Nano Labs Ltd. Sponsored ADR Class A ((NA)) has held its Q4 earnings call. Read on for the main highlights of the call.
Nano Labs Ltd. recently held an earnings call that highlighted both achievements and challenges faced by the company. The sentiment expressed during the call was cautiously optimistic, with significant improvements in gross profit and a reduction in net loss. However, the company also faced hurdles such as a decline in net revenue, increased administrative expenses, and reduced cash reserves. A strategic shift towards Bitcoin investment and the launch of advanced technology like the Cuckoo 3.0 chip were also key points of discussion.
Introduction of Bitcoin as Primary Reserve Asset
Nano Labs has made a strategic move by designating Bitcoin as their primary reserve asset, marking a new business sector for the company. They currently hold about 400 BTC, with a total purchase price of approximately $40 million. This decision underscores their commitment to leveraging cryptocurrency as a significant part of their financial strategy.
Launch of Cuckoo 3.0
In December 2024, Nano Labs launched the Cuckoo 3.0 iteration chip, which is equipped in their upgraded complete machine. This new technology delivers enhanced performance and provides the company with key competitive advantages in the market, showcasing their dedication to innovation and technological advancement.
Gross Profit Improvement
The company reported a gross profit of RMB11.57 million ($1.61 million) for the second half of 2024, a significant turnaround from a gross loss of RMB40.55 million in the same period of 2023. This improvement highlights the company’s effective cost management and operational efficiency.
Decrease in Operating Expenses
Nano Labs successfully reduced their total operating expenses by 38.7% to RMB51.39 million ($7.15 million) in the second half of fiscal year 2024, compared to RMB83.84 million in the same period of 2023. This decrease was primarily due to significant reductions in research and development expenses and selling and marketing expenses.
Reduced Net Loss
The company managed to cut their net loss to RMB60.39 million ($8.4 million) for the second half of 2024, a notable improvement from a net loss of RMB120 million in the same period of 2023. This reduction in net loss reflects the company’s ongoing efforts to enhance financial performance.
Decline in Net Revenue
Despite the positive developments, Nano Labs experienced a decline in net revenue, which fell to RMB15.86 million ($2.21 million) in the second half of 2024 from RMB26.07 million in the same period last year. This drop was primarily attributed to decreased sales volume of their iPollo V Series product.
Increase in General and Administrative Expenses
General and administrative expenses rose by 30.5% to RMB25.38 million ($3.83 million) for the second half of 2024, up from RMB22.38 million in the same period of 2023. This increase was mainly due to higher depreciation expenses, indicating a need for more efficient expense management.
Decrease in Cash and Cash Equivalents
As of December 31, 2024, Nano Labs reported cash and cash equivalents of RMB32.43 million ($4.51 million), a decrease from RMB48.16 million as of December 31, 2023. This reduction in cash reserves highlights the financial challenges the company faces.
Forward-Looking Guidance
Looking ahead, Nano Labs is focusing on strategic business expansions and financial optimizations to navigate market challenges. They aim to capitalize on AI and Web3.0 integration to drive future growth. Despite a decrease in net revenue, the company is optimistic about their strategic investment in Bitcoin and plans to leverage this alongside technological advancements to enhance their market position.
In summary, Nano Labs Ltd.’s earnings call reflected a mix of optimism and caution. While the company has made significant strides in improving gross profit and reducing net loss, challenges such as declining net revenue and increased administrative expenses remain. Their strategic shift towards Bitcoin and technological innovations like the Cuckoo 3.0 chip are poised to play a crucial role in their future growth trajectory.