- Total Computing Power Sold Rebounded to
4.2 Million Thash/s, up 126.8% QoQ -
SINGAPORE, May 26, 2023
/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,
2023.
Starting from January 1, 2023, the
Company changed its reporting currency from Renminbi to U.S.
dollar. The alignment of the reporting currency with the underlying
operations will better illustrate the Company's results of
operations for each period. The Company has applied the change of
reporting currency retrospectively to its historical results of
operations and financial statements.
First Quarter 2023 Operating and Financial Highlights
Total computing power sold was 4.2 million Thash/s,
as compared to 1.9 million Thash/s in the fourth quarter of 2022
and 4.3 million Thash/s in the same period of 2022.
Revenues were US$55.2
million, as compared to US$58.3
million in the fourth quarter of 2022 and US$201.8 million in the same period of 2022.
Mining revenue was US$11.1
million, representing an increase of 3.3% from US$10.7 million in the fourth quarter of 2022 and
an increase of 130.2% from US$4.8
million in the same period of 2022.
Mr. Nangeng Zhang, Chairman and Chief Executive Officer of
Canaan, commented, "The first quarter of 2023 was a challenging
start. The uncertainties in the market have made our performance
less than ideal. Despite these difficulties, we remain committed to
our business strategy and confident in our long-term prospects. We
continued to invest in our research and development and production
capabilities to retain our competitive edge and prepare ourselves
for future increases in customer demand. We also took this
opportunity to enhance our sales system to reach more global
customers and improve their level of satisfaction with our
products. In addition, we remain committed to executing on the
expansion of our mining strategy, particularly in regards to
expanding our installed hash rate. Going forward, we also intend to
continue to geographically diversify our mining operations across
more countries. Moreover, we sustained a solid balance sheet to
remain financially resilient. Now that we are in the second
quarter, although the price of Bitcoin has not risen
substantially, the Company's operational results are on a positive
trajectory trend looking forward."
"In this brand-new industry, we are making history every day.
Canaan is constantly developing the next-generation computing power
that underpins the growing adoption of Bitcoin, the
world's leading decentralized monetary system. We are grateful for
our ability to contribute to this remarkable era of innovation and
seek to employ our prowess in cutting-edge semiconductor design to
benefit society," Mr. Zhang concluded.
Mr. James Jin Cheng, Chief
Financial Officer of Canaan, stated, "In the first quarter of 2023,
we experienced a further contraction in our sales revenue, due to
the industry-wide reduction in selling prices, and unforeseen
delays in payment and shipment following a series of U.S. bank
failures. In addition, our mining business encountered difficulties
that postponed the increase of our installed hash rates. These
compounding factors together led to us recording total revenues of
US$55.2 million, which fell short of
our expectations. Despite the impacted topline, we strived to
maintain a resilient cash level while investing in research and
development and our supply chain to prepare resources for our
future business expansion. Through diligent cost and expense
control, we managed to narrow our operating loss by 31.4% from the
last quarter."
"In spite of the current headwinds, I am confident that the
Company is headed in the right direction. We have secured several
large contract orders recently, enabling us to obtain increased
cash flows from customer advances. In addition, as we endeavor to
develop more mining collaborations, our installed hash rates are
increasing, endowing us with a greater number of Bitcoins to hold
on our balance sheet. These investments to secure both foundry
capacity and mining farm resources will bolster our competitive
position in the next Bitcoin price cycle," Mr. Cheng
added.
First Quarter 2023 Financial Results
Revenues in the first quarter of 2023 were
US$55.2 million, as compared to
US$58.3 million in the fourth quarter
of 2022 and US$201.8 million in the
same period of 2022. Total revenues consisted of US$44.1 million in products revenue, US$11.1 million in mining revenue and
US$0.3 million in other revenues.
Products revenue in the first quarter of 2023 was
US$44.1 million, compared to
US$47.5 million in the fourth quarter
of 2022 and US$196.9 million in the
same period of 2022. The decrease compared to the fourth quarter of
2022 was mainly due to the lower selling price which resulted from
the low market demand, despite a slow recovery in
Bitcoin price and a sequential increase in total
computing power sold. The decrease compared to the first quarter of
2022 was mainly due to the lower total computing power sold and
lower selling price which resulted from the declined
Bitcoin price. AI product revenue was US$0.4 million in the first quarter of 2023, as
compared to US$0.2 million in the
fourth quarter of 2022 and US$0.6
million in the same period of 2022.
