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Edited Transcript of UXIN.OQ earnings conference call or presentation 10-Jun-19 12:00pm GMT

Q1 2019 Uxin Ltd Earnings Call

Jun 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Uxin Ltd earnings conference call or presentation Monday, June 10, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Kun Dai

Uxin Limited - Founder, Chairman & CEO

* Nancy Song

Uxin Limited - IR Director

* Zhen Zeng

Uxin Limited - CFO

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Conference Call Participants

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* Eddy Wang

Morgan Stanley, Research Division - Research Analyst

* Monica Chen

Crédit Suisse AG, Research Division - Associate

* Ronald Keung

Goldman Sachs Group Inc., Research Division - Executive Director

* Y.C. Lai

JP Morgan Chase & Co, Research Division - Head of Asia Auto Research

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by and welcome to Uxin's First Quarter 2019 Earnings Conference Call. (Operator Instructions) Today's conference call is being recorded. If you have any objection, you may disconnect at this time.

I would now like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Please go ahead.

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Nancy Song, Uxin Limited - IR Director [2]

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Thank you, operator.

Hello, everyone. Welcome to Uxin's first quarter 2019 conference call. Today, DK, our Founder and CEO, and Zhen Zeng, our CFO, will discuss our financial results for the first quarter. Following the prepared remarks, DK and Zhen will be available to answer your questions.

Before we start, I would like to remind you that our statements today will contain forward-looking statements that we make under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current knowledge and assumptions about future events that involve risks and uncertainties, which could cause actual results to differ materially from our expectations. Uxin does not undertake any obligations to update any forward-looking statement except as required under applicable laws. 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, DK, please.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [3]

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Thank you, Nancy. Hello, everyone. Thank you for joining our first quarter 2019 earnings conference call.

We are pleased to start the year with another strong quarter of growth as well as a significant improvement on the bottom line. Total revenues in the quarter increased by 55% year-over-year and exceeded RMB1 billion, once again beating the high end of our guidance. Thanks to greater economies of scale and more effective cost control, gross margin improved to 70% from 66% in the same period a year ago.

We also continued to gain operating leverage during the quarter, which enabled us to cut adjusted net loss by over 50% year-over-year to RMB231 million and significantly reduce adjusted net loss as a percentage of total revenues to 23% from 74% in the same period last year.

Before we dive into operations, I'd like to highlight that, starting from the first quarter this year, we will only disclose the transaction volume and corresponding operational metrics for the transactions with generate revenues. With this change, transaction volume growth will serve as a better indicator of our revenue growth. By excluding free-of-charge transactions, investors can get a clearer picture of the take rate that we can actually charge from one used car. And it will better demonstrate our ability to enhance monetization and the development of our cross-region and intra-region business. In addition, this will reflect how we are more focused on the transactions, which have greater monetization potential and better margin profile. The new method of disclosure has been applied to all the metrics of this earnings call.

Now I'll provide some further color on our operating, starting with our 2C business, which continued to be the primary growth driver for Uxin. We facilitated transactions for over 78,000 used cars on our 2C platform, up 40% from the same period a year ago. Revenues from transaction facilitation services increased by 224% year-over-year to RMB308 million, far outpacing the growth of over 2C business and have contribute 35% of total 2C revenues. which we are expanding our loan facilitation services, We are also continuously improving our risk management process. We managed to keep the M3+ delinquency rate relatively stable at 1.45% as of first quarter of 2019, a similar level to the 1.41% as of the previously quarter.

The cross-region business continued to play an increasingly integral role in driving the growth of our 2C business. We maintained the growth momentum for the peak season in the fourth quarter, and facilitated over 20,000 cross-region transactions in the first quarter, up almost 50 times year-over-year.

