Canaan Inc. Reports Unaudited Second Quarter 2021 Financial Results and Announces Change of Board Composition

– Achieves Document-Excessive Leads to A number of Working and Monetary Metrics –

BEIJING, Sept. 15, 2021 /PRNewswire/ — Canaan Inc. (NASDAQ: CAN) (“Canaan” or the “Firm”), a number one high-performance computing options supplier, in the present day introduced its unaudited monetary outcomes for the second quarter ended June 30, 2021 and the Change of Board Composition.

Second Quarter 2021 Working and Monetary Highlights

Whole computing energy bought was 5.9 million Thash/s, up 126.9% from 2.6 million Thash/s in the identical interval of 2020 and up 200.0% from 2.Zero million Thash/s within the first quarter of 2021, setting a brand new excessive mark. The strong year-over-year and sequential will increase have been primarily because of the enhance within the variety of Bitcoin mining machines being delivered pushed by robust market demand.

As of June 30, 2021, the Firm had money and money equivalents of RMB1,220.2 million (US$189.Zero million), up 211.8% in comparison with RMB391.Three million as of December 31, 2020, primarily as a consequence of a bigger variety of down funds acquired by the Firm on account of the bigger quantity of gross sales orders of Bitcoin mining machines, in addition to the online proceeds from the Firm’s registered direct providing in Might 2021.

Whole web revenues have been RMB1,081.Eight million (US$167.5 million), marking the strongest quarterly gross sales within the Firm’s working historical past, up 507.3% from RMB178.1 million in the identical interval of 2020, and up 168.6% from RMB402.Eight million within the first quarter of 2021.

Gross revenue was RMB427.1 million (US$66.2 million), up 887.0% from RMB43.Three million in the identical interval of 2020, and up 119.9% from RMB194.2 million within the first quarter of 2021.

Internet earnings was RMB245.Zero million (US$37.9 million), marking the very best quarterly web revenue for the reason that Firm’s preliminary public providing in 2019 (the “IPO”), in comparison with a web lack of RMB16.Eight million in the identical interval of 2020 and a web earnings of RMB1.2 million within the first quarter of 2021.

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Non-GAAP adjusted web earnings was RMB320.1 million (US$49.6 million), once more signifying a brand new excessive mark for the reason that Firm’s IPO, in comparison with a non-GAAP adjusted web lack of RMB16.Zero million in the identical interval of 2020 and a non-GAAP adjusted web earnings of RMB143.2 million within the first quarter of 2021.

Mr. Nangeng Zhang, Chairman and Chief Government Officer of Canaan, commented, “We delivered a exceptional efficiency within the second quarter of 2021. Regardless of surprising regulatory coverage dynamics and Bitcoin worth volatility, we achieved record-high topline outcomes as we delivered a strong 5.9 million Thash/s of computing energy to our purchasers. Through the second quarter and lately, we additionally secured substantial preorders, due to the efficient execution of our methods, together with enterprise improvement within the abroad markets, institutional consumer relationship constructing, and strengthening our provide chain. Concerning our self-operated Bitcoin mining program, we plan to proceed to deploy computing energy to understand the large alternatives of Bitcoin mining. We additionally made encouraging strides within the AI enterprise by launching our self-developed edge AI chip, Kendryte Ok510, and garnered demand from a number of excellent purchasers within the know-how discipline. Trying forward, whereas we endeavor to achieve better market share in our Bitcoin mining machine enterprise, we’ll proceed our analysis and improvement efforts to additional advance our underlying ASIC and edge computing applied sciences, propelling ahead our progress prospects.”

Mr. James Cheng, Chief Monetary Officer of Canaan, said, “We reported strong monetary outcomes for the quarter. Moreover the record-setting income of RMB1.08 billion and a non-GAAP web revenue of RMB320.1 million, our vigorous e book of preorders, primarily from abroad purchasers, have introduced ample prepayments, which additional enhanced our money place. This enabled us to safe future wafer provide, develop our analysis and improvement staff, and perform strategic investments. At the moment, we’re absolutely conscious of the industry-wide challenges, similar to Bitcoin worth fluctuation, wafer provide instability, regulatory uncertainties in numerous nations. However, we stay assured in our efficient progress methods, technologically superior merchandise, strong working capabilities, in addition to the big potential of the {industry}.”

Second Quarter 2021 Monetary Outcomes

Whole web revenues within the second quarter of 2021 elevated by 507.3% to RMB1,081.Eight million (US$167.5 million) from RMB178.1 million in the identical interval of 2020, and up 168.6% in comparison with RMB402.Eight million within the first quarter of 2021. The year-over-year and quarter-over-quarter will increase have been primarily because of the substantial enhance in complete computing energy bought.

