Uxin Limited
Q1 2019 Earnings Call Transcript

Published: 10 Jun 2019

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to Uxin's First Quarter 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 now like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Please go ahead.

[Nancy Song:]

Thank you, Operator. Hello, everyone. Welcome to Uxin's First Quarter 2019 Conference call. Today, D.K., our Founder and CEO; and Zhen Zeng, our CFO, will discuss our financial results for the first quarter. Following the prepared remarks, D.K. and Zhen will address any questions you have.Before we start, I will 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 made - 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 obligation to update any forward-looking statements, except as required under applicable law. For more information about the potential risks and uncertainties, please refer to the company's filings with SEC.With that, I will now turn the call over to our CEO, D.K. Please?

[Kun Dai:]

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 revenue in a quarter increased by 55% year-over-year and exceeded RMB1 billion, once again beating the high end of our guidance. Thanks to great economics of scale and the more effective cost control.Gross margin improved to 70% from 66% in the same period one 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 revenue to 23% from 74% in the same period last year.Before we dive into operations, I would like to highlight that. Starting from the first quarter this year we will only disclose the transaction volume and the corresponding operational metrics for the transaction with generated 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 clear picture of the take rate that we can actually change -- 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 transaction, which have generated monetization potential and a better margin profile. The new method of disclosure has been applied to all the metrics of this earnings call.Now, I will provide some further color on our operating starting with our 2C business which continued to be the primary growth driver for Uxin. We facilitate transactions for over a 78,000 used car on our 2C platform, up 40% from the same period a year ago.Revenues from the transaction, facilitation services increased by 224% year-over-year, so RMB308 million, far outpacing of the growth of our 2C business and contributed 35% of total 2C revenues, which we are expanding our loan facilitation services. We are also continuously improving our risk management process.We manage to keep the M3+ delinquency rate relatively stable at a 1.45% as of first quarter of 2019. A similar lever to the 1.41% as of the previously quarter, the cross-regional business continued to play an increasingly integral role in driving the growth of our 2C business. We mentioned that the growth momentum for the peak season in the first quarter and the facilitated over 2,000 -- over 20,000 cross-regional transactions in the first quarter, up almost of 50 times year-over-year.The cross-regional business contributed 26% of total 2C transaction volume and a 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 to provide a unique value to customer through our national-wide selection of new car and better price.We are naturally able to generate a higher take rates in our cross-regional business. In the first quarter, we generate a total take rate of 12.6% for cross-regional business transaction, of which 6.2% was for the transaction facilitation fees and a 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've previously noted that we are now adopting a franchising model to expand our service network and a complemented -- complement the service centers that we operate directly with the expansion of our cross-regional 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 center across China, of which over 600 was operated by ourself and over 700 by franchisees. The majority of the franchise services center was operated broadly throughout the quarter.On average this franchise to service center were fully up and running for 1.3 months during the quarter. And collectively, they contribute to low-teens percent of total cross-regional transactions.Our service network covered over 400 prefecture-level city, 900 cities and region at all levels of China administrative deviations, include a prefecture-level city, country level city and district.In order to enhance user experience, we have been promoting untried services across country, up on request our sales consultant can visit a customer at their workplace or home, help them [audio gap] when we first to engage with them.However, if the customer insists on seeing the car in person, but it doesn't require financing, we will no longer accompany him to visit an offline dealership or assist him with the purchase process in effect.In the quarter, we generated a total take rate of 8.4% for intra-region used car transaction, of which 2.5% was for the transaction facilitation services and a 5.9% was for the loan facilitation services.Moving on to our 2B business, transaction volume decreased by 43% to 36,500 used cars during the quarter. The decline was primarily due to our change of approach in serving customer with a 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-regional business.B2B transactions facilitation take rate was 3.8%, down from 4.3% in the previous quarter. Strategically, the 2C business will continue to serve as a complementary pillar of our business that has strengthened our relationship with dealer and expands the inventory available for over 2C customers.Given that we may continue to provide a favorable terms to our dealers on the 2B possible, so as to maintain stickiness as well as encourage dealers to expand collaboration in the 2C business, especially at cross-regional transactions.Now, I'd like to briefly discuss our new strategic partnership with the 58.com. 58.com used car business in complementary with Uxin business model and we believe our partnership will lead to many synergy. 58 used car is a well established classified category of 58.com platform with a huge volume of targeted used car traffic and a large user business.By combining their traffic with our deep expertise we’ll fulfill used car transactions throughout the entire value chain. We are confident that we will improve monetization and generate a significant value for both company.More importantly, in recent year 58.com has been penetrating into lower tier city as well. This is aligned with our strategy focus on cross-regional transactions and the expansion of our service network into lower tier cities across China. Through our strategic cooperation, we are confident that [audio gap] several years, we have continuously involve Uxin's business model to better meet consumer demand and we have experienced rapidly growth of both transaction volume and the revenue.As we continued to expand our business, we will increase our focus on achieving more sustainable growth by implementing the following three initiatives. First, we will continue shifting our resources to the cross-regional business where we’ll see a huge market opportunity in addition to targeting there's a significant growth potential of our strategic focus on cross-regional transaction, will enable us to generate a greater revenue and to take us one step closer to profitability.Second, we will continue to improve our operation efficiency by taking a more rigorous approach to cost control and expense management. Third, we will adopt more stringent risk-control procedures and concentrate our resource on used car assets with better risk profiles.We have already been reviewing our loan facilitation business and are taking a more prudent approach in facilitating a loan, this will ensure that we build an even strong foundation and improve cash flow. 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. Zeng, please?

