Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Canaan Inc (CAN, Financial) achieved a total revenue of around USD 72 million, marking a sequential growth of around 105%.
- The company successfully launched and began large-scale deliveries of its new A14 and A15 series products.
- Canaan Inc (CAN) saw a significant 84% sequential growth in total computing power sales, driven by the A14 series.
- The company expanded its global sales network, securing large orders in North America and the Middle East.
- Canaan Inc (CAN) maintained a stable mining gross margin of 33% and increased its self-mining operational hash rate to 4.5 exahash per second.
Negative Points
- Despite revenue growth, Canaan Inc (CAN) reported a net loss of USD 42 million for the quarter.
- The company faced a USD 10 million reduction in cryptocurrency fair value on the income statement due to the decline in Bitcoin prices.
- Mining revenue decreased by 11% quarter over quarter, impacted by the Bitcoin halving event.
- Canaan Inc (CAN) accrued USD 17.3 million for inventory write-downs and provisions, affecting gross profit.
- The company is exiting operations in Kazakhstan and Paraguay, indicating challenges in certain regional markets.
Q & A Highlights
Highlights from Canaan Inc (CAN) Q2 2024 Earnings Call
Q: Can you provide your perspective on the inventory situation throughout the industry?
A: James Cheng, CFO: The inventory level in Q2 compared to Q1 has eased somewhat due to increased customer demand post-halving. Many customers are upgrading their mining machines, leading to a more optimistic inventory situation. However, competitors still hold significant inventory.
Q: Could you discuss the overall pricing trends and how they affect demand?
A: James Cheng, CFO: Demand and supply are critical factors. Currently, prices are low despite the demand for upgrading machines. If Bitcoin prices rise rapidly, demand will increase significantly, potentially driving up mining machine prices. This could happen in late Q3 or early next year.
Q: Is the company considering shifting the power use for self-mining to provide electricity for AI service providers?
A: Nangeng Zhang, CEO: Currently, there are no plans to shift electricity use from mining to AI services. The focus remains on optimizing the mining business, which offers more predictable returns.
Q: Does the potential Nasdaq policy change regarding penny stocks impact the company?
A: James Cheng, CFO: The proposed Nasdaq regulation is still under discussion and would take time to implement. Even if approved, it would have little impact on Canaan Inc. The company believes its stock price is undervalued and expects it to improve with continued strong performance.
Q: Can you provide an overview of the manufacturing landscape and how Canaan plans to gain market share?
A: Nangeng Zhang, CEO: The key to increasing market share is product innovation and comprehensive sales systems. Canaan has launched new products like the A14 and A1566 series and is expanding its product line. The company is also focusing on building a multi-channel sales approach and establishing mining demonstration projects in key regions.
Q: What are your thoughts on the Russian government's move to legalize cryptocurrency mining? Could China follow suit?
A: Nangeng Zhang, CEO: Canaan does not conduct business in Russia due to compliance and reputation considerations. The company focuses on regions with stable legal frameworks and energy advantages for its mining operations.
Q: Can you elaborate on your plan to expand to 10 exahash in the US?
A: Nangeng Zhang, CEO: The company is negotiating with corporate partners in the US and will announce details when finalized. The expansion plan is part of Canaan's strategy to increase its mining hash rate in North America.
Q: How did the Bitcoin halving event impact your financial performance?
A: James Cheng, CFO: Despite the halving event, Canaan achieved a total revenue of $72 million, beating guidance by $2 million. The company saw a significant increase in average selling price and computing power sold, leading to a narrowed gross loss and improved cash balance.
Q: What are your expectations for Q3 2024 revenue?
A: James Cheng, CFO: Canaan anticipates Q3 revenue to be approximately $73 million. The company expects continued strong performance from its A14 series and the ramp-up of the A15 series.
Q: How is Canaan addressing the challenges of the Bitcoin halving and market volatility?
A: Nangeng Zhang, CEO: Canaan is investing in product development and capacity expansion to meet post-halving demand. The company is also developing consumer-focused products to drive broader public adoption of Bitcoin mining.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
