{"text":[[{"start":6.15,"text":"A growing focus on precision trade-in scenarios to boost recycling and improve its operating efficiency is propelling ATRenew Inc. (RERE.US) to some of its strongest revenue growth in years and record profits, according to its latest quarterly results released on May 19."}],[{"start":23.15,"text":"Founded in 2011, ATRenew spent its early years honing its abilities to collect and sell used goods, with a special focus on smartphones. As it built up its business, it increasingly focused on boosting efficiency and profitability, taking steps like increasing higher-margin product compliant refurbishment over simply reselling recycled phones."}],[{"start":44.8,"text":"The company also discovered it could leverage its brand as a top recycler into other product categories outside its original electronics, and today also offers recycling in other areas like gold, luxury bags and even vintage liquors."}],[{"start":59.449999999999996,"text":"Those efforts lifted the company to its first net profit in 2023, followed by its first operating profit in 2024. Since then, ATRenew has consistently reported new records for both of those profit metrics, including its latest non-GAAP net profit of 140.1 million yuan ($20.6 million) in the first quarter, up 79.6% from 78 million yuan a year earlier. Its quarterly non-GAAP income from operations rose 70.2% to 190.5 million yuan."}],[{"start":93,"text":"Those gains were facilitated partly by higher margins, with ATRenew reporting its adjusted operating margin rose 69 basis points year-on-year to 3.1% in the first quarter."}],[{"start":106.05,"text":"The company’s revenue rose 32.4% year-on-year to 6.16 billion yuan in the first quarter, representing the fastest growth since the second quarter of 2023. Within that total, revenue from product sales rose 34.4% to 5.73 billion yuan, accounting for 93% of revenue. As it ramped up its campaign to do more direct selling, ATRenew’s compliant refurbished product sales shot up 150% during the quarter. That lifted product sales to retail consumers to 45.1% of total product revenue during the three-month period, up 12.1 percentage points from 33% of product revenue a year earlier."}],[{"start":150.25,"text":"The company’s multi-category business, which includes recycling for products like gold, luxury goods and vintage liquor, also achieved 81.5% growth year-on-year in terms of gross merchandise value (GMV). Gold performed especially well, with GMV up 83.3%, while GMV from luxury items rose 58.8%."}],[{"start":171.95,"text":"“This strategic pivot towards direct-to-consumer sales allows us to align our recycling prices with real-time retail trends, ensuring we offer better recycling prices, maintain a strong price advantage and create greater value for end users,” ATRenew founder and CEO Chen Xuefeng, who also uses the name Kerry, said on the company’s earnings call."}],[{"start":192.6,"text":"Investors applauded the latest trends that were broadly positive, bidding up ATRenew’s shares by 15% in the two trading days following the results announcement. The stock now trades at a non-GAAP price-to-earnings (P/E) ratio of around 10 times, with analysts forecasting it will post a non-GAAP net profit of 650 million yuan for all 2026."}],[{"start":216.5,"text":"Offline presence"}],[{"start":218.2,"text":"ATRenew’s direct-to-consumer campaign that is a major pillar of its improving profitability is built on the concept that consumers want to see and touch recycled goods before buying. Many consumers are increasingly willing to buy such goods as China’s economy slows and they become more cautious in their spending. But product quality is always a major concern, which ATRenew addresses through its standardized quality inspection and grading and refurbishment capabilities."}],[{"start":245.45,"text":"Catering to the desire to hold and use products before buying, ATRenew has spent the last few years building up its national network of offline stores. Its offline network grew to 2,156 stores by the end of March, up 14% from the 1,886 it had a year earlier. On its latest earnings call, the company reaffirmed its plan to more than double its store count to around 5,000 over the long term."}],[{"start":275.05,"text":"With a similar aim, ATRenew has also been rapidly expanding its door-to-door service team that travels to buyers’ homes to let them see and use products before a purchase. That team expanded about 27% to 2,248 people by the end of March from 1,765 a year earlier."}],[{"start":294.55,"text":"“This strategy has lifted our face-to-face fulfillment ratio to 80%, fostering deep connection and trust through AHS recycled fulfillment capabilities and brand presence,” said Chen. “Looking ahead to peak seasons like major promotional campaigns and flagship device launches, we will further implement flexible workforce solutions to enhance face-to-face fulfillment timeliness and user experience even during the busiest times.”"}],[{"start":322.1,"text":"ATRenew hasn’t written off used phone traders as an important customer group, and noted that the number of registered merchants on its PJT Marketplace for that part of the business nearly doubled year-on-year to almost 2 million by the end of March. Meantime, the number of registered contracted buyers surged by more than 120%, fueled by an influx of small and micro buyers."}],[{"start":345.75,"text":"Another potential growth area for the company is overseas markets. ATRenew has experimented with earlier partnerships in Japan and Sweden, and last year disclosed it had bigger plans to expand using cross-border e-commerce selling China-sourced electronics to overseas buyers. ATRenew disclosed that its overseas revenue “grew rapidly” year-on-year in the first quarter, with peak monthly revenue of nearly 50 million yuan."}],[{"start":369.6,"text":"ATRenew also suggested that it could establish its own offshore presence, with Chen saying the company was “exploring opportunities to bring more of the capabilities we have built in China to overseas market.” Such efforts could include developing its fulfillment capabilities in other countries, as well as introducing some of its automation technologies."}],[{"start":397.1,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780364703_9280.mp3"}