Intchains Group Q1 2025 Earnings Call Transcript

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May 22, 2025
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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Ink King's First Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded. If you have any objections, you may disconnect at this time. Joining us today are Mr.

Operator

Chao Wei Yan, Chief Financial Officer of Exchange and Ms. Lindsay Wang, Director of Investor Relations. Mr. Yen will provide an overview of the company's performance and financial results. Following his remarks, we will open the floor for a question and answer session.

Operator

I'll now turn the call over to Minty Wang. Please go ahead.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Thank you, operator. Good day, everyone. I'm Minty.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Welcome to Instant Group One's first quarter twenty twenty five earnings call. On today's call, Mr. Howard Yan, our CFO, will present a comprehensive overview of the company's performance and the financial results for the quarter. Before we begin, please note that today's discussion will include forward looking statements. These statements involve known and unknown risks and uncertainties and are based on the company's current expectations and projections regarding future events that could affect its financial condition, operating results, and strategic direction.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

The company undertakes no obligation and publicly update or revise any forward looking statements to reflect subsequent events and changes in expectations, except as required by law. Although the company believes these expectations are reasonable, there's no guarantee they'll provide the to be accurate. Actual results may differ materially from this anticipated. Investors should refer to our registration statements and other filings with the SEC for additional factors that may affect future performance. We'll also discuss certain non GAAP financial measures.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Please refer to the reconciliation of these non GAAP measures to the comparable GAAP figures in our earnings press release. The presentation and a replay of this call will be available on our website at .incense.com. With that, I'll turn the call over to mister Kao Ye. Please go ahead.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Thank you, Lindsey, and thank you all for joining Incense first quarter twenty twenty five earnings conference call. Today, I will provide an overview of our operational and financial performance, followed by a Q and A session. We are pleased to report solid operational performance despite a challenging macroeconomic environment and a significant volatility in crypto market, particularly an 18% decline in the total market cap of cryptocurrency during the quarter. Our revenue reached $18,200,000 a 78.5% quarter over quarter increase and our highest of this quarter was three. In our previous earnings call, guided Q1 twenty twenty five revenue to be between $15,000,000 to $16,000,000 Our results exceeded the upper end of that range.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Gross margin grew by 286.9%, with gross margin improving to 56.9%, up from 26.2% last quarter. This reflects our continued focus on the product optimization and operational efficiency. Our operating income turned positive at $5,100,000 a strong recovery for the loss in Q4 twenty twenty four. While net income was impacted by noncash revaluation loss on Easter. We remain committed to our Easter accumulation strategy, increasing our holding by over 23% to 7,023 East.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

This long term approach remains remains central to our value creation strategy. For context, our business operates across three core segments. Firstly, we produce home miners for high potential other points such as Allio and and Dodge under the Gold Show brand. Secondly, we we really made the profit to accumulate EBITDA, optimizing our asset structure. Last but but not the least, we actively explore Web3's innovation to drive long term growth.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

As a pioneer in home mining products and a long term holder, we occupy a unique position in The U. S. Capital market. Our differentiated strategy focused on blue ocean of coin mining sector enabling us enables us to maintain gross margin higher than industry average for Bitcoin miners regardless of market cycle. This strategic focus has allowed us to achieve accumulating net profit from 20 level for 2019 to 2024 that outperformed our peers, making us one of the few consistently profitable mining companies.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

In early twenty twenty five, we fully solidified satisfied our leadership in Output Money Machine. Since launching the ideal series miners in February, we have released a file of iterations, threatening our market position. According to a third party according to third party miner evaluation website, our AE Max miner currently has fixed in daily profitability among all the mining machines, outperforming most of Bitcoin miners. In March, we learned that the GoShell Byte, our innovative store mining machine that supports all new, dodge, and Litecoin. With hot, flexible mining cost, users can switch between cryptocurrencies based on market conditions to max maximize returns.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

