Circle Internet Group, Inc. (CRCL)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited Condensed Consolidated Financial Statements, including the notes thereto, included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section.

Executive Overview

In the second quarter of 2026, we continued building the infrastructure for an open, programmable internet financial system by scaling adoption of USDC and expanding our platform across product and network milestones.

During the second quarter of 2026 (compared to the second quarter of 2025):

•USDC in circulation grew 19% to $73.3 billion; USDC onchain transaction volume grew 151% to $14.8 trillion.

•Total revenue and reserve income grew 7% to $701 million.

•Net income (loss) from continuing operations increased by $530 million to $48 million.

•Adjusted EBITDA grew 14% to $143 million.

See “—Non-GAAP Financial Measures” below for a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations, the most closely comparable GAAP measure, and additional information about the limitations of our non-GAAP measures.

Overview of Business

Our mission is to raise global economic prosperity through the frictionless exchange of value.

We were founded in 2013, on the belief that we could connect the world more deeply by building a new global economic system on the foundation of the internet, and facilitate the creation of a world where everyone, everywhere can share value as easily as we can today share information, content, and communications.

We are building a full-stack internet financial platform business anchored by our stablecoin network. Our business is organized around three reinforcing pillars: (i) Arc, an open Layer-1 blockchain network and related developer/interoperability infrastructure; (ii) Circle Digital Assets and Services, including USDC, EURC, USYC, cirBTC, and related liquidity infrastructure such as Circle Mint and xReserve; and (iii) Circle Applications, including products like CPN and StableFX that deliver real-world utility on Arc and across a multichain ecosystem. The three pillars of our platform are designed to reinforce one another: Arc is expected to provide an enterprise-grade foundation for stablecoin finance and consumer-scale applications; Circle Digital Assets and related services supply trusted units of value and liquidity infrastructure; and Circle Applications translate that infrastructure into real-world utility for institutions, developers, and end-users.

Our business model is driven by the growth of our platform, including the use and continued utility of Circle Digital Assets. We invest in expansion of our platform by partnering with major financial and technology institutions to drive distribution of Circle Digital Assets, building global fiat on- and off-ramps to increase accessibility and liquidity of Circle Digital Assets, and providing developer tools and operational infrastructure that reduce friction and enable new applications using our Circle Digital Assets, including tools that can be used on our platform without a direct relationship with us. We also aim to increase network activity through the launch of new products and services, expansion into new markets, and the fostering of third-party innovation on our platform, in each case, with a regulation-first approach.

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Circle stablecoins and related reserve income

We currently derive a substantial majority of our revenue from reserve income on the reserve assets backing our stablecoins, USDC and EURC. Reserve income was 95.2% and 94.6% of our total revenue in the three and six months ended June 30, 2026, respectively. Reserve income was 96.4% of our total revenue in both the three and six months ended June 30, 2025. We earn reserve income on the reserve assets backing our stablecoins in circulation at interest rates close to the prevailing SOFR during the applicable periods. We term the rate of return generated on assets held in reserve as the “reserve return rate”. See “—Key operating indicators and financial results” for the calculation of reserve return rate. The reserve income that we generate is a function of (i) our stablecoins in circulation over a given period and (ii) the reserve return rate.

Other products

In addition to revenue from reserve income on the reserve assets backing our stablecoins, we continue to expand product offerings and services that benefit from and support the growth of our platform and the utility of Circle Digital Assets. Our other products contributed between 4.8% and 5.4% of Circle’s total revenue in both the three and six months ended June 30, 2026, respectively. Our other products contributed 3.6% of Circle's total revenue in both the three and six months ended June 30, 2025. We believe these and other new product and service offerings will contribute to the growth of our platform and the use of Circle Digital Assets, and over time drive a flywheel of growth that has been the hallmark of successful internet-driven networks. We also expect growth in our network to drive increases in our stablecoins in circulation and thereby drive our reserve income. We anticipate growing these offerings in the coming years, diversifying our revenue profile.

These offerings include:

•Arc Blockchain and Related Developer Infrastructure – Arc is our open, Layer-1 blockchain purpose-built to bring real world economic activity onchain, supported by our Agent Stack (consisting of Agent Wallets, Nanopayments, Agent Marketplace and Circle CLI), core developer services (including App Kits, Circle Wallets and Circle Contracts) and interoperability services (including CCTP and Gateway) designed to reduce complexity and help developers and enterprises build and operate onchain applications that move value across networks.

