Q2 2023 Cango Inc Earnings Call
Good morning, and good evening, everyone welcome to Tango Inc's second quarter 2023 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. Zhao you want lean Chief Executive Officer, and Mr. Yong, Zhang Chief Financial Officer of the company.
Following management's prepared remarks, we will conclude we will conduct a question and answer session.
Before we begin I would like to refer you to the safe Harbor statements 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 would now like to turn the call over to Mr. Guy want lean CEO of Kimco. Please proceed sir.
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Yeah. She talks have bought them, hoping hi, everyone and welcome to Kengo second quarter 2023 earnings call.
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Despite ongoing stimulus policies from both central and local authority with Coke consumption consumer confidence to stay low in the first half of 2023 Moreover, the intense price war in China's auto market disrupted the pricing structure of the automotive industry, creating a widespread sense of caution.
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Respond to the market trends I'll focus throughout Q2 of 2023 has been doing.
These capabilities across our platform people with achieved by gain a deeper understanding.
I'm continuously refining our resource allocation along the automotive value chain. Consequently, we were able to make further strides in diversifying revenue streams and coating automotive transactions capitalizing all the potential novel business model in Q2, the company reported total revenue yourself 600 on the AC.
RMB, representing a robust year on year increase of 134% of revenues from car trading transactions accounted for 560 million, making a significant year over year growth of 157% and a contribution of 83% of overall revenue morals that by the end of June 2023.
While standing balance so financing trucks that transaction asleep for city tied it decreased from 21 7 billion as of March 31st 2023 to $16 6 billion, thereby further mitigating our risk Boucher B M. One plots and M. Three plus overdue ratios also saw a decrease from 2.33%.
And 1.29% as of March 31st did you want to speak to two point, 12% at 1.09% respectively.
Sure many of which are you would go with friends young horses, Ginger now I'd like to share more details on the major progress we've made with all the different business lines.
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The new car trading transaction, we witnessed a total of 5393 causes so it can go how shall we think the.
Second quarter, reflecting a year on year growth of 157, 2% in the quarter also supported a increase of 52, 3% in the first half of 'twenty. Three Tango household recorded a total of 9760 hospitals, indicating a modest year over year growth of 7%.
As of June 23, the total number of dealers engaged don't Kenkel Howja rose to 11066, a year on year growth of 33.3 full points, 3%. Furthermore, henkel how to App. So over 1 million page views by the end of Q2, attracting more than 96000 unique visits.
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We improved our transaction support and services in the second quotes out to provide one stop service experience for dealers and helping them grow their business on profitability. For example, we launched auto and not until he sure S products to help dealers crosstown and increased cost them on all customer loyalty, while creating you'll probably streams.
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Junk D jeans, and but we also added a column product till the tango, how to app, allowing caught bias to paying for installment.
Yes, but what do you need to input car buyer information payload downpayment on the deposit and they can enjoy a seamless one stop somebody from ordering two loan applications and administration.
This solution will help theaters whiskey inventory related cash flow.
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Also aims to support small and medium sized students by entrusting their various business challenges such as vehicle Eveland Hillary auto financing warehousing and logistics to lease and we started a pilot cross region delivery program for new car services in some parts of China in the second quarter and he was very successful.
As we move forward, we will understand dealers' diverse needs better and use our digital infrastructure to support the air Force sales cycle with digital services for our manufacturing with sales improving efficiency at every step through these initiatives, we will boost efficiency and loyalty and help the auto industry grow in a long time.
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Decreased by six 3% in muscle and two 3% year on year in July According to J D.
Data with more sales promotions by vehicle manufacturers and possible shop price swing, especially in a weak consumption environment L. Folks also because they are in that stage of the new car trading business lumpy on avoiding potential vehicle inventory risks and we will control our transaction goes more carefully.
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Yes used car trading we improved our functions all of kind of can't go you are caught in the second quarter.
Data and digital technologies the <unk>.
It provides a secure reliable and efficient services to used car dealers and individuals nationwide statuesque historic vehicle condition reports vehicle evaluation when I auctions, all life Cos searches youth.
Used car listings and Ah self operated or proprietary used car purchases.
By the end of second quarter 2023 we had 6900 register used car dealers or Kengo Youll call a mini program with over 611000 page views and over 31000 units.
In the second quarter, we sold 651 youth cause on Kengo E com.
