Circle Internet Group, Inc. (CRCL) · Quarterly Report (10-Q) SEC Filing

PART I ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS CIRCLE INTERNET GROUP, INC. AND SUBSIDIARIES Index to Unaudited Condensed Consolidated Financial Statements Page 6 Condensed Consolidated Statements Of Operations 8 Condensed Consolidated Statements Of Comprehensive Income (Loss)9 Condensed Consolidated Statements Of Changes In Redeemable Convertible Preferred Stock And Stockholders' Equity 10 Condensed Consolidated Statements Of Cash Flows 12 Notes to Condensed Consolidated Financial Statements 14 5 CIRCLE INTERNET GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share information) June 30, 2026December 31, 2025 (unaudited) ASSETS Current assets: Cash and cash equivalents$1,730,126 $1,526,046 Cash and cash equivalents segregated for corporate-held stablecoins889,311 822,963 Cash and cash equivalents segregated for the benefit of stablecoin holders73,161,172 75,067,932 105,431 62,866 283,578 321,660 Total current assets 76,169,618 77,801,467 Non-current assets: Restricted cash12,806 2,792 Investments103,757 84,265 Fixed assets, net 22,177 22,791 Digital assets106,539 86,515 Goodwill 265,742 265,742 Intangible assets, net446,577 411,146 Deferred tax assets, net11,354 11,110 Other non-current assets26,890 27,379 Total assets$77,165,460 $78,713,207 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Deposits from stablecoin holders$72,927,544 $74,912,567 Accounts payable and accrued expenses418,588 360,609 Convertible debt, net of debt discount 36,821 Other current liabilities256,021 18,398 Total current liabilities 73,602,153 75,328,395 Non-current liabilities: 28,495 28,702 24,837 25,337 $73,655,485 $75,382,434 June 30, 2026December 31, 2025 (unaudited) Commitments and contingencies (see Note 22) Class A common stock ($0.0001 par value; 2.5 billion authorized as of June 30, 2026 and December 31, 2025; 233.5 million and 223.6 million issued and outstanding as of June 30, 2026 and December 31, 2025, respectively) 25 24 Class B common stock ($0.0001 par value; 500.0 million authorized as of June 30, 2026 and December 31, 2025; 19.2 million and 18.7 million issued and outstanding as of June 30, 2026 and December 31, 2025, respectively) 2 2 Class C common stock ($0.0001 par value; 500.0 million authorized as of June 30, 2026 and December 31, 2025; nil issued and outstanding as of June 30, 2026 and December 31, 2025) Treasury stock at cost (4.6 million and 4.7 million shares held as of June 30, 2026 and December 31, 2025, respectively) (2,645)(2,721) Additional paid-in capital 4,693,986 4,610,216 Accumulated deficit (1,189,235)(1,292,709) Accumulated other comprehensive income6,449 14,515 Total stockholders' equity attributable to common stockholders3,508,582 3,329,327 Noncontrolling interests 1,393 1,446 Total stockholders equity 3,509,975 3,330,773 Total liabilities and stockholders equity $77,165,460 $78,713,207 Three Months Ended June 30,Six Months Ended June 30, 2026202520262025$667,733 $634,274 $1,320,241 $1,192,185 33,582 23,804 75,207 44,466 701,315 658,078 1,395,448 1,236,651 410,414 406,472 815,816 753,784 2,056 470 3,435 805 412,470 406,942 819,251 754,589 133,999 503,392 272,126 579,012 66,273 43,140 123,534 73,824 29,896 14,209 56,663 28,089 16,359 8,760 29,081 16,432 8,657 7,910 15,274 11,770 (698)(693)158 5,577 254,486 576,718 496,836 714,704 34,359 (325,582)79,361 (232,642)17,947 (160,421)29,630 (163,524)52,306 (486,003)108,991 (396,166)4,092 (3,903)5,531 21,143 48,214 (482,100)103,460 (417,309)(7) (14) $48,221 $(482,100)$103,474 $(417,309)$0.19 $(4.48)$0.42 $(5.04)$0.18 $(4.48)$0.39 $(5.04)248,183 107,514 246,122 82,877 268,637 107,514 267,940 82,877 Three Months Ended June 30,Six Months Ended June 30, 2026202520262025$48,221 $(482,100)$103,474 $(417,309)(1,945)9,984 (8,117)11,793 13 (71)(1,945)9,997 (8,117)11,722 (27) (51) (1,918)9,997 (8,066)11,722 $46,303 $(472,103)$95,408 $(405,587)Permanent Equity (in thousands)Redeemable convertible preferred stockClass A common stockClass B common stockTreasury stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive incomeNoncontrolling InterestsTotal Stockholders' Equity SharesAmountSharesAmountSharesAmountSharesAmount Balance at December 31, 2025 $ 228,286$24 18,665$2 4,692$(2,721)$4,610,216 $(1,292,709)$14,515 $1,446 $3,330,773 Issuance of common stock upon exercise of stock options 2,483160 14,411 14,412 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 1,688 60 (80,453) (80,453) Issuance of common stock upon exercise of warrants, net of provision for warrants in common stock 525 4,659 4,659 Re-issuance of treasury stock to Circle Foundation (67)387,699 7,737 Conversion of Class B common stock to Class A common stock 70 (70) Conversion of convertible debt, net 465 39,382 39,382 Vesting of restricted stock units, and common stock in connection with business combinations 37 Stock-based compensation 61,279 61,279 Other comprehensive income (loss), net of tax (6,148)(24)(6,172) Capital contribution from noncontrolling interest (12) 12 Other 1,768 1,768 Net income 55,253 (7)55,246 Balance at March 31, 2026 $ 233,554$25 18,715$2 4,625$(2,683)$4,658,949 $(1,237,456)$8,367 $1,427 $3,428,631 Issuance of common stock upon exercise of stock options 1,737 1,969 27,216 27,216 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 1,092 20 (69,392) (69,392) Issuance of common stock upon exercise of warrants, net of provision for warrants in common stock 195 4,502 4,502 Re-issuance of treasury stock to Circle Foundation (67)385,373 5,411 Conversion of Class B common stock to Class A common stock 1,470 (1,470) Vesting of restricted stock units, and common stock in connection with business combinations 16 Stock-based compensation 67,367 67,367 Other comprehensive income (loss), net of tax (1,918)(27)(1,945) (29) (29) Net income 48,221 (7)48,214 Balance at June 30, 2026 $ 238,064$25 19,234$2 4,558$(2,645)$4,693,986 $(1,189,235)$6,449 $1,393 $3,509,975 10 CIRCLE INTERNET GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY (unaudited) Temporary Equity Permanent Equity (in thousands)Redeemable convertible preferred stockClass A common stockClass B common stockTreasury stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive incomeNoncontrolling InterestsTotal Stockholders' Equity SharesAmountSharesAmountSharesAmountSharesAmount Balance at December 31, 2024139,762$1,139,765 61,313$6 $ 4,960$(2,877)$1,792,969 $(1,223,213)$3,644 $ $570,529 Issuance of common stock upon exercise of stock options 1,009 642 642 Issuance of common stock and preferred stock upon exercise of warrants 457371,130 854 854 Warrants in common stock 1,064 1,064 Vesting of restricted stock units, and common stock in connection with business combinations 1 Issuance of common stock in connection with business combinations 3,857 89,919 89,919 Stock-based compensation 15,440 15,440 Other comprehensive income (loss), net of tax 1,725 1,725 Net income 64,791 64,791 Other 12 12 Balance at March 31, 2025139,807$1,140,502 67,310$6 $ 4,960$(2,877)$1,900,888 $(1,158,410)$5,369 $ $744,976 Issuance of common stock upon exercise of stock options 946 6,157 6,157 Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and offering costs 19,9002 570,127 570,129 Issuance of common stock upon settlement of restricted stock units, net of shares withheld 5,518 362,191 362,191 Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering(139,807)(1,140,502)139,80714 1,140,488 1,140,502 Conversion of Class A common stock to Class B common stock in connection with initial public offering (19,580)(2)19,5802 Warrants in common stock 4,501 4,501 Vesting of restricted stock units, and common stock in connection with business combinations 13 Stock-based compensation 14,474 14,474 Other comprehensive income (loss), net of tax 9,997 9,997 Net loss (482,100) (482,100) Other 3 1 4 Balance at June 30, 2025 $ 213,914$23 19,580$2 4,960$(2,877)$3,998,827 $(1,640,510)$15,366 $ $2,370,831 Six Months Ended June 30,2025$103,460 $(417,309)56,663 28,089 6,375 7,189 6,716 170,106 (15,960)(9,416)(10)(3,826)705 (5,751)(6,226)1,416 16 105,435 447,682 13,148 (7,140)8,763 9,161 5,565 3,614 2,290 (24,482)(8,635)39,008 (42,104)31,923 123,981 216,115 (4,340)538,505 303,716 679 194 (11,735)(6,370) (7,734) 79 (35,764)(24,858)(10,389)(7,419)(57,209)(46,108)(2,011,494)17,339,497 572,558 (149,496)(121,794)4,487 (365) 41,628 6,800 (2,115,240)17,797,061 Six Months Ended June 30,20257,626 53,247 (1,626,318)18,107,916 77,419,733 44,967,604 $75,793,415 $63,075,520 $1,730,126 $1,118,119 12,806 3,210 889,311 588,271 73,161,172 61,365,920 $75,793,415 $63,075,520 $(10,762)$13,525 $216 $180 $23,211 $68,348 $(20,000)$(1,270)$(200)$ $(21,854)$(379)$2,851 $ $39,382 $ $13,148 $ $ $7,000 $821 $(13,820)$(1,150)$(89,919)$ $(71)$ $1,140,502 $ $2,794 $2,412 Accounts receivable, net193 Prepaid expenses and other current assets109 Fixed assets, net8 Digital assets104 Goodwill96,198 Intangible assets, net4,480 Accounts payable and accrued expenses(655) Other current liabilities (2,383) Deferred tax liabilities, net(401) Total purchase consideration$100,065 19 The fair value of consideration transferred was approximately $100.1 million, subject to customary adjustments, consisting of $10.2 million in cash, including a purchase price adjustment of $0.3 million, and approximately 2.9 million shares of our Class A common stock. The intangible assets acquired consist of developed technology of $1.7 million and customer relationships of $2.8 million and were each assigned useful lives of two years. The fair value of the customer relationships were determined using the income approach, and the developed technology was determined using the cost approach. These valuations are considered Level 3 fair value measurements due to the use of unobservable inputs including projected timing and amounts of future revenues, cash flows, discount rates and current replacement costs. The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill and is attributable to Hashnote s workforce and the synergies expected to arise from the acquisition. The Company does not expect goodwill to be deductible for income tax purposes. The agreement also provided for the issuance of up to approximately 1.8 million additional shares of Class A common stock to certain Hashnote employees, which are subject to the satisfaction of vesting conditions and are accounted for as compensation expense over the requisite service period. The Company also holds investments in certain funds managed by affiliates of Hashnote. These funds, including SDYF, are variable interest entities that are not consolidated by the Company due