Intchains Group Limited (NASDAQ:ICG) Q2 2025 Earnings Call Transcript

Intchains Group Limited (NASDAQ:ICG) Q2 2025 Earnings Call Transcript August 14, 2025

Intchains Group Limited beats earnings expectations. Reported EPS is $0.09, expectations were $0.0557.

Operator: Hello, and welcome to the Intchains Group Limited Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Now I will turn the call over to Alex Zhang of the Equity Group. Please go ahead, Alex.

Unidentified Analyst: Thank you, operator. Good evening to everyone. Welcome to Intchains Second Quarter 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 risks 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 and the company’s registration statements 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 will 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 Intchains website at www.ir.intchains.com. It is my pleasure to introduce Intchains CFO, Mr. Charles Yan, who will provide an overview of second quarter and first half 2025 financial results, recent operational achievements and then discuss the company’s long-term growth strategies before opening the floor for questions.

Charles, please go ahead.

Chaowei Yan: Thank you, Alex, and welcome, everyone. For those new to Intchains and our story, I would like to provide an overview of our 3 main business lines: altcoin mining machines, ETH accumulation and Web3 application development. Our core business, altcoin mining machine under the Goldshell brand is our primary revenue contributor. We designed altcoin mining machines incorporating in- house developed asset chips, which are used to mine a number of popular alternative cryptocurrencies, including Litecoin, Dogecoin, Aleo and more. And since first quarter 2024, we have implemented a strategic self-funded dollar cost averaging ETH accumulation strategy, as part of our value creation strategy to generate return on our capital.

We also have our Web3 application development business and have launched a one-stop blockchain payment solutions, Goldshell Pay and our crypto wallet product, Goldshell Wallet. Moving on to our financial results during the second quarter and first half 2025 period. Revenue for Q2 2025 were RMB 43.2 million or $6 million, impacted by lower sales from mining machines compared to Q2 2024. The decline in Aleo price during Q2, combined with newly imposed short-term tariffs and that delayed the export of our machines, negatively impacted mining machine sales and result in lower revenue. We would like to note that quarterly fluctuations in mining machine sales are a common industry-wide phenomenon and are often driven by a combination of external market conditions including volatility in cryptocurrency price, changes in mining difficulty, seasonal demand shifts and evolving regulatory environments.

These factors can influence customers’ purchasing behavior and investment cycles, especially in the altcoin segment. As such, short-term sales — short-term sales variability in our business should be viewed within a broader context of long-term growth trends and product innovation. Cost of revenue was RMB 32.9 million or $4.6 million for Q2 2025, a decrease of 20% from Q2 2024, primarily due to lower revenues recorded during the period. We also recorded an impairment charge related to excess mining machines inventory during the period. Total operating expenses were RMB 26.4 million or $3.7 million for Q2 2025, 10.2% lower versus Q2 2024. As a result, we recorded a loss from operations of RMB 16.2 million or $2.3 million for Q2 2025, compared to the income from operations of $8 million for Q2 2024.

Interest income decreased to RMB 3.1 million or $0.4 million for Q2 2025 from Q2 2024, mainly due to cash used in acquired ETH-based cryptocurrencies. For the second quarter, we recorded a gain in fair value of cryptocurrencies of RMB 42.8 million or $6 million, primarily a result of increased holding of ETH-based crytorocurrency units by 1,793 units since Q1 2025, while ETH price increased by around 34% during the period. As a result, net income from Q2 2025 was RMB 38.3 million or $5.3 million, which was affected by lower revenues and offset by gains on fair value of cryptocurrency as we increased ETH holding and saw a 34% increase in ETH price during the period. Moving on to first half 2025 metrics. Revenues were RMB 175.6 million or USD 24.5 million, primarily supported by sales of our Aleo series mining machines during the first half.

