Intchains Group Limited

Good day, ladies and gentlemen. Thank you for standing by and welcome to InChain's third quarter 2024 earnings conference call. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. Joining us today is Mr. Chow Wei Yen, Chief Financial Officer of InChain and Ms. Minty Wang, Investor Relations Director. Mr. Yen will provide an overview of the company's performance and the details of the company's financial results. After that, we will conduct a question and answer session to take your questions. I would now like to call over to Minty Wang, Head of Investor Relations at InChance Group Limited. Please go ahead.

Thank you, Operator. Good day, everyone. I'm Minty. Welcome to InterChance Group Limited's third quarter 2024 earnings call. For today's call, Mr. Chaowei Yan, CFO of InterChance Group Limited, will provide a comprehensive overview of the company's performance and financial results for the quarter. Before we proceed, I would like to remind everyone that today's discussion will include forward-looking statements. These statements involve known and unknown risk and uncertainties and are based on the company's current expectations and projections regarding future events that may impact its financial condition, operating results, and the strategic direction. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances or changes in its expectations, expect as may be required by law. Although the company believes that the expectations expressed in this forward-looking statement are reasonable, it cannot assure you that such expectations will turn out to be correct, and the company cautions investors that actual results may differ materially from the anticipated results. Investors should review other factors that may affect its future results in the company's registration statements and other findings with the SEC. We'll discuss certain non-GAAP financial measures. Please also refer to the Conciliation of Non-GAAP Measures to the Comparable Gadget Measures in the Earnings Price Relief. The presentation and the webcasted display of this conference call will be available on the InterChance website at ir.interchance.com. Now, let me turn the call over to our staff of Mr. Chao-Wei Yang.

Thank you, Mingti, and everyone for joining InterChance Earnings Conference Call for the third quarter of 2024. On today's call, we will provide an overview of our operational and financial performance. After that, we will conduct a Q&A session to take your questions. In reviewing the third quarter of 2024, the cryptocurrency market was mostly rent-bound, with Bitcoin price remaining relatively stable, while other cryptos experienced a varying degree of decline. The crypto industry's narrative primarily focused on national and institutional investments in ETFs, while some funds flowed into the MIMI sector due to a lack of prevailing applications. However, as the fourth quarter began, the result of U.S. President's election strengthened global investors' expectations for pro-crypto regulations, leading to renewed optimism about crypto's future developments. In November 2024, Bitcoin price consistently broke all-time highs, and sectors such as Payment, MIMI, and RWA also experienced rapid growth. We are confident about the upcoming development of the crypto market and actively preparing new ethics and beginning primary efforts to build blockchain applications. As the company's growth strategy in the long term InterChain's vision is to achieve growth that transcends crypto cycles through the developing applications based on Web3. While in the short term, the company is primarily focused on increasing ROI during crypto cycle. We enhance ROI through continuously exploring promising crypto projects and accumulating Ether. In third quarter 2024, we continue to drive sales of our Gold Shield branded computing equipment. designing for Casper, Alfim, Dogecoin and Litecoin mining. This decision has allowed us to effectively capture the crypto market trends emerging in the first quarter. To see the current wave of cryptocurrency development, we will continue to actively explore new projects and expect to produce new assets by first quarter 2025. Meanwhile, we will stick to our Ether accumulating strategy, whether in the peak or trough of the crypto cycle. In the third quarter 2024, we continue to implement our strategy to accumulating Ether, reaching 4,149 Ether as of September 30, 2024, representing a 71.7% increase as of June 30. This month, we were excited to see that the total market cap of cryptocurrencies reached a historical high, with Ether price surpassing the average cost of our holdings as of September 30. Furthermore, as part of our initial foray into blockchain application expansion, we launched GoldShield Pay in this quarter, offering a one-stop payment solution for merchants. Based on our confidence in the future of the crypto industry, We plan to launch a hardware crypto wallet in the fourth quarter, which will further enhance companies' payment product line and application ecosystem. We are confident that as Interchange positioning and the business model become more defined, our company's growing potential and long-term value will be fully realized. Moving forward, Interchange will continue to lead the industry. collaborating with partners to drive robust growth across the crypto cycle. Now I will provide a brief financial overview on the third quarter of 2024. I'm pleased to report that the company's third quarter revenue was 60.3 million yuan or 8.6 million US dollars, representing a year-on-year increase of 781%. continuing the strong growth momentum from the second quarter of 2024. Revenue from the overseas accounted for 66.2% in the third quarter of 2024. Our global expansion strategy has been well continued since the second quarter. Our sales volume of ASIC chips for the third quarter was 207,838 units. compared to 165,056 units for the same period in 2023, representing an increase of 26%. Revenue for third quarter was driven not only by the increase of sales volume, but more importantly, by the rise in the average selling price. The growth margin was 67.7% in the third quarter, reaching the highest level since Q1, 2023, primarily due to the higher gross margins for our latest ASIC chips products launched in 2024 compared to the older ASIC chips products. In terms of total operating expenses, it was 37.7 million yuan or 5.4 million US dollar for the third quarter, representing an increase of 90.8% for the same period of 2023. The increase was primarily due to the loss on fair value of cryptocurrency and the increase of share-based incentive expenses. The loss on fair value of cryptocurrency for the third quarter was 13.1 million yuan or 1.9 million US dollars. It was primarily due to the volatility of the cryptocurrency market with Ether price falling 24.2% from the end of the second quarter to the end of the third quarter. While in November, as mentioned before, the Ether price surpluses the average cost of our holdings as of September 30, 2024. Our net income for the third quarter was 3.2 million yuan or 450,000 US dollars. And the non-GAAP adjusted net income was 19.1 million yuan or $912,000, both turning from a loss to a profit compared to the same period of last year. This was primarily due to the faster revenue growth in the third quarter compared to the growth in cost of revenue and operating expenses. This quarter, we started to disclose non-GAAP adjusted net income and primarily exclude share-based compensation expenses. We believe non-GAAP net profit reflects the company's ongoing operational performance. Basic and diluted net earning per share was RMB 3 cents for the third quarter of 2024, compared to the basic and diluted net loss ordinary share of RMB 16 cents for the same period of 2023, each ADS representing two of the company's Class A ordinary shares. Looking ahead, we will continue to focus on product and project innovation. and foster the adoption of blockchain technology for our clients and partners. We look forward to updating you on our progress. Thank you for your continued support.