to the fact that we are not the primary beneficiary as we do not have an obligation to absorb losses or a right to receive benefits that could potentially be significant to each fund. The Company s maximum exposure to loss associated with each fund is limited to its insignificant investment and its obligations to perform services as the manager of each fund. The Company provides no guarantees and has no other financial obligations to each of the funds. Circle SBI Japan K.K. In November 2025, Circle and SBI Holdings, Inc., ( SBI ), a third-party, each contributed Japanese Yen worth approximately $1.5 million to Circle SBI Japan K.K. ( Circle Japan ), an entity established to provide support in the distribution of USDC in Japan. The Company owns a 50% interest in Circle Japan and controls the variable interest entity as it has the power to direct the activities that most significantly affect the entity and it has the obligation to absorb losses and the right to receive benefits that could be significant to the entity. Therefore, the Company consolidates the assets and liabilities, which primarily consist of cash. There have been no significant operating results to date. SBI's equity interest and its attribution of net income and losses in Circle Japan are presented as noncontrolling interest on the unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Operations. Noncontrolling interests are adjusted for the proportionate share of additional contributions and distributions, earnings or losses, and other comprehensive income or loss. Malachite In August 2025, the Company acquired Malachite, a core software component that enables blockchain networks to automatically reach agreement on the validity of transactions, from Informal Systems Inc. for total consideration of $15.0 million consisting of $3.0 million in cash and $12.0 million of shares of Class A common stock. The shares of Class A common stock will primarily be paid in three installments over a period of two years and based on the average closing price of the Company s shares over a period of 20 trading days prior to each payment. Each payment will also be subject to certain customary adjustments. The obligation to deliver a variable number of shares for a predominantly fixed monetary amount represents a liability, and upon closing of the acquisition the Company recorded $7.8 million and $4.2 million to Other current liabilities and Other non-current liabilities, respectively, of which $2.4 million was paid as of June 30, 2026. The acquisition was accounted for as an asset acquisition, and substantially all of the fair value of the net assets acquired was attributable to intangible assets which are amortized over a period of two years from the time they were placed in service. 20 4. Leases The Company leases facilities under non-cancelable operating leases. In addition to fixed monthly lease payments, the Company is required to pay operating expenses and real estate taxes for certain of these facilities. The components of lease cost were as follows (in thousands): Three months ended June 30,Six months ended June 30, 2026202520262025$843 $834 $1,673 $1,672 $113 $165 $337 $332 June 30, 2026December 31, 2025 Operating lease right-of-use assets $15,162 $14,127 Operating lease liabilities - current3,722 2,686 Operating lease liabilities - non-current12,229 11,978 Total operating lease liabilities$15,951 $14,664 Operating lease liabilities are included in Other current liabilities and Other non-current liabilities on the unaudited Condensed Consolidated Balance Sheets, while operating lease right-of-use assets are included in Other non-current assets on the unaudited Condensed Consolidated Balance Sheets. Weighted-average lease terms and discount rates are as follows: Table 4.3. Weighted-average Lease Terms and Discount Rates June 30, 2026December 31, 2025 Weighted-average remaining lease term 6.4 years7.4 years Weighted-average discount rates12.7 %13.4 % Maturities of lease liabilities under operating leases are as follows (in thousands): Table 4.4. Maturities of Lease Liabilities Years ending December 31, 2026 (remaining 6 months)$2,188 20274,190 20283,132 20293,058 20303,119 Thereafter8,825 Total lease payments24,512 Less: imputed interest 8,561 $15,951 21 5. Intangible assets, net Intangible assets, net The useful life of the Company s finite-lived acquired intangible assets is as follows: Table 5.1. Acquired Intangible Assets Useful Life Acquired intangible assets Useful life (years) at acquisition Developed technology 2~ 6 Customer relationships 2 Regulatory licenses 5 Patents and trade name 2~ 17 Intangible assets consists of the following (in thousands): Table 5.2. Details of Intangible Assets, net As of June 30, 2026Gross carrying amount Accumulated amortizationIntangible assets, net Weighted average remaining useful life (in years) Amortizing intangible assets Internally developed software $339,210 $(210,867)$128,343 1.3 Acquired intangible assets 68,309 (16,905)51,404 6.6 Total amortizing intangible assets $407,519 $(227,772)$179,747 Indefinite-lived intangible assets Acquired intangible assets 266,830 266,830 Total intangible assets, net$674,349 $(227,772)$446,577 As of December 31, 2025Gross carrying amountAccumulated amortizationIntangible assets, netWeighted average remaining useful life (in years) Amortizing intangible assets Internally developed software $279,472 $(161,666)$117,806 1.5 Acquired intangible assets 38,109 (11,599)26,510 3.0 Total amortizing intangible assets $317,581 $(173,265)$144,316 Indefinite-lived intangible assets Acquired intangible assets 266,830 266,830 Total intangible assets, net$584,411 $(173,265)$411,146 Six months ended June 30, 20252026202525,683 $12,288 $49,345 $24,404 1,334 5,306 2,684 28,879 $13,622 $54,651 $27,088 Years ending December 31, 2026 (remaining 6 months)$61,462 202784,382 202816,197 20291,663 20301,663 Thereafter 14,380 Total amortization expense $179,747 6. Fixed assets, net The following table presents our major categories of fixed assets, net (in thousands): Table 6.1. Details of Fixed Assets, net June 30, 2026December 31, 2025 Computers & equipment $6,987 $5,815 Leasehold improvements 20,288 20,102 4,125 4,113 Total fixed assets31,400 30,030 Less: accumulated depreciation (9,223)(7,239) Total fixed assets, net$22,177 $22,791 Depreciation expense was $1.0 million and $0.6 million for the three months ended June 30, 2026 and 2025, respectively, and $2.0 million and $1.0 million for the six months ended June 30, 2026 and 2025, respectively, which is included within Depreciation and amortization expense on the unaudited Condensed Consolidated Statements of Operations. 23 7. Digital assets The composition of digital assets included the following (in thousands, except quantity): Table 7.1. Details of Digital Assets June 30, 2026December 31, 2025 QuantityCost BasisFair ValueQuantityCost BasisFair Value Canton Coin384,446,370$18,788 $54,306 367,760,063$13,612 $56,028 Hyperliquid501,45922,557 32,548 81,4374,578 2,072 Bitcoin(1) 762,497 4,481 732,255 6,409 Sui4,086,0138,888 2,821 3,838,4058,599 5,385 Ether1,7184,3982,7001,7474,529 5,188 Other digital assets(2) n.m.27,569 9,683 n.m.22,302 11,433 Total digital assets$84,697 $106,539 $55,875 $86,515 (1) Includes Circle-wrapped Bitcoin ( cirBTC ) as of June 30, 2026. (2) Includes other digital asset balances, none of which individually represented more than 10% of the fair value of the total digital assets. n.m.= not meaningful As of June 30, 2026, there are certain digital assets with a total fair value of $1.6 million subject to various time-based contractual sale restrictions ranging from July 2026 until May 2030. Digital assets losses (gains) consists of the following (in thousands): Six months ended June 30, 20252026202579 $(7)$79 $(30)(686)79 5,607 (698)$(693)$158 $5,577 Balance as of December 31, 2025$78,508 Net investments and returns in privately held companies13,301 Upward adjustments8,126 Downward adjustments(1,621) Realized gains (losses) and impairments (258) Balance as of June 30, 2026(1) $98,056 (1) Excludes $5.7 million of strategic investments not accounted for under the measurement alternative as of June 30, 2026. Balance as of December 31, 2024$68,229 Net investments and returns in privately held companies 9,674 Upward adjustments1,511 Downward adjustments (3,156) Realized gains (losses) and impairments (217) Balance as of June 30, 2025(1) $76,041 (1) Excludes $7.8 million of strategic investments not accounted for under the measurement alternative as of June 30, 2025. 9. Derivatives and embedded derivatives The Company enters into certain strategic investments in the form of forward contracts to purchase a specified quantity of digital assets. Certain of these contracts are accounted for as derivatives or investments with embedded derivatives, and we account for these derivatives and embedded derivatives within Investments on the unaudited Condensed Consolidated Balance Sheets. The derivatives and bifurcated embedded derivatives are marked to market through Other income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Embedded derivatives are presented together with the respective host contract on the unaudited Condensed Consolidated Balance Sheets. The Company enters into certain agreements with customers to receive digital assets as non-cash consideration for services. These arrangements are hybrid instruments, consisting of a receivable host instrument with an embedded derivative based on the changes in the fair value of the underlying digital asset until receipt. Such feature is bifurcated and marked to market through Other income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Embedded derivatives are presented together with the respective host contract within Accounts receivable, net on the unaudited Condensed Consolidated Balance Sheets. The fair value of the Company s derivatives and embedded derivatives are as follows (in thousands): Table 9.1. Fair Value of Derivative and Embedded Derivative Assets and Liabilities June 30, 2026December 31, 2025 Investments - embedded derivatives$174 $899 Investments - derivatives$448 $473 Accounts receivable, net - embedded derivatives $17,476 $19,942 June 30, 2026December 31, 2025 Investments - embedded derivatives$3,393 $1,153 Investments - derivatives$494 $582 Accounts receivable, net - embedded derivatives $6,700 $4,000 25 Gains (losses) on derivatives and embedded derivatives included in Other income (expense), net on the unaudited Condensed Consolidated Statements of Operations are as follows (in thousands): Table 9.3. Gains (losses) on Derivatives and Embedded Derivatives