Nano Labs Ltd (NASDAQ:NA) Q4 2024 Earnings Call Transcript

Nano Labs Ltd (NASDAQ:NA) Q4 2024 Earnings Call Transcript March 25, 2025

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Nano Labs Second Half of 2024 Earnings Conference Call. During today’s call, all participants will be in listen-only mode. This conference is being recorded today, Tuesday, March 25th, 2025. Joining us today from Nano Labs are the company’s Chairman and Chief Executive Officer, Mr. Jianping Kong; and the company’s Chief Financial Officer, Mr. Bing Chen. On our call today, Mr. Kong will give you an overview of the company’s performance. Mr. Chen will share the details of the company’s financial results. After that, we will conduct a question-and-answer session to take your questions. Before we continue, I would like to remind you that some of the information discussed on this call will contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995.

Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company’s control, which may cause the company’s actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks and uncertainties and other factors is included in the company’s filing with the Securities and Exchange Commission. During today’s call, Mr. Kong and Mr. Chen will deliver their remarks in Chinese, and the company’s representative will provide corresponding English translations.

With that, I will now turn the call over to Mr. Kong, the company’s Chairman and Chief Executive Officer. Mr. Kong, please go ahead.

Jianping Kong: [Foreign Language] [interpreted] Thank you, operator, and everyone for joining Nano Labs second half of 2024 earnings conference call today. In our call today, I will provide an overview of our recent development and our strategic initiatives in the future. The year 2024 represents numerous opportunities as the company continues to expand its business. As demand for digital currency transactions and cryptocurrency adoption continue to rise, we have officially established the Bitcoin value investment as a new business sector and designated Bitcoin as our primary reserve asset. As of the date of this earnings conference call, the company holds about 400 BTC with a total purchase price of around $40 million. Additionally, in December 2024, we launched an upgraded complete machine equipped with a Cuckoo 3.0 iteration chip, which delivers enhanced performance that meets all leading standards.

This significant improvement provided us with a key competitive advantages to further expand our market share. With the rapid evolution of AI, we plan to develop AI applications with the Web3.0 ecosystem, focusing on integration of AI and the Web3.0 technologies. Through visionary and insightful strategic planning and consistent excursion, we remain committed to deepening our expertise in the Web3.0 space. We believe these efforts will create substantial value and drive strong results for our stakeholders. Thank you for your support and trust. Next, I will turn the call over to our Chief Financial Officer, Mr. Chen, for a closer review of our financial results. Mr. Chen, please go ahead.

Bing Chen: [Foreign Language] [interpreted] Thank you, Mr. Kong. Good morning, everyone. On behalf of the management team, I will provide a brief financial overview of the second half of 2024. In the second half of 2024, our net revenue was RMB15.86 million, $2.21 million compared to RMB26.07 million in the same period last year. This decline was primarily due to the decrease in sales volume of iPollo V Series product. However, we recorded a gross profit of RMB11.57 million, $1.6 1 million for the second half of 2024 compared to a gross loss of RMB40.55 million in the same period of 2023. Cost of revenue for the second half of fiscal year 2024 were RMB4.28 million, $0.6 million compared to RMB66.62 million in the same period of 2023.

The decline was mainly due to the decrease in sales volume and last inventory write down recorded. Total operating expenses for the second half of fiscal year 2024 decreased by 38.7% to RMB51.39 million, $7.15 million, down from RMB83.84 million in the same period of 2023. Selling and marketing expenses dropped by 17.7% to RMB4.8 million, $0.67 million compared to RMB5.83 million in the same period of 2023. This decrease was mainly due to the decrease in employee salary expenses. General and administrative expenses increased by 30.5% to RMB25.38 million, $3.83 million for the second half of 2024 from RMB22.38 million for the same period of 2023. The decrease in general and administrative expenses was primarily due to the increase in depreciation expenses.

