Intchains Group Ltd. Q2 FY2024 earnings call

• The cryptocurrency market in the second quarter of 2024 exhibited remarkable trends, and activity across the WEB3 domain increased. • In March 2024, computing equipment products with the latest chips were officially launched, and chip sales showed strong performance. • The company adopted a strategy of holding cryptocurrency, primarily ETH, as a long-term asset reserve, with a total holding of 2,417 ETH as of June 30, 2024. • In the second half of 2024, the company will continue to focus on technological innovation and develop new WEB3 products beyond mining machines to enhance efficiency and improve customer experience.

In the second quarter of 2024, Intchains' revenue reached RMB 123 million (USD 16.9 million), representing an increase of over 785% year-over-year. Chip sales of the computing equipment products incorporating the latest chips for Alephium, Kaspa, Litecoin and Dogecoin exceeded 274,019 units as of June 30, 2024. Overseas revenue accounted for about 72% of the company's total revenue in the second quarter. The cost of revenue was RMB 40.9 million (USD 5.6 million), an increase of 33.2% year-over-year, with higher gross margin from the latest ASIC chip products contributing to the lower percentage increase in cost of revenue compared to revenue growth.

• The company will continue to follow the asset holding strategy, closely monitoring the cryptocurrency market's volatility and momentum to optimize asset allocation timing. • Proactively develop new WEB3 products beyond mining machines to expand the product footprint within the industry value chain and create long-term value for shareholders.

• The company notes that the cryptocurrency market is volatile, which may impact financial conditions and results of operations. • Market trends and external factors could affect the demand for the company's products and the performance of its asset holdings.

Q: Congratulations on the strong quarter. I wanted to ask you about the demand environment you are seeing for your ASIC chips and mining equipment. What are you seeing in terms of the impact of the more buoyant 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: [Foreign Language] And as Chaowei Yan said, in the second quarter of 2024, the crypto market was in a low state. But our products remain competitive in the industry, especially the AL BOX and KA BOX which were favored by market organizations and customers. Currently, the market trend is low downstream, but we have confidence in our products' future as they have strong financial backing.

Q: We're aware that the company has sold more ETH during Q2. Could you please share more plans on ETH as an asset allocation strategy?

A: Our company leverages operating cash flows to accumulate ETH and other growing cryptocurrencies. As of June 30, 2024, we hold 2,417 ETH. Our ETH asset strategy focuses on leveraging cash flows to continue holding and increasing ETH holdings, with no plans to sell ETH at present.