Cango - Q3 2024
November 4, 2024
Transcript
Speaker 3
Good morning and good evening, everyone. Welcome to Cango Inc.'s third quarter 2024 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. Jiayuan Lin, Chief Executive Officer, and Ms. Ruyan Zhang, Financial Director of Cango. Following management's prepared remarks, we will conduct a Q&A session. Before I begin, I refer you to the Safe Harbor Statement in the company's earnings release, which also applies to the conference call today, as management will make forward-looking statements. With that said, I am now turning the call to Mr. Jiayuan Lin, CEO of Cango. Please go ahead.
Speaker 1
大家好，欢迎参加灿谷2024年第三季度财报电话会议。
Hello everyone, and welcome to Cango's third quarter 2024 earnings call.
2024年第三季度，灿谷的整体业务表现稳健，实现总收入人民币2,695万元，营业利润人民币3,524万元，净利润人民币6,788万元。这主要得益于我们实施了更为严格的成本控制和风险管理策略，通过精益化成本管理提升了运营效率。
In the third quarter of 2024, Cango's overall business performance remained stable, highlighted by total revenue of 26.95 million RMB, an operating profit of 35.24 million RMB, and a net profit of 67.88 million RMB. These solid results were primarily driven by our implementation of stricter cost control and risk management strategies, which significantly improved operational efficiency.
在后管理方面，我们加强了监控机制和风险评估，有效地将不良贷款率控制在一个较低水平，确保资产质量的稳定性和安全性。截至9月30日，全量待贷余额约人民币48亿元，M1+为3.17%，M3+为1.76%。我们已将没有计提全额坏账准备或全额担保责任的信用风险敞口降至人民币17亿元。公司现金和现金等价物及短期投资额约人民币38亿元，较上季度末增加人民币8,927万元。
For post-loan management, we reinforced monitoring mechanisms and risk assessments, effectively maintaining a low non-performing loan ratio and ensuring asset quality and stability. As of September 30, our total outstanding loan balance was approximately 4.8 billion RMB, with M1+ at 3.17% and M3+ at 1.76%. We also reduced our credit risk exposure not fully covered by bad debt allowance for risk assurance liabilities to 1.7 billion RMB. The company's total cash equivalents and short-term investments amounted to approximately 3.8 billion RMB, an increase of 89.27 million RMB compared to the end of the previous quarter.
在业务发展方面，我们进一步聚焦灿谷优车APP和二手车出海业务的发展。截至三季度末，灿谷优车APP累计PV达到28万，环比增长21%。本季度，我们与多个二手车交易市场建立了战略合作，实现车源信息的实时更新，确保灿谷优车APP上车源的多样性和丰富度，进一步强化了灿谷的车源优势。
In terms of business development, we prioritized driving growth across the Cango YuCar app and our overseas used car operations. By the end of the third quarter, the Cango YuCar app had accumulated a total of 280,000 page views, an increase of 21% from last quarter. We strengthened Cango's competitive advantages in vehicle inventory during the quarter by establishing strategic partnerships with numerous used car marketplaces, enabling real-time updates of vehicle listings and ensuring a diverse and abundant supply of vehicles through Cango YuCar app.
同时，我们推出快速车辆检验和上架服务，通过与专业的第三方检测团队紧密合作，对每辆车进行详尽的背景调查和全面的车况评估，为每买家提供详细的车辆历史报告和检测数据，增强交易的透明度。我们所合作的遍布全国的物流服务网络，还可以为买家提供多样化的交付和运输方式，以满足不同客户的需求。
Meanwhile, we introduced the rapid vehicle inspection and listing service. In close collaboration with professional third-party inspection teams, we conduct thorough background checks and comprehensive vehicle condition assessments for each vehicle and provide buyers with detailed vehicle history reports and inspection data, enhancing transparency in transactions. Additionally, our nationwide logistics network offers buyers a variety of delivery and transport options to better meet diverse customer needs.
