Q3 2023 Canaan Inc Earnings Call
Okay.
Yeah.
Ladies and gentlemen, thank you for standing by and welcome to Canon, Inc. Third quarter 2023 earnings Conference call.
This time all participants are in listen only mode. After the management's prepared remarks, we will have a question and answer session. Please note that this event is being recorded now I would like to hand, the conference about Chesapeake a host today, Mr. Takashi <unk> Investor Relations director of the company. Please go ahead.
Thank you 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 join.
Joining us today are chairman and CEO, Mr. <unk>, Zhang and our CFO Mr. Chin, Sean James In addition, Mr. Leo Wong IR Senior director Ms. Qi Jong IR manager will also be available during the question and answer session.
Mr. John will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Cheung will then provide details on the company's operating and financial results for the period before we open up the call for your questions before we continue I would like to refer you to our safe Harbor.
Statements in our earnings press release todays call will include forward looking statements. These statements.
Include but are not limited to our outlook for the company and statements that project that estimate or project future results of operations or the performance of the company. These statements speak only as of the date thereof, and the company assumes no obligation to revise any forward looking.
Statements that may be that may be made in today's press release call or webcast, except as required by law.
These statements do not guarantee future performance and are subject to risks uncertainties and assumptions. Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission, including our most recent annual report on form 20-F for information.
On risks and uncertainties that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call and webcast. We will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental.
Measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings.
Press release, which is posted on the company's website.
With that I will now turn the call over to our chairman and CEO. Mr. <unk>. Zhang. Please go ahead Sir.
Hello, everyone.
<unk>.
Let's say you up here thank.
Thank you for joining our conference call, Jamie said at a high.
Company is headquartered in Singapore to share our quarterly results with you.
During the third quarter of 2000.
And history.
Home prices continue to decline and remain in a low price range.
At the beginning of the quarter.
Price was around 30, southern U S dollars and it reached its low point.
25000.
September.
If that stayed in the range of 35.
227, South in U S dollars until the end of the quarter.
During the third quarter. The total network hash rate remained very stable at around 400 extra hands for a second.
One nurse space seemed appropriate loggers.
There was a lack of correlation and not enough to perhaps here for further investments in the expansion.
Off modeling computing power.
At the macro level the U S. Federal reserves are rising interest rates by 25 basis points to five 5%.
Higher interest rate environment limited the predefined prices upward.
Ah moment.
Increased madness financing and the interest costs.
As a result, the industry is purchasing and the deployment priorities were impacted.
Meanwhile, inventory pressure all year store mining machine models continue to rise.
As mining machine manufacturers to reduce prices to fill their inventory ahead of upcoming having you bet.
Observed considerable price call centers today power.
In the face of this challenging market environment, we achieved total revenue.
The phase III part of street, mainly in U S dollars exceeding our guidance.
At the same time, the caf carrying out our development strategies. This includes focusing.
RMB and the entire ship from all key marquee channel South, Texas and.
Exploring mining partnerships were also make hay.
Product and our flexible operations management to ensure a stable cash flow and ongoing business operations.
This will help us to prepare for potential market opportunities in the future.
Now, let me go to more detail.
First we are committed to RMB and the investments in production capacity.
Allows us to upgrade our products to achieve breakthroughs in Ms.
Sheen half rate performance and energy efficiency.
Our tests anniversary event.
September we overshot a launched our new generation of mining machine, So a 14th series.
Eric with a 1466 achieves a hatch rates of 450 Tera hat for a second with the power efficiency of 21 pardon to fire.
<unk> potash.
At the same time, we introduced the lakes at the court, a one 466 mining machine, which achieves our efficiency below $20 per ton of cash for the first time and has 170 tera harsh.
Of computing power.
Besides our current offerings, we are actively developing new products.
Follow our euro practice, we will announce their performance what's the machine testing is complete.
These products in the pipeline will allow.
With next year's market mainstream production power efficiency level of 10 to 20 draws potash we are.
Also in the process of delivering our air cooled and liquid quarter integrated site solutions.
Should we have developed in house.
This equaled 40 foot and attentive Forbes airport mining box container products and the forecast for deep with putting out in a box.
Mylan container products.
Our products are highly integrated stuff.
Being rapidly.
Volume and <unk>.
