Q1 2024 Canaan Inc Earnings Call

Okay.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Canaan Inc.'s first quarter of 2024 earnings conference call. At this time, all participants are in listen-only mode.

Operator: After the matchmaker's remarks, we will have a question and answer session. Please note that this event is being recorded. The company's financial and operating results were released by the newswire services earlier today and are currently available online. The company has also prepared a presentation for today's call. You may view the presentation and navigate through the slides on the webcast page for the first quarter 2024 earnings call on the company's IR website. Joining us today are Canon Inc.'s Chairman and CEO, Mr. Nangeng Zhang, and CFO, Mr. Jingcheng Cheng.

Operator: In addition, Mr. Leo Wang, Head of Capital Markets, and Ms. Xi Zhang, IR Manager, will also be available during the question and answer session. Ms. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Cheng will then provide details on the company's operating and financial results for the period before we open the call to your questions. Before we continue, I'd like to refer you to our Safe Harbor Statement and our Earnings Press Review.

Speaker Change: Ladies and gentlemen, thank you first journey by and welcome to <unk>, Inc. First quarter of 'twenty 'twenty four earnings conference call.

Speaker Change: At this time all participants are in listen only mode. After the match much prepared remarks, we will have a question and answer session. Please.

Speaker Change: Please note that this event is being recorded.

Speaker Change: The company's financial and operating results released by the Newswire services earlier today and are currently available online.

Speaker Change: The company has also prepared a presentation for today's call you may view, the presentation and navigate through the slides of the webcast page for the first quarter 'twenty 'twenty four earnings call on the company's IR website.

Speaker Change: Joining us today cannot inks, chairman and CEO, Mr Duncan, John and CFO, Mr. Cheng Cheng change.

Speaker Change: In addition, Mr. Leo Wang head of capital markets.

Speaker Change: C. G. IR manager will also be available during the question and answer session.

Mr. John: Mr. John will start the call by providing an overview of the company and performance highlights for the quarter.

Mr. John: Well that provide details on the company's operating and financial results for the period before we open the call up for your questions.

Mr. John: Before we continue I would like to refer you to our Safe Harbor statement and all earnings Press released today's call will include forward looking statements. These statements include but are not limited limited to our outlook for the company and statements that estimate or project future results of operations or the performance.

Operator: Today's call will include forward-looking statements. These statements include, but are not limited to, our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements speak only as of the date hereof, and the company assumes no obligation to revise any forward-looking statements 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.

Speaker Change: After the company. These statements speak only as of the date hereof and the company assumes no obligation to revise any forward looking statements that may be made in today's press release coal all webcast, except as required by law.

Speaker Change: The statements do not guarantee future performance and are subject to risks uncertainties and assumptions.

Operator: Please refer to the press release and the risk factors and documents we filed with the Securities and Exchange Commission, including our most recent annual report on Form 20F, for information on risks, uncertainties, and assumptions 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.

Speaker Change: Please refer to the press release and the risk factors and documents, we filed with the Securities and Exchange Commission, including almost recent annual report on form 20-F for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

Speaker Change: Additionally, 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.

Operator: 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. And with that, I'll turn the call over to our Chairman and CEO, Mr. Nangeng Zhang. Please go ahead, sir.

Speaker Change: You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results and all earnings press release, which is posted on the company's website.

Speaker Change: With that I'll turn the call over to our chairman and CEO. Mr. Duncan Jones. Please go ahead Sir.

Nangeng Zhang: Hello everyone, this is Zeng Ji, CEO of Canaan. Thank you for joining our conference call. Our CFO James and I are at the company's headquarters in Singapore to share our quarterly results with you. The first quarter of 2024 was the last quarter before Bitcoin's first decline.

Duncan Jones: Hello, everyone.

Speaker Change: <unk> LNG <unk>.

Nangeng Zhang: During the Q4 of 2023 earnings call, I forecasted this to be a super weight and Z period. Based on past experience, in the last quarter before the halving of the Bitcoin system, Manners typically wait for the volatility to actually occur, and the rocket dynamics to become stable, before adjusting their investments and mining rig purchasing plans. They also try to maintain the stable operation of the existing computing power to maximize the remaining value of their equipment. Therefore, transactions during this period are generally very flat.

Duncan Jones: Anna.

Jonathan: Thank you for joining our conference call our CFO Jonathan.

Jonathan CFO: At the company's headquarters in Singapore, who share our quarter results with you.

Speaker Change: The first quarter of 'twenty 'twenty, four last quarter before bitcoins Ross hobby.

CFO Jonathan: The Q4 of 2023 earnings call.

David: David just to be Super wait and see period.

David: Based on the past Crs.

David: Last quarter before having.

You can be quite system.

Theres typically waits for the having to actually occur.

David: The market.

Speaker Change: Become stable.

Speaker Change: Floor, adjusting their R&D investments and mining grade purchasing plans.

Speaker Change: They also try to maintain the stable operation of <unk>.

Speaker Change: <unk> computing power to maximize the remaining value statement.

Speaker Change: Therefore transactions during this period generally very flat.

Nangeng Zhang: The only variable was a rapid fluctuation in Bitcoin price during this quarter, reaching a historical high of US$33,000. We seized this opportunity to make maximum effort in sales activity, selling a total computing power of 3.4 million terahash per second and achieving a total revenue of $35 billion, meaning in U.S. dollars. Surpassing Previous Expectations, At the same time, anticipating a market recovery, we will continue to proactively prepare in various aspects, including the mass production of new products and the R&D integration of next generation products, striving to improve mining operations and computing power deployment. We maintain close cooperation with our foundry partners on the supply side. Laying out capacity in advance for the bull market, our efforts have yielded positive results. Now, let me share them with you one by one.

Speaker Change: The only <unk> with a rapid fluctuation in bitcoin price during this quarter reaching.

Speaker Change: Reaching historical high.

Speaker Change: 33000 U S dollars.

Speaker Change: We see this opportunity to make maximum.

Speaker Change: Efforts.

Speaker Change: So activities sorry.

Speaker Change: Total complete can power of three 4 million in cash per second.

Speaker Change: Achieving our total revenue.

Speaker Change: Sure.

Speaker Change: Made in U S dollars.

Speaker Change: Surpassing previous expectations.

Speaker Change: At the same time.

Speaker Change: Typically in a market recovery will continue to proactively preparing Ross ex pats.

Speaker Change: Including the mass production of new products and the R&D integration of next generation products.

Speaker Change: Striving to improve mining operations and the concrete empower deployment.

We met and close cooperation with our foundry partners on the supply side.

Speaker Change: Laying off capacity, yes, otherwise for the bull market.

Speaker Change: Our efforts have yielded positive results.

Speaker Change: Now, let me share with you one by one.

Nangeng Zhang: In terms of research and development, we are delighted to announce that we officially launched our company's new generation of mining machines, the A15 series, at the Bitcoin Asia 2024 in Hong Kong on May 9. The A15 series adopts more advanced designs and process nodes, achieving significant improvements in both computing power and energy efficiency compared to the previous generation. At the event, we showcased the A1566 Engineering and Prototype Machines, with extra computing power exceeding 185 terahertz per second and energy efficiency better than 18.5 joules per ton. The machine operated very stably, demonstrating excellent performance.

Speaker Change: In terms of staff research.

Speaker Change: Yes.

Speaker Change: We are delighted to announce that we also share a large our company's new resolution of mining machine. So <unk> series.

As a bitcoin Asia 2024 in Hong Kong.

Speaker Change: So <unk> serious adopts more of that once the dials and the process nodes.

Speaker Change: <unk> and significant improvements in both concrete and power and energy efficiency compared to the previous generation.

At the event, we showcased a 15 six states.

Speaker Change: And prototyping machine.

Speaker Change: With actual computing power exceeding 185 hotels.

Speaker Change: And energy efficiency better than 18, five Josh potash.

Speaker Change: The machine operating very stably demonstrating excellent performance.

Nangeng Zhang: We believe that the A15 series will become a more competitive Product Choice in the Post-Harving Computing Power Market. Meanwhile, this quarter, our A14 products have entered mass production and delivery. Through close collaboration with foundry partners, we have completed capacity ramp-ups and yield rate improvements this quarter. As we enter the second quarter, the A14 series products have begun Concentrated Delivery, and we'll transition to support cells in the third quarter.

Speaker Change: We believe that to 815 theaters will become more competitive.

Speaker Change: Product choice choice in the post having computing power market.

Speaker Change: Meanwhile, this quarter, our <unk> products have entered mass production delivery.

Speaker Change: Cerro close collaboration with foundry partners, we have completed our capacity ramp ups and yielded rate improvements this quarter.

Speaker Change: Although we entered the second quarter.

Speaker Change: 14th serious products have begun.

Speaker Change: Concentrated delivery.

Speaker Change: No.

Speaker Change: Transition to support sales in the third quarter.

Nangeng Zhang: We will continue to manage the pace of capacity locking, invest capital into mass production, and meet [inaudible] Additionally, the R&D of our next-generation product, the A16 series, is proceeding as planned. This quarter, we once again introduce products to the consumer market. Iron Nano 3 Mining Heater. This product, with its portable and lightweight design and various colors, has received active contract orders from the consumer market since its launch.

Speaker Change: We will continue to manager at a pace of capacity locking.

Speaker Change: Yeah, Ross catheter into mass production and the meats.

Speaker Change: Order delivery needs.

