NYSE:CANG Cango Q1 2023 Earnings Report $3.71 +0.14 (+3.92%) Closing price 04/17/2025 03:58 PM EasternExtended Trading$3.72 +0.01 (+0.27%) As of 04/17/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Cango EPS ResultsActual EPS$0.08Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ACango Revenue ResultsActual Revenue$79.01 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ACango Announcement DetailsQuarterQ1 2023Date6/8/2023TimeN/AConference Call DateThursday, June 8, 2023Conference Call Time9:00PM ETUpcoming EarningsCango's Q1 2025 earnings is scheduled for Tuesday, June 10, 2025, with a conference call scheduled on Wednesday, June 11, 2025 at 9:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Cango Q1 2023 Earnings Call TranscriptProvided by QuartrJune 8, 2023 ShareLink copied to clipboard.There are 3 speakers on the call. Operator00:00:00Good morning and good evening, everyone. Welcome to Chengdu Inc. 1st Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. The call is also being broadcast live on the company's IR website. Operator00:00:16Joining us today are Mr. Jianwen Lin, Chief Executive Officer and Mr. Yongniasheng, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q and 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 make forward looking statements. Operator00:00:40With that said, I am now turning the call over to Mr. Jean Yuan Lim, CEO of Cango. Speaker 100:00:55Hi, everyone, and welcome to Cango's Q1 2023 earnings call. Due to a variety of issues, notably COVID-nineteen, the automotive industry remains low throughout 2022. The macro economy began to show indications of steady recovery in 2023, the 1st year of a post pandemic era, laying a hopeful basis for a revival in China's auto sector. Despite this encouraging trend, the market remained weak in the Q1 due to constrained consumer spending caused by factors such as the spring festival holiday, the loss of national subsidies and the price war that began in March. According to China Passenger Car Association, retail sales volume of passenger vehicles declined 13.4% year on year in the Q1. Speaker 100:02:28We predict the overall passenger vehicle market to remain volatile into 2023 owing to persistent pressure from weaker market demand. Tango reacted promptly to changing macroeconomic and industry conditions by using our resources and constantly expanding our capacity to capture long term growth opportunities. Our Cango Haocha and the Cango Yuka apps are now fully operational showcasing our capacity to successfully develop a full service automotive transaction ecosystem centered on both new and used cars by refining our service capabilities and enhancing our operating skills. In the Q1 of 2023, our overall revenues were RMB540 1,000,000, down 31% year on year, but up 11% quarter on quarter. Revenues from car trading transactions were RMB430 1,000,000, accounting for 79% of total revenues, reinforcing our position as a strong growth engine. Speaker 100:05:03Our company's net income for the Q1 was RMB78 point 8 million primarily due to an increase in gain on risk assurance liabilities under newly implemented accounting standards and the reversal of credit impairment loss due to asset quality improvement. The entire outstanding balance of financing transactions we facilitated have reduced from RMB25.6 billion as of December 31, 2022 to RMB20.7 billion as of March 31, 2023, with our N1 plus and N3 plus percentages falling to 2.33% and 1.29 percent respectively. We anticipate that the ongoing reduction in our outstanding balance of financing transactions together with our robust balance sheet will provide significant support for Cango's healthy long term growth prospects. Next, I would like to provide some specifics on the significant progress we've achieved with our company. Let's begin by discussing the new car trading transactions. Speaker 100:07:02The Q1 is typically considered the off season for automobile sales and when combined with macroeconomic and industry challenges, the overall market remains subdued. Nevertheless, our new car trading transactions business demonstrated a robust performance in the Q1, exhibiting enhanced operational capabilities and efficiency. During this period, a total of 3,867 cars were sold on Cango Haoche, maintaining stability compared to Q4 2022. As of March 31, 2023, the total number of dealers participating in Cango Haoche rose to 10,469 marking a 40.8% increase year on year. By the end of the Q1, the Cango Haozhe app had accumulated over 877,000 page views and attracted more than 78,000 unique visitors. Speaker 100:08:35Our distinctive vehicle inventory advantage has significantly contributed to the success of Cango Huoce, which has been only received by dealers since its inception. Leveraging our vehicle inventory, we have concentrated on our commitment to deliver superior service to dealers through a diverse range of high quality offerings. Since the start of this year, we have further refined our services to accurately address the challenges and unique requirements of small and medium sized dealers, equipping them with effective support to grow their business and achieve profitability. In mid February, Cango Hao Che introduced a new membership service. This incentive based program merges a membership rebate policy with core dealer tiers aiming to boost the repurchase rate of service products and foster dealer engagement. Speaker 100:10:11In addition to enhance our online service efficiency, we introduced an intelligent AI customer service on Cango Haoche in April. This 20 fourseven service has not only significantly improved our service quality for dealers and increased their satisfaction rates, but also boosted boosted our operational capabilities and efficiency. Moreover, Kango Hao Che's multi store model was specifically designed to foster horizontal expansion by attracting more high quality third party auto service providers to open online stores. In April, Cango Hao Che sold the