Making them well suited for mining in challenging nature conditions of cold and hot weather.
On the SaaS front, we are hosting itself in a number of channels.
Equally large clients distribution networks and online retail.
We are also offering a favorable prices to reduce inventory.
During the quarter, we achieved a total computing power so of.
Shreveport eight meetings.
For a second.
This represents an eight 7% increase compared to the same period last year.
Beauty about $13 million in revenue.
In North America, we successfully completed the delivery of back orders to a stronghold.
It's mining company.
Southeast Asia, our computing power ourselves reached one 3 million <unk> per.
This figure was 94, 7% quarter over quarter increase.
Hughes through deeper.
Collaboration with Channel Islands, our online store, our sheer computing power so.
400, <unk> southern Terahertz protect went this quarter, a 17% increase compared to the previous quarter.
Our online store also expanded its reach to five new regions in <unk>.
The important through.
Bringing a total number of regions as customer orders to 42.
Following the September release of a 14th Sirius we have received contract sales onerous and prepayments for computing power off about 2 million terahertz process on it from customers worldwide.
In addition, our market share ourselves efforts operating in the planet.
Destocking of our a path and below for teaching our models closer to <unk>.
Vision as expected.
US progress our mining business in Kazakhstan has been temporary staff granted since the third quarter or two towards the impact of new regulatory policies and we needed to obtain the relevant permits.
We have also expressed a breach of contract by our mining.
<unk> partner in the U S either.
As a result, mainly revenue for this quarter declined to 3.26 million U S dollars.
However, we believe mining is a.
Australia take part of our business and short term setbacks in certain regions will not affect our long term strategy.
We will continue to prudently explore cooperation opportunities.
During the quarter, we expect we expanded and diversified our mining footprint.
Foot print when we completed the deployment of several several new projects in North and South America North Malay.
Our latest batch of 2000 of our.
134, 46 mining machines was successfully deployed in the long term for.
Our drawing mining project with this data mining companies draw halt in the third quarter.
At the end of.
The third quarter, we had approximately four extra hash per second the computing power deployed we also hold a 868 clients owned by us reaching a historical high.
With a current market value of our circuit meeting U S dollars.
Recently, we have been expanding our mind me opportunities in South America and Africa in the Middle East we carried out our first pilot collaboration with our integrated liquid cooling mining solutions.
We have been we have also been attracting some previously announced issues.
You have that time.
We walk together as local mining partners to obtain the type two license required for mining equipment owners.
Our immediate Nomura.
We are currently working to reduced her our locally deployed Miami machines and our incentives.
<unk> is our mining partners to prepare for the <unk>.
Resumption of operations, we expect that our mining projects in Kazakhstan wheel.
Gradually resume around the end of 'twenty or 'twenty three.
For the project I, just mentioned, where our U S partners breached its a contract we have successfully taken possession of a path to me to be older mining machine has evolved we have now restored about half of these machines at the same time, we are carrying out.
Our legal procedures to protect our.
Littermate rights.
Yeah.
The market environment in the third quarter was challenging.
We endeavor to maintain cash flow sand operations.
And accumulate assets with strong growth potential.
Can you help us to allocate resources and all day for our foundation.
Our core market after the next hobby.
We have also recently manager to cost more prudently and optimized and just take our Companys organization.
We have reduced our total head count to increase operational efficiency and reduce fixed.
Our operating cash outflows.
Mostly in navigating through the market downturn.
These measures have been gradually carried out in the fourth quarter, we expected to see potential Paypal reflect changes changes.
Stocking from the first quarter of 2024.
Meanwhile, due to the overall weakness in the market purchasing power.
Further adjust price to quickly cleared inventory in the channel reach cash inflow. However, this adjustments also result in some non cash provisions and impairments.
Leading to a considerable loss after this quarter in terms of financing we are not that they are south of convertible preferred shares of up to $125 million subject to customary closing conditions and future no investor.
This deal are sure we are able to carry out R&D and mass production of new product.
In case of tightening cash flow.
Amid this bear market.
This safeguards, our product supply and the market share in the future our pool market.
We have not utilized our ATM since the third quarter to date. However, we recently adjusted our ATM project by appointing be ready as the new SaaS agent.
Looking ahead.
The big corn price has been a notable revolved since mid to late October which is encouraging we are closely monitoring the market and flexible fluctuate.
Adjusting ourselves our strategy and our supply chain.
To adapt to changing market demands.
However, it is important to note that further price increases in bitcoin often.
Come with increased volatility.
The U S federal reserve's seemed likely to keep interest rates high for a while.
And rich content cycle may not happen for some time.
The financing and operating costs.
Our balance sheet monarch customers remained high and the basic landscape remains unchanged.
Actually.
People are having a powertrain.
Market sentiment, we are likely to be more cautious.
Taking these factors into consideration I believe is that the first quarter has shown signs of <unk>.
The improvement compared to the third quarter. However, we should expect.
Best case scenario of.
Writing bolstered rising price and volumes to happen quickly.
Based on the overall situation mentioned above we provide a highly cautious outlook for the fourth quarter of 2023, we expect revenue after first quarter of 2020 three to be approximately 34 million.
S dollars slightly higher than the third quarter. This forecast is based on Companys current.
Market and operational conditions and actual results may vary.
Finally, I would like to discuss our AI business with you after several years of hard work.
How build.
Our solid foundation of our Iot chip R&D in the South East.
Specialty waste industry.
Brooklyn nation since the release of K two.
<unk> therapy.
This is a small step in our strategic plan given the significant changes in the.
AI industry over the past few months, we have been.
Stretch, particularly discussing the future of our AIP.
In light of the industry and the market environment, we believe that the divestment of our AI business should take a more defined.
Our independent and the long term direction.
So we are internally.
The structuring.
The business with the goal to clearly separate the mining machine and the mainland teams from the <unk> business.
As a different business units.
This trip Harris us for the future independent operation and potential financing for AI business.
Both businesses will have enough scope for their future development.
Personally I'm really excited about this internal organization change.
We operate in an industry four <unk>.
Wearables and rapid changes.
Creating new history every day.
This truly tests our operational capabilities.
Over the 10 years since <unk> inception, we have around too many difficulties and challenges.
We have constantly improved our technical.
And the operational competitive two phase and our resolve these issues.
Amit at a number of uncertainties.
One thing a third tenant our strong confidence in the <unk> network.
This emerging transaction system has operated remarkably stable over the past 14 years.
Its user base and add to our cash rate.
Sure.
<unk> continuously expanded in recent years more and more investment is skewed.
Institutions have shown increased interest.
In corporate currencies is specialty beauty squad.
That have also recognized it as an important asset class.
With ongoing process in the regulatory environment.
Our data between the general public and bid.
Bitcoin is narrowing.
This will be a crucial require work for the next bull market, we remain committed to growing alongside cutting edge technology partners to continuously upgrade shift features.
At the same time, we will support required system and range of other beneficial activities with robust computing power.
We will continue to TD or superior products and services to our customer.
While contributing to <unk>.
Societal.
Progress.
Thank you everyone.
This concludes my prepared remarks, thank you.
I will now turn the call over cloud CFO James Thank you.
Thank you Angie and good day, everyone. This is Jamie speaking at our Singapore headquarters.
<unk> started with the call is I would like to say the market environment in the third quarter of 2023 was still unfavorable first half Q1 search and Q2's comedies bitcoin pricing quarter three showed a downward trend which declined from 30000 in the U S dollars in July.
To about 25000 in September even though climbed a near to 27000 U S dollars by the quarter end.
Secondly, the minus profits was still limited by the high level of total networking computing power around 400 extra huschka threatened and the minus purchasing power was weakened by the high financing interest cost.
Thirdly, along with the product to upgrading the price competition among mining machine manufacturers was more fierce, especially the price of older generation machines continue to decline.
These factors should be considered when analyzing our Q3 numbers.
Despite the market download of volatility geopolitical headwinds regulatory changes and other unfavorable factors from operation, we continued to execute our strategy and deliver solid results through continuous investments in R&D multiple channel sales development and.
Prudent cash flow management.
Let's start with profit and loss.
Speaking in quarter three total revenue generator was $33 3 million U S dollars, which beat our guidance of $30 million, but down 54, 9% quarter over quarter.
Our revenue from machine sales was $29 8 million U S dollars and our mining revenue was $3 3 million U S dollars.
