Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the ATRenew Incorporated Fourth Quarter Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will be hosting a question-and-answer session after managements' prepared remarks. Please note today's event is being recorded.

turn over to speaker the like Mr. today, now the to call first I’d of and Corporate the Director Ji, Jeremy Development company. Investor of Relations Please sir. go ahead,

Jeremy Ji

quarter earnings Hello, full you. everyone, welcome ATRenew's Thank and year call. conference fourth XXXX to and

Speaking call and and first analysts. to Rex our questions he Chairman we that, by CEO; CFO. followed from today After Chen, be will Founder, Kerry Chen, is our will open the

The our earnings call The website. release investor financial earlier results be this at were slides this your also are will today. available following call IR released There accompanying transcript convenience. and a for

For today's financial session. agenda, Rex, quarterly his will Both Kerry followed will business who Rex thoughts Q&A highlights. of performance by will the strategy, our Kerry share the address and and join

statements. the me Safe Let Harbor cover

hear press discussion Safe any you statements Any will and take refer Some assumptions obligations today of and as of not earnings statements. information our that to on that you makes based forward-looking this to today ATRenew of the release. the during does in our our call statements upgrade are these I on on forward-looking assumptions management statements will Harbor consist

Please includes contains GAAP call this measures. financial our refer measures measures. of which certain earnings release, Also, a to non-GAAP non-GAAP of reconciliation discussions to

a Finally, this year-over-year on all and basis. please conference stated, comparisons note during all that figures call are mentioned unless otherwise RMB are in

strategy to I'd updates. and like turn now business to the over for call Kerry

Kerry Chen

Language] [Foreign

conference welcome to and everyone, quarter full XXXX Hello, fourth call. [Interpreted] and year ATRenew's earnings

and cetera., contributed our team's ensuring of At shortfalls surged pandemic the time, goals in easing To the severe the meant cell-sourced met challenges, profit and our operating proportion to products. Thanks of controls. and meet XX during et our affecting models rapidly, to lineup This the put following trading which into Beijing effort store in a infections same especially of challenge quarter. negatively we iPhone hours efforts, the supply these maintaining significant profit business. production of COVID posed us the that a December, every short business. in for our we revenue supply, were XP Shanghai,

Starting with revenues.

our reached of RMBX.XX a range. our by total on XX.X% in high During and the billion, In a billion, revenue new of middle which by revenue grew during arriving fourth of driven growth XXXX, increasing focus guidance was the This quarter, XXXX. RMBX.XX year-over-year reached mainly XX.X% by our XP business, our representing XX.X% year-on-year. record

product XXXX, of and the were Facing stores slower in more by improving COVID store management. growth kept a consumption sourcing and strengthening we new resurgence capabilities in opening prudent

addition, we cities lines business for quarter, severe integration In Hangzhou, growth Suzhou implementing healthy penetration laid foundation major facilities and grew sourcing of strategy which capabilities challenges, flow. rate at sourcing and efficient of The facing our we of of Even pandemic-related transaction city service in (ph). XP integration the in level fourth business. the such as Nanjing, Xi'an operate client foreign the already despite the scale, three

growth. Driven of we take euro demonstrating our chain rebounded enhanced first first overall break PJT Marketplace. merchant rate the services of To trusting Marketplace take for following value PJT merchant the the the to the of and down, structure, increased this core us X.X%, optimization users steady to by scale efficiency IPO marketplaces, of Regarding rate to from with supply marketplaces pivoted X.X%. the capabilities, strategy have our

fulfillment slight decline Paipai, by rate. BXC to leading take the a pandemic, hindered in For was

non-GAAP Paipai as Marketplaces set and XP return expect XXXX. realized business PJT Since have a this businesses, we a optimization premium level healthy engine, category However, to These to third-party (ph) business we platform efficiency growth main operational and prioritized following profit. optimization. during rapidly including

operating efficiency. to Turning

further marketing PJT our in rebates cost expenses were Under prudently promotional optimization reducing mainly decreased and selling by fees total achieved non-GAAP selling marketing During expenses and We percentages measures, fulfillment and new expenses and and initiatives. our with XX.X%, In disciplined by and operations, we for improved fees highly as XXXX, investing enhanced we respectively. merchants, net spending. Marketplaces and particular, X.X% of to our revenue underground efficiency. marketing

Fulfillment is our expense optimization long-term focus.

three have and and of Over gradually enhancing inspection automated operation the our quality pricing past and thereby the centers Eastern efficiency years, in South we warehousing at China, logistics.