Three months ended June 30,Six months ended June 30, 2026202520262025 $256 $1,209 $(161)$(4,131) Accounts receivable, net - embedded derivatives$(2,836)$(408)$(3,997)$(1,384) 10. Fair value measurements Recurring fair value measurements The following table sets forth by level, within the fair value hierarchy, the Company s assets and liabilities measured and recorded at fair value on a recurring basis. The carrying amounts of certain financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, and accounts payable and accrued expenses approximate their fair values due to their short-term nature. Table 10.1. Fair Value Hierarchy (in thousands)June 30, 2026December 31, 2025 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Cash equivalents(1) $63,402,001 $ $ $67,483,506 $ $ Digital assets106,539 86,515 Digital financial assets 1,363 542 Investments - derivatives and embedded derivatives(2)(3) 622 1,372 Accounts receivable, net - embedded derivatives(4) 17,476 19,942 Total assets$63,509,903 $18,098 $ $67,570,563 $21,314 $ Liabilities Convertible debt, net of debt discount$ $ $ $ $ $36,821 $ $ $ $ $ $36,821 (1) Included $61.9 billion and $66.3 billion of Circle Reserve Fund as of June 30, 2026 and December 31, 2025, respectively, and $150.8 million and nil of U.S. Treasury securities as of June 30, 2026 and December 31, 2025, respectively. (2) The fair value measurement is based on the quoted market price of the underlying digital asset. (3) Excluded the host contract balance of $3.4 million and $1.2 million as of June 30, 2026 and December 31, 2025, respectively. (4) Excluded the host contract balance of $6.7 million and $4.0 million as of June 30, 2026 and December 31, 2025, respectively. During the year ended December 31, 2025, $4.6 million of digital assets related to blockchain rewards revenue which were classified as Level 3 within the fair value hierarchy due to the absence of quoted market prices, inherent lack of liquidity, and reliance on unobservable inputs, were transferred from Level 3 to Level 1 when the digital assets were listed on centralized exchanges and quoted prices in active markets became available. 26 Convertible debt, net of debt discount On March 1, 2019, the Company issued a convertible note in connection with an acquisition. The note had an original par value of $24.0 million, a 2.9% interest rate, and matured on March 1, 2026. The note was convertible into Series E preferred stock prior to the IPO, and is convertible into Class A common stock after the IPO. In October 2025, certain holders of the Company s convertible notes converted their principal and accrued interest balance of $11.0 million into approximately 675 thousand shares of Class A common stock at a conversion rate of $16.23 per share. In January 2026, the remaining holders of the Company s convertible notes converted their principal and accrued interest balance of $7.5 million into approximately 465 thousand shares of Class A common stock at a conversion rate of $16.23 per share. The fair value of the notes converted in January 2026 was approximately $39.4 million, substantially all of which was recorded to additional paid-in capital upon conversion. The Company elected the fair value option for recording this note. We measured the fair value of our convertible debt using the probability weighted as converted model. The change in fair value of the note is recorded in Other income (expense), net on the unaudited Condensed Consolidated Statements of Operations. The changes in carrying value of convertible debt, net of debt discount are reflected in the following tables (in thousands): Table 10.3. Changes in Carrying Value of Convertible Debt Balance as of December 31, 2025$36,821 Net discount on convertible notes Capitalized interest Fair value adjustment 2,558 Fair value adjustment credit risk Conversion of convertible notes (39,379) Balance as of June 30, 2026$ Balance as of December 31, 2024$40,717 Net discount on convertible notes 420 Capitalized interest 334 Fair value adjustment 164,591 Fair value adjustment credit risk 78 Balance as of June 30, 2025$206,140 The following significant unobservable inputs were used in the valuation: Table 10.4. Significant Unobservable Inputs June 30, 2026December 31, 2025 Discount rate %8.0 % Volatility %44.8 % Risk-free rate %3.7 % Nonrecurring fair value measurements Non-financial assets and investments accounted for under the measurement alternative are measured at fair value on a nonrecurring basis. Certain investments accounted for under the measurement alternative were impaired or adjusted for observable price changes in orderly transactions involving the same or similar investment. Refer to Note 8 for further details. These fair value measurements are based on Level 3 inputs, predominantly projected cash flows from the underlying investments and an applicable discount rate used in an income approach. 27 11. Revenue recognition Disaggregation of Revenue The following table summarizes the disaggregation of revenue by major product and service (in thousands): Three months ended June 30,Six months ended June 30, 2026202520262025$667,733 $634,274 $1,320,241 $1,192,185 28,156 17,784 63,017 36,495 5,330 5,825 12,060 7,451 96 195 130 520 33,582 23,804 75,207 44,466 $701,315 $658,078 $1,395,448 $1,236,651 Balance at December 31, 2025$11,512 Deferred revenue billed in the current period, net of recognition 243,281 Revenue recognized that was included in the beginning period (8,590) Balance at June 30, 2026$246,203 Balance at December 31, 2024$13,390 Deferred revenue billed in the current period, net of recognition 10,413 Revenue recognized that was included in the beginning period (15,296) Balance at June 30, 2025$8,507 Three months ended June 30,Six months ended June 30, 2026202520262025$3,702 $5,738 $377 $(2,524)(115)(506)(366)(506)14,517 9,952 28,226 17,917 (1,876)(167,724)(5,984)(170,106)(64)(344)(102)(679)1,475 (8,067)6,596 (8,605)308 530 883 979 $17,947 $(160,421)$29,630 $(163,524) Number of Stock Options (in thousands)Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 202513,450$11.36 4.2$919,115 (6,249)6.66 7,201$15.43 5.0$346,981 Exercisable at June 30, 20266,754$13.35 4.8$334,180 Number of Stock Options (in thousands)Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 202422,751$8.48 5.5$522,900 (1,955)3.48 Options forfeited(93)20.62 Balance as of June 30, 202520,703$8.90 4.6$3,568,967 Exercisable at June 30, 202519,630$7.84 4.5$3,404,931 As of June 30, 2026, unrecognized stock-based compensation cost net of estimated forfeitures related to outstanding unvested stock options that are expected to vest was $8.3 million, which is expected to be recognized over a weighted-average period of 2.4 years. Restricted stock units (RSUs) Prior to the IPO, RSUs granted under the award plan generally vested upon the satisfaction of both a service condition and a liquidity-event related performance condition. Both the service and liquidity-event related performance conditions needed to be met for the expense to be recognized. RSUs granted after the IPO generally vest solely based on the satisfaction of a service condition. We record stock-based compensation expense for service-based RSUs on a straight-line basis over the requisite service period, which is generally the vesting period. Prior to the IPO, we had not recognized stock-based compensation expense related to certain RSU awards as the qualifying liquidity-event related performance condition had not yet occurred and was not considered probable of occurring. As the performance condition related to these awards was met upon commencement of trading of the Company's Class A common stock on the NYSE, the Company recognized stock-based compensation expense of $423.8 million, net of $62.7 million of capitalized costs related to internally developed software, associated with the vesting of RSUs for which the service-based condition had also been met. Stock-based compensation expense related to remaining service-based awards after the IPO is recorded over the remaining requisite service period. 33 A summary of RSUs activities for the six months ended June 30, 2026 and 2025 is as follows: Table 17.2. Summary of Restricted Stock Units Activities Number of Shares (in thousands)Weighted- Average Grant Date Fair Value Balance as of December 31, 202514,711 $35.16 RSUs granted 5,213 $71.71 RSUs vested(4,636)$34.67 RSUs forfeited (653)$40.09 Balance as of June 30, 2026 14,635$48.12 Number of Shares (in thousands)Weighted- Average Grant Date Fair Value Balance as of December 31, 202419,943 $30.85 RSUs granted 7,129 $31.13 RSUs vested(9,543)$33.37 RSUs forfeited (714)$29.67 Balance as of June 30, 202516,815$29.58 As of June 30, 2026, unrecognized stock-based compensation cost net of estimated forfeitures related to outstanding unvested RSUs that are expected to vest was $408.7 million, which is expected to be recognized over a weighted-average period of 3.2 years. Shares issued for business combinations The Company has issued the following common shares for the purchase of common shares subject to forfeiture based on certain service conditions in connection with its acquisitions. These shares were issued to the employees of the acquired businesses and are valued based on the fair value of the Company s common shares at the acquisition date. The Company records stock-based compensation expenses over the requisite service period, with an increase to additional paid-in capital. The shares issued for business combinations are subject to forfeiture based on service conditions through various dates over a four-year period from their respective acquisition dates. Table 17.3. Summary of Shares Issued for Business Combinations Activities Number of Shares (in thousands)Weighted- Average Grant Date Fair Value Balance as of December 31, 20251,744 $33.75 (650)$31.16 1,094$35.28 Number of Shares (in thousands)Weighted- Average Grant Date Fair Value Balance as of December 31, 2024548 $47.82 Shares issued 1,473 $31.16 Shares forfeited (6)$47.82 Balance as of June 30, 20252,015$35.64 As of June 30, 2026 unrecognized stock-based compensation cost net of estimated forfeitures related to outstanding unvested shares and warrants issued for business combinations that are expected to vest was $25.8 million, which is expected to be recognized over a weighted-average period of 1.5 years. 