Executive Summary

Kaixin Auto Holdings completed its business combination on April 30, 2019 and changed ticker to KXIN on May 2, 2019, making Q1 2019 primarily a transition quarter with no standalone earnings press release or call transcript; the Form 8-K provides business and historical financial context .
FY 2018 results showed rapid scaling in used auto sales to $420.0M and total net revenues of $431.4M, but losses widened due to contingent consideration fair value changes and operating expense growth .
Renren waived outstanding loans to Kaixin at closing and provided a 12‑month financial support letter, improving near-term liquidity visibility .
Earnout structures set implicit revenue and EBITDA performance thresholds for 2019–2020, framing management’s focus on scale and profitability targets (RMB 5.0B revenue; RMB 150–200M 2019 EBITDA; RMB 340–480M 2020 EBITDA) .

What Went Well and What Went Wrong

What Went Well

Closed the de‑SPAC and secured support agreements: Kaixin completed the share exchange with CM Seven Star; Renren waived outstanding loans and agreed to transitional and support arrangements, easing integration and liquidity pressures .
Scale-up in premium used car operations: “Kaixin is the largest premium used auto dealership group in China… 14 Dealerships covering 14 cities in 12 provinces” and sold 6,904 cars in 2018 with average price rising to $61K, validating the offline+online model .
Expansion of value-added services: Other revenues grew materially to $9.1M in 2018 on insurance, warranties, and after-sales services, supporting margin mix improvement ambitions .

What Went Wrong

Material weakness in internal controls: Management identified inadequate controls for complex transactions and insufficient US GAAP/SEC reporting expertise as of Dec 31, 2018, with remediation plans initiated .
Financing income collapse and related provisions: Financing income fell to $2.3M in 2018 (from $26.4M), with provisions for financing receivables of $10.9M; the pivot away from third‑party floor financing materially reduced this revenue stream .
Elevated non‑cash charges and operating losses: Fair value change of contingent consideration was a $49.5M expense in 2018 and operating expenses rose to $51.5M, contributing to a net loss of $89.5M .

Financial Results

Note: Kaixin did not publish a standalone Q1 2019 earnings press release or call transcript; the Form 8-K provides historical annual results. The Q1 2019 Form 10-Q reflects the SPAC’s pre-combination financials; Kaixin’s historical statements become those of KAH only after closing, and KAH had no operations prior to May 1, 2019 .

Metric	FY 2017	FY 2018
Revenues ($USD Thousands)	$116,586	$431,404
Automobile Sales ($USD Thousands)	$88,227	$420,005
Financing Income ($USD Thousands)	$26,426	$2,317
Others ($USD Thousands)	$1,933	$9,082
Gross Profit ($USD Thousands)	$3,528	$17,433
Net Income - (IS) ($USD Thousands)	$(28,695)	$(89,532)
Fair Value Change of Contingent Consideration ($USD Thousands)	$(1,480)	$(49,503)

Operational KPIs

KPI	FY 2017	FY 2018
Cars Sold (Units)	1,829	6,904
Average Sales Price ($USD Thousands)	$48	$61
Loan Volumes ($USD Thousands)	$649,700	$13,200

Margins (computed from disclosures; no explicit margin % provided in documents)

Metric	FY 2017	FY 2018
Net Income Margin %	(24.6%)	(20.7%)

Guidance Changes

Kaixin did not issue formal quarterly guidance in Q1 2019. Earnout targets embedded at closing provide performance thresholds:

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Revenue (RMB)	FY 2019	n/a	RMB 5,000,000,000 threshold for 1,950,000 earnout shares to Renren	Set earnout threshold
Adjusted EBITDA (RMB)	FY 2019	n/a	≥ RMB 150,000,000 → 3,900,000 shares; proportionally to 7,800,000 shares if ≥ RMB 200,000,000	Set tiered earnout thresholds
Adjusted EBITDA (RMB)	FY 2020	n/a	≥ RMB 340,000,000 → 4,875,000 shares; proportionally to 9,750,000 shares if ≥ RMB 480,000,000	Set tiered earnout thresholds

Earnings Call Themes & Trends

No Q1 2019 earnings call transcript found on Kaixin IR; themes below reflect management MD&A across prior periods and current transition context .

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2019)	Trend
Business model (online+offline)	Differentiated model combining online/offline to lead premium used auto market	Transition to public company; reaffirmed dealership network and SaaS/technology investment	Consistent strategy emphasis
Supply chain/inventory	Expansion of dealership network; inventory management, reconditioning critical	Focus remains on scaling self‑owned/affiliated dealers, optimizing turn times	Scaling with operational discipline
Financing pivot	Shift away from third‑party floor financing; reduced financing income/provisions	Continued de‑emphasis of external floor financing; integration into dealer financing	De‑risk and refocus on auto sales
Regulatory/legal	VIE structure compliance risks; PRC tax/VAT treatment, ancillary agreements	No change; reiterated legal/tax framework post‑combination	Ongoing vigilance
Technology investment	Dealer SaaS, apps, data analytics to support operations	Continued enhancement seen as important to success	Ongoing investment

Management Commentary

“Kaixin is the largest premium used auto dealership group in China in terms of the number of cities and locations of its Dealerships… As of December 31, 2018, Kaixin had 14 Dealerships covering 14 cities in 12 provinces in China” .
On revenue mix: “Kaixin’s revenues are derived from financing income, automobile sales and others… In 2018… US$417.8 million from used car sales and US$2.2 million from new car sales” .
On pivot away from third‑party financing: “The decrease [in financing income] was primarily due to the shift… to used car sales… loan volumes decreased from US$649.7 million in 2017 to US$13.2 million in 2018” .
On internal controls: Management identified a material weakness and outlined remediation via hiring, training, third‑party consultants, and control design .

Q&A Highlights

No Q1 2019 earnings call transcript or Q&A materials were found on the IR site; the company hosted an earnings call for Q2 2019 later in the year .

Estimates Context

S&P Global consensus for Q1 2019 EPS and Revenue was unavailable via our API at this time; therefore, we cannot provide a comparison to consensus. Values retrieved from S&P Global.

Where estimates are needed for future analyses, we recommend refreshing S&P Global data once access limits reset.

Key Takeaways for Investors

The business combination closed on April 30, 2019 and KXIN began trading May 2, 2019; Q1 2019 serves as a transition quarter with limited standalone operational disclosure, shifting focus to execution against FY 2019–2020 earnout thresholds .
FY 2018 demonstrated strong scaling in used auto sales but also highlighted cost and non‑cash charges (contingent consideration) that depressed profitability; watch for normalization of fair value impacts and operating expense leverage .
Liquidity backstop from Renren (loan waiver; support letter) mitigates near‑term financing risk during integration; monitor subsequent capital structure changes and any new financing arrangements .
Strategic emphasis remains on dealership integration, value‑added services, and technology enablement (Dealer SaaS); success should be visible in improved gross profit and inventory turns over time .
Internal control remediation is a key governance milestone; progress there should reduce reporting risk and improve reliability of complex transaction accounting .
Short-term trading implications: de‑SPAC/ticker change may catalyze positioning; absent Q1 earnings specifics, narrative-driven moves likely around execution updates and any disclosure on 2019 revenue/EBITDA targets .
Medium-term thesis: execution against earnout thresholds (RMB 5.0B revenue, RMB 150–200M EBITDA in 2019; RMB 340–480M EBITDA in 2020) and stabilization of non‑cash items are critical for value creation .

Kaixin Holdings (KXIN)·Q1 2019 Earnings Summary