Q3 2023 Intchains Group Ltd Earnings Call
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Speaker 1: Oh.
Okay.
Speaker 2: Good day, ladies and gentlemen. Thank you for standing by and welcome to Exchange 3rd Quarter 2020 Congress Call.
Good day, ladies and gentlemen, thank you for standing by and welcome to <unk> third quarter. Two tells them. So any slight earnings conference call.
Speaker 2: Today's conference is being recorded. If you have any objections, you may disconnect at this time.
Today's conference is being recorded if you have any objections you may disconnect at this time.
Speaker 2: Joining us today is Mr. Tao Wei-yan, Chief Financial Officer of Inc.
Joining us today is Mr. Charlie Young Chief Financial Officer of eight <unk>.
Speaker 2: Mr. Yen will provide an overview of the company's performance and the details of the company's financial results. After that, we will conduct a question and answer session to take your questions.
Mr. Yan, who will provide an overview of the company's performance and the details of the company's financial results.
After that we will conduct a question and answer session to take your questions.
Speaker 2: During the question and answer session, Mr. Yan would deliver the answers in Chinese and the company's representative would provide corresponding English translation.
During the question and answer session. Mr. Yang what delivered the answers and Chinese and the company's representative would provide corresponding English translations.
Speaker 2: Before we continue, I'd like to remind you that today's discussion will contain all the King's Steaks.
Before we continue I'd like to remind you that today's discussion will contain forward looking statements.
Speaker 2: These forward-looking statements involve known and unknown risks and uncertainties, and are based on the company's current expectations and projections about future events that the company believes may affect its financial condition, results of operations, business strategy, and financial needs.
These forward looking statements involve known and unknown risks and uncertainties.
<unk> on the company's current expectations and projections about future events that the company believes may affect us financial condition results of operations business strategy and financial needs. The company undertakes no obligation to update or revise publicly any forward.
Speaker 2: The company undertakes no obligation to update or revise publicly any forelooking statements to reflect subsequent occurring events or circumstances.
Statements to reflect subsequent occurring events or circumstances or changes in its expectations, except as may be required by law.
Speaker 2: or changes in its expectations except as may be required by law.
Speaker 2: Although the company believes that the expectations expressed in this following 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 and encourages investors to review other factors that may affect its future results in the company's registration statement and other filings.
Although the company believes that the expectations expressed in this for 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.
<unk> investors to review other factors that may affect future results in the company's registration statement and other filings with the SEC.
Speaker 2: With that, I'll now turn the call over to Mr. Chao-Wei Yan, the company's CFO . Mr. Yan, please go ahead.
With that I'll now turn the call over to Mr. Charles Yang The company's C. F O. Mr. Young. Please go ahead.
Speaker 3: Thank you, operator, and everyone for joining InterChance Earnings Conference call for the third quarter of fiscal year 2023. On today's call, we will provide an overview of our operational and financial performance for the third quarter of fiscal year 2023. After that, we will conduct a Q&A section to take your questions.
Thank you operator.
One for joining <unk> earnings conference call for the third quarter of fiscal year 2023.
On today's call, we will provide an overview of our operational and financial performance for the third quarter of fiscal year 2023. After that we will conduct a Q&A session to take your questions.
Speaker 3: We are now in the third era of Internet development, which is known widely as Web3. This era integrates the decentralized community-governed ethos of the first era with the advanced modern functionality of the second era.
Yes.
We are now in the third era of Internet development, which low widely at web three <unk> integrates to the decentralized community Calvin ethos of the first era with the advanced modern functionality Orca secondary era.
Speaker 3: unlocking a new wave of creativity and entrepreneurship.
Unlocking a new wave of creativity and entrepreneurship.
Speaker 3: We are very excited to have successfully joined the Web3 industry, leveraging our strong chip capabilities as an entry point. Now, we are deepening our penetration into additional Web3 applications and integrating blockchain technology with traditional industries to transform people's lives, further unleashing our value.
We are very excited to have successfully joined web sorry industry, leveraging our strong chip capabilities as an entry point now.
Now we are deepening our penetration into additional web through applications and integrating block chain technology with traditional industries to transform People's life further unleashing our value.
Speaker 3: Moving on to our financial performance. In the third quarter of 2023, market conditions continued to hover around all-time lows. Against this backdrop, both our revenue and gross profit margin decreased quarter over quarter for 2023. We recorded third quarter revenue of RMB 6.8 million with a negative gross margin of RMB 8.2 million.
