Intchains Group (ICG) FY 2026 earnings call transcript

Thank you, operator. Good evening to everyone. Welcome to Intchains' first half 2026 earnings conference call. Please be advised that the discussions on today's call will include four looking statements. These statements involve known and unknown risk 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 those 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 photo key statements to reflect subsequent events or circumstances or changes in its expectations, except as required by law. Please refer to reconciliation of non-GAAP measures to comparable GAAP measures in the earnings press release. The webcast replay of this conference call will be available on the Intchains website at www. ir. inchains. com.

It is my pleasure to introduce Intchains CFO, Mr. Charles Yen, who will provide an overview of first half 2026 financial results and the company's business strategy and focus for the remainder of the year. Before opening the floor for questions, Charles, please go ahead.

Thank you, Alice, and welcome, everyone. Let me start with a quick look at our first half of 2026 results. The period reflected continued cyclical softness in outcry demand, which was also impacted by the PRC mining machine sales restrictions announced in February. Revenue was 11.1 million RMB and the total operating expenses were 42 million RMB with a basic and diluted net loss per ordinary share of 1.22 RMB. We ended the period with 461 million RMB in cash and cash equivalents, deposits, and government securities. A balance sheet that has allowed us to fund our next generation chip program entirely from internal resources.

Now turning into the remainder of 2026, our progress on new product development and where we are taking the business from here. We entered this cycle with a deliberate choice. Keep funding our next generation mining asset development through a weaker demand environment so that we will be ready with new products when the market turns. And that decision is now paying off. In July, we successfully completed the tape out of our new next generation mining asset, a major technical milestone that keeps us on track for commercial launch in Q4 2026. This chip is architected specifically to optimize performance, balancing efficiency, reliability, and supply availability using a mature process, and is designed to improve unit economics and returns on invested capital for retail and professional miners.

The successful tape house transitions the ESIC project from design completion to the start of the manufacturing process and sets the stage for silicon validation, followed by mass production and official commercial launch. With a capital and R&D intensive phase of this asset chip development now complete, the company has initiated engineering sample production and laboratory validation, including performance, reliability, and thermal testing against internal benchmarks. Subjected to successful validation, Intchains expect to commence initial production ramp and system level integration in advance of a planned commercial launch targeted for Q4. Once launched through the sales of our Gold Show Miner Series, we believe it will broaden our addressable market across retired and professional miners, enhance the competitiveness We will also unlock new revenue streams through future system and service offerings Looking into the second half we believe we are moving quickly to capture the opportunities ahead Our new mining ethic is expected to begin contributing modest revenue in H2 2026 building a far more meaningful impact in fiscal 2027 as commercialization accelerates Longer term, we believe that this platform further stresses our position as a leading active supplier of purpose-built mining ethic systems, driving superior operational efficiency for our customers and advancing a more sustainable approach to proof-of-work infrastructure.

It's a core part of our strategy to build a more resilient, diversified revenue base. Beyond this new project, we are also in the early stages of evaluating new growth opportunities in artificial intelligence, including potential acquisitions that would extend our core competencies in custom ASIC design and hardware systems integration into AI-enabled computing applications. Our goal is to reduce reliance on cryptocurrency market cycles over time and to position Intchains in a higher value computing market adjacent to our existing hardware expertise. This work is still in early stages and we look forward to share more details as our plans develop. On the cost side, we continued to make progress on our cost optimization efforts. As of June 30, 2026, we had realized approximately 23.1 million RMB in annualized labor cost savings through our organizational restructuring.

The diversity of our non-core chip related business and the expanded use of AI enabled tools across our business operations. We expect to continue these cost-discipline initiatives throughout the remainder of the year. On our ETH Treasury holdings as of June 30, 2026, the fair value of our cryptocurrency assets, excluding stablecoins such as USDC and USDT, was 98.9 million RMB, including approximately 9,176 ETH. As of August 20, 2026, the company's total units of ETH staked were 4,556 with 3,556 ETH deposited through our Gold Shield staking platform pending validation activation and 1,000 ETH staked on Falcon X platform. Going forward, we expect to maintain a prudent ETH treasury and staking position, preserving our existing treasury holdings and continue generating staking yields, while prioritizing capital allocation toward our next-generation asset program and new AI initiatives over additional ETH accumulation.