Research and development expenses decreased by 61.9% to RMB28.93 million, $4.06 million for the second half of 2024 from RMB32.97 million for the same period of 2023. The decrease in research and development expenses was primarily due to the decrease in salary expenses, material fees and equipment fees. Loss from operations was RMB39.82 million, $5.54 million for the second half of 2024 compared with loss from operations of RMB124.4 million for the same period of 2023. Net loss was RMB60.39 million, $8.4 million for the second half of 2024 compared to a net loss of RMB120 million in the same period of 2023. Basic and diluted loss per share was RMB6.01, $0.84 for the second half of 2024 compared to basic and diluted loss per share of RMB19.12 in the same period of 2023.

As of December 31, 2024, the company had cash and cash equivalents of RMB32.43 million, $4.51 million compared with RMB48.16 million as of December 31, 2023. We remain confident in our business strategy and ability to execute it. We will continue to leverage the strength of our technology to capture development opportunities, drive long term growth and create additional value for our shareholders. Now, I would like to turn the call over to the operator for questions-and-answer season.

Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from [Claire Harrison] (ph), a Private Investor.

Unidentified Analyst: Hi. Thank you, Mr. Kong and Mr. Chen. So why is the company consider to increase its holdings of Bitcoin? Thank you.

Jianping Kong: [Foreign Language] [interpreted] We believe Bitcoin is a strategic asset with long term value for reserves and plays a crucial role in the Web3.0 ecosystem. Additionally, its limited supply makes it a potential [indiscernible] against inflation with significant room for appreciation over time. More importantly, Bitcoin can serve as foundational infrastructure, creating opportunities for Web3.0 development. Furthermore, many countries have officially recognized Bitcoin as a national strategic reserve asset. We’re imposing our confidence in its long term value and potential.

Operator: Your next question comes from [Alfred Wu] (ph), a Private Investor.

Unidentified Analyst: Hello. My question is, what considerations have driven the company’s recent financing activities? Thank you.

Jianping Kong: [Foreign Language] [interpreted] Our recent financing activities were driven by business adjustments and expansion initiatives, particularly over increased investment in Bitcoin as a strategic asset. During discussions with strategic investors, we found strong alignment between their industry outlook and our long term vision. Recognizing this synergy, we see the opportunity to introduce these investors at the right time and successfully secure financing.

Operator: Your next question comes from [Stephanie Bell] (ph), a Private Investor.

Unidentified Analyst: Hi, Mr. Kong and Mr. Chen. My question is, what is the company’s plan for future development? Thank you.

Unidentified Analyst: [Foreign Language] [interpreted] Historically, our business has primarily focused on chip technology expanding into metaverse computing and ecological applications. Looking ahead, we see massive opportunities within the broader metaverse ecosystem and will continue exploring emerging market opportunities. We will start from the design of cryptocurrency IC chips and we will be committed to the development of AI plus Web3.0 in the future.

Operator: Your next question comes from [Eva Hoffman] (ph), a Private Investor.

Unidentified Analyst: Thank you, management team. My question is, the company’s income is not significant at present. Do you have any expectation for the future? Thank you.

Jianping Kong: [Foreign Language] [interpreted] Our Cuckoo 3.0 equipped machines are being steadily shipped and their impact will be reflected to some extent in this year’s business performance. Our current focus is on optimizing product management and operations, while staying prepared to seize emerging market opportunities as they arise. And that concludes the question-and-answer season. Let me turn the call over to Mr. Chen for closing remarks.

Bing Chen: [Foreign Language] [interpreted] Thank you very much for joining this conference call. If you have any questions, please contact us through e-mails at ir@nano.com or reach our IR Consultants Investor Relations at tina.xiao@ascent-ir.com. Management will respond to your question as soon as possible. We appreciate your interest and support in Nano Labs and look forward to speaking with you again next time.

Operator: Thank you again for attending Nano Labs second half of 2024 earnings conference call. This concludes our call for today and we thank you all for listening in. Goodbye.