Intchains Group Limited

Ladies and gentlemen, thank you for standing by and welcome to ING-18's first quarter 2025 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. Chow-Wei Yan, Chief Financial Officer of ING-18, and Ms. Lin-Ti Wang, Director of Investment Relations. Mr. Yan 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. I'll now turn the call over to Lin-Ti Wang. Please go ahead.

Thank you, operator. Good day, everyone. I'm Lin-Ti. Welcome to ING-18's first quarter 2025 earnings call. On today's call, Mr. Chow-Wei Yan, our CFO, will present a comprehensive overview of the performance and 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 suggestions regarding future events that could affect its financial condition, operating results, and strategic direction. The company undertakes no obligation and publicly updates or revises 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 is no guarantee they'll provide to be accurate. Actual results may differ materially from those anticipated. Invited to refer to our re-adjustation statements and modifying -E-T for additional factors that may affect future performance. We'll also discuss non-GAAP financial measures. Please refer to the reconciliation of these non-GAAP measures to the comparable GAAP figures in our earnings chart release. The presentation and the replay of this call will be available on our website at .instance.com. With that, I'll turn the call over to Mr. Cao Wei-Yen. Please go ahead.

Thank you, Ming-Ji, and thank you all for joining this first quarter conference five earnings cover course. Today I will provide an overview of our operational financial performance followed by Q&A session. We are beneath the foot of our operational performance despite our challenging macroeconomic environment and significant volatility in crypto markets, particularly an 18% decline in the crypto market cap of crypto currencies during the quarter. Our revenue reached $18.2 million, a .5% -over-quarter increase, and our high revenue success since 2023. In our previous earnings call, we guided Q1 2025 revenue to be between $15 million to $16 million. Our results exceeded the upper end of that range. Growth margin grew by 286.9%, with growth margin including to 56.9%, up from .2% last quarter. This reflects our continued focus on product optimization and operational efficiency. Our operating income turned positive at $5.1 million as strong recovery from the loss in Q4 2024. While net income was impacted by non-cash revaluation loss on E-currency, we remain committed to our EastEaster Accumulation Strategy, increasing our holding by over 23% to $7023 E. This long-term approach remains central to our value creation strategy. For context, our business operates across three core segments. Firstly, we produce home miners for high potential altcoins such as alleles and isoskeletons under the Gold Show brand. Secondly, we really invest profits to accumulate easter, optimizing our asset structure. Last but not least, we actively explore web-based innovation to drive long-term growth. As a pioneer in home mining products and long-term easter holder, we occupy a unique position in the US-Tasman margin. Our differentiated strategy focuses on blue ocean altcoin miners and mining sectors, enabling us to maintain growth margin higher than industry average for Bitcoin miners, regardless of market cycle. This strategy's focus has allowed us to achieve a cumulative net profit from 2019 to 2024 that outperformed our year, making us one of the few consistently profitable mining companies. In early 2025, we pulled a solid despite our leadership in altcoin mining machines. Since launching the Ayo series miners in February, we have released five iterations, strengthening our market position. According to third-party miners' evaluation, our AE-Max miners currently run in the BTC. In March, we launched the Gold Show Bites, an innovative gold mining machine that supports alleles, dodge and light coins. With hot, breathable mining cards, users