Cango, Inc. Q3 FY2024 earnings call

Cost Control and Risk Management

• Implemented stricter cost control and risk management strategies to improve operational efficiency.

Postal Management

• Reinforced monitoring mechanisms and risk assessments, maintaining low nonperforming loan ratio and ensuring asset quality and stability.

Business Development

• Prioritized growth in Cango U-Car app and overseas used car operations. Cango U-Car app page views increased 21% quarter-over-quarter. Established strategic partnerships with used car marketplaces for real-time vehicle listing updates. Introduced rapid vehicle inspection and listing service with third-party teams, providing detailed reports and diverse delivery options. Community operations team fostered user engagement via online/offline activities and refined services based on feedback.

AutoCango.com

• Accumulated over 370,000 page views and nearly 60,000 registered users since March 2024, offering over 100,000 used car SKUs. Sitemap posts over 500,000 pages. Visibility in search engine results exceeded 2.41 million impressions, expected to surpass 4 million by year-end. Received inquiries from over 130 countries/regions regarding vehicle purchases.

Global Expansion

• Actively pursuing forward-looking strategic investment opportunities, focusing on high-quality projects complementing core competencies, establishing international cooperation network.

In the third quarter of 2024, Cango's total revenue was RMB27.0 million. For postal management, total outstanding loan balance was approximately RMB4.8 billion as of September 30, 2024, with M1+ at 3.17% and M3+ at 1.76%. The Cango U-Car app had 280,000 page views by the end of the third quarter, an increase of 21% from the previous quarter. The international used car platform AutoCango.com had accumulated over 370,000 page views and nearly 60,000 registered users since launch in March 2024, offering over 100,000 used car SKUs. Guarantee income in the third quarter was RMB14.4 million. Cost of revenue was RMB23.3 million, sales and marketing expenses were RMB3.4 million, general and administrative expenses were RMB45.2 million, research and development expenses were RMB1.4 million.

• Forecasted total revenues for the fourth quarter of 2024 to be between RMB15 million and RMB17.5 million, reflecting current and preliminary views on market and operational conditions subject to change.

• Potential impact of macroeconomic fluctuations on business. Risks associated with overseas expansion such as adapting to local market conditions and regulations. Credit risk related to loan portfolios, though nonperforming loan ratios were kept low.

Q: Considering the moderate recovery of the Chinese economy, how does the company view the potential impact of the future macroeconomic environment on your business? And what specific vehicle quality assurance measures has the company taken to ensure the safety and reliability of used cars?

A: Jiayuan Lin stated that a moderate economic recovery positively impacts business as it boosts consumer confidence and purchasing power, stimulating used car demand. The company will monitor macroeconomic indicators and respond quickly. For vehicle quality assurance, collaborates with reputable dealers, partners undergo regular audits, each vehicle undergoes over 100 professional technical inspections, detailed reports provided, and a dedicated team handles feedback.

Q: How does the company plan to further integrate with your overseas markets, and what are the plans for optimizing AutoCango's features and services? And on risk control and management, what measures have Cango taken in terms of cost control and risk management strategies to improve operational efficiency and improve your financial structure, and how will these measures continue to impact the company's future performance?

A: Jiayuan Lin mentioned conducting comprehensive research on overseas markets, engaging local partners, establishing import custom clearance agency partnerships in Africa, planning multilingual support (AutoCango.com to be in 15 languages by early 2025), introducing direct sourcing feature and online query functionality. For cost control, streamlined processes, automated workflows, leveraged cloud computing, fostered long-term supplier partnerships, optimized workforce allocation. For risk management, established robust internal control system, monitored macroeconomic conditions, ensured compliance with regulations. These measures will enhance operational efficiency, improve financial structure, and positively impact future performance.