SINGAPORE, Feb. 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 14% 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 and change in fair value of financial
instruments 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)
|
View original
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SOURCE Canaan Inc.