Q2 2026 Canaan Inc Earnings Call

September 8, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Canaan Inc.'s Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management prepared remarks, we will have a question and answer session. Please note that this event is being recorded. I will now hand the conference over to your speaker today, Gwyn Lauber, Investor Relations for the company. Please go ahead, Gwyn.

Speaker #1: After management prepares their remarks, we will have a question-and-answer session. Please note that this event is being recorded. I'll now hand the conference over to your speaker today, Gwyn Lauber, Investor Relations for the company.

Speaker #1: Please go ahead, Gwyn.

Speaker #2: Thank you, operator. Hello, everyone, and welcome to our earnings conference call. Joining us today are our Chairman and CEO, Nangeng Zhang, and our CFO, James Cheng.

Gwyn Lauber: Thank you, operator. Hello everyone, and welcome to our earnings conference call. Joining us today are Chairman and CEO, Nangeng Zhang, and our CFO, James Jin Cheng. Leo Wang, Vice President of Capital Markets and Corporate Development, and Xi Zhang, Senior IR Manager, will also be available during the question and answer session. Our CEO will start the call by providing an overview of the company and performance highlights for the quarter. Our CFO 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 begin, I would like to refer you to our safe harbor statement in our earnings press release. 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 operating results and the performance of the company.

Speaker #2: Leah Wong, Vice President of Capital Markets and Corporate Development, and Xi Zhang, Senior IR Manager, will also be available during the question-and-answer session. Our CEO will start the call by providing an overview of the company and performance highlights for the quarter.

Speaker #2: Our CFO will then provide details on the company's operating and financial results for the period, before we open up the call for your questions.

Speaker #2: Before we begin, I would like to refer you to our Safe Harbor statement in our earnings press release. Today's call will include forward-looking statements.

Speaker #2: These statements include, but are not limited to, our outlook for the company and statements that estimate or project future operating results and performance of the company.

Speaker #2: These statements speak only as of today, and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call, or webcast.

Gwyn Lauber: These statements speak only as of today, 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. 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, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, 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.

Speaker #2: 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, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements.

Speaker #2: In addition, during today's call, 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 #2: 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.

Gwyn Lauber: 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, Nangeng Zhang. NG, please go ahead.

Speaker #2: With that, I will now turn the call over to our Chairman and CEO, Nangeng Zhang. NG, please go ahead.

Speaker #3: Thank you, Gwyn. Hello, everyone. This is NG, CEO of Canaan. Thank you for joining our earnings conference call today. James, our CFO, and I are here at our Singapore headquarters to share our financial results and recent business updates for the second quarter of 2026.

Nangeng Zhang: Thank you, Gwyn. Hello everyone. This is Nangeng Zhang, CEO of Canaan. Thank you for joining our earnings conference call today. James Jin Cheng, our CFO, and I are here at our Singapore headquarters to share our financial results and recent business updates for Q2 2026. Q2 2026 remained a difficult environment for the Bitcoin mining industry. In the first half of the quarter, Bitcoin prices recovered from approximately US $62,000 to US $82,000, before declining sharply and reaching a period low of about US $58,000 at the end of the quarter. During the quarter, hashprice fluctuated between 2.8 and 3.9 US cents per terahash per second per day, and remained at low levels. At the same time, in the US, the capital markets and the traditional mining companies continue to shift more attention towards AI and HPC.

Speaker #3: Q2 2026 remained a difficult environment for the Bitcoin mining industry. In the first half of the quarter, Bitcoin prices recovered from approximately $62,000 to $82,000.

Speaker #3: Before declining sharply and reaching a period low of about $58,000 at the end of the quarter. During the quarter, hash price fluctuated between 2.8 and 3.9 US cents per terahash per second per day and remained at low levels.

Speaker #3: At the same time, in the US, the capital markets and traditional mining companies continued to shift more attention toward AI and HPC. Localized armed conflicts in certain countries and regions, as well as tightened mining-related policies in China and elsewhere, are factors that affected miners' investment willingness and capacity.

Nangeng Zhang: Localized armed conflicts in certain countries and regions, and the tighter mining-related policies in China and elsewhere are factors that affected miners' investment willingness and capacity. From the second half of the quarter onward, miner sales weakened noticeably and elevated industry inventory levels, further intensified price competition. During the quarter, the company generated total revenues of approximately $32 million, below our previous guidance range of $35 million to $45 million. We sold 2.5 exahash per second of computing power, and our mining business produced 243 Bitcoins. When we issued guidance in May, our demand outlook was primarily based on the market conditions in the first half of the quarter. We did not fully expect the later decline in the demand and pricing. In the second half of the quarter, Bitcoin prices fell quickly, miners become more cautious about equipment purchases, and high industry inventory levels increased price competition.

Speaker #3: From the second half of the quarter onward, miners' sales weakened noticeably and elevated industry inventory levels further intensified price competition. During the quarter, the company generated total revenues of approximately 32 million US dollars below our previous guidance range of 35 million US dollars to 45 million US dollars.

Speaker #3: We sold 2.5 exahash per second of computing power, and our mining business produced 243 Bitcoins. When we issued guidance in May, our demand outlook was primarily based on the market conditions in the first half of the quarter.

Speaker #3: We did not fully expect the later decline in demand and pricing. In the second half of the quarter, Bitcoin prices fell quickly. Miners became more cautious about equipment purchases.

Speaker #3: High industry inventory levels increased price competition. This was the main reason revenues came in below expectations. In response to the revenue decline, we further tightened our spending, strengthened cash flow and liquidity management, and continued organizational finalization.

Nangeng Zhang: These were the main reasons revenues came in below expectations. In response to the revenue decline, we further tightened our spending, strengthened cash flow and liquidity management, and continued organizational optimization. As of quarter end, the company held 1,915 Bitcoins and 3,952 ETH, bringing our digital assets treasury to another record high. I will start with our mining machine business. As mining economics weakened, many miners delayed equipment purchases, and the average selling prices remain under pressure. During the quarter, we generated approximately $40 million in product revenue. In response to softened demand, we adjusted pricing more flexibly. At the same time, we again emphasized production based on actual sales. We control new production according to real orders and put more focus on inventory management, cash flow, and order quality.

Speaker #3: As of quarter end, the company held 1,915 Bitcoins and 3,952 ETH, bringing our digital assets treasury to another record high. I'll start with our mining machine business.

Speaker #3: As mining economics weakened, many miners delayed equipment purchases, and average selling prices remained under pressure. During the quarter, we generated approximately $14 million in product revenue. In response to certain demand, we adjusted pricing more flexibly. At the same time, we again emphasized production based on actual sales.

Speaker #3: We controlled new production according to real orders and put more focus on inventory management, cash flow, and older inventory quality. For existing machines, we will evaluate whether to sell them to customers or deploy them in our own mining operations.

Nangeng Zhang: For existing machines, we will evaluate whether to sell them to customers or deploy them in our own mining operations based on cash collection, deployment conditions, and additional investment required. Now let me turn to our mining operations. In Q2, we adjusted our deployed hash rate in a timely manner based on power prices, load management, and operating conditions at different sites. We allocated resources to projects with better economics. Mining revenues was approximately $80 million, accounting for more than 50% of the company's total revenue in Q2, and continue to cover direct operating costs, such as power and hosting. As of the end of June, our installed hash rate in non-JV projects was approximately 10.05 exahash per second, and average all-in power cost in June was about 4.3 US cents per kilowatt hour. Overall power and hosting costs remained relatively competitive. Project ABC remains one of our key priorities.

Speaker #3: Based on cash collection, deployment conditions, and additional investment required. Now, let me turn to our mining operations. In Q2, we adjusted our deployed hash rate in a timely manner based on power prices.

Speaker #3: Load management and operating conditions at different sites. We allocated resources to projects with better economics. Mining revenues was approximately 18 US dollar 18 million US dollars according for more than 15 50% of the company's total revenue in Q2.

Speaker #3: And they continue to cover direct costs such as power and hosting. As of the end of June, our installed hash rate in non-GV projects was approximately 10.05 exahash per second.

Speaker #3: The average all-in power cost in June was about 4.3 cents (US dollar) per kilowatt hour. Overall, power and hosting costs remained relatively competitive. Project ABC remains one of our key priorities.

Speaker #3: For project ABC, we focused not only on current period profit but, more importantly, on the cash it can generate and the long-term returns that can be created after optimization.

Nangeng Zhang: For Project ABC, we focus not only on current period profit, but more importantly on the cash it can generate and the long-term returns that can be created after optimization. This is consistent with the transformation the company is pursuing. Whether it is Project ABC or the longer-term power resources we are developing, our goal is to gradually build mining and energy infrastructure assets that have a cost advantage and can generate sustainable cash flow. In Q2, together with our partner, we continue the mining machine upgrade at Project ABC. The project generated a positive cash flow and maintained efficient operations. At the end of July, installed hash rate at Project ABC reached 4.85 exahash per second, up 10% from the end of March.

Speaker #3: This is consistent with the transformation the company is pursuing. Whether it is project ABC or the longer-term power resources we are developing, our goal is to gradually build mining and energy infrastructure assets that have a cost advantage and can generate sustainable cash flow.

Speaker #3: In Q2, together with our partner, we continued the mining machine upgrade at Project ABC. The project generated positive cash flow and maintained efficient operations.