我们的社群运营团队则通过各种线上和线下活动，如线上拍卖专场、实地考察和会员专属优惠，增加与用户的互动。我们还持续收集并深入分析用户反馈，不断优化服务流程，提升客户满意度。
Our community operations team fosters user engagement through a range of online and offline activities, including exclusive online auctions, onsite visits, and members-only discounts. We also continuously collect and analyze user feedback to refine our service processes, ensuring we consistently improve customer satisfaction.
在二手车出海方面，本季度我们也继续看到可喜进展。我们的二手车出口网站 autocango.com 自2024年3月推出以来，累计PV突破37万次，网站用户接近6万，平台二手车SKU超过10万台，涵盖超过6.5万个车型。
On our used car export service, where we continue to make significant progress this quarter, our international used car platform autocango.com has accumulated over 370,000 page views and nearly 60,000 registered users since its launch in March 2024. The platform now offers more than 100,000 used car SKUs, covering over 65,000 different models.
为了更好地服务客户和提升品牌形象，我们持续优化网站内容和用户体验，通过持续的内容更新和技术改进。目前autocango.com页面数量突破50万，这一增长反映了我们在内容建设上的努力，同时也表明了用户对我们所提供信息的关注度有所增加。
To better serve our customers and enhance our brand image, we are continuously optimizing autocango.com's content and improving the overall user experience. autocango.com's sitemap now boasts over 500,000 pages, thanks to consistent content updates and technological improvements. This growth reflects our commitment to content development and drives increased user engagement with information we provide.
在搜索引擎优化方面，我们也看到了积极的变化。autocango在垂直搜索结果的曝光量突破241万次，预计到今年年底将突破400万次。这意味着越来越多的人能够通过搜索引擎找到并访问我们的网站，从而增加我们的品牌曝光率。随着海外市场的不断开拓，目前已收到来自超过130个国家和地区的购车线索。
Our content development efforts have also driven positive changes in search engine optimization. autocango.com's visibility in search engine results pages, or SERP in short, has exceeded 2.41 million impressions and is expected to surpass 4 million by the end of this year. This means that an increasing number of people can find and access our website through search engines, boosting our brand exposure. As we continue to expand into overseas markets, we have already received inquiries from over 130 countries and regions regarding vehicle purchases.
在往未来，我们将继续专注于提高autocango的质量和功能，确保其能够满足不同地区用户的多样化需求。同时，我们也将加强对数据分析的应用，以便更准确地理解目标市场和用户群体的特点。在此基础上，公司将制定更为科学合理的营销策略，以期在全球范围内实现更加均衡的发展。
Looking ahead, we will continue to focus on enhancing autocango.com's quality and functionality to meet the diverse needs of users in different regions. At the same time, we will strengthen our data analysis capabilities to gain a more accurate understanding of the characteristics of our target market and user demographics. Building on this foundation, we will develop database scientific marketing strategies aimed at achieving more balanced global growth.
在夯实现有业务基础上，我们也持续在全球范围寻找面向未来的战略性投资机会。我们会重点关注那些能够与我们核心竞争力相辅相成，以及带来技术创新的优质项目，通过建立国际合作网络，加强与全球领先企业的沟通交流，以及积极参与海外项目的合作开发，期待在更广阔的舞台展现公司的实力。
While steadily advancing our existing business, we are also actively pursuing forward-looking strategic investment opportunities on a global scale. We will focus on high-quality projects that complement our core competencies of brand technological innovation. By establishing an international cooperation network, strengthening communication with leading global companies, and actively participating in the collaborative development of overseas markets or overseas projects, we aim to showcase our company's strength and vision on a broader stage.
下面时间交给我们的财务总监沈瑞岩，与各位分享我们在本季度的财务表现。
Now I would like to hand the call over to our Financial Director, Ruyan Zhang, who will share our financial performance for this quarter.
