Ladies and gentlemen, thank you for standing by, and welcome to Fangdd Network Group Ltd. First Quarter 2020 Earnings Call. Please note, this event is being recorded. I would now like to hand the conference over to your speaker host today, Mr. Warren Wen, Financial Controller of the company. Please go ahead, sir.

Hi, thank you, operator. Hello, everyone, and thank you all for joining us on today's call. FangDD announced its first quarter 2020 results today and earnings release is now available on the company's IR website. Today, you will hear from our Chairman and co-CEO, Mr. Duan Yi, who will start the call with a review of our progress and the current industry dynamics in the first quarter. He will be followed by our co-CEO, Mr. Zeng Xi, who will address our development strategies in more detail. Afterwards, our CFO, Mr. Pan Jiaorong, will go over our financials before we open the call for questions. Our management team will deliver their remarks in Chinese, and I will provide the English translation. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which applies to this call as we will be making forward-looking statements. And please note that we will discuss non-GAAP measurements today, which are more thoroughly explained and reconciled to the most comparable measure reported under the generally accepted accounting principles in our earnings release and filings with the SEC. And with that, I will turn the call over to our co-CEO, Mr. Duan Yi. And please go ahead, sir.

I would like to refer you to our safe harbor statement in our earnings press release, which applies to this call as we will be making forward-looking statements. Additionally, please note that we will be discussing non-GAAP measurements today, which are explained and reconciled to the most comparable measure reported under generally accepted accounting principles in our earnings release and filings with the SEC. Now, I will turn the call over to our co-CEO, Mr. Duan Yi. Please go ahead, sir.

Hello, everyone. Welcome to our earnings call.

Hello, everyone. Welcome to our earnings call.

And this is the co-CEO of Fangduoduo and Chairman of the Board, Duan Yi.

Hello, everyone. Welcome to our earnings call. I am Duan Yi, the co-CEO and Chairman of the Board of Fangduoduo.

Okay. Let me translate this. During the first quarter of 2020, the COVID-19 outbreak severely disrupted economic development, both in China and around the world. In China, this disruption has not only adversely impacted the real estate industry but also reduced the real estate agents' offline business hours to only one-third of that in the same period of 2019. As a result, nearly 80% of all real estate agents in China were unable to work offline and leveraged online platforms to manage their business at an increasing rate during this period. This market channel has brought challenges and opportunities to independent third-party agent-centric service platforms, such as us, Fangduoduo, and the following key metrics reflect some of the market trends that we experienced in the first quarter. As of March 31, 2020, we have grown the number of registered agents on our platform by 35.4% to approximately 1.32 million from approximately 0.97 million as of March 31, 2019. Notably, active agents on our marketplace in the first quarter of 2020 grew by 42.8% year-over-year to 218,400. The number of agents who completed transactions on our marketplace in the first quarter of 2020 decreased by 50.1% year-over-year to 6,700. Our total closed-loop transaction GMV in the first quarter of 2020 decreased by 46.5% year-over-year to RMB 17.9 billion. As a result, our total revenue in the first quarter of 2020 decreased by 58.5% year-over-year to RMB 270 million. The decrease is largely attributable to the reduced offline working hours of our real estate agents in the first quarter of 2020.

The number of agents who completed transactions on our marketplace in the first quarter of 2020 fell by 50.1% year-over-year to 6,700. Our total closed-loop transaction gross merchandise value in the first quarter of 2020 declined by 46.5% year-over-year to RMB 17.9 billion. Consequently, our total revenue in the first quarter of 2020 dropped by 58.5% year-over-year to RMB 270 million. This decrease is mainly due to the reduced offline working hours of our real estate agents during the first quarter of 2020.

Okay. Let me provide some context. Before Mr. Duan hands over the call to Mr. Zeng for further insights on our strategies and how we are responding to the epidemic and our expectations moving forward, Mr. Duan wants to update you on the current state of the real estate market in China. Looking at the larger picture, the following macro trends will help clarify COVID-19's impact on the Chinese real estate market and our business strategies moving forward. Based on data from the National Bureau of Statistics of China and other research organizations, we have come to the following conclusions.

