Q1 2024 Cango Inc Earnings Call
Good morning, and good evening everyone.
Operator: Good morning and good evening, everyone. Welcome to Cango Inc's first quarter 2024 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 investor relations website. Joining us today are Mr. Jiayuan Lin, Chief Executive Officer, and Mr. Yongyi Zhang, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q&A session. Before we begin, I refer you to the safe harbor statement in the company's earnings release, which also applies to the conference call today as management will be making forward-looking statements. With that said, I'm now turning the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.
Welcome to <unk>, Inc. First quarter 2020 full earnings conference call.
At this time all participants are in a victim.
This call is also being broadcast live on the company's IR website.
Joining us today are Mr. Gyronny, Chief Executive Officer, and Mr. Yung, Chen Chief Financial Officer of the company.
Following management's prepared remarks, we will conduct the Q&A session.
Before we begin I refer you to the Safe Harbor statement in the company's earnings release.
Which also applies to the conference call today as management will be making forward looking statements.
With that said.
Speaker Change: Now turning to cool I thought seems to Jai Lamy CEO of Tango. Please go ahead Sir.
Speaker Change: Hello, and welcome to <unk> first quarter 2020 more earnings calls.
Jiayuan Lin: Hello everyone, and welcome to Cango's first quarter 2021 earnings call.
Jiayuan Lin: In the first quarter of 2024, China's GDP grew by 5.3%, maintaining mild growth in the complex and variable global economic environment. According to data from the China Automobile Industry Association, in the first quarter of 2024, automobile sales amounted to 660.6 million units and 672 million units, respectively, and increased by 6.4% and 10.6%, respectively. The performance of new energy vehicles was even more impressive, with 211.5 million units and 209 million units in total sales, and an increase of 28.2% and 31.8%, respectively. The market share has already exceeded 30%.
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Speaker Change: China's GDP maintain smoother requests in Q1 2024, increasing by five 3% year on year. Despite a complex global economic empowerment. According to the China Association of automobile manufacturers. The auto industry also saw strong growth with production net sales, reaching 661 million and six.
Jiayuan Lin: China's GDP maintained moderate growth in Q1 2024, increasing by 5.3% year-on-year despite a complex global economic environment. According to the China Association of Automobile Manufacturers, the auto industry also saw strong growth, with production and sales reaching 6.61 million and 6.72 million vehicles, respectively. This represents a year-on-year increase of 6.4% for production and 10.6% for sales. Real energy vehicles, or NEVs, for short, were a particular price bought. Production and sales surged by 28.2% and 31.8% year-on-year to 2.12 million and 2.09 million units, respectively. This strong performance pushed NEV's market share to over 30%.
Speaker Change: Seven 2 million vehicles, respectively. This represents a year on year increase of six 4%, while production and 10, 6% for sales.
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Speaker Change: In short when a particular bright spot production or sales surged by 28, 2% at 31, 8% year over year to $2, one 2 million and 209 million units, respectively. This strong performance pushed any fees market share to over 30%.
Jiayuan Lin: Although the overall growth trend of car sales data is positive, the market environment is still facing many challenges. The traditional car market has transformed into a deep water zone, while the new car market is rising rapidly. At the same time, it is also facing a severe test of market competition and profitability. In terms of demand, the instability of slow growth in income and the unemployment market continues to restrain the consumer's desire to buy. And price competition and technical overlaps have also made consumers look down on the market and further squeeze the market space.
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Jiayuan Lin: Despite positive growth in vehicle production and sales, the auto market faces challenges on both the supply side and the demand side. Traditional automakers must transform to compete in the new energy vehicle era, and emerging NEV manufacturers face intense competition and struggle for profitability. On the demand side, slow income growth and job market instability restrain consumer purchasing. Rapid technological advancements and price competition lead consumers to delay purchases, further tightening the market.
Despite positive growth in vehicle production and sales the auto market faces challenges on both the supply side the demand side traditional automakers must transform to compete in the new energy vehicle era, and imaging and UV manufacturers face inclusive intense competition a struggle for profitability.
Speaker Change: On the demand side slow income growth and drop in market instability, which joined consumer purchasing propensity.