•Circle Tokenized Funds – Our tokenized fund, USYC, which is a part of our Circle Digital Assets, is an onchain representation of shares in a traditional money market fund intended primarily for use as collateral in digital asset markets, providing yield to token holders and complementing USDC and EURC in institutional trading, treasury, and collateral workflows.

•Circle Liquidity Services – Circle Mint and xReserve provide institutional liquidity and trust infrastructure for Circle Digital Assets, including minting, redeeming, and moving USDC and EURC through Circle Mint, and enabling third-party developers to deploy USDC-interoperable stablecoins through xReserve.

•Circle Applications – Our application-layer products build on Circle Digital Assets and Arc to deliver practical utility, including CPN, which connects eligible financial institutions to facilitate near-instant, 24/7/365 payment settlement using regulated stablecoins, and StableFX, an institutional stablecoin foreign exchange engine built on Arc that supports onchain settlement and configurable escrow-based trade settlement.

See Part I, Item 1 – “Business”, of our Annual Report on Form 10-K for the year ended December 31, 2025 for a detailed description of our suite of products and services.

Recent Developments

Arc and the ARC Token

As previously announced in October 2025, we launched the public testnet of Arc, our open, Layer-1 blockchain network purpose-built to unite programmable money and onchain innovation with real-world economic activity. As of June 30, 2026, since the launch of Arc testnet in October 2025, Arc testnet has processed 502 million cumulative transactions and 2.8 million cumulative transacting wallets. Private mainnet was launched in May 2026, with 100 + partners as of July 20, 2026, spanning capital markets, digital assets, payments, and technology. Building on this momentum and continued ecosystem engagement, we expect to launch Arc on mainnet in September 2026.

Arc is designed as an economic operating system for internet-scale financial infrastructure. It is built to feature predictable, dollar-denominated transaction fees, sub-second finality, opt-in configurable privacy, and native integration with our full-stack platform. Supported by a global ecosystem of partners, Arc is intended to provide an enterprise-grade foundation for stablecoin payments, foreign exchange, lending, and capital markets transactions, and to operate as part of a broader, interoperable multichain ecosystem.

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Arc is expected to initially operate under a Proof-of-Authority consensus model. Over time, it may transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism. If such a transition occurs, the network would introduce a native token (the “ARC Token”). The ARC Token is designed as the native coordination asset of the Arc network under the Proof-of-Stake model. If launched, the ARC Token is intended to align participants with the long-term success of the Arc network through staking, governance, and other platform-wide utilities. The ARC Token’s utility is expected to extend beyond the chain itself, spanning numerous protocols and products from us and our ecosystem partners on the Arc network. It is expected to confer governance rights to a distributed participant set responsible for upholding, among other things, the network’s security posture, and infrastructural integrity, establishing the conditions under which institutions can rely on Arc for mission-critical applications and settlement. The total initial supply of ARC Tokens is expected to be 10 billion, though the supply would be subject to increase as a result of the programmatic functioning of the Arc protocol. The timing, structure, terms, and scope of any such transition, or the creation and broader distribution of ARC Tokens, remain subject to ongoing technical, business, legal, regulatory, and market considerations.

During the three months ended June 30, 2026, we entered into token purchase agreements with certain institutional investors, pursuant to which we agreed to issue and sell to such purchasers an aggregate of 807.5 million ARC Tokens. The offer and sale of the tokens pursuant to the token purchase agreements was conducted as a private placement exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder. Each purchaser has agreed to a lock-up restriction prohibiting the direct or indirect sale, transfer, assignment or other disposition of any ARC Tokens acquired in the presale for a period of not less than one year from the date of the Arc network’s transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism, and may be subject to additional restrictions on transfer until the date that is four years following such transition date.

The ARC Tokens were offered and sold at a purchase price of $0.30 per token, implying a fully diluted network valuation of $3.0 billion and resulting in aggregate gross proceeds to us of approximately $242.2 million. The token purchase agreements and related agreements provide for repayment rights in specified circumstances, including if the ARC Tokens are not delivered or if the Arc network has not completed the transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism on or before May 8, 2028, or if certain purchaser-specific legal, regulatory, or compliance-related conditions are

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with our Consolidated Financial Statements, including the notes thereto, included elsewhere in this Form 10-K. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K, particularly in the “Risk Factors” section.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on a discussion of the 2025 results as compared to the 2024 results, unless otherwise noted. For a discussion of 2024 results as compared to 2023 results, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Prospectus, dated June 5, 2025, filed with the SEC on Form 424B in connection with our IPO.