Mining revenue in the first quarter of 2023 was
US$11.1 million, representing an
increase of 3.3% from US$10.7 million
in the fourth quarter of 2022 and an increase of 130.2% from
US$4.8 million in the same period of
2022. The sequential increase was mainly driven by the
Bitcoin price recovery. The year-over-year increase
was mainly attributable to the increased computing power energized
for mining.
Cost of revenues in the first quarter of 2023 was
US$102.8 million, compared to
US$122.5 million in the fourth
quarter of 2022 and US$78.3 million
in the same period of 2022.
Products costs in the first quarter of 2023 were
US$75.4 million, compared to
US$98.9 million in the fourth quarter
of 2022 and US$74.7 million in the
same period of 2022. The year-over-year increase was mainly due to
the increased production cost of the A13 series. The sequential
decrease was mainly due to more inventory write-down, prepayment
write-down and provision for reserve for inventory purchase
commitments accrued in the fourth quarter of 2022, which resulted
from lower subsequent selling prices. The inventory write-down,
prepayment write-down and provision for reserve for inventory
purchase commitments accrued for this quarter was US$34.9 million, compared to US$60.3 million for the fourth quarter of 2022
and US$0.1 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 first quarter of 2023 were
US$27.3 million, compared to
US$23.6 million in the fourth quarter
of 2022 and US$3.6 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 and amortization. The depreciation
for mining machines deployed in this quarter was US$16.3 million, compared to US$12.6 million in the fourth quarter of 2022 and
US$2.0 million in the same period of
2022. The sequential and year-over-year increases were mainly due
to the increase in mining capacity.
Gross loss in the first quarter of 2023 was
US$47.5 million, compared to a
gross loss of US$64.1 million in the
fourth quarter of 2022 and a gross profit of US$123.5 million in the same period of 2022.
Total operating expenses in the first quarter of
2023 were US$38.1 million,
compared to US$60.8 million in
the fourth quarter of 2022 and US$38.0
million in the same period of 2022.
Research and development expenses in the first quarter of 2023
were US$19.1 million, compared to
US$33.4 million in the fourth
quarter of 2022 and US$15.2 million in the same period of 2022.
The sequential decrease was primarily due to US$14.3 million one-off research and development
expenditure for the A13 series products incurred in the fourth
quarter of 2022. The year-over-year increase was primarily
attributable to an increase of US$5.5
million in staff costs in technology-related departments.
Research and development expenses in the first quarter of 2023 also
included share-based compensation expenses of US$2.3 million.
Sales and marketing expenses in the first quarter of 2023 were
US$1.5 million, compared to
US$1.1 million in the fourth
quarter of 2022 and US$3.0 million in the same period of 2022.
The sequential increase was mainly due to an increase in staff
costs. The year-over-year decrease was mainly due to a decrease of
US$0.8 million in staff costs and a
decrease of US$0.5 million in
share-based compensation expenses. Sales and marketing expenses in
the first quarter of 2023 also included share-based compensation
expenses reversal of US$0.2
million.
General and administrative expenses in the first quarter of 2023
were US$17.6 million, compared
to US$24.6 million in the fourth
quarter of 2022 and US$19.8 million in the same period of 2022.
The sequential decrease was mainly due to US$2.6 million of realized gain on
bitcoin sold, a decrease of US$1.6 million in share-based compensation
expenses, a decrease of US$1.0
million in professional service fees and a decrease of
US$0.8 million in staff costs. The
year-over-year decrease was mainly due to US$2.6 million of realized gain on
bitcoin sold in the first quarter of 2023. General and
administrative expenses in the first quarter of 2023 also included
share-based compensation expenses of US$10.4
million.
Impairment on cryptocurrency in the
first quarter of 2023 was nil, compared to US$1.7 million in the fourth quarter of 2022 and
US$55 thousand in the same period of
2022.
Loss from operations in the first quarter of 2023
was US$85.7 million, compared to a
loss from operations of US$125.0 million in the fourth quarter of
2022 and an income from operations of US$85.4 million in the same period of
2022.
Non-GAAP loss from operations in the first quarter of
2023 was US$73.1 million, compared to
a non-GAAP loss from operations of US$110.0
million in the fourth quarter of 2022 and a non-GAAP income
from operations of US$101.1 million
in the same period of 2022. Non-GAAP income (loss) from operations
excludes share-based compensation expenses. For further
information, please refer to "Use of Non-GAAP Financial Measures"
in this press release.
Foreign exchange losses, net in the first quarter of 2023
were US$2.6 million, compared with a
gain of US$3.7 million in the fourth
quarter of 2022 and a gain of US$0.1
million in the same period of 2022, respectively. The
foreign exchange losses were due to the US dollar depreciation
against the Renminbi during the first quarter of 2023.
