Canaan Technology: As of Q1 2021, more than 156,000 mining machines have been pre-sold

Original source: Canaan Technology

On April 12, Beijing time, Canaan Technology (NASDAQ: CAN) released its 2020 full-year and fourth-quarter financial report. The financial report shows that the company's orders increased significantly in the second half of the year, with orders exceeding 92,000 units in the fourth quarter. As of the end of 2020, the company had reached a total order contract of 1.131 billion yuan (RMB, the same below), of which sales prepayments were 429 million yuan, an increase of 351 million yuan from the third quarter, an increase of 81.8%. As of the end of the first quarter of 2021, more than 156,000 mining machines were pre-sold, and prepayments exceeded 1.547 billion yuan.

Canaan Technology's total net revenue in the fourth quarter was 38.2 million yuan, and its revenue cost dropped to 29.2 million yuan from 1.14 billion yuan in the same period of 2019 and 180 million yuan in the third quarter of 2020. The company's gross profit in the quarter turned from a loss of 673.4 million yuan in the same period of 2019 and a loss of 17 million yuan in the third quarter of 2020 to a profit of 9.1 million yuan, and the gross profit margin turned positive to 23%.

Looking at the full year, the company's total net revenue in 2020 was 447.7 million yuan, and the full-year revenue cost dropped from 1.94 billion yuan in 2019 to 409.9 million yuan, a decrease of 78.9%. The full-year gross profit in 2020 was 37.8 million yuan, while the full-year gross loss in 2019 was 516 million yuan.

The following are the highlights of the company's main financial report:

· Increased orders. With the advancement of the institutional client cooperation strategy, the company's orders increased significantly in the second half of 2020, with orders exceeding 92,000 units in the fourth quarter. As of the end of the first quarter of 2021, the company had pre-sold more than 156,000 mining machines.

· Prepayments surged. As of the end of 2020, the company had reached a total order contract of 1.131 billion yuan, of which 429 million yuan was prepayments, an increase of 351 million yuan from the third quarter, an increase of 81.8%. As of the end of the first quarter of 2021, the company's sales prepayments had exceeded 1.547 billion yuan.

Cost reduction. The cost of revenue in the fourth quarter decreased to RMB 29.2 million from RMB 1.14 billion in the same period of 2019 and RMB 180 million in the third quarter of 2020. The cost of revenue for the full year of 2020 decreased from RMB 1.94 billion in 2019 to RMB 409.9 million, a decrease of 78.9%.

Total net revenue in 2020 fell to 447.7 million from 1.42 billion in 2019. Total net revenue in the fourth quarter decreased to 38.2 million from 463.2 million in the same period of 2019 and 163 million in the third quarter of 2020. The reasons for the decrease include: First, the company started mass production of new product series in the fourth quarter and began to gradually increase sales. In addition, product inventory has been sold out since the third quarter of 2020.

Gross profit turned positive. In the fourth quarter of 2020, Canaan Technology turned from loss to profit, and the gross profit margin turned positive for the whole year. Canaan Technology's gross profit in the fourth quarter was 9.1 million, while the gross loss in the third quarter of 2020 was 17 million yuan, and the gross loss in the fourth quarter of 2019 was 673.4 million yuan. From the full-year perspective, Canaan Technology's full-year gross profit in 2020 was 37.8 million yuan, while the full-year gross loss in 2019 was 516 million yuan.

Increased R&D. Canaan Technology continued to increase its R&D investment, with R&D expenses of RMB 40.1 million in the fourth quarter, compared with RMB 32.1 million in the third quarter of 2020, a 24% increase from the previous quarter. The increase in R&D investment is due to the use of more new materials, and the company will continue to increase investment to consolidate its technology and product advantages in emerging markets.

· Adequate cash. As of December 31, 2020, the company had cash and cash equivalents of RMB 391.1 million.

AI chip shipments tripled year-on-year.

In 2020, despite the impact of the epidemic and the challenge of the global chip shortage, Canaan Technology achieved zero inventory and locked in wafer production capacity through massive pre-sale orders, laying a solid foundation for this year's market share.