our the improved upgraded has and front. at management recycling system fulfillment store In the of standardization addition,

demonstrate revenues in and XX.X% our Such net investments model. As XXXX. in a strategic XXXX of a XX.X% profitability business expenses commitment automation of result, fulfillment XX.X% in from percentage XXXX to in non-GAAP as improvements decreased and the total to our validate

fourth came facility During further in Dongguan, inspection automated the quarter, our online second boosting efficiency. generation

result, XX% a period by inspection same by with quality of decreased failures compared the XXXX. caused losses As

As people's confident and automation normal, expect to to life the further and our returned transaction daily scale. we economy revitalizing are the in we from benefits activity,

helps of larger part On larger processing, force would products chain. this, pricing us service services scale. to along enable we a continue value to and the increase proportion while a turn, enhancing of grading new refurbishment will are Moreover, extra for recondition gain suitable like providing this added in at value our retailing. systems, devices, the sales margin We compliant that and gross

business the million. RMBXXX our of a During of GMV achieved half refurbishing second XXXX, compliant over

the for operating in quarter from service an equivalents, funds clear cash included the million non-GAAP we and are position investments short-term confident cash we an a and the income full long-term fourth strategy, income along Under third-party first profitability our and billion, XXXX. firm receivable with RMBX.X in With year. fully year providers, and achieved cash operating measures, reported of targets the which operating a million for full of of RMBXX.X strong RMBX.X quarter non-GAAP

our again strategies. let emphasize Now core once me

few quarters, remain have we strategy. the executing in we past mentioned productive As over our resolute

range simplifying strategy city partners our acknowledge while of has opportunities First, wider participate merchant out consumers our provided level to carry services. recycling, trading for and users service a how in and integration

electronics addressable for an us. consumer rate recycling the of penetration in remains to indicating X% According at to China market the extensive low CIC X%, report,

to penetration is while over the XX% recycling top-tier cities, achieve elevating first target national in an average. rate Our

in smartphone expect our manufacturers of of season this peak during In have partnerships this phone quarter. highlight, a business the benefit world-leading we programs terms addition, sales strategic as effectively to new and third in with trading we year, the established

refurbishment our Second, our compliant and value improve we capabilities, profit chain customer more distribution, advancing we maximizing retail while continue margins BXC service. through one

shopping prices. For refurbished product affordable new products, we at provide more quality assurance, same and but experience the

demand, Recycle the Third, unit across value growth upgrading new service and our we fronts, categories. will drivers and diverse of for are amplify adding capabilities improving elevating the AHS further the new give more store business of multiple Against development of meeting we goods so, our existing the idle of our second By margin to our backdrop all a of fruition. reuse. mission stores. to lifestyle encourage and the economy, comes circular to our life a doing and recycle By brand we economics greener

the Finally, of supply our we chain. steady continue will automation

completed have savings stages delivering R&D We initial the positive the results are cost following and implementation.

As the six device replacing improved realize optimize to control increases, operation inspection we volume and quality high remaining will cost gradually precision manual centers, efficiency.

driving and We a advancement. circular believe The chain efficiency ongoing the with development supply opportunities. in provides wide strongly as to realize forces range of of technology economy us

to all idle Looking to second life dedicated the remains goods recycling we mission stay ahead, our a business. to and unchanged, give

and go will product will categories in further scale. further We

generate environment the value and shareholders. will We quality high users, profits and for greater

Rex, financials. the that, our CFO, With hand call over to to over will go the I

Rex Chen

Hello, everyone.

maintain fourth that will all report by to leveraged a challenges to RMB supply quarter we I the MP environment. our all capabilities sharing pleased continue go a and face strong chain the are are start in look highlights basis healthy product the and in growth certified that was even note to we comparisons of our guidance, operating at our Please financial are We revenue these some supply numbers. amounts on though more our stated. unless a of further with businesses. our line impact otherwise of COVID-related year-over-year In headwinds, detailed into before stable

Total logistics main strategies primarily marketplaces. efficiencies of attributable XX.X% improved cost by parts resulted quarter in automation net net revenues improved effects million, increased was our optimize profitability. efficiencies in income to promotional growth powered advertising driven scale to We non-GAAP attributable to also product that of operating by revenues and another and inspection This for RMBXX.X year-over-year upgrade. and had from million. cost with terms in profit-making This was by RMBX,XXX.X mainly

in Facing brought changes the temporary decrease quarter. supply short-term resulted of our ensure operational a pandemic, in We fulfillment by costs this that industry to adjustments listings. ample we sources made some of quality product partners the leveraged

and have invest margin to we inspection a into as This heavily Although trade-off. the was grading. considered didn't of gross [indiscernible],

report positive well from the strategies pleased us During and as flow flexibility operating are And tactical XXXX, million volatilities. in non-GAAP from we operating activities XXXX. market our cash to milestone as breakeven safeguarded RMBXXX cost

to to variants COVID-XX as of impact our adverse the as functions away expect we sourcing fulfillment well future, the In fit and recover.

