UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2024
Commission File Number: 001-39127
Canaan Inc.
28 Ayer Rajah Crescent
#06-08
Singapore 139959
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F
x Form 40-F ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Exhibit Index
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Canaan Inc. |
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By: |
/s/
Nangeng Zhang |
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Name: |
Nangeng Zhang |
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Title: |
Chairman and Chief Executive Officer |
Date: February 27, 2024
Exhibit 99.1
Canaan Inc. Reports Unaudited Fourth Quarter
and Full Year 2023 Financial Results
Singapore, February 27, 2024 /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 and twelve months ended December 31, 2023.
Fourth Quarter 2023 Operating and Financial
Highlights
Total
computing power sold was 5.5 million Thash/s, representing an increase of 45.7% from 3.8 million Thash/s in the third quarter
of 2023 and an increase of 191.9% from 1.9 million Thash/s in the same period of 2022.
Revenues
were US$49.1 million, as compared to US$33.3 million in the third quarter of 2023 and US$58.3 million in the same period of 2022.
Mining
revenue was US$3.7 million, representing an increase of 13.6% from US$3.3 million in the third quarter of 2023 and a decrease
of 65.5% from US$10.7 million in the same period of 2022.
Full Year 2023 Operating and Financial Highlights
Total
computing power sold was 19.6 million Thash/s, representing a year-over-year increase of 29.6% from 15.1 million Thash/s in
2022.
Revenues
were US$211.5 million, compared to US$651.5 million in 2022.
Mining
revenue was US$34.0 million, compared to US$32.5 million in 2022.
Mr. Nangeng Zhang, Chairman and Chief Executive
Officer of Canaan, commented, “We capitalized on the opportunity presented by the Bitcoin price recovery in the fourth quarter of
2023, fortifying our operational and financial foundations for the year 2024. Leveraging our multifaceted sales system, we achieved 5.5
million Thash/s of total computing power sold, marking a 45.7% sequential increase. This encouraging sales performance translated into
better-than-expected total revenues, reaching US$49.1 million, reflecting a remarkable 47.3% quarter-over-quarter growth. We also secured
considerable contract sales, including bulk orders from esteemed public company clients, underscoring our product quality and delivery
capabilities. Furthermore, our Bitcoin mining segment exhibited improvements in an evolving regulatory environment, with mining revenue
up 13.6% sequentially. We also expanded our computing power deployment in Africa and tapped our footprint into the Middle East during
the fourth quarter.”
“While we acknowledge the persisting challenges
of the ongoing bearish market for mining machines, we draw inspiration from the recent approval and listing of spot Bitcoin ETFs. This
milestone signals the potential for Bitcoin to attract a larger user base and foster a more concrete consensus in the long run. Our commitment
remains unwavering as we stand shoulder-to-shoulder with the Bitcoin ecosystem and miner partners. We will continue to drive technological
advancements in our product offerings, provide best-in-class services, and optimize our mining operations. These initiatives are poised
to position us for long-term success alongside the evolving cryptocurrency landscape.”
Mr. James Jin Cheng, Chief Financial Officer
of Canaan, stated, “With the bitcoin price experiencing a favorable recovery in December, we seized the opportunity of short-term
upside machine demand, and delivered a 44% higher revenue by selling more machines on top of our previous-announced revenue guidance.
At the same time, customers also paid more cash advances to secure their future-sales contracts on our new A14 series. This operation
was a continuation of our strategy to optimize the inventory mix between product generations. It also effectively contributed as a positive
factor to cash balance, which has an upside change from US$40 million as of September 30, 2023 to US$96 million as of December 31,
2023. On the other hand, despite the impact of regulatory changes in Central Asia, we achieved a sequential growth of 13.6% in our bitcoin
mining revenue by leveraging the improved Bitcoin price. Our diversified mining deployment and enhanced uptime led to a record-setting
909 bitcoins in our cryptocurrency assets by the end of 2023. On the cost and expense fronts, we are taking more measures to streamline
the spending, including optimizing our organization with fewer headcounts. Although we incurred a non-cash inventory write-down, prepayment
write-down and provision for reserve for inventory purchase commitments totaling US$55.5 million, our operating performance improved both
sequentially and year over year, shown as the narrowed operating loss, Non-GAAP operating loss and Non-GAAP net loss.”
