Cango (CANG) 6-K Cango Inc. Reports Third Quarter 2019 Unaudited Financial Results and Issues Notice of Annual General Meeting

Exhibit 99.1

Cango Inc. Reports Third Quarter 2019 Unaudited Financial Results and Issues Notice of Annual General Meeting

SHANGHAI, Nov. 14, 2019 /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 2019.

Third Quarter 2019 Financial and Operational Highlights

• Total revenues in the third quarter of 2019 were RMB351.3 million (US$49.1 million), representing a year-over-year increase of 23.2% and outperforming the high end of the Company’s guidance by 8.1%.

• After-market services facilitation revenues in the third quarter of 2019 were RMB40.7 million (US$5.7 million), continuing to serve as an important driver for the Company’s revenue growth.

• Income from operations in the third quarter of 2019 increased by 17.8% to RMB89.7 million (US$12.6 million) from RMB76.2 million in the corresponding period of 2018.

• Net income in the third quarter of 2019 increased by 14.9% to RMB122.1 million (US$17.1million) from RMB106.3 million in the corresponding period of 2018.Non-GAAP net income in the third quarter of 2019 increased by 21.5% to RMB146.0 million (US$20.4 million) from RMB120.2 million in the corresponding period of 2018.

• The amount of financing transactions the Company facilitated in the third quarter of 2019 totaled RMB5,769.4 million (US$807.2 million). The total outstanding balance of financing transactions the Company facilitated was RMB36,500.5 million (US$5,106.6 million) as of September 30, 2019.

• M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 0.85% and 0.33%, respectively, as of September 30, 2019, as compared to 0.72% and 0.30%, respectively, as of June 30, 2019.

• The number of dealers covered by the Company continued to grow sequentially, reaching 49,396 as of September 30, 2019, compared to 48,367 as of June 30, 2019.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “In the face of adverse market conditions and industry-wide challenges, we remained focused on executing our growth strategies in the third quarter. Accordingly, we further expanded our dealership coverage, optimized our service offerings, and leveraged our industry partnerships to deliver a robust financial performance. In particular, we continued to hone our core competencies in the auto financing market through our auto loan facilitation services. Our burgeoning dealership network and highly efficient direct coverage model also enabled us to enhance the operating capacities of our partnered dealers, further improving both our service quality and efficiency in turn.

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Additionally, we focused on accelerating the development of our after-market services, which have become an integral component of our long-term growth strategy. Going forward, we expect the near-term headwinds and macroeconomic slowdown to persist throughout the first half of 2020. Nonetheless, we are confident in the strength of the foundation we have built through our leadership in the auto financing market as well as strategic partnerships with some of China’s largest financial institutions and original equipment manufacturers (OEMs).”

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “In the face of difficult macroeconomic conditions and the contraction of China’s auto market, we maintained our strong growth momentum to deliver solid financial results in the third quarter of 2019. Our total revenues increased by 23.2% year over year to RMB351.3 million in the third quarter. Our after-market services facilitation business continued to serve as an important growth engine, contributing RMB40.7 million or 11.6% of our total revenues in the third quarter. More importantly, we also expanded our profitability as a result of the increased economies of scale as well as the successful implementation of our cost control initiatives. Our income from operations and net income increased, by 17.8% and 14.9% to RMB89.7 million and RMB122.1 million, respectively, in the third quarter of 2019. Going forward, we plan to continue investing in the expansion of our geographic footprint, refinement of our service offerings, and development of cutting-edge technology. We will forge ahead and strengthen our ties with additional financial institutions and OEMs, further propelling our growth trajectory in spite of the challenging macroeconomic situation.”

Third Quarter 2019 Financial Results

REVENUES

Total revenues in the third quarter of 2019 were RMB351.3 million (US$49.1 million), representing a 23.2% increase from RMB285.2 million in the corresponding period of 2018. Revenues from after-market services facilitation in the third quarter of 2019 were RMB40.7 million (US$5.7 million), compared to RMB39.0 million in the same period of last year.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the third quarter of 2019 were RMB261.6 million (US$36.6 million), compared to RMB209.0 million in the corresponding period of 2018.

• Cost of revenue in the third quarter of 2019 increased by 10.5% to RMB125.4 million (US$17.5 million) from RMB113.5 million in the corresponding period of 2018. As a percentage of total revenues, cost of revenue decreased to 35.7% in the third quarter of 2019 from 39.8% in the corresponding period of 2018. As a result, the Company’s gross profit margin expanded to 64.3% in the third quarter of 2019 from 60.2% in the corresponding period of 2018, further demonstrating the increased economies of scale as well as the effectiveness of the Company’s cost control initiatives.

