Hello, and thank you for standing by for Tuniu's 2018 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary. Mary, please go ahead.

Thank you, Anita. And welcome to our 2018 fourth quarter and full year earnings conference call. Joining me today on the call are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer; and Maria Xin, Chief Financial Officer. For today's agenda, management will discuss business updates, operation highlights and financial performance for the fourth quarter and fiscal year 2018. Before we continue, I refer you to our safe harbor statement in earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Yu.

Thank you, Mary. Good day, everyone. Welcome to our 2018 fourth quarter and full year earnings conference call. 2018 has been a year filled with achievements and milestones. We launched a number of initiatives across the company in order to profitable scale. As a result, we are pleased to announce Tuniu achieved non-GAAP profitability and positive operating cash flow for full year 2018, the first time since our listing. 2018 was not a great year for the travel industry, as a number of external events contributed to decline in Chinese visitors to key destinations, such as Thailand, The Maldives, and Bali. These events all had a negative impact on our revenue and margins during the year. Even taking into consideration all these events, we were able to find growth in other destinations, such as Europe, Australia and New Zealand. Looking back to 2018, we made strong progress in executing our cost strategies. During the year, we profited our service network, sales network, and smart network. Our service network is a core element in our product design and procurement. It improved our presence in China's travel supply chain and has allowed us to directly service our customers at various destinations. Our sales network allowed us to efficiently diversify our user acquisition channels, which in turn lowered our blended user acquisition cost and the required marketing expenses. Lastly, our smart network links our service and sales network through technology and big data. Operationally, we also made strong progress during 2018 by refining our internal workflows in order to achieve higher levels of efficiency. In 2019, we will continue to refine our network through innovation. Now, I would like to give an update on our 2019 strategies in greater detail. First, I would like to talk about our core leisure travel business. We…

Thank you, Donald. Hello, everyone. Now, I will walk you through our fourth quarter and full year 2018 financial results in greater detail. Please note that all the monetary amounts are in RMB, unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. Starting from the fourth quarter of 2018, net revenues was 471.2 million, which remained consistent with the corresponding period last year. Revenues from packaged tours were up 23% year-over-year to 357.6 million and accounted for 76% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours. Our revenues were down 37% year-over-year to 113.6 million and accounted for the 24% of our total net revenues. The decrease was primarily due to the decline in revenues generated from financial services and services fee received from the insurance companies. Gross profit was up 15% year-over-year to 270.2 million for the fourth quarter of 2018. The increase was primarily due to the increase in efficiency resulting from the economics of scale. Operating expenses for the fourth quarter of 2018 was 373.3 million, down 18% year-over-year. Excluding share-based compensation and amortization of acquired intangible assets, non-GAAP operating expenses were 326.4 million, representing a year-over-year decrease of 19%. Research and product development expenses for the fourth quarter of 2018 were 75.9 million, down 32% year-over-year. Research and product development expense as a percentage of net revenues were 16% in the fourth quarter of 2018, decreasing from the 24% in the corresponding period in 2017. The decrease was primarily due to the increase in efficiency resulting from the economies of scale and refined management and optimization of research and product development personnel. Sales and marketing expenses for the fourth quarter of 2018 were 209.1 million, up 8%…

[Operator Instructions] The first question today comes from [Elaine Hee], a Private Investor. Please go ahead.

Hi, management. Thanks for taking my question. Can you share with us what is the key growth drivers in 2019?

