ATRenew Q1 2026 Earnings Call Transcript

On Tuesday, ATRenew (NYSE:RERE) discussed first-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=1ALqoqas Summary ATRenew reported strong financial performance in Q1 2026, with total net revenues reaching RMB 6.16 billion, a 32.4% year-over-year increase, driven by 1P broad tech revenue growth of 34.4%. The company improved its profitability, with non-GAAP operating profit growing 70.2% year-over-year to RMB 190 million, and the non-GAAP operating profit margin expanding to 3.16%. Strategic initiatives included strengthening the 1P-centric strategy, expanding face-to-face fulfillment services to 80%, and increasing compliant refurbishment revenue by 76.1% year-over-year. ATRenew continued its partnership with JD.com to enhance trade-in solutions, achieving a 70% share in trade-in orders through the JD sourcing channel. The company expanded its multi-category recycling services across 966 stores and plans further expansion to self-operated AHS stores and franchisees. For Q2 2026, ATRenew anticipates total revenues between RMB 6.24 billion and RMB 6.34 billion, representing a 25% to 27% year-over-year increase. Management highlighted ongoing efforts to optimize store locations, increase fulfillment capabilities, and leverage AI technologies for long-term efficiency gains. Full Transcript OPERATOR Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to ATRenew Inc.'s first quarter 2026 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, Ms. Jessie Jin, head of Investor Relations. Please go ahead, ma'am. Jessie Jin (Head of Investor Relations) Thank you. Hello everyone and welcome to ATRenew first quarter 2026 earnings conference call. Speaking first today is Terry Chen, our Founder, Chairman and CEO and he will be followed by Rex Chen, our CFO. After that, we will open the call to questions from the analysts. The first quarter 2026 financial results were released earlier today. The earnings press release and investor slides accompanying this call are now available at our IR website, ir.atrenew.com. There will also be a transcript following this call for your convenience. For today's agenda, Kerry will share his thoughts on our quarterly performance and business strategy followed by Rex who will address the financial highlights. Both Kerry and Rex will participate during the Q and A session. Please note our safe harbor statements. Some of the information you will hear during our discussion today will consist of forward looking statements and I refer to you our safe harbor statements in the earnings press release. Any forward looking statements that management makes on this call are based on assumptions as of today and that ATRenew does not take any obligations to upgrade our assumptions on these statements. Also, this call includes discussions of certain non GAAP financial measures. Please refer to our earnings press release which contains a reconciliation of non GAAP measures to GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB and all comparisons are on a year over year basis. Now I'd like to turn the call over to Kerry for business and strategy updates. Hello everyone and thank you for joining ATRenew's first quarter 2026 earnings conference call. We are pleased to review our operating results and share our latest perspective regarding capability building in the second hand industry this year. At the beginning of the year we maintained and interrupted services during the Chinese New Year holiday, achieving a strong start and delivering accelerated overall growth. In the first quarter, total net revenues reached RMB 6.16 billion, representing an accelerated growth rate of 32.4%. This momentum was primarily driven by 1P product revenue which surged 34.4% year over year while 3P service revenue maintained a healthy 10.4% year over year growth rate. Profitability also improved. Non-GAAP operating profit grew 70.2% year over year to 190 million RMB while the non-GAAP operating profit margin expanded by 69 basis points to 3.16%. Amid overall revenue and scale expansion, we continue to advance our one PE centric strategy, strengthening our core foundation in the recycling and trading of secondhand consumer electronics to drive greater value for retail users. We optimized our 1P 2C ratio by securing firsthand supply sources and enhancing compliant refurbishment output. On the supply side, we capitalize on industry trends by prioritizing trade in scenarios that deliver superior user experiences while shifting more fulfillment to offline via two door services. In 2026 the government maintained strong support for trade ins and further advanced fiscal and financial coordination. Against this backdrop, AHS Recycle continues to work closely with JD.com to create industry leading trade in solutions providing a seamless one stop trading experience at highly competitive prices to meet diverse consumer needs. As a result, within the JD sourcing channel, trading orders outpaced overall growth with volume share further expanding year over year to about 70%. Throughout the recycling fulfillment process, we actively guide users towards face to face transactions in offline settings. In the first quarter we expanded beyond our network of 2,156 stores across major cities and scaled up our door to door service team to 2,248 professionals bringing our services directly to users doorsteps. This strategy has lifted our face to face fulfillment ratio to 80% fostering deeper connection and trust through AHS Recycle's fulfillment capabilities and brand presence. Looking ahead to peak seasons like major promotional campaigns and flagship device launches, we will further implement flexible workflow solutions to enhance face to face fulfillment timeliness and user experience even during the busiest times. During the first quarter we leveraged our proprietary compliant refurbishment business to add depth to our supply chain. With compliant refurbished Product revenue increasing 76.1% year over year, our on demand refurbishment model was a standout performer growing by roughly 180% in revenue. Our compliant refurbishment capabilities allowed us to provide more quality secondhand devices directly to consumers. In terms of retail channels, we expanded across pipeline selection, our official website and new media channels which drove nearly 150% year over year growth in 1P 2C retail revenue from refurbished devices. March marked a significant breakthrough with monthly retail sales of compliant refurbished products topping 200 million RMB. As a result, 1P 2C accounted for 45.1% of our product revenue in the first quarter of 2026, rising 12.1 percentage points from 33% year on year and 3.4 percentage points from 41.7% quarter over quarter. This strategic pivot toward 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. Regarding high quality products from older generations, specifically M3 and N4 models, we targeted differentiated demand for device generations in the international markets to drive compliant exports. This strategy allows us to steadily expand our global scale and unlock an additional over 4% gross profit margin. Turning to our 3G business, PJT Marketplace also delivered healthy and rapid growth in both scale and revenue, further reinforcing its position as industry infrastructure. As we onboarded more new users, we offered free shipping on the first three orders to those new users on PJT Marketplace. We are also replicating the operational capabilities PJT Marketplace has used in serving large clients and extending them to small and medium sized merchants. By streamlining platform processes, we have lowered the barrier to using the platform and improved both transaction efficiency and convenience, enabling small and medium sized merchants to sell their products at better prices. Leveraging TJT Marketplace robust supply chain capabilities. As the industry's leading B2B platform, we deliver high quality supplies to those merchants while reaching fragmented markets through Douyin's user base. By the end of the first quarter, the number of total registered merchants on TJT Marketplace nearly doubled year over year to almost notably, the number of registered contracted buyers surged by over 120% as an influx of small and micro buyers seeking high quality value for money products came up to the platform. This validates the effective implementation of our PJT Marketplace supply chain strategy to penetrate fragmented markets. Under our 3P business model, Pypi continues to shift toward the consignment model. Under this model, the PYPI team provides merchants with standardized operational services, making the pre owned retail easier for them to manage. Since the second quarter of last year, PYPI consignment has continued to provide merchants with broader access to curated retail channels. In the first quarter, the consignment business maintained a rapid double digit growth, helping Korean owned retail merchants move closer to consumers. Multi category recycling sustained rapid growth in the first quarter with overall recycling GMV up 81.5% year over year. Among them, gold recycling GMV grew 83.3% and secondhand luxury recycling GMV grew 58.8%, both showing solid growth momentum. By the end of March, we launched multi category recycling services across 966 AHS stores, adding nearly 300 stores compared to the end of March last year. Looking ahead, we expect to roll out this capacity to more self operated AHS stores through the rest of the year while also working with more franchisees to build those recycling service capabilities. Alongside the growth of our multi category business, we are also upgrading the locations and layouts of our stores, creating a better fulfillment experience and conveying greater brand value to both new and existing users. In summary, the overall 3T service take rate was 4.92% in the first quarter in line with our expectations. These results validated the effectiveness of the three stage development strategy we previously shared based on 2026 market dynamics. Let me revisit the long term nature of our strategy. Stage one we continue to solidify the healthy growth of our core secondhand consumer electronics business. In our category assessment within the secondhand industry, we identified secondhand consumer electronics as a category with both scale and enormous room for further penetration as national trading policies promote consumption industry upgrades, we are actively positioning ourselves in recycling and trade in scenarios, strengthening the brand recognition of AHS Recycle to serve broader user replacement and upgrade needs, enabling more electronic products to achieve a second life cycle and creating greater value for society. Throughout this process, we are steadfastly building our 1P business capabilities, increasing our use of AI tools, optimizing pricing experiences and end user services and supply chain efficiency while expanding our industry value chain through compliant refurbishment and creating more value to retail users through a higher portion of retail sales. Stage 2 We are strengthening AHS Recycle's position as China's leading recycling brand. We believe that in the secondhand service industry, pricing, trust and convenience are the three core pillars that define the long term user experience and in the industry's long term development path, brand equity holds enduring value beyond trade in scenarios, we maintain independent and prudent brand investments in AHS Recycle across Douyin and Xiaohongshu. Combined with the Revive Initiative, AHS Recycle has partnered with an increasing number of consumer brands to penetrate more mainstream commercial districts from local communities to shopping districts, from campuses to workplaces. By securing these unique scenarios and locations, AHS Recycle encourages more younger users to participate in recycling and grain consumption. Stage 3 We continue to advance breakthroughs in our overseas strategy. The B2B business in overseas markets represents a business model we are familiar with by accumulating reputation and capabilities of export of China source supplies. We continue to explore global version of TJP marketplace and product development while systematically building capabilities to directly serve end consumers. Now let me share a few thoughts on the 2026 market environment. Industry data shows that new device shipments in China have dipped slightly this year by about 4%. However, if we look at the brand mix, Apple and Huawei remain mainstream brands in the pre owned market. Both grew against a broader trend in the new device market supported by their supply chain capabilities and pricing advantages. This has validated the three opportunities we previously identified. First, pricing trademark trends in the pre owned market remain broadly stable and resilient, laying a solid foundation for the long term healthy development for the industry. Second, Apple products, which are closely tied to our core business drivers, have demonstrated market share advantages. Third, brands and platforms continue to place greater emphasize on trading programs. Their increased investment here supports our efficiency in acquiring first hand recycling supplies. Taking these together, we expect to deliver robust and rapid growth this year. By leveraging our efficient automated quality inspection technology and value added supply chain capabilities, we will further unlock economies of scale. Now I'd like to turn the call over to our CFO Rex for financial updates. Good day everyone. I'm pleased to share our financial performance for the first quarter of 2026. Our revenues grew rapidly and profits reached a record high. As China's circular economy continues to advance and trade in programs for consumer electronics remain ongoing, we sustained strong growth momentum in the first quarter. During the quarter we leveraged our direct to customer reflecting scenarios and face to face fulfillment capabilities, enhanced our supply chain and retail capabilities and further strengthened user mind share of the AHS recycle brand. In the first quarter, total revenue exceeded the high end of our guidance increasing by 32.4% to 6.16 billion RMB while non GAAP operating income surged by 70.2% to over 190 million RMB. Before we review the financials in detail, please note that all figures are in RMB and all comparisons are on a year over year basis unless otherwise stated. In the first quarter, total revenue growth was primarily driven by continued growth in net product revenue. Net product revenues increased by 34.4% to 5.73 billion largely attributable to the growth in online sales of pre owned consumer electronics. Net service revenues were 430 million in the first quarter presenting an increase of 10.4%. The increase was largely driven by PJT marketplace and multi category recycling business. The overall take rate of our market sales was 4.92% for the first quarter of 2026. During the quarter, our multicultural recycling business contributed over 83 million RMB in revenue accounting for 19.3% of service revenues. Now let's discuss operating expenses to provide greater clarity on the trends of our actual operating based expenses, we will mainly discuss our non GAAP operating expenses which better reflect how management views our operating results. The reconciliations of GAAP to non GAAP financial results are available in our earnings release and the corresponding form 6K is furnished with the USSE. Merchandise costs increased by 33.2% to 4.82 billion in line with the growth in product sales. Gross profit margin for our 1P business was 15.9% compared with 15.2% in the same period last year. The gross margin improvement in our 1P business. This was primarily