- Earnings call transcript Q3 2022

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Operator

Good morning and good evening, everyone. Welcome to the Cango, Inc.'s Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. This call is also being broadcast live on the company's IR website.

Joining us today are Mr. Officer, Executive Chief Lin, and Mr. Jiayuan Zhang, Yi Chief Financial company. the of Officer Yong

remarks, the will Management's we Following prepared conduct Q&A session.

Before the to Lin, Please Safe said, I'm earnings refer Mr. will make you Jiayuan in as turning With call I ahead, applies go company's that statements. conference also release, we the Cango. which the management CEO the today now of forward-looking Harbor sir. begin, statement to to call over

Jiayuan Lin

XXXX welcome China's complex and across [Foreign to challenging everyone earnings Hello quarter quarter in call. and external In third conditions due Language] automotive third the the [Foreign environment. the country resurgences Language] Cango's remain operating to market COVID-XX industry

shopping, automotive brought of consumption change However, it's by industry. the the online behavior on the transaction model pandemic with whole the in reshaping consumers to shifting

remain of taking the the service the expertise, among covering to focused automotive Beyond new imposed capabilities only through XX years used trends total further continue enhanced third car regulatory delivery downstream operational of our outstanding platforms performance changes, the row further tier our to industry and if [indiscernible] for released industry. We that quarter Meanwhile, customer delivered like and to million, participants, in improved our self-owned stickiness accounting the support. business these for share to car implement cars, trading Next, while of our sized advantage deep chain also to insights of standardization laying as reaching policies instrumental from during In trading offerings face a evolving XXX service the with industry XX% [Foreign transactions used revenues. channel. Let's diversified two and our was of we our quarter Language] we RMB new business which our [Foreign transaction development model. but business, margin expanded markets revenues Language] third transactions million, third of of our boosted small XXX new car quarters, over and for lower trading into both of chain dual supply on the with supply that high and total strategy have continue quarter full dealers platform new market our with over China's We vehicle car markets. the some our sustainable it last improved prosperity a highlights solid acquisition revenues car performance. order solid the strengthen not and [Foreign empower product brand begin confidence the foundation medium about and sales Language] by industry, I'd and and in also we inventory

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the our As plan on to remains strengthen controls tighten future management. qualitative the and outlook performance We cautious. risk post

volatility Against overdue launched relatively the safe From brought efficiency car by business throughout traditional Cango the Now latest quality Language] transaction and we services. in U-Car this backdrop, keep transformation [Foreign experience models, operational improving transaction logistics, China's our of of mini unprecedented Language] that to ratio logistics program confident platform our ecosystem Haoche auto constraints. registration sourcing, while on business, dealers a with and to and are for also used uncertainty with the solutions can significantly striving supply data the related chain digital new our operational build on [Foreign provide a in dealers can diverse needs supply chain industry. are to the the moving we closures, rights store empowered alleviate within address circular asset to only platform pandemic across development Haoche and car other automotive car operational car facilitating range. It disruptions progress dealers’ business. officially improve auto are car platform to provided and digitization dealers' the the WeChat Cango to more vehicle We market overall Technology Based convenient but also transaction has technological can market. their Cango we automotive business. accept capital inventory used not trading

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Michael Zhang

Hello Jiayuan. welcome to and quarter everyone XXXX earnings call. our Thanks, third

stated comparisons are percentage that all year-over-year terms start review all I and numbers are our please on to Before note unless financials, in a RMB otherwise basis.

a in essential total challenging and performance outperformed in We resilience third XXX.X Our car recorded guidance. revenues play of of trading transaction strength transaction a environment. even previous continued role million, to our XXX.X delivered showcased platform. our Car quarter our the an trading of business business million revenue

our to the in on third in same million move million operating costs of and quarter the compared let's the XXX.X to were the period period Cost the expenses expenses XXX.X Now million XXXX third revenue quarter same decreased and XXXX. from in XXX.X quarter. during in with XXX.X costs XXXX. XXXX Total million

quarter primarily percentage marketing in our pushing share million compared change expense trading an and period XXXX. Car ratio. in XX.X total increase total of third ratio XX.X% was same quarter transaction in XXXX revenue revenue in trading a high-cost decreased car in of thus overall XXXX due the to cost a transaction XX.X XX.X% million from present same the XXXX. up revenues. with Sales As the third normally the period was the of The to

XXXX and marketing quarter from As million compared XXXX. in XXXX decreased expenses in and in the period the a same administrative revenue, XX.X third expenses the percentage same with third million was XXXX. to of General the in X.X% total period sales quarter XX X.X%

in the XX.X% As Research general and of expenses to revenue, quarter the XXXX XXXX. same same a XXXX. with the third and XXXX in quarter XX.X third million percentage million expenses total the XX.X period development period in decreased from compared administrative was X% in

loss in in XXXX quarter X.X% liability was XX.X XX assurance operations in same default third period per a same adjusted As and quarter ADS XXXX. a with XXXX compared with quarter in the the quarter diluted X.XX. third was revenue, third XXX.X percentage in the development total non-GAAP assurance the XXXX expenses million, third of loss million of Net in research loss Net on XX ADS of third X.XX period X.X% the net On on the a was loss period compared adjusted loss in in a liability XXXX basis, million net the million same was recorded increase third to the was compared was non-GAAP XXXX. We net due loss the since XXXX with million. share in risk rate XXXX. in XXX Net was same per quarter XXXX. XXX.X sequential period from risk in diluted quarter loss and per XXXX the mainly million

