Good day ladies and gentlemen. Thank you for standing by and welcome to Intchains Fourth Quarter 2024 Earnings Conference Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Joining us today is Mr. Chaowei Yan, Chief Financial Officer of Intchains; and Ms. Minty Wang, Investor Relations Director. Mr. Yan 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. I would now like to hand the call over to Minty Wang, Head of Investor Relations at Intchains Group Limited. Please go ahead.

Thank you, operator. Good day, everyone. I'm Minty. Welcome to the Intchains Group Limited fourth quarter 2024 earnings call. For today's call, Mr. Chaowei Yan, CFO of Intchains Group Limited, will provide a comprehensive overview of the company's performance and financial results for the quarter. Before we proceed, I would like to remind everyone that today's discussions 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. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances or changes in expectations, 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 the anticipated results. Investors should review the other factors that may affect its future results in the company's registration statements and other filings with the SEC. 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 the webcast replay of this conference call will be available on the Intchains website at ir.intchains.com. Now let me turn the call to our CFO, Mr. Chaowei Yan. Please go ahead.

Thank you, Minty, and everyone, for joining Intchains' earnings conference call for the fourth quarter of 2024. On today's call, I will provide an overview of our operational and financial performance. After that, we will conduct a Q&A session to take your questions. In the fourth quarter of 2024, the cryptocurrency market rebounded strongly. Ethereum and Dogecoin led this resurgence. We benefited from the renewed optimism following the U.S. presidential election, which spurred expectations for a more crypto-friendly regulatory environment. This positive environment translated into robust operational performance for our company. In the fourth quarter, we achieved revenue of $10.2 million, a remarkable 109% increase year-over-year. It is important to note that, due to our production cycle, some orders placed in Q4 will be recognized as revenue in 2025. In addition to our strong revenue performance, our non-GAAP adjusted net income rose by 54% to $2 million. Our strategic focus on accumulating Ethereum also paid off, as our holdings of Ethereum-based cryptocurrencies increased by 37% quarter-on-quarter to a total number of 5,702 units. Looking ahead, we are optimistic about our upcoming product initiatives. In February 2025, we launched our Aleo series mining product, a move we expect to be a significant performance driver in the first half of this year. We have also introduced a new hardware wallet, expanding our payment application ecosystems built on last year's Goldshell Pay. Moreover, we remain committed to upgrading our Dogecoin series mining machines to capture additional market share while steadfastly pursuing our long-term Ethereum treasury strategy. For those less familiar with our business, let me briefly outline our core operations. We operate in three key segments. Firstly, under the Goldshell brand, we produce mining products for promising altcoins such as Kaspa, Alephium, Dogecoin, and Aleo. Secondly, we reinvest our profits by accumulating Ethereum. Last but not least, we are actively exploring innovative Web3 applications to drive long-term growth. Our differentiated growth strategy is focused on the blue ocean altcoin mining sector. As one of the pioneers of home mining products and a committed long-term holder of Ethereum, we have established a unique position in capital markets. Looking forward, the industry is poised to experience several catalysts this year ranging from progress in bitcoin reserve legislation in various U.S. states, to the approval of additional crypto ETFs, emerging new technologies and applications, and anticipated upgrades to Ethereum. In February, we made a significant stride by launching our Aleo miners. These mining machines designed to tap into the promising world of zero-knowledge proof have already generated between 40 to 50 Aleo tokens per day, with an attractive return for miners. We will also continue to enhance our Dogecoin mining products to maintain our leadership in this area. We see several short-term catalysts for Dogecoin, including live broadcasts from the U.S. DOGE department and the potential approval of ETFs. We have also expanded our product suite with the launch of the Goldshell Wallet, featuring air-gapped technology that allows payments without an Internet connection, an important step in advancing our Web3 application. Looking ahead to the first half of 2025, our operational pillars will be built around our DOGE and Aleo series mining machines. While some orders from Q4 2024 will recognize revenue deferred to Q1 2025 due to production cycle limitations, we are confident that the strong profitability and order demand for our Aleo box series and DOGE series products will contribute positively to our gross margins. Now I will provide a brief financial overview of our fourth quarter of 2024. In the fourth quarter, the cryptocurrency industry witnessed a global regulation turning point following the conclusion of the U.S. presidential election in November. This market was filled with optimistic expectations for a more relaxed regulatory environment for the cryptocurrency industry in the future. So, turning to our financial performance, Q4 saw our revenue reach $10.2 million, representing a 109% year-over-year increase. While this strong performance reflects the rebound in market sentiment, please note that some Q4 orders will be recognized as revenue in 2025 due to the production cycle limit. Our non-GAAP adjusted net income increased by 54% to $2 million, a significant turnaround from the previous period, despite a slight dip in the gross margin in Q4 attributed to a higher proportion of lower-margin Dogecoin miner sales compared to Q3's higher-margin Alephium and Kaspa products. We have made a substantial investment in R&D for new projects related to 2025. We expect lighter expense pressure in the first half of 2025 which should further support our profitability this year. Moreover, the gain on fair value of cryptocurrency for the fourth quarter was about $4 million and also significantly contributed to the company's net income growth in Q4. The gain was primarily due to an approximately 31.5% increase in the price of Ethereum and approximately 37.4% increase in the number of Ethereum. For the full year 2024, we achieved significant growth across key financial metrics. In 2024, our revenue was largely driven by the sales of mining products across the Dogecoin, Alephium, and Kaspa lines. This performance not only underscores our deep industry insights but also validates our investment approach in the altcoins sector. Operatively, we experienced rebounds in revenue, gross margin, and non-GAAP adjusted net income compared to 2023, reinforcing our confidence that we'll remain central to the bull cycle. At year-end, our total assets stood at approximately $149 million. Our crypto assets were valued at around $24.7 million, representing 16.6% of total assets, with Ethereum-based holdings comprising about 13.2%. Combined cash, cash equivalents, short-term investments, and cryptocurrencies totaled around $96 million or roughly 64% of our total assets. This robust balance sheet underpins our future growth initiatives and reinforces our ongoing Ethereum treasury strategy. Looking forward, we anticipate Q1 2025 revenue of approximately RMB100 million to RMB120 million, with first half 2025 revenue projected to reach around RMB200 million to RMB250 million, driven largely by new product sales and continued market momentum. Thank you for your attention. We look forward to updating you on our progress as we continue to drive growth across the crypto cycle.

Thank you, Mr. Yan. At this point, I would like to open the floor for questions. You're welcome to ask questions in Chinese or English. We will provide English translation when necessary, for convenience purposes only. In case of any discrepancy, please refer to our management statement in the original language. Now, operator, we may start the Q&A session. Thank you.

First questions come from the line of Mark Palmer from The Benchmark Company.

I definitely appreciate the extent to which the crypto markets have rebounded, particularly in the fourth quarter. And we saw demand for Dogecoin increase nicely. Can you talk a little bit about what your expectations are with regard to Dogecoin for 2025 and what you are seeing in terms of demand for Dogecoin mining rigs at this point?

Thank you, Mark, yes. We are always a pioneer of the Dogecoin mining machines. From the second half of 2024, we're seriously considering the future market potential of Dogecoin. So we believe that the Dogecoin mining market in the next decade has the potential to surpass the bitcoin mining market, so we decided to make serious R&D investments in the Dogecoin mining market. Firstly, in the 2024-2025 perspective, our plan is to reduce costs of the existing mining machines and improve mining efficiency. Further, we will diversify our mining hardware for mining Dogecoin, and please just be patient. We will have more competitive Dogecoin mining products launching into the market this year. Thank you.

And to be specific, some of the revenue will be recognized in the first quarter of this year. Also, according to our order book, the demand for the Dogecoin machine is still very strong.

Yes, yes, yes. Because, firstly, we underestimated the price surge of Dogecoin following the presidential election. So we didn’t prepare enough Dogecoin mining rigs. You can see on our balance sheet that our contract liability increased significantly. This contract liability will be reflected as revenue in Q1. Thank you.

Very good. And can I also ask a question about your move into Aleo mining which is the first time that the company has gone into the zero-knowledge proof space? Can you talk about what you are expecting in terms of demand for Aleo mining equipment in the coming months?

Yes. Thank you for your question. Firstly, we think that Aleo is a crypto project based on zero-knowledge proof technology, and it's a future trend. Our company has always been optimistic about the private computing field. Therefore, once the algorithm for Aleo projects was finalized, we immediately began developing the specialized Aleo miner. We used our consistent approach of quick time to market. Now we are the first mining company to have the specialized mining machine in the total market. For the future plan, we believe that the Aleo mining machinery is currently generating very attractive returns. The product demand is quite good. For our future plans, it will depend on the market conditions as well as the Aleo project's development road map. We will closely monitor the Aleo projects' development and make decisions about upgrading the mining machines accordingly.

Yes. Just as Chaowei said, you can see that we are the first professional Aleo asset provider worldwide. For our Aleo series mining rigs, they will produce around 40 to 50 Aleo tokens per day, which means that if you buy our Aleo products, you may earn around $15 to $20 per day, making this series of products very attractive for miners. Because this is a highly desirable product for miners, it generates very strong demand for us. We believe that the sales of Aleo machines and the sales of the DOGE series machines will be the main drivers of our revenue, at least in the first half of this year.

Our next questions come from the line of Laura Lui from Premia Partners.

So you mentioned about the performances for the first quarter. I would like to ask. Under the pressure of the overall market in the first quarter, what's the company's current guidance based on the current market pressure? Did you make neutral or optimistic assumptions already about the development of the crypto market in the first half of the year and also the first quarter, please?

Yes. Currently, we think the overall crypto market is under pressure. Due to a series of events, including concerns over an economic recession, the Bybit hack, and the improper issuance of many meme coins, all these factors have led to a decline in market risk appetite. However, we still believe that we are in an interest rate cutting cycle. Thus, the crypto market remains in a bull cycle. The company is very confident in the crypto industry. We will continue to accumulate Ethereum and develop our new miners, so our guidance for Q1 2025 is based on relatively conservative assumptions considering the current market situation. Thank you.

So now that you mentioned the crypto market, can I also ask about the company's outlook for the crypto market this year?

Yes. I think, yes...

Actually, Chaowei has just mentioned his outlook. He stated that he believes that the global market is in an interest rate cutting channel. Thus, we are still on the way. Although the crypto market hasn't performed very well in recent days, we believe that during a bull cycle, this is just a matter of market risk preference. The crypto market is closely related to global money liquidity. We remain optimistic about the performance of the market this year. According to our order book, we still have very strong demand for our Aleo series mining rigs and Dogecoin series mining rigs. This indicates that many miners are well-prepared for a market rebound. This is why we will continue to insist on our strategy of accumulating Ethereum and upgrading our Dogecoin series mining machines this year.

Our next questions come from Kelvin Yu from Grow Investment Management.

The company just mentioned the market catalysts. What are the catalysts for the company's own growth in 2025, please?

Thank you for your question. Firstly, for our company's catalysts, the first is, of course, the Dogecoin and Litecoin ETF approval. The price performance of altcoins will also enhance our financial performance. Thirdly, the new initiatives and technology applied in the crypto market could potentially enhance our company's performance. Thank you.

Thank you for the questions. We have no further questions from the line. I would like to hand the call back to management for closing.

Okay, if there are no questions from the line, maybe we'll call it a day. Thank you for joining our conference. You can visit our IR website for further materials or email the IR team for more information. Thank you.

That does conclude today's conference call. Thank you for your participation. You may now disconnect.