Regarding our machine sales, we delivered a total computing power sold of $3 8 million <unk> per second.
Renting a year over year growth of eight 7%, but a sequential decline of 38, 7%.
The average selling price declined from $9 $5 <unk> per second in quarter 227, $9 per Taro has taken in quarter three <unk>.
The decrease in ASP was mainly due to the reduction in the selling price and the increasing the sales proportion of HL series in terms of stock clearance.
Considering both factor so powerful and Asps our revenue from mining machine sales was $29 8 million U S dollars decreased to 48, 5% from 57 $8 million in the last quarter.
Specifically for our mining machine sales, we accrued $53 9 million U S dollars for inventory write down prepayment to write down and a provision for reserve for inventory purchase commitments in this quarter.
The inventory write down was recorded based on most recent subsequent selling price.
We offered a further price concessions for a certain theories.
Those write downs and provisions are made under U S. GAAP rules jeopardizing, our gross profit and then making the quarterly loss figure, but do not impact our cash status.
If the bonds right down Santa provisions, Hawaii Freudian we.
Would have a gross profits for our mining machine sales of $1 $1 million and a gross margin of three 9%.
Turning to our mining business, our mining revenue was down 79, 5% quarter over quarter and is down 64, 6% a year over year.
As we announced in August we temporarily shut down two extra harsha.
Our mining computing power in catheter stance since July to issue a legal compliance at Costa our total deploy the hash rates to decrease two four extra harsh per second and our installed a harsh rate to decrease to $1 nine extra harsh per second in this quarter.
<unk> previously stated already.
Our active working with local partners and the local government.
We've already obtained all the relevant licenses in mid November.
Despite this FX, we mined 117 basis points in this quarter and achieved 14 five pit coins for mining profit gross profit margin reached 10% for our mining business in this quarter. Please note here, that's mining profits or losses.
Find out as the proportion of mining revenues deducting cost for energy and hosting in terms of mining revenues without consideration of depreciation.
Shifting to our AI business AI revenue was zero point $2 million in this quarter as Angie mentioned that we are now restructuring the AI business as a more independent business sentiment from mining machine and a self mining business, which could benefit our long term develop.
Momentum as well as open the possibility for AI to conduct independent financing.
Now, let us look at the expenses, our R&D expenses were $17 2 million U S dollars in this quarter compared to $17 $9 million in the last quarter and $17 6 million U S dollars in the prior year period.
Our sales and marketing expenses were $2 5 million U S dollars compared to $2 4 million U S dollars in the last quarter and $2 1 million U S dollars in the prior year period.
Our general and administrative expenses in this quarter was $21 9 million in U S dollars compared to $26 4 million U S dollars in the last quarter and a $21 7 million in the prior year period.
Our operating expenses totaled $43 8 million U S dollars relending year over year stable in a decreasing 10, 7% quarter over quarter.
The sequential decrease was mainly attributable to the reduced staff costs.
We have recently optimized and adjusted our organization through a series of measures, including reducing total head counts, increasing operational efficiency and lowering operating cash flows.
These measures.
Move that can help us with near term operating leverage against the fierce competition.
The effects of this measures will begin to be reflected in our operating data from quarter one 2024.
The next readout of the foregoing Watson operating loss of $112 8 million U S dollars for this quarter compared to $119 1 million U S dollars in the last quarter.
Benefited from foreign exchange gain in the deferred tax assets. The net loss was $80 1 million U S dollars compared to $110 7 million in the last quarter.
Turning to our balance sheet and our cash flow.
During quarter, three we spent $36 million to assist sustained the wafer supply and the machine production. Other cash payments included a $15 million for operations the cash flow totaling $51 million was partially offset by <unk>.
Cash inflow of $26 million from cells.
So net net at the end of the third quarter, we had a cash and cash equivalents of $41 million on our balance sheet.
We are glad to announce today that our balance is further bolstered with a capital injection up to $125 million in the form of convertible preferred shares cells with multiple tranches and subject to the customary closing conditions.
We intend to use the net proceeds from this capital raise to fund the R&D expansion of production scale and other general corporate purposes.
As of the end of this quarter, we recorded an accounts receivable of $9 8 million U S dollars declined declining zero point $3 million compared to the end of quarter. Two we did not implement more installments in quarter, three and we will continuously evaluate market in <unk>.
