ATRenew(RERE) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues increased by 30.2% year-over-year to RMB 2,871.8 million, exceeding guidance [5][19] - Non-GAAP operating income reached a record of RMB 44.4 million, with an adjusted operating margin of 1.5% [5][25] - Gross margin at the group level was 21.6%, with 1P business gross margin at 12.5% [22][25] Business Line Data and Key Metrics Changes - 1P product revenue increased by 34.9% to RMB 2,575.2 million, driven by strong sales of refurbished devices [19][20] - Service revenue was nearly RMB 300 million, remaining flat year-over-year, but the take rate increased from 4.15% to 5.46% [10][20] - Overall sales of refurbished devices increased to 145 million, with consumer sales reaching 140 million and a gross margin of 25% [9][25] Market Data and Key Metrics Changes - Apple products accounted for 45% of total business and 60% of 1P business, indicating strong brand resilience [7] - Monthly GMV for non-electronics new categories surpassed RMB 70 million, reflecting growth in new category recycling [13][32] Company Strategy and Development Direction - The company aims to expand refurbishment operations to more regions and product categories, including tablets and smartwatches [36] - Focus on enhancing operational efficiencies through automation and AI technology to optimize cost structure [14][25] - Continued emphasis on multi-category recycling services to leverage consumer trust and expand revenue streams [32][34] Management Comments on Operating Environment and Future Outlook - Management noted a rapid recovery in offline retail and consumer demand post-reopening, with expectations for sustained growth [5][30] - Anticipated year-over-year revenue growth of 32.8% to 37.5% in the second quarter, driven by major promotions and improved trading services [31] - Commitment to enhancing brand influence and consumer education on recycling and circular economy practices [16][17] Other Important Information - The company repurchased over 1.4 million ADSs for a total cash consideration of US$4.1 million during the first quarter [26] - Cash and cash equivalents totaled RMB 2.5 billion as of March 31, 2023, ensuring a sustainable growth outlook [25] Q&A Session Summary Question: Outlook for the economy in China and consumption of electronics products - Management observed a significant surge in business volume post-reopening and expects sustained demand for trading services driven by promotions [30] Question: Progress of multi-category recycling services - Management highlighted successful scaling in categories like high-value bags and watches, with significant trading volume and GMV growth [32][33] Question: Strategic targets for repair businesses and impact on net profit - Management anticipates stable gross margins for refurbished devices and plans to expand refurbishment capabilities across more product categories [35][36] Question: Reasons for improved adjusted operating margin and outlook for the year - Improved cost efficiencies from automation and optimized operational processes contributed to the increased operating margin, with expectations for continued improvement [39][41]