Mr. Duan would like to share an update on the current state of the real estate market in China. From a broader perspective, the following macro trends would help to paint a clearer picture of COVID-19's impact on the Chinese real estate market and our development and implementation of business strategies. Based on the data from the National Bureau of Statistics of China and other research institutions, we have reached the following understandings.

First, the epidemic's impact on offline operations was particularly severe. It caused many real estate sales offices across China to shut down during the outbreak. The entire industry relying on offline interactions, including real estate and other businesses, faced significant disruptions. Our research indicates that less than 30% of agents were able to operate offline after the Chinese New Year holiday in the first quarter. Additionally, nearly 80% of real estate agents reported a substantial decrease in property viewings or tours and fewer transactions due to the COVID-19 outbreak and related travel restrictions.

The industry that relies on offline interactions, including real estate and other businesses, experienced serious disruptions. According to our research data, less than 30% of the agents could operate offline following the Chinese New Year holiday in the first quarter. Additionally, during the first quarter, nearly 80% of all real estate agents reported significantly fewer property viewing or touring sessions and fewer transactions as a result of the COVID-19 outbreak and related travel restrictions.

Again, COVID-19 has reduced the overall volume of property transactions. According to data from the National Bureau of Statistics, the real estate industry's GDP in the first quarter declined by 6.1% year-over-year. However, we believe the impact of COVID-19 will be temporary and mainly due to delayed transactions. After 20 years of development, China's real estate market has reached a balance of adequate property supply and general demand. We noted a significant decline in sales and transaction volume in the first quarter. However, during the first month of the second quarter, specifically in April, the recovery of transactions surpassed our expectations. From May onwards, transactions returned to a normal and balanced level. As a result, we remain optimistic about the entire year, believing that overall transaction volume will not be significantly affected.

We have observed that the first quarter did experience a great decline in sales and transaction volume. However, we have also noticed that during the first month of the second quarter, which is April, the recovery of transactions is better than expected. Starting from May, the recovery returned to a normal and balanced transaction level. Therefore, our expectations for the entire year remain optimistic, and we believe the entire year's transaction volume will not be significantly impacted.

Lastly, the COVID-19 outbreak has accelerated the digitalization process of the Chinese real estate market as real estate developers and property sellers increasingly rely on online transaction platforms to sell their properties. Additionally, agents and buyers are becoming more accustomed to viewing properties and conducting negotiations online while agencies are increasingly reliant on various SaaS tools to provide and manage their services and business. As a result, the number of active agents on our marketplace in February of this year increased by 64.4% compared to the same period in 2019.

The number of active agents on our marketplace in February of this year increased by 64.4% compared to the same period in 2019.

Now Mr. Duan will hand the call over to Mr. Zeng, who will give more details about our results and strategy for the first quarter, as well as our expectations for the second quarter.

Now Mr. Duan will turn the call over to Mr. Zeng, who will provide more detail concerning our results and strategy in the first quarter as well as our expectations for the second quarter.

In the first quarter, we quickly adapted our business strategies in response to market dynamics and the progression of COVID-19 to enhance our competitive edge as an independent third-party marketplace. We empowered our agents and improved our matchmaking efficiency by upgrading our SaaS solutions. Additionally, we remain committed to driving product innovation and increasing our presence in the secondary property market. In light of the COVID-19 outbreak, we concentrated on three key initiatives during the first quarter.

In light of the market dynamics and the progression of COVID-19, we aimed to enhance our competitive strengths as an independent third-party marketplace. We empowered our agents and improved our matchmaking efficiency by upgrading our SaaS solutions. Additionally, we are committed to fostering product innovation and growing our presence in the secondary property market. In response to the COVID-19 situation, we concentrated on three key initiatives in the first quarter.

