Good morning and good evening, ladies and gentlemen. Thank you for standing by for TuanChe Limited Fourth Quarter 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. Today's conference call is being recorded. Now I will turn the call over to your speaker host today, Ms. Yang Song, IR Representative of the company. Please go ahead, ma'am.

Hello, everyone, and welcome to TuanChe’s fourth quarter and full year 2020 earnings conference call. We have released our earnings results earlier today and it’s now available on our IR website, as well as on Newswire services. Before we continue, please note that the discussion today 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, our future results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in our earnings release and our Registration Statement filed with the SEC. TuanChe does not assume any obligation to update any forward-looking statements, except as required by law. Today, you'll hear from Mr. Wei Wen, the company's Chief Executive Officer, who will provide an overview of our growth strategies and business developments, who will be followed by Mr. Chenxi Yu, Ronnie, the company's Deputy Chief Financial Officer, who will provide additional details on the company's financial results and discuss the financial outlook. Following management's prepared remarks, we'll open up the call to questions. With that said, I would now like to turn the call over to our CEO, Mr. Wei Wen. Please go ahead, sir.

Hello and thank you everyone for joining us today on our fourth quarter and full year 2020 earnings call. We saw continued momentum in the fourth quarter as our net revenues of RMB165.8 million beat the top end of our guidance range by 7 point and grew 65.7% versus the prior quarter. The better-than-expected fourth quarter results were primarily driven by our offline marketing services that benefited from solid year-over-year passenger vehicle retail sales growth of 7.5% in China, as well as our measured steps to resume our offline auto shows, and with our acceleration growth of our online marketing services. Additionally, we implemented rigorous cost measures such as scaling back our recruitment budget and employee size, combining our top line recovery and strong focus on cost reduction. Our net loss attributable to the company's shareholders was RMB25.4 million in the fourth quarter, which narrowed 38.4% versus the third quarter 2020 and 62.5% year-over-year. Let's take a closer look at the fourth quarter performance of our business segments, while also providing additional detail on our strategic and operational priorities. First, our offline marketing services. As we have discussed on previous earnings calls, our offline marketing events were heavily impacted by the COVID-19 pandemic, especially in the first half of 2020. However, as the pandemic became increasingly under control in China, we were able to progressively resume offline operations in late May of 2020, while keeping in accordance with all local and the national regulatory guidelines on COVID-19 prevention and control. Currently, our offline auto shows and special promotion events are mostly back to normal in most cities we operate. It should be noted however, that with new reported cases in northern China in the fourth quarter of 2021 there are lingering uncertainty on what is to come and how it…

Thank you, Mr. Wen. Hello, everyone. Thank you for joining us. We concluded a challenging 2020 with a fourth quarter that demonstrated solid improvement. Our net revenues, although 9.3% lower than the same period in 2019, grew 65.7% compared with the third quarter of 2020. The significant top line recovery was achieved, while we simultaneously took a comprehensive approach to managing our costs. This resulted in slower operating expense growth of 29.5% quarter-over-quarter, leading to a narrowed net loss of RMB25.7 million, which was 70, sorry, which was 37.6% and 62% lower versus the third quarter 2020 and the same period last year, respectively. Meanwhile we maintained a healthy combined balance of cash and cash equivalents with restricted cash and time deposits of RMB185.4 million, which will provide us with the runway we need to create a platform for the future growth. Next, I would like to walk through our fourth quarter 2020 financial results. Before I start, please note that all numbers that stated in my following remarks are in RMB terms unless otherwise noted. Our total revenues in the fourth quarter were RMB165.8 million, decreasing 9.3% from RMB182.8 million in the same period last year. This was a result of continued adverse impacts of the COVID-19 pandemic. The decrease was partially offset by the year-over-year growth of virtual dealerships, online marketing services and others compared with third quarter this year, total revenues increased by 65.7% as our offline services recovered, and our online services maintained solid performance. As we progressively resumed our offline auto shows, our offline marketing services revenues generated from these auto shows decreased by 24.4% to RMB128.8 million from RMB170.4 million in the fourth quarter of 2019. The offline marketing services revenue generated from auto shows increased 55.9% from the third quarter of 2020, up…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

Hi. Great. Thank you. Good evening, guys. Thanks for taking my questions. I'll start for a few questions for Mr. Wen and then a couple for Ronnie on the financial side. For Mr. Wen, it's great to see the business turning around in a positive direction, but of course I'm sure there is a lot of investors out there that are interested in receiving maybe a status update following the proposal letter from January sent to the Board of Directors on potential taking the company private. So for - you know, as you have positive updates on the business side, what do you - what would you tell investors that are maybe interested in buying the stock, but given this proposal that's still outstanding? Thank you.