• Sales and marketing expenses in the third quarter of 2019 decreased by 1.9% to RMB47.6 million (US$6.7 million) from RMB48.5 million in the corresponding period of 2018. As a percentage of total revenues, sales and marketing expenses decreased to 13.5% in the third quarter of 2019 from 17.0% in the corresponding period of 2018. The decrease was a result of the Company’s efforts to maintain stable sales and marketing expenses while growing its revenues concurrently.

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• General and administrative expenses were RMB52.3 million (US$7.3 million), or 14.9% of total revenues, in the third quarter of 2019, compared to RMB40.7 million, or 14.3% of total revenues, in the corresponding period of 2018. The increase was mainly due to higher share-based compensation expenses in the third quarter of 2019.

• Research and development expenses in the third quarter of 2019 increased to RMB13.2 million (US$1.8 million) from RMB10.8 million in the corresponding period of 2018. The increase was a result of increased investments in the Company’s research and development projects as it grew its total revenues. As a percentage of total revenues, research and development expenses remained stable at 3.8% in the third quarter of 2019 compared to the corresponding period of 2018.

INCOME FROM OPERATIONS

Income from operations was RMB89.7 million (US$12.6 million) in the third quarter of 2019, representing a year-over-year increase of 17.8% from RMB76.2 million in the corresponding period of 2018.

NET INCOME

Net income was RMB122.1 million (US$17.1 million) in the third quarter of 2019, representing a year-over-year increase of 14.9% from RMB106.3 million in the corresponding period of 2018.Non-GAAP adjusted net income increased by 21.5% to RMB146.0 million (US$20.4 million) from RMB120.2 million in the corresponding period of 2018.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

Basic and diluted net income per American Depositary Share (ADS) in the third quarter of 2019 were both RMB0.78 (US$0.11).Non-GAAP adjusted basic and diluted net income per ADS in the third quarter of 2019 were both RMB0.94 (US$0.13). Each ADS represents two of the Company’s Class A ordinary shares.

BALANCE SHEET

As of September 30, 2019, the Company had cash and cash equivalents of RMB1,851.2 million (US$259.0 million), compared to RMB1,609.6 million as of June 30, 2019.

Business Outlook

For the fourth quarter of 2019, the Company expects total revenues to be between RMB380 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.

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Notice of Annual General Meeting

The Company will hold its annual general meeting of shareholders (the “AGM”) at 18F, Building 2, Youyou Century Plaza, 428 Yang Gao Nan Lu, Shanghai, China, on December 23, 2019 at 10:00 A.M. Beijing Time. No proposal will be submitted to shareholders for approval at the AGM. Instead, the AGM will serve as an open forum for shareholders and holders of the Company’s ADSs to discuss the Company’s affairs with management. The chairman of the AGM will conduct and lead the AGM and may accept questions from shareholders at his sole and absolute discretion.

The board of directors of the Company has fixed the close of business on November 25, 2019 (Eastern Standard Time) as the record date (the “Record Date”) for determining the shareholders entitled to receive notice of and attend the AGM or any adjournment or postponement thereof.

Holders of record of the ordinary shares, par value US$0.0001 per share, of the Company (the “Ordinary Shares”), at the close of business on the Record Date are entitled to attend the AGM and any adjournment or postponement thereof in person.

The notice of the annual general meeting is available on the Company’s website at ir.cangoonline.com. The Company filed its annual report on Form20-F for the fiscal year ended December 31, 2018, with the U.S. Securities and Exchange Commission (the “SEC”) April 25, 2019, U.S. Eastern Time. The annual report can be accessed on the Company’s investor relations website at ir.cangoonline.com or the SEC’s website at www.sec.gov. The Company will also provide a hard copy of its annual report containing its audited consolidated financial statements, free of charge, to its shareholders and American Depositary Share holders upon request.

Conference Call Information

The Company’s management will hold a conference call on Thursday, November 14, 2019, at 8:00 P.M. Eastern Time or Friday, November 15, 2019, 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 21, 2019, by dialing the following numbers:    

International:	+1-412-317-0088
United States Toll Free:	+1-877-344-7529
Access Code:	10136898

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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

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 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.

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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 are 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 RMB7.1477 to US$1.00, the noon buying rate in effect on September 30, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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

Caesar Cao

Cango Inc.

Tel: +86 21 3183 5088 ext.5521

Email:ir@cangoonline.com

Jack Wang

ICR Inc.

Tel: +1 (646)405-5056

Email:ir@cangoonline.com

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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, 2018		As of September 30, 2019
	RMB		RMB			US$
ASSETS:
Current assets:
Cash and cash equivalents		2,912,901,189		1,851,224,670			258,995,855
Restricted Cash		298,900,155		610,535,955			85,417,121
Short-term investments		265,869,717		461,521,579			64,569,243
Accounts receivable, net		86,513,830		173,891,886			24,328,369
Financing receivable, net		5,420,617		7,747,866			1,083,966
Short-term loan principal, net		—		17,335,171			2,425,280
Short-term finance leasing receivable, net		1,123,703,618		1,457,631,421			203,930,134
Prepaid expenses and other current assets		61,272,518		95,901,127			13,417,061
Total current assets		4,754,581,644		4,675,789,675			654,167,029
Non-current assets:
Restricted Cash		668,627,618		812,822,983			113,718,117
Long-term investments		292,099,059		573,024,376			80,169,058
Equity method investments		1,448,416		—			—
Goodwill		145,063,857		145,063,857			20,295,180
Property and equipment, net		18,286,218		15,607,057			2,183,508
Intangible assets		1,693,407		34,163,538			4,779,655
Deferred tax assets		100,194,993		86,202,225			12,060,135
Long-term finance leasing receivable, net		1,282,457,409		1,517,138,233			212,255,443
Othernon-current assets		36,687,583		9,128,673			1,277,148
Totalnon-current assets		2,546,558,560		3,193,150,942			446,738,244
TOTAL ASSETS		7,301,140,204		7,868,940,617			1,100,905,273
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings		660,000,000		1,110,000,000			155,294,710
Long-term debts—current		467,194,051		736,392,574			103,025,109
Accrued expenses and other current liabilities		211,458,501		177,268,347			24,800,754
Risk assurance liabilities		173,210,363		202,952,134			28,394,048
Income tax payable		53,517,717		39,803,161			5,568,667
Total current liabilities		1,565,380,632		2,266,416,216			317,083,288
Non-current liabilities:
Long-term borrowings		472,793,340		230,173,405			32,202,443
Othernon-current liabilities		7,599,404		—			—
Totalnon-current liabilities		480,392,744		230,173,405			32,202,443
Total liabilities		2,045,773,376		2,496,589,621			349,285,731
Shareholders’ equity
Ordinary shares		204,260		204,260			28,577
Treasury shares		—		(20,638,881	)		(2,887,486	)
Additionalpaid-in capital		4,444,078,463		4,505,539,185			630,348,110
Accumulated other comprehensive income		109,452,996		152,281,596			21,304,979
Accumulated retained earnings		698,036,438		729,406,743			102,047,756
Total Cango Inc.’s equity		5,251,772,157		5,366,792,903			750,841,936
Non-controlling interests		3,594,671		5,558,093			777,606
Total shareholders’ equity		5,255,366,828		5,372,350,996			751,619,542
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		7,301,140,204		7,868,940,617			1,100,905,273

