Cango Inc. Reports Third Quarter 2021 Unaudited Financial Results

SHANGHAI, November 22, 2021 /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 2021.

Third Quarter 2021 Financial and Operational Highlights

   

Total revenues were RMB800.6 million (US$124.3 million), an 84.1% increase from RMB434.9 million in the same period of 2020, outperforming the high end of the Company’s guidance by 6.8%. The increase was mainly driven by the increased amounts of both financing transactions the Company facilitated and car trading transactions in the third quarter of 2021.

   

Car trading transactions revenues were RMB429.2 million (US$66.6 million), or 53.6% of total revenues in the third quarter of 2021.

   

Automotive financing facilitation revenues were RMB266.5 million (US$41.4 million), a 15.8% increase from RMB230.2 million in the same period of 2020.

   

The amount of financing transactions the Company facilitated in the third quarter of 2021 was RMB6,210.7 million (US$963.9 million). The total outstanding balance of financing transactions the Company facilitated was RMB47,955.2 million (US$7,442.5 million) as of September 30, 2021.

   

M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 1.58% and 0.76%, respectively, as of September 30, 2021, compared to 1.35% and 0.69%, respectively, as of June 30, 2021.

   

The number of dealers covered by the Company was 47,718 as of September 30, 2021, compared to 47,740 as of June 30, 2021.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “As expected, the industry headwinds created by the global chip shortage continued to impact our business in the third quarter. Since the end of the second quarter, we have been proactively responding to industry changes, and delivered third quarter total revenues of RMB800.6 million, above our guidance.

Market disruptions had a particularly significant impact on our automotive financing facilitation business, leading to a decrease in the number of financing transactions the Company facilitated compared to the previous quarter. To address these challenges, we optimized our sales team’s organizational structure and focused on stimulating each salesperson’s output while advancing our expansion into the high-end segment of this market and exploring used car financing facilitation. We are also excited about our achievements in our car trading transactions business which is now serving as an important growth driver. ‘Cango Haoche,’ our B2B service platform providing one-stop transaction, logistics, finance, insurance and other auto-related services, has been widely recognized by dealers, garnering over 1.5 million total views since its launch in the second quarter. Moreover, our after-market services facilitation business made solid progress as we continued to establish cooperation with new energy vehicle manufacturers including Li Auto and HiPhi.”

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“Looking ahead, we expect the chip shortage-related upheaval in the auto market to linger for some time. Given the pervasiveness of the disruption, we remain cautious with respect to industry recovery. Nevertheless, we will continue to strengthen our platform and synergies between businesses in response to market changes, as well as capitalize on the promising opportunities we see in the new energy vehicle sector,” Mr. Lin concluded.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “Despite the ongoing uncertainty due to the global chip shortage, our third quarter performance demonstrates our business model’s flexibility and resilience. Total revenues were RMB800.6 million, coming in above our guidance. We are in a healthy operational and financial position and we remain confident in our ability to navigate the industry turmoil. Looking ahead, we will continue to carefully manage our cost structure while improving operating efficiency and profitability, creating value for our shareholders in the long run.”

Third Quarter 2021 Financial Results

REVENUES

Total revenues in the third quarter of 2021 increased by 84.1% to RMB800.6 million (US$124.3 million) from RMB434.9 million in the same period of 2020. Revenues from car trading transactions in the third quarter of 2021 were RMB429.2 million (US$66.6 million), continuing to serve as an important revenue contributor. Revenues from automotive financing facilitation and after-market services facilitation in the third quarter of 2021 were RMB266.5 million (US$41.4 million) and RMB42.7 million (US$6.6 million), respectively.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the third quarter of 2021 were RMB839.6 million (US$130.3 million) compared to RMB300.4 million in the same period of 2020. This was mainly due to the related costs incurred by car trading transactions business. Primarily as a result of the increase in revenues from car trading transactions, sales and marketing expenses, general and administrative expenses and research and development expenses each decreased as a percentage of total revenues in the third quarter of 2021, compared to the same period of 2020.

   

Cost of revenue in the third quarter of 2021 increased to RMB610.5 million (US$94.7 million) from RMB180.9 million in the same period of 2020. As a percentage of total revenues, cost of revenue in the third quarter of 2021 was 76.3% compared to 41.6% in the same period of 2020, and the change was primarily due to an increase in the amount of car trading transactions. For automotive financing facilitation and after-market services facilitation, cost of revenue as a percentage of relevant revenues was around 50.1% in the third quarter of 2021.

