Cango Inc. Reports Second Quarter 2022 Unaudited Financial Results

SHANGHAI, Aug. 30, 2022 /PRNewswire/ — Cango Inc. (NYSE: CANG) (“Cango” or the “Company”), a leading automotive transaction service platform in China, today announced its unaudited financial results for the second quarter of 2022.

Second Quarter 2022 Financial and Operational Highlights

Total revenues were RMB289.2 million (US$43.2 million), compared with RMB946.7 million in the same period of 2021. Car trading transactions revenues were RMB218.6 million (US$32.6 million), or 75.6% of total revenues in the second quarter of 2022, compared with RMB522.5 million in the same period of 2021. The total outstanding balance of financing transactions the Company facilitated was RMB36,594.4 million (US$5,463.4 million) as of June 30, 2022. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.21% and 1.07%, respectively, as of June 30, 2022, compared with 1.76% and 0.80%, respectively, as of March 31, 2022. “Cango Haoche” platform had engaged 8,237 dealers in China’s 31 provinces and 305 cities as of June 30, 2022. There were 22 self-owned vehicle models listed on the platform including nine car brands and 12 car series. During the second quarter, total sales were 2,291 cars, including 1,329 new energy vehicles (NEVs). Car dealer activity and transaction conversion rate on “Cango Haoche” platform both improved significantly in the second quarter of 2022 compared with the previous quarter. Users’ daily activity rate on the platform rose by nearly 50% and the quarterly dealer activity rate increased by nearly 70%, both on a quarter-over-quarter basis.

Mr. Jiayuan Lin, Chief Executive Officer (CEO) of Cango, commented, “The macro conditions and COVID-19 outbreaks during the second quarter continued to impact our performance and outlook in the short-term. Total revenues came in at RMB289.2 million for the second quarter, of which revenues from our car trading transactions business accounted for over three-fourths of total revenues. Longer-term and benefitting from the nation’s policy stimulus, we foresee a steady upward trend for the automotive market with huge potential in the NEV and used car segments. Galvanized by this opportunity, our efforts are focused on expanding our tech-enabled car trading platform, where we are placing equal emphasis on new and used car trading, and monetizing through multiple channels including financing and insurance services.

“With the successful debut of our ‘Cango Haoche’ App in June, we are committed to providing safe, secure, sustained and stable end-to-end professional car transaction-related services for all participants in the automobile industry chain. We are not only solving the pain points of small- and medium-sized dealers in terms of vehicle sources and capital needs, but also helping OEMs to penetrate lower-tier markets and grow their sales. We also significantly improved car dealer activity and transaction conversion rate on our platform in the second quarter. Furthermore, we explored the used car matching business during the quarter and have made good progress. As of June 30, 2022, just two months after the launch of our used car business, the number of registered used car dealers exceeded 1,500 with increasing engagement, outpacing our expectations.

“While there remain market uncertainties stemming from supply chain issues, unexpected COVID recurrences, and a highly complex external environment, we will continue to invest strategically, tailoring our resource allocation with an eye toward the future development of the NEV and used car segments while leveraging our platform model’s advantages to strengthen our business fundamentals,” concluded Mr. Lin.

Mr. Yongyi Zhang, Chief Financial Officer (CFO) of Cango, stated, “Macro headwinds and a wave of COVID resurgence across China posed ongoing challenges to the domestic auto industry, as expected. Months of pandemic-related disruptions significantly impeded our business, resulting in a slump in total revenues for the second quarter. Amid this harsh environment, we remained focused on our long-term strategy, advancing our car trading transaction platform and continuing to implement cost control initiatives. Despite the COVID-induced decline, we remain confident in our platform model’s potential and are positioned to capturing the opportunities that emerge as the automotive market recovers. Meanwhile, we will continue to create value for participants across our platform with continuous improvements in operating efficiency and cost structure.”

Second Quarter 2022 Financial Results

REVENUES

Total revenues in the second quarter of 2022 were RMB289.2 million (US$43.2 million) compared with RMB946.7 million in the same period of 2021. Revenues from car trading transactions in the second quarter of 2022 were RMB218.6 million (US$32.6 million), continuing to serve as an important revenue contributor.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2022 were RMB643.3 million (US$96.0 million) compared with RMB933.5 million in the same period of 2021.

Cost of revenue in the second quarter of 2022 decreased to RMB272.7 million (US$40.7 million) from RMB697.8 million in the same period of 2021. As a percentage of total revenues, cost of revenue in the second quarter of 2022 was 94.3% compared with 73.7% in the same period of 2021. The change was primarily due to an increase in car trading transactions’ share of total revenues. Car trading transactions normally present a higher cost-revenue ratio, thus pushing up the overall ratio. Sales and marketing expenses in the second quarter of 2022 decreased to RMB41.8 million (US$6.2 million) from RMB60.9 million in the same period of 2021. As a percentage of total revenues, sales and marketing expenses in the second quarter of 2022 was 14.5% compared with 6.4% in the same period of 2021. General and administrative expenses in the second quarter of 2022 were RMB124.7 million (US$18.6 million) compared with RMB64.7 million in the same period of 2021. As a percentage of total revenues, general and administrative expenses in the second quarter of 2022 was 43.1% compared with 6.8% in the same period of 2021. This change was mainly due to the expenses arising from the 12,000,000 Class A ordinary shares options granted to the Company’s Chairman Mr. Xiaojun Zhang and CEO Mr. Jiayuan Lin in the second quarter. These share options are granted in consideration of Mr. Zhang and Mr. Lin’s roles in guiding Cango’s profitable investment in Li Auto Inc., a provider of new energy passenger vehicles in China. Research and development expenses in the second quarter of 2022 were RMB12.9 million (US$1.9 million) compared with RMB15.6 million in the same period of 2021. As a percentage of total revenues, research and development expenses in the second quarter of 2022 was 4.4% compared with 1.7% in the same period of 2021. Net loss on risk assurance liabilities in the second quarter of 2022 was RMB53.1 million (US$7.9 million) compared with RMB35.9 million in the same period of 2021. Net loss on risk assurance liabilities was mainly due to a sequential increase in the default rate since 2021.

INCOME (LOSS) FROM OPERATIONS

Loss from operations in the second quarter of 2022 was RMB354.1 million (US$52.9 million), compared with an income of RMB13.2 million in the same period of 2021.

NET LOSS

Net loss in the second quarter of 2022 was RMB285.8 million (US$42.7 million). Non-GAAP adjusted net loss in the second quarter of 2022 was RMB189.6 million (US$28.3 million). Non-GAAP adjusted net loss excludes the impact of share-based compensation expenses. For further information, see “Use of Non-GAAP Financial Measure.”

NET LOSS PER ADS

Basic and diluted net loss per American Depositary Share (ADS) in the second quarter of 2022 were both RMB2.08 (US$0.31). Non-GAAP adjusted basic and diluted net loss per ADS in the second quarter of 2022 were both RMB1.38 (US$0.21). Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

As of June 30, 2022, the Company had cash and cash equivalents of RMB1,280.7 million (US$191.2 million), compared with RMB2,137.0 million as of March 31, 2022.

As of June 30, 2022, the Company had short-term investments of RMB2,116.2 million (US$315.9 million), compared with RMB1,874.1 million as of March 31, 2022.

Business Outlook

For the third quarter of 2022, the Company expects total revenues to be between RMB350 million and RMB400 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Share Repurchase Program

Pursuant to the share repurchase program announced on August 19, 2021, the Company had repurchased 7,984,500 ADSs with cash in the aggregate amount of approximately US$28.4 million up to June 30, 2022.

Conference Call Information

The Company’s management will hold a conference call on Monday, August 29, 2022, at 9:00 P.M. Eastern Time or Tuesday, August 30, 2022, at 9:00 A.M. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:   

+1-412-902-4272

United States Toll Free: 

+1-888-346-8982

Mainland China Toll Free:

4001-201-203

Hong Kong, China Toll Free:

800-905-945

Conference ID:   

Cango Inc.

The replay will be accessible through September 5, 2022, by dialing the following numbers:           

International:   

+1-412-317-0088

United States Toll Free:

+1-877-344-7529

Access Code: 

5247601

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.cangoonline.com/.

About Cango Inc.

Cango Inc. (NYSE: CANG) is a leading automotive transaction service platform in China connecting car buyers, dealers, financial institutions, and other industry participants. Founded in 2010 by a group of pioneers in China’s automotive finance industry, the Company is headquartered in Shanghai and has a nationwide network. Leveraging its competitive advantages in technological innovation and big data, Cango has established an automotive supply chain ecosystem, and developed a matrix of products centering on customer needs for auto transaction, auto financing and after-market services. By working with platform participants, Cango endeavors to makes car purchase simple and enjoyable, and make itself customers’ car purchase service platform of choice. For more information, please visit: www.cangoonline.com.  

Definition of Overdue Ratios

The Company defines “M1+ overdue ratio” as (i) exposure at risk relating to financing transactions for which any installment payment is 30 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

The Company defines “M3+ overdue ratio” as (i) exposure at risk relating to financing transactions for which any installment payment is 90 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

Use of Non-GAAP Financial Measure

In evaluating the business, the Company considers and uses Non-GAAP adjusted net income (loss), a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines Non-GAAP adjusted net income (loss) as net income (loss) excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income (loss) enables the management to assess the Company’s operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors’ assessment of its operating performance.

Non-GAAP adjusted net income (loss) is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using Non-GAAP adjusted net income (loss) is that it does not reflect all items of expense that affect the Company’s operations. Share-based compensation expenses have been and may continue to be incurred in the business and are not reflected in the presentation of Non-GAAP adjusted net income (loss). Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliations of Cango’s non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.6981 to US$1.00, the noon buying rate in effect on June 30, 2022, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the “Business Outlook” section and quotations from management in this announcement, contain forward-looking statements. Cango may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Cango’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Cango’s goal and strategies; Cango’s expansion plans; Cango’s future business development, financial condition and results of operations; Cango’s expectations regarding demand for, and market acceptance of, its solutions and services; Cango’s expectations regarding keeping and strengthening its relationships with dealers, financial institutions, car buyers and other platform participants; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cango’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Cango does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Yihe Liu
Cango Inc.
Tel: +86 21 3183 5088 ext.5581
Email: ir@cangoonline.com 
Twitter: https://twitter.com/Cango_Group

Emilie Wu
The Piacente Group, Inc.
Tel: +86 21 6039 8363
Email: ir@cangoonline.com

 

 

 

CANGO INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data

 As of December 31, 2021 

As of June 30, 2022

 RMB 

 RMB 

 US$ 

ASSETS:

Current assets:

Cash and cash equivalents

1,434,806,922

1,280,691,159

191,202,156

Restricted cash – current

61,293,114

13,180,416

1,967,784

Short-term investments

2,598,935,704

2,116,239,567

315,946,248

Accounts receivable, net

223,544,396

236,616,905

35,325,974

Finance lease receivables – current, net

1,414,164,625

1,125,086,470

167,970,987

Financing receivables, net

62,296,261

67,805,244

10,123,056

Short-term contract asset

829,940,692

654,377,460

97,695,982

Prepayments and other current assets 

982,948,637

657,589,050

98,175,460

Total current assets

7,607,930,351

6,151,586,271

918,407,647

Non-current assets:

Restricted cash – non-current

1,114,180,729

921,103,121

137,517,075

Goodwill

148,657,971

148,657,971

22,194,051

Property and equipment, net

19,545,933

17,360,611

2,591,871

Intangible assets

45,931,544

45,659,520

6,816,787

Long-term contract asset

495,456,805

280,781,629

41,919,593

Deferred tax assets

474,570,361

579,388,656

86,500,449

Finance lease receivables – non-current, net

1,029,262,174

584,494,426

87,262,720

Other non-current assets

11,568,164

11,839,302

1,767,561

Total non-current assets

3,339,173,681

2,589,285,236

386,570,107

TOTAL ASSETS

10,947,104,032

8,740,871,507

1,304,977,754

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term debts

579,776,131

252,168,334

37,647,741

Long-term debts—current

938,014,362

858,543,903

128,177,230

Accrued expenses and other current liabilities

719,035,377

365,787,374

54,610,615

Risk assurance liabilities 

699,022,914

612,252,485

91,406,889

Income tax payable

481,854,105

322,909,760

48,209,158

Total current liabilities

3,417,702,889

2,411,661,856

360,051,633

Non-current liabilities:

Long-term debts

486,371,672

273,594,919

40,846,646

Deferred tax liability

51,471,040

10,724,133

1,601,071

Other non-current liabilities

991,610

177,972,200

26,570,550

Total non-current liabilities

538,834,322

462,291,252

69,018,267

Total liabilities

3,956,537,211

2,873,953,108

429,069,900

Shareholders’ equity

Ordinary shares

204,260

204,260

30,495

Treasury shares

(485,263,213)

(546,224,976)

(81,549,242)

Additional paid-in capital

4,671,769,821

4,787,583,542

714,767,403

Accumulated other comprehensive income

(187,517,110)

(30,726,360)

(4,587,325)

Retained earnings

2,991,373,063

1,656,081,933

247,246,523

Total Cango Inc.’s equity

6,990,566,821

5,866,918,399

875,907,854

Total shareholders’ equity

6,990,566,821

5,866,918,399

875,907,854

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

10,947,104,032

8,740,871,507

1,304,977,754

 

 

 

CANGO INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data)

 Three months ended June 30, 

 Six months ended June 30, 

2021

2022

2021

2022

 RMB 

 RMB 

 US$ 

 RMB 

 RMB 

 US$ 

Revenues

946,746,211

289,191,585

43,175,167

2,070,532,922

1,076,885,456

160,774,765

Loan facilitation income and other related income 

303,346,685

14,599,571

2,179,659

715,037,501

120,498,214

17,989,910

Leasing income

64,708,395

42,718,041

6,377,636

137,836,071

92,840,092

13,860,661

After-market services income 

51,866,024

10,544,538

1,574,258

114,395,515

36,323,244

5,422,918

Automobile trading income

522,544,976

218,612,145

32,637,934

1,094,109,857

817,913,471

122,111,266

Others

4,280,131

2,717,290

405,680

9,153,978

9,310,435

1,390,010

Operating cost and expenses:

Cost of revenue

697,786,112

272,661,870

40,707,345

1,466,833,661

959,643,012

143,270,929

Sales and marketing

60,885,719

41,798,207

6,240,308

118,729,278

95,643,408

14,279,185

General and administrative

64,658,358

124,670,110

18,612,757

126,048,975

175,553,986

26,209,520

Research and development

15,638,883

12,857,670

1,919,600

29,233,130

27,343,292

4,082,246

Net loss on risk assurance liabilities

35,903,834

53,144,802

7,934,310

57,642,765

152,065,685

22,702,809

Provision for credit losses

58,636,181

138,198,835

20,632,543

99,268,133

209,854,830

31,330,501

Total operation cost and expense

933,509,087

643,331,494

96,046,863

1,897,755,942

1,620,104,213

241,875,190

Income (Loss) from operations

13,237,124

(354,139,909)

(52,871,696)

172,776,980

(543,218,757)

(81,100,425)

Interest income, net

6,288,829

7,153,803

1,068,035

12,848,280

12,500,971

1,866,346

Net gain (loss) on equity securities

601,252,857

1,655,350

247,137

166,008,740

(17,589,345)

(2,626,020)

Interest expense

(234,274)

(4,245,737)

(633,872)

(813,242)

(8,585,969)

(1,281,851)

Foreign exchange gain (loss), net

(938,526)

3,641,027

543,591

(735,132)

3,251,940

485,502

Other income

7,568,769

3,047,649

455,002

11,176,345

37,537,026

5,604,130

Other expenses

(193,817)

(691,665)

(103,263)

(6,479,822)

(823,210)

(122,902)

Net income (loss) before income taxes

626,980,962

(343,579,482)

(51,295,066)

354,782,149

(516,927,344)

(77,175,220)

Income tax expenses 

(69,243,099)

57,794,491

8,628,490

(70,915,821)

94,980,503

14,180,216

Net income (loss)

557,737,863

(285,784,991)

(42,666,576)

283,866,328

(421,946,841)

(62,995,004)

Net income (loss) attributable to Cango Inc.’s shareholders

557,737,863

(285,784,991)

(42,666,576)

283,866,328

(421,946,841)

(62,995,004)

Earnings (loss) per ADS attributable to ordinary shareholders:

Basic

3.85

(2.08)

(0.31)

1.93

(3.05)

(0.46)

Diluted

3.75

(2.08)

(0.31)

1.89

(3.05)

(0.46)

Weighted average ADS used to compute earnings (loss) per ADS
attributable to ordinary shareholders: 

Basic

144,829,122

137,612,565

137,612,565

147,012,155

138,416,992

138,416,992

Diluted

148,579,948

137,612,565

137,612,565

150,005,282

138,416,992

138,416,992

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustment

(42,140,854)

173,077,605

25,839,806

(31,858,589)

156,790,750

23,408,243

Total comprehensive income (loss)

515,597,009

(112,707,386)

(16,826,770)

252,007,739

(265,156,091)

(39,586,761)

Total comprehensive income (loss) attributable to Cango Inc.’s
shareholders

515,597,009

(112,707,386)

(16,826,770)

252,007,739

(265,156,091)

(39,586,761)

 

 

 

CANGO INC.
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except for number of shares and per share data)

 Three months ended June 30, 

 Six months ended June 30, 

2021

2022

2021

2022

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 (Unaudited) 

 RMB 

 RMB 

 US$ 

 RMB 

 RMB 

 US$ 

Net income (loss)

557,737,863

(285,784,991)

(42,666,576)

283,866,328

(421,946,841)

(62,995,005)

Add: Share-based compensation expenses

20,522,138

96,217,718

14,364,927

40,433,303

119,072,008

17,776,983

  Cost of revenue

783,983

1,104,953

164,965

1,454,657

2,000,393

298,651

  Sales and marketing

4,004,166

2,253,413

336,426

7,521,055

6,773,229

1,011,216

  General and administrative

14,987,159

92,068,794

13,745,509

29,678,982

108,407,806

16,184,860

  Research and development

746,830

790,558

118,027

1,778,609

1,890,580

282,256

Non-GAAP adjusted net income (loss)

578,260,001

(189,567,273)

(28,301,649)

324,299,631

(302,874,833)

(45,218,022)

Net income (loss) attributable to Cango Inc.’s shareholders

578,260,001

(189,567,273)

(28,301,649)

324,299,631

(302,874,833)

(45,218,022)

Non-GAAP adjusted net income (loss) per ADS-basic

3.99

(1.38)

(0.21)

2.21

(2.19)

(0.33)

Non-GAAP adjusted net income (loss) per ADS-diluted

3.89

(1.38)

(0.21)

2.16

(2.19)

(0.33)

Weighted average ADS outstanding—basic

144,829,122

137,612,565

137,612,565

147,012,155

138,416,992

138,416,992

Weighted average ADS outstanding—diluted

148,579,948

137,612,565

137,612,565

150,005,282

138,416,992

138,416,992