RERE - Earnings call transcript Q2 2024

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Operator

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the ATRenew's Incorporated Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will be hosting a question-and-answer session after management's prepared remarks. Please note today's event is being recorded. to Mr. call like first to now today, speaker would turn over the our I Director Corporate Ji, Jeremy of the Relations company. of Development and Investor ahead, go sir. Please

Jeremy Ji

Hello, XXXX Second everyone, to Call. Conference Quarter and welcome Earnings ATRenew's

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

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

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

the safe statements. harbor me Let cover

forward-looking obligations of during any in Some statements, forward-looking safe I consist the you'll of earnings are on information based the conversation assumptions press does that press to harbor today will financial as includes to on a of of Please of non-GAAP this that upgrade our statements. measures. ATRenew this Any GAAP not non-GAAP discussions this certain take call on release, refer call our statements to our statements management today you makes which and today, earnings hear refer measures. Also, assumptions contains and measures these reconciliation release. to

for this and figures the comparisons during turn I'd all Finally, to like are basis. stated, ] year-over-year strategy conference are over please a now in call dividends note unless that and Kerry on mentioned call updates. RMB, all otherwise [ to

Xuefeng Chen Kerry

XXXX welcome Call. and Conference to [Interpreted] Earnings Hello, Second ATRenew's Quarter everyone,

behavior. we actions in the achievements in second prudent domestic to pleased we consumer the and solid evolving with where economy the achieved quarter, government driving business, consumers spending. value-for-money taken the growth, has have even has to share consumption, of goods. trade-ins landscape this and quarter We retail consumer circular the though are boost In To implemented especially at encourage been the our [indiscernible] large-scale are strategies more

and entered volumes e-commerce retailers. As have recycling witnessed we increase products more significant cities in term, we Shenzhen, In a a long-lasting have like have result, believe of pre-owned importantly, and sustained such secondhand awareness Such more the in platforms already market the will physical the support by consumption raising to near through growth provides recycling certainty a policies and greater support goods. impact sustainable outlook. of our

X.XX exceeding our self-operated overall business Product up grew Looking growth RMB in main the RMB volume XX.X% other the quarter, recycling up XX.X% from products users. that Apple core new low Among ASP primary business business their widespread Apple of on In grew trade-ins XX.X% We old industry. JD.com included which to year-over-year. through created leading scenarios, collaborated trades an year-over-year, the volume other specifically the consumer the reached XX.X% received become initiatives, of self-operated related value grew second to recycling increasingly our with year-over-year, our high-end JD.com shop. product in total as secondhand year-over-year, in way serving at mainstream electronics while X.X billion, product performance of Notably, guidance. recycling XX% business for used May, billion, revenue our the driver. was revenue have

to grew third-party number XXX leveraging RMB increasing by of current with XXX% number microeconomic XXX% as electronic in environment business, year-over-year. of nearly revenue festival, willing growth our In the services XX.X% the to an of ] the service year-over-year million. consumer PJT explore Paipai and maintained adopting our beyond healthy used GMV platform Shopping [ increased inspection products multi-category our volume driver capabilities serving merchants, consignment and consumer main During our are increasing JD.com from electronics take XXX trade-in that and marketplaces recycling the rates categories. by of recycling model. business and increased platform The reflecting of year-over-year, users business

business On the the gross improvement improved points Group operating Gross it revenue the year-over-year we've economies gross quarter X.X margin bringing product the our margin dropped decreased overall are XXXX. front, X.X% X.X though capabilities. overall the second increased the strengths supply as trade-in to quarter XXXX. resulted percentage a The the the second the positive Apple non-GAAP rooted led fell increase total in while margin of the points profit the first percentage margin a revenue at of quarter to second of product to X.X have level XX.X% points discussed far in non-GAAP year-over-year, points raising percentage of and marketing quarter, points also efficiency, of the selling in percentage by This and in in turned recycling in successfully as we X.X revenue growth margin, of a scenarios the of by XX.X%, as of by an slightly from proportion Even chain of the cost expense with achievements percentage to percentage scale so compared XXXX. year-over-year. fulfillment X.X core revenues non-GAAP expense percentage

