Cango Inc. Reports Third Quarter 2023 Unaudited Financial Results

SHANGHAI, Nov. 28, 2023 /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 third quarter of 2023.

Third Quarter 2023 Financial and Operational Highlights

  • Total revenues were RMB353.6 million (US$48.5 million), compared with RMB416.4 million in the same period of 2022. Car trading transactions revenues were RMB263.8 million (US$36.2 million), or 74.6% of total revenues, in the third quarter of 2023, compared with RMB347.2 million in the same period of 2022.

  • The total outstanding balance of financing transactions the Company facilitated was RMB13,085.6 million (US$1,793.5 million) as of September 30, 2023. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.42% and 1.24%, respectively, as of September 30, 2023, compared with 2.12% and 1.09%, respectively, as of June 30, 2023.

  • There were 27 self-owned vehicle models listed on our platform, including 18 car brands and 23 car series as of September 30, 2023. During the nine months ended September 30, 2023, the total sales of new cars were 12,138, including 3,151 new energy vehicles (NEVs).

  • Total balance of cash and cash equivalents and short-term investment increased by RMB 454.6 million compared to that as of June 30, 2023. The liquidity improvement was primarily driven by the positive operating cashflow generated by the decreased working capital of car trading transactions, the collections of financing receivables, and the loan facilitation service fees.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, "Throughout the third quarter, China's economic downturn continued to weigh on production and demand. China's auto market continued to fluctuate, exerting immense pressure on everyone along the automotive value chain, including car dealers. "

"Cango has been committed to working closely with car dealers and developing services to meet their needs since day one. Through our 'Cango Haoche' and 'Cango U-car' Apps and mini programs, we have fostered a robust warehouse and logistics network across almost 100 cities nationwide with over 11,000 registered new car dealers, as well as over 7,000 accumulated registered used car dealers as of September 30, 2023. As our extended footprint brings us deeper insight into industry trends, we have been recalibrating our strategy accordingly. New car dealers are starting to engage in used car retail, while used car dealers are now attempting to sell new cars as well. As such, we have decided to merge Cango Haoche's services into our Cango U-car platform to cater to the rapidly disappearing boundary between new car and used car sales channels. "

"The integrated Cango U-car platform will adopt a dynamic multi-store growth model to fully unleash the platform's vitality. We believe its innovative, one-stop, end-to-end services will not only improve Cango's resource utilization and significantly boost operating efficiency, but also empower our downstream dealer partners to better serve their end customers."

"Moving forward, we will continue to harness the power of big data and digital technologies while actively exploring opportunities for growth, including our potential expansion into overseas used car markets. By consistently refining business operations and strengthening our core competitive edges, we are confident we will propel Cango's sustainable growth," concluded Mr. Lin.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, "The fluctuating market environment continued to impact our business this quarter. We implemented additional cost optimization measures and enhanced operational efficiency. We are confident that our updated service offerings and effective growth model will boost our competitiveness. Looking ahead, we will continue working with our dealer partners to weather the storm while exploring additional growth opportunities."

Accounting Policy Changes

The Company adopted the Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments on January 1, 2023, using the modified retrospective transition method. This standard requires the measurement of all expected credit losses for financial assets measured at amortized cost and off-balance sheet credit exposures not accounted for as insurance at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Upon adoption of the standard on January 1, 2023, the Company recorded RMB302.4 million (US$41.4 million) increase in risk assurance liabilities, RMB14.5 million (US$2.0 million) increase in the allowance for finance lease receivables, RMB13.8 million (US$1.9 million) increase in the allowance for financing receivables and RMB3.2 million (US$0.4 million) increase in the allowance of other current and non-current assets. After adjusting for deferred taxes, RMB306.9 million (US$42.1 million) decrease was recorded in beginning retained earnings on January 1, 2023 through a cumulative-effect adjustment.

Third Quarter 2023 Financial Results

REVENUES

Total revenues in the third quarter of 2023 were RMB353.6 million (US$48.5 million) compared with RMB416.4 million in the same period of 2022. Revenues from car trading transactions in the third quarter of 2023 were RMB263.8 million (US$36.2 million), or 74.6% of total revenues in the third quarter of 2023, compared with RMB347.2 million in the same period of 2022. The guarantee income, which represented the fee income earned on the non-contingent aspect of a guarantee, in the third quarter of 2023 was RMB50.0 million (US$6.9 million) which was presented separately from contingent aspect of a guarantee pursuant to the adoption of ASC 326 since January 1, 2023.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the third quarter of 2023 were RMB441.4 million (US$60.5 million) compared with RMB608.8 million in the same period of 2022.

