Q2 2024 Intchains Group Ltd Earnings Call
Today's conference is being recorded if you have any objections you may disconnect at this time.
Speaker Change: Joining us today is Mr. Charles Yang Chief Financial Officer of H chain Mr.
Speaker Change: Mr. Yang will provide an overview of the company's performance and the details of the company's financial results.
Speaker Change: After that we will conduct a question and answer session to take your questions.
Speaker Change: During the question and answer session. Mr. Yan will deliver the answers in Chinese and the companies represented here will provide corresponding English translation.
Before we continue I would like to remind you that today's discussion will contain forward looking statements.
Speaker Change: 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. The.
Speaker Change: The company undertakes no obligation to update or revise publicly any forward looking statements to reflect subsequent or current events or circumstances or changes in its expectation, except as may be required by law.
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 anticipated results and encourages investors to review.
Speaker Change: Other factors that may affect future results in the company's registration statement and other filings with the SEC.
Speaker Change: As a reminder, and investor presentation, and a webcast replay of this conference call will be available on <unk> IR website at Www Dot <unk> Dot com.
Speaker Change: With that I'll now turn the call over to Mr. <unk> Yang the Companys CFO Mr. Yan. Please go ahead.
Mr. Yan: Thank you operator.
Speaker Change: Joining me he's a chance earnings conference call for the second quarter at 124.
Speaker Change: On today's call, we will provide an overview of our operational and financial performance after that I will conduct we will.
Speaker Change: Conduct our Q&A session to take your questions.
Speaker Change: During the second quarter of 2012 before the crypto currency market has experienced a series of remarkable market trends of movements, while bitcoin and other liquidity currencies quarter slightly compared to the strong growth.
Speaker Change: Since the beginning of the year the market is still demonstrated a significant growth compared to the same period last year.
Speaker Change: On a positive influence on the overall absolutely industry.
Speaker Change: Second quarter also saw a substantial increase in activity across the west repo man.
Speaker Change: We will not only buying technology advancement within the industry, but.
Speaker Change: But also the growing interest and the participation from both internal and external stakeholders.
In March of this year.
Speaker Change: Computer equipment products that incorporate our latest achieved for our team Costa light coin and Broadcom will officially launch the wholesale.
Speaker Change: June last.
Speaker Change: As of June 30 ton, Tony Hawk chips and salsa.
Speaker Change: <unk> exceeded 274000 <unk> units.
Speaker Change: Outstanding performance is a clear testament to the market's stronger coordination of our products.
Speaker Change: Moreover, the AAR box in Bulks have also won the flavor of individual users due to the exceptional hospital and ultra low power consumption.
Speaker Change: Driven by the impressive sales of these two products the confidence overall revenue in the second quarter increased by over 785% year over year.
Speaker Change: Furthermore, since the company adopted a strategy of holding crypto currency.
Primarily equal equal as a key long term assets are resolved for the group we have closely monitored the volatility and the.
Speaker Change: And the moment momentum of the <unk>.
Speaker Change: The currency market and optimize the timing for our asset allocation.
Speaker Change: As of June 32024, the company has accumulated total holding of 2417 E. Either as a result position not only enhance the companys financial flexibility and a risk of resilience. It also illustrates our strong confidence in blockchain infrastructure.
Speaker Change: And the long term value of visa.
Speaker Change: Going forward. The company will continue to follow these asset holding strategy, making timely adjustments to our portfolio to capitalize to the opportunities we see with is absolutely industry.
Speaker Change: We will also closely monitor industry trends and our reveal market risks ensure ensuring that our investment portfolio can adapt to the evolving market environment and create long term value for our shareholders.
As we move into the second half of 2024, we remain steadfast in our commitment to technological innovation and expanding our footprint within the west La.
Speaker Change: Industry value chain.
Speaker Change: Response to the evolving market and the technological landscape, we are proactively developing new absolutely products beyond mining machines to enhance efficiency and improve customer experience for our industry partners. We.
We hope to accelerate.
Speaker Change: Adoption of blockchain technology, while also closing more in process in achieving their digital transformation goals.
