Canaan Inc. Q4 FY2025 earnings call

• Secured a large order of over 50,000 A15 Pro models from a leading mining company in North America, driving strong sales performance with 14.6 exahash per second in computing power sold, the highest quarterly figure.
• Steadily expanded self-mining operations, with total installed hash rate at 9.91 exahash per second at the end of Q4, up 8.6% quarter over quarter, and mined approximately 300 bitcoins during the quarter. Crypto assets holdings at year-end were 1,750 bitcoins and 3,951 Ethereum.
• Partnered with a local energy infrastructure provider in Canada to convert flare natural gas into computing power, demonstrating integration of computing and energy. Launched A16 XP, a flagship next-generation air-cooled model with high performance and power efficiency.
• Maintained focus on R&D and supply chain, optimizing manufacturing processes for A15 series and ensuring flexible production across Malaysia, US, and Mainland China.

In the fourth quarter, Canaan Inc. achieved total revenue of $196 million, which was a 30.4% quarter-over-quarter increase and a 121.1% year-over-year increase. Product revenue reached $165 million, up 39.1% quarter over quarter and 124.5% year over year. For the full year 2025, total revenue was $530 million, up 139.6% year over year. Mining revenue in 2025 exceeded $100 million for the first time, with full-year mining revenue at $113.2 million compared to $44 million in 2024. Revenue from North American customers in Q4 accounted for over 75% of total product sales.

• Q4 2025 revenue exceeded the midpoint of the guidance range of $175 million to $205 million, with total revenue at $196 million.
• For 2026, management expects total revenue to be in the range of $60 million to $70 million. Q1 2026 revenue is estimated to be in the range of $60 million to $70 million, with focus on maintaining cash position and de-risking balance sheet while preparing for market recovery.

• Macro-economic uncertainties including ongoing monetary tightening, evolving geopolitical developments, and heightened volatility in the digital asset market.
• Challenges in the sale of mining rigs due to global miners' wait-and-see approach in response to Bitcoin price decline.
• Volatility in Bitcoin prices impacting miners' profitability and market demand for mining machines.

Q: What's the progress on A16 mass production and timeline?

A: A16 SIP machines are being sent to customers for testing, mass production preparations are ongoing, starting after Lunar New Year holiday with volume ramp-up expected by end of first quarter. Chips are in mass production, working on different models like liquid-cooled and immersion-cooled.

Q: Color on margin profile difference between home series, A15?

A: Home series continues to have good profitability as it faces less competition, but in Q4, priority was given to industrial orders from strategic North American customers, affecting margin profile. Home series is expected to play a more important role in generating profit going forward.

Q: Size of TAM for heat recovery opportunity in Canada and scalability?

A: Each individual project typically ranges from a few megawatts to several tens of megawatts. Focus on data and methodology standardization, productization of POCs into modular solutions, and replication and expansion. Opportunities dependent on specific scenarios like resource availability and grid connection.

Q: Long-term manufacturing footprint and US manufacturing in tariff environment?

A: Manufacturing footprint includes Mainland China, South Asia, Malaysia, and North America. US is an important market, with thousands of machines built from US facilities in 2025, and will continue to review and expand US manufacturing to be resilient to policy changes.

Q: Breakeven point for Bitcoin mining and foundry availability for A16?

A: All-in payback level for Bitcoin mining is around $100,000 to $110,000 Bitcoin price with hash price around $55 per PH per day. Marginal shutdown level varies by machine. Foundry capacity is tight, but Canaan secured position earlier with long-term partnerships, access to wafers and components stronger than industry average, cost for A16 has upward pressure on wafers but offset by yield improvements and system optimizations.

Q: Self-mining target for 2026?

A: Priority is R&D and delivery to customers first. Current focus is on allocating energy resources, with internal goals for electricity infrastructure, and will rapidly ramp up hash rate when market window opens.