Nano Labs Ltd

Ladies and gentlemen, thank you for standing by. Welcome to NanoLabs' first half of 2024 earnings conference call. During today's call, all participants will be in a listen-only mode. This conference is being recorded today, Wednesday, September 18, 2024. Joining us today from NanoLabs 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'd like to remind you that some 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, uncertainties or factors is included in the company's filings 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.

感谢主持人和所有今天参加Nano Labs 2020年上半年财报电话会议的朋友。 在我们今天的电话会议上,我将概述公司近期发展以及公司未来的战略举措。

Thank you operator and everyone for joining NanoLabs first half of 2024 and this conference call today. On our call today, I will provide an overview of our recent development and our strategic initiative in the future.

今年上半年,我們明顯看到了行業的回溫以及不斷湧現的市場機會。 令人振奮的牛市中公司也在大力投入研發我們的 This year, in May, the company announced that the KUKU 3.0 upgrade of KUKU series chips has been officially produced. The performance has been significantly improved compared to the KUKU 2.0 chips, reaching a global leading level. This is a key advantage for us, so that we can gradually seize new market opportunities. The company will continue to launch KUKU 3.0 chips in the second half of this year and the first half of next year. for various application scenarios. This will greatly promote our sales.

The first half of 2024 has clearly witnessed a recovery in the industry and the continuous emergence of new market opportunities. Amidst this existing bull market environment, our company has been making substantial investments in the research and development of our upgraded Cuckoo series products. In May 2024, we successfully commenced the mass production of Cuckoo 3 chip, which features significantly enhanced performance compared to the Cuckoo 2 chip, setting a new global benchmark. This key development positions us to capitalize on new market opportunities progressively. Moreover, our company plans to launch a range of models equipped with the QQ3 chip for various application scenarios in the remainder of this year and the first half of next year, which is expected to drive significant growth in our sales.

In addition, the company is still continuing to deliver sealed technology and IP, and is working hard to improve the production efficiency of chips. The development of advanced AI computing, ZK computing, and other chips is also in its own plans. We are continuously innovating in packaging technology and IP to improve the efficiency of cheap production.

The development of promising AI computing, BK computing, and other chips is also on the way. Concurrently, our iFollow Metaverse Photographic Studio Service, a component of our Metaverse Business Suite, is making consistent progress. We have established profound collaborations with various institutions and organizations. which laid the groundwork for substantial growth potential in the future. We anticipate that through the combined persistence and efforts of the industry and ourselves, we will overcome existing bottlenecks and unlock new heights of success in the future.

Thank you for your trust and support. Next, we will hand over the phone to our Chief Financial Officer, Mr. Chen Bin. 有他对我们的财务业绩进行更详细的阐述。 陈斌先生,请您继续。 Thank you for your support and trust.

Next, I will turn the call over to our show financial officer, Mr. Chen, for a closer review of our financial results. Mr. Chen, please go ahead.

感谢孔敬平先生,大家早上好。 我将代表... 我们听不到这声音吗?

我听不到了。

Oh, you can't hear me, right? Oh, I'm sorry. Oh, it's okay. Hello, Mr. Jiang. Good morning, everyone. On behalf of the management team, I would like to introduce the financial plan for the first half of 2024. The first half of 2024. The company's operating income is 24,740,000 yuan, or 347,000,000 yuan. Last year, it was 52,270,000 yuan. The decline in sales is mainly due to the reduction in sales of the Apollo series products. In our 3D printing product, in the first half of 2020, sales increased rapidly from RMB220,000 in the same quarter last year to RMB459,000. In the first half of 2020, the company's sales cost was RMB2471,000 or $3.47 million. 2023年同期人民币为1,152亿人民币,主要原因是销售量下降,成果减少。 Thank you, Ms. Kong. Good morning, everyone.

On behalf of the management team, I will provide a brief financial overview of the first half of 2024. In the first half of 2024, our net revenue was RMB 24.74 million, US dollar 3.47 million, compared to RMB 62.27 million in the same period last year. This decline was primarily due to the decreased sale of the Apollo B1 series products. However, revenues from our 3D printing products showed significant growth, increasing to RMB 459,200 from RMB 22,000. Cost of revenues for the first half of fiscal year 2024 were RMB 24.71 million, U.S. dollars 3.47 million, compared to RMB 115.2 million in the same period of 2023. The black line was mainly due to the decreased in-sales volume and the less inventory right down the corridor.

In 2024, the total operating costs for the last 100 years fell by 20.1%. The total operating costs for the last 100 years fell by 20.1%. The total operating costs for the last 100 years fell by 20.1%. In the past few years, the company's sales revenue has dropped by 54.4% from 9.5 million yuan in the same period in 2022, which is 4.33 million yuan or 60.8 US dollars. This is mainly due to the reduction in sales allowance and logistics.

Social operating expenses for the first half of fiscal year 2024 decreased by 20.1 cents to RMB 58.72 million, US dollars 8.24 million, down from RMB 73.15 million in the same period of 2023. Sale and marketing expenses dropped by 64.4% to RMB 4.33 million, US dollars 0.61 million, compared to RMB 9.15 million in the same period of 2003. This decrease was mainly due to reduced sales commissions and product shipping expenses.

In the last 100 years of 2020, the management fee from RMB 3,104 million in the same period in 2023 decreased by 18% to RMB 25,455 million or $3.57 million. The reduction in management fees is mainly due to the reduction in the total number of employees, which leads to the reduction in the rent fee of the office and the reduction in the general number of administrative personnel, which leads to the reduction in the salary fee of the employees.

