To The Moon

Circle Q3 Earnings Preview: USDC Yields, GENIUS Act Implementation, 50% Coinbase Cost

$Circle Internet Corp.(CRCL)$ is set to release its Q3 FY 2025 earnings report on Wednesday, November 12, 2025 at 8:00 AM Eastern Time (ET). The market is keenly watching to see if the "Stablecoin King" can demonstrate clear and sustainable GAAP (Generally Accepted Accounting Principles) profitability, building upon the expansion of its core business, USDC.

Core Financial Indicators

$Circle (CRCL.US)$'s revenue is expected to be $709 Million for 2025Q3, up 7.74% QoQ (Quarter-over-Quarter, a clear increase); YoY (Year-over-Year) growth is not calculated directly as the company was not listed in Q3 2024.

$Circle (CRCL.US)$'s EPS (Earnings Per Share) is estimated to be $0.17, with YoY growth not calculated directly as Q3 2024 data and business structure are not comparable.

Note: While a recovery in Non-GAAP profitability is expected, the key financial focus remains on $Circle (CRCL.US)$'s ability to transition from its Q2 net loss back to profitability on a GAAP basis. The company's revenue is highly dependent on USDC reserve interest income, which historically accounts for nearly 99% of its revenue.

Option Market Signals

The options market is likely pricing in significant volatility around the $Circle (CRCL.US)$ earnings announcement, reflecting the high uncertainty surrounding this high-valuation FinTech stock.

~Implied Volatility (IV): Given the stock's status as a high-growth FinTech company, IV is expected to be elevated. This suggests traders are paying a high premium, indicating the market expects $Circle (CRCL.US)$ needs to deliver a significant surprise to meet expectations.

~Put/Call Ratio: Following recent sharp stock movements, the Put/Call ratio is a key indicator of current market sentiment. A ratio above 1.0 would signal a defensive hedging stance (higher bearish sentiment), while a low ratio would suggest aggressive bullish speculation on an upside breakout.

Three Things to Watch

Reserve Yield Capture and Coinbase as the Distribution Channel Challenges

CRCL's profitability is highly sensitive to Federal Reserve interest rates, as its reserves are mostly invested in short-dated U.S. Treasuries. However, the company faces high channel costs, notably the 50% residual yield-sharing agreement with $Coinbase (COIN.US)$, which is clear evidence of the distribution channel's importance surpassing network effects. Investors will watch for updates on management's strategy to diversify reserve holdings or renegotiate partner revenue-sharing agreements to maximize its net yield capture. The adoption of its Euro stablecoin, EURC (EURO Coin), will also be assessed.

GAAP Profit Recovery and Cost Control Test

Despite achieving an adjusted Non-GAAP (Non-Generally Accepted Accounting Principles) EPS of $1.02 in Q2, the company's GAAP net loss was heavily impacted by IPO-related non-cash charges. The key for Q3 is whether the company's GAAP net profit can begin to recover as these one-time costs fade. Specifically, distribution and transaction costs surged 64% YoY last quarter. Investors need to see a clear optimization strategy from management for these costs to prove that operating efficiency is improving.

Diversification Progress with CPN Against White-Label Stablecoin Competition

$Circle (CRCL.US)$ is actively transitioning from a "stablecoin issuer" to a "financial infrastructure provider" to combat the commoditization trend in the stablecoin market. The Circle Payments Network (CPN) is active in multiple countries; furthermore, its payment-focused Arc Layer-1 (Arc Layer-1 Blockchain) has launched its public testnet. The market will look for evidence that these new businesses can contribute meaningful non-interest subscription revenue and mitigate the pressure from the application layer (like Hyperliquid) issuing its own white-label stablecoins to recapture yield.

Summary of Risks and Opportunities

Potential Positive Catalysts:

~GENIUS Act Implementation Benefits: Although the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) was signed into law in July 2025, federal agencies are still developing implementing regulations (e.g., Treasury's ANPRM in September). Forward-looking commentary from management during Q3/Q4 on how these final rules will accelerate greater bank/institutional adoption of USDC or lead to new strategic partnerships (effects that take time to materialize) will serve as a positive catalyst for the stock.

~Higher-than-Expected Reserve Yield: Stronger interest income driven by higher-than-expected short-term Treasury rates or a better net yield capture.

~Product price increases: Evidence of successful monetization of new services, particularly EURC or CPN.

Risks to Monitor:

~Costs and Margins: Failure to demonstrate a clear and rapid path to GAAP profitability could trigger a major correction.

~Interest Rate Impact: Any indication that management is bracing for a substantial drop in the revenue-driving short-term Treasury yields.

~USDC Market Share Loss: Continued strong competition from Tether or new white-label stablecoin ventures (as detailed in recent market reports) could cap reserve growth, highlighting the risk of distribution channel leakage.

Valuation

Circle's valuation reflects extremely high growth expectations, highlighted by its 12-month forward Price-to-Sales (P/S) ratio of 8.18x, significantly exceeding the S&P 500 index's average of about 2.7x.. This significant premium underscores the market's heavy bet on long-term exponential growth within the stablecoin market.

Furthermore, with the trailing Price-to-Earnings (P/E) ratio sitting at 147.45 times, the P/E based on forward expected earnings likely exceeds 150 times, further emphasizing the aggressive growth forecasts driving the company's valuation.

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