Hello, and thank you for standing by for Tuniu's 2024 Second Quarter Earnings Conference Call. [Operator Instructions] 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 2024 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 2024. 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 second quarter 2024 earnings conference call. In the second quarter, our business continued to maintain healthy growth with revenue from package tours, Tuniu's core business, increasing by 29% year-over-year. We also saw further improvement in our profitability with net income reaching a quarterly record high since our listing, up to RMB 43 million. During this quarter, the domestic travel market maintained steady growth with the number of trips booked during the 3-holiday period increasing year-over-year. And with the full opening of overseas destinations and the availability of diverse product offerings, the outbound travel market continued to grow rapidly compared to last year with new popular destinations and roads emerging. It is clear that tourism has increasingly become an essential part of many people's lives. Tuniu continues to steadfastly adhere to our mission of making travel easier and focusing on customer needs. We will continue to enhance our products, services and sales to offer more travel options, ensuring customers have an exceptional trip experience. In the second quarter, we continued to strengthen our in-house product development. Our new tour products maintained their high-quality service, adding more destinations and new roads. In the second quarter, the transaction volume of new tour products increased by more than 40% year-over-year. The primary customer base for our new tour products are middle-to-upper class customers, many of whom are senior travelers who value experience over price. Focusing on this growth, we have continuously upgraded new tour offering small groups, higher standards for accommodation and dining and the more local sightseeing and restaurant options. For some of our outbound products, we employ local tour guides who speak Chinese, providing a more authentic cultural experience for our guests. By providing a constantly excellent customer experience, new tour products have…

Thank you, Donald. Hello, everyone. Now I'll walk you through our second quarter of 2024 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 2024, net revenues were CNY 116.9 million, representing a year-over-year increase of 17% from the corresponding period in 2023. Revenues from packaged tours were up 29% year-over-year to CNY 89.8 million and accounted for 77% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours. Other revenues were down 10% year-over-year to CNY 27.2 million and accounted for 23% of our total net revenues. The decrease was primarily due to the decrease in commission fees received from other travel-related products and revenues generated from financial services. Gross profit for the second quarter of 2024 was CNY 84.4 million, up 29% year-over-year. Operating expenses for the second quarter of 2024 were CNY 49.9 million, down 15% year-over-year. Net gain on disposals of subsidiaries, which was allocated to operating expenses was CNY 24.6 million in the second quarter of 2024. Research and product development expenses for the second quarter of 2024 were CNY 12.7 million, down 8% 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 2024 were CNY 40.2 million, up 61% year-over-year. The increase was primarily due to the increase in promotional expenses and sales and marketing personnel-related expenses. General and administrative expenses for the second quarter of 2024 was CNY 21.7 million, which was in line with general and administrative expenses in the second quarter of 2023. Net income attributable to ordinary shareholders of Tuniu Corporation was CNY 43 million in the second quarter of 2024. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation which excluded share-based compensation expenses, amortization of acquired intangible assets and net gain on disposals of subsidiaries was CNY 20.8 million in the second quarter of 2024. As of June 30, 2024, the company had cash and cash equivalents, restricted cash and short-term investments of CNY 1.3 billion. Cash flow generated from operations for the second quarter of 2024 was CNY 105.3 million. Capital expenditures for the second quarter of 2024 were CNY 8.5 million. For the third quarter of 2024, the company expects to generate CNY 183.5 million to CNY 192.4 million of net revenues, which represents a 3% to 8% 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?

[Operator Instructions] Our first question comes from [Gucu Lin].

First of all, congratulations on this quarter's performance. For the second quarter, what are the proportions of domestic and outbound tourism in revenues, respectively, and how about the recovery of outbound tourism. Are there any changes in top outbound destinations and for the third quarter, what are the primary reasons behind the slowdown in revenue growth? Can you share some trends of this summer towards the market?

Thank you for the questions. In the second quarter, domestic was comprised about 70% of the total GMV and outbound towards comprised a bit more than 30% compared to a bit less than 30% in the previous quarter. The proportion didn’t change much from last quarter because the second quarter is usually good for domestic tours due to the 3 national holidays. Domestic tours maintained steady growth this quarter as people’s enthusiasm for traveling remains high. But considering the lump of the holiday, self-drive tours and city walks were prevailing especially in Qingming and Duanwu holiday. For outbound travel, although the second quarter is not the peak season, it still increased at a high year-over-year rate, mainly due to more choices of destinations and products compared to last year. Breakdown to destinations, Southeast Asia has entered off-season since April due to hot and rainy weather. Japan was one of the star destinations in the second quarter due to mixed reasons such as pent-up demand, akura season and the favorable exchange rate. Long distance outbound decrease are usually not as popular as short distance, at least, in the second quarter, but Europe become – became our top outbound destination. In this quarter, we strengthened our supply capacity and launched more new tour products. Currently, our new tour products cover most of the popular countries throughout Europe. We also increased coverage of departing cities, providing more options for travelers from various parts of China. For the summer vacation, the market surges on a quarter-over-quarter basis due to seasonality, but compared to the strong growth last summer, the market growth moderately this summer. With the release of 3-year pent-up demand and the few choices of outbound destinations, domestic travel market was exceptionally thriving during last summer, which formed a hybrid. This year, we see trends towards more self-guided tours in domestic market. People tend to book more flexible products such as transportation or hotel plus X products. And the destination-based package tours may become one of the choices of that. People also have more choices of products this year with the recovery of supply chain, especially for outbound travel products. For example, overseas islands have entered off season in summer, which offers favorable prices and attracted many tourists. Outbound tours will have a higher increase rate than domestic tools. But considering that some of the demand have already been released last year. The outbound travel market will incur a step-by-step increase in that our domestic recovery. Under the influence of overseas flight, product price and exchange rate, generally we think, compared to the first half of the year, our top line will grow at a lower rate in the third quarter, but we are still confident with the bottom line to achieve another profitable quarter.

[Operator Instructions] We are now approaching to the end of the conference call. I will now turn the conference 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. Goodbye.