Speaker #3: As of the end of July, installed hash rate at project ABC reached 4.85 EH/s, up 10% from the end of March. Through this project, while increasing hash rate and cash generation, we also gained experience in operations, power dispatch, fleet upgrades, and the management of low-cost power resources.

Nangeng Zhang: Through this project, while increasing hash rate and cash generation, we also gain experience in operations, power dispatch, fleet upgrades, and the management of low-cost power resources. Beyond traditional mining use cases, we continue to advance energy utilization partnerships, such as compute-to-heat. Our earlier Nordic project has already validated the feasibility of using hydro-cool equipment for district heating. Our high-temperature hydro-cool equipment can supply the hot water needed for heating, which is particularly suitable for winter heating demands. These projects are still relatively small in scale, but using the heat generated from computing for comfort heating is a useful explanation of our compute-to-heat closed loop. Regarding R&D and the products, we continued advancing the A16 series in the second quarter with the focus on cost-effective air-cooled models and the high-temperature hydro-cooled models.

Speaker #3: Beyond traditional mining use cases, we continue to advance energy utilization partnerships, such as compute-to-heat. Our earlier Nordic project has already validated the feasibility of using hydro-cooled equipment for district heating.

Speaker #3: Our high temperature hydro-cooled equipment can supply the hot water needed for heating, which is particularly suitable for winter heating demand. These projects are still relatively small in scale, but using the heat generated from computing for comfort heating is a useful explanation of the compute-to-heat closed loop.

Speaker #3: Regarding R&D and the products, we continued advances in the A16 series in the second quarter, with a focus on cost-effective air-cooled module models and the high-temperature hydro-cooled models.

Speaker #3: We pay close attention to products’ full life cycle economics, including purchase cost, power consumption, stability, maintenance, and deployment efficiency. On the consumer side, the second quarter was mainly devoted to R&D on new Avalon home products, which we will prepare for mass production in the third quarter.

Nangeng Zhang: We pay close attention to products' full lifecycle economics, including purchase cost, power consumption, stability, maintenance, and deployment efficiency. On the consumer side, the second quarter was mainly devoted to R&D on new Avalon Home products, which we will prepare for mass production in Q3. These home series products are designed for home heating use cases, and we hope to capitalize on the winter heating season in the northern hemisphere and deliver a solid sales performance. Long-term power resources remain another key focus of the company's transformation. Over the past several quarters, we have been advancing long-term, stable, cost-advanced, and expandable power resources projects in North America. On our Q4 2025 earnings call, we mentioned our confidence in our ability to secure substantial load by year-end 2026, potentially reaching the gigawatt scale.

Speaker #3: These Home Series products are designed for home heating use cases, and we hope to capitalize on the winter heating season in the Northern Hemisphere and deliver a solid sales performance.

Speaker #3: Long-term power resources remain another key focus of the company's transformation. Over the past several quarters, we have been advancing long-term, stable-cost, advanced, and expandable power resources projects in North America.

Speaker #3: On our fourth quarter 2025 earnings call, we mentioned our confidence in our ability to secure substantial load by year-end 2026, potentially reaching the gigawatt scale.

Nangeng Zhang: Based on the progress we have made so far, our confidence in securing gigawatts scale load by the end of 2026 remains intact. We continue to work with all the stakeholders and hope to provide an update when we are in a position to do so. Finally, let me discuss capital allocation. Since the beginning of Q2 to date, the company has not utilized the ATM program or raised capital. Under the existing 30 million share repurchase authorization, we recently mentioned a portion of our digital assets and used to proceed to repurchase the company's ADS. We believe that the current share price meaningfully undervalues the company while retaining the capital needed for operations and project investments. We choose to use a portion of our digital assets for buybacks.

Speaker #3: Based on the progress we have made so far, our confidence in securing gigawatt-scale load by the end of 2026 remains intact. We continue to work with all the stakeholders and hope to provide an update when we are in a position to do so.

Speaker #3: Finally, let me discuss capital allocation since the beginning of the second quarter to date. The company has not utilized the ATM program or raised capital.

Speaker #3: Under the existing 30 million share repurchase authorization, we recently monetized a portion of our digital assets and used the proceeds to repurchase the company's ADS.

Speaker #3: We believe that the current share price meaningfully undervalues the company. While retaining the capital needed for operations and the project environment investment, we chose to use a portion of our digital assets for buybacks. We deployed around $2 million in the first quarter and around $5.4 million in August to repurchase our ADS shares.

Nangeng Zhang: We deployed around $2 million in Q1 and around $5.4 million in August to repurchase our ADS shares. In 2026, the company deployed $7.4 million and repurchased approximately 16.4 million ADSs so far. James will provide more details on the execution of digital asset monetization and the buyback. James and I also continue to purchase the company's ADS in the open market this quarter. We remain confident in company's long-term development and the transformation underway, and we hope these purchases further align management interest with those of our shareholders. Digital assets remain an important part of the company's asset allocation. We will continue to evaluate the risks and the rewards of holding digital assets, investing in mining and the power infrastructure, and repurchasing the company's shares.

Speaker #3: In 2026, the company deployed $7.4 million and repurchased approximately 16.4 million US ADSs so far. James will provide more details on the execution of digital asset monetization and the buyback.

Speaker #3: James and I also continued to purchase the company's ADS in the open market this quarter. We remain confident in the company's long-term development and the transformation underway.

Speaker #3: And we hope these purchases further align management's interests with those of our shareholders. Digital assets remain an important part of the company's asset allocation.

Speaker #3: We will continue to evaluate the risks and rewards of holding digital assets, investing in mining and power infrastructure, and repurchasing the company's shares.

Speaker #3: While meeting our operational, operating, and liquidity needs, we will choose the uses of capital that we believe can create the best long-term value per share.

Nangeng Zhang: While meeting our operating and liquidity needs, we will choose the uses of capital that we believe can create the best long-term value per share. Finally, during this quarter, the company completed its transfer to Nasdaq Capital Market and have been granted an additional 180-day grace period to regain compliance with the minimum bid price requirement, with a deadline of 11 January 2027. We will continue to monitor the trading price of our ADS and take necessary actions to regain compliance and maintain the company's listing status. Despite the significant impact of industry volatility on our Q2 financial results, changes in the macro environment have actually strengthened our conviction in Bitcoin as a decentralized financial asset.

Speaker #3: Finally, during this quarter, the company completed its transfer to the NASDAQ Capital Market and has been granted an additional 180-day grace period to regain compliance with the minimum bid price requirement.

Speaker #3: With a deadline of January 11, 2027, we will continue to monitor the trading price of our ADS and take necessary actions to regain compliance and maintain the company's listing status.

Speaker #3: Despite the significant impact of industry volatility on our second quarter financial results, changes in the macro environment have actually strengthened our conviction in Bitcoin as a decentralized financial asset.

Speaker #3: In response to market changes, we manage the inventory expenses and cash flow more strictly while continuing to organize our mining fleet, advance fleet upgrades at project ABC, explore compute-to-heat applications, and prepare Avalon home products for mass production.

Nangeng Zhang: In response to market changes, we manage the inventory, expenses, and cash flow more strictly, while continue to organize our mining fleet, advance fleet upgrades at Project ABC, explore compute-to-heat allocations, and prepare Avalon Home products for mass production. Work on power resources also continued. In addition, we monetized a portion of our digital assets to fund share repurchases. We believe we have come through the most difficult period and were able to sell these digital assets at relatively favorable prices. Looking ahead to Q3, although Bitcoin price recovered somewhat at the end of August, miner procurement remains cautious, and industry inventory still needs to be digested. Some competitors have adopt a more aggressive pricing strategy to speed up cash collection, and we expect miner sales and average selling prices to remain under pressure in Q3.

Speaker #3: Work on power resources also continued. In addition, we monetized a portion of our digital assets to fund share repurchases. We believe we have come through the most difficult period and were able to sell these digital assets at relatively favorable prices.

Speaker #3: Looking ahead to the third quarter, although Bitcoin price recovered somewhat at the end of August, minor procurement remains cautious, and industry inventory still needs to be digested.

Speaker #3: Some competitors have adopted a more aggressive pricing strategy to speed up cash collection. We expect miner sales and average selling prices to remain under pressure in the third quarter.

Nangeng Zhang: Therefore, we remain cautious about the near-term mining machine market. Based on the current market and operating conditions, we expect total revenues for Q3 2026 to be between $11 million and $15 million. This outlook reflects management's current judgment, and actual results may differ due to changes in macroeconomic conditions, policies, Bitcoin prices, and industry demand. That concludes my remarks. Thank you. I will now turn the call over to our CFO, James.

Speaker #3: Therefore, we remain cautious about the near-term mining machine market. Based on the current market and the operating conditions, we expect total revenues for the third quarter of 2026 to be between 11 million US dollars and 15 million US dollars.

Speaker #3: This outlook reflects management's current judgment, and the actual results may differ due to changes in macroeconomic conditions, policies, Bitcoin prices, and industry demand.

Speaker #3: That concludes my remarks. Thank you. I will now turn the call over to our CFO, James.

Speaker #2: Thanks. Thank you, Angie. Hello, everyone. This is James, speaking to you from our Singapore headquarters. Angie just walked you through the market environment and our business progress during the second quarter.