And adopt corresponding credit policies with caution.
Now turning our attention to our bitcoin assets withheld a record high 860 basis points as our AUM holding assets of September 30.
Is 113 more than 747 at the end of June. We also held 370 ADP clients received as customer deposit, which is the same as the balance of June 30.
From August 29, 2023, the date, we reported to our quota tool financial result to November 28, 2023, we neither utilized the ATM nor purchased any ABS.
On November 10, we terminated the ATM agreement with our former sales agent.
And we announced on November 13, we have adjusted our ATM project by appointing B Riley as the new sales agent.
In the future, we will prioritize shareholders' carefully monitor cash flows and stock prices and flexibly execute any potential ATM sales or stock repurchases.
In quarter four we anticipate our revenue was $34 million in the end of 2023, the price of bitcoin is still facing a challenging environment and the price competition remains intense.
Policy changes regarding crypto currencies and many different countries. We are also add uncertainty to industry operations.
We may face unforeseen obstacles based on the above comprehensive situation, we gave a cautious expectation for the fourth quarter of 2023.
Now I would like to briefly walk you through our financial results for the quarter.
Revenues in the third quarter of 2023 was $33.3 million as compared to $73 9 million in the second quarter of 2023 and $145 $5 million in the same period of 2022 gross loss in the third quarter of 2023 was 69.
$1 million compared to a gross loss of $71 million in the second quarter of 2023, and a gross profit of $32 6 million U S dollars in the same period of 2022.
Total operating expenses in the third quarter of 2023 or $43 $8 million compared to 49.0 million U S dollars in the second quarter of 2023, and $43 1 million U S dollars in the same period of 2022.
Loss from operations in the third quarter of 2023 was $112 $8 million compared to a loss from operations of $119 1 million U S dollars in the second quarter of 2023, and a loss from operation of $10 $5 million in the same period.
2022.
Net loss in the third quarter of 2023 was $80 1 million U S dollars compared to a net loss of $110 7 million U S dollars in the second quarter of 2023, and a net income of $6 $3 million in the same period of 2022.
Basic and diluted net loss per ads in the third quarter of 2023 or 47 cents U S dollars.
As of September 32023, the company had a cash and cash equivalents of $40 6 million U S dollars.
This concludes our prepared remarks, we are now open for questions.
Thank you we will now begin the question and answer session.
LTC to other investors and analysts who may wish to ask a question. Please limit your questions to three questions at the time, if you have any follow up questions. After the Q&A session. The Investor relations team will be available after the call.
I'll ask a question. Please press star one one and with brand name to be announced for the benefit of all participants on today's call. If you wish to ask questions to management in Chinese. Please immediately repeat your questions in English.
One moment for your first question.
Okay.
First question comes from the line of.
Mr. Lucas pipes from B Riley Securities. Please go ahead.
Mr. <unk>. Your line is now open you may on mute locally.
Thank you very much operator, good morning, everyone. Good evening.
My first question is on the marketing side and I Wonder if in the current environment could.
Could you speak to.
What do you mean.
Compete on is it is it price is it financing is it that the quality of your product. If you could maybe just share a little bit of.
Color on that I would appreciate it thank you.
Yeah, good evening or morning.
Hum for this.
Streets.
Most importantly, crackers product performance at a price.
Regardless of the ways of competition this too.
<unk> should always be top priority.
Our vision is.
The CRO to establish our unique features.
At the current time the future market.
It is.
Essential to make targeted adjustments and the customized product designs.
I have to say at some level based on the specific needs of our customers.
For example.
We have fabrics.
Dedicated a lot of effort recently to ensure our systems can operate.
Reliably.
Hash.
Environments.
This has received.
A lot of positive feedback from our customers.
Obviously, we are industrial leaders regarding the product quality and customization.
Right now I think the key focus is a rapidly improving.
Product performance while.
Reducing cost is that correct.
Very very helpful. Thank you for that and then.
I wanted to touch on the.
Chip procurement strategy at this time.
Kind of with where the market is today.
How.
Yeah.
How are you looking at making making commitments to your suppliers. Thank you very much.
Yeah.
Given that we are currently in.
Progress process.
Product integration and considering.
Volatile market can see.
<unk> we have.
At our South Australian production strategy.
This means that be the.
Determines.
Quantity of wafer us.
To be older but based on the number of contracts.
On south side.
So today, there is a certain percentage it added.
Yes.
That's that's very helpful.
Good to hear as well thank you and then.
One last one for me.
I'm just curious how maybe the U S market is holding up more specifically and also kind of what what are.
Some of the key differences you might be seeing between the U S and other markets globally.
Yeah Okay.
In the United States.
Smaller customers.
Primarily institutional clients.
Their phone being often comes from the capital markets currently are.
Financing costs in U a EUR United States remains relatively high.
However, we have observed with debt financing channels that we're almost close to in the past.
Half of the year.
Gradually reopens.
As a result, there are signs of.
Recovery in mining machines demand in the U S market, along with the reopening of financing channels.
So U S market has a relatively high demand of mining machines and the competition is.
Ferrets aswell as necessary to provide both top performance and.
Competitive pricing.
Given that U S market has constantly be spies boardwalk.
It's become a highly.
Competitive battleground yep. Thank you.
Thank you very much for all the color.
To your team best of luck.
Question, one moment for the next questions.
Okay.
Our next question comes from the line of Michael Donovan from H C. Wainwright. Please go ahead.
Thank you operator, this is Michael Donovan, calling in on behalf of Kevin BD MGM.
<unk> James Congrats on the quarter Keith.
Can you discuss a bit more about the inventory levels of older generation machines.
Are they completely gone now.
Okay.
Yeah.
Yes Hello.
As Canada.
The destocking process of models up to a clause.
<unk> is now nearly complete.
So our focus has recently shifted to clearing stock off the <unk>.
Starting with sales.
Yes.
Okay. Thank you that's helpful.
Now for the order levels for the new <unk> 14th series, what are the trends you're seeing in the fourth quarter.
Yes, our newly launched a 14 curious mining machines.
You have a higher computing power at the.
<unk> and <unk>.
Much better power efficiency.
Making them more competitive.
Since we.
We start pre.
<unk> mid of September we had.
I have received.
Future contracts for about two medium tier harsh plus okay.
These owners are going to be making.
Their ways into the supply chain for our production yes.
Yes.
Okay great.
If I could switch to self mining.
<unk> four <unk> has currently deployed how much are you generating now.
In terms of the fourth.
<unk> fourth quarter and how much more do you have to deploy.
Yeah.
Okay.
Okay.
Yes.
Mining remains.
Our long term strategic part of our business so.
We continue to explore our mining cooperation opportunities with other agents.
In the third quarter Pylos batch of computing power for new.
New projects in North and South America.
The entire operation.
So this is the batch of two southern half hour.
Yes.
So before being groups Miami machines.
<unk> was successfully deployed.
The launch of our drug in mining.
Jack.
Strong hall.
Yes, so as of the end of the.
The third quarter, we had all thoughtful axa hash.
Our second half hour to Florida.
Also recently, we have expanded our mining and power.
Your source of America and Africa.
In addition, we signed contracts for our new products in the middle East during the fourth quarter.
This includes our first part outs.
Collaborations our in house.
Integrated decorative coating monitoring solution.
It's currently in <unk>.
Progress.
Deployment and installation testing.
Also about.
Yes.
Okay.
Sure.
We already obtained as a pipe to license for our mining operations.
<unk> time, you meet November are often require to fires.
Countries, New mining property Opertaneous. This lightest means we are equally.
Permutated to conduct with current mining activities.
<unk> collects tab.
So at present.
We are in the process.
Readjusting, some mining machines deployed.
Low call it under this license.
We are in discussions with our mining partners to prepare for.
Reception of operations.
All costs, mostly we are we can't expect our mining project and kind of economy of gravity resume operations.
Yes.
Thank you.
Thank you and I'll hop back into queue.
Thank you for the questions.
One moment for the next questions.
Our next question comes from the line of Michael <unk> from Benchmark Company. Please ask your question.
Thanks.
Wanted to touch base on the preferred offering youre doing a $125 million can you talk about some of the terms of that whether it is convertible whether there's a dividend board seat et cetera, just give us a little bit more information on that please.
Thank you Michael.
I'm thinking I think today, we announced our sales of convertible preferred shares.
Up to a 125 million he left us with multiple trenches subject to the customary closing conditions I think the specific prefer to share details.