“Other than operation, from late 2023 to
the end of January 2024, we have seized the capital market windows to secure approximately US$136 million in financing from both
ATM program and preferred shares. We continued to utilize cash to lock wafer supply capability, preparing for the potential booming market
post the next bitcoin halving. Looking forward, the industry will go through halving for customers to have certainties on returns. And
it will drive most of the capital expenditure investment decisions to post halving time, including machine procurements. We will pursue
a proactive approach in investing in strategic directions like research and development of new products, supply capacity and self-mining,
and remain prudent in operating expense spending.”
Fourth Quarter 2023 Financial Results
Revenues
in the fourth quarter of 2023 were US$49.1 million, as compared to US$33.3 million in the third quarter of 2023 and US$58.3 million in
the same period of 2022. Total revenues consisted of US$44.9 million in products revenue, US$3.7 million in mining revenue and US$0.5
million in other revenues.
Products
revenue in the fourth quarter of 2023 was US$44.9 million, compared to US$29.9 million in the third quarter of 2023 and US$47.5
million in the same period of 2022. The increase compared to the third quarter of 2023 was mainly due to the growth in total computing
power sold and average selling price led by the recovery of bitcoin price. The decrease compared to the fourth quarter of 2022 was mainly
due to lower selling prices, which resulted from the stepping-up destocking efforts as the halving event approaches, despite a gradual
recovery in the price of bitcoin and an increase in total computing power sold. AI product revenue was US$0.3 million in the fourth quarter
of 2023, as compared to US$0.2 million in the third quarter of 2023 and US$0.2 million in the same period of 2022.
Mining
revenue in the fourth quarter of 2023 was US$3.7 million, representing an increase of 13.6% from US$3.3 million in the third
quarter of 2023 and a decrease of 65.5% from US$10.7 million in the same period of 2022. The sequential increase was mainly driven by
the bitcoin price recovery. The year-over-year decrease was mainly attributable to the decrease of mining computing power which resulted
from the temporary shutdown of approximately 2.0 Exahash/s computing power in Kazakhstan to ensure legal compliance.
Cost
of revenues in the fourth quarter of 2023 was US$103.1 million, compared to US$102.4 million in the third quarter of 2023 and
US$122.5 million in the same period of 2022.
Products
costs in the fourth quarter of 2023 were US$95.8 million, compared to US$83.7 million in the third quarter of 2023 and US$98.9
million in the same period of 2022. The sequential and year-over-year increases were consistent with the increase of computing power sold.
The inventory write-down, prepayment write-down and provision for reserve for inventory purchase commitments accrued for this quarter
was US$55.5 million, compared to US$53.9 million for the third quarter of 2023 and US$60.3 million for the same period of 2022. Products
costs consist of direct production costs of mining machines and AI products and indirect costs related to production, as well as inventory
write-down, prepayment write-down and provision for reserve for inventory purchase commitments.
Mining
costs in the fourth quarter of 2023 were US$6.0 million, compared to US$17.9 million in the third quarter of 2023 and US$23.6
million in the same period of 2022. Mining costs herein consist of direct production costs of mining operations, including electricity
and hosting, as well as depreciation of deployed mining machines. The sequential and year-over-year decrease was mainly due to the decreased
depreciation, which was driven by the end of the depreciation period of early deployed mining machines and the impairment of the currently
deployed mining machines. The depreciation in this quarter for deployed mining machines was US$7.4 million, compared to US$10.8 million
in the third quarter of 2023 and US$10.7 million in the same period of 2022.
Gross
loss in the fourth quarter of 2023 was US$54.1 million, compared to a gross loss of US$69.1 million in the third quarter of
2023 and a gross loss of US$64.1 million in the same period of 2022.
Total
operating expenses in the fourth quarter of 2023 were US$39.2 million, compared to US$43.8 million in the third quarter of
2023 and US$60.8 million in the same period of 2022.
Research and development expenses in the fourth
quarter of 2023 were US$10.8 million, compared to US$17.2 million in the third quarter of 2023 and US$33.4 million in the same period
of 2022. The sequential decrease was mainly due to a decrease of US$5.5 million in staff costs. The year-over-year decreases were mainly
due to US$14.3 million one-off research and development expenditure for the A13 series products incurred in the fourth quarter of 2022,
as well as a decrease of US$7.5 million in staff costs. Research and development expenses in the fourth quarter of 2023 also included
share-based compensation expenses of US$1.9 million.
Sales and marketing expenses in the fourth quarter
of 2023 were US$1.8 million, compared to US$2.5 million in the third quarter of 2023 and US$1.1 million in the same period of 2022. The
sequential decrease was mainly due to a decrease of US$0.4 million in staff costs and a decrease of US$0.5 million in promotion expenses.
