$Circle Internet Corp.(CRCL)$ 3Q25 Update: Solid Quarter, but Rate Sensitivity Limits Upside
The Tiger Research team maintains a HOLD rating on Circle and lowers the price target to $100 (from $140) after a strong third quarter that was overshadowed by softer margin guidance and continued sensitivity to interest rates.
Circle beat expectations across revenue and profit as USDC adoption accelerated. Total revenue and reserve income rose 66% YoY to $740 million, while net income more than tripled to $214 million. Adjusted EBITDA reached $166 million, up 78% YoY with a margin of 22.5%, reflecting solid scale benefits. USDC in circulation surged 108% YoY to $73.7B, bringing Circle’s share of the dollar stablecoin market to 29%. Network activity remained strong, with on-chain transaction volume growing 580% to $9.6T and cross-chain transfer volume up 640% to $31B.
Despite the strong print, shares traded lower intraday as investors reacted to the updated full-year margin guidance. Management lifted its full-year RLDC margin outlook to ~38%, the top of its previous range, but this implies a material sequential decline in 4Q margins—below 36% versus 39% in 3Q. Operating expense guidance was raised to $495–510 million (from $475–490 million) due to higher payroll taxes and continued platform investment.
Investors appear concerned that profitability may have peaked for now, particularly as distribution costs rise with expanding circulation and partner incentives. Full-year guidance for other revenue was raised to $90–100M (from $75–85M), while Circle maintained its long-term 40% USDC circulation CAGR outlook.
Operational progress remained solid. The Circle Payments Network expanded to eight countries with 29 institutions enrolled, 55 under review, and over 500 in the pipeline, with annualized transaction volume reaching $3.4B. USYC, Circle’s tokenized money market fund, grew more than 200% since midyear to nearly $1B, making it the world’s second-largest tokenized fund.
On the infrastructure side, Circle launched the Arc public testnet in late October, with participation from leading partners including Visa, BlackRock, and MasterCard. The company is exploring a native Arc token launch in 2026, which could broaden Circle’s business beyond reserve income and deepen its position across the blockchain stack.
However, Circle remains heavily exposed to macro and crypto-cycle risk. Roughly 96% of quarterly revenue came from reserve income, making the business highly sensitive to interest rate shifts. USDC circulation still depends primarily on crypto-native activity, and a potential late-cycle Bitcoin pullback could pressure transaction and minting volumes. While payment adoption and tokenized assets are ramping quickly, they contribute modestly today.
Valuation also limits upside in the near term; at roughly 35× 2026E EBITDA, the stock already prices in meaningful long-term execution. Circle remains one of the most strategically well-positioned companies in the stablecoin ecosystem, with deep institutional relationships and credible plans to build a full-stack internet financial infrastructure through Arc, CPN, and tokenization initiatives.
But with margin momentum slowing and macro headwinds in focus, a neutral stance remains appropriate. The Tiger Research team maintains HOLD and lowers the PT to $100.
💰Estimate revisions: 4Q revenue raised 6%, adjusted EBITDA lowered 14%; 2026 revenue raised 9% and adjusted EBITDA raised 9%.
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