Q1 2021 Canaan Inc Earnings Call
Ladies and gentlemen, thank.
Thank you for standing by and welcome to the economic and first quarter 'twenty 'twenty..1 on earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded.
Now I'd like to hand, the conference we'll speak a host of day, Mr. Shao Lee both Secretary of the company. Please go ahead Leslie.
Central very much on.
Hello, everyone and welcome to our earnings conference call the company's financial and operating results were released by our Newswire services earlier today and are currently available online and joining us today, our chairman and CEO, Mr. <unk>, Zhang and our CFO and Mr. Hong COO, Mr Metz and Matthew Lee.
And from ICR, our IR consulting firm will conduct the English translation, so relative to coal.
And Mr. Sha Lu our SVP will also available during the question and answer session.
Mr. Zhang will start for the call by providing an overview for the company and the performance highlights for the quarter for Soho will then provide the details on the company's operating and financial results for the periods before and open the call up for your questions. Before we continue I would like to refer you to our safe Harbor statement.
And our earnings press release, which also applies to this call as we will be making forward looking statements. Please also note that we will discuss non-GAAP measures today.
Which I'm more so roughly explains at are reconciled to the for the most comparable measures reported under generally accepted accounting principles and our earnings release and the filings with the SEC.
With that I will now turn the call over to our chairman and CEO and Mr. <unk>. Zhang. Please go ahead Sir.
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Hello, everyone. This is an ongoing Zhang chairman and CEO of Kennedy, Inc. And will now provide a brief overview of our progress and the first half quarter for 2020.1.
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During the quarter, we significantly improved our financial performance as a result of the breakpoint and price rally and increasing customer demand and a substantial ramp up of our mining and production and deliveries and as such we reported a total net revenues of 61.5 million U S dollars and a.
Non-GAAP adjusted net income of 21, 9 million and U S dollars and the first step quarter of 2021, a significant improvement in pharma and non-GAAP adjusted net loss of 31.4 million and U S dollars and the full year of 2020.
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With the mass production of new generation for mining machines are product yield and continuing to improve through the close collaboration with our foundry partners. We have further and enhanced our chief manufacturing and process as of today, such advantages have led to industry, leading performance status and our chief speed and yield and the second.
Quarter to date, and addition to our delivery of mining machines and we have also secured a number of large purchase orders of future contracts.
Furthermore, we have Latvia, and the fab capacities for our foundry partners for the and that's a tough months to fulfill these future contracts.
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Although the decline and price volatility and Q1 and create created some challenges and sales of mining machines, and we expect our Q2, a total shipments to either maintain or surpass our current growth rate due to there'll be price due to the viewpoint and price volatility caused by recent and policy and market uncertainties.
We are not able to project for total net revenues for the second quarter in a precise manner.
We expect our total net revenue and for the second quarter to be in the range of $150 million for $100 million.
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In terms of mining machine and sales strategy, we have re prioritized our sales focus to our long term and large scale customers as of May 31, 2020.1.
We have had total order volume of over 100, 149000, and mining machines with over 190 million U S dollars and for total customer transactions and.
And regards to our future contracts, we have signed a purchase orders of more than 10000 and mining machines with both Martin and <unk>.
Literally a company and the Genesis and international Bitcoin mining giant and aggregate, we have had 29 different customers each with purchase orders of more than 1000 and mining machines and accounts for 94% of our total orders this quarter.
And our partnerships with such large scale customers generally involve multi batch mining machine purchases over a long period of time. These characteristics have helped us to reduce the impact of short term fluctuations and crypto currency and prices and to ensure that for the ability of our production and delivery schedule.
And since the second half of 2020.
Had our focus on overseas customers.
As of May 31, 2021, our overseas revenue has accounted for more than 70% of our total net revenues for the purchase orders from overseas markets accounts accounting for more than 70% of our total outstanding purchase orders.
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And for the second half of last year capacity shortages and the global semiconductor supply chain has become a common challenge for chip makers around the world.
In order to secure the production and supply of our products. We have initiated negotiations with our suppliers opting to provide them with a higher unit price and longer upfront payments as of now we have paid our suppliers a total of approximately $200 million upfront.
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And teammates and attributable include Hayward and Thirteenths here for a tariff for download hung Ching balance you download competitiveness led sales you know on Google cyclical Hollow Painkiller clean air ship all of it I turned on and the total volume.
And I won't slip weighted tissue downtown yet on either side of your household piece on kind of Internet of Hussein and no cash on coal for put on hold while yielding real home washer. Additionally in April of this year, we completed and direct the offering of 13 million and 490 to 1065 of our ABS.
At 12.6 U S dollars for <unk> for a total announced release of 117 million and U S dollars the financial impact on through our Lady and the reason ethanol are our recent large purchase orders will considerably and enhance our cash position Adas and supply chain improvements.
And they enable us to secure sufficient production capacity for future deliveries going forward, we will continue the investments and our R&D capabilities to improve for quality and performance of our mining machines and we will also utilize our cash reserves and enhance our customer service capacity and expand our business segment.
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For transfer of our future.
Anticipation of self operated and bitcoin mining, we have already set up a wholly owned subsidiary in Singapore and deployed and operational team and cut at this time.
