Intchains Group Limited

Thank you for standing by. Welcome to the Interest Group Limited fourth quarter and full year 2025 earnings conference call. All lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star 1 on your telephone keypad. If you would like to draw your question, please press the star 1 again. Thank you. I would now like to turn the conference over to Alice Zhang with Equity Group. You may begin.

Thank you, operator. Good evening to everyone. Welcome to Enchant's fourth quarter and full year 2025 earnings conference call. Please be advised that the discussions on today's call 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 strategic direction. Although the company believes that the expectations expressed in these forward-looking statements 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 statement and other filings with the SEC. 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, except as required by law. Please note that in today's call, we'll discuss certain non-GAAP financial measures. Please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. The presentation and webcast replay of this conference call will be available on the InChance website at www.irr.inchance.com. It is my pleasure to introduce in-chance CFO, Mr. Charles Yen, who will provide an overview of full-year 2025 financial results, recent operational achievements, and the company's long-term growth strategies before opening the floor for questions. Charles, please go ahead.

Thank you, Alice, and welcome, everyone. Thanks, Chance. engaged in the design and development of altcoin mining machines, its accumulation and yield generating strategies, as well as the delivery of Web3 infrastructure services. Starting December 2025, following the completion of acquisition and launch of our Gold Shield stake platform, we also provide cryptocurrency staking services for individual and institutional crypto investors. Altcoin mining hardware and Ethereum accumulation and staking activities are the core pillars of our businesses and with sales of our mining machine being the primary source of our revenues. As discussed in the past, we operate in an industry heavily influenced by cyclical volatility and this has impacted net revenue for full year 2025. Despite short-term market volatility, our ability to continuously and promptly deliver state-of-the-art mining products showcases our business agility supported by a long-term commitment in R&D. 2025 was highlighted by launch of series of mining products, including Allio, Dogecoin, and XTM Miners. In Q1, we introduced our first allure mining series to the market in response to the rapid growth of the allure demand. The launch achieved a strong customer adoption and contributed to substantially increased revenues in the first quarter. During the year, we also launched our groundbreaking gold showbite dual miner. an innovative solution that allows our customers to maximize mining returns by switching seamlessly between algorithm cards according to market conditions. This new machine has generated significant market interest and more support mining across six different cryptocurrencies using our proprietary algorithm cards. Throughout 2025, These products experienced rapid iterations with multiple additional product models released for Alio and Dogecoin miners. Late in this year, we introduced XTM miners, another high-performing miner series, which accounted for a significant portion of our Q4 net revenue. Together, these product launches have reinforced our market competency, reflecting InterChain's capabilities to season early market share in the innovative altcoin projects with the top tier next generation miners. During the year, we also continued to explore ways to elevate our ETH accumulation, holding, and staking strategies. On the ETH accumulation side, we continued executing a disciplined and a self-founded ETH purchase strategy, always mindful of prevailing market conditions and price, more so during the second half of the year. 2025 was characterized by significant swings in ETH pricing. driven by macroeconomic uncertainty, shifting liquidity conditions, and evolving institutional participation in digital assets. ETH experienced periods of sharp upward momentum, followed by notable corruptions, creating a volatile but opportunity-rich environment. During a year full of volatility in ETH and overall crypto market, we adopted a more mindful approach in accumulating ETH. and took a conservative and strategic capital allocation approach in the second half of 2025. That said, our long-term conviction in Ethereum ecosystem hasn't changed, and ETH remains the core digital asset in our crypto transfer strategy. As of December 31, 2025, we held a total of 1,826 ETH, increasing from 5,702 a year ago, growing this position by 56%. The same volatility continued in 2026, with ETH trading within a broad range as macro and peripheral sentiment fluctuated. In February, ETH stabilized in a range that highlighted opportunistic entry point for long-term accumulation. As a result, we are pleased to announce that by February 23, 2026, we hit another significant milestone of our yeast accumulation strategy with over 9,000 units of yeast and remain one of the top players of yeast transfer holders. Moving into the staking aspect of yeast holding, In 2025, we expanded our digital asset strategy by partnering with FalconX to support e-staking activities. Through FalconX institutional-grade platform, we are able to securely stake a portion of our e-holding, generating yields while maintaining operational flexibility and strong risk controls. Furthermore, In December 2025, we acquired a proof-of-stake platform and launched GoldShow stake platform, which operates as an independent POS service platform under the GoldShow brand. As part of Interchange's comprehensive Web3 infrastructure offering, we now provide cryptocurrency stake services for individual and institutional investors. Converting ETH, our launch, Menta, and Conflux and they expect to expand this line business to broader international market, leveraging GoldShield's existing customer base and market presence. I will provide additional details on dating strategy for 2026 shortly. Turning to a summary of our full year 2025 financial performance as compared to full year 2024, FY2025 revenue of 220.9 million RMB or 31.6 million U.S. dollar decreased by 21.6% due to cyclical fluctuations in the market and softer demand for our products in this period. Whereby our aluminum mining machine series contributed to increased revenues in the first six months in 2025 and overall demand for our products become softer during the second half. FY2025 cost of revenue was 204.9 million RMB or 29.3 million U.S. dollar, an increase of 56.1% impacted by impairment charges recorded against access mining machines inventory for certain altcoin mining machines during the period. FY205 total operating expenses were 120.6 million RMB, or 17.3 million U.S. dollars, decreased by 18.7%, primarily as a result of lower sales and R&D expenses. and primarily due to the reduced expenses related to the preliminary research costs conducted for new outpoint mining projects. As a result of lower revenues and gross margins, FY2025 loss for operating was 104.7 million RMB or 15 million US dollars compared to the income from operations of 2.9 million RMB. FY2025 interest income was 11 million RMB or 1.6 million US dollar, decreased from FY2024 mainly due to cash used to acquire East-based cryptocurrency. For the four-year period, we recorded a gain in fair value of cryptocurrency of 4.8 million RMB or 0.7 million US dollar, primarily a result of increased East holdings by 3,117 units since the beginning of the year, partially offset by an approximately decrease of 12.6% in ease price during the period. That loss for FY2025 was 52 million RMB or 7.4 million US dollar, compared to a net income of 51.5 million RMB in FY2024. We continue to maintain a strong balance sheet. As of December 31, 2025, our cash provision, which consisted of cash and cash equivalents, deposits and government securities listed in long-term investments and short-term investments, was 67.8 million US dollars. We had current assets of 83.2 million US dollars, total assets of 145.2 million US dollars, and total liability of just 6.2 million dollars. And I would now like to provide an update to sales of our outpoint mining machines in mainland China. before discussing our 2026 strategies and business focus. On February 6th, a notice on further preventing and handling risks related to virtual currency was issued, prohibiting the provision of service such as sale of mining machines within mainland China by mining machine production enterprises. In response to the notice and to ensure full compliance, we are enhancing internal control policies and undertaking rectification measures. I would like to note that although our primary sales markets have consist of overseas end users, as well as domestic channel partners within China, the company business model is designed to serve a global customer base. And our channel partners purchase are primarily for So as detailed in our early release, management does not expect the notice to have a material adverse impact on company's business, financial condition, or results of operations. Now moving on to our 2026 business strategies. For 2026 and beyond, our growth is centralized on continued investment in R&D. on the development and the sale of our Gold Shield Mining Machines and our ETH accumulation and staking activities, supplemented with cost optimization to improve overall financial performance. In the first half of 2026, we remain focused on generating revenues from the sale of our existing mining machine series that were launched in 2025, including ILEO, Dogecoin, XTM,