James Jin Cheng: Thank you, Nangeng Zhang. Hello, everyone. This is James Jin Cheng speaking to you from our Singapore headquarters. Nangeng Zhang just walked you through the market environment and our business progress during Q2. To summarize, in H2 of the quarter, Bitcoin prices and hashprice weakened again, miners became more cautious with equipment purchases, and the elevated industry inventory added further pressure on pricing. These pressures directly impacted our financial results. Computing power sold, average selling price, and revenue all declined, while lower market prices also affected the value of our inventory and fixed assets. In this environment, we are not waiting for the market to turn. We are focusing on what we can control. From a financial perspective, we are focused on three things. First, managing cash and maintaining sufficient liquidity. Second, actively allocating capital, including repurchasing our shares when we believe they are significantly undervalued.

Speaker #2: To summarize, in the second half of the quarter, Bitcoin prices and hash price weakened again. Miners became more cautious with equipment purchases, and elevated industry inventory added further pressure on pricing.

Speaker #2: This pressure directly impacted our financial results. Computing power sold, average selling price, and revenue all declined, while lower market prices also affected the value of our inventory and fixed assets.

Speaker #2: In this environment, we are not waiting for the market; we are focusing on what we can control. From a financial perspective, we are focused on three things. First, managing cash and maintaining sufficient liquidity.

Speaker #2: Second, actively allocating capital, including repurchasing our shares when we believe they are significantly undervalued. And third, managing and optimizing our strategic assets so they can generate stronger cash returns over time.

James Jin Cheng: Third, managing and optimizing our strategic assets so they can generate stronger cash returns over time. Let me go through each of these areas. First, cash. As market conditions weakened, we tightened our expense and inventory management and placed even greater emphasis on cash flow. At the end of Q2, we had $66 million in cash, up about $23 million from $43 million at the end of Q1. So despite generating less revenue during the quarter, our cash position improved. During the quarter, we collected $54 million in cash from product sales. We also received $15 million from value-added tax refunds, cash distributions from equity investments, and Bitcoin-backed financing. On the cash outflow side, we used $35 million for operating expenses and working capital, and another $11 million for wafer purchases. We also continued to exercise discipline on expenses.

Speaker #2: Let me go through each of these areas. First, cash. As market conditions weakened, we tightened our expense and inventory management and placed even greater emphasis on cash flow.

Speaker #2: At the end of the second quarter, we had $66 million in cash, up about $23 million from $43 million at the end of the first quarter.

Speaker #2: So despite generating less revenue during the quarter, our cash position improved. During the quarter, we collected $54 million in cash from product sales. We also received $15 million from value-added tax refunds, cash distributions from equity investments, and Bitcoin-backed financing.

Speaker #2: On the cash outflow side, we used $35 million for operating expenses and working capital, and another $11 million for wafer purchases. We also continued to exercise discipline on expenses.

Speaker #2: Total operating expenses were $40 million in the second quarter, including $9.2 million of impairment charges on property, plant, and equipment, and $2.7 million of credit losses.

James Jin Cheng: Total operating expenses were $40 million in Q2, including $9.2 million of impairment charges on property, plant, and equipment, and $2.7 million of credit losses. Excluding these items, operating expenses were $28.2 million, down 9% sequentially and 14% year-over-year. This is consistent with the build-to-order approach that Nangeng Zhang discussed earlier: control new commitments, accelerate collections, manage inventory and working capital, and protect liquidity. In a down cycle, we believe financial resilience itself is a competitive advantage. Second, capital allocation. At the end of Q2, we held 1,915 Bitcoin and 3,952 Ethereum. Based on their carrying value as of 30 June, our digital asset holdings were worth $112 million. Digital assets remain an important part of our asset base, but we do not believe they should simply be held passively.

Speaker #2: Excluding these, that was $28.2 million, down 9% sequentially and 14% year-over-year. This is consistent with the bill-to-order approach that Angie discussed earlier: control new commitments, accelerate collections, manage inventory and working capital, and protect liquidity.

Speaker #2: In a down cycle, we believe financial resilience itself is a competitive advantage. Second, capital allocation. At the end of the second quarter, we held 1,915 Bitcoin and 3,952 Ethereum.

Speaker #2: Based on their carrying value as of June 30, our digital asset holdings were worth $112 million. Digital assets remain an important part of our asset base, but we do not believe they should simply be held passively.

Speaker #2: We continuously compare different uses of capital: holding digital assets, investing in mining and power infrastructure, and repurchasing our own shares. When our shares trade significantly below what we believe to be their long-term intrinsic value, we view share repurchases as an attractive use of capital.

James Jin Cheng: We continuously compare different uses of capital, holding digital assets, investing in mining and power infrastructure, and repurchasing our own shares. When our shares trade significantly below what we believe to be their long-term intrinsic value, we view share repurchases as an attractive use of capital. In late August, we were authorized by our board and sold all our Ethereum holdings and 54 Bitcoin, generating approximately $13.9 million in cash. We used a portion of these proceeds to repurchase our shares. In H1 2026, we repurchased 2.8 million ADSs for about $2 million. In late August, we repurchased an additional 13.6 million ADSs for $5.4 million. Year to date, we have repurchased 16.4 million ADSs for a total consideration of $7.4 million. Third, strategic assets, especially mining sites in the United States. Nangeng Zhang discussed the operational recovery and Bitcoin miner upgrades at Project ABC.

Speaker #2: In late August, we were authorized by our board and sold all our Ethereum holdings and 54 Bitcoins, generating approximately $13.9 million in cash.

Speaker #2: We used a portion of these proceeds to repurchase our shares. In the first half of 2026, we repurchased 2.8 million ADSs for about $2 million.

Speaker #2: In late August, we repurchased an additional 13.6 million ADSs for $5.4 million. Year to date, we have repurchased 16.4 million ADSs for a total consideration of $7.4 million.

Speaker #2: Third, strategic assets, especially mining sites in the United States. Angie discussed the operational recovery and Bitcoin miner upgrade at Project ABC. Let me add a few points from a financial perspective.

James Jin Cheng: Let me add a few points from a financial perspective. During the Q2, we have been upgrading the mining fleet at Project ABC to improve efficiency, received $5.2 million in cash from Project ABC, including sales collections and cash distributions. As of 31 August, cumulative cash received had reached $8.4 million. We would like to thank our partner, WindHQ, for the top-tier management and the result of Project ABC. Their long-term commitment and shared vision give us confidence in the future of ABC. As part of this process, the retirement of older mining machines and the related accounting treatment resulted in a one-time loss. As a result, we recognized approximately $4 million of equity investment losses for Project ABC in the Q2. There is an important distinction here between short-term accounting results and the long-term cash-generating ability of the assets.

Speaker #2: During the second quarter, we've been upgrading the mining fleet at Project ABC to improve efficiency. We received $5.2 million in cash from Project ABC, including sales collections and cash distributions.

Speaker #2: As of August 31st, cumulative cash received had reached $8.4 million. We would like to thank our partner, WindHQ, for their top-tier management and the results of Project ABC.

Speaker #2: Their long-term commitment and shared vision give us confidence in the future of ABC. As part of this process, the retirement of older mining machines and the related accounting treatment resulted in a one-time recognition of approximately $4 million of equity investment losses for project ABC in the second quarter.

Speaker #2: There is an important distinction here between short-term accounting results and the long-term cash-generating ability of the assets. We are not trying to preserve the book value of older equipment.

James Jin Cheng: We are not trying to preserve the book value of older equipment. We are trying to improve asset quality and generate more computing power and better economics from the same energy resources. For Project ABC or other strategic assets, we look beyond the current period earnings. We are focused on the cash the asset can generate and the returns it can produce after optimization. This is also consistent with the broader transformation NG discussed earlier. Let me briefly add a few operating and financial metrics. Total revenue for the Q2 was approximately $32 million. Product revenue was approximately $14 million. We sold 2.5 exahash per second of computing power at an average selling price of $5.50 per terahash per second. Mining revenue was approximately $18 million, with 243 Bitcoin mined during the quarter. Mining accounted for 55% of total revenue.

Speaker #2: We are trying to improve asset quality and generate more computing power and better economics from the same energy resources. So for project ABC, or other strategic assets, we look beyond current period earnings. We are focused on the cash the asset can generate, and the returns it can produce after optimization.

Speaker #2: This is also consistent with the broader transformation Angie discussed earlier. Let me briefly add a few operating and financial metrics. Total revenue for the second quarter was approximately $32 million. Product revenue was approximately $14 million. We sold 2.5 exahash per second of computing power at an average selling price of $5.5 per terahash per second.

Speaker #2: Mining revenue was approximately $18 million, with 243 Bitcoin mined during the quarter. Mining accounted for 55% of total revenue. Excluding depreciation, the gross margin for the mining business was 20%.

James Jin Cheng: Excluding depreciation, the gross margin for the mining business was 20%. These numbers also showed that during a weak market for mining machines, our mining operations have become an important contributor to revenue. Over time, we want to build a business that combines technology and mining machines, Bitcoin mining, power resources, and infrastructure. Next, let me briefly discuss our income statement. Adjusted EBITDA was a loss of $74.9 million in the Q2, broadly in line with the previous quarter. Our results included several significant non-cash accounting adjustments, primarily inventory write-downs, impairment of property, plant, and equipment, and fair value losses on digital assets. These items reflect changes in the mining machine market and digital asset prices during the quarter, but they did not result in an equivalent amount of cash outflow. When we are looking at the quarter, I think it is useful to separate three things.

