Cango Inc (NYSE:CANG) Q2 2020 Earnings Conference Call - Final Transcript
Aug 24, 2020 • 09:00 pm ET
Good morning, and good evening everyone. Welcome to Cango, Inc.'s Second Quarter 2020 Earnings Conference Call. [Operator Instructions] This call is also being broadcast live on the Company's IR website.
Joining us today are Mr. Jiayuan Lin, Chief Executive Officer; and Mr. Michael Zhang, Chief Financial Officer of the Company. Following management's prepared remarks, we will conduct a 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 make forward-looking statements. Please note this call is being recorded.
With that, I will now turn the call over to Mr. Jiayuan Lin, CEO of Cango. Please go ahead, sir.
[Foreign Speech] Hello, everyone, welcome to Cango's 2020 Q2 Earnings Call.
[Foreign Speech] The entire industry has been abruptly and dramatically impacted by COVID-19 since the beginning of 2020. The difficult conditions persisted through the end of the second quarter and the recovery was slower than our previous expectations. The low- and mid-range market segments, as well as domestic brands were impacted more than the higher-end segment and joint venture brands. Despite the unfavorable conditions, we continue to make meaningful progress in our strategic initiatives. It is worth noting that our insurance facilitation services delivered very strong performance in the second quarter.
[Foreign Speech] In Q2, we booked RMB274.1 million in revenue, exceeding the higher end of the guidance range by approximately 10%, in particular, aftermarket services revenue grew to RMB52.5 million, accounting for 19.1% of the total. Thanks to our efforts to optimize the cost structure and improve operating efficiency, the gross margin stayed at a healthy level in the second quarter. We also regained positive operating income mainly attributable to effective cost control and improved asset quality as a result of the post-loan management. Overall speaking, our net profit increased to RMB70.2 million.
[Foreign Speech] In the second quarter, we continued to build on our core auto loan facilitation business. The aftermarket services facilitation also achieved an outstanding performance, mainly fueled by the strong growth of insurance facilitation business, particularly the car insurance business that we have rigorously promoted grew significantly on a sequential basis, completing 18,000 transactions in the second quarter, more than double the previous quarter. In addition, our health insurance products continued to gain in popularity and we recorded more than 10,000 transactions in the second quarter. Insurance facilitation, as a whole, is no longer a sideline business, instead they hold promising growth potential as an independent business line. Looking forward, we will continue to explore more channels and categories to meet the increasingly diverse needs of consumers. In addition, we will expand our insurance product portfolio to include loans that have higher transaction value.
[Foreign Speech] Moving to our asset quality, in the first quarter, the COVID-19 pandemic had led to an uptick in our delinquency rate. However, in the second quarter, the overall delinquency has improved, thanks to redemption of economic activities and as well as our