Cango Inc. Reports Second Quarter 2018 Unaudited Financial Results

SHANGHAI,Aug. 31,2018 -- Cango,Inc. (NYSE: CANG) ("Cango" or the "Company"),a leading automotive transaction service platform in China,today announced its unaudited financial results for the second quarter of 2018.

Financial and Operational Highlights

Total revenues in the second quarter of 2018 were RMB236.3 million (US$35.7 million).

Net income in the second quarter of 2018 was RMB64.6 million (US$9.8 million). Net income per ADS in the second quarter of 2018 was RMB0.44 (US$0.07). Each ADS represents two of the Company's Class A ordinary shares.

The number of dealers covered by the Company increased to 40,282 as of June 30,2018,representing a year-over-year increase of 62.0%.

M1+ and M3+ overdue ratios for all financing transactions which the Company facilitated and remained outstanding were 0.92% and 0.46%,respectively as of June 30,as compared to 1.09% and 0.46%,respectively as of March 31,2018.

Recent Developments

The Company recently entered into strategic cooperation agreements (the "Agreements") with the Industrial and Commercial Bank of China ("ICBC") and Didi Chuxing ("DiDi") to generate additional growth opportunities. Under the Agreements,the Company will integrate its extensive network and experience in the Chinese automotive sector with ICBC's world-class financing capabilities to provide OEM-subsidized or non-subsidized financing solutions primarily in tier-one and tier-two cities in China. In addition,the Company will provide a variety of solutions to Didi's fleet,including registered driver recruitment,vehicle sourcing,automotive financing and insurance facilitation.

Mr. Jiayuan Lin,Chief Executive Officer of Cango,stated,"During the second quarter of 2018,we executed three strategic initiatives to combat the near-term headwind in the macroeconomic environment and the automotive sector. First,along with our efforts to continuously expand and optimize our dealer coverage,we started implementing our proprietary SaaS management system and supply chain financing solutions among our dealers to enable them to conveniently source cars,manage inventory,and improve their sales performance. Secondly,we have launched our strategic partnerships with ICBC and Didi. Thirdly,we further diversified our revenue streams by expanding our after-market services,which now mainly involve facilitating the sale of insurance policies.

Looking ahead,we will continue to enhance our cooperation with ICBC and Didi,as well as further increase the market penetration of our insurance facilitation services. As we expand our dealer network,optimize our dealer coverage,innovate our products and services,and expand our strategic partnerships,we are well-positioned to capitalize on emerging opportunities and generate sustainable shareholder value."

Mr. Yongyi Zhang,Chief Financial Officer of Cango,"Although weak new car sales,aggressive subsidies from Original Equipment Manufacturers ("OEMs") and the transition of our dealer coverage model have caused a year-over-year decline in our revenues in second quarter of 2018,our business remains highly profitable and our free cash flow positive. Furthermore,we have allocated more resources to improve the conversion rate of our after-market services,through strengthening our self-reinforcing platform and further expansion of our dealer coverage. Our after-market services can be cross-sold with our financing facilitation services,with minimum incremental labor and system costs and expenses,resulting in high profit margins and generating great return on our investment. The progress we have achieved in our after-market services initiatives combined with our nationwide and well-penetrated dealer network validates our promising monetization potential. We are well positioned to implement our growth strategies in the second half of 2018."

Second Quarter 2018 Financial Results

REVENUES

Total revenues decreased by 11.6% to RMB236.3 million (US$35.7 million) in the second quarter of 2018 from RMB267.3 million in the corresponding period of 2017. The decrease was primarily due to a change in our dealer coverage model as well as conditions in the automotive market. Total revenues for the first half of 2018 were RMB485.1 million (US$73.3 million),an increase of 4.9% compared to the corresponding period of 2017.

After-market services facilitation revenues in the second quarter of 2018 were RMB12.3 million (US$1.9 million) compared to RMB6.7 million in the same period of last year,with insurance facilitation services as the key growth driver.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2018 were RMB164.4 million (US$24.9 million),compared to RMB111.3 million in the corresponding period of 2017. The increase in operating cost and expenses was primarily attributable to the increases in general and administrative expenses as well as sales and marketing expenses.

Cost of revenue in the second quarter of 2018 decreased by 8.0% to RMB81.2 million (US$12.3 million) from RMB88.3 million in the corresponding period of 2017. As a percentage of total revenues,cost of revenue in the second quarter of 2018 increased to 34.4% from 33.0% in the corresponding period of 2017. The increase was due to a higher average amount of commission paid to dealers in each financing transaction.