Speaker Change: Rapid technological advancements and price competition lead consumers to delay purchases further tightening the market.
Jiayuan Lin: In the face of the situation where the new car market is in a state of surplus, we have taken the initiative to reduce the size of the new car purchase, reduce the number of new cars purchased, and optimize the inventory. Although this has led to a drop in the company's revenue in the short term, it has effectively avoided the risk of the new car price falling. In the first quarter, Cangu recorded a total revenue of 64.42 million yuan, and the operating profit was 74.15 yuan, and the net profit was 90.03 yuan.
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Jiayuan Lin: In response to the oversupply in the new car market, we took proactive steps to manage inventory and reduce costs. We strategically reduced the scale of our self-operated new car business, streamlined purchasing processes to improve efficiency, and improved inventory management to mitigate the risk of declining new car prices. While this strategy resulted in lower revenue compared to last year, that is $64.42 million in Q1 this year, it ensured profitability for the company. Our operating profit was $74.15 million, and net profit was $90.03 million.
A response to the oversupply in the new car market, we took proactive steps to manage inventory and reduce costs, we strategically reduced the scale of our self operated <unk> business, a streamlined purchasing processes to improve efficiency and improved inventory management to mitigate the risk of declining new car prices.
Speaker Change: Well at least this strategy resulted in a lower revenue compared to last year and that is $64 2 million in Q1. This year. It ensure the profitability for the company. Our operating profit was $74. One five RMB 70, 415 million RMB and net profit was <unk>.
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Jiayuan Lin: We maintained financial stability in a challenging macroeconomic environment through strict cost controls and risk management. We closely monitored liquidity and liabilities, reducing our total outstanding facilitated financing balance to 7.586 billion RMB by the end of Q1. Additionally, our delinquency ratios remain low at 2.87% for M1+ and 1.51% for M3+ as of March 31st, indicating strong asset quality.
Speaker Change: We maintain financial stability in a challenging macroeconomic environment, so strict cost controls and risk management, we closely monitored liquidity on liabilities, reducing our total outstanding facilitated financing balance to 758 6 billion RMB by the end of Q1 and our delinquency ratios.
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Jiayuan Lin: In this quarter, we have fully integrated the Cango E-POWER platform and continue to provide high-quality vehicles, optimize the vehicle service experience and supply chain management, enhance the convenience and safety of 1D delivery, and enhance the competitive advantage of the E-POWER platform.
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Jiayuan Lin: Q1 also saw the successful integration of Cango Eurocar, strengthening our platform's competitiveness in several ways. We secured a consistent supply of high-quality vehicles, and daily service experiences and supply chain management were optimized. Cross-region deliveries became more convenient and secure.
Q1 also saw the successful integration of <unk> cost strengthening our platform competitiveness in several ways, we secured a consistent supply of high quality vehicles, and DNA surface appearances and supply chain management, while optimized cross region deliver ray speaking more convenient and secure.
Jiayuan Lin: Since the end of the last quarter, Cangu Youche's app has accumulated 8,459 registered car dealer users. The accumulated PV is more than 130,000. Registered car dealers cover 31 provinces and 251 cities. In the first quarter, the auction sold 124 orders, and the total sold 204 orders.
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Jiayuan Lin: Cango Youka achieved impressive growth in Q1 2024. The platform expanded its reach to 8,459 registered card redealers across 31 provinces and 251 cities in China. It generated significant user engagement with over 130 million accumulated page views. The platform also facilitated 124 auctions and 204 facilitated deals.
Speaker Change: Kingrey you achieved impressive growth in Q1 2020 for the platform expanded its reach to 8469 retrofit card readers across 31 provinces and 251 cities in China, a generated significant user engagement with over 130 million accumulated page views.
Speaker Change: The platform also facilitated 124 auctions and 204 facilitated views.
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Jiayuan Lin: And we ramped up our vehicle offerings and transactions in Q1 2024 with strengthened partnerships with existing stores and brought high-quality third-party vendors nationwide to our platform, creating a more diverse and stable vehicle pipeline. Also, we boosted transaction volume by hosting 42 auction events and special sales throughout the quarter.