  • Cost of revenue in the third quarter of 2023 decreased to RMB304.6 million (US$41.8 million) from RMB388.7 million in the same period of 2022. As a percentage of total revenues, cost of revenue in the third quarter of 2023 was 86.1% compared with 93.3% in the same period of 2022.

  • Sales and marketing expenses in the third quarter of 2023 decreased to RMB9.9 million (US$1.4 million) from RMB17.9 million in the same period of 2022. As a percentage of total revenues, sales and marketing expenses in the third quarter of 2023 was 2.8% compared with 4.3% in the same period of 2022.

  • General and administrative expenses in the third quarter of 2023 decreased to RMB34.7 million (US$4.8 million) from RMB57.8 million in the same period of 2022. As a percentage of total revenues, general and administrative expenses in the third quarter of 2023 was 9.8% compared with 13.9% in the same period of 2022.

  • Research and development expenses in the third quarter of 2023 decreased to RMB7.0 million (US$1.0 million) from RMB10.2 million in the same period of 2022. As a percentage of total revenues, research and development expenses in the third quarter of 2023 was 2.0% compared with 2.4% in the same period of 2022.

  • Net loss on contingent risk assurance liabilities in the third quarter of 2023 was RMB3.5 million (US$0.5 million).

  • Net recovery on provision for credit losses in the third quarter of 2023 was RMB66.9 million (US$9.2 million). The recovery was primarily due to the positive impact from the collections of financing receivables.

  • Impairment loss from goodwill in the third quarter of 2023 was RMB148.7 million (US$20.4 million). The provision of goodwill impairment is based on the profit forecast associated with historical trend and the prevailing current conditions of market downturn.

LOSS FROM OPERATIONS

Loss from operations in the third quarter of 2023 decreased to RMB87.8 million (US$12.0 million) from RMB192.3 million in the same period of 2022.

NET LOSS

Net loss in the third quarter of 2023 was RMB49.1 million (US$6.7 million). Non-GAAP adjusted net loss in the third quarter of 2023 was RMB41.2 million (US$5.7 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 (the "ADS") in the third quarter of 2023 were both RMB0.45 (US$0.06), respectively. Non-GAAP adjusted basic and diluted net loss per ADS in the third quarter of 2023 were both RMB0.38 (US$0.05), respectively. Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

As of September 30, 2023, the Company had cash and cash equivalents of RMB665.6 million (US$91.2 million), compared with RMB589.4 million as of June 30, 2023.

As of September 30, 2023, the Company had short-term investments of RMB2,434.2 million (US$333.6 million), compared with RMB2,055.7 million as of June 30, 2023.

Business Outlook

For the fourth quarter of 2023, the Company expects total revenues to be between RMB100 million and RMB150 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 April 21, 2023, the Company had repurchased 25.4 million ADSs with cash in an aggregate amount of approximately US$32.9 million up to September 30, 2023.

Conference Call Information

The Company's management will hold a conference call on Monday, November 27, 2023, at 8:00 P.M. Eastern Time or Tuesday, November 28, 2023, 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 December 4, 2023 by dialing the following numbers:             

International:                                                                    

+1-412-317-0088

United States Toll Free:                                                    

+1-877-344-7529

Access Code:                                                                     

5256781

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 transactions, auto financing and after-market services. By working with platform participants, Cango endeavors to make car purchases 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 RMB7.2960 to US$1.00, the noon buying rate in effect on September 29, 2023, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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 

Helen Wu
Piacente Financial Communications
Tel: +86 10 6508 0677
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, 2022 


As of September 30, 2023






 RMB 


 RMB 

 US$ 











ASSETS:









Current assets:









Cash and cash equivalents




378,917,318


665,591,727

91,226,936


Restricted cash - current




152,688,510


15,801,703

2,165,804


Short-term investments




1,941,432,848


2,434,156,645

333,628,926


Accounts receivable, net




266,836,951


123,819,231

16,970,838


Finance lease receivables - current, net




799,438,656


282,736,702

38,752,289


Financing receivables, net




73,818,025


23,284,584

3,191,418


Short-term contract asset




500,389,654


209,365,695

28,695,956


Prepayments and other current assets 




1,356,822,028


270,276,955

37,044,539


Total current assets




5,470,343,990


4,025,033,242

551,676,706











Non-current assets:









Restricted cash - non-current




750,877,306


593,599,158

81,359,534


Goodwill




148,657,971


-

-


Property and equipment, net




14,689,988


12,118,253

1,660,945


Intangible assets




48,317,878


47,857,254

6,559,382


Long-term contract asset




173,457,178


48,742,636

6,680,734


Deferred tax assets




62,497,781


139,735,945

19,152,405


Finance lease receivables - non-current, net




260,049,967


64,427,204

8,830,483


Operating lease right-of-use assets




80,726,757


70,770,118

9,699,852


Other non-current assets




6,633,517


6,656,956

912,412


Total non-current assets




1,545,908,343


983,907,524

134,855,747


TOTAL ASSETS




7,016,252,333


5,008,940,766

686,532,453











LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Short-term debts




349,299,134


69,071,500

9,467,037


Long-term debts—current




565,143,340


16,791,391

2,301,452


Accrued expenses and other current liabilities




890,836,699


250,241,166

34,298,406


Deferred guarantee income




-


128,329,126

17,588,970


Contingent risk assurance liabilities 




-


151,469,025

20,760,557


Risk assurance liabilities 




402,303,421


-

-


Income tax payable




313,406,680


347,884,077

47,681,480


Short-term lease liabilities




9,913,073


10,283,813

1,409,514


Total current liabilities




2,530,902,347


974,070,098

133,507,416











Non-current liabilities:









Long-term debts




75,869,353


1,465,264

200,831


Deferred tax liability




10,724,133


10,724,133

1,469,865


Long-term operating lease liabilities




76,533,208


67,047,629

9,189,642


Other non-current liabilities




314,287


347,239

47,593


Total non-current liabilities




163,440,981


79,584,265

10,907,931


Total liabilities




2,694,343,328


1,053,654,363

144,415,347











Shareholders' equity









Ordinary shares




204,260


204,260

27,996


Treasury shares




(559,005,216)


(780,461,039)

(106,971,085)


Additional paid-in capital




4,805,240,472


4,821,193,562

660,799,556


Accumulated other comprehensive income




66,359,902


146,196,978

20,037,963


Retained earnings




9,109,587


(231,847,358)

(31,777,324)


Total Cango Inc.'s  equity




4,321,909,005


3,955,286,403

542,117,106


Total shareholders' equity




4,321,909,005


3,955,286,403

542,117,106


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY




7,016,252,333


5,008,940,766

686,532,453




















 

 

 

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 September 30, 


 Nine months ended September 30, 





2022


2023


2022


2023





 RMB 


 RMB 

 US$ 


 RMB 


 RMB 

 US$ 














Revenues




416,449,708


353,638,119

48,470,137


1,493,335,164


1,571,681,558

215,416,880

Loan facilitation income and other related income 




14,710,212


11,345,343

1,555,009


135,208,426


27,618,224

3,785,393

Guarantee income 




-


50,006,711

6,853,990


-


170,010,917

23,301,935

Leasing income




34,710,562


11,298,293

1,548,560


127,550,654


50,157,926

6,874,716

After-market services income 




19,381,025


14,116,184

1,934,784


55,704,269


41,364,974

5,669,541

Automobile trading income




347,247,512


263,821,645

36,159,765


1,165,160,983


1,256,429,781

172,208,029

Others




400,397


3,049,943

418,029


9,710,832


26,099,736

3,577,266

Operating cost and expenses:













Cost of revenue




388,703,295


304,638,147

41,754,132


1,348,346,307


1,400,985,230

192,021,002

Sales and marketing




17,888,406


9,854,441

1,350,664


113,531,814


34,546,132

4,734,941

General and administrative




57,812,378


34,682,695

4,753,659


233,366,364


111,319,960

15,257,670

Research and development




10,172,951


6,990,685

958,153


37,516,243


22,841,206

3,130,648

Net loss on contingent risk assurance liabilities




-


3,541,506

485,404


-


3,475,114

476,304

Net loss on risk assurance liabilities




84,952,664


-

-


237,018,349


-

-

Provision (net recovery on provision) for credit losses




49,259,212


(66,945,232)

