USDC Is Growing. How Much of the Income Does Circle Keep?
Circle’s second-quarter 2026 figures leave $288.845 million after distribution, transaction and other costs. But that calculated contribution comes before operating expenses, so it is not profit.
- $288.845 million remained after the specified costs, about 41.2% of revenue and reserve income.
- The contribution margin improved from about 38.2% a year earlier.
- Average USDC circulation grew faster than reserve income as reserve returns fell.
- Transaction volume is not revenue, and product activity does not automatically mean meaningful earnings.
What Circle’s “contribution” measures
Circle reported $667.733 million in reserve income and $33.582 million in other revenue for the three months ended June 30, according to its Q2 results and Form 10-Q. Together, that comes to $701.315 million. The company also reported $412.470 million in distribution, transaction and other costs.
Subtract those costs and $288.845 million remains, about 41.2% of the combined revenue and reserve-income total. This is a calculated measure before operating expenses, not Circle-reported net income, free cash flow or cash available to shareholders.
Circle still had operating expenses to cover. It reported $254.486 million in operating expenses and $34.359 million in operating income. Net income from continuing operations was $48.214 million after non-operating income and tax effects. These figures represent different stages of the income statement. The $48.214 million net-income figure is the clearest measure of the quarter’s reported bottom line.
The same calculation for Q2 2025 leaves $251.136 million from $658.078 million in revenue and reserve income, after $406.942 million in the specified costs. The resulting contribution rose $37.709 million, or 15.0%, year over year. Its share of the combined total climbed from about 38.2% to 41.2%, an improvement of roughly three percentage points.
Circulation grew faster than reserve income
USDC is a stablecoin designed to track the U.S. dollar. Reserve assets back the outstanding tokens and help meet redemptions. Circle earns interest and dividend income on those assets. Its reserve income depends on both the amount of USDC in circulation and the return on its reserves.
Average USDC circulation was $76.524 billion in Q2, up from $61.039 billion a year earlier, roughly 25% growth. Reserve income rose just 5.3%, from $634.274 million to $667.733 million. Circle attributed the slower growth in part to lower returns on reserve assets. Its reported reserve return rate was rounded to 3.5%, down 66 basis points from a year earlier.
More USDC in circulation can lift reserve income, but it does not guarantee a proportional increase. Lower yields can offset growth in the balance. How much Circle ultimately keeps also depends on where USDC is held and the terms of distribution agreements.
Other revenue grew 41.1% to $33.582 million, according to Circle’s Q2 figures. It accounted for about 4.8% of combined revenue and reserve income. That growth stands out, but reserve income remains by far the larger part of the total.
Distribution costs shape what remains
Circle’s distribution, transaction and other costs rose 1.4% year over year, slower than the 6.6% increase in combined revenue and reserve income. The company’s filing put Coinbase-related costs at $324.6 million for the quarter, down from $332.3 million a year earlier.
Coinbase-related costs made up about 78.7% of Circle’s $412.470 million combined cost category. That comparison does not show how every remaining dollar was spent. The category also includes transaction and other costs, and Circle does not publish a complete profit-and-loss breakdown for each distribution partner.
Circle reported that USDC held on its own platform, including Circle Mint, averaged 19.5% of circulation during Q2, compared with 7.4% a year earlier. At June 30, $12.442 billion was on-platform, about 17% of quarter-end circulation. The first figure is a weighted average for the quarter. The second is a snapshot at quarter-end.
A separate report put Coinbase’s share of USDC circulation at 30% at quarter-end. That figure is not directly comparable with Circle’s 19.5% quarterly average. The measures cover different platforms and periods, and neither reveals the precise economics of the agreements involved.
Activity figures are not earnings figures
Circle reported $14.8 trillion in USDC onchain transaction volume for Q2, up 151% year over year. That measures reported activity, not Circle’s revenue or the amount of USDC outstanding. A token can be transferred multiple times, so transaction volume can far exceed the circulating supply. It does not mean Circle earned a fee on every transfer.
Circle also reported $14.7 billion in annualised Circle Payments Network volume, based on activity during the 30 days ending at quarter-end, and 175 enrolled financial institutions. Annualising one month of activity does not mean that amount was processed over a full 12 months. Enrollment also does not show how active each institution is or how much recognized revenue the network generated.
These figures may point to activity, but they do not answer the earnings question on their own. Revenue depends on the services customers use, the fees that apply and how the income is recognized. It does not depend simply on the number of transfers, enrolled institutions or announced products.
Interest-rate sensitivity is not an earnings forecast
Circle’s Q2 filing included modeled rate scenarios based on an average June reserve yield of 3.49%. For a hypothetical one-percentage-point rate change, the model estimated a $737 million annual change in reserve income and a $360 million change in distribution and transaction costs. That leaves a modeled difference of $377 million before other effects. A two-percentage-point move produced a modeled difference of $755 million.
These are scenarios, not predictions of Circle’s earnings over the next year. The assumptions hold circulation at its June 30 level for the following 12 months, keep reserve allocation constant and apply the rate change at the start of the period. They do not account for customers changing their USDC balances in response. Circle has said it cannot reliably predict that response.
Other factors matter too: partner terms, reserve composition, operating expenses and how quickly newer services generate recognized revenue. Circle reported adjusted operating expenses of $146 million, up 23% year over year. The decline in GAAP operating expenses was heavily affected by the comparison with IPO-related stock compensation in Q2 2025. The two expense measures use different accounting treatments.
Key questions about Circle’s USDC income
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How much remained after distribution, transaction and other costs?
$288.845 million, or about 41.2% of combined revenue and reserve income. This calculated contribution is before operating expenses and is not net income.
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Did that contribution improve year over year?
Yes. It increased 15.0%, while its share of revenue and reserve income rose from about 38.2% to 41.2%.
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Why did reserve income grow more slowly than USDC circulation?
Average circulation grew roughly 25%, while reserve income rose 5.3%. Circle cited lower reserve returns as one reason income did not keep pace with balance growth.
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Does USDC transaction volume equal Circle revenue?
No. Transaction volume measures activity on blockchain networks. It is not the value of USDC outstanding, and it does not show how much revenue Circle recognized.
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What could change Circle’s contribution margin?
Reserve yields, average USDC circulation, the platforms where USDC is held, partner agreements and transaction-related costs can all affect the amount left before operating expenses.
Circle’s Q2 figures show a stronger pre-operating-expense contribution despite lower reserve returns. That is a positive sign, but it is only part of the financial picture. The key test is whether the company can grow USDC and other revenue while managing distribution costs and operating expenses. Changes in yields, customer balances or partner economics could also affect how much Circle actually earns.