Moving on to our financial performance in the third quarter of 2023 market conditions continue to hover around all times all time lows.
Against this backdrop, both our revenue and gross profit margin decreased quarter over quarter quarterly policy.
We recorded third quarter revenue of RMB, six 8 billion with a negative gross margin of RMB eight two media.
Speaker 3: However, our recent order growth and increasing industry visibility in the downstream market demonstrate an accelerated recovery starting from the fourth quarter.
However, our recent order growth and increasing industry visibility in the downstream market demonstrate.
Demonstrates an accelerated recovery starting from the fourth quarter.
Speaker 3: which should also propel improvement of our revenues.
Which should also propel improving improvement of our revenues.
Speaker 3: Our product development efforts, new business explorations, and peer collaboration initiatives in the past several quarters have begun to bear fruit, underscoring our business rebound and return to its growth path.
Our product development efforts, new business explorations and peer collaboration initiatives in the past several quarters have begun to bear fruit and thus, calling our business rebound and the return is returned to its growth path.
First and foremost we continue to continue to innovate and make.
Technology co breakthroughs they are in the third quarter of 2023, we completed the paper out of our latest achieved in October which contains innovative algorithms.
Speaker 3: The mass production will commerce in the fourth quarter of 2024.
The mass production will commence in the fourth quarter of 2024.
Speaker 3: Our new generation chips incorporate advanced new algorithms and process nodes.
Our new generation chips incorporate advanced our new algorithms and approach process node.
Speaker 3: representing an industry-wide product and a technology iteration.
Representing an industry wide product and technology iteration.
Speaker 3: Secondly, as I have mentioned previously, interchains have been actively seeking collaboration opportunities in the downstream industry value chain. In line with this strategy, we are currently signing a letter of intent and finalizing the negotiation with a Singapore-based company regarding our proposed acquisition of GoldShill.
Secondly, as I.
I have mentioned previously.
Has have been actively seeking collaboration opportunities in the downstream industry value chain in line with this strategy. We are currently.
Signed a letter of intent and finalizing the negotiation with our Singapore base of the company regarding our proposed acquisition of go the Shaw.
Speaker 3: a Web3 infrastructure brand. This transaction involves the potential acquisition of over 20 registered trademarks of GoldShill across the United States, Singapore, European Union, United Kingdom, Hong Kong, and China.
Our web sorry infrastructure brand.
This transaction involves the potential acquisition of over 20 registered registered trademarks of go to show across the United States Singapore.
European Union, United Kingdom, Hong Kong and China.
Speaker 3: This transaction also involves GoldShark's website and application and social media accounts with a large user and a community base.
This transaction also involves go to <unk> website and application.
And the social media accounts with a larger user and the community base.
Speaker 3: We anticipate that we will execute the acquisition agreement in the fourth quarter of 2023.
We anticipate that we will execute the acquisition agreement in the fourth quarter of 2023.
Speaker 3: Following the completion of this transaction, we will be able to enter the downstream production and the sales sector across cryptocurrency mining equipment and other Web3 infrastructure-related hardware and software products.
Following the completion of this transaction, we will be able to enter enter the downstream production and sales sector across cryptocurrency mining equipment.
Other wearable III infrastructure related hardware and software products.
Speaker 3: GoldShill is a well-known brand in the blockchain infrastructure industry with a strong market reputation and customer base.
<unk> is a well known brand in the blockchain infrastructure industry with a strong market reputation and customer base.
Speaker 3: Meanwhile, InterChance possesses industry-leading cheap research and development technology and capability.
Meanwhile, interchanged possesses industry, leading chief research and development technology and our capabilities.
Speaker 3: As such, we believe that gold shield acquisition will create a combination with powerful synergy.
Yeah.
As such we believe that go to show acquisition will create a combination with powerful synergies.
Speaker 3: Once completed, this transaction will broaden our offerings for existing customers with new products and brand choices.
Once completed this transaction will broaden our offerings for existing customers with new products and our brand choices.
Speaker 3: while enabling us to more effectively acquire new customers.
While enabling us to more effectively acquire new customers.
Speaker 3: Last but not least, I want to mention that our latest takeout and potential
Last but not least I want to mention that our latest the tape out in a potential.
Speaker 3: cultural brand acquisition are just two of our many initiatives in our flourishing pipeline.
Go to show brand acquisition or just the two of our many initiatives in our flourishing pipeline.
Speaker 3: We will report on additional developments when the time is right.
We will report on additional developments when the time is right.
