Ladies and gentlemen, thank you for standing by and welcome to Sunlands Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After prepared remarks by the management team, 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 conference over to your host today, Yingying Liu, Sunlands' IR Director. Please go ahead.

Hello, everyone, and thank you for joining Sunlands’ fourth quarter and full-year 2018 earnings conference call. On the call, our CEO, Tongbo Liu, will provide an update on our operational performance as well as our strategic initiatives. Our CFO, Steven Yipeng Li, will give you an overview of our financial performance and also provide our guidance for the first quarter of 2019. Following their prepared remarks, we will move into the Q&A session. Before I hand over to the management, I’d like to remind you of Sunlands' safe harbor statement in relation to today's call. Except for the historical information contained herein, certain of the matters discussed in this conference call are forward-looking statements. These statements are based on current trends, estimates, and projections, and therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the Company's filings with the Securities and Exchange Commission. With that, I will now turn the call over to our CEO Tongbo Liu.

Thank you, Yingying. Hello, everyone. Welcome to Sunlands' fourth quarter and full-year 2018 conference call. 2018 was a memorable year for us. Coincidentally, today is the one-year anniversary of our listing on the NYSE. Thank you for joining our quarter four and full-year earnings call. In 2018, we made a number of substantial changes to our Company. In addition to our U.S. public listing, we fine-tuned our business, enhanced our brand, served even more students, and launched more courses. Throughout the year, we work to support and enrich our industry-leading brand by focusing on user experience and course offerings development. First, we continue to bring students our best-in-class STE programs. We will also introduce new, proprietary AI technology designed to help students develop better study habits and support our unrivaled pass rates. Importantly, we refined our marketing tactics by offering a broader variety of free trials, selected course offerings. By adding more free course offerings including graduate, post-graduate and professional classes, we believe we can support our goals over the longer term. We ended the year growing our total annual net revenues by nearly 104%, or RMB 2 billion, with fourth quarter net revenues of RMB 569 million, at the high end of our guidance, demonstrating an increase of 65%. The increase was mainly driven by the growth in numbers of students in the year of 2018 compared to 2017 following new student enrollment continuous increase over the past years. During the year, we continued to introduce the market to the benefits of online STE and more specifically to our high-quality post-secondary education and our technologically advanced platform. In April, we reached a considerable milestone initiating our free trial program. We began working diligently to gain the interest of new students with increasingly versatile courses on both mobile and PC.…

Okay. Thank you, Tongbo. And hello, everyone. Thanks for joining us. We are pleased to report that we delivered revenue at the higher end of our guidance in the fourth quarter, reflecting the effectiveness of our initiatives to strengthen brand awareness and attract more students to our platform. Let me walk you through some of the key financial results for the fourth quarter and full-year 2018. All comparisons are year-over-year and all numbers are in RMB. In the fourth quarter of 2018, net revenues increased by 65% to RMB 568.8 million from RMB 344.7 million in the fourth quarter of 2017. The increase was mainly driven by the growth in the number of students in the fourth quarter of 2018 compared to the fourth quarter of 2017, following new student enrollments continuous increase over the past years. Cost of revenues decreased by 1.1% from RMB 79.4 million in the fourth quarter of 2017 to RMB 78.5 million in the fourth quarter of 2018. Gross profit increased by 84.8% to RMB 490.3 million from RMB 265.3 million in the fourth quarter of 2017. In the fourth quarter of 2018, operating expenses were RMB 699.7 million, representing a 0.2% increase from RMB 698 million in the fourth quarter of 2017. Sales and marketing expenses increased by 2.5% to RMB 530.1 million in the fourth quarter of 2018 from RMB 517.3 million in the fourth quarter of 2017. The increase was mainly due to increases in spending on branding and marketing activities, including investments in broadening Sunlands’ search engine and mobile application channels. General and administrative expenses decreased by 15.5% to RMB 142.6 million in the fourth quarter of 2018 from RMB 168.7 million in the fourth quarter of 2017. The decrease was mainly due to significant share-based compensation expenses recognized in the…

Yes. Thank you. [Operator Instructions] And the first question comes from Alex Xie with Credit Suisse.

Hi, management. Thank you for taking my questions. So, my question -- the first question is about our outlook for 2019. What are management expectations for the growth in 2019, and what are key initiatives to drive growth? And my second question I think is about GP margin of this quarter. I think, the GP margin of fourth quarter is higher than the previous three quarters. And could management provide some explanations about it?

Yes. For the first question, in terms of the guidance or outlook for the entire of 2019, I don't think right now, I mean, as of now, the Company has a very clear guidance or outlook for the entire 2019. As I mentioned during the call, our guidance for the first quarter of 2019 in terms of net revenues will be between RMB 550 million and RMB 570 million. I think, that's what we can give right now in terms of the guidance. However, for the entire year of 2019, as our CEO mentioned during his call, I think, the most important thing for the Company is we will continue to offer more courses through our free trials, through our introduction seminars, through our knowledge open programs in order for our potential students to have more experience in terms of online learning, in terms of all the course offerings, the content, the quality. And I think those are the primary goals for the Company. We want to build up better brand awareness, offer better content to the students, but not really -- transfer those students into our paid students advance. So, in terms of the strategy for 2019, we will continue to expand our course offerings from those perspectives. For your second question, in terms of the gross profit margin for first quarter of 2018, I believe that’s only a little bit higher compared to previous quarters, I think those because, one, our net revenues for first quarter actually continue to increase; and second, in terms of controlling the costs for the teachers and mentors for the fourth quarter of 2018, yes, the Company sees some progress from that regard too. So, that's why our GP margin is just a little bit higher compared to previous quarters.

Thank you. [Operator Instructions] All right. Showing now further questions, this will conclude the question-and answer-session. At this time, I’d like to turn the conference back over to Yingying Liu, Investor Relations Director, for closing remarks.

Once again, thank you everyone for joining today's call. And we look forward to speaking with you again soon. Good day and good night.

Thank you. This concludes the earnings conference call. You may now disconnect your lines. Thank you.