SHANGHAI, November 27, 2023 /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 2023.

Third Quarter 2023 Financial and Operational Highlights

• Total revenues were RMB353.6 million (US$48.5 million), compared with RMB416.4 million in the same period of 2022. Car trading transactions revenues were RMB263.8 million (US$36.2 million), or 74.6% of total revenues, in the third quarter of 2023, compared with RMB347.2 million in the same period of 2022.

• The total outstanding balance of financing transactions the Company facilitated was RMB13,085.6 million (US$1,793.5 million) as of September 30, 2023. M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 2.42% and 1.24%, respectively, as of September 30, 2023, compared with 2.12% and 1.09%, respectively, as of June 30, 2023.

• There were 27 self-owned vehicle models listed on our platform, including 18 car brands and 23 car series as of September 30, 2023. During the nine months ended September 30, 2023, the total sales of new cars were 12,138, including 3,151 new energy vehicles (NEVs).

• Total balance of cash and cash equivalents and short-term investment increased by RMB 454.6 million compared to that as of June 30, 2023. The liquidity improvement was primarily driven by the positive operating cashflow generated by the decreased working capital of car trading transactions, the collections of financing receivables, and the loan facilitation service fees.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “Throughout the third quarter, China’s economic downturn continued to weigh on production and demand. China’s auto market continued to fluctuate, exerting immense pressure on everyone along the automotive value chain, including car dealers. ”

“Cango has been committed to working closely with car dealers and developing services to meet their needs since day one. Through our ‘Cango Haoche’ and ‘Cango U-car’ Apps and mini programs, we have fostered a robust warehouse and logistics network across almost 100 cities nationwide with over 11,000 registered new car dealers, as well as over 7,000 accumulated registered used car dealers as of September 30, 2023. As our extended footprint brings us deeper insight into industry trends, we have been recalibrating our strategy accordingly. New car dealers are starting to engage in used car retail, while used car dealers are now attempting to sell new cars as well. As such, we have decided to merge Cango Haoche’s services into our Cango U-car platform to cater to the rapidly disappearing boundary between new car and used car sales channels. ”

“The integrated Cango U-car platform will adopt a dynamic multi-store growth model to fully unleash the platform’s vitality. We believe its innovative, one-stop, end-to-end services will not only improve Cango’s resource utilization and significantly boost operating efficiency, but also empower our downstream dealer partners to better serve their end customers.”

“Moving forward, we will continue to harness the power of big data and digital technologies while actively exploring opportunities for growth, including our potential expansion into overseas used car markets. By consistently refining business operations and strengthening our core competitive edges, we are confident we will propel Cango’s sustainable growth,” concluded Mr. Lin.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “The fluctuating market environment continued to impact our business this quarter. We implemented additional cost optimization measures and enhanced operational efficiency. We are confident that our updated service offerings and effective growth model will boost our competitiveness. Looking ahead, we will continue working with our dealer partners to weather the storm while exploring additional growth opportunities.”

Accounting Policy Changes

The Company adopted the Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments on January 1, 2023, using the modified retrospective transition method. This standard requires the measurement of all expected credit losses for financial assets measured at amortized cost and off-balance sheet credit exposures not accounted for as insurance at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Upon adoption of the standard on January 1, 2023, the Company recorded RMB302.4 million (US$41.4 million) increase in risk assurance liabilities, RMB14.5 million (US$2.0 million) increase in the allowance for finance lease receivables, RMB13.8 million (US$1.9 million) increase in the allowance for financing receivables and RMB3.2 million (US$0.4 million) increase in the allowance of other current and non-current assets. After adjusting for deferred taxes, RMB306.9 million (US$42.1 million) decrease was recorded in beginning retained earnings on January 1, 2023 through a cumulative-effect adjustment.

Third Quarter 2023 Financial Results

REVENUES

Total revenues in the third quarter of 2023 were RMB353.6 million (US$48.5 million) compared with RMB416.4 million in the same period of 2022. Revenues from car trading transactions in the third quarter of 2023 were RMB263.8 million (US$36.2 million), or 74.6% of total revenues in the third quarter of 2023, compared with RMB347.2 million in the same period of 2022. The guarantee income, which represented the fee income earned on the non-contingent aspect of a guarantee, in the third quarter of 2023 was RMB50.0 million (US$6.9 million) which was presented separately from contingent aspect of a guarantee pursuant to the adoption of ASC 326 since January 1, 2023.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the third quarter of 2023 were RMB441.4 million (US$60.5 million) compared with RMB608.8 million in the same period of 2022.

·        Cost of revenue in the third quarter of 2023 decreased to RMB304.6 million (US$41.8 million) from RMB388.7 million in the same period of 2022. As a percentage of total revenues, cost of revenue in the third quarter of 2023 was 86.1% compared with 93.3% in the same period of 2022.

·        Sales and marketing expenses in the third quarter of 2023 decreased to RMB9.9 million (US$1.4 million) from RMB17.9 million in the same period of 2022. As a percentage of total revenues, sales and marketing expenses in the third quarter of 2023 was 2.8% compared with 4.3% in the same period of 2022.

·        General and administrative expenses in the third quarter of 2023 decreased to RMB34.7 million (US$4.8 million) from RMB57.8 million in the same period of 2022. As a percentage of total revenues, general and administrative expenses in the third quarter of 2023 was 9.8% compared with 13.9% in the same period of 2022.

·        Research and development expenses in the third quarter of 2023 decreased to RMB7.0 million (US$1.0 million) from RMB10.2 million in the same period of 2022. As a percentage of total revenues, research and development expenses in the third quarter of 2023 was 2.0% compared with 2.4% in the same period of 2022.

·        Net loss on contingent risk assurance liabilities in the third quarter of 2023 was RMB3.5 million (US$0.5 million).

·        Net recovery on provision for credit losses in the third quarter of 2023 was RMB66.9 million (US$9.2 million). The recovery was primarily due to the positive impact from the collections of financing receivables.

·        Impairment loss from goodwill in the third quarter of 2023 was RMB148.7 million (US$20.4 million). The provision of goodwill impairment is based on the profit forecast associated with historical trend and the prevailing current conditions of market downturn.

LOSS FROM OPERATIONS

Loss from operations in the third quarter of 2023 decreased to RMB87.8 million (US$12.0 million) from RMB192.3 million in the same period of 2022.

NET LOSS

Net loss in the third quarter of 2023 was RMB49.1 million (US$6.7 million). Non-GAAP adjusted net loss in the third quarter of 2023 was RMB41.2 million (US$5.7 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 (the “ADS”) in the third quarter of 2023 were both RMB0.45 (US$0.06), respectively. Non-GAAP adjusted basic and diluted net loss per ADS in the third quarter of 2023 were both RMB0.38 (US$0.05), respectively. Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

As of September 30, 2023, the Company had cash and cash equivalents of RMB665.6 million (US$91.2 million), compared with RMB589.4 million as of June 30, 2023.

As of September 30, 2023, the Company had short-term investments of RMB2,434.2 million (US$333.6 million), compared with RMB2,055.7 million as of June 30, 2023.

Business Outlook

For the fourth quarter of 2023, the Company expects total revenues to be between RMB100 million and RMB150 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 21, 2023, the Company had repurchased 25.4 million ADSs with cash in an aggregate amount of approximately US$32.9 million up to September 30, 2023.