Canaan's Q3 2025: Contradictions Emerge on North American Expansion, A16 Launch, and Revenue Growth Expectations

Date of Call: November 12, 2025

Financials Results

• Revenue: $150.5M, up 50.2% sequentially and ~104% year-over-year (management also referenced $150M+ and said it beat guidance of $125M-$145M)
• EPS: Net loss per ADS $0.05, narrowed from $0.27 in the prior-year quarter
• Gross Margin: Product gross margin ~17%; gross profit $16.6M, up 78.6% QoQ (vs. a gross loss of $21.5M in the same period last year)

Guidance:

• Q4 revenue expected in the range of $175M to $205M.
• Complete delivery of the 50,000 A15 Pro order by end of 2025; focus on fulfilling large Q4 orders.
• Begin volume shipments of A16 series in Q1 2026 after sample/testing this month.
• Maintain ~30% gross margin for Avalon Home series into year-end (Q3 was ~33%).
• Cautious optimism: guidance assumes current market and policy conditions; results may vary with volatility.

Business Commentary:

• Revenue and Profit Growth:
• Canaan reported total revenue of $150.5 million for Q3, exceeding expectations and representing a 104% year-over-year increase.

• The growth was driven by strong demand in both North America and Asia, increased mining machine sales, and improved gross profit.

• Mining Machine Sales and Demand:

• The company delivered a record high of computing power in Q3, up 55.6% sequentially and 37.7% year-over-year.

• This was largely due to growing demand from North America, including large orders from well-known clients, and increased sales in Asia.

  

• Consumer Grade Mining Machines:

• Canaan's consumer-grade mining machine sales generated $12.2 million in revenue during Q3, representing a 115% quarter-over-quarter increase.

• The growth was fueled by increased demand for the Avalon Home Series and successful marketing efforts to expand its consumer base.

• Strategic Initiatives and Partnerships:

• Canaan secured large orders from North American clients, such as a purchase agreement for over 50,000 A15 pro models with a U.S.-based miner.
• These strategic partnerships and large orders reflect the company's growing recognition in the North American market and highlight its expanding customer base.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management repeatedly stated results 'exceeded expectations' with revenue of $150.5M (beat guidance), product gross margin ~17%, gross profit up 78.6% QoQ to $16.6M, record mining revenue $30.6M and adjusted EBITDA of $2.8M. CEO/CFO emphasized delivery wins (50k A15 Pro order) and expanding A16/Home series while noting macro/policy risks—a constructive but cautious message.

Q&A:

• Question from Mike Grondahl (Northland): The 50,000 machine order on the A15 PROs, can you talk a little bit about delivery timing there and gross margin on those sales?
  Response: Deliveries expected to be completed by end-2025 with partial shipments already underway; management confirmed the order will generate positive gross margin but declined to disclose exact margin figures.

• Question from Mike Grondahl (Northland): Your home mining sales have done really well lately. What are the margins on that business line versus the industrial mining equipment?
  Response: Avalon Home Series delivered ~33% gross margin in Q3 and management expects to maintain around ~30% by year-end, materially higher than industrial mining equipment margins.

• Question from Henry (on behalf of Nick Giles, B. Riley): When is the earliest you guys could ship your new A16 models and at what scale? And what are your expectations on price and margin, respectively?
  Response: A16 samples to selected customers this month; volume shipments planned to begin in Q1 2026; pricing will be market-driven—A16 offers >300 TH per unit, cost-per-TH is higher than A15 but considered 'under control' with acceptable yields and expected to support reasonable margins.

• Question from Henry (on behalf of Nick Giles, B. Riley): Several public miners are winding down mining and ASIC supply appears to be increasing — what's the market impact and how is Canaan responding?
  Response: Management does not expect a near-term slowdown in global hashrate, views AI/HPC energy use as different from mining, will continue to fulfill customer orders, pursue energy resources and build adaptable mining sites that could later support AI workloads.

• Question from Kevin Cassidy (Rosenblatt Securities): Your guidance for $190 million for the fourth quarter is impressive. Is this — orders also scheduled out into the first quarter? What kind of visibility are your customers giving you?
  Response: Q4 is seasonal peak and management is optimistic with existing order collections; Q1 is typically a soft season (holidays/Chinese New Year) and could see lower revenue—company will prioritize Q4 deliveries and reassess Q1 once demand visibility improves.

• Question from Kevin Cassidy (Rosenblatt Securities): Is the U.S. market less sensitive to the price of Bitcoin?
  Response: North American customers are more institutional and generally less short-term price-sensitive due to long-term site plans, though recent U.S. tariff changes have increased costs and may pressure smaller operators' purchasing decisions.

• Question from Michael Donovan (Compass Point): How much inventory do you have left for the A15 series? And for Q1 guidance, what mix do you expect between A15 orders and preorders for A16?
  Response: End-Q3 inventory ~ $200M (including wafers/components) to prepare for strong Q4 demand; expect inventory to be digested in Q4 and lower in Q1; A16 mass delivery planned in 2026 (Q1) while A15 production continues during the transition.

• Question from Michael Donovan (Compass Point): Can you expand on the pilot projects (2.5 MW in Alberta and 4.5 MW in Japan) and growth opportunities there?
  Response: Pilots are technical/business-model validations with decent project-level margins given low power costs; management sees potential to scale (e.g., Canada's stranded-gas project could scale to ~20 MW mid-next year) but emphasizes time and partnership-building are required.

