Cango Inc. Reports First Quarter 2024 Unaudited Financial Results
Cango Inc. (NYSE: CANG) announced its unaudited financial results for Q1 2024. The company reported total revenues of RMB64.4 million (US$8.9 million), a significant decrease from RMB542.6 million in Q1 2023. However, income from operations grew by 43.1% to RMB74.2 million (US$10.3 million), and net income increased by 14.3% to RMB90.0 million (US$12.5 million).
Key financial metrics include a total financing transaction balance of RMB7.6 billion (US$1.1 billion) and an improved liquidity position with cash and short-term investments at RMB1.2 billion (US$160.1 million) and RMB2.3 billion (US$321.6 million), respectively. The company also saw significant reductions in costs and expenses, including a sharp drop in the cost of revenue and lower sales, marketing, and R&D expenses.
CEO Jiayuan Lin highlighted Cango's shift towards optimizing inventory and cross-border used car transactions, while CFO Yongyi Zhang emphasized effective cost control and liquidity management. The company has provided a Q2 2024 revenue forecast of RMB35-45 million.
- Income from operations increased by 43.1% to RMB74.2 million.
- Net income rose by 14.3% to RMB90.0 million.
- Cash and cash equivalents increased to RMB1.2 billion.
- Short-term investments surged to RMB2.3 billion.
- Cost of revenue decreased significantly to RMB29.1 million.
- Sales and marketing expenses dropped to RMB3.5 million.
- R&D expenses fell to RMB1.1 million.
- Third consecutive quarter of positive operating cash flow.
- Launched a cross-border information platform for used car transactions.
- Repurchased 360,858 ADSs for approximately US$578,975.4.
- Total revenues declined sharply to RMB64.4 million from RMB542.6 million in Q1 2023.
- M1+ and M3+ overdue ratios increased to 2.87% and 1.51%, respectively.
- Q2 2024 revenue forecast of RMB35-45 million is lower than Q1 2024 revenues.
Insights
Analyzing Cango Inc.'s financial performance for Q1 2024 reveals some critical insights. Notably, total revenues dropped significantly from
Despite this steep decrease in revenue, income from operations increased by
Further, the net income of
Key terms explained:
Income from operations: Profit derived from core business operations, excluding non-operating income and expenses.
Net income: Overall profit after all expenses, taxes and costs.
Liquidity: Availability of liquid assets to a company — important for meeting short-term obligations.
Overall, while the revenue decline is concerning, the improved profitability and strong cash position suggest Cango is navigating current market difficulties effectively, positioning for long-term gains.
The reported significant revenue decline signals substantial market challenges for Cango Inc., particularly in the automotive sector amidst the transition to new energy vehicles (NEVs). The strategic reduction in new car business scale and focus on operational efficiencies is noteworthy.
One highlight is the successful integration of 'Cango U-car' and the launch of a cross-border used car transaction platform. This move could position Cango as an essential player in the global used car market, potentially opening new revenue streams and diversifying risk.
The M1+ and M3+ overdue ratios — metrics indicating the health of financing transactions — showed slight increases, which should be monitored. However, the company’s proactive steps in reducing inventory risks and optimizing supply chains appear sensible.
For retail investors, the divergence between revenue and profitability trends underscores the importance of looking beyond top-line numbers to understand a company’s strategic pivots and operational health. Investors should weigh these factors against the backdrop of industry dynamics and Cango’s adaptation strategies.
First Quarter 2024 Financial and Operational Highlights
- Total revenues were
RMB64.4 million (US ), compared with$8.9 million RMB542.6 million in the same period of 2023. Income from operations wasRMB74.2 million (US ) for the three months ended March 31, 2024, an increase of$10.3 million 43.1% fromRMB51.8 million in the same period last year. Net income wasRMB90.0 million (US ) for the three months ended March 31, 2024, an increase of$12.5 million 14.3% fromRMB78.8 million in the same period last year. - The total outstanding balance of financing transactions the Company facilitated was
RMB7.6 billion (US ) as of March 31, 2024. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were$1.1 billion 2.87% and1.51% , respectively, as of March 31, 2024, compared with2.66% and1.37% , 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 ) 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.$21.1 million