Speaker 4
Thanks, Ms. Lin. Hello everyone. I am Ruyan Zhang, Financial Director of Cango, and welcome to our third quarter 2024 earnings call. Before I review our financials, please note that, unless otherwise stated, all numbers are in RMB terms and all percentage comparisons are on a year-over-year basis. Total revenues in the third quarter of 2024 were RMB 27.0 million compared with RMB 353.6 million in the same period of 2023. Guarantee income, which represented the fee income earned on the non-contingent aspect of a guarantee, was RMB 14.4 million in the third quarter of 2024. This was represented separately from the contingent aspect of a guarantee pursuant to the adoption of ASC 326 since January 1, 2023. Now let's move on to our costs and expenses during the quarter. Cost of revenue in the third quarter decreased to RMB 23.3 million from RMB 304.6 million in the same period of 2023.
As a percentage of total revenues, cost of revenue in the third quarter of 2024 was 86.3% compared with 86.1% in the same period of 2023. Sales and marketing expenses in the third quarter decreased to RMB 3.4 million from RMB 9.9 million in the same period of 2023. General and administrative expenses in the third quarter were RMB 45.2 million compared with RMB 34.7 million in the same period of 2023. Research and development expenses in the third quarter decreased to RMB 1.4 million from RMB 7.0 million in the same period of 2023. Net gain on contingent risk assurance liabilities in the third quarter was RMB 7.1 million compared with a net loss of RMB 3.5 million in the same period of 2023. Net recovery on provision for credit losses in the third quarter of 2024 was RMB 74.4 million compared with RMB 66.9 million in the same period of 2023.
We recorded RMB 35.2 million in income from operations in the third quarter of 2024 compared with a loss of RMB 87.8 million in the same period of 2023. Net income in the third quarter of 2024 was RMB 67.9 million. Non-GAAP adjusted net income in the third quarter of 2024 was RMB 71.3 million. On a per-share basis, basic and diluted net income per ADS in the third quarter of 2024 were $0.66 and $0.60, respectively, and the Non-GAAP adjusted basic and diluted net income per ADS in the same period were $0.69 and $0.63, respectively. Moving on to our balance sheet. As of September 30, 2024, the company had cash and a cash equivalent of RMB 691.8 million compared with RMB 949.5 million as of June 30, 2024. As of September 30, 2024, the company had short-term investment of RMB 3.1 billion compared with RMB 2.7 billion as of June 30, 2024.
Looking ahead to the fourth quarter of 2024, we are now predicting our total revenues to be between RMB 15 million and RMB 17.5 million. Please note that this forecast reflects our current and preliminary views on market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions.
Speaker 2
Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Emerson Zhou with Goldman Sachs. Please go ahead.
哎，管理层好。我这边是高盛的 Emerson。我这边主要有两个问题。第一个问题是，考虑到中国经济有这个温和复苏的态势，那公司如何看待未来宏观经济对业务的一个潜在影响？那第二个问题是说，啊，为确保这个二手车交易的安全和可靠，那公司这边有采取了哪些具体的措施来保障车辆的一个质量？对，谢谢。
Speaker 4
Thank you, management, for taking my questions. I have two questions. The first question is that, considering the moderate recovery of the Chinese economy, how does the company view the potential impact of the future macroeconomic environment on its or your business? And the second question is, what specific vehicle quality assurance measures has the company taken to ensure the safety and reliability of used cars?
Speaker 1
好，谢谢 Emerson。呃，关于第一个问题，面对中国经济温和复苏的态势，我们认为这将为我们的业务带来积极的影响。宏观经济环境的改善有助于提升消费者信心和购买力，从而气刺激汽车消费市场的需求增长。特别是对于二手车市场来说，随着经济状况的好转，更多人可能倾向于升级他们的车辆或者首次购车，从而推动二手车交易量上升。
Speaker 4
Thank you, Emerson, for your questions. On your first question, China's moderate economic recovery will, we believe, positively impact our business. The improvements in the macroeconomic environment help boost consumer confidence and purchasing power, which in turn stimulates demand growth in the automotive market. Specifically for the used car market, as economic conditions improve, more people may be inclined to upgrade their vehicle, upgrade their vehicles or purchase a car for the first time. This will drive an increase in used car transactions.
Speaker 1
我们将继续监控宏观经济指标和市场动态，以便快速响应可能出现的经济变化。我们相信通过不断提升运营效率，加强客户体验，并利用数字化优势，公司能够减轻宏观经济波动对业务的潜在影响。此外，我们也在积极探索新的增长机会和增值服务，以适应和满足市场的需求变化。
Speaker 4
And we will continue to monitor macroeconomic indicators and market dynamics to respond quickly to potential economic changes. We believe that by consistently enhancing operational efficiency and strengthening customer experience and leveraging our digital capabilities, the company can mitigate the potential impact of macroeconomic fluctuations on our business. In addition, we are actively exploring new growth opportunities and value-adding services to adapt to and meet the market's evolving needs.
Speaker 1
关于第二个问题，就是二手车交易的安全性和可靠性，公司有哪些质量保证措施？我们与信誉良好的经销商合作，并对合作伙伴进行定期审核，以确保他们能够提供符合标准的高质量车源。每辆车在上线前都需要超过 100 项的专业技术检测，涵盖外观、内饰、机械性能等多个方面。
Speaker 4
On your second question, how we are ensuring the safety and reliability of used cars? Well, we collaborate with reputable dealers and regularly assess our partners to ensure they provide high-quality vehicles that meet our standards. Each vehicle undergoes over 100 professional technical inspections before being listed, covering areas such as the exterior, interior, and mechanical performance.
Speaker 1
呃，而且我们为每辆车出具详细的检验报告，包括但不限于行驶里程、车况描述等重要信息，供买家参考，设立专门团队收集反馈意见，针对投诉问题及时响应处理，并不断优化流程，以提高整体服务水平。
Speaker 4
A detailed inspection report is also provided for each vehicle, including but not limited to key information such as mileage and condition descriptions for buyer's preference. We have also established a dedicated team to gather feedback, respond promptly to any complaints, and continuously improve processes to enhance overall service quality.
Speaker 1
好，谢谢。我的回答完毕。
Speaker 4
Thank you. That's all from my side.
Speaker 2
Thank you. The next question comes from Ping Yu with CITIC Securities. Please go ahead.
管理层好。我这边有两个问题。想请问就是公司计划怎么样去这个深化海外的市场融合，在优化 AutoCango 功能和服务方面有哪些计划？我第二个问题是关于成本控制，就是我们在成本控制和风险管理策略方面，具体采取了哪些措施，来提升运营效率，并且增强财务的结构？这些财务结构会怎么影响公司未来的表现？谢谢。
Speaker 4
Thank you. I have two questions for the management. And the first question is, how does the company plan to further integrate with your overseas markets? And what are the plans for optimizing AutoCango's features and services? My second question is on risk control and management. What measures has 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?
Speaker 1
我谢谢。呃，关于您第一个问题，就是如何深化与海外市场的融合。呃，目前我们正在深入调研海外市场，积极地与当地合作伙伴建立联系，以获得更加本地化的支持和资源。在这一过程中，对于非洲地区各国的清关政策进行了详尽研究，并已经在四个非洲国家建立了进口清关代理合作关系。下一步计划是逐步构建非洲地区的业务代理商机制，旨在为潜在客户提供服务，涵盖包括但不限于清关物流等关键环节的支持。
Speaker 4
Thank you for your questions. On your first question, we are currently conducting comprehensive research on overseas markets and actively engaging with local partners to secure more localized support and resources. For example, we have thoroughly examined the customs clearance policies of various African countries and established import customs clearance agency partnerships in four nations to date. Our next step is to gradually develop a business agency framework in Africa in depth, providing services to potential clients in key areas such as customs clearance and logistics, among others.
Speaker 1
further enhancing user experience and market coverage range.
