Canaan Inc. Q2 FY2025 earnings call

• Strong Q2 results: Total revenue $100.2 million, up 40% year-over-year; gross profit $9.3 million; EBITDA profitable at $1.68 million; adjusted EBITDA $25.3 million. - Factors for strong results: Higher and stable Bitcoin price, quick response to tariff policy, growth of home use mining product line. - Product sales: $72 million, with $55.9M from Avalon Industrial and $5.7M from Avalon Home. - Self-mining: Produced 284 Bitcoins, mining revenue $28.1M. - Vertical integration: Design, manufacture ASIC chips/mining machines, operate mining business, disciplined Bitcoin treasury management. - R&D: A-16 series in chip packaging/testing, soon to move to full machine testing. - Supply chain: Manufacturing capacity in U.S. up and running, secured orders from Cipher and Cleanspark.

For the second quarter, total revenue was $100.2 million. Product sales reached approximately $72 million, with $55.9 million from Avalon Industrial Mining Solutions and $5.7 million from the Avalon Home-Use Miner Series. The Avalon Home Miner product line generated $5.7 million in revenue, a 359% increase from the previous quarter, accounting for over 5% of total revenue. Mining operations produced 284 Bitcoins, with mining revenue reaching $28.1 million. Total installed mining capacity worldwide was 8.15 exa hash per second, with 6.57 exa hash per second already in operation.

• Expected Q3 2025 revenue in range of $125 million to $145 million based on current market and operational conditions, noting potential variances due to policy uncertainties and market fluctuations.

• Tariff policy uncertainties affecting U.S. market demand. - Regulatory risks impacting global trade and customer deployment. - Market fluctuations in Bitcoin price and hash rate affecting mining margins and revenue.

Q: Congrats on the quarter. Is there anything to call out on current market dynamics, pricing strategy and demand for A15 you guys saw in July and August?

A: Nangeng Zhang mentioned Bitcoin price rise, ASP increase from $10.50 in Q1 to $11.10 in Q2, tariff policy impact on U.S. customers, and U.S. production facilities to improve delivery. James added on U.S. market importance, orders from Cipher and Cleanspark, and return of customer demand Q: Have you seen any changes in customary site demand since May? And has sentiment rebounded back towards like Q1 levels?

A: Nangeng Zhang said since July, positive changes seen with new orders from North American institutional customers, return of willingness to purchase, active demand in Asia, but U.S. tariff impact still present Q: Describe the effect that Bitcoin miners pursuing AI and HPC co-location hosting agreements. Is that slowing the demand for the Bitcoin mining rigs?

A: Nangeng Zhang stated AI/HPC and Bitcoin mining are complementary; Bitcoin mining offers higher and more predictable returns, no direct resource competition, and many large energy projects plan for both mining and HPC Q: Address the company's current capital deployment priorities, given where the share price is, how inexpensive the stock certainly appears, it seems like buybacks would be very much in order.

A: James Jin Cheng said shares are undervalued, bought back 3.6 million ADS's, prioritizing capital use based on business needs, balancing between sales and mining, and maintaining flexible capital allocation