Intchains Group Limited Reports Fourth Quarter and Full Year 2022 Unaudited Financial Results

Rhea-AI Summary

Intchains Group Limited (Nasdaq: ICG) reported its unaudited financial results for Q4 and the full year of 2022, revealing significant declines in sales and profitability. In Q4 2022, sales volume dropped by 74.5% to 666,420 ASIC chips, leading to an 88.8% revenue decrease to RMB33.7 million (US$4.9 million). Net income also plummeted by 93.6% to RMB12.7 million (US$1.8 million). For the full year, ASIC chip sales totaled 3,235,235 units, a decline of 36.7%, with annual revenue at RMB473.7 million (US$68.7 million), down 25.0% year-over-year. The CEO attributed the downturn to the cryptocurrency market's price decline, which reduced product demand and margin, dropping to 41% in Q4 from 85% in prior quarters. Despite challenges, the company achieved profitability and anticipates stable financial conditions in Q1 2023, with a projected revenue of RMB26 million (US$3.8 million).

Positive

• Achieved profitability in Q4 2022 despite significant revenue decline.
• Successfully completed an IPO in March 2023, raising US$8.9 million.
• Increased research and development team from 94 to 101 employees.

Negative

• Q4 2022 revenue decreased by 88.8%, reflecting reduced demand for ASIC chips.
• Full year 2022 revenue declined by 25%, totaling RMB473.7 million (US$68.7 million).
• Net income fell by 21.1% in 2022, amounting to RMB355.2 million (US$51.5 million).

SHANGHAI, April 18, 2023 /PRNewswire/ -- Intchains Group Limited (Nasdaq: ICG) ("we," or the "Company"), a provider of integrated solutions consisting of high-performance computing ASIC chips and ancillary software and hardware for blockchain applications, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Operating and Financial Highlights

• Sales volume of ASIC chips was 666,420 units for the three months ended December 31, 2022, representing a decrease of 74.5% from 2,615,828 units for the same period of 2021.
• Revenue was RMB33.7 million (US$4.9 million) for the three months ended December 31, 2022, representing a decrease of 88.8% from RMB301.5 million for the same period of 2021.
• Net income was RMB12.7 million (US$1.8 million) for the three months ended December 31, 2022, representing a decrease of 93.6% from RMB198.6 million for the same period of 2021.

Full Year 2022 Operating and Financial Highlights

• Sales volume of ASIC chips was 3,235,235 units for the year ended December 31, 2022, representing a year-over-year decrease of 36.7% from 5,107,153 units for 2021.
• Revenue was RMB473.7 million (US$68.7 million) for the year ended December 31, 2022, representing a year-over-year decrease of 25.0% from RMB 631.8 million for 2021.
• Net income was RMB355.2 million (US$51.5 million) for the year ended December 31, 2022, representing a year-over-year decrease of 21.1% from RMB450.1 million for 2021.

Mr. Qiang Ding, Chairman of the Board of Directors and Chief Executive Officer, commented, "In the fourth quarter of 2022, our performance was adversely affected by the significant price decline of cryptocurrencies, which led to a decreased market demand for our products, in particular, ASIC chips, as we expected. As a result, we lowered the price of our products to address business-critical headwinds in the fourth quarter of 2022 in response to tough market conditions, which resulted in a decrease in product gross margin from 85% for the first three quarters of 2022 to 41% for the fourth quarter of 2022. Although our overall performance in the fourth quarter of 2022 was not as good as the same period of 2021, we still achieved profitability, which was in line with the management's expectations for the fourth quarter of 2022. From our operating perspective, our workforce increased from 94 to 101 in the fourth quarter of 2022, including ten new dedicated research and development (R&D) employees. The expansion of our R&D team further enhanced our R&D capabilities, especially for the development of 'Xihe' Platform and 'Wangshu' Platform, and will help us better prepare for when the market recovers from its current decline. Despite the challenging environment in 2022, we achieved sales revenue of RMB473.7 million in 2022, with a gross margin of 82%, which is comparable to that in 2021. Our net income was RMB355.2 million for 2022."

Mr. Ding continued, "The management anticipates a stable financial condition and continued profitability for the first quarter of 2023. We started to expand our business in Singapore. In March 2023, we completed our initial public offering ("IPO") of 1,114,516 American depositary shares ("ADSs"), after underwriters partially exercised over-allotment option to purchase additional ADSs. The proceeds from the IPO will be used for the continued development of new products on 'Xihe' Platform and 'Wangshu' Platform, as well as the expansion of our business in Singapore. Looking ahead, we are confident that while we may still encounter certain near-term macroeconomic uncertainties, the long-term opportunities in global markets remain abundant. We will continue to invest in research and development of new products and business expansion, seizing market opportunities and striving to create long-term value for our shareholders."

Fourth Quarter 2022 Financial Results

Revenue

Revenue decreased by 88.8% to RMB33.7 million (US$4.9 million) in the three months ended December 31, 2022, from RMB301.5 million in the three months ended December 31, 2021. Such decrease was primarily attributable to the continued broad decline of cryptocurrency market, which caused the decrease in the sales volume and average selling price of our ASIC chips that were primarily used in cryptocurrency mining machines.

Cost of Revenue

Cost of revenue decreased by 69.9% to RMB20.0 million (US$2.9 million) in the three months ended December 31, 2022, from RMB66.4 million in the three months ended December 31, 2021, which was in line with the decrease in the sales volume of our ASIC chips. 

Operating Expenses

Total operating expenses decreased by 66.4% to RMB12.7 million (US$1.8 million) in the three months ended December 31, 2022, from RMB37.9 million in the three months ended December 31, 2021, primarily due to a decrease in research and development expenses for the design of ASIC chips.

• Research and development expenses decreased by 64.1% to RMB10.0 million (US$1.4 million) in the three months ended December 31, 2022, from RMB27.7 million in the three months ended December 31, 2021, primarily due to the reduction in direct materials and tape-out expenses in connection with our research and development projects.
• Sales and marketing expenses decreased by 6.8% to RMB1.1 million (US$0.2 million) in the three months ended December 31, 2022, from RMB1.2 million in the three months ended December 31, 2021.
• General and administrative expenses decreased by 81.2% to RMB1.7 million (US$0.2 million) in the three months ended December 31, 2022, from RMB9.0 million in the three months ended December 31, 2021, primarily due to a decrease in taxes surcharges and professional expenses.

Interest Income

Interest income increased by 153.2% to RMB3.5 million (US$0.5 million) in the three months ended December 31, 2022, from RMB1.4 million in the three months ended December 31, 2021, primarily due to an increase in our cash balances.

Other Income

Our other income increased by 4,697.7% to RMB10.6 million (US$1.5 million) in the three months ended December 31, 2022, from RMB0.2 million in the three months ended December 31, 2021, primarily due to an increase in government grants we received from local government. Such government grants were granted to us to support qualified projects of IC industry with no repayment obligations.

Net Income

As a result of the foregoing, net income decreased by 93.6% to RMB12.7 million (US$1.8 million) in the three months ended December 31, 2022, from RMB198.6 million in the three months ended December 31, 2021.

Basic and Diluted Net Earnings Per Ordinary Share

Basic and diluted net earnings per ordinary share decreased by 94.4% from RMB1.92 in the three months ended December 31, 2021 to RMB0.11 (US$0.02) in the three months ended December 31, 2022. Each ADS represents two of the Company's class A ordinary shares.

Full Year 2022 Financial Results

Revenue

Revenue decreased by 25.0% to RMB473.7 million (US$68.7 million) in 2022, from RMB631.8 million in 2021, primarily due to the decrease in the sales volume of our ASIC chips, which was in line with the broad decline of cryptocurrency market in 2022.

Cost of Revenues

Cost of revenue decreased by 23.6% to RMB87.0 million (US$12.6 million) in 2022, from RMB114.0 million in 2021, primarily due to the decrease in the sales volume of our ASIC chips.

Operating Expenses

Operating expenses decreased by 9.3% to RMB 64.0 million (US$ 9.3 million) in 2022, from RMB70.6 million in 2021, primarily due to the decrease in research and development expenses for the design of ASIC chips.

• Research and development expenses decreased by 9.0% to RMB48.4 million (US$7.0 million) in 2022, from RMB53.2 million in 2021, primarily due to the reduction in direct materials and tape-out expenses in connection with our research and development projects, which was partially offset by the increased staff cost of research and development personnel. Our research and development expenses as a percentage of our revenue was 10.2% in 2022 as compared with 8.4% in 2021.
• Sales and marketing expenses increased by 35.4% to RMB4.1 million (US$0.6 million) in 2022, from RMB3.0 million in 2021, primarily due to the increase in staff cost of sales and marketing personnel. Our sales and marketing expenses as a percentage of our revenue was 0.9% in 2022 as compared with 0.5% in 2021.
• General and administrative expenses decreased by 19.8% to RMB11.6 million (US$1.7 million) in 2022, from RMB14.4 million in 2021, primarily due to the decrease in taxes surcharges and professional expenses. Our general and administrative expenses as a percentage of our revenue was 2.4% in 2022 as compared with 2.3% in 2021.