[Foreign Language] Give us a moment. Hello, Jack. [Foreign Language] We received the proposal in January from the buying – buyer’s group and the company is evaluating the proposal in-depth. But due to the Chinese New Year, the company is still in the process of forming a special committee to further evaluating the proposal. That's all we can say for now. There's little we can express until further information is available.

Okay, understood. I appreciate the added color. And that's understandable. And then another question from Mr. Wen more on - an update on the business. So just kind of bigger picture, I believe I’ve asked this kind of question before. Just maybe can you provide some perspective on what you're seeing in terms of consumer purchases and their appetite for big ticket purchases such as new cars? And then just kind of talk about the overall financial health of your various auto partners and just the general state of the economy for new cars in China?

[Foreign Language] The macro economy for the Chinese market overall, its been improving significantly over the past few quarters, especially for GDP figures, as well as import and export. So we think that the overall macro economy is improving. [Foreign Language] For the auto sector for the first two months of 2021, auto passenger retail sales in China grew close to 70% year-over-year, according to China Passenger Car Association, up from the low base last year, but also boosted by the broad economic recovery that significantly bolstered consumer confidence. [Foreign Language] Is that good enough?

Sure. That's good. And then I guess just sticking to that trend of new passenger auto sales, up significantly obviously, off a down year last year, I'm talking about the overall market obviously. And just any preliminary thoughts and what you're expecting for March and kind of throughout the balance of 2021? do you expect this sort of high positive levels to continue in terms of growth for the overall new passenger car market?

[Foreign Language] We think that the macro economy, we're being quite optimistic about the improving trends for the rest of year. And that's also being aided by the statement from the World Bank stating that the Chinese GDP growth for 2021 will be one of the best in the world. And for the auto sector, we also believe that the upward trend is more likely in 2021.

Excellent. That's helpful. And then let me switch gears now, just from TuanChe specifically from a segment perspective, virtual dealership in other segment was very strong clearly, it was ahead of my expectations. Longer term I guess, do you see - and given just - given the dynamic, you guys are shifting your kind of strategy as you go along here. Do you expect the virtual dealership segment and other segment to be kind of - kind of where do you see that mix evolving over time? Is it going to be the core offline auto show business as the core of the business? Or is it going to become the virtual dealer business? Is that going to be more of a focus? Just how do you see this playing out over time?

Okay. [Foreign Language] In 2020, our online product services was improving very fast. But - and we are also - we're also - we also believe that this segment will be an important part of our future growth. But our auto show businesses will remain a strong - remain a core product for our product mix. [Foreign Language] For 2021, or maybe the next few years, the auto show business will still be the largest business in our revenue mix and our core business and our product mix. Does that help understand?

That's helpful, that's helpful. I appreciate the color there. And then just as far as auto show events go, you know, they continue to – I think it was for the 230 auto show events in the fourth quarter. That's again, you know, another sequential improvement, which is good to see. Do you expect the number of auto show events you host to eventually recover? Like when do you expect that to maybe return to the same levels you saw earlier in 2019 and 2018? Or is it too - is it too hard to say, just any color there?

Okay. Gives us a sec. [Foreign Language] We are trying to recover the number of auto shows and city coverage to the level of 2018 and 2019. But still our priority - our first priority is the ROIs these auto shows produced and the operational efficiencies in the cities we operate. So that's the base we are trying to recover from. So that’s that.

Got you. Okay, that's helpful. That makes sense to me as well. And then may just one last question, maybe for you, Ronnie. Just given the revenue momentum and just the overall macro environment continues to kind of turn around in a positive direction. Just wondering you know, for your perspective on what that means for your plans and how you think about operating expense investments and whether you expect to ramp those up, as we - as you go along as the top line begins to recover, do you expect OpEx to pick up again or any color there?

The OpEx will certainly pick up in terms of absolute figures, but we are - we're doing everything we can to come - to take everything, to take cost control measures to you know to minimize the OpEx and the costs. So, I would expect for 2021 the absolute figure will go up, but the percentage that OpEx is - of the revenue will be lower than that of 2019 and 2020.

Of 2019 as well. Okay, excellent. Okay, that's it for me guys. It's great to see the positive turnaround story playing out. I wish you best of luck. Thank you.

All right. Thank you.

As there are no further questions now, I'd like to turn the call back over to management for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact TuanChe’s Investor Relations through the contact information provided on our website or the Piacente Group, Investor Relations.

This concludes…

This concludes the conference call.

You may now disconnect your line. Thank you.

Thank you.