[Zhen Zeng:]

Okay. Thank you. Hello, everyone. Thanks for joining us today. Now let me walk you through our financial details of the first quarter of 2019. Please note that all numbers are in RMB unless otherwise stated. Also please note that some numbers I referred to are non-GAAP, you can find our 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 the 2C transaction volume transactions facilitation take rate and the amount of the 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 RMB [Indiscernible] in the prior year period.Cross-regional transaction volume increase up potentially 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 RMB57 million in the prior year period.Cross-regional transaction facilitation revenue increase substantially by 47 times from RMB140 million from only RMB3 million in the prior year period, primarily due to the increase in the transaction volume GMV and the transaction facilitation take rate of used car sales were lower at cross-regional business.Take rate for the cross-regional transactions facilitation increase to 6.2% from 4.4% in the prior year period, primarily driven by enhanced service user experience in a higher pricing power.Cross-regional loan facilitation revenue significantly increased by 64 times to RMB144 million from RMB2 million in the prior year period. Primarily due to the increases in the financing transaction, volume and amount of loan facilitated, as well as the increase in the loan facilitation take rate of the use part 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 a prior year period.Intra-regional transaction volume increased by 4% year-over-year to 57,630 units and is 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 the transaction facilitation take rate and GMV of the used car sold through our intra-regional services.Take rate for intra-regional transaction facilitation increased 2.5% from 1.7% in the prior year period. Intra-regional loan facilitation revenue increased by 21% to RMB431 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 car sales to our intra-regional service. Take rate for intra-regional loan facilitation remains at 5.9% compared with 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 strategy shifted to the 2C business, the decrease of 2B transaction volume was merely because of a change of approaching certain customers with car selling meet as well as the dealers growing preference for retail transactions for our 2C platform.Our take rates 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 the prior year period. The increase was primarily due to the increase in costs of fulfillment, title transfer, and the registrations which were correspondingly driven by the increase in the transaction volume as well as the increase in the salary and the benefit of employees engaged in car inspection, quality control, customer service and after-sales services.Gross profit increased by 56% to RMB708 million from RMB427 million in the prior year period. Gross margin increased to 70% in the quarter compared to 56% 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, so RMB681 million, compared to RMB633 million the prior year period. The minimal increase reflects our continuous efforts to enhance operating efficiency and improve conversion rate.2C marketing expenses as a percentage of the total revenue increase 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 a share-based compensation expenses.G&A expenses including share-based compensation expenses was RMB135 million, representing 13% of total revenue in the quarter decreased 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 the salaries and benefits expenses.R&D expenses excluding share-based compensation expenses was RMB79 million, representing 8% of the revenue in the quarter, decreasing from 10% in the prior year period. We are confident that we -- our increasing operating leverage and a prudent approach to expenses, 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 first quarter of 2018.Loss from operations was RMB261 million, a decrease from RMB453 million in the prior year period. Non-GAAP loss from operations which exclude the share-based compensation expenses was RMB 208 million, a decrease from RMB451 million in the prior year period.Non-GAAP loss from operations as a percentage of total revenue 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 [Indiscernible] impact of derivative liability as the preferred share would convert into ordinary share at the time of IPO.Net loss was RMB285 million, a decrease from a net loss from RMB839 million in the prior year period. The narrowed net loss was primarily due to the great operating leverage and the 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 revenue was 23% decreases 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 have a short term deposit and other investment product of RMB597 million compared to RMB596 million as of December 31, 2018.We have a restricted cash of RMB25,025 million compared to RMB22,030 million as of December 31, 2018. Before we move on to our guidance, I'd like to highlight our determination to implement of initiatives that D.K outlined which will have drive the substantial result of the business.Our strategy focusing on the building the cross-regional business will fuel our growth and our initiatives to improve cost control in the stringent risk will enhance our operating efficiency and move us towards profitability.Factoring the measure that we are taking we expect the total revenue for the second quarter of 2019 to be in the range of RMB900 million to RMB950 million. This forecast to reflect the company's current and primary view on marketing and operational condition which are subject to change. That concludes our prepared remarks.

