Ladies and gentlemen, thank you for standing by, and welcome to Uxin's First Quarter 2019 Earnings Conference Call. At this time all participants are in listen-only mode. After management prepared remarks there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Please go ahead.

Thank you, Operator. Hello, everyone. Welcome to Uxin's First Quarter 2019 Conference call. Today, D.K., our Founder and CEO; and Zhen Zeng, our CFO, will discuss our financial results for the first quarter. Following the prepared remarks, D.K. and Zhen will address any questions you have. Before we start, I will like to remind you that our statements today will contain forward-looking statements that we make under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are made - are based on management's current knowledge and assumptions about future events that involve risks and uncertainties, which could cause actual results to differ materially from our expectations. Uxin does not undertake any obligation to update any forward-looking statements, except as required under applicable law. For more information about the potential risks and uncertainties, please refer to the company's filings with SEC. With that, I will now turn the call over to our CEO, D.K. Please?

Thank you, Nancy. Hello, everyone. Thank you for joining our first quarter 2019 earnings conference call. We are pleased to start the year with another strong quarter of growth as well as a significant improvement on the bottom line. Total revenue in a quarter increased by 55% year-over-year and exceeded RMB1 billion, once again beating the high end of our guidance. Thanks to great economics of scale and the more effective cost control. Gross margin improved to 70% from 66% in the same period one year ago. We also continued to gain operating leverage during the quarter, which enabled us to cut adjusted net loss by over 50% year-over-year to RMB231 million and significantly reduce adjusted net loss as a percentage of total revenue to 23% from 74% in the same period last year. Before we dive into operations, I would like to highlight that. Starting from the first quarter this year we will only disclose the transaction volume and the corresponding operational metrics for the transaction with generated revenues. With this change transaction volume growth will serve as a better indicator of our revenue growth by excluding free of charge transactions, investors can get a clear picture of the take rate that we can actually change -- charge from one used car, and it will better demonstrate our ability to enhance monetization and the development of our cross-region and intra-region business. In addition this will reflect how we are more focused on the transaction, which have generated monetization potential and a better margin profile. The new method of disclosure has been applied to all the metrics of this earnings call. Now, I will provide some further color on our operating starting with our 2C business which continued to be the primary growth driver for Uxin. We facilitate transactions for…

Okay. Thank you. Hello, everyone. Thanks for joining us today. Now let me walk you through our financial details of the first quarter of 2019. Please note that all numbers are in RMB unless otherwise stated. Also please note that some numbers I referred to are non-GAAP, you can find our reconciliation of these numbers in our earnings release. In the first quarter, total revenue increased by 55% to RMB1,004 million from RMB649 million in the prior year period. The increase was primarily due to the increases in the 2C transaction volume transactions facilitation take rate and the amount of the loans facilitated. Drilling down to our business pillars, in terms of our 2C business, total 2C revenue was RMB883 million, representing an increase of 94% year-over-year from RMB454 million in the prior year period. Moving on to more details; revenue of 2C cross-regional business was RMB284 million, representing a significant increase of 54 times from only RMB [Indiscernible] in the prior year period. Cross-regional transaction volume increase up potentially by 48 times to 20,647 units from only 420 units in the prior year period and the corresponding GMV increased to RMB2,268 million from RMB57 million in the prior year period. Cross-regional transaction facilitation revenue increase substantially by 47 times from RMB140 million from only RMB3 million in the prior year period, primarily due to the increase in the transaction volume GMV and the transaction facilitation take rate of used car sales were lower at cross-regional business. Take rate for the cross-regional transactions facilitation increase to 6.2% from 4.4% in the prior year period, primarily driven by enhanced service user experience in a higher pricing power. Cross-regional loan facilitation revenue significantly increased by 64 times to RMB144 million from RMB2 million in the prior year period. Primarily due to the…

Thank you, Mr. Zeng. Operator, we'd like to open the call for questions now.

Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions]. The first question comes from the line of Eddy Wang from Morgan Stanley. Please ask the questions.

[Foreign Language] I have two questions, the first is about that you have been talking about to implement three new initiatives, including the shift more resources to cross-region transactions that improved operation efficiency as well as focus on the used car assets with better risk profile. So, can you give us more color on how such initiatives will be reflected on the operation as well as the financial metrics in terms of the transaction volume growth, proportion of the cross-region transaction, longer tax rate and other placement spending in the next few quarters? This is a first question. And second question is actually I would like to have your view on the competitive landscape of the used car e-commerce industry. On the one hand that we actually noted that the demand of both new car and used car relatively weak yesterday in China, but on the other hand we have also noticed some of our competitors are claiming to increase their investment in the used car business, so our new initiatives seem to me that is to focus more balance between the sustainable growth with the profitability, so does it mean that you think the used car e-commerce industry has gone to a stage that probability is becoming the most -- one of the most important targets of all the used car e-commerce companies? Thank you.

