Tuniu Announces Unaudited Fourth Quarter and Fiscal Year 2018 Financial Results

Non-GAAP[1] Net Income in 2018 Reached RMB10.9 million

Added 345 Offline Retail Stores During 2018[2]

NANJING,China,Feb. 28,2019 --Tuniu Corporation (NASDAQ:TOUR) ("Tuniu" or the "Company"),a leading online leisure travel company in China,today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31,2018.

Highlights for the Fourth Quarter of 2018

Revenues from packaged tours in the fourth quarter of 2018 increased by 23.3% year-over-year to RMB357.6 million (US$52.0[3] million).

Gross margin in the fourth quarter of 2018 was 57.3%,compared to a gross margin of 50.0% in the fourth quarter of 2017.

As of December 31,2018,Tuniu had 29 local tour operators in total,including 3 newly launched local tour operators in China[4] since November 27,2018.

Highlights for the Fiscal Year 2018

Non-GAAP net income was RMB10.9 million (US$1.6 million) in 2018,compared to a Non-GAAP net loss of RMB531.1 million in 2017.

Revenues from packaged tours in 2018 increased by 15.2% year-over-year to RMB1.8 billion (US$266.3 million).

Operating expenses in 2018 decreased by 25.7% year-over-year to RMB1.5 billion (US$221.7 million).

As of December 31,Tuniu had 509 offline retail stores in total,of which 345 were newly added since January 1,2018.

[1] The section below entitled "About Non-GAAP Financial Measures" provides information about the use of Non-GAAP financial measures in this press release,and the table captioned "Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release reconciles Non-GAAP financial information with the Company's financial results under GAAP.

[2] The sections below entitled "Highlights for the Fourth Quarter of 2018" and "Highlights for the Fiscal Year of 2018" provide additional information about some key financial figures and operating data.

[3] The conversion of Renminbi ("RMB") into United States dollars ("US$") is based on the exchange rate of US$1.00=RMB6.8755 on December 31,2018 as set forth in H.10 statistical release of the U.S. Federal Reserve Board and available at https://www.federalreserve.gov/releases/h10/default.htm.

[4] The 3 newly launched local tour operators in China are located in Lanzhou,Enshi and Nanchang.

Mr. Donald Dunde Yu,Tuniu's founder,Chairman and Chief Executive Officer,said,"2018 has been a year filled with achievements and milestones. We perfected our sales and service networks,opened offline retail stores to improve our user acquisition ability and launched local tour operators to strengthen our service capability. Going forward in 2019,we will focus on the customer experience,because our customers are our greatest asset. We will continue to leverage Tuniu's core competitive advantage in packaged tour products to differentiate ourselves from our peers and to provide the best experience to our customers."

Ms. Maria Yi Xin,Tuniu's Chief Financial Officer,"We are pleased to announce Tuniu achieved non-GAAP profitability and positive operating cash flow for the full year 2018 for the first time since our listing,reflecting positive changes in Tuniu as a result of the implementation of our core strategies. In 2019,we will continue to leverage our leading position and our competitive advantage in China's online leisure travel market to unlock additional value for our customers and shareholders."

Fourth Quarter 2018 Results

Net revenues were RMB471.2 million (US$68.5 million) in the fourth quarter of 2018,representing a year-over-year increase of 0.3% from the corresponding period in 2017.

Revenues from packaged tourswere RMB357.6 million (US$52.0 million) in the fourth quarter of 2018,representing a year-over-year increase of 23.3% from the corresponding period in 2017. The increase was primarily due to the growth of organized tours.

Other revenueswere RMB113.6 million (US$16.5 million) in the fourth quarter of 2018,representing a year-over-year decrease of 36.8% from the corresponding period in 2017. The decrease was primarily due tothe decline in revenues generated from financial services and service fees received from insurance companies.

Cost of revenues was RMB201.0 million (US$29.2 million) in the fourth quarter of 2018,representing a year-over-year decrease of 14.4% from the corresponding period in 2017. As a percentage of net revenues,cost of revenues was 42.7% in the fourth quarter of 2018 compared to 50.0% in the corresponding period in 2017.

