Circle, a major stablecoin issuer in the United States, recorded strong revenue growth but incurred losses due to IPO costs. The stablecoin company's stock price rose on investors' optimism about future plans.
Circle (CRCL) reported a 53% increase in revenue compared to last year. The major stablecoin issuer showed strong growth in its core business. The market capitalization of its flagship USD Coin (USDC) also increased by 90%, reaching $61.3 billion.
Expansion Plans Attract Investor Interest
The company generated $658 million in revenue from stablecoin operations in the second quarter. However, Circle recorded a net loss of $482 million during the quarter. The company pointed to one-time IPO-related costs of $591 million as the cause of the loss.
Excluding distribution costs, Circle showed a healthy profit margin of 38%. However, the company continues to pay high fees to Coinbase for USDC distribution. These high costs could negatively impact future earnings.
In May, Circle launched the "Circle Payments Network" for dedicated payments. The network currently operates four payment routes. The company plans to collaborate with over 100 financial institutions this year.
Circle also announced a blockchain network called "Project Arc". Arc is an open blockchain designed for stablecoin finance. The new chain will use USDC as its native gas token.
Arc will provide EVM compatibility and transaction speed per second. It will include an embedded foreign exchange engine and privacy features. Circle plans to combine Arc with its payment network.
The company aims for an annual 40% growth of USDC. The public testnet of Arc may be launched this fall. Circle seeks to create a complete system for payments and settlements.
Mixed Stock Reaction Despite Positive Atmosphere
Investors initially reacted with strong optimism to the performance report. CRCL stock surged 14.66% in pre-market trading. The company's revenue and plans exceeded market expectations.
However, the upward trend disappeared when the market opened. The stock price gave up most of its gains during regular trading. CRCL closed with a 1.27% increase.