Speaker #2: These numbers also showed that during a weak market for mining machines, our mining operations have become an important contributor to revenue. Over time, we want to build a business that combines technology and mining machines, Bitcoin mining, power resources, and infrastructure.

Speaker #2: Next, let me briefly discuss our income statement. Adjusted EBITDA was a loss of $74.9 million in the second quarter, broadly in line with the previous quarter.

Speaker #2: Our results included several significant non-cash accounting adjustments, primarily inventory write-downs, impairment of property, plant, and equipment, and fair value losses on digital assets.

Speaker #2: These items reflect changes in the mining machine market and digital asset prices during the quarter, but they did not result in an equivalent amount of cash outflow.

Speaker #2: So, when we're looking at the quarter, I think it is useful to separate three things. First, the real operating impact of weaker demand and lower pricing.

James Jin Cheng: First, the real operating impact of weaker demand and lower pricing. Second, the accounting impact from inventory, fixed assets, digital assets, and investments, a significant portion of which was non-cash. And third, what we are particularly focused on today, cash flow, liquidity, capital allocation, efficiency, and the ability of our assets to generate cash returns. Finally, turning to the Q3. As NG mentioned, although Bitcoin prices have recovered recently, miners remain cautious, industry inventory still needs to be absorbed, and mining machine pricing remains under pressure. As a result, we remain cautious about the near-term market environment. Based on our current market and operating conditions, we expect the total revenue for the Q3 2026 to be between $11 million and $15 million. This outlook reflects our current assessment of market and operating conditions.

Speaker #2: Second, the accounting impact from inventory, fixed assets, digital assets, and investments, a significant portion of which was non-cash. And third, what we are particularly focused on today: cash flow, liquidity, capital allocation efficiency, and the ability of our assets to generate cash returns.

Speaker #2: Finally, turning to the third quarter, as Angie mentioned, although Bitcoin prices have recovered recently, miners remain cautious. Industry inventory still needs to be absorbed, and mining machine pricing remains under pressure.

Speaker #2: As a result, we remain cautious about the near-term market environment. Based on our current market and operating conditions, we expect total revenue for the third quarter of 2026 to be between $11 million and $15 million.

Speaker #2: This outlook reflects our current assessment of market and operating conditions. Actual results may vary depending on changes in the macroeconomic environment, policy developments, Bitcoin prices, and industry demand.

James Jin Cheng: Actual results may vary depending on changes in the macroeconomic environment, policy developments, Bitcoin prices, and industry demand. Let me close with three words that summarize our financial priorities today: cash, value, and assets. First, manage cash, maintain financial discipline and liquidity so that we can navigate through the cycle. Second, manage value, continue to compare different capital allocation opportunities. Where we believe our shares are significantly undervalued, we are prepared to repurchase them to create value for long-term shareholders. Third, manage assets, whether it is our digital assets or Project ABC or the mining and energy infrastructures we are developing, our goal is not simply to own assets. Our goal is to make those assets more efficient, generate cash, and create long-term returns. We will not build our strategy around predicting short-term movements in the price of Bitcoin.

Speaker #2: Let me close with three words that summarize our financial priorities today: cash, value, and assets. First, manage cash—maintain financial discipline and liquidity so that we can navigate through the cycle.

Speaker #2: Second, to manage value, we continue to compare different capital allocation opportunities. When we believe our shares are significantly undervalued, we are prepared to repurchase them to create value for long-term shareholders.

Speaker #2: Third, manage assets. Whether it is our digital assets, or Project ABC, or the mining and energy infrastructures we are developing, our goal is not simply to own assets.

Speaker #2: Our goal is to make those assets more efficient, generate cash, and create long-term returns. We will not build our strategy around predicting short-term movements in the price of Bitcoin.

Speaker #2: What we can do is maintain financial discipline during this difficult market, improve capital allocation, and continuously upgrade the quality of our assets. So, when the next industry cycle comes, we want Canaan to have a stronger balance sheet, higher quality assets, stronger operating capabilities, and greater strategic flexibility.

James Jin Cheng: What we can do is maintain financial discipline during the difficult markets, improve capital allocation, and continuously upgrade the quality of our assets. When the next industry cycle comes, we want Canaan to have stronger balance sheets, higher quality assets, stronger operating capabilities, and greater strategic flexibility. Thank you. We will now open the call for questions.

Speaker #2: Thank you. We will now open the call for questions.

Speaker #1: Thank you, Management. We will now begin the question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced.

Operator: Thank you, management. We will now begin the question and answer session. To ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 1 and 1 again. Please hold while we compile the Q&A roster. First question. The first questions will come from the line of Logan Hannon from Northland. Please go ahead. Your line is open.

Speaker #1: If you wish to cancel your request, please press star one, and then one again. Please hold while we compile the Q&A roster. First question. The first question will come from the line of Logan Hannon from Northland.

Speaker #1: Please go ahead. Your line is open.

Logan Hannon: Hey. Morning, guys. Thanks for taking our question. First one from us, can you provide some additional color to help us understand how we should be thinking about this 1 gigawatt pipeline? For instance, should we expect a dual deployment strategy balancing Bitcoin mine and HPC? If your team does pursue HPC, should we expect Canaan to go the co-location or the GPU cloud rental route? Any color here would be great.

Logan Hennen: Hey. Morning, guys. Thanks for taking our question. First one from us, can you provide some additional color to help us understand how we should be thinking about this 1 gigawatt pipeline? For instance, should we expect a dual deployment strategy balancing Bitcoin mine and HPC? If your team does pursue HPC, should we expect Canaan to go the co-location or the GPU cloud rental route? Any color here would be great.

Speaker #3: Hey, morning, guys. Thanks for taking our question. First one from us: can you provide some additional color to help us understand how we should be thinking about this one-gigawatt pipeline?

Speaker #3: For instance, should we expect a dual deployment strategy balancing Bitcoin mining and HPC? And if your team does pursue HPC, should we expect Canaan to go the co-location or the GPU cloud rental route?

Speaker #3: Any color here would be great.

Speaker #4: Thank you. I will take this one. Yeah, we are currently advancing several power resources projects internally. However, securing and developing power resources involves many steps.

James Jin Cheng: Thank you. I will take this one. We are currently advancing several power resources projects internally. However, securing and developing power resources invoke many steps, and it has become more and more complex. The market attention and the computation are both very high now. Even for the projects that are moving the fastest, currently there are still key matters that need to be completed. As a management team of a public company, we need to be very careful about when we disclose project details. If we disclose too early, it may affect project execution. It may also cause the market to view an ongoing process as a confirmed outcome.

Nangeng Zhang: Thank you. I will take this one. We are currently advancing several power resources projects internally. However, securing and developing power resources invoke many steps, and it has become more and more complex. The market attention and the computation are both very high now. Even for the projects that are moving the fastest, currently there are still key matters that need to be completed. As a management team of a public company, we need to be very careful about when we disclose project details. If we disclose too early, it may affect project execution. It may also cause the market to view an ongoing process as a confirmed outcome.

Speaker #4: And it's become more and more complex. The market and the market attention and the computation are both very high now. Even for the projects that are moving the fastest, currently there are still key matters that need to be completed.

Speaker #4: So as a measurement team of a public company, we need to be very, very careful about when we disclose project details. If we disclose too early, it may affect project execution.

Speaker #4: It may also cost the market to view an ongoing process as a confirmed outcome. So, for the benefit of the company and our shareholders, we do not think it is appropriate at this stage to disclose the exact number and the location of the site.

James Jin Cheng: For the benefit for the company and our shareholders, we do not think it is appropriate at this stage to disclose the exact number and the location of the sites, the power capacity for each project, or specific stage of each project. What we can say is our view from the Q4 2024 earnings call earlier this year based on the progress we have made so far, our confidence in securing gigawatt scale power resources by the end of this year remains unchanged. We will continue to work with the relevant parties and provide updates to the market when we are able to share more specific information. About the co-location or the GPU cloud rent, I think it is still too early to decide whether we will focus on co-location or GPU cloud rental. There are many steps even between we secure the power resources and providing computing services.

Nangeng Zhang: For the benefit for the company and our shareholders, we do not think it is appropriate at this stage to disclose the exact number and the location of the sites, the power capacity for each project, or specific stage of each project. What we can say is our view from the Q4 2024 earnings call earlier this year based on the progress we have made so far, our confidence in securing gigawatt scale power resources by the end of this year remains unchanged. We will continue to work with the relevant parties and provide updates to the market when we are able to share more specific information. About the co-location or the GPU cloud rent, I think it is still too early to decide whether we will focus on co-location or GPU cloud rental. There are many steps even between we secure the power resources and providing computing services.

Speaker #4: The power capacity for each project, or specific stage of each project, what we can say is our view from the Q4 2025 earnings call earlier this year.

Speaker #4: Based on the progress we have made so far, our confidence in securing gigawatt-scale power resources by the end of this year remains unchanged.

Speaker #4: We will continue working with the relevant parties and provide updates to the market when we are able to share more specific information. Yeah.

Speaker #4: And about the co-location or the GPU cloud rent, I think it's still too early to decide whether we will focus on co-location or GPU cloud rental.