The year-over-year increase was mainly due to an increase of US$0.9 million in staff cost, partially offset by a decrease of US$0.6 million
in share-based compensation expenses. Sales and marketing expenses in the fourth quarter of 2023 also included share-based compensation
expenses of US$79 thousand.
General and administrative expenses in the fourth
quarter of 2023 were US$20.2 million, compared to US$16.2 million in the third quarter of 2023 and US$24.6 million in the same period
of 2022. The sequential increase was mainly due to one-off staff costs of US$2.2 million for organization optimization. Excluding this
one-off expenditure, the sequential increase was mainly due to an increase of US$4.1 million in staff cost, partially offset by an increase
of US$3.3 million of realized gain on asset disposals. The year-over-year decreases were partially offset by one-off staff costs of US$2.2
million for organization optimization. Excluding this one-off expenditure, the year-over year decrease was mainly due to a decrease of
US$5.4 million in share-based compensation expenses and an increase of US$4.0 million of realized gain on asset disposals, partially offset
by an increase of US$2.5 million in staff cost. General and administrative expenses in the fourth quarter of 2023 also included share-based
compensation expenses of US$6.6 million.
Impairment
on property and equipment in the fourth quarter of 2023 was US$6.3 million, compared to US$5.7 million in the third quarter
of 2023 and nil in the same period of 2022.
Impairment
on cryptocurrency in the fourth quarter of 2023 was US$0.1 million, compared to US$2.2 million in the third quarter of 2023
and US$1.7 million in the same period of 2022.
Loss
from operations in the fourth quarter of 2023 was US$93.3 million, compared to a loss from operations of US$112.8 million in
the third quarter of 2023 and a loss from operations of US$125.0 million in the same period of 2022.
Non-GAAP
loss from operations in the fourth quarter of 2023 was US$78.3 million, compared to a non-GAAP loss from operations of US$97.4
million in the third quarter of 2023 and a non-GAAP loss from operations of US$110.0 million in the same period of 2022. Non-GAAP loss
from operations excludes share-based compensation expenses and impairment on property and equipment. For further information, please refer
to “Use of Non-GAAP Financial Measures” in this press release.
Excess of fair value of Series A Convertible Preferred
Shares in the fourth quarter of 2023 was US$59.2 million, compared to nil in the third quarter of 2023 and nil in the same period
of 2022, due to the fair value of the Preferred Shares Financing exceeding the proceeds. For further information, please refer to “Preferred
Shares Financing” in this press release.
Foreign exchange gains, net in the fourth
quarter of 2023 were US$1.4 million, compared with a gain of US$10.9 million in the third quarter of 2023 and a gain of US$3.7 million
in the same period of 2022, respectively. The foreign exchange gains were due to the US dollar appreciation against the Renminbi during
the fourth quarter of 2023.
Net loss in the fourth quarter of 2023
was US$139.0 million, compared to a net loss of US$80.1 million in the third quarter of 2023 and a net loss of US$91.6 million in the
same period of 2022.
Non-GAAP adjusted net loss in the fourth
quarter of 2023 was US$53.9 million, as compared to a non-GAAP adjusted net loss of US$64.7 million in the third quarter of 2023 and a
non-GAAP adjusted net loss of US$76.6 million in the same period of 2022. Non-GAAP adjusted net loss excludes share-based compensation
expenses, impairment on property and equipments, change in fair value of financial instruments and excess of fair value of Series A Convertible
Preferred Shares. 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 fourth quarter of 2023 was a loss of US$0.3 million, compared with
a gain of US$7.7 million in the third quarter of 2023 and a gain of US$8.7 million in the same period of 2022, respectively.
Basic
and diluted net loss per American depositary share (“ADS”) in the fourth quarter of 2023 were US$0.77. In comparison,
basic and diluted net loss per ADS in the third quarter of 2023 were US$0.47, while basic and diluted net loss per ADS in the same period
of 2022 were US$0.55. Each ADS represents 15 of the Company’s Class A ordinary shares.
Non-GAAP
adjusted basic and diluted net loss per American depositary share (“ADS”) in the fourth quarter of 2023 were US$0.30.
In comparison, non-GAAP basic and diluted net loss per ADS in the third quarter of 2023 were US$0.38, while non-GAAP basic and diluted
net loss per ADS in the same period of 2022 were US$0.46.
Full Year 2023 Financial Results
Revenues
in the full year of 2023 decreased to US$211.5 million from US$651.5 million in 2022. The decrease was mainly due to the lower
selling price which resulted from overall soft purchasing power from the market demand front.
