Welcome to the 111, Inc. Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. After management's prepared remarks. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Miss Monica Mu, the Investor Relations Director.

Thank you, operator. Hello, everyone, and thank you for joining us today for 111's fourth quarter and fiscal year 2018 earnings conference call. The Company's results were released earlier today and are available on the Company's IR website at ir.111.com.cn, as well as on GlobeNewsWire's services. On the call today from 111 are Dr. Gang Yu, Co-Founder and Executive Chairman; Mr. Junling Liu, Co-Founder, Chairman and CEO; Mr. Luke Chen, Chief Financial Officer; Mr. Harvey Wang, Co-COO; Mr. Barry Zhu, Co-COO; and Mr. Alex Liu, Finance Director. Mr. Liu will discuss the Company's business operations, highlights, financials and guidance. They will be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, target, confident and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as 111's strategic and operational plans, contain forward-looking statements. 111 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict…

Thank you, everyone, for joining us today for our Fourth Quarter and Fiscal Year 2018 Earnings Call. First, let me introduce our new CFO, Yang Chen or Luke Chen who is on the call with us tonight. He comes to us after serving as Chief Financial Officer of iKang Healthcare Group Inc. for 6 years. Previously he was Vice President of Finance and Strategy at Campbell Soup Asia and at Lee Kum Kee Sauce Group. He also held various senior finance positions at Dumex, PepsiCo and Wyeth China subsidiaries and started his career as an auditor at Arthur Andersen & Co. I'm very excited to have Luke on board and feel confident that his extensive leadership experience in financial management, strategy, and capital markets makes him a great addition to the team. Luke, if you want to say a few words to everyone on the call tonight?

Hello, everyone. This is Luke. I'm very excited to join the Company, and looking forward to meeting you all in person very soon. Thanks, Junling.

All right, then tonight, I will deliver all our prepared remarks, including the financial review of the quarter, given Luke just came onboard. And now let me start with the business review section first. We delivered a very strong quarter. Fueled by growth in our B2B segment, top line was up 102% year-over-year, reaching RMB557 million, substantially higher than the high end of our guidance. On full year basis, net revenue has reached RMB1,786 million, up 86.1%, which means that revenue growth accelerated in the second half of the year. We continued to focus on our mission of building China's largest integrated online and offline healthcare platform powered by technology. We have developed a fast growing virtual pharmacy network in China and we are determined to further build scale rapidly. As of December 31, 2018 we served more than 150,000 pharmacies, up 15.4% sequentially. And we expect to continue to dominate the virtual pharmacy network by adding 80,000 pharmacies in 2019. This would bring us to 200,000 pharmacies, which represents more than 50% of our addressable market. We have made further progress in building our sourcing network of pharmaceutical manufacturers. As of December 31, 2018, we were directly sourcing from 93 manufacturers, up from 80 at the end of September. In our B2C segment, we have restructured our organization to be more customer-centric in order to better meet the specific needs of different customer segments. As we search for new and innovative ways to acquire customers, we are leveraging big data to better understand our customers and their behavior, execute direct marketing and promotions, and provide professional customized services. We are focusing on building strategic partnership with pharmaceutical companies, insurance companies and local municipal health commissions, to launch various healthcare solutions for individual consumers and patients. For instance, our strategic…

I think we're ready to do the Q&A session.

[Operator Instructions] We have a question from the line of Leon Chik, please ask your question.

Yes. Junling, Liu and congratulations. Just you mentioned very fast growth in the number of new drug stores. Could you just comment on the strategy or what you've been doing in terms of lifting the ARPU, the average sales per drug store in recent months, just your general strategy today and then what's going on in 2019?

Yes. So Leon, indeed. So the drivers of our B2B growth comes from mainly two metrics. One is the new customers we acquire, new stores that we add on to our list and also the per store sales. And in Q4, obviously, we have done a lot of work to motivate the team to make sure that not only we're growing by adding more stores, but we have also noticed a very, very pleasing ARPU uplift. So in Q4, if we compare to Q3, the ARPU actually went up 13.6%, which was very pleasing.

[Operator Instructions] We have another question from the Leon Chik. Please go ahead.

So could I get an idea like when you sign up these drug stores, do you know how many other online providers they use or do you get the feeling that you're the only one or the leading one in terms of their online providers?

Yes. So from our intel, we believe we're the major one from the online providers. Obviously, those pharmacies still have existing purchasing channels and so on, but the fact that the ARPU is growing on a per store basis indicated that we're taking more and more share. So we want that to continue in the foreseeable future.

Right. Just a follow-on, just curious if you have any change or how many of your drugstores can you deliver, say, within 24 hours or 48 hours? Can you give us an update on that?

Yes. Harvey, you have the exact numbers. So in terms of 24 and 48 hours, right. So I'll let Harvey to give you the indicative numbers.

Actually, currently, we have about for 24 hours, we have about 19 of cities we are able to deliver within 24 hours and we are expecting with the launch of new logistic centers which we plan in 2019, we are expecting this number to be increased in the coming one and two quarters.

Okay. Great. I mean, and 48 hours, I mean is it pretty much everybody is 48 hours?

Yes, I would say 70% of the GDP that would be covered, with the exception of pretty far corners of the country like Tibet or Xingang, et cetera.

[Operator Instructions] As there are no further questions, I would like to hand the call back to Monica for any closing remarks.

In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and your participation in today's call. If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.