ATRenew Inc. Q1 FY2025 earnings call

• Core businesses achieved faster-than-expected growth in the first quarter. The strong and stable growth of total revenue was primarily driven by the accelerated growth of the 1P business, with investment in 1P business, recycling fulfillment capabilities, and in-house supply access. - 1P business: Revenue grew by 28.8% year-over-year, product revenue increased by over 50% year-over-year, 1P2C revenue grew by 73.5% year-over-year, retail revenue accounted for 33% of 1P revenue. - Apple official trade-in business: Revenue declined year-over-year but margin improved. Overseas revenues saw margin improvement after adjusting business scale. - Marketplace businesses: PJT Marketplace registered merchants exceeded one million, active trade-in merchants grew double-digit year-over-year, take rate rose. Launched offline flagship store in Shenzhen, piloted compact authentication warehouses, and explored collaborations with live-streaming influencers. - Paipai consignment business: Sales across all categories grew by 2.2 times year-over-year, plan to integrate consignment products into more self-operated distribution channels. - Multi-category recycling services: Both broad transaction value and revenue nearly tripled year-over-year, gold recycling grew faster, luxury goods recycling service fees slightly increased, user experience optimized.

Total net revenues for the first quarter exceeded the high end of the guidance range, with a year-over-year increase of 27.5% to RMB 4,653.5 million. Non-GAAP operating income increased by 39.5% year-over-year to over RMB 110 million, and non-GAAP operating margin reached 2.4%. The 1P business revenue grew by 28.8% year-over-year, with product revenue increasing by over 50% year-over-year. 1P2C revenue grew by 73.5% year-over-year, and retail revenue accounted for 33% of 1P revenue. Apple's official trade-in business revenue declined year-over-year but margin improved. Overseas revenues saw margin improvement after adjusting business scale. In marketplace businesses, the number of registered merchants in PJT exceeded one million with a double-digit year-over-year increase in active trade-in merchants, and PJT Marketplace's take rate for secondhand consumer electronics transactions rose by 24 basis points. Sales across all categories in the Paipai consignment business grew by 2.2 times year-over-year. Both broad transaction value and revenue of multi-category recycling services nearly tripled year-over-year, with gold recycling growing faster and luxury goods recycling service fees slightly increasing, while overall take rate remained stable.

Anticipates total revenues for the second quarter of 2025 to be between RMB 4,710 million and RMB 4,801 million, representing a year-over-year increase of 24.7% to 27.4%. This forecast reflects current and preliminary views on the market and operational conditions, which are subject to change.

Q: How effective has the national subsidy been in promoting recycling and trade-in programs? Do you see the same growth momentum in your second-hand recycling and resale business as a result? Secondly, could you please help to explain the increase in the non-GAAP fulfillment margin and self-marketing margins? Is there any adjustment to this year’s total revenue and margin targets?

A: Regarding the first question, national subsidies have slightly driven the accelerated growth of the 1P business. In the long run, with increasing adoption of recycling in mainstream channels, AHS Recycle is well positioned to benefit. Regarding the second question, the year-on-year improvement of non-GAAP operating profit margin was mainly due to pricing strategy and balanced control of overall expense ratio. For the full year of 2025, remain committed to accelerating total revenue growth and gradually improving non-GAAP operating profit margin.

Q: Can you share details on the progress of store openings in the first quarter?

A: As of March 31, 2025, there were a total of 1,886 AHS Recycle stores nationwide, including 917 self-operated stores and 969 joint operated stores. The total number of stores has increased by a net of 458 compared to the same period last year. Transitioned some joint operated stores to self-operated model, two door fulfillment team expanded by 360 people year-over-year to 1,000 people.

Q: Can you discuss how much traction you’ve seen as a result of your increased focus on marketing and advertising, and then just related to that, how should we be thinking about incremental expenses or customer acquisition costs as you continue to prioritize improving brand awareness and loyalty?

A: AHS Recycle has solidified its position as a leading brand in recycling by providing best-in-class fulfillment services. Employed well-planned new media campaigns to promote services and enhance brand awareness. Product revenue from AHS mini programs and official websites grew faster than overall 1P business. Will continue to strengthen brand and refine service offerings, with new media campaigns driving user awareness and orders.