Gross profit was RMB270.2 million (US$39.3 million) in the fourth quarter of 2018,representing a year-over-year increase of 14.9% from the corresponding period in 2017. The increase was primarily due to the increase in efficiency resulting from economies of scale.

Operating expenses were RMB373.3 million (US$54.3 million) in the fourth quarter of 2018,representing a year-over-year decrease of 18.1% from the corresponding period in 2017. Share-based compensation expenses and amortization of acquired intangible assets,which were allocated to operating expenses,were RMB46.9 million (US$6.8 million) in the fourth quarter of 2018. Non-GAAP operating expenses,which excluded share-based compensation expenses and amortization of acquired intangible assets,were RMB326.4 million (US$47.5 million) in the fourth quarter of 2018,representing a year-over-year decrease of 18.8%.

Research and product development expenses were RMB75.9 million (US$11.0 million) in the fourth quarter of 2018,representing a year-over-year decrease of 31.8%. Non-GAAP research and product development expenses,which excluded share-based compensation expenses and amortization of acquired intangible assetsof RMB2.8 million (US$0.4 million),were RMB73.1million (US$10.6million) in the fourth quarter of 2018,representing a year-over-year decrease of 33.2% from the corresponding period in 2017. Research and product development expenses as a percentage of net revenues were 16.1% in the fourth quarter of 2018,decreasing from 23.7% in the corresponding period in 2017. The decrease was primarily due to the increase in efficiency resulting from economies of scale and refined management,and optimization of research and product development personnel.

Sales and marketing expenses were RMB209.1 million (US$30.4 million) in the fourth quarter of 2018,representing a year-over-year increase of 7.9%. Non-GAAP sales and marketing expenses,which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB34.5 million (US$5.0 million),were RMB174.6 million (US$25.4 million) in the fourth quarter of 2018,representing a year-over-year increase of 9.6% from the corresponding period in 2017. Sales and marketing expenses as a percentage of net revenues were 44.4% in the fourth quarter of 2018,increasing from 41.2% in the corresponding period in 2017. The increase was primarily due to the expansion of customer loyalty program team and increased promotional campaigns on certain channels.

General and administrative expenseswere RMB120.5 million (US$17.5 million) in the fourth quarter of 2018,representing a year-over-year decrease of 22.0%. Non-GAAP general and administrative expenses,which excluded share-based compensation expensesand amortization of acquired intangible assets of RMB9.7 million (US$1.4million),were RMB110.8 million (US$16.1 million) in the fourth quarter of 2018,representing a year-over-year decrease of 18.9% from the corresponding period in 2017. General and administrative expenses as a percentage of net revenues were 25.6% in the fourth quarter of 2018,decreasing from 32.9% in the corresponding period in 2017. The decrease was primarily due to the increase in operating efficiency resulting from economies of scale and refined management.

Loss from operationswas RMB103.1 million (US$15.0 million) in the fourth quarter of 2018,compared to a loss from operations of RMB220.8 million in the fourth quarter of 2017. Non-GAAP loss from operations,was RMB55.8 million (US$8.1 million) in the fourth quarter of 2018.

Net loss was RMB72.9 million (US$10.6 million) in the fourth quarter of 2018,compared to a net loss of RMB186.1 million in the fourth quarter of 2017. Non-GAAP net loss,was RMB25.6 million (US$3.7 million) in the fourth quarter of 2018.

Net loss attributable to ordinary shareholderswas RMB64.7 million (US$9.4 million) in the fourth quarter of 2018,compared to a net loss attributable to ordinary shareholders of RMB184.9 million in the fourth quarter of 2017. Non-GAAP net loss attributable to ordinary shareholders,was RMB17.3 million (US$2.5 million) in the fourth quarter of 2018.

As of December 31,the Company had cash and cash equivalents,restricted cash and short-term investments of RMB1.7 billion (US$245.8 million).

Fiscal Year 2018 Results

Net revenues were RMB2.2 billion (US$325.8 million) in 2018,representing a year-over-year increase of 2.2% from 2017.

Revenues from packaged tourswere RMB1.8 billion (US$266.3 million) in 2018,representing a year-over-year increase of 15.2% from 2017. The increase was primarily due to the growth of organized tours.

Other revenueswere RMB409.5 million (US$59.6 million) in 2018,representing a year-over-year decrease of 32.1% from 2017. The decrease was primarily due tothe decline in revenues generated from financial services and service fees received from insurance companies.

