CRCL: beats big, raises “other rev” — but higher spend sinks the chart through $100

Circle Internet Group opened the books with a headline beat that would normally earn a standing ovation, then promptly tripped over guidance optics and technicals. Q3 EPS came in at $0.64 versus $0.18–$0.22 expected, with total revenue and reserve income of $740 million topping ~$700 million consensus. The core growth engine remains the surge in USDC adoption: circulation ended the quarter at $73.7 billion, up 108% year over year and ahead of the ~$72.4 billion street mark ; on-chain transaction volume jumped to $9.6 trillion from $5.9 trillion in Q2, and “meaningful” wallets grew to 6.3 million from 5.7 million. Adjusted EBITDA rose to $166 million (vs. ~$130 million expected), reflecting scale benefits even as distribution and partner costs rise alongside circulation.

So why is the stock down ~5% premarket, slicing below psychological $100 and probing $94 — the lowest since June 6 — with $92 (the June 6 intraday low) now the obvious line to defend to avoid a gap-fill? Two reasons spending and the tape. Management lifted 2025 adjusted operating expense guidance to $495–$510 million (from $475–$490 million), and while it also nudged “other revenue” up to $90–$100 million (from $75–$85 million), the net message is heavier investment intensity into 2025. RLDC margin is now guided to roughly 38%, the top of the prior 36–38% range, but some investors likely wanted a cleaner flow-through to profit given the magnitude of the top-line beat.

Quarterly detail helps square the circle. Reserve income rose 60% year over year, powered by a 97% increase in average USDC in circulation and partially offset by lower reserve yields; total distribution, transaction and other costs climbed 74% as Circle shared more economics with distribution partners (notably Coinbase) and funded growth initiatives. GAAP operating expenses were $211 million, including $59 million of SBC; adjusted operating expenses were $131 million, up 35% year over year on higher headcount and G&A. Net income was $214 million, aided by tax benefits tied to SBC/R&D credits and a mark-to-market gain from lower convertible debt valuation.

Guidance and operating framework were the other key hooks. Management reiterated its multi-year 40% CAGR target for USDC in circulation and pushed FY25 “other revenue” higher, citing stronger subscription/services and transaction activity. RLDC margin guidance moves to ~38%, while the higher opex range reflects faster investment in platform capabilities, global partnerships, and payroll taxes from option exercises — in other words, spend to win while the adoption curve is steepening rather than easing off the accelerator. That spend posture is rational for a network-effect business, but it dilutes the purity of the beat in a market currently rewarding operating leverage and punishing budget creep.

Strategically, Circle leaned into two growth vectors. First, Arc — the company’s layer-1 network — opened its public testnet with 100+ institutional participants spanning banks, exchanges, payments, asset managers, and tech. Management is exploring a native Arc token to incentivize participation and align stakeholders, a move that, if executed with regulatory guardrails, could deepen liquidity and utility around USDC and Arc rails. Second, the Circle Payments Network continues to expand: 29 financial institutions are enrolled, 55 are in eligibility review, and roughly 500 sit in the pipeline; eight countries are now supported, with trailing-30-day annualized volume at ~$3.4 billion as of November 7. Partnership velocity remains brisk, with names like Deutsche Börse, Visa, Brex, Hyperliquid, Fireblocks, Itaú Unibanco, Finastra, and Kraken cited.

On the call, management’s tone was straightforward: adoption is accelerating, Circle is “building the Economic OS for the internet,” and this requires near-term investment in people, compliance, distribution, and developer ecosystems. The company reiterated confidence in durable USDC growth, highlighted that reserve income is scaling with circulation even as yields drift, and emphasized that “other revenue” will increasingly diversify the model via subscriptions, services, and transaction fees. Investors also got color on operating leverage: adjusted EBITDA strength (up 78% year over year) shows the model can expand profitably, but distribution sharing will remain elevated as the company prioritizes footprint and liquidity depth.

Trading setup and risk framing • Price action: premarket at ~$94 after losing $100 support; June 6 intraday low at $92 is key — a break risks a gap fill toward the IPO-week range. • Near-term bull case: follow-through adoption (wallets, circulation, volumes), continued “other revenue” upticks, and RLDC holding ~38% could re-anchor the multiple once the opex reset is digested. • Bear case/watch-outs: higher-for-longer partner costs cap incremental margins; regulatory headline risk around stablecoins and any Arc tokenization efforts; sensitivity to front-end rates via reserve yields.

Bottom line: operationally, this was a high-quality beat with healthier forward mix — USDC usage is compounding, and “other revenue” is finally moving the needle. Strategically, Arc and the bank-to-blockchain plumbing (CPN) widen the moat. But the market is voting on 2025 spending optics and a shaky chart today. If $92 holds and sentiment stabilizes, the fundamental trajectory argues the downside should be tactical rather than thesis-breaking; lose $92 decisively, and technicians will press for a deeper fill before the next fundamental catalyst.