Cango (CANG) 6-K Cango Inc. Reports Second Quarter 2018 Unaudited Financial Results

Exhibit 99.1

Cango Inc. Reports Second Quarter 2018 Unaudited Financial Results

SHANGHAI, Aug. 30, 2018 /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 2018.

Financial and Operational Highlights

• Total revenues in the second quarter of 2018 were RMB236.3 million (US$35.7 million).

• Net income in the second quarter of 2018 was RMB64.6 million (US$9.8 million). Net income per ADS in the second quarter of 2018 was RMB0.44 (US$0.07). Each ADS represents two of the Company’s Class A ordinary shares.

• The number of dealers covered by the Company increased to 40,282 as of June 30, 2018, representing a year-over-year increase of 62.0%.

• M1+ and M3+ overdue ratios for all financing transactions which the Company facilitated and remained outstanding were 0.92% and 0.46%, respectively as of June 30, 2018, as compared to 1.09% and 0.46%, respectively as of March 31, 2018.

Recent Developments

The Company recently entered into strategic cooperation agreements (the “Agreements”) with the Industrial and Commercial Bank of China (“ICBC”) and Didi Chuxing (“DiDi”) to generate additional growth opportunities. Under the Agreements, the Company will integrate its extensive network and experience in the Chinese automotive sector with ICBC’s world-class financing capabilities to provideOEM-subsidized ornon-subsidized financing solutions primarily intier-one andtier-two cities in China. In addition, the Company will provide a variety of solutions to Didi’s fleet, including registered driver recruitment, vehicle sourcing, automotive financing and insurance facilitation.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, stated, “During the second quarter of 2018, we executed three strategic initiatives to combat the near-term headwind in the macroeconomic environment and the automotive sector. First, along with our efforts to continuously expand and optimize our dealer coverage, we started implementing our proprietary SaaS management system and supply chain financing solutions among our dealers to enable them to conveniently source cars, manage inventory, and improve their sales performance. Secondly, we have launched our strategic partnerships with ICBC and Didi. Thirdly, we further diversified our revenue streams by expanding our after-market services, which now mainly involve facilitating the sale of insurance policies.

Looking ahead, we will continue to enhance our cooperation with ICBC and Didi, as well as further increase the market penetration of our insurance facilitation services. As we expand our dealer network, optimize our dealer coverage, innovate our products and services, and expand our strategic partnerships, we are well-positioned to capitalize on emerging opportunities and generate sustainable shareholder value.”

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Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “Although weak new car sales, aggressive subsidies from Original Equipment Manufacturers (“OEMs”) and the transition of our dealer coverage model have caused a year-over-year decline in our revenues in second quarter of 2018, our business remains highly profitable and our free cash flow positive. Furthermore, we have allocated more resources to improve the conversion rate of our after-market services, through strengthening our self-reinforcing platform and further expansion of our dealer coverage. Our after-market services can be cross-sold with our financing facilitation services, with minimum incremental labor and system costs and expenses, resulting in high profit margins and generating great return on our investment. The progress we have achieved in our after-market services initiatives combined with our nationwide and well-penetrated dealer network validates our promising monetization potential. We are well positioned to implement our growth strategies in the second half of 2018.”

Second Quarter 2018 Financial Results

REVENUES

Total revenues decreased by 11.6% to RMB236.3 million (US$35.7 million) in the second quarter of 2018 from RMB267.3 million in the corresponding period of 2017. The decrease was primarily due to a change in our dealer coverage model as well as conditions in the automotive market. Total revenues for the first half of 2018 were RMB485.1 million (US$73.3 million), an increase of 4.9% compared to the corresponding period of 2017.

After-market services facilitation revenues in the second quarter of 2018 were RMB12.3 million (US$1.9 million) compared to RMB6.7 million in the same period of last year, with insurance facilitation services as the key growth driver.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2018 were RMB164.4 million (US$24.9 million), compared to RMB111.3 million in the corresponding period of 2017. The increase in operating cost and expenses was primarily attributable to the increases in general and administrative expenses as well as sales and marketing expenses.

• Cost of revenue in the second quarter of 2018 decreased by 8.0% to RMB81.2 million (US$12.3 million) from RMB88.3 million in the corresponding period of 2017. As a percentage of total revenues, cost of revenue in the second quarter of 2018 increased to 34.4% from 33.0% in the corresponding period of 2017. The increase was due to a higher average amount of commission paid to dealers in each financing transaction.