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
OPERATING COST AND EXPENSES
- Cost of revenue in the first quarter of 2024 decreased to
RMB29.1 million (US ) from$4.0 million RMB480.5 million in the same period of 2023. As a percentage of total revenues, cost of revenue in the first quarter of 2024 was45.1% compared with88.6% in the same period of 2023. - Sales and marketing expenses in the first quarter of 2024 decreased to
RMB3.5 million (US ) from$0.5 million 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 ) from$5.3 million 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 ) from$0.2 million 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 ) compared with$2.1 million 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 ). The recovery was primarily due to the positive impact from the collections of financing receivables.$9.2 million
INCOME FROM OPERATIONS
Income from operations in the first quarter of 2024 was
NET INCOME
Net income in the first quarter of 2024 was
NET INCOME PER ADS
Basic and diluted net income per American Depositary Share (the "ADS") in the first quarter of 2024 were
BALANCE SHEET
- As of March 31, 2024, the Company had cash and cash equivalents of
RMB1.2 billion (US ), compared with$160.1 million RMB1.0 billion as of December 31, 2023. - As of March 31, 2024, the Company had short-term investments of
RMB2.3 billion (US ), compared with$321.6 million 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 ofRMB1,670.0 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
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
Conference Call Information
The Company's management will hold a conference call on Wednesday, June 12, 2024, at 9:00 P.M. Eastern Time or Thursday, June 13, 2024, 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 |
800-905-945 | |
Conference ID: | Cango Inc. |
The replay will be accessible through June 19, 2024 by dialing the following numbers:
International: | +1-412-317-0088 |
United States Toll Free: | +1-877-344-7529 |
Access Code: | 8381005 |
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
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
Non-GAAP adjusted net income (loss) is not defined under
The Company compensates for these limitations by reconciling the Non-GAAP financial measure to the nearest
Reconciliations of Cango's Non-GAAP financial measure to the most comparable
Exchange Rate Information
This announcement contains translations of certain RMB amounts into
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. | |||||||
As of December 31, | As of March 31, | ||||||
RMB | RMB | US$ | |||||
ASSETS: | |||||||
Current assets: | |||||||
Cash and cash equivalents | 1,020,604,191 | 1,155,986,847 | 160,102,329 | ||||
Restricted cash - current - bank deposits held for short-term investments | 1,670,006,785 | - | - | ||||
Restricted cash - current - others | 14,334,937 | 13,744,123 | 1,903,539 | ||||
Short-term investments | 635,070,394 | 2,322,320,101 | 321,637,619 | ||||
Accounts receivable, net | 64,791,709 | 106,148,788 | 14,701,437 | ||||
Finance lease receivables - current, net | 200,459,435 | 133,027,146 | 18,424,047 | ||||
Financing receivables, net | 29,522,035 | 20,366,970 | 2,820,793 | ||||
Short-term contract asset | 170,623,200 | 80,595,646 | 11,162,368 | ||||
Prepayments and other current assets | 78,606,808 | 79,424,682 | 11,000,191 | ||||
Total current assets | 3,884,019,494 | 3,911,614,303 | 541,752,323 | ||||
Non-current assets: | |||||||
Restricted cash - non-current | 583,380,417 | 538,159,571 | 74,534,240 | ||||
Property and equipment, net | 8,239,037 | 7,635,993 | 1,057,573 | ||||
Intangible assets | 48,373,192 | 48,107,157 | 6,662,764 | ||||
Long-term contract asset | 36,310,769 | 564,583 | 78,194 | ||||
Finance lease receivables - non-current, net | 36,426,617 | 22,252,619 | 3,081,952 | ||||
Operating lease right-of-use assets | 47,154,944 | 47,531,988 | 6,583,104 | ||||
Other non-current assets | 4,705,544 | 4,491,801 | 622,107 | ||||
Total non-current assets | 764,590,520 | 668,743,712 | 92,619,934 | ||||
TOTAL ASSETS | 4,648,610,014 | 4,580,358,015 | 634,372,257 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Short-term debts | 39,071,500 | 26,650,000 | 3,690,982 | ||||
Long-term debts—current | 926,237 | 888,415 | 123,044 | ||||
Accrued expenses and other current liabilities | 206,877,626 | 173,238,481 | 23,993,251 | ||||
Deferred guarantee income | 86,218,888 | 55,959,307 | 7,750,275 | ||||
Contingent risk assurance liabilities | 125,140,991 | 81,427,530 | 11,277,583 | ||||
Income tax payable | 311,904,279 | 323,337,170 | 44,781,681 | ||||
Short-term lease liabilities | 7,603,380 | 8,654,701 | 1,198,662 | ||||