And latter part of May of this year. We have also deployed the first batch and for mining machines to cut that has down for our bitcoin mining and related operations. We believe that our self operated <unk> mining and <unk> will help us improve our financial performance as well as to expand our business goals and customer base.
As we integrate more industry and resources into our operations. We believe this business segment will enable us to revitalize our mining and machine inventory shield us from viewpoint and volatility and ensure our inventories sufficiency during a market upturn.
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As a technology company, we have always prioritized our investments in R&D as the driver of our for our competitiveness and.
Such our total R&D investments reached $8.9 million U S dollars and the first quarter of 2021 with the majority of our R&D investments allocated to develop new products improved capacity and yield expanded product lines and supply chains as well as invest and our R&D team.
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Beyond our core mining machine business, we also achieved a steady progress and advancing our other business initiatives during the period.
And I industry is still in the early stage of marketing conurbation.
Since launching our first generation for AI and cheap K 210 series in 2018.
Have made outstanding progress and continue to gain traction and the market for robotics agile patient and smart homes. We have accumulatively delivered a 479000 of the case for why zero theory, AI chips to our customers to date.
In March 2021, we finished that cheap back and process for our second generation for AI chip for K 510 series.
We have also completed the main function testing for all functional modules of these theories and expect to launch in the second half of this year as such we plan to expand our K 510 theories and medical application scenarios with a promising outlook that includes high and cameras and computing.
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Furthermore, we may 10, and emphasize agile patient sponsorship.
<unk> and our basic rather for ecosystem. We recently became the sole technique on the part of provider for the 2021 national skilled and OLED design and competition.
And events organized by China's Ministry of agile patient using development force equipped with our K 210 chips students from over 120 colleges and universities across China.
<unk> and the competition.
And currently our Kindred K 210, cheap also became the chief of choice for developers and many interesting applications scenarios, such as the smart meter eye tracking VR applications for.
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In summary, we have established the in depth partnerships for the various segments of the semiconductor industry value chain.
Relationships, we have say on essential role in supporting our steady business expansion and the future as we continue to accelerate our growth and we will generate increasing returns for our customers and investors going forward.
Yes.
Now I will turn the call over to Mr. Cohen, Our Chief Financial Officer to go through our financial details.
Hello, everyone. This is Matthew Lee with ICR and now speaking English on behalf of Mr. Tong flow.
Thank you and net income.
Now I will provide an overview of our first step for our financial results before I start. Please note that all numbers are in RMB terms unless otherwise noted.
Total net revenue increased to $402.8 million from 6 to $8.3 million and in the same period of 2020 and $38.2 meeting and the previous quarter.
<unk> for due to the increase in our total computing power sold as we delivered on more bitcoin mining machines and the pyramid.
Cost of revenue increased to 208.6 million from $65.9 million and the same period of 2020, and $29.2 million and in the previous quarter.
Increasing and our cost of revenue and were in line with the changes and our sales volumes of cash and the cost of our cash.
As a result.
Reported gross profit of $194.2 million and in the first quarter of 2021 compared to 2 point of for many in the same period of 2020, and a $9.1 million and in the previous quarter.
Gross margin and further expanded its a 48, 2% for.
Around 3.5% in the same share rate of 2020, and 23, 8% and the previous quarter.
Research and development and <unk> expenses were $58.2 million compared to $41.8 million in the same share rate of 2020, and $40.1 million and in the previous quarter. The increases were mainly due to higher share based compensation expenses, which increased to $24.
And 1 million in the first quarter for 2201, and it's part of our amended in 2018 and share incentive plan.
The increases were partially offset by the decrease in contract and expenses and other expenses related to our R&D activities. During the first quarter of 2021.
Let's now take a look at on other operating expenses in the first quarter.
Selling and marketing expenses for $6.3 meeting compared to a $4.1 million in the semi pure rate of 2020 and 6.
And 1 million and the previous quarter. The increases were mainly driven by higher share based compensation expenses and the first step for a 2021.
Partially offset by lower advertising expenses are.
And our selling and marketing expenses and the quarter included $3 zero mean and share based compensation expenses.
General and administrative expenses increased to $143 for meeting from 27.6 million and in the same share rate of 2020, and $33.9 mini and the previous quarter general and administrative expenses in the quarter, including them.
$114.8 million share based compensation and expenses.
Consequently, our our loss from operations and the first part of 2021 narrowed to $13.7 million from $71.1 million in the same share rate and for 2020, and 71 zero, meaning in the previous quarter.
Net income attributable to ordinary shareholders was $1.2 million compared to a loss of $39.9 million in the same share rate of 2020, and SMT to zero and the previous quarter.
Non-GAAP adjusted and net income, which excluded a sharp share based compensation and expenses was $143.2 million.
And comparison non-GAAP adjusted and net loss was $38.2 million and the same period of 2020 and $73, 1 meeting and the previous quarter.
Diluted net earnings per avs.
RMB.
And once they are all 1 compared to a loss of <unk>.
RMB <unk> 25, and the same share rate of 2020, and a loss of RMB <unk> 46, and the previous quarter.
Turning on to our balance sheet.
Contract liabilities as of March 31, and 2021 increased to 1000 and that too.