Speaker 3: Now I will provide a brief financial overview of the third quarter of 2023.
Now I will provide a brief financial overview of the third quarter of 2023.
Speaker 3: Our revenue was RMB 6.8 million or USD 0.9 million in the third quarter, a year-over-year decrease of 94.6%. The decrease was mainly due to the challenging cryptocurrency market, which resulted in decreasing sales volume and average selling price of our ASIC chips that were primarily used in cryptocurrency mining machines.
Our revenue was RMB $6 8 million or USD.
U S dollar general point million in the third quarter, our year over year decrease of 94, 6%. The decrease was mainly due to the challenging crypto currency market, which resulted in decrease in sales volume and average selling price of our ASIC chips that were primarily used in corporate currency in mind.
Speaker 3: Cost of revenue decreased by 8.3% year-over-year to RMB 15.1 million or US dollar 2.1 million in the third quarter. Due to the decrease in sales volume of our asset chips, largely offset by an inventory write-down, totally RMB 10.1.
Machines.
Cost of revenue decreased by eight 3% year over year to <unk> to RMB, $15 1 million or U S. Dollar $2 1 billion in the third quarter due to the decrease in sales volume of our ASIC chips, largely offset by an inventory write down.
Italy, RMB $10 3 million.
Speaker 3: Total operating expenses decreased by 16.7% year-over-year to RMB 19.7 million or U.S. dollar 2.7 million in the third quarter, primarily due to the decrease in research and development expenses, partially offset by increase in sales and marketing expenses and GMA expenses.
Total operating expenses decreased by 16, 7% year over year to RMB 19, 7 billion to our U S. Dollar $2 7 million in the third quarter, primarily due to the decrease in research and development expenses, partially offset by increase in <unk>.
Sales and marketing expenses and G&A expenses specifically.
Speaker 3: Research and development expenses decreased by 41% to RMB $11.4 million, or US dollar $1.6 million for the third quarter of 2023, from RMB $19.2 million for the same period of 2022. The decrease was primarily attributable to the different stage of our research and development projects during the respective.
Research and development expenses decreased by 40, 41% to RMB.
11 four.
Our U S dollar $1 6 million for the third quarter of 2012, three for RMB $19 2 million for the same period of 2022. The decrease was primarily attributable to the difference different stage of our research and development projects.
They are in the respective period.
Speaker 3: Sales and marketing expenses increased by 74.3% year-over-year to RMB 2.2 million or U.S. dollar 0.3 million in the third quarter mainly due to the increasing personnel expenses.
Sales and marketing expenses increased by 74, 3%.
Percent year over year to RMB, $2 2 million or U S. Dollar <unk> 3 billion in the third quarter, mainly due to the increase in personnel expenses.
Speaker 3: G&A expenses increased by 93.8% year over year to RMB 6.2 million or U.S. dollar 0.8 million in the third quarter. Largely due to increase in personnel related costs and professional expenses. Partially offset by the decrease in tax surcharge.
G&A expenses increased by 93, 8% year over year to RMB, $6 2 million or U S dollar to zero price 0.8.
8 million in the third quarter, largely due to increase in personnel related costs and professional expenses.
Totally offset by the decrease in tax surcharges.
Speaker 3: Interest income increased by 50.3% year-over-year to RMB $4.6 million or US$0.66 million in the third quarter. Mostly attributable to the increase in our cash balance and our effective fund management.
The interest income increased by 53% year over year to RMB, four 6 million or U S. Dollar to Euro six 6 million in the third quarter, mostly attributable to the increasing our cash balance and our effective <unk> management.
Speaker 3: Other income decreased by 83.6% year-over-year to RMB 1.4 million or U.S. dollar 0.2 million in the third quarter, primarily due to the decrease in grants received from the local government. The grants were issued in support of eligible
Other income decreased by 83, 6% year over year to RMB, one 4 million or U S. Dollar zero quite to media in the third quarter, primarily due to the decrease in grants received from the local government.
<unk> were issued in support of eligible.
Speaker 3: IC industry projects with no repayment obligation.
IC IC industry projects with no repayment obligations.
Speaker 3: Our net loss for this quarter was RMB 19.1 million or US dollar 2.6 million in the 2.6 million. The basic and diluted net loss per ordinary share was RMB 0.16 or US dollar $0.02 in the third quarter. Each ADS represents two of our company's class A ordinary share.
Our net loss for this quarter was RMB 19.1 million or U S dollar $2 6 million.
The $2 6 million.
Basic and diluted.
