omniture

Cango Inc. Reports Second Quarter 2019 Unaudited Financial Results

2019-09-04 07:00 1541

SHANGHAI, Sept. 4, 2019 /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 2019.

Second Quarter 2019 Financial and Operational Highlights

  • Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million), representing a year-over-year increase of 42.3% and outperforming the high end of the Company's guidance by 6.8%.
  • After-market services facilitation revenues in the second quarter of 2019 were RMB35.9 million (US$5.2 million), continuing to serve as an important driver for the Company's revenue growth.
  • Income from operations in the second quarter of 2019 increased by 17.3% to RMB84.3 million (US$12.3 million) from RMB71.8 million in the corresponding period of 2018.
  • Net income in the second quarter of 2019 increased by 46.4% to RMB94.6 million (US$13.8 million) from RMB64.6 million in the corresponding period of 2018. Non-GAAP net income in the second quarter of 2019 increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018.
  • The amount of financing transactions the Company facilitated in the second quarter of 2019 totaled RMB6,154.8 million (US$896.6 million). The total outstanding balance of financing transactions the Company facilitated was RMB36,394.0 million (US$5,301.4 million) as of June 30, 2019.
  • M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 0.72% and 0.30%, respectively, as of June 30, 2019, as compared to 0.77% and 0.37%, respectively, as of March 31, 2019.
  • The number of dealers covered by the Company was 48,367 as of June 30, 2019, as compared to 47,879 as of March 31, 2019.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, "Despite the continuing macroeconomic and industry-wide challenges, we maintained our solid growth trajectory with strong financial and operating performances in the second quarter of 2019. During the quarter, our core auto loan facilitation business continued to be a vital growth driver, and we further expanded and refined our after-market services. In addition, we achieved significant breakthroughs in our cooperation with the Industrial and Commercial Bank of China ("ICBC") in relation to our automotive financing solutions. As a result, our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter of 2019. Going forward, we will continue to augment our leadership in China's market for automotive financing services by bolstering our core competencies in auto loan facilitation services, expanding our dealership network, developing differentiated products and services, and harnessing our well-developed capabilities in big data and internet technologies."

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, "After a strong start in the first quarter of 2019, we continued to deliver healthy performances in the second quarter. Our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter. Our after-market services facilitation business continued to serve as an important growth engine, contributing RMB35.9 million or 10.7% of our total revenues in the second quarter. Our income from operations and net income increased by 17.3% and 46.4% in the second quarter, respectively. Looking ahead, we will continue to invest in expanding our dealership network, optimizing our service quality and efficiency, and advancing our technology through innovation. As we continue to deepen our collaborations with more financial institutions and original equipment manufacturers, we are confident that we will sustain our growth despite the persisting industry challenges."

Second Quarter 2019 Financial Results

REVENUES

Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million), representing a 42.3% increase from RMB236.3 million in the corresponding period of 2018. This increase was primarily driven by the Company's strategies to rejuvenate growth, increased revenue contribution from its after-market services business, and a significant increase in loan facilitation volume from the Company's business partnership with ICBC.

Revenues from after-market services facilitation in the second quarter of 2019 were RMB35.9 million (US$5.2 million), compared to RMB12.3 million in the same period of last year.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2019 were RMB252.0 million (US$36.7 million), compared to RMB164.4 million in the corresponding period of 2018.

  • Cost of revenue in the second quarter of 2019 increased by 55.0% to RMB125.8 million (US$18.3 million) from RMB81.2 million in the corresponding period of 2018. The increase was primarily driven by the Company's business expansion and was in line with the increase in total revenues in the second quarter of 2019.  Cost of revenue as a percentage of total revenues in the second quarter of 2019 increased to 37.4% from 34.4% in the corresponding period of 2018. This was primarily due to increases in the amount of incentives paid to employees per individual financing transaction. 
  • Sales and marketing expenses in the second quarter of 2019 increased by 20.3% to RMB44.5 million (US$6.5 million) from RMB37.0 million in the corresponding period of 2018. The increase was due to increases in travel expenses as a result of the Company's business expansion and higher share-based compensation expenses. Sales and marketing expenses as a percentage of total revenues in the second quarter of 2019 decreased to 13.2% from 15.7% in the corresponding period of 2018.
  • General and administrative expenses were RMB53.4 million (US$7.8 million), or 15.9% of total revenues, in the second quarter of 2019, compared to RMB31.4 million, or 13.3% of total revenue, in the corresponding period of 2018. The increase was mainly due to higher share-based compensation expenses in the second quarter of 2019.
  • Research and development expenses in the second quarter of 2019 increased by 29.2% to RMB12.3 million (US$1.8 million) from RMB9.5 million in the corresponding period of 2018. The increase was a result of increased investments in the Company's research and development projects as it expanded its business. Research and development expenses as a percentage of total revenues in the second quarter of 2019 decreased to 3.6% from 4.0% in the corresponding period of 2018.

INCOME FROM OPERATIONS

Income from operations was RMB84.3 million (US$12.3million) in the second quarter of 2019, representing a year-over-year increase of 17.3% from RMB71.8 million in the corresponding period of 2018.

NET INCOME

Net income was RMB94.6 million (US$13.8 million) in the second quarter of 2019, representing a year-over-year increase of 46.4% from RMB64.6 million in the corresponding period of 2018. Non-GAAP adjusted net income increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018. 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 (ADS) in the second quarter of 2019 were both RMB0.60 (US$0.09). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2019 were both RMB0.75 (US$0.11). Each ADS represents two of the Company's Class A ordinary shares.

BALANCE SHEET

As of June 30, 2019, the Company had cash and cash equivalents of RMB1,609.6 million (US$234.5 million), compared to RMB2,178.0 million as of March 31, 2019. The change was due to the fact that the Company invested certain amount of cash in term deposit over three months for better cash-on-cash return.

Business Outlook

For the third quarter of 2019, the Company expects total revenues to be between RMB300 million and RMB325 million. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

The Company's management will hold a conference call on Tuesday, September 3, 2019, at 9:00 P.M. Eastern Time or Wednesday, September 4, 2019, 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 Toll Free:

800-905-945

Conference ID:

Cango Inc.

The replay will be accessible through September 10, 2019, by dialing the following numbers:

International:

+1-412-317-0088

United States Toll Free:

+1-877-344-7529

Access Code:

10134672

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 dealers, financial institutions, car buyers, 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 engages car buyers through a nationwide dealer network. The Company's services primarily consist of automotive financing facilitation, automotive transaction facilitation, and after-market services facilitation. By utilizing its competitive advantages in technology, data insights, and cloud-based infrastructure, Cango is able to connect its platform participants while bringing them a premium user experience. Cango's platform model puts it in a unique position to add value for its platform participants and business partners as the automotive and mobility markets in China continue to grow and evolve. 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, 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 as net income 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 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 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 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. 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 RMB6.8650 to US$1.00, the noon buying rate in effect on June 28, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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

Caesar Cao
Cango Inc.
Tel: +86 21 3183 5088 ext.5521
Email: ir@cangoonline.com

Jack Wang
ICR Inc.
Tel: +1 (646) 405-5056
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,
2018 


As of June 30,
2019





 RMB 


 RMB 

 US$ 









ASSETS:








Current assets:








Cash and cash equivalents




2,912,901,189


1,609,621,867

234,467,861

Restricted Cash




298,900,155


586,789,155

85,475,478

Short-term investments




265,869,717


546,167,864

79,558,320

Accounts receivable, net




86,513,830


135,437,250

19,728,660

Financing receivable, net




5,420,617


7,626,277

1,110,892

Short-term loan principal and financing service fee
receivables, net




-


5,759,707

838,996

Short-term finance leasing receivable, net




1,123,703,618


1,499,097,355

218,368,151

Prepaid expenses and other current assets 




61,272,518


78,004,663

11,362,660

Total current assets




4,754,581,644


4,468,504,138

650,911,018









Non-current assets:








Restricted Cash




668,627,618


805,081,110

117,273,286

Long-term investments




292,099,059


441,534,200

64,316,708

Equity method investments




1,448,416


-

-

Goodwill




145,063,857


145,063,857

21,130,933

Property and equipment, net




18,286,218


16,720,263

2,435,581

Intangible assets




1,693,407


33,776,532

4,920,107

Deferred tax assets




100,194,993


81,593,698

11,885,462

Long-term finance leasing receivable, net




1,282,457,409


1,577,577,084

229,800,012

Other non-current assets




36,687,583


9,493,492

1,382,883

Total non-current assets




2,546,558,560


3,110,840,236

453,144,972

TOTAL ASSETS




7,301,140,204


7,579,344,374

1,104,055,990









LIABILITIES AND SHAREHOLDERS' EQUITY








Current liabilities:








Short-term borrowings




660,000,000


1,110,000,000

161,689,731

Long-term debts—current




467,194,051


542,456,711

79,017,729

Accrued expenses and other current liabilities




211,458,501


215,035,436

31,323,443

Risk assurance liabilities 




173,210,363


196,388,309

28,607,183

Income tax payable




53,517,717


7,418,417

1,080,614

Total current liabilities




1,565,380,632


2,071,298,873

301,718,700









Non-current liabilities:








Long-term borrowings




472,793,340


314,346,370

45,789,712

Other non-current liabilities




7,599,404


-

-

Total non-current liabilities




480,392,744


314,346,370

45,789,712

Total liabilities




2,045,773,376


2,385,645,243

347,508,412

















Shareholders' equity








Ordinary shares




204,260


204,260

29,754

Additional paid-in capital




4,444,078,463


4,481,629,026

652,822,873

Accumulated other comprehensive income




109,452,996


98,390,209

14,332,150

Accumulated retained earnings




698,036,438


611,766,717

89,113,869

Total Cango Inc.'s equity




5,251,772,157


5,191,990,212

756,298,646

Non-controlling interests




3,594,671


1,708,919

248,932

Total shareholders' equity




5,255,366,828


5,193,699,131

756,547,578

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY




7,301,140,204


7,579,344,374

1,104,055,990

 

 

 

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, 





2018


2019


2018


2019





 RMB 


 RMB 

 US$ 


 RMB 


 RMB 

 US$ 














Revenues




236,287,811


336,303,754

48,988,165


485,107,011


687,962,259

100,213,002

Operating cost and expenses:













Cost of revenue




81,181,330


125,824,004

18,328,333


162,037,069


256,630,454

37,382,440

Sales and marketing




36,979,636


44,503,534

6,482,671


71,798,024


90,050,914

13,117,395

General and administrative




31,350,545


53,418,413

7,781,269


58,094,590


118,182,033

17,215,154

Research and development




9,481,415


12,246,050

1,783,838


15,933,541


25,593,854

3,728,165

Net loss on risk assurance liabilities




(4,951,451)


2,379,706

346,643


(1,183,503)


20,230,839

2,946,954

Provision for financing receivables




10,402,370


13,672,656

1,991,647


13,464,113


23,695,938

3,451,703

Total operating cost and expenses




164,443,845


252,044,363

36,714,401


320,143,834


534,384,032

77,841,811














Income from operations




71,843,966


84,259,391

12,273,764


164,963,177


153,578,227

22,371,191

Interest income




18,246,042


22,704,386

3,307,267


26,323,438


41,588,934

6,058,111

(Loss) income from equity method investments




937,549


(942,312)

(137,263)


(1,396,142)


(926,205)

(134,917)

Interest expense




(4,712,329)


(4,712,329)

(686,428)


(9,502,055)


(10,006,574)

(1,457,622)

Foreign exchange loss, net




10,045,905


1,409,293

205,287


7,422,516


122,801

17,888

Other income




(975,669)


856,340

124,740


21,046,154


21,593,278

3,145,416

Other expenses




(7,091,835)


(168,717)

(24,576)


(7,197,923)


(1,184,660)

(172,565)

Net income before income taxes




88,293,629


103,406,052

15,062,791


201,659,165


204,765,801

29,827,502

Income tax expenses 




(23,677,171)


(8,819,437)

(1,284,696)


