ATRenew (RERE) Q1 2025 Earnings Call May 20, 2025 08:00 AM ET Speaker0 Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to AT Renu Inc. First Quarter twenty twenty five 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. I will now turn the call over to the first speaker today, Mr. Jeremy Ji, Director of C ...

1Q25 INVESTOR PRESENTATION May 2025 Forward-looking Statements This presentation has been prepared by ATRenew Inc. (the "Company") solely for informational purposes. This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current expectations and projections with respect to, among other things, our financial condition, results of operations, plans, objectives, future performa ...

Core Insights - The company reported a total revenue of 4.65 billion yuan for Q1 2025, representing a year-on-year growth of 27.5%, exceeding the high end of the revenue guidance [1][2] - The non-GAAP operating profit reached 110 million yuan, with a year-on-year increase of 39.5%, and the non-GAAP operating profit margin improved to 2.4% [2] - The company has strengthened its offline delivery capabilities, with a total of 1,886 stores across 283 cities and over 1,000 personnel in the delivery team [4] Financial Performance - Total revenue for Q1 2025 was 4.65 billion yuan, with 1P (self-operated) product sales contributing 4.26 billion yuan, a growth of 28.8% year-on-year, while 3P (platform) service revenue was 390 million yuan, up 14.2% [1][2] - Non-GAAP net profit was 78.04 million yuan, with a non-GAAP net profit margin increasing from 0.6% in the same period last year to 1.7% [2] - Cash and cash equivalents, restricted funds, short-term investments, and third-party payment platform account balances totaled 2.78 billion yuan as of the end of Q1 2025, ensuring stable operations [2] Business Development - The company has expanded its multi-category recycling services, with a nearly 200% year-on-year growth in transaction volume and revenue from multi-category recycling [4] - The C2B mobile digital recycling revenue grew over 50% year-on-year, driven by national subsidies and user demand from platforms like JD.com [4] - The company’s拍机堂 (Paimitang) platform has registered over 1 million merchants, with a double-digit year-on-year growth in trading merchants [5] Infrastructure and Service Enhancement - The first offline flagship store of拍机堂 was opened in Shenzhen, featuring a "warehouse-sales integration" model that allows for nearly 10,000 units available for immediate supply [5] - The company has improved its self-operated product retail, with toC revenue from self-operated products increasing by 73.5% year-on-year, and the toC share of 1P revenue rising to 33% [5] - The拍卖 (Pai Pai) consignment business saw a 220% year-on-year increase in sales across all categories, enhancing the experience for small and medium-sized merchants [5]

Company Overview - ATRenew Inc. is a leading technology-driven platform for pre-owned consumer electronics transactions and services in China, headquartered in Shanghai [3] - The company was founded in 2011 and aims to give a second life to idle goods, addressing environmental impacts through recycling and trade-in services [3] - ATRenew integrates C2B, B2B, and B2C capabilities, providing end-to-end coverage of the value chain with proprietary inspection, grading, and pricing technologies [3] Upcoming Financial Results - ATRenew plans to release its unaudited financial results for the first quarter of 2025 before the U.S. market opens on May 20, 2025 [1] - An earnings conference call will be held on the same day at 08:00 A.M. Eastern Time to discuss the financial results [2] - The call will be accessible via multiple international and toll-free numbers, with a replay available until May 27, 2025 [2]

Company Overview - ATRenew Inc. is a leading technology-driven platform for pre-owned consumer electronics transactions and services in China, headquartered in Shanghai [3] - The company was founded in 2011 and aims to give a second life to idle goods, addressing the environmental impact of pre-owned electronics through recycling and trade-in services [3] - ATRenew integrates C2B, B2B, and B2C capabilities, providing end-to-end coverage of the entire value chain with proprietary inspection, grading, and pricing technologies [3] - The company is a participant in the United Nations Global Compact, adhering to principles of responsible business [3] Financial Reporting - ATRenew filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, with the SEC on April 11, 2025 [1] - The annual report includes audited consolidated financial statements and is available on the SEC's website and the company's investor relations website [1] Shareholder Information - The company offers a copy of its annual report containing audited financial statements free of charge to shareholders and ADS holders upon request [2] - Requests for the report should be directed to the Investor Relations department of ATRenew [2]

