Earnings call transcript: Cango Inc. Q2 2025 reveals unexpected loss

Cango Inc. reported a significant loss for Q2 2025, with earnings per share (EPS) at -2.76 USD, far below the forecasted -0.23 USD. The revenue also fell short, reaching only 139.84 million USD against an expected 1.44 billion USD. Following the earnings announcement, Cango’s stock price fell by 2.47% to close at 4.85 USD, reflecting investor disappointment. According to InvestingPro data, despite recent challenges, the company maintains a GOOD financial health score of 2.58, with several positive indicators among its 12 key ProTips available to subscribers.

Key Takeaways

• Cango’s Q2 2025 EPS was significantly below expectations, with an 1100% negative surprise.
• Revenue underperformance was notable, with a 90.29% shortfall.
• The company’s transition to a Bitcoin mining focus is a major strategic shift.
• Cango plans to implement renewable energy projects and expand AI capabilities.
• Stock price declined by 2.47% post-announcement, indicating negative investor sentiment.

Company Performance

Cango Inc. has undergone a major transformation, shifting from an automobile trading platform to a Bitcoin mining company. This strategic pivot has positioned the company as a significant player in the Bitcoin mining industry, with a computing power of 50 exahash, representing approximately 6% of the global network hash rate. Despite these advancements, the financial performance in Q2 2025 was hampered by substantial one-off accounting adjustments, leading to a net loss of 2.1 billion RMB.

Financial Highlights

• Total revenues: 1 billion RMB
• Bitcoin mining revenue: 989.4 million RMB
• Automobile trading income: 12.4 million RMB
• Net loss: 2.1 billion RMB
• Adjusted EBITDA: 710.1 million RMB
• Cash and cash equivalents: 843.8 million RMB

Earnings vs. Forecast

Cango’s Q2 2025 EPS of -2.76 USD was significantly below the forecasted -0.23 USD, resulting in an 1100% negative surprise. Revenue also missed expectations by 90.29%, coming in at 139.84 million USD compared to the anticipated 1.44 billion USD. This substantial miss highlights the challenges faced during the company’s strategic transition.

Market Reaction

Following the earnings release, Cango’s stock price decreased by 2.47%, closing at 4.85 USD. The stock has experienced volatility, with its 52-week range spanning from 1.4 USD to 9.66 USD. Despite recent volatility, InvestingPro analysis shows the stock has delivered an impressive 179.88% return over the past year, with a 37.5% gain in the last six months. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. For deeper insights into valuation opportunities, investors can explore the Most Undervalued Stocks list on InvestingPro.

Outlook & Guidance

Cango is focused on maximizing its current 50 exahash capacity and plans to implement efficiency upgrades. The company is exploring renewable energy storage projects and aims to develop near-zero cost mining operations. Financial metrics from InvestingPro indicate the company holds more cash than debt on its balance sheet, with a current ratio of 1.41, though rapid cash burn remains a concern. Subscribers to InvestingPro can access the comprehensive Pro Research Report, offering detailed analysis of Cango’s operational efficiency and financial stability among 1,400+ top stocks. Additionally, Cango is considering expansion into AI high-performance computing. The reporting currency will change from RMB to USD in Q3 2025, aligning with its international operations.

Executive Commentary

Paul Yu, CEO, stated, "We have accepted temporary accounting adjustments to secure lasting competitive advantages." This indicates a strategic focus on long-term growth over short-term financial performance. Michael Zhang, CFO, emphasized, "We believe the most sustainable way to achieve fair value is through continuous development of our core business."

Risks and Challenges

• The substantial net loss due to one-off accounting adjustments poses a financial risk.
• The transition to Bitcoin mining involves significant operational and market risks.
• Increasing global competition in the Bitcoin mining industry could impact profitability.
• Potential policy risks related to U.S. infrastructure investments could affect operations.
• The high cost of Bitcoin mining may challenge profitability if Bitcoin prices fluctuate.

Q&A

Analysts raised questions about Cango’s computing power expansion strategy and potential policy risks in U.S. infrastructure investments. The company clarified its approach to mining site acquisitions and operational efficiency improvement plans, indicating a focus on strategic growth and cost management.

Full transcript - Cango Inc (CANG) Q2 2025:

Earnings Call Moderator: Good morning and good evening, everyone. Welcome to Cango Inc.’s second quarter 2025 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 IR website and is being recorded. Joining us today are Mr. Paul Yu, Chief Executive Officer, and Mr. Michael Zhang, Chief Financial Officer of the company. Following management’s prepared remarks, we will conduct a question-and-answer 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. With that said, I will now turn the call over to Mr. Paul Yu, CEO of Cango. Please go ahead, sir.

Paul Yu, Chief Executive Officer, Cango Inc.: Thank you. Good afternoon, and thank you for joining Cango Inc.’s second quarter 2025 earnings call. Today marks an important milestone as we report our first quarter following Cango Inc.’s strategic transformation. This isn’t just another quarterly update, it showcases our complete transformation into a leading Bitcoin mining company. In just nine months, we’ve scaled to 50 exahash of computing power, placing us firmly among the world’s top miners. As part of this transformation, we recently completed a governance and leadership restructuring, onboarding a senior management team with deep expertise across digital asset infrastructure, finance, and energy investments. This leadership team gives us the right mix of skills to hit the ground running and execute our next phase of growth. I’m optimistic about what we can achieve together as we enter a new chapter in the journey.

Today, I will walk you through how our strategic execution has fundamentally repositioned us to lead the industry over the long term. Let me start with our financials, where we generated RMB 1 billion in total revenue in the second quarter of 2025, with Bitcoin mining contributing RMB 989.4 million of that amount. However, you can see we incurred a net loss, which reflects two accounting adjustments that temporarily mask our operational strengths and should be billed as essential investments in our foundation for the future. First, our clean exit from China. We completed the $352 million divestiture of our legacy China asset in May, which resulted in a one-off loss from discontinued operations. Second, as a part of the acquisition of mining equipment last November, we purchased 18 exahash of mining capacity through a share-based payment.

By the time the equipment was delivered in June, our stock price had nearly doubled, triggering a non-cash accounting adjustment in accordance with applicable fair value accounting standards. These were strategic decisions we took into consideration to rapidly build competitive scale and sharpen our focus. The important story is what lies beneath. Excluding this one-off adjustment, adjusted EBITDA for the quarter was RMB 710.1 million, clear evidence of the underlying strength of our Bitcoin mining business. Now, let me build the progress we’ve made in the transformative quarter. We’ve already achieved one of the industry’s largest scales at 50 exahash, representing approximately 6% of the global network’s hash rate as of June 30, 2025. July’s Bitcoin production reached 650.5 BTC, up 44.4%, or approximately 200 BTC increase from June, primarily driven by the full deployment of the 50 exahash mining equipment since the end of June.

In addition, in August, we strategically acquired a 50-megawatt mining site in Georgia, a move that will reduce power costs and enhance operational stability, and lay the groundwork for future expansion. We maintain a fortress balance sheet with $118 million in cash and cash equivalents as of June 30, providing ample capital to fund our strategic expansion. Our asset-led strategy provides a distinct advantage. By acquiring plug-and-play mining rigs with minimal upfront capital, we are able to scale more quickly and cost-effectively than vertically integrated competitors. Although this model resulted in higher cash costs per BTC of $83,091 during the quarter, our all-in cost remained competitive at $98,636 per BTC. This is primarily due to significantly reduced depreciation expenses from low equipment acquisition costs, which offset elevated power expenses.

As a result, our capital efficiency supports a solid return on capital employed and ensures resilience across market cycles without the burden of heavy equipment financing. Additionally, our geographically diversified footprint across North and South America, Middle East, and Africa helps mitigate regional risks while sustaining industry-leading efficiency. Our roadmap forward is clear and purposeful. In the near term, we will maximize value from our 50 exahash of mining capacity by implementing efficiency upgrades and replicating the low-cost operational model of our Georgia site. Looking to the midterm, we plan to pilot new renewable energy storage projects aimed at achieving near-zero cost mining operations while simultaneously retrofitting select facilities to support HPC applications. Over the long term, we are ultimately building a dynamic computing platform that intelligently balances Bitcoin mining and AI workloads, all powered by our expanding energy expertise.

This quarter’s results reflect a company making bold and strategic moves. We have accepted temporary accounting adjustments to secure lasting competitive advantages, namely meaningful skill, cost-effective infrastructure, and a focused commitment on pure-play, high-value computing. With this strong foundation firmly in place and a clear path to compounding value, I will never be more confident in Cango’s future. Before I turn the call to Michael Zhang, our CFO, to take you through our financial results for the quarter in more detail, let me quickly reveal our legacy business. We remain focused on lean asset-led operations for our used car export platform, AutoCango.com. Since its launch, our platform has attracted over 6 million visits and surpassed 456,000 registered users. It now hosts more than 800,000 vehicles, listing with 70,000 different models on offer, connecting China’s used car market with international buyers seeking quality inventory.

