Cango (CANG) 6-K Cango Inc. Reports Second Quarter 2021 Unaudited Financial Results

Exhibit 99.1

Cango Inc. Reports Second Quarter 2021 Unaudited Financial Results

SHANGHAI, August 19, 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 second quarter of 2021.

Second Quarter 2021 Financial and Operational Highlights

• Total revenues were RMB946.7 million (US$146.6 million), a 245.5% increase from RMB274.1 million in the same period of 2020, meeting the Company’s previous guidance range. The increase was mainly driven by the increased amounts of both financing transactions the Company facilitated and car trading transactions in the second quarter of 2021.

• Car trading transactions revenues were RMB522.5 million (US$80.9 million), or 55.2% of total revenues in the second quarter of 2021.

• Automotive financing facilitation revenues were RMB303.3 million (US$47.0 million), a 111.2% increase from RMB143.6 million in the same period of 2020.

• After-market services facilitation revenues were RMB51.9 million (US$8.0 million), compared to RMB52.5 million in the same period of 2020.

• The amount of financing transactions the Company facilitated in the second quarter of 2021 was RMB7,789.7 million (US$1,206.5 million). The total outstanding balance of financing transactions the Company facilitated was RMB48,637.8 million (US$7,533.0 million) as of June 30, 2021.

• M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 1.35% and 0.69 %, respectively, as of June 30, 2021, compared to 1.23% and 0.54%, respectively, as of March 31, 2021.

• The number of dealers covered by the Company was 47,740 as of June 30, 2021, compared to 47,017 as of March 31, 2021.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, “We entered the second quarter with a focus on navigating major challenges primarily associated with the global chip shortage. We are pleased with our second quarter performance, and thanks to solid progress in our car trading transactions business, we delivered a 245.5% year-over-year growth in total revenues, meeting our previous guidance range. The ongoing chip supply shortage, which has slowed down production and consumption in the entire auto industry, impacted our business to a certain extent and we expect the impact to linger in the second half of 2021. However, we remain dedicated to advancing key elements of our strategy and believe our solid business fundamentals give us considerable flexibility to navigate uncertain and stressful times. In late May, we launched our B2B service platform ‘Cango Haoche’ integrating car information with transactions, logistics, finance and insurance to directly address pain points for car dealers in the lower-tier markets. In addition, we introduced an updated service account of ‘Cango Cheshenghuo’ on WeChat also in the second quarter, offering consumers a one-stop service covering purchases, usage and maintenance of cars. With ‘Cango Haoche’ and ‘Cango Cheshenghuo,’ we have empowered B-end car dealers and served C-end car owners, further enhancing the bond between dealers, users and us.”

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“Looking ahead, we expect the impact of the supply chain-related challenges in the auto market to remain unresolved in the near term. However, we will closely monitor the situation and adapt accordingly, while staying true to our original goals and upholding our commitment to facilitating easy and enjoyable car purchase experiences for our consumers,” Mr. Lin concluded.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, “Our second quarter financial performance was in line with our expectations. Total revenues came in at RMB946.7 million, more than tripling from a year ago. We also recorded a net income of RMB557.7 million in the second quarter. While uncertainty stemming from global chip supply chain disruptions are ongoing, we remain committed to improving our operating efficiency while continually investing in the business to deliver more value to our dealers, partners and users. We fully believe that this will enable us to continue creating value for our shareholders well into the future.”

Second Quarter 2021 Financial Results

REVENUES

Total revenues in the second quarter of 2021 increased by 245.5% to RMB946.7 million (US$146.6 million) from RMB274.1 million in the same period of 2020. Revenues from car trading transactions in the second quarter of 2021 were RMB522.5 million (US$80.9 million), continuing to serve as an important revenue contributor. Revenues from automotive financing facilitation and after-market services facilitation in the second quarter of 2021 were RMB303.3 million (US$47.0 million) and RMB51.9 million (US$8.0 million), respectively.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2021 were RMB933.5 million (US$144.6 million) compared to RMB207.4 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 second quarter of 2021, compared to the same period of 2020.