Speaker Change: We are confident that at.
Speaker Change: <unk> positioning in the.
Speaker Change: The business model become more defined our company's go our covenants growing potential in the long term value will be fully realized.
Speaker Change: Moving forward in that.
Speaker Change: <unk> will continue to lead the industry collaborating with partners to drive robust growth across the sector.
Speaker Change: Now I will provide a brief financial overview of the second quarter of 2024.
Speaker Change: Our revenue was 123 million RMB or $16 9 million U S. Dollar for the second quarter 2024, representing an increase of 700.
Speaker Change: 700, and the <unk>.
Speaker Change: 5% strong.
Speaker Change: $13 9 million RMB for the same period of 2023.
Speaker Change: Substantial growth was primarily driven by a significant increase in the average selling price of our <unk> products, which was attributed to the sales of our latest ASIC chip products reached comment commanded higher average selling price compared to the older ASIC chip product.
Speaker Change: Cost of revenue was $40 9 million RMB or full of high point $6 million for the second quarter. Consequently for us representing an increase of 33, 2% from $30 7 million RMB for the same period of 2023 day increase awards.
Speaker Change: Primarily caused by the impact of inventory inventory write down prepayment rebound and a provision for commenced preliminary purchase commitment.
Speaker Change: Yeah.
Speaker Change: Which amounted to.
Speaker Change: 33 million RMB or $4 2 million U S. Dollar for the second quarter of <unk> compared to $22 5 million RMB for the same period of 2023.
Speaker Change: Central to increase in cost of revenue was substantially lower than the percentage of increase of our revenue.
Speaker Change: It was primarily due to the higher gross margin for our latest asset should products.
Speaker Change: Our total operating expenses.
Speaker Change: $104 3 million RMB or $3 3 million U S dollar for the second quarter.
Speaker Change: Presenting an increase of 44, 2% from $717 3 million RMB for the same period of 2023.
Speaker Change: The increase was primarily due to an increase in research and development expenses.
Speaker Change: Sales and marketing expenses.
Speaker Change: General and.
Administrative expenses.
Speaker Change: Research and development expenses increased by 47, 6%.
Speaker Change: $13 2 million RMB or $1 8 million U S dollar for the second quarter of 2024.
Speaker Change: One 9 million RMB for the same period of $2 three primarily due to the increased share based incentive expenses labor costs and the expenses related to our R&D projects.
Speaker Change: Sales and marketing expenses increased by 48, 5%.
Speaker Change: $1 9 million RMB <unk> $3 million for the second quarter of 194 from $1 3 million RMB for the same period of 2023, mainly driven by increased business promotion expenses increased share based incentive expenses and labor costs.
Speaker Change: <unk> expenses increased by 25, 5% to $8 9 million RMB or $1 2 million for the second quarter 2024 from RMB $7 1 million of some.
Speaker Change: <unk> one.
Speaker Change: 1 million RMB for the same period of 2020, mainly driven by the increased.
Speaker Change: Tax surcharges as well as increased share based incentive expenses and labor costs.
Speaker Change: Loss on fair value of crypto currency or for the second quarter was.
Speaker Change: 0.3 million RMB or zero.
Speaker Change: 0.0, 4 million U S dollar.
Speaker Change: Compared to nil in the same period of commodity price range.
Speaker Change: Interest income decreased by five 6% to $4 1 million RMB or 0.6 million U S. Dollar for the second quarter of 'twenty 'twenty four for $4 4 million RMB for the same period of 2023 other income decreased $2.
Speaker Change: 1 million RMB or 0.0 2 million U S dollar for the second quarter.
Speaker Change: <unk> 3 million RMB for the same period of 2023, mainly due to the decrease of government requirements, which was partially offset by a change in fair value.
Speaker Change: <unk> February of short term investment.
Speaker Change: As a result of Florida going.
Speaker Change: We recorded a net income of 54 million RMB of $6 $9 million for the second quarter of 2024 compared to the net loss.
Speaker Change: Project 5 million RMB for the same period.
Speaker Change: 2023.
