Canaan Inc. Q3 FY2025 earnings call

• Revenue and Profitability: Total revenue exceeded $150 million, beating guidance. Gross profit reached $16.6 million, much higher than Q2. Adjusted EBITDA was positive at $2.8 million in Q3. - Mining Operations: Mining revenue reached $30.6 million, an all-time high. Deployed over 8,000 mining machines, expanding total deployed hash rate. - Product Launches: Officially launched next-generation Avalon A16 series, with Avalon A16 XP delivering 300 terahash per second. - Market Presence: Secured large orders from North American customers like Bitfury, Cipher, etc. Avalon Home series led in consumer-grade market, with expansion into smart home scenarios. - Organizational and Financial Moves: Realigned R&D team, streamlined headcount, closed $72 million strategic investment, renewed ATM program.

Industrial Mining Machines: Total revenue for the quarter exceeded $150 million, up 50.2% quarter over quarter and 104.4% year over year. Mining machine sales delivered a record high of 10 exahash per second of computing power in Q3, up 55.6% sequentially and 37.7% year over year. Average selling price increased 33.8% year over year to $11.8 per terahash, with a product gross margin of approximately 17%. North American customers contributed 31% of total revenue. Consumer-Grade Avalon Home Series: Delivered 14,000 units in Q3, generating over $12 million in revenue, a sequential increase of 115.3%. Contributed 10.3% of total product revenue and about 20% of product gross profit, with a gross margin of around 33%.

• Expect total revenue for Q4 to be in the range of $175 million to $205 million. - Focus on driving Q4 sales, fulfilling large customer orders, and converting preorders for A16 series. - Accelerate deployment of newly signed mining projects.

• Macro environment uncertainty, including US tariff policy impact on mining costs. - Market volatility affecting customer demand and pricing. - Regulatory changes in global mining and energy sectors. - Semiconductor industry capacity tightness impacting manufacturing costs.

Q: On the 50,000 machine order for the A15 Pros, can you talk a little bit about delivery timing there and gross margin on those sales?

A: Nangeng Zhang said deliveries expected to complete by end of 2025, working at full strength for on-time delivery, and there's a positive gross margin but exact numbers not provided.

Q: When is the earliest you guys could ship your new A16 models and at what scale? And what are your expectations on price and margin respectively?

A: Nangeng Zhang said A16 series officially launched in October, samples to be shipped to selected customers by end of month, volume shipments in 2026, pricing market-driven, margins under control with product's pricing power offsetting some costs.

Q: Do you have orders also scheduled out into the first quarter? What kind of visibility are your customers giving you?

A: James Jin Cheng said Q4 is peak season, customers have some orders, but Q1 may have lower visibility due to holidays and market turbulence; US customers are institutional, less price-sensitive in short term but may have short-term worries.

Q: How much inventory do you have left for the A15 series? And for Q4 guidance, what mix do you expect between A15 orders and preorders for A16s?

A: James Jin Cheng said $56 million was wafer prepayments in Q3, inventory levels will adjust, and there will be a transition between A15 and A16 production.

Q: Can you expand a bit more on the pilot projects that you have, the 2.5 megawatts in Alberta, Canada, and 4.5 megawatts in Japan? What are the growth opportunities in those two countries?

A: Nangeng Zhang said pilots to validate technology and business model, using stranded gas/energy, low power cost, with potential for scale-up as they have growth potential.