Moving cash of of of on sheet, million XXXX, XXXX.X as June to XX, balance with XXX XX, XXXX. million had September as our equivalent cash and we compared

XXXX, As XX, of the XXXX. of with X.X billion as of September XX, had billion investments company short-term compared June two X.X

prepared are preliminary subject we Looking total operator, this to XXX This ahead ready the revenue Please note between on quarter remarks, take to now operational current million. change. reflects our are our now XXX that view to XXXX, million questions. are and concludes predicting the to fourth market our which forecast and we be conditions and

Operator

Instructions]. [Operator

We Stanley. Please with Shelley ahead. have go our first Morgan Wang question from

Shelley Wang

I'm Hi, Language] have from I three Shelly questions. Stanley. [Foreign Morgan

The because seeing some policies your car are first restrictions for released. are we question reopening gradually some outlook because for being is following we XXXX months, are about in market, the expecting China

could XXXX car outlook breakeven? you to is question So auto process and And second the your of transformation? on to is, the for market. When do do progress when market? elaborate China expect transmission question And used you what is you your the third about the expect complete the

issuance the used cars. the favorable seeing government are many We on from policies of

you car some are So initiatives elaborate used specific and the car to take what What you're used that expectation for your going on car used plans could of to drive market is business? the business. your

Jiayuan Lin

[Foreign your will take I Language] Thank you, Shelley. three questions.

talk consumers demographics car let’s different and side, stimulated segments. outlook also market new first the your in for of market. choices OEMs growing supply variety the about more models, given So on question XXXX of car which are car From consumption has various has

the overall likely the remain to remain year next controls and capacity with reliable services on and [Foreign will [indiscernible] side Language] long service, Okay. call Language] behavior Consumers we transformation chip second Haoche will will demand Cango cycles gradually [Foreign search guarantee pressure. products under pandemic app your on purchasing [indiscernible], their in as constraints semiconductors, question, automatic as reduction, due while perception insurance customer and continued our we production development. development deposit largely of pandemic pandemic About well launched have we which and the the Well, the including the program. we However, of our car also production continual standardized call logistics production consumption also and and market call what [indiscernible]. weak also on impact. generation also leads depend And the the

a these refining use been to have these services products dealers the on As basis, trial user experience. enhance we

the resources business, cars car have new of model, viability the year. the we been our end also by the on a based addition which have of our of the [Foreign viability we our transaction In business supported platform for investing of used validated entire Language] validation our processes. by car business transaction the used platform to proves to launch logic expect business we Over so transaction develop time

infrastructure our and completed have backend operations IT We support.

to [Foreign used will expanding. used model and your milestone third car will in-depth also market, while a over Language] next to our with transactions Language] question is account market quickly next is that about sustainability consistently of OEMs. while This from are on our means complete. beginning its to The total the car We XX%, up replicability, solid year, the our car the transformation for be complete data improving About According of platform actually car business [Foreign our we cooperation revenues. trading transaction major XX% effectively revenues endeavor which now scale the profitability.

Ministry more First, the encourage attention the series government market this Commerce is by of demonstrated car of paying a the used documents to market as to the by published development segment. of

long to going pool market car used of will has Thank forward maintained we for used growing the number pandemic, translate expanding all used therefore Language] will to keep from come. believe me. cars Second, larger you. growth a car cars the time steady amid That's either of [Foreign the the used market

Operator

with Please question Sachs. comes go from Sophia Your next Xu Goldman ahead.

Sophia Xu

I [Foreign Language] have questions. you. two Thank

question car automotive we the can revenue is see data, is already very to that incremental facilitation. The related first on loans the company's based financing Well, the from small.

that about So does going overdue you And to seeing the we business are that mean that completely? why so? decide related question continued are ratio, do stop grow. is to you lease do another ratio And the to overdue

expect So you second markets. relating network. when now mentioned down? to dealers inflection appear? as that my you lower dealership go question tier to have XX,XXX do is, before nearly point That And you ratio do the in And the when serves company overdue expect the start that is to the

network well, is the of the market expects So to what a what the be company that size And dealer reach? share? will

Jiayuan Lin

[Foreign take Language] Thank will you. your I two questions. to try

The about business. financing [Foreign Language] mean, first facilitation I the Okay. question car, automotive

this the business significant and our [ph] fluctuations actually pressure the survival. conditions current [back given So down] expanding may threatening cause company's macroeconomic even leading to flow cash rates in

So such to business an a challenge -- asset transformation. huge our be will

for rose really automotive current overdue business reducing Haoche the but slightly business has In About Language] app. third on your however, the come due some and the to development will Language] are overdue facilitation So both auto our tier facilitation at there's car used XX,XXX point. based financing the been of So an will remain to far, in to we quarter, is dealers its [Foreign going [Foreign zero Language] dealers, have car level existing the about we new pandemic's networking incorporated services that second size. have into not the to these are proactively strategy giving a impact dealership total ratios our the ratios overdue dealers. platform financing not the those Actually, up our low ratios markets. our [Foreign settled drop as our inflection time be question including present

at using drive through our and our app, better the that So can [Foreign dealers platform stage, this developing functions we services which in focusing promotions we to and experience, dealers. you. so user turn, app on our of to migrating provide improvements our dealer’s to Thank habit believe Language] will are we

Operator

[Operator Instructions].

Brian question next Please comes from Your with go Lantier Zacks. ahead.

BrianLantier

It's little call. a Thank holding evening, so see business. of to you gentlemen. the stabilization Good this for much nice in bit

I that's good think news.

of question company, picture, for had to ways obviously value I still guess sort special increase incredibly is two The and big an this shareholder the sheet. you first have strong balance the you year dividends

of have an board the share then Looking manufacturers. internal and preference are third the ramping future? Chinese the hearing and sell among going perhaps buybacks, little that lower. drive to company prioritize those? a does after we're from out, your preferences but auto quarter value lot the in R&D we're management or hearing dividends, the And level, is They're investments a up dealers you production bit secondly, how through even acquisitions at Do the in where additional try shareholder

inventory at on is So the XXXX, about level. we're you. impact build dealer dealer hearing Thank that inventory some excess you there Wondering loss? could if how think

Jiayuan Lin

try questions. Brian, your [Foreign Language] take Thank I you, two to will

[Foreign use mind careful don't ongoing of related as their consider opportunities all is our MMA of we as commitment a made as holistic them. will If business in to programs really decisions the perspective plan fact, with opportunities. In Well, year, for has course along, [Foreign first R&D about based any have the right demand We definitely The question question come future about on is position, our we cash And and investments, with our [Foreign of shareholder depends second the to far been Language] these decline the development market That about our dividends demand. on well due say twice business company's are we compatibility distributed capital Your this value. and Well our buyback external a have and the Language] which the to resulted our Language] allocation program. actual pandemic, we decisions our preferences. with following uncertainties. consumers plans. business will inventory particular from [Foreign model expenditure share in strategic maximizing the forecast Language] this consideration. development income, deployments build-up along is surprised a But actually our the to with demand committed in always actually capital. the are by uncertain

future. will we see to So be have the if these demand pent-up will wait and unleashed in

are monitoring on an worth [Foreign closely. consumer Language] rise. that clearly mentioning We situation a the for EV demand very is It's the

Although mean the consumers engine cars, are combustion EV more rather cheaper an IC are cars engine becoming the for they cars. some than customers, still internal ICE demanding I for

you. types declining. the demand Language] for these the consumer So are ICE -- traditional for cars Thank [Foreign

Operator

comes with from Citi. The next ahead. Please question [indiscernible] go

Unidentified Analyst

Language] you. have Citi. [Indiscernible] I [Foreign Thank questions. two from

first is Lin earlier, mentioned Mr. new that The with OEMs. several the partnerships question traditional

work Cango OEMs these competitive advantages? the do question choose And with second why So company's is my about Cango? And the U-Car. to what are

the You Cango purely so car company U-Car Cango build a into also self-owned does an to mentioned U-Car, platform. cars self-owned that the plan advantage are used of

Jiayuan Lin

delivery, financing geographical locations. to needs to and have our selling do specific [Foreign markets thanks Language] Thank on the and markets. much. auto our advantages. very into I We these markets all them logistics, questions. also concerned medium a met have [Foreign recognition of and your based work, been they expertise the and over have their the leverage tier of hope like [Foreign including rich Earlier, these OEMs Because up decades, Language] vehicles, with we addition in our facilitation tier their dealers lower built OEMs, to in and vehicles. deep also And dealers we our services competitive to sized provide sales Language] serving major markets of to and can small services they the several [Foreign range network our sell we recognized customize our wide also lower capabilities hard penetration In and two insurance. warehousing, and in Language] you I strong

definitely competitors are dealers. a cash such lower tier So model OEMs making Language] from [Foreign large us this in heavy validate and flow the vehicle. and business can mean more a question, amount our not to what second U-Car. is call both transaction through will while to with self-owned widely been address used such recognized logic the our we also want. self-owned we self-owned markets different and I challenges our dealers your have about capabilities Right we purely will we cars then car the very want these asset efficiency And build and by that capabilities now be investment, model we of requires platform service attract unique so Cango So and enhance used platform.

[Foreign the Thank be one. models the one of than rather will our only So self-owned you. model Language]

Operator

We further at I'll closing time. this remarks. to questions hand back now management for have no

Jiayuan Lin

much. closes call. you Thank very Language] earnings That today's [Foreign

Cango (CANG) 30 Nov 222022 Q3 Earnings call transcript