Intchains Group Limited

Hey, ladies and gentlemen, thank you for standing by and welcome to IncChain'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-Yen, Chief Financial Officer of IncChain, and Ms. Lin-Pi Wong, Director of Investment 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. I'll now turn the call over to Minty Wong. Please go ahead.

Thank you, operator. Good day, everyone. I'm Minty. Welcome to H-Chance Group 1S, first quarter 2025 earnings call. On today's call, Mr. Calvary Yuen, our CFO, will present a comprehensive overview of the company's 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 projections regarding future events that could affect its financial condition, operating results, and strategic directions. The company undertakes no obligation and publicly updates or revives 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 are provided to be accurate. Actual results may differ materially from the anticipated. Invited to refer to our registration statements and other filings with the SEC for additional factors that may affect future performance. We also discussed non-GAAP financial measures. Please refer to the reconciliation of these non-GAAP measures to the comparable GAAP figures in our earnings catch release. The presentation and the replay of this call will be available on our website at ii.inchchance.com. With that, I will turn the call over to Mr. Kauria. Please go ahead.

Thank you, Nidhi, and thank you all for joining InchChance's first quarter conference by early conference call. Today, I will provide an overview of our operational and financial performance, followed by a Q&A session. We are pleased to report solid operational performance despite a challenging macroeconomic environment and a significant volatility in crypto markets, particularly an 18% decline in the total market cap of crypto currencies during the quarter. Our revenue reached $18.2 million, a 78.5% quarter-over-quarter increase, and our high-risk 15.3%. In our previous earnings score, 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 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 $5.1 million, a strong recovery from the loss in Q4 2024. While net income was impacted by non-cash revaluation loss on E-Curvy, we remain committed to our Easter accumulation strategy, increasing our holding by over 23% to $7,023 billion. 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 Alio and Doge under the Gold Show brand. Secondly, we re-invade the profit to accumulate ETH, optimizing our asset structure. Last but not least, We actively explore Web3 innovations to drive long-term growth. As a pioneer in home mining products and a long-term investor holder, we occupy a unique position in the U.S. capital market. Our differentiated strategy focuses on blue ocean of coin mining sectors, enabling us to maintain growth margins higher than industry average for Bitcoin miners, regardless of market cycle. This strategic focus has allowed us to achieve a cumulative net profit from 2019 to 2024 that outperforms our peers, making us one of the few consistently profitable mining companies. In early 2025, we fully solidified our leadership in outdoor mining machines. Since launching the Alu series miners in February, we have released five iterations. strengthening our market position. According to a third-party miner evaluation website, our AEMax miner currently ranks fifth in daily profitability among all the mining machines, outperforming most of Bitcoin miners. In March, we launched the GoldShieldBite, an innovative DAO mining machine that supports Alio, Doge, and Litecoin. We talked to restable mining hubs, users can switch between cryptocurrencies based on market conditions to maximize returns. This product showcases our technical strength through developing advanced out-of-coin mining machines. Looking ahead, we plan to continue refining our board coin miners through shift upgrades and enhanced product design, aiming to become the top tier player in board coin mining equipment. Now, let's review our financial results for the first quarter of 2025. During Q1, the price of Ether, Dogecoin and Alio fell by 46%, 49% and 75% respectively. However, price has shown signs for recovery in Q2. Despite these headwinds, 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 Aleo 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 78% quarter-over-quarter, significantly outperforming industry peers. Cost of revenue rose modestly from $7.5 million in 2004 to $7.9 million in 2001, growing at a much lower pace than revenue due to the high margins of aluminum miners. Offering income turned positive 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 Q1 2025. Net income was negative $4.7 billion compared to our profit in the previous quarter. primarily due to the $9.8 million non-cash loss from the valuation of our cryptocurrency holding, mainly due to the Ethereum price drop of 46%. Despite the downturn, we maintained a steady pace of Ethereum accumulation. As of March 31, 2045, we held approximately 7,023 units of ETH. up 33.2% quarter-over-quarter. Net income was negative 4.4 million, also declined from the previous quarter. As of March 31, 2025, our cash, cash equivalents, and short-term investments totaled $74.9 million, up from year-end 2024. Thanks to positive operating income, our USDC and QFP holding other than Ether amounted to $16.1 million. As of May 21, 2035, our total assets represented $107 percent of our market capitalization. Looking forward, several catalysts could drive long-term upside in 20.5. First is, anticipated interest rate cuts, potentially improving liquidity conditions. Second is, a broader regulatory support for Periscope Link, ETF, Young, Bitcoin. Third is, new blockchain applications in payment and AI agents. Fortis continues its advancement in zero-knowledge proof and Ethereum protocol upgrades. And finally, the passage of new capture Bitcoin reserve fields, the first at the US state level, may encourage similar moves elsewhere. Ethereum has also gone significant upticks, including the capture upgrade completed in May, anticipating layer-1 scaling and new leadership at the Ethereum Foundation. 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 sustaining momentum into Q2 and beyond. Market sentiment is improving, and our rapid product declaration, especially in AAE and Doge series, positions us well for future growth. However, taking into account tariffs and crypto market volatility, we project the first half of 2025 revenue of approximately RMB 180 million to 200 million. In conclusion, we remain focused on innovation, disciplined execution, and long-term value creation. As we navigate the evolving crypto and Web2 landscape, our strategy is anchored in technological leadership, operational excellence, and a prudent capital management. Thank you for your attention. We look forward to keeping you updated on our progress as we continue to grow across crypto