But this product showcases our technical technical strength to developing advanced output mining machine. Looking ahead, we plan to continue refining our gold point miner through chip upgrades and enhanced production design aiming to become the top title player in gold coin mining equipment. Now let's review our financial results for the first quarter of twenty twenty five. During Q1, the price of Ether, Dogecoin and Aaliyo fell by 46%, forty nine % and seventy five % respectively. However, price has shown price has shown signs for recovery in Q2.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Despite these headwinds, we delivered a strong result. Revenue for Q1 was $18,200,000 exceeding the high end of our guidance and making our highest recorded revenue since 2023. This performance was largely driven by the successful launch of our allele minor series, which accounted for nearly 75% of our total revenue. The product's strong margin and the timely launch helped us respond quickly to market demand. Revenue increased 78% quarter over quarter, significantly outperforming industry peers.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Cost of revenue rose modestly from $7,500,000 in Q4 to $7,900,000 in Q1, growing at a much lower pace than revenue due to the higher margins of new mines. Operating income turned positive at $5,100,000 driven by top line growth and reduced R and D expenses at several early stage projects concluded. Among crypto mining companies, we are one of the few to report positive operating income in Q1 twenty twenty five. Net income was negative $4,700,000 compared to a profit in the previous quarter, primarily due to the $9,800,000 noncash loss from revalue revaluation of our cryptocurrency holding, mainly due to the current price drop of 46%. Despite the downturn, we maintain a steady pace of Ethereum Ethereum accumulation.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

As of 03/31/2025, we held approximately 7,043 units of each, up 23.2% quarter over quarter. Non GAAP income, net income was negative $4,400,000 also declined from the previous quarter. As of 03/31/2025, our cash, cash equivalents and short term investments totaled $74,900,000 up from year end 2024. That's to for positive operating income. Our USBC and the cryptocurrency holding other than Ether amounted to 16,100,000.0.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Including Ether commodity to 6 16 point 1 million. As of May 2025, our total assets represented 147% of our market capitalization. Looking forward, several catalysts could drive long term upside in Hong Kong fund. First is anticipated interest interest rate cut, potentially improving liquidity condition. Second is a broader regular regulatory support for crypto linked ETF, Yong, Bitcoin.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Third is new blockchain application in payment and AI agent. Fourth, there's continued advancement in zero knowledge proof and then Ethereum protocol upgrade. And finally, the passage of new app capture bitcoin reserve deal. The first at US debt level may encourage a similar move elsewhere. It's still it's still in has also up gone significant update, including the extra upgrade completed in May, anticipated the layer one scaling and new leadership at the Ethermi Foundation.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

We remain confident in Ether's future and the broader blockchain ecosystem and will continue to our long term Ether accumulation strategy. Looking ahead, we are optimistic about the standing momentum into Q2 and beyond. Market sentiment is improving, and our rapid product iteration, especially in AE and body series, positions us well for future growth. However, taking into account tariffs and the market volatility, we project the first quarter the first half of twenty twenty five revenue of approximately RMB 180,000,000 to 200,000,000 RMB. Yeah.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

In conclusion, we remain focused on innovation, discipline discipline execution, and the long term value creation. As we navigate the evolving crypto and web landscape, our strategy is anchored in tech technology for leadership, operational excellence and a proven capital market capital management. Thank you for your attention. We look forward to keeping you updated on our progress as we continue to grow across triple market cycle.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Thank you, miss Yan. We're now beginning the question and answer session. You're welcome to ask questions in either Chinese or English. For convenience, English translations will be provided by minute. In case of discrepancies, please refer to the original language used by the management.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Then operator, please begin the q and a session. Thank you.

Operator

Thank you. To ask a question now, please press 11 on your telephone and wait We will now take our first question from the line of Mark Palmer from The Benchmark Company. Please go ahead, Mark.