And women 1000, and the plan to maintain on the Stakes meeting.
$430.4 million as of December 31, and 2020.
The increase was driven by the increase that non payment for the sales and orders of our <unk> mining machines, which are scheduled FERC delivery and the following quarter of 2021.
As of March 31, 2021, we have cash and cash equivalents of 1337 and 8 million and.
Per 2 or $391.3 million as of December 31, and 2020.
Short term investments as of March 31 for 2021 decreased 2.8 point and fast media from 6.2 for me as of December 31, 2020, as we redeemed a portion of our short term financial products during the period.
We purchased the short term financial products and receive higher returns, but at the same time.
But at the same time kind of a draw and anytime.
Looking ahead into the second quarter for 2021, as we have began mass producing our new generation of pinpoint and mining machines.
Believe that our product yields and deliveries we have substantially increased on a year over year basis.
However, the volatility and <unk> pricing and late May of this year has made a difficult.
To predict future trends and viewpoint and prices.
As a result, we will not provide our financial guidance for the for.
For the coming quarter.
This concludes our prepared remarks for today operator.
We're now ready to take questions.
Chuck and Lisa.
Ladies and gentlemen, if you can now begin the question and answer session. If you wish to ask a question. Please press star followed by the number 1 and we have telephone keypad and wait for your name to be announced if you wish to come sit and their request we didn't break the bound on how should eat once again. It is star 1 to ask a question.
When asking your question. Please state your question in Chinese first then immediately repeat your question in English for the convenience and say if you went on the skull and once again. It is star followed by the number 1 for you ask your question.
Yeah.
And we have the first question and this is coming from the line of Akita and can from China and Securities. Please go ahead.
Thank you for taking my question comes on line.
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Yeah.
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On the day, combining as cheese and coffee question on them.
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Yeah, sure Tim to Evo, but real followed syndrome.
In terms of policy environment.
I believe every new and emerging industry is subjected to the testing for market evolution and regulatory compliance.
Interest.
And 'twenty crypto currency represented about the bitcoin is increasingly.
And for the market.
The bitcoin has gone through a long process for being validated.
To the and recognize that by the market.
And early in terms of regulatory supervision.
I believe the viewpoint and the mining industry wholesale and need to go through a process of regulatory compliance.
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Truly come on board the curtailment on our sure Joe and SEDAR.
And although they're still cautious on crude for this and wait and see.
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For behind you that temporarily for your product.
The particular at the.
The particularity of the crypto currency mining industry is.
The combination and for technology, driven and strong financial future as.
And the vice President of the POC and <unk> expressed and at the ball for them for Asia and recently, if we consider bitcoin.
As on investment instruments, we need to develop regulatory policies to efficiently manage potential financial risks.
Which men and we referred to 1 activities to cause market disorder, such as financial fraud and to preventing individually investment and risks from extending into the overall financial system.
And as such we believe regulatory supervision is constructive to the development of the bitcoin mining industry not destructive.
And the long run regulatory supervision is positive for the healthy and orderly development of the industry.
For sure complement handler.
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Well net of timber and drilling 12 months, along with our credit to correlate them on 1 quarter at that and shown on cell highlight the homegrown cultural.
Far enough, along with them, which and the other upon.
And trunking and China. It sounds like they are available for the carrier and off on a cohort of hey for the pro forma for all share documents Ebola portray a up on wholesale.
And just your thoughts on the quantity that you show quite tell on play piano bar coordinate policy the cultural till you close in yield and thoughtful about the proposal.
From the market perspective, currently majority of for our customers our overseas companies, including public companies, while each day.
Average for mining companies and professional and financial institution.
Policy changes and China might cause.
The mining companies or vendors to undersell, the coin and mining machines to medium and small miners and abroad.
We will cause price volatility of mining machines and international markets.
Majority of our customers are large scale and institutions and professional and mining companies.
The large amount of upfront payments received from these customers.
We will enable us to a smooth and the price volatility caused by the understanding of mining machines.
Yeah.
I would say goodbye and thank you Don and simple.
And thank you Louis.
And I'll just talk maybe bolt on.
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You bet.
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Tony on <unk>.
Second question what is it.
And then towards greater currency currently.
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Hi, Congratulations on board.
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Potential too.
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VW for Paypal for the for <unk>.
The supervision and I'll be claimed some gross major economies has long been initiated.
And the economy is wholly developmental perspective on <unk>.
According to the debt of <unk>.
And so 157 economies in the world.
Over 52% or 1% and 32 economies currently recognized bitcoin and legal currency and do not impose restrictions on it.
On the 14 economies and consider viewpoint illegal and restricted.
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The nature of the client more than 60 per cent of the economy as believes that it has monetary properties, which means it could be used as a means of payment nearly 30% of the economy is regarded as a commodity more than 10% of economies Trillium and property.
Continuing to drill for truckload will flow towards.
For US you know you Didnt dwell nodules on industrial economy weighted John without the B.
<unk> and team.
And they don't see any future debt.
No.
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And on frequently over pressured household cleaning and <unk>.
And you told me that Tim was hired on Norquist Theatre should Jennifer and I don't care.
