Canaan Inc. Reports Unaudited Fourth Quarter and Full Year 2020 Financial Results
Canaan Inc. (NASDAQ: CAN) reported its unaudited financial results for Q4 and full-year 2020. The fourth quarter saw total net revenues plummet to RMB38.2 million (US$5.9 million), a staggering 91.8% drop year-over-year. Total computing power sold fell 93.1% to 0.2 million Thash/s. Despite the challenges, gross profit improved to RMB9.1 million from previous losses. The net loss narrowed significantly to RMB72 million from RMB798.2 million year-over-year. For 2021, Canaan expects improved revenues, forecasting at least RMB400 million in Q1, buoyed by a surge in Bitcoin prices.
- Gross profit in Q4 2020 improved to RMB9.1 million from a loss of RMB673.4 million YoY.
- Total computing power sold in 2020 was 6.6 million Thash/s despite a 37.1% YoY decline.
- The net loss for Q4 2020 narrowed to RMB72 million from RMB798.2 million in Q4 2019.
- Contracted orders reached US$174 million with US$66 million cash advances as of December 31, 2020.
- Canaan expects Q1 2021 revenues to be not less than RMB400 million.
- Total net revenues decreased by 91.8% YoY in Q4 2020.
- Total computing power sold dropped 93.1% YoY in Q4 2020.
- Net loss for the full year 2020 was RMB215.1 million compared to RMB1,034.5 million in 2019.
HANGZHOU, China, April 12, 2021 (GLOBE NEWSWIRE) -- 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, 2020.
Fourth quarter 2020 Operating and Financial Highlights
Total computing power sold was 0.2 million Thash/s, representing a year-over-year decrease of
Total net revenues decreased to RMB38.2 million (US
Gross profit was RMB9.1 million (US
Net loss narrowed to RMB72.0 million (US
Non-GAAP adjusted net loss narrowed to RMB73.1 million (US
Full Year 2020 Operating and Financial Highlights
Total computing power sold was 6.6 million Thash/s, representing a year-over-year decrease of
Total net revenues decreased to RMB447.7 million (US
Gross profit was RMB37.8 million (US
Net loss narrowed to RMB215.1 million (US
Non-GAAP adjusted net loss narrowed to RMB212.1 million (US
Mr. Nangeng Zhang, Chairman and Chief Executive Officer of Canaan, commented, “Although the outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter of 2020, our market leadership has enabled us to attain US
Mr. Tong He, Chief Financial Officer of Canaan, stated, “Due to supply chain disruptions, as the price of Bitcoin rallied in late 2020, we experienced a surge of demand for high-quality mining machines both in and outside of China. By leveraging our established market presence, we further optimized our international customer base, secured a large number of pre-orders from clients in both domestic and international markets, and streamlined our supply chain management to optimize our cash flow. Our abundant cash reserve gives us the confidence to expand our global client service coverage and develop more first-rate products going forward. Meanwhile, the rapid development of our new business initiatives should help us to launch into a new growth cycle and deliver increasing value to both our customer and shareholders over the long term.”
Fourth quarter 2020 Financial Results
Total net revenues in the fourth quarter of 2020 decreased to RMB38.2 million (US
Cost of revenues in the fourth quarter of 2020 decreased to RMB29.2 million (US
Gross profit in the fourth quarter of 2020 was RMB9.1 million (US
Total operating expenses in the fourth quarter of 2020 were RMB80.1 million (US
Research and development expenses in the fourth quarter of 2020 were RMB40.1 million (US
Selling and marketing expenses in the fourth quarter of 2020 were RMB6.1 million (US
General and administrative expenses in the fourth quarter of 2020 were RMB33.9 million (US
Loss from operations in the fourth quarter of 2020 narrowed to RMB71.0 million (US
Net loss attributable to ordinary shareholders in the fourth quarter of 2020 narrowed to RMB72.0 million (US
Non-GAAP adjusted net loss in the fourth quarter of 2020 narrowed to RMB73.1 million (US
Basic and diluted net loss per ADS in the fourth quarter of 2020 were both RMB0.46 (US
Full Year 2020 Financial Results
Total net revenues in the full year of 2020 were RMB447.7 million (US
Cost of revenues in the full year of 2020 decreased by
Gross profit in the full year of 2020 was RMB37.8 million (US
Total operating expenses in the full year of 2020 decreased by
Research and development expenses in the full year of 2020 decreased by
Sales and marketing expenses in the full year of 2020 decreased by
General and administrative expenses in the full year of 2020 decreased by
Loss from operations in the full year of 2020 narrowed to RMB253.9 million (US
Net loss attributable to ordinary shareholders in the full year of 2020 narrowed to RMB215.1 million (US
Non-GAAP adjusted net loss in the full year of 2020 narrowed to RMB212.1 million (US
Basic and diluted net loss per ADS in the full year of 2020 were both RMB1.38 (US
Contract liabilities as of December 31, 2020, increased to RMB430.4 million (US
As of December 31, 2020, the Company had cash and cash equivalents of RMB391.3 million (US
Business Outlook
As the price of Bitcoin started to move up in the fourth quarter of 2020, the Company believes that its revenue will be substantially improved in 2021 and expects that its total net revenues in the first quarter of 2021 will be not less than RMB400.0 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to changes, particularly in regards to the potential fluctuations in the price of Bitcoin as well as the impact of COVID-19 on the global economy.