34 ESPP The Company's ESPP became effective on June 4, 2025, with the grant date of the initial offering period beginning on March 5, 2026. Refer to Note 2 for additional details regarding the Company's ESPP. As of June 30, 2026, $4.5 million has been withheld on behalf of employees for future purchases under the ESPP due to the timing of payroll deductions. As of June 30, 2026, there was approximately $0.8 million of unrecognized stock-based compensation cost net of estimated forfeitures related to the ESPP, which is expected to be recognized over a remaining period of 0.2 years. The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option-pricing model. The weighted average assumptions utilized in the valuation of ESPP purchase rights are presented below: Table 17.4. ESPP Valuation Assumptions June 30, 2026 Risk-free interest rate3.65 % Expected term (years)0.5 Expected volatility 49.33 % Expected annual dividend 35 18. Earnings (loss) per share The computation of earnings (loss) per share attributable to common stockholders is as follows (in thousands, except per share amounts): Three months ended June 30,Six months ended June 30,202520262025$48,214 $(482,100)$103,460 $(417,309)(7) (14) $48,221 $(482,100)$103,474 $(417,309)$48,221 $(482,100)$103,474 $(417,309)248,183 107,514 246,122 82,877 20,454 21,818 268,637 107,514 267,940 82,877 $0.19 $(4.48)$0.42 $(5.04)$0.18 $(4.48)$0.39 $(5.04)Six months ended June 30,20252026202537,518 765 37,518 2,103 2,103 1,125 1,125 40,746 765 40,746 Three Months Ended June 30, 20262025$8,367 $5,369 (1,945)9,984 13 6,422 15,366 27 $6,449 $15,366 Six Months Ended June 30, 20262025$14,515 $3,644 (8,117)11,793 (78) 7 6,398 15,366 51 $6,449 $15,366 June 30, 2026December 31, 2025 Reserve income receivable$193,581 $219,221 Prepaid expenses 28,497 24,243 1,363 542 Income tax receivable 51,828 65,060 Other8,309 12,594 Total prepaid expenses and other current assets$283,578 $321,660 37 21. Accounts payable and accrued expenses Accounts payable and accrued expenses include the following (in thousands): Table 21.1 Details of Accounts Payable and Accrued Expenses June 30, 2026December 31, 2025 Accrued distribution costs$105,799 $119,038 Stablecoin redemptions in transit 149,016 80,593 Accrued expenses 116,209 114,272 Accounts payable 23,399 24,733 Income taxes payable 3,499 1,632 Other payables20,666 20,341 Total accounts payable and accrued expenses $418,588 $360,609 22. Commitments and contingencies Legal matters The Company is subject to various litigation, regulatory investigations, and other legal proceedings that arise in the ordinary course of its business. The Company is also subject to regulatory oversight by numerous regulatory and other governmental agencies. The Company reviews its lawsuits, regulatory investigations, and other legal proceedings on an ongoing basis and provides disclosure and records loss contingencies for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss on the unaudited Condensed Consolidated Financial Statements. The Company is in a dispute with a financial advisor regarding advisory fees related to two engagement letters between the parties. In 2022, the Company s Board of Directors passed resolutions terminating the engagement letters. The financial advisor has subsequently asserted that the terminations of the engagement letters are ineffective and has demanded fees and interest for various transactions. The Company believes it has properly and effectively terminated the engagement letters with the financial advisor, and strenuously disputes the financial advisor s demand for any fees in connection with the transactions, which have all been conducted without the financial advisor s assistance. On May 28, 2024, the financial advisor filed a lawsuit regarding the dispute, now pending in the U.S. District Court for the Southern District of New York. The operative complaint alleges, among other things, that the terminations of both engagement letters are ineffective and demands, among other relief, fees and interest for various transactions that occurred after termination of the engagement letters, including the Company s IPO and follow-on public offering. The Company does not believe that the outcome of the dispute at this point can be reasonably quantified or estimated. Commitments and other contingencies Current tax rules related to stablecoins require significant judgments to be made in interpretation of the law, including but not limited to the withholding tax, income tax and information reporting. Additional guidance may be issued by U.S. and non-U.S. governing bodies that may significantly differ from the Company s interpretation of the law, which could have unforeseen effects on our financial condition and results of operations, and as a result, the related impact on our financial condition and results of operations is not estimable but could be material. 23. Subsequent events On July 9, 2026, the Company received final approval from the U.S. Office of the Comptroller of the Currency ( OCC ) to establish First National Digital Currency Bank, N.A., a national trust bank that will operate under the name Circle National Trust. Circle National Trust opened on July 24, 2026 and is subject to direct federal oversight by the OCC. At opening, Circle National Trust offers fiduciary digital asset custody services to the Company and its affiliates. On July 31, 2026, the Company received a limited purpose trust charter from the New York Department of Financial Services to establish Circle Internet Trust Company LLC, a New York trust company. 38 ITEM 2. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited Condensed Consolidated Financial Statements, including the notes thereto, included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results and the timing of events could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the Risk Factors section. Executive Overview In the second quarter of 2026, we continued building the infrastructure for an open, programmable internet financial system by scaling adoption of USDC and expanding our platform across product and network milestones. During the second quarter of 2026 (compared to the second quarter of 2025): USDC in circulation grew 19% to $73.3 billion; USDC onchain transaction volume grew 151% to $14.8 trillion. Total revenue and reserve income grew 7% to $701 million. Net income (loss) from continuing operations increased by $530 million to $48 million. Adjusted EBITDA grew 14% to $143 million. See Non-GAAP Financial Measures below for a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations, the most closely comparable GAAP measure, and additional information about the limitations of our non-GAAP measures. Overview of Business Our mission is to raise global economic prosperity through the frictionless exchange of value. We were founded in 2013, on the belief that we could connect the world more deeply by building a new global economic system on the foundation of the internet, and facilitate the creation of a world where everyone, everywhere can share value as easily as we can today share information, content, and communications. We are building a full-stack internet financial platform business anchored by our stablecoin network. Our business is organized around three reinforcing pillars: (i) Arc, an open Layer-1 blockchain network and related developer/interoperability infrastructure; (ii) Circle Digital Assets and Services, including USDC, EURC, USYC, cirBTC, and related liquidity infrastructure such as Circle Mint and xReserve; and (iii) Circle Applications, including products like CPN and StableFX that deliver real-world utility on Arc and across a multichain ecosystem. The three pillars of our platform are designed to reinforce one another: Arc is expected to provide an enterprise-grade foundation for stablecoin finance and consumer-scale applications; Circle Digital Assets and related services supply trusted units of value and liquidity infrastructure; and Circle Applications translate that infrastructure into real-world utility for institutions, developers, and end-users. Our business model is driven by the growth of our platform, including the use and continued utility of Circle Digital Assets. We invest in expansion of our platform by partnering with major financial and technology institutions to drive distribution of Circle Digital Assets, building global fiat on- and off-ramps to increase accessibility and liquidity of Circle Digital Assets, and providing developer tools and operational infrastructure that reduce friction and enable new applications using our Circle Digital Assets, including tools that can be used on our platform without a direct relationship with us. We also aim to increase network activity through the launch of new products and services, expansion into new markets, and the fostering of third-party innovation on our platform, in each case, with a regulation-first approach. 39 Circle stablecoins and related reserve income We currently derive a substantial majority of our revenue from reserve income on the reserve assets backing our stablecoins, USDC and EURC. Reserve income was 95.2% and 94.6% of our total revenue in the three and six months ended June 30, 2026, respectively. Reserve income was 96.4% of our total revenue in both the three and six months ended June 30, 2025. We earn reserve income on the reserve assets backing our stablecoins in circulation at interest rates close to the prevailing SOFR during the applicable periods. We term the rate of return generated on assets held in reserve as the reserve return rate . See Key operating indicators and financial results for the calculation of reserve return rate. The reserve income that we generate is a function of (i) our stablecoins in circulation over a given period and (ii) the reserve return rate. Other products In addition to revenue from reserve income on the reserve assets backing our stablecoins, we continue to expand product offerings and services that benefit from and support the growth of our platform and the utility of Circle Digital Assets. Our other products contributed between 4.8% and 5.4% of Circle s total revenue in both the three and six months ended June 30, 2026, respectively. Our other products contributed 3.6% of Circle's total revenue in both the three and six months ended June 30, 2025. We believe these and other new product and service offerings will contribute to the growth of our platform and the use of Circle Digital Assets, and over time drive a flywheel of growth that has been the hallmark of successful internet-driven networks. We also expect growth in our network to drive increases in our stablecoins in circulation and thereby drive our reserve income. We anticipate growing these offerings in the coming years, diversifying our revenue profile. These offerings include: Arc Blockchain and Related Developer Infrastructure Arc is