[Nancy Song:]

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

[Operator:]

Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions]. The first question comes from the line of Eddy Wang from Morgan Stanley. Please ask the questions.

[Eddy Wang:]

[Foreign Language]I have two questions, the first is about that you have been talking about to implement three new initiatives, including the shift more resources to cross-region transactions that improved 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, longer tax rate and other placement spending in the next few quarters? This is a 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 that we actually noted that the demand of both new car and used car relatively weak yesterday 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 the profitability, so does it mean that you think the used car e-commerce industry has gone to a stage that probability is becoming the most -- one of the most important targets of all the used car e-commerce companies? Thank you.A - Michael YaoOkay, Eddie. Here is -- Michael here. So I'll address your first question. So, overall speaking after a year of the rapid development, we think now is the right time for us to shift our focusing on a high quality and a more sustainable growth, and we have been continuously optimizing our business model and the operations and we have identified great market opportunity in the 2C especially for the cross-regional business.More importantly, we have viewed the upward [ph] comparability 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 scores to our cross-regional transaction and become more focusing on the spending days core business, using our new disclosure method that we are looking at around the 40% of the transaction volume coming from the cross-regional transaction this year. Concentrating on the -- within the cross-regional business will not only gave 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 a over all for whole company in-depth review of our business operations. Operational efficiency and the cash flow and for some of the low margin and/or the low efficient business such as new car loan facilitation business, we have decided to stop the business. For the loan product, the headcount or operating regions, we streamlined related [Indiscernible] operations. And at the same time we have decide to take more conversational approach to our loan facilitation business and going forward we will commit our resource to used car asset with better risk profits.We will also adopt restrict rate of control process in it be 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 its portion of volume, but we are confident that it will lead a more sustainable business and improve the cash flow, things we no longer provide onset transaction facilitation service to the local transaction without financing package and not disclose the free of charge transaction financing a tax rate will seem higher and for the -- I think the intra-regional business over flow has actually well 100% and for the cross regional is around 80% or the 5%.And we will also take strict measure to manage the quality expenses to ensure that we are maximizing the impact over dollar with Ben and continue to optimize the operational efficiency. Compared to the last year, our branding expenses will be great reviews in this year. And I think with this initiatives through our top line of this year will be lower than the previous factor, our bottom line will be further improved, so we believe we can build a even stronger foundation for our long term growth.

[Kun Dai:]

Hello Eddy, this is D.K. I'm addressing your second question. I use Chinese to answer the question and then Nancy will help me to translate. Okay, right.[Foreign Language]

[Nancy Song:]

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 to have a model, some of the competitors is choosing the traffic, their action model and for us, for Uxin, we are a firm believer of the B2C model and our key value is the whole supply chain.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes. So, we have been prepared for cross-regional services for 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 from the hallway, secure the car inventory to car inspection, to standardization and to digitization as well as the offline 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 bearer were been set is quite high. So it's not something other competitors can catch up with -- within a very short time period.

[Kun Dai:]

[Foreign Language].

[Nancy Song:]

Yes. So our focus is on the sustainability and the high quality of the growth doesn't mean that we will slow down our pace. Instead, we will put more concentrated our resources on the core business which has 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.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Thank you.

[Operator:]

Thank you. The next question comes from the line of Ronald Keung from Goldman Sachs. Please ask your question.

[Ronald Keung:]

Hey thank you, [Indiscernible] Michael and Nancy.[Foreign Language]So thank you D.K. Michael, and Nancy, as I've got two questions. Firstly is on, given the focus on cross-regional that we've talked about and I've heard D.K. talked about the strategies and the uniqueness of our business model there. I just want to hear, have you done sort of -- how do you see the market size could be ultimately, how many cities do you plan to cover in the lower tier of cities to your cell phone and franchise models and sort of how -- how do you see the total volumes could -- could reach in terms of lower tier consumption power for these used cars?And I'm thinking one of the potential challenges is always that we as a buyer we haven't seen the car, we 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 talk about inspection report, what else can we offer to increase the confidence of the buyer using our platform in buying these products from other cities?And the second about the disclosure change, and you outline what exactly have changed there, particularly as we mentioned about volume and notes that are not generating, submission revenues are no longer accounted. So could you give us some apples-to-apples GMV and volume numbers of fiscal last year full year 2018 under this new definition that could help us compare more apples-to-apples from -- from this year onwards? Thank you.