Net income for first half 2025 was RMB 4.3 million or $0.6 million, primarily impacted by lower gross profit and the losses on fair value of cryptocurrency as ETH price dropped by about 28% during the 6-month period. Our balance sheet remains strong. As of June 30, 2025, our cash position, which consisted of cash and cash equivalents, deposits and government securities listed in long-term investment and short-term investments were $71.6 million. Also, as of June 30, 2025, we had current assets of $94.5 million, total assets of $148 million and total liability of just $4.6 million. I would like to provide some color on our current and long-term growth strategies before opening the floor for questions. We currently compete in the cryptocurrency segment through the development, launch and ongoing enhancements of our Goldshell mining machines.

In line with this strategic focus, we have invested $5.8 million in R&D so far this year. At the beginning of this year, we have launched new products and several upgrades to our existing portfolio of mining machines which together represented the primary source of our total revenues. Key highlights include the release of 6 major Aleo mining series following the debut of the first AE Box in February. Our Goldshell Byte dual-mining machine launched in Q1 2025 gained strong traction among the miner customers. As previously mentioned, at the beginning of 2024, we adopted an ETH dollar-cost averaging accumulation strategy and start to build our strategic reserve. As of June 30, 2025, Intchains has total holding of ETH units of 8,816 units, representing a 25.5% increase from the end of first quarter.

According to recent publicly available information, including a report published by standard chartered in July 2025, the company was identified as one of the top ETH treasury holders among public companies globally. Notably, the price of ETH has risen 34% since the end of first quarter 2025. Looking ahead, our growth strategy rests on the same 2 core pillars. First is the launch of our new products and the continuous upgrade efficiency of mining machines and exploration of innovative new projects. Second is optimizing our ETH accumulation and yield generation strategies. On one hand, we remain firmly committed to long-term R&D investments, making every effort to stay ahead in the dynamic cryptocurrency market, leveraging our experienced — leverage our experienced R&D team and past investments — we have been able to quickly identify, assess and act on opportunities in the development of altcoin mining machines, achieving 100% profitability across all such projects to date.

As we continue to explore new altcoin projects, we are also planning new upgrades of mining efficiency for our existing mining products, such as the Dogecoin series to expand our market share. On the other hand, we have taken several steps to increase our strategic ETH reserve and expand our long-term digital asset positioning and yield-generation strategy. As part of these efforts, we recently announced the cooperation with FalconX, which focused on 2 key aspects. First, we are optimizing our ETH acquisitions through customized derivative-based trading strategy, such as funded put selling, which may enable Intchains to accumulate ETH at a favorable price while also potentially generate premium income. Second, we are enhancing ETH yield by combining lending activities with derivative-based yield generation — yield strategy, aiming to deliver superior returns compared to traditional passive ETH accumulation and staking method.

Our goal is to achieve an increased annualized yield on our ETH holdings, which could potentially be as high as 10%. 2025 has been a transitional year for us as we make strategic moves to ensure we are well positioned for long-term sustainable growth. While we expect revenue for the second half of the year to be impacted by softer sales driven by altcoin price volatility. We see the value of investing into the future and have accelerated R&D investments to strengthen our technology leadership in the altcoin mining machine market, allowing us to advance new altcoin projects under development towards commercialization. At the same time, the expansion of our ETH reserve and new ETH yield-generating initiatives paved the way for improved overall profitability.

We expect these strategic moves to reinforce our business pillars and translate into tangible growth in 2026. We believe that the ability to pivot quickly and innovate across evolving crypto mining ecosystem is critical to long-term success, particularly in a market defined by rapid technological change and regulatory shifts. We remain focused on executing our long-term vision and delivering sustained value through the technology leadership and our strong commitment to innovation to unlock long-term value and reinforce our leadership in the evolving blockchain ecosystem. By aligning our development road map with the needs of both enterprise and crypto-native users, we aim to be driving force in shaping the future. With that, operator, let’s open it up to — open it up for questions.

Operator: [Operator Instructions] And our first question comes from the line of Matthew Galinko with Maxim Group.

Q&A Session

Matthew Evan Galinko: I wanted to maybe focus on the ETH accumulation strategy. Do you have any, I guess, concrete objectives on how aggressively you intend to accumulate ETH? Is there any thought to becoming more like the traditional Bitcoin strategies where they issue and use financial instruments to acquire more? Or are you intending to continue to sort of do it organically from cash flows that you could generate off the core business?

