Hello and thank you for standing by for Tuniu's 2019 First 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 is being recorded. If you have any objections, you may disconnect at this time. I would like to now turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary.

Thank you. And welcome to our 2019 first quarter earnings conference call. Joining me on the call today 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 first quarter of 2019. 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 2019 first quarter earnings conference call. In 2019, Tuniu focused on maintaining and expanding its long-term competitive advantage. On the supply side, we continue to consolidate and strengthen our supply chain in order to offer high-quality and competitively priced products to our customers. During the first quarter of 2019, direct procurement as a percent of our packaged tour GMV reached 60%. We also continued to refine our local tour operators in order to provide the highest quality services to our customers. As of March 31, 2019, Tuniu operates 31 local tour operators. For our sales channel, we continue to make strides in diversifying our distribution channels through our social marketing, offline stores and B2B distribution. As of March 31, 2019, Tuniu operates 536 offline retail stores throughout China. We also made investments to our offline and online experience by further integrating our professional and dedicated customer service representatives. Technology wise Tuniu continued to heavily invest in the development in innovative tours and the strengthening of our ecosystem. Over the years Tuniu invested over [RMB2 billion] [ph] in the development of [indiscernible] technologies. Our dynamic packaging system continue to be industry-leading allowing our customers to dynamically packaging where we have our products such as air tickets, hotel booking and destination-based products into a one bundled product. Overall, our service sales and the technology networks are essential to our long-term ability to differentiate ourselves from our peers. This year we are also put further emphasis on the improvement of the customer experience. Areas such as user experience of our prior tired products, price competitiveness of our dynamic packaging system and the service quality of our customer representatives will be key topics of focus. We will leverage our widely recognize the brand and extensive…

Thank you, Donald. Hello everyone. Now I will walk you through our first quarter 2019 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 first quarter of 2019 net revenues were RMB456 million representing 5% year-over-year decrease. Revenues from packaged tours was down 9% year-over-year to RMB365.9 million and accounted for 80% of our total net revenue for the quarter. The decrease was primarily due to the decline in certain destinations. Other revenues were up 17% year-over-year to RMB91 million and accounted for 20% of our total net revenue. The increase was primarily due to the increase in revenues generated from financial services and the commission fees received from the certain travel related products. Gross profit was down 5% year-over-year to RMB250.8 million for the first quarter 2019, the decrease was primarily due to the decline in revenue from packaged tours. Operating expenses for the first quarter 2019 were RMB431.4 million, a 12% year-over-year excluding share-based compensation and amortization from acquired intangible assets. Non-GAAP operating expenses were RMB374.7 million represented a year-over-year increase of 11%. Research and product development expenses for the first quarter of 2019 were RMB80 million about 5% year-over-year, the decrease was primarily due to the increase in efficiency resulting from the economics of scale and refined management and optimization of research and product development personnel. Sales and the marketing expenses for the first quarter of 2019 was RMB280.8 million up 17.8% year-over-year, the increase was primarily due to the expansion of our offline retail stores. General and administrative expenses for the first quarter of 2019 was RMB503.1 million up 17.5% year-over-year, the increase was primarily due to an increase in general and administrative personnel related expenses. Net loss attributable to ordinary shareholders was RMB150.6 million in the first quarter of 2019. Non-GAAP net loss attributable to ordinary shareholders which exclude share based conversation expenses and amortization of acquired intangible assets was RMB82.1 million in the first quarter of 2019. As of March 31, 2019, the company had cash and cash equivalents restrictive cash and the short-term investments of RMB1.8 billion cash flow generated from the operations for the first quarter of this year was RMB13.5 million. In the first quarter, cash conversion cycle was negative 28 days compared to negative 22 days in the corresponding period of last year. Capital expenditures for the first quarter of this year was RMB34.3 million. Tuniu currently expect to generate RMB472.7 million to RMB499.8 million of net revenues for the second quarter of 2019, which represent 5% to 10% year-over-year decrease. Please note that this forecast reflects Tuniu's trend and the [premier reveal] [ph] on the industry and its operations which is subject to change. Thank you for listening. We are now ready for your questions. Operator?