And recently, many countries, such as Turkey, and India contended and Thats.
And join the list of economies for strips or prohibits a coin.
And as academic has worsened and the growth of their economies.
Domestic inflation has clearly.
Our teachers and tourists declining regulation of these economy and the varies over time.
Sure.
And Keith Josh.
Your line is just on.
Ladies and gentlemen.
Okay.
Yes.
Yes.
And probably that you guys should something Keith Feldman on for Rob.
And why you tell Keith.
Oh come on.
And then.
And my third question more for Richard.
Hello meters.
And also internationally.
Yes.
And at the high energy consumption and combining what do you think of it.
And also that will be.
The closing down of people buying farms.
On top of Ching reaction.
China.
And they won't for logic.
Shane will leave alcoholics, yet on Cuba.
And do things.
So that prohibits Hilton and what's your take on.
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Each and off on a 2 year on year bump on it so that's all stuff.
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And we are sure.
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Took a clear and that's the only thing and Huntsville, and Oh, Yeah for sure Daniel Uncle Sam.
<unk> for you called for.
What are your father and knows what do you go on and Rockwell and they decided that our fun box and so that's a bit our shirt up well do they take a different name uncle chewed Chengdu R&D contract and now you've got your interest.
<unk>.
These babish and of Liza.
And the whistle blower platform for our digital currency and mining companies and inner Mongolia is not a new more.
And John has he showed a similar policies before.
At present the device.
And the bitcoin many industry relies on low cost of power resources. There are 2 main types of resources.
<unk> hover and hydropower.
The northern and Western region is dominated by thermal power, which is against the inherent environmental protection principle of carbon neutrality.
Neutrality.
This is 1 of the fundamental reasons for the withdrawals local mines and Hino and more.
For the year.
And I'll get off a low Voc policy and Barbara.
Similar to the holidays and long haul model.
Yeah, it sounds on sort of what's out there.
That's it.
Okay.
And I'm not sure I feel my other use and its the only and on the trove of data.
Triples, and Sierra Tuesday, and the ore.
And they work on theory.
Secondly.
Many mining companies engaged in mining activities pretending to be data centers and joining on policy subsidies granted by the country, but sailing to fulfill their corresponding and social responsibility.
And withdraws and these companies that will help standardize the operations of.
Domestic mining companies.
Several of our country and yeah, so have downward pressure and on top on that hurdle from Lee you won't see that they are now.
And you'll need a mood point won't for human session. Dr. Peter Chu will serve alcohol hurdle Earth day.
Dr Dinah checkout flow and.
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And as for dilution issues for them. So I thought I heard on the here and I'll quit drilling so Paul on Saturday.
Sales, which are youll sell that you've shown on table 3 chip in on the.
Sure Douglas Channel BW Pong, Yeah, Shabaab shipyard and for our marketing and channel person for that you can catch up on.
Although the mining industry consumes electricity.
Use is waste electricity and largely extend.
Miners and prefer to choose areas with low electricity prices to engage and mining activities out of property and making purposes.
The low electricity price any case that the local power supply is greater than the actual demand.
And there is a waste of energy before the emergence of effective means.
<unk> paid waste and electricity declined mining into solution and so transformed waste electricity and a historic value.
And sure enough on issued on January <unk> alcohol issue for you for seabed because each day.
And day to Chile, and less hedge on it.
Have you ever quality credit issued a typhoon Joe yet and you showed on the focus on the phone.
Recently, I assure Sheila for the flow picture and.
And for that you'll collect payable.
At present.
And the degree of hover abandonment exist and many.
Mining areas and China, such as the northwest and southwest regions equally and mining has contributed a lot to the finances employment and income of residents and poverty areas at all.
And also help new energy facilities to generate income and further expand their scale.
And sure Jonathan.
Hope that answers your question.
Yes.
That's helpful. Thank you.
Yeah.
Thank you.
The next question is coming from Martin and Chin from 10 and as such please go ahead.
Hey, Glenn how do you intend on.
Yes.
Okay.
And what they've been on <unk>.
And when do you see on buying a woman and cigarettes.
And and patrol.
No no 1 share.
And I think our outputs and view on the debt Jack.
Good day.
And it's kind of normal for me it's okay.
And he jumped on.
And well find out.
Absolutely and revenue growth and the second program, maybe you can give some color on the second quarter and 90 machine output.
Compared to the first quarter.
And what.
So Jones for.
And then Q2.
On the incentive of Xiaomi and people with a neighborhood cause I'd ask for.
And by whom and they are a tool.
And.
You bet Shanghai for you to take a T shirt or a box, where you try and see if you go to 14 and done the Gulfport visual.
Thanks for not younger women and <unk>.
Yeah.
Higher channel, how long do up and down.
So and a woman.
And that's Huntingtown, Florida for Downhole Buildout Heathrow.
And isn't that you'd seen a dollar for you to figure it out would be to be achievable causative Sunday eshop.
As we discussed on last quarter.
Still he expects, 70% to 80% of our Q2 orders to be future contracts.
Driven by our alpha optimizing the supply chain continuous ramp up for our capacity and the improvement of product yields and.
Our product and throughput has been considerably I debated.