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,
	2018 RMB			2019						2018 RMB			2019
				RMB			US$						RMB			US$
Revenues		285,171,140			351,290,100			49,147,292			770,278,151			1,039,252,359			145,396,751
Operating cost and expenses:
Cost of revenue		113,539,426			125,416,378			17,546,396			275,576,495			382,046,832			53,450,317
Sales and marketing		48,494,188			47,576,811			6,656,241			120,292,212			137,627,725			19,254,827
General and administrative		40,703,732			52,318,827			7,319,673			98,798,322			170,500,860			23,853,947
Research and development		10,833,449			13,181,083			1,844,101			26,766,990			38,774,937			5,424,813
Net (gain) loss on risk assurance liabilities		(14,055,654	)		7,489,058			1,047,758			(15,239,157	)		27,719,897			3,878,156
Provision for financing receivables		9,464,769			15,577,884			2,179,426			22,928,882			39,273,822			5,494,610
Total operating cost and expenses		208,979,910			261,560,041			36,593,595			529,123,744			795,944,073			111,356,670
Income from operations		76,191,230			89,730,059			12,553,697			241,154,407			243,308,286			34,040,081
Interest and investment Income, net		15,045,281			41,110,413			5,751,558			41,368,719			82,699,347			11,570,064
Income (Loss) from equity method investments		43,795,483			—			—			42,399,341			(926,205	)		(129,581	)
Interest expense		(4,757,534	)		(3,288,553	)		(460,085	)		(14,259,589	)		(13,295,127	)		(1,860,057	)
Foreign exchange (loss) gain, net		(6,739,620	)		1,964,457			274,838			682,896			2,087,258			292,018
Other income		11,925,506			17,304,702			2,421,017			32,971,660			38,897,980			5,442,028
Other expenses		6,669,254			(300,706	)		(42,070	)		(528,669	)		(1,485,366	)		(207,810	)
Net income before income taxes		142,129,600			146,520,372			20,498,955			343,788,765			351,286,173			49,146,743
Income tax expenses		(35,866,227	)		(24,388,408	)		(3,412,064	)		(88,882,439	)		(60,196,464	)		(8,421,795	)
Net income		106,263,373			122,131,964			17,086,891			254,906,326			291,089,709			40,724,948
Less: Net income attributable to the noncontrolling interest shareholders		3,447,788			4,491,935			628,445			7,546,938			5,692,189			796,367
Net income attributable to Cango Inc.’s shareholders		102,815,585			117,640,029			16,458,446			247,359,388			285,397,520			39,928,581
Accretion of Series C Preferred Shares		(6,991,289	)		—			—			—			—			—
Net income attributable to Cango Inc.’s ordinary shareholders		109,806,874			117,640,029			16,458,446			247,359,388			285,397,520			39,928,581
Net income per ADS(Note 1):
Basic		0.73			0.78			0.11			1.82			1.89			0.26
Diluted		0.73			0.78			0.11			1.80			1.89			0.26
ADSs used in net income per ADS computation (Note 1):
Basic		150,049,511			151,057,825			151,057,825			135,592,860			151,287,968			151,287,968
Diluted		150,049,511			151,057,825			151,057,825			137,062,696			151,287,968			151,287,968
Other comprehensive income, net of tax
Unrealized gain (loss) onavailable-for-sale securities		11,384			—			—			167,515			(146,801	)		(20,538	)
Reclassification of losses to net income		—			—			—			—			(276,843	)		(38,732	)
Foreign currency translation adjustment		63,386,168			53,891,387			7,539,682			107,277,023			43,252,244			6,051,211
Total comprehensive income		169,660,925			176,023,351			24,626,573			362,350,864			333,918,309			46,716,889
Total comprehensive income attributable to Cango Inc.’s shareholders		166,213,137			171,531,416			23,998,128			354,803,926			328,226,120			45,920,522

Note1: Each ADS represents two ordinary shares.

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,
	2018			2019				2018		2019
	(Unaudited) RMB			(Unaudited) RMB		(Unaudited) US$		(Unaudited) RMB		(Unaudited) RMB		(Unaudited) US$
Net income		106,263,373			122,131,964		17,086,890		254,906,326		291,089,709		40,724,948
Add: Share-based compensation expenses		13,971,837			23,910,159		3,345,154		19,439,077		61,460,722		8,598,671
Cost of revenue		572,846			980,317		137,151		797,003		2,519,891		352,546
Sales and marketing		2,976,001			5,092,863		712,518		4,140,523		13,091,132		1,831,517
General and administrative		9,696,453			16,593,648		2,321,537		13,490,717		42,653,735		5,967,477
Research and development		726,537			1,243,330		173,948		1,010,834		3,195,963		447,132
Non-GAAP adjusted net income		120,235,210			146,042,123		20,432,044		274,345,403		352,550,431		49,323,619
Less: Net income attributable to the noncontrolling interest shareholders		3,447,788			4,491,935		628,445		7,546,938		5,692,189		796,367
Net income attributable to Cango Inc.’s shareholders		116,787,422			141,550,188		19,803,599		266,798,465		346,858,242		48,527,252
Accretion of Series C Preferred Shares		(6,991,289	)		—		—		—		—		—
Net income attributable to Cango Inc.’s ordinary shareholders		123,778,711			141,550,188		19,803,599		266,798,465		346,858,242		48,527,252
Non-GAAP adjusted net income perADS-basic (Note 1)		0.82			0.94		0.13		1.97		2.29		0.32
Non-GAAP adjusted net income perADS-diluted (Note 1)		0.82			0.94		0.13		1.95		2.29		0.32
Weighted average ADS outstanding—basic		150,049,511			151,057,825		151,057,825		135,592,860		151,287,968		151,287,968
Weighted average ADS outstanding—diluted		150,049,511			151,057,825		151,057,825		137,062,696		151,287,968		151,287,968

Note1: Each ADS represents two ordinary shares.