First, we remain committed to continuing the optimization of our SaaS offering by upgrading our product features. During the first quarter, we made our SaaS product available to all real estate agents in China free of charge to help agents transition their business from offline to online since the beginning of the outbreak. Additionally, we increased our investment in research and development, particularly for SaaS solutions aimed at the secondary property segment.

First, we remain committed to the continued optimization of our SaaS offering by upgrading our product features. During the first quarter, we made our SaaS product available to all real estate agents in China free of charge to help agents move their business from offline to online since the beginning of the outbreak. Moreover, we increased our investment in research and development, specifically for SaaS solutions for the secondary property segment.

During the first quarter, we further upgraded our online agency management tools. Our Duoduo Cloud Agency app enabled agency owners to analyze customer communications, marketing efforts within their existing connections, and manage their agents more effectively and transparently through the analysis of their online broadcasts, customer acquisition efforts, and call quality. This allows agency owners to better understand the operation status of their respective agents.

During the first quarter, we further upgraded our online agency management tools. For example, our Duoduo Cloud Agency app enabled agency owners to analyze customer communications, marketing efforts within their existing connections, and manage their agents more effectively and transparently through analysis of their online broadcasts, customer acquisition efforts, and analysis of call quality. This allows agency owners to better understand the operation status of their respective agents.

We also strengthened our online agency service system by making our online customer support available around the clock. The number of agencies that contacted us with inquiries in the first quarter rose by 261% compared to the previous year. Additionally, we have created over 100 online courses that cover tutorials on using SaaS tools, online project management, and more, aimed at enhancing remote SaaS service and improving agency service capabilities. These courses are designed for both agencies and owners at various growth stages, enabling both groups to continually enhance their online business service capabilities.

The number of agencies that reached out to us with inquiries in the first quarter increased by 261% year-over-year. Furthermore, we've developed over 100 online courses covering SaaS tools usage tutorials, online project management, and more to help us establish remote SaaS service and improve agency service capabilities. These courses are tailored for both agencies and owners at different growth stages and help both parties to continuously improve their online business service capabilities.

Additionally, we enhanced the SaaS function to assist agents in attracting and converting customers. We achieved this by enabling agents to share marketing campaigns or information previously created for their online shops across various social media and video-sharing platforms, such as WeChat, Weibo, TikTok, and Kuaishou. As a result, our agencies generated a record high of 1.4 million leads during this period.

Additionally, we enhanced the SaaS function to assist agents in attracting and converting customers or buyers. We achieved this by enabling agents to share marketing campaigns or information previously created for their online shops across various online social media platforms and video-sharing platforms, such as WeChat, Weibo, TikTok, and Kuaishou. As a result, our agencies generated a record high of 1.4 million leads during this period.

Additionally, we strengthened our research and development efforts, particularly in the secondary property segment, to meet the needs of our agencies. For the online secondary property business, we quickly upgraded our secondary property software modules. For instance, Duoduo Cloud Agency CRM was designed to help agencies evaluate more secondary property listings and enhance their matchmaking and operation management efficiencies. Furthermore, our Duoduo Transaction, another CRM tool, provides solutions that assist agencies in managing the transaction process for secondary properties, streamlining their service processes, and optimizing their efficiencies.

We quickly upgraded our secondary property SaaS modules. For example, Duoduo Cloud Agency CRM was designed to help agencies assess more secondary property listings and improve their matchmaking and operation management efficiencies. Additionally, our Duoduo Transaction, another CRM tool, provides solutions that assist agencies in managing the transaction process for secondary properties, streamlining their service processes, and optimizing their efficiencies.

As we enhance our SaaS offerings and address the operational needs of real estate agencies during the COVID-19 outbreak, we are also increasing the stickiness of our platform. As a result, our number of active agents grew by 43% year-over-year to 218,000 this quarter. Specifically, the number of active agents in February of this year rose by 64.4% compared to the same period in 2019, while the number of active agencies in March of this year reached a record high of 159,000.