can switch between cryptocurrencies based on market conditions to maximize returns. This product showcases our technical strength to developing advanced altcoin mining machines. Looking ahead, we plan to continue refining our dodge coin miners through shift upgrades and enhanced product design, aiming to become the top tier player in dodge coin mining equipment. Now, let's review our financial results for the first quarter of 2025. During Q1, the price of each dodge coin and alleles failed by 46%, 49% and 75% respectively. However, price has shown signs for recovery in Q2. Since that deep headwind, we delivered a strong result. Revenue for Q1 was $18.2 million, exceeding the high end of our guidance and making our highest quarterly revenue since 2023. This performance was largely driven by the successful launch of our Aurel Mining Miner Series, which accounted for nearly 75% of our total revenue. The product's strong margin and timely launch helped us respond quickly to market demand. Revenue increased by 78% quarter over quarter, significantly outperforming industry peers. Cost of revenue rose, multiplying from $7.5 million into $4 to $7.9 million into $1. Growing at a much slower pace than then is due to the high margin of Aurel Mining. Of raising income, trend policies are at $5.1 million driven by top line growth and reduced R&D expenses, as several early stage projects concluded. Among crypto mining companies, we are one of the few to report positive operating income in 2021-2025. That income was negative $4.7 million compared to our profit in the previous quarter, primarily due to the $9.8 million non-cash loss from the revaluation of our crypto currency holdings, mainly due to the Ethereum price drop of 46%. Despite the downturn, we maintained a steady pace of Ethereum accumulation. As of March 31, 2025, we held approximately 7023 units of ETH, up .2% quarter over quarter. Non-cash income net income was negative $4.4 million, also declined from the previous quarter. As of March 31, 2025, our cash equivalent and short-term investment totalled $74.9 million, up from the end of 2024. Thanks to the positive operating income, our USDC and crypto currency holdings, other than ETH, amounted to $16.1 million. Including ETH, amounted to $16.1 million. As of May 31, 2025, our total assets represented 107% of our market capitalization. Looking forward, several catalysts could rise long-term upside in 2025. First is, asset-tested interest, increased interest rate cuts, potentially improving liquidity conditions. Second is, broader regulatory support for first-goal ETFs, YARN, Bitcoin. Third is, new blockchain applications in payments and AI agents. Fourth is, continuous advancement in zero-knowledge proofs and Ethereum protocol upgrades. And finally, the passage of new, half-patch Bitcoin reserves. The first at the USD level may encourage similar moves everywhere. Ethereum has also upgone significant updates, including the capture upgrades completed in May, anticipated layer 1 sterling, and new leadership at the Ethereum Foundation. We remain confident in Ethereum's future and broader blockchain ecosystem, and will continue to our long-term easter accumulation stretch. Looking ahead, we are optimistic about sustaining momentum into future and beyond. Market sentiment is improving, and our rapid product integration is specializing in AE and budget series, positions as well for future growth. However, taking into account tariffs and the threats of market volatility, we project the first quarter, the first half of the financial revenue of approximately RMB 118 million to 200 million. In conclusion, we remain focused on innovation, discipline execution, and long-term value creation. As we navigate the evolving crypto and RACC landscape, our strategy is in technological leadership, operational excellence, and a smooth and tactical management. Thank you for your attention. We look forward to keeping you updated on our progress as we continue to grow across the crypto market cycle.

