Cango Inc. Reports Second Quarter 2019 Unaudited Financial Results

SHANGHAI,Sept. 4,2019 -- 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 2019.

Second Quarter 2019 Financial and Operational Highlights

Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million),representing a year-over-year increase of 42.3% and outperforming the high end of the Company's guidance by 6.8%.

After-market services facilitation revenues in the second quarter of 2019 were RMB35.9 million (US$5.2 million),continuing to serve as an important driver for the Company's revenue growth.

Income from operations in the second quarter of 2019 increased by 17.3% to RMB84.3 million (US$12.3 million) from RMB71.8 million in the corresponding period of 2018.

Net income in the second quarter of 2019 increased by 46.4% to RMB94.6 million (US$13.8 million) from RMB64.6 million in the corresponding period of 2018. Non-GAAP net income in the second quarter of 2019 increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018.

The amount of financing transactions the Company facilitated in the second quarter of 2019 totaled RMB6,154.8 million (US$896.6 million). The total outstanding balance of financing transactions the Company facilitated was RMB36,394.0 million (US$5,301.4 million) as of June 30,2019.

M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 0.72% and 0.30%,respectively,as of June 30,2019,as compared to 0.77% and 0.37%,as of March 31,2019.

The number of dealers covered by the Company was 48,367 as of June 30,as compared to 47,879 as of March 31,2019.

Mr. Jiayuan Lin,Chief Executive Officer of Cango,commented,"Despite the continuing macroeconomic and industry-wide challenges,we maintained our solid growth trajectory with strong financial and operating performances in the second quarter of 2019. During the quarter,our core auto loan facilitation business continued to be a vital growth driver,and we further expanded and refined our after-market services. In addition,we achieved significant breakthroughs in our cooperation with the Industrial and Commercial Bank of China ("ICBC") in relation to our automotive financing solutions. As a result,our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter of 2019. Going forward,we will continue to augment our leadership in China's market for automotive financing services by bolstering our core competencies in auto loan facilitation services,expanding our dealership network,developing differentiated products and services,and harnessing our well-developed capabilities in big data and internet technologies."

Mr. Yongyi Zhang,Chief Financial Officer of Cango,stated,"After a strong start in the first quarter of 2019,we continued to deliver healthy performances in the second quarter. Our total revenues increased by 42.3% year-over-year to RMB336.3 million in the second quarter. Our after-market services facilitation business continued to serve as an important growth engine,contributing RMB35.9 million or 10.7% of our total revenues in the second quarter. Our income from operations and net income increased by 17.3% and 46.4% in the second quarter,respectively. Looking ahead,we will continue to invest in expanding our dealership network,optimizing our service quality and efficiency,and advancing our technology through innovation. As we continue to deepen our collaborations with more financial institutions and original equipment manufacturers,we are confident that we will sustain our growth despite the persisting industry challenges."

Second Quarter 2019 Financial Results

REVENUES

Total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million),representing a 42.3% increase from RMB236.3 million in the corresponding period of 2018. This increase was primarily driven by the Company's strategies to rejuvenate growth,increased revenue contribution from its after-market services business,and a significant increase in loan facilitation volume from the Company's business partnership with ICBC.

Revenues from after-market services facilitation in the second quarter of 2019 were RMB35.9 million (US$5.2 million),compared to RMB12.3 million in the same period of last year.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2019 were RMB252.0 million (US$36.7 million),compared to RMB164.4 million in the corresponding period of 2018.

Cost of revenue in the second quarter of 2019 increased by 55.0% to RMB125.8 million (US$18.3 million) from RMB81.2 million in the corresponding period of 2018. The increase was primarily driven by the Company's business expansion and was in line with the increase in total revenues in the second quarter of 2019. Cost of revenue as a percentage of total revenues in the second quarter of 2019 increased to 37.4% from 34.4% in the corresponding period of 2018. This was primarily due to increasesin the amount of incentives paid to employees per individual financing transaction.

Sales and marketing expenses in the second quarter of 2019 increased by 20.3% to RMB44.5 million (US$6.5 million) from RMB37.0 million in the corresponding period of 2018.The increase was due to increases in travel expenses as a result of the Company's business expansion and higher share-based compensation expenses. Sales and marketing expenses as a percentage of total revenues in the second quarter of 2019 decreased to 13.2% from 15.7% in the corresponding period of 2018.

General and administrative expenses were RMB53.4 million (US$7.8 million),or 15.9% of total revenues,in the second quarter of 2019,compared to RMB31.4 million,or 13.3% of total revenue,in the corresponding period of 2018. The increase was mainly due to higher share-based compensation expenses in the second quarter of 2019.

Research and development expenses in the second quarter of 2019 increased by 29.2% to RMB12.3 million (US$1.8 million) from RMB9.5 million in the corresponding period of 2018. The increase was a result of increased investments in the Company's research and development projects as it expanded its business.Research and development expenses as a percentage of total revenues in the second quarter of 2019 decreased to 3.6% from 4.0% in the corresponding period of 2018.