The cross-region business contributed 26% of total 2C transaction volume and 32% of total 2C revenues, up from only 1% of transaction volume and revenues in the same period last year. As we control 100% of the entire shopping process and provide unique value to customers through our nationwide selection of used cars and better prices, we are naturally able to generate higher take rates in our cross-regional business. In the first quarter, we generate a total take rate of 12.6% for cross-region business transaction, of which 6.2% was for the transaction facilitation fee and 6.4% was for the loan facilitation services.

During the quarter, we also made significant progress expanding our business in lower-tier cities.

As we previously noted, we are now adopting a franchise model to expand our service network and complement the service centers that we operate directly. With the expansion of our cross-region business, our franchise model has gained significant traction from local merchants across the country. As of end of the quarter, we had over 1,300 service centers across China, of which over 600 was operated by ourselves and over 700 by franchisees. The majority of the franchised service centers were operated gradually throughout the quarter. On average, these franchised service center were fully up and running for 1.3 months during the quarter, and collectively they contribute a low-teens percent of total cross-region transactions. Our service network covered over 400 prefecture-level cities, Or 900 cities and region at all level of China's administrative divisions, includ the prefecture-level cities, country-level cities and the districts.

In order to enhance user experience, we have been promoting on-site services across the country. Upon request, our sales consultants can visit customers at their workplace or home, help them interpret video inspection reports, introduce car specifics, assist them in selecting the car they prefer and help them execute the purchase.

In terms of our intra-region business, we facilitated over 57,000 used car transactions in the first quarter. As we have been expanding our cross-region business, whereby customers don't need to see the car in person before they actually buy it, we now encourage all customers to use our cross-region services when we first engage with them. However, if the customer insists on seeing the car in person but doesn't require financing, we will no longer accompany him to visit an offline dealership or assist him with the purchase process onsite. In the quarter, we generated a total take rate of 8.4% for inter-region used car transactions, of which 2.5% was for the transaction facilitation service and 5.9% was for the loan facilitation services.

Moving on to our 2B business, transactions volume decreased by 43% to 36,500 used cars during the quarter. The decline was primarily due to our change of approach in serving customers with car-selling needs as well as dealers' growing preference to sell used cars on our 2C platform, which was further bolstered by the growth of our 2C cross-region business. B2B transaction facilitation take rate was 3.8%, down from 4.3% in the previous quarter.

Strategically, the 2B business will continue to serve as a complementary pillar of our business that strengthens our relationships with dealers and expands the inventory available for our 2C customers. Given that, we may continue to provide favorable terms to our dealers on the 2B platform so as to maintain stickiness as well as encourage dealers to expand collaboration in the 2C business, especially cross-region transactions.

Now, I'd like to briefly discuss our new strategic partnership with 58.com. 58.com's used car business is complementary with Uxin's business model, and we believe our partnership will lead to many synergy. 58 Used Car is a well-established classifieds category on 58.com's platform, with a huge volume of targeted used car traffic and a large user base. By combining their traffic with our deep expertise in fulfilling used car transactions throughout the entire value chain, we are confident that we will improve monetization and generate significant value for both companies. More importantly, in recent years, 58.com has been penetrating into lower-tier cities as well. This is aligned with our strategic focus on cross-region transactions and the expansion of our service network into lower-tier city across China. Through our strategic cooperation, we are confident that we will be better positioned to provide the customer with an enhanced car purchasing experience in China.

Over the past several years, we have continuously evolved Uxin's business model to better meet customer demand and we have experienced rapidly growth of both transaction volume and revenues. As we continue to expand our business, we will increase our focus on achieving more sustainable growth by implementing the following 3 initiatives.

First, we will continue shifting our resources to the cross-region business, where we see a huge market opportunity. In addition to targeting this significant growth potential, our strategic focus on cross-region transactions will enable us to generate greater revenue and take us one step closer to profitability.

Second, we will continue to improve our operation efficiency by taking a more strict approach to cost control and expense management.

Third, we will adopt more stringent risk-control procedures and concentrate our resources on used car assets with better risk profiles. We have already been reviewing our loan facilitation business and are taking a more prudent approach when facilitating a loan. This will ensure that we build an even strong foundation and improve cashflow.

Together, this initiative will help us build a more sustainable business over the long term and take us one step closer to profitability.

With that, I would like to turn the call over to our CFO, Zhen Zeng, to talk through our financials. Zhen, please.

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Zhen Zeng, Uxin Limited - CFO [4]

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Thanks, DK. Hello everyone. Thanks for joining us today.

Now, let me walk you through our financial details of the first quarter 2019. Please note that all numbers are in RMB, unless otherwise stated. Also, please note that some numbers I refer to are non-GAAP. You can find a reconciliation of these numbers in our earnings release.

In the first quarter, total revenue increased by 55% to RMB1,004 million from RMB649 million in the prior year period. The increase was primarily due to the increases in 2C transaction volume, transaction facilitation take rate and amount of loans facilitated.

Drilling down to our business pillars.In terms of our 2C business, total 2C revenue was RMB883 million, representing an increase of 94% year-over-year from RMB454 million in the prior year period.

Moving on to more details. Revenue of 2C cross-regional business was RMB284 million, representing a significant increase of 54 times from only RMB5 million in the prior year period. Cross-regional transaction volume increased substantially by 48 times to 20,647 units from only 420 units in the prior year period, and the corresponding GMV increased to RMB2,268 million from RMB67 million in the prior year period.

Cross-regional transaction facilitation revenue increased substantially by 47 times to RMB140 million from only RMB3 million in the prior year period, primarily due to the increases in the transaction volume, GMV and transaction facilitation take rate of used cars sold through our cross-regional business. Take rate for cross-regional transaction facilitation increased to 6.2% from 4.4% in the prior year period, primarily driven by our enhanced service, user experience and higher pricing power.

Cross-regional loan facilitation revenue significantly increased by 64 times to RMB144 million from only RMB2 million in the prior year period, primarily due to the increases in the financing transaction volume and amount of loans facilitated, as well as the increase in loan facilitation take rate of the used cars facilitated through our cross-regional services. Take rate for cross-regional loan facilitation increased to 6.4% from 3.3% in the prior year period.

Revenue of 2C intra-regional business was RMB599 million, representing an increase of 33% of RMB449 million in the prior year period. Intra-regional transaction volume increased by 4% year-over-year to 57,630 units, and its corresponding GMV increased by 22% year-over-year to RMB6,624 million.

Intra-regional transaction facilitation revenue increased by 83% to RMB168 million from RMB92 million in the prior year period, primarily due to the increases in transaction facilitation take rate and GMV of the used cars sold through our intra-regional services. Take rate for intra-regional transaction facilitation increased to 2.5% from 1.7% in the prior year period.

Intra-regional loan facilitation revenue increased by 21% to RMB430 million from RMB357 million in the prior year period, primarily due to the increases in the financing transaction volume and amount of loans facilitated for the used cars sold through our intra-regional services. Take rate for intra-regional loan facilitation remained at 5.9% compared the prior year period.

In terms of our 2B business. Our 2B transaction facilitation revenue was RMB70 million, representing a decrease of 36% year-over-year, primarily due to the decline in transaction volume, which reflects our ongoing strategic shift to the 2C business. The decrease of 2B transaction volume was mainly because of our change of approach in serving consumers with car-selling needs, as well as dealers' growing preference for retail transactions through our 2C platform. Our take rate for 2B transaction facilitation increased to 3.8% from 3.5% in the prior year period.

Cost of revenues increased by 33% year-over-year to RMB296 million, compared to RMB222 million in the prior year period. The increase was primarily due to the increases in costs of fulfilment, title transfer and registration, which were correspondingly driven by the increase in the transaction volume, as well as the increase in salaries and benefits of employees engaged in car inspection, quality control, customer service and after-sales service.