Cost of revenues was RMB1.1 billion (US$154.9 million) in 2018,representing a year-over-year increase of 4.0% from 2017. As a percentage of net revenues,cost of revenues was 47.5% in 2018 compared to 46.7% in 2017.

Gross profit was RMB1.2 billion (US$170.9 million) in 2018,representing a year-over-year increase of 0.6% from 2017. The increase was primarily due to the increase in efficiency resulting from economies of scale,whichwas partially offset by the decrease in other revenues.

Operating expenses were RMB1.5 billion (US$221.7 million) in 2018,representing a year-over-year decrease of 25.7% from 2017. Share-based compensation expenses and amortization of acquired intangible assets,were RMB208.8 million (US$30.4 million) in 2018. Non-GAAP operating expenses,were RMB1.3 billion (US$191.3 million) in 2018,representing a year-over-year decrease of 27.4%.

Research and product development expenses were RMB315.2 million (US$45.8 million) in 2018,representing a year-over-year decrease of 41.7%. Non-GAAP research and product development expenses,which excluded share-based compensation expenses and amortization of acquired intangible assetsof RMB10.9 million (US$1.6 million),were RMB304.3million (US$44.3million) in 2018,representing a year-over-year decrease of 42.9% from 2017. Research and product development expenses as a percentage of net revenues were 14.1% in 2018,decreasing from 24.7% in 2017. The decrease was primarily due to the increase in efficiency resulting from economies of scale and refined management,and optimization of research and product development personnel.

Sales and marketing expenses were RMB778.1 million (US$113.2 million) in 2018,representing a year-over-year decrease of 13.0%. Non-GAAP sales and marketing expenses,which excluded share-based compensation expenses and amortization of acquired intangible assets of RMB138.0 million (US$20.1 million),were RMB640.2 million (US$93.1 million) in 2018,representing a year-over-year decrease of 15.3% from 2017. Sales and marketing expenses as a percentage of net revenues were 34.7% in 2018,decreasing from 40.8% in 2017. The decrease was primarily due to the optimization of promotional expense structure and preference for marketing channels with higher ROI.

General and administrative expenseswere RMB487.4 million (US$70.9 million) in 2018,representing a year-over-year decrease of 23.6%. Non-GAAP general and administrative expenses,which excluded share-based compensation expensesand amortization of acquired intangible assets of RMB60.0 million (US$8.7million),were RMB427.4 million (US$62.2 million) in 2018,representing a year-over-year decrease of 21.6% from 2017. General and administrative expenses as a percentage of net revenues were 21.8% in 2018,decreasing from 29.1% in 2017. The decrease was primarily due to the increase in operating efficiency resulting from economies of scale and refined management.

Loss from operationswas RMB349.0 million (US$50.8 million) in 2018,compared to a loss from operations of RMB883.4 million in 2017. Non-GAAP loss from operations,was RMB138.7 million (US$20.2 million) in 2018.

Net loss was RMB199.4 million (US$29.0 million) in 2018,compared to a net loss of RMB771.3 million in 2017. Non-GAAP net income,was RMB10.9 million (US$1.6 million) in 2018.

Net loss attributable to ordinary shareholderswas RMB187.9 million (US$27.3 million) in 2018,compared to a net loss attributable to ordinary shareholders of RMB773.0 million in 2017. Non-GAAP net income attributable to ordinary shareholders,was RMB22.4 million (US$3.3 million) in 2018.

Business Outlook

For the first quarter of 2019,Tuniu expects to generate RMB432.5 million to RMB456.5 million of net revenues,which represents 5% to 10% decrease year-over-year. This forecast reflects Tuniu's current and preliminary view on the industry and its operations,which is subject to change.

Conference Call Information

Tuniu's management will hold an earnings conference call at 8:00 am U.S. Eastern Time,on February 28,2019,(9:00 pm,Beijing/Hong Kong Time,2019) to discuss the fourth quarter and fiscal year 2018 financial results.