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Sales and marketing expenses in the third quarter of 2021 were RMB46.8 million (US$7.3 million) compared to RMB41.9 million in the same period of 2020. As a percentage of total revenues, sales and marketing expenses in the third quarter of 2021 was 5.8% compared to 9.6% in the same period of 2020.

   

General and administrative expenses in the third quarter of 2021 were RMB64.0 million (US$9.9 million) compared to RMB52.2 million in the same period of 2020. As a percentage of total revenues, general and administrative expenses in the third quarter of 2021 was 8.0% compared to 12.0% in the same period of 2020.

   

Research and development expenses in the third quarter of 2021 were RMB17.4 million (US$2.7 million) compared to RMB14.2 million in the same period of 2020. As a percentage of total revenues, research and development expenses in the third quarter of 2021 was 2.2% compared to 3.3% in the same period of 2020.

   

Net loss on risk assurance liabilities in the third quarter of 2021 was RMB55.5 million (US$8.6 million) compared to a net gain of RMB12.9 million in the same period of 2020.

LOSS FROM OPERATIONS

Loss from operations in the third quarter of 2021 was RMB39.0 million (US$6.1 million), compared to an income of RMB134.5 million in the same period of 2020.

FAIR VALUE CHANGE OF EQUITY INVESTMENT

Fair value change of equity investment in the third quarter of 2021 was a loss of RMB447.5 million (US$69.5 million) compared to a gain of RMB1,827.7 million in the same period of 2020. The loss in the third quarter of 2021 is mainly due to the investment in Li Auto. As of September 30, 2021, Cango held 8,000,000 American Depositary Shares of Li Auto. Each American Depositary Share of Li Auto represents two Class A ordinary shares of Li Auto.

NET LOSS

Primarily due to the fair value change of the Company’s investment in Li Auto, net loss in the third quarter of 2021 was RMB416.5 million (US$64.6 million). Non-GAAP adjusted net loss in the third quarter of 2021 was RMB392.5 million (US$60.9 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 (ADS) in the third quarter of 2021 were RMB2.88 (US$0.45) and RMB2.88 (US$0.45). Non-GAAP adjusted basic and diluted net loss per ADS in the third quarter of 2021 were RMB2.72 (US$0.42) and RMB2.72 (US$0.42). Each ADS represents two Class A ordinary shares of the Company.

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BALANCE SHEET

As of September 30, 2021, the Company had cash and cash equivalents of RMB906.4 million (US$140.7 million), compared to RMB1,498.9 million as of June 30, 2021.

As of September 30, 2021, the Company had short-term investments of RMB3,588.2 million (US$556.9 million), compared to RMB3,127.2 million as of June 30, 2021.

Business Outlook

For the fourth quarter of 2021, the Company expects total revenues to be between RMB950 million and RMB1,000 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

The Company’s investment in Li Auto and the change in fair value of investment due to the price volatility of the stock may have a significant impact on the Company’s fourth quarter of 2021 financial results.

Conference Call Information

The Company’s management will hold a conference call on Monday, November 22, 2021, at 8:00 P.M. Eastern Time or Tuesday, November 23, 2021, 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 November 29, 2021, by dialing the following numbers:    

International:    +1-412-317-0088
United States Toll Free:    +1-877-344-7529
Access Code:    10162135

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/.

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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, car trading transactions, 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.

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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 RMB6.4434 to US$1.00, the noon buying rate in effect on September 30, 2021, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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: [email protected]

Twitter: https://twitter.com/Cango_Group

Emilie Wu

The Piacente Group, Inc.

Tel: +86 21 6039 8363

Email: [email protected]

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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, 2020     As of September 30, 2021  
     RMB     RMB     US$  

ASSETS:

      

Current assets:

      

Cash and cash equivalents

     1,426,899,576       906,425,650       140,675,055  

Restricted cash - current

     9,693,008       102,552,307       15,915,868  

Short-term investments

     4,342,356,612       3,588,187,133       556,877,911  

Accounts receivable, net

     141,594,170       186,847,242       28,998,237  

Finance lease receivables - current, net

     2,035,397,525       1,528,881,416       237,278,675  

Short-term consumer financing receivables, net

     23,168       —         —    

Financing receivables, net

     20,105,893       50,124,675       7,779,228  

Short-term contract asset

     364,618,635       799,673,531       124,107,386  

Prepayments and other current assets

     558,360,959       690,993,737       107,240,546  
            

Total current assets

     8,899,049,546       7,853,685,691       1,218,872,906  
            

Non-current assets:

      

Restricted cash - non-current

     878,299,140       733,538,679       113,843,418  

Goodwill

     145,063,857       148,657,971       23,071,355  

Property and equipment, net

     10,311,971       19,914,252       3,090,643  

Intangible assets

     44,887,871       45,702,955       7,092,987  

Long-term contract asset

     281,374,110       489,252,809       75,930,845  

Deferred tax assets

     170,951,082       424,256,893       65,843,637  

Finance lease receivables - non-current, net

     1,454,499,864       1,040,027,023       161,409,663  

Other non-current assets

     261,495,158       483,107,022       74,977,034  
            

Total non-current assets

     3,246,883,053       3,384,457,604       525,259,582  
            

TOTAL ASSETS

     12,145,932,599       11,238,143,295       1,744,132,488  
            

LIABILITIES AND SHAREHOLDERS’ EQUITY

      

Current liabilities:

      

Short-term debts

     355,816,940       991,933,733       153,945,701  

Long-term debts—current

     1,228,783,730       1,006,900,131       156,268,450  

Accrued expenses and other current liabilities

     324,734,202       471,273,484       73,140,496  

Risk assurance liabilities

     460,829,299       678,662,222       105,326,725  

Income tax payable

     87,132,455       371,913,283       57,720,036  
            

Total current liabilities

     2,457,296,626       3,520,682,853       546,401,408  
            

Non-current liabilities:

      

Long-term debts

     977,791,191       638,447,901       99,085,561  

Deferred tax liability

     330,765,029       125,506,827       19,478,354  

Other non-current liabilities

     4,870,616       1,598,485       248,081  
            

Total non-current liabilities

     1,313,426,836       765,553,213       118,811,996  
            

Total liabilities

     3,770,723,462       4,286,236,066       665,213,404  
            

Shareholders’ equity

      

Ordinary shares

     204,260       204,260       31,701  

Treasury shares

     (56,419,225     (411,075,103     (63,797,856

Additional paid-in capital

     4,591,455,557       4,648,746,810       721,474,192  

Accumulated other comprehensive income

     (115,386,427     (153,214,761     (23,778,558

Retained earnings

     3,955,354,972       2,867,246,023       444,989,605  
            

Total Cango Inc.’s equity

     8,375,209,137       6,951,907,229       1,078,919,084  
            

Total shareholders’ equity

     8,375,209,137       6,951,907,229       1,078,919,084  
            

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

     12,145,932,599       11,238,143,295       1,744,132,488  
            

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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,  
     September 30,
2020
    September 30, 2021     September 30,
2020
    September 30, 2021  
     RMB     RMB     US$     RMB     RMB     US$  

Revenues

     434,949,892       800,634,866       124,256,583       955,002,617       2,871,167,788       445,598,254  

Loan facilitation income and other related income

     230,156,995       266,515,911       41,362,621       493,781,301       981,553,412       152,334,701  

Leasing income

     63,404,140       60,778,371       9,432,655       206,961,678       198,614,442       30,824,478  

After-market services income

     68,901,306       42,658,080       6,620,430       170,430,167       157,053,595       24,374,336  

Automobile trading income

     70,361,821       429,200,614       66,610,891       77,963,237       1,523,310,471       236,414,078  

Others

     2,125,630       1,481,890       229,986       5,866,234       10,635,868       1,650,661  

Operating cost and expenses:

            

Cost of revenue

     180,871,289       610,508,451       94,749,426       374,286,048       2,077,342,112       322,398,441  

Sales and marketing

     41,852,916       46,793,061       7,262,169       130,065,097       165,522,339       25,688,664  

General and administrative

     52,154,925       64,038,373       9,938,600       175,606,783       190,087,348       29,501,094  

Research and development

     14,151,770       17,423,683       2,704,113       39,610,068       46,656,813       7,241,024  

Net (gain) loss on risk assurance liabilities

     (12,885,280     55,504,598       8,614,179       21,072,204       113,147,363       17,560,195  

Provision for credit losses

     24,287,059       45,373,233       7,041,815       94,501,601       144,641,366       22,447,988  
                        

Total operation cost and expense

     300,432,679       839,641,399       130,310,302       835,141,801       2,737,397,341       424,837,406  
                        

