Cango Inc – ADR (NYSE: CANG) stock fell over 12.7% on 3^rd September, 2019 (as of 4:00 pm GMT-4; Source: Google finance) as the company in the second quarter of FY 19 has reported 46.4% increase in the net income to RMB94.6 million (US$13.8 million). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2019 were both RMB0.75 (US$0.11). As of June 30, 2019, the Company had cash and cash equivalents of RMB1,609.6 million (US$234.5 million), compared to RMB2,178.0 million as of March 31, 2019. The change was due to the fact that the Company invested certain amount of cash in term deposit over three months for better cash-on-cash return. Income from operations was RMB84.3 million (US$12.3million) in the second quarter of 2019, representing a year-over-year increase of 17.3% from RMB71.8 million in the corresponding period of 2018.

Moreover, total revenues in the second quarter of 2019 were RMB336.3 million (US$49.0 million), representing a 42.3% increase from RMB236.3 million in the corresponding period of 2018. This increase was primarily driven by the Company’s strategies to rejuvenate growth, increased revenue contribution from its after-market services business, and a significant increase in loan facilitation volume from the Company’s business partnership with ICBC. Revenues from after-market services facilitation in the second quarter of 2019 were RMB35.9 million (US$5.2 million), compared to RMB12.3 million in the same period of last year.

Total operating cost and expenses in the second quarter of 2019 were RMB252.0 million (US$36.7 million), compared to RMB164.4 million in the corresponding period of 2018. Cost of revenue in the second quarter of 2019 rose by 55% to RMB125.8 million (US$18.3 million) from RMB81.2 million in the corresponding period of 2018. The increase was primarily due to the Company’s business expansion and was in line with the increase in total revenues in the second quarter of 2019.  Cost of revenue as a percentage of total revenues in the second quarter of 2019 increased to 37.4% from 34.4% in the corresponding period of 2018. This was primarily due to increases in the amount of incentives paid to employees per individual financing transaction. Sales and marketing expenses in the second quarter of 2019 rose by 20.3% to RMB44.5 million (US$6.5 million) from RMB37.0 million in the corresponding period of 2018.

For the third quarter of 2019, the company expects total revenues to be between RMB300 million and RMB325 million.