Ladies and gentlemen, thank you for standing by, and welcome to Uxin's earnings conference call for the Q4 ended March 2021. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A 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 your host for today's conference call, Mr. Eric Yuen. Please go ahead, sir.
Thank you, operator. Hello, everyone. Welcome to Uxin's earnings conference call for the quarter ended 31 March 2021, and the full fiscal year 2021. On the call today are DK, the Founder and CEO, and John Lin, CFO. DK will reveal business operations and company highlights, followed by John, who will discuss financials and the guidance. They will both be available to answer your questions during the Q&A session that follows.
Before we start, I would like to remind you that this call may contain forward-looking statements made 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 known or unknown risks and uncertainties, which would cause actual results to differ materially from those in the forward-looking statements.
Uxin does not undertake any obligations to update any forward-looking statements except as required under applicable law. For more information about the potential risks and uncertainties, please refer to our filings with the SEC. With that, I will now turn the call over to our CEO, DK. Please go ahead, sir.
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Thank you for joining our earnings conference call today. To better communicate with both domestic and international investors, my prepared remarks today will be in both English and Chinese.
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We're pleased to report another solid performance for the quarter ending 31 March 2021. In spite of a slower quarter in the Chinese domestic used car market due to the Chinese New Year holiday and a constraint on working capital, we still delivered on our operational targets set last quarter. As you can see from our guidance for the quarter ended June 2021, Uxin has returned to a solid growth trajectory following our successful transformation into an inventory-only model.
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From October 2020 till 12 July 2021, we faced the challenge of sustaining sufficient working capital for our operations. This also puts significant pressures on our ability to continue as a going concern. Despite the pressing financial constraints, we overcame many difficulties and delivered some key achievements.
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First of all, we transformed our business into an inventory-only model instead of only being a platform-based model. This was a critical decision driven by the enormous pressure on our business from the combined impact of COVID-19 and a severe capital constraint. We faced the challenge head on and successfully transformed the business with a stronger foundation of a much leaner and efficient operation.
As a customer-centric company, we believe the key to creating customer value is to continuously improve on customer satisfaction. In a used car transaction, the key to customer satisfaction is to enhance vehicle quality and provide best-in-class after-sales services. Under an inventory-only model, we can better control over the quality of vehicles. Our veteran team acquired used cars in more than 40 cities across China, and only the ones that met our strict standards in terms of quality and value for money were added to our vehicle inventory.
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Customers come first. In order to better implement our goal of improving customer satisfaction, we have been closely monitoring our sales Net Promoter Score, or NPS, since the Q2 of 2020. Our committed efforts in the past year have generated some impressive results. We were happy to see that our NPS remained at 42 in the March quarter, the same as the previous quarter, despite the negative impact on vehicle deliveries during the Chinese New Year holiday.
To put the March improved score in perspective, our NPS was only 10 when we just started to monitor this metric in the quarter ended June 2020. Maintaining an industry high NPS of 42 for two consecutive quarters reflects the stronger customer recognition of our premium quality used vehicles and services. It also demonstrated that we are heading in the right direction with our inventory-owning business model.
Moving forward, we will conduct regular assessments and the necessary improvements to our products and services based on customers feedback in order to provide the best-in-class car purchasing experience in the industry.
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After more than a year of effort, we divested our loan facilitation business and settled our remaining guarantee liability in the second half of 2020. In order to meet our customers' financial needs, we established a new cooperation, a model with the financial institutions to provide third-party auto-loan financing options, which we no longer undertake any credit risk.
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We also made sustained efforts to optimize our operational costs. We adjusted our organizational structure accordingly following our business model transformation. Meanwhile, we consistently refine every step in our business process in order to further boost our operational efficiency. In the March quarter of 2021, our operational loss decreased by 40% quarter-over-quarter to CNY 98 million.
In the next quarter, we expect our operational loss to further narrow down. So far, we have developed a set of refined operational models that we believe are well aligned with our business developments. Even during the time when our cash liquidity was tight, such operational models still allowed us to focus our resources and capital on creating long-term value for our customers.
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Our first Inspection and Reconditioning Center, or IRC i n Xi'an was officially in operation in March 2021. As an important structural part of our business transformation, IRC has been designed to service a range of functions including vehicle refurbishment, warehousing and exhibition.
Establishing our own IRC allows us to have stronger control and management over the front end of our supply chain. In the past six months, we have optimized our business process in relation to the IRC business. As our inventory of used vehicles increases, we are expecting better operating leverage driven by our investment in IRC.
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During March quarter of 2021, we expanded our sourcing of vehicles to individual car owners. This enriched our channels for sourcing high quality vehicles and allowed us to empower the supply chain with our expertise in used cars. From the very beginning, we also established strict inspection standards, so only select premium vehicles that met our online retail requirements will be refurbished and featured on our proper retail online platform.
