Author: Claude, Shenchao TechFlow

Shenchao Overview: Circle released its Q1 2026 financial report, with adjusted earnings per share of $0.21 exceeding expectations, but revenue of $694 million falling short. The circulating supply of USDC reached $77 billion, and on-chain transaction volume skyrocketed 263% to $21.5 trillion. On the same day, it announced the completion of the Arc blockchain token presale financing of $222 million at a valuation of $3 billion, led by a16z with a $75 million contribution, along with participation from BlackRock, Apollo, and others. The company also launched the Agent Stack toolkit, allowing AI agents to autonomously hold USDC, initiate payments, and call services. The CRCL stock price surged 16% to $131.76 on the same day, with a year-to-date increase of 66%.

Circle is undergoing the most intense round of strategic output since its IPO.

On May 11, the issuer of the world's second-largest stablecoin USDC released three significant signals on the same day: Q1 2026 financial report, completion of the Arc blockchain token presale, and the new infrastructure tool Agent Stack aimed at AI agents. According to Cointelegraph, CRCL's stock price closed up nearly 16% to $131.76 that day, reaching its highest level since March 18, with a year-to-date increase expanding to 66% and a market value of approximately $35 billion.

Circle CEO Jeremy Allaire stated in an interview with CNBC, "We are becoming a broader internet platform company, and we are entering the operating system business." He positioned Arc as a multi-stakeholder distributed network, analogous to mobile operating systems and cloud platforms.

Looking at these three things together points to the same conclusion: Circle is attempting to break free from the valuation narrative of "USDC interest income standing on one leg" and is transitioning to become an infrastructure platform company.

Financial Report: Revenue Below Expectations, Earnings Exceed Expectations, USDC Transaction Volume Increased 263%

According to CoinDesk, Circle's Q1 2026 revenue was $694 million, a 20% year-over-year increase, but below Wall Street's consensus expectation of about $715 million. Adjusted earnings per share were $0.21, exceeding the analysts' expectation of $0.17. Adjusted EBITDA was $151 million, up 24% year-over-year. Net profit was $55 million, down 15% year-over-year, primarily due to IPO-related equity incentive expenses and a 76% increase in operating expenses.

However, key operational metrics showed strong performance.

As of the end of Q1, the circulating supply of USDC reached $77 billion, a 28% year-over-year increase. More notably, on-chain USDC transaction volume reached $21.5 trillion in the quarter, a staggering increase of 263% year-over-year. According to a report from Mizuho analysts, the adjusted transaction volume of USDC for 2026 year-to-date is about $2.2 trillion, surpassing Tether's USDT (approximately $1.3 trillion), capturing the number one position in adjusted stablecoin transaction volume with about 64% share, a first for USDC since 2019 in that metric.

However, the core reason for the revenue falling short of expectations is clear: interest rates. Over 95% of Circle's revenue comes from interest income on USDC reserve assets, with reserve income in Q1 totaling $653 million, a 17% year-over-year increase. By Q4 2025, the reserve return rate had already decreased by 68 basis points year-over-year to 3.8%, with the downward pressure from the interest rate cycle on Circle's revenue gradually becoming apparent. Even with the continuous expansion of USDC's circulating supply, the decline in interest rates remains a sword hanging over its head. This is precisely the underlying motivation for Circle's eagerness to tell the story of the "second growth curve."

Arc Token Presale: Building a Public Chain, $3 Billion Valuation

Alongside the financial report, a significant announcement was the completion of the Arc blockchain token presale. According to exclusive reports from CNBC, Circle sold 740 million ARC tokens at a fully diluted valuation of $3 billion, at a price of $0.30 each, raising a total of $222 million. This marks the first presale of tokens by a public company.

a16z crypto led the investment with $75 million. Other participating investors include a prestigious lineup: BlackRock, Apollo Global Management, Intercontinental Exchange (ICE), Standard Chartered Ventures, ARK Invest, General Catalyst, Haun Ventures, and Bullish.

Currently, USDC relies heavily on third-party networks like Ethereum and Solana for settlement and depends on distribution partners like Coinbase to reach users. Building a public chain means Circle aims to control more of the underlying infrastructure for USDC's operation. From a defensive perspective, as the GENIUS Act has been signed into law and the CLARITY Act is set for a preliminary vote in the Senate Banking Committee this week, the legalization of stablecoin regulation is lowering the barrier to entry for the industry, while banks and fintech companies may launch their own dollar tokens. Circle, by building its own network, seeks to lock in first-mover advantages in the infrastructure layer before this competitive landscape takes shape.

Circle explicitly stated in its financial report that the current performance guidance has not factored in "future Arc-related revenue streams," indicating that Arc may become an independent source of revenue beyond USDC.

Agent Stack: When AI Agents Become "Clients"

The third announcement made on the same day was Circle Agent Stack, a set of financial infrastructure tools designed for AI agents.

According to Decrypt, Agent Stack comprises four core components: Agent Wallets allow AI agents to autonomously hold assets; Circle CLI enables developers and AI agents to build applications on the Circle platform; Agent Marketplace lets AI agents browse, evaluate, and pay for services provided by other agents; Nanopayments, based on Circle Gateway, support gasless USDC transfers down to $0.000001.

Allaire commented in the press release, "Financial infrastructure has traditionally been built for humans, with manual onboarding processes, approvals, and payment workflows, never designed for software that operates autonomously. Agent Stack is our first complete service suite launched specifically with AI agents themselves as clients, not just developers and enterprises."

Circle is betting on a future of machine-to-machine payments: AI agents autonomously trading with each other, hiring services from one another, and settling instantly on demand, all conducted through USDC.

However, Circle is not the only player in this field. Recently, Amazon partnered with Coinbase and Stripe, Google Cloud teamed up with the Solana Foundation, and MoonPay has launched similar AI agent stablecoin payment solutions.

$35 Billion Valuation, Can It Stand?

CRCL currently has a market value of about $35 billion, with a forward P/E ratio of about 135, significantly higher than the industry median of about 33. Citigroup analyst Peter Christiansen set a target price of $243, while Bernstein's Gautam Chhugani gave a target price of $190, and all 12 analysts tracked by TipRanks gave a rating of "Buy," with a consensus target price of $138.50.

However, some are applying the brakes. Compass Point downgraded CRCL to "Sell" in April, warning that gross margins are narrowing in the first half of 2026 due to the supply of USDC shifting to lower-margin areas. Even according to management's guidance, non-reserve revenue (expected to be between $150 million to $170 million for the year) remains negligible compared to the reserve revenue engine. Whether Arc can transition from a white paper to a genuine revenue-generating business line is the core verification node for the second half of 2026.

William Blair analyst Andrew Jeffrey told clients that Circle's stock may "continue to be volatile" in the short term, but the company has multiple positive catalysts stemming from its "significant stablecoin business advantage."

On May 4, when the bipartisan compromise of the CLARITY Act was announced, CRCL surged nearly 20%, and the upcoming preliminary vote in the Senate Banking Committee will be the next catalytic node. Some analysts believe that this legislation effectively provides Circle with a "regulatory shield": compliance restrictions mean that Circle does not need to distribute USDC reserve earnings to users, preserving its profit margins under regulatory cover.

With the three cards played, Circle's valuation narrative has shifted from "stablecoin interest income stock" to "infrastructure platform + AI agent economy entry." Whether this narrative can be realized depends on the actual adoption after the Arc mainnet launch and Agent Stack's competitive performance in the machine-to-machine payment track.