SHANGHAI, August 29, 2022 /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 2022.

Second Quarter 2022 Financial and Operational Highlights

• Total revenues were RMB289.2 million (US$43.2 million), compared with RMB946.7 million in the same period of 2021. Car trading transactions revenues were RMB218.6 million (US$32.6 million), or 75.6% of total revenues in the second quarter of 2022, compared with RMB522.5 million in the same period of 2021.

• The total outstanding balance of financing transactions the Company facilitated was RMB36,594.4 million (US$5,463.4 million) as of June 30, 2022. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.21% and 1.07%, respectively, as of June 30, 2022, compared with 1.76% and 0.80%, respectively, as of March 31, 2022.

•  “Cango Haoche” platform had engaged 8,237 dealers in China’s 31 provinces and 305 cities as of June 30, 2022. There were 22 self-owned vehicle models listed on the platform including nine car brands and 12 car series. During the second quarter, total sales were 2,291 cars, including 1,329 new energy vehicles (NEVs).

• Car dealer activity and transaction conversion rate on “Cango Haoche” platform both improved significantly in the second quarter of 2022 compared with the previous quarter. Users’ daily activity rate on the platform rose by nearly 50%  and the quarterly dealer activity rate increased by nearly 70%, both on a quarter-over-quarter basis.

Mr. Jiayuan Lin, Chief Executive Officer (CEO) of Cango, commented, “The macro conditions and COVID-19 outbreaks during the second quarter continued to impact our performance and outlook in the short-term. Total revenues came in at RMB289.2 million for the second quarter, of which revenues from our car trading transactions business accounted for over three-fourths of total revenues. Longer-term and benefitting from the nation’s policy stimulus, we foresee a steady upward trend for the automotive market with huge potential in the NEV and used car segments. Galvanized by this opportunity, our efforts are focused on expanding our tech-enabled car trading platform, where we are placing equal emphasis on new and used car trading, and monetizing through multiple channels including financing and insurance services.

“With the successful debut of our ‘Cango Haoche’ App in June, we are committed to providing safe, secure, sustained and stable end-to-end professional car transaction-related services for all participants in the automobile industry chain. We are not only solving the pain points of small- and medium-sized dealers in terms of vehicle sources and capital needs, but also helping OEMs to penetrate lower-tier markets and grow their sales. We also significantly improved car dealer activity and transaction conversion rate on our platform in the second quarter. Furthermore, we explored the used car matching business during the quarter and have made good progress. As of June 30, 2022, just two months after the launch of our used car business, the number of registered used car dealers exceeded 1,500 with increasing engagement, outpacing our expectations.

“While there remain market uncertainties stemming from supply chain issues, unexpected COVID recurrences, and a highly complex external environment, we will continue to invest strategically, tailoring our resource allocation with an eye toward the future development of the NEV and used car segments while leveraging our platform model’s advantages to strengthen our business fundamentals,” concluded Mr. Lin.

Mr. Yongyi Zhang, Chief Financial Officer (CFO) of Cango, stated, “Macro headwinds and a wave of COVID resurgence across China posed ongoing challenges to the domestic auto industry, as expected. Months of pandemic-related disruptions significantly impeded our business, resulting in a slump in total revenues for the second quarter. Amid this harsh environment, we remained focused on our long-term strategy, advancing our car trading transaction platform and continuing to implement cost control initiatives. Despite the COVID-induced decline, we remain confident in our platform model’s potential and are positioned to capturing the opportunities that emerge as the automotive market recovers. Meanwhile, we will continue to create value for participants across our platform with continuous improvements in operating efficiency and cost structure.”

Second Quarter 2022 Financial Results

REVENUES

Total revenues in the second quarter of 2022 were RMB289.2 million (US$43.2 million) compared with RMB946.7 million in the same period of 2021. Revenues from car trading transactions in the second quarter of 2022 were RMB218.6 million (US$32.6 million), continuing to serve as an important revenue contributor.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2022 were RMB643.3 million (US$96.0 million) compared with RMB933.5 million in the same period of 2021.

• Cost of revenue in the second quarter of 2022 decreased to RMB272.7 million (US$40.7 million) from RMB697.8 million in the same period of 2021. As a percentage of total revenues, cost of revenue in the second quarter of 2022 was 94.3% compared with 73.7% in the same period of 2021. The change was primarily due to an increase in car trading transactions’ share of total revenues. Car trading transactions normally present a higher cost-revenue ratio, thus pushing up the overall ratio.

• Sales and marketing expenses in the second quarter of 2022 decreased to RMB41.8 million (US$6.2 million) from RMB60.9 million in the same period of 2021. As a percentage of total revenues, sales and marketing expenses in the second quarter of 2022 was 14.5% compared with 6.4% in the same period of 2021.

• General and administrative expenses in the second quarter of 2022 were RMB124.7 million (US$18.6 million) compared with RMB64.7 million in the same period of 2021. As a percentage of total revenues, general and administrative expenses in the second quarter of 2022 was 43.1% compared with 6.8% in the same period of 2021. This change was mainly due to the expenses arising from the 12,000,000 Class A ordinary shares options granted to the company’s Chairman Mr. Xiaojun Zhang and CEO Mr. Jiayuan Lin in the second quarter. These share options are granted in consideration of Mr. Zhang and Mr. Lin’s roles in guiding Cango’s profitable investment in Li Auto Inc., a provider of new energy passenger vehicles in China.   

• Research and development expenses in the second quarter of 2022 were RMB12.9 million (US$1.9 million) compared with RMB15.6 million in the same period of 2021. As a percentage of total revenues, research and development expenses in the second quarter of 2022 was 4.4% compared with 1.7% in the same period of 2021.

• Net loss on risk assurance liabilities in the second quarter of 2022 was RMB53.1 million (US$7.9 million) compared with RMB35.9 million in the same period of 2021. Net loss on risk assurance liabilities was mainly due to a sequential increase in the default rate since 2021.

INCOME (LOSS) FROM OPERATIONS

Loss from operations in the second quarter of 2022 was RMB354.1 million (US$52.9 million), compared with an income of RMB13.2 million in the same period of 2021.

NET LOSS

Net loss in the second quarter of 2022 was RMB285.8 million (US$42.7 million). Non-GAAP adjusted net loss in the second quarter of 2022 was RMB189.6 million (US$28.3 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 second quarter of 2022 were both RMB2.08 (US$0.31). Non-GAAP adjusted basic and diluted net loss per ADS in the second quarter of 2022 were both RMB1.38 (US$0.21). Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

As of June 30, 2022, the Company had cash and cash equivalents of RMB1,280.7 million (US$191.2 million), compared with RMB2,137.0 million as of March 31, 2022.

As of June 30, 2022, the Company had short-term investments of RMB2,116.2 million (US$315.9 million), compared with RMB1,874.1 million as of March 31, 2022.

Business Outlook

For the third quarter of 2022, the Company expects total revenues to be between RMB350 million and RMB400 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 August 19, 2021, the Company had repurchased 7,984,500 ADSs with cash in the aggregate amount of approximately US$28.4 million up to June 30, 2022.