• Sales and marketing expenses in the second quarter of 2018 increased to RMB36.9 million (US$5.59 million) from RMB13.6 million in the corresponding period of 2017. As a percentage of total revenues, sales and marketing expenses in the second quarter of 2018 increased to 15.7% from 5.1% in the corresponding period of 2017. The increase was due to the expansion of the Company’s sales personnel to 2,148 as of June 30, 2018 from 724 as of June 30, 2017, to further improve the Company’s dealer coverage and dealers’ stickiness. The Company expects its sales and marketing expenses as a percentage of total revenue to decrease in the future due to economies of scale.

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• General and administrative expenses were RMB31.4 million (US$4.7 million) or 13.3% of total revenue in the second quarter of 2018, compared with RMB14.9 million or 5.6% of revenues in the corresponding period of 2017. The increase was primarily due to increased administrative staff headcount and compensation, along withone-time fees paid to professional service providers related to the Company’s initial public offering in July 2018.

• Research and development expenses in the second quarter of 2018 increased to RMB9.5 million (US$1.4 million) from RMB3.1 million in the corresponding period of 2017. As a percentage of total revenues, research and development expenses in the second quarter of 2018 increased to 4.0% from 1.2% in the corresponding period of 2017, mostly due to the expansion in the Company’s research and development team.

NET INCOME

Net income was RMB 64.6 million (US$9.8 million) in the second quarter of 2018, compared to RMB109.5 million in the corresponding period of 2017.Non-GAAP adjusted net income was RMB70.1 million (US$10.6 million), compared to RMB109.5 million in the same period last year.Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see “Use ofNon-GAAP Financial Measure.”

NET INCOME PER ADS

Net income per ADS was RMB0.44 (US$0.07) in the second quarter of 2018, and RMB0.44 (US$0.07) on a diluted basis.Non-GAAP adjusted net income per ADS was RMB0.48 (US$0.08) in the second quarter of 2018, and RMB0.48 (US$0.08) on a diluted basis. Each ADS represents two of the Company’s Class A ordinary shares.

BALANCE SHEET

As of June 30, 2018, the Company had cash and cash equivalents of RMB3,121.4 million (US$471.7 million), compared with RMB803.3 million as of December 31, 2017.

Business Outlook

For the third quarter of 2018, the Company expects total revenues to be between RMB270 million and RMB290 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

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Conference Call Information

The Company will hold a conference call on Thursday, August 30, 2018 at 9:00 pm Eastern Time or Friday, August 31, 2018 at 9:00 am Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

International:	+1-412-902-4272
United States Toll Free:	+1-888-346-8982
China Toll Free:	4001-201-203
Hong Kong Toll Free:	800-905-945
Conference ID:	Cango Inc.

The replay will be accessible through September 06, 2018, by dialing the following numbers:

United States Toll Free:	+1-877-344-7529
International:	+1-412-317-0088
Access Code:	10123205

A live and archived webcast of the conference call will also be available at the Company’s investor relations website athttp://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

We define “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.

We define “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.

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Use ofNon-GAAP Financial Measure

In evaluating the business, the Company considers and usesNon-GAAP adjusted net income, anon-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of thenon-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 definesNon-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents thenon-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 arenon-cash charges. The Company also believes that the use of thenon-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. Thisnon-GAAP financial measure has limitations as analytical tools. One of the key limitations of usingNon-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 is not reflected in the presentation ofNon-GAAP adjusted net income. Further, thenon-GAAP measure may differ from thenon-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling thenon-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’snon-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 RMB6.6171 to US$1.00, the noon buying rate in effect on June 29, 2018 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

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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 expectation of its collection efficiency and delinquency, 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

Jack Wang

ICR Inc.

+1 (646)405-5056

ir@cangoonline.com

SOURCE: Cango Inc.

