Canaan Technology releases first quarter financial report: revenue of 400 million yuan, overseas revenue accounts for nearly 80%

On June 1, Beijing time, Canaan Inc. (NASDAQ: CAN) released its first quarter financial report for 2021. The financial report shows that thanks to the increase in the number of Bitcoin mining machines delivered in the first quarter, Canaan Inc.'s revenue in the first quarter was 402.8 million yuan (RMB, the same below), a year-on-year increase of nearly 4.9 times and a month-on-month increase of 9.5 times. In terms of revenue structure, in the first quarter of 2021, the company's revenue from overseas markets accounted for 78.4% of its total revenue, while in the same period of 2020 it was only 4.9%.

The company's gross profit in the quarter increased from RMB 2.39 million in the same period of 2020 and RMB 9.09 million in the fourth quarter of 2020 to RMB 194.2 million, and the gross profit margin increased from 3.5% in the same period of 2020 and 23.8% in the fourth quarter of 2020 to 48.2%.

The net profit attributable to ordinary shareholders in the first quarter of 2021 was RMB 1.2 million, and the net profit adjusted for non-GAAP was RMB 143.2 million.

In this quarter, the company's share-based compensation expenses for restricted shares granted under the Revised 2018 Equity Incentive Plan amounted to approximately RMB145.5 million. The equity compensation mechanism further stimulates the efficiency of the company's business line teams, enhances internal cohesion through executive and employee shareholding, consolidates investor confidence, and locks in the company's business prospects and long-term value.

As of the end of the first quarter, the company's prepayments were RMB 1.2106 billion due to the increase in down payments for Bitcoin mining machine sales orders in the next few quarters. During the same period, the company's cash and cash equivalents were RMB 1.3378 billion.

The following are the company's main financial data for the first quarter:

Revenue: Revenue in the first quarter of 2021 increased to RMB 402.8 million (US$61.48 million) from RMB 68.27 million in the same period of 2020 and RMB 38.25 million in the fourth quarter of 2020. The year-on-year and quarter-on-quarter increases were mainly due to the increase in mining machine sales.

Proportion of overseas revenue: From the perspective of revenue structure, excluding revenue from Hong Kong, the company's revenue from overseas markets accounted for 78.4% of total revenue in the first quarter of 2021, compared with only 4.9% in the same period of 2020.

Total sales computing power: In the first quarter of 2021, the company's total sales computing power was 1.98 million TH/s, an increase of 122.2% year-on-year from the first quarter of 2020 and an increase of 900% from the fourth quarter of 2020. The continuous increase in total sales computing power is mainly due to the increase in the number of Bitcoin mining machines delivered this quarter.

Costs: Costs increased to RMB208.6 million (US$31.83 million) in the first quarter of 2021 from RMB65.89 million in the same period of 2020 and RMB29.16 million in the fourth quarter of 2020. The year-over-year and sequential increases in costs were consistent with revenue growth.

Gross Profit and Gross Margin: Gross profit increased to RMB 194.2 million (US$29.64 million) in the first quarter of 2021 from RMB 2.39 million in the same period of 2020 and RMB 9.09 million in the fourth quarter of 2020. Gross margin in the first quarter of 2021 increased to 48.2% from 3.5% in the same period of 2020 and 23.8% in the fourth quarter of 2020.

Total operating expenses: Total operating expenses were RMB 207.9 million (US$31.73 million) in the first quarter of 2021, compared with RMB 73.52 million in the same period of 2020 and RMB 80.10 million in the fourth quarter of 2020.

R&D expenses: R&D expenses in the first quarter of 2021 were RMB 58.16 million (US$8.88 million), an increase of 39.2% from RMB 41.79 million in the same period of 2020 and an increase of 45.2% from RMB 40.06 million in the fourth quarter of 2020.

Equity Incentive: In the first quarter of 2021, the share-based payment expenses incurred for the restricted shares granted by the company under the Revised 2018 Equity Incentive Plan were approximately RMB 145.5 million.

Operating Loss: Operating loss narrowed to RMB 13.67 million (US$2.09 million) in the first quarter of 2021 from RMB 71.13 million in the same period of 2020 and RMB 71.0 million in the fourth quarter of 2020.

Net profit attributable to shareholders: Net profit attributable to ordinary shareholders in the first quarter of 2021 was RMB 1.2 million (US$190,000), compared with a loss of RMB 39.95 million in the same period of 2020 and a loss of RMB 72.05 million in the fourth quarter of 2020.

Non-GAAP adjusted net income: Non-GAAP adjusted net income was RMB143.2 million (US$21.85 million) in the first quarter of 2021, compared with a loss of RMB38.22 million in the same period of 2020 and a loss of RMB73.12 million in the fourth quarter of 2020. Non-GAAP adjusted net income/loss excludes share-based compensation expenses.

Net income per share: Basic and diluted net income per American Depositary Share (ADS) were RMB0.01 (US$0.00) in the first quarter of 2021. This compares to basic and diluted net loss per ADS of RMB0.25 in the same period of 2020 and basic and diluted net loss per ADS of RMB0.46 in the fourth quarter of 2020. Each ADS represents 15 Class A ordinary shares of the Company.

Accounts receivable: As of March 31, 2021, accounts receivable were RMB 1,210.6 million (US$184.8 million), an increase from RMB 430.4 million as of December 31, 2020, primarily due to an increase in down payments for sales orders of Bitcoin mining machines in the coming quarters.

Cash Flow: As of March 31, 2021, the Company had cash and cash equivalents of RMB1,337.8 million (US$204.2 million), compared to RMB391.3 million as of December 31, 2020. As the Company redeemed some of its wealth management products in the first quarter of 2021, short-term investments decreased to RMB8.5 million (US$1.3 million) as of March 31, 2021 from RMB62.39 million as of December 31, 2020. The short-term investments held are highly liquid and can be withdrawn at any time.