Value of revenues within the second quarter of 2021 elevated to RMB654.6 million (US$101.Four million) from RMB134.Eight million in the identical interval of 2020 and RMB208.6 million within the first quarter of 2021. Each the year-over-year and sequential will increase in value of revenues have been consistent with the will increase within the Firm’s Thash gross sales quantity and price per Thash.

Gross revenue within the second quarter of 2021 was RMB427.1 million (US$66.2 million), up 887.0% from RMB43.Three million in the identical interval of 2020 and up 119.9% from RMB194.2 million within the first quarter of 2021.

Whole working bills within the second quarter of 2021 have been RMB261.6 million (US$40.5 million), in comparison with RMB62.2 million in the identical interval of 2020 and RMB207.9 million within the first quarter of 2021, because the Firm enhanced its funding in analysis and improvement efforts and gross sales bonus spending throughout the quarter.

Analysis and improvement bills within the second quarter of 2021 have been RMB64.Zero million (US$9.9 million), representing a rise of 145.4% from RMB26.1 million in the identical interval of 2020 and a rise of 10.0% from RMB58.2 million within the first quarter of 2021. The rise was primarily attributable to the elevated headcounts in know-how associated departments. Analysis and improvement bills within the second quarter of 2021 additionally included share-based compensation bills of RMB23.7 million (US$3.7 million).

Gross sales and advertising bills within the second quarter of 2021 have been RMB25.Eight million (US$4.Zero million), in comparison with RMB6.5 million in the identical interval of 2020 and RMB6.Three million within the first quarter of 2021. The rise was primarily attributable to the elevated gross sales bonus for the excellent sale efficiency within the quarter. Gross sales and advertising bills within the second quarter of 2021 additionally included share-based compensation bills of RMB1.Eight million (US$0.Three million).

Normal and administrative bills within the second quarter of 2021 have been RMB171.9 million (US$26.6 million), in comparison with RMB29.6 million in the identical interval of 2020 and RMB143.Four million within the first quarter of 2021. The rise was primarily because of the employees value and the rental prices for brand spanking new places of work enlargement. Normal and administrative bills within the second quarter of 2021 additionally included share-based compensation bills of RMB126.5 million (US$19.6 million).

Earnings from operations within the second quarter of 2021 was RMB165.5 million (US$25.6 million), in comparison with a loss from operations of RMB18.9 million in the identical interval of 2020 and a loss from operations of RMB13.7 million within the first quarter of 2021.

Change in honest worth of warrant legal responsibility within the second quarter of 2021 was a achieve of RMB77.7 million (US$12.Zero million), in comparison with nil in the identical interval of 2020 and nil within the first quarter of 2021, because of the honest worth change in warrants issued in Might 2021.

Internet earnings attributable to unusual shareholders within the second quarter of 2021 reached a brand new excessive for the reason that Firm’s IPO to RMB245.Zero million (US$37.9 million), in comparison with a web lack of RMB16.Eight million in the identical interval of 2020 and a web earnings of RMB1.2 million within the first quarter of 2021.

Non-GAAP adjusted web earnings within the second quarter of 2021 was RMB320.1 million (US$49.6 million), in comparison with a non-GAAP adjusted web lack of RMB16.Zero million in the identical interval of 2020 and a non-GAAP adjusted web earnings of RMB143.2 million within the first quarter of 2021. Non-GAAP adjusted web (loss)/earnings excludes share-based compensation bills and alter in honest worth of warrant legal responsibility. For additional data, please consult with “Use of Non-GAAP Monetary Measures” on this press launch.

Overseas foreign money translation adjustment, web of nil tax, was a lack of RMB10.2 million (US$1.6 million), in contrast with a lack of RMB0.08 million in the identical interval of 2021 and a achieve of RMB2.Four million within the first quarter of 2021, because of the US greenback depreciation towards the Renminbi throughout the second quarter of 2021.

Fundamental web earnings per American depositary share (“ADS”) within the second quarter of 2021 was RMB1.46 (US$0.23). As compared, primary web loss per ADS in the identical interval of 2020 was RMB0.11, whereas primary web earnings per ADS within the first quarter of 2021 was RMB0.01. Every ADS represents 15 of the Firm’s Class A unusual shares.