Executive Overview

In the fourth quarter and full year 2025, we continued building the infrastructure for an open, programmable internet financial system by scaling adoption of USDC and expanding our platform across product, network, and regulatory milestones.

During the fourth quarter of 2025 (compared to fourth quarter of 2024):

•USDC in circulation grew 72% to $75.3 billion; USDC onchain transaction volume grew 247% to $11.9 trillion.

•Total revenue and reserve income grew 77% to $770 million.

•Net Income from continuing operations increased by $129 million to $133 million.

•Adjusted EBITDA grew 412% to $167 million.

For the full year 2025 (compared to full year of 2024):

•Total revenue and reserve income grew 64% to $2.7 billion.

•Net Loss from continuing operations was $70 million compared to a Net Income from continuing operations in the prior year of $157 million, significantly impacted by $424 million for stock-based compensation related to vesting conditions met by our IPO.

•Adjusted EBITDA grew 104% to $582 million.

See “—Non-GAAP Financial Measures” below for a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations, the most closely comparable GAAP measure, and additional information about the limitations of our non-GAAP measures.

In addition, during fiscal year 2025, we also:

•Expanded USDC adoption globally as more enterprises, developers, and public institutions integrated digital dollars into real-world payments, treasury, and onchain financial workflows.

•Launched Arc in public testnet with over 100+ participants spanning banking, capital markets, digital assets, payments and technology.

•Launched and expanded Circle Payments Network (CPN).

•Grew EURC and USYC following our relaunch of USYC in the third quarter of 2025.

•Strengthened our regulatory foundation, including receiving conditional OCC approval to establish a national trust bank, further reinforcing the infrastructure supporting USDC.

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Overview of Business

Our mission is to raise global economic prosperity through the frictionless exchange of value.

We were founded in 2013, on the belief that we could connect the world more deeply by building a new global economic system on the foundation of the internet, and facilitate the creation of a world where everyone, everywhere can share value as easily as we can today share information, content, and communications.

We are building a full-stack internet financial platform business anchored by our stablecoin network. Our business is organized around three reinforcing pillars: (i) Arc, an open Layer-1 blockchain network and related developer/interoperability infrastructure; (ii) Circle Digital Assets and Services, including USDC, EURC, USYC and related liquidity infrastructure such as Circle Mint and xReserve; and (iii) Circle Applications, including products like CPN and StableFX that deliver real-world utility on Arc and across a multichain ecosystem. The three pillars of our platform are designed to reinforce one another: Arc is expected to provide an enterprise-grade foundation for stablecoin finance and consumer-scale applications; Circle Digital Assets and related services supply trusted units of value and liquidity infrastructure; and Circle Applications translate that infrastructure into real-world utility for institutions, developers, and end-users.

Our business model is driven by the growth of our platform, including the use and continued utility of Circle Digital Assets. We invest in expansion of our platform by partnering with major financial and technology institutions to drive distribution of Circle Digital Assets, building global fiat on- and off-ramps to increase accessibility and liquidity of Circle Digital Assets, and providing developer tools and operational infrastructure that reduce friction and enable new applications using our Circle Digital Assets, including tools that can be used on our platform without a direct relationship with us. We also aim to increase network activity through the launch of new products and services, expansion into new markets, and the fostering of third-party innovation on our platform, in each case, with a regulation-first approach.

Circle stablecoins and related reserve income

We currently derive a substantial majority of our revenue from reserve income on the reserve assets backing our stablecoins, USDC and EURC. Reserve income was 96.0% and 99.1% of our total revenue in the years ended December 31, 2025 and 2024, respectively. Historically, we earn reserve income on the reserve assets backing our stablecoins in circulation at interest rates close to the prevailing SOFR during the applicable periods. We term the rate of return generated on assets held in reserve as the “reserve return rate”. See “—Key operating indicators and financial results” for the calculation of reserve return rate. The reserve income that we generate is a function of (i) our stablecoins in circulation over a given period and (ii) the reserve return rate.