Speaker Change: Basic and diluted net earnings per ordinary share or whatever for two RMB or zero point of 0.0.
Speaker Change: Six U.
Speaker Change: U S dollar for the second quarter of 2024.
Speaker Change: Compared to basic and diluted net loss per ordinary share.
Speaker Change: Of the $1 7 million RMB for the same period over 123, each ads represents two of our accompanying ordinary shares.
Speaker Change: Thank you for your continued support we look forward to updating you on our progress in the future.
Speaker Change: Now.
Speaker Change: I'd like to I'd like to take the discussion over the operator for any questions.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question. Please press star one one on your telephone you would earn here an automated message advising yohan this rate too.
Speaker Change: To withdraw your question. Please press star one again for.
Speaker Change: For the benefit of all participants on today's call. If you wish to ask your question to mention a Chinese police immediately repeat your question in English they may be a short pause, while we compile the Q&A roster once again Thats star one one quick question.
Speaker Change: We'll take our first question now from the line of Mark Palmer from bench.
Speaker Change: Please ask your question Marc.
Mark Palmer: Yes. Thank you for taking my question and congratulations on the strong quarter.
Speaker Change:
Mark Palmer: I wanted to ask you about the demand environment, you are seeing for your ASIC chips and mining equipment.
Mark Palmer: What.
Mark Palmer:
Are you seeing in terms of.
Speaker Change: 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.
Speaker Change: For what you provide chips.
Speaker Change: Canada sale.
Speaker Change: <unk>.
Speaker Change: When a government issued by <unk>.
Speaker Change: And it also has it shifted.
Speaker Change: <unk> and Genco kryptonite.
Don: Sure Don.
Speaker Change: <unk>.
Speaker Change: Ah Okay, Okay. Okay marks.
Speaker Change: Your final question and.
Let let me have a discovery have a short sharp reply to you and maybe I will ask in Chinese and her.
Speaker Change: Our our our staff will translate to English.
Speaker Change: Saturday out anyway, because of our people and a woman.
Speaker Change: Stronger housing changes that are being put in touch with her how something easy collateral.
Speaker Change: And Oh, you're warm weather campaign.
Speaker Change: Joe do you think the Q.
Speaker Change: Do you think the accompany the yoshi so in a woman.
The answer is no.
Speaker Change: You commented a policymaker Pierre Fabre.
Speaker Change: The quality of attrition I thought okay.
Speaker Change: Took a defense at all.
Speaker Change: Attrition are you where you think you can do the.
Speaker Change:
Speaker Change: The sapphire fashion at home, but that's our collateral.
Speaker Change: Hmm.
Speaker Change: Because the Australian industrial woman and Googles of the negotiations of the charters that you could also.
Speaker Change: No.
Speaker Change: Yes.
Speaker Change: Because if it wasn't for the future.
Speaker Change: Hmm.
Hello, Mark.
Speaker Change: Questions.
Mark Palmer: This is no pleasure to answer your question yes.
Mark Palmer: And they can see that the second quarter of the 294, the crypto market is showing.
Mark Palmer: Now a low start low and those trades in the market.
Speaker Change: Our parent axis shows the main competitive edge in the industries in our especially for our air box and a K box.
Speaker Change: When the market organization under the customers had a CE mark on it.
Speaker Change: And also back to.
Speaker Change: The current the current.
Speaker Change: In the quarter.
And the market trends in the low downstream.
Speaker Change: And so but.
Speaker Change: Because they believe that they.
Speaker Change: They will show and they have a strong confidence on our part as Andrea.
Speaker Change: And they have a strong financial express.
Speaker Change: Actually in the future.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: And.
Speaker Change: One more question.
Speaker Change: The company.
Speaker Change: As meaningfully diversified both its business line and.
Speaker Change: Indeed, its geographic footprint.
Through the acquisition of gold shell.
Speaker Change: What are your thoughts about the company's potential next steps in <unk>.
Speaker Change: Terms of further diversification.
Speaker Change: Into new product lines.
Speaker Change: As it continues to.
Speaker Change: <unk> on expanding its role within.