Diluted web earnings per ADS within the second quarter of 2021 was RMB1.40 (US$0.22). As compared, diluted web loss per ADS in the identical interval of 2020 was RMB0.11, whereas diluted web earnings per ADS within the first quarter of 2021 was RMB0.01. Every ADS represents 15 of the Firm’s Class A unusual shares.

Contract liabilities as of June 30, 2021, have been RMB1,040.6 million (US$161.2 million), rising from RMB430.Four million as of December 31, 2020, primarily because of the elevated down funds for the gross sales orders of Bitcoin mining machines to be delivered within the coming quarters.

As of June 30, 2021, the Firm had money and money equivalents of RMB1,220.2 million (US$189.Zero million), up 211.8% in comparison with RMB391.Three million as of December 31, 2020.

Latest Developments

The Firm’s Share Repurchase Replace

Between September 22, 2020, and September 12, 2021, the Firm has cumulatively deployed roughly US$9.Three million to repurchase roughly 2.51 million ADSs underneath the Firm’s share repurchase program with a complete approved quantity of as much as US$10 million.

Strategic Funding

On August 11, 2021, the Firm by its wholly-owned subsidiary, Hangzhou Canaan Inventive Info Know-how Restricted, entered into an settlement with Pixelworks Semiconductor Know-how (Shanghai) Co., Ltd.(“PWSH”), a subsidiary of Pixelworks, Inc. (NASDAQ: PXLW) (“Pixelworks”) to take a position roughly US$3.1 million in money in change for an fairness curiosity in PWSH (the “Funding”), topic to sure closing circumstances. PWSH designs, manufactures and gross sales visible show processing semiconductors and customized software particular built-in circuits options for video functions, superior media processing, and the environment friendly supply and streaming of video within the goal markets of smartphones, tablets, digital projection techniques, high-quality video infrastructure gear, and over-the-air streaming units. This funding displays the Firm’s technique of additional increasing Canaan’s compelling computing energy past cryptocurrency mining to AI options.

Change of Board Composition

Mr. Jiaxuan Li, a director of the Firm, has stepped down from the board of administrators of the Firm for private causes, efficient September 15, 2021.

Mr. Jiaxuan Li has served as a director of the Firm since December 2015. Mr. Nangeng Zhang, Chairman and Chief Government Officer of Canaan, commented, “On behalf of the board of administrators, I want to specific our sincerest gratitude to Mr. Jiaxuan Li, for his excellent contributions to the Firm over the previous years. We want him success in his future endeavors.”

Enterprise Outlook

For the third quarter of 2021, the Firm expects complete revenues to have a sequential enhance of 10% to 30%. This forecast displays the Firm’s present and preliminary views available on the market and operational circumstances, that are topic to vary.

Convention Name Info

The Firm’s administration staff will maintain a Direct Occasion convention name on Wednesday, September 15, 2021, at 8:00 A.M. Jap Time (or 8:00 P.M. Beijing Time on the identical day) to debate the monetary outcomes. Particulars for the convention name are as follows:

Occasion Title: Canaan Inc. Second Quarter 2021 Earnings Convention Name
Registration Hyperlink: http://apac.directeventreg.com/registration/event/6764915

All members should use the hyperlink supplied above to finish the web registration course of prematurely of the convention name. Upon registering, every participant will obtain a set of participant dial-in numbers, the Direct Occasion passcode, and a singular entry PIN, which can be utilized to affix the convention name.

A replay of the convention name can be accessible by September 22, 2021, by dialing the next numbers:

Worldwide: +61-2-8199-0299
United States: +1-646-254-3697
Hong Kong, China: +852-3051-2780
Replay PIN: 6764915

A dwell and archived webcast of the convention name may even be out there on the Firm’s investor relations web site at investor.canaan-creative.com.

About Canaan Inc.

Established in 2013, Canaan (NASDAQ: CAN), is a know-how firm specializing in ASIC high-performance computing chip design, chip analysis and improvement, computing gear manufacturing, and software program companies. The corporate’s imaginative and prescient is “tremendous computing is what we do, social enrichment is why we do.” Canaan has a wealthy expertise in chip design and streamlined manufacturing within the ASIC discipline. In 2013, it launched and mass produced its first ASIC Bitcoin mining machine. In 2018, Canaan launched the world’s first 7nm ASIC chip, offering power environment friendly computing gear to the cryptocurrency mining {industry}. In the identical yr, Canaan launched the world’s first RISC-V structure business edge AI chip, additional harnessing the potential of ASIC know-how within the discipline of high-performance computing and synthetic intelligence.