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You have done the journey towards good until you are of course, which we don't do you go from being a concept. We just had the two original Hello, James since you brought it down to two and then that's how you thought yours.
All proprietary vehicle inventory is the core of Kengo Youll caused full service capabilities in all main advantage. It come from the auto financing business. We have developed over the last decade, which includes trading and repossessed cars from over 2 million auto financing costumers as long as all high quality you as possible we will keep explore.
More potential vehicle inventory sources in the future by increasing the channels to acquire used costs from individuals raising transaction conversion rate embracing transaction conversion rate and strengthening repossessed causes confusion channels, we wont make tango youll call more distinctive and competitive in vehicle inventory.
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Upgraded kengo youll costume lung functions in June after getting the online auction license in April all Rogers to used car dealer is now able to list their used cars will be to be option.
This gets used car dealers another tech powered sales channel, helping them sell faster and better.
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We also set up lending how confection team you know second quarter to provide more professional services as we call them more of the used car trading transaction service Chang our train technician or professional services, such as vehicle condition checks pricy valuations and documentation favorite vacation Besides alongside service team of over one.
100 axis is now offering basic vehicle inspection and other related services working closely with vehicle inspection professionals to improve our overall service efficiency.
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Did you don't get the abilities that essential to improve service capacity across the platform as we drive changes in our platform business ecosystem. We have also been working on group wide digital transformation by using a data centric approach to improve operating efficiency and optimize business processes. We have made are cool.
Resources are smarter with digital operations lowering costs and increasing.
We also plan to use data exchanges to share in all of our industry expertise and know how we have gained over the last decade with more stakeholders and tolerate more settlements and industry.
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Our first aid had product on the Shanghai exchange in May we saw a car dealer operational index quarry. It covers the operational data off more than 80004 theaters and Navara thetis nationwide and rank status from multiple dimension enterprise information operating information Reis consolidation et cetera.
Provide preference indicators for the overall operation. So it is the first data index that includes comprehensive operational information on car dealers in lower tier market in the country and it can be a tool for assessing the financial position and ongoing concern of car dealers in these markets, we will keep innovating.
Technology, and keeping industry grow healthily and Saturday.
Sure I mean, this is Joe Viola I'm the CFO .
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I turn the call over to our Chief Financial Officer, Michael John for a review of the company's finished the first quarter.
Thanks, Joe Hello, everyone and welcome to our second quarter, two Southern 23 earnings call before I started to review all the financials. Please note that unless otherwise stated all numbers I RMB terms and all percentage comparisons on a.
The year over year basis.
Our total revenue for the second quarter grew by 133, 6% to $675 4 million of which the car trading transactions business revenues was $562 8 million or 83, 3% of total revenues.
Now, let's move on to our costs and expenses during the quarter total operating costs and expenses in the second quarter 2023 were $684 4 million compared with $643 3 million in the same period 2022.
Cost of revenue in the second quarter of 2023, or $615 8 million compared with $272 7 billion in the same period 2022.
As a percentage of total revenues cost of revenue in the second quarter to charter in 23 was 91, 2% compared with 94, 3% in the same period 2022.
So I would say the marketing expenses in the second quarter, two southern twenty-three decreased to $12 2 million from 41 8 million in the same period Tucson in 'twenty two.
As a percentage of total revenues sales and marketing, especially in second quarter, two southern 23, well, one 8% compared with 14, 5% in the same period of Tucson in 'twenty two.
General and administrative especially in second quarter 2023 decreased to 36.
<unk> 8 million from $124 7 million in the same period 2022.
As a percentage of total revenues general and industry, especially the second quarter two southern 23 were five 5% compared with 43, 1% in the same period 2020 to research and development, especially the second quarter two southern tracery decreased to $7 7 billion from $12 9 billion in the same period.
122.
As a percentage of total revenues research and development, especially in the second quarter 2023.
One 1% compared with four 4% in the same period 2022.
Net loss on contingent risk assurance liabilities, you have second quota Tucson annuities, three was 1.6 million provision for credit losses in the second quarter 2023 was $10 2 million.
We recorded a loss from operations of $8 9 billion in the second quarter 2023, compared with $354 1 billion in the same period 2022.
Net income in the second quarter 2023 was $36 2 million non-GAAP adjusted net income in the second quarter of 210 was $48 2 billion.
