Ladies and gentlemen, thank you for standing by, and welcome to Sunland's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host today, Yuhua, Sunland's IR Representative. Please go ahead.

Hello, everyone, and thank you for joining Sunlands' third quarter 2020 earnings conference call. The company's financial and operating results were issued in our press release via Newswire services earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting our IR website. Participants on today's call will be our CEO, Mr. Tongbo Liu; and our CFO, Selena Lu Lv, and our Financial Controller, [indiscernible]. Selena will provide an update on our operational performance on behalf of our CEO, Mr. Lu, and then [indiscernible] will give you an overview of our financial performance on behalf of Selena. Management will begin with prepared remarks, and the call will conclude with a Q&A session. Before I hand it over to the management, I'd like to remind you of Sunlands' safe harbor statement in relation to today's call. Except for the historical information contained herein, certain of the measures discussed in this conference call are forward-looking statements. These statements are based on current trends, estimates and projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CFO, Selena Lu Lv.

Thank you, Yuhua. Hello, everyone. Welcome to Sunlands' third quarter 2022 conference call. Despite the macroeconomic uncertainty and shifting industry landscape, we delivered encouraging results in the third quarter with sequential top line growth, further bottom line improvement and increased new food and enrollment. This achievement testifies to the effectiveness of our strategic initiatives to prioritize profitability and healthy growth. Amid the ongoing pandemics and uncertain macroeconomics, our third quarter net revenues came in at RMB 576.3 (ph) million, up by 3.8% quarter-over-quarter despite 3.3% year-over-year drop. To navigate the macro challenges, we remain laser focused on cost optimization and the profitability rather than blind pursuit of school expansion. We adopted multiple measures to enhance our operational efficiency and streamline our organization during the quarter. Due to our effective expense control measures and improved operational efficiency, we reduced our G&A expenses by 29.6% year-over-year and 4.7% quarter-over-quarter. This cost reduction initiative enables us to deliver on our commitment to creating additional shareholder value will sustained profitability. Our third quarter net income reached RMB168.1 million, representing an 81.1% year-over-year increase and a 48% -- 46.7% quarter-over-quarter increase, demonstrating our organization's resilience during tough times like this. With a leaner and more efficient organization, we also further refined our product strategies in the third quarter. We focused more on margin accretive programs and allocated our capital and human resources accordingly to expand our course offerings in those programs, leading to an optimized product lineup and a more diversified cost content. Additionally, we leveraged our solid and convenient online teaching infrastructure and the learning resources to further refine our services, which has increased our user stickiness and the core selling opportunities. Given this, we have transformed our student acquisition efforts, focusing more on users' lifetime value instead of investing heavily in marketing activities.…

Thank you, Selena. Hello, everyone. We are pleased with our third quarter results amid a soft macro environment. Our net revenue reached on the RMB576.2 million during the quarter, exceeding the high end of our guidance reached by 6.7%, despite a slight 3.2% year-over-year decrease, benefiting from our dedicated efforts under major steps in cost control and operational efficiency enhancement. Our third quarter operating expenses declined by 24.5% year-over-year and 7.4% quarter-over-quarter. As a result, we maintained our profitability with a net income of RMB168.1 million, up 81.1% year-over-year, and 46.7% quarter-over-quarter. Our net profit margin for the quarter remained solid at 29.2%, expanding 13.6 percentage points year-over-year, and 8.6 percentage points quarter-over-quarter. Moving forward, we will continue to prudently manage costs and expenses enrich our cost offerings and further optimize our operations, aiming for continued success and additional shareholder value. Now let me walk you through some of our key financial results for the third quarter of 2022. All comparisons are year-over-year and all numbers are in RMB, unless otherwise noted. In the first quarter of 2022, net revenue were RMB576.2 million, a decrease of 3.2% year-over-year. Cost of revenue increased by 2.2% to RMB84.9 million in the third quarter of 2022 from RMB83.1 million in the first quarter of 2021. The increase was primarily due to increased service fees based to educational institution and increased cooperation costs. Gross profit decreased by 4% to RMB491.3 million from RMB510 million in the third quarter of 2021. In the third quarter of 2022, operating expenses were RMB325 million, representing a 24.5% decrease from RMB430.6 million in the first quarter of 2021. Sales and marketing expenses decreased by 23.9% to RMB259.1 million in the third quarter of 2022 from RMB353.5 million in the third quarter of 2021. The decrease was mainly due…

We will now begin the question-and-answer session. [Operator Instructions] Showing no further questions, this will conclude our question-and-answer session. Now I'd like to turn the conference back over to Yuhua Ye, IR representative for any closing remarks.

Once again, thank you, everyone for joining today's call. We look forward to speaking with you again soon. Good day and good night.

This concludes the earnings conference call. You may now disconnect your lines, thank you. End of Q&A: