Ladies and gentlemen, thank you for standing by. Welcome to Uxin's fourth quarter and full year 2019 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question- and- answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I'd like to turn the call over to Nancy Song, Investor Relations Director of Uxin. Please go ahead.
Thank you, operator. Hello, everyone. Welcome to Uxin's fourth quarter and full year 2019 earnings conference call. On the call today are DK, Founder and CEO, and Zhen Zeng, our CFO. DK will review business operations and the company highlights, followed by Zhen, 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 could 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 the company's filings with SEC. With that, I will now turn the call over to our CEO, DK. Go ahead, please.
Thank you, Nancy. Hello, everyone. Thank you for joining our fourth quarter and full year 2019 earnings conference call. We are pleased to finish off the year on such a solid note with our 2C revenue increase by 65% to RMB 388 million in the quarter. Not only did we record over 28,300 online used car transactions during the quarter, but we also increased our total 2C take rate to 11.7%, which is equivalent to a per unit revenue of over RMB 13,700. 2019 marked an important milestone for Uxin as we shaped our strategy focus to 2C online transactions. Throughout the year, we continued to improve our platform by optimizing product and service offering, enhancing service quality, and strengthening our fulfillment capability and infrastructure.
What encouraged us the most is we helped over 97,000 consumers buy their car of choice online without the need to visit a dealership in person. This is a truly differentiated and innovative car-buying experience for the average consumer in China when compared with the traditional way of spending weeks or even months visiting several dealerships to find the ideal car. With a nationwide online selection of inspected and certified used cars, we help customers conveniently buy a car that might not be available in their local market and enable them to find better deals across the country by simplifying, comparing each car's price to performance. Coupled with the professional service and the convenience we deliver, our business model offers consumer a unique value proposition that reinforce our competitive position in the market and increase barriers to entry. This will help us generate long-term sustainable growth going forward.
We are now currently focused on our 2C online transaction business. Divesting from the loan facilitation, salvage car, and the 2B business will allow us to devote all our attention and resources toward developing and scaling up our 2C online business. In addition, the divestiture of our loan facilitation business enables us to drive further growth without incurring additional guaranteeing obligations or credit risk starting from November 2019. This will place us on a much stronger footing for the next stage of our development. As we move further into 2020, we are keenly aware of the challenge created by both the softening macro environment and volatility created by the coronavirus outbreak. China's used car industry has been severely impacted by the pandemic, with disruption taking place across the industry's infrastructure and the supply chain.
During the first quarter, we saw considerable barriers to the used car purchase process and fulfillment due to people restricted from offline activities, temporarily closed the local used car market and the dealerships, and the challenging used car logistics and the title transfer. As a result, our business operations during the first quarter were also severely disrupted. While the used car industry has been recovering steadily in recent weeks and overall operations gradually returning to normal. It will take some time before the market completely digests the overall impact. With this in mind, we expect the outbreak will continue to weigh down our results for the second quarter. That said, we believe the outbreak presents just as many opportunities as it does challenges, and remaining confident in our ability to seize the long-term growth opportunities in China used car market. Buying used car online continues to trend upward in China.
Since we launched our 2C online used car transaction services in earlier 2018, we have been dedicated to transforming the entire buying process and the transaction online, each step in the sales process. The outbreak is actually accelerating our online initiative as offline activities remain significantly constrained. In response to the situation, we immediately implemented two stages to adopt our business service model upgrade and cost structure optimization. On the service model front, we upgrade our products, standardize fees, and transform the way consumers are served and the procedure they go through to complete a purchase to facilitate the customer's self-help online buying experience. Instead of assigning a sales consultant to assist in an offline in-person purchase once a customer demonstrated their intention to purchase online, we are now offering online sales consulting and assistant services.
Going forward, customer will be empowered to complete the purchase entirely online all by themselves, including learning about and selecting the car, making a payment, and filling all purchase-related document. During the entire buying process, our online consultants are always available to address any issues that the consumer may have in order to facilitate a smooth online transaction. The service model for online consulting and assistance will simplify the process of servicing customers, increase sales productivity, and even truly enable us to significantly reduce sales head count. On the cost structure front, in response to outbreak of coronavirus, we immediately implemented a temporary workload-based staffing program company-wide to fortify our cash flow and financial position by bringing costs and expenses under carefully control. We optimized our cost structure according to our current service model.
On top of reducing sales expense by simplifying the buying and the servicing process, we are also streamlining the corresponding corporate management structure and the process. All this adjustment not only enable us to reduce cost and expense for better unit economics, but also allow us to improve overall operation efficiency. As the impact of outbreak begin to fade, we believe the used car market will gradually bounce back in the coming quarters, catalyzed by people's growing preference for owning their own car and pent-up demand for used cars the outbreak has created. With an upgraded service model and optimized cost structure already in place, we will benefit from further growth opportunities once the market rebounds.