On a per share basis basic and diluted net income for the second quarter of two sided twenty-three war. So you appoint 270 plus two.
Effectively a non-GAAP adjusted basic and diluted net income per E. D. S. In a.
Second in the same period was 0.36035, respectively.
Moving onto our balance sheet.
As of June 32 is harder in 'twenty, three we had cash or the cash equivalents of 589 4 billion compared with $696 6 million as of March 31st two San Antonio Street.
As of June 32023, the company had short term investment of $2 1 billion compared with 2 billion as of March 31st 2023.
Looking ahead to the third quarter of two started 20th Street. We are now predicting our total revenues to be between 300 million 350 million.
Please note that this forecast reflects our current and preliminary view on market and operational conditions, which are subject to change.
This concludes our prepared remarks, operator, operator, we are now ready to take questions.
Thank you we will now begin the question and answer session.
I'd like to ask a question. Please press Star then one on your telephone keypad.
Youre using a speakerphone please pick up your handset before pressing the keys.
Your question has been answered and you wish to withdraw your question. Please press Star then two we will pause for one moment to assemble our roster.
And our first question today will come from Helen. Please proceed with your question.
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I'm, sorry stimulus like policies, we see people like the consumption have been gradually aided I really think the August so could management comment on the auto market in the second half.
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Well first of all thank you for your question as the Munis policy is already being implemented we do see any effect on the car sales and also on the car market as a whole. However, if you look at the July numbers. The retail sales volume of passenger vehicles in July was about $1 77 million decrease.
By six 3% quarter over quarter and down two 3% year on year. According to data from China passenger Coffee Association C. P C. Yet and this indicates that the higher Atlantic radically figures well actually mainly due to auto order backlogs in the previous periods, although the batesville compare.
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In the same period last year was relatively hot so the auto market overall sales volume may decline actually in the second half of me yet.
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Like on a Chinese automakers actually started to tap into the overseas market I think this year I'm wondering if management can share with us.
More color and the company has any plans to explore the global market as well.
Or are you too well.
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Regarding these question actually we are we are.
Positively cautious about the plan of going overseas and the business units are studying the feasibility and we are not auto manufacturer and do not control the production process the car.
Our business model and potential profitability still needs to be explored.
Yeah.
Sure. Thank you.
Thank you.
Yeah.
Thank you. Our next question will come from Sophie <unk> with Goldman Sachs. Please proceed with your question.
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Thank you I have two questions. The first question is on the macro environment.
Environment I can understand that on August 9th U S. President, Joe Biden, finding exactly or not well prohibits a new U S investments in China.
Sensitive technology, so as a new company listed on the New York Stock exchange, well can go be affected bodies or not and how well the company comp with it. That's the first question and then a second question is related to your.
Your company's business, so could you share with us more information on our gross margin off both the new and used car business.
How do you go in to Joseph by chance, we'll do questions towards you shouldn't do that she doesn't mean it won't be a one $2 showing them that she wont bottle. When we're told <unk>. She said Joe you wait.
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Okay. So on your first question on the executive order, we have seen any order.
Copyright and the news as China's leading automotive transaction services platform I will flip it.
Tom the oldest factors moral Saudi order exempt publicly traded securities on some other investments and we will definitely follow the situation closely.
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Oh your second question the gross margin on new car transaction is generally about 1% it really depends on the car model, though with some models region, 2% our business model involves centralized purchasing cars from Oems and then selling them to small and medium sized theaters as we do not control the production process.
Our gross margin on new car transactions Zillow.
Since all appears maintain a similar gross margin level. We believe these are these gross margin will remain stable for awhile.
Oh, So you wish you till you call two which are so essential to lead with each event on downstream.
And I'll use costs since the price of used cars really depends on the condition of the cost the gross profit for each car can vary from 1000, RMB two 2000 RMB.
With our ambitious yet that's all from me. Thank you.
Thank you that concludes our question and answer session I would now like to turn the conference over to Mr. <unk> for any closing remarks.
Oh sure sure Tunku that she is going to hurt us.
Well I'm going to end up where you thought switches will change with IGF I. Thank you all for your interest and.
And as a portable tango and that concludes today's earnings call. Thank you.
Thank you very much the conference has now concluded. Thank you everybody for joining today's presentation. You may now disconnect your lines.
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