[Kun Dai:]

Okay. Thank you, Ronald. I will address your first question and I use Chinese to answer and then Nancy will help me to translate. Ronald.[Foreign Language]

[Nancy Song:]

Yes. So the alleged condition of the used car transactions is that 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 digital transactions, we provided two key unique values to the consumers. Why is the wide selection of used cars nationwide selections? So whether especially for the consumer thing the lower tier cities, whether they can find this car is very important. So for lower tier cities, we can enlarge the Used Car Connection as high as thousands of folds and for high tier cities we can provide as high as 20 times more used car selection.This is first value we provide. And for the second value is to increase of the overall efficiency of the used car industry, and we can cut the unnecessary procedures in-between, so we can lower the price gap between different markets. So we can provide better prices to the consumers.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

So we think we can guide our consumers to change their shopping behavior, especially by the capabilities we provide the reservation. So the first thing is how we can better display the used cars online. So first we provide on top of the tax plus picture, the special report we also provide reading the special 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 based on policy or we provide a one year or 20,000 kilometres warranty programs to the consumers. Also for the super value of the cars, we also provide a three day no-reason-ask return policy, so all of these will lower the -- increase the people's trust to purchase online.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

So in longer term if we look at in 10 years for as an online transaction of the used car, the advantages is quite clear. So we believe there will be as high as 50% of the consumers will choose to 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 a comfort level. And also with our professional 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 that this will be the trend going forward.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yeah, starting from Q4 2017 or early 2018 we started to launch this professional transactions with the consecutive quarters of volume growth very rapidly. So this is also the evidence that our professional [ph] transactions is gaining traction among consumers. Thank you.

[Michael Yao:]

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, the full year of 2018 the portal to fee transaction is 255,000 used cars and the GMV is RMB27 billion. And for the intra-regional, the transaction volume is 220,000 used cards and the GMV of RMB23 billion and a 40 at cross-regional if the transaction volume is 38,000 and the GMV RMB4 billion. Thanks, Ronald.

[Kun Dai:]

[Foreign Language]

[Ronald Keung:]

Thank you.

[Operator:]

Thank you. Your next question comes from the line of Nick Lai from JPMorgan. Please ask your question.

[Nick Lai:]

[Foreign Language]My simple question is number one, our partnership with Uber [ph]. What does that mean to our revenue and profit, if we could quantify that for now [ph]. And secondly, management talked about marketing expense and cutting. What does that mean to [Indiscernible] to the rest of the year? Thanks.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes, so 58.com has massive targets at the used car traffic and large user base, so they've been also penetrated into larger cities in recent years, so this is highly in line with our strategy in the profit and retail connections, so by leveraging the traffic and their resources in the lower tier cities, we believe we can further expand our cross-regional transaction. In return, we will help to stay out 58.com to further monetize their traffic as well, so we believe the synergy is quite great.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes. So after three years of branding investment, Uxin brand is highly recognized by the consumers, especially with the consumer with purchase minded consumers. So we believe it is the right time to control the branding budget and also it is practical. So we don't see any or material impact on volume and we believe it will impact, I mean in the near future as well.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes, so our car producing is habit is just a making process, so it will take quite a 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 -- invest more in branding will have a limited impact show.

[Kun Dai:]

[Foreign Language]

[Nick Lai:]

Thank you very much

[Operator:]

Thank you. We have the last question from the line of Monica Chen from Credit Suisse. Please ask the question.

[Monica Chen:]

[Foreign Language]So I will quickly translate my questions. My question is about the market outlook for this year. So the year today used car transaction volume looks quite weak comparing to the growth rate in the last year and given the micro uncertainties for this year. So how do your 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? Thank you.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

So the car marketing trend in China has been quite challenging for quite a few times. So the new car market has been declined year-over-year and for the used car market that growth is still slowing down underway. I think this trend will continue in the next few months.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes, if you look back to our last year's third quarter and fourth quarter as this years first quarter growth, we maintain very high growth both in transactions volume and revenue growth. This is especially thanks to our cross-region transactions. I think this high growth is mainly because our cross-region connections or our total transactions are still relatively low compared to the whole market. So we are still benefiting from the People's condition of their purchasing behavior.So this is also why we are less impacted than the whole market and -- I mean looking into the remainder of 2019, we ask you to look at very decent or high quality growth. So as we previously mentioned we are focused more on the sustainability of our growth, even though our topline growth or volume growth will be lower than previously expected.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Yes, with all the initiatives in place, we believe our profitability of this deal will be highly improved. Thank you.

[Kun Dai:]

[Foreign Language]

[Nancy Song:]

Thank you.

[Operator:]

I will now hand over to Nancy for closing remarks.

[Nancy Song:]

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

[Operator:]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating.