Hello, ladies and gentlemen, and thank you for standing by for Hexindai's First Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded.I would now like to turn the meeting over to your host for today's call Ms. Daisy Wang, Investor Relations Director. Please proceed, Daisy.

Thank you, operator. Hello, investors, analysts and colleagues. Thank you for joining us today. Our earnings release was distributed earlier today and is available on our IR website at ir.hexindai.com.On the call today from Hexindai are Mr. Xiaobo An, our Founder, Chairman and CEO; and Ms. Kerrie Zhang, our CFO. Mr. An will review business operations and company highlights followed by Ms. Zhang, who will discuss financials. They will be available to answer your questions during the Q&A session that follows.Before we begin, I would like to remind you that this conference call may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, potential, continue, ongoing, targets, guidance and similar statements.The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, the SEC, in its annual report to shareholders, in press releases and other written materials and oral statements made by its officers, directors or employees to third parties.Any statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.Such factors and risks include, but not limited to the following: the Company's goals and strategies; its future business development, financial condition and results of operations; the expected growth of the credit industry, and marketplace lending in particular, in China; the demand for and market acceptance of its marketplace's products and services; its ability to attract and retain borrowers and investors on its marketplace; its relationships with its strategic cooperation partners; competition in its industry; and relevant government policies and regulations relating to the corporate structure, business and industry.Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this call is current as of the date of this call, and the Company does not undertake any obligation to update such information, except as required under applicable law.It is now my pleasure to introduce our Founder, Chairman and CEO, Mr. An, please go ahead.

Thank you, everyone for joining our call today. The first quarter of fiscal year 2020 marked the beginning of a transition period for us. With an uncertain regulatory environment hanging over the P2P industry, the market has remained challenging. We took advantage of this period to begin strategically repositioning our business by developing a loan assistance business to drive future growth, while at the same time, maintaining our P2P business.With market demand growing from institutions, we saw an opportunity to expand our relationships with them to grow our loan assistance business, leveraging our extensive experience in borrower acquisition and strong risk management, and operational capabilities. This loan assistance business will operate alongside our P2P and is expected to drive future growth across our business going forward.Our partner institutions have shown strong interest in investing in the underlying assets that are short-term and in small amounts, which closely matches the profile of the high-quality microfinancing loans we facilitate. Our microfinancing loan product typically mature over 2 to 12 months in amounts that range from RMB1,000 to RMB20,000.To grow our loan assistance business and diversify our funding sources, we are working with financial institutions and trust partners such as Bohai International Trust, Kunming Aotou and Phoenix Intelligent Credit Group, a wholly owned subsidiary of Phoenix Financial Group to provide them with access to our high-quality underlying assets and borrow base.Our partnership with each of them has already yielded solid results. Bohai International Trust has already extended around RMB40 million and Kunming Aotou RMB30 million to borrowers assessed and referred by us as of June 30, 2019.Our partnership with Phoenix Finance has also progressed well, following our strategic investment at the beginning of this year. We expect total loan volumes for borrowers referred by us over the three-year partnership with Phoenix Finance to…

Thank you, Mr. An, and thank you everyone for joining our call today. This is Kerrie, the Company's new CFO. It's been real a pleasure to join the management team and I look forward to working with everyone to get long-term growth and increase shareholder value.And I will now review our financial performance during the quarter. Further details can be found in the earnings release and accompanied presentation. As Mr. An mentioned, this was a quarter of transition for us, as we repositioned our business by developing more efficient business to drive future growth. This has strengthened confidence in our partners -- among our partners, but the ramp up period was not quick enough to offset decline of our peer-to-peer business.During the first quarter of the fiscal year 2020, net revenue was $4.9 million, a decrease of 90.5% from same period last fiscal year. Volume of credit loans facilitated through our peer-to-peer marketplace was $28.2 million or RMB0.2 billion, a decrease from $0.5 billion or RMB2.9 billion during the same period of last fiscal year.On a sequential basis, however, our performance is steadily improving, as the market recovers and our loan assistance businesses grew up, with net revenue increasing by 8.6%. Operating costs and expenses were $12.6 million, a decrease of 18.9% from same period last fiscal year. The decrease was primarily due to decrease in sales and marketing expenses.Sales and marketing expenses were $7.5 million, a decrease of 35.5% from same period last year, due primarily to a decrease in advertising expenses, as we continue to carefully capture costs during this year. As our business progress this year, we expect to gain operating leverage going forward. Service and development expenses were $1.9 million, an increase of 42.3% from the same period last year, primarily due to an increase in…

[Operator Instructions] Your first question comes from the line of Josh Vogel from Sidoti Investments. Please ask your questions.