Our number of active agents grew by 43% year-over-year to 218,000 during this quarter. Specifically, the number of active agents in February of this year increased by 64.4% compared to the same period in 2019, while the number of active agencies in March of this year reached a record high for the period at 159,000.

Secondly, in response to the impact of COVID-19, we upgraded our SaaS products to help our agencies sell new products more effectively and efficiently while attracting more property listings from developers to our platform. For the secondary segment, we launched our preferred agent alliance network and established a certified property transaction service center to focus on developing innovative business initiatives. Additionally, we offered more products, including car parking space services and property decoration services to our agents and agencies on our platform.

We are working efficiently to attract more property listings from developers to our platform. In the secondary segment, we launched our preferred agent alliance network and established a certified secondary property transaction service center to focus on developing innovative business initiatives. We also provided additional products, such as car parking space services and property decoration services, to our agents and agencies on our platform.

We also launched our online sales office during the Chinese New Year period to better empower our partnering developers. By leveraging our technology capabilities, we enabled potential buyers to arrange live streaming property tours and viewings. Additionally, we successfully enhanced the service capabilities of our agencies by strengthening their online business operations, which helped reduce some of the sales differences experienced by developers during the epidemic. As a result of our online shop services, we increased the total number of new primary housing property projects in the first quarter by 54.8% year-over-year to 2,400 projects.

We enabled potential buyers to arrange live streaming property tours and viewings. Additionally, we enhanced our agencies' service capabilities by strengthening their online business operations, which helped mitigate some of the sales gaps that developers faced during the pandemic. As a result of our online shop services, we increased the total number of new primary housing property projects in the first quarter by 54.8% year-over-year to 2,400 projects.

At the same time, we launched our preferred agent alliance network project to better meet the needs of agencies by identifying top-performing real estate and secondary housing service agencies. In the first quarter, we had over 1,000 offline shops and more than 10,000 real estate agents actively participating in this alliance network. We have extended our reach to first-tier cities like Shanghai and Hangzhou, where we provided our certified secondary transaction property transaction center. Through our SaaS system, we have gained control over transaction scenarios and have digitalized both the transactions and the scenarios, which enables us to offer more value-added services through financial services.

In the first quarter, we had more than 1,000 offline shops and over 10,000 real estate agents who actively joined this alliance network. We have covered first-tier cities, such as Shanghai and Hangzhou, and we offered our certified secondary transaction property transaction center. Through our SaaS system, we have control over the transaction scenarios and digitalized both the transactions and the transaction scenarios, thus providing more value-added services through financial services.

Our platform is dedicated to offering car parking sales services, especially exclusive sales services to our agencies. In the first quarter, our exclusive car parking space sales service gained a solid presence in cities like Shanghai, Nanjing, Qingdao, Chengdu, and Wuhan. We now have around 10,000 car parking spaces added to the platform across China. All of these services can be accessed by our agencies through our preferred agent alliance network project.

Our platform is dedicated to offering car parking sales services, especially exclusive sales services to our agencies. In the first quarter, our exclusive car parking space sales service gained significant traction in cities like Shanghai, Nanjing, Qingdao, Chengdu, and Wuhan, among others. Currently, we have around 10,000 car parking spaces across China added to the platform. All these services can be accessed by our agencies through our preferred agent alliance network project.

At the same time, our platform also provided secondary housing decoration services. This initiative is largely aligned with our strategy and value proposition of branding secondary houses. Through this project, we can assist agencies in achieving more transactions and increasing profits. In the first quarter, our platform in Shanghai alone had more than 1,000 real estate agencies and over a dozen secondary house owners participating in our secondary housing decoration service project, receiving positive feedback from agencies, owners, and buyers.

In the first quarter, our platform in Shanghai alone had more than 1,000 real estate agencies and over a dozen secondary house owners participate in our secondary housing decoration service project, receiving positive feedback from agencies, owners, and buyers alike.