With our focus clearly on becoming a one-stop online destination for buying a used car, we are confident we will be able to further solidify our market leading position as a nationwide online used car dealer and create long-term value for our shareholder. Before I turn the call to Zhen for our financial details, I want to extend our deepest sympathies to all those who faced and continue to face extremely difficult as a result of the coronavirus outbreak. I want to also express our sincere gratitude to those who fought and continue to fight on the front line to complete the disease. Thank you. I'd like to turn the call over to our CFO to walk you through the financial results. Zhen, please.
Thanks, DK. Hello, everyone. Thanks for joining us today.
As DK mentioned, already highlighted, we are pleased to see our continuing business generate a solid and consistent top line growth and a gross margin improvement throughout 2019. If I tell the account loss from the guarantee liability and the provision for credit losses, which are primarily associated with our historical financial assets, our adjusted loss from continuing operations continued to narrow for the fourth consecutive quarter of RMB 135 million in the fourth quarter of 2019. As we continue developing our 2C online used car transaction business without incurring additional credit risk going forward, as a result of the divestiture of our loan facilitation business, we have also taken active measures to assess and manage the impact from the guarantee obligations associated with our historical loan that we are not transferred to Golden Pacer.
In the fourth quarter of the last year, a series of regulations in relation to lending and debt collection, including the prohibition on extreme debt collection practices, were jointly issued by the relevant authorities. This adversely affects the delinquency rate as well as the collection and the repossession rate in the connection with our historical loans. After re-evaluating the loan performance, we made a significant provision for the credit losses and incurred additional loss from guarantee liability for the fourth quarter. Moving into the first quarter of 2020, in response to the new accounting standard for credit losses effect on January 1st, 2020, and the outbreak of the coronavirus, we have fully reviewed the quality of our historical financial assets again and carefully assessed other relevant impacts. As a result, a significant provision for credit losses and loss from guarantee liability will be provided for the first quarter of 2020.
We believe the impact from the fluctuation of asset quality on our further cash flow will be limited with careful control and a proper solution already in place to manage the guarantee obligations associated with this portion of loans. Under the current arrangement with our financing partners, we believe the cash flow for buying back further default loans as a result of our historical guarantee obligations will be carefully controlled at a limited level going forward. Looking ahead, as DK just mentioned, the transformation of our service model will help us effectively reduce corresponding costs and expenses and improve operational efficiency. In addition to reducing sales headcount by providing online consulting and assistance services, we are also able to reduce the inspection-related cost by focusing on selecting and inspecting higher price-to-performance used cars based on our accumulated experience and the knowledge in the inventory.
Benefiting from the streamlined cooperation management structure and the process, we are able to bring our headquarter-related expenses and optimize the efficiency level. In addition, our cash position will be strengthened in the coming quarters as a result of our recent divestiture and sufficient to support our business development in the next 12 months. This will provide us a greater flexibility to invest in order to further generate long-term sustainable growth. Now, let me walk you through our financial details for the fourth quarter and the full year 2019. Please note that the results I will discuss related to continuing operations only. All numbers are in RMB unless otherwise stated. Also, please note that some numbers I refer to are non-GAAP numbers. You can find the reconciliation of these numbers at the bottom of our earnings release.
In the fourth quarter, total revenue increased by 61% to RMB 466 million from RMB 289 million in the same period last year. The increase was primarily due to the increases in 2C transaction volume, GMV, commission rate, and VAS take rate. Our total 2C revenue was RMB 388 million, up to 65% year-over-year from RMB 236 million in the same period last year. Online used car transaction volume increased by 26% year-over-year to 28,302 units, and its corresponding GMV increased by 32% year-over-year to RMB 3,308 million. Looking at two revenue streams of our 2C business. Commission revenue was RMB 207 million, up 69% from RMB 123 million in the same period last year, primarily due to the increase in the transaction volume, GMV, and commission rate.
The unique value proposition we are now able to offer consumer, along with improved user experience and higher pricing power, resulted in the commission rate expanding to 6.3% from 4.9% in the same period last year. Value-added service revenue was RMB 180 million, up to 60% from RMB 113 million in the same period last year. Primarily due to the increases in the transaction volume, GMV, and the VAS take rate. VAS take rate increased to 5.5% in the fourth quarter of 2019, from 4.5% in the same period last year, primarily due to our higher pricing power as a result of our increasingly optimized and diversified services. Looking at other businesses. Other revenue was RMB 79 million in the fourth quarter of 2019, up 46% from RMB 54 million in the same period last year. Cost of the revenues increased by 21% year-over-year to RMB 190 million.
The increase was primarily due to an increases in salaries and benefits for employees engaged in car inspection, quality control, customer service, and after-sales services, as well as an increase in the fulfillment costs driven by an increase in the transaction volume. Gross profit increased by 109% to RMB 276 million from RMB 132 million in the same period last year. Gross margin increased to 59% in the quarter from 46% in the same period last year, driven by the growing economics of scale and optimized cost structure. Total operating expenses was RMB 862 million. Non-GAAP operating expenses, excluding the impact of share-based compensation, were RMB 853 million. Sales and marketing expenses decreased by 31% year-over-year to RMB 255 million. The decreases was driven by our continuous efforts to enhance operating efficiency. Share-based compensation expenses associated with the sales and marketing expenses were nil during the quarter.
As a percentage of total revenue, sales and marketing expenses, excluding share-based compensation expenses, decreased to 55% from 127% in the same period last year. G&A expenses increased by 20% to RMB 125 million. The increase was mainly due to an increase in the salaries and benefits as well as the professional fees. G&A expenses, excluding share-based compensation expenses, were RMB 116 million. As a percentage of total revenue, G&A expenses, excluding share-based compensation expenses, were 25%, compared with 12% in the same period last year. R&D expenses increased by 26% to RMB 41 million. The increase was primarily due to the increase in IT infrastructure services-related expenses. R&D expenses, excluding share-based compensation expenses, were RMB 14 million.
As a percentage of total revenues, R&D expenses, excluding share-based compensation expenses, were 9%, a decrease from 11% in the same period last year. Loss from guarantee liabilities were RMB 170 million. We incurred guarantee liabilities associated with the remaining guarantee obligations from the portion of the historical facilities loans, which were now transferred to Golden Pacer. In addition, due to the impact from a series of the regulation relating to the lending and debt collection in the first quarter of 2019, the performance of the aforementioned portion of the loan was adversely affected, which leads to a significant loss from guarantee liabilities in the reported quarter. Provision for credit losses was RMB 271 million, compared with nil in the same period last year.
Due to the impact of aforementioned new regulations in relation to lending and debt collection and impairment was incurred as a result of the adversely affected performance of the company's financial assets, which mainly includes loans recognized as a result of payment under the guarantee and financial lease receivables. Loss from the continuing operations was RMB 586 million, compared with RMB 368 million in the same period last year. If not taking into account guarantee liabilities and the provision for credit losses, loss from continuing operation would be RMB 144 million. Non-GAAP loss from continuing operations, which excludes the impact of share-based compensation, was RMB 577 million, compared with the RMB 300 million in the prior year period. If not taking into account guarantee liabilities and provision for credit losses, non-GAAP loss from the continuing operation would be RMB 135 million.
Net loss from continuing operations was RMB 589 million, compared with RMB 392 million in the same period last year. If not taking into account guarantee liabilities and the provision for credit losses, net loss from continuing operations would be RMB 148 million. Non-GAAP net loss from continuing operations, which exclude the impact of share-based compensation, was RMB 518 million in the quarter. Compared with the RMB 323 million in the same period last year. If not taking into account guarantee liabilities and provision for credit losses, non-GAAP net loss from continuing operations would be RMB 139 million. Turning to our cash position. As of 31st of December 2019, we have a cash and cash equivalent of RMB 478 million. That's our fourth quarter results. Let me briefly go through some highlights of our full year results.
For full year 2019, total revenues increased by 141% to RMB 1,588 million from RMB 659 million in the prior year. Total 2C revenue was RMB 1,347 million, up to 265% year-over-year, from RMB 370 million in the prior year. Online used car transaction volume increased by 154% year-over-year to 97,100 units, and its corresponding GMV increased by 155% year-over-year to RMB 11,268 million. Looking at two revenue stream of our 2C business. Commission revenue was RMB 711 million, up to 258% from RMB 203 million in the prior year. Commission rate increased to 6.3% from 4.6% in the prior year. Value added service revenue was RMB 636 million, up to 282% from RMB 166 million in the prior year. VAS take rate increased to 5.6% from 3.8% in the prior year.
Gross profit increased by 274% to RMB 899 million from RMB 240 million in the prior year. Gross margin increased to 57% in 2019 from 36% in the prior year. Loss from continuing operation was RMB 1,292 million, a decrease from RMB 2,488 million in the prior year. Non-GAAP loss from continuing operation, which exclude the impact of share-based compensation, was RMB 1,208 million, a decrease from RMB 1,486 million in the prior year. Net loss from continuing operation was RMB 1,328 million, compared with RMB 1,352 million in the prior year. Non-GAAP net loss from continuing operations, which exclude the impact of share-based compensation, was RMB 1,243 million in the 2019, a decrease from RMB 1,535 million in the prior year. Moving on to our guidance. For the three months end of 31st of March 2020.
Taking into account of the factors mentioned earlier regarding the coronavirus and the business development future, we expect our total revenue from continuing operation to be in a range of RMB 80 million-RMB 85 million. This forecast reflects our current and primarily view on the market and operational condition, and it is based upon the current situation and uncertainty associated with the coronavirus outbreak, which are subject to change. That concludes our prepared remarks.
Thank you, Mr. Zeng. Operator, we'd like to open the call for questions now. Thank you.
Ladies and gentlemen, we will now begin the question- and- answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel the request, please press the pound or hash key. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your first question comes from the line of Ronald Keung from Goldman Sachs. Please ask your question.
Hey. Thank you.
DK, Michael, Nancy . [Non-English content ]
Thank you, DK, Michael, Nancy and team. Two questions. Firstly, just given the current virus situation and your first quarter guidance of revenue down around 78%-79%, which is the RMB 80 million-RMB 85 million. Just want to hear how are we seeing the March trends and the recovery path recently in April, and when do we see or expect the levels to return to more normalized level through the year? My second question would be on your loan business, which has been divested, but it seems like there are still some that haven't moved on to Golden Pacer. At the current situation, current level, what should we expect to see on impact more on a cash flow perspective from now on? Would it be more on non-cash P&L? Just want to hear anything from the cash flow on your cash that we should be aware of. Thank you.
[Non-English content]
Because of the outbreak of the coronavirus, the used car factor in Q1 has been significantly disrupted, mainly because the closed used car market and the vehicle bureau locally, they don't go back to full operation. The second thing is that because some of the highway has been closed, we cannot deliver the car to the consumer. The fulfillment has been constrained during that period of time. Basically all the transaction volume in Q1 happens in January before the Chinese New Year. Volume in February and March, basically there is no transaction volume happened in these two months.
[Non-English content]
Yes, entering into April, we didn't see significant pickup in the volume. Based on our current knowledge, we think it will be the second half of the year, we will see significant recovery in our volume. In Q2, basically the transaction volume will be constrained by three factors. The first one is because although the outbreak has been largely contained in China, but there are still local governments have adopted strict measures to give response to the outbreak. Also, because of the softening macro environment, consumers' ability to afford to buy the car will be the situation now.
[Non-English content]
For those consumers who are very eager to buy a car at the very moment, they normally want to have the car within a couple of days. Our current fulfillment period of time normally lasts for around two weeks, including the logistics, title transfers and vehicle registration, etc. We are not able to meet this type of demands for consumers who are not willing to wait.
[Non-English content]
The overall used car demand in the market now basically are the cars with price range at low end or to mid end. If you look at our average selling price on our platform, it is basically RMB 120,000 . Our used car selection price range is basically mid to high end. This type of cars, if we look at our transaction volume, it will recover a little bit slower than the low price end cars.
[Non-English content]
Our full recovery will depend on the development of the outbreak. Based on current situation, we expect to see a significant recovery starting from the second half of this year. If we use last December as the normalized level, we expect to see we can return back to that level in the first half of next year, 2021. Thank you.
Hello, everyone. It's Michael here. I address your second question. For the cash flow and the provision of our guarantee and the credit risk. Given the regulatory changes in the last fourth quarter and the coronavirus outbreak in the first quarter, we have fully reviewed our historical financial assets and assessed the relevant impact on the asset quality. In the Q4 last year, we made a provision for credit losses of about RMB 270 million, and incurred a loss from guarantee liabilities of RMB 170 million. In this Q1, taking into account of the new accounting standards for credit losses, which at the same time take consideration of the coronavirus outbreak, we will provide a significant provision for credit losses and loss from guarantee liabilities as well to sufficiently reflect the impact. This item will hit our P&L but won't affect the cash flow too much.
Overall speaking, as we have divested our loan facilitation business since last November. Starting from this point, we don't need to take any guarantee obligations for the new loans referred through our platform. We now can drive our business growth without incurring any guarantee, credit risk or cash outflow and our guarantee obligations. Regarding our historical loans, more than half has been transferred to Golden Pacer already, and the rest are still with us, but we already have a proper solution in place to manage the guarantee obligations and corresponding cash flow. Xinwang Bank related loans are the portion that has been transferred to Golden Pacer. For this part, the Golden Pacer will take fully guarantee obligations for this historical portion and be held responsible for buying back further default loans. There won't be any cash outflow from us.