Mark Palmer
Equity Research Analyst at The Benchmark Company LLC

Yes. Thank you for taking my question, and congratulations on the strong operating performance during what was a challenging quarter in the cryptocurrency industry. With regard to the mix of the company's revenue going forward, insofar as about 75% of revenue was derived from Aleo chips and miners during the first quarter, and at the same time, the company continues to develop new iterations of those miners. How should we think about the mix of the company's mining rigs in the second quarter and perhaps during the balance of the year?

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah. Thank you for your question, Mark. Yeah. The first thing, we are very optimistic about the Dogecoin Dogecoin future development, and we'll upgrade our Dogecoin miner program continuously. So so we we aim to become the top tier supplier of gold mining miner in this industry.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

But we will also identify promising innovative projects in the future, not only are you miner. So we also hope to lead the market launching of corresponding miners. This is similar to how we launch the the new miner in q one. So create creating substantial returns for miners and the contributing to project ecosystem and all while earning our share of the reward. So in conclusion, our future revenue will come from those miners, are new miners, and new miners, maybe launched in second or third quarter.

Mark Palmer
Equity Research Analyst at The Benchmark Company LLC

Yeah. Thank you. And thank you. And one of

Mark Palmer
Equity Research Analyst at The Benchmark Company LLC

the questions, just wanted to touch base on GoldShell Byte, you know, the new dual miner that you introduced in March. Could you talk a bit about the potential of that miner in terms of revenue generation and how we should think about the timing of that rollout?

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah. Yes. That's yes. The social side. Yeah.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

In in March 2025, our company launched the social side, and this product currently support mining of cryptocurrency such as Arlio and. But in the future, as maybe with potential compatibility for more projects in the future through the flexible mining cost. So the primary motivation behind this product was addressing a common pain point for individual miners. Every time they they switch projects, they typically need to purchase entirely new machines. So we also take up significant space at home.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

So in response, we introduced the the standardized miner with flexible mining cost, allowing the miner to easily switch cost based on the market condition. So from a company perspective, this product helps us to standardize the hardware design while leveraging our technical expertise across multiple cryptocurrencies. And for crypto crypto industry, we hope this will check will lower the barrier to enter and a to enter the industry and encourage more people participate in the crypto mining. Ultimately, contributing to the decentralized for more blockchain project.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

And, Mark, in conclusion, for for your first and last question, we think that for the for the first half of this year, most of the most of the of our revenues were generated from the Allianz Series Miner. Yeah. And for the second for the second half of this year, we think some revenues come from we think some revenues of some some revenues may come from the go show by product, but it kinda has to for us to give you a specific guidance. But for the first half of this of this year, we think the a new service miners will be still be very competitive in the market among all the q w machines. And for the whole year, just as Charles stated, we may launch some new innovative miners in in in this quarter or maybe even next quarter.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

So we think regarding to the revenues of the whole year, we think our revenue will be compromised from the sales of the a little miners, innovative miners, and the and the Dogecoin miners. But percentage of these miners will depend on the market price of these miners. So it's kinda hard to for us to give you a pre precise percentage. Yeah.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Thank you.

Mark Palmer
Equity Research Analyst at The Benchmark Company LLC

Thank you very much.

Operator

Thank you. We will now take our next question from the line of Matthew Galinko from Maxim Group. Please ask your question, Matthew.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Hey. Thanks for taking my questions. And congratulations on a strong quarter. I noticed that inventories remain pretty high, down a little bit from the fourth quarter. But I was curious if you could comment on what we could expect from from the inventory through the balance of the year.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah. In fact, most of our inventory are inventory for for both coin miners, and some of them are all your miners related cheap inventory. So it's now it's now we we gain out some performance during this quarter. But in the future, we will adjust our price. Depends on the market condition.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

So what what I can what we can predict is we will try out we will try our best to to to sell these inventories to the market instead of the to write off the inventory. But it still depends on the market condition on that on the next quarter. Thank you.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Got it. Thank you.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