Gross profit increased by 66% to RMB708 million from RMB427 million in the prior year period. Gross margin increased to 70% in the quarter, compared to 66% in the prior year period.

Total operating expenses was RMB969 million. Non-GAAP operating expenses, excluding share-based compensation was RMB915 million.

For sales and marketing expenses slightly increased by 8% year-over-year to RMB681 million, compared to RMB633 million in the prior year period. The minimal increase reflects our continuous efforts to enhance operating efficiency and improve conversion rate. Sales and marketing expenses as a percentage of total revenue decreased to 68% during the quarter, decreasing from 97% in the prior year period.

For G&A expenses increased by 17% to RMB188 million from RMB161 million in the prior year period. The increase was primarily attributable to the increase in share-based compensation expenses. G&A expenses excluding share-based compensation expenses was RMB135 million, representing 13% of total revenues in the quarter, decreasing from 24% in the prior year period.

R&D expenses increased by 17% to RMB80 million from RMB68 million in the prior year period. The increase was primarily due to the increase in salaries and benefits expenses. R&D expenses, excluding share-based compensation expenses, was RMB79 million, representing 8% of total revenues in the quarter, decreasing from 10% in the prior year period.

We are confident that our increasing operating leverage and prudent approach to expense management will continue to improve our profitability over time. Loss from guarantee liability was RMB20 million, compared to a loss of RMB18 million in the prior year period. The loss was primarily due to the fluctuation in the delinquency rate from the fourth quarter of 2018.

Loss from operations was RMB 261 million, a decrease from RMB 453 million in the prior year period.

Non-GAAP loss from operations, which excludes share-based compensation expenses, was RMB208 million, a decrease from RMB451 million in the prior year period. Non-GAAP loss from operations as a percentage of total revenues was 21%, a significant decrease from 69% in the prior year period.

Fair value change of derivative liabilities was nil in the quarter, compared to a loss of RMB359 million in the prior year period. We no longer see any impact of derivative liabilities as the preferred shares were converted into ordinary shares at the time of IPO.

Net loss was RMB285 million, a decrease from a net loss of RMB839 million in the prior year period. The narrowed net loss was primarily due to greater operating leverage and a decrease in loss from fair value change of derivative liabilities.

Non-GAAP net loss, which excludes share-based compensation expenses, was RMB231 million in the quarter, a decrease from RMB478 million in the prior year period. Non-GAAP net loss as a percentage of total revenues 23%, decreasing significantly from 74% in the prior year period.

Turning to our cash position. As of March 31, 2019, we have cash and cash equivalents of RMB455 million, compared to RMB801 million as of December 31, 2018. We had short-term deposits and other investment products of RMB597 million, compared to RMB596 million as of December 31, 2018. We had restricted cash of RMB2,025 million, compared to RMB2,030 million as of December 31, 2018.

Before we move on to the guidance, I'd like to highlight our determination to implement of initiatives that DK outlined which will help drive the substantial growth of our business. Our strategic focus on building the cross-regional business will fuel our growth, and our initiatives to improve cost control and strict manage risk will enhance our operating efficiency and move us steadily towards profitability.

Factoring the measures that we are taking, we expect total revenues for the second quarter of 2019 to be in the range of RMB900 million to RMB950 million. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.

That concludes our prepared remarks.

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Nancy Song, Uxin Limited - IR Director [5]

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first questions comes from the line of Eddy Wang from Morgan Stanley.

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Eddy Wang, Morgan Stanley, Research Division - Research Analyst [2]

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(foreign language) I have 2 questions. The first is about that you have been talking about the -- to implement 3 new initiatives, including the shift more resources through cross-region transactions, improve operation efficiency as well as focus on the used car assets with better risk profile. So can you give us more color on how such initiatives will be reflected on the operation as well as the financial metrics in terms of the transaction volume growth, proportion of the cross-region transaction, loan attach rates and advertisement spending in the next few quarters? This is the first question.