And the result, we expect the shipment of mining machines in Q2 to be more than tripled from that in Q1.
Yes.
On top of eye for talent.
Yes.
Oh, no you up on your chocolate with Switzerland.
It's also seem to go the other.
Bolt on and there'll be kind and I think that's a woman chocolate Yosemite income.
With that.
All right.
Do we see any impact on the bitcoin.
Fluctuation in.
And the second quarter or second half on 1.
Okay.
And so I'll go and let's see.
Please and canola.
Firstly, the chocolate pushout on the Bulldog hopefully for sure.
Sure on chronological Colombia, and then you've got the war.
That's for <unk>.
And that's what we'll show you don't all onshore and Oh.
You don't have to go for you to jump out.
Does that also between horizontal quantitative.
Provision for you on controlling controller, BD and adult male at Hollister.
On a unit switching to go for that being a lot and our whole highlights for from.
And that.
And corporate to have already she doesn't go on drug.
And that too soon because every day.
And so I'll leave it there.
And I'm with China, and Hong Kong, and our triple bottom on phone control and I'm sure you know it sounds on on the flow of traffic to other Tucker again for you because there'll be a huge order to go for dollar.
Originally we have observed considerable fluctuation and re treatment of the big point, and France, and also heard a different losses on the market.
And the overall return on for viewpoint and miners remains at a relatively high level.
And then most other circumstances because of mining machines and does not exceed 1 third of the miners and income.
In addition, total computing power of a big client and network declined and recently due to policy change and China and the transition between dry and wet season.
There is a minor decline overall return for our miners, but the changes significantly less than on re treatment of feed prices.
Quantity of childhood zone.
For total newsworthy and hotel touches on Mayo clinic for years, we did on <unk>.
Hum in the telco and shrimp with how to show it on well enough.
And so.
Turning to our trajectory for liquid share didn't ceiling on what are the.
So that's like a bottleneck.
And since you know for sure well on and see if it was on a hold up well.
And that's how we want to know how do you take a tour.
Particularly thoughtful highlights for Zillow came to us.
On Ghana.
General thoughts on a gross you pointed to that each year and Sheila portal.
So on the tenure of course for non Sandro and I kind of on that same day.
Moving along.
Peter.
Roger and Intel and a teacher, Patricia Odell, which India for sales yeah.
And on their sugar cocoa firsthand on that you took.
<unk> talked at our Florida, Colorado, California, and that chart on the other go to Jim was judged on loyalty.
And a high amount of Copel and on Archie for debt on the geography, Cuba.
And so there's so much other Jim Hall, and tenants and all that kind of on the highlight a cohort you can keep it and half will fall on to hotel for us on that.
And Jack all are turned off on that U S. Albertsons other critical to adopt simple without reliance on hydro for their call.
And it sounds a little short had other in the channel.
Channel for example on on <unk>.
All told us for each other and only until <unk>.
Because you do on me extra hold on to it but I'll call that some of you don't want him with his share of what's our value both for our sensor that's helpful.
And the price of mono machines depends on multiple factors without considering the impact of policy change, we see a strong correlation between and the price of mining machine and the return of mining.
However, the recent and policy uncertainties and the volatility of bitcoin prices have cultivated and overwhelming watching Adam Adam a sphere and our domestic market.
Domestic domestic miners consider going abroad overseas demand for a second hand, and mining machines and boom, which caused a short term turbulence and market supply and demand.
From our experience on current market situation, we believe the major impact from policy uncertainty and fluctuating breakpoint and price is not the price of mining machine itself, but the timing of placing purchase orders.
While domestic customers and wait for a clearer policy environment overseas customers and flying to a more stable <unk> and price.
Currently most of our overseas customers have resumed ordering for spot sales and work futures contracts and the impact on overall price, it's not material, especially miner on the price of futures contracts.
Depending largely on the bitcoin price.
Current price of mining machine and for spot sales is 20% to 30% and over comparative with that and then viewpoint and price it was $61000.
So I'll put on and then Sheila.
Okay on sale.
Why are you good.
For the 1 he and counsel.
It sounds like some data you said no woman someone come and shop on cigarettes and.
And.
And all our shipment and we already treat.
Shipment.
Second quarter compared to the first person can we continue to increase.
Shipments for the second half.
Yes.
Yes.
And as you sow.
So for a woman and Tien Tran Nguyen.
Now on the funnel, what you're talking about with our furniture on hydro.
And a high opinion, it's Lee.
Country for you.
And talked about and Thats what youll.
And thanks for calling me and question that you referred to a showroom for a deal with <unk> on top.
Sure sure a quarter ago, it would be the tariff on Europe, you talked on a failure.
So it was a 10 day and I assure you with tenure and therefore on Saturday with channel or clay pointed out and so we did trigger a took a fool to pay day they paid for.
Yeah.
And in terms of our total shipments and this year.
We currently expect.
And you expected it to be around 300000.
On <unk> mining machines are delivered and it's our customers and this year.
However in terms of revenue and profit.
We are not able to give you a clear guidance at this point I think that they are closely related to the price of a decline.
Yes.
For all women Chairman, Ken think of it.
<unk> had some fee.
Income tax say weighs on combines and downtown and tongue you like kind of.
Bye for today.
So what do you do you saw each other.
As a woman on Tonight.
Maybe on.
With me on meal Tonight.
Great. Thank you.
And pick up and down for them.
And I also want to know.
And the strategy too.
You guys read off.
Michael and then end up our sales force.
A long time.
Yeah.
And.
Definitely the haulage on frozen or what's the other woman for a part of the Hong here and I'll show you the coastal photos and Javier.
And.
Trivalent and look we can go short and then he changed Chicago, which and as you know you can see on mobile.
And what channel women would either share to kick off our metro E and a whole.
Hold on.
2 came for cultural lets you couldnt refuse on the phones yet.
And that's our church and off on a woman.
Shy on more sure sure exactly and done.
Having said that for you.
What's the other.
What about female and it sort of a pulse of the team for opponents and will show up it would be the.
So on and getting it on SEDAR for a whole.
And our soon to be therapy that you got on the affordable and I found out to go.
And how do you go to go to go down there.
Honolulu Fukuoka adjuvant.
Turning to our home and deal with on the show you know on it.
Yeah Bob.
Kevin.
This is a very good question.
Firstly as we are in a faster developing and emerging new industry.
Believe stable profitability is not the top priority for our business operations.
We are working on maximizing our profit and managing the risks of losses at the same time.
Our operating performance used to be significantly affected by the change of bitcoin price the impact of whats, sometimes even magnified on our operating and performance.
This is natural due to the simplicity of our business model and product line.
As a result, we have carried it on out following initiatives to increase and stabilize our profitability.
Deanna just for cohort social and most restaurants at all.
Shanghai, Hangzhou, Coca Cola and a whole horseshoe on intaglio change for trailing Sheila cohorts, yet and when do you want and they'll come on yet.
Central Harlotry Guardiola.
Thank you for example.
Trying to hang on credit.
And dealer channel channel there sure so hung up on us.
Wholesale and gone to a free.
And the first initiative.
And the selection of customers and so.
On a margin models.
Enter into long term supply agreements with select customers and suppliers.
And to stabilize our supply chain sales and profits and.
And we also reserve a small portion of the mining machines for spot sales and market upturn to increase our profitability.
Darren and I know for high touch and the shower and washer and that's it.
And I'm not phosphorus and.
So you know alcohol and you took.
Yeah, and when I showed you travel for coal tons.
And ladies and gentlemen.
And Chris I'll follow on call for insurance regarding Ohio, Faneuil Hall, that's going on.
Total contrast, what's on hold on and what other Yoshi harsher.
Hung year, yet and so I'm trying and will share a beautiful sunny its audience and also on its own.
Turning to Rodrigo suddenly for you that's useful.
So do you plan on the Hong you fund on our kidney care and the long haul and on cards.
And on golf.
Come on to Youtube.
And so outside and you can get halfway there to withhold litho and last 1 on and soil for what a surgeon Dr and on chip would you buy a territorial unit and when you go through.
<unk> channel towards locally and more on that at all on who and what home depot on the lease kick on lot Hoelscher trials with order it holds with us.
And then you guys also that took a final moisturizing culture centered on that.
And we though you didn't get a job for the mantra for gigabit for Florida.
And just to give us a very logical.
And sort of among other service Sinclair and a toy poodle.
Our second initiative is to expand into new business segments, such as self operated and mining disease to diversify out for Pcs model on.
And this is a critical segment for a hardware and manufacturer to share the development for dividend of the blockchain and chemistry.
In addition has a disruptive business model of a blockchain industry. It is the fundamentals for computing power for leasing.
Cloud computing and sales and even computing power contracts.
As the industry evolves the enter the entry of areas brokerage crypto currency mining has become too high for most other participants on our cost day to build and operate a tens of millions of dollars large scale mining facility.
This entry barrier has essentially discourage for investments in this field.
The business model of pure hardware and manufacturing is out of date.
And would per month, the hardware plus service model or even pure service model.
Mining as a service for and Aaas to become the mainstream model.
December and I'll go for it.
For additional notes on honestly, John compatible for military for closings and only and I'm sure you can assure day for a longtime and elite.
And that's it for what sits in the Yorkshire room about share on those shelves of the lock.
And I'll call them.
Yeah. So you know on Linzess.
And Keith was only on a young and old 1 try and football and luxury and a ton of our gas and candidly.
And with that I'm not sure per year awards for its other huh.
For you you go switch on pay you the thoughts.
It's actually on a corner and lesser and I'm sure very light sales.
Kudos on C I neither on yet.
So thats it for electrical yoga to retrofit the tables.
And the third point is diversification.
Essentially we are a chip company.
Core companies is their capability of designing chips and the massive production of it.
It'll be too narrow and if we leave me and our technological advantage and a strong balance sheet only in the development mining chips.
As such we are developing.
Homologous technologies to be applied to a completely different and AI devices and edge AI channel.
Although this new business segment is still in the early stage of market cultivation and it is generally acknowledged that AI chip is an important industry and the future with the huge market potential and we hope to be prepared for potential business opportunities and the future.
And so on and the 1 color into that and.
For this help.
Oh, we're not quantity and we.
Sorry that 1 for you, though at some point Mitch and Holland.
