Cango Inc. Reports Fourth Quarter and Full Year 2023 Unaudited Financial Results

Cango Inc. (NYSE: CANG) ("Cango" or the "Company"), a leading automotive transaction service platform in China, today announced its unaudited financial results for the fourth quarter and full year of 2023.

Fourth Quarter 2023 Financial and Operational Highlights

• Total revenues were RMB130.2 million (US$18.3 million), compared with RMB487.1 million in the same period of 2022. The total outstanding balance of financing transactions the Company facilitated was RMB10.0 billion (US$1.4 billion) as of December 31, 2023. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.66% and 1.37%, respectively, as of December 31, 2023, compared with 2.42% and 1.24%, respectively, as of September 30, 2023.

• Total balance of cash and cash equivalents, short-term investments and restricted cash - current - bank deposits held for short-term investments were RMB 3.3 billion (US$ 468.4 million) as of December 31, 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.

Full Year 2023 Financial and Operational Highlights

Ÿ   Total revenues were RMB1.7 billion (US$239.7 million), compared with RMB2.0 billion in the full year of 2022. Car trading transactions revenues were RMB1.3 billion (US$184.5 million), or 77.0% of total revenues in the full year of 2023, compared with RMB1.6 billion in the full year of 2022.

Ÿ   In 2023, the company seamlessly merged new car service platform “Cango Haoche,” into “Cango U-car,” a specialized platform for used car transaction, to optimize resource allocation and enhance operational efficiency. The upgraded "Cango U-car" APP covers historical vehicle condition reports, vehicle appraisal and inspection, logistics and delivery services, insurance and supply chain financing facilitation, etc.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “2023 was a challenging year. Despite a long-term recovery trend, short-term influences resulted in a slower-than-expected recovery pace and depressed consumer confidence. In the automobile sector, intense competition hastened the survival of the fittest, transforming the industry landscape. “

“With keen insight into market conditions and industry trends, Cango strategically consolidated its two platforms, ‘Cango Haoche’ for new cars and ‘Cango U-car’ for used cars, into a single integrated ‘Cango U-car’ APP in 2023. Servicing as an online marketplace, ‘Cango U-car’ connects upstream vehicle suppliers, aftermarket service providers, and downstream small car dealers in lower-tier cities and provides comprehensive services across three major scenarios, including online auctions, dealer transaction facilitation, and deal assistance to brokers. “

“Our dynamic online marketplace featuring third-party and self-operated stores continues to drive progress across the platform. In the fourth quarter, the total number of upstream third-party seller stores on the platform reached 38, offering new cars, used cars, and traffic generation services. In the fourth quarter, ‘Cango U-car’ provided services to 3,499 small online car dealers and facilitated a total of 530 used car transactions.”

“Beyond ‘Cango U-car’, we plan to establish a preferred website for overseas buyers seeking Chinese used cars. Leveraging Cango’s rich experience and market know-how, we established an interactive and export service website for used car information in March 2024, catering to auto dealers in emerging and developing countries to provide them with easy access to China’s abundant automobile-related resources.”

“Moving into 2024, we will continue to leverage technology to broaden our presence across the domestic and international automotive value chain. With our comprehensive, end-to-end service model and efficient operations, we will explore business opportunities inside and outside of China,” concluded Mr. Lin.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, "China’s uneven economic recovery impacted our business throughout 2023. In addition to our integration of ‘Cango Haoche’ and ‘Cango U-car’, we implemented various cost optimization measures to address the automotive market’s evolution. We are confident that our streamlined model and online marketplace will increase our competitiveness across the industry value chain. For 2024, we will continue refining and building ‘Cango U-Car’ while exploring international growth opportunities."

Fourth Quarter 2023 Financial Results

REVENUES

Total revenues in the fourth quarter of 2023 were RMB130.2 million (US$18.3 million) compared with RMB487.1 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 fourth quarter of 2023 was RMB42.1 million (US$5.9 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 fourth quarter of 2023 were RMB159.1 million (US$22.4 million) compared with RMB698.7 million in the same period of 2022.

• Cost of revenue in the fourth quarter of 2023 decreased to RMB110.9 million (US$15.6 million) from RMB481.7 million in the same period of 2022. As a percentage of total revenues, cost of revenue in the fourth quarter of 2023 was 85.1% compared with 98.9% in the same period of 2022.

• Sales and marketing expenses in the fourth quarter of 2023 decreased to RMB4.4 million (US$0.6 million) from RMB19.2 million in the same period of 2022. As a percentage of total revenues, sales and marketing expenses in the fourth quarter of 2023 was 3.4% compared with 4% in the same period of 2022.

• General and administrative expenses in the fourth quarter of 2023 decreased to RMB45.6 million (US$6.4 million) from RMB66.2 million in the same period of 2022. As a percentage of total revenues, general and administrative expenses in the fourth quarter of 2023 was 35.0% compared with 13.6% in the same period of 2022.

