On Thursday, the agency launched its first unaudited earnings report because it went public within the U.S. final November. Canaan stated it offered computing energy totaling 10.5 exhashes per second (EH/s), which accounted for roughly 20 p.c of the Bitcoin community’s computing energy progress final yr.
Since its $90 million IPO, Canaan’s share value has been on a downward development and is at present round $3.5 per share – 61 p.c under its providing value.
The agency stated it recorded $114.7 million in internet loss in This autumn 2019 alone, which widened its $31.2 million internet loss for the primary 9 months in 2019.
Nangeng Zhang, CEO and founding father of Canaan, stated in an earnings name on Thursday morning Eastern time that, though the agency recorded gross sales uptick in October and November, it noticed a “considerable drop” in quantity in December amid volatility in bitcoin’s value.
“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, financial markets, as well as the cryptocurrency market activities, we have lowered our expectations for business in the year of 2020,” according to the report. “For the first quarter of 2020, the Company expects total revenues not less than RMB60 million.”
Also notable within the report is the growing ratio of the “cost of revenues” for Canaan’s gross sales of bitcoin miners over the previous yr, which results in declining profitability. In 2019, the price of income for Canaan was $278 million, $78 million greater than the full income made for the yr.
Canaan’s price of revenues usually embrace the prices of uncooked materials, manufacturing and logistics for the manufacturing of mining tools, in addition to write-downs of prepayments and inventories.
Sell at loss?
To put this into perspective, in 2019, Canaan’s complete price of revenues was $100 million with no stock write-down, accounting for 54 p.c of its $183 million income on the again of the crypto market’s bull run. It introduced dwelling $53 million with a 30 p.c internet revenue margin.
In 2019, its complete price of revenues went as much as $307.four million, taking over 80 p.c of its $378 million income. But the full price included a write-down of $110 million in inventories because the market downturn made it not potential for Canaan to promote these machines.
The improve of the price of revenues is maybe additionally resulting from the truth that extra superior mining tools depends on extra pricey chip know-how.
According to Canaan’s IPO prospect, the price of its Avalon 10, the newest machines launched to assist climate via bitcoin’s halving occasion, is round $751, in comparison with $354 and $600 for its older Avalon eight and 9 sequence.
Based on info marketed by Canaan’s licensed distributors, a number of fashions of its Avalon 10 sequence are at present on gross sales, with value starting from $650 to $1,000, as buyers’ shopping for spree has cooled down in current months.
The agency has additionally lately been hit with a lawsuit filed by an investor who purchased its shares and accused the corporate of deceptive buyers about its operations and monetary knowledge and of violating the U.S. securities legal guidelines.
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