driven by high efficiency C2B recycling scenarios, compliant refurbishment capabilities incorporated in our supply chains and an increasingly diversified retail channel mix. This allowed us to increase the proportion of higher margin retail sales with 1P 2C revenue accounting for 45.1% of product revenue in the first quarter of 2026, up from 33% in the same period last year. Fulfillment expenses increased by 22.5% to 520 million. Non GAAP fulfillment expenses increased by 22.7% to 520 million under the non GAAP measures. The increase was mainly driven by higher personnel costs driven by the growth of our business compared to the same period in 2025. Additionally, operating center related census rose along with the increasing volumes of refurbishing and transactions. Non GAAP fulfillment census as a percentage of total revenues decreased to 8.5% from 9.1%. Selling and marketing expenses increased by 17.9% to 490 million. Non GAAP selling and marketing expenses increased by 27% to 490 million, primarily driven by an increase in commission expenses in relation to channel service fees. Non GAAP selling and marketing expenses as a percentage of total revenues decreased to 8% from 8.3%. General and administrative expenses increased by 25.9% to 79.8 million. Non GAAP G&A expenses also increased by 33% to 79 million primarily due to an increase in personnel costs. Non GAAP G&A expenses as a percentage of total revenues remain flat year over year at 1.3%. Research and development expenses increased by 33.5% to 73.4 million. Non GAAP R&D expenses increased by 36.4% to 72.3 million, primarily due to an increase in personnel costs. Non GAAP R and D expenses as a percentage of total revenues increased to 1.2% from 1.1%. As a result, our non GAAP operating income exceeded 119 million in the first quarter of 2026 compared to non GAAP operating income of 110 million in the first quarter of 2025, representing an increase of 70.2% year over year. Non GAAP operating profit margin was 3.1% for the quarter compared to 2.4% in the first quarter of 2025, representing an increase of 69 basis points. As of March 31, 2026. Cash and cash equivalents restricted cash, short term investments and Funds receivable from third party payment service providers Total 1.72 billion. Our financial reserves are sufficient to support reinvestment in business development and shareholder returns. During the first quarter of 2026, we repurchased a total of approximately 0.5 million ADSes for approximately US$2.7 million on June 30, 2025. The Board has authorized a share repurchase program under which the Company may repurchase up to 50 million US of our shares over 12 months. As of March 30, 2026, we repurchased approximately US$11 million under this program. Today, the Board has authorized the extension of the existing share repurchase program for 12 months from June 30, 2026, with key terms unchanged. Now turning to the business outlook for the second quarter of 2026, we anticipate total revenues to be between 6240 million RMB to 6340 million RMB, representing an increase of 25% to 27% year over year. Please note that this forecast only reflects our current and preliminary views on the market and operational conditions which are subject to change. This concludes our prepared remarks. Operator we are now ready to take questions. OPERATOR Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the Call. The first question today comes from Rafael Tse with dbs. Please go ahead. Rex Chen (Chief Financial Officer) I'll recap in English. Congratulations for the brilliant first quarter results. Does management have any updated guidance on revenue and profit growth for the full year of 2026? Thank. You. Thank you for the question. We continue to actively pursue our full year operating targets from a strategic perspective. We will continue to prioritize our 1P business which spans the end to end value chain and enables us to deliver a better user experience and create greater value. Pina. In terms of scale growth, we We've seen the government's continued promotion of consumer electronics trading programs, the expansion of eligible categories and meaningful subsidy support together with dedicated investments by brand manufacturers and platforms including JD.com in trading scenarios. These factors allows us to capitalize on this momentum and secure more first hand supply efficiently and at lower cost. They also reduce our reliance on traffic driven marketing and performance of the target for high value low frequency consumer electronics categories. For our international business, we are advancing at a steady pace in the first quarter. Overseas revenue grew rapidly year over year. This was largely driven by our solid domestic inventory based as our combined export supply chain capabilities gradually strengthened. Meanwhile, we are exploring opportunities to bring more of the capabilities we have built in China to overseas markets. This include recessing fulfillment platform capabilities and export opportunities of automation technologies and among others. We will also remain disciplined in our international expansion investments while actively applying new AI technologies to accelerate business from the incubation stage towards rapid growth. As