Canaan’s Q3 Financials Reveals Long Road Back to Profitability
Canaan Creative, one of the only crypto firms listed on a major stock exchange, is still trying to get out of its 2020 slump. Last week, the Hangzhou-based firm released an unaudited financial statement, confirming that it had lost $21 million in the third quarter.
As Canaan’s financial statement showed, the firm made $24 million in net revenues across the quarter. Compared to the same period last year, when the firm earned $100 million, this was a 75.7 percent decline. The revenue drop coincided with a $12 million net loss, which pales in comparison to the next profit of $14 million the firm made in Q3 2019
Despite the jump in Bitcoin’s price, the company also saw an increased net loss over the previous quarter. The metric jumped by 30 percent, showing that Canaan’s efforts to climb out of the 2020 slump has met another roadblock.
Canaan’s financials improved significantly in Q2. At the time the firm announced its results, it still presented a net loss. However, its numbers had improved markedly over Q1.
Canaan’s Q2 performance saw it sell 2.6 million TH/s in computing power from its Application-Specific Integrated Circuits (ASICs). That represented almost a 200 percent increase in figures from Q1. Revenues also jumped 160 percent from Q1, marking $25.2 million.
All of these led to gross profits of $6.1 million – up over 1,700 percent from Q1 2020 and 300 percent over Q2 2019. This was joined by a substantial jump in gross margins for the quarter by almost 25 percent.
In general, Q2 2020 saw a net loss of just $2.4 million. That is less than half the net loss reported in Q1 and over a 90 percent reduction in losses reported in Q2 2019.
Struggling to Raise the Share Price
Now that the company’s situation appeared to have worsened, it would need to take even more drastic measures to improve its bottom line. The firm already began on that trajectory, selling 2.9 million TH/s of computing power in Q3. This indicates that it has cut the prices of its mining rigs to help salvage its share of the hashpower market in the face of players like Bitmain and others.
Such revenues and sales numbers show that Canaan had sold an average of $8.27 per TH/s. This is a 70 percent decrease from the $27.5 per TH/s that it sold in Q3 2019. The company will be hoping that this market rally continues in the long term
The company is also running out of options to grow its share price. In September, the mining giant announced that its board of directors had approved a share buyback program worth $10 million in American depositary shares.
Share buybacks work to boost a company’s stock price. The strategy worked pretty well, with Canaan’s stock rising from the $1.87 mark on the day of the buyback announcement to $5.75 at press time.