Products
revenue in the full year of 2023 decreased to US$176.9 million from US$618.9 million in 2022. Mining equipment product
sales revenue in the full year of 2023 decreased to US$175.9 million from US$617.5 million in 2022, and AI product revenue in the full
year of 2023 decreased to US$1.0 million from US$1.4 million in 2022.
Mining
revenue in the full year of 2023 increased to US$34.0 million from US$32.5 million in 2022. The increase was mainly due to
the increased computing power energized for mining and bitcoin price recovery.
Cost
of revenues in the full year of 2023 increased to US$452.3 million from US$421.2 million in the full year of 2022.
Products
costs in the full year of 2023 were US$368.1 million, compared to US$366.5 million in the full year of 2022. The increase was
mainly due to US$190.2 million of inventories write-down, prepayment write-down and provision for reserve for inventory purchase commitments
accrued, partially offset by US$127.2 million of transfer of inventories write-down and prepayment write-down.
Mining
costs in the full year of 2023 were US$81.8 million, compared to US$54.5 million in the full year of 2022. Mining costs herein
consist of direct production costs of mining operations, including electricity and hosting, as well as depreciation. The depreciation
in the full year of 2023 for deployed mining machines was US$53.2 million, compared to US$30.7 million in the full year of 2022. The year-over-year
increase was mainly due to the increase in deployed computing power for the Company's mining operations.
Gross
loss in the full year of 2023 was US$240.8 million, compared to a gross profit of US$230.3 million in the full year of 2022.
Total
operating expenses in the full year of 2023 increased to US$170.1 million from US$187.4 million in the full year of 2022.
Research and development expenses in the full
year of 2023 decreased by 20.7% to US$64.8 million from US$81.8 million in the full year of 2022, primarily due to the decreased research
and development costs for new products.
Sales and marketing expenses in the full year
of 2023 decreased to US$8.2 million from US$9.4 million in the full year of 2022. The decrease was mainly attributable to decreased share-based
compensation expenses.
General and administrative expenses in the full
year of 2023 decreased to US$71.2 million from US$88.3 million in the full year of 2022. This year-over-year decrease was mainly due to
decreased share-based compensation expenses, and increased realized gain on asset disposals, partially offset by increased staff cost.
Impairment
on property and equipment in the full year of 2023 was US$21.1 million, compared to nil in the full year of 2022.
Impairment
on cryptocurrency in the full year of 2023 was US$4.7 million, compared to US$7.9 million in the full year of 2022.
Loss
from operations in the full year of 2023 was US$410.9 million, compared to an income from operations of US$42.9 million in
the full year of 2022.
Non-GAAP
loss from operations in the full year of 2023 was US$347.7 million, compared to an income of US$106.0 million in the full year
of 2022.
Excess of fair value of Series A Convertible Preferred
Shares in the full year of 2023 was US$59.2 million, compared to nil in the full year of 2022.
Foreign
exchange gains, net in the full year of 2023 were US$12.3 million, compared with a gain of US$35.9 million in the full year
of 2022.
Net
loss in the full year of 2023 was US$414.2 million, compared to a net income of US$69.9 million in the full year of 2022.
Non-GAAP
adjusted net loss in the full year of 2023 was US$280.8 million, compared to a non-GAAP adjusted net income of US$129.1 million
in the full year of 2022.
Foreign
currency translation adjustment, net of nil tax, in the full year 2023 was a loss of US$7.0 million, compared to a loss of
US$36.3 million in the full year of 2022.
Basic
and diluted net loss per American depositary share (“ADS”) in the full year of 2023 was US$2.41, compared to basic
and diluted net earnings per ADS of US$0.41 in the full year of 2022.
Non-GAAP
adjusted basic and diluted net loss per American depositary share (“ADS”) in the full year 2023 were both US$1.63,
compared to non-GAAP adjusted basic and diluted net earnings per ADS of US$0.76 and US$0.75, respectively.
As of December 31, 2023, the Company held
cryptocurrency assets that primarily comprised 1,078.5 bitcoins with a total carrying value of US$28.3 million, which consisted
of 909.2 bitcoins owned by the Company and 169.3 bitcoins received as customer deposits.
As of December 31, 2023, the Company had
cash and cash equivalents of US$96.2 million, compared to US$101.6 million as of December 31, 2022.
Accounts
receivable, net as of December 31, 2023 was US$3.0 million, compared to nil as of December 31, 2022. Accounts receivable
was mainly due to an installment policy implemented for some major customers who meet certain conditions.
Shares Outstanding
As of December 31, 2023, the Company had
a total of 222,858,941 ADSs outstanding, each representing 15 of the Company’s Class A ordinary shares.