Speaker #4: There are many, many steps even between when we secure the power resources and when we provide computing services. So for a project of meaningful scale, we normally need different parties to work together.

James Jin Cheng: For a project of meaningful scale, we normally need different parties to work together. Many different parties, including capital providers, engineering contractors, and other resources partners. Which parts Canaan will participate in and what type of partnership we will use will depend on the specific project. Our approach is to use the capabilities and resources we already have, participate where we can add value, and work with partners that bring complementary strengths. We do not assume that we need to manage the entire chain from the power to computing services by ourselves. We will not make investments beyond our capabilities or capital capacity to adjust to build an end-to-end model. At this stage, our main focus is still on advancing long-term cost-advanced power resources.

Nangeng Zhang: For a project of meaningful scale, we normally need different parties to work together. Many different parties, including capital providers, engineering contractors, and other resources partners. Which parts Canaan will participate in and what type of partnership we will use will depend on the specific project. Our approach is to use the capabilities and resources we already have, participate where we can add value, and work with partners that bring complementary strengths. We do not assume that we need to manage the entire chain from the power to computing services by ourselves. We will not make investments beyond our capabilities or capital capacity to adjust to build an end-to-end model. At this stage, our main focus is still on advancing long-term cost-advanced power resources.

Speaker #4: There are many different parties involved, including capital providers, engineering contractors, and other resource partners. Which parts Canaan will participate in, and what type of partnership we will use, will depend on the specific project.

Speaker #4: Our approach is to use a competitive advantage and resources we already have, participate where we can add value, and work with partners that bring complementary strengths.

Speaker #4: We do not assume that we need to manage the entire chain from the power to computing services by ourselves. And we will not make investments beyond our capabilities or capital capacity to adjust or build an end-to-end model.

Speaker #4: So, at this stage, our main focus is still on advancing long-term, cost-advanced power resources. As the projects become clearer, we will evaluate the most suitable business model and level of participation.

Nangeng Zhang: As the projects become clear, we will evaluate the most suitable business model and level for participation. For now, we do not think it is appropriate to make a firm choice between these two routes. Thank you.

Speaker #4: So, for now, we do not think it's appropriate to make a firm choice between these two routes. Yeah, thank you.

Logan Hannon: Thank you. Yeah, we appreciate the color there. Can you formally remind us, how is Canaan strategically positioned versus peers to secure and develop power for HPC? It seems like you guys will likely go more the development partner route, but should we expect any upcoming hires to build a DAS and development team internally? Thank you.

Logan Hennen: Thank you. Yeah, we appreciate the color there. Can you formally remind us, how is Canaan strategically positioned versus peers to secure and develop power for HPC? It seems like you guys will likely go more the development partner route, but should we expect any upcoming hires to build a DAS and development team internally? Thank you.

Speaker #3: Thanks. Thank you. Yeah, we appreciate the color there. Can you kind of formally remind us, how is Canaan strategically positioned versus its peers to secure and develop power for HPC?

Speaker #3: And it seems like you guys will likely go more the development partner route, but should we expect any upcoming hires to build a DAS and development team internally?

Speaker #3: Thank you.

Speaker #4: Yeah, I think our advantage first comes from the practical experience. We have been building in Bitcoin mining over the past several years. Mining requires us to work with many types of power providers.

Nangeng Zhang: Yeah. I think our advantage first comes from the practical experience we have built in Bitcoin mining over the past several years. Mining requires us to work with many types of power providers and to evaluate sites across different regions. The US is a very large market, and our local team has spent years visiting mining sites and advancing projects. Through this work, we have developed a better understanding of how power infrastructure works, the power conditions in different regions, and how to work with our local partners. We have also built relevant resources and relationships. Since late 2024, our strategy has gradually shifted from mainly adopting partnerships to increasing the amount of assets we own directly. We want to have more control over long-term power resources and the site operations.

Speaker #4: And to evaluate sites across different regions. The US is a very large market, and our local team has spent years visiting mining sites and advancing projects.

Speaker #4: Through this work, we have developed a better understanding of how power infrastructure works, the power conditions in different regions, and how to work with local partners.

Speaker #4: We have also built relevant resources and relationships. So, since late 2024, our strategy has gradually shifted from mainly adopting partnerships to increasing the amount of assets we own directly.

Speaker #4: We want to have more control over long-term power resources and site operations. This direction is based on the needs of our own business and started before the market's broader focus on AI and HPC.

Nangeng Zhang: This direction has based on the needs of our own business and started before the market's broader focus on AI and HPC. As the market attention has moved more towards AI and HPC, we see strong continuity with our existing direction of funding long-term, stable, cost-advanced, and scalable power resources. Our past experience, resources, and local relationships can continue to support us and give us a good starting point that we expand into this area. Of course, HPC has higher infrastructure requirements, so each project still needs to be evaluated and developed based on its actual use cases. Changing the markets also affect competition for power resources and project economics. We will also adjust our evaluation and the execution approach as needed. We will continue to focus on long-term cost and investment returns. Thank you.

Speaker #4: So, as the market attention has moved more towards AI and HPC, we see strong continuity with our existing direction of funding long-term, stable-cost, advanced and scalable power resources.

Speaker #4: Our past experience, resources, and local relationships can continue to support us and give us a good starting point as we expand into this area.

Speaker #4: Of course, HPC has higher infrastructure requirements, so each project still needs to be evaluated and developed based on its actual use cases. Changing the markets also affects competition for power resources and the project economics.

Speaker #4: We will also adjust our evaluation and execution approach as needed. We will continue to focus on long-term cost and investment returns. Thank you.

Speaker #3: Great. Rest of the third quarter.

Logan Hannon: Great. Thank you, Nangeng Zhang. That was very helpful. Good luck the rest of the Q3.

Logan Hennen: Great. Thank you, Nangeng Zhang. That was very helpful. Good luck the rest of the Q3.

Speaker #2: Thank you for the question. One moment for our next question. The next questions will come from the line of Kevin Cassidy from Rosenblatt Securities.

Operator: Thank you for the question. One moment for our next question. The next questions will come from the line of Kevin Cassidy from Rosenblatt Securities. Your line is open. Thank you.

Speaker #2: Your line is open. Thank you.

Speaker #5: Yes, thank you for taking my question. With your internal mining fleet improving energy efficiency, can you tell us what percentage efficiency increase you expect to see by next year?

Kevin Cassidy: Yes, thank you for taking my question. With your internal mining fleet improving energy efficiency, can you tell us a percentage in efficiency increase you should see by next year?

Nangeng Zhang: Oh, I think you are asking about the mining machine efficiency, right?

Speaker #4: Oh, I think you're asking about the mining machines' efficiency, right? Yeah. Currently, yeah. Okay. Yeah, yeah. I think for the first—the A15, older machines—we are at, like, four, I think it's 15.8 to 17.8 joules per terahash.

Kevin Cassidy: Yes.

Nangeng Zhang: Yeah. Currently, yeah. Okay. Yeah. I think the first, the A15 older machines, we are at, I think it is 15.8 to 17.8 joules per terahash. The next level is our A16. We have 12.8 joules per terahash to 16.8. It is already our cost-effective models, so there are a huge advantage for these kind of machines. Yeah. For our mining fleet, we have plans to deploy at least a part of the A16 machines to our mining fleets next year. So currently, our all-in power cost was about 4.3 cents per kilowatt hour. Still, we have a positive cash contribution. For next year, if you have reviewed the total network hashrate, I think it is declining for a few quarters already. So it is quite easy to calculate the income for mining projects.

Speaker #4: And the next level is our A16. We have about 12.8 joules per terahash. Up to 16.8, it's already our cost-effective model. So there is a huge advantage for these kinds of machines.

Speaker #4: Yeah. For our mining fleet, we have plans to deploy at least a part of the 60 machines to our mining fleets next year. Currently, our OEM power cost is about 4.3 cents per kilowatt-hour.

Speaker #4: And still, we have a positive cash contribution. For the next year, if you have reviewed the total network hash rate, I think it's been declining for a few quarters already.

Speaker #4: So it's quite easy to calculate the income for mining projects. And we assume we will upgrade a significant percent of our machines from the old ones to the more advanced and also cost-effective models next year.

Nangeng Zhang: And we assume we will upgrade a significant percent of our machines from the old one to the more advanced and also cost-effective models next year. I hope I answered your question. Thank you.

Speaker #4: Yeah, I hope I answered your question. Thank you.

Kevin Cassidy: Yeah, that helps a lot. Thank you. And then just on the power pipeline, are you still pursuing, looking for stranded power around the world? I guess if you could talk more about that development.

Speaker #5: Yeah, that helps a lot. Thank you. And then, just on the power pipeline, are you still pursuing or looking for stranded power around the world? Or, I guess, if you could talk more about that development?

Nangeng Zhang: Stranded power.

Speaker #4: Yes. It's about.

James Jin Cheng: Yeah.

Nangeng Zhang: It's a lot of-

James Jin Cheng: Yeah

Nangeng Zhang: a lot of questions.