General and administrative expenses decreased by 18% to RMB 25.45 million, US dollars 3.57 million for the first half of 2024. From RMB 31.04 million for the same period of 2023, the decrease in general and administrative expenses was primarily due to the decrease in office leave expenses, mainly attributable to the relocation of the head office, and the decrease in employee salary expenses, as the number and salaries of general and administrative staff decreased.

The cost of development decreased by 12.2% from RMB 3,295 million in the last 100 years in 2021 to RMB

research and development expenses decreased by 12.2% to RMB 28.93 million, US dollars 4.06 million for the first year, for the first half of 2024. From RMB's $32.95 million for the same period of 2023. The decrease in research and development expenses was primarily due to the decrease in salary expenses.

In the same period of time, the revenue loss was $5,869 million or $8.24 million. In the same period of time, the revenue loss was $1.364 million or In 2020, the last 100 years, the net loss was 5,915,000 yuan, or 8.3 million dollars. In 2023, the same period, the loss was 1.33 billion yuan. In 2020, the last 100 years, the normal stock, the basic stock, and the lost stock, the loss was 0.85 yuan, or 0.12 dollars. In 2023, the same period, the normal stock, the basic stock, and the lost stock, the loss was RMB 2.11 billion. As of June 30, 2020, the company's cash and cash-related expenses amounted to RMB 23.51 million or RMB 3.35 million. As of December 31, 2023, the number amounted to RMB 4,816 million.

Loss from operations was only 58.69 million, years past 8.24 million for the first half of 2024, compared with loss from operations of only 136.4 million for the second half of 2023. Net loss was only 69.15 million, years past 8.30 million for the first half of 2024, Compared to net loss of RMB 134.3 million in the same period of 2013, basic and dilutive loss per share was RMB 0.85, US dollar 0.12 for the first half of 2024. Compared to basic and dilutive loss per share of RMB 2.41 in the same period of 2013, As of June 30, 2024, the company had cash and cash equivalents of RMB 23.51 million, US dollar 3.3 million, compared with RMB 48.16 million as of December 31, 2023.

We believe that our future business development strategy and execution capabilities 我们将继续发挥我们的技术优势,抓住发展机遇,推动公司的长期增长氛围活动,创造更多的价格。 现在我将电话交给主持人来进行问答环节。 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 answers session.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Oscar Tracy, private investor. Please go ahead.

Hey, thank you for your introduction. So I'm just wondering, could you provide some more details about your new Iterator products? Thank you.

Can you introduce the new Iterator products?

Our company's newly launched KUKU3 chip is an upgraded iteration of the original KUKU2 chip.

with significantly improved performance, the KUBO3 has reached a leading position globally. Machines equipped with varying quantities of these chips can be used not only in data center environments, but also independently in home or consumer settings, offering flexibility for various user scenarios.

Your next question comes from Irana Rabno, a private investor. Please go ahead.

Hi, thank you. What are the company's expectations for the market and financial figures in the second half of this year?

Our company plans to launch our complete machine equipped with Cuckoo 3 chip in the second half of the year.

Would you expect to drive an increase in sales of this series product? Additionally, we are gradually introducing new product lines to the market, and we anticipate the sales volume to go over time.

Your next question comes from Clara Watton, private investor. Please go ahead.

Okay, thank you. I have a question. What are the compatibility advantages of the recent launch of Cuckoo 3.0? Does it have relevance to the recent trend? Thank you.

What is the competitive advantage of the recently launched KUKU3? Does it have something in common with the recent popular AI?

KUKU3.0 single-core chip among existing products has the highest performance, the lowest P1, and the company has developed a variety of models for users to choose from for different application scenarios. The high bandwidth, multi-channel 3D DLM in AI KUKU3.0 designs a specialized distributed chip network, The KUKU 3 chip offers the highest computing power and the lowest power efficiency.

among our current products. Our company has developed multiple models to cater to different application scenarios. Regarding AI, the Cuckoo 3 features a high bandwidth multi-channel 3D DRAM with a dedicated distributed on-chip network to enable efficient data exchange between computing and storage units. which is a key technology in AI chips. Additionally, the chips specialize in low-voltage circuits designed to reduce power consumption. Along with corresponding timing sign-off processes provide a comparative advantage for AI chip design.

The next question comes from Armstrong Wu, private investor. Please go ahead.

Hi, thank you. My question is, will the company introduce any new product lines that could support its business revenue in the future? Thank you.

想问一下公司未来有什么能够支撑业务收入的产品线吗?

我也提到公司将会在今年下半年和明年上半年陆续推出搭载KUKU 3.0芯片的整机。 As mentioned before, our company plans to launch complete machines equipped with QQ3 chips in the second half of this year and the first half of next year.

which is expected to significantly boost sales. Additionally, our photo studio services will contribute to the company's overall revenue. We are also exploring new opportunities in sales, such as AI computing to drive our future revenue growth.

And that concludes the question and answer session. Let me turn the call over to Mr. Chen for closing remarks.

非常感谢各位参加本次电话会议。 如果您有任何问题,请通过电子邮件联系我们, ir.nano.cn, 或者联系我们的IR顾问, ascentinvestment. Thank you very much for joining this conference call.

If you have any questions, please contact us through email at irfnano.ca. Thank you again for attending Nanolab's first half of 2024 earnings conference call.

This concludes our call today and we thank you all for listening in. Goodbye.