Recent Developments
Resumption of Bitcoin Mining Operations
in Kazakhstan
Since early January 2024, the Company has
commenced resuming its bitcoin mining in Kazakhstan in compliance with the local regulatory requirements. To date, the Company has recovered
the energization of approximately 1.09 Exahash/s of the previously affected 2.0 Exahash/s of mining power in the country. As a result,
these gradually reactivated mining machines have begun generating mining revenues.
Resolution of U.S. Joint Mining Project
Dispute
On August 3, 2023, Canaan U.S. Inc., an operating
subsidiary of the Company (“Canaan US”), participated in a mediation with a partner that provides hosting and management
services for cryptocurrency mining machines, relating to a dispute concerning a Joint Mining Agreement at a U.S.-based mining farm. The
Company subsequently took possession of approximately all 26,000 units of mining machines deployed in such project and reached a confidential
settlement with the hosting partner.
Preferred Shares Financing
On November 27, 2023, the Company entered into a
Securities Purchase Agreement with an institutional investor (the “Buyer”), pursuant to which the Company shall issue
and sell to the Buyer up to 125,000 Series A Convertible Preferred Shares (the “Preferred Shares”) at the price of
US$1,000.00 for each Preferred Share.
On December 11, 2023, the Company closed the first
tranche of the preferred shares financing (the “First Tranche Preferred Shares Financing”) and is obligate to issue
the second tranche of the preferred shares financing (the “Forward Purchase Liabilities”), raising total net proceeds
of $25.4 million. Pursuant to the First Tranches Preferred Shares Financing, the Company issued 25,000 Preferred Shares in total at the
price of US$1,000.00 per Preferred Share.
In connection with the issuance of the Preferred
Shares, the Company caused The Bank of New York Mellon to deliver 8,000,000 ADSs collectively as pre-delivery shares (the “Pre-delivery
Shares”), each representing fifteen Class A ordinary shares of the Company, at the price of US$0.00000075 for each ADS. The
Pre-delivery Shares shall be returned to the Company at the end of the arrangement and the Company shall pay such Buyer US$0.00000075
for each such Pre-delivery Share. The Pre-delivery Shares is considered a form of stock borrowing facility and was accounted as share
lending arrangement.
On January 22, 2024, the Company closed the second
tranches of the preferred shares financing (the “Second Tranche Preferred Shares Financing”), raising total net proceeds
of $49.9 million. Pursuant to the Second Tranche Preferred Shares Financing, the Company issued 50,000 Preferred Shares in total at the
price of US$1,000.00 per Preferred Share and caused The Bank of New York Mellon to deliver an addition 2,800,000 ADSs collectively as
pre-delivery shares (the “Pre-delivery Shares”), each representing fifteen Class A ordinary shares of the Company,
at the price of US$0.00000075 for each ADS.
The Company intends to use the net proceeds from
the sale of the securities for research and development, expansion of production scale, and other general corporate purposes.
According to the Securities Purchase Agreement, the
closing of the third tranche of preferred shares financing (the “Third Tranche”), would be contingent upon mutual agreement
between the Company and the Buyer. Neither the Company is obliged to sell nor the Buyer is obliged to purchase for the Third Tranche as
of December 31, 2023.
The At-the-Market (“ATM”) Offering
On November 10, 2023, the Company entered
into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B. Riley Securities, Inc. as a sales agent
(the “sales agent”).
From November 28, 2023, the date the Company
reported its financial results for the third quarter of 2023, to December 31, 2023, the Company utilized the ATM for fundraising
and sold 31,347,044 ADSs with net proceeds of approximately US$61.2 million at an average price of US$1.99 per ADS. With the successful
settlement of its first tranche of Preferred Shares Financing, the Company did not utilize the ATM after December 31, 2023.
The Company expects the ATM program to be a flexible
mechanism for the Company to access public capital markets. 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 agreements and the ATM facility is duly
established.
Decision on Early Adoption of FASB’s
New Accounting Rules for Crypto Assets Since 2024
On December 13, 2023, the Financial Accounting
Standards Board (“FASB”) issued its first direct accounting and disclosure standard on crypto assets. The new accounting rules allow
cryptocurrencies to be carried at the fair value. The Company plans to early adopt these rules since January 1, 2024, to enhance
the transparency and accuracy of the Company’s financial statements. This change aligns the Company’s financial reporting
more closely with the economic realities of its business model.
Business Outlook
For the first quarter of 2024, and the second
quarter of 2024, the Company expects total revenues to be approximately US$33 million and US$70 million, respectively, 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 at 8:00 A.M. U.S. Eastern Time on February 27, 2024 (or 9:00 P.M. Singapore Time on the same day) to
discuss the financial results. Details for the conference call are as follows:
Event Title: Canaan Inc. Fourth
Quarter and Full Year 2023 Earnings Conference Call Registration Link: https://register.vevent.com/register/BI6e35271f074a4c5fa205a0ce7a269748
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 and a unique access PIN, which can be used to join the conference call.
A live and archived webcast of the conference
call will be available at the Company’s investor relations website at investor.canaan-creative.com.
About Canaan Inc.
Established
in 2013, Canaan Inc. (NASDAQ: CAN), is a technology company focusing on ASIC high-performance computing chip design, chip research and
development, computing equipment production, and software services. Canaan's vision is "super computing is what we do, social enrichment
is why we do it." Canaan has extensive experience in chip design and streamlined production in the ASIC field. In 2013, under the
leadership of Mr. Nangeng Zhang, founder and CEO, Canaan's founding team shipped to its customers the world's first batch of mining
machines incorporating ASIC technology in bitcoin's history under the brand name, Avalon. In 2019, Canaan completed its initial public
offering on the Nasdaq Global Market. To learn more about Canaan, please visit https://www.canaan.io/.
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. 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 income (loss) from operations and adjusted net income (loss), as supplemental measures to review
and assess its operating performance. The Company defines adjusted income (loss) from operations as income (loss) from operations excluding
share-based compensation expenses and impairment on property and equipment, and adjusted net income (loss) as net income (loss) excluding
share-based compensation expenses, impairment on property and equipment, change in fair value of financial instruments and excess of fair
value of Series A Convertible Preferred Shares. 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 expenses, impairment on property and equipment, change in fair value of financial instruments and excess of fair
value of Series A Convertible Preferred Shares 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 CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in thousands, except share and
per share data, or as otherwise noted)
| |
As of December 31, | |
| |
2022 | | |
2023 | |
| |
USD | | |
USD | |
ASSETS | |
| | |
| |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
| 101,551 | | |
| 96,154 | |
Accounts receivable, net | |
| - | | |
| 2,997 | |
Inventories | |
| 211,640 | | |
| 142,287 | |
Prepayments and other current assets | |
| 242,523 | | |
| 122,242 | |
Total current assets | |
| 555,714 | | |
| 363,680 | |
Non-current assets: | |
| | | |
| | |
Cryptocurrency | |
| 12,531 | | |
| 28,342 | |
Property, equipment and software, net | |
| 85,350 | | |
| 29,466 | |
Right-of-use assets | |
| 4,250 | | |
| 1,690 | |
Deferred tax assets | |
| 21,740 | | |
| 66,809 | |
Other non-current assets | |
| 2,504 | | |
| 486 | |
Non-current financial investment | |
| 2,872 | | |
| 2,824 | |
Total non-current assets | |
| 129,247 | | |
| 129,617 | |
Total assets | |
| 684,961 | | |
| 493,297 | |
LIABILITIES, AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable | |
| 16,703 | | |
| 6,245 | |
Contract liabilities | |
| 662 | | |
| 19,614 | |
Income tax payable | |
| 7,228 | | |
| 3,534 | |
Accrued liabilities and other current liabilities | |
| 48,349 | | |
| 64,240 | |
Lease liabilities, current | |
| 2,314 | | |
| 1,216 | |
Series A Convertible Preferred Shares Forward Purchase Liabilities | |
| - | | |
| 40,344 | |
Total current liabilities | |
| 75,256 | | |
| 135,193 | |
Non-current liabilities: | |
| | | |
| | |
Lease liabilities, non-current | |
| 1,441 | | |
| 210 | |
Other non-current liabilities | |
| 598 | | |
| 9,707 | |
Total liabilities | |
| 77,295 | | |
| 145,110 | |
Shareholders’ equity: | |
| | | |
| | |
Ordinary shares (US$0.00000005 par value; 1,000,000,000,000 shares authorized, 2,804,138,492 and 3,772,078,667 shares issued, 2,496,001,757 and 3,514,973,327 shares outstanding as of December 31, 2022 and December 31, 2023, respectively) | |
| - | | |
| - | |
Treasury stocks (US$0.00000005 par value; 308,136,735 shares as of December 31, 2022 and 257,105,340 shares as of December 31, 2023, respectively) | |
| (57,055 | ) | |
| (57,055 | ) |
Additional paid-in capital | |
| 492,220 | | |
| 653,724 | |
Statutory reserves | |
| 14,892 | | |
| 14,892 | |
Accumulated other comprehensive loss | |
| (36,913 | ) | |
| (43,879 | ) |
Retained earnings (accumulated deficit) | |
| 194,522 | | |
| (219,495 | ) |
Total shareholders’ equity | |
| 607,666 | | |
| 348,187 | |
Total liabilities and shareholders’ equity | |
| 684,961 | | |
| 493,297 | |
CANAAN INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME/(LOSS)
(all amounts in thousands of USD, except share
and per share data, or as otherwise noted)
| |
For the Three Months Ended | |
| |
December 31,
2022 | | |
September 30,
2023 | | |
December 31,
2023 | |
| |
USD | | |
USD | | |
USD | |
Revenues | |
| | | |
| | | |
| | |
Products revenue | |
| 47,546 | | |
| 29,937 | | |
| 44,907 | |
Mining revenue | |
| 10,735 | | |
| 3,264 | | |
| 3,708 | |
Other revenues | |
| 33 | | |
| 118 | | |
| 458 | |
Total revenues | |
| 58,314 | | |
| 33,319 | | |
| 49,073 | |
Cost of revenues | |
| (122,454 | ) | |
| (102,409 | ) | |
| (103,142 | ) |
Gross loss | |
| (64,140 | ) | |
| (69,090 | ) | |
| (54,069 | ) |
Operating expenses: | |
| | | |
| | | |
| | |
Research and development expenses | |
| (33,364 | ) | |
| (17,152 | ) | |
| (10,778 | ) |
Sales and marketing expenses | |
| (1,145 | ) | |
| (2,491 | ) | |
| (1,762 | ) |
General and administrative expenses | |
| (24,633 | ) | |
| (16,223 | ) | |
| (20,191 | ) |
Impairment on property and equipment | |
| - | | |
| (5,691 | ) | |
| (6,324 | ) |
Impairment on cryptocurrency | |
| (1,678 | ) | |
| (2,199 | ) | |
| (144 | ) |
Total operating expenses | |
| (60,820 | ) | |
| (43,756 | ) | |
| (39,199 | ) |
Loss from operations | |
| (124,960 | ) | |
| (112,846 | ) | |
| (93,268 | ) |
Interest income | |
| 1,141 | | |
| 61 | | |
| 229 | |
Change in fair value of financial instruments | |
| - | | |
| - | | |
| (10,918 | ) |
Excess of fair value of Series A Convertible Preferred Shares | |
| - | | |
| - | | |
| (59,199 | ) |
Foreign exchange gains, net | |
| 3,741 | | |
| 10,890 | | |
| 1,404 | |
Other income (expense), net | |
| 2,089 | | |
| 1,349 | | |
| (363 | ) |
Loss before income tax expenses | |
| (117,989 | ) | |
| (100,546 | ) | |
| (162,115 | ) |
Income tax benefit | |
| 26,380 | | |
| 20,443 | | |
| 23,100 | |
Net loss | |
| (91,609 | ) | |
| (80,103 | ) | |
| (139,015 | ) |
Foreign currency translation adjustment, net of nil tax | |
| 8,654 | | |
| 7,662 | | |
| (268 | ) |
Total comprehensive loss | |
| (82,955 | ) | |
| (72,441 | ) | |
| (139,283 | ) |
Weighted average number of shares used in per share calculation: | |
| | | |
| | | |
| | |
— Basic | |
| 2,515,312,493 | | |
| 2,562,542,847 | | |
| 2,706,024,111 | |
— Diluted | |
| 2,515,312,493 | | |
| 2,562,542,847 | | |
| 2,706,024,111 | |
Net loss per share (cent per share) | |
| | | |
| | | |
| | |
— Basic | |
| (3.64 | ) | |
| (3.13 | ) | |
| (5.14 | ) |
— Diluted | |
| (3.64 | ) | |
| (3.13 | ) | |
| (5.14 | ) |
Share-based compensation expenses were included in: | |
| | | |
| | | |
| | |
Cost of revenues | |
| 66 | | |
| 67 | | |
| 14 | |
Research and development expenses | |
| 2,217 | | |
| 2,411 | | |
| 1,911 | |
Sales and marketing expenses | |