Speaker Change: We ramped up our vehicle offerings in six transactions in Q1, 2024, we strengthened partnerships with existing stores in broth.
Speaker Change: <unk> brought on our platform high quality slip party vendors nationwide, creating a more diverse and stable vehicle pipeline also we boosted transactions volume by hosting 42 auction events and special sales throughout the quarter.
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Jiayuan Lin: We differentiated Cango Yoka in Q1 through an enhanced membership ecosystem and premium services. We developed a more attractive membership program with exclusive benefits to boost dealer engagement and loyalty. And we launched an MCM pilot program in Q1, helping dealers transition to an online plus offline marketing strategy. In addition, we introduced the hassle-free purchase service in April, offering comprehensive transaction support for payments, logistics, and insurance. This streamlines transactions for both buyers and sellers and improves transparency for a better member experience. In Q2, we will continue to focus on deepening user engagement, enriching platform content, and expanding both our membership-based and high-quality vehicle inventory.
Speaker Change: We differentiated Kendall <unk> and enhanced membership ecosystem and premium services, we developed a more attractive membership program with exclusive benefits to boost dealer engagement and loyalty and we launched an MTM pilot program in Q1, helping do those transitions online plus offline marketing.
Speaker Change: <unk> in addition to reintroduce the hassle free purchase servicing April offering comprehensive transaction support for payments logistics and insurance is a strange streamlines transactions for both buyers and sellers and improved transparency for a better member experience in Q2, we will.
Speaker Change: To continue to focus on deepening user engagement enbridge and platform content and expanding both our membership base and high quality vehicle inventory.
Jiayuan Lin: In addition, we have also made some progress in cross-border transactions with second-hand cars. In March this year, we officially launched a cross-border information exchange platform for second-hand car transactions and built bridges for global multi-language users to recognize and understand the second-hand car market in China, to fill the blanks of the domestic cross-border second-hand car transaction information service. Through this platform, overseas buyers can access China's high-quality second-hand car resources more conveniently and directly. In the future, we hope to build this platform into a gateway for second-hand cars to go abroad.
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Jiayuan Lin: In addition, we are making waves in the cross-border used car market. In March, we launched the first of its kind information platform to connect overseas buyers from different countries and regions directly to China's high-quality used car inventory. This platform fills the gap in cross-border used car information services, providing valuable insights to global users, and our goal is to become the go-to gateway for Chinese used cars entering the international market.
Speaker Change: In addition, we are making waves in cross border used car market in March we launched a first of its kind information platform to connect overseas buyers from different countries and regions directly with Chinas high quality used car inventory. This platform fills the gap in cross border used car information services, providing valuable insights to global.
Speaker Change: And our goal is to become the go to gateway for Chinese use cost.
Speaker Change: The international market.
Jiayuan Lin: In the future, we will work hard to explore new business models and expand our growth opportunities. At the same time, we firmly believe that through continuous innovation and sophisticated management, Cango will push the company to achieve long-term sustainable development in the fierce market competition.
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Jiayuan Lin: Moving forward, we are committed to unlocking new growth opportunities through innovative business models. Partnering with our dealer network, we will leverage continuous innovation and meticulous management to create additional value in China's rapidly evolving auto sector. This focus will ensure the company's long-term sustainable success.
Speaker Change: Moving forward, we are committed to unlocking new growth opportunities through innovative business models partner partnering with our dealer network, we will leverage continuous innovation and meticulous management to create additional value in China's rapidly evolving auto sector. This focus will ensure the companys long term.
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Unknown Executive: CFO Zhang Yongyi, Unknown Executive, Jiayuan Lin, Yongyi Zhang, Pingyue Wu, Cango Inc.
Jim: Sure I mean, this is Jim <unk> the CFO, Tony will lead you to go with <unk> 10, a quarter over to our CFO, Michael John for a review of it.
Unknown Executive: Next, I will turn the call over to our CFO, Michael Zhang, for a review of the company's financial performance.
Michael John: The company's financial performance.
