Nano Labs Ltd Q2 FY2024 earnings call

• In the first half of 2024, the industry showed recovery and new market opportunities emerged. Nano Labs invested in R&D of upgraded Cuckoo Series products.
• In May 2024, mass production of Cuckoo 3.0 chip commenced, which has enhanced performance compared to Cuckoo 2.0 and set a global benchmark.
• Plans to launch models with Cuckoo 3.0 chip for various application scenarios in the remainder of 2024 and first half of 2025 to drive sales growth.
• Continuously innovating in packaging technology and IP to improve chip production efficiency, and developing AI computing, ZK computing chips.
• iPollo Metaverse's photography studio service made progress with collaborations with institutions, laying groundwork for future growth.

In the first half of 2024, Nano Labs' net revenue was RMB24.74 million (USD3.47 million), down from RMB52.37 million in the same period last year. The decline was mainly due to decreased sales of the iPollo V1 Series product. However, revenue from 3D-printing products saw significant growth, increasing from RMB22,000 to RMB459,200. Cost of revenues for the first half of 2024 was RMB24.71 million (USD3.47 million), compared to RMB115.2 million in the same period of 2023. Total operating expenses for the first half of 2024 decreased by 20.1% to RMB58.72 million (USD8.24 million), with selling and marketing expenses dropping 54.4% to RMB4.33 million (USD0.61 million), general and administrative expenses down 18% to RMB25.45 million (USD3.57 million), and research and development expenses down 12.2% to RMB28.93 million (USD4.06 million). Loss from operations was RMB58.69 million (USD8.24 million) in H1 2024 vs RMB136.4 million in H1 2023, and net loss was RMB59.50 million (USD8.30 million) vs RMB134.3 million in the prior year.

• Plans to launch complete machines equipped with Cuckoo 3 chip in the second half of 2024 and first half of 2025, expected to drive sales increase.
• Gradually introduce new product lines to the market, anticipating sales volume growth over time.
• Explore new opportunities in fields like AI computing to drive future revenue growth.

Q: Could you provide some more details about your new 3D products?

A: Our company's newly launched Cuckoo3.0 Chip is an upgraded integration of the original Cuckoo 2, with significantly improved performance. Machines equipped with these chips can be used in data center environments, homes, or consumer setups.

Q: What are the company's expectations for the market and financial figures in the second half of this year?

A: The company plans to launch complete machines equipped with Cuckoo 3 chip in the second half of the year, expected to drive an increase in sales of relevant products, and is gradually introducing new product lines with sales volume anticipated to grow over time.

Q: What sort of competitiveness advantage does the Cuckoo 3.0 have relevant to recent AI trends?

A: The Cuckoo 3.0 Chip offers the highest computing power and lowest power efficiency among current products. It features high-bandwidth multichannel, 3D DRAM with dedicated distributed on-chip network for efficient data exchange between computing and storage units, and a chief specialized low-voltage circuit to reduce power consumption, aligning with AI chip design needs.

Q: Will the company introduce any new product lines that could support its business revenue in the future?

A: The company plans to launch complete machines equipped with Cuckoo 3 chips in the second half of 2024 and first half of 2025 to boost sales, photo studio services will contribute to revenue, and it is exploring new opportunities in fields such as AI computing for future revenue growth.