SHANGHAI, June 12, 2024 -- Cango Inc. (NYSE: CANG) ("Cango" or the "Company"), a leading automotive transaction service platform in China, today announced its unaudited financial results for the first quarter of 2024.
First Quarter 2024 Financial and Operational Highlights
Total revenues were RMB64.4 million (US$8.9 million), compared with RMB542.6 million in the same period of 2023. Income from operations was RMB74.2 million (US$10.3 million) for the three months ended March 31, 2024, an increase of 43.1% from RMB51.8 million in the same period last year. Net income was RMB90.0 million (US$12.5 million) for the three months ended March 31, 2024, an increase of 14.3% from RMB78.8 million in the same period last year.
The total outstanding balance of financing transactions the Company facilitated was RMB7.6 billion (US$1.1 billion) as of March 31, 2024. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.87% and 1.51%, respectively, as of March 31, 2024, compared with 2.66% and 1.37%, respectively, as of December 31, 2023.
Total balance of cash and cash equivalents, short-term investments and restricted cash - current - bank deposits held for short-term investments increased by RMB152.6 million (US$21.1 million) compared to that as of December 31, 2023. The liquidity improvement was primarily driven by the positive operating cash flow generated by decreased working capital for car trading transactions, collections of financing receivables, and loan facilitation service fees.
Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “In the first quarter of 2024, the Chinese automotive industry continued to encounter significant challenges. Traditional automakers are under pressure to transform and adapt to the new energy era and emerging NEV manufacturers are facing intense market competition and severe profitability struggles. In response to these trends, Cango proactively reduced the scale of our self-operated new car business, streamlined purchasing, and optimized inventory management, mitigating the risk of declining new car prices.
“In the first quarter, we completed the integration of ‘Cango U-car’ and further strengthened the platform’s competitive advantages by ensuring a consistent supply of high-quality vehicles, optimizing dealer service experiences and supply chain management.
“We also made significant strides in cross-border used car transactions during the first quarter. In March, we officially launched a cross-border information platform specifically for used car transactions. This platform brings insights into the Chinese used car market to multilingual global users, filling a gap in domestic cross-border used car transaction information services. Our ultimate goal is to build this platform into the preferred gateway for Chinese used cars to enter the international market.
“Looking ahead, we will remain committed to exploring new business models and expanding growth opportunities. We firmly believe that through continuous innovation and meticulous management, Cango will drive a long-term and sustainable development,” concluded Mr. Lin.
Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “Our strategic efforts to scale back new car inventory and improve operational efficiency have begun to bear fruit, resulting in a profit for the first quarter of 2024. We also achieved a third consecutive quarter of positive operating cash flow, allowing us to maintain a strong cash position. We are confident that our meticulous cost control and effective liquidity management will propel Cango’s long-term growth and progress.”
First Quarter 2024 Financial Results
REVENUES
Total revenues in the first quarter of 2024 were RMB64.4 million (US$8.9 million) compared with RMB542.6 million in the same period of 2023. The guarantee income, which represented the fee income earned on the non-contingent aspect of a guarantee, was RMB30.3 million (US$4.2 million) in the first quarter of 2024. This was presented separately from the contingent aspect of a guarantee pursuant to the adoption of ASC 326 since January 1, 2023.
OPERATING COST AND EXPENSES
Cost of revenue in the first quarter of 2024 decreased to RMB29.1 million (US$4.0 million) from RMB480.5 million in the same period of 2023. As a percentage of total revenues, cost of revenue in the first quarter of 2024 was 45.1% compared with 88.6% in the same period of 2023.
Sales and marketing expenses in the first quarter of 2024 decreased to RMB3.5 million (US$0.5 million) from RMB12.5 million in the same period of 2023.
General and administrative expenses in the first quarter of 2024 decreased to RMB37.9 million (US$5.3 million) from RMB39.8 million in the same period of 2023.
Research and development expenses in the first quarter of 2024 decreased to RMB1.1 million (US$0.2 million) from RMB8.1 million in the same period of 2023.
Net gain on contingent risk assurance liabilities in the first quarter of 2024 was RMB15.0 million (US$2.1 million) compared with RMB1.6 million in the same period of 2023. The gain was recognized due to the release of obligations from the contingent aspect of the risk assurance liabilities.
Net recovery on provision for credit losses in the first quarter of 2024 was RMB66.3 million (US$9.2 million). The recovery was primarily due to the positive impact from the collections of financing receivables.
INCOME FROM OPERATIONS
Income from operations in the first quarter of 2024 was RMB74.2 million (US$10.3 million), an increase of 43.1% from RMB51.8 million in the same period of 2023.
NET INCOME
Net income in the first quarter of 2024 was RMB90.0 million (US$12.5 million). Non-GAAP adjusted net income in the first quarter of 2024 was RMB95.7 million (US$13.3 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 INCOME PER ADS
Basic and diluted net income per American Depositary Share (the “ADS”) in the first quarter of 2024 were RMB0.85 (US$0.12) and RMB0.80 (US$0.11), respectively. Non-GAAP adjusted basic and diluted net income per ADS in the first quarter of 2024 were RMB0.91 (US$0.13) and RMB0.85 (US$0.12), respectively. Each ADS represents two Class A ordinary shares of the Company.
BALANCE SHEET
As of March 31, 2024, the Company had cash and cash equivalents of RMB1.2 billion (US$160.1 million), compared with RMB1.0 billion as of December 31, 2023.
As of March 31, 2024, the Company had short-term investments of RMB2.3 billion (US$321.6 million), compared with RMB635.1 million as of December 31, 2023. The increase was mainly due to the conversion from restricted cash – bank deposits held for short-term investments of RMB1,670.0 million on December 31, 2023 after the Company completed its subscription process.
Business Outlook
For the second quarter of 2024, the Company expects total revenues to be between RMB35 million and RMB45 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 23, 2024 (the “New Share Repurchase Program”), the Company had repurchased 360,858 ADSs with cash in the aggregate amount of approximately US$578,975.4 up to May 31, 2024.
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