Sales and marketing expenses in the second quarter of 2018 increased to RMB36.9 million (US$5.59 million) from RMB13.6 million in the corresponding period of 2017. As a percentage of total revenues,sales and marketing expenses in the second quarter of 2018 increased to 15.7% from 5.1% in the corresponding period of 2017. The increase was due to the expansion of the Company's sales personnel to 2,148 as of June 30,2018 from 724 as of June 30,2017,to further improve the Company's dealer coverage and dealers' stickiness. The Company expects its sales and marketing expenses as a percentage of total revenue to decrease in the future due to economies of scale.

General and administrative expenses were RMB31.4 million (US$4.7 million) or 13.3% of total revenue in the second quarter of 2018,compared with RMB14.9 million or 5.6% of revenues in the corresponding period of 2017. The increase was primarily due to increased administrative staff headcount and compensation,along with one-time fees paid to professional service providers related to the Company's initial public offering in July 2018.

Research and development expenses in the second quarter of 2018 increased to RMB9.5 million (US$1.4 million) from RMB3.1 million in the corresponding period of 2017. As a percentage of total revenues,research and development expenses in the second quarter of 2018 increased to 4.0% from 1.2% in the corresponding period of 2017,mostly due to the expansion in the Company's research and development team.

NET INCOME

Net income was RMB 64.6 million (US$9.8 million) in the second quarter of 2018,compared to RMB109.5 million in the corresponding period of 2017. Non-GAAP adjusted net income was RMB70.1 million (US$10.6 million),compared to RMB109.5 million in the same period last year. Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information,see "Use of Non-GAAP Financial Measure."

NET INCOME PER ADS

Net income per ADS was RMB0.44 (US$0.07) in the second quarter of 2018,and RMB0.44 (US$0.07) on a diluted basis. Non-GAAP adjusted net income per ADS was RMB0.48 (US$0.08) in the second quarter of 2018,and RMB0.48 (US$0.08) on a diluted basis. Each ADS represents two of the Company's Class A ordinary shares.

BALANCE SHEET

As of June 30,the Company had cash and cash equivalents of RMB3,121.4 million (US$471.7 million),compared with RMB803.3 million as of December 31,2017.

Business Outlook

For the third quarter of 2018,the Company expects total revenues to be between RMB270 million and RMB290 million. This forecast reflects the Company's current and preliminary views on the market and operational conditions,which are subject to change.

Conference Call Information

The Company will hold a conference call on Thursday,August 30,2018 at 9:00 pm Eastern Time or Friday,August 31,2018 at 9:00 am Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

International:

+1-412-902-4272

United States Toll Free:

+1-888-346-8982

China Toll Free:

4001-201-203

Hong Kong Toll Free:

800-905-945

Conference ID:

Cango Inc.

The replay will be accessible through September 06,by dialing the following numbers:

United States Toll Free:

+1-877-344-7529

International:

+1-412-317-0088

Access Code:

10123205

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.cangoonline.com/.

About Cango,Inc.

Cango Inc. (NYSE: CANG) is a leading automotive transaction service platform in China connecting dealers,financial institutions,car buyers,and other industry participants. Founded in 2010 by a group of pioneers in China's automotive finance industry,the Company is headquartered in Shanghai and engages car buyers through a nationwide dealer network. The Company's services primarily consist of automotive financing facilitation,automotive transaction facilitation,and after-market services facilitation. By utilizing its competitive advantages in technology,data insights,and cloud-based infrastructure,Cango is able to connect its platform participants while bringing them a premium user experience. Cango's platform model puts it in a unique position to add value for its platform participants and business partners as the automotive and mobility markets in China continue to grow and evolve. For more information,please visit: www.cangoonline.com.

Definition of Overdue Ratios

We define "M1+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 30 to 179 calendar days past due as of a specified date,divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date,excluding amounts of outstanding principal that are 180 calendar days or more past due.

We define "M3+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 90 to 179 calendar days past due as of a specified date,excluding amounts of outstanding principal that are 180 calendar days or more past due.

Use of Non-GAAP Financial Measure

In evaluating the business,the Company considers and uses Non-GAAP adjusted net income,a non-GAAP measure,as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines Non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company's operating results without considering the impact of share-based compensation expenses,which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors' assessment of its operating performance.

Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using Non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company's operations. Share-based compensation expenses have been and may continue to be incurred in the business and is not reflected in the presentation of Non-GAAP adjusted net income. Further,the non-GAAP measure may differ from the non-GAAP information used by other companies,including peer companies,and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure,all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliations of Cango's non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated,all translations from RMB to US$ were made at the rate of RMB6.6171 to US$1.00,the noon buying rate in effect on June 29,2018 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB,as the case may be,at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the expectation of its collection efficiency and delinquency,contain forward-looking statements. Cango may also make written or oral forward-looking statements in its periodic reports to the SEC,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about Cango's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: Cango's goal and strategies; Cango's expansion plans; Cango's future business development,financial condition and results of operations; Cango's expectations regarding demand for,and market acceptance of,its solutions and services; Cango's expectations regarding keeping and strengthening its relationships with dealers,car buyers and other platform participants; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cango's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release,and Cango does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

Investor Relations Contact

Jack Wang

ICR Inc.

+1 (646) 405-5056

ir@cangoonline.com

CANGO INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(Amounts in Renminbi ("RMB") and US dollar ("US$"),except share data and per share data)

As of December 31,

As of June 30,

2017

2018

RMB

RMB

US$

ASSETS:

Current assets:

Cash and cash equivalents

803,270,815

3,121,436,414

471,722,721

Restricted Cash

10,060,360

1,019,254,673

154,033,440

Short-term investments

62,380,000

89,250,000

13,487,782

Accounts receivable,net

85,595,207

84,185,107

12,357

Financing receivable,net

832,052

3,588,565

542,317

Short-term amounts due from related parties

1,253,833

1,626,981

245,875

Prepaid expenses and other current assets

144,858,222

118,831,260

17,958,208

Total current assets

1,108,489

4,438,173,000

670,712,700

Non-current assets:

Restricted Cash

319,352,347

484,973,496

73,290,943

Long-term investments

191,002,602

191,210,777

28,896,462

Equity method investments

165,659,951

164,263,809

24,824,139

Property and equipment,net

9,751,738

17,138,951

2,590,100

Intangible assets

1,701,770

1,615,452

244,133

Deferred tax assets

67,774,187

83,863,943

12,673,821

Long-term amounts due from related parties

122,383,094

-

-

Other non-current assets

10,991,399

13,343,002

2,016,443

Total non-current assets

888,617,088

956,409,430

144,536,041

TOTAL ASSETS

1,996,867,577

5,394,582,430

815,248,741

LIABILITIES,MEZZANINE EQUITY AND

SHAREHOLDERS' EQUITY

Current liabilities:

Accrued expenses and other current liabilities

328,522,735

204,480,289

30,901,798

Short-term amounts due to related parties

5,525,000

10,277,301

1,553,143

Risk assurance liabilities

129,935,457

160,834,512

24,305,891

Income tax payable

62,320,855

42,491,257

6,421,432

Total current liabilities

526,304,047

418,083,359

63,182,264

Non-current liabilities:

Long-term debt

175,000,000

175,000

26,446,631

Other non-current liabilities

35,555,908

34,710,048

5,245,508

Total non-current liabilities

210,908

209,048

31,692,139

Total liabilities

736,859,955

627,793,407

94,874,403

Mezzanine equity

Convertible Preferred Shares

Series A-1

1,501,153,698

1,698

226,757

Series A-3

307,816,408

307,408

46,518,325

Series B

2,132,875,970

2,081,275,970

314,529,925

Series C

-

1,488,348,221

224,924,547

Total mezzanine equity

3,941,846,076

5,378,594,297

812,832,554

Shareholders' equity

Ordinary shares

83,145

83,145

12,565

Series A-2 Convertible Preferred Shares

1,450

1,450

219

Additional paid-in capital

4,100,000

5,467,240

826,229

Accumulated other comprehensive (loss) income

(398,698)

43,648,288

6,596,287

Accumulated deficit

(2,711,414,472)

(674,212,454)

(101,889,414)

Total Cango Inc.'s deficit

(2,707,628,575)

(625,012,331)

(94,454,114)

Non-controlling interests

25,790,121

13,207,057

1,995,898

Total shareholders' deficit

(2,681,838,454)

(611,805,274)

(92,458,216)

TOTAL LIABILITIES,MEZZANINE EQUITY AND

SHAREHOLDERS' EQUITY

1,741

CANGO INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Amounts in Renminbi ("RMB") and US dollar ("US$"),except share data and per share data)

Three months ended June 30,

Six months ended June 30,

2017

2018

2017

2018

RMB

RMB

US$

RMB

RMB

US$

Revenues

267,337,279

236,287,811

35,708,666

462,433,591

485,107,011

73,311,120

Operating cost and expenses:

Cost of revenue

88,256,080

81,181,330

12,268,415

162,593,546

162,037,069

24,626

Sales and marketing

13,566,023

36,979,636

5,496

33,772,538

71,798,024

10,850,376

General and administrative

14,910,126

31,350,545

4,737,807

26,927,596

58,094,590

8,779,464

Research and development

3,127,150

9,481,415

1,432,866

5,393,313

15,933,541

2,407,934

Net gain on risk assurance

liabilities

(8,560,011)

(4,951,451)

(748,281)

(21,915,578)

(1,183,503)

(178,855)

Provision for financing

receivables

-

10,402,370

1,572,044

-

13,464,113

2,034,745

Total operation cost and

expense

111,299,368

164,443,845

24,851,347

206,771,415

320,143,834

48,381,290

Income from operations

156,911

71,843,966

10,857,319

255,662,176

164,963,177

24,929,830

Interest income

3,192

18,246,042

2,757,408

6,214,713

26,323,438

3,978,093

(Loss) income from equity

method investments

(982,650)

937,549

141,686

272,112

(1,396,142)

(210,990)

Interest expense

(3,215,694)

(4,329)

(712,144)

(4,893,281)

(9,502,055)

(1,435,985)

Foreign exchange (loss) gain,

net

(8,689,544)

10,045,905

1,173

(8,544)

7,422,516

1,717

Other income

1,447

(975,669)

(147,447)

2,188

21,046,154

3,180,570

Other expenses

(98,117)

(7,091,835)

(1,071,744)

(108,188)

(7,197,923)

(1,087,777)

Net income before income taxes

147,802,545

88,293,629

13,251

251,011,176

201,165

30,475,458

Income tax expenses

(38,332,913)

(23,677,171)

(3,578,179)

(67,280,698)

(53,212)

(8,001)

Net income

109,469,632

64,616,458

9,765,072

183,730,478

148,642,953

22,463,457

Less: Net income attributable to

the non-controlling interest

shareholders

2,157,807

164,843

24,912

2,786

4,099,150

619,477

Net income attributable to

Cango Inc.

107,825

64,451,615

9,740,160

181,442,692

144,543,803

21,980

Less: Accretion of Series C

Preferred Shares

-

6,289

1,056,549

-

6,549

Net income attributable to

Cango Inc.'s ordinary

shareholders

107,825

57,460,326

8,683,611

181,692

137,552,514

20,787,431

Net income per ADS (Note 1):

Basic

0.85

0.44

0.07

1.44

1.07

0.16

Diluted

0.85

0.44

0.07

1.44

1.05

0.16

ADSs used in net income per

ADS computation (Note 1):

Basic

126,415,858

130,053,500

130,500

126,858

128,244,728

128,728

Diluted

126,858

131,667,341

131,341

126,925

130,925

Other comprehensive income,

net of tax

Unrealized losses on available-for-

sale securities

1,205,213

78,147

11,810

1,411

156,131

23,595

Foreign currency translation

adjustment

-

43,890,855

6,632,944

-

43,944

Total comprehensive income

110,674,845

108,585,460

16,826

185,312,889

192,939

29,119,996

Total comprehensive income

attributable to Cango Inc.

108,517,038

108,420,617

16,384,914

183,025,103

188,789

28,500,519

Note1: Each ADS represents two ordinary shares.

CANGO INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(Amounts in Renminbi ("RMB") and US dollar ("US$"),

2017

2018

2017

2018

RMB

RMB

US$

RMB

RMB

US$

Net income

109,459

Add: Share-based compensation

expenses

-

5,240

826,229

-

5,229

Cost of revenue

-

224,157

33,875

-

224,875

Sales and marketing

-

1,164,522

175,987

-

1,987

General and administrative

-

3,794,264

573,403

-

3,403

Research and development

-

284,297

42,964

-

284,964

Non-GAAP adjusted net income

109,632

70,698

10,591,301

183,478

154,110,193

23,289,688

Less: Net income attributable to the

non-controlling interest

shareholders

2,478

Non-GAAP adjusted net income

attributable to Cango Inc.

107,825

69,918,855

10,389

181,692

150,043

22,670,210

Less: Accretion of Series C Preferred Shares

-

6,549

Non-GAAP adjusted net income

attributable to ordinary

shareholders

107,825

62,566

9,509,840

181,692

143,754

21,613,661

Non-GAAP adjusted net income per

ADS-basic (Note 1)

0.85

0.48

0.07

1.44

1.12

0.17

Non-GAAP adjusted net income per

ADS-diluted (Note 1)

0.85

0.48

0.07

1.44

1.1

0.17

Weighted average ADS

outstanding-basic

126,728

Weighted average ADS

outstanding-Diluted

126,925

Note1: Each ADS represents two ordinary shares.

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