Speaker Change: Additionally, the R&D of our next generation product to a <unk> Sirius it's proceeding as Pat.

Speaker Change: This quarter, we once again introduce products to the consumer market.

Speaker Change: I will now streamlining heater.

Speaker Change: This product is it profitable in March which design and the virus colors.

Speaker Change: <unk> active contract orders from consumer market since its launch <unk>.

Nangeng Zhang: We continue to provide customers with more diverse and customized products in the comprehensive mining solution, such as Integrated Mining Container Products. We have received positive feedback from customers regarding product performance, durability, and service quality. In terms of mining machine cells, this quarter, we delivered 3.4 million Terahertz per second of computing power, reflecting the wait and see attitude towards purchasing sports mining machines before Harvey.

Speaker Change: We continue to provide our customers.

With more diverse and the customized products in the comprehensive managed solutions such as integrated mining container products.

Speaker Change: We have received positive feedbacks from customers regarding product performance durability and the service quality.

Speaker Change: In terms of money machine sales this quarter, we could even three 4 million terabytes per second of computing power, reflecting the wait and see attitude towards purchasing sports mining machine because what the hobby.

Nangeng Zhang: Additionally, as we transition through product integrations, we have completed the first batch delivery of our A14 presale orders in the first quarter and are now accelerating mass production deliveries. Since the pre-sale launch of the A14 product in late 2023, this has continued to be popular.

Speaker Change: Additionally, as we transition through product integrations, we have completed the first batch delivery of our 814% in the first quarter and are now accelerating mass production DD worse.

Since the pre sell our trough a 14th product in late 2023.

Speaker Change: <unk> has continued to be popular bars, and the first quarter customer otherwise, it's primarily driven by.

Nangeng Zhang: By the end of the first quarter, customer advances, primarily driven by the A14 product, amounted to about $39 million, nearly double the 19.6 million U.S. dollars at the end of 2023. After the successful completion of halving in the second quarter, we have seen a significant increase in purchasing inquiries and expect to receive more customer advances. Our A15 series products made their official debut at Bitcoin Asia 2024 in Hong Kong on May 9, and we'll be there three days after the summit on May 12.

Speaker Change: A 14 products.

Speaker Change: Amounted to about $39 million.

Speaker Change: Nearly double.

Speaker Change: 19, 6 million U S dollars at the end of 2023.

Speaker Change: After the successful completion of hiring in the second quarter, we have seen a significant increase in purchasing inquiries and expect to receive more customer otherwise.

Speaker Change: Our <unk> products made their off ratio debuted at Blizzcon Asia 2020 for Ya Ha may not us.

Speaker Change: And with the three days after summit.

Nangeng Zhang: We signed MOUs and received earnest deposits from 26 customers, which we are currently holding up on forming contract sales. Over the past few years, the company has established good sales coverage in markets with energy cost advantages. After the halving, customers in this market continue to show active interest in our traditional models. Based on the current situation, we are optimistic about the sales pace of a certain spot inventory and expect to complete the transition of mainstream products for sale in the third quarter of this year. Additionally, in North America, where institutional matters are concentrated.

Speaker Change: May TARP.

Speaker Change: We signed Mou's and they received earliest deposits.

Speaker Change: From 2006 customers.

We should we are currently falling up forming contract sales.

Speaker Change: Over the past few years. The company has established good sales coverage in markets with energy cost advantages.

Speaker Change: Also the hobby customers in this market continue to show active interest in our traditional models.

Speaker Change: Just on the current situation.

Speaker Change: We're optimistic about a sales pace of a certain spot inventory.

Speaker Change: And they expect to complete the transition of mainstream products sickle cells in the third quarter of this year.

Additionally, in North America, where institutional miners.

Nangeng Zhang: We are working to enhance brand and product recognition. Besides, there are corporations with public-traded companies such as Cypher and Stronghold. This quarter, we also signed an agreement with Marathon Digital for the first time. At the Bitcoin industry conference in Dubai and Hong Kong this year, we actively discussed cooperation opportunities with institutional and distributor customers. East-West Asia, Distributor customers generated sales revenue of $5.7 million for this quarter, up by 27% sequentially, making a stable contribution to sales owners.

Speaker Change: Concentrated we are working to enhance brand and product recommendation.

Speaker Change: Besides chorus.

Speaker Change: Collaborations Swiss public traded companies such as background stronghold.

Speaker Change: This quarter, we also signed agreements with marathon digital for the first time.

Speaker Change: As a bitcoin industry conference in Dubai, and Hong Kong. This year, we activated cost cooperation opportunities with institution institutional and distributor customers.

Speaker Change: In Southeast Asia.

Speaker Change: Distributor customers generate themselves revenue of $5 7 million U S. Doris for that this quarter.

Speaker Change: By 27% sequentially.

Speaker Change: A stable contribution to sell SaaS owners are on a store floor overseas retail clients continues to diligently serve each customer, especially after the launch.

Nangeng Zhang: Our online store for overseas retail clients continues to diligently serve each customer, especially after the launch of the consumer-oriented mining machine, Argon Nano 3, which has attracted active orders from individual e-services and current orders of near 10,000 units, although occasionally selling out.

Speaker Change: Its a consumer oriented the mining machine our analysis right.

Speaker Change: <unk> has attracted active odors from individual.

Speaker Change: Is aerospace and current orders of near 10000 units.

Speaker Change: <unk> sorry about that.

Nangeng Zhang: The company's comprehensive mining solutions also received more orders this quarter. By the end of the first quarter, our mining business installed computing power increased to 3.8 ExaHash per second, a nearly 100% growth quarter over quarter. The growth is primarily due to our continued partnership adjustments and the recovery efforts in Kazakhstan after obtaining the necessary licenses, as well as the progressive deployment of mining cooperation projects in other regions to diversify our mining operation.

Speaker Change: <unk> comprehensive mining solutions also received some orders this quarter.

Speaker Change: Okay.

Speaker Change: But <unk>.

Speaker Change: First quarter, our mining business installed computing power increased to 3.8 extra hedge for a second.

Speaker Change: Nearly 100% growth quarter over quarter.

<unk> is our growth is primarily due to our continued partnership adjustments.

Speaker Change: And the recovery efforts in Kazakhstan, after obtaining the necessary licenses as.

Speaker Change: As well as the progressive deployment of modeling cooperation projects in other regions.

Speaker Change: Diversifying our mining operations.

Nangeng Zhang: During this quarter, the energization condition was favorable, and with the combined impact of the rapid increase in Bitcoin price from January to March, as well as the rise in transaction fee rewards, we achieved mining revenue exceeding $10 million this quarter. By the end of Q1, the number of Bitcoins held by the company increased by 148, surpassing 1,000 for the first time to reach 1,057 viewpoints, with a current market value of over $1.2 billion. 65 million U.S. dollars.

Speaker Change: This quarter I know transaction condition was terrible and with the combined impact after a rapid increase of bitcoin price from January and March as well there is the transaction fee rewards.

Speaker Change: Achieved in line with revenue exceeding.

Speaker Change: I mean in U S dollars this quarter by the end of Q1.

Speaker Change: The number of clubs have by the company increased by 148.

Speaker Change: Surpassing 1000 for the first time to reach 1050 <unk> clients with.

Speaker Change: Current market value of over.

Speaker Change: $65 million.

Nangeng Zhang: We will continue to carefully balance policy stability and the locational advantages of energy costs and persist in cultivating our mining business. Since the first quarter, the company has continued to improve at the overall operational level by pushing forward and adopting flexible sales and marketing strategies. We have made good progress in clearing out inventories, significantly reducing inventory levels on the balance sheets. We are also optimizing the inventory map, coupled with a gradual collection of accounts receivable.

We will continue to carefully balance policies stability and the locational advantages of energy costs.

Speaker Change: And to assist in.

Speaker Change: Coffee rating our mining business.

Speaker Change: Yes.

Speaker Change: Since the first quarter.

Speaker Change: The company has continued to improve as our operational level.

Speaker Change: By pushing forward and adopting flexible sales and sales strategies.

Speaker Change: <unk> made good progress in <unk> clearing out inventory.

Speaker Change: So it is clearly reducing inventory levels on the balance sheet.

Speaker Change: We're also optimizing the inventory mix coupled with.

Speaker Change: Gradual collection of accounts receivable.

Nangeng Zhang: So cash inflows have continued to improve. As the number and value of bitcoins held by the company increase, this portion of cryptocurrency assets will provide us with a substantial potential liquidity safeguard, while maintaining an overall robust balance sheet and keeping cash at a safe level. We endeavor to direct cash towards mass production. This is reflected in increased prepayment, primarily used for securing production capacity for advanced processing technology on the expanse side.

Speaker Change: <unk> cash cash inflows.

To improve.

As a number or undervalue of with clients held by the company increased Sis.

Speaker Change: Potion of current assets will provide us with a substantial potential liquidity safeguard.

While maintaining an overall robust balance sheet and.

Speaker Change: Keeping cash at a safe level.

Speaker Change: We endeavor to direct cash towards mass production.

This is reflected in increased pay prepayments primarily used for supporting production capacity for the last processing technologies.

Nangeng Zhang: The organizational optimizations made Primacy show further positive effects in the Flopper portal. Despite the overall market conditions this quarter, the company continues to implement pricing strategies to drive sales, which has resulted in some inventory write-downs. However, the overall net loss of this quarter has significantly narrowed. This is the fourth quarter, apart from the previously disclosed $50 million US settlement of preferred stocks. The company has not engaged in any other financing activities, including ATM offering, in line with routine practice for U.S. visited companies.