And second question is, actually, I would like to have your view on the competitive landscape of the used car e-commerce industry. On the one hand, we actually noted that demand of both new car and used car are relatively weak year-to-date in China. But on the other hand, we have also noticed some of our competitors are claiming to increase their investment in the used car business. So our new initiatives seem to me that is to focus more balance between the sustainable growth with profitability. So does it mean that you're seeing the used car e-commerce industry has come to a stage that profitability is becoming the most -- one of the most important targets of all the used car e-commerce companies?

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Zhen Zeng, Uxin Limited - CFO [3]

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Okay, Eddy. Here is Michael here. So I will address your first question. So overall speaking after a year of rapid development, we think now is the right time for us to shift our focusing on high-quality and more sustainable growth and we have been continuously optimizing our business model and operations. And we have identified great market opportunity in the 2C, especially for the cross-regional business. More importantly, we have built the core capability to carry out the business and have the first-mover advantage.

In order to capture this market opportunity, I think we will shift the key resource to our cross-regional transaction and become more focusing on expanding this core business. Using our new disclosure method, we are looking at around 40% of transaction volume coming from the cross-regional transaction this year. Concentrating on the -- within the cross-regional business will not only give us more sustainable growth, but also take us one step closer to the profitability.

And to ensure this high-quality growth, starting from the second quarter, we have been conducting an overall, for the whole company, in-depth review of our business operations, operational efficiency and cashflow. And for some of the low-margin and/or the low-efficient business, such as new car loan facilitation business, we will defy to stop the business. So the loan product will be the headcount for operating regions, we streamlined related headcount and the operations.

And at the same time, we have decided to take more conversation approach to our loan facilitation business. And going forward, we will commit our resource to used car asset with better risk profiles. We will also adopt strict risk control process in a bit more prudent when facilitating the loan. Regarding some of the intra-regional loans with less satisfactory risk profile or low cash flow performance, we will also cutting back this portion of volume. But we are confident that it will lead a more sustainable business and improve the cash flow, since we no longer provide on-site transaction facilitation service through local transaction without financing package and not disclose the free-of-charge transaction, financing attach rate will seem higher.

And for the, I think, intra-regional business, our loan attach rate were 100%, and for the cross-regional, it's around 80% to 85%. And we will also take strict measure to manage the cost experience -- expenses to ensure that we are maximizing the impact of every dollar we spend and continue to optimize the operational efficiency.

Compared to the last year, our brand expenses will be great reviews in this year. And I think, with this initiatives, though our top line of this year will be lower than the previous expected, our bottom line will be further improved. So we believe we can build a even stronger foundation for our long-term growth.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [4]

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Hello Eddy, this is DK I'm addressing your second question. I'll use Chinese to answer the question, and then Nancy, help me to translate. Okay? Right. (foreign language)

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Nancy Song, Uxin Limited - IR Director [5]

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[Interpreted] Yes. So I think the key difference from previous years is the different models between different players are very clear now. So some of the players are choosing a asset-heavy model and some of the competitors is choosing the traffic direction model. And for us, for Uxin, we are a firm believer of the B2C model, and our key value is in the -- for the whole supply chain.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [6]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [7]

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[Interpreted] Yes, so we have been prepared for cross-regional services for quite many years. So starting from 2011, when we established, we've been fully prepared for all the capabilities. So we have been doing a lot of things throughout the value chain. So from how we secure the car inventory, to car inspection, to standardization and to the digitization as well as the off-line fulfillment, such as logistics and the title transfer, so all of the -- these are the whole new used car purchasing experience to Chinese consumers. So we believe the market or the barrier we've been set is quite high. So it's not something other competitors can catch up within very short time of period.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [8]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [9]

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[Interpreted] Yes. So our focus on the sustainability and the high-quality of the growth doesn't mean that we will slow down our pace. Instead, we will more concentrate our resources on the core business, which is our cross-regional business. So our goal is not only to maintain our market leadership for the moment. More importantly, we will extend our market leadership in the future. Thank you.

