Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cango Inc (CANG, Financial) has implemented strict cost control and risk management strategies, reinforcing financial stability.
- The company has decreased its credit risk exposure to a low level.
- Cango U-car app has accumulated over 130,000 page views and facilitated the transaction of 266 vehicles.
- Strategic partnerships with major used car markets have expanded supply channels and diversified vehicle offerings.
- The international used car platform, AutoCango.com, has gained traction with over 180,000 visits and more than 20,000 registered users across 207 countries.
Negative Points
- The automotive market remains sluggish, presenting significant challenges for the industry.
- Total revenue in the second quarter of 2024 was significantly lower at RMB45.1 million compared to RMB675.4 million in the same period of 2023.
- The company has decreased its revenue guidance for the third quarter of 2024 to between RMB20 million and RMB25 million.
- Cross-border transactions come with high logistics costs, including transportation, insurance, and warehousing expenses.
- Used car transactions involve a relatively long transaction cycle, posing challenges for cross-border used vehicle transactions.
Q & A Highlights
Q: How has your strategic partnership with major used car markets helped improve your market position? What about the contribution by these partnerships to your financial performance?
A: By collaborating with major used car markets, we have expanded our supply channels and diversified our vehicle offerings. These partnerships allow us to leverage their geographic coverage and market penetration, providing our customers with a broader range of choices. This has increased transaction volumes, created economies of scale, reduced unit costs, and strengthened our bargaining power, thereby improving our profit margins. β Jiayuan Lin, CEO
Q: What challenges does your company face in promoting used car cross-border transactions?
A: Cross-border transactions come with high logistics costs, including transportation, insurance, and warehousing. We have partnered with third-party companies with established cross-border logistics capabilities to control these costs. Additionally, varying regulations and standards across countries pose challenges, which we address by ensuring all vehicles meet the target market's standards. The long transaction cycle due to vehicle condition assessment, buyer selection, and legal reviews also poses a challenge. β Jiayuan Lin, CEO
Q: The company has decreased its revenue guidance. Will you continue to do that in the future?
A: We have reallocated resources, optimized staffing, and implemented measures to reduce operational costs in response to market changes and internal demand. Moving forward, we will continue to evaluate business development from a strategic perspective while leveraging our unique business model to drive ongoing cost reduction and efficiency improvements. β Jiayuan Lin, CEO
Q: How will management balance long-term strategy against short-term performance pressure?
A: We have adopted an integrated approach to strategic planning, ensuring alignment between short-term performance goals and our long-term vision. This involves maintaining continual communication to ensure all stakeholders understand the company's strategy and direction. We focus on enhancing execution, efficiency, controlling costs, and driving revenue growth in the short term. We have also broken down our goals into different phases and maintain strategic flexibility to adapt to market and technological changes. β Jiayuan Lin, CEO
Q: What are the key advancements Cango has made in cross-border used car transactions?
A: Since China began allowing the export of used vehicles in 2019, export volumes have surged, with a significant increase in the average value of exported vehicles. Our international used car platform, AutoCango.com, has quickly gained traction, attracting over 180,000 visits and more than 20,000 registered users across 207 countries. The platform hosts over 85,000 high-quality used car SKUs, offering more than 60,000 different models. β Jiayuan Lin, CEO
Q: How has Cango U-car app performed in the second quarter?
A: By the end of the second quarter, the Cango U-car app accumulated over 130,000 page views. We facilitated the transaction of 266 vehicles and successfully auctioned 124 vehicles. We have also onboarded new partners with strong reputations and abundant vehicle inventories to ensure a diverse range of listings. β Jiayuan Lin, CEO
Q: What measures have been taken to enhance operational efficiency in Cango U-car?
A: We implemented rigorous management practices, refined key processes such as vehicle listing, transaction facilitation, and customer service. These efforts have increased resource utilization efficiency and improved overall operational effectiveness. We also established strategic partnerships with major used car markets nationwide, enabling real-time synchronization of their vehicle listings with Cango U-car. β Jiayuan Lin, CEO
Q: What are the financial highlights for the second quarter of 2024?
A: Total revenue was RMB45.1 million, compared with RMB675.4 million in the same period of 2023. Cost of revenue decreased to RMB26.5 million from RMB615.8 million. Net income was RMB86 million, and non-GAAP adjusted net income was RMB90.7 million. Cash and cash equivalents were RMB949.5 million, and short-term investments were RMB2.7 billion as of June 30, 2024. β Yongyi Zhang, CFO
Q: What is the revenue forecast for the third quarter of 2024?
A: We are predicting total revenue to be between RMB20 million and RMB25 million. This forecast reflects our current preliminary views on the market and operational conditions, which are subject to change. β Yongyi Zhang, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