Okay, Eddie. Here is -- Michael here. So I'll address your first question. So, overall speaking after a year of the rapid development, we think now is the right time for us to shift our focusing on a high quality and a more sustainable growth, and we have been continuously optimizing our business model and the operations and we have identified great market opportunity in the 2C especially for the cross-regional business. More importantly, we have viewed the upward [ph] comparability to carry out the business and have the first mover advantage. In order to capture this market opportunity, I think we will shift the key scores to our cross-regional transaction and become more focusing on the spending days core business, using our new disclosure method that we are looking at around the 40% of the transaction volume coming from the cross-regional transaction this year. Concentrating on the -- within the cross-regional business will not only gave us more sustainable growth but also take us one step closer to the profitability. And to ensure this high quality growth starting from the second quarter, we have been conducting a over all for whole company in-depth review of our business operations. Operational efficiency and the cash flow and for some of the low margin and/or the low efficient business such as new car loan facilitation business, we have decided to stop the business. For the loan product, the headcount or operating regions, we streamlined related [Indiscernible] operations. And at the same time we have decide to take more conversational approach to our loan facilitation business and going forward we will commit our resource to used car asset with better risk profits. We will also adopt restrict rate of control process in it be more prudent when facilitating the loan. Regarding some of the intra-regional loans with less satisfactory risk profile or low cash flow performance, we will also cutting back its portion of volume, but we are confident that it will lead a more sustainable business and improve the cash flow, things we no longer provide onset transaction facilitation service to the local transaction without financing package and not disclose the free of charge transaction financing a tax rate will seem higher and for the -- I think the intra-regional business over flow has actually well 100% and for the cross regional is around 80% or the 5%. And we will also take strict measure to manage the quality expenses to ensure that we are maximizing the impact over dollar with Ben and continue to optimize the operational efficiency. Compared to the last year, our branding expenses will be great reviews in this year. And I think with this initiatives through our top line of this year will be lower than the previous factor, our bottom line will be further improved, so we believe we can build a even stronger foundation for our long term growth.

Hello Eddy, this is D.K. I'm addressing your second question. I use Chinese to answer the question and then Nancy will help me to translate. Okay, right. [Foreign Language]

Yes. So I think the key difference from previous years is the different models between different players are very clear now, so some of the players are choosing to have a model, some of the competitors is choosing the traffic, their action model and for us, for Uxin, we are a firm believer of the B2C model and our key value is the whole supply chain.

[Foreign Language]

Yes. So, we have been prepared for cross-regional services for many years. So starting from 2011 when we established, we've been fully prepared for all the capabilities. So we have been doing a lot of things throughout the value chain from the hallway, secure the car inventory to car inspection, to standardization and to digitization as well as the offline fulfillment such as logistics and the title transfer, so, all of the -- these are the whole new used car purchasing experience to Chinese consumers. So, we believe the market or the bearer were been set is quite high. So it's not something other competitors can catch up with -- within a very short time period.

[Foreign Language].

Yes. So our focus is on the sustainability and the high quality of the growth doesn't mean that we will slow down our pace. Instead, we will put more concentrated our resources on the core business which has our cross-regional business. So our goal is not only to maintain our market leadership for the moment. More importantly, we will extend our market leadership in the future.

[Foreign Language]

Thank you.

Thank you. The next question comes from the line of Ronald Keung from Goldman Sachs. Please ask your question.

Hey thank you, [Indiscernible] Michael and Nancy. [Foreign Language] So thank you D.K. Michael, and Nancy, as I've got two questions. Firstly is on, given the focus on cross-regional that we've talked about and I've heard D.K. talked about the strategies and the uniqueness of our business model there. I just want to hear, have you done sort of -- how do you see the market size could be ultimately, how many cities do you plan to cover in the lower tier of cities to your cell phone and franchise models and sort of how -- how do you see the total volumes could -- could reach in terms of lower tier consumption power for these used cars? And I'm thinking one of the potential challenges is always that we as a buyer we haven't seen the car, we haven't test driven it. So to make a decision on the spot without touching and seeing the car what else besides the video or the sales agent talk about inspection report, what else can we offer to increase the confidence of the buyer using our platform in buying these products from other cities? And the second about the disclosure change, and you outline what exactly have changed there, particularly as we mentioned about volume and notes that are not generating, submission revenues are no longer accounted. So could you give us some apples-to-apples GMV and volume numbers of fiscal last year full year 2018 under this new definition that could help us compare more apples-to-apples from -- from this year onwards? Thank you.

Okay. Thank you, Ronald. I will address your first question and I use Chinese to answer and then Nancy will help me to translate. Ronald. [Foreign Language]

Yes. So the alleged condition of the used car transactions is that future trend for the China's used car market as well as it's also true for the U.S. or European market. So for our digital transactions, we provided two key unique values to the consumers. Why is the wide selection of used cars nationwide selections? So whether especially for the consumer thing the lower tier cities, whether they can find this car is very important. So for lower tier cities, we can enlarge the Used Car Connection as high as thousands of folds and for high tier cities we can provide as high as 20 times more used car selection. This is first value we provide. And for the second value is to increase of the overall efficiency of the used car industry, and we can cut the unnecessary procedures in-between, so we can lower the price gap between different markets. So we can provide better prices to the consumers.

