Canaan Inc (NASDAQ:CAN) Q1 2020 Earnings Conference Call - Final Transcript

May 22, 2020 • 08:00 am ET

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Canaan Inc (NASDAQ:CAN) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to Canaan Inc.'s First Quarter 2020 Earnings Call. [Operator Instructions]

Now, I'd like to hand the conference over to your speaker host today Mr. Shaoke Li, Board Secretary of the Company. Please go ahead, sir.

Executive
Shaoke Li

Thank you very much, and hello, everyone, and welcome to Canaan inc.'s first quarter 2020 earnings conference call. The Company's financial and operational results were released by our newswire services earlier today and are currently available online.

Joining us today are our Chairman and CEO, Mr. Nangeng Zhang and our CFO, Mr. Hong Quanfu. In addition, Mr. Jianping Kong, Co-CEO; and Mr. Jingjie Wu and Ms. Li Zhang, our Senior Vice President will also be available during the question-and-answer session. Mr. Zhang will start with a call by providing the overview of the Company and the performance highlights for the first quarter of 2020. Mr. Hong will then provide the details on the Company's operating and the financial results for the period, before you open the call up for your questions.

Before we continue, I would like to refer you to our Safe Harbor Statement in our earnings press release, which also applies to this call as we are making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are mostly roughly explained at the written files to the most comparable measures reported on the general accepted accounting principles in our earnings release and the filings with the SEC.

With that, I will now turn the call over to our Chairman and the CEO, Mr. Nangeng Zhang. Mr. Zhang will deliver his remarks in Chinese and I will provide corresponding English translations. Please go ahead, sir.

Executive
Nangeng Zhang

[Foreign Speech] Hello, I'm Nangeng Zhang, Chairman and the CEO of Canaan Inc. Please allow me to provide a brief overview of the Company in the first quarter of this year. This call is just a months away from the last, but Bitcoin halving just happened on May 12 from the general market perspective after halving the Bitcoin prices steady and rising. We haven't seen computing power volatility. The Bitcoin network is running stable. In general, to serve the halving in Bitcoin history has successfully completed. Upon completion, the coming rainy season further rebalanced as a market demand of mining machines.

In Q1 this year affected by the COVID-19, our total net revenue was RMB68.3 million reflects a 44.6% year-on-year increase. The Company's total net revenue growth aligns with the computing power sales. The Company's total sales grew from 700,000 terahash per second to 900,000 terahash per second in Q1 2020, represents 18.4% year-on-year increase and there was an increase to ASP. The Company's first quarter gross profit was RMB2.38 million, while operating loss was RMB71.1, which mainly includes RMB41.8 million R&D expense, representing a 33% year-on-year increase. The drop of our gross profit margin is due to Q1 market conditions, including the influence of low Bitcoin price and the halving was about to come.

We