Those that do not meet our standards will be sold to wholesalers through offline dealership. Vehicle wholesale is an efficient channel to sell used cars. While our working capital was constrained, the wholesale vehicle sales business enabled us to accelerate cash flow while maintaining our penetration rate for the acquisition of premium used vehicles.
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Recently we have secured a key financing, which we believe is a game changer for our business going forward. We were glad to onboard two prominent investors, NIO Capital and Joy Capital, who share the same respect for Uxin's business strategy and have entered into definitive agreements for total investment of up to $315 million into the company.
We closed the first tranche of the financing transaction on 12 July and are well-tracked to close the remaining tranches. The additional funding addressed the pressing working capital issue that we were faced with in the past six months. Going forward, we will remain committed to our current business model and strategy direction and steadily expand our business network.
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Like all great companies, we believe that the temporary difficulties we have encountered were only going to make us stronger and more resilient. We will continuously expand our experience and learn from our successes and challenges, even at the toughest times.
In response to many factors, we made a few decisive but painful decisions and adjustments that we believe will benefit us in the long term. We understand that only when we genuinely place our customers at heart can we achieve sustainable development. We believe that our committed focus on the quality of our products and services will drive organic and sustained business growth in the long run.
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I would like to thank all our customers for their continuous trust and support even during our most difficult times.
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I would also like to thank the entire Uxin team for their dedication, innovative spirit, positive work attitude, and for their strength and resilience over the years. With a strong customer-centric model, we were able to continuously steer the development of Uxin in the right direction.
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I would like to thank the two new investors and our shareholders for supporting Uxin's strategic transformation and their continuous trust in our management team.
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Now that we have addressed the liquidity issue, we believe a new exciting chapter for Uxin lies ahead.
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Going forward, we will continue to explore new opportunities to further unlock the potential of our IRCs. While maintaining the quality of our used vehicles and customer satisfaction, we will focus on expanding our vehicle inventory and boosting our efficiency on refurbishing used cars.
With our comprehensive measures, we believe our production capacity and business skill will steadily increase. We are confident that our sustained efforts and investment will generate greater return for our shareholders in the long term.
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With that, I'd like to turn the call over to our CFO, Feng Lin, who will walk you through the financial results. Feng Lin, please.
Okay. Thanks, DK. Hello, everyone. Thanks for joining us today. As DK just mentioned, Uxin underwent some significant and profound changes in the fiscal year 2021. After we shifted into the inventory owning model, the accounting treatment for revenue recognition and the structure of cost expenses were also adjusted accordingly. Therefore, the financial data in the fiscal year 2021 was not directly comparable with the data for fiscal year 2020.
Overall speaking, our total vehicle sales in the fiscal year 2021 were lower than the prior fiscal year, but we were able to dramatically improve our operational efficiency. As you all know, in the past year, we went through a tough time, so the company took a resolute but carefully planned actions to reduce cost and expenses. This led to a much lower operational loss in the fiscal year 2021, comparable to fiscal year 2020.
If you look at the results just released, our total vehicle sales in the Q4 were lower than the previous quarter. First, in this quarter, we had a Chinese New Year holiday, so Q4 was a traditionally off-season for the Chinese car market.
Second, our efforts to expand our vehicle inventory was restrained by our cash constraints. At the same time, we continued to vigorously reduce cost and expenses. The benefit of those actions will be further reflected on our financials in the next quarter. As a result, despite lower sales volume and revenue in the Q1, our operational loss decreased by CNY 64 million. This led to the first time in our history that our quarterly operational loss has dropped below the CNY 100 million.
One thing I want to mention is that on 12 July , we successfully closed the first tranche of our new financing. Convertible note holders converted $69 million into ordinary shares. This significantly reduced our repayment obligations. At the same time, the company entered into several payable waiver agreements.
The company was exempted from the repayment of payables of approximately CNY 120.4 million or around $18.7 million. These efforts have dramatically improved our cash position. Full details on our Q4 ended 31 March 2021, and the annual financial results are available in our earning release. Now I will run through some key numbers. All numbers are in RMB, unless otherwise stated. Online used car transaction volume was 1,719 units this quarter. This was lower than 2,307 units sold last quarter.
As I said earlier, it was a traditional off-season in the Chinese used car market. Total revenue were CNY 196 million. Retail vehicle sales revenue was CNY 125 million, while the wholesale vehicle sales revenue was CNY 51 million.
As you can see, in this quarter, we broke down the revenue stream to retail and wholesale vehicle sales revenues. If the cars we acquired did not meet our quality standards to list and sell through our proprietary online platform, we sell to wholesale dealers. In order to accelerate the cash turnover, we sometimes need to choose to sell more cars under our wholesale channels. Gross margin was 4.6% compared with 2.9% in the previous quarter.