Other products

In addition to revenue from reserve income on the reserve assets backing our stablecoins, we continue to expand product offerings and services that benefit from and support the growth of our platform and the utility of Circle Digital Assets. Our other products contributed 4.0% and 0.9% of Circle’s total revenue in the years ended December 31, 2025 and 2024 respectively. We believe these and other new product and service offerings will contribute to the growth of our platform and the use of Circle Digital Assets, and over time drive a flywheel of growth that has been the hallmark of successful internet-driven networks. We also expect growth in our network to drive increases in our stablecoins in circulation and thereby drive our reserve income. We anticipate growing these offerings in the coming years, diversifying our revenue profile.

These offerings include:

•Arc Blockchain and Related Developer Infrastructure – Arc is our open, Layer-1 blockchain purpose-built to bring real world economic activity onchain, supported by developer tools (including Circle Wallets and Circle Contracts) and interoperability services (including CCTP and Gateway) designed to reduce complexity and help developers and enterprises build and operate onchain applications that move value across networks.

•Circle Tokenized Funds – Our tokenized fund, USYC, which is a part of our Circle Digital Assets, is an onchain representation of shares in a traditional money market fund intended primarily for use as collateral in digital asset markets, providing yield to token holders and complementing USDC and EURC in institutional trading, treasury, and collateral workflows.

•Circle Liquidity Services – Circle Mint and xReserve provide institutional liquidity and trust infrastructure for Circle Digital Assets, including minting, redeeming, and moving USDC and EURC through Circle Mint, and enabling third-party developers to deploy USDC-interoperable stablecoins through xReserve.

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•Circle Applications – Our application-layer products build on Circle Digital Assets and Arc to deliver practical utility, including CPN, which connects eligible financial institutions to facilitate near-instant, 24/7/365 payment settlement using regulated stablecoins, and StableFX, an institutional stablecoin foreign exchange engine built on Arc that supports onchain settlement and configurable escrow-based trade settlement.

See Part I, Item 1 – “Business” for a detailed description of our suite of products and services.

Discontinued products

As we continue to focus on our core strategy of growing the Circle stablecoin network, we have discontinued certain products that we deemed as non-core to our business. Together, these products contributed less than 1% of total revenue in the years ended December 31, 2025 and 2024 and we do not anticipate them to impact our future financial or operating performance.

Significant Transactions

Initial Public Offering and Follow-on Public Offering

In June 2025, we completed our IPO, in which we issued and sold 19.9 million shares of Class A common stock, including the underwriters’ over-allotment option which was exercised in full, at a public offering price of $31.00 per share, which resulted in net proceeds to us of $583.0 million after deducting the underwriting discounts and commissions and before deducting offering costs of $12.8 million, which were charged to additional paid-in capital as a reduction of the net proceeds received from the IPO. Certain selling stockholders offered an additional 19.2 million shares of our Class A common stock at the IPO price in a secondary offering, for which we received no proceeds.

In connection with the IPO, all shares of our outstanding redeemable convertible preferred stock automatically converted into a total of 139.8 million shares of our Class A common stock, and a total of 19.6 million shares of Class A common stock held by our co-founders and certain entities controlled by our co-founders were converted into an equivalent number of shares of Class B common stock. Certain of our restricted stock units granted to employees included both a service condition and a liquidity-event related performance condition. The performance condition related to these awards was met upon the commencement of trading of our Class A common stock on the NYSE, and we recognized $423.8 million of stock-based compensation expense, net of $62.7 million of capitalized costs related to internally developed software, for the vesting of approximately 9.5 million shares of Class A common stock, 4.0 million of which were withheld for tax withholding requirements.

In August 2025, we completed a follow-on public offering of our Class A common stock, in which we issued and sold 3.5 million shares of our Class A common stock, including the underwriters’ over-allotment option which was exercised in full, at a public offering price of $130.00 per share. This resulted in net proceeds to us of $444.8 million after deducting the underwriting discounts and commissions and before deducting offering costs of $1.8 million, which were charged to additional paid-in capital as a reduction of the net proceeds received from the follow-on public offering. Certain selling stockholders offered an additional 8.0 million shares of our Class A common stock at the follow-on public offering price in a secondary offering, for which we received no proceeds.

Hashnote Acquisition

In January 2025, we acquired 100% of the ownership interest in Hashnote, which, through its affiliates, is the fund manager of Hashnote International Short Duration Yield Fund Ltd. (“SDYF”), a TMMF and the issuer of USYC. The fair value of consideration transferred fo

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