Hello and thank you for standing by for Tuniu's 2023 First Quarter Earnings Conference Call. At this time, all participants are in 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 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 2023 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, operational highlights and financial performance for the first quarter of 2023. 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 2023 earnings conference call. We are pleased to see that 2023 has kicked off with a robust recovery in China's travel industry and a solid first quarter of positive growth for Tuniu. Our net revenues grow 52% year-over-year for the quarter, with revenues from packaged tours growing 179% year-over-year. Total travel GMV maintained a triple-digit growth year-over-year during both April and May. In the first quarter, the improvement in the external environment was accompanied by the release of consumers pent up demand for travel. Beyond the business travel and the family visits, the number of leisure and vacation trips increased significantly. During this year's Labor Day holiday, we saw a threefold growth in our number of trips compared to the previous year. Building on the strong beginning of -- to the year, we plan to capitalize on the collective capabilities of both upstream and downstream sectors to expedite our business recovery. Additionally, we will continue to enhance internal operations through digitalization, aiming to continuously enhance efficiency. In terms of our products, we firmly believe that excellent products serve as a competitive advantage for Tuniu and we are committed to the development of our in-house products. For example, our new tour products, which target at the mid to high-end market, employ a direct procurement strategy that ensures higher than average standards for accommodations and dining. We also closely monitor factors that may impact the customer experience, allowing us to design products that standout in the market. As a result, we have gained a favorable reputation among customers for high quality experiences and services. New tour products are not only fueled by Tuniu members, but are also popular across channels such as live streaming shows and offline stores by both customers…

Thank you, Donald. Hello, everyone. Now I will walk you through our first quarter of 2023 financial results in greater detail. Please note that all the monetary amounts are in RMB, unless otherwise stated. You can find the US dollar equivalents of the numbers in our earnings release. For the first quarter of 2023, net revenues were RMB63.2 million, representing a year-over-year increase of 52% from the corresponding period in 2022. The increase was primarily due to the growth in revenues from packaged tours. Revenues from packaged tours were up 179% year-over-year to RMB40.1 million and accounted for 64% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours. Other revenues were down 15% year-over-year to RMB23.1 million and accounted for 36% of our total net revenues. The decrease was primarily due to the decrease in commission fees received from other travel-related products and the revenues generated from financial services. Gross profit for the first quarter of 2023 were RMB38.9 million, up 146% year-over-year. Operating expenses for the first quarter of 2023 were RMB55.9 million, down 19% year-over-year. Research and product development expenses for the first quarter of 2023 were RMB14.3 million, down 11% 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 2023 were RMB20 million, down 33% year-over-year. The decrease was primarily due to the decrease in sales and marketing personnel-related expenses. General and administrative expenses for the first quarter of 2023 were RMB22.3 million, down 19% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel-related expenses. Net loss attributable to ordinary shareholders was RMB7 million in the first quarter of 2023. Non-GAAP net loss attributable to ordinary shareholders which excluded share-based compensation expenses and amortization of acquired intangible assets was RMB5.4 million in the first quarter of 2023. As of March 30, 2023, the company had cash and cash equivalents, restricted cash and short-term investments of RMB960.2 million. Cash flow generated from operations for the first quarter of 2023 was RMB11.6 million. Capital expenditures for the first quarter of 2023 were RMB1 million. For the second quarter of 2023, the company expects to generate RMB88.7 million to RMB92.4 million of net revenues, which represents a 140% to 150% increase year-over-year. Please note that this forecast reflects Tuniu's current and preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions. Operator?

The question-and-answer session of this conference call will start in a moment. [Operator Instructions] The first question comes from Elsa Lee, a Private Investor. Please go ahead.

Thank you, Operator. Hi, management. I have some questions for you. Firstly, how is the recent recovery of your domestic and outbound business? And what is the proportion of outbound tourism in your revenues from packaged tours? And what are the top destinations? And my second question is regarding profitability outlook. The gross profit margin increase and net loss decreased in the first quarter. What are the drivers for the margin improvement? What is the margin trend in the following quarters? Is it feasible to achieve profitability this year or even in a single quarter? Thank you.

Thank you for the questions. Firstly, we see the enthusiasm for travel continues to rise in the second quarter. We expect our net revenues to increase about 140% to 150% year-over-year in the second quarter and revenues from packaged tours to grow at a higher rate. Domestic tours currently contribute to the majority of our revenues. Compared to last year, long distance travel is gaining popularity this year. Bookings of some destinations in Xinjiang and Northwest China have reached or even surpassed 2019 level. For traditional hot destinations such as Yunnan and Hainan, we target at mid to high-end market with products focusing on visiting and experiencing. For example, we have launched a certain new tour itineraries with zero shopping trying to provide clients with enjoyment of pure travel. Outbound tours accounted for a single-digit percent of our packaged tour revenues in the first quarter and the proportion will continue to grow in the second quarter. The overseas destination popularity may depend on various factors apart from tourist preference such as airline capacity and the complexity of visa applications. In the first quarter, our top overseas destination is Maldives, followed by Southeast Asia, Middle East and Africa soared since March. In May, we launched our first new tour product to Europe after the pandemic. For Europe, we have been a promising destination in the second half of the year. For the second question, yes, we expect our gross margin to remain at a higher level than the previous year. That comes from two parts. First, as our business gets on track after the pandemic, our revenues will gradually recover. In particular, we will leverage brand assets to expand the sales of our self-operated products, which have a higher take rate to other channels. For example, new tour, our own branded product is welcomed by our partners at channels such as offline stores and live streaming because it's a differentiated product with a trusted brand and a high satisfaction rate. Second, we will continue to control the cost of sales through digitalization. We use automation technology to replace our staff in simple and repeated works and assist them in competitive works. So that our revenues may increase faster than headcount as business recovers. In the first quarter, our operating cash flow turned positive, and we will try to keep the trend in the following quarter. We are also trying our best to narrow the loss in the hope of achieving non-GAAP profitability for a single quarter of this year, probably in the third quarter. Thank you

[Operator Instructions] We are now approaching the end of the conference call. I will now turn the call over to Tuniu's Director of Investor Relations, Mary, 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.

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