Cango Inc. Reports Third Quarter 2018 Unaudited Financial Results

SHANGHAI,Nov. 23,2018 -- Cango,Inc. (NYSE:CANG) ("Cango" or the "Company"),a leading automotive transaction service platform inChina,today announced its unaudited financial results for the third quarter of 2018.

Financial and Operational Highlights

Total revenues in the third quarter of 2018 were RMB285.2 million(US$41.5million).

Net income in the third quarter of 2018 was RMB106.3million (US$15.5million). Net income per ADS in the third quarter of 2018 was RMB0.73 (US$0.11).Each ADS represents two of the Company's Class A ordinary shares.

The number of dealers covered by the Company increased to 44,279 as ofSeptember 30,2018,representing a year-over-year increase of 45.1%.

M1+ and M3+ overdue ratios for all financing transactions which the Company facilitated and remained outstanding were 0.83% and 0.36%,respectively as ofSeptember 30,as compared to 0.92% and 0.46%,respectively as ofJune 30,2018.

Recent Developments

The Company has made significant progress under the strategic cooperation with Industrial and Commercial Bank of China ("ICBC") and Didi Chuxing ("Didi"). The Company has completed the system integration with ICBC,and started to facilitate auto loans for ICBC.The Company has also established 39 subsidiaries in key ride-sharing cities across China for Didi,among which we have started operations in 7 cities,including the pilot city Changzhou.

Mr.Jiayuan Lin,Chief Executive Officer of Cango,stated,"During the third quarter of 2018,we adhered to our asset-light business model,focused on high-quality services for consumers,dealers and financial institutions,and pushed forward strategic growth initiatives. First,we continued to expand and optimize our dealer coverage. Leveraging our extensive dealer network,our proprietary SaaS management system helps dealers with loan facilitation,supply chain financing,and car sourcing. Our dealer relationship has become more deeply integrated in many operational fronts,which provided multiple sustainable monetizing opportunities for Cango. Second,our after-market service,has become a meaningful source of revenue despite being launched for less than a year. We observed a satisfying attach rate,along with the potential for providing after-market services as a standalone product."

Mr. Lin continued,"Third,our strategic cooperation with ICBC and Didi has been progressing as planned. Our system integration with ICBC has achieved initial success. Auto loan products with OEM subsidies represent a tremendous market segment we currently have little presence in. As to the cooperation with Didi,we have established 39 subsidiaries in key ride-sharing cities. Looking ahead,we expect the growth rate of car transactions in China to remain soft. Our strategy is to grow our market share with competitive products and solid execution; and to enter into new market segments through cooperation with our strategic partners. We have confidence in the transparent growth path ahead. We believe we will continue delivering value to our shareholders ."

Mr.Yongyi Zhang,Chief Financial Officer of Cango,our business remained highly profitable and our operation cash flow positive. Third quarter revenues increased by 2.4% year-over-year,and after-market services started to make a meaningful revenue contribution. Our after-market services incurred minimum incremental labor and system costs and expenses,resulting in high profit margins and generating great return on our investment. As we continue cultivating dealership and customer life-long monetization opportunities,and developing operations and systems for new market opportunities,we believe we are well positioned to implement our growth strategies."

Third Quarter 2018 Financial Results

REVENUES

Total revenues increased by 2.4% toRMB285.2 million(US$41.5 million) in the third quarter of 2018 from RMB278.4 million in the corresponding period of 2017. The increase was primarily due to the contribution of after-market services. Total revenues for the first nine months of 2018 were RMB770.3million (US$112.2 million),an increase of 4.0% compared to the corresponding period of 2017.

Revenue from after-market services in the third quarter of 2018 wasRMB39.0 million(US$5.7 million),which accounted for 14% of total revenues.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the third quarter of 2018 wereRMB209.0 million(US$30.4 million),compared to RMB103.1 millionin the corresponding period of 2017. The increase in operating cost and expenses was primarily attributable to the increases in cost of revenue,general and administrative expenses as well as sales and marketing expenses.