Speaker Change: Thanks, Joe Hello, everyone and welcome to <unk> first quarter 2024 earnings call.
Yongyi Zhang: Thanks, Jiayuan. Hello, everyone, and welcome to our first quarter 2024 learning score. Before I start to review our financials, please note that, unless otherwise stated, all numbers are in IMB terms, and all percentage comparisons are on a year over year basis. Total revenue in the first quarter of 2024 was $64.4 million, compared with $552.6 million in the same period of 2023. The guarantee income, which represented the fee income earned on the non-contingent aspect of guarantee, was $30.3 million in the first quarter of 2024.
Before I started to review our financials. Please note that unless otherwise stated all numbers I RMB terms and all percentage comparisons.
Speaker Change: On a year over year basis.
Speaker Change: Total revenue in the first quarter of 2000 and Chinese coal.
Speaker Change: The $4 4 million compared with $552 6 million in the same period of 2023.
Speaker Change: Guaranteed income, which represented a fee income earned on the non contingent aspect of guarantee was $30 3 billion in the first quarter of 2024.
Yongyi Zhang: Now let's move on to our costs and expenses during the quarter. Cost of revenue in the first quarter decreased to 29.1 million from 480.5 million in the same period 2023. As a percentage of total revenue, cost of revenue in the first quarter of 2024 was 45.1% compared with 88.6% in the same period 2023. Sales and marketing expenses in the first quarter decreased to 3.5 million from 12.5 million in the same period 2023.
Speaker Change: Now, let's move on to our costs and expenses during the quarter.
Speaker Change: Cost of revenue in the first quarter decreased to $29 1 million from 485 million in the same period of 2023 as a percentage of total revenue cost of revenue in the first quarter of 2024 was 45, 1% compared with 88, 6% same period of 2010.
Speaker Change: Sales and marketing expenses in the first quarter decreased to $3 5 million from $12 5 million in the same period of 2023 general and administrative expenses in the first quarter decreased to $37 9 million from $39 8 million in the same period of 2023 <unk>.
Yongyi Zhang: General and administrative expenses in the first quarter decreased to 37.9 million from 39.8 million in the same period 2023. Research and development expenses in the first quarter decreased to 1.1 million from 8.1 million in the same period 2023. The net gain on the contingent risk assurance liability in the first quarter was 15 million compared with 1.6 million in the same period 2023. The gain was recognized due to the release of obligations from the contingent aspect of the risk assurance liability. The net recovery on provision for credit losses in the first quarter was 66.3 million. The recovery was primarily due to the positive impact from the collections of financing receivables.
Research and development expenses in the first quarter decreased to $1 1 million from $8 1 billion in the same period of 2023 net gain on contingent risk assurance liabilities in the first quarter was 15 million compared with one six.
Speaker Change: 6 million in the same period of 2023.
Speaker Change: The gain was recognized due to the release of obligations from the contingent effect on the risk assurance liabilities net recovery of provision for credit losses in the first quarter was $66 3 million and recovery was primary due to the positive impact from collections of finance.
Speaker Change: Z receivables.
Yongyi Zhang: We recorded $74.2 million in income from operations in the first quarter of 2024, compared with $51.8 million in the same period of 2023. Net income in the first quarter was $90 million. Non-debt adjusted net income in the first quarter was $95.7 million. On a per share basis, basic and diluted net income per ADS in the first quarter of 2024 were $0.85 and 0.8, respectively. And non-GAAP adjusted basic and diluted net income per ADS for the same period was 0.91 and 0.85, respectively.
Speaker Change: We recorded $74 2 million in income from operations in the first quarter of 2024, compared with 51 8 million in the same period of 2023.
Speaker Change: Net income in the first quarter was $19 million non-GAAP adjusted net income in the first quarter was $95 7 million unappreciated basis basic and diluted net income per ads in the first quarter of 224 were.
Speaker Change: 0.85, and eight respectively.
non-GAAP adjusted basic and diluted net income per ads in the same period was <unk> nine one and <unk> 85, respectively.
Yongyi Zhang: Moving on to our balance sheet, as of March 31, 2024, the company had cash and cash equivalents of $1.2 billion compared with $1 billion as of December 31, 2023. As of March 31, 2024, the company had a short-term investment of $2.3 billion compared with $635.1 million as of December 31, 2023. The increase was mainly due to the conversion from a restricted cash bank deposit held for short-term investments of RMB $1,670 million on December 31, 2023 after the company completed its subscription process.
Speaker Change: Moving on to our balance sheet.
Speaker Change: As of March 31, 2024, the company had cash and cash equivalents of $1 2 billion compared with 1 billion as of December 31 2023.
As of March 30.
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Speaker Change: 30, 31 2024.
Speaker Change: The company has short term investments of $2 3 billion compared with $635 1 million as of December 31st 2023. The increase was mainly due to the conversion from restricted cash bank deposit handful of short term investments.
Speaker Change: 1600 $17 million on December 31, 2000, and <unk> after the company completes its subscription process.
Speaker Change: Looking ahead to the second quarter of 2020 floor. We are now predicting all with total revenues to be between $35 million and $45 million. Please note that this forecast reflects our current and preliminary view on the market and operational conditions, which are subject to change.
Yongyi Zhang: Looking ahead to the second quarter of 2024, we are now predicting our total revenues to be between $35 million and $45 million. Please note that this forecast reflects our current and preliminary view of the market and operational conditions, which are subject to change. And this concludes our prepared remarks. Operator, we are now ready to take questions. Thank you.
Speaker Change: This concludes our prepared remarks, operator, we are now ready to take questions.
Thank you.
Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your questions. We will now pause for a moment to assemble our roster. Thank you. Our first question comes from Pingyue Wu from CITIC Security. Please go ahead.
Speaker Change: If you wish to ask a question. Please press star one on your telephone and wait BMO BMO.
If you wish to cancel your request please press star two.
If you're on Speakerphone, please pick up the home to ask your question.
Speaker Change: We will now pause a moment to assemble also.
Tim <unk>: Thank you our first question comes from Tim <unk> from.
Speaker Change: Synthetic securities. Please go ahead.
Pingyue Wu: Hello, everyone. I'm Pingyue Wu from Cango Inc. I have two questions.
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Pingyue Wu: The first question is that our company has officially introduced a new car replacement policy. Does our company think that this policy can promote the recovery of the car market and bring some new growth? And can you help us estimate the impact of this policy on this year's car demand? Thank you.
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Pingyue Wu: Thank you. My name is Pingyue Wu. I'm from CITIC.
Speaker Change: Thank you my name is <unk> from Citic press.
Pingyue Wu: I have a question. The first question is that recently the government launched a subsidy program for trading programs in order to encourage consumption. So does the company believe that this will help drive the recovery and growth of the automobile market? And if possible, could you give us a specific number measuring the degree of impact of this policy on the demand for vehicles or for automobiles?
<unk>. The first question is that recently the government launched a subsidy program forward trading programs in order to encourage consumption. So that the company believes that these will help drive fee recovery and growth of the automobile market and if possible could you give us a specific number.
Speaker Change: During the degree of impact of the policy on the demand for vehicles or for automobiles.
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Jiayuan Lin: Regarding your question, in terms of the company, this policy does provide an active external environment for promotion of test recovery. Consumers may have a desire to re-purchase or change their second-hand car due to the subsidy policy. Especially for those customers who already have a need for a new car, the subsidy may be an important factor in their final decision-making.
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Jiayuan Lin: Thank you very much for your question. In our view, the government's trading subsidy program creates a positive tailwind for the auto market recovery, and these subsidies act as an incentive for consumers, especially those already considering an upgrade or trading in their older vehicles. This could indeed lead to a significant boost in demand for new cars, which benefits our company.
Speaker Change: Thank you very much for your question. So in our view the government's trading subsidy program creates a positive tailwind for the auto market recovery and the subsidies act as an incentive for consumers, especially those already considering an upgrade or trading their older vehicles. This could indeed due to a.
Speaker Change: <unk> boosting demand for new cars, which benefits all company.