Trade Charge Info

This announcement comprises translations of sure RMB quantities into U.S. {dollars} (“US$”) at specified charges solely for the comfort of the reader. Until in any other case said, all translations from RMB to US$ have been made on the fee of RMB6.4566 to US$1.00, the midday shopping for fee in impact on June 30, 2021, within the H.10 statistical launch of the Federal Reserve Board. The Firm makes no illustration that the RMB or US$ quantities referred could possibly be transformed into US$ or RMB, because the case could also be, at any explicit fee or in any respect.

Protected Harbor Assertion

This announcement comprises ahead−wanting statements. These statements are made underneath the “secure harbor” provisions of the U.S. Personal Securities Litigation Reform Act of 1995. These ahead−wanting statements could be recognized by terminology similar to “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and comparable statements. Amongst different issues, the enterprise outlook and quotations from administration on this announcement, in addition to Canaan Inc.’s strategic and operational plans, include ahead−wanting statements. Canaan Inc. can also make written or oral ahead−wanting statements in its periodic studies to the U.S. Securities and Trade Fee (“SEC”) on Kinds 20−F and 6−Ok, in its annual report back to shareholders, in press releases and different written supplies and in oral statements made by its officers, administrators or workers to 3rd events. Statements that aren’t historic details, together with statements about Canaan Inc.’s beliefs and expectations, are ahead−wanting statements. Ahead−wanting statements contain inherent dangers and uncertainties. Plenty of elements may trigger precise outcomes to vary materially from these contained in any ahead−wanting assertion, together with however not restricted to the next: the Firm’s objectives and techniques; the Firm’s future enterprise improvement, monetary situation and outcomes of operations; the anticipated progress of the Bitcoin {industry} and the value of Bitcoin; the Firm’s expectations relating to demand for and market acceptance of its merchandise, particularly its Bitcoin mining machines; the Firm’s expectations relating to sustaining and strengthening its relationships with manufacturing companions and prospects; the Firm’s funding plans and techniques, fluctuations within the Firm’s quarterly working outcomes; competitors in its {industry} in China; and related authorities insurance policies and laws referring to the Firm and cryptocurrency. Additional data relating to these and different dangers is included within the Firm’s filings with the SEC, together with its registration assertion on Kind F−1, as amended, and its annual studies on Kind 20−F. All data supplied on this press launch and within the attachments is as of the date of this press launch, and Canaan Inc. doesn’t undertake any obligation to replace any ahead−wanting assertion, besides as required underneath relevant legislation.

Use of Non­-GAAP Monetary Measures

In evaluating Canaan’s enterprise, the Firm makes use of non-GAAP measures, similar to adjusted web loss, adjusted web earnings, adjusted web (loss)/earnings, as supplemental measures to assessment and assess its working efficiency. The Firm defines adjusted web loss as web loss excluding share­primarily based compensation expense and alter in honest worth of warrant legal responsibility. The Firm believes that the non-GAAP monetary measures present helpful details about the Firm’s outcomes of operations, improve the general understanding of the Firm’s previous efficiency and future prospects and permit for better visibility with respect to key metrics utilized by the Firm’s administration in its monetary and operational decision-making.

The non-GAAP monetary measures are usually not outlined underneath U.S. GAAP and are usually not introduced in accordance with U.S. GAAP. The non-GAAP monetary measures have limitations as analytical instruments and traders mustn’t contemplate them in isolation, or as an alternative to web loss, money flows supplied by working actions or different consolidated statements of operations and money flows knowledge ready in accordance with U.S. GAAP. One of many key limitations of utilizing adjusted web loss is that it doesn’t mirror the entire gadgets of earnings and expense that have an effect on the Firm’s operations. Share-based compensation has been and should proceed to be incurred in Canaan’s enterprise and isn’t mirrored within the presentation of adjusted web earnings/loss. Additional, the non-GAAP monetary measures could differ from the non-GAAP data utilized by different firms, together with peer firms, and due to this fact their comparability could also be restricted. The Firm mitigates these limitations by reconciling the non-GAAP monetary measures to probably the most comparable U.S. GAAP efficiency measures, all of which needs to be thought of when evaluating the Firm’s efficiency.

Investor Relations Contact

Canaan Inc.
Mr. Shaoke Li
E mail: IR@canaan-creative.com

ICR, LLC
Robin Yang
Tel: +1 (347) 396-3281
E mail: canaan.ir@icrinc.com

The desk beneath units forth a reconciliation of web (loss)/earnings to non-GAAP adjusted web (loss)/earnings for the interval indicated:

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SOURCE Canaan Inc.