Cost of revenue in the third quarter of 2018 increased by 50.9% toRMB113.5 million(US$16.5 million) from RMB75.2 millionin the corresponding period of 2017. As a percentage of total revenues,cost of revenue in the third quarter of 2018 increased to 39.8% from 27.0% in the corresponding period of 2017. The increase was due to a higher average amount of commissions paid to dealers in each financing transaction.

Sales and marketing expenses in the third quarter of 2018 increased toRMB48.5 million(US$7.1 million) from RMB23.3 millionin the corresponding period of 2017. As a percentage of total revenues,sales and marketing expenses in the third quarter of 2018 increased to 17.0% from 8.4% in the corresponding period of 2017. The increase was due to the expansion of the Company's sales personnel to 2,203 as ofSeptember 30,2018from 1,260 as of September 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 revenues to decrease in the future due to economies of scale.

General and administrative expenses wereRMB40.7 million(US$5.9 million) or 14.3% of total revenues in the third quarter of 2018,compared withRMB16.5 millionor 5.9% of revenues in the corresponding period of 2017. The increase was primarily due to increased administrative staff headcount and compensation,as well as the share-based compensation expenses.

Research and development expenses in the third quarter of 2018 increased toRMB10.8 million(US$1.6 million) fromRMB3.8 millionin the corresponding period of 2017. As a percentage of total revenues,research and development expenses in the third quarter of 2018 increased to 3.8% from 1.4% in the corresponding period of 2017,mostly due to the expansion of the Company's research and development team.

NET INCOME

Net income wasRMB 106.3 million(US$15.5 million) in the third quarter of 2018,compared toRMB135.5 millionin the corresponding period of 2017. Non-GAAP adjusted net income wasRMB120.2 million(US$17.5 million),compared to RMB135.5 millionin 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 wasRMB0.73(US$0.11)in the third quarter of 2018,andRMB0.73(US$0.11)on a diluted basis. Non-GAAP adjusted net income per ADS wasRMB0.82(US$0.12)in the third quarter of 2018,andRMB0.82(US$0.12) on a diluted basis. Each ADS represents two of the Company's Class A ordinary shares.

BALANCE SHEET

As ofSeptember 30,the Company had cash and cash equivalents ofRMB3,643 million(US$530.4 million),compared withRMB3,121 millionas ofJune 30,2018.

Business Outlook

For the fourth quarter of 2018,the Company expects total revenues to be betweenRMB280 millionandRMB295 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 onThursday,November 22,2018at8:00 pm Eastern TimeorFriday,November 23,2018at9:00 amBeijing 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 throughNovember 30,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 athttp://ir.cangoonline.com/.

About Cango,Inc.

Cango Inc. (NYSE:CANG) is a leading automotive transaction service platform inChinaconnecting dealers,financial institutions,car buyers,and other industry participants. Founded in 2010 by a group of pioneers inChina'sautomotive finance industry,the Company is headquartered inShanghaiand 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 inChinacontinue 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 RMB6.8680toUS$1.00,the noon buying rate in effect onSeptember 28,2018in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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 "Business Outlook" section and quotations from management in this announcement,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

Caroline Li

Cango Inc.

+86 21 3183 5087

ir@cangoonline.com

CANGO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

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

As of December 31,

2017

As of September 30,

2018

RMB

RMB

US$

ASSETS:

Current assets:

Cash and cash equivalents

803,270,815

3,642,758,351

530,395,800

Restricted Cash

10,060,360

10,129,155

1,474,833

Short-term investments

62,380,000

201,454,000

29,332,266

Accounts and financing receivable,net

86,427,259

100,671,704

14,658,082

Short-term finance leasing receivable,net

-

751,934,198

109,483,721

Short-term amounts due from related parties

1,253,833

-

-

Prepaid expenses and other current assets

144,858,222

63,304,040

9,217,245

Total current assets

1,108,250,489

4,770,251,448

694,561,947

Non-current assets:

Restricted Cash

319,352,347

580,965,889

84,590,258

Long-term investments

191,002,602

291,225,956

42,403,313

Equity method investments

165,659,951

1,451,427

211,332

Goodwill

-

145,063,857

21,121,703

Property and equipment,net

9,751,738

19,570,541

2,849,525

Intangible assets

1,701,770

1,774,670

258,397

Deferred tax assets

67,187

76,286,734

11,107,562

Long-term amounts due from related parties

122,383,094

-

-

Long-term finance leasing receivable,net

-

748,241,928

108,946,116

Other non-current assets

10,991,399

22,078,402

3,214,677

Total non-current assets

888,617,088

1,886,404

274,702,883

TOTAL ASSETS

1,996,867,577

6,656,910,852

969,264,830

LIABILITIES,MEZZANINE EQUITY AND

SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

-

171,400,000

24,956,319

Long-term debts—current

-

303,521,920

44,193,640

Accrued expenses and other current liabilities

328,522,735

156,482,317

22,784,263

Short-term amounts due to related parties

5,525,000

-

-

Risk assurance liabilities

129,935,457

161,743,140

23,550,253

Income tax payable

62,320,855

55,515,820

8,083,259

Total current liabilities

526,047

848,663,197

123,567,734

Non-current liabilities:

Long-term borrowings

175,000,000

581,876,978

84,722,915

Other non-current liabilities

35,555,908

32,870,283

4,786,005

Total non-current liabilities

210,908

614,747,261

89,508,920

Total liabilities

736,859,955

1,463,410,458

213,076,654

Mezzanine equity

Convertible Preferred Shares

Series A-1

1,501,153,698

-

-

Series A-3

307,816,408

-

-

Series B

2,132,875,970

-

-

Series C

-

-

-

Total mezzanine equity

3,941,846,076

-

-

Shareholders' equity

Ordinary shares

83,145

204,260

29,741

Series A-2 Convertible Preferred Shares

1,450

-

-

Additional paid-in capital

4,100,000

19,439,077

2,830,384

Accumulated other comprehensive

income/(loss)

(398,698)

107,045,840

15,586,174

Accumulated (deficit) retained earnings

(2,711,414,472)

5,058,446,424

736,523,940

Total Cango Inc.'s (deficit) equity

(2,707,628,575)

5,185,135,601

754,970,239

Non-controlling interests

25,790,121

8,364,793

1,937

Total shareholders' (deficit) equity

(2,681,838,454)

5,500,394

756,188,176

TOTAL LIABILITIES,MEZZANINE EQUITY

AND SHAREHOLDERS' EQUITY

1,830

CANGO INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

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

Three months ended September 30,

Nine months ended September 30,

2017

2018

2017

2018

RMB

RMB

US$

RMB

RMB

US$

Revenues

278,442,720

285,171,140

41,715

740,311

770,278,151

112,154,652

Operating cost and expenses:

Cost of revenue

75,237,589

113,539,426

16,531,658

237,831,135

275,576,495

40,124,708

Sales and marketing

23,285,963

48,494,188

7,889

57,501

120,292,212

17,514,882

General and administrative

16,980

40,703,732

5,926,577

43,449,576

98,798,322

14,385,312

Research and development

3,788,950

10,833,449

1,577,380

9,182,263

26,766,990

3,897,349

Net (gain) on risk assurance liabilities

(15,725,161)

(14,055,654)

(2,046,543)

(37,640,739)

(15,239,157)

(2,218,864)

Provision for financing receivables

-

9,464,769

1,378,097

-

22,928,882

3,338,509

Total operation cost and expense

103,109,321

208,979,910

30,428,058

309,880,736

529,123,744

77,041,896

Income from operations

175,333,399

76,191,230

11,093,657

430,995,575

241,407

35,112,756

Interest income

3,562,379

15,281

2,190,635

9,777,092

41,368,719

6,023,401

income from equity method investments

3,883,027

43,795,483

6,376,745

4,155,139

42,399,341

6,173,463

Interest expense

(5,119,996)