launch of its first online store by 3rd party service provider JL Car Tuning. We anticipate the introduction of auto accessories boutique stores in the second half of twenty twenty three, empowering dealers to better serve and retain customers with a diverse range of products and services. Speaker 100:11:25Moving forward, fueled by big data and digitalization, Cango Haoche will persist in deepening its multi store expansion strategy, welcoming more upstream and downstream participants from the auto transaction value chain to join us. In doing so, we aim to fully actualize resource sharing across industry by eliminating barriers between small and medium sized dealers and automotive service providers and achieving bidirectional or two way empowerment through digitalized service processes. Now let's shift our focus to used cars. Building on the success of the Cango You Car Mini program, which was introduced in May last year, the Cango You Car app was launched in early January this year. The app operates in tandem with the Mini program providing a seamless experience. Speaker 100:12:44Both the app and the Mini program have been specifically designed to offer comprehensive technology driven services that are more secure, reliable, diverse and efficient for used car dealers and individual used car owners alike. By refining these services, we have been able to better understand and cater to the unique needs of various industry players offering a one stop solution for all their requirements. Powered by our enhanced used car transaction services and optimized digital capabilities, Cango U Car now provides a range of functions, including historic vehicle condition reports, vehicle appraisals, online auctions, online car searches, used car listings, self operated used car inventory repurchases and other services such as logistics, financing and insurance. By the end of the Q1 of 2023, our network has included nearly 6,000 registered used car dealers across 1 179 cities in 21 I mean in 29 provinces nationwide. The accumulated page views and total unique visitors on the Cango U Car app and Mini program reached over 513,026,000, respectively, by the end of the Q1 of 2023. Speaker 100:15:23Maintaining a stable and abundant inventory as well as a transparent pricing structure are crucial for used car dealers. Thanks to our extensive dealer network across lower tier cities and decades of industry experience, we have ample sources of high quality used cars such as trading from our auto financing customers and repossessed cars from our asset management department. These represent unique advantages for our used car transaction services and specifically address one of the primary challenges for used car dealers. In addition to overdue customers, Kendall has potential inventory of approximately 20,000 used cars from customers whose payments ended normally each month. Powered by our enhanced capabilities in used car acquisition and transaction conversion, these potential inventory sources along with repossessed cars will further strengthen the competitive edge of Cango You Car in terms of used car resources. Speaker 100:17:02In May 4th year, Kangoo UCaa successfully obtained its online auction qualification with upgraded auction services in addition to auctioning individual and repossessed vehicles, all registered dealers nationwide can now list their used cars for B2B auction through our platform. As far as we know, this capability is the first of its kind available in the market. In other words, we can now provide all small and medium sized used car dealers with additional technology enabled sales channel enabling them to achieve better prices and faster inventory turnover. Vehicle inspection plays an important role in improving the used car transaction experience. We have last established in house technician teams to not only improve our capabilities, but also offer professional services to dealers and consumers, including vehicle condition checks, pricing and license verifications. Speaker 100:18:23In April of this year, we entered into a group level partnership with China Grand Auto to provide a suite of professional after sales services for all these used cars. Going forward, we will continue to accelerate digitalization and enhance our differentiated services in lower tier markets. These efforts will provide the foundation for Cango's sustainable growth. We remain committed to standardizing our offerings and deepening our penetration across the automotive value chain powered by big data and technological innovation. We will continue strengthening our competitive advantages across the supply chain, offering car transactions, aftermarket services and building a closed loop ecosystem. Speaker 100:19:42With these initiatives, Cango is well positioned for resilience as we strengthen our place in China's automotive industry evolution powered by Operator00:19:59Next, I Speaker 100:19:59will turn the call over to our Chief Financial Officer, Michael Zhang, for a review of the company's financial performance. Speaker 200:20:08Thanks, Jiayuan. Hello, everyone, and welcome to our Q1 2023 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are RMB terms and all percentage comparisons on a year over year basis. Our total revenues for the Q1 was $542,600,000 among which par trading transaction business delivered revenues of $429,800,000 further demonstrating its solid position as our major revenue drivers. Now let's move on to our costs and expenses during the quarter. Speaker 200:20:46Total operating costs and expenses in the Q1 of 2023 were $490,800,000 compared with 970 $6,800,000 in the same period of 2022. Cost of revenue in the Q1 of 2023 decreased to $480,500,000 from $687,000,000 in the same period 2022. As a percentage of total revenues, cost of revenue in the Q1 of 2023 was 88.6% compared with 87.2% in the same period 2022. Sales and marketing expenses in the Q1 of 2023 decreased to $12,500,000 from $53,800,000 in the same