We also announced today that our board of directors had approved a share repurchase program, under which we may repurchase up to $15 million of our ADS over the next two years, funded from our existing cash balance. We believe that this program reflects our confidence in Intchains' long-term strategic direction and our commitment to creating value for shareholders. And it's consistent with our disciplined approach to capital allocation, balancing returns to shareholders with continued investment in our next generation assets and new AI initiatives.

Looking ahead to second half of 2026, while we expect continued market headwind, we will remain focused on disciplined execution, commercializing our new ethic, prioritizing cost optimization, and advising our evaluation of AI-related growth opportunities. We believe these initiatives will position Intchains for a more diversified and resilient business over the long term.

With that operator, let's open it up for questions.

Thank you, Mark. Thank you for your question. Thank you, everyone. Firstly, for the share repurchase program, we planned $15 million for the share repurchase program. And for the R&D in current assets, we will handle this as usual. We will do the tape out and buy the inventory and then sell them. So the cost of the current business will remain the same with our prior projects. And finally, for the AI initiatives and MMA, it will depend on the project we engaged. Currently, we have several projects to assess, and every project has a different capital requirement. So currently, for the AI part, we cannot give a period estimation. Thank you.

Yes. Firstly, our next milestone of the product is the product launch. It will be happening in Q4, 2026, and it will contribute some revenue for the second half, but it will not be very big. But for the 2027, the whole mass production will be on track. So in 2027, our expectation is the revenue will be better than the last cycle. Last cycle, I mean maybe 2025 and 2024. And this is our business basics. And in addition, for other revenue base, we will continue to stake ease and will contribute meaningful revenue compared with this year and last year. And finally, the AI initiatives, if it has some meaningful process, it will also contribute additional revenue. I think in current stage, I think we cannot estimate the apparent figure of that part, but I believe that 2027 will be a good year or the best year among the AI initiatives.

Among five years of the company.

Yeah. Currently what I can say now is that our new next generation asset the foundation of this new cryptocurrency is very good and the competition of this new cryptocurrency is not intense We may not be the first one entering into that area, but we believe that our products have a leading performance among all competitors. And I think we are very confident on this new asset or new mining machine for this new coin and for 2027. And on the other hand, I think the crypto environment currently it have some soft demand issues. And now I think for the second half and next year, the market will recover and together with our business and our revenue and the price.

Yeah, this is all our company's business.

Thank you. Yes, I think we will not sell ETH firstly, but we are using our own fund to buy ETH. So if we did not generate operating cash, it's difficult for us to pay more money on it. So our current strategy is to sell mining machines and obtain profit and use that profit to buy the ETH. So for the capital allocation, we will not fully use current cash to buy ETH. But this is our current strategy. I cannot ensure if we will change in the future. Currently, we are using this strategy. Our current cash will use in R&D, mining machine sales, current business, and AI initiatives.

Thank you. And maybe last question for me, in addition to the new machine that you're rolling out in Q4 and, you know, you expect to contribute to 27, do you expect any, you know, if we get a recovery in the crypto market, do you expect to have decent contribution from other products in your portfolio? Do you think that 27 is going to be just predominantly driven by the new launch? I think if the, currently, if the, if the, and now currently cryptocurrency is in the bear market, so if the market did not recover, if the market did not recover, I think we can, our main product Our main revenue will come from contributed by this new product.

But if the market recovered, all the price, the Dogecoin price, the Alleyo coin price recovered, then we will have other contributions from this prior product line because we have finished the tape out, so it's very quick for us to order more We will be able to get more waiver from our FAB.

Yeah. Thanks again to all of you for joining us. We are always open to a 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 all again on our next call. Thank you.