our open, Layer-1 blockchain purpose-built to bring real world economic activity onchain, supported by our Agent Stack (consisting of Agent Wallets, Nanopayments, Agent Marketplace and Circle CLI), core developer services (including App Kits, Circle Wallets and Circle Contracts) and interoperability services (including CCTP and Gateway) designed to reduce complexity and help developers and enterprises build and operate onchain applications that move value across networks. Circle Tokenized Funds Our tokenized fund, USYC, which is a part of our Circle Digital Assets, is an onchain representation of shares in a traditional money market fund intended primarily for use as collateral in digital asset markets, providing yield to token holders and complementing USDC and EURC in institutional trading, treasury, and collateral workflows. Circle Liquidity Services Circle Mint and xReserve provide institutional liquidity and trust infrastructure for Circle Digital Assets, including minting, redeeming, and moving USDC and EURC through Circle Mint, and enabling third-party developers to deploy USDC-interoperable stablecoins through xReserve. Circle Applications Our application-layer products build on Circle Digital Assets and Arc to deliver practical utility, including CPN, which connects eligible financial institutions to facilitate near-instant, 24/7/365 payment settlement using regulated stablecoins, and StableFX, an institutional stablecoin foreign exchange engine built on Arc that supports onchain settlement and configurable escrow-based trade settlement. See Part I, Item 1 Business , of our Annual Report on Form 10-K for the year ended December 31, 2025 for a detailed description of our suite of products and services. Recent Developments Arc and the ARC Token As previously announced in October 2025, we launched the public testnet of Arc, our open, Layer-1 blockchain network purpose-built to unite programmable money and onchain innovation with real-world economic activity. As of June 30, 2026, since the launch of Arc testnet in October 2025, Arc testnet has processed 502 million cumulative transactions and 2.8 million cumulative transacting wallets. Private mainnet was launched in May 2026, with 100 + partners as of July 20, 2026, spanning capital markets, digital assets, payments, and technology. Building on this momentum and continued ecosystem engagement, we expect to launch Arc on mainnet in September 2026. Arc is designed as an economic operating system for internet-scale financial infrastructure. It is built to feature predictable, dollar-denominated transaction fees, sub-second finality, opt-in configurable privacy, and native integration with our full-stack platform. Supported by a global ecosystem of partners, Arc is intended to provide an enterprise-grade foundation for stablecoin payments, foreign exchange, lending, and capital markets transactions, and to operate as part of a broader, interoperable multichain ecosystem. 40 Arc is expected to initially operate under a Proof-of-Authority consensus model. Over time, it may transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism. If such a transition occurs, the network would introduce a native token (the ARC Token ). The ARC Token is designed as the native coordination asset of the Arc network under the Proof-of-Stake model. If launched, the ARC Token is intended to align participants with the long-term success of the Arc network through staking, governance, and other platform-wide utilities. The ARC Token s utility is expected to extend beyond the chain itself, spanning numerous protocols and products from us and our ecosystem partners on the Arc network. It is expected to confer governance rights to a distributed participant set responsible for upholding, among other things, the network s security posture, and infrastructural integrity, establishing the conditions under which institutions can rely on Arc for mission-critical applications and settlement. The total initial supply of ARC Tokens is expected to be 10 billion, though the supply would be subject to increase as a result of the programmatic functioning of the Arc protocol. The timing, structure, terms, and scope of any such transition, or the creation and broader distribution of ARC Tokens, remain subject to ongoing technical, business, legal, regulatory, and market considerations. During the three months ended June 30, 2026, we entered into token purchase agreements with certain institutional investors, pursuant to which we agreed to issue and sell to such purchasers an aggregate of 807.5 million ARC Tokens. The offer and sale of the tokens pursuant to the token purchase agreements was conducted as a private placement exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder. Each purchaser has agreed to a lock-up restriction prohibiting the direct or indirect sale, transfer, assignment or other disposition of any ARC Tokens acquired in the presale for a period of not less than one year from the date of the Arc network s transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism, and may be subject to additional restrictions on transfer until the date that is four years following such transition date. The ARC Tokens were offered and sold at a purchase price of $0.30 per token, implying a fully diluted network valuation of $3.0 billion and resulting in aggregate gross proceeds to us of approximately $242.2 million. The token purchase agreements and related agreements provide for repayment rights in specified circumstances, including if the ARC Tokens are not delivered or if the Arc network has not completed the transition to a Proof-of-Stake or a delegated Proof-of-Stake consensus mechanism on or before May 8, 2028, or if certain purchaser-specific legal, regulatory, or compliance-related conditions are not satisfied. Please see the section titled Part II, Item 1A. Risk Factors Risks Related to Arc and ARC Tokens of the Quarterly Report on Form 10-Q filed with the SEC on May 11, 2026 for additional discussion about Arc and the ARC Token. Key Factors Affecting Operating Results The growth and success of our business as well as our financial condition and operating results have been, and will continue to be affected by a number of factors, including: Growth of the internet financial system The internet financial system is built on blockchain infrastructure, and represents a fundamental shift that we believe will result in a profound change to the existing financial system by materially improving efficiency, reducing costs, expanding accessibility, and accelerating innovation. While the internet financial system has grown rapidly, it remains in its infancy and is very small relative to the legacy financial system. We believe we are well positioned to be among the winners in this emerging, transformative space, and we expect increased adoption and expansion of the internet financial system to be a key driver of growth in all our products and services, and hence of our overall financial performance. Adoption of stablecoins as the core means of value exchange within the internet financial system We believe stablecoins are the core facilitator of value exchange in the internet financial system. We believe that we are poised to lead the way in driving the growth of stablecoins, with our trusted brand, regulation-first posture, robust scalable infrastructure, institutional-grade safety and soundness, global presence, and strong interoperability. We stand to benefit as the adoption of stablecoins and the internet financial system increase, due not only to the growth in circulation of our stablecoins but also to growth of the platform that we have developed. 41 Expanding global awareness and distribution of our platform Our efforts to expand global awareness and distribution of our digital assets, and to grow our platform, follow a multi-pronged approach that includes: obtaining additional foreign licenses and registrations where necessary; collaboration with key strategic partners; local go-to-market strategies; and further integration with major blockchains. We expect increased awareness and interest in our platform, anchored by our stablecoin network, including both increasing penetration among our existing markets and expansion into new markets, to positively impact our performance. Growth in new products and services We believe we have a sizable opportunity to grow our business through the introduction of new products and services. Arc, our related developer infrastructure, and CPN provide platforms upon which third-party software developers can build and create their own products and financial applications. We continue to develop our products and services, which in turn facilitate the creation of new third-party products for the emerging internet financial system. We expect this will, in turn, increase demand for Circle Digital Assets and serve as a critical driver to the growth of our platform. We anticipate that the products developed on our platform will drive new sources of revenue for us including network service fees, subscription fees, and additional developer services fees. Strategic partnerships We complement our products and services with enterprise-level strategic commercial partnerships, with the goal of driving growth in the distribution and adoption of our platform and Circle Digital Assets. Through these partnerships, we enable companies to offer internet-native financial services to their own customers, to the benefit of our overall network. Many of these partnerships are still in early stages, but we expect that they will contribute meaningfully to our operating and financial performance over time. A few of our strategic partners include Coinbase, who provides a variety of products and services that support the growth and utility of USDC, and Binance, who makes USDC extensively available across its full suite of products and services and adopts USDC as a dollar stablecoin for its corporate treasury. We plan to continue to enter into strategic partnerships like these to expand our product offerings and amplify the network effects of our platform business. In addition, we may enter into such arrangements where we incentivize the use of USDC in exchange for our participation in the digital asset ecosystem. We believe each of these partnerships helps to foster growth of the internet financial system broadly and of our platform and Circle Digital Assets specifically, by reaching new end-users and expanding opportunities for existing end-users. Distribution costs We incur costs to incentivize distributors to use and distribute Circle Digital Assets and these distribution