Circle's Revenue Increased by 20%, but...Margin Pressure Exposed Amid Ripple and PayPal's Offensive

▲ USDC, RLUSD, PYUSD, Stablecoin/AI-generated image

Circle (CRCL), the issuer of USDC, revealed profitability pressure despite revenue growth in Q1 2026. As Ripple's RLUSD expansion and PayPal's PYUSD ecosystem expansion intertwine, an analysis suggests that Circle is being pushed into a structure where it must spend more to maintain its stablecoin market share.

U.Today reported on May 11 (local time) that Circle recorded revenue of $694 million in its Q1 2026 report, a 20% increase year-over-year. However, this figure fell short of Wall Street's minimum forecast of $720 million.

Profitability metrics were even more sluggish. Circle's GAAP net income plummeted by 59% quarter-over-quarter to $55 million. Adjusted EBITDA also decreased by 10% quarter-over-quarter. U.Today assessed that this trend indicates a deterioration in Circle's operational efficiency amidst competitive pressure.

Earnings per share (EPS) were $0.21, nominally exceeding market consensus but falling short of the target in optimistic scenarios. The simultaneous weakening of net income and adjusted EBITDA despite revenue growth was presented as a sign that Circle's core business model is facing rising costs and intensifying competition.

The core of the competitive pressure comes from Ripple and PayPal. U.Today reported that Ripple is aggressively promoting its own stablecoin, RLUSD, while PayPal is expanding its market share in the personal payment sector with PYUSD. In particular, PayPal's existing user base was identified as a factor weakening USDC's key advantages in real-world payments and cross-border remittances.

PYUSD's growth has also been remarkable. In spring 2026, PYUSD's market capitalization exceeded $4.1 billion, and PayPal expanded PYUSD to 70 international markets. It is also integrating with institutional funds like State Street's SWEEP, increasing its influence in both personal payments and institutional finance.

In response to slowing core business growth, Circle has embarked on building a new ecosystem. Circle raised $222 million in an ARC token presale led by a16z and participated in by BlackRock, with the project's fully diluted valuation estimated at $3 billion. U.Today interpreted this as a move demonstrating that Circle can no longer withstand pressure from Ripple and PayPal by merely defending USDC.

While Circle achieved external growth through revenue increase, it simultaneously faces the burdens of decreasing profits, rising costs, and intensifying competition. As RLUSD and PYUSD gain prominence in the stablecoin market, Circle's Q1 performance revealed that the USDC issuance model can no longer reliably guarantee high margins as it once did.

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