(9,175,607)


259,114,042


(105,260,489)

(14,427,150)

Impairment loss from goodwill




-


148,657,971

20,375,270


-


148,657,971

20,375,270

Total operation cost and expense




608,788,906


441,420,213

60,501,675


2,228,893,119


1,616,565,124

221,568,685














Loss from operations




(192,339,198)


(87,782,094)

(12,031,538)


(735,557,955)


(44,883,566)

(6,151,805)

Interest income, net




14,619,894


19,481,911

2,670,218


27,120,865


58,981,302

8,084,060

Net gain (loss) on equity securities




4,285,558


7,038,386

964,691


(13,303,787)


15,439,734

2,116,192

Interest expense




(3,107,158)


(153,088)

(20,982)


(11,693,127)


(4,099,783)

(561,922)

Foreign exchange gain (loss), net




4,066,308


(489,215)

(67,052)


7,318,248


2,346,525

321,618

Other income




3,775,871


21,806,106

2,988,775


41,312,897


29,404,718

4,030,252

Other expenses




(964,807)


(141,358)

(19,375)


(1,788,017)


(368,492)

(50,506)

Net (loss) income before income taxes




(169,663,532)


(40,239,352)

(5,515,263)


(686,590,876)


56,820,438

7,787,889

Income tax benefits (expenses) 




39,338,402


(8,847,190)

(1,212,608)


134,318,905


9,084,706

1,245,163

Net  (loss) income




(130,325,130)


(49,086,542)

(6,727,871)


(552,271,971)


65,905,144

9,033,052

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




(130,325,130)


(49,086,542)

(6,727,871)


(552,271,971)


65,905,144

9,033,052

(Loss) earnings per ADS attributable to ordinary shareholders:













Basic




(0.96)


(0.45)

(0.06)


(4.01)


0.52

0.07

Diluted




(0.96)


(0.45)

(0.06)


(4.01)


0.50

0.07

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













Basic




136,442,760


109,587,726

109,587,726


137,751,682


125,710,975

125,710,975

Diluted




136,442,760


109,587,726

109,587,726


137,751,682


131,630,583

131,630,583














Other comprehensive income, net of tax













Foreign currency translation adjustment




141,603,735


7,806,144

1,069,921


298,394,485


79,837,076

10,942,582














Total comprehensive income (loss)




11,278,605


(41,280,398)

(5,657,950)


(253,877,486)


145,742,220

19,975,634

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




11,278,605


(41,280,398)

(5,657,950)


(253,877,486)


145,742,220

19,975,634














 

 

 

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 September 30, 


 Nine months ended September 30, 



2022


2023


2022


2023



 (Unaudited) 


 (Unaudited) 

 (Unaudited) 


 (Unaudited) 


 (Unaudited) 

 (Unaudited) 



 RMB 


 RMB 

 US$ 


 RMB 


 RMB 

 US$ 












Net (loss) income


(130,325,130)


(49,086,542)

(6,727,871)


(552,271,971)


65,905,144

9,033,052












Add: Share-based compensation expenses


20,373,774


7,857,905

1,077,015


139,445,782


33,897,580

4,646,050

  Cost of revenue


1,318,415


444,748

60,958


3,318,808


1,920,626

263,244

  Sales and marketing


4,367,008


1,608,169

220,418


11,140,237


6,747,135

924,772

  General and administrative


13,700,843


5,427,332

743,878


122,108,649


23,710,996

3,249,862

  Research and development


987,508


377,656

51,761


2,878,088


1,518,823

208,172












Non-GAAP adjusted net (loss) income


(109,951,356)


(41,228,637)

(5,650,856)


(412,826,189)


99,802,724

13,679,102

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


(109,951,356)


(41,228,637)

(5,650,856)


(412,826,189)


99,802,724

13,679,102












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


(0.81)


(0.38)

(0.05)


(3.00)


0.79

0.11

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


(0.81)


(0.38)

(0.05)


(3.00)


0.76

0.10












Weighted average ADS outstanding—basic


136,442,760


109,587,726

109,587,726


137,751,682


125,710,975

125,710,975

Weighted average ADS outstanding—diluted


136,442,760


109,587,726

109,587,726


137,751,682


131,630,583

131,630,583












 

 

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