Speaker Change: On the expense side.

Speaker Change: Opening additional authorizations optimizations made previously show further positive effects in the fluff before her death.

Speaker Change: As part of the overall market conditions this quarter the company continues to improve.

Implements pricing strategies to drive sales, which has resulted in some inventory write downs. However.

Speaker Change: However, our ROE and let Louis lateral.

Speaker Change: Loss of this quarter has significantly is narrow.

Speaker Change: Since the first quarter apart from the previously disclosed 50 million U S dollar settlements.

Speaker Change: Great for stock.

Speaker Change: Company has not engaged in any other financing activities, including ATM offerings.

Speaker Change: Along with routine practice for U S listed companies.

Nangeng Zhang: A new shelf registration statement was submitted to the ICC just before the expiration of the last one to maintain the validity of our financing eligibility, looking ahead to the second and third quarters of 2024. Our A14 mining machines have successfully passed through the stages of transition to mass production and are entering the phase of accelerated bulk delivery. Regarding our mining operations, post-harvesting, we are evaluating and adjusting our existing mining projects, especially after the official launch of the new A1566 product. There has been a significant increase in inquiries for mining machine cells, and we have already received several earnest deposits.

Speaker Change: New shelf.

Speaker Change: Yes tuition statement.

Speaker Change: It was submitted to the SEC just before the expiration of the last what two maintained.

Speaker Change: Quality of our financing.

Speaker Change: In disability.

Speaker Change: Looking ahead to the second and third quarter of 2024.

Speaker Change: Our a 14 Miami machines have successfully passed through the stages after six months into mass production.

As they ramp up and yield agreed in programs.

Speaker Change: Entering into phase accelerated back delivery.

Speaker Change: Regarding our money operations post holiday.

Evaluating.

Speaker Change: Adjusting our existing mining projects.

Recently.

Speaker Change: So equity after the official launch of the new.

Speaker Change: The <unk> 66 product.

Speaker Change: There has been significant increase in incur encourage acreage for mining machines out.

Speaker Change: And we have already received several.

Speaker Change: Honest tea products.

Nangeng Zhang: Now we are swiftly Advancing the Shipment for Protocol Machines, Aiming to convert these intention orders into actual sales contracts as quickly as possible. Based on my personal experience this week, following the Harbin miners will gradually start their computing power purchases, preparing for the new four-year cycle. This process will also initially reflect in volumes and supply and demand dynamics shifts. Computing power prices are expected to recover more quickly. However, we need to note that the 5-inch series cut cycle has not yet begun, resulting in high financing costs for miners, and there is uncertainty regarding the timing of Bitcoin price increases, which will pose challenges for the industry.

Speaker Change: Now we are swiftly.

Speaker Change: But the one teens shipment for proton machines aiming to convert these inpatient holders into actual sales contracts as quickly as possible.

Speaker Change: Based on my personal experience in the <unk>.

Speaker Change: <unk>.

Speaker Change: Following the Harbin manners.

<unk> started their computing power purchases.

Speaker Change: Preparing for the new four year cycle.

Speaker Change: This process will also initially reflect in volumes and a supply and demand dynamic shift.

Speaker Change: Computing power prices.

Speaker Change: Acted to recover more quickly power.

Speaker Change: However, we need to note that the SaaS interest rate cut cycle has not yet begun.

Speaker Change: Resulting in high finance financing cost for minors and there is uncertainty regarding the timing of good client price increases posting and challenges to the industry.

Nangeng Zhang: Based on the comprehensive situation described above, we maintain a cautiously optimistic outlook for the second and third quarters of 2024. For the second quarter of 2024, the company expects total revenue to be approximately 70 million US dollars. For the third quarter of 2024, the company expects total revenue to be approximately 70 million U.S. dollars. This forecast is based on the current market and the operational conditions of the company, and the actual results may vary.

Speaker Change: Based on the comprehensive situation described above.

Speaker Change: We maintain a cautious today optimistic outlook for the second and third quarters of 2024.

Speaker Change: For the second quarter of 2024, the company expects total revenue to be approximately $70 million plus.

Speaker Change: Third quarter of 2024.

Speaker Change: <unk> total revenue to be approximately seven to 8 million.

Speaker Change: In U S dollars.

Speaker Change: This forecast is based on the current market and operational conditions of the company.

Speaker Change: <unk> actual results may vary.

Nangeng Zhang: Overall, the period leading up to the 2024 Bitcoin halving, including the entire first quarter, was a super wait and see season for the money machine market. However, we also witnessed many positive changes within the industry and at the cognitive level. At the beginning of 2024, the Bitcoin spot ETS was approved for listing by the US FEC, and by the end of April, the Hong Kong Stock Exchange approved the listing of multiple currencies for ETFs.

Speaker Change: Overall superior leading up to the 2024 decline, having including the entire first quarter or the Super wait and see the floor mining machine market.

Speaker Change: However, we also witnessed the many positive changes.

Speaker Change: In the industry.

Speaker Change: And at the Companys level.

At the beginning of 2024 to bitcoin and swap Etfs was approved for <unk> by the U S. SEC.

Speaker Change: And by the end of April the Hong Kong stock exchange.

Speaker Change: The listing of Multicore per policy is bought Etfs.

Nangeng Zhang: These milestone events will further encourage traditional finance to participate in Bitcoin's development. By the end of the first quarter, the price of Bitcoin reached a new all-time high of $70 billion. 3,000 US dollars.

Speaker Change: These milestone events, we are further encouraged traditional finance.

Speaker Change: Correct.

Speaker Change: Parties.

Speaker Change: Participate in feed clients development by the end of the first quarter the price of <unk> decline and reached a new all time high of 70.

Speaker Change: 3000.

Nangeng Zhang: On April 20th, the Bitcoin trading system, which has been operating smoothly for 15 years, completed its fourth halving schedule, starting a new four-year cycle. These series of events confirm that the Bitcoin trading system has formed a strong consensus and is continuously expanding its user base, forming a closer connection with traditional finance, all of which indicate a broader potential of Industrial Growth, looking at the underlying operation of Bitcoin, which the existing miner will face a new wave of equipment upgrades.

Speaker Change: <unk> thousand U S dollars.

Speaker Change: Our April 20th that beef client trading system, which has been operating as mostly for 15 years.

Speaker Change: <unk> is for us having schedule starting a new four year cycle. This series of events confirmed at the.

Speaker Change: The <unk> trading system has formed a strong content sets and continuously expanding its user base.

A closer connection.

Speaker Change: With traditional finance.

Speaker Change #100: Oh, we actually.

Speaker Change #101: Indicate a broader potential of industry growth.

Speaker Change #101: Looking at the underlying operation of Bitcoin trading system, which.

Speaker Change #101: So most completion of the hiring.

Speaker Change #102: We anticipate that on one hand exist.

Speaker Change #102: Existing miner will face a new wave of equipment upgrades and the other half.

Nangeng Zhang: On the other hand, as the Bitcoin price stabilizes and increases after halving, more miners are expected to join the mining activities, which will significantly boost demand for computing power. However, due to the limited production capacity on the Bitcoin computing power supply side, the shift in supply and demand relationships may potentially drive the prices of computing power up.

Speaker Change #102: As a brief call price stabilizes and increase active hobby more miners are expected to join the mining activities, which will significantly boost the demand for computing power.

However, due to the limited production capacity bitcoin competing Paris quantify the shift in supply and demand relationships may potentially private practice corporate empower.

Nangeng Zhang: The company's A14 products are being delivered successfully, and the new A15 series products have debuted and opened for pre-sales, and our one-stop comprehensive mining solutions and AgroNano3 products are being brought to market. They are gradually gaining recognition from more customers. On the product side, the company is catering to diverse needs and different customers with a richer and more efficient selection of products. At the same time, we continue to lock in production capacity on the supply side with advanced processes and comprehensively reach customers at the sales level.

Speaker Change #103: At Cognex.

Speaker Change #103: Cognex, a 14 products are being delivered are successfully and the new <unk> product.

Speaker Change #103: Debuted in open for yourselves.

Speaker Change #104: And our one stop comprehensive mining solutions and our amount of three products are being brought to market.

Speaker Change #105: Yes, gradually gaining nice recognition for more customers.

Speaker Change #105: The product side the company is addressing two diverse needs.

Speaker Change #105: Different customers.

Speaker Change #106: With a richer and more efficient.

Speaker Change #106: And our products.

Speaker Change #107: At the same time, we continue to lock in production capacity.

Speaker Change #107: The supply side with advanced process and comprehensively reach customers at South Antelope.

Nangeng Zhang: Recently, the company's management, including myself, announced a proposed ownership expansion plan. We are very confident in seeding the market opportunities driven by the certain demand path rate, continuously supporting the Bitcoin network with our computing power, and creating long-term value for our shareholders. This concludes my prepared remarks. Thank you, everyone. I will now turn the call over to our CFO, James.

Speaker Change #108: Recently, the covenant measurement, including myself announced.

Speaker Change #108: Proposed ownership expansion plan.

Speaker Change #109: We are very confident in seeding the market opportunities driven by the surge in demand in the past right.

Speaker Change #110: He knows state supporting the Bitcoin network with our computing power and creating long term value for our shareholders.

