Good day, and welcome to the Tuniu ‘23 Q2 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note 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, and welcome to our 2023 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, operational highlights and financial performance for the second 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 its most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this 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 2023 earnings conference call. In the second quarter, Tuniu’s business experienced a rapid recovery and deliver robust results. Building on the strong momentum we saw in the first quarter. Our net revenues beat our previous guidance, growing by 170% year-over-year for the quarter with revenues from packaged tours growing even faster at 632% year-over-year. In this year -- in this quarter, we achieved our first operating profit since Tuniu's listing and the first net income since the pandemic outbreak, both on GAAP and non-GAAP basis. By leveraging Tuniu’s advantages in products, supply chain, and sales channels, we have been able to continuously increase our profitability. We also focused on improving internal operation, operational efficiency through the -- in premiumization, our technology tools. During the quarter, our gross margin improved to 65%, up from 45% during the same period last year. Additionally, we have maintained positive operating cash flow for two consecutive quarters. The encouraging results from this quarter domestic Tuniu is overcoming the negative impact of the pandemic. And we are now one step closer to realize our goal of sustained growth and long-term profitability. In the second quarter, people's enthusiasm for traveling search with a warm weather and upcoming holidays. In response to the increasing market demand for travel products in terms of both quantity and quality, our strategy has been to focus our in-house offerings on the most popular travel products and to meet diverse customer demands through collaborations with suppliers. To be more specific regarding our in-house products Tuniu follows strict quality standards for product development and provides industry leading services for a selection of popular travel destinations and roads. During the quarter, our new tour series launched a large number of roads without planned shopping…

Thank you, Donald. Hello, everyone. Now I will walk you through our second 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 U.S. dollar equivalents of the numbers in our earnings release. For the second quarter of 2023, net revenue were RMB100 million, representing a year-over-year increase of 170% from the corresponding period in 2022. The increase was primarily due to the growth of packaged tours and the travel market recovers. Revenues from packaged tours were up 632% year-over-year to RMB69.8 million and accounted for 70% of our total net revenues for the quarter. The increase was primarily due to the growth of an organized tours. Other revenues were up 10% year-over-year to RMB30.2 million and accounted for 30% of our total net revenues. The increase was primarily due to the increase in service fees received from insurance companies. Gross profit for the second quarter of 2023 was RMB65.4 million, up 296% year-over-year. Operating expenses for the second quarter of 2023 were RMB48.6 million, down 48% year-over-year. The decrease was primarily due to the fact that the company did not incur gain on disposals of subsidiaries and the impairment of goodwill in the second quarter of 2023. Gain on disposals of subsidiaries, which were recorded in other operating income in the amount of RMB32.8 million and impairment of goodwill in the amounts of RMB112.1 million were incurred as operating expenses in the second quarter of 2022. Research and product development expenses for the second quarter of 2023 were RMB13.8 million, down 1% year-over-year. The decrease was primarily due to the decrease in amortization of acquired intangible assets. Sales and marketing expenses for the second quarter of 2023 were RMB24.9 million, up 2% year-over-year. The…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Rachel Lee, a Private Investor. Please go ahead.

Thank you, operator. First of all congratulations on the excellent performance this quarter. For the second quarter, the revenues have exceeded last quarter's guidance, which part of your company's business recovers better-than-expected domestic or outbound tourism business? What are their proportions and revenues respectively? And another question is regarding profitability outlook. From your perspective, do you think the profitability will expand in the third quarter? Thank you.

Thank you for the questions. We had strong second quarter with packaged for revenue growing over 6 times year-over-year. Our total GMV maintained a steady growth month-by-month, so it was through June. This year, the summer peak season come a bit earlier than before, probably due to the release of pent up demand in previous years. We saw little travels saw since the second-half of June, which used to happen in early July. This also contributed to the positive results of the second quarter. In terms of domestic and outbound tours, both have experienced faster recovery during the second quarter. Domestic travel towards -- accounted for less than 98% of our total GMV and outbound towards accounted for over 10%, increasing from a single-digit proportion in the previous quarter. For domestic tours, inter travels tours contribute the most to our revenues. New tour products, family tours, private and corporate customized tours were among our main revenue drivers. Both of our direct and distribution channels grow fast and many of the channels such as online platform, B2B distribution and a live streaming achieved profitability in the second quarter. For outbound tours with the reopening of more countries announced in March, we launched a new SKUs and saw increased bookings in the second quarter. For example, as several European countries were included in the March list. Europe become our second largest overseas destination in terms of GMV in the second quarter, something from bottom of the list with its GMV increased over 100 times, compared to the first quarter. We are excited about the new list of opening countries released last week. The third list contains much more destinations and some of them were among popular destinations for Chinese travelers before the pandemic. Soon after the release of the news, outbound destination searches on Tuniu platform increased significantly, especially for some countries in the new list. We are positive for the outlook of the industry and trying our best to resume supply chain as soon as possible. So far we’ve already have SKUs launched for the newly added destinations. For your second question, regarding the feasibility we will achieve our goal for a quarterly profit in the second quarter. The third quarter is the peak season and we are targeting for a top line growth of 110% to 120% year-over-year. While we continue to take strict cost control measures, we will maintain the increase of our total head account within 10% year-on-year during the peak season and the leveraging technology tools to assist our staff to handle the increasing business. Thus we still have room to -- for margin improvement in the first quarter both on a GAAP and non-GAAP basis. Thank you.

[Operator Instructions] There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Mary Chen 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.

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