New York — Stablecoin giant Circle surpassed expectations for second-quarter revenue in its maiden quarterly results since going public, sending its shares 5% higher on Tuesday.
Higher circulation of its USDC stablecoin and stronger subscription services helped the New York-based company cement a rally that has pushed its stock to more than five times its initial public offering (IPO) price.
Stablecoins — digital tokens backed by low-risk assets such as the dollar or Treasuries — have drawn increasing investor attention, especially since the Genius Act was passed last month. The federal legislation that was signed into law by US President Donald Trump on July 18, establishes a regulatory framework for stablecoins.
The momentum has helped companies such as Circle, which issues USDC — the second-biggest stablecoin by market value after Tether.
After “our IPO and the Genius Act, we’re seeing an acceleration of interest, with major institutions all leaning in”, CFO Jeremy Fox-Geen said.
USDC in circulation has grown 90% year on year by June 30, and Circle forecasts it will grow at a compounded annual rate of 40% through the years.
The token is also being used for cross-border transactions, including remittances between both individuals and businesses, CEO Jeremy Allaire said.
The company’s revenue and reserve income grew 53% to $658m, thanks to a jump in the interest it earns from the cash and short-term investments backing its USDC stablecoins. Revenue from subscription and services also rose, Circle said.
Analysts were expecting revenue of $644.7m, according to estimates compiled by LSEG.
The company’s net loss was $482m, primarily due to two non-cash charges related to its IPO, including costs for employee stock awards that vested when the company went public and a higher valuation of its convertible debt after a rise in the share price.
‘Pillar of stablecoins’
Circle also said it will roll out Arc, a public blockchain designed specifically for stablecoin transactions, before the end of the year as it pushes to build the technological infrastructure for digital payments.
“They’re really trying to become the pillar of stablecoins in the US,” said David Bartosiak, stock strategist at Zacks Investment Research. “Circle can use what they have already done to establish themselves as a trusted mover.”
However, the company isn’t looking to strike many deals at present, even as the huge jump in its stock price has given it the ability to do so, Allaire said.
“We’re careful and deliberate. I don’t think our strategy here is to go try to do big, complex acquisitions to throw additional business lines.”
Reuters
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