• Question from Kevin Dede (HCW): Can you refresh us on self-mining objectives and how you might rethink hash deployment given tariff changes and regional cost shifts?
  Response: Short-term focus is on delivering customer orders, which slows immediate self-mining additions; company is screening and pursuing greenfield and stranded-energy projects (U.S., Canada, Texas wind) to expand self-mining prudently where returns and financing are attractive.

• Question from Kevin Dede (HCW): Can you offer more color on the $56M wafer prepayment and the ~$90M processing/cash used in Q3—do these include supply for A15/A16 and how do they affect future cash use?
  Response: The $56M reflects wafer prepayments/contract payments (part of normal pacing) rather than total wafer needs; Q3 cash outflows (~$90M cited) were largely supply-chain and production payments; most components are paid on standard terms, and management has secured meaningful wafer allocation for next year at favorable terms to support 2026 production.

Contradiction Point 1

North American Market Expansion and Tariff Impact

It highlights differing perspectives on the impact of tariff policies on North American customer demand and Canaan's strategic expansion in the region, which could influence investor decisions and market confidence.

Is the U.S. market less sensitive to Bitcoin prices than other global markets? - Kevin Cassidy (Rosenblatt Securities)

20251118-2025 Q3: We are expecting a strong Q4 sales performance, with significant orders from North America. Our Q4 will be an excellent quarter. And we are actually discussing with some customers. They are doing preorders for A16. So that's a pretty significant part of our Q4 revenue. - James Cheng(CFO)

Have you observed changes in customer demand since May? Has customer sentiment rebounded to Q1 levels? - Evan (Compass)

2025Q2: In North America, we believe expanding in this market is strategic, given its strong policy signals and large crypto community. The key to gaining market share is by offering superior products and exceptional service quality. - Nangeng Zhang(CEO)

Contradiction Point 2

A16 Launch and Availability

It involves differing timelines and expectations regarding the launch and delivery of the A16 series, which could impact revenue projections and customer expectations.

When can you ship the new A16 models, and what are your expectations for pricing and margins? - Nick Giles (B. Riley)

20251118-2025 Q3: The A16 series was launched at the end of October, with the first batch in production. We expect to start shipping samples to selected customers by the end of November for testing. Volume shipments will begin in early 2026. - Nangeng Zhang(CEO)

Can you provide an update on the A-16 and clarify if there is a shift toward liquid cooling over immersion systems? - Kevin Cassidy (Rosenblat Securities)

2025Q2: Our engineering team has been working on the next-generation A-16 since February. A16 is currently in the chip assembly and testing stage, and we expect to launch it soon. - Nangeng Zhang(CEO)

Contradiction Point 3

Market Conditions and Tariffs Impact

It reflects differing perspectives on how market conditions and tariffs are influencing order patterns and regional demand, which are crucial for strategic planning and investor understanding.

What are your thoughts on public Bitcoin miners planning to scale back operations in the medium term? - Nick Giles (B. Riley Securities)

20251118-2025 Q3: Orders from non-US regions have increased, aligning with bitcoin price recovery, but the US market remains under pressure. Tariffs add complexity, with Southeast Asia's situation still uncertain. - Nangeng Zhang(CEO), James Cheng(CFO)

Can you clarify your self-mining expansion plans following U.S. tariff policy changes? - Michael Donovan (H.C. Wainwright)

2025Q1: Despite US tariff policies, we have made progress in self-mining, adding over 1.5 exahash capacity in April through partnerships. Our strategy outside North America shows strategic value, with projects like Ethiopia achieving high uptime. We continue to optimize partnerships globally. - Nangeng Zhang(CEO)

Contradiction Point 4

ASPs and Pricing Trends

It involves changes in pricing strategy and ASP trends, which are important for financial forecasting and competitive positioning.

When can you ship the new A16 models, and what are your expectations for pricing and margins? - Nick Giles (B. Riley Securities)

20251118-2025 Q3: The A16 series was launched at the end of October, with the first batch in production. We expect to start shipping samples to selected customers by the end of November for testing. Volume shipments will begin in early 2026. Pricing will be market-driven, taking into supply and demand factors. With a significant performance improvement, the A16 series is expected to have a higher per-unit gross margin that will help offset cost pressures. - Nangeng Zhang(CEO)

How did ASP per terahash trend during bitcoin price fluctuations in Q1, and what are expectations for Q2? - Kevin Cassidy (Rosenblatt Securities)

2025Q1: From ASP perspective in Q1, we saw the ASP rise to $10.5 due to strong demand, successful A15 series sales, and some older A14 inventory clearance. We expect ASP to improve further in Q2 due to higher locked contract prices and limited A14 inventory. However, long-term ASP trends are uncertain, especially for the U.S. market, where demand is under pressure. - James Cheng(CFO)

Contradiction Point 5

Revenue and Sales Growth Expectations

It involves changes in revenue and sales growth expectations, which are crucial for investors and stakeholders.

Can you provide details on the 50,000 A15 PRO order, including delivery schedule and gross margin? - Mike Grondahl (Northland)

20251118-2025 Q3: We expect strong sales in Q4, driven by robust demand and order backlog. - Nangeng Zhang(CEO)

What were the key highlights for Q4 and FY2024? - Analyst

2024Q4: For the fourth quarter of 2024, we expect revenue to be approximately in the range of $80 to $100 million. - James Cheng(CFO)