Canaan(US:CAN)2021-11-16 16:19Financial Data and Key Metrics Changes - The company achieved total net revenues of RMB 1,317.6 million, representing a year-over-year increase of 708.2% and a quarter-over-quarter increase of 21.8%, marking a historical high [5][15][19] - Gross profit reached RMB 741.7 million, up 73.3% sequentially, with a gross margin of 56.3% [15][19] - Non-GAAP adjusted net income was RMB 587.5 million, reflecting an 83.6% sequential increase [19] - Cash and cash equivalents increased by 334% to RMB 1,698.5 million compared to RMB 391.3 million as of December 31, 2020 [19] Business Line Data and Key Metrics Changes - The company sold 6.7 million terahash of computing power, an increase of 128.4% year-over-year and 12.9% quarter-over-quarter [7][15] - The average selling price (ASP) of computing power improved by 7% sequentially [15] - R&D expenses increased by 188.8% year-over-year to RMB 92.8 million, driven by increased staff costs and development expenses [11][17] Market Data and Key Metrics Changes - The company delivered mining machines to 26 countries and regions, strengthening its presence in overseas markets, particularly in the U.S. [7] - Repeat orders from large-scale mining companies indicated strong recognition of the company's product performance and service quality [7] Company Strategy and Development Direction - The company aims to expand its business footprint in overseas markets to offset the impact of regulatory changes in China [24] - A multipronged growth strategy has been implemented, establishing long-term partnerships with major foundries to secure stable supplies [26] - The company is focusing on renewable energy mining and enhancing its technological capabilities through R&D investments [6][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from regulatory changes and supply constraints but emphasized the company's ability to navigate these issues [12][13] - The company expects revenue in Q4 2021 to increase by 35% to 50% sequentially, reflecting confidence in continued growth [14] - The management noted that the overall global demand for mining machines has resumed an upward trajectory despite short-term volatilities [23] Other Important Information - The company has initiated a new share repurchase program of up to $20 million, reflecting confidence in its growth potential [12] - The company is negotiating additional contracts for approximately 1 million terahash of computing power to be shipped by January 2022 [10][32] Q&A Session Summary Question: Impact of Chinese government regulations on cryptocurrency mining - Management noted that the computing power from mining firms in Mainland China has largely relocated to overseas markets, and the overall global demand for mining machines has resumed an upward trajectory [22][23] Question: Collaboration with partners and cost operations - The company has established long-term partnerships with multiple foundries to secure stable supplies and improve production capacity [26][27] Question: Future mining business impact from regulations - Management believes that new policies in Kazakhstan will promote sustainable development in the cryptocurrency mining sector, benefiting large-scale companies [30] Question: Bitcoin holding and trading strategy - The company currently holds 23.86 Bitcoin and plans to hold them in the short term, with the possibility of trading in the future [33] Question: Mining costs in Q3 - The costs of mining in Q3 were about 39% of mining revenue, with a gross margin of 61%, slightly higher than the gross margin from sales of mining machines [35]