and and growth core and we Going agreement such new services. methods deepen one capabilities service electronics, we for business introduced of our strategic This On strengths our of have in to value-for-money recycling areas our products. also forward, June, consumer In drive build continue consumer products. trade-ins our transaction success. recycling, on secondhand Apple as renewed business collaboration with will strengthened trade-in to renewal these we the hand, in electronics further retail to JD.com

industry-leading and continue through the users and of JD needs fulfillment supply chain standards meet our high capabilities. specific We to

method leading regular capturing has through of value of over program by JD. receiving recycling, rapid growing demand fulfilled the in Trade-ins our and first through that the June, In first XX% acceptance and the users devices year, users. of recycling the by growth. experience Notably, products JD products for half recycling Our the value trade-in year-over-year. time, upgraded JD effectively experienced user recycling the by business increased better as surpassed provide adoption of in by establishing recycling users traded trade-in a than revenue for it

For in our margin anticipated the turned successfully Apple's we trade-in second quarter. the gross business, positive official as

off-peak this RMB During period, revenue. we typically in million achieved XXX

bring in operating Apple a profit. margin ensured margin the quarter a to we positive for operating trade-in simple, X%. profit are the while for X% positive business Specifically, operating the of second segment we operating aiming and Expenses at at long-term official to more expect level

our continue business our fulfillment strengthen mode. capabilities to We build to offline

self-operated of jointly operated the increase off-line operated multi-category image As we meet recycling, quarter. of stores. the users' stores and AHS end stores demand self-operated XXX with upgraded of cities stores X,XXX To XX XX in XX for the quarter, over we nationwide second in store location a of for the net

Additionally, service doorstep a over needs. we team of fulfillment XXX have address diverse staff nationwide to users'

inspections consistent image doorstep spot advantages face-to-face maintains second standards, year-over-year recycling. quarter, In the on mail device and service Our the which service a payments, as recycling growth provides business several sustained the business. the and CXB same brand offering team the over traditional in overall rate

convenient Our offer choices. flexible and users in-store doorstep options and fulfillment recycling

premium to recognition while are and core provide supply we hand, scenarios of AHS products brand other capabilities Selection. aim management. strengthening wider shopping client selection the improvements These users chain our the in with of a enhancing further On

Retail these the offline We value-for-money access of By selection for for pre-owned our revenue offer secondhand businesses e-commerce. our allowing our increase in leading elements electronics supports supplying trust options In We consumer linking medium-sized supply June, our new are products. online landscape with year-over-year. our off-line capabilities to high-quality interest to a items. premium XX% e-commerce and of trying our Marketplace and sourcing AHS processing and XX% Key our buying increased streaming synergies Selection in pre-owned transaction in Selection, purchasing retail electronics established are Selection to nationwide thrive operation platform, addition quarter included and previous and consumer curative Douyin stores gained products products. BXB increase stimulating live leveraging witnessing which are and website, are end-to-end partners consumers partnered by Product quality the new, channels items RMB to of inventory, by XXX Building a chain In XXX% inventory store million. to clear eightfold robust websites our we revenue Douyin product inspections business looking with chain. platforms. quarter, stores and from exploring secondhand in the recycle and has brand. consumers retail to PJT collaboration XPXC PJT's trend physical second secondhand XX to successfully and that This brought quality the from the a that to etc. marking with Douyin, with Paipai on center, we product secondhand more an retail stores, increasingly our include our of XXX sales, consumers surpassed AHS million, on year-over-year supply in-store channels their by capability of cost-effective small- directly XX% RMB provide official AHS AHS recognition the PJT retail in empower Paipai, from

increased comes our with leading recently. offline our have on secondhand to exploring [indiscernible] circular like nationwide to cities. established recycling. opportunities the efforts our consumption. marketing improve to raise are as Together, launched would upgraded of products brand in promote of has trade-ins understanding consumers closing, PJT have Additionally, for we through programs brand to in Starting recycling our [indiscernible] share a already store last services establishing strategic top-of-mind pilot Initial and recycling extensive sales a it network. we awareness the partnership choice we to retailer In public market our year, mass and for been when perspective

To the content rolled partnering revived Douyin, trade-ins return up partnerships used owners, educational initiative. our collaborated Xiaohongshu strengthening jointly In to leading goods sustainable consumer the name including with pick more programs brand and rewards. Moreover, we video second brand have we popular of concept [indiscernible] on consumption. [indiscernible] platforms, and in few XX brands encouraged consumers platform influencers out We the to circular key request, launch name. social [indiscernible]. claim distributed have while We more recycling with trade-in a advertise quarter, media the with to about

shift the we Given opportunities behaviors, believe presented circular the proactively crucial in seize economy. consumer by is clear it the to

marketing, stores. our through to in to will brand We cross-brand brand among brand. our services partnerships and revamping for consumers strategic and greater invest our aim mindshare We continue acquire

As we forward more and even upcoming October. enhanced through quarter, look models for our preparing facilitating to by products of the offering. service September for the enter and secondhand launch new we transactions cell season users in phone their We third the serving are recycling

to financial over CFO, turn like our I'd to the Rex updates. for call Now

Chen Chen

Hello, everyone.

profitable of exceeded the again another once revenues report to end under pleased are quarter top we guidance. measures. On We non-GAAP our

and all year-over-year by increased was the XXXX, XX.X% attributable revenues of RMB electronics, driven primarily X% by product net and service XX% revenues for increase the are in In service sales to accounted in same a RMB increased both increased average Marketplace of directly detailed by second strong the product Net multi-category to at online second otherwise company's total stated. overall the service consistently Growth to X,XXX.X The financials, consumer X%. increase million, PJT our on revenues the Marketplaces recycling X% the of million, primarily quarter rate with unless business RMB that period service by taking recycling a rate from in increase with service the XXXX. in was recycling and revenues. figures primarily of in comparisons of an and value net an million. quarter, while RMB second Multi-category in to of XXX.X in million our an generated product multi-category the $XX the revenues look note take Before Marketplaces increased to growth in driven offline of pre-owned of the was was was About transaction figure total X.XX% channels. while service gross XX.X% quarter X,XXX.X business revenues business. please are in our XXXX. take revenues the by revenues throughout net basis, The the due revenue

our discuss change clarity expenses. the expenses let's in actual our provide base Now on operating to greater operating

million. Group by We of the XX.X%. furnished in Form will in in increased better the which discuss also management non-GAAP in increased and million, are XP and X-K to views costs reflect XXX.X margin the available RMB line level by reconciliations the how non-GAAP revenues. earnings RMB at gross X,XXX.X our our results release Product results quarter. was operations growth expenses margin, we our The product to XX.X% SEC. with revenues with which to margin expenses, also the XX.X% GAAP corresponding was refer business Fulfillment Gross second Merchandise XX.X% gross operating as of

XXXX; Excluding expenses refer as non-GAAP as transaction operation expenses X.X% increased non-GAAP percentage of increase Company period personnel fulfillment decreased station in an first, RMB measures, expenses and million. center Selling increase SBC and Company an X.X%. expenses, expenses and to by as to share-based primarily hereon, same the which and from from the to, the XX.X% recycling revenues related a increased increase the the X.X% store activities due as conducted million. to in expanded XXX of its will Non-GAAP compensation operation Under we total XXX.X fulfillment networks. more with by secondly, was to compared RMB marketing costs

promotional XXX.X and RMB marketing assets million, intangible due deferred increased cost of percentage assets of to XX.X% business resulting administrative XX.X% as increase expenses marketing selling an revenues acquisitions. primarily by to XX.X and to related from General and expenses RMB from amortization and selling to Non-GAAP a Non-GAAP in decreased X.X%. expenses advertising expenses increased and expenses expenses. million. total X.X% campaign and SBC and by Excluding

