BEIJING, May 19, 2022
/PRNewswire/ -- Canaan Inc. (NASDAQ: CAN) ("Canaan" or the
"Company"), a leading high-performance computing solutions
provider, today announced its unaudited financial results for the
three months ended March 31,
2022.
First Quarter 2022 Operating and Financial Highlights
Total computing power sold was 4.3 million Thash/s,
representing an increase of 119.1% from 2.0 million Thash/s in
the same period of 2021.
Revenues were RMB1,356.1
million (US$213.9 million),
representing an increase of 236.7% from RMB402.8 million in the same period of 2021.
Gross profit was RMB829.8
million (US$130.9 million),
representing an increase of 327.2% from RMB194.2 million in the same period of 2021.
Net income was RMB441.6 million (US$69.7 million), compared to a net income of
RMB1.2 million in the same
period of 2021.
Non-GAAP adjusted net income was RMB543.4 million (US$85.7
million), representing an increase of 279.5% from
RMB143.2 million in the same
period of 2021.
Mr. Nangeng Zhang, Chairman and Chief Executive Officer of
Canaan, commented, "We kicked off the year 2022 in an increasingly
unpredictable environment due to macroeconomic uncertainties and
logistic disruptions caused by the COVID-19 pandemic. While
confronting these challenges, we remained steadfast in our
commitment to strengthening our partnerships with clients and
expanding our global coverage. As a result, our computing power
sold in the first quarter reached 4.3 million Thash/s, representing
an increase of 119.1% from 2.0 million Thash/s in the same
period of 2021. As we continued to develop globally, we established
an international headquarters in Singapore which has already earned recognition
and support from the local authorities. In order to provide
best-in-class service and amplify our global reach, we are
investing in building up our network of after-sales service centers
overseas. We also recently launched an online store to enable
global retail clients to seamlessly purchase our products. We have
also been ramping up our mining business despite power shortages,
and we now hold a total of 166.96 bitcoins on our balance sheet as
of March 31, 2022. Looking ahead,
while we are cognizant of the near-term headwinds, we are confident
that our extensive experience, increasingly globalized operations,
and execution capabilities put us in a solid position to navigate
the current period of uncertainty."
Mr. James Jin Cheng, Chief
Financial Officer of Canaan, stated, "We delivered revenues of
RMB1,356.1 million in the first
quarter of 2022. The underperformance of our topline result for the
quarter was anticipated, given the sudden suspension of delivery
logistics during the second half of March, resulting from COVID-19
control measures in the city where our factory and warehouses are
located. Since the end of March, we have been gradually resuming
production and delivery, following the guidelines from the local
governments. I am pleased to report that all of the employees at
our factory are healthy and have returned to their posts. As of
present, we have shipped out most of the delayed orders from the
first quarter. In addition, despite increasing costs for raw
materials, especially wafers, we managed to achieve a net income of
RMB441.6 million. We are staying
vigilant and will dynamically manage our operations to navigate
through the challenges ahead, including the recent downward
fluctuation in the bitcoin price, COVID-19 resurgence, and ongoing
supply chain constraints. Our solid balance sheet with a cash
position of RMB2,643.2 million as of
March 31, 2022, provides us
considerable liquidity to further strengthen product offerings,
optimize services, and expand our presence in international
markets. At the same time, in the capital markets, we are facing
pressure from both cryptocurrency price fluctuations and potential
de-listing risks. The share repurchase program we announced in
March this year reflects our confidence in the long-term prospects
of the Company's business and our commitment to shareholder
value."
First Quarter 2022 Financial Results
Revenues in the first quarter of 2022 were
RMB1,356.1 million (US$213.9 million), representing an increase of
236.7% from RMB402.8 million in the
same period of 2021. The year-over-year increase was mainly
attributable to the increase in total computing power sold and the
average selling price per Thash/s.
Cost of revenues in the first quarter of 2022 was
RMB526.3 million (US$83.0 million), representing an increase
of 152.4% from RMB208.6 million in
the same period of 2021. The year-over-year increase in cost of
revenues was in line with revenue growth.
Gross profit in the first quarter of 2022 was
RMB829.8 million (US$130.9 million), representing an increase
of 327.2% from RMB194.2 million in
the same period of 2021.
Total operating expenses in the first quarter of
2022 were RMB251.5 million
(US$39.7 million), representing
an increase of 21.0% from RMB207.9
million in the same period of 2021.
Research and development expenses in the first quarter of 2022
were RMB101.2 million
(US$16.0 million), representing
an increase of 73.9% from RMB58.2 million in the same period of 2021.