Total current liabilities | 777,742,901 | 670,155,604 | 92,815,478 | ||||
Non-current liabilities: | |||||||
Long-term debts | 712,023 | 665,401 | 92,157 | ||||
Deferred tax liability | 10,724,133 | 10,724,133 | 1,485,275 | ||||
Long-term operating lease liabilities | 42,228,435 | 42,027,702 | 5,820,769 | ||||
Other non-current liabilities | 226,035 | 143,886 | 19,928 | ||||
Total non-current liabilities | 53,890,626 | 53,561,122 | 7,418,129 | ||||
Total liabilities | 831,633,527 | 723,716,726 | 100,233,607 | ||||
Shareholders' equity | |||||||
Ordinary shares | 204,260 | 204,260 | 28,290 | ||||
Treasury shares | (773,130,748) | (844,938,545) | (117,022,637) | ||||
Additional paid-in capital | 4,813,679,585 | 4,814,230,470 | 666,763,219 | ||||
Accumulated other comprehensive income | 111,849,166 | 132,744,094 | 18,384,845 | ||||
Retained earnings | (335,625,776) | (245,598,990) | (34,015,067) | ||||
Total Cango Inc.'s equity | 3,816,976,487 | 3,856,641,289 | 534,138,650 | ||||
Total shareholders' equity | 3,816,976,487 | 3,856,641,289 | 534,138,650 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 4,648,610,014 | 4,580,358,015 | 634,372,257 | ||||
CANGO INC. | |||||||
Three months ended March 31 | |||||||
2023 | 2024 | ||||||
RMB | RMB | US$ | |||||
Revenues | 542,613,363 | 64,422,494 | 8,922,412 | ||||
Loan facilitation income and other related income | 2,315,400 | 13,821,022 | 1,914,189 | ||||
Guarantee income | 64,128,746 | 30,259,581 | 4,190,904 | ||||
Leasing income | 22,213,681 | 4,939,712 | 684,142 | ||||
After-market services income | 16,719,476 | 11,637,788 | 1,611,815 | ||||
Automobile trading income | 429,849,643 | 3,445,040 | 477,133 | ||||
Others | 7,386,417 | 319,351 | 44,229 | ||||
Operating cost and expenses: | |||||||
Cost of revenue | 480,517,980 | 29,058,868 | 4,024,607 | ||||
Sales and marketing | 12,538,562 | 3,548,273 | 491,430 | ||||
General and administrative | 39,802,530 | 37,923,531 | 5,252,348 | ||||
Research and development | 8,102,363 | 1,098,105 | 152,086 | ||||
Net gain on contingent risk assurance liabilities | (1,622,556) | (15,018,246) | (2,080,003) | ||||
Net recovery on provision for credit losses | (48,554,100) | (66,339,084) | (9,187,857) | ||||
Total operation cost and expense | 490,784,779 | (9,728,553) | (1,347,389) | ||||
Income from operations | 51,828,584 | 74,151,047 | 10,269,801 | ||||
Interest income, net | 18,780,880 | 16,503,965 | 2,285,773 | ||||
Net gain on equity securities | 3,732,355 | 10,984,524 | 1,521,339 | ||||
Interest expense | (2,294,085) | - | - | ||||
Foreign exchange (loss) gain, net | (984,307) | 131,689 | 18,239 | ||||
Other income, net | 4,459,897 | 832,551 | 115,307 | ||||
Other expenses | (130,885) | (535,390) | (74,151) | ||||
Net income before income taxes | 75,392,439 | 102,068,386 | 14,136,308 | ||||
Income tax benefit (expense) | 3,372,638 | (12,041,600) | (1,667,742) | ||||
Net income | 78,765,077 | 90,026,786 | 12,468,566 | ||||
Net income attributable to Cango Inc.'s shareholders | 78,765,077 | 90,026,786 | 12,468,566 | ||||
Earnings per ADS attributable to ordinary shareholders: | |||||||
Basic | 0.58 | 0.85 | 0.12 | ||||
Diluted | 0.56 | 0.80 | 0.11 | ||||
| |||||||
Basic | 134,769,131 | 105,521,018 | 105,521,018 | ||||
Diluted | 140,231,084 | 112,786,810 | 112,786,810 | ||||
Other comprehensive (loss) income, net of tax | |||||||
Foreign currency translation adjustment | (6,020,579) | 20,894,928 | 2,893,914 | ||||
Total comprehensive income | 72,744,498 | 110,921,714 | 15,362,480 | ||||
Total comprehensive income attributable to Cango Inc.'s shareholders | 72,744,498 | 110,921,714 | 15,362,480 | ||||
CANGO INC. | ||||||
Three months ended March 31 | ||||||
2023 | 2024 | |||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||
RMB | RMB | US$ | ||||
Net income | 78,765,077 | 90,026,786 | 12,468,566 | |||
Add: Share-based compensation expenses | 14,059,098 | 5,717,422 | 791,854 | |||
Cost of revenue | 747,416 | 254,391 | 35,233 | |||
Sales and marketing | 2,793,396 | 1,046,659 | 144,961 | |||
General and administrative | 9,907,268 | 4,416,372 | 611,660 | |||
Research and development | 611,018 | - | - | |||
Non-GAAP adjusted net income | 92,824,175 | 95,744,208 | 13,260,420 | |||
Net income attributable to Cango Inc.'s shareholders | 92,824,175 | 95,744,208 | 13,260,420 | |||
Non-GAAP adjusted net income per ADS-basic | 0.69 | 0.91 | 0.13 | |||
Non-GAAP adjusted net income per ADS-diluted | 0.66 | 0.85 | 0.12 | |||
Weighted average ADS outstanding—basic | 134,769,131 | 105,521,018 | 105,521,018 | |||
Weighted average ADS outstanding—diluted | 140,231,084 | 112,786,810 | 112,786,810 | |||
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SOURCE Cango Inc.
FAQ
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