And she cannot be and sometimes because of tight.
And again.
Okay.
Yes.
Neil.
And then comes over.
Probably on the China.
We would like to know Oh.
And next generation machine program.
And finally, our required capital.
Property rates and.
Please note the other use.
And the and you rapidly scheduled for publication.
Uh huh.
For this and kind of I fall off on it.
And as I assure to adult community.
Trough for Brooklyn.
And it all for if you buy a home.
And the.
And that will have to go for trough on there.
Well on them, which I don't know on them for sure, but we're on Romania.
Cash and cash Youtube and with a bubble.
The amount of on onshore for Colorado, which I didn't see and I'll take that.
A particular coupon on it.
I don't call and you will get replenished Rumble on yet.
And we have worked on.
In order to avoid causing confusion.
For the market, we normally don't separately these launch and a single and new chip due to.
And the simultaneous integration on technologies and massive production by multiple foundry partners.
And certainly is always associated with any R&D projects as such there might be change to our following discussions and the expectation.
Shale locally and a woman.
On the yards.
Good day, and Fahad whole, Ken and I don't want to call out.
And finally I know for sure.
On that zone.
I assume.
And I'm not homebound wholeheartedly.
And that's all for China for them on and there should offshore.
And that's all for our terminals on me.
The next generation chip is the second iteration out for our existing technology, we expect it to gradually adopt next generation chip and the second half of this year compared with current products. We expect for the overall improvement to be 10% to 15% in terms of performance and cost.
And the public consumption.
Sales I won't call them.
I'll touch on it that's the only and the Hudson do on them.
And she and other social channel knowledge on so I'll, just kind of and whole lot now on track.
And our final <unk> I went on non accrual kind of awkward time yet.
Chunky and Tony gave a talk on icon off on a per se.
The Chinese RMB and the whole cash I'll, let up and draw for us actually.
And in terms of in terms of the R&D process of the Nexgen and are essentially.
By our foundry partners.
The full function testing chips have from being put into production and mass production is absolutely the foundry partners and casual.
And the expectation is next year compared with current products.
We expect the overall improvement to be in the range of 20% to 30%.
It turns on.
Well actually go a channel and I won't tell you right now.
Approachable.
And I mean, if you've only got Apache and do well.
And I was kind of many other media channel.
On the pushes and dollar weighted to.
And the proceeds and hydraulic Ortega channel referral channel just for free but the Ottawa.
And.
In addition.
We're also in the process of developing the 5 nanometer chip we expect to launch.
And 5 products and next year instead of the challenges that for the R&D itself, a long process and capacity constrained and are the major obstacles for a launch.
The whole day, some gross and seem to be on the hot on <unk>.
And do you assume Canada, Chile, and should hold off on a central scenario and other things it off and Didnt see better trying to assure you talked about how currently on.
Truecar channel on a string of your trials.
Prior to <unk>.
And Canada touch and GPM for sure.
For your call.
Net sales.
Well <unk> drilled for union or trigger to contingent interest and Qiagen.
And so for woman free.
And I'm, telling you all that's it for Tinder plus all of Asia.
So in our opinion and Dave you mentioned and young women and diet.
Sales in Japan on a bullish on yet.
I'm not trying to steal neutral on whether gotcha, and social plus quota.
<unk>, Yeah and logic.
The advantage of essentially on a channel you'll see on and I'm sure.
And so for women and that's what's hard rolled on and let's see we've got I forget.
Central to Novartis for whole now on the flip chip.
Sales income Schindler, Jacob Attritional and trauma, we assume that should flow.
In terms of our cooperation with Samsung.
The manufacturing of mining and shape requires large volume wafers under the current supply shortages of wafers, we're only able to utilize foundries surplus capacity from time to time as such R&D managed not prioritize them and the foundry partners.
Foundries have multiple cash fabrication production lines are important potential partners for us the performance and cost of our 8 nanometers chip producer by Samsung was very good.
And by sometimes capacity constrained, we suspended our cooperation for several months and this year.
We plan to resume our cooperation with Samsung for the production for a new ship and later this year or and next year.
Quantifying it sends a superpower and I've tried to be a coupon on them, which are truly other table to appeal and I will repeat and until <unk> to go out and say about Youtube and to some level.
Sure Sean here on <unk>.
Zone.
And I know well known for loved ones on budget PTC vital partner and 2 indications <unk> and apparel.
And since our crews for does it assume and I'm not sure debuted on the original and CPO 4 on or you'll get all of them.
And so that's useful.
And I forgot to unify it for feeding off with us.
Huh.
You would see that partnership.
Let me hand, 10, and 10, a little on there sure.
So timna and logical it seemed kind of channel surf on Hana.
And what Youre the Kenosha only adult.
So Pete on non shootout down on from country to Israel coffee.
Uhm EPS for continuing to Egypt.
For the logic for debate for DRAM, the Chipotle for a package and that had been a total of $2 future.
And Ohio, which were the 2.
So you answered and that those for which you bet.
For us strategic plan of developing many machines.
Currently the midstream IPO that viewpoint included only the big point is.
Ram and light point.
In addition to our existing bitcoin mining machines, we are developing and mining machines for.