Jiayuan Lin: Even so, we need to consider other factors that may affect the test, such as the macroeconomic environment, consumer confidence, the vehicle update cycle, etc. For the current consumer confidence, we judge that there is still a relatively long recovery period. Therefore, the notice issued twice this year by the State Council and the Ministry of Commerce, we believe that its driving force for the increase in consumer demand is still relatively limited.
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Jiayuan Lin: While the trading subsidy is a positive step, we shouldn't underestimate the broader challenges facing the auto market. Consumer confidence and overall economic conditions will likely take time to improve, potentially limiting the program's immediate impact on new car demand. We commend the State Council and the Ministry of Commerce's efforts, but a comprehensive approach that addresses those other factors will be crucial for a sustained market recovery.
Speaker Change: While the trading subsidy as a positive step we shouldn't underestimate the broader challenges faced in the auto market consumer confidence and overall economic conditions will likely take time to improve potentially limiting the program immediate impact on new car demand, we commended they cancel a ministry of commerce as assets, but a comprehensive.
Speaker Change: Approach that addresses those other factors will be crucial for a sustained market recovery.
Speaker Change: Sure. Thank you.
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Unknown Executive: Unknown Executive, Jiayuan Lin, Yongyi Zhang, Pingyue Wu, Cango Inc
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Speaker Change #102: And my second question is we noticed that accompany single yoga App was upgraded in April so are there any new features after the applegate.
Pingyue Wu: And my second question is, we noticed that the company's Cango Yuka app was upgraded in April. So are there any new features after the upgrade?
Unknown Executive: Unknown Executive, Jiayuan Lin, Yongyi Zhang, Pingyue Wu, Cango Inc.
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Unknown Executive: Yes, the latest version of Cango EO card features our newly added hassle-free purchase service, which provides card dealers with more comprehensive and reliable solutions.
Speaker Change #105: Yes, the latest version of Kangaroo Youll call features our newly added hassle free purchase service, which provides got car dealers with more comprehensive and reliable solutions.
Unknown Executive: We've also enhanced the Cango Youkai.
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Speaker Change #108: You cant put on my job won't sound like go to John Charlotte, Google. We've also enhanced the Kangaroo youll kind of experience for our members with two exciting features associated exclusive membership section members now have access to a curated selection of premium vehicles nationwide and these vehicles are all under three years.
Unknown Executive: We've also enhanced the Cango YouCar experience for our members with two exciting features. The first is the exclusive membership section. Members now have access to a curated selection of premium vehicles nationwide, and these vehicles are all under three years old and have fewer than 50,000 kilometers, ensuring top quality. Plus, they are offered at competitive prices compared to industry standards. And the second feature is the improved in-app communication. With just one click, members can now connect with sellers directly within the app. This will streamline communication and will boost transaction efficiency. Thank you.
Operator: Thank you. The next question comes from Emerson Zhao from Goldman Sachs. Please go ahead.
Speaker Change #108: <unk> and have fewer than 50000 kilometers ensuring top quality plus they are offered at competitive prices compared to industry standards and second feature is improved Inc. Enact communication with just one click members now can connect with sellers directly with Indiana is streamlines communication and Bruce.
Transaction efficiency.
Speaker Change #109: Sure. Thank you.
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Speaker Change #110: Thank you.
Speaker Change #111: Comes from Emily <unk> from Goldman Sachs. Please go ahead.
Speaker Change #112: And finally, the Hollywood your Bachelor Gulch.
Emerson Zhao: Hi, I'm Emerson from Kaohsiung. I have two questions. The first question is that the size of the new car is decreasing, so I want to know what the next income process will be like. The second question is that the company's profits are rising this quarter, and there is still a lot of cash. So I want to know if there will be a dividend arrangement in the future. Thank you.
Speaker Change #113: <unk> Oh lunch the depot in Houston for <unk> coals lithium towards high voltage grid and more of that.
Speaker Change #114: So that's all I got.
Speaker Change #115: We will go to a doctor.
Speaker Change #116: Now the arguments you should pan out, but can you talk also about.
Speaker Change #117: Yeah, Hi, Tien tsin some of these chabot wholesale polyol vocal about that.
Speaker Change #116: Yeah.
Speaker Change #118: Alright, Thank you and Amazon Joe from Goldman Sachs I have two questions. The first question is we noticed that the company has decrease of your new car procurement. So what will the revenue sources look like moving forward and my second question is the company returned to profitability this quarter and holds a significant amount of cash so well there.
Emerson Zhou: Thank you. I'm Emerson Zhou from Goldman Sachs. I have two questions. The first question is, we noticed that the company has decreased its new car procurement. So what will the revenue sources look like moving forward? And my second question is that the company returned to profitability this quarter and holds a significant amount of cash. So will there be any plans for a dividend payout?
Speaker Change #119: Any plans for dividend payout.
Jiayuan Lin: Thank you, Mr. Emerson. Regarding the first question, due to the change in the market environment, we have made strategic adjustments. We have reduced the purchase volume of new cars. Although the whole car business has brought us a larger income scale, the profit margin is relatively low. After the adjustment, although the income scale has decreased, the main income has been generated by the transfer of the service fee. This change has led to an increase in the profit margin. The reason is a significant reduction in overall cost.
Speaker Change #120: Oh, okay.
Speaker Change #121: Quite diesel when to use so suzanne quantity that therefore ensure we'll move towards some sort of intelligent search and machine.
Speaker Change #122: Go there financing term I might be able to work with that.
Speaker Change #123: So we will sanction Molly do Jody Telecom hope so that's a little bit more youthful Janssen Duncan we also knew Youll Daniel cocoa for vehicles.
Speaker Change #123: There's a multitude of Chico.
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Thank you for your question. So on your first question, we strategically adapted to changing market by streamlining our self operated new car business well at least segment previously generated significant revenue at lower profit margins and these proactive shift has led to a decrease.
Jiayuan Lin: Thank you for your questions. As for your first question, we strategically adapted to a changing market by streamlining our self-operated new car business. While this segment previously generated significant revenue, it offered lower profit margins. This proactive shift has led to a decrease in total revenue, but our core business has transitioned to facilitation services with much higher gross profit margins due to a leaner cost structure.
In total revenue, but our core business has transitioned to facilitation services with much higher gross profit margin due to a leaner cost structure.
Jiayuan Lin: In addition, for the company, this transformation means optimizing the income structure, strengthening profitability, and laying the foundation for stable development in the future.
Speaker Change #124: But anyway.
Speaker Change #125: Oh, sorry, yeah, so you're trying to use the Europa shuttle coach arguably the only when we led the way.
Speaker Change #126: In general our evolving business model and optimize the revenue structure have posted profitability laying a solid foundation for long term sustainable growth.
Jiayuan Lin: Our evolving business model and optimized revenue structure have boosted profitability, laying a solid foundation for long-term sustainable growth.
Jiayuan Lin: ????,????????????,???????????????????,??????????????????????????,????????????????,?????????????????? On your second question about dividend payout.
Speaker Change #126: Quite a bit of a full.
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Speaker Change #127: Shinji will ask CFO cheater, Youll phone call unpack, where.
Speaker Change #128: Hydro quite consistent with your standard Fujitsu for Jessica.
Speaker Change #128: Slide 17 shows that you can continue in Guam.
Jiayuan Lin: On your second question about dividend payout, well, since going public, the company has been consistently rewarding shareholders with dividends reflecting our commitment to shared success. Looking ahead, we will strategically plan future dividend allocations in light of our evolving business and cash flow requirements.
Speaker Change #128:
Speaker Change #129: On your second question about dividend payout, but since going public the company has been consistently rewarding shareholders with dividends, reflecting our commitment to shared success. Looking ahead, we must strategically planned future dividend allocations, considering our evolving business and cash flow requirements.
Speaker Change #130: Sure. Thank you.
Speaker Change #130: Okay.
Speaker Change #131: Thank you.
Operator: That concludes the question and answer session. Thank you once again for joining Cango's first quarter 2024 earnings conference call today. Have a great day. Thank you for watching.
Speaker Change #132: That concludes the question and answer session.
Speaker Change #133: Thank you once again for joining Kangaroo basketball that 2024 earnings conference call today, Okay great.
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