James Jin Cheng: I think, Kevin, we are always actively exploring and evaluating stranded power, trying to seek for opportunities. But of course, from different perspectives, it takes quite a long time to evaluate the opportunities. It is not easy to find the partners like Cipher Mining, Cipher Digital or WindHQ. Those partners in Project ABC, they supported us. They do good deals with us in a transparent way, in a fair way. It is not easy every time we can find this kind of good partners. What we do is, we mainly look at the long-term power cost, site stability, expansion potential, grid access, and the local policies and the regulatory conditions. We also try to evaluate the best use for each site, including mining and where it is suitable potential HPC applications together with the additional equipment and the investment required.

Speaker #6: I think, Kevin, we are always actively exploring and evaluating stranded power, trying to seek opportunities. But, of course, from different perspectives, it takes quite a long time to evaluate the opportunities.

Speaker #6: And it's not easy to find partners like Cyber Mining, Cyber Digital, or Wind HQ. Those partners in project ABC supported us. They do good deals with us in a transparent way.

Speaker #6: In a fair way. It's not easy every time we can find this kind of good partners, so what we do is we mainly look at the long-term power cost, site stability, expansion potential, and agreed access.

Speaker #6: And the local policies and the regulatory conditions—we also try to evaluate the best use for each site, including mining, and where it is suitable, potential HPC.

Speaker #6: Applications, together with the additional equipment and the investment required. So currently, we stay open-minded while maintaining our capital discipline. No matter if it is through acquisition, through JV, or joint development, we will only move forward when the risk and the return are attractive.

James Jin Cheng: Currently we stay open-minded while maintaining our capital discipline. No matter through acquisition, through JV or joint development, we will only move forward when the risk and the return are attractive and the project can improve the quality of our long-term assets and operating flexibility. I should say currently, we have not yet dealed another one, just like Project ABC. But we do have some projects under discussion. We continue the strategy of expanding in North America, especially United States. I think this strategy remains same. We will do more, but we do it cautiously, slowly with all kinds of evaluations done, but not immediately jump to many deals. I think, the capital allocation is also in a very cautious way. Kevin, I do not know if I answered your question.

Speaker #6: And the project can improve the quality of our long-term assets and operating flexibility. So I should say, currently we haven't yet dealt another one just like Project ABC.

Speaker #6: But we do have some projects under discussion. We continue the strategy of expanding in North America, especially the United States. I think this strategy remains the same.

Speaker #6: We will do more, but we will do it cautiously and slowly, with all kinds of evaluations done. We will not immediately jump to many deals. And I think the capital allocation is also being handled in a very cautious way.

Speaker #6: Kevin, I'm not sure if I answered your question.

Speaker #5: No, that's very clear. Thank you.

Kevin Cassidy: No, that is very clear. Thank you.

Speaker #6: Thank you.

James Jin Cheng: Thank you.

Speaker #4: Thank you.

Nangeng Zhang: Thank you.

Operator: One moment for our next question. The next questions will come from the line of Ben Sommers from BTIG. Your line is open. Please go ahead.

Speaker #2: One moment for our next question. The next questions will come from the line of Ben Sommers from BTIG. Your line's open. Please go ahead.

Ben Sommers: Hey. Yeah, thank you guys for taking my questions. I appreciate the commentary on the current state of the product market. With Bitcoin prices up around 20% over the past month, just curious if you've seen any positive implications for the global demand for mining machines.

Speaker #7: Hey, yeah. Thank you, guys, for taking my questions, and I appreciate the commentary on the current state of the product market. So, with Bitcoin prices up around 20% over the past month, I’m just curious if you’ve seen any positive implications for the global demand for mining machines?

James Jin Cheng: Global demand.

Speaker #4: Global demand?

Nangeng Zhang: Global demand, yeah. Global demand, to be frank, from this meeting, mining rig demand outside the US is also very weak at the moment. Weaker mining economics, together with the policy developments, and the geopolitical conditions in some regions, have affected customers' willingness and ability to invest. We have not yet seen a meaningful improvement in overall demand. One specific area of progress we can share is ESG-related applications, particularly compute-to-heat. Our Nordic heating products already have 2 megawatts of equipment in operation, and customer ordered another 6 megawatts in March this year. These products combined with mining rigs are real heating demand. The same energy input produce both computing power and useful heat. We will continue to develop these kind of applications. But the market is still at an early stage, and small scale.

Speaker #7: Globally, yeah. Yeah. Yeah. Global demand.

Speaker #4: To be frank, frankly speaking, mining risk demand outside the US is also very, very weak at the moment. We heard that mining economics, together with policy development and the geopolitical conditions in some regions, have affected customers.

Speaker #4: And the ability to invest. We have not yet seen a meaningful improvement in overall demand. One specific area of progress we can share is ESG-related applications.

Speaker #4: Particularly, Computer Heat. Our Nordic heating projects already have 2 megawatts of equipment in operation, and the customer ordered another 6 megawatts in March this year.

Speaker #4: These projects combined mining with real heating demand, so the same energy input produced both computing power and usable heat. We will continue to develop this kind of application.

Speaker #4: But the market is still at an early stage and on a small scale, so this does not yet indicate a broader recovery in demand outside the US.

Nangeng Zhang: This does not yet indicate that broader recovery in demand outside the US. Thank you.

Speaker #4: Thank you.

Ben Sommers: Super helpful. I just wanted to touch a little bit on the Avalon Home series. It seems like you guys are making some positive developments here, but can you just talk a little bit more about what you are seeing for those machines? I think you guys mentioned some product developments there that could help potential winter seasonality. If you could just talk a little bit more about that.

Speaker #5: That's very helpful. I also wanted to touch a little bit on the Avalon Home series. It seems like you guys are making some positive developments here.

Speaker #5: But can you just talk a little bit more about what you were seeing for those machines? And I think you guys mentioned some product developments there that could help potential winter seasonalities—if you could just talk a little bit more about that.

Speaker #4: Yeah, yeah. Avalon Home is a consumer product line that we have committed to developing. In Q2, it generated approximately $1 million in revenue.

Nangeng Zhang: Yeah. Avalon Home is a consumer product line that we have committed to developing. In Q2, it generated approximately USD 1 million in revenue. It is still relatively small. I think the long-term value lies on serving household users by combining computing and heating, which can broaden our customer base and revenue resources over time. After the heating season ended, sales of our home products came down. At first I was a little disappointed. But then we realized that this may actually show that consumers are really using this product to heat other heating devices. After all, it is not very easy to sell heaters in summer. It reminds us that we need to understand the use cases and the seasonality of this kind of business as a true consumer product business. We began preparing new products for this year. Heating season in Q2 and in Q3.

Speaker #4: So it is still relatively small. I think its long-term value lies in serving household users by combining computing and heating, which can broaden our customer base and revenue sources over time.

Speaker #4: After the heating season ended, sales of our home products came down. At first, I was a little disappointed, but then we realized that this may actually show that consumers are really using these products as heating devices.

Speaker #4: After all, it's not very easy to sell heaters in the summer. So it reminds us that we need to understand the use cases and the seasonality of this kind of business as a true consumer product business.

Speaker #4: So, we began preparing new products for this year—heating season in Q2 and in Q3. Currently, we are working on preparations for mass production.

Nangeng Zhang: Currently, we are working on preparations for mass production, with plans to launch new products and updates during the Christmas shopping season. Most of our key product line will receive updates, and we may also introduce additional products. At the same time, we will focus on sales channels, after-sales service, and user community. Continue to improve the noise levels. Yeah, easy for use and many different kind of stuff related to the consumer product. We hope Avalon Home will grow its revenue and contribution to the company and become a consumer business with lasting value. I think it is still too early to give a specific revenue mix target. Its shares of total revenue will also depend on heating seasonality and changes in our other business. But for now, the priority to get the product experience and the business fundamentals right.

Speaker #4: We plan to launch new products and updates during the Christmas shopping season, so most of our key product lines will receive updates, and we may also introduce additional products.

Speaker #4: So at the same time, we will focus on sales channels, after-sales service, and user community. We will continue to improve the noise levels, ease of use, and many different kinds of things related to the consumer product.

Speaker #4: So yeah, we hope Avalon Home will grow its revenue and contribution to the company and become a consumer business with lasting value. Yeah, so I think it's still too early to give a specific revenue mix target.

Speaker #4: Its share of total revenue will also depend on heating seasonality and changes in our other businesses. But for now, the priority is to get the product experience and the business fundamentals right.

Speaker #4: So growth is supported by real household demand. I hope I answered your question. Thank you.

Nangeng Zhang: Growth is supported by real household demand. I hope I answered your question. Thank you.

Ben Sommers: Helpful. Thank you for taking my questions.

Speaker #5: Very helpful. Thank you for taking my questions.

Speaker #2: Thank you for the questions. As a reminder, to ask a question, please press star one and wait for your name to be announced.

Operator: Thank you for the questions. As a reminder, to ask question, please press star 1 and 1 and wait for your name to be announced. Our next question comes from the line of Nick Giles of B. Riley Securities. Your line is open. Please go ahead.

Speaker #2: Our next question comes from the line of Nick Jowles of B. Riley Securities. Your line is open. Please go ahead.

Speaker #6: Thank you for taking my questions. This is Bill Chen for Nick Jowles. First, I want to congratulate you on maintaining a positive cash contribution from mining in this pressured pricing environment.