To participate in the conference call,please dial the following numbers:

US:

+1-888-346-8982

Hong Kong:

+852-301-84992

China:

4001-201203

International:

+1-412-902-4272

Conference ID: Tuniu 4Q 2018 Earnings Call

A telephone replay will be available one hour after the end of the conference through March 7,2019. The dial-in details are as follows:

US:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code: 10129007

Additionally,a live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.tuniu.com.

AboutTuniu

Tuniu (Nasdaq:TOUR) is a leading online leisure travel company in China that offers a large selection of packaged tours,including organized and self-guided tours,as well as travel-related services for leisure travelers through its website tuniu.comand mobile platform. Tuniu has over 2,200,000 stock keeping units (SKUs) of packaged tours,covering over 420 departing cities throughout China and allpopular destinations worldwide. Tuniu provides one-stop leisure travel solutions and a compelling customer experience through its online platform and offline service network. For more information,please visit http://ir.tuniu.com.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934,as amended,and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Tuniu may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission,in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Any statements that are not historical facts,including statements about Tuniu's beliefs and expectations,are forward-looking statements that involve factors,risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include,but are not limited to the following: Tuniu's goals and strategies; the growth of the online leisure travel market in China; the demand for Tuniu's products and services; its relationships with customers and travel suppliers; the Company's ability to offer competitive travel products and services; Tuniu's future business development,results of operations and financial condition; competition in the online travel industry in China; relevant government policies and regulations relating to the Company's structure,business and industry; and the general economic and business condition in China and elsewhere. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is current as of the date of the press release,and Tuniu does not undertake any obligation to update such information,except as required under applicable law.

About Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"),the Company has provided non-GAAP information related to cost of revenues,research and product development expenses,sales and marketing expenses,general and administrative expenses,operating expenses,loss from operations,net loss,net loss attributable to ordinary shareholders,net loss per ordinary share attributable to ordinary shareholders-basic and diluted and net loss per ADS,which excludes share-based compensation expenses and amortization of acquired intangible assets. We believe that the non-GAAP financial measures used in this press release are useful for understanding and assessing underlying business performance and operating trends,and management and investors benefit from referring to these non-GAAP financial measures in assessing our financial performance and when planning and forecasting future periods. For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of GAAP and non-GAAP Results" set forth at the end of this press release.

A limitation of using non-GAAP financial measures excluding share-based compensation expenses and amortization of acquired intangible assets is that share-based compensation expenses and amortization of acquired intangible assets have been – and will continue to be – significant recurring expenses in the Company's business. You should not view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP,or as being comparable to results reported or forecasted by other companies.

For investor and media inquiries,please contact:

China

Mary Chen

Investor Relations Director

Tuniu Corporation

Phone: +86-25-6960-9988

E-mail: ir@tuniu.com

(Financial Tables Follow)

Tuniu Corporation

Unaudited Condensed Consolidated Balance Sheets

(All amounts in thousands,except per share information)

December 31,2017

December 31,2018

December 31,2018

RMB

RMB

US$

ASSETS

Current assets

Cash and cash equivalents

484,101

560,356

81,500

Restricted cash

91,810

270,670

39,367

Short-term investments

3,084,634

859,211

124,967

Accounts receivable,net

286,627

347,547

50,549

Amounts due from related parties

171,331

696,520

101,305

Prepayments and other current assets

939,463

1,673,584

243,413

Yield enhancement products and accrued interest

31,337

-

-

Total current assets

5,089,303

4,407,888

641,101

Non-current assets

Long-term investments

484,991

1,302,506

189,442

Property and equipment,net

148,278

187,360

27,250

Intangible assets,net

460,634

317,885

46,234

Land use right,net

-

100,836

14,666

Goodwill

147,639

159,409

23,185

Yield enhancement products over one year and accrued interest

170,505

-

-

Other non-current assets

156,455

81,039

11,787

Total non-current assets

1,568,502

2,149,035

312,564

Total assets

6,657,805

6,556,923

953,665

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts and notes payable

852,500

1,305,610

189,893

Amounts due to related parties

86,923

77,159

11,222

Salary and welfare payable

187,561

104,480

15,196

Taxes payable

32,036

23,316

3,391

Advances from customers

1,210,615

1,058,946

154,017

Accrued expenses and other current liabilities

373,690

533,144

77,544

Amounts due to the individual investors of yield enhancement products

177,971

-

-

Total current liabilities

2,921,296

3,102,655

451,263

Non-current liabilities

42,481

40,416

5,878

Total liabilities

2,963,777

3,143,071

457,141

Mezzanine equity

Redeemable noncontrolling interests

96,719

69,319

10,082

Shareholders' equity

Ordinary shares

248

249

36

Less: Treasury stock

(185,419)

(304,535)

(44,293)

Additional paid-in capital

9,013,793

9,061,979

1,318,010

Accumulated other comprehensive income

272,386

284,079

41,318

Accumulated deficit

(5,505,897)

(5,691,409)

(827,781)

Total Tuniu's shareholders' equity

3,595,111

3,350,363

487,290

Noncontrolling interests

2,198

(5,830)

(848)

Total Shareholders' equity

3,597,309

3,344,533

486,442

Total liabilities and shareholders' equity

6,665

Tuniu Corporation

Unaudited Condensed Consolidated Statements of Comprehensive (Loss)/Income

(All amounts in thousands,except per share information)

QuarterEnded

QuarterEnded

QuarterEnded

QuarterEnded

December 31,2017

September 30,2018

RMB

RMB

RMB

US$

Revenues

Packaged tours

290,054

632,723

357,619

52,014

Others

179,832

130,408

113,616

16,525

Net revenues

469,886

763,131

471,235

68,539

Cost of revenues

(234,733)

(371,622)

(201,018)

(29,237)

Gross profit

235,153

391,509

270,217

39,302

Operating expenses

Research and product development

(111,151)

(78,270)

(75,854)

(11,033)

Sales and marketing

(193,696)

(209,563)

(209,094)

(30,411)

General and administrative

(154,490)

(122,936)

(120,510)

(17,527)

Other operating income

3,348

15,656

32,130

4,673

Total operating expenses

(455,989)

(395,113)

(373,328)

(54,298)

Loss from operations

(220,836)

(3,604)

(103,111)

(14,996)

Other income/(expenses)

Interest and investment income,net

44,426

38,167

30,696

4,465

Foreign exchange losses,net

(2,009)

(9,030)

(2,043)

(297)

Other (loss)/income,net

(147)

1,293

(505)

(73)

(Loss)/Income before income tax expense

(178,566)

26,826

(74,963)

(10,901)

Income tax (expense)/benefit

(7,569)

1,126

2,025

295

Net (loss)/income

(186,135)

27,952

(72,938)

(10,606)

Net loss attributable to noncontrolling interests

(2,939)

(4,104)

(9,511)

(1,383)

Net (loss)/income attributable to redeemable

noncontrolling interests

(93)

831

(1,848)

(269)

Net (loss)/income attributable to Tuniu Corporation

(183,103)

31,225

(61,579)

(8,954)

Accretion on of redeemable noncontrolling interest

(1,757)

(204)

(3,082)

(448)

Net (loss)/income attributable to ordinary

shareholders

(184,860)

31,021

(64,661)

(9,402)

Net (loss)/income

(186,606)

Other comprehensive (loss)/income:

Foreign currency translation adjustment,net of nil tax

(24,770)

16,342

1

-

Comprehensive (loss)/income

(210,905)

44,294

(72,937)

(10,606)

(Loss)/Income per share

Basic

(0.48)

0.08

(0.17)

(0.02)

Diluted

(0.48)

0.08

(0.17)

(0.02)

(Loss)/Income per ADS*

Basic

(1.44)

0.24

(0.51)

(0.06)

Diluted

(1.44)

0.24

(0.51)

(0.06)

Weighted average number of ordinary shares used in

computing basic (loss)/income per share

387,993,534

370,412,795

370,486,502

370,502

Weighted average number of ordinary shares used in

computing diluted (loss)/income per share

387,534

379,333,481

370,502

Share-based compensation expenses included are as follows：

Cost of revenues

230

614

392

57

Research and product development

1,324

3,790

2,173

316

Sales and marketing

201

556

333

48

General and administrative

17,089

14,731

8,901

1,295

Total

18,844

19,691

11,799

1,716

*Each ADS represents three of the Company's ordinary shares.

