ATRenew Inc. Q3 FY2024 earnings call

Key Points

• Total revenue for Q3 2024 reached RMB4.05 billion, up 24.4% y-o-y, in line with forecast. Core recycling business in Mainland China grew over 30% y-o-y.
• Had 1,637 AHS stores nationwide by end of Q3. Anticipate accelerating store openings in next 2-3 years.
• In Q3, value of goods collected through JD.com via recycling and trade-in services up over 40% y-o-y, trade-in services doubled. Singles Day Grand Promotion with JD saw total recycled product value via JD.com up 77% y-o-y, trade-in solutions value up 246% y-o-y. 1P retail revenue from JD.com up 71% y-o-y.
• Apple official trade-in program had healthy growth with sequential improvement in gross profit margin. Multi-category recycling business transaction value up 270% y-o-y, service revenue up 400% y-o-y. 587 AHS stores offered multi-category recycling services by end of September.
• Direct-to-consumer sales strong. 1PtoC product revenue through various channels had significant growth. Service revenue accounted for 9.4% of total revenues, up 13.9% y-o-y with a take rate of 5.34%.
• Achieved non-GAAP operating income of RMB104 million in Q3, with non-GAAP operating margin 2.6%, and first GAAP operating income of RMB24.9 million.
• Initiated Revive [indiscernible] campaign in collaboration with leading consumer brands, established strategic partnership with L'Oréal Groupe for eco-friendly recycling.

In the third quarter, total revenues reached RMB4.05 billion, achieving a year-over-year growth of 24.4%. Net product revenues increased by 25.6% to RMB3,672 million, primarily driven by increased sales of pre-owned consumer electronics through online and offline channels. Net service revenues were RMB379 million, representing a 13.9% increase. The growth was mainly due to the rise in service revenue from PJT Marketplace and the multi-category recycling business. The core recycling business revenue in Mainland China increased by over 30% year-over-year. The transaction value of goods under multi-category recycling business saw a 270% year-over-year increase, and service revenue from this segment grew by 400% year-over-year. 1P retail revenue generated from JD.com increased by 71% year-over-year, and 1PtoC product revenue through various channels had significant year-over-year growth.

Guidance

• For the fourth quarter of 2024, anticipate total revenues to be between RMB4,740 million and RMB4,840 million, representing an increase of 22.4% to 24.9% year-over-year.

Q: Great. Good morning or good evening, everyone. Maybe just to follow-up on some of your earlier comments. Just curious to get your thoughts on what you're seeing in the market for pre-owned smartphones in terms of transaction volumes. It would seem like there are tailwinds on both the supply side, with the ongoing growth in shipments of new smartphones in China, as well as on the demand side, with rising demand for used phones just given the somewhat challenging macroeconomic backdrop. So just curious to get your thoughts there.

A: Kerry Chen responded that on the supply side, main category of mobile phones not directly benefited from subsidy policies but cross-category trade-in capabilities help capture recycling sources. Have industry-leading supply chain capabilities, compliant refurbishment coverage in 1P business grew from single digits to double digits. 1P-to-consumer revenue up 120% y-o-y, offline stores and official websites revenue up over 300% y-o-y. Cost-effective purchasing options gaining acceptance, continue advancing retail brands, channels, and capabilities.