effects improve to accurately capture automated cost our inspection leverage realize facilities We shopping efficiency, to scale our and continue scenarios. will recycling further

We expect improve operating margins our years. in to coming further the non-GAAP

Now take through sales million. XX.X% pre-owned Growth electronics primarily and Paipai a fourth Net by service RMBX,XXX.X net overseas revenues and product our increased In RMBX,XXX.X was consumer driven offline in by by the revenues to million, increase in total quarter, an XX.X% look markets channels revenues financials. RMBXXX.X by China million. detailed let's while net the Mainland, at the of XX.X% the in to increased decreased product Marketplace. to revenues

we to commission profit X.X% revenues our lessened the compliant scale rates to business prioritized service focus The overall shifted XPXC Paipai of while and marketplaces eliminated to lower due rate The as PJT strategic the fourth refurbishing with with sales, businesses stable for our ramp decrease we in quarter. consignment Marketplace. was we take rebounded business, prioritize during Marketplace primarily growth our up further of some

actual Next, operating provide change operating clarity turning on the to greater expenses. our in expenses to base our

also X-K expenses, results results which non-GAAP better our available and management We SEC. corresponding our of in The non-GAAP reconciliations reflect release and of furnished how the will the with views our discuss are earnings Form GAAP our operations. operating

million. XX.X% Fulfillment XP was the refer for RMBX,XXX.X decreased by RMBXXX.X Merchandise in as the which in costs XX.X%. was from product compensation to the million, group at we hereon. margin was SBC fourth XX.X% margin share-based level to Gross increased expenses, growth revenues. to expenses X.X% quarter. line in This sales will by with our business excluding Gross

we stations RMBXXX.X expenses center-related a our a level expenses. Non-GAAP for percentage decreased the fulfillment X.X% to decline as in revenues was as Paipai optimized operation period as total same the to in measures, last strategy XX.X% well Under decreased decrease the in city from million. X.X% primarily operations of expenses to in due Non-GAAP logistics the a selection stores by decrease as expense fulfillment year. non-GAAP

due primarily was excluding and million. selling marketing intangible Non-GAAP by amortization expenses and impairment expenses in marketing period non-GAAP to to expenses by more measures, the a last for assets. selling and Under total marketplaces. Selling SBC year. decrease same decreased revenues our to spending the to of expenses our expenses in strategy and from Non-GAAP of million, decreased and decreased marketing to marketing RMBXXX.X increased RMBXXX XX.X% relation as prudent XX.X% XX.X% percentage loss X.X%

by RMBXX.X X.X% increased compared expenses due million, G&A service by non-GAAP expenses, in increased XX.X% of Non-GAAP period SBC the an revenues expenses to as to to million, increase percentage last professional RMBXX.X XX.X% year. a increased with fees. G&A same from G&A X.X% excluding expenses total to slightly primarily

content RMBXX.X million. and to expenses decreased Technology XX.X% by

Non-GAAP in to non-GAAP Excluding to percentage to same SBC in research decrease our a million, X.X% spending expenses expenses RMBXX.X decreased G&A with revenues compared development. and period assets, adjustments to year. to intangible impairment of costs X.X% total XX.X% due by last of and relation expenses amortization as personnel a decreased from in primarily G&A and loss

in with As compared million margin operating RMBXX.X was our fourth same a operating year. was X.X% the non-GAAP of period result, Non-GAAP last X.X% XXXX. in quarter the income

equivalents, and As service of cash cash from and XXXX, third-party short-term providers totaled December funds receivable RMBX.X XX, billion. payment investments

outlook. on hand cash growth sufficient sustainable Our safeguards a

assets, quantitative respectively, of assets Considering on changes million COVID-XX goodwill XXXX. goodwill impairment XX, RMBX,XXX.X RMBXXX.X demand and on the the and pandemic market recognized resulting December period and tests and from for the ended in losses company and outbreak negative performed intangible market conditions, impairment the impacts million an intangible the on

