Earnings call transcript: Intchains Group Q2 2025 sees stock dip despite strategic moves

Intchains Group Ltd ADR (ICG) reported its second-quarter 2025 earnings with an EPS of $0.04 and revenue of $6 million. Despite strategic initiatives and a robust cash position, the company’s stock fell by 2.43% in after-hours trading, closing at $2.47. The decline reflects investor concerns over the ongoing volatility in the cryptocurrency mining market and its impact on future performance. According to InvestingPro data, the company maintains impressive gross profit margins of 55.82% and shows strong financial health with a "GOOD" overall rating, suggesting resilience despite market challenges.

Key Takeaways

• Intchains reported a Q2 revenue of $6 million, facing a decrease from the previous quarter.
• The company maintained a strong cash position of $71.6 million as of June 30, 2025.
• Stock fell by 2.43% in after-hours trading, closing at $2.47.
• The company is focusing on expanding its Ethereum holdings and yield-generating activities.
• Intchains is preparing for new product launches in the cryptocurrency mining sector in 2025-2026.

Company Performance

Intchains Group’s performance in Q2 2025 showed a decline in revenue compared to the previous quarter, reflecting the challenges in the cryptocurrency mining market. Despite these challenges, the company has implemented several strategic initiatives, including the introduction of new mining machines and increased investments in research and development.

Financial Highlights

• Revenue: $6 million, down from the previous quarter.
• Cost of Revenue: $4.6 million, a 20% decrease.
• Operating Loss: $2.3 million.
• Net Income for the first half of 2025: $600,000.
• Cash Position: $71.6 million as of June 30, 2025.
• Total Assets: $148 million.
• Total Liabilities: $4.6 million.

Earnings vs. Forecast

The company’s EPS of $0.04 met expectations, with revenue aligning closely with forecasts at $6 million. This performance indicates a stable, albeit challenging, quarter for Intchains, as the company navigates market volatility.

Market Reaction

Intchains’ stock experienced a 2.43% drop in after-hours trading, closing at $2.47. This decline is part of a broader trend, with the stock trading near its 52-week low of $1.19, far below its high of $12.04. The market’s reaction reflects concerns over the company’s ability to maintain profitability amid fluctuating cryptocurrency prices and mining difficulties.

Outlook & Guidance

Looking forward, Intchains anticipates continued volatility in the Altcoin market, which could impact revenue in the second half of 2025. However, the company is accelerating its R&D investments and expanding its Ethereum reserve, aiming for tangible growth in 2026.

Executive Commentary

Charles Yan, CFO of Intchains, emphasized the company’s strategic focus: "We believe that the ability to pivot quickly and innovate across the evolving crypto mining ecosystem is critical to long-term success." He also highlighted the company’s goal of achieving a 10% annualized yield on Ethereum holdings.

Risks and Challenges

• Cryptocurrency market volatility poses a risk to revenue stability.
• Fluctuations in Altcoin prices and mining difficulty could impact profitability.
• The company faces competitive pressure in the cryptocurrency mining technology sector.
• External economic factors, such as regulatory changes, could influence market dynamics.

Q&A

During the earnings call, analysts inquired about Intchains’ Ethereum accumulation strategy and its Altcoin project pipeline. The company confirmed its commitment to expanding its Ethereum holdings and clarified its R&D spending expectations. Additionally, Intchains reiterated that it has no immediate plans to enter the artificial intelligence market.

Full transcript - Intchains Group Ltd ADR (ICG) Q2 2025:

Ellis, Moderator/Introducer, Inchant: Thank you, operator. Good evening to everyone. Welcome to Inchant’s Second Quarter twenty twenty five 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 in the company’s registration statement 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 NCHANZ website at www.ir.inchance.com. It is my pleasure to introduce InChance’s CFO, Mr. Charles Yan, who will provide an overview of second quarter and first half twenty twenty five 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.

Charles Yan, CFO, Inchant: Thank you, Ellis, and welcome everyone. For those new to In The Change and our story, I would like to provide an overview of our three main business lines, Altcoin mining machines, ease accumulation and the Webster application development. Our core business, Altcoin mining machine under the GoSho brand is our primary revenue contributor. We design Altcoin Mining Machines incorporating in house developed ASIC chips, which are used to mine number of popular alternative cryptocurrencies, including Litecoin, Doge coin, Alleyo and more. And since first quarter twenty twenty four, we have implemented a strategic self funded dollar cost averaging ease accumulation strategy as part of our value creation strategy to generate a return on our capital.

We also have our Web3 application development business and have launched a one stop blockchain payment solution, Go Show Pay and our crypto wallet product, Go Show Wallet. Moving on to our financial results during the second quarter and first half twenty twenty five period. Revenue for Q2 twenty twenty five were RMB43.2 million or $6,000,000 impacted by lower sales from mining machines compared to Q2 twenty twenty four. The decline in allele price during Q2 combined with newly imposed short term tariffs and that delayed the export of our machines negatively impacted the 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 outgoing segment. As such, short term sales variability in our business should be viewed within a broader context of long term growth trends and the product innovation. Cost of revenue was 32,900,000.0 or $4,600,000 for Q2 twenty twenty five, a decrease of 20% from Q2 twenty twenty four, 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 26,400,000.0 or $3,700,000 for Q2 twenty twenty five, 10.2% lower versus Q2 twenty twenty four.

As a result, we recorded a loss from operations of RMB 16,200,000.0 or $2,300,000 for Q2 twenty twenty five compared to the income from operations of $8,000,000 for 2024 or Q2 twenty twenty four. Interest income decreased to RMB 3,100,000.0 or $400,000 for Q2 twenty twenty five from Q2 twenty twenty four, mainly due to cash used in acquired East based cryptocurrencies. For the second quarter, we recorded a gain in fair value of cryptocurrencies of RMB42.8 million or $6,000,000 primarily a result of increased holding of East based cryptocurrency units by seventeen ninety three units since Q1 twenty twenty five, while East price increased by around 34% during the period. As a result, net income from Q2 twenty twenty five was RMB38.3 million or $5,300,000 which was affected by lower revenues and offset by gains of fair value of cryptocurrency as we increased East Holding and saw a 34% increase in East price during the period. Moving on to first half twenty twenty five metrics.

Revenues were million or US24.5 million dollars primarily supported by sales of our Allele series mining machines during the first half. Net income for first half twenty twenty five was RMB 4,300,000.0 or $600,000 primarily impacted by lower gross profit and the losses on fair value of cryptocurrency as its price dropped by about 28% during the six months period. Our balance sheet remains strong. As of 06/30/2025, our cash position, which consisted of cash and cash equivalent, deposits and the government securities listed in long term investment and short term investments were $71,600,000 Also as of 06/30/2025, we had current assets of $94,500,000 total assets of $148,000,000 and total liability of just $4,600,000 I would like to provide some color on our current and the long term growth strategies before opening the floor for questions. We currently compete in the cryptocurrency segments through the development, launch and ongoing enhancements of our gold show mining machines.

In line with this strategic focus, we have invested $5,800,000 in R and D so far this year. At the beginning of the year, we have launched the new products and several upgrades to existing portfolio of mining machine, which together represented the primary source of our total revenues. Key highlights included the release of six major Allele mining series following the debut of the first AE box in February. Our Gold Show Knights dual mining machine launched in Q1 twenty twenty five gained strong traction among the miner customers. As previous mentioned, at the beginning of 2024, we adopted an East dollar cost averaging accumulation strategy and start to build our strategic reserve.

As of 06/30/2025, interchange has total holding of East 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 East Treasury holders among public companies globally. Notably, the price of East has risen 34% since the end of first quarter twenty twenty five. Looking ahead, our growth strategy rests on the same two core pillars. First is launch of our new products and the continuous upgrade of the efficiency of mining machines and exploration of innovative new projects.

Second is optimizing our ease accumulation and yield generation strategies. On one hand, we remain firmly committed to long term R and D investments, making every effort to stay ahead in the dynamic cryptocurrency market, leveraging our experienced R and D team and the past investments. We have been able to quickly identify, assess and act on opportunities in the development of outgoing 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 East Reserve and expand our long term digital asset positioning and the yield generation strategy.

As part of these efforts, we recently announced the cooperation with FalconX, which focused on two key aspects. First, we are optimizing our ESAC acquisitions through customized derivative based trading strategies such as funded put selling, which may enable interchange to accumulate ease at a favorable price while also potentially generate premium income. Second, we are enhancing East Yield by combining lending activities with derivatives based yield generation yield strategy aiming to deliver superior returns compared to traditional passive ease accumulation and staking method. Our goal is to achieve an increased annualized yield on our ease 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 and 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 East Reserve and new East 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 technology leadership and a strong commitment to innovation to unlock long term value and reinforce our leadership in the evolving blockchain ecosystem. By aligning our development roadmap with the needs of both enterprise and crypto native users, we aim to be a driving force in shaping the future. With that, operator, let’s open up to open the app for questions.

Operator: Absolutely. We will now open the floor for questions. And our first question comes from the line of Matthew Galinko with Maxim Group. Matthew, please go ahead.

Matthew Galinko, Analyst, Maxim Group: Hi, thanks for taking my question. I wanted to maybe focus on the heap 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 you could generate off the core business?

Charles Yan, CFO, Inchant: 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 ease purchases. This approach is we think as a risk controlled prudent and consistent with our long term strategy. But in the future, we may consider moderate financing for East accumulation depending on market conditions and opportunities.

But overall strategy time will remain unchanged. The dollar cost averaging approach to continue to be the core of our East Treasury operation. And I think we think on the one hand, our profits from our mining machine business can directly support easy strategy. And I think compared to short term gains, our approach is more resilient across market cycles and avoid some forced ease of sales or ease disposal triggered by short term price drops. Thank you.

Matthew Galinko, Analyst, Maxim Group: Thank you. 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, Anif, you would consider putting towards a staking or trading strategy? Is it half or more?

Just how much do you intend to to put towards yield activity?

Charles Yan, CFO, Inchant: Yeah. Yes. Let me think about this question how to 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 DAXes decentralized exchange and to expand the other staking. Overall, we will make decision based on the market condition and the yield efficiency. But we will not put all our EEs in one place. So but we will put all over 80% of our ease to generate to generate income, but it may be not put in one place. Yes, that’s our long term strategy.

Thank you.

Matthew Galinko, Analyst, Maxim Group: Great. Thank you. I’ll jump back in the queue.

Operator: And our next question comes from the line of Mark Palmer with The Benchmark Company. Mark, please go ahead.

Mark Palmer, Analyst, The Benchmark Company: Yes, thanks for taking my question. 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 Gold Shell 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?

Thank you.

Charles Yan, CFO, Inchant: Yes. Thank you. Allele minor series 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 art Dogecoin miner is expected to complete testing in twenty twenty, twenty twenty five and enter mass production in 2026.

And we will continue to invest in R and D to maintain product competitiveness. So for the 2025, first is our allele miners and second is our dodgecoin miners. And we also will have a new coin miners were launched in 2025. In 2026, there’s a dodge coin miners. Thank you.

Operator: And our next question comes from the line of Kevin Dede with H. C. Wainwright. Kevin, please go ahead.

Kevin Dede, Analyst, H.C. Wainwright: Thank you. Thanks so much for taking my question. 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.

Charles Yan, CFO, Inchant: Yeah. Currently, we we don’t have any plan to to to expand to business in in that area. Yeah. Thank you for your question, but we will internally get discussed further.

Kevin Dede, Analyst, H.C. Wainwright: Yeah. Thank you. I I appreciate I appreciate the response. Just, curious. Thank you.

Charles Yan, CFO, Inchant: Yes. Thank you.

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

Matthew Galinko, Analyst, Maxim Group: Hi, I appreciate you taking my follow-up. I’m curious about if you could give us some thoughts about how to model R and 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.

Charles Yan, CFO, Inchant: Yes. I think our R and D expenses have firstly, our product in our product will second half, in the second half we will have new products just like I mentioned. But the R and D expenses are mostly occurred in the first half. So we believe that the second quarter, the base figure of the second half not large than we’re 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 and D expenses were not larger than first half. Yeah, thank you.

Matthew Galinko, Analyst, Maxim Group: Great, thank you.

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

Charles Yan, CFO, Inchant: Yes, yes, 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.

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