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Operator [10]

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The next questions comes from the line of Ronald Keung from Goldman Sachs.

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Ronald Keung, Goldman Sachs Group Inc., Research Division - Executive Director [11]

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(foreign language) I got 2 questions. Firstly is on given the focus on cross-regional that we talked about, and I heard DK talked about the strategies and the uniqueness of our business model there, just want to hear, have you done sort of a -- how do you see the market size because it will be ultimately, how many cities do you plan to cover in the lower-tier cities through your self-owned and franchised models? And sort of how do you see the total volumes could reach in terms of lower-tier consumption power for these used cars? And I'm thinking one of the potential challenges is that we, as a buyer, we haven't seen the car, we have haven't test driven it, so to make a decision on the spot without touching and seeing the car, what else besides the video or the sales agent talking about the inspection report, what else can we offer to increase the confidence of a buyer using our platform and buying these assets from other cities?

And the second, about the disclosure change. Can you just outline what exactly have changed there, particularly as you mention about volumes that are not generating commission revenues are no longer counted. So can you give us some apples-to-apples GMV and volume numbers for fiscal last year, full year 2018, under this new definition that could help us compare more apples-to-apples from this year onwards?

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [12]

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Okay. Thank you, Ronald. I will address your first question, then I use Chinese to answer, and then Nancy will help me to translate. Okay? (foreign language)

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Nancy Song, Uxin Limited - IR Director [13]

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[Interpreted] Yes. So the online provisioning of the used car transactions is the future trend for the China's used car market as well as it's also true for the U.S. or European market. So for our cross-regional transactions, we've provided 2 key unique values to the consumers. One is the wide selection of used cars, nationwide selections. So whether -- especially for the consumers in the lower-tier cities, whether they can find this car is very important. So for lower-tier cities, we can enlarge the used car transactions as high as thousands of folds. And for high-tier cities, we can provide as high as 20 times of more used car selections. This is the first value we provide.

And for the second value is to increase the overall efficiency of the used car industry. And we can cut the unnecessary procedures in between, so we can lower -- close the price gap between different markets so we can provide better prices to the consumers.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [14]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [15]

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[Interpreted] So we think we can guide our consumers to change their shopping behavior, especially by the capabilities we provide the digitalization. So the first thing is how we can better display the used cars online. So, first, we provide -- on top of the text plus picture inspection report, we also provide video inspection reports as well as the VR functions, so consumers will have a better idea of how this car performs even without seeing the car in person. So we will increase their comfort level to purchase a car online.

So secondly, we provide a well-round -- warranty services to the consumers. So we provide a 30-day quality issue return policy or we provide 1 year or 20,000 kilometers warranty program to the consumers. Also, for the super value cars, we also provide a 3-day no-reason-ask return policy. So all of this will lower the -- increase the people's trust to purchase online.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [16]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [17]

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Yes. So in longer term, if we look at in 10 years horizon, the online transaction of the used car, the advantages is quite clear. So we believe there will be as high as 50% of consumers will choose -- purchase the car online, so especially for the cars with car price above RMB80,000, so people will be more price-sensitive and they will be more prudent when choosing the car. So online transaction will give them more comfort level. And also, with our cross-regional transactions, we provide a whole new purchasing experience to the consumers. The consumers who are purchasing through our cross-regional services, they feel very happy about it. We believe this will be the trend going forward.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [18]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [19]

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[Interpreted] Yes. Starting from Q4 '17 or early '18, we started to launch this cross-regional transactions. We've seen consecutive quarters of volume growth very rapidly. So this is also the evidence that our cross-regional transactions is gaining traction among consumers. Thank you.

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Zhen Zeng, Uxin Limited - CFO [20]

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Okay. Ronald. It's Michael here. So I'll address your second question. Because we changed the disclosure method, so on the apple-to-apple base, for the full year of 2018, the total 2C transaction is 255,000 used cars and the GMV is RMB27 billion. And for the intra-regional, the transaction volume is 220,000 used cars and GMV is RMB23 billion. And for the cross-regional, the transaction volume is 38,000 and the GMV is RMB4 billion.

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Operator [21]

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The next questions comes from the line of Nick Lai from JP Morgan.

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Y.C. Lai, JP Morgan Chase & Co, Research Division - Head of Asia Auto Research [22]

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(foreign language) My simple question is, #1, our partnership with 58, what does that mean to our revenue and profit? If we could quantify that, yes, for now. And secondly, management talked about marketing expense saving and cutting. What does it mean to our volume and traffic in the rest of the year?

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [23]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [24]

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[Interpreted] Yes. So 58.com has a massive targeted used car traffic and a large user base. So they've been also penetrated into lower-tier cities in recent years. So this is highly in line with our strategy in the cross-regional transactions. So by leveraging their traffic and their resources in the lower-tier cities, we believe we can further expand our cross-regional transactions. In return, we will help 58.com to further monetize their traffic as well. So we believe the synergy is quite great.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [25]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [26]

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[Interpreted] Yes. So after 3 years of branding investment, Uxin's brand is highly recognized by the consumers, especially with the consumers with -- purchase-minded consumers. So we believe it is the right time to control the branding budget and also it is practicable. So we won't -- we don't see any or material impacts on our volume, and we believe it won't impact, I mean, in the near future as well.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [27]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [28]

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[Interpreted] Yes. So car purchasing is a heavy decision-making process, so it will take quite long time before they can finally make the purchase. So people normally will choose from platform to platform and compare the used cars. So we believe the -- invest more in branding will have a limited impact. So, yes.

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Operator [29]

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We have the last questions from the line of Monica Chen from Crédit Suisse.

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Monica Chen, Crédit Suisse AG, Research Division - Associate [30]

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(foreign language) So I will quickly translate my questions. My question is about the market outlook for this year. So the year-to-date used car transaction volume looks quite weak comparing to the growth rate in last year and given the macro uncertainties for this year, so how do you management think about the second half market outlook? And what is our expectation on the transaction volume growth for this year? And to achieve this target, what do management think about the biggest opportunity and the challenges for this?

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [31]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [32]

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[Interpreted] Yes. So the car marketing trend in China has been quite challenging for quite a few time, so that new car market has seen a decline year-over-year. And for the used car market, the growth is still slowing down. And I think this trend will continue in the next few months. Yes.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [33]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [34]

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[Interpreted] Yes. If you look at our last year's third quarter and fourth quarter as well as this year's first quarter growth, we maintain very high growth, both in transaction volume and revenue growth. This is especially thanks to our cross-regional transactions. I think this high growth is mainly because our cross-regional transactions or our total transactions are still relatively low compared to the whole market. So we are still benefiting from the people's online transition of their purchasing behavior. So this is also why we are less impacted than the whole market. And for the -- I mean, looking into the remainder of 2019, we are still look at very decent or high-quality growth, so -- and we previously mentioned we are focusing more on the sustainability of our growth, even though our topline growth or volume growth will be lower than previously expected.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [35]

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(foreign language)

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Nancy Song, Uxin Limited - IR Director [36]

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[Interpreted] Yes. With all the initiatives in place, we believe our profitability of this year will be highly improved. Thank you.

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Kun Dai, Uxin Limited - Founder, Chairman & CEO [37]

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(foreign language)

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Operator [38]

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I will now hand over to Nancy for closing remarks.

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Nancy Song, Uxin Limited - IR Director [39]

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Yes. Thank you, everyone, for joining us today and for your continuous support for Uxin. We look forward to speaking to you again in the future. Thank you.

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Operator [40]

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Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]