We continue to see steady growth opportunities in this segment in the future. With that, I will turn the call to Michael.

Michael Zhang, Chief Financial Officer, Cango Inc.: Thanks, Paul. Hello, everyone, and welcome to our second quarter 2025 earnings call. Before I start to review our financials, please note that unless otherwise stated, all numbers are in RMB terms. Total revenues in the second quarter of 2025 were RMB 1 billion. Revenue from the Bitcoin mining business in the second quarter of 2025 was RMB 989.4 million, with a total of 1,404.4 Bitcoins mined in the second quarter of 2025. The average cost to mine Bitcoins, including depreciation of mining machines, was $83,091 USD per coin, with all-in costs at $98,636 USD per coin during the quarter. Revenue from automobile trading income was RMB 12.4 million in the second quarter of 2025. Now let’s move on to our cost and expenses during the quarter. Cost of revenue, exclusive of depreciation and amortization in the second quarter of 2025, was RMB 836.9 million.

Depreciation and amortization in the second quarter of 2025 was RMB 156.4 million. General and administrative expenses in the second quarter were RMB 21.7 million. Due to one-off loss from discontinued operations and non-cash impairment loss, we recorded an operating loss of RMB 1.3 billion and a net loss of RMB 2.1 billion in the second quarter of 2025, respectively. Excluding the impairment loss and one-off loss from discontinued operations, we recorded an adjusted EBITDA of RMB 710.1 million in the second quarter of 2025, compared with RMB 5.4 million in the same period of last year. Moving on to our balance sheet, as of June 30, 2025, we had cash and cash equivalents of RMB 843.8 million.

Starting with our second quarter 2025 results, we intend to change the reporting currency of our consolidated financial statement from RMB to US dollars, reflecting the profile of our revenue and profit after the divestiture of our China asset in May 2025. The change is expected to be effective from the company’s results for the third quarter of 2025, which will be reported in US dollars. This concludes our prepared remarks. Overall, we are now ready to take questions.

Earnings Call Moderator: Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you’d like to remove yourself from queue, please press star then two. We do ask that you please pick up your handset before pressing the keys. Once again, that is star then one if you have a question. Today’s first question comes from Emerson Zhao with Goldman Sachs. Please go ahead.

Emerson Zhao, Analyst, Goldman Sachs: Thank you, management team. This is Emerson from Goldman Sachs. I have two questions. Number one, could you outline your roadmap for computing power over the next 12 months, as well as the capital expenditure plans? For example, whether you will continue to acquire mining sites or order new miners. Number two, we understand the previous announcements mentioned your strategic direction of green energy plus storage. Could you update us when is the new progress expected? Thank you.

Michael Zhang, Chief Financial Officer, Cango Inc.: Thank you, Emerson, for attending the conference call. I will take the first question, and our CEO, Paul, will take the second one. For the first question, for computing power, our goal for the second half of the year is to fully unlock the value of the current 50 exahash computing power. This will be achieved by improving operational efficiency, upgrading machines, and selective acquisition of mining sites with low electricity costs. One example of such a site is our newly acquired mining facility in the state of Georgia. Of course, if suitable opportunities come up, we will be open to expanding computing power through M&A as well. As for capital allocation, we will continue to maintain strict capital expenditure discipline. We are also evaluating opportunities in areas including computing power expansion, green energy storage, AI HPC center, and more for long-term growth.

For the second half of the year, in particular, the focus will be on selective mining site acquisition. Specifically, we are looking at sites that significantly reduce electricity costs, enhance energy security, and support the stability of our overall operations. More importantly, by operating this infrastructure, we will get critical hands-on management expertise. We believe this will provide a solid foundation and a strategic flexibility for future business expansion into the energy plus HPC sector. Thank you.

Paul Yu, Chief Executive Officer, Cango Inc.: Regarding the green energy plus storage, it is one of our most important strategic objectives. We are advancing through two parallel paths. First, we are actively seeking M&A targets globally for rapid deployment. Second, we will develop critical hands-on management experience by investing in pilot projects that are developed with experienced partners. Thank you.

Earnings Call Moderator: Thank you. Our next question today comes from Pingyue Wu with CITIC Securities. Please go ahead.

