ATRenew (RERE) Q2 2026 earnings call transcript

I will now turn the call over to the first speaker today, Ms. Jenny Jin, Head of Investor Relations. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to ATRenew's second quarter 2026 earnings conference call. Speaking first today is Kerry 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 second quarter of 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 of our quarterly performance and business strategy, followed by Rex, who will address the financial highlights. Both Kerry and Rex will participate during the Q&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 you to 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 obligation to upgrade our assumptions on the 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 year-over-year basis. I'd now like to turn the call over to Kerry for business and strategy updates.

Thank you for joining ATRenew's second quarter 2026 earnings conference call. We are pleased to review our operating results for the quarter and share our views on industry trends and our strategy. Thank you. In the second quarter, total net revenues exceeded the high end of our guidance, increasing 32.4% year-over-year to 6.61 billion RMB. Our continued focus on 1P has strengthened our end-to-end capabilities and driven rapid growth in product revenue of 35.9% over a year to 6.19 billion RMB. Non-GAAP operating profit grew 70.1% over a year to 210 million RMB, while non-GAAP operating profit margin expanded by 69 basis points over a year to 3.1%. Thank you. The first thing is that the business development of the company's development and the market is more important than the market.

The second change is the market. The second is microeconomic headwinds in consumption and significant growth in demand for high-quality, affordable pre-owned smartphones and other second-hand products. This is clearly reflected in the sustained robust growth of our curated B2C business. The third shift is increasingly strengthening regulation, including taxation and device refurbishment. The fourth change is the market's sales. The fourth shift is the accelerating trend of exporting domestic pre-owned devices. As the penetration rate of trading and recycling programs continues to rise in China, domestic supply is expanding rapidly. China has shifted from a net importer to a net exporter of pre-owned smartphones, establishing a clear industry trend where high-end modules are sold domestically, while mid-to-high-end and low-end modules are exported.

With that, let us now move to our business updates. In recent years, We have firmly prioritized 1P business because trust and efficiency are critical in the second-hand consumer electronics industry. Our 1P model starts with first-hand supply from C2B channels. We add depth to the value chain through compliant refurbishment, strengthen B2C retail for premium curated products, and leverage B2C retail pricing capabilities to offer better pricing and user experience on the recycling side.

Together, those efforts enhance our end-to-end capabilities across the value chain. Thank you. 此外,叠加2117间爱回收门店,让我们实现远超行业的货源获取能力和用户服务能力。 在5月13日至6月18日的主流大触期间,爱回收手机3C品内的回收额同比增长57%,上门和到店的回收订单量均实现了45%的同比增长。 The overall return of the market and the overall return of the market will be 80% of the users. The users experience will continue to be improved.

On recycling, we capitalized on opportunities as brand, e-commerce platforms, and offline retailers prioritized and invested in trading programs. Leveraging AHS recycles increasingly extensive fulfillment network to enhance the user experience. Trading and recycling demand was strong during the June 18th shopping festival. In response, we expanded our nationwide two-door fulfillment team, including flexible capacity, to nearly 3,000 by the end of June, up sharply from the end of March. Together with our 2,117 AHS source, this gave us strong advantages in sourcing and customer service over industry peers. During the major promotional period from May 13th through June 18th, the recycling value of mobile phones and consumer electronics at AHS Recycle increased 57% year-over-year.

Both two-door and in-store recycling orders grew 45% year-over-year, while face-to-face orders accounted for 80% of recycling orders across all channels. Multiple user experience metrics also continue to improve.

In the supply chain and the market market, the market market will be increased by the ATRenew Inc. Thank you. In the percentage of product revenue, when P2C retail revenue increased 3.6 percentage points sequentially to 48.8%, allowing us to meet user demand better for curative phones, computers, smart devices, and other products. Thank you. To our 3P business, service revenue decreased 4.2% year-over-year in the second quarter. Within 3P business, we maintained our industry-leading position in B2B, while B2C's 3P services faced pressure from merchant activity. In multi-culture resulting, we navigated the headwinds from gold price fluctuations and continued to focus on more refined operations. 具体来看,拍机堂的平台继续推进分散下沉,向区域市场的小币、夫妻老婆店、代陶达人等用户拓展。截止6月末,拍机堂的注册商家总数超过227万人。 In the process of expanding the market, we use the first-time option of the market and the second-time option of the market.