• Cost of revenue in the second quarter of 2021 increased to RMB697.8 million (US$108.1 million) from RMB102.8 million in the same period of 2020. As a percentage of total revenues, cost of revenue in the second quarter of 2021 was 73.7% compared to 37.5% 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 41.6% in the second quarter of 2021.

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• Sales and marketing expenses in the second quarter of 2021 were RMB60.9 million (US$9.4 million) compared to RMB42.4 million in the same period of 2020. As a percentage of total revenues, sales and marketing expenses in the second quarter of 2021 was 6.4% compared to 15.5% in the same period of 2020.

• General and administrative expenses in the second quarter of 2021 were RMB64.7 million (US$10.0 million) compared to RMB66.0 million in the same period of 2020. As a percentage of total revenues, general and administrative expenses in the second quarter of 2021 was 6.8% compared to 24.1% in the same period of 2020.

• Research and development expenses in the second quarter of 2021 were RMB15.6 million (US$2.4 million) compared to RMB12.9 million in the same period of 2020. As a percentage of total revenues, research and development expenses in the second quarter of 2021 was 1.7% compared to 4.7% in the same period of 2020.

• Net loss on risk assurance liabilities in the second quarter of 2021 was RMB35.9 million (US$5.6 million) compared to a net gain of RMB42.9 million in the same period of 2020.

INCOME FROM OPERATIONS

Income from operations in the second quarter of 2021 was RMB13.2 million (US$2.1 million), compared to RMB66.7 million in the same period of 2020.

FAIR VALUE CHANGE OF EQUITY INVESTMENT

Fair value change of equity investment in the second quarter of 2021 was a gain of RMB603.4 million (US$93.5 million) compared to nil in the same period of 2020. The gain in the second quarter of 2021 is mainly due to the investment in Li Auto. As of June 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 INCOME

Primarily due to the fair value change of the Company’s investment in Li Auto, net income in the second quarter of 2021 was RMB557.7 million (US$86.4 million). Non-GAAP adjusted net income in the second quarter of 2021 was RMB578.3 million (US$89.6 million). Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see “Use of Non-GAAP Financial Measure.”

NET INCOME PER ADS

Basic and diluted net income per American Depositary Share (ADS) in the second quarter of 2021 were RMB3.85 (US$0.60) and RMB3.75 (US$0.58). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2021 were RMB3.99 (US$0.62) and RMB3.89 (US$0.60). Each ADS represents two Class A ordinary shares of the Company.

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BALANCE SHEET

As of June 30, 2021, the Company had cash and cash equivalents of RMB1,498.9 million (US$232.2 million), compared to RMB1,631.0 million as of March 31, 2021.

As of June 30, 2021, the Company had short-term investments of RMB3,127.2 million (US$484.3 million), compared to RMB2,627.6 million as of March 31, 2021.

Business Outlook

For the third quarter of 2021, the Company expects total revenues to be between RMB700 million and RMB750 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 third quarter of 2021 financial results.

Share Repurchase Program

Pursuant to the share repurchase program announced on March 2, 2021, we had repurchased 5,397,207 American depositary shares (“ADSs”) with cash in the aggregate amount of approximately US$48.4 million up to July 31, 2021.

Conference Call Information

The Company’s management will hold a conference call on Thursday, August 19, 2021, at 9:00 P.M. Eastern Time or Friday, August 20, 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 August 26, 2021, by dialing the following numbers:

International:	+1-412-317-0088
United States Toll Free:	+1-877-344-7529
Access Code:	10159690

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.

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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.

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 RMB6.4566 to US$1.00, the noon buying rate in effect on June 30, 2021, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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: ir@cangoonline.com

Twitter: https://twitter.com/Cango_Group

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Emilie Wu

The Piacente Group, Inc.