Available in the documentation released to date on our form 6K.
I think.
We intend to use the net proceeds from this capital raise.
Finally, our R&D and expansion of production scale and other general corporate purposes.
Uh huh.
And I think that's the basic.
Our idea of doing this found the racing.
Thank you Michael Okay, Gotcha, Okay ill check to subscribe to the details and then just I want to follow up on Michael's question on the inventory what percent is finished goods a 14th of the inventory and what how much of it is still raw materials versus all the models.
My Naval currently a 14th Crs is a steal in purely new product.
So we are placing the orders of wafers and then we can get the finished goods.
In late quarter, one I think that that's a schedule. So currently we don't have any finished goods.
I mean, the current stock, we will wait for that wafers coming out and produce the.
The chips, and then assemble the machines and deliver to our customers later.
Okay.
Okay. Okay. So of the $217 million of inventory how much is raw materials versus older finished goods.
Okay.
Okay.
Thank you.
Yeah.
Most I think of about.
Uh huh.
Maybe one third of the number of seats.
The schools for a used 13 serious.
And another two services.
I finished diversified somebody is different.
Yeah.
Stages like the chips or already a separate GCB, but not.
Still waiting for a subject to the machine.
Ashish.
Maybe.
There's also some presentation, let me for a level, yes, but I think theres no.
Great for us are still in process.
Okay and then just one last question could you comment on where you think your market share is today.
Seeing yourselves versus your competition.
Yeah I think.
Yeah, it's a very volatile.
Market.
This quarter, our box for the third quarter.
Quietly.
During the quarter.
So I don't think.
Market share numbers.
Have some significant change in sort of a quarter three.
You already we think it's about 20%.
Or close to that number as our market share.
For the first quarter.
We can.
Observer.
Second our cells.
Sure.
Spark.
Yes, but.
Steve.
About one month to go so.
And also we can of the reps that Manny etcetera, there is a significant harsh rate increase.
Product for us so.
Uh huh.
We are still.
We are waiting for that number yes.
Okay.
And if I can.
You know are our two major competitors they are private companies, though they don't disclose their results. So we have no accurate number of the hold market share and G has described that the the you know the sense about the market share.
Okay, great. Thank you.
Okay.
Okay.
The questions.
Our next question now comes from the line of shrunk <unk> from <unk> Securities. Please go ahead.
Hello can you hear me.
Yes. Please.
Oh, okay.
My first question is Uh huh.
<unk> has a computing power price recovered from the Belgium, when and to what extent.
Yes. Thank you.
Thank you for your question.
Well from what we've seen so far.
So demand.
Was acquired to know.
Throughout the entire third quarter.
However, as we move towards the fourth quarter, we noticed that.
An increase in demand.
Specialty in past few weeks.
Oh.
But.
There is a there has no been a significant increase in <unk>.
Average selling price.
It's important to note that.
If corn price has only experienced.
Noticeable upturn in the past few weeks and the market typically does not react so quickly.
Okay. Thank you okay. Thank.
Hum.
Second question Doug.
His inquiry.
None from AI computing power nowadays.
Thank you no wafer supply the foundry.
So cheap.
The RVO mainstream products and waste foundry Breo collaborates with now.
Yeah.
The chips used in our mining machines.
Adopt a different process node and we are fabricated or different production lines from our men's training our cloud based AI computing chips.
I think the current bottleneck in AI chip production.
<unk>.
Primarily in in advanced packaging.
So from my authorization.
Has not yet impacted.
Production capacity.
The process now.
So.
The fabry.
Primary patient process off our current mainstream products Alliance boots.
That of our peers.
The capacity for these advanced process.
It's only available for all.
Our selective.
We are a top tier semiconductor foundries and.
And also we have established long term.
Partnerships.
With this focus.
Okay. Thank you.
Okay.
Yeah.
Thank you for the questions and interest of time I'll like to turn the call back over to the company for any closing remarks.
Yes.
Hello, everyone and thank you again for joining our Q3 earnings conference call. Today. If you have any further questions. Please feel free to reach out to the contact information provided on our website and thank you again.
That concludes the call today. Thank you everyone for attending you may now disconnect.
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Okay.
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Hum.
[music] okay.
Okay.
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