The increase was mainly due to the company's continued focus on cost management. We stay focused on optimizing our business operations, we adjust our gross margin accordingly to the development strategy of the company.
Total operating expenses were CNY 124 million, a CNY 64 million drop from the CNY 188 million in the previous quarter. Overall labor costs and expenses, excluding salaries paid, decreased by over 40% quarter-over-quarter due to the restructuring of human resources following our business model transformation. We also significantly reduced our marketing expenses.
Looking ahead, we believe our ongoing efforts at cost saving will benefit our financials in the long run. The non-GAAP adjusted loss from continuing operation, which excludes the impact of share-based compensation, was CNY 98 million for the three months ended 31 March 2021, compared with CNY 162 million in the previous quarter.
As I mentioned earlier, this is the Q1 the loss is below RMB 100 million. Net loss from continuing operation was RMB 133 million for the three months ending 31 March 2021, compared with RMB 173 million in the previous quarter. About our cash position. As of 31 March 2021, we had cash and cash equivalents of RMB 193 million. That sums up our results for the three months ended 31 March 2021.
Moving on to our guidance, we expect our total revenues to be in the range of RMB 260 million-RMB 280 million for the three months ended 30 June 2021. The non-GAAP adjusted loss from continuing operations is expected to be less than RMB 50 million. This forecast reflects our current and preliminary views on the market and the operation conditions, which are subjected to change. That concludes our prepared remarks today. Thanks, Operator, we are ready to take questions now. Thank you.
Certainly. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Once again, if you wish to ask a question, you may press star and the number one on your telephone keypad. Your first question comes from the line of Eddy Wang of Morgan Stanley. Please ask your question.
Hey, DK Zhang [Non-English content]
Firstly, it's about the used car industry. We noticed that in the Q2 of this year, the new car sales actually was weaker than we expected. I'm not sure what kind of the market condition of the used car market in China. When do you expect that the used car market could see some recover or even accelerate in terms of the transaction volume going forward?
My second question actually is regarding to the competition as well as the business model. As DK mentioned that we are now mainly adopt the inventory-owning business model. How do you think, you know, the competition going forward among the different business model adopted by different used car platform?
Why you choose this model? Do you think this model will be the mainstream model going forward for all these online used car platform? You will think that, you know, a different model will also have a, you know, different chance in this used car market in China? Thank you.
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OK. Thanks, Eddy Wang. In terms of the market, we think the trend is getting better for sure. On the one hand, the size of the existing market is growing, so the number of the vehicles available for sale is kept increasing and t he interest of willing car from the potential buyers is stronger. The customers have become more adaptive to select a used car, in particular for those with high value for money cars.
After careful screening and refurbish, the quality of used cars sold on our platform is approaching the level of new ones, while their price is much cheaper and much more competitive. This brings substantial value to our customers. On the second hand, with so favorable policies towards this market in the past few years. In 2019, used cars are allowed to be transferred between the sellers and the buyers who are in different cities.
In 2020, government reduced the related VAT for used car transaction. Earlier this year we saw the launch of digital registrations for transactions, which makes the whole process much more convenient. In past July, the new circulation economic policy also promotes the development of our sector. We are welcoming the golden window of time from the perspective of policy making. Thank you.
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In terms of competition, after 10 years of development, we now firmly believe that the used car market in China is not a winner takes all market. The critical thing is to take the advantage of our own strength. We need to have a clear mind of what type of products we want to offer and know the profiles of our customers.
We know how to consistently improve our products and sales channel. We focus on how to make each car our platform better and make our customer satisfied. In our view, if other industry players are willing to improve the trust of consumers, increase the transparency, and do positive things for the overall industry, we actually like to treat them more as our allies rather than competitors.
In addition, we think the real competition happens on the level of customer service and product quality. Such competition is beneficial to the whole industry, as it drives market participants to learn from each other and keep improving themselves. Thanks Eddy.
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Once again, if you wish to ask a question, please press star and the number one on your telephone keypad. Your next question comes from the line of [Non-English content] Please ask your question.
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DK [Non-English content] Repeat my question in English. Uxin recently received investment from NIO Capital and Joy Capital, how will you use this money to promote the development of your new business models? Thank you.
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We and our new investors have strong consensus on strategies. In particular, you can see NIO is a consumer-facing company which actually pays great attention to customers, which is highly aligned with our business philosophy. Because of our business transformation in 2020, we regard user needs, vehicle quality, and NPS as the most important things for us. We have established a consensus with our new investors on strategies and value propositions.
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After receiving the investment, we will work together on key strategic fronts and enhance our digital and automation capabilities to further improve our vehicle quality control and production efficiency. In addition, the additional financing capital will also allow us to expand our vehicle inventory and scale up our business. [Non-English content] Thank you.