Against the backdrop of macro uncertainty surrounding the COVID-19 pandemic, we leveraged our growing agent base and property listings to maintain our persistent business growth, which we refer to as a flywheel effect. We continued to optimize our matchmaking algorithms throughout the pandemic. Features such as personalized recommendations and daily suggestions improved our platform's operational efficiencies. This strategy enabled us to fortify our capabilities in facilitating real estate transactions and assisted in enhancing agent transactions.

During the COVID-19 pandemic, we took advantage of our expanding agent network and property listings to sustain our ongoing business growth, a phenomenon we call a flywheel effect. We also optimized our matchmaking algorithms throughout the pandemic. Features like personalized recommendations and daily suggestions enhanced our platform's operational efficiencies. This approach strengthened our ability to support real estate transactions and helped improve agent transactions.

Lastly, let me update you on our expectations for the second quarter.

Lastly, let me update you on our expectations for the second quarter.

Currently, the global pandemic is still ongoing, and we cannot be overly optimistic about the situation. China's traditional real estate sales model will continue to face challenges going forward under these circumstances. Based on data from EH Consulting, China's total floor area of primary housing sold in April decreased by 25.6% year-over-year but slightly increased by 3.7% compared to March. The month-over-month increase in April was largely due to transactions that were delayed from March and closed in April. According to our own data, the total floor area of primary real estate sold in May decreased by 5.5% year-over-year but increased 11.6% from April. We believe that there will be a steady recovery in the months to come.

China's total floor area of primary housing sold in April decreased by 25.6% year-over-year but slightly increased by 3.7% compared to March. The month-over-month increase in April was largely due to transactions that were delayed from March and closed in April. According to our own data, the total floor area of primary real estate sold in May decreased by 5.5% year-over-year but increased 11.6% from April. We believe that there will be a steady recovery in the months to come.

The business model as an independent third-party platform is increasingly valued by our agents, especially during this difficult time for all involved. Moving forward, we will uphold this core commitment and empower agencies to function effectively by focusing on the development of our SaaS tools, enhancing our agency services, improving our matchmaking algorithms, and fostering innovation in our product offerings.

The business model as an independent third-party platform is increasingly recognized and appreciated by our agents, particularly during this challenging moment for all participants. Going forward, we will maintain this core commitment and enable agencies to operate effectively through our focus on developing our SaaS tools, refining our agency services, improving our matchmaking algorithms, and driving innovation in our product offerings.

Yes. First, we will continue to invest in optimizing our SaaS infrastructure and refining our SaaS product lineup. For example, our Duoduo Property Sales application will enable agencies to operate and manage their businesses remotely and online. Our Duoduo Cloud Agency CRM tool will efficiently match agencies with property listings, enhance coordination within agencies, and allow multiple operation projects to be executed online simultaneously. Our Duoduo Transaction CRM will assist agencies with secondary property transactions across various stages. Additionally, we will provide value-added financial services to streamline the process and digitalize agency operations. We expect that in the second quarter, the active agents on our platform will continue to increase both in size and depth.

Our Duoduo Transaction CRM will assist agencies with secondary property transactions across various stages. Additionally, we will provide value-added financial services to streamline the process and digitalize agency operations. We expect that in the second quarter, the active agents on our platform will continue to increase both in size and depth.

Secondly, in terms of operation services, we have established a dedicated service team for our preferred agent alliance network to better serve our top agencies on the platform. This initiative will further increase the loyalty of high-quality agencies to our platform. At the same time, we will continue to optimize our platform's ability to provide online agency services to improve our request response, efficiency, and service quality. Enhancements to our operation services will help attract more new primary housing property listings from our partner developers, drawing more agencies to complete new property transactions on our platform. This forms a flywheel effect, allowing us to strengthen our market competitiveness.

We are focused on bringing high-quality agencies to our platform. At the same time, we will continue to improve our platform's capacity to deliver online agency services, enhancing our request response, efficiency, and service quality. Upgrades to our operational services will help us attract more new primary housing property listings from our partner developers, encouraging more agencies to finalize new property transactions on our platform. This creates a flywheel effect, enabling us to enhance our market competitiveness.