XX, XXXX, and on momentum. an on our December December in company's XX repurchase announced X, based solid million $XXX confidence month's XXXX, another we of the As from fundamentals strong existing period share program growth management's a for recap, extension starting

quarter repurchased fourth we total market of $X.X XXX,XXX in open a for of During consideration million. cash the ADSs the XXXX,

million $X.X share at repurchased under of $XX.X we ADSs end repurchase of As the approximately million program. total XXXX, a for our

turning outlook. Now to

seasonality its to For the the currently million first of of the be quarter due million between to XXXX, company and RMBX,XXX total business. expects our RMBX,XXX revenues

from and impact forecast operating to measures. conditions, COVID-XX current expect This the already we the market our to XXXX, under our views reflects variants fade year on anticipated negative change. are which full During a subject and preliminary out non-GAAP and operational income

today. ready Operator, are This concludes for our questions. now we prepared remarks to take

Operator

you. Thank

We session. first Our comes will now the Keung ahead. question-and-answer Instructions] from question [Operator Please Sachs. Goldman from begin Ronald go

Ronald Keung

[Foreign Language]

I expanding One should we opportunity, is growth. second to you, want the is about year, on is how category growth we're an impact how overall particularly industry, for in share questions you. expansion, Thank ask the progressing expect the this acceleration categories? could COVID a growth? management. And And Thank in more about you for [Interpreted] and about industry after your your this two long-term bit seeing

Kerry Chen

[Foreign Language]

may Many or users view, not remains had [Interpreted] unfamiliar Thank the and good the pricing satisfying if recycling importance. experiences of recycling sourcing have with question. supply-driven our industry services vital with are yet. unchanged you for In

trading efficient conversion for more strategy growth cover Our to recycling is scenarios. and

hand, developing We existing one sources, and at which continued have the we suitable stores. user our AHS offline cities new enhancing opened for our foundation stores On experience at pace, are while business.

also have our been recycling expanding category We coverage business. the of

have we and of user repurchases. our generated result, more awareness grown services a recycling As

both Our forms and quality store improved efficiency centers. strategy inspection back-end in has

new On have other recycling growth. business that the to developed hand, our provided have significant contributions we scenarios

for and We still We and to highly penetrate product Through continue trading these electronics user is potential is collaborations e-commerce great provide China's on our where traffic in brands. scenarios further industry-leading collaborations, concentrated market. top us with there to services players purchases. enhance new believe we recycling consumer

and were In terms pandemic to we the restrictions observed spring economy after festival growth the trajectory, changes prior began to several and as of lifted revitalize.

our to shopping go First with willing malls of and stores out residual all, visit more were sell consumers value. to goods their in idle

the We during and meet to uninterrupted the continued demand. services holiday our rebounding

increase. During volume year-over-year had holiday, the restructuring day seven a significant

recovering. quality is quality spending is by with Consumer strong believe at assurance capability backed natural still essential low Pre-owned we high products and are reasonable prices cautiously Second, consumers. of options. a pursuit chain supply products

our improving capabilities our We operating maximizing also are and value chain.

goal profitable and quarters delightful, expect nutshell, self-operated Our for compliant consumers years. refurbishment that value coming quality to are and profit first we options. sourcing thus quarter and are growth confident into – consumer will that source bringing full a select goods the enhanced for sales, the a precisely assured we is suitable will be year money trajectory In a in

recycling me turn in our willing goods started circular of business. saw that XX electronics. recycling this for the their number growing to ago, to now grew. expanded. Let phones can business years pre-owned users we is as A category market business believe our and mobile potential We valuable and the scope be our sell beyond are huge cash, consumer economy

from gold luxury packages, liquor, Our growing demand coming bags, is and watches, jewelry.

solved We industry. and pre-owned has successfully quality, service standardization electronics have problems -- played inspection regarding pricing that

standards experience, as We highly the also channels. quality inconsistent these and user have problems tackle to such categories recycling of ambition the poor fragmented

business more of demonstrates the upgraded and In future to we our more which for endows with non-standard success, realizing service for our goal system you, developed and recycling multi-category recycle our recycling. slogan pricing love have and achieve order more It care. strategically also to standardized brand

by category the fourth selected top footwear strong business above February mentioned surpassed momentum. January monthly breakeven, and During gift ASP closing to stores the to has also with cards, achieved country in categories GMV RMBXX across pilot followed among growth we but this others. year, from From stores only over million high new quarter, X,XXX cities higher-tier the the AHS performing the not

across these recycling the stores. stores brand XXX plan to the the and X Tier of By new we end image category offerings upgrade allocate June, of

further the products fundamental user rate database, business. high our be capabilities the and overall process also include to experience will will fundamental improve our service making increasing recycling the and in product pricing recycling offline diversifying long-lasting will non-standard channels. distribution These our the in them every enhance Putting stores, capabilities. enhancements optimizing continue We capabilities strategies, value of the the first conversion at stage we enhancing principle,

Thank question. for the you

Operator

Bank of ahead. Joyce go next comes from Please America. from The question Ju

Joyce Ju

Language] [Foreign

my remarkable year, a for we [Interpreted] actually I will and company non-GAAP the which this translate is compared last to achieved have quarter even full pretty loss. year's the seen question. profitability, Actually,

want just is the to sustainability? management look how key at understand, of the future, like, source I our how in profitability process So should we looking our what's Thanks. and at

Rex Chen

Thanks, Joyce. I take this will question.

So strategy GMV quality profit during revenue the prioritizing high the XXXX, controllable of our and second we mix have business. adjusted half by

profit from gross on XPXC and run. scale expected pivoted business the capabilities. also We consignment sales long retailing refurbishing our is generate the in leveraging XPXC to by to This compliant

marketing In capabilities. advanced improved and fulfillment addition, efficiency our marketplaces spending automated sales suspending we and as further optimized we in the our expansion

result, realized profit a As our in successfully we targets XXXX.

policy device third-party experienced pre-owned business. compliant the refurbishment of batteries our the refurbishment earnings logic functionality components, screens improved overall the and certified In and of replacing parts call, details products. of the last we polishing with we screens and By and

refurbished inform devices return quality day of We we and also how one-year have a seven customers warranties. free

During the China South center's team and fourth of increased capabilities elevated the as production we our overall quarter, capabilities operation planned.

we result, a refurbished for phones of our supply sales process million the second for precisely surpassed screen half in compliant refurbishment. locating self-operated [indiscernible] simplifying business As XXXX. XXX improved user devices total suitable by and the further the more of Meanwhile, and

quality, enhancing our ASP XPXC expanded for products to operating further and efficiency our margin. So product operating increased RMBX,XXX. we By

and implement China at Looking China same North operation the ahead our improvements to to centers. this year, we're East going

test as recycling new supply categories our our complete chain to expect for We tablets for business. our upgrades we

focus generate margin. expect we X%. our to Our margin full provide on high million additional of with compliant of users more products. refurbishment quality non-GAAP operating more to RMBXXX our of retail cost-efficient, with goal encourage to We business XXXX, revenues an year is the you In

we non-GAAP RMBXX.X quarter, large-scale for of fourth profit the mainly million implementation achieved automated to is long-term non-GAAP and our investment and operating year. and stocking pricing full profit realized This the In operating technology. inspection, the in due quality

As have a result, significantly. fulfillment improved efficiency

operating also logistics. dispatching and reducing have costs our fragmented We for strategy adjusted that stations, arisen from our

in a in to decreased result, XX.X% XXXX further As expenses our in from revenue a and fulfillment XX.X% as XX.X% XXXX dropped to non-GAAP percentage of XXXX.

prudent to you. efforts we our We each for our operations, of marketing lines. remain strive in growth business Thank by our achieve organic greater refining also

Operator

Renaissance. Lin Please Our next question comes China from ahead. from go Fay

Fay Lin

[Foreign Language]

taking my and for Management X.X% Thanks, lower the percentage non-GAAP [Interpreted] We a revenue quarter. was to of in expense sales as that marketing question. noticed fourth

So to more taken the just wondering, can elaborate measures management Thanks. on efficiency improve behind?

Rex Chen

In the for last year, prudent we you. Thank ROI. each related expenses Apart marketing been Recycle, with our from of marketing to the develop assessment personnel have line prioritized the and budget used selling AHS mindshare our business consumer and costs.

For its we marketing PJT frontline team. Marketplace, optimized

we and reputation. prioritized Marketplace, its image Paipai we're more For profitability on focused and brand

our also investments channels. of subsidies We provided traffic user reduced in and jd.com the new on

In and period and future XX.X% total by the better in you. our fourth accounted amortization of for X.X% of the expenses. from revenue, of million, XXXX. Thank a impairment percentage were and same GAAP quarter, believe X.X of internal the excluding marketing refer that assets, loss down SBC points that expenses selling expenses measures non-GAAP RMBXXX We of

Operator

to As I'd to hand at are management [Operator closing this no questions conference Instructions] the like for our back there remarks. further time,

Jeremy Ji

website, be by Thank were call ready. a available on you of IR you. for us. today's A transcript followed our will all again replay joining Thank

at Have any day. good ir@atrenew.com. you If to additional a feel have free e-mail us questions, please

Operator

The conference you Thank concluded. now for presentation. attending has today's

now disconnect. may You

ATRenew (RERE) 13 Mar 232022 Q4 Earnings call transcript