content X.X% Excluding business million, SBC personnel a million, expenses due XX.X% from $XX.X X.X%. X.X% resulting The increased system. of and content expenses upgrade an Non-GAAP percentage connection was technology increase of in and increase XX.X non-GAAP and a increase primarily revenues in percentage of acquisitions. as cost content million. primarily and with an total and XXXX. RMB excluding costs. the of expenses in intangible to was and operating to with SBC X.X% amortization XX.X% G&A period G&A XX.X% to personnel Technology to assets by personnel by costs total expenses XX.X company's due the from increased expenses in by of expenses, assets expenses and decreased same ongoing to RMB increased Non-GAAP the as Non-GAAP to to revenues compared center technology

was was $XX.X the second and purchase our Board second share June of of Non-GAAP result, margin quarter XX% XX a the income compared X.X% of XXXX to XX, approved X.X% non-GAAP year-on-year. significant repurchase of an quarter to the As ongoing representing USD program, a our which operating million million uplifting in through Directors profit in XXXX. XXXX increase operating limited

ADSs total returned We have USD X.X June of X as XXXX. shareholders of a approximately amount million XX, our to million for

and funds short-term payment XX, and party receivable service billion. As cash from cash of RMB cash, providers June X.X third XX, equivalents, totaling restricted investments

Our growth strong cash position safeguards a sustainable outlook.

quarter the and between We to revenues be turning XXXX. Now of of business note we subsidy market Please outlook first representing to X,XXX million current questions. year-over-year. to XX% views RMB change. million prepared third operational such concludes anticipate the increase that our This to on ready reflects XX.X% RMB to are now X,XXX total and an Operator, only forecast remarks. preliminary and conditions, are which our this take

Operator

come Bank of from We question will the will And Instructions] session. Ju answer Joyce America. question first now the and begin [Operator session with

Joyce Ju

Bank result goods there America. impact translate Joanne the Congrats domestic myself. see We recent the increased is and National trade-ins have the this consumer these by quarter. for subsidies business? on do that from This How large-scale Development on announced solid policies July. Joyce Reform of your I'll in policies such Commission of behalf [Interpreted] support as are

Xuefeng Chen Kerry

securing and at issued large-scale action consumer policy [Interpreted] more these group cars local Finance we computers, State trade-ins. computers. focusing released implementing are firsthand NDRC subsidies Ministry both trade-in Thank including high-quality mainly appliances the subsidies March, central phone-specific support and observed Council joint, and and In home Since ATRenew in meet specific level. seen collaborated users' for the measures home products. its more you on plan have for local JD.com appliances. products, cities question. trade-in needs, of to being Currently, the recycling and implemented to We've electronic further for support,

increased the For though successful recycling instance, we grand cities of from second circular with more peak subsidy introduce within month further the promotion In electronics JDs the effective of we was the products program, number processed of promoting compared in even in expect July the number June year, similar consumer idle half Shenzhen's the to such The transactions reflecting economy. trade-in of electronic popularity June, a considering new season, recycling the orders. trade-in products initiatives. subsidies, X.Xx

awareness. enhancing policy view However, subsidies recycling as we primarily these catalysts users for

this the factors of acceptance These the further this enhance recycling Some into We you previous and are unique trade-in. studies and brand going to recognition circular the opportunities last suggest round promote subsidy strengthen economy. longer recycle model may than policies penetration collectively AHS Thank to to and Therefore, programs strengthen. appliances for local national the the capabilities these increases anticipate subsidy service home countryside. like user will users towards as aim guide system, seize fulfillment our introduced, of that question. we

Operator

come will from CICC. [indiscernible] question with next The

Unknown Analyst

I on Congratulations And [Interpreted] the have solid results. X questions.

of top the our is the elaborate The you include What please one Apple And on about second business? could non-GAAP the first how are the one, refurbishment business your line. trade-in and margin? compliance contributions operating you

Chen Chen

I Okay. take Thank will your question. you.

the same continued Currently, performance for repair chain. to improving XX% revenue. swiftly replication efficiency in we and RMB comparison identifying future time, In this coverage categories. category, year-over-year have increase capabilities year, have enhance our product and we second laying a saw in quarter, coverage and for In conditions. foundation first refurbishment, terms to XXX across recycled the phone capabilities our for of the achieved different phone a compliant suitable we million in our value enhanced other XX% solid mobile At processing sales refurbishment goods half of selection of the we the the reaching

up both industry business the our buyers, goods end-to-end connecting chain. capabilities bolstered for for retail channels opening and better sales have we Additionally, XP

our in margin gross gross planned, successfully official achieving second as positive trade-in a Apple's the optimized service, margin Regarding we have quarter.