| 662 | | |
| 86 | | |
| 79 | |
General and administrative expenses | |
| 12,022 | | |
| 7,176 | | |
| 6,649 | |
The table below sets forth a reconciliation of
net income/(loss) to non-GAAP adjusted net income/(loss) for the period indicated:
| |
For the Three Months Ended | |
| |
December 31,
2022 | | |
September 30,
2023 | | |
December 31,
2023 | |
| |
USD | | |
USD | | |
USD | |
Net loss | |
| (91,609 | ) | |
| (80,103 | ) | |
| (139,015 | ) |
Share-based compensation expenses | |
| 14,967 | | |
| 9,740 | | |
| 8,653 | |
Impairment on property and equipment | |
| - | | |
| 5,691 | | |
| 6,324 | |
Change in fair value of financial instruments | |
| - | | |
| - | | |
| 10,918 | |
Excess of fair value of Series A Convertible Preferred Shares | |
| - | | |
| - | | |
| 59,199 | |
Non-GAAP adjusted net loss | |
| (76,642 | ) | |
| (64,672 | ) | |
| (53,921 | ) |
CANAAN INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME/(LOSS)
(all amounts in thousands of USD, except share
and per share data, or as otherwise noted)
| |
For the Years Ended | |
| |
December 31, 2022 | | |
December 31, 2023 | |
| |
USD | | |
USD | |
Revenues | |
| | | |
| | |
Products revenue | |
| 618,890 | | |
| 176,898 | |
Mining revenue | |
| 32,530 | | |
| 33,957 | |
Other revenues | |
| 106 | | |
| 622 | |
Total revenues | |
| 651,526 | | |
| 211,477 | |
Cost of revenues | |
| (421,239 | ) | |
| (452,257 | ) |
Gross profit (loss) | |
| 230,287 | | |
| (240,780 | ) |
Operating expenses: | |
| | | |
| | |
Research and development expenses | |
| (81,755 | ) | |
| (64,845 | ) |
Sales and marketing expenses | |
| (9,413 | ) | |
| (8,175 | ) |
General and administrative expenses | |
| (88,302 | ) | |
| (71,249 | ) |
Impairment on property and equipment | |
| - | | |
| (21,126 | ) |
Impairment on cryptocurrency | |
| (7,880 | ) | |
| (4,706 | ) |
Total operating expenses | |
| (187,350 | ) | |
| (170,101 | ) |
Income (loss) from operations | |
| 42,937 | | |
| (410,881 | ) |
Interest income | |
| 2,372 | | |
| 956 | |
Change in fair value of financial instruments | |
| 3,795 | | |
| (10,918 | ) |
Excess of fair value of Series A Convertible Preferred Shares | |
| - | | |
| (59,199 | ) |
Foreign exchange gains, net | |
| 35,935 | | |
| 12,309 | |
Other income, net | |
| 3,295 | | |
| 2,240 | |
Income (loss) before income tax expenses | |
| 88,334 | | |
| (465,493 | ) |
Income tax expense | |
| (18,450 | ) | |
| 51,340 | |
Net income (loss) | |
| 69,884 | | |
| (414,153 | ) |
Foreign currency translation adjustment, net of nil tax | |
| (36,267 | ) | |
| (6,966 | ) |
Total comprehensive income (loss) | |
| 33,617 | | |
| (421,119 | ) |
Weighted average number of shares used in per share calculation: | |
| | | |
| | |
— Basic | |
| 2,560,106,403 | | |
| 2,579,202,596 | |
— Diluted | |
| 2,577,892,069 | | |
| 2,579,202,596 | |
Net earnings (loss) per share (cent per share) | |
| | | |
| | |
— Basic | |
| 2.73 | | |
| (16.06 | ) |
— Diluted | |
| 2.71 | | |
| (16.06 | ) |
Share-based compensation expenses were included in: | |
| | | |
| | |
Cost of revenues | |
| 154 | | |
| 207 | |
Research and development expenses | |
| 10,251 | | |
| 9,098 | |
Sales and marketing expenses | |
| 2,464 | | |
| 234 | |
General and administrative expenses | |
| 50,146 | | |
| 32,535 | |
The table below sets forth a reconciliation of
net income to non-GAAP adjusted net income for the years indicated:
| |
For the Years Ended | |
| |
December 31,
2022 | | |
December 31,
2023 | |
| |
USD | | |
USD | |
Net income (loss) | |
| 69,884 | | |
| (414,153 | ) |
Share-based compensation expenses | |
| 63,015 | | |
| 42,074 | |
Impairment on property and equipment | |
| - | | |
| 21,126 | |
Change in fair value of financial instruments | |
| (3,795 | ) | |
| 10,918 | |
Excess of fair value of Series A Convertible Preferred Shares | |
| - | | |
| 59,199 | |
Non-GAAP adjusted net income (loss) | |
| 129,104 | | |
| (280,836 | ) |
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