Cango Inc – ADR (NYSE: CANG) stock surged 14.68% on July 1st, 2019 and corrected over 5.3% on 2nd July, 2019 (As of 9:36 am GMT-4; Source: Google finance). The company had recently authorized a share repurchase program under which the Company may repurchase up to US$10 million worth of its outstanding shares from June 5, 2019.
On the other hand, CANG has reported 41.3% rise in the total revenue to RMB351.7 million (US$52.4 million) compared to the corresponding period of 2018. The increase was primarily due to the Company’s strategies to rejuvenate growth and the increased contribution from its after-market services business. Revenues from after-market services facilitation in the first quarter of 2019 were RMB39.8 million (US$5.9 million), compared to RMB4.4 million in the same period of last year. Net income was RMB74.4 million (US$11.1 million) in the first quarter of 2019, compared to RMB84.0 million in the corresponding period of 2018. Non-GAAP adjusted net income was RMB89.6 million (US$13.4 million), compared to RMB84.0 million in the corresponding period of 2018, representing a year-over-year increase of 6.7%. As of March 31, 2019, the Company had cash and cash equivalents of RMB2,178.0 million (US$324.5 million), compared to RMB2,912.9 million as of December 31, 2018.
Moreover, in the first quarter of 2019, eesearch and development expenses increased to RMB13.3 million (US$2.0 million) from RMB6.5 million in the corresponding period of 2018. Research and development expenses as a percentage of total revenues in the first quarter of 2019 increased to 3.8% from 2.6% in the corresponding period of 2018. The increase was mostly on the back of the expansion of the Company’s research and development team, as well as increases in their salaries and benefits. Cost of revenue in the first quarter of 2019 rose by 61.8% to RMB130.8 million (US$19.5 million) from RMB80.9 million in the corresponding period of 2018. Cost of revenue as a percentage of total revenues in the first quarter of 2019 expanded to 37.2% from 32.5% in the corresponding period of 2018. This was primarily driven by increases in the average amount of commissions paid to dealers per individual financing transaction. Sales and marketing expenses in the first quarter of 2019 increased by 30.8% to RMB45.5 million (US$6.8 million) from RMB34.8 million in the corresponding period of 2018. The increase was due to increases in staff compensation.
For the second quarter of 2019, the Company expects total revenues to be in the range of RMB290 million to RMB315 million.