Speaker Change #111: This concludes my prepared remarks. Thank you everyone I will now turn the call where cloud SaaS <unk>. Thank.

James Jin Cheng: Thank you, NG, and good day everyone. This is James speaking at our Singapore headquarters. As NG studied at the top of the course, this quarter was a super wait and see period that occurs every four years, as the last complete quarter before the halving event of Bitcoin. Despite the subdued market, we continued to execute our strategy. First, we were committed to wafer-capacity investment and R&D activities of new-generation machines

Speaker Change #112: Thank you.

Speaker Change #112: Okay.

Jim: Thank you Angie and good day, everyone. This is Jim speaking at our Singapore headquarters.

Jim: <unk> started at the top of the cost this quarter was a simpler wait and see period that occurs every four years.

Jim: As the last complete closure before the having event of this coin.

Jim: Despite the subdued market, we continued to execute our strategy.

Speaker Change #114: First we were committed to wafer capacity investments and R&D activities of new generation machine.

James Jin Cheng: This allowed us to mass deliver the A14 series since April, to upgrade our products, achieve breakthroughs in the A15 series, and to enrich our product portfolio with Avalon Nano 3 and integrated mining solutions. Secondly, we enhanced a flexible and multi-channel sales strategy to enable us to accelerate the de-stocking of existing products and accumulate contra-sales orders for the A14 series. Thirdly, we adhered to our own mining strategy, continued to expand mining deployment, and strived for operation excellence. Last but not least, we continue to manage cash in a prudent way and streamline our expenses to make sure strategic tickets are prioritized.

Speaker Change #115: This allowed us to deliver a 14th theories since April to upgrade our products achieving breakthroughs in <unk> series and to enrich our product portfolio with Avalon nano <unk> III and the integrated mining solutions.

Speaker Change #115: Secondly, we enhance the flexible in our multichannel sales strategy to enable us to accelerate destocking of existing products and accumulate contract sales orders for April 14th theories.

Speaker Change #115: Thirdly, we adhere to our own mining strategy continued to expand the mining deployment and ascribe the four operation excellence.

Last but not least we continue to manage cash in a prudent to wait and streamline our expenses to make sure strategical ticket be prioritized.

James Jin Cheng: Let's start with the introduction from the Profit and Loss Statement. Q1 total revenue was $35 million, which beat our guidance by $2 million, or 6%. Our revenue from machine sales was $23 million, and our mining revenue was $10 million. Regarding our machine cells, we delivered a total computing power sold of 3.4 million terahertz per second, representing a year-over-year decrease of 20% and a quarter-over-quarter decrease of 38%. And the average selling price decreased from $8.2 per THPS in Q4 to $6.9 per THPS in Q1. Coupled with the multiple factors, including before having the New Year and the Lunar New Year, market demand in this quarter was quite weak. And we could only sell our current inventory of older generation products.

Speaker Change #116: Let's start with an introduction from profit and loss.

Speaker Change #116: Q1, total revenue was $35 million, which beat our guidance by $2 million or 6%.

Speaker Change #116: Our revenue from machine sales was $23 million and our mining revenue was $10 million.

Speaker Change #116: Regarding our machine sales, we delivered a total computing power sold of $3 4 million <unk> per second.

Speaker Change #116: Representing a year over year decrease of 20% and a quarter over quarter decrease of 38%.

Speaker Change #116: And the average selling price decreased from $8 $2 per tire hospice seven in quarter four to $6 $9 per Taro hospice secondly in quarter one.

Speaker Change #116: Couple that with the multiple factors, including before having the new year and the lunar new year. The market demand may in this quarter was quite weak.

Speaker Change #116: And we could only sell currency inventory of older generation products.

James Jin Cheng: These factors led to decreases in our computing power sold and average selling price. On the sales side, we were committed to executing a multi-channel sales strategy. Our distribution channels in Southeast Asia performed in a good way, contributing $5.7 million to our total Q1 revenue, representing a 27% sequential growth. We continued to gain from the Southeast Asia region after moving headquarters to Singapore and developing distribution channels in different countries like Thailand, Malaysia, and Indonesia.

Speaker Change #116: These factors lead to the decreases of our computing power sold and average selling price.

Speaker Change #117: From a sales side, we will committed to execute our multichannel sales strategy our distribution channels in southeast Asia performed in a good way contributing $5 $7 million to our total quarter, one revenue representing a 27% sequentially.

Speaker Change #117: Gross.

Speaker Change #117: We continue the toucan from Southeast Asia region, after moving headquarters to Singapore, and developing distribution channel in different countries, like Thailand, Malaysia and Indonesia.

James Jin Cheng: I'd like to discuss the orders and the revenue of our integrated mining solution, which diversified our product revenue stream. In Q1, we received customer payments of $4.9 million from purchase orders for our integrated mining solution. These orders are gradually delivered, so 0.2 million U.S. dollars was recognized in Quarter 1 revenue.

Speaker Change #117: I'd like to discuss the orders and the revenue of our integrated the mining solutions, which diversifies our product revenue streams.

Speaker Change #117: In quarter, one we received the customer payments of $4 $9 million from purchase orders for our integrated mining solutions.

Speaker Change #117: These orders are gradually deliver therefore 0.2 million U S dollars was recognized in quarter. One revenue the remaining $4 7 million U S dollars will be delivered in quarter, two and contributes to our quarter two revenue.

James Jin Cheng: The remaining 4.7 million U.S. dollars will be delivered in Quarter 2 and contribute to our Quarter 2 revenue. Specifically, for our mining machine sales, we have accrued 47.5 million US dollars for inventory write-down, prepayment write-down, and a provision for inventory purchase commitments in this quarter, representing a 14% decrease sequentially. The decrease was driven by accelerated diesel stocking in this quarter.

Speaker Change #117: Specifically for our mining machine itself, we accrued $47 $5 million for inventory write down prepayment write down and a provision for inventory purchase commitments in this quarter, representing a 14% decrease sequentially.

Speaker Change #117: The decrease was driven by accelerated a diesel stocking in this quarter.

Speaker Change #117: Noncash write downs and the provisions are made under U S. GAAP rules jeopardizing, our gross profit, but do not impact our cash data.

Speaker Change #118: If the above write downs and a provision to excluded we would have a gross profit of <unk> 1 million U S dollars for mining machine sales.

James Jin Cheng: Those non-cash write-downs and provisions are made under U.S. GAAP rules, jeopardizing our gross profit but do not impact our cash status. If the above write-downs and provisions were excluded, we would have a gross profit of $0.1 million for mining machine sales. Turning to our mining business, our mining revenue increased 182% quarter over quarter. We mined 195 bitcoins in this quarter, an increase of 92% over the last quarter. The increases were not only driven by increases in Bitcoin prices but also by increases in our energized hashrate. Our average revenue per Bitcoin in Q1 increased 47% over the last quarter, from almost $37,000 to almost $54,000. Our energized computing power in Kazakhstan recovered to 1.1 exaHash in Q1.

Speaker Change #118: Turning to our mining businesses.

Speaker Change #118: Our mining revenue increased 182% quarter over quarter.

Speaker Change #118: We mined 195 basis points in this quarter, an increase of 92% over the last quarter.

Speaker Change #118: The increase is not only driven by increases in bitcoin prices, but also by increases in our energize the hash rates.

Speaker Change #118: Our average revenue per bitcoin in quarter, one increased to 47% over the last quarter from almost 37000 U S dollars to almost 54000 U S dollars.

Speaker Change #118: Energize, the computing power and covenant ton recover to one one extra harsh in quarter. One. We also further expanded our mining business in Africa, increasing our energize the hash rates to zero nine extra hush.

James Jin Cheng: We also further expanded our mining business in Africa, increasing our energized hash rate to 0.9 exaHash. At the end of quarter one, our energized hash rate totaled 3.0 exahash per second, increasing 58% over the last quarter. Our mining profit was 121 Bitcoin, which increased 250% compared to the last quarter; gross profit doubled quarter over quarter to 3.5 million US dollars for our mining business. Please note here that mining profit or loss is defined as mining revenue net of costs for energy and hosting but without consideration of depreciation for the deployed machines.

Speaker Change #119: That's the end of quarter, one our energized the hash rates totaled 3.0 X the hospice segment.

Speaker Change #119: Increasing <unk>.

Speaker Change #119: 58% over the last quarter.

Speaker Change #119: Our mining profit was 121 bitcoin.

Speaker Change #119: <unk> increased 250% compared to the last quarter.

Speaker Change #119: Gross profit doubled.

Speaker Change #119: The quarter to $3 5 million U S dollars for our mining business.

Speaker Change #119: Please note here that mining profit or loss is defined as money revenues net of cost for energy and hosting but without consideration of depreciation for the deploy the machines.

James Jin Cheng: Now turning to expenses. Our operating expenses totaled US$31 million, decreasing 19% year-over-year and 22% quarter-over-quarter, respectively. Staff costs, including share-based compensation, decreased 27% year-over-year and 11% quarter-over-quarter, driven by organizational optimization performed in Q4 last year.

Speaker Change #120: Now turning to expenses.

Speaker Change #120: Our operating expenses totaled $31 million, decreasing 19% year over year, and 22% quarter over quarter, respectively.

Speaker Change #120: Staff costs, including share based compensation decreased 27% year over year, and 11% quarter over quarter.

Speaker Change #120: Driven by organizational optimization.

Speaker Change #120: Net in quarter four last year.

James Jin Cheng: As the Bitcoin price rose, no further impairment for our self-mining machines was accrued in this quarter, which reduced the operating expenses by $6 million compared to the last quarter. I want to point out that we chose to early adopt the FASB's new accounting rules on cryptocurrency assets on January 1st, 2024, which allow cryptocurrencies to be carried at their fair market value. According to these accounting rules, the cumulative effect of 19 million U.S. dollars was recorded on the opening balance of our retained earnings, as the Bitcoin price increased from US$42,000 on Jan. 1, 2024 to US$70,000 on Mar.

Speaker Change #120: As the first coil price rose no further impairment for our self mining machines was accrued in this quarter.

Speaker Change #121: Which reduced operating expenses by $6 million compared to the last quarter.

Speaker Change #122: I want to point out that we chose to early adopt the FASB new accounting rules on critical currency assets. Since January one 2024, which allow cricket of currencies to be carried at fair market value.

Speaker Change #122: According to this accounting rules, the accumulative effect of $19 million U S. Dollars was recorded to the opening balance of our retained earnings.

Speaker Change #122: As a bitcoin price increased from $42000 on January 1st to 'twenty to 'twenty four to 70000 in the U S dollars on March 31 2024.

James Jin Cheng: 31, 2024, again a fair value change of US$33 million was recognized in our Q1 profit and loss. As the second tranche of preferred shares was issued in January, we recognized the remaining unconverted preferred shares as a liability and recorded a non-cash gain on fair value of $2 million according to U.S. accounting rules, compared to a non-cash loss of $10.9 million in Q4, benefiting from the narrowed gross loss, the lower expenses, and the gain from the fair value change of cryptocurrency and financial instruments. Quarter 1's net loss was US$39 million, narrowing 72% quarter-over-quarter and 53% year-over-year.

Speaker Change #123: Gain on fair value change of $33 million was recognized in our quarter, one profit and loss.

Speaker Change #123: As I said inferential preferred a shares towards the issued in January we recognized the remaining converted the preferred shares at the liability and recorded a noncash gain on fair value of $2 million. According to U S accounting rules.

Speaker Change #123: <unk> to a noncash loss of $10 9 million U S dollars in quarter four.

Speaker Change #123: Benefiting from the narrow the gross loss the lower expenses and again from the fair value change of crypto currency and financial instruments.

Speaker Change #123: Quarter, one net loss was $39 million narrowing 72% quarter over quarter and 53% year over year.

James Jin Cheng: Turning to our balance sheet and cash flow, In Q1, we generated $48 million of cash inflows from sales, received $50 million from preferred shares financing facilities, and $10 million from export VAT refunds. We paid $88 million to secure our wafer supply, and $61 million for production and operation. Our increasing investment in wafer supply is aimed at enabling the concentrated delivery and spot sales of our A14 series products in the following quarters.

Speaker Change #124: Turning to our balance sheet and cash flow.

Speaker Change #124: In quarter, one we generated a $48 million of cash inflows from cells received a 50 million U S. Dollar from preferred share financing facilities and $10 million from export of VIP rebounds.

Speaker Change #124: We paid $88 million to secure our wafer supply.

Speaker Change #124: And $61 million for production and operation.

Speaker Change #124: Our increasing investment in wafer supply is aimed at enabling the concentrated a delivery and spot sales of our <unk> products in the following quarters.

James Jin Cheng: Consequently, at the end of Q1, we held cash and cash equivalents of $55 million on our balance sheet. Now, moving on to our contract liability. Our A14 series has continued to be popular since the pre-sale beginning in late 2023. The balance of contract advances reached 39 million U.S. dollars as of this quarter end, nearly doubled from 19.5 million U.S. dollars at the end of the last quarter. As of the end of Q1, we recorded an account receivable of $1.6 million, a decrease of 45% compared to the last year-end. We will continuously evaluate market demand and adopt corresponding credit policies with caution.

Speaker Change #124: Consequently at the end of quarter, one, we held cash and cash equivalents of $55 million on our balance sheet.

Speaker Change #124: Now moving on to our contract liability.

Speaker Change #124: Or a 14th theories has continued to be popular things the presale beginning in late 2023.

Speaker Change #125: The balance of contractor advances reached $39 million as of this quarter end.

Speaker Change #125: Nearly doubled from $19 5 million U S dollars at the end of the last quarter.

Speaker Change #126: As of the end of quarter. One we recorded account receivable of one $6 million a decrease of 45% compared to the last year, and we will continuously evaluate market demand and adopt corresponding credit processes with <unk>.

James Jin Cheng: Now turning our attention to our Bitcoin asset. The bitcoins we held as our own holding asset kept growing in this quarter and reached a record high of 1057 bitcoins as of March 31, 2020, which is 148 more than the 909 at the end of last year. As previously mentioned, we adopted the FASB's new rules effective January 1st, 2024. As of March 31st, the fair value of our owned bitcoins totaled 75 million US dollars.

Speaker Change #125: <unk>.

Speaker Change #125: Now turning our attention to our bitcoin assets. The bitcoin. So we held our own holding assets kept growing in this quarter and reached a record high of 1057 bitcoin as of March 31st.

Speaker Change #125: Which is 148 more than the 900 zero nine at the end of last year.

Speaker Change #125: As previously mentioned, we adopted the Fasb's new rules effective.

Speaker Change #125: January one 2024 on March 31, the fair value of our owned fleet clients totaled $75 million.

James Jin Cheng: Combined, our balance of cash and owned bitcoins demonstrates approximately $130 million in liquidity. Turning to our fundraising, in early January 2024, we closed the second tranche of our preferred shares financing, raising total net proceeds of $49.9 million. This was reported in the previous quarterly release. After that, we have not done any fundraising.

Speaker Change #125: Combined our balance of cash and on the bitcoin demonstrated approximately $113 million of liquidity.

Speaker Change #125: Yeah.

Speaker Change #125: Turning to our pharma racing in early January 2020 call. We closed the second tranche of our preferred shares financing raising total net proceeds of $49 9 million U S. Dollars. This has been recorded in the previous quarterly release.

Speaker Change #125: After that we have not done any fund raising.

James Jin Cheng: We expect our Q2 revenues to be $70 million, and Q3 revenues to be $70 million, respectively. We are glad to see that our A14 product is being successfully delivered. The new A15 series products have debuted and opened for pre-sales, and our one-stop comprehensive mining solutions and Avalon Nano 3 products are gaining recognition from all customers. We will continue to address the diverse needs of our varied customers with a richer and more efficient selection of products.

Speaker Change #125: We expect our quarter two revenues to be $70 million in quarter, three revenues to be $17 million respectively.

Speaker Change #125: We are glad to see that our <unk> product.

Speaker Change #125: <unk> successfully delivered.

Speaker Change #125: The new <unk>.

Speaker Change #127: Risk product.

Speaker Change #127: The beauty of it and opened for pre sales and our one stop comprehensive mining solutions and the Avalon mammals III products are gaining recognition from our customers.

Speaker Change #127: We will continue to address the diverse needs of our varied customers with a richer and more efficient selection of products.

Operator: This concludes our prepared remarks. We are now open to questions. Thank you. We will now begin the question and answer session. As a courtesy to all the investors and analysts who may wish to ask a question, please limit your questions to

Speaker Change #128: This concludes our prepared remarks, we are now open for questions.

Operator: Thank you. We will now begin the question and answer session. As a courtesy to all the investors and analysts who may wish to ask a question, please limit yourself to three questions at a time. If you have any follow-up questions after the Q&A session, the investor relations team will be available after the call. For the benefit of all participants on today's call, if you wish to ask a question to the management in Chinese, please immediately repeat your question in English.

Speaker Change #129: Thank you we will now begin the question and answer session.

Speaker Change #130: As a courtesy to other investors and analysts who may wish to ask a question. Please limit yourself to three questions at a time.

Speaker Change #130: You have any follow up questions. After the Q&A session. The Investor relations team will be available after the call.

Speaker Change #130: For the benefit of all participants on today's call. If you wish to ask a question to dimension in Chinese. Please immediately repeat your question, England in English.

Operator: To ask a question, please press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Once again, that's star 11 for questions. Our first question comes from the line of Kevin Dede from H.C. Wainwright. Hi James, and yes, hi NG and James. Thank you very much for having me on the call. Can you hear me okay?

To ask a question. Please press star one one on your telephone.

Speaker Change #131: You wouldn't hear an automated message advising yohan is raised.

Speaker Change #131: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster once again to stop one one for questions.

Speaker Change #131: Yeah.

Speaker Change #132: Our first question comes from the line of Kevin Dede from H C. Wainwright.

Speaker Change #133: Please ask your question James.

Kevin Darryl Dede: Yes, hi.

Speaker Change #135: M <unk> and James Thank you very much for having me on the call can you hear me okay.

Speaker Change #136: Yes, yes, yes.

Kevin Darryl Dede: Great. Okay, NG, right off the bat, I'm going to apologize because my first question is long and a little convoluted. But I think you'll understand where I'm going and I know you'll give me a great answer.

Speaker Change #137: Great Okay.

Speaker Change #138: N G.

Speaker Change #139: Off the bat I'm going to apologize because my first question.

Speaker Change #139: His long and a little convoluted.

Speaker Change #139: But I.

I think you'll understand where I'm going and I know you gave me a great answer.

Kevin Darryl Dede: So I'm wondering how all these factors combine together. Number one, we have many Canaan new products coming to market. We have the A14, we have the A15 coming soon, and the A-16 and R&D. So I'm wondering how you balance product cycles again, the fact that liquid-cooled machines tend to last longer, and semiconductor improvements are incrementally less from process geometry change to process geometry change.

Speaker Change #139: So.

Speaker Change #140: I'm wondering how these all these factors combined together.

Speaker Change #140: Number one we.

Speaker Change #141: We have the.

Speaker Change #141: Yes.

Speaker Change #141: Many non new products coming to market, we have the <unk> 14 of the 15 coming soon.

Speaker Change #142: Are the 816 in R&D, so I'm wondering.

How you balanced product cycles.

Speaker Change #142: Against.

Speaker Change #143: The fact that liquid cooled machines tend to last longer.

Speaker Change #143: And semiconductor improvements are incrementally less.

Speaker Change #143: From process geometry change to process geometry change.

Speaker Change #143: Okay.

Speaker Change #143: Okay.

Nangeng Zhang: Yeah, uh, good morning. Thank you.

Speaker Change #143: Yes.

Speaker Change #143: Yes.

Speaker Change #143: Yes.

Speaker Change #143: Good morning.

Speaker Change #143: Correct.

Nangeng Zhang: I think in terms of our major product series, we are still in a cycle of iterating generations roughly every three quarters. This pattern also applies to our next generation products. I think this is beneficial for both customer choices and Hashrate Deployment Planning because you have a quite clear prediction about our new product. And in terms of power efficiency, our mainstream products released last year have entered the range of 20 to 25 kilowatts per hash.

Speaker Change #143: Thank you.

Speaker Change #143: Four.

Speaker Change #143: Or do you mean in the <unk>.

Speaker Change #143: Some of our major products.

Speaker Change #143: We are still in the cycle.

Speaker Change #143: It's a routine.

Speaker Change #143: Dilutions roughly every three quarters.

Speaker Change #143: This pattern.

Speaker Change #143: So lives through our next generation products.

Speaker Change #143: I think this is.

Speaker Change #143: Beneficial for both customer choices.

Speaker Change #143: And.

Hatch rate deployment timing.

Speaker Change #143: Because you can't you have.

Speaker Change #143: Quite clear.

Speaker Change #143: Pre predictions.

Speaker Change #143: When you products.

And.

Speaker Change #143: In term of power efficiency.

Speaker Change #144: Our mainstream products released last year.

Speaker Change #144: Anchor is a range of 20 to 25 across because of ash.

Nangeng Zhang: And with the products, the first half of this year is in the 15 to 20 joules per ton hatch range, and I believe the next target for the industry will be in the 10 to 15 jobs per cash later this year or early next year.

Speaker Change #144: And with the product style first half of this year or in the <unk>.

Speaker Change #145: <unk> two <unk> per ton range.

And I believe the next target for the industry will be in the 10 to 15 Johnson potash.

Speaker Change #145: Later this year or early next year.

Nangeng Zhang: These are the efforts progressing systematically. Yeah, so also I want to mention, apart from the chip development, we are actually accelerating in the chip to machine, to mass production stages. I will have an example here. The A15 latch has an example, yeah.

Speaker Change #145: These R&D efforts.

Speaker Change #145: Sure.

Speaker Change #145: Progressing.

Speaker Change #145: Sure.

Speaker Change #145: Systematically.

Speaker Change #145: Yes, so also.

Speaker Change #145: Also I want machines.

Speaker Change #145: From the chip development, we are actually accelerating.

Speaker Change #145: In the shade achieved two machines to mass.

Speaker Change #145: Two mass production stages.

Speaker Change #145: Example, here.

Speaker Change #145: At 815 match.

<unk> had as an example, yes.

Nangeng Zhang: We went from receiving the chips to have a stable running machine in less than 72 hours, and within less than 10 days, multiple protomachines with accurate performance and stable operation will be showcased at public events like exhibitions. Yeah, for today, we are in the process of sending fresh portable machines to customers for testing. Yeah, so we are continuing to improve our user experience. Yeah, and yeah, we have comprehensive solutions for from the machines who would like to, Out-of-the-Box Containers, even the consumer level. I don't know. I don't know about three products. Um, yeah, so, uh, I think this will give you some guidelines for what will happen in the next 18 months or two years.

Speaker Change #145: We went from receiving the chips to have a stable running machine in <unk>.

Speaker Change #145: Less than 72 hours.

Speaker Change #145: We see less than 10 days multiple proton machines.

Speaker Change #145: Record performance and stable operations.

Speaker Change #145: Our showcase in public demands.

Speaker Change #145: Black.

Speaker Change #145: Yes.

Speaker Change #145: And.

Yeah. So today, we are in the process of outstanding fresh product proton machines to customers for testing.

Speaker Change #145: Yes, so we are continuing to improve our user experience.

Speaker Change #145: Yes.

Speaker Change #145: Yes.

Speaker Change #145: Yes.

Speaker Change #145: We have.

Speaker Change #146: Comparable comprehensive solutions for.

Speaker Change #146: From the machines, who liked.

Speaker Change #146: Yes.

Speaker Change #147: I don't want to box containers.

Speaker Change #147: You as a consumer level I will now three products.

Speaker Change #147: Yes so.

Sure.

Speaker Change #147: I think this.

Speaker Change #147: I'll give you some color for the.

Speaker Change #147: What will happen.

Speaker Change #147: Next like 18 months or two years.

Speaker Change #147: Yes.

Kevin Darryl Dede: Okay. Thanks, NG.

Andy: Okay. Thanks, Andy.

Speaker Change #149: <unk> you.

Speaker Change #150: You made it very clear both James and you made it very clear that you're holding over 1000 bitcoin.

Kevin Darryl Dede: You made it very clear, both James and you, that you're holding over a thousand Bitcoin. And I'm, I'm wondering, I'm sure many people are wondering how you consider that your, would you consider selling them at some point in order to raise capital in order to fund your business? I understand $88 million for a wafer run. That's a lot of money. So just kind of. I'm just kind of wondering how you're thinking about that.

Speaker Change #151: And I'm wondering.

Im sure. Many people are wondering how you consider that our.

Speaker Change #152: Would you consider selling them at some point in order to raise capital in order to fund your business I understand the $88 million to per wafer run that's a lot of money. So just kind of I'm just kind of wondering how you're thinking about that.

Nangeng Zhang: I think for the Bitcoins we are currently holding, today our communist policy is only to use the Bitcoin to pay the mining electricity bill, and all of the other Bitcoins we will hold, hold most of them. I mean, we will hold most of the profit from the sale, yes, and currently, we have no plans to sell the Bitcoin. But I think we are considering to maybe do some financing operations to let the bitcoins generate more bitcoins. I think maybe James can have some ideas on this.

Speaker Change #151: Yes.

Speaker Change #153: So for the brief comments around our private holdings.

Speaker Change #154: Today, our Congress policy is.

Speaker Change #155: Let me use the required to pay the mining actually city deal.

Speaker Change #156: All other B class.

Speaker Change #156: We all hope.

And also where we received some big clients from our.

Speaker Change #156: Sure.

Speaker Change #156: <unk>.

Speaker Change #156: We will.

Speaker Change #156: On most of them.

Speaker Change #156: I mean, I will leave it for the most of the profit from the sale.

Speaker Change #156: Yes.

Speaker Change #156: We are confident we have no plans to sell the <unk>.

Clients.

Speaker Change #156: But I think we are considering.

Speaker Change #156: To make the maybe to sunlight.

Speaker Change #156: Asking operations too.

Speaker Change #157: Let the required standards more food cost.

Speaker Change #156: I think.

Speaker Change #158: Maybe James can have some ore hardness.

James Jin Cheng: Yeah, currently, we are starting on different approaches such as using bitcoins as collateral and can also generate new financing interest, either in bitcoins or in other cryptocurrencies like the USDT. So we are talking to different vendors to see the possibility and the potential to generate more cash flows and profit for our shareholders. I think we are still in the starting phase, and once we get some solutions, we will let our investors know that.

Speaker Change #159: Yes currently we are studying on different approaches.

Speaker Change #159: As using bitcoins has collateral and also can generate new fee.

Speaker Change #159: Financing interest.

Speaker Change #159: Either in bitcoin all in.

Speaker Change #160: The Caribbean currency slightly USD P.

Speaker Change #161: So we are talking to different vendors to see the possibility and potential to generate more cash flows and profit.

Speaker Change #162: For our shareholders I think we are we are still in the starting phase.

Speaker Change #162: Once we get some solutions, we will let our investors know that.

Kevin Darryl Dede: Thank you. One last question for me. Okay, last question for me.

Speaker Change #163: Thank you and our last question for me. Okay last question for me just.

Curious about your perspective on the competitive environment.

Kevin Darryl Dede: Just curious about your perspective on the competitive environment. You know, obviously, Yihan Wu is back in the market at Bitbeer, and the Aurodyne machines are expected to come out this year. I appreciate your perspective on Canaan's revenue. You're obviously a pretty bright outlook. I'm just wondering how you see that competitive environment shaking up.

Speaker Change #164: Obviously <unk> was back in the market a bit here the aura dyeing machines are expected to come out this year.

Speaker Change #163: Jim.

Jim: I appreciate.

