BTC Digital Ltd.

Third-quarter revenue was RMB187.9 million (US$29.2 million), down 36.9% year over year. First-nine-month revenue was RMB599.2 million (US$93.0 million), down 10.4% year over year. Q3 gross profit was RMB64.0 million (US$9.9 million), down 49.1% year over year, and gross margin was 34.1%, down 8.2 percentage points year over year. Nine-month gross profit was RMB201.0 million (US$31.2 million), down 7.0% year over year, and gross margin was 33.5%, up 1.2 percentage points year over year. Q3 operating loss was RMB166.8 million and net loss was RMB175.3 million; nine-month operating loss was RMB329.4 million and net loss was RMB345.0 million. Cash and cash equivalents were RMB279.9 million as of September 30, 2021. No formal next-quarter or full-year financial guidance was provided; management instead said it expects offline operations to improve when COVID conditions get better next year and outlined a strategic shift toward new metaverse, blockchain, and crypto-related businesses.

Alan Peng said the company deliberately reduced offline centers to protect the business from COVID-19 disruptions and improve resource utilization, with the long-term goal of lowering fixed costs and raising margins. He framed the quarter as part of a broader transformation toward metaverse-related education, career planning, and professional skills training, plus overseas blockchain and cryptocurrency opportunities. His tone was strategic and transitional, emphasizing that the company is moving toward a new business direction over the next one to two years.

The financial update showed sharp top-line pressure and heavier losses. Q3 revenue declined 36.9% to RMB187.9 million, gross profit fell 49.1% to RMB64.0 million, and gross margin dropped to 34.1%; nine-month revenue was RMB599.2 million, gross profit RMB201.0 million, and gross margin 33.5%. Operating costs fell 27.9% in Q3 to RMB123.8 million and 12.0% in the nine months to RMB398.2 million, but general and administrative expenses rose 76.4% in Q3 to RMB165.8 million and 38.3% in the nine months to RMB310.3 million, mainly due to goodwill impairment and share-based compensation. Cash and cash equivalents were RMB279.9 million at September 30, 2021.

Analysts pressed on the company’s premium service business and how management was handling the impact of COVID-19 and the double reduction policy. Alan Peng said the company is shrinking to one or two centers per city and focusing on stronger centers, while also adding career development and metaverse-related training as a fourth-quarter priority. Another analyst asked when metaverse-related training might generate revenue and how teachers would be recruited; Jason Zhao said the company expects demand to grow and cited partnerships, universities, platforms, forums, and hiring new graduates as recruitment channels. Management did not give a start date for revenue generation.