And I guess as a follow-up question also on GoldShell byte. Can you talk about the kind of where you're you're getting the feedback from the market that that, you know, I guess, consumers want that kind of all in one style device for providing or ability to mine multiple currencies. Is it direct feedback you're getting from existing customers? Is it kind of broad industry expectations? Or, you know, talk a little bit about that feedback.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Okay. Yeah. Yeah. Go to budget was very welcomed by by many individual miners. We we it's just it's just it's just and actually explore our customer base because we we receive the managed feedback from new customers.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

And all these all these will be a good entry for these new customers. So in the our our market strategy is that we use HomeMiner to attract to attract new customers and use professional manners to to maintain them. Because for profit for for profit for profit perspective, maybe the small minor like Photoshop Bank will will not have a big big return, but it will be a good entry for for some new customers. So this is our market strategy. So I think that those are bite individually, maybe we'll not have a big proportion of our total revenue stream.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Eventually, the the measure of the this kind of product will will broaden our customer base, and then we'll have a final we'll have a a positive impact on our revenue. Thank you.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

And the sale and the sale of brochure byte is kind of a profitable product for the individual miners. Because yeah. Because you can because you can attach the daily profit to our virtual buy. If you use two Allele mining cards, you may you may get about you may get about 25 to $1 Mhmm. Daily profit per day.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

And you may get your cost of that, I think, within forty four, four hundred days. Yeah. Still $0,400. Yes. Yes.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Three three to four hundred days. I think it's still more profitable for the some Bitcoin or or other because the currency is minusing.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah. But but for limited users, maybe they don't they don't care about this hundred ten days. It's an interesting product. Yeah. And if they want a higher return, they will purchase our bulk miner or other other miners instead.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Yeah.

Minty Wang
Minty Wang
Head of Investor Relations at Intchains Group

Just like the switch in the manufacture.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Then also, and and I can see all that stuff. Yeah. Thank you.

Operator

Thank you.

Operator

We will now take our next question from the line of Theresa Lowe from Eastgate. Alright. Theresa has left the call. Once again, to ask a question, please press 11 on your telephone. We now have a follow-up question from the line of Matthew Galinko from Maxim Group.

Operator

Please go ahead, Matthew.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Thanks for taking my follow-up question. I just wanted to ask about R and D spending this year. I think, you know, q one is down from q four. But just given your your, you know, I think plans to launch additional new products and the the Allayo miner, should we expect, you know, ever return to higher R and D spending at some point this year? Or, you know, can you sort of level set up?

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

R and D expense.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Yeah. Maybe I we cannot predict the date because last year and the first of this year, we we we we launched the three three new projects rapidly. So this year, currently, we have some pro some projects in progress, but now we cannot actually predict when to when to do the the waiver tape out at at this time. Yeah.

Chaowei Yan
Chaowei Yan
Chief Financial Officer at Intchains Group

Thank you.

Matthew Galinko
SVP & Senior Research Analyst at Maxim Group

Yeah. Thank you.

Operator

Thank you. I'm not showing any further questions. And with that, we conclude our conference call for today.

Executives
    • Minty Wang
      Minty Wang
      Head of Investor Relations
    • Chaowei Yan
      Chaowei Yan
      Chief Financial Officer
Analysts
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Key Takeaways

  • Revenue of $18.2 million in Q1, up 78.5% QoQ and exceeding guidance of $15–16 million, marking the highest quarterly revenue since 2023
  • Gross margin improved to 56.9% from 26.2%, reflecting successful product optimization and operational efficiency
  • Operating income turned positive at $5.1 million, but net income was a $4.7 million loss due to a $9.8 million noncash revaluation charge on cryptocurrency holdings
  • Launched new high-performance home miners such as the AE Max and GoldShell Byte, delivering top daily profitability and flexible multi-coin mining capability
  • Increased Ethereum holdings by 23% QoQ to 7,043 ETH and bolstered liquidity with $74.9 million in cash and short-term investments, with assets at 147% of market cap
AI Generated. May Contain Errors.
Earnings Conference Call
Intchains Group Q1 2025
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