Nano(NA) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue for the first half of 2023 was RMB52.3 million or $7.2 million, a significant decrease from RMB380.1 million in the same period of 2022, primarily due to a drop in sales volume of Z and B series products and a decline in service revenue [10] - The cost of revenue decreased to RMB115.2 million or $15.9 million from RMB203.8 million year-over-year [10] - Loss from operations was RMB136.4 million or $18.9 million for the first half of 2023, compared to a profit of RMB107.6 million in the same period of 2022 [13] - Net loss was RMB134.3 million or $18.6 million, compared to a net income of RMB111.4 million in the same period of 2022 [13] - Basic and diluted loss per share was RMB1.2 or $0.17 for the first half of 2023, compared to RMB1.07 for the same period of 2022 [13] - Cash and cash equivalents decreased to RMB16.8 million or $2.3 million from RMB87.8 million as of December 31, 2022 [13] Business Line Data and Key Metrics Changes - The decrease in revenue was attributed to lower sales of Z and B series products, while 3D products began to contribute to the revenue stream [10] - Selling and marketing expenses decreased by 6.5% to RMB9.5 million or $1.3 million, down from RMB10.2 million in the prior year [11] - General and administrative expenses increased by 83.8% to RMB31 million or $4.3 million, primarily due to higher employee salaries, professional fees, and rental fees [12] - Research and development expenses decreased by 21% to RMB33 million or $4.6 million, attributed to reduced design, service, and material costs [12] Market Data and Key Metrics Changes - The company experienced a commendable uptick in overseas sales during the first half of 2023, despite challenges in the cryptocurrency sector [5] - The management noted a continuous downturn in cryptocurrency prices impacting overall performance [15] Company Strategy and Development Direction - The company is focusing on exploring new markets and solidifying its presence, particularly in North America, Northern Europe, the Middle East, and Southeast Asia [5] - The development of iPollo's capabilities in AI reasoning and real-time rendering for the 3D metaverse is a key strategic initiative [6] - The company is committed to developing a Web 3 AI training platform and expanding its product offerings to cater to the evolving Web 3 landscape [8] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment for the cryptocurrency sector and the impact on the company's performance [4] - The company anticipates maintaining sales of existing products while expecting contributions from new product lineups in the second half of 2023 and a noticeable uptick in sales next year [17] - Management is positioning itself across the entire value chain of Web 3, including higher-level applications like AIGC and AR gadgets [19] Other Important Information - The company is ramping up the addition of iPollo computing nodes and expanding support for model training for data sets below 10 bytes [6] - The company is developing the Cuckoo 3 product, expected to offer substantial performance improvements [18] Q&A Session Summary Question: Reason for revenue drop from December 2022 to June 2023 - The drop in revenue was primarily due to the transition to proof-of-stake and the continuous downturn in cryptocurrency prices [15] Question: Rationale behind new developments less associated with B and V series products - The company is launching products that cater to various segments of the Web 3 evolution, moving beyond traditional computational devices [16] Question: Expectations for market and financial results in the second half of the year and next year - The company expects to maintain sales of existing products while seeing contributions from new product offerings [17] Question: Plans for existing products or product iterations - The company is launching new Web 3 products and developing the Cuckoo 3 product for improved performance [18] Question: Solutions to drive business development after unimpressive performance - The company is focusing on upgrading existing products and diversifying into higher-level applications within the Web 3 landscape [19]