Income (Loss) from operations

     134,517,213       (39,006,533     (6,053,719     119,860,816       133,770,447       20,760,848  
                        

Interest and investment income

     9,875,421       14,853,381       2,305,209       60,683,716       37,222,389       5,776,824  

Fair value change of equity investment

     1,827,718,488       (447,536,895     -69,456,637       1,827,718,488       (291,048,883     (45,170,078

Interest expense

     (513,622     (8,320,463     (1,291,316     (2,250,545     (9,133,705     (1,417,529

Foreign exchange gain (loss), net

     (1,761,929     (51,473     (7,988     (5,201,874     (786,605     (122,079

Other income

     8,014,913       25,465,800       3,952,230       33,805,616       36,642,145       5,686,772  

Other expenses

     (16,381     (107,905     (16,747     (597,876     (6,587,727     (1,022,399
                      

Net income before income taxes

     1,977,834,103       (454,704,088     (70,568,968     2,034,018,341       (99,921,939     (15,507,641
                        

Income tax expenses

     (208,451,556     38,166,368       5,923,327       (229,091,015     (32,749,453     (5,082,635
                

Net income

     1,769,382,547       (416,537,720     (64,645,641     1,804,927,326       (132,671,392     (20,590,276
                        

Less: Net income attributable to non-controlling interests

     256,018       —         —         3,902,214       —         —    
                        

Net income attributable to Cango Inc.’s shareholders

     1,769,126,529       (416,537,720     (64,645,641     1,801,025,112       (132,671,392     (20,590,276
                        

Earnings per ADS attributable to ordinary shareholders:

            

Basic

     11.82       (2.88     (0.45     11.97       (0.91     (0.14

Diluted

     11.78       (2.88     (0.45     11.89       (0.91     (0.14

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

            

Basic

     149,706,190       144,470,649       144,470,649       150,425,738       146,155,678       146,155,678  

Diluted

     150,185,842       144,470,649       144,470,649       151,520,229       146,155,678       146,155,678  

Other comprehensive (loss) income, net of tax

            
                        

Foreign currency translation adjustment

     (105,299,287     (5,969,745     (926,490     (82,069,737     (37,828,334     (5,870,865
                        

Total comprehensive income

     1,664,083,260       (422,507,465     (65,572,131     1,722,857,589       (170,499,726     (26,461,141
                        

Total comprehensive income attributable to Cango Inc.’s shareholders

     1,663,827,242       (422,507,465     (65,572,131     1,718,955,375       (170,499,726     (26,461,141
                        

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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,  
     September 30,
2020
     September 30, 2021     September 30,
2020
     September 30, 2021  
     (Unaudited)      (Unaudited)     (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)  
     RMB      RMB     US$     RMB      RMB     US$  

Net income

     1,769,382,547        (416,537,720     (64,645,641     1,804,927,326        (132,671,392     (20,590,276

Add: Share-based compensation expenses

     13,853,582        24,011,050       3,726,457       59,268,760        64,444,353       10,001,607  

Cost of revenue

     567,997        1,512,966       234,809       2,430,021        2,967,623       460,568  

Sales and marketing

     2,950,813        4,049,203       628,426       12,624,245        11,570,258       1,795,676  

General and administrative

     9,614,385        17,209,292       2,670,841       41,132,513        46,888,274       7,276,946  

Research and development

     720,387        1,239,589       192,381       3,081,981        3,018,198       468,417  
                          

Non-GAAP adjusted net income

     1,783,236,129        (392,526,670     (60,919,184     1,864,196,086        (68,227,039     (10,588,669
                          

Less: Net income attributable to non-controlling interests

     256,018        —         —         3,902,214        —         —    

Net income attributable to Cango Inc.’s shareholders

     1,782,980,111        (392,526,670     (60,919,184     1,860,293,872        (68,227,039     (10,588,669
                          

Non-GAAP adjusted net income per ADS-basic

     11.91        (2.72     (0.42     12.37        (0.47     (0.07

Non-GAAP adjusted net income per ADS-diluted

     11.87        (2.72     (0.42     12.28        (0.47     (0.07

Weighted average ADS outstanding—basic

     149,706,190        144,470,649       144,470,649       150,425,738        146,155,678       146,155,678  

Weighted average ADS outstanding—diluted

     150,185,842        144,470,649       144,470,649       151,520,229        146,155,678       146,155,678  

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