Tuniu Corporation

Hello, and thank you for standing by for 2NEW's 2023 fourth quarter and full year earnings conference call. At this time, all participants are in a 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 2023 Fourth Quarter and Four-Year Earnings Conference Call. Joining me on the call today is Donald Yu, Junior's Founder, Chairman, and Chief Executive Officer, and Anqiang Chen, Junior's Financial Controller. For today's agenda, management will discuss business updates, operation highlights, and financial performance for the fourth quarter and fiscal year 2023. 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 contains a reconciliation of non-GAF measures to the most directly comparable GAF measures. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are IRMB. 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 fourth quarter and four-year 2023 earnings conference call. 2NEW delivered a strong performance in the fourth quarter of 2023, with net revenues growing year-over-year by 266%, including a 1,377% increase in revenues from packaged tools. Gross profit increased by 512% year-over-year, and we achieved non-gap profitability for the third consecutive quarter. 2023 was a significant year of recovery for the travel industry following the pandemic. With a robust rebound in the domestic travel market, we saw a dramatic increase in travel demand during China's national holidays and summer occasions amid the emergence of many popular destinations and attractions. In terms of upbound travel, the number of newly opened up destination countries increased from 20 at the beginning of the year to 138 by the end of the fourth quarter. Countries like Thailand and Singapore introduced favorable visa policies, helping to boost the recovery of the outbound travel market. We are pleased with our performance for the full year 2023. Our net revenues increased by 140% year over year. Revenues from package tours increased by 374%. and gross profit increased by 228%. We also achieved our first full-year profitability on a non-GAAP basis since the pandemic, with non-GAAP net income approaching RMB 51 million, the highest since our listing. In 2023, pent-up travel demand was released with the relaxation of travel restrictions. However, the tourism supply chain, especially the supply chain relating to the outbound travel market, was impacted during the pandemic. In response, our priority was to recover and rebuild the supply chain to promptly provide products to meet customer demand. Leveraging 2NEWS' rich experience in the industry and our continuous efforts to maintain relationships during the pandemic, our procurement and product teams have been able to rapidly rebuild our portfolio of products by sourcing high-quality resources from hotels, airlines, and local tour operators. For example, as one of 2NEWS' star destinations, the Maldives was among the first batch of countries to open up for outbound travel as of last February. As one of our earliest launched outbound travel products, in the first quarter of last year, Maldives' tours have already surpassed RMB 10 million in sales volumes. Two news call competitiveness is our commitment to providing high-quality products and services to our customers. Amidst the strong demand post-pandemic, we continue to adhere to our strict standards for product procurement and development, and increasingly reach the bar in terms of product and service quality. For instance, For our in-house new tool products, we require our product personnel to work closely at the destination and actively coordinate with local tool operators on resource procurement, tool guide management, and quality control. Additionally, we conduct quality inspections during organized tours to promptly identify and resolve issues. As a result, the average customer satisfaction rate for our new tool products has been continuously increasing from slightly over 90% to 97% and reached over 98% during the summer of 2023. At the same time, we prioritize the customer experience by addressing pain points during the trips. Beginning last year, new tools introduced the Zero Shopping itinerary, ensuring no visits to shopping venues throughout the entire journey, which have been very well received. For instance, our Zero Shopping tool to Bali was launched in December last year, and nearly 40 tours were conducted as of the end of this February, with a satisfaction rate of 100%. Additionally, since 2023, new tours have commenced, offering exclusive services, where dedicated service personnel establishes a WeChat group prior to the trip to ensure seamless support throughout the journey. Furthermore, we established more collaborations with suppliers to increase the diversity of our products. To ensure customer satisfaction, we maintain our focus on quality control through implementing strict supplier selection process. The satisfaction rate for product launches has reached 90%, and we have introduced a new machine exam where products receiving highly negative reviews are promptly removed from our offerings. We also handle customer complaints about supplier products in the same way as our in-house products. That is to say we prioritize problem resolution and direct compensation seeking customers on behalf of suppliers. Additionally, we provide maximum assistance to our partners by granting them access to our inventory management systems. to improve their efficiency. We also offer support and advice for product development and improvement for our partners, collectively striving to provide customers with more and better products. Looking now to our sales efforts, as you know, our professional customer service team has always been one of two new core advantages. After the pandemic, we didn't directly expand customer service staff in the face of increased demand. Instead, we utilized automation technology to help our customer service teams improve efficiency. We also focused on talent development, particularly for overseas destinations, to help our staff become more familiar with destinations and products enhance work efficiency and service quality. In 2023, the number of our customer service staff increased by over 50% year-over-year, while our net revenues increased by 140%. In addition to individual customers, we also sell corporate clients. offering services such as group travel for companies and personnel travel for corporate employees. In the fourth quarter, with the arrival of the year-end season, company annual meetings, team building activities, and incentive vacation trips become increasingly popular. leading to the small peak in corporate clients travel demand. In the fourth quarter of 2023, the GMV from corporate clients increased by over 40% compared to the previous quarter. Live streaming emerged as a new sales channel for us following the pandemic. In 2023, The total payment volume from all two new live streaming channels exceeded RMB 1 billion, and our live streaming channels also achieved profitability for the full year. On the supply side, we received the Douyin iNews Star Merchants, a recognition based on comprehensive evaluation of business volume and product quality. Additionally, we established our own MCN agency to further develop and promote our accumulated live streaming capabilities and experiences. We have secured partnerships with more than 100 external influencers, with a total fan base exceeding 4 million. Moreover, In response to market demand this year, we will further strengthen the sales and promotion of our upbound travel products, as well as high-quality in-house products such as new tools via live streaming channels. Also, we continue to enhance the application of system automation in live streaming activities. such as online product verification to lower cost and improve live streaming channel profitability. In 2023, we also strengthen our offline channels by establishing more offline stores. We opened more than 150 offline stores, primarily located in second and third tier cities, as well as provincial capitals. These stores expand the sales channels for our in-house products and help to promote the two new brands. We will continue to establish and develop our offline stores this year. In terms of technology, we are committed to leveraging tools to replace simple, repetitive manual labor, to liberate our employees to participate in more complex and creative work, thereby enhancing our overall operational efficiency. In 2023, we have completed the application of system automation across various sales processes, such as marketing, booking, and order processing. and have started to integrate it into supply chain management. We are sharing the benefits brought by automation in inventory, pricing, and marketing management with our partners. This year, we will also focus on the application of technology in production and services, such as utilizing dynamic packaging systems to generate self-guided tools that enrich our product offerings. In conclusion, the travel industry saw substantial recovery last year and the positive growth momentum continued into the beginning of 2024. The Spring Festival travel boom this year was remarkable. We remain optimistic about the development of the travel market this year, especially with the resumption of flights, relaxation of visa policies, and the further enhanced supply chain, which still offers significant growth opportunities for the outbound travel market. Outbound travel is one of two musical advantages. and we will seize the opportunity to provide more and better products and achieve further revenue recovery. At the same time, we will continue to implement our strict cost control measures to enhance our profitability. I will now turn the call over to Anqiang Chen, our financial controller, for the financial highlights.