Net loss in the first quarter of 2023 was
US$84.4 million, compared to a
net loss of US$91.6 million in
the fourth quarter of 2022 and a net income of US$65.1 million in the same period of
2022.
Non-GAAP adjusted net loss in the first quarter of
2023 was US$71.8 million, as compared
to a non-GAAP adjusted net loss of US$76.6 million in the fourth quarter of
2022 and a non-GAAP adjusted net income of US$80.8 million in the same period of 2022.
Non-GAAP adjusted net income (loss) 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 2023 was a gain of
US$9.2 million, compared with a
gain of US$8.7 million in the
fourth quarter of 2022 and a gain of US$6.6
million in the same period of 2022, respectively.
Basic and diluted net loss per American depositary share
("ADS") in the first quarter of 2023 were US$0.51. In comparison, basic and diluted net
loss per ADS in the fourth quarter of 2022 were US$0.55, while basic and diluted net earnings per
ADS in the same period of 2022 were US$0.38. Each ADS represents 15 of the Company's
Class A ordinary shares.
As of March 31, 2023, the Company
held cryptocurrency assets that primarily
comprised 623 bitcoins, with a carrying value of US$13.4 million.
As of March 31, 2023, the Company
had cash and cash equivalents of US$72.0 million, compared to US$101.6 million as of December 31, 2022.
Shares Outstanding
As of March 31, 2023, the Company
had a total of 159,432,773 ADSs outstanding, each representing 15
of the Company's Class A ordinary shares.
Recent Developments
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 a potential at-the-market ("ATM") equity
offering program, with H.C. Wainwright & Co., LLC ("HCW").
From March 7, 2023, the date the
Company reported its financial results for the fourth quarter of
2022, to May 25, 2023, the Company
utilized the ATM for a small amount of fundraising to test the
financing facility. During the above period, the Company sold
1,532,219 ADSs with net proceeds of approximately US$4.2 million at an average price of
US$2.73 per ADS. The Company executed
the above sales within ten trading days in March and did not
utilize the ATM after March 31.
The Company expects the ATM program to be 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 agreements and the ATM
facility is duly established.
The Mining Machine Purchase Agreement with Cipher Mining
Inc.
On May 9, 2023, the Company
jointly announced an agreement with Cipher Mining Inc. ("Cipher"),
a leading developer and operator of bitcoin mining
data centers, whereby Cipher has purchased from Canaan 11,000 new
A1346 model mining machines to be delivered in the third quarter of
2023 for use at Cipher's Odessa,
Texas facility.
Business Outlook
For the second quarter of 2023, the Company expects total
revenues to be approximately US$72
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 at
8:00 A.M. U.S. Eastern Time on May 26,
2023 (or 8:00 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. First Quarter 2023 Earnings
Conference Call
Registration Link:
https://register.vevent.com/register/BIdaaba906f8b048cf8f589d21660a7a9b
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 2018, Canaan released the world's first RISC-V
architecture commercial edge AI chip. 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,
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 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 change in fair value of warrant liability, and
adjusted net income (loss) as net income (loss) excluding share-based 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 CONDENSED
CONSOLIDATED BALANCE SHEETS
(all amounts in
thousands, except share and per share data, or as otherwise
noted)
|
|
|
As of December
31,
|
As of March
31,
|
|
2022
|
2023
|
|
USD
|
USD
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
101,551
|
71,972
|
Inventories
|
211,640
|
310,456
|
Prepayments and other
current assets
|
242,523
|
138,329
|
Total current
assets
|
555,714
|
520,757
|
Non-current
assets:
|
|
|
Cryptocurrency
|
12,531
|
13,394
|
Property, equipment and
software
|
85,350
|
68,728
|