Tel: +86 21 6039 8363

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, 2020			As of June 30, 2021
	RMB			RMB			US$
ASSETS:
Current assets:
Cash and cash equivalents		1,426,899,576			1,498,947,545			232,157,412
Restricted cash - current		9,693,008			34,767,022			5,384,726
Short-term investments		4,342,356,612			3,127,171,118			484,337,131
Accounts receivable, net		141,594,170			157,050,941			24,324,093
Finance lease receivables - current, net		2,035,397,525			1,717,714,853			266,040,153
Short-term consumer financing receivables, net		23,168			—			—
Financing receivables, net		20,105,893			43,575,286			6,748,952
Short-term contract asset		364,618,635			714,635,512			110,682,946
Prepayments and other current assets		558,360,959			887,766,346			137,497,498
Total current assets		8,899,049,546			8,181,628,623			1,267,172,911
Non-current assets:
Restricted cash - non-current		878,299,140			845,590,108			130,965,231
Goodwill		145,063,857			145,063,857			22,467,530
Property and equipment, net		10,311,971			21,032,036			3,257,448
Intangible assets		44,887,871			44,683,992			6,920,669
Long-term contract asset		281,374,110			474,407,237			73,476,325
Deferred tax assets		170,951,082			374,774,207			58,045,133
Finance lease receivables - non-current, net		1,454,499,864			1,186,837,807			183,817,769
Other non-current assets		261,495,158			427,327,797			66,184,648
Total non-current assets		3,246,883,053			3,519,717,041			545,134,753
TOTAL ASSETS		12,145,932,599			11,701,345,664			1,812,307,664
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debts		355,816,940			779,104,385			120,667,903
Long-term debts—current		1,228,783,730			1,122,603,494			173,869,141
Accrued expenses and other current liabilities		324,734,202			352,398,112			54,579,517
Risk assurance liabilities		460,829,299			642,664,973			99,536,129
Income tax payable		87,132,455			388,784,530			60,215,056
Total current liabilities		2,457,296,626			3,285,555,494			508,867,747
Non-current liabilities:
Long-term debts		977,791,191			836,810,348			129,605,419
Deferred tax liability		330,765,029			171,705,298			26,593,764
Other non-current liabilities		4,870,616			2,479,512			384,028
Total non-current liabilities		1,313,426,836			1,010,995,158			156,583,211
Total liabilities		3,770,723,462			4,296,550,652			665,450,957
Shareholders’ equity
Ordinary shares		204,260			204,260			31,636
Treasury shares		(56,419,225	)		(356,910,505	)		(55,278,398	)
Additional paid-in capital		4,591,455,557			4,624,962,530			716,315,480
Accumulated other comprehensive income		(115,386,427	)		(147,245,016	)		(22,805,349	)
Retained earnings		3,955,354,972			3,283,783,743			508,593,338
Total Cango Inc.’s equity		8,375,209,137			7,404,795,012			1,146,856,707
Total shareholders’ equity		8,375,209,137			7,404,795,012			1,146,856,707
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		12,145,932,599			11,701,345,664			1,812,307,664

