Hello, and thank you for standing by for Tuniu’s 2020 Second Quarter Earnings Conference Call. My name is Andrew. 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. [Operator Instructions] I would now like to turn the meeting over to your host for today’s conference call, Director of Investor Relations, Mary.

Thank you, Andrew, and welcome to our 2020 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, operation highlights and financial performance for the second 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 second quarter earnings conference call. After nearly six months of downturn caused by the COVID-19 outbreak, we are encouraged to see that China’s domestic travel market is finally showing signs of recovery. On July 14, China’s Ministry of Culture and Tourism announced the resumption of inter-province tours and began allowing travel agencies and OTAs to resume sales of packaged tours. We have also seen local travel authorities across China launch promotions for discounted or free tickets to local attractions in order to support the recovery of the travel industry. The release of pent-up demand has increased the flow of travelers during summer holiday season. According to our data, packaged tour GMV was up over 200% in the second-half of July, compared to the first-half of the month. Although the control over the pandemic is getting better within China, the outbound travel market still faces challenges due to the continuous spread of the COVID-19 abroad. Also, China still experience small-scale outbreaks from time to time, and the travel industry continues to adjust in line with the anti-coronavirus precautions implemented throughout the country. From improving safety measures during travel, anti-coronavirus precautions limiting the number of tourists at popular attractions and customer focus on safety and hygiene. The bar for travel products and services has been raised in many ways. In this new environment, our focus on continuous innovation is one of Tuniu’s main advantages in ensuring the satisfaction of our customers. As part of this, we have adjusted our product positioning to better meet current customer demand. We upgrade our mass market products to mass premium products to create higher-quality travel experiences through stricter product selection, higher service standards and more precise product production process. As a leading company in China’s travel…

Thank you, Donald. Hello, everyone. Now, I’ll walk you through our second 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 second quarter of 2020, net revenues were RMB34 million, representing a year-over-year decrease of 93% from the corresponding period in 2019. The decrease was primarily due to the negative impact brought by the outbreak and spread of COVID-19. Revenues from packaged tours were down 97% year-over-year to RMB12.6 million and accounted for 37% 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 76% year-over-year to RMB21.5 million and accounted for 63% of our total net revenues. The decrease was primarily due to the decline in service fees received from insurance companies and the commissions received from other travel-related products impacted by the outbreak and spread of COVID-19. Gross margin was 23% in the second quarter of 2020, compared to a gross margin of 45% in the second quarter of 2019. The decrease was primarily due to the decline in net revenues impact by the outbreak and spread of COVID-19. Operating expenses for the second quarter of 2020 were RMB158.1 million, down 63% year-over-year. Excluding share-based compensation expenses and amortization of our acquired intangible assets, non-GAAP operating expenses were RMB128.9 million, representing a year-over-year decrease of 64%. Research and product development expenses for the second quarter of 2020 were RMB20.6 million, down 74% 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 2020…

The question-and-answer session of this conference call will start any moment. [Operator Instructions] The first question comes from [Tracy Wong,] [ph] private investor. Please go ahead.

Thank you for taking my questions. Hi, management. Can you just talk about how you begin to recover as we see the industry has shown the sign of recovery? Thanks.

Thank you for your question. After the outbreak of COVID-19 in late January, we have experienced a really hard time for nearly three months. We restarted the local tour travel in late April when the number of bookings trended up. But the increase of revenues was limited, because the ASP of local tour is comparatively low. After the inter-province travel reopened in July, we finally see the recovery in both revenues and in number of trips. The release of pent-up demand has greatly increased the flow of travelers, especially during summer holiday season. Currently, our domestic packaged tour products are resumed. Based on our transportation plus local tour service model, we quickly launched a number of packaged tour products in popular destinations, such as Hainan, Yunnan and Western China. We also launched products that are designed for summer holidays, such as theme parks, seaside and prairie. To capture the recovery, we upgraded our product positioning from mass market to mass premium products to create higher quality travel experience to our customers. We also upgraded Niu Tour, our self-owned product, targeting medium to high-end customers to meet customers’ more exact [Technical Difficulty] post the COVID-19 era. Our Niu Tours are popular, especially among repeated customers. Recently, we have invited our loyal customers to travel with Niu Tour itineraries for free, appreciating them for their continuous support, as well as taking their advices on how to improve the travel experiences. This activity was welcomed by our customers and the sponsoring helped us promote Niu Tour products among their friends and relatives. Starting at the end of July, we began releasing our premium products to customers through our weekly product-based live stream show. So far, we have held five shows, each of which had a specific theme. Products selected for product base are specifically designed for our key user groups, such as parent-child, family travel and senior citizens. We start from understanding customer needs, leveraging our advantages in all segments to roll out top-selling products. Lastly, on the financial side, we see net revenues are increased on a month-over-month basis in the third quarter. Also, we have been implementing more strict cost-control measures since the outbreak of COVID-19. We see our operating expenses were reduced for two consecutive quarters. We believe with the recovery of revenues, our financial conditions will be gradually improved. Thank you.

Thank you. I have no further questions.

[Operator Instructions] We are now approaching 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. Good day.