Hello. And thank you for standing by for Tuniu's 2021 Second Quarter Earnings Conference Call. At t 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. [Operator Instructions] I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary.

Thank you. And welcome to our 2021 second 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 second quarter of 2021. 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 second quarter 2021 earnings conference call. The overall domestic tourism industry saw a clear trend towards full recovery in the second quarter. Year-on-year, our net revenues increased by 373% with revenue from packaged tours, up by over 900%. This is the first quarter in which we achieved positive growth since the COVID-19 outbreak last year and benefiting from our strict cost control measures, operating expenses decreased by 40% year-over-year and our quarterly loss was the lowest since the pandemic outbreak. In the second quarter, with epidemic [ph] stabilized, the warm weather and holiday further demand for travel. While last year, most people choose to take local tours during the public holiday, this year, the proportion of travelers taking inter-provincial tours has steadily increased. Also in line with the high standing demand for high quality tour products, the proportion consumption of inter-provincial tours has increased compared with the same period last year. We continue to emphasize the development of our core tax tour business with special focus on demand stagnation to continuously upgrade our product and the level of service. This allows us to rapidly recover our business by exciting [ph] opportunities during industry upstream. Our core competitiveness and protective mode is our commitment to providing the high quality products and services to our customers. Based on customer demand, Tuniu's travel rules are designed to satisfy and even exceed customer expectations. Our new tour product designers have more than 5 years of experience in production or asset mission. Our high quality products are subject to strict internal procurement and production procedures. Both our - for new tool would go through logical interviews and the training before they are officially on the job. Our products also have been impacted by our customers ensuring…

Thank you, Donald. Hello, everyone. Now I'll walk you through our second 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 US dollar equivalence of the numbers in our earnings release. For the second quarter of 2021, net revenues were RMB 161 million, representing a year-over-year increase of 373% from the corresponding period in 2020. The increase was primarily due to the growth in revenues from packaged tours. Revenues from packaged tours were up 907% year-over-year to RMB 126.5 million and accounted for 79% of our total net revenues for the quarter. The increase was primarily due to the growth in demand for domestic tours. Other revenues were up 61% year-over-year to RMB 34.5 million and accounted for 21% of our total net revenue. The increase was primarily due to a rise in commission fees received from other travel-related products and service fees received from insurance companies. Gross profit for the second quarter of 2021 was RMB 69 million, up 792% year-over-year. Operating expenses for the second quarter of 2021 were RMB 95.1 million, down 40% year-over-year. Excluding share-based compensation expenses and amortization of acquired intangible assets, non-GAAP operating expenses were RMB 89.6 million, representing a year-over-year decrease of 36%. Research and product development expenses for the second quarter of 2021 were RMB 13.8 million, down 33% 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 second quarter of 2021 were RMB 44.8 million, down 47% 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 second quarter of 2020 (sic) [2021] were RMB 41.5 million, down 32% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel related expenses. Net loss attributable to shareholders was RMB 13.1 million in the second quarter of 2021. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses and amortization of acquired intangible assets was RMB 7.4 million in the second quarter of 2021. As of June 30, 2021, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB 1.1 billion. Cash flow generated from operations for the second quarter of 2021 was RMB 55.7 million. Capital expenditures for the second quarter of 2021 were RMB 2.9 million. For the third quarter of 2021, the company expects to generate RMB 111.2 million to RMB 123.5 million of net revenues, which represents 0% to 10% decrease year-over-year. Please note that the forecast reflects Tuniu's current and preliminary view on the industry and its operations, which is subject to change, particularly as tourist uncertainties brought by the impact of COVID-19. Thank you for listening. We are now ready for your questions. Operator?

Thank you. [Operator Instructions] We can now take the first question from Tina Bide [ph] who is a Private Investor. Please go ahead.

Thank you. This is Tina Bide speaking of [indiscernible] Hi, management. Congratulations on the strong recovery of the second quarter. Would you please share with us your core destinations? And my second question is regarding the recent coronavirus outbreak in several cities across China, how does it impact your performance in the third quarter? And what is your view towards the mid to long-term development of the travel industry? Thank you.

Thank you for the question. In the second quarter, the external environment was very positive for the recovery of travel industry. In fact, we report the sales strengthening ever since the resumption of inter-province travel in last July. We've adapted the four life cycle customer management method to gain and retain customers. Also, our tour advisers in more training such as on destination knowledge and customized services to add to - enhance their serviceability, part from traditional online channels will also provide our sales staff with new channels such as Taiko app, our social media and live streaming show. As a result, our revenues, especially the revenues from packaged tours grew largely during the quarter. In terms of the packaged tour GMV, our best destination for the culture [ph] was Hainan, one of the most popular leisure travel destinations in China, followed by Shanghai and Guandong [ph] both of which have famous theme parks and good for families with children. And then were Guangzhou and Sichuan [ph] [indiscernible] boosted by short holidays during the quarter. Other destinations included the popular site in [indiscernible] Yunnan and Xinjiang. For the second question, yes, the recent COVID-19 outbreaks in several cities across China had negative impact on the travel industry during the peak season. In fact, the travel market showed rapid growth due to the summer vacation before the outbreak in late July. Our tour generally in July increased both year-over-year and quarter-over-quarter basis. However, considering the safety issue some provinces have ceased inter-province travel since mid-July. Therefore, we expect the net revenue for the third quarter to align with the same period last year or decrease up to 10% year-over-year. After the outbreak of virus in July, our first priority is to ensure the safety and the interest of our customers, having been done refund and reschedule their trips. We also upgraded our destination service, including customers with new, clean of ATG [ph] testing. Our employees, both in the headquarter and at destinations worked in shifts around the clock to help our customers with any emergencies and try to send them on earlier and safer. For products, we launched the products without a fixed departure date, which means the customer may book the itinerary now enjoying the current favorable price and departing in two or three months time when the external environment gets better or they have a vaccine. The customer only needs to make second confirmation about the exact departure date in advance, then we will arrange their trips accordingly. They can also cancel orders at any time with a full refund, if they change their trip plan. The economical and flexible product is welcomed by all customers, especially the younger generation. In general, we are still positive about the industry, for the demand its always there, despite the short term recession during this January and February, we experienced record rebound since March. With the pandemic being under control, the market will get better and better. Thank you.

[Operator Instructions] It appears at this time, there are no further questions. I'd like to now turn the call back over to Mary Chen for any additional or 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 for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.