Bill Chen: Thank you for taking my questions. This is Bill Chen for Nick Giles. First I want to congrats on the maintaining positive cash contribution from mining in this pressured pricing environment. I guess on the share repurchase program, with approximately USD 7.4 million deployed against the, I think the total of USD 30 million authorization. What is your expectation for the pace of repurchases between now and the program's expiration in mid-December? I guess any color on how you are balancing the capital allocation strategy against liquidity preservation would be appreciated. Thank you.

Speaker #6: I guess on the share repurchase program, with approximately $7.4 million deployed against, I think, the total of $30 million authorization, what's your expectation for the pace of repurchases between now and the program's expiration in mid-December?

Speaker #6: And I guess any color on how you're balancing the capital allocation strategy against liquidity preservation would be appreciated. Thank you.

Speaker #4: Thank you, Bill. I think you asked a very forward-looking question about the future stock repurchase. Currently, I think it's difficult to answer because in September, we will see a lot of activities in the United States, especially on September 15. The senator will start to vote for the Clarity Act.

Nangeng Zhang: Thank you, Bill. I think you asked a very forward-looking question about the future stock repurchase. Currently, I think it is difficult to answer because in September we will see a lot of activities in the United States, especially on 15 September, the senator will start to vote for Clarity Act. We do not know if it passed, then what will happen to our industry. That could make the Bitcoin price jump very high. Our share price could fluctuate together with the Bitcoin price. So, it is depending on what kind of a share price we will trade in the market. It depends on how we consider it is better to do some allocation to do stock repurchase. So it is difficult to predict the pace. To be very honest, as CEO and I myself, we have already purchased to get more shares of the company.

James Jin Cheng: Thank you, Bill. I think you asked a very forward-looking question about the future stock repurchase. Currently, I think it is difficult to answer because in September we will see a lot of activities in the United States, especially on 15 September, the senator will start to vote for Clarity Act. We do not know if it passed, then what will happen to our industry. That could make the Bitcoin price jump very high. Our share price could fluctuate together with the Bitcoin price. So, it is depending on what kind of a share price we will trade in the market. It depends on how we consider it is better to do some allocation to do stock repurchase. So it is difficult to predict the pace. To be very honest, as CEO and I myself, we have already purchased to get more shares of the company.

Speaker #4: We don't know if it's passed, then what will happen. To our industry, that could make Bitcoin price jump very high. And also, our share price could fluctuate together with the Bitcoin price.

Speaker #4: So it depends on what kind of share price we will trade at in the market. And it depends on how we consider it's better to do some allocation to do stock repurchase.

Speaker #4: So it's difficult to predict the pace. But to be very honest, as CEO—and I myself—we have already purchased more shares of the company.

Speaker #4: We do have strong confidence that, in the second half, our share price should come back again with some good trajectory, even though we are currently under the restriction of Nasdaq compliance requirements.

Nangeng Zhang: We do have strong confidence that in the second half, our share price should come back again with some good trajectory. Even we are currently under the restriction of NASDAQ compliance requirement. So we better to regain compliance very soon. That is why we consider stock repurchase is something we need to put a lot of efforts.

James Jin Cheng: We do have strong confidence that in the second half, our share price should come back again with some good trajectory. Even we are currently under the restriction of NASDAQ compliance requirement. So we better to regain compliance very soon. That is why we consider stock repurchase is something we need to put a lot of efforts trying to make sure we do and we allocate funds to do. That is why we discussed with our board, and we got the authorization from them, and say management can start to sell the digital assets to generate cash and to repurchase. I think our board understands the shareholder value quite well. They support us to do this, and we are together with our shareholders, and we are the shareholders.

Speaker #4: So we better regain compliance very soon. That's why we consider a stock repurchase as something we need to put a lot of effort into, making sure we do, and we allocate funds to do this.

James Jin Cheng: trying to make sure we do and we allocate funds to do. That is why we discussed with our board, and we got the authorization from them, and say management can start to sell the digital assets to generate cash and to repurchase. I think our board understands the shareholder value quite well. They support us to do this, and we are together with our shareholders, and we are the shareholders. We will do everything we can to do, but not within September, the particular month, but through the whole H2 or even future. I think that is our commitment. That is my answer. Thank you, Bill.

Speaker #4: And that's why we discussed with our board, and we got the authorization from them, and said management can start to sell the digital assets to generate cash and to repurchase.

Speaker #4: I think our board understands shareholder value quite well. They support us in doing this, and we are together with our shareholders — we are the shareholders.

Speaker #4: So we will do everything we can to do. But not within September, the particular months, but through the whole second half year or even future.

James Jin Cheng: We will do everything we can to do, but not within September, the particular month, but through the whole H2 or even future. I think that is our commitment. That is my answer. Thank you, Bill.

Speaker #4: So I think that's our commitment. That's my answer. Thank you, Bill.

Speaker #6: Yeah. Thanks so much for the answer. I guess maybe one more if I could. Specifically on the project ABC, we'd love to see all the progress in given now it has reached 4.85 acts of hash.

Bill Chen: Yeah. Thanks so much for the answer. I guess maybe one more, if I could. Specifically on the Project ABC, we would love to see all the progress. Given now it has reached 4.85 exahash, what is the next milestone or target for the project? If there is a rough timeline you can provide. Thanks so much.

Speaker #6: What's the next milestone or target for the project? And if there's roughly a timeline you can provide, that would be helpful. Thanks so much.

Speaker #4: Yeah. I think yeah, we have been actively exploring and evaluating this type of opportunity. But the if the power cost we need the power cost stability scalability and the grid access are suitable.

James Jin Cheng: Yeah. I think we have been actively exploring and evaluating this type of opportunity. If the power cost, we need the power cost, stability, scalability, and the grid access are suitable. We can use mining as a flexible load to push the resources to work relatively quickly. If the site conditions allow, we have the flexibility for other computing load in the future. Yeah. Our approach is stay open-minded while maintaining capital discipline. Whether through an acquisition, JV, or joint development, we will only forward when the risk and the returns are attractive and the project can improve the quality of our long-term assets and the operating flexibility.

Nangeng Zhang: Yeah. I think we have been actively exploring and evaluating this type of opportunity. If the power cost, we need the power cost, stability, scalability, and the grid access are suitable. We can use mining as a flexible load to push the resources to work relatively quickly. If the site conditions allow, we have the flexibility for other computing load in the future. Yeah. Our approach is stay open-minded while maintaining capital discipline. Whether through an acquisition, JV, or joint development, we will only forward when the risk and the returns are attractive and the project can improve the quality of our long-term assets and the operating flexibility.

Speaker #4: We can use mining as a flexible load to push the resources to work relatively quickly. So if the site conditions allow, we also have the flexibility for other competing loads in the future.

Speaker #4: So, yeah, our approach is to stay open-minded and maintain disciplined capital deployment. Whether through authorization, JV, or joint development, we will only move forward when the risk-return profile is attractive and the project can improve the quality of our long-term assets and operating flexibility.

James Jin Cheng: We do have a very good machine, even maybe still at the wafer level, but we can manufacture machines in a relatively short time and deploy them into new sites if we find somewhere it can fulfill our requirements. Currently, I think it is still at some stage of a bear market. Yeah. It is not a bull market, right? So investment is very, very, we will have very high cautious in investment and consume our cash flow to do this kind of project. Currently, we are still evaluating the resources and wait for the best timing to get the scale-up of our mining fleets, include upgrade the machines. Thank you. I hope I answered your question.

Nangeng Zhang: We do have a very good machine, even maybe still at the wafer level, but we can manufacture machines in a relatively short time and deploy them into new sites if we find somewhere it can fulfill our requirements. Currently, I think it is still at some stage of a bear market. Yeah. It is not a bull market, right? So investment is very, very, we will have very high cautious in investment and consume our cash flow to do this kind of project. Currently, we are still evaluating the resources and wait for the best timing to get the scale-up of our mining fleets, include upgrade the machines. Thank you. I hope I answered your question.

Speaker #4: We have we do have very good machine even maybe still as the wafer level. But we can manufacture machines in a relatively short time.

Speaker #4: ...to and deploy them into new sites if we find somewhere that can fulfill our requirements. But currently, I think it's still at some stage of the bear market.

Speaker #4: Yeah, it's not a bull market, right? So, for investment, we will be very, very cautious, and the consumer needs to cover cash flow to do this kind of project.

Speaker #4: So currently, we are still evaluating the resources. And the wait for the best timing to get the scale up of our mining fleets include upgrade the machines.

Speaker #4: Thank you. I hope I answered your question.

Speaker #6: Yeah, yeah. Thanks. Thanks for the detailed answer, and I'll continue. Best of luck.

Bill Chen: Yeah. Thanks for the detailed answer, and continue. Best of luck.

Speaker #2: Thank you for the question. We will now take the last questions. One moment, please. Our next question comes from Michael Donovan of Compass Point.

Operator: Thank you for the question. We will now take the last questions. One moment, please. Our next question comes from Michael Donovan of Compass Point. Your line is open. Please go ahead.

Speaker #2: Your line is open. Please go ahead.

Ian Generes: Hello, this is Ian Generes dialing in for Michael Donovan. Thank you for taking our questions. Firstly, on potential JV partners, what type of companies are you engaging with today? Are prospective AI customers already involved in evaluating these sites? Additionally, what requirements are they emphasizing, and would you expect to secure customer commitment before making a significant development investment?