Speaker Change #165: Your perspective on <unk> revenue.

Speaker Change #166: Obviously, a pretty bright outlook I'm, just wondering how you see that competitive environment shaking out.

Nangeng Zhang: Thank you, Kevin. Yes, we have also noticed some new entries in the market recently. Some have announced that their designs are in the table of swathes, while others have shared results from blood shape testing. However, I think, without expectation, we have not seen back machine deliveries in the open market yet. So, once machines are actually delivered to the market, we will conduct research. However, we cannot comment on products that have not been delivered.

Speaker Change #166: Okay.

Speaker Change #167: Yes, we have also noticed some new.

Speaker Change #167: Countries.

Speaker Change #167: In the market recently.

Speaker Change #168: Some have announced that their designs in the taper off space.

Speaker Change #169: While orders have share results from black chip testing.

However, however.

Speaker Change #169: Resolved.

Speaker Change #169: Expectation there.

Speaker Change #169: Patient we have note.

Speaker Change #169: <unk>.

Speaker Change #170: Buck machine deliveries in the open market yet.

So whilst machines actually can be worked with the market we will conductors sewers.

Speaker Change #170: Research.

Speaker Change #170: However, we cannot comment on products that have not been to New York.

Nangeng Zhang: I think the entry of new players indicates that the bull market for mining machines is approaching. They are mainly seeing the industry prospects and choosing to invest in and enter the market. At the same time, this phenomenon also suggests that the industry, including ourselves, Inevitably have errors that do not fully satisfy our market partners or our customers in terms of products, pricing, customer service, customization, and sales coverage. I think this led us to... Actuaries, Progress, and Influence.

Speaker Change #170: The entry of new players indicates that the boom market for mining machines is a poultry is many scenes industrial appropriate course.

Speaker Change #170: Cross taxed and trucking to engraft and entered the market.

Speaker Change #170: At the same time this format mono also suggest that the industry.

Speaker Change #170: Including our self.

Speaker Change #170: Yes.

Speaker Change #170: Sure.

Speaker Change #170: Whenever you have areas that are not fully satisfied our marketer partners or our customers incurred loss.

Speaker Change #170: <unk> products pricing customer service customization and sales coverage.

Speaker Change #171: I think this matter up to <unk>.

Speaker Change #172: Accelerated progress and improvement.

Nangeng Zhang: The entry of these new players clearly brings more competition to the industry, but of course, the barrier to entering the mining machine business is extremely high now, and I think developing an excellent mining chip is already very challenging at this stage. However, this is just the beginning of the journey of hardships, growing into an excellent brand, and the road ahead is indeed a lot. It has been 11 years since I delivered the world's first 18 Bitcoin mining machines to customers.

Andrea: And as Andrea.

Andrea: Nuclear is clearly brings more relative to the industry.

Andrea: But of course, the barrier to enter the manual machine business is extremely high now.

Developing and I think.

Andrea: Developing and excellent Miami ship is already very challenging at this stage.

Andrea: However, this is like that that you just at the beginning of that journey of hardships.

Andrea: Towards.

Andrea: Growing into an accident brand.

Andrea: The road ahead is indeed very long.

Andrea: It has been 11 years since IPD were four.

Andrea: Awards first AC become mining machines to customers.

Nangeng Zhang: And although we have accumulated a lot of experience over time, my respect for this industry has only grown. So in preparation for this cycle, we have made a lot of preparations, including not only a roadmap for new products but also production capacity deployment. I think additionally, as mining machine providers, we must continuously serve our customers, especially during industry downturns, which is not easy. I think I have endured several past cycles; only a few, including us, have persisted, and we are the only one among them that is publicly illicit. Sorry for it; it needed a bit of love. Thank you.

Speaker Change #174: And although we have accumulated a lot of experience our time.

My respect for this industry has only growth.

Speaker Change #175: So in preparation for this cycle, we haven't made a lot of preparations.

Speaker Change #175: <unk>.

Speaker Change #175: Not only our roadmap for new products, but also production capacity deployment.

Speaker Change #175: I think additionally, as mining machine providers.

Speaker Change #175: Continuously to serve our customers.

Speaker Change #175: Especially doing industrial downturns.

Speaker Change #175: Which is the <unk>.

Speaker Change #175: Hum.

Speaker Change #175: <unk>.

Speaker Change #175: And Europe, several past cycles, only a few including us.

Chris: Chris This test and we are the only one on one with us.

Chris: Publicly listed company.

Speaker Change #177: Sorry Toyota.

Speaker Change #177: A little bit of luck second okay.

Kevin Darryl Dede: So thank you, thank you very much, gentlemen. I appreciate you. Thank you for taking the time to answer my questions, and thanks for having me on the call.

Speaker Change #178: Thank you. Thank you very much gentlemen, I appreciate you.

Taking the time to answer my questions and thanks for having me on the call.

Nangeng Zhang: Thank you very much. Thank you.

Kevin Darryl Dede: Thank you Kevin Thank you.

Kevin Darryl Dede: Thank you Kevin.

Operator: Our next question comes from the line of Shuang Sun from Gorshan Securities. Please ask your question, Shuang.

Speaker Change #180: Our next question comes from the line of shrunk Chen from <unk> Securities. Please ask your question strong.

Sun Shuang: Hello, hello, can you hear me? Thank you. Alright, alright. Thank you. Thank you, Jim. My first question is... Please share more color on A15666 new products.

Speaker Change #179: Hello Hello.

Sun Shuang: You mean the performance or... Okay.

Speaker Change #179: Okay.

Speaker Change #179: Thank you.

Speaker Change #181: Okay great.

Speaker Change #182: Correct Yeah.

Speaker Change #182: Oh, what does he go into your share.

Speaker Change #182: And so whether it's you know you Gotta Guava may all come to work for them.

Tyler: Sure Tyler.

Tyler: Okay. Thanks.

Tyler: Alright.

Tyler: Okay.

Tyler: Yes.

Tyler: Sure.

Tyler: Yes.

Tyler: Yes.

Tyler: You mean the performance or.

Nangeng Zhang: Yeah, I think for Yes, I think we have already demonstrated our A315, Series. The model is A1566, at the Hong Kong event, and with an average computing power of 185 TeraHash per second and a power efficiency of better than 18 wide 0.5 jaws per cat. I think this performance is unparalleled when competing for that country on the market. Yeah, and so, I think at this stage we are preparing the photo machines for our customers to demonstrate the machines in the field.

Tyler: Okay.

Tyler: Yeah, I think for.

Tyler: Yes, I think we have already.

Tyler: Demonstrates.

Tyler: Our April 15.

Tyler: Serious.

Tyler: To normalize.

Tyler: 1566.

Tyler: And the Hong Kong rent.

Tyler: And.

Tyler: With that average computing power of 180 <unk> per second.

Tyler: Our efficiency of.

Speaker Change #184: Better than 18.

Why five trucks per cap.

Speaker Change #184: Cash.

Speaker Change #184: I think this performance is on Paris competing products currently on the market.

Speaker Change #184: Yes.

Speaker Change #184: So.

Speaker Change #185: I cannot at this stage, we are preparing and portable machines to our customers.

Speaker Change #185: To demonstrate the machines.

Nangeng Zhang: So everything is going very smoothly. We hope we can... Push it to mass production as soon as possible. Yeah, but you know, there's really a long production period due to the cutting-edge technology. So it's still some months away.

Speaker Change #185: On the field so.

Speaker Change #185: Everything is going very smoothly and we hope we can.

Speaker Change #185: Four shirts to mass production.

Speaker Change #185: As possible.

Speaker Change #186: Yes, but youll note there is really not production.

Speaker Change #186: Areas due.

Due to the.

Speaker Change #186: Our cutting edge technology so.

Speaker Change #186: Is there still some months.

Sun Shuang: Thank you. The second question is, what do you think about the sustainability of the company?

Speaker Change #186: Yes.

Speaker Change #187: Thank you.

Speaker Change #187: Sure.

Speaker Change #188: Oh sure.

Speaker Change #188: The criticism.

Speaker Change #188: Please share your view.

Speaker Change #188: Continuing.

Speaker Change #188: Company's obligations.

James Jin Cheng: Thank you, Sun. I will take this question. I think first of all we should take a look at our balance sheet. At the end of March 31st, we had 55 million cash on hand, and also we had another 1057 Bitcoin. You know, as of today, it equals like 65 million US dollars. Putting this together, we have the liquidity, total liquidity, of like 120 million together, and, you know, in quarter one, our expense together is about 31 million, which includes like one third of the expense is non-cash expense.

Shawn: Thank you Shawn I will take this question I think.

Speaker Change #190: First of all we should take a look at our balance sheet.

Speaker Change #190: In the end of March 31, we have $55 million cash on hand, and also we have another 1057 bitcoins.

Speaker Change #190: As of today.

Speaker Change #191: Oh, it's like $65 million.

Speaker Change #191: This together, we have the liquidity total liquidity like a $120 million together and you know in quarter. One our expense together is about $31 million, which including like a one third of the expense is noncash.

James Jin Cheng: So actually, the cash expense for routine business is like 20 million per quarter. So 120 million compared to the 20 million spending, so that means another six quarters to go if we don't do anything. But of course, we are doing, you know, preparations for the global market.

Speaker Change #191: Expense, so actually the cash expense.

Speaker Change #191: Routine business is like a $20 million per quarter, so $120 million.