The year-over-year increase was primarily attributable to the
increased staff costs in technology-related departments as well as
increased costs associated with new product development. Research
and development expenses in the first quarter of 2022 also included
share-based compensation expenses of RMB20.0
million (US$3.1 million).
Sales and marketing expenses in the first quarter of 2022 were
RMB20.0 million (US$3.2 million), representing an increase of
217.0% from RMB6.3 million in
the same period of 2021. The year-over-year increase was mainly
driven by increased staff costs and advertising expenses. Sales and
marketing expenses in the first quarter of 2022 also included
share-based compensation expenses of RMB2.1
million (US$0.3 million).
General and administrative expenses in the first quarter of 2022
were RMB130.4 million
(US$20.6 million), representing
a decrease of 9.1% from RMB143.4 million in the same period of 2021.
The year-over-year decrease was mainly due to decreased share-based
compensation expenses, partially offset by increased staff costs
and administrative expenses. General and administrative expenses in
the first quarter of 2022 also included share-based compensation
expenses of RMB79.3 million
(US$12.5 million).
Income from operations in the first quarter of 2022
was RMB578.3 million
(US$91.2 million), compared to a
loss from operations of RMB13.7 million in the same period of
2021.
Net income attributable to ordinary shareholders in
the first quarter of 2022 was RMB441.6 million (US$69.7 million), compared to a net income
of RMB1.2 million in the same
period of 2021.
Non-GAAP adjusted net income in the first quarter of
2022 was RMB543.4 million
(US$85.7 million), representing an
increase of 279.5% from RMB143.2 million in the same period of 2021.
Non-GAAP adjusted net income excludes share-based compensation
expenses and change in fair value of warrant liability. For further
information, please refer to "Use of Non-GAAP Financial Measures"
in this press release.
Foreign currency translation adjustment, net of nil
tax, in the first quarter of 2022 was a loss of
RMB4.8 million (US$0.8 million), compared with a gain of
RMB2.4 million in the same period of
2021, due to the US dollar appreciation against the Renminbi during
the first quarter of 2022.
Basic net earnings per American depositary share
("ADS") in the first quarter of 2022 was RMB2.57 (US$0.41). In comparison, basic net
earnings per ADS in the same period of 2021 was RMB0.01. Each ADS represents 15 of the Company's
Class A ordinary shares.
Diluted net earnings per ADS in the first quarter of
2022 was RMB2.57 (US$0.41). In
comparison, diluted net earnings per ADS in the same period of 2021
was RMB0.01. Each ADS represents 15
of the Company's Class A ordinary shares.
As of March 31, 2022, the Company
held cryptocurrency assets that comprised 166.96 Bitcoins,
with a carrying value of RMB45.3
million (US$7.1 million).
Contract liabilities as of March 31, 2022, were RMB1,769.9 million (US$279.2 million), increasing from
RMB1,340.7 million as of December 31, 2021, mainly due to increased
customer advances from sales orders of Bitcoin mining machines.
As of March 31, 2022, the Company
had cash and cash equivalents of RMB2,643.2 million (US$417.0 million), essentially remaining
flat compared to RMB2,684.3 million
as of December 31, 2021, as the
increased cash from customer advances was offset by increased
prepayment to suppliers and income tax payment during the first
quarter of 2022.
Shares Outstanding
As of March 31, 2022, the Company
had a total of 158,329,596 ADSs outstanding, each representing 15
of the Company's Class A ordinary shares. The increase in the total
ADS outstanding compared with the end of the fourth quarter of 2021
was due to the ADSs transferred from outstanding Class A ordinary
shares held by an existing shareholder.
Recent Developments
The Impact of the Recent COVID-19 Quarantine
Control
Recently, local governments in a number of cities in
China have initiated quarantine
control mandates due to the recent resurgence of COVID-19 cases. On
March 14, 2022, the government
implemented a five-day quarantine lock-down for all residents and
businesses in the city where the Company's mining machine factory
and warehouses are located. This strict quarantine control period
was further extended until the end of March. This lock-down measure
resulted in the logistics suspension for the delivery of the
Company's mining machines to clients that have made down payments
or fully prepaid for computing power orders. As such, the Company's
revenue recognition in the first quarter of 2022 was adversely
affected due to the delay in its inventory delivery.
The Company actively cooperates with the local government for
pandemic control and has taken measures to ensure the health and
safety of its employees in the affected region. Since the end of
March, the Company has been gradually resuming production and
delivery under the guidance of the local government. As of the date
of this press release, the Company has completed the delivery of
most of the delayed orders from the first quarter.
The Company is closely monitoring the evolvement of the COVID-19
pandemic situation and may adjust its operations further according
to the quarantine requirements by the local government.
The Company's Share Repurchase Update
In the first quarter of 2022, the Company repurchased a total of
2.1 million ADSs with an aggregate value of US$10.3 million and an average repurchase price
of US$4.81 per ADS. As of the
March 31, 2022, the Company has
completed the share repurchase program of U$20 million approved in
September 2021.
On March 16, 2022, the Company
announced that its board of directors authorized a share repurchase
program under which the Company may repurchase up to US$100 million worth of its outstanding (i)
American depositary shares, each representing 15 Class A ordinary
shares, and/or (ii) Class A ordinary shares over the next 24 months
starting from March 16, 2022.
The At-the-Market ("ATM") Offering
On April 8, 2022, the Company
entered into an at-the-market offering agreement (the "ATM
Agreement"), providing for an at-the-market ("ATM") equity offering
program, with H.C. Wainwright & Co., LLC ("HCW").
The Company does not currently expect to sell any ADS under the
ATM program at this point in time. However, the program has been
established as a flexible mechanism for the Company to access
public capital markets in the future. The timing and extent of the
use of the ATM program will be at the discretion of the Company,
provided that the Company has satisfied certain obligations set
forth in the ATM agreement, and any equity offerings will be
disclosed on a quarterly basis.
The Company will prioritize shareholder interests and the
general market when considering the execution of its financing
plans and will make proactive adjustments to accommodate market
conditions.
Business Outlook
For the second quarter of 2022, the Company expects total net
revenues to be in the range of RMB1,600
million (US$252.4 million) to
RMB1,800 million (US$283.9 million), representing an increase of
48% to 67% from the second quarter of 2021. 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 Direct Event
conference call at 8:00 A.M. U.S. Eastern Time on May 19, 2022 (or 8:00
P.M. Beijing Time on the same day) to discuss the financial
results. Details for the conference call are as follows:
Event
Title:
Canaan Inc. First Quarter 2022 Earnings Conference Call
Registration
Link:
http://apac.directeventreg.com/registration/event/4736536
All participants must use the link provided above to complete
the online registration process in advance of the conference call.
Upon registering, each participant will receive a set of
participant dial-in numbers, the Direct Event passcode, and a
unique access PIN, which can be used to join the conference
call.
A replay of the conference call will be accessible through
May 26, 2022, by dialing the
following numbers:
International:
+61-2-8199-0299
United
States:
+1-646-254-3697
Hong Kong,
China:
+852-3051-2780
Replay
PIN:
4736536
A live and archived webcast of the conference call will also be
available at the Company's investor relations website at
investor.canaan-creative.com.
About Canaan Inc.
Established in 2013, Canaan (NASDAQ: CAN), is a technology
company focusing on ASIC high-performance computing chip design,
chip research and development, computing equipment production, and
software services. The company's vision is "super computing is what
we do, social enrichment is why we do it." Canaan has a rich
experience in chip design and streamlined production in the ASIC
field. In 2013, it released and mass produced its first ASIC
Bitcoin mining machine. In 2018, Canaan released the world's first
7nm ASIC chip, providing energy efficient computing equipment to
the cryptocurrency mining industry. In the same year, Canaan
released the world's first RISC-V architecture commercial edge AI
chip, further harnessing the potential of ASIC technology in the
field of high-performance computing and artificial
intelligence.
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 RMB6.3393 to US$1.00, the noon buying rate in effect on
March 31, 2022, in the H.10
statistical release of the Federal Reserve Board. The Company makes
no representation that the RMB or US$ amounts referred could be
converted into US$ or RMB, as the case may be, at any particular
rate or at all.
Safe Harbor Statement
This announcement contains forward−looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward−looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar statements. Among other things,
the business outlook and quotations from management in this
announcement, as well as Canaan Inc.'s strategic and operational
plans, contain forward−looking statements. Canaan Inc. may also
make written or oral forward−looking statements in its periodic
reports to the U.S. Securities and Exchange Commission ("SEC") on
Forms 20−F and 6−K, in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements
that are not historical facts, including statements about Canaan
Inc.'s beliefs and expectations, are forward−looking statements.
Forward−looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward−looking
statement, including but not limited to the following: the
Company's goals and strategies; the Company's future business
development, financial condition and results of operations; the
expected growth of the Bitcoin industry and the price of Bitcoin;
the Company's expectations regarding demand for and market
acceptance of its products, especially its Bitcoin mining machines;
the Company's expectations regarding maintaining and strengthening
its relationships with production partners and customers; the
Company's investment plans and strategies, fluctuations in the
Company's quarterly operating results; competition in its industry
in China; and relevant government
policies and regulations relating to the Company and
cryptocurrency. Further information regarding these and other risks
is included in the Company's filings with the SEC, including its
registration statement on Form F−1, as amended, and its annual
reports on Form 20−F, as amended. All information provided in this
press release and in the attachments is as of the date of this
press release, and Canaan Inc. does not undertake any obligation to
update any forward−looking statement, except as required under
applicable law.
Use of Non-GAAP Financial
Measures
In evaluating Canaan's business, the Company uses non-GAAP
measures, such as adjusted net income, as supplemental measures to
review and assess its operating performance. The Company defines
adjusted net income as net income excluding sharebased
compensation expenses and change in fair value of warrant
liability. The Company believes that the non-GAAP financial
measures provide useful information about the Company's results of
operations, enhance the overall understanding of the Company's past
performance and future prospects and allow for greater visibility
with respect to key metrics used by the Company's management in its
financial and operational decision-making.
The non-GAAP financial measures are not defined under U.S. GAAP
and are not presented in accordance with U.S. GAAP. The non-GAAP
financial measures have limitations as analytical tools and
investors should not consider them in isolation, or as a substitute
for net income, cash flows provided by operating activities or
other consolidated statements of operations and cash flows data
prepared in accordance with U.S. GAAP. One of the key limitations
of using adjusted net income is that it does not reflect all of the
items of income and expense that affect the Company's operations.
Share-based compensation and change in fair value of warrant
liability have been and may continue to be incurred in Canaan's
business and are not reflected in the presentation of adjusted net
income. Further, the non-GAAP financial measures may differ from
the non-GAAP information used by other companies, including peer
companies, and therefore their comparability may be limited. The
Company mitigates these limitations by reconciling the non-GAAP
financial measures to the most comparable U.S. GAAP performance
measures, all of which should be considered when evaluating the
Company's performance.
Investor Relations Contact
Canaan Inc.
Ms. Xi Zhang
Email: IR@canaan-creative.com
ICR, LLC.
Robin Yang
Tel: +1 (347) 396-3281
Email: canaan.ir@icrinc.com
CANAAN
INC.
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
(all amounts in
thousands of RMB, except share and per share data, or as
otherwise noted)
|
|
|
As of December
31,
|
As of March
31,
|
|
2021
|
2022
|
2022
|
|
RMB
|
RMB
|
US$
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
2,684,342
|
2,643,183
|
416,952
|
Restricted
cash
|
47,362
|
47,412
|
7,479
|
Accounts receivable,
net
|
367
|
1
|
-
|
Inventories
|
812,363
|
1,193,304
|
188,239
|
Prepayments and other
current assets
|
1,729,027
|
1,890,192
|
298,169
|
Total current
assets
|
5,273,461
|
5,774,092
|
910,839
|
Non-current
assets:
|
|
|
|
Cryptocurrency
|
20,310
|
45,256
|
7,139
|
Property, equipment and
software
|
185,566
|
313,022
|
49,378
|
Right-of-use assets,
net
|
30,920
|
27,552
|
4,346
|
Deferred tax
assets
|
99,044
|
66,750
|
10,530
|
Other non-current
assets
|
2,956
|
3,840
|
606
|
Non-current financial
investment
|
20,000
|
20,000
|
3,155
|
Total non-current
assets
|
358,796
|
476,420
|
75,154
|
Total
assets
|
5,632,257
|
6,250,512
|
985,993
|
LIABILITIES, AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
143,441
|
101,175
|
15,960
|
Contract
liabilities
|
1,340,731
|
1,769,897
|
279,194
|
Income tax
payable
|
148,719
|
151,651
|
23,922
|
Accrued liabilities and
other current liabilities
|
437,394
|
157,382
|
24,826
|
Lease liabilities,
current
|
14,819
|
14,713
|
2,321
|
Total current
liabilities
|
2,085,104
|
2,194,818
|
346,223
|
Non-current
liabilities:
|
|
|
|
Lease liabilities,
non-current
|
16,292
|
13,323
|
2,102
|
Warrant
liability
|
66,347
|
66,505
|
10,491
|
Other non-current
liabilities
|
5,824
|
5,305
|
837
|
Total
liabilities
|
2,173,567
|
2,279,951
|
359,653
|
Shareholders'
equity:
|
|
|
|
Ordinary shares
(US$0.00000005 par value;
1,000,000,000,000 shares authorized, 2,804,138,492
shares issued, 2,577,386,552 and 2,580,402,467 shares
outstanding as of December 31, 2021 and March 31,
2022, respectively)
|
1
|
1
|
-
|
Subscriptions
receivable from shareholders
|
(1)
|
(1)
|
-
|
Treasury stocks
(US$0.00000005 par value;
226,751,940 shares as of December 31, 2021 and
223,736,025 shares as of March 31, 2022, respectively)
|
(231,281)
|
(193,029)
|
(30,450)
|
Additional paid-in
capital
|
2,891,134
|
2,992,482
|
472,052
|
Statutory
reserves
|
97,420
|
97,420
|
15,368
|
Accumulated other
comprehensive loss
|
(101,925)
|
(106,715)
|
(16,834)
|
Retained
earnings
|
803,342
|
1,180,403
|
186,204
|
Total shareholders'
equity
|
3,458,690
|
3,970,561
|
626,340
|
Total liabilities
and shareholders' equity
|
5,632,257
|
6,250,512
|
985,993
|
CANAAN
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(all amounts in
thousands of RMB, except share and per share data, or as
otherwise noted)
|
|
|
For the Three Months
Ended
|
|
March 31,
2021
|
March 31,
2022
|
March 31,
2022
|
|
RMB
|
RMB
|
US$
|
Revenues
|
402,774
|
1,356,113
|
213,922
|
Cost of
revenues
|
(208,556)
|
(526,319)
|
(83,025)
|
Gross
profit
|
194,218
|
829,794
|
130,897
|
Operating
expenses:
|
|
|
|
Research and
development expenses
|
(58,161)
|
(101,155)
|
(15,957)
|
Sales and marketing
expenses
|
(6,298)
|
(19,966)
|
(3,150)
|
General and
administrative expenses
|
(143,426)
|
(130,407)
|
(20,571)
|
Total operating
expenses
|
(207,885)
|
(251,528)
|
(39,678)
|
Income (loss) from
operations
|
(13,667)
|
578,266
|
91,219
|
Interest
income
|
430
|
3,244
|
512
|
Change in fair value of
warrant liability
|
-
|
(445)
|
(70)
|
Investment
income
|
184
|
-
|
-
|
Interest
expense
|
(231)
|
-
|
-
|
Foreign exchange gains,
net
|
13,008
|
913
|
144
|
Other income,
net
|
1,489
|
423
|
67
|
Income before income
tax expenses
|
1,213
|
582,401
|
91,872
|
Income tax
expense
|
(9)
|
(140,799)
|
(22,210)
|
Net
income
|
1,204
|
441,602
|
69,662
|
Foreign currency
translation adjustment, net of nil tax
|
2,357
|
(4,789)
|
(755)
|
Total comprehensive
income
|
3,561
|
436,813
|
68,907
|
Weighted average
number of shares used in per
Class A and Class B ordinary share calculation:
|
|
|
|
— Basic
|
2,349,277,761
|
2,580,294,054
|
2,580,294,054
|
— Diluted
|
2,423,489,527
|
2,582,735,151
|
2,582,735,151
|
Net earnings per
Class A and Class B ordinary
share (cent per share)
|
|
|
|
— Basic
|
0.05
|
17.11
|
2.70
|
— Diluted
|
0.05
|
17.10
|
2.70
|
Share-based
compensation expenses
were included
in:
|
|
|
|
Cost of
revenues
|
177
|
-
|
-
|
Research and
development expenses
|
24,059
|
19,962
|
3,149
|
Sales and marketing
expenses
|
2,980
|
2,118
|
334
|
General and
administrative expenses
|
114,760
|
79,267
|
12,504
|
The table below sets forth a reconciliation of net income to
non-GAAP adjusted net income for the period indicated:
|
For the Three Months
Ended
|
|
March 31,
2021
|
March 31,
2022
|
March 31,
2022
|
|
RMB
|
RMB
|
US$
|
Net income
|
1,204
|
441,602
|
69,662
|
Share-based
compensation expenses
|
141,976
|
101,347
|
15,987
|
Change in fair value of
warrant liability
|
-
|
445
|
70
|
Non-GAAP adjusted net
income
|
143,180
|
543,394
|
85,719
|
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content:https://www.prnewswire.com/news-releases/canaan-inc-reports-unaudited-first-quarter-2022-financial-results-301550976.html
SOURCE Canaan Inc.