Pingyue Wu, Analyst, CITIC Securities: Thank you for taking my question. This is Pingyue Wu from CITIC Securities. I have also two questions. The first is, the company previously mentioned to follow a light asset model, and we also acquire mining sites. Does it mean that the company is gradually shifting towards an integrated operation? My second question is, is there a plan to acquire more low electricity cost mining sites in the next phases? Are low-cost regions such as South America and the Middle East prioritized, and what are the screening criteria? Thank you.

Paul Yu, Chief Executive Officer, Cango Inc.: Thank you for your question. Acquiring those mining sites isn’t solely about reducing costs. Beyond cost reduction, there are three strategic benefits. First, stable energy supply. Supporting our existing large-scale computing power requires reliable and consistent energy sources. Second, infrastructure and operational expertise. Again, critical operational experience that leads a solid foundation for upgrading our capacities. Third, creating a foundation for strategic transformation. By securing low-cost power and scalable sites, we are building the infrastructure needed for future transformation into AI data centers. With these benefits in mind, our criteria for selecting mining sites also fall under three pillars: low-cost electricity to maintain business competitiveness, sufficient capacity and power redundancy to support future upgrading, and stronger regional grid stability to handle high load demands after transformation.

Our asset-led strategy avoids the risks of CapEx-heavy mining models, and by managing energy sources and scalable sites, we achieve dual strategic positioning for both current business support and future AI transformation. In our view, selectively acquiring mining sites doesn’t change our capital-led strategy in mining business. Instead, it enhances our operational efficiency and gradually creates a pathway towards green energy and AI computing centers. Regarding the plan to acquire more mining facilities, in general, we will continue to monitor M&A opportunities for energy projects in line with the company’s strategic transformation needs. In mining site selection, we conduct in-depth evaluations based on actual operational performance, detailed cost-benefit calculations, and potential strategic synergies. Regionally, the U.S. is our current priority. Most of our miners and hosting sites are already located there, and we want to strengthen our local operations and market position.

The Middle East, a region with attractive energy prices and policy stability, is also within our scope of consideration. For specific targets, we will focus on factors such as local climates, energy prices, and policy stability. We tend to prioritize acquiring sites where we already have long-term stable collaborative relationships, good operating conditions, and sustained low power cost advantages. Thank you.

Earnings Call Moderator: Thank you. As a reminder, if you would like to ask a question, please press star then one. Our next question today comes from Julie Chi with CITIC Securities. Please go ahead.

Pingyue Wu, Analyst, CITIC Securities: Thanks, management, for taking my question. This is Julie from Guo Jing Securities, and I have two questions as well. The first one is that we have noticed the leading mining companies like Mara, CleanSpark, et cetera, have reached 50. How will Cango maintain its computing power market share? Are you facing miner supply shortage or energy efficiency bottleneck? The second one is that when promoting related infrastructure investment in the U.S., do you face restrictive policy risks? Thanks.

Michael Zhang, Chief Financial Officer, Cango Inc.: Thank you for your question. I would take the first one. As one of the largest miners with a current scale of 50 exahash per second, maintaining competitiveness isn’t just about increasing the total volume of the computational power. The critical factor, I think, is the optimization of computing power efficiency. We have established a unique asset-led model, which focuses on strategic acquisition of second-hand unracked miners to achieve rapid, low-cost mining capacity expansion. This strategy will continue to be a core advantage. Meanwhile, we will not cling to inefficient capacity. We closely monitor miner performance and economic metrics. We dynamically phase out inefficient capacity and upgrade to more energy-efficient miners. Miner supply shortage will not be a bottleneck. I think we’ve got the expertise and relationships to acquire cost-effective hardware to power our growth. Furthermore, we remain open to computing power M&A opportunities that align with our strategies.

Thank you.

Paul Yu, Chief Executive Officer, Cango Inc.: Regarding U.S. infrastructure investment, we continuously monitor changes in the policy environment. We have deployed local compliance teams and legal advisors to evaluate potential restrictive policies and mitigate related risks. Currently, most computing power-friendly states in the U.S. have no restrictive policies on power access or land use for data centers. Instead, they have introduced computing power infrastructure investment subsidies. Only a few states have stricter approval process requirements for converting critical computing power to general-purpose computing power. We have established regular communications with local energy regulators to ensure compliance and efficiency during project implementation. Thank you.

Earnings Call Moderator: Thank you. Our next question today comes from William Gregorzenski with Greenridge Global. Please go ahead.