a forecast, we look forward to update you with more developments from the overseas business during the next earnings conference call. Chai AI t shao AI hong kong. Regarding efficiency improvements, building flexible fulfillment capabilities in our one piece scenarios as well as integrating AI across automated quality inspection, R and D and operations will be key priorities as we strengthen our one piece model in terms of AI enabled productivity, we actively encourage AI learning and knowledge sharing across the organization. We have already made progress in areas such as in store compliance audits and risk control reflecting pricing, algorithm optimization and coding efficiency. Going forward, we will gradually expand these applications laying the groundwork for long term organizational efficiency gains and improved profitability. Taken together, we expect to scale in 2026 at a pace faster than what we expected internally at the beginning of the year, we also expect to achieve meaningful margin improvement. Thank you for the question. The next question comes from Wan Jiao with cicc. Please go. Congratulations for the strong results. I have one question, could you please give us more color about your plan for STAR expansion and to door fulfillment capacity in 2026? Thank you. Bb. Thank you for the question. During the first quarter we reviewed our nationwide store network based on factors such as location quality and traffic performance. We optimized our store footprint by phasing out certain underperforming stores while further improving the efficiency of our high quality stores so they can better and more efficiently capture online traffic. We also maintain focused on store quality by expanding service categories. We continue to increase the proportion of stores capable of providing multi category recycling services. By the end of the first quarter, 841 of our 965 self operated HS stores had enabled multi category service capabilities alongside more user friendly store layouts and upgraded in store experiences, further strengthening AHS recycles brand image and fulfillment experience. We have our AHS velocity at store openings. It follows a leapfrog pattern, opening new stores, solidifying store performance and then further ramping up store openings. We will continue to follow this rhythm and based on our past experience looking at the long term, our goal of reaching 5,000 stores in China remains unchanged. At the same time, we added nearly 502 door service teams nationwide year over year. This helped increase the proportion of face to face fulfillment in key service scenarios including JD's trading services, extend fulfillment coverage, improve service speed and further reinforce our industry leading fulfillment experience. In addition, we are also building up flexible workforce capacity during peak seasons such as major promotional campaigns and flagship device launches. We can quickly activate additional two door capacity to ensure fulfillment experience and quality while meeting face to face demand. Thank you for the question. The next question comes from Brian Lantier with Zach Smallcap. Please go ahead. Good evening and I'll add my congratulations on the strong performance this quarter. I was wondering if you could provide some insight into the growth of inventory in the first quarter. Specifically, is the inventory build mostly due to anticipated demand growth or changes in the product mix? And how should we think about normalized inventory going forward? Quizzically johan, Put the Jagger, You patch it on the song. Thank you for the question. Our recycling and trading business continue to gain user recognition especially during the trading scenarios. As we build stronger user mindshare, we are also enhancing the customer experience by offering offering more attractive pricing against the backdrop of the rising upstream cost for new devices, especially memory price hikes. Secondhand market prices have remained relatively stable compared to past cycles and we have even seen price increases in some products. As a result, we are not in a hurry to reprice our high quality inventory for faster turnover and part of it will be sold in the second quarter as inventory will. In addition, the increase in inventory is consistent with our strategy of strengthening 1P 2C sales. On average, inventory turnover days for 1P 2C retail are longer than those of bulk sales. Therefore, as our revenue mix continues to shift towards one P2C inventory, turnover days may increase to some extent. That said, as PJD Marketplace remains an important piece of of industry infrastructure, it supports our strong pricing capabilities. Therefore, the increase in inventory is not expected to have significant impact on turnover in our core businesses. Thank you for the question. This concludes our question and answer session. I'd like to turn the conference back over to management for closing remarks. OPERATOR Thank you all again for joining us. A replay of today's call will be available on our IR website shortly, followed by a transcript when ready. If you have any additional questions, please feel free to email us at ir@atrenew.com. Have a good day. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.