Instead, we can have additional cash inflow going forward from this portion of loan when Xinwang Bank related retrieved cash can fully cover the actual loss from the guarantee liabilities. Meaning, if there eventually will be a net cash inflow after the maturity of this portion of loan, we will be entitled for 85% of such amount of net cash. Regarding the loan that we not transfer, over 90% are loans for WeBank, and the remaining small portion is sitting on our own balance sheet. For the WeBank portion, under the current arrangement with our financing partner, the cash outflow as a result of corresponding guarantee will be controlled at a limited level and won't impact our cash position much. For the remaining small portion on our own balance sheet, it represents the loan we historically bought back and our guarantee.
Going forward, we will only be cash inflow from this, depending on how much we can collect back. Overall, we believe the impact of divest the loan facilitation on our operating cash flow will be limited. It also will ease out along with the maturity of all these loans. Additionally, our cash position can be strengthened as we will receive additional cash as a result of the business divest feature and sufficient to support our business development in the next 12 months.
Okay. Thank you very much. That's very clear. Thank you, DK, Michael, Nancy.
Thanks, Ronald.
Thank you, Ronald.
Your next question comes from the line of Eddy Wang from Morgan Stanley. Please ask your question.
Hi, DK, Michael, Nancy, [Non-English content] Please let me translate myself. So as you mentioned that the COVID-19 outbreak has accelerated your transformation of the entire buying process and transaction online of each step in the sales process. Just want, would you please elaborate more about have you witnessed any long term trend in the used car industry that you believe such online transformation will benefit? How do you compare with the online transformation model versus your major competitors? Thank you.
[Non-English content]
Yes. Our key strategy for 2020 is to accelerate our progress and degree of enabling online car transactions.
[Non-English content]
We believe the online car transactions can bring unparalleled customer value, at the same time, can create great growth opportunities for ourselves as well.
[Non-English content]
With our online used car transaction model through our online nationwide selection of used cars and services, we can provide consumers with high price-to-performance used cars, as well as a simplified and transparent car purchase process, as well as the well-rounded after sales warranty services.
[Non-English content]
When we are transacting online to a higher degree, our operations will become more efficient, which will bring our cost and expenses to a much lower level. On one hand, the consumers can enjoy better prices. On the other hand, we can also continue to improve our financial performance by doing the process.
[Non-English content]
The outbreak actually accelerates the transition to online used car transactions. Because of being very cautious about personal offline contact amidst the outbreak, and consumers growing preference for online purchases, their acceptance for buying used cars online actually also gets increasingly higher as well.
[Non-English content]
Right following the outbreak, we have fully devoted ourselves to upgrading our online transaction model. We have been working on three areas. The first one is we transformed and upgraded our product and service process. Consumers will be able to complete the online purchase in a more simplified and straightforward way while without the need to be assisted by our offline sales.
[Non-English content]
Yeah. Second, based on our analysis in our transaction data, we have accumulated extensive expertise and know-how in selecting high performance used car inventory. It will not only help consumers to find the car of their choice more quickly and accurately. In return, it can also help us to reduce our inspection related costs.
[Non-English content]
The third one is we upgraded our service package. Now consumers can have a three-day free test drive. Also, we extend our 30-day quality issue return policy to one year and extend the warranty coverage as well. All of these will eliminate consumers' concerns to buy a used car online.
[Non-English content]
With all of these measures in place, our cost structure will be significantly changed and therefore optimized. With more accurate selection of used car inventory and the consumer self-help online purchase, we are able to reduce costs and expenses accordingly. Our condensed sales conversion and the simplified service process will also help us improve our operational efficiency. All of these will eventually be reflected in our optimized cost structure.
[Non-English content]
Our upgraded strategy this year is actually of long-term significance. Our optimized cost structure will enable us to narrow our losses and take us to the break-even point at a lower volume level and will strengthen our profitability as well.
[Non-English content]
At the same time, we now can devote more resources and energy to create customer value for our consumers. All these changes will not only ensure our business continuity during the coronavirus outbreak, but also create more solid conditions for our future growth once the market rebounds.
[Non-English content]
Thank you, Eddy.
[Non-English content]
Once again, ladies, gentlemen, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no further questions at this time. I would like to hand the conference back to Ms. Nancy Song. Please continue.
Thank you again for joining our call today and for your continued support in Uxin. We look forward to speaking to you soon in the future. Thank you.
[Non-English content]
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may all disconnect.