Right-of-use assets,
net
|
4,250
|
3,669
|
Deferred tax
assets
|
21,740
|
21,543
|
Other non-current
assets
|
2,504
|
2,699
|
Non-current financial
investment
|
2,872
|
2,910
|
Total non-current
assets
|
129,247
|
112,943
|
Total
assets
|
684,961
|
633,700
|
LIABILITIES, AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
16,703
|
26,947
|
Contract
liabilities
|
662
|
8,251
|
Income tax
payable
|
7,228
|
7,323
|
Accrued liabilities and
other current liabilities
|
48,349
|
38,107
|
Lease liabilities,
current
|
2,314
|
2,359
|
Total current
liabilities
|
75,256
|
82,987
|
Non-current
liabilities:
|
|
|
Lease liabilities,
non-current
|
1,441
|
695
|
Other non-current
liabilities
|
598
|
1,895
|
Total
liabilities
|
77,295
|
85,577
|
Shareholders'
equity:
|
|
|
Ordinary shares
(US$0.00000005 par value;
1,000,000,000,000
shares authorized, 2,804,138,492
and 2,820,686,147
shares issued, 2,496,001,757 and
2,526,208,472 shares
outstanding as of December 31,
2022 and March 31,
2023, respectively)
|
-
|
-
|
Treasury stocks
(US$0.00000005 par value;
308,136,735 shares as
of December 31, 2022 and
294,477,675 shares as
of March 31, 2023, respectively)
|
(57,055)
|
(57,055)
|
Additional paid-in
capital
|
492,220
|
507,884
|
Statutory
reserves
|
14,892
|
14,892
|
Accumulated other
comprehensive loss
|
(36,913)
|
(27,756)
|
Retained
earnings
|
194,522
|
110,158
|
Total shareholders'
equity
|
607,666
|
548,123
|
Total liabilities
and shareholders' equity
|
684,961
|
633,700
|
CANAAN
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME/(LOSS)
(all amounts in
thousands, except share and per share data, or as otherwise
noted)
|
|
|
For the Three Months
Ended
|
|
March 31, 2022
|
December 31,
2022
|
March 31, 2023
|
|
USD
|
USD
|
USD
|
Revenues
|
|
|
|
Products
revenue
|
196,934
|
47,546
|
44,114
|
Mining
revenue
|
4,817
|
10,735
|
11,089
|
Other
revenues
|
21
|
33
|
29
|
Total
revenues
|
201,772
|
58,314
|
55,232
|
Cost of
revenues
|
(78,310)
|
(122,454)
|
(102,778)
|
Gross profit
(loss)
|
123,462
|
(64,140)
|
(47,546)
|
Operating
expenses:
|
|
|
|
Research and
development expenses
|
(15,172)
|
(33,364)
|
(19,058)
|
Sales and marketing
expenses
|
(2,982)
|
(1,145)
|
(1,485)
|
General and
administrative expenses
|
(19,825)
|
(24,633)
|
(17,577)
|
Impairment on
cryptocurrency
|
(55)
|
(1,678)
|
-
|
Total operating
expenses
|
(38,034)
|
(60,820)
|
(38,120)
|
Income (loss) from
operations
|
85,428
|
(124,960)
|
(85,666)
|
Interest
income
|
483
|
1,141
|
440
|
Change in fair value of
warrant liability
|
(66)
|
-
|
-
|
Foreign exchange
gains (losses), net
|
136
|
3,741
|
(2,559)
|
Other
income, net
|
62
|
2,089
|
1,078
|
Income (loss) before
income tax expenses
|
86,043
|
(117,989)
|
(86,707)
|
Income tax
benefit (expense)
|
(20,949)
|
26,380
|
2,341
|
Net income
(loss)
|
65,094
|
(91,609)
|
(84,366)
|
Foreign currency
translation adjustment, net of nil tax
|
6,576
|
8,654
|
9,158
|
Total comprehensive
income (loss)
|
71,670
|
(82,955)
|
(75,208)
|
Weighted average
number of shares used in
per share
calculation:
|
|
|
|
— Basic
|
2,580,294,054
|
2,515,312,493
|
2,502,558,388
|
— Diluted
|
2,582,735,151
|
2,515,312,493
|
2,502,558,388
|
Net
earnings (loss) per share (cent per
share)
|
|
|
|
— Basic
|
2.52
|
(3.64)
|
(3.37)
|
— Diluted
|
2.52
|
(3.64)
|
(3.37)
|
Share-based
compensation expenses
were included
in:
|
|
|
|
Cost of
revenues
|
-
|
66
|
66
|
Research and
development expenses
|
3,092
|
2,217
|
2,324
|
Sales and marketing
expenses
|
327
|
662
|
(164)
|
General and
administrative expenses
|
12,270
|
12,022
|
10,387
|
|
|
|
|
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
|
|
March 31,
2022
|
December 31,
2022
|
March 31,
2023
|
|
USD
|
USD
|
USD
|
Net income
(loss)
|
65,094
|
(91,609)
|
(84,366)
|
Share-based
compensation expenses
|
15,689
|
14,967
|
12,613
|
Change in fair value of
warrant liability
|
66
|
-
|
-
|
Non-GAAP adjusted net
income (loss)
|
80,849
|
(76,642)
|
(71,753)
|
View original
content:https://www.prnewswire.com/news-releases/canaan-inc-reports-unaudited-first-quarter-2023-financial-results-301835538.html
SOURCE Canaan Inc.