To The Moon

👋 Hey Tigers!

$Circle Internet Corp.(CRCL)$ just delivered its 4Q25 results, and the headline numbers were strong — especially on margins.

The Tiger Research Team has updated its model, and here’s the verdict:

👉 Maintain HOLD rating

The big question? Profitability momentum is real, but can revenue diversification keep pace in a rate-cut cycle?

Let’s break it down. 👇

1. The Core Beat: Margin Surprise Drives Earnings Upside 📈

CRCL reported total revenue of $770M (+77% YoY) — broadly in line with The Tiger Research Team’s estimate and 4% above Street expectations.

But the real surprise came from profitability.

🔥 Adjusted EBITDA:

• $167M (+412% YoY)

• 28% above consensus

The key driver? A stronger-than-expected RLDC margin of 40.1%, compared with ~36.3% consensus.

Revenue less distribution costs (RLDC) reached $309M (+136% YoY), supported by higher USDC balances on Circle platforms (17.8% in 4Q vs. 13.5% in 3Q).

While total distribution, transaction, and other costs rose 52% YoY to $461M, margin expansion more than offset cost growth — a clear operational positive.

2. USDC Metrics: Strong Growth, Rate Headwinds Emerging 🌊

Operationally, growth remained robust.

🪙 USDC Highlights:

• USDC in circulation: $75.3B (+72% YoY, +2% QoQ)

• Average circulation: $76.2B (+100% YoY)

• Onchain transaction volume: $11.9T (+247% YoY)

• Stablecoin market share: 28% (+426bps YoY, -100bps QoQ)

Reserve income reached $733M (+69% YoY).

However, reserve return rate declined 68bps YoY to 3.8% following recent rate cuts — a reminder that revenue remains rate-sensitive.

In The Tiger Research Team’s model, reserve income accounted for:

• ~95% of 4Q revenue

• ~94% of 2026E revenue

This concentration remains the core structural issue.

3. Diversification: Progress, But Still Early-Stage 🧩

Other revenue came in at $37M, including:

• $24.7M subscription & services

• $12.2M transaction revenue

While growing from a low base, it remains modest relative to reserve income.

Importantly, a meaningful portion was tied to blockchain rewards and token-related activity — implying higher variability versus recurring SaaS-style revenue. Diversification is happening, but it is not yet durable or recurring at scale.

Strategic Developments:

The Tiger Research Team notes several ecosystem milestones:

• Arc public testnet launched with 100+ participants

  • Near-100% uptime

  • ~0.5 second finality

  • 166M+ transactions since launch

  • 2.3M average daily transactions

  • Mainnet on track this year

• Circle Payments Network:

  • 55 institutions enrolled (74 under review)

  • $5.7B annualized TPV (as of Feb 20, 2026)

• EURC circulation: €310M (+284% YoY, +44% QoQ)

• USYC assets: $1.5B (+111% QoQ post relaunch)

Partnership and regulatory catalysts include:

• Visa enabling USDC settlement for U.S. issuers and acquirers

• Intuit entering multi-year USDC integration partnership

• Polymarket formalizing USDC as core collateral

• Conditional OCC approval to establish a national trust bank

Strategically, The Tiger Research Team continues to view CRCL as well-positioned to become core infrastructure for internet-native money.

But near-term financial contribution from these initiatives remains limited.

4. FY26 Guidance: Normalization After Step-Function Growth 📊

Management reiterated:

• Long-term USDC circulation CAGR: 40% multi-year through-cycle

• FY26 Other revenue: $150–170M

• FY26 RLDC margin: 38–40%

• FY26 adjusted operating expenses: $570–585M

Notably, FY26 Other revenue guidance implies a sharp deceleration versus 2025’s 600%+ growth. Diversification beyond reserve income will likely remain gradual, with limited earnings impact in 2026.

From a macro perspective, although strong labor data has slightly reduced Street expectations for aggressive rate cuts in 2026, The Tiger Research Team still views the environment as a broader rate-cut cycle.

Against this backdrop:

• Crypto asset prices may face 1H pressure

• USDC demand could soften as trading activity slows

The Tiger Research Team models 27% USDC circulation growth in 2026, below management’s long-term 40% target — but we believe the 40% multi-year CAGR remains achievable through-cycle as structural stablecoin adoption expands.

5. Estimate Revisions ✏️

The Tiger Research Team is adjusting near-term expectations:

• 1Q revenue estimate ↓ 3%

• 1Q adjusted EBITDA ↓ 5%

• 2026E revenue ↓ 3%

• 2026E adjusted EBITDA ↓ 11%

Revisions reflect lower rate assumptions and more gradual non-reserve revenue ramp.

📝 Summary

CRCL delivered a clear margin-driven beat in 4Q25, supported by strong RLDC performance and disciplined cost management.

However:

• Revenue remains heavily concentrated in reserve income

• Diversification growth is normalizing

• Macro rate dynamics introduce earnings sensitivity

While The Tiger Research Team remains constructive on CRCL’s long-term strategic positioning as foundational stablecoin infrastructure, near-term earnings concentration and macro uncertainty justify a balanced stance.

👉 The Tiger Research Team maintains a HOLD rating.

🐯 Questions for Tigers:

• Rate Sensitivity: How much downside risk do you see if rate cuts accelerate in 2H26?

• Diversification: When do you expect non-reserve revenue to exceed 10% of total revenue?

• Stablecoin Adoption: Is 40% multi-year USDC CAGR realistic, or too optimistic?

• Valuation: Does CRCL deserve infrastructure-style multiples, or remain tied to rate cycles?

Let’s discuss 👇

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