INCOME FROM OPERATIONS

Income from operations was RMB84.3 million (US$12.3million) in the second quarter of 2019,representing a year-over-year increase of 17.3% from RMB71.8 million in the corresponding period of 2018.

NET INCOME

Net income was RMB94.6 million (US$13.8 million) in the second quarter of 2019,representing a year-over-year increase of 46.4% from RMB64.6 million in the corresponding period of 2018. Non-GAAP adjusted net income increased by 66.7% to RMB116.9 million (US$17.0 million) from RMB70.1 million in the corresponding period of 2018. 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

Basic and diluted net income per American Depositary Share (ADS) in the second quarter of 2019 were both RMB0.60 (US$0.09). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2019 were both RMB0.75 (US$0.11). 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 RMB1,609.6 million (US$234.5 million),compared to RMB2,178.0 million as of March 31,2019. The change was due to the fact that the Company invested certain amount of cash in term deposit over three months for better cash-on-cash return.

Business Outlook

For the third quarter of 2019,the Company expects total revenues to be between RMB300 million and RMB325 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's management will hold a conference call on Tuesday,September 3,at 9:00 P.M. Eastern Time or Wednesday,September 4,at 9:00 A.M. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

+1-412-902-4272

United States Toll Free:

+1-888-346-8982

Mainland China Toll Free:

4001-201-203

Hong Kong Toll Free:

800-905-945

Conference ID:

Cango Inc.

The replay will be accessible through September 10,by dialing the following numbers:

International:

+1-412-317-0088

United States Toll Free:

+1-877-344-7529

Access Code:

10134672

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

The Company defines "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.

The Company defines "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 are 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 RMB6.8650 to US$1.00,the noon buying rate in effect on June 28,in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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 "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

Caesar Cao

Cango Inc.

Tel: +86 21 3183 5088 ext.5521

Email: ir@cangoonline.com

Jack Wang

ICR Inc.

Tel: +1 (646) 405-5056

Email: 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,

2018

As of June 30,

2019

RMB

RMB

US$

ASSETS:

Current assets:

Cash and cash equivalents

2,912,901,189

1,609,621,867

234,467,861

Restricted Cash

298,900,155

586,789,155

85,475,478

Short-term investments

265,869,717

546,167,864

79,558,320

Accounts receivable,net

86,513,830

135,437,250

19,728,660

Financing receivable,net

5,420,617

7,626,277

1,110,892

Short-term loan principal and financing service fee

receivables,net

-

5,759,707

838,996

Short-term finance leasing receivable,net

1,123,703,618

1,499,097,355

218,368,151

Prepaid expenses and other current assets

61,272,518

78,004,663

11,362,660

Total current assets

4,754,581,644

4,468,504,138

650,911,018

Non-current assets:

Restricted Cash

668,627,618

805,081,110

117,273,286

Long-term investments

292,099,059

441,534,200

64,316,708

Equity method investments

1,448,416

-

-

Goodwill

145,063,857

145,857

21,130,933

Property and equipment,net

18,286,218

16,720,263

2,435,581

Intangible assets

1,693,407

33,776,532

4,920,107

Deferred tax assets

100,194,993

81,593,698

11,885,462

Long-term finance leasing receivable,282,457,409

1,577,084

229,800,012

Other non-current assets

36,687,583

9,493,492

1,382,883

Total non-current assets

2,546,560

3,840,236

453,144,972

TOTAL ASSETS

7,301,140,204

7,579,344,374

1,104,055,990

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

660,000,000

1,000

161,689,731

Long-term debts—current

467,051

542,456,711

79,017,729

Accrued expenses and other current liabilities

211,458,501

215,035,436

31,323,443

Risk assurance liabilities

173,210,363

196,388,309

28,607,183

Income tax payable

53,517,717

7,418,417

1,080,614

Total current liabilities

1,565,380,632

2,071,298,873

301,718,700

Non-current liabilities:

Long-term borrowings

472,793,340

314,346,370

45,712

Other non-current liabilities

7,599,404

-

-

Total non-current liabilities

480,392,744

314,370

45,712

Total liabilities

2,045,773,376

2,385,645,243

347,508,412

Shareholders' equity

Ordinary shares

204,260

204,260

29,754

Additional paid-in capital

4,444,078,463

4,481,629,026

652,822,873

Accumulated other comprehensive income

109,452,996

98,390,209

14,332,150

Accumulated retained earnings

698,036,438

611,766,717

89,113,869

Total Cango Inc.'s equity

5,251,772,157

5,191,990,212

756,646

Non-controlling interests

3,594,671

1,708,919

248,932

Total shareholders' equity

5,255,366,828

5,193,699,131

756,547,578

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

7,990

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 June 30,

Six months ended June 30,

2018

2019

2018

2019

RMB

RMB

US$

RMB

RMB

US$

Revenues

236,287,811

336,303,754

48,988,165

485,107,011

687,962,259

100,213,002

Operating cost and expenses:

Cost of revenue

81,181,330

125,824,004

18,328,333

162,037,069

256,630,454

37,440

Sales and marketing

36,979,636

44,503,534

6,482,671

71,798,024

90,050,914

13,117,395

General and administrative

31,350,545

53,413

7,781,269

58,094,590

118,182,033

17,215,154

Research and development

9,415

12,246,050

1,783,838

15,933,541

25,854

3,165

Net loss on risk assurance liabilities

(4,951,451)

2,379,706

346,643

(1,183,503)

20,230,839

2,946,954

Provision for financing receivables

10,402,370

13,672,656

1,991,647

13,464,113

23,695,938

3,451,703

Total operating cost and expenses

164,443,845

252,044,363

36,714,401

320,143,834

534,384,032

77,841,811

Income from operations

71,843,966

84,259,391

12,764

164,963,177

153,578,227

22,371,191

Interest income

18,042

22,704,386

3,307,267

26,438

41,588,934

6,058,111

(Loss) income from equity method investments

937,549

(942,312)

(137,263)

(1,396,142)

(926,205)

(134,917)

Interest expense

(4,712,329)

(4,329)

(686,428)

(9,502,055)

(10,006,574)

(1,622)

Foreign exchange loss,net

10,905

1,409,293

205,287

7,422,516

122,801

17,888

Other income

(975,669)

856,340

124,740

21,046,154

21,278

3,145,416

Other expenses

(7,091,835)

(168,717)

(24,576)

(7,197,923)

(1,184,660)

(172,565)

Net income before income taxes

88,293,629

103,406,052

15,062,791

201,659,165

204,765,801

29,827,502

Income tax expenses

(23,677,171)

(8,819,437)

(1,284,696)

(53,016,212)

(35,808,056)

(5,216,031)

Net income

64,616,458

94,586,615

13,778,095

148,642,953

168,957,745

24,611,471

Less: Net incomeattributable to the noncontrolling

interest shareholders

164,843

3,047,624

443,936

4,150

1,200,254

174,837

Net income attributable to Cango Inc.'s

shareholders

64,615

91,538,991

13,334,159

144,543,803

167,757,491

24,436,634

Accretion of Series C Preferred Shares

6,289

-

-

6,289

-

-

Net income attributable to Cango Inc.'s ordinary

shareholders

57,460,326

91,159

137,552,514

167,634

Net income per ADS (Note 1):

Basic

0.44

0.60

0.09

1.07

1.11

0.16

Diluted

0.44

0.60

0.09

1.05

1.11

0.16

ADSs used in net income per ADS computation

(Note 1):

Basic

130,053,500

151,404,946

151,946

128,244,728

151,946

Diluted

131,667,341

151,946

130,925

151,946

Other comprehensive income,net of tax

Unrealized losses on available-for-sale securities

78,147

(108,594)

(15,818)

156,131

(146,801)

(21,384)

Reclassification of losses to net income

-

(276,843)

(40,327)

-

(276,327)

Foreign currency translation adjustment

43,890,855

31,329,909

4,563,716

43,855

(10,639,143)

(1,549,766)

Total comprehensive income

108,585,460

125,531,087

18,285,666

192,939

157,894,958

22,999,994

Total comprehensive income attributable to Cango

Inc.'s shareholders

108,617

122,483,463

17,730

188,590,789

156,694,704

22,825,157

Note 1: 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 June 30,

2018

2019

2018

2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

RMB

RMB

US$

RMB

RMB

US$

Net income

64,094

148,471

Add: Share-based compensation expenses

5,240

22,101

3,443

5,240

37,550,563

5,469,856

Cost of revenue

224,157

913,198

133,022

224,157

1,539,574

224,264

Sales and marketing

1,164,522

4,744,170

691,066

1,522

7,998,269

1,165,079

General and administrative

3,794,264

15,530

2,643

3,264

26,060,087

3,796,080

Research and development

284,297

1,158,203

168,711

284,952,633

284,433

Non-GAAP adjusted net income

70,083,698

116,859,716

17,022,537

154,193

206,308

30,327

Less: Net income attributable to the noncontrolling interest

shareholders

164,843

3,624

443,936

4,150

1,254

174,837

Non-GAAP adjusted net income attributable to

Cango Inc.'s shareholders

69,918,855

113,812,092

16,601

150,011,043

205,308,054

29,906,490

Accretion of Series C Preferred Shares

6,289

-

-

6,289

-

-

Non-GAAP adjusted net income attributable to

Cango Inc.'s ordinary shareholders

62,927,566

113,601

143,019,754

205,490

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

0.48

0.75

0.11

1.12

1.36

0.20

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

0.48

0.75

0.11

1.10

1.36

0.20

Weighted average ADS outstanding—basic

130,500

151,946

151,946

128,728

151,946

Weighted average ADS outstanding—diluted

131,341

151,946

130,925

151,946

Note 1: Each ADS represents two ordinary shares.