costs have a meaningful impact on our financial performance. For example, our distribution costs payable to key distributors such as Coinbase and Binance are directly impacted by the amount of USDC held on their respective platforms, which is in turn affected by actions and policies that we do not control or oversee. We have added and expect to continue to add additional distributors in the future and anticipate that such distribution contracts may have different commercial terms depending on negotiations with our distributors and the circumstances in our evolving industry. Moreover, our financial performance has been, and we expect it will continue to be, affected by the mix of USDC growth driven by commercial distribution partnerships versus organic growth outside of those arrangements. To the extent USDC adoption increases through channels that do not require third-party incentive payments, our distribution costs may decrease. As we add distributors and approved participants to which incentive payments are paid, our distribution costs may increase in the future. Interest rate fluctuations We derive a substantial majority of our revenue from reserve income. Fluctuations in interest rates impact reserve return rates, which in turn affect our reserve income. However, interest rates are only one contributor to reserve income, and the other primary contributor USDC in circulation is inherently difficult to predict given the uncertainties in end-user and customer behavior. For example, although interest rates are positively correlated with the opportunity cost of holding USDC versus other financial instruments, given the utility of USDC as a means for the exchange of value, an increase in interest rates does not necessarily result in a decrease in USDC in circulation (and vice versa). Any relationship between interest rates and USDC in circulation is complex, highly uncertain, and unproven. As a result, while we are able to predict the impact of interest rate changes on the reserve return rate, given uncertainties in end-user and customer behavior and interests and market dynamics, we are unable to accurately predict the impact of such changes on reserve income. 42 Government regulation We have always had a regulation-first philosophy that underlies our operations and has led to significant investments in building a robust compliance infrastructure. However, the laws and regulations to which we are subject are rapidly evolving and increasing in scope. As a result, we monitor regulatory changes closely and we expect to continue to invest significant resources in our legal, policy, compliance, product, and engineering teams to ensure our business practices comply with, and plan and prepare for, current and future regulations. National legislation in the US (including the GENIUS Act) and abroad is expected to provide increased certainty for market participants and accelerate institutional adoption. We believe increased global regulatory clarity will result in increased conviction in stablecoins by consumers and enterprises alike, which will drive greater adoption. We believe these trends will naturally increase the growth of our platform and the use and utility of Circle Digital Assets, and set us up to be the leading regulated player in the space. 43 Key Operating Indicators and Financial Results We regularly review several key operating and non-GAAP financial indicators to evaluate our performance and trends and inform management s budgets, financial projections, and strategic decisions. The following table presents our key operating and financial results, as well as the relevant GAAP measures, for the periods indicated: CCT Three months ended June 30,Six months ended June 30, 2026202520262025$73,269 $61,333 $73,269 $61,333 $76,524 $61,039 $75,865 $57,574 3.5 %4.1 %3.5 %4.2 %$12,442 $6,040 $12,442 $6,040 19.5 %7.4 %18.3 %6.6 %$701 $658 $1,395 $1,237 $289 $251 $576 $482 41 %38 %41 %39 %$48 $(482)$103 $(417)7 %(73)%7 %(34)%$143 $126 $295 $248 50 %50 %51 %52 %Three months ended June 30,Six Months Ended June 30, 2026202520262025 Important Platform Metrics USDC minted $83,004$42,174$156,543$95,396 USDC redeemed $86,784$40,817$158,540$77,920 Stablecoin market share, end of period 27 %28 %27 %28 % Meaningful wallets, end of period 7.015.667.015.66 2025$ Change% Change Revenue and reserve income$667,733 $634,274 $33,459 5.3%33,582 23,804 9,778 41.1%701,315 658,078 43,237 6.6%410,414 406,472 3,942 1.0%2,056 470 1,586 337.4%412,470 406,942 5,528 1.4%133,999 503,392 (369,393)(73.4%)66,273 43,140 23,133 53.6%29,896 14,209 15,687 110.4%16,359 8,760 7,599 86.7%8,657 7,910 747 9.4%(698)(693)(5)n.m.254,486 576,718 (322,232)(55.9%)34,359 (325,582)359,941 n.m.17,947 (160,421)178,368 n.m.52,306 (486,003)538,309 n.m.4,092 (3,903)7,995 204.8%48,214 (482,100)530,314 n.m.(7) (7)n.m.$48,221 $(482,100)$530,321 n.m.2025% Change Revenue and reserve income$1,320,241 $1,192,185 128,056 10.7%75,207 44,466 69.1%1,395,448 1,236,651 12.8%815,816 753,784 8.2%3,435 805 326.7%819,251 754,589 8.6%272,126 579,012 (53.0%)123,534 73,824 67.3%56,663 28,089 101.7%29,081 16,432 77.0%15,274 11,770 29.8%158 5,577 (97.2%)496,836 714,704 (30.5%)79,361 (232,642)n.m.29,630 (163,524)n.m.108,991 (396,166)n.m.5,531 21,143 (73.8%)103,460 (417,309)n.m.(14) n.m.$103,474 $(417,309)520,783 n.m.June 30, 2026December 31, 2025$ Change% Change ASSETS Current assets: Cash and cash equivalents (including cash and cash equivalents segregated for corporate-held stablecoins)$2,619,437 $2,349,009 $270,428 11.5% Cash and cash equivalents segregated for the benefit of stablecoin holders 73,161,172 75,067,932 (1,906,760)(2.5%) Accounts receivable, net105,431 62,866 42,565 67.7% 283,578 321,660 (38,082)(11.8%) Non-current assets: 103,757 84,265 19,492 23.1% Fixed assets, net 22,177 22,791 (614)(2.7%) Digital assets 106,539 86,515 20,024 23.1% 446,577 411,146 35,431 8.6% Deferred tax assets, net11,354 11,110 244 2.2% Other non-current assets26,890 27,379 (489)(1.8%) LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Deposits from stablecoin holders$72,927,544 $74,912,567 $(1,985,023)(2.6%) Accounts payable and accrued expenses418,588 360,609 57,979 16.1% 36,821 (36,821)(100.0%) Other current liabilities256,021 18,398 237,623 n.m. Non-current liabilities: 28,495 28,702 (207)(0.7%) Other non-current liabilities24,837 25,337 (500)(2.0%) Additional paid-in capital4,693,986 4,610,216 83,770 1.8% Accumulated deficit (1,189,235)(1,292,709)103,474 8.0% Total stockholders equity3,509,975 3,330,773 179,202 5.4% n.m.= not meaningful In accordance with applicable regulatory requirements and commercial law, for stablecoins issued and outstanding, we are generally required to hold at least an equivalent amount of fiat currency denominated assets, held in accounts that are titled FBO holders of Circle stablecoins. We may hold reserve assets segregated for the benefit of holders of Circle stablecoins in excess of deposits from holders of Circle stablecoins due to funds related to reserve income received that has not yet been transferred to corporate cash due to the timing of receipt and unprocessed customer deposits that have not yet been minted. We have access to and are entitled to the excess over redemption and customer obligations. We are not required by law or internal policy to maintain any such excess. Current assets Cash and cash equivalents (including cash and cash equivalents segregated for corporate-held stablecoins). Cash and cash equivalents (including cash and cash equivalents segregated for corporate-held stablecoins) increased by $270.4 million, or 11.5%, as of June 30, 2026, compared to December 31, 2025. Refer to Liquidity and Capital Resources Cash Flows below for further discussion on the net cash flows from operating activities, investing activities and financing activities during the period. 53 Cash and cash equivalents segregated for the benefit of stablecoin holders. Cash and cash equivalents segregated for the benefit of stablecoin holders decreased by $1.9 billion, or 2.5%, as of June 30, 2026, compared to December 31, 2025, due to a $2.0 billion decrease in USDC in circulation. Refer to Liquidity and Capital Resources Composition of USDC reserves below for further discussion of the composition of the reserves. Accounts receivable, net. Accounts receivable, net increased by $42.6 million, or 67.7%, as of June 30, 2026, compared to December 31, 2025, driven by a $28.0 million increase in accounts receivables related to integration services for new blockchain launches and maintenance and support fees and a $20.2 million increase from the ARC Token presale, offset by a $5.8 million increase in provision for expected credit losses and a decrease due to unfavorable changes in the fair value of certain embedded derivatives associated with digital assets receivable for integration services. Prepaid expenses and other current assets. Prepaid expenses and other current assets decreased by $38.1 million, or 11.8%, as of June 30, 2026, compared to December 31, 2025, driven by a $25.6 million decrease in reserve income receivables due to lower average interest rates and reduced average holdings, and a $13.2 million decrease in income tax receivables. Non-current assets Investments. Investments increased by $19.5 million, or 23.1%, as of June 30, 2026 compared to December 31, 2025, due to a $12.4 million increase in new strategic investments and a $6.5 million increase due to net unrealized gains on certain investments. Digital assets. Digital assets increased by $20.0 million, or 23.1%, as of June 30, 2026 compared to December 31, 2025, due to a $19.3 million increase in purchases of digital assets, a $5.4 million increase in blockchain rewards revenue, and a $4.0 million increase in digital assets received for services, offset by an $8.8 million decrease due to mark-to-market fluctuations in prices of digital assets. Intangible assets, net. Intangible assets, net increased $35.4 million, or 8.6%, as of June 30, 2026 compared to December 31, 2025, due to a $20.0 million increase in acquired patents, a $10.5 million increase in capitalization of internally developed software, net of amortization, and a $7.9 million increase in acquired intangible assets, net of amortization, related to an asset acquisition that closed in January 2026. Current liabilities Deposits from stablecoin holders. Deposits from stablecoin holders decreased by $2.0 billion, or 2.6%, as of June 30, 2026, compared to December 31, 2025. Refer to the Cash and cash equivalents segregated for the benefit of stablecoin holders narrative above for further discussion. Accounts payable and accrued