Release Date: November 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ATRenew Inc (NYSE:RERE) reported a total revenue of 4.05 billion for Q3 2024, marking a year-over-year growth of 24.4%.
• The company's core recycling business revenue in mainland China increased by over 30% year-over-year, significantly outpacing the overall market growth.
• ATRenew Inc (NYSE:RERE) achieved its first GAAP operating income of 24.9 million, indicating improved profitability.
• The multicategory recycling business saw a 270% year-over-year increase in transaction value, contributing significantly to service revenue.
• The company plans to accelerate store openings in the next 2 to 3 years to meet growing demand and enhance brand awareness.

Negative Points

• Despite growth, the company's fulfillment expenses increased by 20.7%, impacting overall profitability.
• Selling and marketing expenses rose by 5.3%, driven by higher advertising and promotional costs.
• General and administrative expenses, excluding certain costs, increased by 9.5%, primarily due to personnel and office-related expenses.
• Technology and content expenses increased by 35.5%, reflecting higher personnel costs for system maintenance.
• The company's cash balance decreased compared to the previous quarter, despite a strong cash position, due to increased product collection and share repurchases.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Signs with DFM:AGLTY.

Q: Could management elaborate on how trading subsidies are driving business growth, and what are the expectations for the trading business in the fourth quarter of 2024 and beyond? A: Our recycling and trading business through JD.com increased by over 40% in the third quarter, with trading business doubling. During the Singles' Day promotion, trading recycling value increased by 246% year over year. We expect trading to become mainstream, and we are committed to strengthening our supply chain capabilities to support this growth. (Unidentified_3)

Q: Could you provide more color on the progress of your multicategory recycling business and its profit contribution? A: Our multicategory recycling business increased by 270% year over year, generating over 30 million in service revenue. This segment operates as an asset-light platform, focusing on luxury goods and gold jewelry. We plan to expand services and integrate them with joint-operated stores to meet growing user demand. (Unidentified_3)

Q: What are your thoughts on the market for preowned smartphones in terms of transaction volumes? A: Despite not directly benefiting from subsidy policies, our cross-category trading capabilities have captured consumer and recycling sources effectively. Our compliant refurbishment processes have enhanced product quality, leading to sustained revenue growth. We are meeting retailer needs through our PJT marketplace and serving consumers directly through AHS retail channels. (Unidentified_3)

Q: How do you plan to further grow the multicategory recycling segment? A: We are expanding our AHS store network to offer multicategory recycling services, covering mainstream users in first and second-tier cities. We are confident in meeting the recycling needs of more users as we continue to expand. (Unidentified_3)

Q: What is the outlook for the fourth quarter of 2024? A: We anticipate total revenues to be between RMB 4,740 million and RMB 4,840 million, representing an increase of 22.4% to 24.9% year over year. This forecast reflects our current views on market and operational conditions. (Unidentified_3)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.