If we and more Eth, we hope to improve the performance of our new machine and by 1 to 2 orders of magnitude and <unk>.
With the current mainstream GPU as a result, the RMB of new Dth mining machines is complicated and difficult.
And so we expect to launch our Eth mine and machine.
A year.
In light of the current.
Supply shortages on the market.
Sure.
We think it's difficult for anyone in the industry too for the Eth mining machines into mass production and this year.
On.
And is.
Due to other severe.
Short of supply for logic papers.
<unk> wafer and package.
I'll show up on that.
Thank you and if they don't seem too thank you.
Thank you and we have the next question. This is coming from the line of John on this call from George So investments. Please go ahead.
Okay.
Thank you very much Unfortunately, I don't speak Chinese.
So I'm gonna do thank you for trying to give you the transparency.
On this call and and.
They're all the great questions and congratulations on a good quarter.
Thank you.
Let me translate for the management.
That was my only question. Thank you.
Thank you. Thank you.
Okay.
Thanks for that.
Based on football.
No.
Hi.
[laughter].
Okay.
We have the next question and this is coming from the line of credit.
And this is from B Riley and Securities. Please go ahead.
Thanks for taking the question and I will ask for help and translating.
On the following.
First regarding the the order.
Order intake that the company, saying I believe that's leading to the company fully being a can ship 300000 units for sure. But the question is really on 2022 are you taking orders currently for 2022 shipments and can you quantify the magnitude of orders that you might have taken.
On a year to date for next year.
And thank you for your question.
Okay. This is ed with Lula and responsible for overseas sales yes.
Sure we have.
<unk>.
Taken on.
June 2020 to quarter 1.
And so it helps you on AR.
It does but I was hoping you could also quantify the degree of orders that you've taken for 2022 in addition to whether youre, taking them or not.
Yes.
Yes.
Have taken orders for in fact, and the preorder sales pass neck, and John the Chairman and CEO mentioned and.
And in his previous savings.
And in 'twenty, 1 and we have.
Preorders and.
Also we have pre orders for quarter, 1 for 2020..1 every months with a long term overseas partners as well.
Monthly phase G. So very well organized amongst us placing orders.
And of course helps us along and the allocation of production capacity and also.
Several of our business pipeline.
Thank you that's helpful. I have a second alright, and I have a second question if I could.
And the press release the company disclosed there was 56 million order cancellation and the calendar second quarter and and the question is related to that order cancellations and <unk>.
And this system will be redeployed to other customers for.
And with those systems be redeployed at the company's internal mining operation.
Can you just confirm what's happened with the system for Soc.
The order cancellation.
And the cancellation of 1 of our customers and.
And North America.
And of course customers has the right to decide to.
Purchase or to cancel and also.
This cancellation doesn't impact our business as you know.
The miners sales and demand you can see for them to report are stable and healthy.
Thank you.
And that's also helpful.
And Mr. John if I can.
For the balance.
Supplementary Oh go ahead.
You mentioned that for sure.
Sure you're going to go home and we don't show that your votes for all Iot Society and yet no throughput.
So for tentatively slated for the trigger.
2 for Jim fish, and the hard on how to vote.
So, let's say, that's how I would qualify and assure you go call on Trulia and you won't.
On the.
Peter I'll call, the telco and let's say the ease and.
And I've got to go for terrorists and the hurdle for Saturday Alibaba.
Uh huh.
And.
In light of the current and the short of a supply.
Supply situation on the market.
Actually for the second and half of this year.
We actually see the cancellation of day certain customer as a positive impact on on our full year performance.
We already are.
On.
Sign a contract with a new customer at a higher price.
Thank you.
And so that's very helpful and and opportunistic.
Finally, I just wanted to get some further color on.
And on some of the supply dynamics and the market.
The company indicated that it's.
Pre booked capacity with foundry suppliers and the back half of the year.
If demand continues to grow through the year can you get upside to your current capacity for this year and.
And succeed.
The unit shipment target of 300000 bricks. Thank you.
Net.
Let me take a second to translate for the management.
Yeah.
Okay.
And I say that.
Don't you turn.
And I don't know oral agent with heck on on your table, you'll see lots of things out there.
And if a woman and non Florida hard to for tissue cash only on New York and assume.
And that Sean articulated Gulf will come on board.
To go thorough hodgkin for.
So your trip.
Turning to your debt to your tenure and channel.
And on the order I mean, yeah sure actually lets you all to see.
And on the heart of your shelf would have on.
For example.
Yeah actually we do.
Don't see further potential for increasing our manufacturing capacity and this year.
Given the supply and demand.
The situation on the market.
What we can do actually hit too.
Increased.
Improve the performance of that yield.
So that will enable us to deliver more on terra hash to our customers and in turn.
And.
Manufacturing capacity.
And we hope.
And we will be able to locking and more capacity to address.
And the increasing market demand and next year.
Thank you.
Thank you for taking the questions.
Okay.
Thank you yeah on no.
Other questions at this moment I can try and go back and the management for any closing remarks.
And.
Thank you everyone for joining us today here for you have any further questions. Please.
Has it hesitate to contact us. Thank you bye bye bye.
Bye bye.
Okay.
[music].