Ian Generous: Hello, this is Ian Generes dialing in for Michael Donovan. Thank you for taking our questions. Firstly, on potential JV partners, what type of companies are you engaging with today? Are prospective AI customers already involved in evaluating these sites? Additionally, what requirements are they emphasizing, and would you expect to secure customer commitment before making a significant development investment?

Speaker #5: Hello, this is Ian Generous dialing in for Michael Donovan. Thank you for taking my questions. Firstly, on potential JV partners, what type of companies are you engaging with today?

Speaker #5: And are prospective AI customers already involved in evaluating these sites? Additionally, what requirements are they emphasizing and what would you expect to secure would you expect to secure customer commitment before making a significant development investment?

James Jin Cheng: Yeah, we are open to using JVs or development partners. From securing power resources to building infrastructure, and finally providing computing services. Different stages require different capabilities and capital. So for each project, we will choose a structure that allow all parties to contribute their strengths. Canaan has always valued working with partners. Our past joint mining projects as well as Project ABC with WindHQ.

Nangeng Zhang: Yeah, we are open to using JVs or development partners. From securing power resources to building infrastructure, and finally providing computing services. Different stages require different capabilities and capital. So for each project, we will choose a structure that allow all parties to contribute their strengths. Canaan has always valued working with partners. Our past joint mining projects as well as Project ABC with WindHQ have given us a useful experience at Project ABC. We combine our mining machine and the technology capabilities with our partner's site operations and power management experience. Together, we are upgrading the fleets and improve the project's cash returns. This experience can also support future partnerships. I think since late 2024, we have gradually increased the amount of assets we own directly. This does not mean that we need to do everything by ourselves.

Speaker #4: Yeah, we are open to using GVs or development partners, from securing power resources to building infrastructure, and finally providing computer services. Different stages require different capabilities and capital.

Speaker #4: So for each project, we will choose a structure that allows all parties to contribute their strengths. Canaan has always valued working with partners. Our past joint mining projects, as well as project ABC with WindHQ, have given us useful experience at project ABC.

Nangeng Zhang: Have given us a useful experience at Project ABC. We combine our mining machine and the technology capabilities with our partner's site operations and power management experience. Together, we are upgrading the fleets and improve the project's cash returns. This experience can also support future partnerships. I think since late 2024, we have gradually increased the amount of assets we own directly. This does not mean that we need to do everything by ourselves. We want to have more control over our core assets and the long-term resources, whilst we are working with partners that can bring complementary competitive and resources. For future projects, we will not limit ourselves to advance to a JV, joint development, or any other structures are acceptable. We will focus on how investment and the responsibilities are shared.

Speaker #4: We combine our mining machines and technology capabilities with our partner site operations and power management experience. Together, we are upgrading the fleets and improving the projects' cash returns.

Speaker #4: This experience can also support future partnerships. I think since late 2024, we have gradually increased the amount of assets we own directly. But this does not mean that we need to do everything by ourselves.

Speaker #4: So we want to have more control over core assets and the long-term resources. While still working with partners that can bring complementary capabilities and the resources.

Nangeng Zhang: We want to have more control over our core assets and the long-term resources, whilst we are working with partners that can bring complementary competitive and resources. For future projects, we will not limit ourselves to advance to a JV, joint development, or any other structures are acceptable. We will focus on how investment and the responsibilities are shared. Whether the risk Canaan takes, it matches by the return we can earn, our final decision will always be based on the long-term shareholders' interest and the value per share. Currently, we do not have any specific partnership agreements that we can disclose. Thank you.

Speaker #4: So for future projects, we will not limit our sales in advance to a JV. Joint development or any other structures are flexible. So we will focus on how investment and responsibilities are shared.

Speaker #4: So, whether the risk can and does match the return we can earn, our final decision will always be based on the long-term shareholders' interests and the value per share.

Nangeng Zhang: Whether the risk Canaan takes, it matches by the return we can earn, our final decision will always be based on the long-term shareholders' interest and the value per share. Currently, we do not have any specific partnership agreements that we can disclose. Thank you.

Speaker #4: Yes. However, currently, we do not have any specific partnership agreements that we can disclose. Thank you.

Speaker #5: That's great color. Thank you. And then lastly, if I may, more strategically, how should we think about the allocation of capital and management resources between pursuing the AI-powered land opportunity and the core Bitcoin mining business?

Ian Generes: That's great color. Thank you. Lastly, if I may, more strategically, how should we think about the allocation of capital and management resources between pursuing the AI-powered land opportunity and the core Bitcoin mining business?

Ian Generous: That's great color. Thank you. Lastly, if I may, more strategically, how should we think about the allocation of capital and management resources between pursuing the AI-powered land opportunity and the core Bitcoin mining business?

Nangeng Zhang: Let me think. I think for currently, we have already invested in the Bitcoin mining machines, key core parts like the chips. We already have them in our inventory or our partners' inventory. When we have the clear opportunities to deploy the mining machines to have good cash returns in the future, then we will do it. For the data center, I just mentioned, we are very open to do any kind of partnerships with third parties, with any kind of companies can contribute their benefits to the projects. To be clear, we are not going to do the end-to-end projects by ourselves, because I think to develop a meaningful scale of AI HPC data center needs a lot of capitals, which may be out of our capital capabilities. I think overall, our first priority is the interest of our shareholders.

Speaker #4: I mean, let me think. I think for currently, we have already invested in the Bitcoin mining machines core parts like the wafers. We already have them in our inventory or our partner's inventory.

Speaker #4: Yeah. So when we have clear opportunities to deploy the many machines to have good cash returns in the future, then we will do it.

Speaker #4: For the data center I just mentioned, we are very open to doing any kind of partnerships with partners, with third parties, with any kind of companies that can contribute their benefits to the project.

Speaker #4: We are not—to be clear—we are not going to do the end-to-end projects by ourselves. Because I think to develop a meaningful scale of HPC, AI HPC data center, needs a lot of capital.

Speaker #4: We should maybe act out of our capital capabilities. So, yeah, I think overall, our first priority is the interest of our shareholders. What kind of benefits we can get for every share is the most important part.

Nangeng Zhang: What kind of benefits we can get for every share is the most important part. Thank you.

Speaker #4: Yeah. Thank you.

Speaker #3: Yeah. I would like to add some color on this. As Angie mentioned, we do have an inventory of mining machines now. So when we create new mining corporations, this can be injected into the projects as a kind of capacity investment.

James Jin Cheng: I would like to add some color in this. As Nangeng Zhang mentioned, we do have the inventory of mining machines now. So, when we do some new mining corporations, this can be injected to the projects as a kind of CapEx investment and without spending any cash. So, for the new HPC data center or this kind of power infrastructure things, sometimes we have to use some cash as a deposit to secure some opportunities. That is something we do. We spend some of the money, we allocate some of the money as a deposit to secure some of the opportunities. That is what we are doing now. I think from a long-term perspective, we will continue to balance between the different business, and we will utilize our technology in the mining machine side and do mining operations.

Speaker #3: And without spending any cash. So for the new HPC data center or this kind of power infrastructure things, sometimes we have to use some cash as a deposit to secure some opportunities.

Speaker #3: That's something we do. We spend some of the money we allocate some of the money as deposit to secure some of the opportunities. That's what we are doing now.

Speaker #3: I think from a long-term perspective, we will continue to balance between the different business. And we will utilize our technology in the mining machine side and the mining do mining operations.

Speaker #3: And on the other side, I think step by step, we start from initial capital on a kind of small scale. But in the future, with pipelines of different projects in the air, we will see, step by step, that we accumulate more and more assets. With these assets, we can use them as collateral to leverage and get more funds to sponsor the business in the data center part.

James Jin Cheng: In the other side, I think step by step, we start from initial capital in a kind of a smaller scale. But in future, with pipelines, with different projects on air, we will see step by step, we accumulate more and more assets. With these assets, we can use these assets as collateral to leverage to get more funds to sponsor the business in the data center part. I think that is something in future, step by step, we will reach there. But first of all, we should try to secure gigawatts level power. With this on hand, then we can start to talk about the next step. As Nangeng Zhang mentioned, we do have the long-term ambition, but in short term, we will not just immediately try to do everything in the ecosystem. We will do step by step and gradually grow ourselves. Thank you.

Speaker #3: I think that's something in future step by step we will reach there. But first of all, we should try to secure gigawatt level power and with this on hand and then we can start to talk about the next step.

Speaker #3: As Angie mentioned, we do have the long-term ambition. But in the short term, we will not just immediately try to do everything in the ecosystem.

Speaker #3: We will do this step by step and gradually grow ourselves. Thank you.

Speaker #5: Thank you for the insight and for taking my questions. And congrats on the corridor. Thank you for the question.

Ian Generes: Thank you for the insight and for taking my questions, and congrats on the quarter.

Ian Generous: Thank you for the insight and for taking my questions, and congrats on the quarter.

James Jin Cheng: Thank you.

Nangeng Zhang: Thank you for your question.

Speaker #1: I'll now like to turn the call back over to the company for any closing remarks.

Operator: I will now like to turn the call back over to the company for any closing remarks.

Speaker #2: Thank you, everyone, for joining us today. If you have any further questions, please feel free to reach out to us directly or through the contact information on our website.

Gwyn Lauber: Thank you everyone for joining us today. If you have any further questions, please feel free to reach out to us directly or through the contact information on our website. Thanks.

Speaker #2: Thanks.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.