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spk04: Hello and thank you for standing by for Tuneo's 2024 First Quarter 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.
spk02: Thank you, and welcome to our 2024 first quarter earnings conference call. Joining me on the call today are Donald Yu, 2NEWS founder, chairman, and chief executive officer, and An Qiangchen, 2NEWS financial controller. For today's agenda, management will discuss business updates, operation highlights, and financial performance for the first quarter of 2024. 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 Wu.
spk00: Thank you, Mary. Good day, everyone. Welcome to our first quarter 2024 earnings conference call. In 2024, China's travel industry continues its healthy development trend The upbound travel market, in particular, is showing robust growth due to the resumption of flights, the introduction of visa-free policies, and the further enhanced supply chain. During this year's Spring Festival and Labor Day holidays, the upbound travel market showed an encouraging rebound. Over the Labor Day holiday, transaction volume for our outbound travel products increased by more than 200% year-over-year. In the first quarter, the company's financial performance maintained strong growth. Net revenues increased by 71% year-over-year, and revenues from package tours grew by 107% while our profitability continued to improve. Our gross profit increased by 111% and net income turned positive on a year-over-year basis, reaching RMB 22 million. This marks the first time since our listing that we have achieved GAAP profitability in the first quarter. and our fourth consecutive quarter of profitability on a non-GAAP basis. During the first quarter, we see market development opportunities and continue to focus on enhancing our products and services, as well as development of sales channels. Our in-house package tools are one of our core competitive advantages. Reflecting the growing contribution of in-house products to our revenue and profit, we will look to increase the proportion of the in-house products in our package tours this year. During the quarter, the GMV of new tour products grew by more than 60% compared to the previous quarter. We are pleased to see that Our in-house products have been very well received due to their high quality service. This has contributed to increased repeat purchases by loyal customers and has enhanced 2NEWS brand image. We were pleased to see loyal customers contributed over 65% to our total transaction volume in the first quarter. We also continued to innovate to meet the needs of different customer growth. We upgraded our new tour products to zero-shopping itineraries for tourists seeking more time for travel experience. Additionally, we introduced more private tours and small growth tours which have been well received by families and young travelers. We also add various themed tours, such as family and honeymoon packages, to attract niche customer segments. During the first quarter, with the recovery of China's outbound travel market and the arrival of the Spring Festival travel peak, we saw an increased customer demand for diverse products. We incorporated individual flight tickets and hotel accommodations into our package tour offerings and leveraging the flexibility and convenience of the individual bookings. We launched more package tours to various destinations. with a particular focus on off-bound tours for East Pacific regions during the spring fast-forward travel season. In addition to improving our package tour products, we have also enhanced other travel-related products. We lower resource costs through our centralized procurement strategy. to enhance our product competitiveness. Also, we have focused on attracting and retaining customers by improving the service experience. For example, we have implemented a non-bonding funneling policy for our flight tickets, streamlining the booking process for customers and eliminating unnecessary expenses. By providing customers an exceptional booking experience, we have become one of the travel suppliers for Alipay transport. In terms of sales channels, we have further strengthened the development of various channels to attract new customers while prioritizing reconnection and engagement with our existing customer base. Since the beginning of this year, our live streaming business has maintained strong growth momentum. Along with the increase in transaction volume, our verification and sales rate has also been increasing. From January to May this year, the total payment volume from 2NEWS live streaming channels increased by over 200% year-over-year, with verification volume growing by 400%. In the first quarter, our live streaming channel continued to achieve quarterly net income, making the fourth consecutive quarter of profitability. This improvement in profitability is mainly due to product optimization and enhanced competitiveness. For our products, we have increased the supply of organized tool products at destinations on our live streaming channels this year. These products offer further enhanced flexibility, allowing guests to choose their preferred transportation and accommodations, while providing more options for FIT guests. Furthermore, we will continue to boost sales of our new tool products, providing exclusive product offerings to guests and further promoting the two new brands. To strengthen our competitive needs, we also established our own live streaming network with over 60 in-house live streaming accounts. By collaborating with over 1,000 