expenses. Accounts payable and accrued expenses increased by $58.0 million, or 16.1%, as of June 30, 2026, compared to December 31, 2025, due to a $68.4 million increase in stablecoin redemption liabilities, a $20.0 million increase related to an acquisition of patents, offset by a $29.5 million decrease in accrued compensation expenses primarily driven by payments of the year-end accrued bonus and payroll taxes in the first quarter of 2026. Convertible debt, net of debt discount. Convertible debt, net of debt discount decreased by $36.8 million, or 100.0%, as of June 30, 2026, compared to December 31, 2025, due to the conversion of the outstanding convertible notes into Class A common stock in the first quarter of 2026. Other current liabilities. Other current liabilities increased by $237.6 million, as of June 30, 2026, compared to December 31, 2025, due to a $242.2 million increase in deferred revenue related to the ARC Token presale during the second quarter of 2026. Stockholders equity Stockholders equity. Stockholders' equity increased by $179.2 million, or 5.4%, as of June 30, 2026, compared to December 31, 2025, largely due to a $128.6 million increase in stock-based compensation, $103.5 million of net income attributable to common stockholders recognized during the six months ended June 30, 2026, a $41.6 million increase resulting from the issuance of common stock upon the exercise of stock options, and a $39.4 million increase due to the conversion of the outstanding convertible notes into Class A common stock. This increase is offset by a $149.8 million decrease related to the issuance of common stock upon the settlement of RSUs, net of shares withheld. 54 Non-GAAP Financial Measures Adjusted EBITDA To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this Form 10-Q Adjusted EBITDA, a non-GAAP financial measure that we calculate as net income (loss) from continuing operations excluding: net income (loss) attributable to noncontrolling interests; depreciation and amortization expenses; interest expense, net of amortization of discounts and premiums; interest income; income tax expense (benefit); stock-based compensation expense and payroll tax expense related to stock-based compensation; certain legal expenses; realized and unrealized (gains) losses, net, on digital assets held for investment, other related investments and strategic investments; realized (gains) losses on available-for-sale debt securities; impairment losses on strategic investments; restructuring expenses; acquisition-related costs; change in fair value of convertible debt, warrant liability, embedded derivatives and U.S. Treasury securities; charitable contributions to Circle Foundation; losses on sale of long-lived assets and foreign currency exchange (gains) losses. We have provided a reconciliation below of Adjusted EBITDA to net income (loss) from continuing operations, the most directly comparable GAAP financial measure. Beginning in the first quarter of 2026, we have amended the above definition of Adjusted EBITDA to exclude payroll tax expense related to stock-based compensation, because these taxes are directly related to stock-based compensation expense which is already excluded from Adjusted EBITDA. These expenses represent employer payroll taxes related to the vesting and settlement of certain equity awards, and are variable with our stock price and other factors outside of our control. The change had no effect on the prior periods presented. We present Adjusted EBITDA because it is a key measure used by our management and board of directors to monitor and evaluate the growth and performance of our business operations, facilitate internal comparisons of the historical operating performance of our business operations, facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures or operating histories, review and assess the performance of our management team and other employees, and prepare budgets and evaluate strategic planning decisions regarding future operating investments. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. We believe it is useful to exclude non-cash charges, such as depreciation and amortization, stock-based compensation expense, and change in fair value of various financial instruments as well as certain cash charges such as payroll tax related to stock-based compensation from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax expense (benefit), interest income, interest expense, and non-routine items as these items are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures; Adjusted EBITDA does not reflect stock-based compensation and payroll tax expense related to stock-based compensation. Stock-based compensation expense and the related payroll tax expense has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy; Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital; Adjusted EBITDA excludes one-time non-routine items; and Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other GAAP results. 55 The following table reconciles Adjusted EBITDA to net income (loss) from continuing operations, the most closely comparable GAAP financial measure, for the periods indicated (in thousands): Six months ended June 30, 2026202520262025$48,214 $(482,100)$103,460 $(417,309)(7) (14) $48,221 $(482,100)$103,474 $(417,309)29,896 14,209 56,663 28,089 64 344 102 679 (14,517)(9,952)(28,226)(17,917)4,092 (3,903)5,531 21,143 61,236 434,966 123,660 447,682 10,341 1,706 17,360 3,611 (3,702)(5,738)(377)2,524 115 506 366 506 1,920 3,790 535 1,876 167,724 5,984 170,106 5,411 13,148 4 16 (1,475)8,067 (6,596)8,605 $143,478 $125,833 $294,879 $248,270 June 30, 2026Three Months Ended June 30, 2026Six Months Ended June 30, 2026June 30, 2025Three Months Ended June 30, 2025Six Months Ended June 30, 2025 Asset ClassFair ValueAverage YieldAverage YieldFair ValueAverage YieldAverage Yield Cash$11,428 2.98 %2.97 %$8,233 3.45 %3.45 % Circle Reserve Fund$61,917 3.57 %3.58 %$53,165 4.24 %4.25 % Six months ended June 30, 20262025 Net cash provided by operating activities$539 $304 Net cash used in investing activities(57)(46) Net cash (used in) provided by financing activities(2,115)17,797 Operating Activities Net cash provided by operating activities was $538.5 million and $303.7 million for the six months ended June 30, 2026 and 2025, respectively, resulting in an increase of $234.8 million. The increase in net cash provided by operating activities was primarily driven by favorable changes in net working capital for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 of $193.7 million, which was driven by $222.0 million in proceeds received from the sale of our ARC tokens during the second quarter of 2026. Additionally, net income after adjusting for non-cash items increased by $41.1 million. The increase was primarily driven by higher revenues less distribution costs, partially offset by an increase in cash-based operating expenses. Investing Activities Net cash used in investing activities was $57.2 million for the six months ended June 30, 2026, primarily driven by $35.8 million in capitalization of software development costs, $11.7 million in purchases of strategic investments, and $10.4 million in purchases of long-lived assets. Net cash used in investing activities was $46.1 million for the six months ended June 30, 2025, primarily driven by $24.9 million in capitalization of software development costs, $7.7 million in net cash consideration related to the Hashnote acquisition, $7.4 million in purchases of long-lived assets and $6.4 million in purchases of strategic investments. 59 Financing Activities Net cash used in financing activities was $2.1 billion for the six months ended June 30, 2026, reflecting a $2.0 billion decrease in net changes in deposits held for stablecoin holders primarily due to a decrease in USDC in circulation, and a decrease from $149.5 million of payments of withholding taxes on settlement of restricted stock units. Net cash provided by financing activities was $17.8 billion for the six months ended June 30, 2025, reflecting a $17.3 billion increase in net changes in deposits held for stablecoin holders primarily due to an increase in USDC in circulation, and $572.6 million in proceeds received from the issuance of common stock in connection with the IPO, net of underwriting discounts and commissions and offering costs. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. In preparing our unaudited Condensed Consolidated Financial Statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders equity, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions. There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Note 2 to the unaudited Condensed Consolidated Financial Statements included in this Form 10-Q for updates to disclosures of accounting standards required to be adopted in the future. 60 Item 3. Quantitative And Qualitative Disclosures About Market Risk Interest rate risk Our results of operations are exposed to changes in interest rates, among other macroeconomic conditions. Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors beyond our control. Fluctuations in interest rates impact reserve return rates, such that a decrease in interest rates reduces reserve return rates and an increase in interest rates increases reserve return rates. Reserve return rate is a contributing factor to reserve income (the other being, primarily, USDC in circulation), which in turn is a contributor to distribution and transaction costs (the others being, primarily, the amount of USDC held on and off our and Coinbase s platforms). As such, fluctuations in interest rates may result in changes in reserve income and in turn distribution costs. However, interest rates are only one contributor to reserve income, and the other USDC in circulation is inherently difficult to predict given the uncertainties in end-user and customer behavior. For example, although interest rates are positively correlated with the opportunity cost of holding USDC versus other financial instruments, given the utility of USDC as a means for the exchange of value, an increase in interest rates does not necessarily result in a decrease in USDC in circulation (and vice versa). Any relationship between interest rates and USDC in circulation is complex, highly uncertain, and unproven. As a result, while we are able to predict the impact of interest rate changes on the reserve return rate, given the uncertainties in end-user and customer behavior and interests and market dynamics, we are unable to accurately predict the impact of such changes on reserve income or distribution and transaction costs. In the following