period 2022. As a percentage of total revenues, sales and marketing expenses in Q1 of 2023 was 2.3 percent compared with 6.8% in the same period of 2022. Speaker 200:21:44General and administrative expenses in the Q1 of 2023 decreased to $39,800,000 from $15,900,000 in the same period 2022. As a percentage of total revenues, general and administrative expenses in the Q1 of 2023 was 7 point 3% compared with 6.5% in the same period of 2022. Research and development expenses in the Q1 of 2023 decreased to $8,100,000 from $14,500,000 in the same period of 2022. As a percentage of total revenues, research and development expenses in the Q1 of 2023 was 1.5% compared with 1.8 percent in the same period 2022. Net gain on contingent risk assurance liabilities in the Q1 of 2023 was $1,600,000 The gain was recognized due to the release of obligations from the contingent aspect of the risk assurance liabilities. Speaker 200:22:48Net recovery on provision for credit losses in the Q1 of 2023 was 48 $600,000 The recovery was primarily due to the positive impact from the collections of financial receivables. We recorded income from operations of $51,800,000 in the Q1 of 20 23 compared with a loss of $189,100,000 in the same period 2022. Net income in the Q1 of 2023 was $78,800,000 Non GAAP adjusted net income in the Q1 of 2023 was $92,800,000 On a per share basis, basic and diluted net income per ADS in the Q1 of 2023 was $0.58 and $0.56 respectively. And non GAAP adjusted basic and diluted net income per ADS in the same period was 0.69 and 0.66 respectively. Moving on to our balance sheet. Speaker 200:23:54As of March 31, 2023, we had cash and cash equivalents of 696.6 $1,000,000 compared with $378,900,000 as of December 31, 2022. As of March 31, 2023, the company had a short term investment of $2,000,000,000 compared with RMB1.9 billion as of December 31, 2022. Looking ahead to the Q2 of 2023, we are now predicting our total revenues to be between $600,000,000 $650,000,000 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, we are now ready to take questions. Speaker 100:25:53Good morning. I have two questions. The first question is beginning this year, many OEMs suggested their strategies. What do you think of structural opportunities for NEVs, new energy vehicles and also internal combustion engine vehicles, in short, ICEVs? My second question is that the overdue ratios of Cango's financing facilitation business dropped. Speaker 100:26:14Is this a sign of reduced credit risk in the market and gradual economic recovery? Thank you. Thank you for your questions. About the first question, the automotive industry was sluggish in the Q1. According to China Passenger Car Association, retail sales of passenger vehicles decreased 13.4% year on year and consumer demand began slowing since late 2022 as incentives ended. Speaker 100:27:05The impact of China 6B emission standards and industry wide price competition further constrain consumer spending. Although NEV sales sold in Q4 2022, NEV penetration exceeded 30%. The CPCA forecast NEV penetration may reach 36% nationwide in 2023. And the recent Shanghai Auto Show, over 100 of the more than 150 new models launched were NEVs. In addition, government campaigns encouraging rural NE fee purchases and expanding charging stations there indicates lower tier markets over huge opportunity and potential for NEV sales, a growing trend. Speaker 100:28:35For ICEVs, the announcement in May that some ICEVs received a grace period under the China 6B emission standards mitigated some of the sales pressure for automakers. As of the end of Q1, the total outstanding balance of financing transactions we facilitated were RMB20.7 billion with our M1 plus and M3 plus ratios down to 2.33% and 1.29%, respectively, and our overdue ratios decreasing quarter over quarter. Overdue ratios dropped mainly because we strengthened our collection efforts of non performing assets, leading to a decrease in value of numerator and denominator for calculation where the loans were prepaid. By the end of March, our existing customers had already been paying made payments for around 2 years with an average of 14 months remaining on their prepayment contracts. This led to our lower overdue ratios from this customer cohort. Speaker 100:30:33While our outstanding balance of financing transactions continues to decrease, our risk exposures have been shrinking. The credit cycle and risk exposure of the entire market remain unclear. Therefore, we will remain cautious and prudent. Thank you. That's all for your questions from my side. Operator00:31:05Thank you. Your next question comes from Emerson Xu from Goldman Sachs. Please go ahead. Speaker 100:31:46Thank you. I have two questions as well. The first question is that the price war that began in March weighed on the whole industry. Could you please provide some covers around where the market is heading and your net moves for vehicle inventory? And the second question is that in addition to calculating transactions business, could you shed some light on the development of your other value adding services? Speaker 100:32:57Thank you for your questions. On your first question, China's automotive industry growth began moderating in 2019. With the pandemic's impact, recovery has been unstable and sluggish. The highly anticipated rebound has yet to materialize in the first half of twenty twenty three. According to the National Bureau of Statistics and Ministry of Finance, in April, retail sales of automotive consumer goods were RMB362 1,000,000,000, down 15.1 percent quarter over quarter. Speaker 100:33:30Collected vehicle purchase tax was RMB21.3 billion, down 9.7 percent quarter over quarter. And China Automobile Dealers Association data show that from January to April, the retail passenger vehicle sales was about RMB5.895 million, down 1.3% year on year. In summary, the auto market still faces considerable downward pressure with little evidence of recovery so Speaker 200:34:08far. Speaker 100:34:41Despite improvements in supply and demand, recovery on the demand side was too moderate for the new supply. Against this backdrop and coupled with the withdrawal of subsidies, Wuhan started a price war as production capacity resumed amid weak consumer demand. The inappropriate intervention by non market participants exacerbated the situation. The price war disrupted market order and impacted the used car market as well. Lower prices ultimately hindered rather than helped the situation. Speaker 100:35:38Early this year, we reduced inventory in anticipation of China 6B emission standards. This proved a very wise decision safeguarding us from auto market disruptions and losses. In the second half, we will maintain a low inventory level, enhance service and product functions, further refine our business management and upgrade the dealer experience as well as improve operational efficiency. On your second question, in addition to revenues from car sales, our services and products mainly aim to enhance the dealer experience. We hope these services will empower dealers, attract more small and medium sized dealers to our platform and generate more traffic. Speaker 100:36:56Going forward, we will leverage big data and technological innovations to refine our products, to refresh our service portfolio and offer more accessible and diversified functions so as to improve the dealer experience. And we believe that this will more effectively support small and medium sized dealers across lower tier markets. Operator00:37:24Thank you. Your next question comes from Ping Yu Wu from Citic Securities. Please go ahead. Speaker 100:38:30Thank you. I'm Soren, Citi Securities. I have two questions. The first question is that, yes indeed, in March April, the car market has not been performing very well. However, in May, based on data, we have seen some pickups in both the traffic to the stores as well as the car purchases. Speaker 100:38:47So what about in the lower tier markets? Have you observed any similar demand recovery in the lower tier markets? And that's my first question. And the second question is about the used car market. Well, based on what I have heard, I understand that the company mainly provides services and customers for used car purchases. Speaker 100:39:07Do I understand that in the right way? And also what about could you give us more colors on your plans for your used car business? And what are your thoughts on the used car market? Thank you. Thank you for your two questions. Speaker 100:39:48Let me take on the first question first. Overall economic indicators and total financing showed little improvement in April and May. So recovery in lower tier markets have just begun. Public data show that Tier 3 and Tier 4 city households disposable income was 17% to 18% below national average and rural households disposable income was 40% net of urban levels. According to CADA data, 51% of dealers reported declining transactions and 36.5% reported flat transactions and only 12.5% reported increased transactions. Speaker 100:41:05In lower tier markets, many dealers closed the stores while remaining dealers saw much lower sales volumes than expected. Our sales team interacting with the clients noted that consumers mostly postponed car purchases. On your second question on used car market, well, the reason new car price fall pushed the prices to all time lows causing rare but substantial depreciation in used car values. It has also impacted the used car market. The new car price war has led to a 5% drop in average used car prices in March and also 1.5 6,000,000 used car trades nationwide in March, up 7.4% quarter over quarter, a slower rate than in previous years. Speaker 100:42:49All in all, the used car market is All in all, the used car market is rapidly expanding due to favorable government policies encouraging used car businesses and also growth in the new car market increasing the supply of used cars. Despite COVID-nineteen's negative impact, the used car market saw steady growth overall. We believe the used car market will maintain sustainable long term growth due to government policy support and also increasing supply of used cars as the new car market expands. And at Cango, we launched Cango UCAR app in Q1. And this app, our office has been offering vehicle condition reports, evaluations, online auctions, car searches, listings, inventory purchases and also logistics and financing and insurance services. Speaker 100:44:14By the end of Q1, our dealer network included nearly 6,000 used car dealers in 179 cities across 29 provinces. Cango UCaa saw monthly active users above 35%, transactions doubling monthly from January and also 513,000 accumulated page views and 26,000 total unique visitors. And in April, Kangoyuka obtained online auction qualifications and we also upgraded the auction services. Now this upgrade allows individuals and repossessed vehicles to be auctioned and the all registered dealers nationwide to list the used cars for B2B auctions. Thank you. Operator00:45:29Thank you. We have no further questions Speaker 100:45:43Thank you all for your participation. That closes today's earnings call. Operator00:45:51Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCango Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) Cango Earnings HeadlinesCango Inc. Announces Sale of PRC Business Ahead of May 16 EGMApril 11, 2025 | tipranks.comAnalyzing Femto Technologies (NASDAQ:FMTO) and Cango (NYSE:CANG)April 11, 2025 | americanbankingnews.comMy prediction is coming trueWe've developed a surprisingly effective way to see which stocks could double during massive shake-ups, by using a secret we tested against every horrible thing that's happened to our financial system since 1991.April 20, 2025 | InvestorPlace (Ad)Cango Inc. Achieves 12% Growth in Bitcoin Production for March 2025April 7, 2025 | gurufocus.comCango Inc. Achieves 12% Growth in Bitcoin Production for March 2025April 7, 2025 | prnewswire.comCango Inc. divests PRC business operationsApril 5, 2025 | investing.comSee More Cango Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Cango? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Cango and other key companies, straight to your email. Email Address About CangoCango (NYSE:CANG) operates an automotive transaction service platform that connects dealers, original equipment manufacturers, financial institutions, car buyers, insurance brokers, and companies in the People's Republic of China. The company offers automobile trading solutions comprising car sourcing, transaction facilitation, logistics, and warehousing support for dealers through Cango Haoche app that offers new car transaction services, and Cango U-Car app that offers used-car transaction services. It also provides automotive financing facilitation services that include facilitating financing transactions from financial institutions to car buyers, which comprises credit origination, credit assessment, credit servicing, and delinquent asset management services; facilitating financing transactions of car purchases for car buyers; and after-market services to car buyers, which includes facilitating the sale of insurance policies from insurance brokers or companies. The company was founded in 2010 and is headquartered in Shanghai, the People's Republic of China.View Cango ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 3 speakers on the call. Operator00:00:00Good morning and good evening, everyone. Welcome to Chengdu Inc. 1st Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. The call is also being broadcast live on the company's IR website. Operator00:00:16Joining us today are Mr. Jianwen Lin, Chief Executive Officer and Mr. Yongniasheng, Chief Financial Officer of the company. Following management's prepared remarks, we will conduct the Q and 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 make forward looking statements. Operator00:00:40With that said, I am now turning the call over to Mr. Jean Yuan Lim, CEO of Cango. Speaker 100:00:55Hi, everyone, and welcome to Cango's Q1 2023 earnings call. Due to a variety of issues, notably COVID-nineteen, the automotive industry remains low throughout 2022. The macro economy began to show indications of steady recovery in 2023, the 1st year of a post pandemic era, laying a hopeful basis for a revival in China's auto sector. Despite this encouraging trend, the market remained weak in the Q1 due to constrained consumer spending caused by factors such as the spring festival holiday, the loss of national subsidies and the price war that began in March. According to China Passenger Car Association, retail sales volume of passenger vehicles declined 13.4% year on year in the Q1. Speaker 100:02:28We predict the overall passenger vehicle market to remain volatile into 2023 owing to persistent pressure from weaker market demand. Tango reacted promptly to changing macroeconomic and industry conditions by using our resources and constantly expanding our capacity to capture long term growth opportunities. Our Cango Haocha and the Cango Yuka apps are now fully operational showcasing our capacity to successfully develop a full service automotive transaction ecosystem centered on both new and used cars by refining our service capabilities and enhancing our operating skills. In the Q1 of 2023, our overall revenues were RMB540 1,000,000, down 31% year on year, but up 11% quarter on quarter. Revenues from car trading transactions were RMB430 1,000,000, accounting for 79% of total revenues, reinforcing our position as a strong growth engine. Speaker 100:05:03Our company's net income for the Q1 was RMB78 point 8 million primarily due to an increase in gain on risk assurance liabilities under newly implemented accounting standards and the reversal of credit impairment loss due to asset quality improvement. The entire outstanding balance of financing transactions we facilitated have reduced from RMB25.6 billion as of December 31, 2022 to RMB20.7 billion as of March 31, 2023, with our N1 plus and N3 plus percentages falling to 2.33% and 1.29 percent respectively. We anticipate that the ongoing reduction in our outstanding balance of financing transactions together with our robust balance sheet will provide significant support for Cango's healthy long term growth prospects. Next, I would like to provide some specifics on the significant progress we've achieved with our company. Let's begin by discussing the new car trading transactions. Speaker 100:07:02The Q1 is typically considered the off season for automobile sales and when combined with macroeconomic and industry challenges, the overall market remains subdued. Nevertheless, our new car trading transactions business demonstrated a robust performance in the Q1, exhibiting enhanced operational capabilities and efficiency. During this period, a total of 3,867 cars were sold on Cango Haoche, maintaining stability compared to Q4 2022. As of March 31, 2023, the total number of dealers participating in Cango Haoche rose to 10,469 marking a 40.8% increase year on year. By the end of the Q1, the Cango Haozhe app had accumulated over 877,000 page views and attracted more than 78,000 unique visitors. Speaker 100:08:35Our distinctive vehicle inventory advantage has significantly contributed to the success of Cango Huoce, which has been only received by dealers since its inception. Leveraging our vehicle inventory, we have concentrated on our commitment to deliver superior service to dealers through a diverse range of high quality offerings. Since the start of this year, we have further refined our services to accurately address the challenges and unique requirements of small and medium sized dealers, equipping them with effective support to grow their business and achieve profitability. In mid February, Cango Hao Che introduced a new membership service. This incentive based program merges a membership rebate policy with core dealer tiers aiming to boost the repurchase rate of service products and foster dealer engagement. Speaker 100:10:11In addition to enhance our online service efficiency, we introduced an intelligent AI customer service on Cango Haoche in April. This 20 fourseven service has not only significantly improved our service quality for dealers and increased their satisfaction rates, but also boosted boosted our operational capabilities and efficiency. Moreover, Kango Hao Che's multi store model was specifically designed to foster horizontal expansion by attracting more high quality third party auto service providers to open online stores. In April, Cango Hao Che sold the launch of its first online store by 3rd party service provider JL Car Tuning. We anticipate the introduction of auto accessories boutique stores in the second half of twenty twenty three, empowering dealers to better serve and retain customers with a diverse range of products and services. Speaker 100:11:25Moving forward, fueled by big data and digitalization, Cango Haoche will persist in deepening its multi store expansion strategy, welcoming more upstream and downstream participants from the auto transaction value chain to join us. In doing so, we aim to fully actualize resource sharing across industry by eliminating barriers between small and medium sized dealers and automotive service providers and achieving bidirectional or two way empowerment through digitalized service processes. Now let's shift our focus to used cars. Building on the success of the Cango You Car Mini program, which was introduced in May last year, the Cango You Car app was launched in early January this year. The app operates in tandem with the Mini program providing a seamless experience. Speaker 100:12:44Both the app and the Mini program have been specifically designed to offer comprehensive technology driven services that are more secure, reliable, diverse and efficient for used car dealers and individual used car owners alike. By refining these services, we have been able to better understand and cater to the unique needs of various industry players offering a one stop solution for all their requirements. Powered by our enhanced used car transaction services and optimized digital capabilities, Cango U Car now provides a range of functions, including historic vehicle condition reports, vehicle appraisals, online auctions, online car searches, used car listings, self operated used car inventory repurchases and other services such as logistics, financing and insurance. By the end of the Q1 of 2023, our network has included nearly 6,000 registered used car dealers across 1 179 cities in 21 I mean in 29 provinces nationwide. The accumulated page views and total unique visitors on the Cango U Car app and Mini program reached over 513,026,000, respectively, by the end of the Q1 of 2023. Speaker 100:15:23Maintaining a stable and abundant inventory as well as a transparent pricing structure are crucial for used car dealers. Thanks to our extensive dealer network across lower tier cities and decades of industry experience, we have ample sources of high quality used cars such as trading from our auto financing customers and repossessed cars from our asset management department. These represent unique advantages for our used car transaction services and specifically address one of the primary challenges for used car dealers. In addition to overdue customers, Kendall has potential inventory of approximately 20,000 used cars from customers whose payments ended normally each month. Powered by our enhanced capabilities in used car acquisition and transaction conversion, these potential inventory sources along with repossessed cars will further strengthen the competitive edge of Cango You Car in terms of used car resources. Speaker 100:17:02In May 4th year, Kangoo UCaa successfully obtained its online auction qualification with upgraded auction services in addition to auctioning individual and repossessed vehicles, all registered dealers nationwide can now list their used cars for B2B auction through our platform. As far as we know, this capability is the first of its kind available in the market. In other words, we can now provide all small and medium sized used car dealers with additional technology enabled sales channel enabling them to achieve better prices and faster inventory turnover. Vehicle inspection plays an important role in improving the used car transaction experience. We have last established in house technician teams to not only improve our capabilities, but also offer professional services to dealers and consumers, including vehicle condition checks, pricing and license verifications. Speaker 100:18:23In April of this year, we entered into a group level partnership with China Grand Auto to provide a suite of professional after sales services for all these used cars. Going forward, we will continue to accelerate digitalization and enhance our differentiated services in lower tier markets. These efforts will provide the foundation for Cango's sustainable growth. We remain committed to standardizing our offerings and deepening our penetration across the automotive value chain powered by big data and technological innovation. We will continue strengthening our competitive advantages across the supply chain, offering car transactions, aftermarket services and building a closed loop ecosystem. Speaker 100:19:42With these initiatives, Cango is well positioned for resilience as we strengthen our place in China's automotive industry evolution powered by Operator00:19:59Next, I Speaker 100:19:59will turn the call over to our Chief Financial Officer, Michael Zhang, for a review of the company's financial performance. Speaker 200:20:08Thanks, Jiayuan. Hello, everyone, and welcome to our Q1 2023 earnings call. Before I started to review our financials, please note that unless otherwise stated, all numbers are RMB terms and all percentage comparisons on a year over year basis. Our total revenues for the Q1 was $542,600,000 among which par trading transaction business delivered revenues of $429,800,000 further demonstrating its solid position as our major revenue drivers. Now let's move on to our costs and expenses during the quarter. Speaker 200:20:46Total operating costs and expenses in the Q1 of 2023 were $490,800,000 compared with 970 $6,800,000 in the same period of 2022. Cost of revenue in the Q1 of 2023 decreased to $480,500,000 from $687,000,000 in the same period 2022. As a percentage of total revenues, cost of revenue in the Q1 of 2023 was 88.6% compared with 87.2% in the same period 2022. Sales and marketing expenses in the Q1 of 2023 decreased to $12,500,000 from $53,800,000 in the same period 2022. As a percentage of total revenues, sales and marketing expenses in Q1 of 2023 was 2.3 percent compared with 6.8% in the same period of 2022. Speaker 200:21:44General and administrative expenses in the Q1 of 2023 decreased to $39,800,000 from $15,900,000 in the same period 2022. As a percentage of total revenues, general and administrative expenses in the Q1 of 2023 was 7 point 3% compared with 6.5% in the same period of 2022. Research and development expenses in the Q1 of 2023 decreased to $8,100,000 from $14,500,000 in the same period of 2022. As a percentage of total revenues, research and development expenses in the Q1 of 2023 was 1.5% compared with 1.8 percent in the same period 2022. Net gain on contingent risk assurance liabilities in the Q1 of 2023 was $1,600,000 The gain was recognized due to the release of obligations from the contingent aspect of the risk assurance liabilities. Speaker 200:22:48Net recovery on provision for credit losses in the Q1 of 2023 was 48 $600,000 The recovery was primarily due to the positive impact from the collections of financial receivables. We recorded income from operations of $51,800,000 in the Q1 of 20 23 compared with a loss of $189,100,000 in the same period 2022. Net income in the Q1 of 2023 was $78,800,000 Non GAAP adjusted net income in the Q1 of 2023 was $92,800,000 On a per share basis, basic and diluted net income per ADS in the Q1 of 2023 was $0.58 and $0.56 respectively. And non GAAP adjusted basic and diluted net income per ADS in the same period was 0.69 and 0.66 respectively. Moving on to our balance sheet. Speaker 200:23:54As of March 31, 2023, we had cash and cash equivalents of 696.6 $1,000,000 compared with $378,900,000 as of December 31, 2022. As of March 31, 2023, the company had a short term investment of $2,000,000,000 compared with RMB1.9 billion as of December 31, 2022. Looking ahead to the Q2 of 2023, we are now predicting our total revenues to be between $600,000,000 $650,000,000 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, we are now ready to take questions. Speaker 100:25:53Good morning. I have two questions. The first question is beginning this year, many OEMs suggested their strategies. What do you think of structural opportunities for NEVs, new energy vehicles and also internal combustion engine vehicles, in short, ICEVs? My second question is that the overdue ratios of Cango's financing facilitation business dropped. Speaker 100:26:14Is this a sign of reduced credit risk in the market and gradual economic recovery? Thank you. Thank you for your questions. About the first question, the automotive industry was sluggish in the Q1. According to China Passenger Car Association, retail sales of passenger vehicles decreased 13.4% year on year and consumer demand began slowing since late 2022 as incentives ended. Speaker 100:27:05The impact of China 6B emission standards and industry wide price competition further constrain consumer spending. Although NEV sales sold in Q4 2022, NEV penetration exceeded 30%. The CPCA forecast NEV penetration may reach 36% nationwide in 2023. And the recent Shanghai Auto Show, over 100 of the more than 150 new models launched were NEVs. In addition, government campaigns encouraging rural NE fee purchases and expanding charging stations there indicates lower tier markets over huge opportunity and potential for NEV sales, a growing trend. Speaker 100:28:35For ICEVs, the announcement in May that some ICEVs received a grace period under the China 6B emission standards mitigated some of the sales pressure for automakers. As of the end of Q1, the total outstanding balance of financing transactions we facilitated were RMB20.7 billion with our M1 plus and M3 plus ratios down to 2.33% and 1.29%, respectively, and our overdue ratios decreasing quarter over quarter. Overdue ratios dropped mainly because we strengthened our collection efforts of non performing assets, leading to a decrease in value of numerator and denominator for calculation where the loans were prepaid. By the end of March, our existing customers had already been paying made payments for around 2 years with an average of 14 months remaining on their prepayment contracts. This led to our lower overdue ratios from this customer cohort. Speaker 100:30:33While our outstanding balance of financing transactions continues to decrease, our risk exposures have been shrinking. The credit cycle and risk exposure of the entire market remain unclear. Therefore, we will remain cautious and prudent. Thank you. That's all for your questions from my side. Operator00:31:05Thank you. Your next question comes from Emerson Xu from Goldman Sachs. Please go ahead. Speaker 100:31:46Thank you. I have two questions as well. The first question is that the price war that began in March weighed on the whole industry. Could you please provide some covers around where the market is heading and your net moves for vehicle inventory? And the second question is that in addition to calculating transactions business, could you shed some light on the development of your other value adding services? Speaker 100:32:57Thank you for your questions. On your first question, China's automotive industry growth began moderating in 2019. With the pandemic's impact, recovery has