influencers, 2NEWS MCN agency has gained advantages in selling HotelPlusX products. within Douyin's local lifestyle fixed rate. In the first quarter, our offline stores experienced significant growth, with transaction volume increasing by over 200% year-over-year. As of now, we operate approximately 200 offline stores. Our focus for this year is on expanding our offline presence in the main cities of key provinces. Our stores attract partners through diverse product selection, exceptional customer service systems, and affordable policies. Working together to provide exceptional, comprehensive services for our customers. In terms of maintaining relationships with existing customers, we utilize automation technology to offer customized support. This year, we have strengthened our service for customers interested in individual travel products by providing targeted sales promotions and updates on new features. Our goal is to increase customer loyalty and encourage cross-category purchases. To prepare for the upcoming quick summer season, we extended our membership day promotions in April and May to three days and introduced additional sales promotions to reward our customers. The transaction volume on our membership days in both April and May exceeded RMB 50 million. Looking to technology, we leverage automation systems to refine our management process and continuously improve operational efficiency. In the first quarter, Total operating expenses as a percentage of net revenues dropped 20 percentage points compared to the same period last year. On the supply side, we established a unified resource network for resource acquisition and allocation to support for centralized procurement. On the sales side, we integrated diverse and fragmented information obtained from various channels to help formulate and execute our marketing and promotion strategies. In summary, 2 news business and financial performance. have been growing at a healthy pace this year. In response to evolving customer demands, we are always looking to enhance our products and services, aiming to provide a wider range of competitively priced offerings. Furthermore, we will improve our revenue and profitability demonstrating the company's value to both the market and the shareholders. I will now turn the call over to Anqiang, our financial controller, for the financial highlights.
spk01: Thank you, Donald. Hello, everyone. Now I will walk you through our first quarter of 2024 financial results in greater detail. Please note that only monthly amounts are in RMB unless otherwise stated. You can find the US dollar equivalents of the numbers in our earnings release. For the first quarter of 2024, net revenues were 108 million, representing a year-over-year increase of 71% from the corresponding period in 2023. The increase was primarily due to the growth of package growth as the travel market recovers. Revenues from package tours were up 107% year-over-year to $83 million and accounted for 77% of our total net revenues for the quarter. The increase was primarily due to the growth of overnight tours. Other revenues were up 8% year-over-year to $25 million and accounted for 23% of our total net revenues. The increase was primarily due to the increase in commission fees received from other travel-related products. Gross profit for the first quarter of 2024 was $82 million, up 111% year over year. Operating expenses for the first quarter of 2024 were $69.7 million, up 25% year over year. Research and product development expenses for the first quarter of 2024 were 13 million, down 9% 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 2024 were 36.8 million, up 84% year-over-year. The increase was primarily due to the increase in promotion expenses and sales and marketing personnel-related expenses. General and administrative expenses for the first quarter of 2024 were $20.5 million, down 8% year-over-year. The decrease was primarily due to the reversal of allowances for doubtful accounts Net income attributable to ordinary shareholders of two new corporations was $13.9 million in the first quarter of 2024. Non-GAAP net income attributable to ordinary shareholders of two new corporations, which excluded shell-based compensation expenses and amortization of acquired intangible assets, was $19.7 million in the first quarter of 2024. As of March 30, 2024, the company had cash and cash equipments, restricted cash, and short-term investments of $1.2 billion. Capital expenditures for the first quarter of 2024 were $1.2 million. For the second quarter of 2024, the company is bound to generate $114.9 million to $119.9 million of net revenues. which represents a 15% to 20% increase year-over-year. Please note that these forecasts reflect a new current and a preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions. Operator?
spk04: The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been answered. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Once again, to ask a question, please press star, then 1. The first question today comes from Arinda Chen, who's an individual investor. Please go ahead.
spk03: Thank you, operator. Hi, management. First of all, congratulations on this quarter's performance. For the first quarter, how about your company's performance on domestic tourism, respectively, and what are their proportions in revenues? Can you share your outlook for the upcoming summer vacation? And do you think you will achieve profitability in the second quarter of 2024? Thank you.
spk00: Thank you for the questions.
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