Conference Call Information
The Company’s management team will hold a Direct Event conference call on Monday, April 12, 2021, at 8:00 A.M. Eastern Time (or 8:00 P.M. Beijing 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 2020 Earnings Conference Call |
| Registration Link: | http://apac.directeventreg.com/registration/event/8075184 |
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, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.
A replay of the conference call will be accessible through April 20, 2021, by dialing the following numbers:
| International: | +61-2-8199-0299 |
| United States: | +1-646-254-3697 |
| Hong Kong, China: | +852-3051-2780 |
| Replay PIN: | 8075184 |
A live and archived webcast of the conference call will also be available at the Company’s investor relations website at investor.canaan-creative.com.
About Canaan Inc.
Established in 2013, Canaan Inc. provides high-performance computing solutions to efficiently solve complex problems. In 2016, Canaan successfully initiated the production of its first 16nm chip and passed the test to receive China's national high-tech enterprise certification. In 2018, Canaan achieved major technological breakthroughs to launch the K210, the world's first-ever RISC-V-based edge artificial intelligence (AI) chip, which is now widely used for access control in situations such as smart door locks and more. Canaan Inc. is currently focused on the research and development of advanced technology, including such areas as AI chips, AI algorithms, AI architectures, system on a chip (SoC) integration and chip integration. Using the AI chip as its base, Canaan Inc. has established an intellectual value chain. Canaan Inc. also provides a suite of AI service solutions and is able to tailor these solutions to the needs of its partners. For more information, please visit: investor.canaan-creative.com.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.5250 to US
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. 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 NonGAAP Financial Measures
In evaluating Canaan’s business, the Company considers and uses adjusted net income as a supplemental measure to review and assess its operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. GAAP. The Company defines adjusted net loss as net loss excluding sharebased compensation expense.
Canaan believes that adjusted net income helps to identify underlying trends in the Company’s business that could otherwise be distorted by the effect of the expenses that the Company excludes in adjusted net income. The Company believes that adjusted net income provides useful information about our operating results, enhances the overall understanding of Canaan’s past performance and future prospects and allows 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 measure “adjusted net loss” is not defined under U.S. GAAP, is not presented in accordance with U.S. GAAP and has limitations as an analytical tool. One of the key limitations of using adjusted net loss is that it does not reflect all of the items of income and expense that affect the Company’s operations. Share-based compensation has been and may continue to be incurred in Canaan’s business and is not reflected in the presentation of adjusted net loss. Further, the non-GAAP financial measure “adjusted net loss” may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.
Investor Relations Contact
Canaan Inc.
Mr. Shaoke Li
Email: IR@canaan-creative.com
ICR Inc.
Jack Wang
Tel: +1 (347) 396-3281
Email: canaan.ir@icrinc.com
| CANAAN INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (all amounts in thousands of RMB, except share and per share data, or as otherwise noted) | ||||||
| As of December 31, | ||||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | US$ | ||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 516,607 | 391,310 | 59,971 | |||
| Restricted cash | 8,239 | 4,494 | 689 | |||
| Short-term investments | 11,005 | 62,386 | 9,561 | |||
| Accounts receivable | 2,872 | 7,128 | 1,092 | |||
| Inventories | 196,067 | 225,522 | 34,563 | |||
| Prepayments and other current assets | 206,020 | 316,366 | 48,484 | |||
| Total current assets | 940,810 | 1,007,206 | 154,360 | |||
| Non-current assets: | ||||||
| Property, equipment and software | 22,602 | 12,193 | 1,869 | |||
| Right-of-use assets, net | 22,764 | 14,422 | 2,210 | |||
| Other non-current assets | 5,250 | 2,530 | 388 | |||
| Non-current financial investment | - | 25 | 4 | |||
| Total non-current assets | 50,616 | 29,170 | 4,471 | |||
| Total assets | 991,426 | 1,036,376 | 158,831 | |||
| LIABILITIES, AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Short-term debts | 99,903 | 34,754 | 5,326 | |||
| Accounts payable | 99,050 | 37,407 | 5,733 | |||
| Notes payable | 27,462 | 13,963 | 2,140 | |||
| Contract liabilities | 8,288 | 430,388 | 65,960 | |||
| Accrued liabilities and other current liabilities | 40,691 | 63,343 | 9,708 | |||
| Lease liabilities, current | 9,838 | 12,621 | 1,934 | |||
| Total current liabilities | 285,232 | 592,476 | 90,801 | |||
| Non-current liabilities: | ||||||
| Lease liabilities, non-current | 13,399 | 3,322 | 509 | |||
| Other non-current liabilities | - | 8,020 | 1,229 | |||
| Total non-current liabilities | 13,399 | 11,342 | 1,738 | |||
| Total liabilities | 298,631 | 603,818 | 92,539 | |||
| Shareholders’ equity: | ||||||
| Ordinary shares (US 1,000,000,000,000 shares authorized, 2,372,222,222 shares issued, 2,350,123,270 and 2,328,326,132 shares outstanding as of December 31, 2019 and 2020, respectively) | 1 | 1 | - | |||
| Subscriptions receivable from shareholders | (1 | ) | (1 | ) | - | |
| Treasury stocks (US and 43,896,090 shares as of December 31, 2019 and 2020, respectively) | - | (23,915 | ) | (3,665 | ) | |
| Additional paid-in capital | 1,631,609 | 1,634,619 | 250,516 | |||
| Statutory reserves | 97,307 | 97,307 | 14,913 | |||
| Accumulated other comprehensive loss | (55,542 | ) | (79,780 | ) | (12,227 | ) |
| Accumulated deficit | (980,579 | ) | (1,195,673 | ) | (183,245 | ) |
| Total shareholders’ equity | 692,795 | 432,558 | 66,292 | |||
| Total liabilities and shareholders’ equity | 991,426 | 1,036,376 | 158,831 | |||
| CANAAN INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (all amounts in thousands of RMB, except share and per share data, or as otherwise noted) | |||||||||
| For the Three Months Ended | |||||||||
| December 31, 2019 | September 30, 2020 | December 31, 2020 | December 31, 2020 | ||||||
| RMB | RMB | RMB | US$ | ||||||
| Net revenues | |||||||||
| Products revenue | 448,289 | 159,727 | 37,838 | 5,799 | |||||
| Leases revenue | 11,267 | 2,860 | - | - | |||||
| Service revenue | 1,877 | 151 | 68 | 10 | |||||
| Other revenues | 1,814 | 303 | 340 | 53 | |||||
| Total net revenues | 463,247 | 163,041 | 38,246 | 5,862 | |||||
| Cost of revenues | (1,136,676 | ) | (180,033 | ) | (29,155 | ) | (4,468 | ) | |
| Gross (loss)/profit | (673,429 | ) | (16,992 | ) | 9,091 | 1,394 | |||
| Operating expenses: | |||||||||
| Research and development expenses | (63,609 | ) | (32,117 | ) | (40,057 | ) | (6,139 | ) | |
| Sales and marketing expenses | (7,684 | ) | (3,181 | ) | (6,147 | ) | (942 | ) | |
| General and administrative expenses | (56,446 | ) | (40,561 | ) | (33,887 | ) | (5,193 | ) | |
| Total operating expenses | (127,739 | ) | (75,859 | ) | (80,091 | ) | (12,274 | ) | |
| Loss from operations | (801,168 | ) | (92,851 | ) | (71,000 | ) | (10,880 | ) | |
| Interest income | 1,793 | 283 | 173 | 27 | |||||
| Investment income | 179 | 1,963 | 895 | 137 | |||||
| Interest expense and guarantee fee | (1,395 | ) | (785 | ) | (98 | ) | (15 | ) | |
| Foreign exchange (loss)/gains, net | (1,392 | ) | 2,066 | 33 | 5 | ||||
| Value added tax refunds | 905 | - | - | - | |||||
| Other income/(loss), net | 2,867 | 2,942 | (2,054 | ) | (315 | ) | |||
| Loss before income tax expenses | (798,211 | ) | (86,382 | ) | (72,051 | ) | (11,041 | ) | |
| Income tax expense | - | (24 | ) | 96 | 15 | ||||
| Net loss | (798,211 | ) | (86,406 | ) | (71,955 | ) | (11,026 | ) | |
| Foreign currency translation adjustment, net of nil tax | (3,272 | ) | (15,402 | ) | (15,238 | ) | (2,335 | ) | |
| Total comprehensive loss | (801,483 | ) | (101,808 | ) | (87,193 | ) | (13,361 | ) | |
| Weighted average number of shares used in per share calculation: | |||||||||
| — Basic and diluted | 2,240,601,754 | 2,350,115,118 | 2,332,549,534 | 2,332,549,534 | |||||
| Net loss per share (cent per share) | |||||||||
| — Basic and diluted | (35.62 | ) | (3.68 | ) | (3.08 | ) | (0.47 | ) | |
| Research and development expenses | 17,649 | 1,025 | (1,625 | ) | (249 | ) | |||
| Sales and marketing expenses | 28 | 11 | 8 | 1 | |||||
| General and administrative expenses | 30,018 | 600 | 457 | 70 | |||||
The table below sets forth a reconciliation of net loss to non-GAAP adjusted net loss for the period indicated:
| For the Three Months Ended | ||||||||
| December 31, 2019 | September 30, 2020 | December 31, 2020 | December 31, 2020 | |||||
| RMB | RMB | RMB | US$ | |||||
| Net loss | (798,211 | ) | (86,406 | ) | (71,955 | ) | (11,026 | ) |
| Share-based compensation expense | 47,695 | 1,636 | (1,160 | ) | (178 | ) | ||
| Non-GAAP adjusted net loss | (750,516 | ) | (84,770 | ) | (73,115 | ) | (11,204 | ) |
| CANAAN INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (CONTINUED) (all amounts in thousands of RMB, except share and per share data, or as otherwise noted) | |||||||
For the Years Ended | |||||||
| December 31, 2019 | December 31, 2020 | December 31, 2020 | |||||
| RMB | RMB | US$ | |||||
| Net revenues | |||||||
| Products revenue | 1,392,859 | 427,522 | 65,521 | ||||
| Leases revenue | 24,548 | 18,963 | 2,906 | ||||
| Service revenue | 2,668 | 300 | 46 | ||||
| Other revenues | 2,548 | 901 | 139 | ||||
| Total net revenues | 1,422,623 | 447,686 | 68,612 | ||||
| Cost of revenues | (1,938,626 | ) | (409,922 | ) | (62,823 | ) | |
| Gross (loss)/profit | (516,003 | ) | 37,764 | 5,789 | |||
| Operating expenses: | |||||||
| Research and development expenses | (168,982 | ) | (140,041 | ) | (21,462 | ) | |
| Sales and marketing expenses | (21,917 | ) | (19,980 | ) | (3,062 | ) | |
| General and administrative expenses | (347,633 | ) | (131,624 | ) | (20,172 | ) | |
| Total operating expenses | (538,532 | ) | (291,645 | ) | (44,696 | ) | |
| Loss from operations | (1,054,535 | ) | (253,881 | ) | (38,907 | ) | |
| Interest income | 3,853 | 3,153 | 483 | ||||
| Investment income | 3,055 | 5,844 | 896 | ||||
| Interest expense and guarantee fee | (20,038 | ) | (3,587 | ) | (550 | ) | |
| Foreign exchange gains, net | 6,809 | 2,419 | 371 | ||||
| Value added tax refunds | 1,253 | - | - | ||||
| Other income, net | 25,093 | 30,958 | 4,745 | ||||
| Loss before income tax expense | (1,034,510 | ) | (215,094 | ) | (32,962 | ) | |
| Net Loss | (1,034,510 | ) | (215,094 | ) | (32,962 | ) | |
| Foreign currency translation adjustment, net of nil tax | 9,688 | (24,238 | ) | (3,715 | ) | ||
| Total comprehensive loss | (1,024,822 | ) | (239,332 | ) | (36,677 | ) | |
| Weighted average number of shares used in per share calculation: | |||||||
| — Basic and diluted | 2,153,172,769 | 2,345,703,779 | 2,345,703,779 | ||||
| Net loss per share (cent per share) | |||||||
| — Basic and diluted | (48.05 | ) | (9.17 | ) | (1.41 | ) | |
| Share-based compensation expenses were included in: | |||||||
| Research and development expenses | 22,465 | 652 | 100 | ||||
| Sales and marketing expenses | 358 | 41 | 6 | ||||
| General and administrative expenses | 247,419 | 2,257 | 346 | ||||
The table below sets forth a reconciliation of net loss to non-GAAP adjusted net loss for the years indicated:
For the Years Ended | ||||||
| December 31, 2019 | December 31, 2020 | December 31, 2020 | ||||
| RMB | RMB | US$ | ||||
| Net loss | (1,034,510 | ) | (215,094 | ) | (32,962 | ) |
| Share-based compensation expense | 270,242 | 2,950 | 452 | |||
| Non-GAAP adjusted net loss | (764,268 | ) | (212,144 | ) | (32,510 | ) |
FAQ
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