Updating Circle 2Q RLDC Assumptions on the Back of COIN 2Q Earnings

Research evidence excerpt

Updating Circle 2Q RLDC Assumptions on the Back of COIN 2Q Earnings

more than expected in 2Q. We model Adj. EPS - 26E ($) 1.33 1.24 -6.9%

Adj. EPS - 27E ($) 1.53 1.59 4.2%

$15bn USDC on-platform for Circle, up from our prior projection of $13.6bn. We

model $41.5bn of USDC off-platform. This change is further accretive to Circle’s Quarterly Forecasts (FYE Dec)

RLDC margins, all else equal. Adj. EPS ($)

2025A 2026E 2027E

Distribution changes — we expect distribution costs may have gone Q1 0.87 0.16A 0.29

meaningfully higher. Despite the positive change in mix discussed above, to get Q2 (3.30) 0.17 0.34

Q3 0.42 0.71 0.42

the distribution pieces to fit based on Coinbase disclosure, we now see the potential Q4 0.38 0.20 0.54

for a bigger step up in terms of distribution costs. for Circle. Because Coinbase FY (0.42) 1.24 1.59

off-platform reserve income fell materially in 2Q, we can now back into

distribution costs for Circle that could be meaningfully higher in 2Q. We now Style Exposure

model 3rd party distribution costs (think Binance and other distribution partners) to

increase to $106mn in 2Q, up from $81mn in 1Q. All in, we expect the 2Q

Distribution and Transaction cost line will be $426mn. We note that while we

triangulate various pieces of USDC market cap and distribution costs, the pieces

could come together somewhat differently, but based on trends in recent quarters

and newsflow in 2Q, our mosaic here seems the most logical to us.

We have already modeled that Circle margins will be under pressure in 3Q from

the migration of Hyperliquid USDC to the Coinbase. See the research linked in the Recent related research:

sidebar on the Impact of Hyperliquid. But the Coinbase release suggests Circle is Coinbase: 2Q26 Missed Top-Line