Interest Income

Interest income increased to RMB11.1 million (US$1.6 million) in 2022, from RMB2.5 million in 2021, primarily due to an increase in our cash balances.

Foreign Exchange (Loss)/ Gains, Net

Foreign exchange gains, net was RMB3.5 million (US$0.5 million) in 2022, compared with foreign exchange loss, net of RMB0.2 million in 2021, as a result of the exchange rate fluctuation between RMB and U.S. dollars as we make prepayment to our foundry partner in U.S. dollars.

Other Income

Other income increased to RMB29.8 million (US$4.3 million) in 2022, from RMB0.7 million in 2021, primarily due to the increase in government grants we received from local government. Such government grants were granted to us to support qualified projects of IC industry with no repayment obligations.

Net Income

As a result of the foregoing, net income decreased by 21.1% to RMB355.2 million (US$51.5 million) in 2022 from RMB450.1 million in 2021.

Basic and Diluted Net Earnings Per Ordinary Share

Basic and diluted net earnings per ordinary share decreased by 32.3% from RMB4.46 for the year ended December 31, 2021 to RMB3.02 (US$0.44) for the year ended December 31, 2022. Each ADS represents two of the Company's class A ordinary shares.

Recent Developments

In March 2023, the Company completed its IPO on the Nasdaq Capital Market. In the offering, 1,000,000 ADSs, representing 2,000,000 Class A ordinary shares, were issued and sold to the public at a price of US$8.00 per ADS. In addition, the underwriters of the Company's IPO have exercised their over-allotment option to purchase additional 114,516 ADSs. Gross proceeds of the Company's IPO, including the proceeds from the sale of the over-allotment shares, totaled US$8.9 million, before deducting underwriting discounts and commission, and other related expenses. The ADSs began trading on March 16, 2023, U.S. Eastern time, on the Nasdaq Capital Market under the symbol "ICG."

Business Outlook

For the first quarter of 2023, the Company expects sales volume to be approximately 490,000 units and revenue to be approximately RMB26.0 million (US$3.8 million), considering the challenging market conditions across the industry. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

The Company's management team will hold a conference call to discuss its at 9:00 P.M. U.S. Eastern Time on April 18, 2023 (9:00 A.M. Beijing Time on the April 19,2023) to discuss the financial results. Details for the conference call are as follows:

Date:	April 18, 2023
Time:	9:00 pm U.S. Eastern Time
International:	1-412-902-4272
United States Toll Free:	1-888-346-8982
Conference ID	Intchains Group Limited
Date:	April 18, 2023
Time:	9:00 pm U.S. Eastern Time

Please dial in at least 15 minutes before the commencement of the call to ensure timely participation.

For those unable to participate, an audio replay of the conference call will be available from approximately one hour after the end of the live call until April 25, 2023. The dial-in for the replay is +1-877-344-7529 within the United States or +1-412-317-0088 internationally. The replay access code is No.4872097. 

A live and archived webcast of the conference call will be available at the Company's investor relations website at  https://intchains.com/

About Intchains Group Limited

Intchains Group Limited is a provider of integrated solutions consisting of high-performance ASIC chips and ancillary software and hardware for blockchain applications. The Company utilizes a fabless business model and specializes in the front-end and back-end of IC design, which are the major components of the IC product development chain. The Company has established strong supply chain management with a leading foundry, which helps to ensure its product quality and stable production output. The Company's products consist of high-performance ASIC chips that have high computing power and superior power efficiency as well as ancillary software and hardware, which cater to the evolving needs of the blockchain industry. The Company has built a proprietary technology platform named "Xihe" Platform, which allows the Company to develop a wide range of ASIC chips with high efficiency and scalability. For more information, please visit the Company's website at: https://intchains.com/.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8972 to US$1.00, the noon buying rate in effect on December 30, 2022, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. 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. Investors can identify these forward-looking statements by words or phrases such as "may," "could," "will," "should," "would," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "project" or "continue" or the negative of these terms or other comparable terminology. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its 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 and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC.

For investor and media inquiries, please contact:

Intchains Group Limited
Email: ir@intchains.cn

Ascent Investor Relations LLC
Tina Xiao
Phone: +1 917-609-0333
Email: tina.xiao@ascent-ir.com 

 

 

INTCHAINS GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands of RMB, except share and per share data, or as otherwise noted)
		As of December 31,
		2021				2022
		RMB				RMB				US$
ASSETS
Current assets:
Cash and cash equivalents			502,420				712,231				103,264
Inventories, net			66,818				77,782				11,277
Prepayments and other current assets			38,124				41,968				6,085
Total current assets			607,362				831,981				120,626
Non-current assets:
Property, equipment, and software, net			1,623				6,965				1,009
Right-of-use assets			2,275				1,329				193
Prepayments on long-term assets			—				112,856				16,362
Total non-current assets			3,898				121,150				17,564
Total assets			611,260				953,131				138,190
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			6,583				2,903				420
Contract liabilities			3,002				6				1
Income tax payable			—				2,239				325
Lease liabilities			934				972				141
Provision for warranty			463				223				32
Accrued liabilities and other current liabilities			20,615				12,855				1,863
Total current liabilities			31,597				19,198				2,782
Non-current liabilities:
Deferred tax liabilities			—				42				6
Lease liabilities			1,267				294				43
Total non-current liabilities			1,267				336				49
Total liabilities			32,864				19,534				2,831
Shareholders' equity
Ordinary shares (US$0.000001 par value; 50,000,000,000 shares   authorized, 117,647,000 shares issued and outstanding   as of both December 31, 2021 and 2022)			1				1				—
Subscriptions receivable from shareholders			(1)				(1)				—
Additional paid-in capital			144,577				144,577				20,962
Statutory reserve			43,674				47,478				6,884
Retained earnings			390,145				741,542				107,513
Total equity			578,396				933,597				135,359
Total liabilities and shareholders' equity			611,260				953,131				138,190

 

 

INTCHAINS GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(All amounts in thousands of RMB, except share and per share data, or as otherwise noted)
		For the Three Months ended December 31,
		2021				2022
		RMB				RMB				US$
Products revenue			301,507				33,664				4,881
Cost of revenue			(66,408)				(19,991)				(2,898)
Gross profit			235,099				13,673				1,983
Operating expenses:
Research and development expenses			(27,737)				(9,958)				(1,443)
Sales and marketing expenses			(1,160)				(1,081)				(157)
General and administrative expenses			(8,999)				(1,690)				(245)
Total operating expenses			(37,896)				(12,729)				(1,845)
(Loss) Income from operations
Interest income			1,372				3,474				504
Interest expense and guarantee fee			(99)				(15)				(2)
Foreign exchange (loss)/gains, net			(143)				(72)				(10)
Other income			221				10,603				1,537
Income before income tax expenses			198,554				14,934				2,167
Income tax expense			—				(2,281)				(331)
Net income and total comprehensive income			198,554				12,653				1,836
Weighted average number of shares used in per share calculation:
— Basic and diluted			103,452,674				117,647,000				117,647,000
Net earnings per share
— Basic and diluted			1.92				0.11				0.02

 

 

INTCHAINS GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(All amounts in thousands of RMB, except share and per share data, or as otherwise noted)
		For the Year ended December 31,
		2021				2022
		RMB				RMB				US$
Products revenue			631,838				473,740				68,685
Cost of revenue			(113,955)				(87,021)				(12,617)
Gross profit			517,883				386,719				56,068
Operating expenses:
Research and development expenses			(53,153)				(48,387)				(7,015)
Sales and marketing expenses			(3,006)				(4,070)				(590)
General and administrative expenses			(14,403)				(11,557)				(1,676)
Total operating expenses			(70,562)				(64,014)				(9,281)
(Loss) Income from operations
Interest income			2,518				11,132				1,614
Interest expense and guarantee fee			(197)				(73)				(11)
Foreign exchange (loss)/gains, net			(238)				3,494				507
Other income			740				29,799				4,320
Income before income tax expenses			450,144				367,057				53,217
Income tax expense			—				(11,856)				(1,719)
Net income and total comprehensive income			450,144				355,201				51,498
Weighted average number of shares used in per share calculation:
— Basic and diluted			100,870,300				117,647,000				117,647,000
Net earnings per share
— Basic and diluted			4.46				3.02				0.44

 

 

 

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SOURCE Intchains Group Limited

FAQ

What were Intchains Group Limited's Q4 2022 financial results?

In Q4 2022, Intchains Group Limited reported a revenue decrease of 88.8% to RMB33.7 million (US$4.9 million) and a net income drop of 93.6% to RMB12.7 million (US$1.8 million).

How did Intchains Group Limited perform in 2022 overall?

For the full year 2022, Intchains Group Limited's revenue was RMB473.7 million (US$68.7 million), down 25.0% from the previous year, and net income decreased by 21.1% to RMB355.2 million (US$51.5 million).

What is the outlook for Intchains Group Limited in Q1 2023?

Intchains Group Limited expects a revenue of approximately RMB26.0 million (US$3.8 million) and sales volume of about 490,000 units for Q1 2023, given current market conditions.

What significant event occurred for Intchains Group Limited in March 2023?

In March 2023, Intchains Group Limited completed its IPO, raising gross proceeds of US$8.9 million.