Hello and thank you for standing by for Tuniu's 2020 First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. 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, Tate, and welcome to our 2020 first 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, operation highlights and financial performance for the first quarter of 2020. 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 2020 first quarter earnings conference call. I would first like to give a brief update on the travel market in China, following the outbreak of COVID-19 earlier in this year. China's domestic travel market continues to trend positively, as the market continues to make its recovery. Based on the official statistics released by the China Tourism Academy, the number of people traveled during China's 2020 Labor Day holiday on May 1 were over 150 million. In terms of China's outbound travel market, we continue to see challenges in the foreseeable future, as other countries deal with COVID-19 with varying degrees of progress. The recovery of the outbound market will depend on other countries' recovery progress in the second half of 2020. Currently China has removed restrictions in the province for tourist activities, but have yet to remove -- has not yet to remove restrictions on inter-province and outbound tours. Given the current market conditions and regulations we will focus on capturing the recovery of domestic travel, while closely monitoring the outbound market. With the outbound market still restricted, a portion of our existing demand for outbound travel has converted into local and domestic products due to accumulating demands. Currently, local and domestic travel products are cost efficient, as tourist attractions use lower prices to attract the customers. Because local and domestic travel products will be a main source of our revenue in this year, we will leverage our existing advantages in direct procurement products, with extensive network of local tour operators and the industry-leading service quality to capture the recovery in market. As of the end of April, we offered over 20,000 SKUs of local tour and road trip products. We are also seeing a rapid increase for these products, with…

Thank you, Donald. Hello everyone. Now, I will walk you through our first quarter 2020 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 first quarter of 2020, net revenues were RMB174 million, representing a year-over-year decrease of 62% from the corresponding period in 2019. The decrease was primarily due to the negative impact brought out by the outbreak and spread of COVID-19. Revenues from packaged tours were down 67% year-over-year to RMB120.2 million and accounted for 69% of our total net revenues for the quarter. The decrease was primarily due to the suspension of sales of packaged tours impacted by the outbreak and spread of COVID-19. Other revenues were down 41% year-over-year to RMB53.7 million and accounted for 31% of our total net revenues. The decrease was primarily due to the decline in service fees received from insurance companies and revenues guaranteed from financial services. Gross margin was 53.2% in the first quarter of 2020 compared to a gross margin of 54.9% in the first quarter of 2019. Operating expenses for the first quarter of 2020 were RMB308 million, down 29% year-over-year, excluding share-based compensation expenses, amortization for acquired intangible assets and impairment of acquired intangible assets. Non-GAAP operating expenses were RMB270.4 million, representing a year-over-year decrease of 28%. Research and product development expenses for the first quarter of 2020 were RMB51 million, down 36% 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 first quarter of 2020 were RMB124.7 million, down 43% year-over-year. The decrease was primarily due to the decrease in promotional expenses and sales and marketing personnel-related expenses.…

The question-and-answer session of this conference will start in a moment. [Operator Instructions] Our first question comes from William Yan [ph] of Bluesky Capital. Please go ahead.

Hi, management. I just wanted to ask how the company plans to navigate through the gradual recovery of the market? Thank you.

Thank you for your question. First, the travel plans that were delayed by the COVID-19 has resulted in an accumulation of demand. A portion of demand for outbound travel that cannot be met in the current state have been converted to domestic and local products. We will leverage these trends to offer better domestic products to customers. Since April, the growth rate in the number of bookings have been trending up. Now in terms of how we plan to capture the recovery, we will leverage our adherence in Tuniu's branded products and establish a network of over 30 local tour operators to shift our focus to domestic products. Products such as city tours, countryside tours, same-day tours, attraction ticketing and local hotels will be the key segments. Also to provide our customers with safety conditions, we are also promoting a number of smaller group tours such as tailored and road trip tours. In the current state of the market, we are also utilizing new forms of distribution such as live streaming and social marketing to stimulate customer increase and to maintain engagement with our existing customers. This way will be better placed to capture the recovery in the future. Lastly on the financial side, COVID-19 has resulted in losses totaling approximately RMB100 million as we provided coverage on the losses for our customer. As of March 31, the company has cash and cash equivalents, restricted cash and short-term investments of RMB2.1 billion. We still have a strong balance sheet and have the capital to maintain our operations during the current talent and to capture the opportunities once the China's leader tour market mix is full recovery. Thank you.

[Operator Instructions] There are no other questions at this time. We are now approaching the end of the conference call. I will now turn the call 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.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.