Thirdly, by leveraging our SaaS solutions and agent service system, we will continue to introduce innovative business initiatives to further empower our agencies' connections and develop our secondary property segment as a new driver for profit growth.

We will continue to introduce innovative business initiatives to further empower our agencies' connections and develop our secondary property segment as a new driver for profit growth.

With our nationwide coverage of our secondary property transaction service center, we will be able to launch transactional services on our SaaS system and establish a data collection process for secondary property transactions, allowing us to control this offline transaction scenario. Additionally, by connecting our SaaS system with financial institutions such as banks, we will diversify our revenue streams for both our agency and ourselves through various value-added financial service product offerings.

We will be able to launch transactional services on our SaaS system and establish a data collection process for secondary property transactions, giving us control over this offline transaction scenario. Additionally, by connecting our SaaS system with financial institutions such as banks, we will diversify our revenue streams for both our agency and ourselves through various value-added financial service product offerings from our SaaS system.

Moreover, following government guidelines for urbanization, our platform in key cities has been rolling out our secondary housing decoration service targeting urban areas, including older and smaller secondary housing that require upgrading and renovation. We aim to create the first brand-name secondary housing business on this platform. Thus, we will help our agencies increase transaction efficiency by renovating and upgrading secondary housing listings and involving more real estate agencies, driving profit growth.

In line with government guidelines for urbanization, our platform is launching a secondary housing decoration service in key cities, focusing on older and smaller properties that need upgrades. Our goal is to establish a recognized brand in the secondary housing market. By renovating and improving these listings, we will enhance transaction efficiency for our agencies and engage more real estate firms, contributing to profit growth.

Our platform will continue to offer car parking services, mainly focusing on exclusive sales for agencies and targeting the car parking market in first- and second-tier cities. We see a potential market exceeding RMB 800 billion for car parking space in these urban areas. This allows us to support our agencies, especially within our preferred agent alliance network, in growing their sales revenue from car parking spaces and sharing the profits.

Our platform will continue to offer our car parking services, emphasizing exclusive sales services to agencies and focusing on the car parking space market in first- and second-tier cities. We believe the potential market for car parking space in these cities exceeds RMB 800 billion. Therefore, we can help our agencies, especially those in our preferred agent alliance network, to enhance their car parking space sales revenue and share profits.

Therefore, we remain confident in our independence as a third-party platform to our agency network. We are also confident in our efficiency, cost-effectiveness, and our asset-light Internet SaaS model. Going forward, we expect that these competitive advantages will continue to help us expand our business operation in China's real estate transaction sector. Based on these insights, I would like to provide an update on our expectations for the second quarter of 2020. We are expecting our revenue to be between RMB 660 million and RMB 720 million in the second quarter of 2020. This forecast is, of course, based on our current views of the market environment and is subject to change.

Going forward, we expect that these competitive advantages will continue to help us expand our business operation in China's real estate transaction sector. Based on these insights, I would like to provide an update on our expectations for the second quarter of 2020. We are expecting our revenue to be between RMB 660 million and RMB 720 million in the second quarter of 2020. This forecast is, of course, based on our current views of the market environment and is subject to change.

And this concludes my prepared remarks today. I will now hand the call over to our CFO, Mr. Pan Jiaorong, to discuss our financial results for this quarter.

We are expecting our revenue to be between RMB 660 million and RMB 720 million in the second quarter of 2020. This forecast is based on our current views of the market environment and is subject to change. And this concludes my prepared remarks today. I will turn the call over to our CFO, Mr. Pan Jiaorong, to review our financial results for this quarter.

Thank you, Mr. Zeng Xi. Now I will provide a closer look into our first quarter financial results. Please note that all numbers are in RMB terms unless otherwise stated.

And this concludes my prepared remarks today. I will turn the call over to our CFO, Mr. Pan Jiaorong, to review our financial results for this quarter. Thank you, Mr. Zeng Xi. Now I will provide a closer look into our first quarter financial results. Please note that all numbers are in RMB terms unless otherwise noted.

Revenue in the first quarter of 2020 decreased by 58.5% to RMB 272.1 million from RMB 656 million in the same period of 2019. The decline was attributed to the outbreak of COVID-19 in China and the subsequent restrictions placed on agents, which adversely affected their ability to conduct business during that time. The reduction in agents' business activities led to fewer transactions and a decrease in GMV facilitated on the company's marketplace, significantly limiting the company's potential for revenue growth.

The revenue in the first quarter of 2020 fell by 58.5% to RMB 272.1 million from RMB 656 million in the same quarter of 2019. This decline was attributed to the COVID-19 outbreak in China and the consequent restrictions placed on agents, which hindered their ability to operate. The reduction in agents' business activities led to a decrease in both transaction numbers and gross merchandise volume handled on the company's marketplace, significantly restricting the company's potential for revenue growth.

Cost of revenue in the first quarter of 2020 decreased by 58.3% to RMB 222.7 million from RMB 534.5 million in the same period of 2019, mainly due to a decrease in commission fees payable to agents for the services rendered, which was largely consistent with the reduced commission income from our transactions.

Cost of revenue in the first quarter of 2020 decreased by 58.3% to RMB 222.7 million from RMB 534.5 million in the same period of 2019, mainly due to a decrease in commission fees payable to agents for the services rendered, which was largely in line with the decreased commission income from our transactions.

Gross profit in the first quarter of 2020 decreased by 59.3% to RMB 49.4 million from RMB 121.5 million in the same period of 2019. Gross margin in the first quarter of 2020 remained stable at approximately 18.2% compared to the same period of 2019.

Gross profit in the first quarter of 2020 decreased by 59.3% to RMB 49.4 million from RMB 121.5 million in the same period of 2019. Gross margin in the first quarter of 2020 remained stable at approximately 18.2% compared to the same period of 2019.

Operating expenses in the first quarter of 2020, including share-based compensation expenses of RMB 26.4 million, increased by 62.7% to RMB 189.4 million from RMB 116.4 million in the same period of 2019.

Operating expenses in the first quarter of 2020, including share-based compensation expenses of RMB 26.4 million, increased by 62.7% to RMB 189.4 million from RMB 116.4 million in the same period of 2019.

Now let's take a look at the breakdown of operating expenses for the first quarter of 2020.

Operating expenses in the first quarter of 2020, including share-based compensation expenses of RMB 26.4 million, increased by 62.7% to RMB 189.4 million from RMB 116.4 million in the same period of 2019. Now let's take a look at the breakdown of operating expenses for the first quarter of 2020.

Sales and marketing expenses in the first quarter of 2020 decreased by 77% to RMB 1.4 million from RMB 6.1 million in the same period of 2019. This decline in expenses was mainly due to lower spending on brand promotion and marketing efforts to attract property listings from real estate developers to the company's marketplace.

Sales and marketing expenses in the first quarter of 2020 decreased by 77% to RMB 1.4 million from RMB 6.1 million in the same period of 2019. The decrease in sales and marketing expenses was primarily due to the reduction in spending on brand promotion and marketing activities aimed at attracting property listings from real estate developers to the company's marketplace.

Product development expenses in the first quarter of 2020 were RMB 95 million, up from RMB 65.7 million in the same period of 2019. This increase was mainly driven by share-based compensation expenses of RMB 17.2 million in the first quarter of 2020. Additionally, the rise of RMB 12.1 million was largely due to higher personnel-related expenses resulting from increased average compensation for product development staff, as the company aimed to improve its technological infrastructure to better attract and retain agents.

Product development expenses rose to RMB 95 million from RMB 65.7 million in the same period of 2019. The increase was largely driven by share-based compensation expenses of RMB 17.2 million in the first quarter of 2020. Additionally, the remaining increase of RMB 12.1 million was mainly due to higher personnel-related costs arising from increased average compensation for product development staff as the company aimed to improve its technological infrastructure to better attract and retain agents.