Thank you. [Operator Instructions] And the first question today comes from Elaine He a Private Investor. Please go ahead.

Thanks for taking my question. I was wondering if management can share the reason for the negative growth for this quarter as well as the negative guidance for the next quarter. Also can you provide rate -- full year guidance for 2019? Thank you.

Okay. Thank you for your questions. So let me answer your questions, the negative growth during the first quarter of 2019 was primarily due to a number of the external factors in certain destinations and also the macro economic slowdown which impact our packaged tour revenue during the quarter. For the destination side such as the Middle East cruise and the certain island impacted us a lot. We also moved out the lower certification rate product in the first quarter which also impacted total transaction volume strongly during the last quarter even through -- so we are seeing an improvement following the Chinese New Year. So the recover will benefit packaged tour revenues still in the second quarter. To answer your questions on the guidance for the next quarter, the negative guidance is primarily due to the decline in tour products, because in this year, the supply side in China is decreasing. As we are [indiscernible] our product of the new tour and the Tuniu selection, we have started to improve our take rate during the second quarter which will have positive impact in the second half this year excluding the impact of our core product, our packaged tours revenue is expected to have a positive growth next quarter. Unfortunately, we don't offer the full year guidance. Thank you for your questions.

Understand. Thanks management. I have got a last question. Can you also share us -- the breakdown of the GMV by destination during the first quarter?

Okay. In terms of the GMV breakdown during the quarter domestic tour accounted for about 30% of our total GMVs. Southeast Asia was about 15%, Japan around 10%, Europe 10% and Middle East and Africa around 10%, Maldives and other islands was around 5% each. Thank you.

[Operator Instructions] Our next question today comes from William Yen with Blue Sky Capital. Please go ahead.

Thank you management for taking my question. Can you share with us some key drivers for growth in the future? Also what are some key initiatives that we are taking in order to protect the external customers?

[Foreign Language] We have two main areas that we are going to focus in addition to our current business. [Foreign Language] Social marketing will be one of our core focuses going forward. We have based on some of the research we have noticed that our target market demographic is very similar to the audience reach via social marketing tools. So we have tested out a number of products and services through distribution, through social marketing tools, our products such as Difeng and our certain destination based products have been very well associated within the community. [Foreign Language] We have invested in the R&D for the social marketing tools in the past quarter -- few quarters. We have perfected a number of tools for our distributors. So that they are more easily and able to distribute products and services from [indiscernible] to their social circle, to their chat rooms and to their local communities. [Foreign Language] For social marketing, we will leverage establish social marketing platforms as well as develop our own social marketing channels. So overall, we expect both of these to reach into the local communities. [Foreign Language] Our focus on top selling products and our years of accumulation on -- in the channel supply chain will allow us to better serve our customers through social marketing. [Foreign Language] The second main focus here is to push our dynamic packaging system which allows users to bundle products at a discounted price. [Foreign Language] For dynamic packaging system, we recently launched a new application version for app and we have prioritized our dynamic packaging system into front spot. Features such as air tickets, plus hotel -- hotel plus [indiscernible] and various combination of these products allow users to bundle products at a discounted prices compared to booking them separately [indiscernible].…

I have got follow up questions regarding your offline retail stores since your peers are expanding their offline stores rapidly. How much contribution did these stores contribute during the quarter? What's your strategy for offline stores this year? Thanks.

Offline stores in this quarter, [indiscernible] around 20% of the total GMV transaction volume. So, for the clarity…

[Foreign Language] We continue to open direct -- directly operate store this year, last year, as you know last year we opened relatively large amount of stores. This year, we will be focusing on creating efficiencies of each store as all -- for this year, we will open store with relatively more caution and slowdown the pace of that.

We are now approaching the end of the conference call. I will now turn the call over to Tuniu's CFO Maria Xin for 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.

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