Ladies and gentlemen, thank you for standing by and welcome to Uxin's Fourth Quarter and Full Year 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 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 fourth quarter and full year 2019 earnings conference call. On the call today are D.K., Founder and CEO and Zhen Zeng, our CFO. D.K. will review business operations and the company highlights followed by Zhen who will discuss financials and the guidance. They will both be available to answer your questions during the question-and-answer session that follows. Before we start, I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are made -- are based on the management's current knowledge and assumptions about future events that involves known or unknown risks and uncertainties, which could cause actual results to differ materially from those in the forward-looking statements. Uxin does not undertake any obligations to update any forward-looking statement, except as required under applicable law. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC. With that, I will now turn the call over to our CEO, D.K. Go ahead please.

Thank you, Nancy. Hello everyone. Thank you for joining our fourth quarter and full year 2019 earnings conference call. We are pleased to finish off the year on such a solid note with our Q3 revenue increased by 65% to RMB388 million in the quarter. Not only did we record over 28,300 online used car transactions during the quarter, but we also increased our total 2C take rate to 11.7%, which is equivalent to a per-unit revenue of over RMB13,700. 2019 marked an important milestone for Uxin as we shaped our strategic focus to 2C online transactions. Throughout the year, we continued to improve our platform by optimizing product and service offering, enhancing service quality, and strengthening our fulfillment capability and infrastructure. What encouraged us the most is we helped over 97,000 consumers buy their car of choose online without the need to visit a dealership in person. This is a truly differentiated and innovating car buying experience for the average consumer in China when compared with the traditional way of spending weeks or even months visiting several dealerships to find his ideal car. With the national-wide online selection of inspected and certified used car, we help customers conveniently buy a car that you might not be able -- available in their local market and enable them to find a better deals across the country by simplifying comparing each car's price to performance. Coupled with the professional service and the convenience we deliver, our business model offers consumer a unique value proposition that reinforce our competitive position in the market and increase barriers to entry. This will help us generate a long-term sustainable growth going forward. We are now currently focused on our 2C online transaction business divesting from the loan facilitation, service car, and 2C business will allow us…

Okay. Thanks D.K. Hello everyone. Thanks for joining us today. As the D.K. mentioned -- as already highlighted, we are pleased to see our continuing business generate a solid and consistent topline gross and the gross margin improvements throughout 2019. If back-held the account loss from the currency liabilities and the provision for credit losses, which are primarily associated with our historical financial assets, our adjusted loss from continuing operations continued to narrow for the fourth consecutive quarter of RMB135 million in the fourth quarter of 2019. As we continue developing our 2C online used car transaction business, we are incurring additional credit risk going forward. As a result of the divestiture of our loan facilitation business, we have also taken active measures to assess and managing the impact from the guaranteed obligations associated with our historical loans that we are now transferred to Golden Pacer. In the fourth quarter of the last year, a series of regulations in relation to lending and debt collection, including the prohibition on exchange data collection practices were jointly issued by the relevant authorities. This adversely affects the delinquency rate as well as the collection and repossession rate in the connection with our historical loans. After reevaluating the loan performance, we made a significant provision for the credit losses and incurred additional loss on the guarantee liabilities for the fourth quarter. Moving into the first quarter of 2020, in response to the new accounting standard for credit losses effect on January the 1st, 2018, and the hard breakout of the coronavirus, we have fully reviewed the quality of our historical financial assets again and carefully assessed other relevant impacts. As a result, a significant provision for credit losses and the loss from guarantee liabilities will be provided for the first quarter of 2020. But…

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

Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Ronald Keung from Goldman Sachs. Please ask your questions.

[Foreign Language] Thank you. Hi, DK, Michael, Nancy and team. So, two questions. Firstly, just given the current virus situation and your first quarter guidance of revenue down around 78% to 79%, which is the RMB80 million to RMB85 million. So, I was wondering here how are we seeing the March trends and the recovery part recently in April, and when do we see or expect the levels to return to more normalized level through the year? And my second question will be on your loan business, which has been divested, but seems like there's still some that haven't moved on to Golden Pacer. So at the current situation current level, what do we expect to see on impact more on a cash flow perspective from now on? Or would it be more on non-cash P&L while assuming here is anything from the cash flow on your cash that we should be aware of? Thank you.