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CANGO INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except share data and per share data)

	As of December 31, 2017			As of June 30, 2018
	RMB			RMB			US$
ASSETS:
Current assets:
Cash and cash equivalents		803,270,815			3,121,436,414			471,722,721
Restricted Cash		10,060,360			1,019,254,673			154,033,440
Short-term investments		62,380,000			89,250,000			13,487,782
Accounts receivable, net		85,595,207			84,185,107			12,722,357
Financing receivable, net		832,052			3,588,565			542,317
Short-term amounts due from related parties		1,253,833			1,626,981			245,875
Prepaid expenses and other current assets		144,858,222			118,831,260			17,958,208
Total current assets		1,108,250,489			4,438,173,000			670,712,700
Non-current assets:
Restricted Cash		319,352,347			484,973,496			73,290,943
Long-term investments		191,002,602			191,210,777			28,896,462
Equity method investments		165,659,951			164,263,809			24,824,139
Property and equipment, net		9,751,738			17,138,951			2,590,100
Intangible assets		1,701,770			1,615,452			244,133
Deferred tax assets		67,774,187			83,863,943			12,673,821
Long-term amounts due from related parties		122,383,094			—			—
Othernon-current assets		10,991,399			13,343,002			2,016,443
Totalnon-current assets		888,617,088			956,409,430			144,536,041
TOTAL ASSETS		1,996,867,577			5,394,582,430			815,248,741
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		328,522,735			204,480,289			30,901,798
Short-term amounts due to related parties		5,525,000			10,277,301			1,553,143
Risk assurance liabilities		129,935,457			160,834,512			24,305,891
Income tax payable		62,320,855			42,491,257			6,421,432
Total current liabilities		526,304,047			418,083,359			63,182,264
Non-current liabilities:
Long-term debt		175,000,000			175,000,000			26,446,631
Othernon-current liabilities		35,555,908			34,710,048			5,245,508
Totalnon-current liabilities		210,555,908			209,710,048			31,692,139
Total liabilities		736,859,955			627,793,407			94,874,403
Mezzanine equity
Convertible Preferred Shares
SeriesA-1		1,501,153,698			1,501,153,698			226,859,757
SeriesA-3		307,816,408			307,816,408			46,518,325
Series B		2,132,875,970			2,081,275,970			314,529,925
Series C		—			1,488,348,221			224,924,547
Total mezzanine equity		3,941,846,076			5,378,594,297			812,832,554
Shareholders’ equity
Ordinary shares		83,145			83,145			12,565
SeriesA-2 Convertible Preferred Shares		1,450			1,450			219
Additionalpaid-in capital		4,100,000			5,467,240			826,229
Accumulated other comprehensive (loss) income		(398,698	)		43,648,288			6,596,287
Accumulated deficit		(2,711,414,472	)		(674,212,454	)		(101,889,414	)
Total Cango Inc.’s deficit		(2,707,628,575	)		(625,012,331	)		(94,454,114	)
Non-controlling interests		25,790,121			13,207,057			1,995,898
Total shareholders’ deficit		(2,681,838,454	)		(611,805,274	)		(92,458,216	)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY		1,996,867,577			5,394,582,430			815,248,741

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CANGO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except share data and per share data)