(53,016,212)


(35,808,056)

(5,216,031)

Net income




64,616,458


94,586,615

13,778,095


148,642,953


168,957,745

24,611,471

Less: Net incomeattributable to the noncontrolling
interest shareholders




164,843


3,047,624

443,936


4,099,150


1,200,254

174,837














Net income attributable to Cango Inc.'s
shareholders




64,451,615


91,538,991

13,334,159


144,543,803


167,757,491

24,436,634

Accretion of Series C Preferred Shares




6,991,289


-

-


6,991,289


-

-

Net income attributable to Cango Inc.'s ordinary
shareholders




57,460,326


91,538,991

13,334,159


137,552,514


167,757,491

24,436,634

Net income per ADS (Note 1):













Basic




0.44


0.60

0.09


1.07


1.11

0.16

Diluted




0.44


0.60

0.09


1.05


1.11

0.16














ADSs used in net income per ADS computation
(Note 1):













Basic




130,053,500


151,404,946

151,404,946


128,244,728


151,404,946

151,404,946

Diluted




131,667,341


151,404,946

151,404,946


130,443,925


151,404,946

151,404,946



























Other comprehensive income, net of tax













Unrealized losses on available-for-sale securities




78,147


(108,594)

(15,818)


156,131


(146,801)

(21,384)

Reclassification of losses to net income




-


(276,843)

(40,327)


-


(276,843)

(40,327)

Foreign currency translation adjustment




43,890,855


31,329,909

4,563,716


43,890,855


(10,639,143)

(1,549,766)














Total comprehensive income




108,585,460


125,531,087

18,285,666


192,689,939


157,894,958

22,999,994

Total comprehensive income attributable to Cango
Inc.'s shareholders




108,420,617


122,483,463

17,841,730


188,590,789


156,694,704

22,825,157



























Note 1: Each ADS represents two ordinary shares.













 

 

 

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, 



2018


2019


2018


2019



 (Unaudited) 


 (Unaudited) 

 (Unaudited) 


 (Unaudited) 


 (Unaudited) 

 (Unaudited) 



 RMB 


 RMB 

 US$ 


 RMB 


 RMB 

 US$ 












Net income


64,616,458


94,586,615

13,778,094


148,642,953


168,957,745

24,611,471

Add: Share-based compensation expenses


5,467,240


22,273,101

3,244,443


5,467,240


37,550,563

5,469,856

  Cost of revenue


224,157


913,198

133,022


224,157


1,539,574

224,264

  Sales and marketing


1,164,522


4,744,170

691,066


1,164,522


7,998,269

1,165,079

  General and administrative


3,794,264


15,457,530

2,251,643


3,794,264


26,060,087

3,796,080

  Research and development


284,297


1,158,203

168,711


284,297


1,952,633

284,433

Non-GAAP adjusted net income


70,083,698


116,859,716

17,022,537


154,110,193


206,508,308

30,081,327

Less: Net income attributable to the noncontrolling interest
shareholders


164,843


3,047,624

443,936


4,099,150


1,200,254

174,837

Non-GAAP adjusted net income attributable to
Cango Inc.'s shareholders


69,918,855


113,812,092

16,578,601


150,011,043


205,308,054

29,906,490

Accretion of Series C Preferred Shares


6,991,289


-

-


6,991,289


-

-

Non-GAAP adjusted net income attributable to
Cango Inc.'s ordinary shareholders


62,927,566


113,812,092

16,578,601


143,019,754


205,308,054

29,906,490























Non-GAAP adjusted net income per ADS-basic (Note 1)


0.48


0.75

0.11


1.12


1.36

0.20

Non-GAAP adjusted net income per ADS-diluted (Note 1)


0.48


0.75

0.11


1.10


1.36

0.20












Weighted average ADS outstanding—basic


130,053,500


151,404,946

151,404,946


128,244,728


151,404,946

151,404,946

Weighted average ADS outstanding—diluted


131,667,341


151,404,946

151,404,946


130,443,925


151,404,946

151,404,946























Note 1: Each ADS represents two ordinary shares.











 

 

Source: Cango Inc.
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