beat expectations by 127%; CRCL made $182 million selling tokens
First, the numbers: I’m siding with the bears on this earnings report. The numbers won, but the business didn’t.
As you’ve seen, Circle released its Q3 earnings on November 4. EPS was $0.84 versus the market’s expectation of just $0.37—a 127% beat. It looks like a big win.
Revenue was $865 million, up 17% year over year and a quarterly record. Net income was $226 million, and adjusted EBITDA was $317 million, up a staggering 85%.
But dig deeper, and $182 million of that $865 million came from one-time revenue from the ARC token private placement presale. Excluding that, revenue was just $683 million, down 7.7% year over year.
The core business looks even worse: reserve income was $658 million, down 8% year over year. The reserve yield fell 61 basis points to 3.5%. As interest rates fall, they’re making less and less money from interest.
Average USDC in circulation was $73.3 billion, up 8% year over year. On-chain transaction volume was $13.9 trillion, surging 49%. Volume is up, but the money hasn’t followed.
There was also a line buried in the footnotes: Circle cut 5% of its workforce in Q3 and incurred $9.1 million in restructuring costs. Something feels off about a profitable company laying people off.
The stock’s reaction was telling. After the earnings report came out, shares fell 3.35% in premarket trading, hit an intraday low of $72.38, then recovered to close at $76.12, up just 1.2%.
Perpetual futures are currently at $75.70, up 0.89% over 24 hours, with a high of $78.18 and a low of $72.56. Futures volume is $454 million, and the funding rate is 0.0209%. Neither bulls nor bears have made a big bet.
BTC was at $80,604 over the same period, up 3.33% in 24 hours. The broader market didn’t crash; this move in CRCL is about its own earnings report.
What do the bulls say? Their arguments aren’t all wishful thinking.
USDC transaction volume is genuinely up 49%. More and more people are using stablecoins, and Circle still has the reputation of being a compliant industry leader.
The ARC chain’s mainnet launched on September 16. Its private placement raised $222 million at a $3 billion valuation, with names like BlackRock and a16z behind it. Q3 also saw the creation of 10 billion ARC tokens at genesis.
EPS beat expectations by 127%. Looking at that figure alone, it’s hard to say the earnings report was bad. And a 1.2% gain at the close at least means the stock didn’t get dumped.
Here’s what the bears say—and I think it stings a little more.
The record revenue was propped up by $182 million in one-time income. There won’t be another helping of that in Q4. Full-year guidance for other income is $310 million to $330 million, which implies just $28 million to $48 million in Q4. That pillar disappears next quarter.
The 8% decline in reserve income is the real story of the core business. USDC’s market share is 27%, down 1.83 percentage points from a year ago. Volume is up, but both market share and yield are falling.
At $76.12, the 50-day moving average at $87 and the 200-day moving average at $86 are both overhead. The 52-week high of $140 is still a long way off. Until the stock gets back above its moving averages, the trend hasn’t turned around.
The 5% workforce cut was buried in the footnotes, not mentioned in the CEO’s remarks. The more upbeat the earnings report, the closer you should read the footnotes.
I think this earnings report is a classic paper victory.
The EPS figure of $0.84 is real, but it was borrowed from token sales and presales—and that source won’t be there next quarter. When other income is down to just tens of millions in Q4, the market will run the numbers again.
I’m siding with the bears. If the stock holds above $78.18, I’ll admit it really has held up, and then we can talk about $80 to $82. If it breaks below $72.56, that means the market isn’t buying this beat at all; first stop, the $70 mark.
I just opened a small short position. If it gets back above $78.18, I’ll close it. If it breaks below $72.56, I’ll see whether to add.
This trade isn’t betting that Circle will collapse tomorrow. It’s betting that when there’s no $182 million cushion next quarter, the valuation will have to come down.
Will it hold above $78.18, proving this beat is the real deal, or break below $72.56, showing the market isn’t buying it?
I’m betting on the latter. What about you?
