Circle Releases First Financial Report Since Going Public: Revenue Growth but Still Facing Challenges

Circle recently released its first quarterly report after going public, showcasing a complex operating situation. Total revenue and reserve income for the second quarter reached $658 million, a year-on-year increase of 53%, with an adjusted EBITDA of $126 million, up 52% year-on-year. The market share of the USDC stablecoin reached 28%, with a circulation of $61.3 billion at the end of the period. However, due to non-cash factors such as large stock-based compensation triggered by the IPO and changes in the fair value of convertible bonds, the company recorded a net loss of $482 million.

In terms of the competitive landscape, recent legislation has cleared the way for banks to issue stablecoins, and Circle's Chief Strategy Officer stated that true competition is just beginning. Circle is expanding its cooperation network and deepening partnerships with mainstream trading platforms, payment networks, and banking infrastructure providers. The company also announced the launch of its self-developed blockchain Arc for stablecoin finance, which is seen as a key step in transforming from a single issuer to a full-stack platform.

During the earnings call, Circle CEO Jeremy Allaire responded to key issues facing the company:

Diversification of Income Sources

The Circle plan aims to increase revenue sources by introducing high-margin models such as subscription fees, service fees, and transaction fees, reducing reliance on reserve interest. The company is building a full-stack system from infrastructure to payment networks, creating multiple monetization channels.

Growth Prospects of USDC

The management believes that USDC has tremendous growth potential in the future, with an internal forecast of a compound annual growth rate of 40%. The growth momentum comes not only from the digital asset market but also from the increasing demand in various segments of the financial services sector.

Cross-border remittances adopted

The demand for USDC in the cross-border remittance sector is growing, and the company has partnered with several remittance service providers. The advantage of USDC lies in its construction of a global liquidity network and an inbound/outbound payment system.

Relationship with Partners

Circle is willing to collaborate with institutions that drive network growth, but the partnership structure will vary depending on the type of partner. The company is gradually reducing its dependence on a single distribution partner and attracting more participants from various fields to join the ecosystem.

Regulatory Environment

Recently, the easing signals from the U.S. regulatory environment have boosted institutional participation. The passing of the "GENIUS Act" is seen as an important catalyst that has generated interest among large financial institutions.

Arc Blockchain Strategy

Arc is an open blockchain designed specifically for stablecoin finance, focusing on scenarios such as payments, foreign exchange, and capital markets. It will settle transactions and gas fees in USDC, bringing new revenue sources to Circle.

Overall, Circle is working in multiple areas to expand its business scale and diversify its revenue sources, while actively responding to challenges brought by regulatory changes and market competition. The company's strategic focus is to build a comprehensive stablecoin infrastructure and ecosystem to seize long-term growth opportunities in digital payments and financial markets.