	Three months ended June 30,									Six months ended June 30,
	2017			2018						2017			2018
	RMB			RMB			US$			RMB			RMB			US$
Revenues		267,337,279			236,287,811			35,708,666			462,433,591			485,107,011			73,311,120
Operating cost and expenses:
Cost of revenue		88,256,080			81,181,330			12,268,415			162,593,546			162,037,069			24,487,626
Sales and marketing		13,566,023			36,979,636			5,588,496			33,772,538			71,798,024			10,850,376
General and administrative		14,910,126			31,350,545			4,737,807			26,927,596			58,094,590			8,779,464
Research and development		3,127,150			9,481,415			1,432,866			5,393,313			15,933,541			2,407,934
Net gain on risk assurance liabilities		(8,560,011	)		(4,951,451	)		(748,281	)		(21,915,578	)		(1,183,503	)		(178,855	)
Provision for financing receivables		—			10,402,370			1,572,044			—			13,464,113			2,034,745
Total operation cost and expense		111,299,368			164,443,845			24,851,347			206,771,415			320,143,834			48,381,290
Income from operations		156,037,911			71,843,966			10,857,319			255,662,176			164,963,177			24,929,830
Interest income		3,446,192			18,246,042			2,757,408			6,214,713			26,323,438			3,978,093
(Loss) income from equity method investments		(982,650	)		937,549			141,686			272,112			(1,396,142	)		(210,990	)
Interest expense		(3,215,694	)		(4,712,329	)		(712,144	)		(4,893,281	)		(9,502,055	)		(1,435,985	)
Foreign exchange (loss) gain, net		(8,689,544	)		10,045,905			1,518,173			(8,689,544	)		7,422,516			1,121,717
Other income		1,304,447			(975,669	)		(147,447	)		2,553,188			21,046,154			3,180,570
Other expenses		(98,117	)		(7,091,835	)		(1,071,744	)		(108,188	)		(7,197,923	)		(1,087,777	)
Net income before income taxes		147,802,545			88,293,629			13,343,251			251,011,176			201,659,165			30,475,458
Income tax expenses		(38,332,913	)		(23,677,171	)		(3,578,179	)		(67,280,698	)		(53,016,212	)		(8,012,001	)
Net income		109,469,632			64,616,458			9,765,072			183,730,478			148,642,953			22,463,457
Less: Net income attributable to thenon-controlling interest shareholders		2,157,807			164,843			24,912			2,287,786			4,099,150			619,477
Net income attributable to Cango Inc.		107,311,825			64,451,615			9,740,160			181,442,692			144,543,803			21,843,980
Less: Accretion of Series C Preferred Shares		—			6,991,289			1,056,549			—			6,991,289			1,056,549
Net income attributable to Cango Inc.’s ordinary shareholders		107,311,825			57,460,326			8,683,611			181,442,692			137,552,514			20,787,431
Net income per ADS (Note 1):
Basic		0.85			0.44			0.07			1.44			1.07			0.16
Diluted		0.85			0.44			0.07			1.44			1.05			0.16
ADSs used in net income per ADS computation (Note 1):
Basic		126,415,858			130,053,500			130,053,500			126,415,858			128,244,728			128,244,728
Diluted		126,415,858			131,667,341			131,667,341			126,415,858			130,443,925			130,443,925
Other comprehensive income, net of tax
Unrealized losses onavailable-for-sale securities		1,205,213			78,147			11,810			1,582,411			156,131			23,595
Foreign currency translation adjustment		—			43,890,855			6,632,944			—			43,890,855			6,632,944
Total comprehensive income		110,674,845			108,585,460			16,409,826			185,312,889			192,689,939			29,119,996
Total comprehensive income attributable to Cango Inc.		108,517,038			108,420,617			16,384,914			183,025,103			188,590,789			28,500,519

Note1: Each ADS represents two ordinary shares.

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CANGO INC.

RECONCILIATIONS OF GAAP ANDNON-GAAP RESULTS

(Amounts in Renminbi (“RMB”) and US dollar (“US$”), except share data and per share data)

	Three months ended June 30,						Six months ended June 30,
	2017		2018				2017		2018
	RMB		RMB		US$		RMB		RMB		US$
Net income		109,469,632		64,616,458		9,765,072		183,730,478		148,642,953		22,463,459
Add: Share-based compensation expenses		—		5,467,240		826,229		—		5,467,240		826,229
Cost of revenue		—		224,157		33,875		—		224,157		33,875
Sales and marketing		—		1,164,522		175,987		—		1,164,522		175,987
General and administrative		—		3,794,264		573,403		—		3,794,264		573,403
Research and development		—		284,297		42,964		—		284,297		42,964
Non-GAAP adjusted net income		109,469,632		70,083,698		10,591,301		183,730,478		154,110,193		23,289,688
Less: Net income attributable to thenon-controlling interest shareholders		2,157,807		164,843		24,912		2,287,786		4,099,150		619,478
Non-GAAP adjusted net income attributable to Cango Inc.		107,311,825		69,918,855		10,566,389		181,442,692		150,011,043		22,670,210
Less: Accretion of Series C Preferred Shares		—		6,991,289		1,056,549		—		6,991,289		1,056,549
Non-GAAP adjusted net income attributable to ordinary shareholders		107,311,825		62,927,566		9,509,840		181,442,692		143,019,754		21,613,661
Non-GAAP adjusted net income perADS-basic (Note 1)		0.85		0.48		0.07		1.44		1.12		0.17
Non-GAAP adjusted net income perADS-diluted (Note 1)		0.85		0.48		0.07		1.44		1.10		0.17
Weighted average ADS outstanding—basic		126,415,858		130,053,500		130,053,500		126,415,858		128,244,728		128,244,728
Weighted average ADS outstanding—Diluted		126,415,858		131,667,341		131,667,341		126,415,858		130,443,925		130,443,925

Note1: Each ADS represents two ordinary shares.

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