ATRenew(RERE) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q3 2023 reached RMB3.26 billion, representing a 28.4% year-over-year increase, surpassing guidance [6][21] - Adjusted operating income was RMB73.8 million with an adjusted operating margin of 2.3%, marking a new record [7][25] - Total revenues for the first three quarters amounted to RMB9.1 billion, marking a 32% year-over-year increase [6] Business Line Data and Key Metrics Changes - Revenue from the 1P business grew by 31.4% year-over-year to RMB2.92 billion [9] - The complex refurbished business contributed RMB200 million in revenue during Q3 [11] - 3P revenue increased by 7.3% year-over-year to RMB330 million, with an overall take rate of 5.4% [14][21] Market Data and Key Metrics Changes - Monthly recycling values in Beijing and Shanghai exceeded RMB100 million in October [10] - The recycling volume of the multi-category business amounted to RMB350 million in Q3 [18] Company Strategy and Development Direction - The company focuses on enhancing its 1P business as the primary growth driver while improving the service capabilities of its 3P platform [8] - Integration of the B2C retail brand into the AHS main brand aims to bolster service quality and trustworthiness [11] - The company is committed to sustainability, becoming the first signatory from the pre-owned consumer electronics industry to join the United Nations Global Compact [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the secondhand industry and the company's strategies to enhance profitability [5][30] - The outlook for Q4 2023 anticipates total earnings between RMB3,730 million and RMB3,830 million, reflecting a year-on-year increase of 25.1% to 28.5% [26] Other Important Information - The company repurchased 1.6 million ADSs for a total cash consideration of $4 million during Q3 [26] - Cash and cash equivalents totaled RMB2.3 billion as of September 30, 2023, supporting long-term strategic development [33] Q&A Session Summary Question: Performance of new single-state grant promotion and outlook for 2024 - Management noted a 60% year-on-year increase in C2B recycling orders during the Double Eleven event, with B2C sales totaling RMB160 million, a 24% increase year-on-year [28][29] Question: Use of cash and share repurchase handling - Total cash and cash equivalents were RMB2.3 billion, with a disciplined approach to cash deployment for long-term potential areas [32][34] Question: Insights on gross profit margin and refurbishment progress - Overall gross profit margin was 19.8%, with a focus on improving operational efficiencies and a promising outlook for the compliant refurbishment business [35][38]