[Foreign Language]

So we think we can guide our consumers to change their shopping behavior, especially by the capabilities we provide the reservation. So the first thing is how we can better display the used cars online. So first we provide on top of the tax plus picture, the special report we also provide reading the special reports as well as the VR functions, so consumers will have a better idea of how this car performs even without seeing the car in person, so we will increase their comfort level to purchase a car online. So secondly we provide a well round warranty services to the consumers, so we provide a 30-day quality issue based on policy or we provide a one year or 20,000 kilometres warranty programs to the consumers. Also for the super value of the cars, we also provide a three day no-reason-ask return policy, so all of these will lower the -- increase the people's trust to purchase online.

[Foreign Language]

So in longer term if we look at in 10 years for as an online transaction of the used car, the advantages is quite clear. So we believe there will be as high as 50% of the consumers will choose to purchase the car online. So especially for the cars with car price above RMB80,000 so people will be more price sensitive and they will be more prudent when choosing the car, so online transaction will give them more a comfort level. And also with our professional transactions, we provide a whole new purchasing experience to the consumers, the consumers who are purchasing through our Cross-regional services they feel very happy about it. We believe that this will be the trend going forward.

[Foreign Language]

Yeah, starting from Q4 2017 or early 2018 we started to launch this professional transactions with the consecutive quarters of volume growth very rapidly. So this is also the evidence that our professional [ph] transactions is gaining traction among consumers. Thank you.

Okay, Ronald. It's Michael here. So I'll address your second question, because we changed the disclosure method. So on the apple-to-apple base, the full year of 2018 the portal to fee transaction is 255,000 used cars and the GMV is RMB27 billion. And for the intra-regional, the transaction volume is 220,000 used cards and the GMV of RMB23 billion and a 40 at cross-regional if the transaction volume is 38,000 and the GMV RMB4 billion. Thanks, Ronald.

[Foreign Language]

Thank you.

Thank you. Your next question comes from the line of Nick Lai from JPMorgan. Please ask your question.

[Foreign Language] My simple question is number one, our partnership with Uber [ph]. What does that mean to our revenue and profit, if we could quantify that for now [ph]. And secondly, management talked about marketing expense and cutting. What does that mean to [Indiscernible] to the rest of the year? Thanks.

[Foreign Language]

Yes, so 58.com has massive targets at the used car traffic and large user base, so they've been also penetrated into larger cities in recent years, so this is highly in line with our strategy in the profit and retail connections, so by leveraging the traffic and their resources in the lower tier cities, we believe we can further expand our cross-regional transaction. In return, we will help to stay out 58.com to further monetize their traffic as well, so we believe the synergy is quite great.

[Foreign Language]

Yes. So after three years of branding investment, Uxin brand is highly recognized by the consumers, especially with the consumer with purchase minded consumers. So we believe it is the right time to control the branding budget and also it is practical. So we don't see any or material impact on volume and we believe it will impact, I mean in the near future as well.

[Foreign Language]

Yes, so our car producing is habit is just a making process, so it will take quite a long time before they can finally make the purchase, so people normally will choose from platform-to-platform and compare the used cars. So we believe -- invest more in branding will have a limited impact show.

[Foreign Language]

Thank you very much

Thank you. We have the last question from the line of Monica Chen from Credit Suisse. Please ask the question.

[Foreign Language] So I will quickly translate my questions. My question is about the market outlook for this year. So the year today used car transaction volume looks quite weak comparing to the growth rate in the last year and given the micro uncertainties for this year. So how do your management think about the second half market outlook and what is our expectation on the transaction volume growth for this year? And to achieve this target, what do management think about the biggest opportunity and the challenges for this? Thank you.

[Foreign Language]

So the car marketing trend in China has been quite challenging for quite a few times. So the new car market has been declined year-over-year and for the used car market that growth is still slowing down underway. I think this trend will continue in the next few months.

[Foreign Language]

Yes, if you look back to our last year's third quarter and fourth quarter as this years first quarter growth, we maintain very high growth both in transactions volume and revenue growth. This is especially thanks to our cross-region transactions. I think this high growth is mainly because our cross-region connections or our total transactions are still relatively low compared to the whole market. So we are still benefiting from the People's condition of their purchasing behavior. So this is also why we are less impacted than the whole market and -- I mean looking into the remainder of 2019, we ask you to look at very decent or high quality growth. So as we previously mentioned we are focused more on the sustainability of our growth, even though our topline growth or volume growth will be lower than previously expected.

[Foreign Language]

Yes, with all the initiatives in place, we believe our profitability of this deal will be highly improved. Thank you.

[Foreign Language]

Thank you.

I will now hand over to Nancy for closing remarks.

Yes, thank you everyone for joining us today and for your continuous support for Uxin. We're looking forward to speaking to you again in the future. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating.