Hangzhou, China-based ASIC hardware mining manufacturer Canaan Creative Inc. (NASDAQ: CAN) recently reported a Q2 2020 net loss of $2.38 million, an improvement over the prior Q1’s reported loss of $5.64 million loss. Its overall revenue rose by 160% to $25.2 million from $9.6 million in Q1, driven by an approximately 200% increase in total computing power sold to 2.6 million Thash/s.
According to the unaudited August 31 filing, the block reward mining manufacturer’s largest expenses during Q2 were general and administrative which accounted for $4.19 million, or 48% of the firm’s $8.8 million quarterly operating expenses. Its filing shows that as of June 30, Canaan had cash and cash equivalents worth $22.2 million, down 40% from $37.3 million at the end of Q1.
Company officials cited an increase in short-term investments for the lower cash on hand as total computing power sold year-over-year declined 18% from 3.2 million TH/s. The investments amounted to a total of $49.2 million by the end of June.
Gross profit also increased by 302.5% year over year to US$6.1 million, while gross margin expanded significantly to 24.3% from 4.5% in the same period of 2019.
Canaan Chairman and CEO Nangeng Zhang noted that during the second quarter of 2020, the Covid-19 pandemic impacted people worldwide, and the Bitcoin halving also caused significant volatility in digital currency prices. He was confident their pipeline of next-generation products would sustain Canaan’s growth momentum into the future.
For the second consecutive quarter, Canaan chooses not to issue financial guidance for the next three trading months, citing “continued uncertainty from the rapidly changing global environment related to the Covid-19 pandemic and corresponding economic downturn.”
Canaan buys back up to $10M in shares
Following the financial report release, Canaan also announced a share repurchase program of up to $10 million. Canaan’s board of directors authorized the program under which Canaan may repurchase up to its outstanding (i) American depositary shares (ADSs), each representing 15 Class A ordinary shares, and/or (ii) Class A ordinary shares over the next 12 months.
Under the share repurchase program, Canaan may repurchase its ADSs from time to time through open market transactions at the real time market prices, privately negotiated transactions, block trades, or any combination thereof. The number of ADSs repurchased, and the timing will depend on many factors, including price, trading volume, and general market conditions, and Canaan’s working capital requirements and general business conditions.
Canaan plans to fund the repurchases from its existing cash balance and reserves the right to adjust its terms and size.
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