General and administrative expenses in the first quarter of 2020 were RMB 93.1 million compared to RMB 44.5 million during the same period in 2019. The increase included share-based compensation expenses of RMB 9.3 million in the first quarter of 2020. The remaining increase of RMB 39.3 million was mainly due to three factors: first, an increased headcount to enhance corporate governance and ensure compliance with the company's status as a U.S.-listed company; second, certain listing expenses related to the company's listing since the last quarter of 2019; and third, a rise in provisions for doubtful debts, mainly because of a slowdown in settlements with developers as a result of the COVID-19 outbreak during the quarter, with this provision increase reaching RMB 32 million.

The increase in expenses was primarily due to three factors: first, a growth in headcount to enhance corporate governance and ensure compliance with the company's status as a U.S.-listed entity; second, certain expenses associated with the company's listing since the last quarter of 2019; and third, a rise in provisions for doubtful debts, mainly attributed to a slowdown in settlements with developers caused by the COVID-19 outbreak during the quarter. This rise in provisions amounted to RMB 32 million.

The loss from operations for the first quarter of 2020 was RMB 140 million compared to an income from operations of RMB 5.1 million in the same period of 2019. The non-GAAP loss from operations in the first quarter of 2020 was RMB 113.6 million compared to a non-GAAP income from operations of RMB 5.1 million in the same period of 2019.

The loss from operations for the first quarter of 2020 was RMB 140 million compared to the income from operations of RMB 5.1 million in the same period of 2019. Non-GAAP loss from operations in the first quarter of 2020 was RMB 113.6 million compared to a non-GAAP income from operations of RMB 5.1 million in the same period of 2019.

Our net loss in the first quarter of 2020 was RMB 136.4 million, compared to a net income of RMB 14.8 million in the same period of 2019. The non-GAAP net loss for the first quarter of 2020 was RMB 110 million, while there was a non-GAAP net income of RMB 14.8 million in the same period of 2019. This loss is primarily due to several factors: a decrease in sales volume caused by the COVID-19 outbreak, additional investments in our product offerings to help our real estate agencies resume work, an increase in headcount for improved corporate governance and compliance with our status as a U.S.-listed company, and an increase in accounts receivable provisions by RMB 32 million, mainly due to delayed settlements with developers during the COVID-19 outbreak.

The decline in sales volume was influenced by several factors, including the COVID-19 outbreak, increased investment in our product offerings to aid our real estate agencies in resuming operations, a rise in headcount to enhance corporate governance and maintain compliance as a U.S.-listed company, and an increase in accounts receivable provisions by RMB 32 million, primarily due to a slowdown in settlements with developers during the COVID-19 outbreak.

The basic and diluted loss attributable to ordinary shareholders per American Depository Share in the first quarter of 2020 were both RMB 1.75. In comparison, the company's basic and diluted losses attributable to ordinary shareholders per ADS in the same period of 2019 were both RMB 1.25. Each ADS represents 25 of the company's Class A ordinary shares. As of March 31, 2020, the company had cash and cash equivalents, restricted cash, and short-term investments totaling RMB 1 billion, short-term bank borrowings of RMB 488 million, and an unutilized banking credit line of RMB 315 million. For the first quarter of 2020, our net cash used in operating activities was RMB 48.6 million.

The losses attributable to ordinary shareholders per ADS in the same period of 2019 were both RMB 1.25. Each ADS represents 25 of the company's Class A ordinary shares. As of March 31, 2020, the company had cash and cash equivalents, restricted cash, and short-term investments totaling RMB 1 billion, short-term bank borrowings of RMB 488 million, and an unutilized banking credit line of RMB 315 million. For the first quarter of 2020, our net cash used in operating activities was RMB 48.6 million.

Okay. That concludes our remarks for today. Given the extensive nature of our prepared remarks, if there are any questions, please contact our investor relations for timely sharing of our information. Thank you all. We will not hold a Q&A session. This concludes today's telephone conference.

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