Circle Cuts 5% of Staff Despite $226M in Q3 Net Income

Circle, the issuer of USDC, cut about 5% of its workforce in the third quarter, in a move described as Circle layoffs. The company (CRCL) disclosed the move on Nov. 4 and booked $9.1 million in restructuring expenses, even as net income from continuing operations reached $226 million.

A $182 million private presale of Circle’s ARC token lifted headline growth while income from the reserves backing USDC fell.

Circle Layoffs Appear in Earnings Footnotes

Circle disclosed the reduction in footnotes to its financial tables, not its business highlights. The cuts, the company said, were “designed to better align our organizational structure with our operating model and strategic priorities.”

Related: Circle Takes Arc Multi-Asset as EURC and cirBTC Go Live on CCTP

Restructuring costs included cash expenses for departing employees. A reversal of stock-based compensation tied to forfeited shares partly offset them.

ARC Presale Lifts Revenue as Reserve Income Falls 8%

Total revenue and reserve income rose 17% year over year to $865 million, while net income climbed 5%. Other revenue jumped to $207 million from $29 million, including $182 million from the ARC presale.

Without the one-time sale, total revenue and reserve income would have fallen. Adjusted EBITDA, which also included the presale contribution, rose 85% to $317 million.

Reserve income dropped 8% to $658 million as the reserve return rate fell 61 basis points to 3.5%. Average USDC circulation grew 8% to $73.3 billion, but not enough to make up for lower yields.

CRCL Shares Edge Lower as Allaire Highlights Growth

CRCL shares slipped about 1.2% to $74.33 in premarket trading after gaining 4.4% on Tuesday.

CEO Jeremy Allaire called Q3 “a big quarter for Circle” but did not mention the layoffs in his results comments or accompanying X post. He said the company’s payments network reached $41 billion in annualized volume, up 15-fold.

USDC Ends the Quarter Flat as Operating Costs Rise

USDC circulation stood at $73.9 billion at quarter-end, flat year over year. Circle put its share of the dollar stablecoin market at 27%.

Operating expenses rose 16% to $245 million, driven by higher administrative, depreciation, IT and marketing spending. Distribution costs paid to partners such as Coinbase fell 8% to $409 million.

Circle Expands Arc and Prepares for Stablecoin Rules

Circle is pushing ahead with expansion even as it cuts staff. Arc’s public mainnet launched in September with more than 100 institutional builders. The company also agreed to acquire Singapore-based cross-border payments platform Tazapay, which handles more than $25 billion in annualized volume.

The GENIUS Act takes effect Jan. 18, bringing federal licensing and reserve requirements for stablecoin issuers. Circle says its stablecoins will qualify. Implementing the rules will be another milestone as the company builds businesses beyond reserve income.

FAQ

What costs did Circle include in its $9.1 million restructuring charge?

The charge covered notice-period pay, severance, employee benefits and related costs from the third-quarter workforce reduction.

How did forfeited employee shares affect stock-based compensation expenses?

Departing employees forfeited unvested shares, triggering a $5.7 million reversal of stock-based compensation. That accounting reversal partly offset restructuring expenses and was separate from cash severance.

What is reserve income, and why did Circle’s reserve income fall this quarter?

Circle earns interest on the Treasuries and cash backing USDC. Returns on those assets fell, pushing reserve income down 8% despite growth in average circulation.

When did Arc’s public mainnet launch, and which institutions serve as validators?

Arc’s public mainnet launched Sept. 16. BlackRock, DTCC and Visa were among its permissioned validators.

When is Circle’s Tazapay acquisition expected to close?

The acquisition is expected to close in 2027. Tazapay operates a cross-border payments platform based in Singapore.

This article is for information only and is not financial advice.