Tuniu Corporation

Hello and thank you for standing by for 2NEWS 2021 second 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 and welcome to our 2021 second quarter earnings conference call. Joining me on the call today are Donald Yu, 2NEWS founder, chairman, and chief executive officer, and Anqiang Chen, 2NEWS financial controller. For today's agenda, management will discuss business updates, operation highlights, and financial performance for the second quarter of 2021. Before we continue, I refer you to our safe harbor statement in 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 second quarter 2021 earnings conference call. The overall domestic tourism industry saw a clear trend towards full recovery in the second quarter. Year on year, our net revenues increased by 373% with revenues from packaged tools up by over 900%. This is the first quarter in which we achieved positive growth since the COVID-19 outbreak last year. And benefiting from our strict cost control measures, operating expenses decreased by 40% year-over-year. And our quarterly loss was the lowest since the pandemic outbreak. In the second quarter, with the pandemic stabilized, the warm weather and holidays spurred the demand for travel. While last year most people chose to take local tours during the public holidays, this year the proportion of travelers taking inter-provincial tours has steadily increased. Also, in line with the high-end demand for high-quality tour products, The per-person consumption of inter-provincial tools has increased compared with the same period last year. We continue to emphasize the development of our core package, Texas Tool Business, with special focus on demand definitions to continuously upgrade our products and the level of service. This allows us to rapidly recover our business by setting opportunities during industry upswing. Our core competitiveness and protective mode is our commitment to providing the high-quality products and services to our customers. Based on customer demands, 2NEWS travel roads are designed to satisfy and even exceed customer expectations. Our new tool product designers have more than five years of experience in production or ad definitions. Our high-quality products are subject to strict internal procurement and production procedures. Co-guides for new tools would go through multiple interviews and training before they are officially on the job. Our products also have been tested by our customers ensuring that they meet their requirements before being launched. The satisfaction rate of our new products needs to reach 90% before they can be launched. And we are proud that satisfaction rate for our new tool products has reached 97%. We always strive to upgrade our products through product innovations, creating new destination selections, and in itineraries to bring fresh travel experience to customers. In addition, we also focus on selected market segments and customers, and launch themed tool products to attract target customer growth. While standard products remain popular with customers, we also see that demand for customized tours is increasing. Due to considerations of travel safety and overall experience, most tourists are choosing to travel with their families and friends in the form of private tours or small group tours that may take as few as two people, providing the freedom of self-guided tours with the convenience and services of organized tours. Also, amid China's stabilized pandemic situation and economic recovery, we are seeing an increase in demand for customized tours for business travel around conferences and team-building activities. As an experienced travel service provider, With an extensive service network across China, 2NEW is able to offer business clients customized travel products with competitive prices and outstanding service. In the second quarter, our customized tours achieved record growth since the pandemic, with GMV increasing by more than 200% quarter on quarter. Good products require good service. Our self-operated local tour operators play a crucial role in improving customer experience through excellent service. This year, we launched the Zero Complaint initiative for our local tour operators, with six of our local tour operators maintaining Zero Complaint records through Dream. We will continue to work hard to maintain and exceed these records. Through our efforts, we are pleased to report that in the second quarter, GMV of local tour operator products increased over 200% quarter over quarter, and the overall satisfaction rate of our local tour operator service reached 98%. Several unexpected events have occurred since the beginning of this year, including regional pandemic outbreak and natural disasters. Our self-operated local tour operators have become our most powerful supporting during this time. In response to emergency situations, our local tour operators have helped to ensure the safety of tourists' lives and property. and that they always get home safely. While our local tour staff have faced many unexpected difficulties, they have successfully carried out their duties, receiving recognition and praise from our guests. By providing excellent products and services, we have built a large and loyal customer base. Junio holds a Member's Day every month, where we launch special products and discounts for our members. In the second quarter, Member's Day sales continuously reached new heights. In July, our Member's Day single-day sales exceeded RMB 40 million, with the transaction volume of package tour products increasing five times over the same period last year. In terms of technology, we have continued to automate physical workflows and further replace staff's daily tasks with automated process flow, such as order processing and inventory management. In order to liberate our employees and invest in more creative work, we have also strengthened internal information data and risk management, and conducted self-audits to ensure technical security and compliance. In July, China experienced several pandemic outbreaks which may impact summer travel. We remain, however, optimistic about the domestic travel tourism market. Our industry has overcome many challenges since the COVID-19 outbreak last year, and we are confident that we will overcome any temporary difficulties. With ongoing vaccination roll-out and the enhancement of personal protection measures, domestic tourism should continue to experience a strong recovery. We will continue to work hard and provide high-quality products and services to meet the demands of our customers. I will now turn the call over to Anqiang, our financial controller, for the financial highlights.