gross we've Apple for receiving the overall the same the business during second digits, was Although gross the for margin low observed single significant quarter margin goods in our in improvements already quarter.

our this We will profitabilities. Fortune provide the second offerings in excellent for Apple's from of also number while of continue we corporates. this enhanced refine based to half Apple's users first maintaining Apple's to steady trade-in experience on aiming our this year, In to an to corporate business trade-in half end of a year, consumer the XXX orders in addition service service, official

corporate service clients devices domestic needs can Through MacBooks the We international of when [indiscernible] the their employees. program, while addressing market expect workplace of to corporate of years. X-X leading and recover used in iPhones next such access we disposing from they're corporates a and used

our In terms quarter X.X% of second the was RMB [ XX profit in profit with profitability, during we a quarter. operating positive Non-GAAP ] operating the reported operating Non-GAAP of end-to-end in consecutive Such margin supply the non-GAAP economy operating back skilled was with platforms in efficiency million. of testament improved X.X% e-commerce promotional XXXX. to chain. second by quarter a the compared season with of

percentage but Marketplace of expenses dropped. related the earlier, XXXX, preferred As the and in with X.X% Paipai fees and marketing of by to by Labor revenues to to as sales increased in mentioned as promotion quarter in relation and recycle revenues AHS XX.X%, increased, total X.X% slower of of the branded fees fees XXXX, the quarter PJT promotion second and costs expenses total a sales of the line. compared promotion commission both although marketing fulfillment and top our than second non-GAAP non-GAAP relation grow percentage by increased of fulfillment decreased a

So above behind reasons main the the Thanks. improved are margin.

Operator

with question will Michael next Research. from Kim The come Zack

Michael Kim

taking for my questions. Thanks

to items, I continues luxury second consumer the impact for the the might do wondering in goods luxury mix First, of that compared shift margins? question. electronics how then how just overall of And a gross gross just have assuming to curious then and recycling margins favor

Chen Chen

Okay.

question, approximately related So sales for total [indiscernible] XX% quality refurbishment revenues the to your first of for recycling, from -- inspection, the of our resell comes currently, products. product the and

But our equivalent by of our So revenues the from XX% this in revenues model. to platform. remaining goods our recycling operating under products gross is operated will the terms Of financial to come Revenue service similar to margin, platform Selection total attributable XX% of revenues, this is the be electronic in our service profit generated the segment for multi-category business statements. profit products. our

other luxury impact categorized indicates overall of high-value we when the has business some recycling a than gross multi-category of categories. currently [indiscernible] we This multi-category recycling business such our including as our alongside business goods, limited items, a consumer margin. that on part So electronic the

our as by we margins mix that overall expanding believe of as our recycling can services, multi-category operating and the we profit influence However, profit scope accessibility margin. well gross positively and

Michael Kim

and capital I extending down thinking then curious talked just the wondering sheet of instituting asset-light balance Makes model, hear know how management Board about upsizing potential recently business strength on and just sense. potentially might but the and/or repurchase your thinking about the given to second, that. your front. you Appreciate updated And opportunities? on the the M&A authorization, be a road share you just capitalizing dividend your

Chen Chen

for questions. Okay. you Thank the

to In our terms maintain marketers of in explore and we shareholder returns, current share the most in profit current use feasibility year. our share current open terms dividend of for of communication And and the with of the regular will plans. our to year repurchase plan buyback -- and Board the

adopt any utilization, and development, you. capital prudent So not have of capital content environment do approach a the considering to M&A the we and current now. Thank we market stage will plan

Operator

hand conclude go back session. like remarks. This to over any the to Please our would ahead. will conference management for closing question-and-answer I

Jeremy Ji

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

to have at questions, free If us any ir@atrenew.com. additional you. you Thank email please feel

Operator

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

now may disconnect. You

ATRenew (RERE) 20 Aug 242024 Q2 Earnings call transcript