Nano Labs Ltd Q4 FY2022 earnings call

• The fourth quarter of 2022 was challenging due to industry and crypto market dynamics, including Ethereum's transition from POW to POS. The company shifted development strategy and explored global expansion by visiting other countries and meeting industry experts.
• Focus on overseas markets, targeting North America, North Europe, the Middle East, and Southeast Asia.
• Updates on iPollo Metaverse: AIGC connected as a Layer 2 tool, supports stable diffusion model inference, and plans 3D printing services for metaverse integration.
• Financials: Net revenues increased, but cost of revenues spiked, operating expenses adjusted, R&D expenses decreased.

Net revenues for the fourth quarter of 2022 increased to RMB 12.7 million (USD 1.8 million) from RMB 3.2 million in the same period of 2021. Cost of revenues spiked to RMB 89.3 million (USD 12.8 million) from RMB 26.9 million. Total operating expenses were RMB 60.3 million (USD 8.7 million) compared to RMB 113 million in 2021. Research and development expenses decreased to RMB 39.2 million (USD 5.6 million) from RMB 99.6 million. Loss from operations was RMB 136.9 million (USD 19.7 million) in Q4 2022 vs RMB 136.8 million in 2021. Net loss was RMB 132.8 million (USD 19.1 million) in Q4 2022 vs RMB 135.5 million in 2021. Cash and cash equivalents as of Dec 31, 2022 were RMB 87.8 million (USD 12.6 million) compared to RMB 233.9 million in 2021.

• Expect financial performance in 2023 to be well improved compared to the fourth quarter of 2022.
• Developing Cuckoo3.0 and new A-series iPollo computing devices with high-performance specs for AI and zero-knowledge proof computing.
• Continued progress in iPollo Metaverse with AIGC integration and plans for 3D printing services.

• Impact from Ethereum's conversion from POW to POS in September 2022 affecting existing business.
• Decline in cryptocurrency prices in the second half of 2022 contributing to financial performance decline.

Q: What has caused the company's financial metrics decline in the fourth quarter?

A: The conversion of Ethereum mainnet from proof-of-work to proof-of-stake in September 2022 affected business, and the decline in cryptocurrency prices in the second half of 2022 further impacted financial performance.

Q: Do you have some expectations for your new products?

A: We are developing Cuckoo3.0, recently launched new A-series iPollo computing devices for AI-generated content and zero-knowledge proof, and iPollo Metaverse has new technological progress with AIGC integration and plans for 3D printing services for metaverses.

Q: Could you give some brief introduction of AIGC and the ZKP computing and what is the performance outlook for 2023?

A: AIGC uses AI to generate content for metaverse development. Zero-knowledge proof is an encryption protocol for proving information without revealing it. The performance outlook for 2023 is that financial performance is expected to be well improved compared to the fourth quarter of 2022.

Q: What is the key direction of the company's development in the future?

A: Enrich the product portfolio, focus on overseas markets (North America, North Europe, Middle East, Southeast Asia), and continue development in metaverse areas like AIGC, real-time rendering, and 3D printing integration