analysis, we modeled the impact of hypothetical changes in interest rates on our reserve income and distribution and transaction costs for the following twelve-month period. We assume that the amount of USDC in circulation throughout this period is equal to the amount of USDC in circulation as of June 30, 2026, due to the inherent uncertainties described above in respect of predicting or forecasting USDC in circulation; such changes in interest rates occur on July 1, 2026 and are held constant through the period and impact all reserve assets equally; and our allocation of reserve assets do not change, as we are unable to predict the market and yield reactions to interest rate changes. The table below summarizes the hypothetical impact on our operating results for the following twelve-month period based on our internal modeling, which are subject to uncertainties and limitations as discussed above (in millions): Change in interest rates from average yield of 3.49% in June 2026 Estimated change in reserve incomeEstimated change in distribution and transaction costs +200 bps$1,475 $720 +100 bps $737 $360 -100 bps $(737)$(360) -200 bps $(1,475)$(720) Change in interest rates from average yield of 4.26% in June 2025 Estimated change in reserve incomeEstimated change in distribution and transaction costs +200 bps$1,235 $631 +100 bps $618 $315 -100 bps $(618)$(315) -200 bps $(1,235)$(631) Foreign currency risk Our reporting currency is the U.S. dollar and the functional currency of our international operations is its local currency. The assets and liabilities of each of our international operations are translated into dollars at exchange rates in effect at each balance sheet date. Revenues and expenses are translated using the average exchange rate for the relevant period. Equity transactions are translated using historical exchange rates. Decreases in the relative value of the U.S. dollar to other currencies may negatively affect revenues and other operating results as expressed in dollars. Foreign currency translation adjustments are accounted for as a component of accumulated other comprehensive income (loss) within stockholders equity. Gains or losses due to transactions in foreign currencies are included in Other income (expense), net on our unaudited Condensed Consolidated Statements of Operations. We have not engaged in hedging of foreign currency transactions to date, although we may choose to do so in the future. A 10.0% increase or decrease in current exchange rates would not have a material effect on our operating results or financial condition for the three and six months ended June 30, 2026 and 2025. 61 Item 4. Controls And Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control Over Financial Reporting There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 62 PART II Item 1. Legal Proceedings From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. The results of litigation and claims cannot be predicted with certainty. Refer to Risk factors Risks related to our business and industry We are and may continue to be subject to litigation, including individual and class action lawsuits, as well as regulatory audits, disputes, inquiries, investigations, and enforcement actions by regulators and governmental authorities of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and Note 22 to our unaudited Condensed Consolidated Financial Statements included in this Form 10-Q for a summary of legal proceedings to which we are a party. Item 1A. Risk Factors Our business and Class A common stock are subject to many risks, as more fully described in the Risk Factors section of our Annual Report on Form 10-K filed with the SEC on March 9, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on May 11, 2026. Except as set forth below, there have been no material changes to the principal risks that we believe are material to our business, results of operations, and financial condition from those disclosed in Part I, Item 1A Risk Factors of the 2025 Annual Report on Form 10-K filed with the SEC on March 9, 2026 and Part II, Item 1A Risk Factors of the Quarterly Report on Form 10-Q filed with the SEC on May 11, 2026. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Risks Related to Artificial Intelligence Issues relating to the development and use of artificial intelligence in our business could result in reputational harm, competitive harm, and legal liability, and could adversely affect our business, operating results, and financial condition. We use, and may increasingly use, artificial intelligence, machine learning, generative artificial intelligence, and other automated technologies (collectively, AI ) in our business, including in fraud detection, transaction monitoring, compliance, reserve analytics, smart contract development, customer support, and developer tools, and we may incorporate these technologies into or alongside our products and services, including in connection with agentic payment capabilities. We anticipate that AI will become increasingly important to our operations in the future. Our competitors and other third parties may incorporate AI into their businesses or offerings more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our business, results of operations, financial condition, and prospects. Our use of AI may result in new or expanded risks and liabilities, including due to regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, and other factors that could adversely affect our reputation, business, results of operations, financial condition, and prospects. Evolving legal frameworks and guidance, including the EU AI Act, other international regulatory regimes, and emerging U.S. federal and state rules and industry standards governing AI may require us and our third-party developers to incur significant costs to modify, maintain, or align our business practices, services, and products to comply with applicable requirements, the nature of which remains unclear and may be inconsistent from jurisdiction to jurisdiction. There can be no assurance that our use of AI will enhance our products or services, produce the intended results, or be beneficial to our business. AI systems are complex and may be flawed, reflect unwanted bias, or produce outputs that are incorrect, incomplete, or inconsistent with our policies, regulatory obligations, or applicable law, including with respect to financial data, compliance determinations, and customer-facing communications. Because transactions on our platform and on blockchain networks may be difficult to reverse, errors involving AI-enabled tools could result in losses that are not readily remediable. Consumer and institutional attitudes toward AI are evolving, and concerns about automated decision-making, privacy, transparency, or other ethical considerations could reduce trust in our products or platform or deter adoption of AI-enabled features in our products and services. If our AI systems produce, or are alleged to produce, inaccurate, deficient, or biased outputs, our reputation, business, results of operations, financial condition, and prospects could be adversely affected. 63 Other risks associated with the use of AI tools could include unauthorized use of our confidential information, or that of our users or third parties, in user prompts, code outputs that are potentially not protectable under copyright, reproduction of our code in code outputs to third parties, use of data without sufficient oversight and governance to ensure its responsible and ethical use, disclosure of our confidential or personal information, or that of our users or third parties in the output of the tools, the use of user prompts by licensors of these tools for training purposes or other unauthorized purposes, our use of output violating third-party copyrights or other intellectual property rights and/or adverse impacts by unforeseen defects, technical challenges, cybersecurity threats, or material performance issues. As a result, we could be subject to lawsuits by parties claiming intellectual property infringement, breach of confidential information, and data privacy claims. We could also suffer loss of confidentiality, trade secret rights, or other intellectual property or proprietary rights, suffer harm to our reputation or incur liability resulting from harm to individuals, civil claims, or the violation of laws or contracts to which we are a party. Moreover, our collaborators or other third-party service providers may also incorporate AI tools into their own offerings, and the providers of these AI tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to intellectual property, data privacy, and cybersecurity. Further, bad actors around the world use increasingly sophisticated methods, including the use of AI, to engage in illegal activities involving the theft and misuse of personal data, confidential information, and intellectual property. Any of these effects could damage our reputation, result in the loss of valuable intellectual property and information, cause us to breach applicable laws and regulations, or otherwise adversely impact our business. Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds In the second quarter of 2026, we issued an aggregate of approximately 0.2 million shares of Class A common stock to warrant holders upon the cashless exercise of those warrants. The warrants were issued in December 2024 to a commercial counterparty. The warrants have an exercise price of $22.71 per share and an exercise period of six years from the grant date. The vesting of the warrants is subject to certain conditions to be achieved over a three-year period. As of June 30, 2026, 1.0 million of these warrants have vested, and the counterparty elected to exercise 0.3 million and 1.0 million of the warrants during the three and six months ended June 30, 2026, respectively, which resulted in the net issuance of approximately 0.2 million and 0.7 million shares of Class A common stock during the three and six months ended June 30, 2026, respectively. As of June 30, 2026, none of the common shares associated with these warrants have been forfeited or expired. No underwriters were involved in this transaction. The transaction was exempt from registration under Section 3(a)(9) of the Securities Act in that the securities were issued upon conversion of existing securities. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information Director and Officer Trading Arrangements During the fiscal quarter ended June 30, 2026, no directors or executive officers of the Company adopted, modified, or terminated any Rule 10b5-1 trading arrangements. 64