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 June 30,									Six months ended June 30,
	2020			2021						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
Revenues		274,054,751			946,746,211			146,632,316			520,052,725			2,070,532,922			320,684,714
Loan facilitation income and other related income		143,604,125			303,346,685			46,982,419			263,332,523			715,037,501			110,745,207
Leasing income		69,275,783			64,708,395			10,022,054			143,557,538			137,836,071			21,348,089
After-market services income		52,472,658			51,866,024			8,033,024			101,528,861			114,395,515			17,717,609
Automobile trading income		6,228,508			522,544,976			80,931,911			7,601,416			1,094,109,857			169,456,038
Others		2,473,677			4,280,131			662,908			4,032,387			9,153,978			1,417,771
Operating cost and expenses:								—
Cost of revenue		102,817,046			697,786,112			108,073,307			193,414,759			1,466,833,661			227,183,605
Sales and marketing		42,437,952			60,885,719			9,429,997			88,212,181			118,729,278			18,388,824
General and administrative		66,040,192			64,658,358			10,014,304			123,451,858			126,048,975			19,522,500
Research and development		12,901,613			15,638,883			2,422,155			25,458,298			29,233,130			4,527,635
Net (gain) loss on risk assurance liabilities		(42,928,191	)		35,903,834			5,560,796			33,957,484			57,642,765			8,927,727
Provision for credit losses		26,119,771			58,636,181			9,081,588			70,214,542			99,268,133			15,374,676
Total operation cost and expense		207,388,383			933,509,087			144,582,146			534,709,122			1,897,755,942			293,924,967
Income (Loss) from operations		66,666,368			13,237,124			2,050,169			(14,656,397	)		172,776,980			26,759,747
Interest and investment income		21,675,128			4,128,041			639,352			50,808,295			22,369,008			3,464,518
Fair value change of equity investment		—			603,413,645			93,456,873			—			156,488,012			24,236,907
Interest expense		(369,637	)		(234,274	)		(36,284	)		(1,736,923	)		(813,242	)		(125,955	)
Foreign exchange gain (loss), net		621,774			(938,526	)		(145,359	)		(3,439,945	)		(735,132	)		(113,857	)
Other income		7,317,072			7,568,769			1,172,253			25,790,703			11,176,345			1,730,995
Other expenses		(527,390	)		(193,817	)		(30,018	)		(581,495	)		(6,479,822	)		(1,003,597	)
Net income before income taxes		95,383,315			626,980,962			97,106,986			56,184,238			354,782,149			54,948,758
Income tax expenses		(25,152,250	)		(69,243,099	)		(10,724,390	)		(20,639,459	)		(70,915,821	)		(10,983,462	)
Net income		70,231,065			557,737,863			86,382,596			35,544,779			283,866,328			43,965,296
Less: Net income attributable to non-controlling interests		—			—			—			3,646,196			—			—
Net income attributable to Cango Inc.’s shareholders		70,231,065			557,737,863			86,382,596			31,898,583			283,866,328			43,965,296
Earnings per ADS attributable to ordinary shareholders:
Basic		0.47			3.85			0.60			0.21			1.93			0.30
Diluted		0.47			3.75			0.58			0.21			1.89			0.29
Weighted average ADS used to compute earnings per ADS attributable to ordinary shareholders:
Basic		150,605,540			144,829,122			144,829,122			150,789,465			147,012,155			147,012,155
Diluted		150,819,440			148,579,948			148,579,948			151,899,153			150,005,282			150,005,282
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment		(5,444,800	)		(42,140,854	)		(6,526,787	)		23,229,550			(31,858,589	)		(4,934,267	)
Total comprehensive income		64,786,265			515,597,009			79,855,809			58,774,329			252,007,739			39,031,029
Total comprehensive income attributable to Cango Inc.’s shareholders		64,786,265			515,597,009			79,855,809			55,128,133			252,007,739			39,031,029

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 June 30,						Six months ended June 30,
	2020		2021				2020		2021
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	RMB		RMB		US$		RMB		RMB		US$
Net income		70,231,065		557,737,863		86,382,596		35,544,779		283,866,328		43,965,296
Add: Share-based compensation expenses		22,096,880		20,522,138		3,178,474		45,415,178		40,433,303		6,262,321
Cost of revenue		905,973		783,983		121,424		1,862,024		1,454,657		225,298
Sales and marketing		4,706,635		4,004,166		620,166		9,673,432		7,521,055		1,164,863
General and administrative		15,335,232		14,987,159		2,321,215		31,518,128		29,678,982		4,596,689
Research and development		1,149,040		746,830		115,669		2,361,594		1,778,609		275,471
				—
Non-GAAP adjusted net income		92,327,945		578,260,001		89,561,070		80,959,957		324,299,631		50,227,617
Less: Net income attributable to non-controlling interests		—		—		—		3,646,196		—		—
Net income attributable to Cango Inc.’s shareholders		92,327,945		578,260,001		89,561,070		77,313,761		324,299,631		50,227,617
Non-GAAP adjusted net income per ADS-basic		0.61		3.99		0.62		0.51		2.21		0.34
Non-GAAP adjusted net income per ADS-diluted		0.61		3.89		0.60		0.51		2.16		0.33
Weighted average ADS outstanding—basic		150,605,540		144,829,122		144,829,122		150,789,465		147,012,155		147,012,155
Weighted average ADS outstanding—diluted		150,819,440		148,579,948		148,579,948		151,899,153		150,005,282		150,005,282