Excuse me, ladies and gentlemen. Please continue to stand by. Our conference will resume momentarily. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Excuse me, ladies and gentlemen, your conference will now resume. Charles, please go ahead.

Hi. Sorry, everyone. Let's continue for our earnings conference call. So, 2026 is expected to be a year of much improvement due to steps we took to implement cost management I need initiatives, including workforce reduction and organizational restructuring, aiming to enhance efficiency, optimize headcount, and operate with a leaner corporate model. We believe these initiatives will enable us to force resources on core R&D efforts to maintain a leading position in the auto coin mining product industry. driving further margin expansion for FY2026 and beyond. Prior to our altcoin hardware business, we are well equipped to enhance our ETH accumulation and the transferring holding strategy. In 2026, Interchange participates continuing a prudent approach in ETH purchasing by pursuing selective value-driven purchases when market conditions are favorable. to gradually expand the East Treasury holding over time. As of December 31, 2025, the fair value of our cryptocurrency assets other than stablecoins such as USDC and USDT was 187.6 million RMB or 26.8 million US dollars. which includes approximately 8,826 ETH-based cryptocurrencies, valued at 186.7 million RMB. In 2026, exchange continued to accumulate ETH, and as of February 33, 2026, total ETH held reached over 9,070 units. As part of our efforts to generate incremental returns from idle assets, we plan to continue our dual-platform staking approach using FalconX to stake ETH. We have accumulated in our GoldShare staking platform to stake our third-party ETH. Staking on two platforms allows diversification, and we expect this practice of combination to maximize returns as we build our strategic east reserve and also from third-party staking. As an update, as of February 23, 2026, we have a total of 2,600 units of east or 28.7% of our total east transit holding currently staked with 1,000 units or 11% staked on FalconX and 1,600 units of 18% staked in on our own GoldShow Stake platform. Additionally, GoldShow Stake currently stake 1,359 units of ETH currently owned by group of investors. We remain optimistic about these initiatives and we are implementing combining sale of new and existing altcoin mining machines and a solid ETH accumulation holding and staking strategy. Along with cost-saving method, we are undertaking to drive solid top-line results and improve operation margins in 2026. As a Web3 infrastructure provider, we have a market-leading altcoin hardware business, and integrated hardware and software service portfolio, such as Goldshore Wallet and Goldshore Stake, and a prudent long-term ease strategy. With staking service serving as a second growth engine beyond our mining machine business, we have expanded into the blockchain infrastructure service sector. So we are looking to further generate synergies across our business lines. capture and act on additional opportunities as we emerge. With that, operator, please open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press the star 1 again. Once again, that would be Stormwind to ask a question. Your first question comes from the line of Matthew Galinko with Maxim Group. Please go ahead.

Hi. Thanks for taking my questions. I think you've covered this in the prepared remarks, but just to clarify, do you expect to launch new mining products in the second half of 26 at this point?

Yes, we are targeting new upstream mining machine in the second half, but it's also subject to market conditions and our R&D progress. Currently, we have multiple coins project is under R&D process. Thank you.

Got it. Thank you. And on the gold shell stake, I think you mentioned you have about 1,400 units of ETH. stake by third-party investors. Did that come over with the acquisition or are those new users for the platform since you rebranded it?

I think it's both. The thing is it's about we cannot After the acquisition, I have amount growth in the EC units. So it's both and half are prior to the acquisition and another half are post acquisition. Thank you.

Thank you. Okay. I'll turn back in the queue.

Thank you and once again if you would like to ask a question simply press the star 1 on your telephone keypad.

And again please press the star 1 to ask a question.

And we have no further questions at this time. I would like to hand it back to Charles Yan for closing remarks.

Yeah. Thanks again to all of you for joining us. We are always open to a dialogue with investors. Please feel free to reach out to us or our investor relation firms, the equity group, for any additional questions. We look forward to speaking with you all again on our next quarterly call. Thank you.

Thank you. And ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.