Thank you, Mr. Yang. We now begin the questions and answer session. You are welcome to ask questions in either Chinese or English. For convenience, English translations will be provided by NETED. In case of disturbances, please refer to the original language used by the management. Then operators, please begin the Q&A session. Thank you.

Thank you. To ask a question now, please press star 11 on your telephone and wait for a name to be announced. To re-roll your question, please press star 11 again. A moment for this question. We will now pick up this question from the line of Mark Palmer from the Benchmark Company. Please go ahead, Mark.

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 Doge 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?

Thank you for asking, Mark. First of all, we are very optimistic about the Bitcoin future development and we will upgrade our Doge miners program continuously. We aim to become the top-tier supplier of Doge mining in this industry. But we will also identify promising innovative projects in the future, not only Aleo miners. We also hope to lead the market launching of corresponding miners. This is similar to how we launched the Aleo chips mining in Q1. So creating substantial returns for miners and the contributing to project effort system and all while earning our share of the reward. So in conclusion, our future round will come from Doge miners, Aleo miners and new miners, maybe launching in the second or third quarter. Thank you.

Thank you. One of the questions, I just wanted to touch base on GoldShark Byte, 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?

Yeah, yeah, yeah, the GoldShark Byte. In March 2025, our company launched GoldShark Byte and this product currently supports mining of critical currency such as Aleo and Bitcoin. But in the future, as maybe with potential compatibility for more projects in the future through the flexible mining cards. So the primary motivation behind this product was addressing a common pain point for individual miners. Every time they switch projects, they typically need to purchase entirely new machines. So we also take up significant space at home. So in response, we introduced the standardized miners with flexible mining cards. Allowing the miners to easily switch cards based on the market conditions. So from a company's perspective, this product helps us to standardize the hardware design while leveraging our technical expertise across multiple critical currencies. And for critical industry, we hope this project will lower the barrier to enter the industry and encourage more people to participate in the personal mining. Ultimately contributing to the decentralized for more blockchain projects.

And Mark, in conclusion, for our first year in this session, we think that for the first half of this year, most of our revenues were generated from the Aleo series miners. And for the second half of this year, we think some revenues come from the Go Show by Pup Produce. But it kind of has to give you a specific guidance. But for the first half of this year, we think the Aleo series miners will still be very competitive in the market among all the POW machines. And for the whole year, just as how it is, we may launch some new innovative miners in this quarter or maybe the next quarter. So we think regarding to the revenues of the whole year, we think our revenue will be compromised from the sales of the Aleo miners, innovative miners, and the Dogecoin miners. But the percentage of these miners will depend on the market price of these miners. So it's kind of hard to give you a precise percentage.

Thank you very much.

Thank you. We will now hear from next question from the line of Matthew Galinto from Maxime Group. So you got your question, Matthew.

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

Yeah. In fact, most of our inventory are inventory for Dogecoin miners. And some of them are Aleo miners related to chip inventory. So it's not... Now we gain a strong performance during this quarter. But in the future, we will adjust our price, depends on the market conditions. So what we can predict is we will try our best to sell these inventory to the market instead of to rise up the excess inventory. But it still depends on the market condition on that, on the next quarter. Thank you.

Got it. Thank you. And just as a follow-up question, also on GoldSheld, but can you talk about the kind of where you're getting the feedback from the market that, you know, I guess consumers want that kind of -in-one style device for mining, for ability to mine multiple currencies. Is it direct feedback you're getting from existing customers, is it kind of broad industry expectations? Or talk a little bit about that feedback.

Okay, yeah. Yeah, GoldSheld mining was very welcomed by many individual miners. It is un-doge play, explore our customer base, because we receive the money feedback from new customers. And all these will be a good entry for these new customers. So our market strategy is that we use home miners to accost new customers and use professional miners to maintain them. Because for profit perspective, maybe the small miners like GoldSheld Fines will not have a big turn, but it will be a good entry for the new customers. So this is our market strategy. So I think the fight individually maybe will not have a big proportion of our total revenue stream, but eventually the launch of this kind of product will broaden our customer base and will have a big impact.

And the feel of GoldSheld Bikes is kind of a profitable product for the individual miners. Because you can attract daily profits from our GoldSheld Bikes. If you use two real mining cards, you may get about 25 to $1 daily profit per day. And you may get your cost of that, I think maybe 40 to 400 days. I think it's still more profitable for some Bitcoin or other certifying this mining machine.

But for individual users, maybe they don't care about this return base. It's an interesting product. And if they want a higher return, they will purchase our box miners or other miners instead.

Just like the switch in the mining center.

Thank you. As a reminder, if you have a question, please press star 1-1 on your telephone. We will now take our next question from the line of Theresa Lowe

from Eastgate. All right, Theresa has last

call. Once again, to ask a question, please press star 1-1 on

your telephone. We now have a follow-up question from

the line of Matthew Gillingho from Maxin Group. Please go ahead, Matthew.

Oh, thanks for taking my follow-up question. I just wanted to ask about R&D spending this year. I think Q1 sounds from Q4, but given your plans to launch additional new products and success in rail miners, should we expect, you know, ever return to higher R&D spending at some point this year or, you know, can you spur the level set up?

R

&D

success. Yeah, maybe I wish a lot of projector days because last year and the first of this year, we launched three new projects rapidly. So this year, currently, we have some projects in progress, but now we cannot actually predict when to do the waiver takeout at this time. Yeah. Thank you. Thank you.

Thank you. Once again, to ask a question, please press star 1

-1 on your telephone. I am not showing any further questions. And with that, we conclude our conference call for today.