Chaowei Yan: Okay. Thank you for your question, Matt. And our — currently, the company primarily use our own funds to conduct a dollar cost averaging strategy to do the ETH purchases. This approach is — we think, is a risk controlled prudent and consistent with our long- term strategy. But in the future, we may consider a moderate financing for ETH accumulation depending on market conditions and opportunities. But overall strategy, [indiscernible] will remain unchanged. The dollar cost averaging approach to continue to be the core of our ETH treasury operation. And I think — we think, on the one hand, our profits from our mining machine business can directly support the ETH strategy. And I think compared to short-term gains, our approach is more resilient across market cycles and avoid some forced ETH sales or ETH disposal triggered by short-term price drops. Thank you.

Matthew Evan Galinko: And if I could ask one follow-up question. I think you mentioned targeting up to a 10% yield on your Ethereum treasury. Can you talk about how much of your holdings, any if you would consider putting towards a staking or trading strategy? Is it half or more? Just how much do you intend to put towards yield activity?

Chaowei Yan: Yes. We — yes, let me think about this question, how to answer your question. And — currently, we cooperate with FalconX. The key point of this cooperation is to lower purchase price cost through certain trading strategies and to optimize returns through the lending. So in the future, we will also explore partnership with some taxes decentralized exchange and to expand the other staking. Overall, we will make decisions based on the market condition and the yield efficiency. But we will not put all our ETH in one place. So — but we will put all — over 80% of our ETH to generate — to generate income, but maybe not put in one place. Yes, this is our long-term strategy. Thank you.

Operator: [Operator Instructions] And our next question comes from the line of Mark Palmer with The Benchmark Company.

Mark Anthony Palmer: Yes. Just the company’s prepared remarks made reference to a pipeline of multiple altcoin projects that are moving toward commercialization. We saw the rollout of the new mining machines recently as well as the Goldshell Byte initiative. What can you tell us about what that pipeline of altcoin projects looks like? And what your thinking is with regard to their potential contribution especially in 2026?

Chaowei Yan: Yes. Thank you. The Aleo mining has achieved a strong revenue growth in the first half of this year. And in the second half, we will launch new altcoin mining products, while our new state-of-the-art Dogecoin miner is expected to complete testing in 2025 and enter mass production in first half of 2026. And we will continue to invest in R&D to maintain product competitiveness. So for the second half of 2025, first is our Aleo miners and second is our Dogecoin miners. And we also will have a new — new coin miners will launch in 2025. In 2026, there’s Dogecoin miners. Thank you.

Operator: [Operator Instructions] And our next question comes from the line of Kevin Dede with H.C. Wainwright.

Kevin Darryl Dede: I’m just curious strategically, how you’re thinking about the artificial intelligence market given excellence in semiconductor design. I’m just wondering where that might fall in your strategic thinking.

Chaowei Yan: Yes. Currently, we don’t have any plan to expand business in that area. Yes. Thank you for your question. But we will internally discuss further.

Operator: And your next question comes from the line of again with Matthew Galinko with Maxim Group.

Matthew Evan Galinko: I’m curious about if you could give us some thoughts about how to model R&D spending through the rest of 2025. Should we see that pick up in the back half of the year as you try to bring new products to market? Or do you think first quarter was maybe the high point of the year? Just some thoughts around that.

Chaowei Yan: Yes, I think our R&D expenses have — firstly, our product will — the second half — in the second half, we will have new products, just like I mentioned. But the R&D expenses are mostly occurred in the first half. So we believe that the second quarter, the base — the base figure of the second half were — were not — were not large than — were not big than the first half. And it will have maybe one tape-out and the process node is not very high. So I think the total R&D expenses were not larger than first half.

Operator: There is no further question at this time. I will now hand it over to Charles Yan for closing remarks. Charles?

Chaowei Yan: Yes. Thanks again for all of you for joining us. We are always open to dialogue with investors. Please feel free to reach out to us or to our Investor Relations firm, the Equity Group for any additional questions. We look forward to speaking with you again on our next quarterly call. Thank you.

Operator: That concludes today’s conference call. You may now disconnect.