William Gregorzenski, Analyst, Greenridge Global: Thanks, and congratulations on all the progress you guys have made over the last 10 months on this change. I also have two questions. The cost for BTC has increased, and you mentioned you have the new mining equipment, the Georgia acquisition, and you’re making optimizations. Is there a number we should be looking at for what you think the cost is going to be as you exit the year on that with your current exahash portfolio? The second question is, given how undervalued the stock is, do you plan to do any repurchases or just prioritize the cash for operational expansion?

Michael Zhang, Chief Financial Officer, Cango Inc.: Thank you, William. I think I will take both of the questions. For the first one, as we just disclosed in our second quarter results, our cash cost for BTC was approximately $83,000, with an all-in cost around $98,000. The deployment of our new equipment in July brings our operational hash rate to 50 exahash, a key step towards improving both metrics. The increased scale and efficiency of this new peak are expected to increase our absolute Bitcoin production and improve our cost profile on a per-coin basis. However, we are also seeing continuous upward pressure on mining costs across the sector, driven primarily by the rapid increase in global network hash rates. Therefore, while our new risks will gain us further economy of scale, we anticipate these industry-wide headwinds will also be reflected in our cost structure during the third quarter.

As for your second question, we absolutely agree that our current stock price doesn’t reflect the instant value of our business. We firmly believe that the most sustainable way to achieve a fair value is through the continuous development of our core business and enhancement of profitability. Therefore, our primary focus is to strategically deploy our cash and liquidity to fund high-return operational expansion and our business transformation. This includes investing in new high-value areas such as AIGC, which we believe will drive future growth and profitability. Simultaneously, we are deeply committed to delivering return to our investors. We will continue to take a balanced approach, carefully evaluating our business development needs alongside capital market conditions to manage our liquidity prudently. This means we will consider all tools at our disposal, including our ongoing share repurchase program, to ensure we are creating long-term value for our shareholders. Thank you.

Earnings Call Moderator: Thank you. Our next question today comes from Kevin Dede at HC Wainwright. Please go ahead.

William Gregorzenski, Analyst, Greenridge Global: Thank you. Good afternoon. Appreciate you taking my questions. Paul and Michael, you’ve addressed this question a number of times, but it’s still a little unclear to me. The August hash rate was almost 44 exahash of the 50 that you have deployed. I don’t understand how improvements and optimization will get you that next six exahash. Could you maybe explain that? How should we look at that going forward?

Michael Zhang, Chief Financial Officer, Cango Inc.: Thank you, Kevin, for your questions. I think first, we’d like to highlight that the 43, I mean, near 44 exahash disclosed in our August production report represent our effective operational hash rate. Although it’s reached 87% effective rate, it still has a difference, a gap compared to the top miner, which is above 90%. We think we expect we still have space to improve our efficiency. I think our major way to improve our efficiency is to maybe upgrade our inefficient miners and also to develop our operational team. I think maybe we can further improve the efficiency of the miners. If you have any.

Paul Yu, Chief Executive Officer, Cango Inc.: Yeah. I think it takes time to implement our rates on track after acquiring all the mining machines. Also, there are a lot of curtailments in the U.S. during the summertime. I think we will improve our operational efficiency in the future. Thank you.

William Gregorzenski, Analyst, Greenridge Global: Thank you, Paul. I had suspected that curtailment was certainly a factor. Okay, just from a high level, what do you think is the most important aspect of Cango’s June report? What would you really like to have resonate for investors?

Paul Yu, Chief Executive Officer, Cango Inc.: This quarter was truly a milestone for us. First, we completed the divestiture of our China operations and the acquisition of 18 exahash in hash rate. We have finalized the change in ownership and established a new management structure and team. We are now fully prepared and ready to move forward. From a business perspective, having 15 exahash means we are officially entered the first tier of industry players. At the same time, our Bitcoin holding continues to grow, now exceeding 5,000 BTC. This helps further solidify our man-on-hold strategy. On the financial side, it’s especially worth highlighting that while maintaining scale, we’re validating the effectiveness of our B2B model through solid financials. We also see continued opportunities for cost optimization, which will remain a focus in our next phase.

William Gregorzenski, Analyst, Greenridge Global: Perfect, Paul. Thank you very much. It was a very comprehensive review, and I appreciate you discussing it with me. Congratulations on all the progress you have made.

Paul Yu, Chief Executive Officer, Cango Inc.: Thank you.

Earnings Call Moderator: Thank you. That concludes the question and answer session. Thank you once again for joining Cango Inc.’s second quarter 2025 earnings conference call today. Have a great day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.