Speaker 4
Additionally, we plan to actively showcase our brand image through social media and other platforms to enhance our international visibility. We will also offer multilingual support to ensure that users worldwide can seamlessly access our services. By early 2025, autocango.com will be available in 15 languages, further improving user experience and expanding our market reach.
Speaker 1
在功能优化方面，AutoCango 将开启中国二手车市场直发车源的网站功能，并为海外用户提供在线快速查询二手车车况和价格的服务，进一步提升用户体验。
Speaker 4
In terms of functionality improvement, we are introducing a direct sourcing feature for the Chinese used car market on autocango.com. We are also enabling online queries, but to allow overseas users to quickly access information on the condition and prices of used vehicles, further enhancing user experience.
Speaker 1
呃，最后，我们正着力培养具有国际视野和跨文化沟通的人才，以强化公司在海外市场的运营能力。我们计划招募在上海的海外留学生参与实习项目，这不仅为他们提供了宝贵的实践机会，同时也为我们的团队注入了新鲜的国际血液。通过这样的人才战略，我们期待构建一个多元化且具有全球竞争力的团队，以更好地服务不同文化背景的客户，并推动公司的国际化进程。
Speaker 4
Last but not least, we are dedicated to developing talent with an international perspective and cross-cultural communication skills to enhance our operational capabilities in overseas markets. We plan to recruit international students in Shanghai for internship programs, providing them with valuable practical experience while infusing, I mean, while infusing our team with fresh blood, and including global insights. Our goal is to create a diverse and globally competitive team that can better serve clients from various cultural backgrounds and advance the company's globalization efforts.
Speaker 1
关于您第二个问题，成本控制和风险管理的策略，在成本控制上，我们通过优化业务流程，采取自动化工具简化审批过程，并实施严格的预算管理制度来确保开支的合理性。同时，利用云计算服务替代传统的 IT 基础设施建设，减少硬件投资和维护费用。此外，与优质供应商建立长期合作关系，争取更优惠的价格条件，定期评估供应商绩效，淘汰表现不佳者，以降低采购成本，合理规划员工编制，加强培训与发展计划，提高团队专业技能和服务水平。
Speaker 4
On your second question of cost control and risk management strategies, well, firstly, on cost control, we have streamlined our business processes, automated approval workflows, and enforced strict budget management systems to ensure disciplined spending. We also leverage cloud computing services to replace legacy IT infrastructure, significantly reducing hardware investments and maintenance costs. In addition, by fostering long-term partnerships with top-tier suppliers, we have secured more favorable pricing terms. We conduct regular performance evaluations and phase out underperforming suppliers to minimize procurement costs. Moreover, we have strategically optimized workforce allocation and upgraded our training and development programs to elevate the team's expertise and service quality.
Speaker 1
在风险管理策略方面，我们建立了健全的内控体系，明确各层级风险管理职责，并强化内审工作，及时发现并纠正潜在问题，密切关注宏观经济环境变化对公司业务的影响，确保所有经营活动均符合相关法律法规要求，对新出台的政策法规保持敏感，并适时调整公司的战略方向。
Speaker 4
In terms of risk management, we have established a robust internal control system that clearly defines risk management ownerships at various levels and strengthens internal audits to promptly identify and rectify potential issues. Additionally, we closely monitor changes in the macroeconomic conditions and their impact on our business, ensuring that all operations comply with relevant laws and regulations, and we follow closely the developments in policies and regulations and adjust our corporate strategy as necessary.
Speaker 1
以上措施的持续影响将体现在公司的财务报表上，如资产负债表的改善和现金流的增加，从而为公司的下一步战略发展奠定坚实的基础。
Speaker 4
The sustained positive impact of these measures is reflected in the company's financial statements. Improvements in the balance sheet, improved cash flow, and enhanced profit performance have all laid a solid foundation for the company's next phase of strategic development.
Speaker 1
好，这以上是我的回答，谢谢。
Speaker 4
That is all from my side.