Net loss per ordinary share was RMB.
0.16, or U S dollar of <unk> in the third quarter. Each ads represents two of our company's class a ordinary shares.
Speaker 3: To sum up, during the third quarter, our business was under pressure, especially due to the challenges facing the Web3 industry. However, we believe the industry was irrevocably progressing despite those short term fluctuations. Each Web3 industry player can capitalize on emergent opportunities to become a tech giant.
To sum up during the third quarter, our business was under pressure, especially due to the challenges faced facing the web sorry industry. However, we believe the industry was a basketball a progressing despite those short term fluctuations each web through industry.
Player can capitalize on emerging opportunities to become a tech giant our diverse innovative and growing product portfolio puts us in a prime position to capture the web survey recovery opportunities.
Speaker 3: Our diverse, innovative, and growing product portfolio put us in a prime position to capture the Web3 recovery opportunity.
Speaker 3: Moving forward, we will remain focused on advancing our chip technologies while further expanding our product and service offerings to serve upstream and downstream along the value chain, ultimately driving our long-term sustainable growth.
Moving forward, we will remain focused on advising our chip technologies.
While further expanding our product and service offerings to serve upstream and downstream along the value chain.
Ultimately driving our long term sustainable growth. Thank.
Speaker 3: Thank you for your continued support. We look forward to updating you on our progress in the future. Now, I'd like to turn the discussion over to the operator for any questions. Thank you.
Thank you for your continued support we look forward to updating you on our progress in the future.
Now I'd like to turn the discussion over to operator for any questions.
Speaker 2: Thank you. We will now begin the question and answer session.
Thank you.
Thank you we will now begin the question and answer session.
Speaker 2: To ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
I ask a question. Please press star one on your telephone.
<unk> automated message advising yohan is raised to.
Speaker 2: To withdraw your question, please press star one one again. Please stand by while we.
To withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Yes.
Speaker 2: Our first question comes from the line of Liz Canyon. Please go ahead, Liz.
Our first question comes from the line of this.
Kevin. Please go ahead Lee.
Okay.
Speaker 4: Thank you for taking my question. Yes, can you please share your management guidance for the fourth quarter?
Thank you for taking my question.
Please yes.
Management guidance for the fourth quarter.
Okay.
Speaker 5: Okay, thank you for your question. Please make an estimate of the financial situation of the fourth quarter.
Okay. Thank you for your question.
<unk> is our key cities with US how would you perhaps.
Speaker 3: In our opinion, the fourth quarter has seen a rapid recovery. So our performance and income will improve to a certain extent. We believe that the sales of the fourth quarter will be better than the third quarter.
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Hello World is particularly challenging.
However, it is tangible.
We expect the overall industrial recovery rates will accelerate in the fourth quarter.
Improvement in our revenues.
What we can see that our performance in Q4 is expected to.
Be much better than in Q3.
Speaker 3: The company is currently in a critical period of diversified development, coupled with the high volatility of the industry, it is still difficult for us to predict the company's performance trend. But we believe that in the past few quarters, our continued product development, new business exploration, and some cooperation plans with our partners have achieved some results. This will accelerate our business development back to a growth track.
So more tender.
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Speaker 5: As the company is currently in a critical development period regarding diversifying its business penetration, how do we elevate industry volatility?
As a company.
And currently increased.
Regarding diversifying his kidneys penetration.
With the elevated interest rate volatility.
Speaker 5: It is challenging to provide the company financial outlook for the fourth quarter.
It is a challenging and should provide the companys financial outlook for the fourth quarter. However.
Speaker 5: However, we are ongoing product development efforts, new business explorations, and the pair collaboration initiatives in the past several quarters have began bear fruit, underscoring our business rebounds and return to its growth trajectory.
However, we are ongoing.
Development efforts.
New business.
<unk> and the payer collaboration initiatives into past several quarters, how began bear fruit.
Underscoring our business to rebound and return to its growth trajectory.
Speaker 5: Thank you, Mr. Yang. Let's move to the next question.
Thank you Mr. Yang, let's move to the next question.
Okay.
Thank you.
Okay.
Speaker 6: As a reminder, to ask a question, please press star 1 1 on your telephone keypad.
As a reminder to ask a question. Please press star one one on your telephone keypad.
Okay.
<unk> for questions.
Speaker 6: I'm showing no further questions and with that, we conclude today's conference call. Thank you for participating. You may now disconnect.
I am showing no further questions with that we conclude today's conference call. Thank you for participating you may now disconnect.
Okay.
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