Cash Transfers and Investments - The company transferred cash to its intermediate holding company of RMB595.1 million in 2022, RMB14.6 million in 2023, and RMB226.6 million in 2024 through capital contributions[41]. - The company received cash from its intermediate holding company as investment returns of RMB804.7 million in 2022, RMB223.2 million in 2023, and RMB450.1 million in 2024[41]. - The company's intermediate holding company transferred cash to the two Shanghai subsidiaries of RMB1,801.6 million in 2022, nil in 2023, and RMB2,330.7 million in 2024[40]. - The two Shanghai subsidiaries transferred cash to the former VIE and its subsidiaries of RMB351.6 million before the complete unwinding of the variable interest entity structure in 2022[39]. Financial Performance - Total net revenues for 2024 are projected to be RMB 16,328,400, representing a 25.5% increase from RMB 12,965,782 in 2023[49]. - Net product revenues for 2024 are expected to reach RMB 14,844,416, which is a 27.5% increase from RMB 11,658,298 in 2023[49]. - The company reported a net loss of RMB 2,467,937 for 2022, which is a significant increase from a net loss of RMB 816,547 in 2021[49]. - The company experienced a net loss of RMB 156,250 thousand in 2023, a reduction from a net loss of RMB 2,467,937 thousand in 2022[55]. - The adjusted net income for 2023 was RMB 225,175 thousand, a significant increase from RMB 50,841 thousand in 2022[55]. Regulatory and Compliance Risks - The company faces risks related to regulatory approvals, anti-monopoly actions, and cybersecurity laws that may impact its operations in China[34]. - The company is not required to go through a cybersecurity review by the Cyberspace Administration of China for past securities issuances to foreign investors[37]. - The company has not been required to obtain permissions from the China Securities Regulatory Commission for past securities offerings under current laws[37]. - The company is subject to evolving regulatory requirements in mainland China regarding cybersecurity and data protection, which could affect its operations[105]. - The company is subject to risks related to compliance with anti-monopoly laws, with recent regulatory changes increasing scrutiny on acquisitions and investments[161]. Market and Business Strategy - The company plans to continue expanding its market presence and investing in new product development to drive future growth[46]. - The company plans to expand its AHS store network into lower-tier cities and strengthen cooperation with JD Group to increase customer traffic on its platform[76]. - The company aims to leverage technology and data to improve services and enhance the functionality, performance, and reliability of its platform[69]. - The company has expanded its recycling business product categories to include used luxury goods, gold, and vintage liquor since June 2022[85]. Operational Challenges - The company has faced challenges in maintaining its existing customer base and attracting new customers, which could adversely affect its business[68]. - The company has experienced a slowing growth rate in the Chinese economy, which may impact consumer discretionary spending and, consequently, its business performance[80]. - The company must effectively manage relationships with third-party service providers to avoid disruptions in service and maintain operational efficiency[132]. - The company faces risks related to the quality control of products sold by third-party merchants, which could adversely affect its brand reputation and operational results[103]. Financial Position and Assets - As of December 31, 2023, total assets amounted to RMB 5,493,079 thousand, a decrease of 3.5% from RMB 5,048,755 thousand in 2022[50]. - Cash, cash equivalents, and restricted cash at the end of 2023 totaled RMB 2,190,696 thousand, up from RMB 1,703,626 thousand at the end of 2022[50]. - The total current liabilities as of December 31, 2023, were RMB 1,691,465 thousand, an increase of 65.5% from RMB 1,022,248 thousand in 2022[50]. - As of December 31, 2024, the company's net inventories were RMB535.1 million (US$73.3 million), showing a significant decrease from RMB1,017.2 million in 2023[140]. Human Resources and Employee Management - The company plans to hire additional qualified employees to support business operations and planned expansion, emphasizing the importance of retaining skilled personnel in a competitive labor market[153]. - The company recorded share-based compensation expenses of RMB174.2 million in 2022, RMB134.4 million in 2023, and RMB166.7 million (US$22.8 million) in 2024, indicating a focus on attracting and retaining key personnel[173]. Legal and International Risks - The company is incorporated under the laws of the Cayman Islands, with a majority of assets and operations located in China, making legal processes challenging for foreign investors[206]. - The PCAOB's historical inability to inspect auditors in China has deprived investors of the benefits of such inspections, potentially affecting confidence in the company's financial statements[190]. - Changes in U.S. and international trade policies, particularly regarding China, may adversely impact the company's business and operating results[184]. - The company may face challenges in customer growth and activity on mobile devices due to dependencies on mobile operating systems and networks that it does not control, which could adversely affect its financial condition[171]. Currency and Economic Factors - Fluctuations in the Renminbi against the U.S. dollar can materially affect the company's operations and investment value, with the Renminbi having appreciated over 20% against the dollar from 2005 to 2008[210]. - Revenue generated by mainland China subsidiaries is primarily in Renminbi, which is not freely convertible, potentially limiting dividend payments[225]. - The PRC government may impose a withholding tax rate of up to 10% on dividends payable by mainland China companies to non-resident enterprises[227]. Technology and Cybersecurity - The satisfactory performance of the company's technology platform is critical, with potential system interruptions impacting sales and customer satisfaction[167]. - The company has experienced past cyber-attacks and may face future security breaches that could adversely affect its operations and reputation[164]. - The company must continue to upgrade its technology platform to support growth, with risks of system disruptions during upgrades[168].

"As a front-end distribution center, the Paijitang flagship store operates on a 'warehouse-to-retail model,' which enables buyers to browse inventory, inspect devices, and complete purchases onsite—helping businesses reduce inventory costs and minimizing logistics delays by 3 to 5 days," said Mr. Kerry Xuefeng Chen, Founder, Chairman, and CEO of ATRenew. "By offering a compliant and efficient sourcing solution, we are committed to fostering the long-term, sustainable growth of the pre-owned electronics indu ...

Core Insights - The article discusses the investment philosophy and methodology of Yiazou IQ, an AI-driven stock research platform founded by Yiannis Zourmpanos, emphasizing the identification of high-potential investment opportunities while managing risks effectively [1]. Investment Philosophy - The company focuses on spotting asymmetric opportunities with an upside potential of 2-3 times that outweighs the downside risk, leveraging market inefficiencies and contrarian insights to maximize long-term compounding [1]. - Risk management is a priority, aiming for a strong margin of safety to protect against capital impairment while ensuring long-term growth [1]. Investment Methodology - **Leadership & Management Analysis**: The company looks for proven track records in scaling businesses, smart capital allocation, insider ownership, consistent revenue growth, and credible guidance [1]. - **Market Disruption & Competitive Positioning**: Emphasis is placed on strong technology moats, first-mover advantages, and network effects that drive exponential growth in high-growth industries [1]. - **Financial Health & Risk Management**: Sustainable revenue growth, efficient cash flow, a strong balance sheet, and avoidance of excessive dilution are key factors [1]. - **Valuation & Asymmetric Risk/Reward**: The company employs revenue multiples versus peers and DCF modeling, along with institutional backing and market sentiment analysis to ensure downside protection with significant upside potential [1]. - **Portfolio Construction & Risk Control**: The investment strategy includes core positions (50-70%) in high-confidence, stable plays, growth bets (20-40%) in high-risk, high-reward opportunities, and speculative investments (5-10%) in moonshot disruptors [1].

Core Insights - ATRenew (NYSE: RERE) reported strong sales growth and achieved its second consecutive quarter of positive GAAP net income in Q4 2024 [1] - The overall performance for full year 2024 was significantly better compared to previous periods [1] Financial Performance - The company demonstrated sound sales growth in Q4 2024 [1] - Positive GAAP net income marks a notable achievement for the company, indicating improved profitability [1] - Full year 2024 results were generally much better than prior periods, suggesting a positive trend in financial performance [1]

Investment Rating - The report maintains a "Buy" rating for Hesai Technology, indicating strong growth potential in the lidar market and expected revenue increases for 2025-2027 [8][12][32]. Core Insights - Hesai Technology reported a net revenue of RMB 2.077 billion (approximately USD 285 million) for 2024, marking a year-on-year growth of 10.7% and achieving a non-GAAP net profit of RMB 13.7 million, reversing a loss from the previous year [3][4]. - The company experienced a significant increase in gross margin, reaching 42.6% in 2024, up from 35.2% in 2023, primarily due to cost optimization and increased sales volume [4][5]. - Hesai's Q4 2024 performance was particularly strong, with net income of RMB 720 million (approximately USD 98.6 million), a year-on-year increase of 28.3%, and a non-GAAP net profit of RMB 170 million [4][5]. - The company anticipates a revenue of RMB 3-3.5 billion (approximately USD 411-480 million) for 2025, representing a growth of 44%-69% compared to 2024 [6][8]. Summary by Sections Hesai Technology - Hesai Technology is positioned as a leading player in the autonomous driving and advanced driver-assistance systems (ADAS) lidar market, with a projected shipment of 1.5 million units in 2025 [8]. - The company has secured exclusive design contracts with top European OEMs, indicating strong demand for its lidar products [6][7]. - Hesai's new product line, including the JT series of 3D lidar for robotics, is expected to enhance its market presence and revenue streams [7]. Ideal Automotive - Ideal Automotive is transitioning from an electric vehicle manufacturer to an artificial intelligence company, with plans to leverage AI in its product offerings [9][10]. - The company is expected to achieve significant revenue growth, with projected net profits of RMB 13.35 billion and RMB 19.18 billion for 2025 and 2026, respectively [11]. Energy and Aluminum Sector - The report highlights the robust performance of Electric Power Energy and Shenhua Co., with both companies benefiting from rising aluminum prices and stable coal operations [12][13]. - Electric Power Energy is noted for its strong cash flow and stable profit margins, while Shenhua Co. is expected to see enhanced earnings due to its high aluminum production capacity [14][15]. Chemical Industry - Baofeng Energy reported a revenue of RMB 32.983 billion (approximately USD 4.5 billion) for 2024, driven by increased production and sales of polyethylene and polypropylene [24][26]. - The company is expanding its coal-to-olefins project in Xinjiang, which is expected to significantly boost its production capacity and market competitiveness [30][31]. Defense and Alloy Market - The report indicates that increased defense spending in China is likely to drive demand for chromium salts and high-temperature alloys, benefiting companies in the materials sector [38][39].