(4,757,534)

(692,710)

(10,013,277)

(14,259,589)

(2,236)

Foreign exchange loss,net

(15,655,457)

(6,739,620)

(981,308)

(24,345,001)

682,896

99,432

Other income

13,261

11,925,506

1,736,387

15,981,449

32,971,660

4,800,765

Other expenses

(174,390)

6,669,254

971,062

(282,578)

(528,669)

(76,976)

Net income before income taxes

175,257,223

142,600

20,694,468

426,268,399

343,765

50,056,605

Income tax expenses

(39,749,961)

(35,866,227)

(5,222,223)

(107,030,659)

(88,882,439)

(12,532)

Net income

135,507,262

106,263,373

15,472,245

319,740

254,906,326

37,115,073

Less: Net income attributable to the noncontrolling interest shareholders

10,818,050

3,447,788

502,008

13,105,836

7,546,938

1,098,854

Net income attributable to Cango Inc.'s shareholders

124,689,212

102,815,585

14,237

306,131,904

247,359,388

36,016,219

Less: Accretion of Series C Preferred Shares

-

(6,289)

(1,017,951)

-

-

-

Net income attributable to Cango Inc.'s ordinary shareholders

124,212

109,806,874

15,988,188

306,219

Net income per ADS(Note 1):

Basic

1.00

0.73

0.11

2.42

1.82

0.27

Diluted

1.00

0.73

0.11

2.42

1.80

0.26

ADSs used in net income per ADS computation (Note 1):

Basic

63,574,601

150,049,511

150,511

63,601

135,592,860

135,860

Diluted

126,415,858

150,511

126,858

137,062,696

137,696

Other comprehensive income,net of tax

Unrealized losses on available-for-sale securities

(3,647,669)

11,384

1,658

(2,065,258)

167,515

24,391

Reclassification of losses to net income

2,258

-

-

2,258

-

-

Foreign currency translation adjustment

-

63,386,168

9,229,203

-

107,277,023

15,619,834

Total comprehensive income

133,924,851

169,660,925

24,106

319,740

362,350,864

52,759,298

Total comprehensive income attributable to Cango Inc.'s shareholders

123,106,801

166,213,137

24,201,098

306,904

354,803,926

51,444

Note1: Each ADS represents two ordinary

shares.

CANGO INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

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

Three months ended September 30,

Nine months ended September 30,

2017

2018

2017

2018

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

RMB

RMB

US$

RMB

RMB

US$

Net income

135,244

319,074

Add: Share-based compensation expenses

-

13,837

2,034,338

-

19,077

2,384

Cost of revenue

-

572,846

83,408

-

797,003

116,046

Sales and marketing

-

2,976,001

433,314

-

4,140,523

602,872

General and administrative

-

9,696,453

1,411,831

-

13,490,717

1,964,286

Research and development

-

726,537

105,786

-

1,010,834

147,180

Non-GAAP adjusted net income

135,262

120,235,210

17,506,582

319,740

274,403

39,945,458

Less: Net income attributable to the

noncontrolling interest shareholders

10,050

3,788

502,008

13,836

7,938

1,855

Non-GAAP adjusted net income attributable to

Cango Inc.'s shareholders

124,212

116,787,422

17,004,575

306,904

266,465

38,603

Accretion of Series C Preferred Shares

-

(6,289)

(1,951)

-

-

-

Non-GAAP adjusted net income attributable to

Cango Inc.'s ordinary shareholders

124,212

123,778,711

18,022,526

306,603

Non-GAAP adjusted net income per ADS-basic (Note 1)

1.00

0.82

0.12

2.42

1.97

0.29

Non-GAAP adjusted net income per ADS-diluted (Note 1)

1.00

0.82

0.12

2.42

1.97

0.29

Weighted average ADS outstanding—basic

63,601

150,511

150,511

63,601

135,860

135,860

Weighted average ADS outstanding—diluted

126,858

150,511

126,858

137,696

137,696

Note1: Each ADS represents two ordinary shares.

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