So because of the outbreak of the coronavirus, the used car factor in Q1 has been significantly disrupted mainly because the flows the used car market and the vehicle built locally. They don't go back to the operation. And the second thing is that the cost of some of the highway has been closed, we cannot deliver the car to the consumers. So the fulfillment has been constrained during that period of time. So, basically all the transaction volume in Q1 happens in January before the Chinese New Year. So volume in February and the March there, basically there is no transaction volume happens in this two months. Yes. So, entering into April, we didn't see significant pickup in the volume. So, based on our current knowledge, we think it will be the second half of the year we will see significant recovery in our volume. So, in Q2 basically the transaction volume will be constrained by three factors. The first one is because although the outbreak has been largely contained in China, but there are few local governments have adopted strict measures to give a response to the outbreak, and also because of the softening natural environment, consumer’s ability to uphold buying a car will be a situation now. For those consumers who are very eager to buy a car at the very moment is normally want to have the car waiting a couple of days. But our current fulfillment period of time normally lasts for around two weeks. So, including the logistics, title transfers and vehicle registration, et cetera. So, we are not able to meet these type of demands or consumers are not willing to wait. So, the overall used car demand in market now is basically are the cars with price range at low end or to mid-end, but if you look at our average selling price, our platform is basically RMB120,000. So, our used car selection of price range is basically mid to high end. So, this type of cars, if we look at our transaction volume it will recover a little bit slower than the low price end cars. Yes. Our full recovery will depend on the development of the outbreak. So, based on our -- based on current situation, we expect to see significant recovery starting from the second half of this year. If we use last December as a normalize level, we expect to see we can return back to that level next year -- in the first half next year. Thank you.

Hi, Ronald. It’s Michael here. I’ll try to address your second question. So for the cash flow and the provision and guarantee and credit risk, so is that given the regulatory changes in the last the fourth quarter and the coronavirus outbreak in the first quarter, we have fully reviewed our historical financial assets and assessed the relevance impact on the asset quality. In the Q4 last year, we made a provision for credit losses about RMB270 million and incurred a loss from the guarantee liabilities of RMB170 million. In this Q1, taking into the account of the new accounting standards for credit losses, which had been time to take consideration of the coronavirus outbreak, we will provide a significant provision for credit losses and the loss from guarantee liabilities as well to sufficient that reflect the impact. This item will hit our P&L but won't affect the cash flow too much. Overall, speaking so as we have divest our loan facilitation business since last November, starting from this point, we don't need to take any guarantee obligations for the new loans referred through our platform. So, we now can drive our business grows without incurring any guarantee, credit risk or cash outflow in our guarantee obligations. Regarding of our historical loans, more than half has been transferred to Golden Pacer already and the rest are still with us, but we already have a proper solution in place to manage the guarantee obligations and responding cash flow. Sichuan Bank relative loans are the portion that has been transferred to Golden Pacer. So, for this part, the Golden Pacer will take fully guarantee obligations for this historical portion and be held responsible for buying back further default loans. So, there won't be any cash outflow from us. Instead, we can have…

Okay. Thank you very much. That's very clear. Thank you, D.K., Michael, Nancy.

Thanks Ron.

Thank you very much.

Your next question comes from the line of Eddy Wang from Morgan Stanley. Please ask your question.

Hi, D.K., Michael, and Nancy. [Foreign Language] Please let me translate myself. So, as I mentioned that the COVID-19 outbreak has accelerated your transformation of the entire buying process and transaction online of each step in the sales process. Just one would you please elaborate more about have you witnessed any long-term trend in the industry -- used car industry that you believe that online transformation will benefit? And how do you compare with your -- the online transformation model versus your major competitors? Thank you.

[Foreign Language]

Our key strategies for 2020 is to accelerate our progress and continue of enabling selling cars. So, we believe the hours [ph] car connection something when customer value at the same time can create great growth opportunities for ourselves as well. With our online car connecting model through our online national-wide selection of used cars and services, we can provide consumers with high price to performance used cars, as well as simplified as transparent flat purchase process, as well as the well-rounded after sales warranty services. The way of connecting online to a higher degree, our operations will become more efficient which will bring our costs and expenses to a much lower level. So, on one hand, the consumers can enjoy better prices. On the other hand, we can also continue to improve our financial performance during the process. The offers actually accelerate the transaction to online used car conventions because of being very cautious about personal offline contact amidst of the outbreak and the consumer showing preference for online purchases. We are accepting buying used cars online actually also gets increasingly higher as well. The rest following the outbreak, we have fully devoted ourselves to operating our online transaction model. So, we have been working on three areas. The first one is we transformed and upgraded our products and service process. So, consumers will be able to complete the online searches in a more simplified and straightforward way, while without the need to be assisted by our offline sales. So, second, based on our analysis in our transaction data, we have accumulated extensive activities and know-how interacting high-performance used card inventories. So, it will not only help consumers to find a car of their choice more quickly and accurately, in return, it can also help us to reduce our…

Appreciate it.

Thank you Eddy.

[Operator Instructions] There are no further questions at this time. I would like to hand the conference back to Ms. Nancy Song. Please continue.

Thank you again for joining our call today and for your continued support in Uxin. We look forward to speaking to you soon in the future. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may all disconnect.