Hello, ladies and gentlemen. Thank you for standing by for China Online Education Group's Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. [Operator Instructions] I will now turn the call over to your host, Ms. Judy Piao, Investor Relations for the Company. Please go ahead, Judy.

Hello, everyone, and welcome to the 2018 fourth quarter and full year quarter earnings conference call of China Online Education Group, also known as 51Talk. The Company's results were issued via newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting the IR section of its website at ir.51talk.com. Mr. Jack Huang, our Chief Executive Officer; and Mr. Min Xu, our Chief Financial Officer will begin with some prepared remarks. Following the prepared remarks, Mr. Liming Zhang, our Chief Operating Officer, will also join the call for our Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the Company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that 51Talk's earnings press release and this conference call includes discussions of unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Huang. Please go ahead.

Okay. Hello everyone, thank you for joining us for our quarterly earnings conference call. 2018 was a year of strategic positioning and healthy build for us. We continued to grow and refocused our efforts on our core offering in the K-12 market and further strength our 51Talk brand. We ended the year on a strong note with record high Q4 gross billing of RMB503 million representing a 27.9% year-over-year growth. Our core K-12 mass-market one-on-one offering continue to grow at 63% year-over-year in the fourth quarter. Our growth was driven by our continued penetration in non-tier-one cities. During this quarter, we also successfully gained even stronger footholds in our target market of non-tier-one cities which accounted for 69.7% of our K-12 mass-market one-on-one gross billings. With the solid growth we achieved in the mass market, we plan to make our offering more assessable to our target market in 2019. There remains great unmet demand for high-quality live online English courses in China particularly in non-tier-one cities. In February of this year we engaged China's hugely popular Super Student' Junkai Wang, from the hit boy band TF Boys, as our new brand spokesperson. With a massive presence among the K-12 demographic, Junkai will work with 51Talk to increase the accessibility of high-quality English education for students in China. In addition, we are taking our products and services to best suit our target demographics which will help us expand into more cities where we see growing demand. Access to our large base of foreign teachers in the Philippines remains a key part of our offering. We currently have over 18,000 teachers in the Philippines. We are dedicated to providing our teachers with more training and improving our service offerings to help our student thrive. We are involving with advances in technology and bringing more interactive course elements to our students which we believe will improve learning outcomes and effectiveness. We continue to closely monitor the online education regulation that are under review by our government. As forerunners in the online education industry, we remain optimistic that new regulations will finally benefit the online education industry in the long-term. In 2019, we will continue to dedicate resource to increasing the accessibility of our product offerings, improving our exposure and strengthening the quality of our offerings and services while balancing between growth billings growth and GAAP profitability. With that, I will now turn the call to our CFO, Xu Min.

Thank you, Jack. Hello everyone. Let me give you an overview of our financial results. We’re pleased with our progress in 2018. We concluded the year with total annual net revenues of RMB1.1 billion and gross billing of RMB1.7 billion led by our focus on our core K-12 mass-market one-on-one offering in non-tier-one cities. Compared with 2017, we improved our gross margins by one percentage point to 64% and narrowed our net loss by RMB164 million. As Jack discussed, we have a healthy fourth quarter achieving year-over-year growth in gross billings and net revenues beating the top end of our guidance. As we move through 2019, our strategic growth initiatives are aimed continue to build on the success. We plan to expand our business and reach new students in underserved markets while maintaining a prudent investment strategy. So gross billings for the fourth quarter of 2018 were RMB503.2 million a 27.9% increase from RMB393.4 million for same quarter last year. If we look at the breakdown of our gross billings, you’ll find gross billings from our K-12 mass-market one-on-one offering increase 63.0% year-over-year to RMB365.7 million. Gross billings from our K-12 small class offering increased 127% year-over-year to RMB60.6 million. Gross billings from our adult offering decreased 28.9% year-over-year to RMB55.0 million and gross billings from our K-12 American Academy one-on-one offering declined 66.3% year-over-year to RMB21.9 million. Net revenues for the fourth quarter of 2018 were RMB298.1 million a 14.4% increase from RMB260.6 million for the same quarter last year. The increase was primarily attributed to an increase in the number of active students and partially offset by a decrease in average revenue per active student. The number of active students in the fourth quarter of 2018 was approximately 213,900, a 22.1% increase from approximately 175,200 for the same…

[Operator Instructions] The first question comes from Roger Parodi of Silverhorn. Please go ahead. Mr. Parodi, your line is open. Please go ahead with your question.

Congratulations for the outstanding quarter and I have the following three questions. The first question is I have, you showed very good growth in the one-on-one class offering in Q4 maybe you can elaborate what factors were leading to that. Second question is the small class offering in your guidance shows that it will decrease fast maybe you can explain more what is your strategy for the Hawo small class offering. The third question is for the guidance as well for Q1, can you explain what are the factors that are influenced in your guidance for the one-on-one class offering, these are my three questions?

So first of all we did see very strong growth for our core product K-12 mass-market one-on-one, it was growing at 63% year-over-year. And we do see the stress from two areas very similar to the previous quarters. One, is that we're doing very well in non-tier cities and the gross billing, the new gross billings from the non-tier-one city is close to 70% of our total core product gross billing. And second area is that we continue to do very well in our referral business the percentage of our referral business is right now at 67% of our new gross billings. So those are mostly the two key areas that’s helping us to achieve very strong growth for the Q4. And for your second question for the small class our guidance it is actually a decline from the Q1 in 2018. And the main reason is that we totally restructured of our product offering. So we're seeing much stronger seasonalities this year. However, if you look back you can see that in the second half of 2018 its already demonstrating a very strong seasonalities. We will typically see very strong Q2 and Q4 and we will see relatively weak Q1 and Q3. And when we just get started at totally different product offering mix and so that - you are still seeing pretty nice growth and gross billing in Q1. So that’s because - now going forward you’re going to see much stronger seasonality very similar to our Q1, 2019 and Q3, 2018. And for your third question. [Foreign Language] So just to translate what Jack just said, so in terms of a strategy for our Hawo small class business, in 2019 we believe our Hawo number one is still on early stage and it is still - we're…

[Operator Instructions] As there are no further questions now, I'd like to turn the call back over to the Company, for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact 51Talk's Investor Relations through the contact information provided on our website at ir.51talks.com of the Piacente Group Investor Relations. This concludes the conference call. You may now disconnect your line. Thank you.

Again, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.