Speaker Change: The Rep web three infrastructure space.
Speaker Change: Yeah.
Speaker Change:
Nancy: And Nancy SaaS.
John: Hi, John.
John: And now Dan sugar local shorter haul uncle Sam.
John: Yes.
John: Yeah.
John: They just issued logo, Sean Goodman, Tanya not functional logos alcohol uncle.
John: <unk>, yes.
John: Yeah.
John: Exactly.
Speaker Change: Thank you and thank you for your question and.
Speaker Change: Actually in this quarter.
Speaker Change: Our revenue our overseas revenue.
Speaker Change: Was achieved about 70, 72%.
Speaker Change: Our revenue was 72% have come from the oversea market and.
Speaker Change: Compared with last quarter that there was a significant increase with them.
Speaker Change: Because last quarter about 90% over 90% of revenue will come from come from China. Yeah. So this is the main advantage is that we acquired a telco to show brand because we have we have the ability to expand into overseas markets and Furthermore, we believe that.
Speaker Change: We believe we have well we will we will have other project planning.
Speaker Change: <unk>.
Speaker Change: The other area.
Speaker Change: Beyond the cryptocurrency mining machine, which will also go to show brand two.
Speaker Change: 222 to make sales so I believe in the.
Speaker Change: The future of our product line will be more diversified with Dakota show brand. Thank you.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: Thank you.
Mark Palmer: Thank you Mark.
Speaker Change: As a reminder to ask a question. Please press star one on your telecom keypad.
Speaker Change: Yeah.
Speaker Change: Well take our next question from the line of Sheng Zhong Wang from final link. Please go ahead.
Josh: Hi, Josh.
Speaker Change: I'm not sure whether you can hear me clearly that.
Speaker Change: One question for you are way up there that company has showed more east during Q2.
Speaker Change: Could you please share more players on U S M a.
Speaker Change: Asset allocation strategy.
Speaker Change: My first question. Thank you.
Speaker Change: And thank you for your questions and I would like to translate.
Speaker Change: Questions to our SaaS.
Speaker Change: Camrys apples today I can't show you net shale alley.
Ali: Ali intervene either.
Speaker Change: We lapped it yet.
Speaker Change: Ah, yes isn't it <unk> make a.
Speaker Change: Go through the three focal eth at that NATO soil <unk> doses, she opens up half on the pet or no mood sandwich a goldfish.
Speaker Change: Silica processed grades of strategy two <unk> since you started the quarter wages or Massawa Dakota East facility answer Bob.
Speaker Change: Bob I don't May not answer that we do not have traveled without all the losses. So that is assuming.
Speaker Change: Now Clay, Colorado, Florida, that's for citizens are now Chris I caught in the only Australian where Macquarie tissue.
Speaker Change: Same center growth story, I think Sheryl Mcquade Holly.
The shuttle tanker.
Speaker Change: Who'll go through their rigorous thinking kwan for operating cash whats required but for sure the soy girl.
Speaker Change: If you've already got a culture up until now you guys have pointed to my that idea.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: This is this is.
Speaker Change: Our answer to your questions.
Speaker Change: Our companies in chance, a narrow range, our operating cash flows to accumulate eatery and evergreen crypto currencies.
Speaker Change: From our <unk>.
Speaker Change: QUADRA upturn you're planning for.
Speaker Change: How does that.
Speaker Change: Andre and the Chinese five is there and the app to the line.
Speaker Change: June 30th January 24.
Raymond: Current holdings is a raymond.
Speaker Change: Yes.
Speaker Change: Chinese floor tenure 117, so so basically our Israel Atkins J&J is considering our cash flows and a continued to Howard and accelerated our E series and available now.
Tony: Tony is right.
Speaker Change: Yeah. So this is our options for you all.
Speaker Change: A question.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks.
Speaker Change: Great. Thank you for your questions.
Speaker Change: Yes.
Speaker Change: And I'm not showing any further questions in the queue I would just conclude this period end conference for today. Thank you once again for joining <unk> second quarter 2024 financial results and business update conference call today have a great day.
Speaker Change: Okay.