FANUC Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 27, 2025

There are 5 speakers on the call.

Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Inchain's Fourth Quarter twenty twenty four 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.

Operator

Chaowei Yan, Chief Financial Officer of Inchange and Ms. Minqi 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.

Operator

I would now like to hand the call over to Minqi Wang, Head of Investor Relations at Inchang Group Limited. Please go ahead.

Speaker 1

Thank you, operator. Good day, everyone, and Ming Ti. Welcome to the InterTranscript Limited's fourth quarter twenty twenty four earnings call. For today's call, Mr. Chao Wei Yan, CFO of InterTranscript Limited will provide a comprehensive overview of the company's performance and financial results for the quarter.

Speaker 1

Before we proceed, I would like to remind everyone that today's discussion 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.

Speaker 1

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 Interchange website at ir.interchance.com. Now, let me turn the call to our CFO, Mr. Chaowei Yan.

Speaker 1

Please go ahead.

Speaker 2

Thank you, Mingqi, and everyone for joining the Chen's earnings conference call for the fourth quarter of twenty twenty four. On today's call, I will provide an overview of our operational and financial performance. After that, we will conduct a Q and A session to take your questions. In the fourth quarter of twenty twenty four, the cryptocurrency market rebounded strongly. Ethereum also currently sees the resurgence and we benefited from the reuse of optimism following The U.

Speaker 2

S. Presidential Election, which spurred expectations for our more crypto friendly regulatory environment. This positive environment translated into robust operational performance for our company. In fourth quarter, we achieved revenue of $10,200,000 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.

Speaker 2

In addition to our strong revenue performance, our non GAAP adjusted net income rose by 54% to $2,000,000 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, we launched 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 ecosystem built on last year's social pay. Moreover, we remain committed to upgrading our Dogecoin series mining machines to capture additional market share, while steadfastly pursuing our long term discovery and treasury strategy.

Speaker 2

For those less familiar with our business, let me briefly outline our core operations. We operate in three key segments. Firstly, under the Gold Show brand, we produce mining products for promising Altcoins such as Caspar, Alfim, Dogecoin and Alio. Secondly, we reinvest our profits by accumulating Ethereum, which of the commerce structure. Last but not the least, we are actively exploring innovative Web3 application to drive long term growth.

Speaker 2

Our differentiated growth strategy focused on Blue Ocean altcoin mining sector as one of the pioneers of home mining products and a committed long term holder of deserving. 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.

Speaker 2

In February, we made a significant strides by launching our LEO miner. These machines designed to pass into promising world of zero knowledge proof are already generated between 40 to 50 ALU 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 broadcast from U. S.

Speaker 2

Storage department and the potential approval of EPS. We have also expanded our product suite with the launch of the Go Show wallet, featuring ARGAP technology that allows payment without an Internet connection, an important step in advancing our Web3 application. Looking ahead to the first half of twenty twenty five, our operational pillars will be built around our Zolg and A, Alio series mining machine. While some orders from Q4 twenty twenty five will recognize the revenue deferred to Q1 twenty twenty five due to the production cycle limitation, we are confident that the strong profitability and order demand for our Alio box series and storage series products will contribute positively to our gross margins. Now, I will provide a brief financial overview of our fourth quarter of twenty twenty four.

Speaker 2

In the fourth quarter, the cryptocurrency industry witnessed a global regulation turning point following the conclusion of U. S. Presidential election in November. This market was filled with optimistic expectations for a more relaxed regulatory environment for the crypto industry in the future. So turning to our financial performance, Q4 saw our revenue reach $10,200,000 representing a 109% year over year increase.

Speaker 2

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 $2,000,000 a significant turnaround from reinvest period. Despite slight dip in the gross margin in Q4 attributed to a higher proportion of lower margin water coin miner sales compared to Q3's higher margin RFIM and KartapAR products. We have made a substantial investment in R and D for new projects slated for 2025. We expect a lighter expense pressure in the first half of twenty twenty five, which should further support our profitability in this year.

Speaker 2

Moreover, the gain on fair value of cryptocurrency for the fourth quarter was about $4,000,000 It 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 we also achieved a significant growth across key financial metrics. In 2024, our revenue was largely driven by the sales of mining products across the logic coins, tariffim and the customer lines. This performance not only underscore our deep industry insight, but also validates our investment approach in our quality sector.

Speaker 2

On an operational level, we experienced a rebound in revenue, gross margin and non GAAP adjusted net income compared to 2023, reinforcing our confidence that we remain in the middle of the full cycle. At the year end, our total assets stood at approximately $149,000,000 Our crypto assets were valued at around $24,700,000 representing 16.6% of total assets with Ethereum based Ethereum Holdings comprised about 13.2%. Combined cash, cash equivalents, short term investments and cryptocurrencies totaled around $96,000,000 or roughly 64% of our total assets. This robust balance sheet underpins our future growth initiatives and reinforces our ongoing recurring strategy. Looking forward, we anticipate Q1 twenty twenty five revenue of approximately RMB100 million to RMB120 million with first half twenty twenty five revenue projected to reach around RMB200 million to RMB250 million, driven largely by new product sales and the continued market momentum.

Speaker 2

Thank you for your attention. We look forward to updating you on our progress as we continue to drive growth across the crypto cycle.

Speaker 1

Thank you, Ms. Tian. At this point, I would like to open the floor for questions. You're welcome to ask questions in Chinese or English. We'll provide English translation when necessary for convenience purposes only.

Speaker 1

In case of any discrepancy, please refer to our management statement in the original language. Now operator, we may start the Q and A session. Thank you.

Operator

Thank you. First question comes from the line of Mark Palmer from The Benchmark Company. Please go ahead.

Speaker 3

Yes. Hello. Thank you very much for taking my question. 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?

Speaker 2

Thank you, Mark. Yes. We are always a pioneer of the Dogecoin mining machine. From the second half of twenty twenty four, we're seriously considering about the future or the potential of the logic coin. So, we believe that the logic coin money market the potential of the Dogecoin mining market is in the future decades to have a possibility to surpass the Bitcoin mining market.

Speaker 2

So, we decided to have a deep to have a serious R and D input on the solidcoin mining market. So, firstly, we for the 2025 perspective, our plan is that firstly, we expect to reduce the cost or yes, it reduce the cost of existing mining machines and then improves the mining efficiency. And further, we will diversify our mining hardware for mining the Dogecoin and please just keep patient. Yes, we will have a more competitive gold coin mining product launching into the market this year. Thank you.

Speaker 1

And to be specifically, some of the revenue will be recognized in the first quarter of this year. And also according to our order book, the demand of the Dogecoin machine

Speaker 2

is still very strong. Yes, yes, yes. Because firstly, we underestimated the Solgecoin by third after the Trump election. So we don't prepare we didn't prepare enough Solgecoin money rig. And you can see on our balance sheet that our contract liability increased significantly.

Speaker 2

And these contract liability will reflect will turn into revenue in this Q1. Thank you.

Speaker 3

Very good. And can I also ask a question about your move into Alejo 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 Alejo Mining equipment in the coming months?

Speaker 2

Yes. Thank you for the question. Firstly, we think that ALU is a project crypto project based on zero knowledge proof technology and it's a future trend. And our company has always been optimistic about the private computing field. And therefore, once the algorithm was of the algorithm for Alu project was finalized, we immediately began developing the specialized miner the Alio specialized miner.

Speaker 2

So, we're using our we use our consistent approach of quick time to market. Now, we are the first mining we have the first mining machine in the total market. And for the future plan, we believe that the Alio money currently the Alio money machine are generating a very attractive returns and the productive demand is quite good. And also for the future plan as well depends on the market condition and also the Aliyo project Aliyo project, their future development roadmap. So, we will close monitor the Aliyo project development and make the decision of upgrade the mining machine, make this decision accordingly.

Speaker 1

Yes. Just as Charles stated, you can watch that where the first professional Aleo asset provider around the world. And for our Aleo series mining rigs, it will produce around 40 to 50 alleles per day, which means that if you buy our allele products, you may get around $15 to $20 per day, which makes this series of products a very attractive products for minors. And because this is a very attractive product for minors, so for us, it generates a very strong demand and we think the sales of the LEO machines and the sales of the DOSE series machines will be the main drivers of our revenue at least in the first half of this year.

Speaker 3

Very good. Charles and Mincy, thank you very much.

Speaker 2

Thank you.

Operator

Thank you for the questions. Our next question comes from the line of Laura Lui from Premier Partners. Please go ahead.

Speaker 4

Thank you for the presentation. So you mentioned about the performances for the first quarter. So I would like to ask under the pressure of the overall market in the first quarter, was the company's current guidance based on the current market pressure? Or 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?

Speaker 2

Yes. Currently, we think the overall crypto market is under pressure. And for due to series of events, first including the concern over an economic recession, the buyback hack and the improper issuance of many meme coins. All these things leading the market to decline leading to a decline in risk appetite. However, we do believe that now is in interest rate cutting cycle.

Speaker 2

So, it's now now crypto market, it remain in a bull cycle. And the company are very confident of the crypto industry and we'll keep accumulating Ethereum and develop our new miners. So, and for the fourth quarter, yes, our guidance for the 2025 is taken the current market situation into our consideration. And we believe we set a relatively conservative assumption for the Q1 revenue guidance. Thank you.

Speaker 4

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

Speaker 2

Yes. I think,

Speaker 1

Actually Charles has just mentioned his outlook. He just stated that he believes that the global market is in the interest rate cutting channel. So we think we are still on the way. Although the crypto market didn't perform very well in recent days, But we think during the bull cycle is a very normal price adjustment. It's about the risk preference of the market.

Speaker 1

But we think crypto market has a very close relationship to the whole liquidity of the whole world. So we're still very optimistic about the performance of the whole market. Although the market seems not performed very well recently, But we're still just as the Arab Trump say that it's a good chance it's a good opportunity to buy the debt. So we're still very confident about CSeries' performance. And according to our order book, we still have a very strong demand on our Aliyo series mining rigs and Dogecoin series mining rigs.

Speaker 1

So according to us, it seems that some miners are all well prepared for the rebound of the market. And that's why we are still we are still in our strategy of accumulating Ethereum and upgrade our Dogecoin series mining machines this year.

Speaker 4

Great. Thank you, Charles and the team for the market outlook. I don't have further questions from my side. Thank you.

Speaker 1

Thank you.

Operator

Thank you for the questions. One moment for the next questions. Our next question comes from Kevin Yu from growth Investment Management.

Speaker 2

Thank you for the presentation. The company just mentioned the market catalyst. What are the market catalyst for the company's own growth in 2025, please? Thank you for your question. Firstly, for the company's catalyst, firstly, of course, the gold coin and lite coin ETF approval and the price of altcoins, if they have a good price performance as well also increased our financial performance.

Speaker 2

And the third one is the new initiative project or new technology, which applies in the crypto market. So all these factors could potentially enhance our company's performance. Thank you. That's great. Thank you.

Operator

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.

Speaker 1

Okay. If there are no questions in the line, maybe we'll call you today. Thank you for joining our conference and you can visit our website for further materials or email the IR team for further information. Thank you.

Operator

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

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