Speaker Change #191: Compared to the 20 million spending so that means another six quarters to go if we don't do anything.

Speaker Change #191: But of course, we are doing it.

Speaker Change #192: <unk> or below market.

James Jin Cheng: We have to be very careful about cash management. I think currently we have already seen a lot of improvements from cash inflows as the A14 series has already been delivered on schedule. And we have already collected cash gradually from our customers. Step by step, we will collect more cash in quarter two and quarter three as we predicted that revenue would be higher. Also, most of the credit customers have already completed the payments for their orders, and account receivables have decreased sequentially.

Speaker Change #192: We'll have to be very careful about the.

Speaker Change #192: Cash management.

Speaker Change #192: I think currently we have already seen a lot of improvements from cash inflows as the 14th Crs.

Speaker Change #192: <unk> has already been delivered on schedule and we have already collected the cash gradually from our customers.

Speaker Change #192: By that but we will collect.

Speaker Change #192: More cash in quarter two in quarter three as we predicted.

Revenue will be higher.

Speaker Change #192: And also.

Speaker Change #192: Most of the credit customers has already completed the payments for their orders and our account receivables have decreased sequentially.

James Jin Cheng: The self-cash inflows, I think, have already been shown in the customer advances, which doubled the previous customer advances. So, I think from the inflows, there is a lot of good news. On the other hand, we have to control the capacity for pay and the locking proportion of cash in two-month production. That's something we have to do. That's why in quarter one, our cash payment to lock in the waiver is about 88 million. So it's a lot.

Speaker Change #192: The sales cash inflows.

Speaker Change #192: Inflows I think.

Speaker Change #192: Has already been shown in the customer advances doubled the previous.

Speaker Change #192: Customer advances.

Speaker Change #192: So I think.

Speaker Change #192: From the inflows a lot of good news on the other hand, we have to control.

Speaker Change #192: The capacity of pace and unlocking proportion of cash.

Speaker Change #192: Cash into mass production.

Speaker Change #192: That's something we'll have to do that's why in quarter, one our cash payment to lock the wafer is about $88 million. So it's a it's a lot.

James Jin Cheng: So putting this together, while we maintain a safe level of cash reserves, while we have more than 1,000 coins, we have a substantial potential liquidity safeguard on hand. It seems to me, it's quite safe. Overall, speaking, the company is able to maintain continuous operations, with overall risks being relatively controllable. But, of course, we have to work very carefully in a prudent way to manage the cash. Thank you for the questions, Shuang.

Speaker Change #192: So putting this together while we maintained our first level of cash reserves, while we have the more than 1000 in the coin.

Speaker Change #192: We have a substantial potential liquidity safeguard on hand.

Speaker Change #193: Looking to me.

Speaker Change #193: It is quite safe.

Speaker Change #193: Overall speaking the company is able to.

Speaker Change #193: To maintain continuous operations.

Speaker Change #193: With overall risks being relatively controllable, but of course, when we have to work.

Speaker Change #194: Very carefully in a prudent way to manage the cash. Thank you for the questions Tom.

Sun Shuang: Okay, thank you. The third question is...?? Please share your view on the timing of the return to profitability this year.

Speaker Change #194: Okay.

Speaker Change #195: Does that go into your share.

Speaker Change #195: Okay, Nigeria, and Kenya in easy to clean.

Speaker Change #196: Please share your view on the timing of return.

Speaker Change #196: Ill fated to entertain any this year.

James Jin Cheng: Yeah, I think profitability is always a question from investors. People would like to see the bear market end and our profit coming back as in the bull market. I think the most interesting thing in our industry is the average selling price. I think we can see that our past three years' average selling price could be below $7 per terahash or above $70 per terahash.

Speaker Change #197: Yes, I think our profitability is to always.

Cheng: Cheng from the investors.

Cheng: People would like to see.

Cheng: The payer market and and to see our <unk>.

Cheng: Profit coming back as the Bull market.

Cheng: I think the.

Cheng: The most interesting thing in our industry is the average selling price I think that we can see our past three years' average selling price could it be below $7 patera hash or above $70 per tower hash. So.

James Jin Cheng: So I think the main factor driving profitability is still the increase in computing power prices. I think the fundamental reason behind the rise in computing power prices is still the shift in supply and demand dynamics. As the price of Bitcoin increases, attracting more miners into the market, there could be a surge in demand for computing power. With this kind of condition, in such cases, given the limited supply capacity of the advanced process using our mining machines, I think the price of computing power could potentially rapidly increase.

Cheng: The main factor driving profitability is still the increase in computing power prices.

Cheng: I think this fundamental reason behind the rise in computing power prices.

Cheng: Is this still the shift in supply and demand dynamics.

Cheng: As the price of bitcoin increases attracting more minus into the market.

Cheng: There could be a surge in demand for computing power with this kind of condition under such cases.

Cheng: Given the limited supply capacity of the advanced the process.

Cheng: Using our mining machines.

Cheng: Think of the price of computing power could potentially rapidly increased.

James Jin Cheng: So, therefore, it is anticipated that after halving, as our Bitcoin price is still fluctuating, but after it is stabilized and rises, the total network computing power decreases, the expanded profitability of mining could potentially attract a larger number of new miners coming in. Thus, as miners begin to purchase computing power, sales volume will initially react. And as the supply-demand relationship changes, computing power prices will quickly recover. So, currently, computing power prices have already been recovering from their market low.

Cheng: So therefore, it is anticipated that the after having.

Cheng: At our bitcoin prices it is still fluctuating, but after it has stabilized and the rise the total network computing power.

Cheng: Created the expanded profitability of mining.

Cheng: Could it potentially attract a large number of new miners coming in.

Cheng: So as miners beginning to purchase computing power sales volume will initially react.

Cheng: As the supply demand relationship changes computing power prices will quickly recover.

Mark Hello: So currently computing power prices have already been recovering from the Mark Hello, Our current assessment is that.

James Jin Cheng: Our current assessment is that the losses could continue through the first two or three quarters of 2024, but there is a big potential opportunity for gross margin to turn positive or even significantly improve in the third and fourth quarters, especially the fourth quarter. So for the full year, we will try our best to see if there is any possibility to get break-even, but it looks to me the trajectory will be from loss to earnings in the coming year. Step by step, we will be there. Thank you, Sean.

Mark Hello: Lastly.

Mark Hello: Loss could continue through the first.

Mark Hello: Two or three quarters of 2000 and import but there is a big potential opportunity for gross margin to turn positive.

Mark Hello: <unk> significantly improve in the third and fourth quarter, especially the fourth quarter. So for the full year.

Mark Hello: We will try our best to see if there is any possibility to get breakeven.

Mark Hello: But it looks to me.

Speaker Change #200: The trajectory will be from the loss to earnings.

In the coming one year time.

Speaker Change #201: By Stefan will be there. Thank you Sean.

Sun Shuang: Do you still have financing plans going forward?

Speaker Change #202: Is it something going on do you share horseshoe, Ohio longer.

Speaker Change #203: You'll still have financing plan going forward.

Speaker Change #202: Yes.

James Jin Cheng: I think after the A14 series shipment, we have already seen more active purchasing inquiries and stronger self-cash inflows after halving and after our A14 series shipment. So it looks like cash flow operations and the balance sheet are also improving.

Speaker Change #202: Hum.

Speaker Change #202: I think.

Speaker Change #204: After a 14th Crs.

Shipment.

Speaker Change #204: We have already testing.

Speaker Change #204: More active purchasing inquiries and a stronger sales cash inflows are up.

Speaker Change #204: After having an after hour a 14th year shipment so it looks like cash flow operations and the balance sheet.

Speaker Change #204: Also improving.

Speaker Change #204: So.

James Jin Cheng: So I think, As I just mentioned, we already did the financing in Q4 and Q1 of 2024 with a total cash of 136 million. We do not have any urgent equity financing plans in the near term. So I think that's a clear answer. We do not have any urgent equity financing plans in the near term.

Speaker Change #204: <unk>.

Speaker Change #204: As just mentioned.

Speaker Change #204: We have already.

Speaker Change #204: Did the financing in quarter, four and quarter one of 2024.

Sun Shuang: Thank you.

Speaker Change #204: With a total cash like 136 million.

Speaker Change #204: We do not have any urgent equity financing plans in the near term. So I think that that's a clear answer we do not have urgent equity financing plans in the near term.

Speaker Change #204: Sean.

Sun Shuang: Thank you. I'm done.

Speaker Change #205: Is that all of them.

Operator: Thank you, Shuang. As there are no further questions now, I would like to turn the call back to the company for any closing remarks.

Okay.

Speaker Change #206: Thank you Sean.

Sean: Thank you.

Speaker Change #208: If there are no further questions now I'd like to turn the call back to the company for any closing remarks.

Sean: Okay.

Unknown Executive: Thank you once again for joining us today. If you have any further questions, please feel free to reach us through the contact information provided on our website.

Sean: Thank you once again for joining us today.

Speaker Change #209: If you would have for any further question. Please feel free to reach us through the contact information provided on our website.

Operator: Thank you. That concludes the call today. Thank you everyone for attending. You may now disconnect.

Speaker Change #209: Thank you that concludes the call today. Thank you everyone for attending you may now disconnect.

Speaker Change #209: Hum.

Speaker Change #209: [music].

Speaker Change #209: Yes.

Speaker Change #209: Hum.

Speaker Change #209: [music].