I have four questions, please. The first one is, can you please talk about the percentage of borrowers that were acquired from online channels in the first quarter and how that compared to a year ago? And if there was any change, why so? Thank you.

Thank you for your questions. In terms of loan volume facilitated, we acquired 42% of our borrowers online and 58% of borrowers off-line in this quarter. During the past two quarters, we began strategically repositioning our business by developing a loan assistance business to drive future growth.Our partner institutions have shown strong interest in investing in underlying assets that are short-term and in small amounts, which closely matches the profile of the high-quality microfinancing loans we facilitate. Borrowers for our microfinancing loans with us are acquired purely online. Microfinance loan products accounted for approximately 22% of total loan volume during the first quarter fiscal year 2020 and significantly contributed to the overall percentage of borrowers acquired online during this period.[We had several months doing analytical] work to carefully customize and fine-tune our risk management system and algorithm, based on big data generated by our legacy peer-to-peer products to ensure our system continues to be highly effective, by assessing borrowers for our microfinancing loan products. As we continue to put more effort and resources into developing our loan assistance business, the proportion of borrowers acquired online will continue increasing.

It's nice to see you diversify into the loan assistance business. Can you please discuss some advantages that you see in loan assistance compared to the P2P business?

Thanks, this is good question. With uncertainty in regulatory environment and over the peer-to-peer industry, the market has remained challenging and short of funding from the individual investors. We took advantage of this period of uncertainty to begin strategically repositioning our business by developing our loan assistance business, regardless of what regulatory environment finally emerge for the peer-to-peer industry. This loan assistance business will operate alongside our peer-to-peer business and that is expected to drive growth across our business going forward.Loan assistance business has several advantages when compared to peer-to-peer business. Firstly, demand for good investment opportunities is still strong. There is a massive amount of funding available for investments in the market, but investment options are very limited. Institutional funds have shown great interest in investing in loans facilitated by customer financed companies.Second, we will continue to develop partnerships with other funding partners that are licensed financial institutions that operate in a highly regulated and a clear framework, given the regulations governing investment licensed financial institutions are very clear. This will allow us to operate loan assistance business without regulatory uncertainty and they ensure the sustainable development of our loan assistance business.Furthermore, licensed financial institutions have strict process put in place to prevent defaults. Any default will be reflected on the personal credit report of the borrower issued by the Credit Reference Center, the People’s Bank of China. This will strengthen deterrence against default. We also precise certain competitive edge when it comes to loan assistance business and attracting funding partners.We have extensive experience in borrower acquisition, solid risk management capabilities and strong operational capabilities, derived from our legacy peer-to-peer business. We are very confident about the future growth prospects of our loan assistance business. This new business will drive growth going forward regardless of what regulatory environment finally emerge for the peer-to-peer industry.

My third question, can you tell me please how much is left remaining on the current share repurchased authorization? And maybe discuss your appetite for buying back shares and at what prices would you get aggressive in perhaps repurchasing shares? Thank you.

Okay. We have repurchased about 1,160,000 ADS under the share repurchase program so far, representing a total value of approximately $4 mainly. We purchased shares on open market at prevailing market price, depending on number of factors, including but not limited to share price, trading volume and general market conditions, along with our working capital requirements, general business conditions and other factors. We believe our share repurchase program aligns with the Company’s commitment to maximize shareholder value and demonstrate our confidence and optimism in the long-term future potential of our business and strategy.

And my last question. Looking at the press release from earlier this month about regulators’ decision to include P2P platforms in the Central Bank's system, can you please share what the proposed timing is for when the P2P lending companies are required to be connected to the Credit Reference Center at the PBOC? And are you already in compliance given that it requires a relationship with Baihang Credit which you currently have? Thank you.

China's regulators for the Internet finance industry issued an official guideline on September 2 that requires peer-to-peer lending companies to be connected to the Credit Reference Center at the People’s Bank of China and Baihang Credit. This is a significant progress to improve the development of China's credit system.We are committed to remaining for compliance and protecting investors’ interest. As a first mover, we connected our systems and began sharing credit data with Baihang Credit in January this year. We will make regular transfers of credit data to Baihang Credit which integrate and process the data collected to providing individual credit data.On the other hand, we'll leverage the data generated from Baihang Credit to more accurately assess a borrower’s creditworthiness and potentially reduce the cost of risk amendment. Baihang Credit’s platform will greatly enhance our credit services and strengthen compliance. Thank you.

There are no further questions at this time. I would now like to hand the conference back to Daisy Wang. Please continue.

Thank you, operator. In closing, on behalf of the entire Hexindai management team, we'd like to thank you for your interest and participation in today's call. If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call.

Thank you.

Ladies and gentlemen, that concludes the conference for today. Thank you for participating. You may now disconnect.