Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intchains Group Ltd (ICG, Financial) reported a significant revenue increase of 785% year-over-year for Q2 2024, reaching USD 16.9 million.
- The company successfully launched new computing equipment products incorporating their latest chips for Alephium, Kaspa, Litecoin, and Dogecoin.
- Intchains Group Ltd (ICG) has accumulated a total holding of 2,417 Ethereum, enhancing financial flexibility and risk resilience.
- The AL BOX and KL BOX products have been well-received by individual users due to their exceptional hashrates and ultra-low power consumption.
- The company has diversified its business line and geographic footprint through the acquisition of GoldShell, with 72% of revenue now coming from overseas markets.
Negative Points
- Cost of revenue increased by 33.2% year-over-year, primarily due to inventory write-downs and provisions for inventory purchase commitments.
- Total operating expenses rose by 40.2%, driven by higher research and development, sales and marketing, and general and administrative expenses.
- Research and development expenses increased by 47.6%, mainly due to higher share-based incentive expenses and labor costs.
- Sales and marketing expenses saw a 48.5% increase, attributed to higher business promotion expenses and share-based incentive expenses.
- The company recorded a loss on the fair value of cryptocurrency amounting to RMB 0.3 million (USD 0.04 million) for Q2 2024.
Q & A Highlights
Q: What are you seeing in terms of the impact of the more buoyant crypto markets thus far in 2024, and how is that translating into increased demand for the types of mining equipment for which you provide chips?
A: The crypto market has shown a low stop in the second quarter of 2024, but our products, especially the AL BOX and KL BOX, have remained competitive and favored by customers. Despite the market trend being on a low down street, we have strong confidence in our products and their financial performance in the future. (Chaowei Yan, CFO)
Q: The company has meaningfully diversified both its business line and geographic footprint through the acquisition of GoldShell. What are your thoughts about the company's potential next steps in terms of further diversification into new product lines?
A: Our overseas revenue was about 72% this quarter, a significant increase from over 90% revenue coming from China last quarter. The acquisition of GoldShell has enabled us to expand into overseas markets. We plan to diversify our product line beyond cryptocurrency mining machines, leveraging the GoldShell brand. (Chaowei Yan, CFO)
Q: We observe that the company has sold more chips during Q2. Could you please share more plans on these ASIC allocation strategy?
A: We leverage our operating cash flows to accumulate Ethereum and other growing cryptocurrencies. As of June 30, 2024, we hold 2,417 ETH. Our strategy is to continue holding and accumulating Ethereum without selling it, considering our cash flows. (Chaowei Yan, CFO)
Q: Can you provide more details on the financial performance for the second quarter of 2024?
A: Our revenue was RMB123 million (USD16.9 million), a 785% increase from the same period in 2023. This growth was driven by higher average selling prices of our latest ASIC chip products. Our net income was RMB50.4 million (USD6.9 million), compared to a net loss of RMB20.5 million in the same period of 2023. (Chaowei Yan, CFO)
Q: What are the company's plans for technological innovation and expanding its footprint within the industry value chain?
A: We are committed to developing new WEB3 products beyond mining machines to enhance efficiency and improve customer experience. We aim to accelerate the adoption of blockchain technology and support enterprises in achieving their digital transformation goals. (Chaowei Yan, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