been unstable and sluggish. The highly anticipated rebound has yet to materialize in the first half of twenty twenty three. According to the National Bureau of Statistics and Ministry of Finance, in April, retail sales of automotive consumer goods were RMB362 1,000,000,000, down 15.1 percent quarter over quarter. Speaker 100:33:30Collected vehicle purchase tax was RMB21.3 billion, down 9.7 percent quarter over quarter. And China Automobile Dealers Association data show that from January to April, the retail passenger vehicle sales was about RMB5.895 million, down 1.3% year on year. In summary, the auto market still faces considerable downward pressure with little evidence of recovery so Speaker 200:34:08far. Speaker 100:34:41Despite improvements in supply and demand, recovery on the demand side was too moderate for the new supply. Against this backdrop and coupled with the withdrawal of subsidies, Wuhan started a price war as production capacity resumed amid weak consumer demand. The inappropriate intervention by non market participants exacerbated the situation. The price war disrupted market order and impacted the used car market as well. Lower prices ultimately hindered rather than helped the situation. Speaker 100:35:38Early this year, we reduced inventory in anticipation of China 6B emission standards. This proved a very wise decision safeguarding us from auto market disruptions and losses. In the second half, we will maintain a low inventory level, enhance service and product functions, further refine our business management and upgrade the dealer experience as well as improve operational efficiency. On your second question, in addition to revenues from car sales, our services and products mainly aim to enhance the dealer experience. We hope these services will empower dealers, attract more small and medium sized dealers to our platform and generate more traffic. Speaker 100:36:56Going forward, we will leverage big data and technological innovations to refine our products, to refresh our service portfolio and offer more accessible and diversified functions so as to improve the dealer experience. And we believe that this will more effectively support small and medium sized dealers across lower tier markets. Operator00:37:24Thank you. Your next question comes from Ping Yu Wu from Citic Securities. Please go ahead. Speaker 100:38:30Thank you. I'm Soren, Citi Securities. I have two questions. The first question is that, yes indeed, in March April, the car market has not been performing very well. However, in May, based on data, we have seen some pickups in both the traffic to the stores as well as the car purchases. Speaker 100:38:47So what about in the lower tier markets? Have you observed any similar demand recovery in the lower tier markets? And that's my first question. And the second question is about the used car market. Well, based on what I have heard, I understand that the company mainly provides services and customers for used car purchases. Speaker 100:39:07Do I understand that in the right way? And also what about could you give us more colors on your plans for your used car business? And what are your thoughts on the used car market? Thank you. Thank you for your two questions. Speaker 100:39:48Let me take on the first question first. Overall economic indicators and total financing showed little improvement in April and May. So recovery in lower tier markets have just begun. Public data show that Tier 3 and Tier 4 city households disposable income was 17% to 18% below national average and rural households disposable income was 40% net of urban levels. According to CADA data, 51% of dealers reported declining transactions and 36.5% reported flat transactions and only 12.5% reported increased transactions. Speaker 100:41:05In lower tier markets, many dealers closed the stores while remaining dealers saw much lower sales volumes than expected. Our sales team interacting with the clients noted that consumers mostly postponed car purchases. On your second question on used car market, well, the reason new car price fall pushed the prices to all time lows causing rare but substantial depreciation in used car values. It has also impacted the used car market. The new car price war has led to a 5% drop in average used car prices in March and also 1.5 6,000,000 used car trades nationwide in March, up 7.4% quarter over quarter, a slower rate than in previous years. Speaker 100:42:49All in all, the used car market is All in all, the used car market is rapidly expanding due to favorable government policies encouraging used car businesses and also growth in the new car market increasing the supply of used cars. Despite COVID-nineteen's negative impact, the used car market saw steady growth overall. We believe the used car market will maintain sustainable long term growth due to government policy support and also increasing supply of used cars as the new car market expands. And at Cango, we launched Cango UCAR app in Q1. And this app, our office has been offering vehicle condition reports, evaluations, online auctions, car searches, listings, inventory purchases and also logistics and financing and insurance services. Speaker 100:44:14By the end of Q1, our dealer network included nearly 6,000 used car dealers in 179 cities across 29 provinces. Cango UCaa saw monthly active users above 35%, transactions doubling monthly from January and also 513,000 accumulated page views and 26,000 total unique visitors. And in April, Kangoyuka obtained online auction qualifications and we also upgraded the auction services. Now this upgrade allows individuals and repossessed vehicles to be auctioned and the all registered dealers nationwide to list the used cars for B2B auctions. Thank you. Operator00:45:29Thank you. We have no further questions Speaker 100:45:43Thank you all for your participation. That closes today's earnings call. Operator00:45:51Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.Read morePowered by