Tuniu Corporation

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(All amounts in thousands,except per share information)

YearEnded

YearEnded

YearEnded

December 31,2018

RMB

RMB

US$

Revenues

Packaged tours

1,589,353

1,830,630

266,254

Others

602,747

409,519

59,562

Net revenues

2,192,100

2,240,149

325,816

Cost of revenues

(1,024,206)

(1,065,022)

(154,901)

Gross profit

1,167,894

1,175,127

170,915

Operating expenses

Research and product development

(541,126)

(315,222)

(45,847)

Sales and marketing

(894,148)

(778,126)

(113,174)

General and administrative

(637,795)

(487,372)

(70,885)

Other operating income

21,749

56,599

8,232

Total operating expenses

(2,051,320)

(1,524,121)

(221,674)

Loss from operations

(883,426)

(348,994)

(50,759)

Other income/(expenses)

Interest and investment income,net

130,250

152,929

22,243

Foreign exchange losses,394)

(11,729)

(1,706)

Other (loss)/income,net

(121)

8,576

1,247

Loss before income tax expense

(755,691)

(199,218)

(28,975)

Income tax expense

(15,625)

(153)

(22)

Net loss

(771,316)

(199,371)

(28,997)

Net loss attributable to noncontrolling interests

(4,934)

(14,037)

(2,042)

Net income attributable to redeemable noncontrolling

interests

922

178

26

Net loss attributable to Tuniu Corporation

(767,304)

(185,512)

(26,981)

Accretion on redeemable noncontrolling interest

(5,725)

(2,422)

(352)

Net loss attributable to ordinary shareholders

(773,029)

(187,934)

(27,333)

Net loss

(771,997)

Other comprehensive income/(loss):

Foreign currency translation adjustment,net of nil tax

(128,539)

11,693

1,701

Comprehensive loss

(899,855)

(187,678)

(27,296)

Loss per share

Net loss per ordinary share attributable to ordinary

shareholders - basic and diluted

(2.04)

(0.50)

(0.07)

Net loss per ADS - basic and diluted*

(6.12)

(1.50)

(0.21)

Weighted average number of ordinary shares used in

computing basic and diluted loss per share

378,230,039

377,744,381

377,381

Share-based compensation expenses included are as follows：

Cost of revenues

1,075

1,483

216

Research and product development

6,864

9,124

1,327

Sales and marketing

1,650

1,305

190

General and administrative

89,086

56,826

8,265

Total

98,675

68,738

9,998

*Each ADS represents three of the Company's ordinary shares.

Reconciliations of GAAP and Non-GAAP Results

(All amounts in thousands,except per share information)

Quarter Ended December 31,2018

GAAP

Share-based

Amortization of acquired

Non-GAAP

Result

Compensation

intangible assets

Result

Cost of revenues

(201,018)

392

-

(200,626)

Research and product development

(75,854)

2,173

589

(73,092)

Sales and marketing

(209,094)

333

34,163

(174,598)

General and administrative

(120,510)

8,901

781

(110,828)

Other operating income

32,130

-

-

32,130

Total operating expenses

(373,328)

11,407

35,533

(326,388)

Loss from operations

(103,111)

11,799

35,533

(55,779)

Net loss

(72,938)

11,533

(25,606)

Net loss attributable to ordinary shareholders

(64,661)

11,533

(17,329)

Net loss per ordinary share attributable to ordinary

shareholders - basic and diluted (RMB)

(0.17)

(0.05)

Net loss per ADS - basic and diluted (RMB)

(0.51)

(0.15)

Weighted average number of ordinary shares used

in computing basic and diluted loss per share

370,502

Quarter Ended September 30,2018

GAAP

Share-based

Amortization of acquired

Non-GAAP

Result

Compensation

intangible assets

Result

Cost of revenues

(371,622)

614

-

(371,008)

Research and product development

(78,270)

3,790

399

(74,081)

Sales and marketing

(209,563)

556

34,844)

General and administrative

(122,936)

14,731

781

(107,424)

Other operating income

15,656

-

-

15,656

Total operating expenses

(395,113)

19,077

35,343

(340,693)

(Loss)/Income from operations

(3,604)

19,691

35,343

51,430

Net income

27,952

19,343

82,986

Net income attributable to ordinary shareholders

31,021

19,343

86,055

Net income per ordinary share attributable to

ordinary shareholders(RMB)