• Research and development expenses in the fourth quarter of 2023 decreased to RMB7.3 million (US$1.0 million) from RMB8.4 million in the same period of 2022. As a percentage of total revenues, research and development expenses in the fourth quarter of 2023 was 5.6% compared with 1.7% in the same period of 2022.

• Net loss on contingent risk assurance liabilities in the fourth quarter of 2023 was RMB22.2 million (US$3.1 million).

• Net recovery on provision for credit losses in the fourth quarter of 2023 was RMB31.2 million (US$4.4 million). The recovery was primarily due to the positive impact from the collections of financing receivables.

LOSS FROM OPERATIONS

Loss from operations in the fourth quarter of 2023 decreased to RMB28.9 million (US$4.1 million) from RMB211.6 million in the same period of 2022.

NET LOSS

Net loss in the fourth quarter of 2023 was RMB103.8 million (US$14.6 million). Non-GAAP adjusted net loss in the fourth quarter of 2023 was RMB99.2 million (US$14.0 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 fourth quarter of 2023 were both RMB0.95 (US$0.13). Non-GAAP adjusted basic and diluted net loss per ADS in the fourth quarter of 2023 were both RMB0.91 (US$0.13). Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

• As of December 31, 2023, the Company had cash and cash equivalents of RMB1.0 billion (US$143.7 million), compared with RMB665.6 million as of September 30, 2023.

• As of December 31, 2023, the Company had short-term investments of RMB635.1 million (US$89.4 million), while the Company had restricted cash - current - bank deposits held for short-term investments of RMB1.7 billion (US$ 235.2 million). As of September 30, 2023, the Company had short-term investments of RMB2.4 billion. 

Full Year 2023 Financial Results

REVENUES

Total revenues in the full year of 2023 were RMB1.7 billion (US$239.7 million) compared with RMB2.0 billion in the full year of 2022. Revenues from car trading transactions in the full year of 2023 were RMB1.3 billion (US$184.5 million), or 77.0% of total revenues in the full year of 2023, compared with RMB1.6 billion in the full year of 2022.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the full year of 2023 were RMB1.8 billion (US$250.1 million) compared with RMB2.9 billion in the full year of 2022.

• Cost of revenue in the full year of 2023 decreased to RMB1.5 billion (US$212.9 million) from RMB1.8 billion in the full year of 2022. As a percentage of total revenues, cost of revenue in the full year of 2023 was 88.8% compared with 92.4% in the full year of 2022.

• Sales and marketing expenses in the full year of 2023 decreased to RMB38.9 million (US$5.5 million) from RMB132.8 million in the full year of 2022. As a percentage of total revenues, sales and marketing expenses in the full year of 2023 was 2.3% compared with 6.7% in the full year of 2022.

• General and administrative expenses in the full year of 2023 decreased to RMB157.0 million (US$22.1 million) from RMB299.5 million in the full year of 2022. As a percentage of total revenues, general and administrative expenses in the full year of 2023 was 9.2% compared with 15.1% in the full year of 2022.

• Research and development expenses in the full year of 2023 decreased to RMB30.1 million (US$4.2 million) from RMB46.0 million in the full year of 2022. As a percentage of total revenues, research and development expenses in the full year of 2023 was 1.8% compared with 2.3% in the full year of 2022.

• Net loss on contingent risk assurance liabilities in the full year of 2023 was RMB25.6 million (US$3.6 million).

• Net recovery on provision for credit losses in the full year of 2023 was RMB136.5 million (US$19.2 million).

• Impairment loss from goodwill in the full year of 2023 was RMB 148.7 million (US$20.9 million).

LOSS FROM OPERATIONS

Loss from operations in the full year of 2023 was RMB73.8 million (US$10.4 million), compared with RMB947.1 million in the full year of 2022.

NET LOSS/ INCOME

Net loss in the full year of 2023 was RMB37.9 million (US$5.3 million). Non-GAAP adjusted net income in the full year of 2023 was RMB0.6 million (US$0.09 million). Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see “Use of Non-GAAP Financial Measure.”

NET LOSS/ INCOME PER ADS

Basic and diluted net loss per ADS in the full year of 2023 were both RMB0.31 (US$0.04). Non-GAAP adjusted basic and diluted net income per ADS in the full year of 2023 were RMB0.01 (US$0.00) and RMB0.00 (US$0.00), respectively. Each ADS represents two Class A ordinary shares of the Company.

Business Outlook

For the first quarter of 2024, the Company expects total revenues to be between RMB50 million and RMB100 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 26.1 million ADSs with cash in the aggregate amount of approximately US$33.7 million up to December 31, 2023. In addition to open market transactions, the Company repurchased 2.3 million Class A ordinary shares and 5.5 million Class A ordinary shares respectively from two institutional investors in privately negotiated transactions for an aggregate purchase price of approximately US$2.9 million and US$6.8 million, respectively. The Company settled the transactions in January 2024. The two institutional investors are independent third parties to the Company and not related to any director or executive officer of the Company. The two transactions enabled the Company to repurchase more shares than otherwise available from open market, and through a single transaction, increased the average value per share to all remaining shareholders of the Company.