Circle Cuts About 5% of Staff as ARC Presale Lifts Revenue to $865M

Circle Internet Group cut about 5% of its workforce in the third quarter, even as revenue and reserve income rose 17% to $865 million. A one-time token sale did much of the lifting.

The staff cut cost about $9.15 million in restructuring charges, mostly severance and related pay, Bitcoin.com News reported from Circle's filing. Decrypt also reported the 5% reduction. Circle tied the move to aligning staff with its operating model and priorities.

A $182 million token sale did the heavy lifting

Other revenue jumped to $207 million, and $182 million of it came from the presale of ARC, the token for Circle's new Arc blockchain, the company's results release shows. Net income from continuing operations rose 5% to $226 million. Adjusted EBITDA climbed 85% to $317 million.

Here is how the core business works: every USDC is backed by cash and short-term U.S. government debt. Circle earns the interest on those reserves, then pays a large share to partners, such as exchanges, that hand USDC to users. When interest rates fall, that income shrinks even if more coins are in circulation.

That happened this quarter. Reserve income fell 8% to $658 million as Circle's return on reserves dropped 0.61 percentage point to 3.5%. Average USDC in circulation rose 8% from a year earlier to $73.3 billion, and supply ended the quarter at $73.9 billion. Distribution and transaction costs fell 8% to $412 million.

Usage grew faster than supply

Onchain USDC transaction volume rose 49% to $13.9 trillion. Still, USDC's share of the dollar-backed stablecoin market slipped 1.83 percentage points to 27%, the release says. Circle kept its full-year guidance unchanged, executives said on the earnings call.

In our opinion: Take out the $182 million presale and other revenue drops to roughly $25 million, so a big piece of this quarter's growth came from a sale Circle has not shown it can repeat. The core business still rises and falls with interest rates and with how many dollars sit in USDC. Next quarter's reserve income and market share will show whether the slide in both has stopped.