Good morning, and welcome to Tuniu First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Mary Chen, Investor Relations Director. Please go ahead.

Thank you, Kate, and welcome to our 2021 first quarter earnings conference call. Joining me on the call today are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer; and Anqiang Chen, Tuniu's Financial Controller. For today's agenda, management will discuss business updates, operation highlights and financial performance for the first quarter of 2021. Before we continue, I refer you to our safe harbor statement in the 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 first quarter 2021 earnings conference call. This spring, the domestic tourism industry has been experiencing a rapid recovery. Tuniu also experienced a strong recovery during the April and May holidays. The number of people traveling during the Qingming festival was nearly 3x that of the same period last year. And our total travel GMV during the Labor Day holiday was more than 4x than that of the same period last year. Also, for the first quarter, our operating expenses decreased over 17% year-over-year, and the net loss was narrowed significantly. Based on these encouraging things, for the second quarter, we anticipate net revenues will grow more than 300% year-over-year, delivering the first period of growth since the COVID-19 outbreak. We see great potential for growth in the travel industry with the release of pent-up tourist travel demand. However, we continue to face new challenges under the ever-changing market environment. Despite the strong demand for travel after enduring the pandemic restrictions, customers have become more demanding when selecting products with higher expectation for travel insurances and security and increase in new destinations and activities. This drives us to constantly develop innovative new products and enhance our service quality. We're always committed to develop high quality products that satisfy customers' demand. Our focus is to maximize customer satisfaction so as to raise repurchase rate for each products instead of creating the highest number of SKUs. Currently, all of Tuniu's new products are required to reach a 90% satisfaction rate for product launch, and we are expecting to increase this threshold in the future. We are fully leveraging the advantages of our integrated business model to accelerate the development of our own products. By vertically integrating across the industry, we have been able to…

Thank you, Donald. Hello, everyone. Now I'll walk you through our first quarter of 2021 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 equivalents of the numbers in our earnings release. For the first quarter of 2021, net revenues were RMB77.4 million, representing a year-over-year decrease of 56% for the corresponding period in 2020. The decrease was primarily due to the negative impact brought by the outbreak and spread of COVID-19. Revenues from packaged tours were down 62% year-over-year to RMB45.4 million and accounted for 59% of our total net revenues for the quarter. The decrease was primarily due to the decline in travel to international destinations, impacted by the outbreak and spread of COVID-19. Other revenues were down 40% year-over-year to RMB32 million and accounted for 41% of our total net revenues. The decrease was primarily due to the decline in revenues generated from financial services. Gross profit for the first quarter of 2021 was RMB28.7 million, down 69% year-over-year. Operating expenses for the first quarter of 2021 were RMB83.5 million, down 73% year-over-year. Excluding share-based compensation expenses, amortization of acquired intangible assets and impairment of acquired intangible assets, non-GAAP operating expenses were RMB79.5 million, representing a year-over-year decrease of 71%. Research and product development expenses for the first quarter of 2021 were RMB11.8 million, down 77% year-over-year. The decrease was primarily due to the decrease in research and product development personnel-related expenses. Sales and marketing expenses for the first quarter of 2021 were RMB35.4 million, down 72% year-over-year. The decrease was primarily due to the decrease in sales and marketing personnel-related expenses and amortization of acquired intangible assets. General and administrative expenses for the first quarter of 2021 were RMB44.7 million, down 67% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel related expenses and allowance for doubtful accounts. Net loss attributable to ordinary shareholders were RMB39.5 million in the first quarter of 2021. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses, amortization of acquired intangible assets and the impairment of acquired intangible assets was RMB35.4 million in the first quarter of 2021. As of March 31, 2020, the company had cash and cash equivalents, restricted cash and short-term investments of RMB1.3 billion. Capital expenditures for the first quarter of 2021 were RMB7.7 million. For the second quarter of 2021, the company expects to generate RMB142.9 million to RMB149.7 million of net revenues, which represents 320% to 340% increase year-over-year. Please note that this forecast reflects new current and preliminary view on the industry and its operations, which is subject to change, particularly as to the uncertainties brought about by the impact of COVID-19. Thank you for listening. We are now ready for your questions. Operator?

[Operator Instructions] Our first question is from [Emilie Zhao], a private investor.

Congratulations on the strong recovery of the second quarter. Would you please give us more color on the performance in this quarter and the future quarters? What is your strategy for the coming 6 seasons?

Thank you for the questions. First, let me give some updates on our recent performance. Despite the outbreaks of virus during the winter season, we see travel industry rebound rapidly since the spring comes when the virus is very well controlled in China. Our booking transaction volume in March increased over 190% compared to February. The pent-up travel demand were increased in April and May holidays, in particular. The sales volume of our membership base in April reached a new high since outbreak of COVID-19, which also contributed to the GMV growth of over 400% year-over-year in the following Labor Day holiday. In general, we are positive about the domestic travel market in the second quarter as well as the coming summer when high school graduates will be the first group of potential travelers in spring, followed by the families and with children in July and August. The summer holidays is always the peak season for travel industry, especially for leisure travel purpose. Since international travel is still very limited, the domestic travel market has more opportunities than before. However, this also brings new challenges. Customers are more demanding in the post-pandemic era. Apart from the quality and safety issues, customized itineraries and the new destinations are preferable to traditional products. The booking GMV of our customized tours in the March increased over 8x quarter-over-quarter and was the highest one since last October. Thus, we launched some products customized for summer holidays, such as travel to Falkland and New Zealand as well as customized tours for 1 or 2 families. In terms of the destination services, as orders are increasing in the coming peak season, our local tour operators are working on ensuring the supply of destination resources and our tour guide, so as to keep the high satisfaction rate of our services. On one hand, we continue the 0 campaign trial at 7 of our local tour operators, and we’ll try to pace the record during the peak season. On the other hand, we are giving value-added services to our customers. For example, some of our tour guys have learned photography and took photos for customers during the period. This was highly appreciated by our customers. In general, we will continue to focus on product development and services for these are our competitive advantages and bring us the long-term trust from customers. As we integrate the supply chain, we could provide closed-loop services for our customers from product development, booking to destination services. During the process of integration, our customers will enjoy high-quality products and services, and Tuniu will have the chance to improve its revenue and profit. Moreover, there remains a lot of more opportunities for us to cooperate with our partners throughout the supply chain. We will insist on our integrated model and try to bring more value to our customers, shareholders and business partners. Thank you.

[Operator Instructions] At this time, we have no more questions. So this concludes our question-and-answer session. I would like to turn the conference back over to Mary Chen 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 for your continued support, and we look forward to speaking with you in the coming months.

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