-Basic

0.08

0.23

-Diluted

0.08

0.23

Net income per ADS(RMB)

-Basic

0.24

0.69

-Diluted

0.24

0.69

Weighted average number of ordinary shares

-Basic

370,795

-Diluted

379,481

379,481

Quarter Ended December 31,2017

GAAP

Share-based

Amortization of acquired

Non-GAAP

Result

Compensation

intangible assets

Result

Cost of revenues

(234,733)

230

-

(234,503)

Research and product development

(111,151)

1,324

399

(109,428)

Sales and marketing

(193,696)

201

34,163

(159,332)

General and administrative

(154,490)

17,089

777

(136,624)

Other operating income

3,348

-

-

3,348

Total operating expenses

(455,989)

18,614

35,339

(402,036)

Loss from operations

(220,836)

18,844

35,339

(166,653)

Net loss

(186,135)

18,339

(131,952)

Net loss attributable to ordinary shareholders

(184,860)

18,339

(130,677)

Net loss per ordinary share attributable to ordinary

shareholders - basic and diluted (RMB)

(0.48)

(0.34)

Net loss per ADS - basic and diluted (RMB)

(1.44)

(1.02)

Weighted average number of ordinary shares used

in computing basic and diluted loss per share

387,534

387,534

*Basic net income/(loss) per share is calculated by dividing net income/(loss) attributable to ordinary shareholders by the weighted average

number of ordinary shares outstanding during the periods. Diluted net income/(loss) per share is calculated by dividing net income/(loss)

attributable to ordinary shareholders by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding

during the periods,including the dilutive effect of share-based awards as determined under the treasury stock method.

Reconciliations of GAAP and Non-GAAP Results

(All amounts in thousands,except per share information)

Year Ended December 31,2018

GAAP Result

Share-based

Amortization of acquired

Non-GAAP

Compensation

intangible assets

Result

Cost of revenues

(1,022)

1,483

-

(1,063,539)

Research and product development

(315,222)

9,786

(304,312)

Sales and marketing

(778,126)

1,305

136,652

(640,169)

General and administrative

(487,372)

56,826

3,124

(427,422)

Other operating income

56,599

-

-

56,599

Total operating expenses

(1,121)

67,255

141,562

(1,315,304)

Loss from operations

(348,994)

68,738

141,562

(138,694)

Net (loss)/income

(199,371)

68,562

10,929

Net (loss)/income attributable to ordinary shareholders

(187,934)

68,562

22,366

Net (loss)/income per ordinary share attributable to

ordinary shareholders(RMB)

-Basic

(0.50)

0.06

-Diluted

(0.50)

0.06

Net (loss)/income per ADS(RMB)

-Basic

(1.50)

0.18

-Diluted

(1.50)

0.18

Weighted average number of ordinary shares used

in computing basic (loss)/income per share

377,381

Weighted average number of ordinary shares used

in computing diluted (loss)/income per share

377,381

386,224

Year Ended December 31,2017

GAAP Result

Share-based

Amortization of acquired

Non-GAAP

Compensation

intangible assets

Result

Cost of revenues

(1,206)

1,075

-

(1,023,131)

Research and product development

(541,126)

6,864

1,596

(532,666)

Sales and marketing

(894,148)

1,650

136,652

(755,846)

General and administrative

(637,795)

89,086

3,273

(545,436)

Other operating income

21,749

-

-

21,749

Total operating expenses

(2,320)

97,600

141,521

(1,812,199)

Loss from operations

(883,426)

98,675

141,521

(643,230)

Net loss

(771,316)

98,521

(531,120)

Net loss attributable to ordinary shareholders

(773,029)

98,521

(532,833)

Net loss per ordinary share attributable to ordinary

shareholders - basic and diluted

(2.04)

(1.41)

Net loss per ADS - basic and diluted

(6.12)

(4.23)

Weighted average number of ordinary shares used

in computing basic and diluted loss per share

378,039

378,039

*Basic net income/(loss) per share is calculated by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number

of ordinary shares outstanding during the periods. Diluted net income/(loss) per share is calculated by dividing net income/(loss) attributable to

ordinary shareholders by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the periods,

including the dilutive effect of share-based awards as determined under the treasury stock method.

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