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,
2020.
First Quarter 2020 Operating and
Financial Highlights
Total computing power sold
increased by 18.4% to 0.9 million Thash/s from 0.7 million Thash/s
in the same period of 2019.Total net revenues
increased by 44.6% to RMB68.3 million (US$9.6 million) from RMB47.2
million in the same period of 2019.Gross profit
increased by 417.0% to RMB2.4 million (US$0.3 million) from RMB0.5
million in the same period of 2019, while gross margin expanded to
3.5% from 1.0% in the same period of 2019.Net loss
narrowed to RMB39.9 million (US$5.6 million) from RMB67.9 million
in the same period of 2019.Non-GAAP adjusted net
loss was RMB38.2 million (US$5.4 million) compared to
RMB63.9 million in the same period of 2019.
“On behalf of our team at Canaan, I wish to
sincerely thank all of the medical staff and community workers who
are combating the COVID-19 pandemic on the frontlines to keep our
society moving forward,” commented Mr. Nangeng Zhang, Chairman and
Chief Executive Officer of Canaan. “As the COVID-19 pandemic swept
the globe, we continued to refine our R&D capabilities to
develop a strong lineup of next-generation products. In addition,
we also lowered the barrier for consumers to enter the Bitcoin
mining space through a series of SaaS solutions designed to help
our clients reduce the costs of maintaining our mining machines. As
such, we further improved the quality of our product offerings and
strengthened our value propositions, which allowed us to minimize
the impact of the fluctuations in Bitcoin price and related
derivatives during the Bitcoin halving. Going forward, we expect
that our core commitment to technological innovation, product
leadership and strong service value proposition to our clients will
fuel our growth in the years to come and help create sustainable
value for our shareholders.”
Mr. Quanfu Hong, Chief Financial Officer of
Canaan, stated, “Despite facing increasing macroeconomic
uncertainties, we carried through our growth momentum to deliver
better-than-expected financial results for the first quarter of
2020. Our total net revenues in the first quarter grew by 44.6%
year over year to RMB68.3 million, driven by increases in total
computing power sold and the average selling price per Thash in the
period. Looking ahead, we will continue to focus on streamlining
our operations, bolstering our cash reserves and prioritizing
investments that can fortify our market leadership. We believe that
these strategic focuses will enable us to weather the current
headwinds and sustain our growth in the future.”
First Quarter 2020 Financial
Results
Total net revenues in the first
quarter of 2020 increased by 44.6% to RMB68.3 million (US$9.6
million) from RMB47.2 million in the same period of 2019. The
growth was mainly driven by increases in total computing power sold
and the average selling price (ASP) per Thash.
Cost of revenues in the first
quarter of 2020 was RMB65.9 million (US$9.3 million) compared to
RMB46.8 million in the same period of 2019, which was in line with
the increased sales volume of Thash.
Gross profit in the first
quarter of 2020 increased by 417.0% to RMB2.4 million (US$0.4
million) from RMB0.5 million in the same period of 2019. Gross
margin in the first quarter of 2020 expanded to 3.5% from 1.0% in
the same period of 2019.
Total operating expenses in the
first quarter of 2020 were RMB73.5 million (US$10.4 million)
compared to RMB58.5 million in the same period of 2019.
Research and development expenses in the first
quarter of 2020 were RMB41.8 million (US$5.9 million) compared to
RMB31.3 million in the same period of 2019. The increase was mainly
due to higher research and development investment in the first
quarter of 2020. As a percentage of total net revenues, research
and development expenses in the first quarter of 2020 was 61.2%
compared to 66.3% in the same period of 2019.
Sales and marketing expenses in the first
quarter of 2020 were RMB4.1 million (US$0.6 million) compared to
RMB2.3 million in the same period of 2019, driven by the increased
headcount of the Company’s sales and marketing departments. As a
percentage of total net revenues, sales and marketing expenses in
the first quarter of 2020 increased to 6.1% from 4.9% in the same
period of 2019.
General and administrative expenses in the first
quarter of 2020 were RMB27.6 million (US$3.9 million) compared to
RMB24.8 million in the same period of 2019. The increase was mainly
due to higher insurance fees in the first quarter of 2020. As a
percentage of total net revenues, general and administrative
expenses in the first quarter of 2020 decreased to 40.4% from 52.6%
in the same period of 2019.
Loss from operations in the
first quarter of 2020 was RMB71.1 million (US$10.0 million)
compared to RMB58.0 million in the same period of 2019.
Net loss attributable to ordinary
shareholders in the first quarter of 2020 was RMB39.9
million (US$5.6 million) compared to RMB67.9 million in the same
period of 2019.
Non-GAAP adjusted net loss in
the first quarter of 2020 was RMB38.2 million (US$5.4 million)
compared to RMB63.9 million in the same period of 2019. Non-GAAP
adjusted net loss excludes share-based compensation expense. For
further information, please refer to "Use of Non-GAAP Financial
Measures" in this release.
Basic and diluted net loss per
ADS in the first quarter of 2020 was RMB0.25 (US$0.04)
compared to RMB0.50 in the same period of 2019. Each ADS represents
15 of the Company's Class A ordinary shares.
As of March 31, 2020, the Company had
cash and cash equivalents of RMB264.4 million
(US$37.3 million) compared to RMB516.6 million as of December 31,
2019. The decrease was mainly due to higher short-term investments
as the Company invested RMB173.4 million (US$24.5 million) in
short-term investments as of March 31, 2020, compared with RMB11.0
million as of December 31, 2019.
Business
Outlook
Given the evolving nature of the COVID-19
pandemic and the uncertainties surrounding the Bitcoin halving
event, the Company currently has very limited visibility on the
potential impacts to its business and the markets in which it
operates. As a result, the Company will not issue a business
outlook for the second quarter of 2020 since Canaan believes that
it is not appropriate to provide financial forecasts that could be
materially different due to the rapidly changing market and
operational conditions.
Conference Call
Information
The Company’s management team will hold a Direct
Event conference call on Friday, May 22, 2020, at 8:00 A.M. Eastern
Time (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 2020
Earnings Conference CallRegistration Link:
https://s1.c-conf.com/diamondpass/10006957-invite.html
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 June 02, 2020, by dialing the following
numbers:
International: |
+61-7-3107-6325 |
United States: |
+1-855-883-1031 |
Hong Kong, China: |
800-930-639 |
Replay PIN: |
10006957# |
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 Inc. provides
high-performance computing solutions to efficiently solve complex
problems. In 2016, Canaan successfully initiated the production of
its first 16nm chip and passed the test to receive China's national
high-tech enterprise certification. In 2018, Canaan achieved major
technological breakthroughs to launch the K210, the world's
first-ever RISC-V-based edge artificial intelligence (AI) chip,
which is now widely used for access control in situations such as
smart door locks and more. Canaan Inc. is currently focused on the
research and development of advanced technology, including such
areas as AI chips, AI algorithms, AI architectures, system on a
chip (SoC) integration and chip integration. Using the AI chip as
its base, Canaan Inc. has established an intellectual value chain.
Canaan Inc. also provides a suite of AI service solutions and is
able to tailor these solutions to the needs of its partners. For
more information, please visit: investor.canaan-creative.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 RMB7.0808
to US$1.00, the noon buying rate in effect on March 31, 2020, in
the H.10 statistical release of the Federal Reserve Board. The
Company makes no representation that the RMB or US$ 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. 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 NonGAAP Financial
Measures
In evaluating Canaan’s business, the Company
considers and uses adjusted net income as a supplemental measure to
review and assess its operating performance. The presentation of
this non-GAAP financial measure is not intended to be considered in
isolation or as a substitute for financial information prepared and
presented in accordance with U.S. GAAP. The Company defines
adjusted net loss as net loss excluding sharebased compensation
expense.
Canaan believes that adjusted net income helps
to identify underlying trends in the Company’s business that could
otherwise be distorted by the effect of the expenses that the
Company excludes in adjusted net income. The Company believes that
adjusted net income provides useful information about our operating
results, enhances the overall understanding of Canaan’s past
performance and future prospects and allows 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 measure “adjusted net
loss” is not defined under U.S. GAAP, is not presented in
accordance with U.S. GAAP and has limitations as an analytical
tool. One of the key limitations of using adjusted net loss is that
it does not reflect all of the items of income and expense that
affect the Company’s operations. Share-based compensation has been
and may continue to be incurred in Canaan’s business and is not
reflected in the presentation of adjusted net loss. Further, the
non-GAAP financial measure “adjusted net loss” may differ from the
non-GAAP information used by other companies, including peer
companies, and therefore their comparability may be limited.
Investor Relations
Contact
Canaan Inc.Mr. Shaoke LiTel:
+86-137-5090-0683Email: IR@canaan-creative.com
ICR Inc.Jack WangTel: +1 (347) 396-3281Email:
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 ofDecember 31, |
|
As of March 31, |
|
2019 |
|
2020 |
|
2020 |
|
RMB |
|
RMB |
|
US$ |
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
516,607 |
|
|
264,445 |
|
|
37,347 |
|
Restricted cash |
8,239 |
|
|
7,125 |
|
|
1,006 |
|
Short-term investments |
11,005 |
|
|
173,402 |
|
|
24,489 |
|
Accounts receivable |
2,872 |
|
|
6,792 |
|
|
959 |
|
Inventories |
196,067 |
|
|
226,622 |
|
|
32,005 |
|
Prepayments and other current
assets |
206,020 |
|
|
253,365 |
|
|
35,782 |
|
Total current
assets |
940,810 |
|
|
931,751 |
|
|
131,588 |
|
Non-current
assets: |
|
|
|
|
|
|
|
|
Property, equipment and
software |
22,602 |
|
|
20,497 |
|
|
2,895 |
|
Right-of-use assets, net |
22,764 |
|
|
19,684 |
|
|
2,780 |
|
Other non-current assets |
5,250 |
|
|
2,230 |
|
|
315 |
|
Total non-current
assets |
50,616 |
|
|
42,411 |
|
|
5,990 |
|
Total
assets |
991,426 |
|
|
974,162 |
|
|
137,578 |
|
LIABILITIES, AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Short-term debts |
99,903 |
|
|
175,747 |
|
|
24,820 |
|
Accounts payable |
99,050 |
|
|
65,805 |
|
|
9,293 |
|
Notes payable |
27,462 |
|
|
13,746 |
|
|
1,941 |
|
Contract liabilities |
8,288 |
|
|
10,888 |
|
|
1,538 |
|
Accrued liabilities and other
current liabilities |
40,691 |
|
|
18,403 |
|
|
2,600 |
|
Lease liabilities,
current |
9,838 |
|
|
7,358 |
|
|
1,039 |
|
Total current
liabilities |
285,232 |
|
|
291,947 |
|
|
41,231 |
|
Non-current
liabilities: |
|
|
|
Lease liabilities,
non-current |
13,399 |
|
|
10,758 |
|
|
1,519 |
|
Other non-current
liabilities |
- |
|
|
10,394 |
|
|
1,468 |
|
Total non-current
liabilities |
13,399 |
|
|
21,152 |
|
|
2,987 |
|
Total
liabilities |
298,631 |
|
|
313,099 |
|
|
44,218 |
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
|
|
Ordinary shares (US$0.00000005
par value; 1,000,000,000,000 shares authorized, 2,372,222,222
shares issued, 2,350,123,270 shares outstanding as of December 31,
2019 and March 31, 2020, respectively) |
1 |
|
|
1 |
|
|
- |
|
Subscriptions receivable from
shareholders |
(1 |
) |
|
(1 |
) |
|
- |
|
Treasury stocks (US$0.00000005
par value; 22,098,952 shares as of December 31, 2019 and March 31,
2020, respectively) |
- |
|
|
- |
|
|
- |
|
Additional paid-in
capital |
1,631,609 |
|
|
1,633,340 |
|
|
230,672 |
|
Statutory reserves |
97,307 |
|
|
97,307 |
|
|
13,742 |
|
Accumulated other
comprehensive loss |
(55,542 |
) |
|
(49,059 |
) |
|
(6,928 |
) |
Accumulated deficit |
(980,579 |
) |
|
(1,020,525 |
) |
|
(144,126 |
) |
Total shareholders’
equity |
692,795 |
|
|
661,063 |
|
|
93,360 |
|
Total liabilities and
shareholders’ equity |
991,426 |
|
|
974,162 |
|
|
137,578 |
|
|
|
|
|
|
|
|
|
|
CANAAN INC. UNAUDITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS (all amounts in
thousands of RMB, except share and per share data, or as otherwise
noted)
|
For the Three Months Ended |
|
2019 |
|
2020 |
|
2020 |
|
RMB |
|
RMB |
|
US$ |
Net revenues |
|
|
|
|
|
|
|
|
Products revenue |
47,160 |
|
|
67,032 |
|
|
9,467 |
|
Leases revenue |
- |
|
|
994 |
|
|
140 |
|
Services revenue |
20 |
|
|
24 |
|
|
3 |
|
Other revenue |
38 |
|
|
223 |
|
|
31 |
|
Total net
revenue |
47,218 |
|
|
68,273 |
|
|
9,641 |
|
Cost of revenue |
(46,755 |
) |
|
(65,885 |
) |
|
(9,305 |
) |
Gross
profit |
463 |
|
|
2,388 |
|
|
336 |
|
Operating expense |
|
|
|
|
|
|
|
|
Research and development
expenses |
(31,315 |
) |
|
(41,794 |
) |
|
(5,902 |
) |
Selling and marketing
expenses |
(2,332 |
) |
|
(4,132 |
) |
|
(584 |
) |
General and administrative
expenses |
(24,823 |
) |
|
(27,589 |
) |
|
(3,896 |
) |
Total operating
expenses |
(58,470 |
) |
|
(73,515 |
) |
|
(10,382 |
) |
Loss
from operations |
|
|
|
|
|
|
|
|
Interest income |
421 |
|
|
1,824 |
|
|
258 |
|
Investment income |
15 |
|
|
1,063 |
|
|
150 |
|
Interest expense and guarantee
fee |
(12,902 |
) |
|
(1,185 |
) |
|
(167 |
) |
Foreign exchange (loss) gain |
(854 |
) |
|
240 |
|
|
34 |
|
Others, net |
3,470 |
|
|
29,239 |
|
|
4,129 |
|
Loss before income tax
expenses |
(67,857 |
) |
|
(39,946 |
) |
|
(5,642 |
) |
Income tax expense |
- |
|
|
- |
|
|
- |
|
Net loss |
(67,857 |
) |
|
(39,946 |
) |
|
(5,642 |
) |
Foreign currency translation
adjustment, net of nil tax |
18,993 |
|
|
6,483 |
|
|
916 |
|
Total comprehensive
loss |
(48,864 |
) |
|
(33,463 |
) |
|
(4,726 |
) |
Weighted average number of
shares used in per share
calculation: |
|
|
|
|
|
|
|
|
— Basic and diluted |
2,029,528,768 |
|
|
2,350,123,270 |
|
|
2,350,123,270 |
|
Net loss per share (cent
per share) |
|
|
|
— Basic and diluted |
(3.34 |
) |
|
(1.70 |
) |
|
(0.24 |
) |
Share-based compensation
expenses were included in: |
|
|
|
Research and development
expenses |
2,404 |
|
|
1,120 |
|
|
158 |
|
Sales and marketing expenses |
110 |
|
|
11 |
|
|
2 |
|
General and administrative
expenses |
1,422 |
|
|
600 |
|
|
85 |
|
The table below sets forth a reconciliation of
net loss to non-GAAP adjusted net loss for the period
indicated:
|
For the three monthsended March 31 |
|
|
|
2019 |
|
2020 |
|
2020 |
|
RMB |
|
RMB |
|
US$ |
|
|
|
|
Net loss |
(67,857 |
) |
|
(39,946 |
) |
|
(5,642 |
) |
Add: Share-based
compensation expense |
3,936 |
|
|
1,731 |
|
|
245 |
|
Non-GAAP adjusted net
loss |
(63,921 |
) |
|
(38,215 |
) |
|
(5,397 |
) |
|
|
|
|
|
|
|
|
|
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