$CRCL $USDC $BTC
#Circle #Earnings
First, the numbers: I’m siding with the bears on this earnings report. The numbers won, but the business didn’t.
As you’ve seen, Circle released its Q3 earnings on November 4. EPS was $0.84 versus the market’s expectation of just $0.37—a 127% beat. It looks like a big win.
Revenue was $865 million, up 17% year over year and a quarterly record. Net income was $226 million, and adjusted EBITDA was $317 million, up a staggering 85%.
But dig deeper, and $182 million of that $865 million came from one-time revenue from the ARC token private placement presale. Excluding that, revenue was just $683 million, down 7.7% year over year.
The core business looks even worse: reserve income was $658 million, down 8% year over year. The reserve yield fell 61 basis points to 3.5%. As interest rates fall, they’re making less and less money from interest.
Average USDC in circulation was $73.3 billion, up 8% year over year. On-chain transaction volume was $13.9 trillion, surging 49%. Volume is up, but the money hasn’t followed.
There was also a line buried in the footnotes: Circle cut 5% of its workforce in Q3 and incurred $9.1 million in restructuring costs. Something feels off about a profitable company laying people off.
The stock’s reaction was telling. After the earnings report came out, shares fell 3.35% in premarket trading, hit an intraday low of $72.38, then recovered to close at $76.12, up just 1.2%.
Perpetual futures are currently at $75.70, up 0.89% over 24 hours, with a high of $78.18 and a low of $72.56. Futures volume is $454 million, and the funding rate is 0.0209%. Neither bulls nor bears have made a big bet.
BTC was at $80,604 over the same period, up 3.33% in 24 hours. The broader market didn’t crash; this move in CRCL is about its own earnings report.
What do the bulls say? Their arguments aren’t all wishful thinking.
USDC transaction volume is genuinely up 49%. More and more people are using stablecoins, and Circle still has the reputation of being a compliant industry leader.
The ARC chain’s mainnet launched on September 16. Its private placement raised $222 million at a $3 billion valuation, with names like BlackRock and a16z behind it. Q3 also saw the creation of 10 billion ARC tokens at genesis.
EPS beat expectations by 127%. Looking at that figure alone, it’s hard to say the earnings report was bad. And a 1.2% gain at the close at least means the stock didn’t get dumped.
Here’s what the bears say—and I think it stings a little more.
The record revenue was propped up by $182 million in one-time income. There won’t be another helping of that in Q4. Full-year guidance for other income is $310 million to $330 million, which implies just $28 million to $48 million in Q4. That pillar disappears next quarter.
The 8% decline in reserve income is the real story of the core business. USDC’s market share is 27%, down 1.83 percentage points from a year ago. Volume is up, but both market share and yield are falling.
At $76.12, the 50-day moving average at $87 and the 200-day moving average at $86 are both overhead. The 52-week high of $140 is still a long way off. Until the stock gets back above its moving averages, the trend hasn’t turned around.
The 5% workforce cut was buried in the footnotes, not mentioned in the CEO’s remarks. The more upbeat the earnings report, the closer you should read the footnotes.
I think this earnings report is a classic paper victory.
The EPS figure of $0.84 is real, but it was borrowed from token sales and presales—and that source won’t be there next quarter. When other income is down to just tens of millions in Q4, the market will run the numbers again.
I’m siding with the bears. If the stock holds above $78.18, I’ll admit it really has held up, and then we can talk about $80 to $82. If it breaks below $72.56, that means the market isn’t buying this beat at all; first stop, the $70 mark.
I just opened a small short position. If it gets back above $78.18, I’ll close it. If it breaks below $72.56, I’ll see whether to add.
This trade isn’t betting that Circle will collapse tomorrow. It’s betting that when there’s no $182 million cushion next quarter, the valuation will have to come down.
Will it hold above $78.18, proving this beat is the real deal, or break below $72.56, showing the market isn’t buying it?
I’m betting on the latter. What about you?
$CRCL $USDC $BTC
#Circle #Earnings