[Foreign Language] As mentioned in the opening remarks, for 2019, our overall strategy is a continuation of our 2018 strategy. So, notably two parts; for the sales network, we want to increase our sales channel and distribution, so that we're able to diversify our channels and for the service network, we want to increase and improve our direct procurement, as well as our ability to service customers. [Foreign Language] In 2019, additionally, one of our more primary strategy revolves around improving and optimizing the user experience. We will dedicate more resource into increasing direct procurement, especially within the travel industry, mainly focusing on accommodation, transportation and destination-based products. So, we will also increase our resources dedicated to R&D and the overall development of our systems. Although we have a very stable system that’s able to service most of our need, there continues to be room for improvement. Now, one of the core focus for us will be improving our dynamic packaging system. This tool allows customers to tailor their ownership and bundle transportation, accommodation and various services and products into a bundled product, but in 2019, we will also focus on improving this tool so that – and putting in more direct procurement products, so that customers are able to enjoy better bundle price. [Foreign Language] Just for example, currently over 95% of our long-haul domestic organized tours is already using this dynamic packaging system. 50% of our self-guided tour is using this system as well. So, we are seeing overarching of this ratio being increasing. So being able to dynamically package this product, allows us to differentiate ourselves from other more static products that are being offered by other travel agencies. There are – another benefit is that, we are able to quickly scale the product and connect multiple departure cities into this package. This allows us to rapidly provide products to larger cities where generally these kinds of [SKUM product] variety is lacking. Thank you.

Thank you.

Thank you. [Operator Instructions] The next question comes from Ted [indiscernible] with ICBC International. Please go ahead.

Hi, [indiscernible] from ICBC International. Just one quick question here, can the management share with us on your projections for the 2019 revenue and profit? Thank you.

Thank you for your question. We believe our ability to generate a non-GAAP breakeven year is a positive step in our ability to be profitable. In 2019, we plan to continue improve our user experience as just mentioned by Donald, because our customer is our greatest and the most important asset. We plan to make investments in order to achieve this such as R&D investments. We will dedicate more resource into improving our presence in supply chain, lessening the direct procurement capabilities, and upgrade our dynamic packaging tours. By improving this user experience, we will refine our competitive advantage and further improve our position, as the leading online leisure travel company in China. As your questions regarding the status [ph], we continue to see the headwinds driven by the external factors in field our core destinations. But after Chinese New Year, we are seeing the recovery on customer's needs, which help us to impact our March and April. Also, we moved out majority of the insurance products to give our customers a better experience, but it continues to impact our other revenues. These factors – negative factors, we are seeing new growth drivers in the lower tier cities and improve our procurement capabilities. For the yearly number, unfortunately we don't give the yearly guidance, but we are – for the longer-term, we are very confident for the travel industry.

Okay. Thank you.

Thank you.

[Operator Instructions] The next question comes from William Yen with Blue Sky Capital. Please go ahead. Hello, Mr. Yen, your line is open for question.

Yes, hi, management. Congratulations on the solid results. I have two questions, the first one is, can you share the GMV breakdown by a destination, and what are the chairs in these destinations?

Thank you for your question. Domestic destinations contributed around 30% of our GMV; Europe, around 15%; Japan, around 10%; Southeast Asia around 10%; Maldives and other airlines together around 9% to 10%; Australia and New Zealand around 5%; Americans around 5%. In terms of destination, we are seeing strong recovery from the European destinations; Australia and New Zealand. Japan are also very solid in the last quarter. Thank you.

Thanks. Second question is, what are your thoughts on this slowing economy? How we are – affect the company and the industry's outlook?

[Foreign Language] So last year, a number of external events have impacted us and a number of our relatively key destination. This includes places such as Thailand and Maldives. So, this year, as noted by our internal data, Chinese New Year was not too great of a year, but we are seeing a very strong recovery following the Chinese New Year outbreak. So, in terms of the external events, we believe that these events are temporary in nature and we believe that this year, there will be a relatively strong rebound from these events and on a mid-to-long-term basis, we believe the Chinese economy is fine and the travel industry, we are optimistic of the travel industry, but on a very short-term basis, we do see some temporary headwinds.

Thank you.

We are now approaching the end of the conference call. I would like to turn the call back over to Tuniu's CFO, Maria Xin for any closing remarks.

Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support and we look forward to speaking with you in the coming months. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.