This is a way to reduce the market and the market. In the market, we have a lot of different options on the market, and we use the market for the market. The video is a lot of different options. The market is a lot of different options. This is a good idea. Specifically TJT marketplace continued to expand into fragmented markets reaching more small merchants mom stocks and specialty buyers By the end of June total registered merchants on the platform exceeded 2 million For sellers we offered free shipping on the first three orders and aligned inspection standards up front lowering selling costs and barriers to trial and error for new small merchants For buyers, we launched a PJT-themed campaign on Douyin and other platforms.

Video views rose sharply, driving rapid growth in our specialty buyer model. Together with one-piece minimum quantity ordering, this initiative made it easier for small merchants to start buying on a platform. After their first transaction, buyers gradually become more engaged on the platform through repeat purchases, VIP membership, and participation in the like-new device marketplace, showing consistent improvement in transaction stickiness. Throughout this process of user expansion and support, PJT's 3P warehousing inspection penetration rate reached 84.4% this quarter, up around 11.5% year-over-year, delivering rapid-scale expansion with solid growth in service revenue. Thank you. Thank you. I'm in business grew 22.4% sequentially.

In multi-category recycling services, service realm will maintain the UOA and the UOA. We also chose to give more back to users. Together, these factors led to a 35% year-over-year decline in gold service revenue. During the quarter, we upgraded a select number of AHS stores to luxury-themed stores with improvements to store design and functional areas. Together with more refined tiered pricing and enhanced category-specific service capabilities. Luxury recycling service revenue grew 77.3% year-over-year. Building on those positive results and experience, we plan to open more themed multi-category stores this year, including luxury-themed stores and sports-themed stores. This will give more users a better and more engaging experience when recycling and buying pre-owned products. Thank you. Our long-term strategy has remained focused and consistent.

Here, we would like to reiterate our our three-stage development strategy. Stage one, we continue to solidify the healthy growth of our core second-hand consumer electronics business. In 2026, the smartphone and consumer electronics market has faced substantial price hikes across the upstream supply chain. Brand manufacturers are actively adjusting their product portfolios and placing greater emphasis on trading programs. At the same time, e-commerce platforms are also introducing subsidy programs to support device upgrades. Against this backdrop, we have captured these opportunities through our 1D model. Leveraging our front-end fulfillment capabilities and targeted trading scenarios, we drove reflected growth in our core second-hand consumer electronics business. At the same time, we are strengthening merchant capabilities with a decentralized strategy to penetrate fragmented markets, while leveraging AI-powered automated inspection to reinforce the infrastructure we have built for the industry.

Thank you. In stage two, we are strengthening AHS Recycle's position as China's leading recycling brand. In the pre-owned industry, word of mouth brand names remain scarce. We continue to make a prudent investment in building the AHS Recycle brand. As ATRenew marks its 15th anniversary, we invited Liu Wu to serve as AHS Recycle's global brand ambassador. Through his useful, energetic, stylish, and environmentally conscious image, we encourage users to embrace a simpler lifestyle and choose high-quality pre-owned products. This initiative has generated broad positive feedback and engagement from users. From second-hand consumer electronics recycling to multi-categorized stockings and further into consumer retail, we aim to leverage the ATRs Recycle brand name to provide users with better stockings and purchasing experiences.

The third, the development of international trade is developed by a Chinese-owned economy. The last year, international trade has increased health and health. The last year, international trade has increased 1.2 million dollars. In addition to some strong progress, on 7th of 28, we have the first launched international trade. It has been renewed our international trade. Today's free, we continue to advance breakthroughs in our overseas strategy. Over the past year, our overseas export business has grown rapidly. In June this year, we hit a milestone with $120 million in monthly sales. Building on our solid progress, on July 28th, we held our overseas strategy launch event in Hong Kong and updated our global expansion strategy.

Thank you. We will now turn the call over to management for the ATRenew Inc. Of course, the FOSQA platform needs more time to develop and develop, and we hope to get everyone's support. We also have a new feature of the FOSQA platform. We also have a new feature of the FOSQA platform for the FOSQA platform. I will now turn the call over to management for the EIE.

First, we see a huge pre-owned phone market globally, with a scale of over 100 billion US dollars and Hong Kong, Dubai and Miami as key hubs. As China is changing from a consumer to a supplier of real-owned phones globally, we see a chance to build an international B2B marketplace, leveraging TJT's success domestically. As such, we launched PhoneSquare. It relies on two core trends of our growing 1PX for supply and automated quality inspection technology. We will follow our domestic experience and gradually expand from 1P to 3P supply while establishing global standards. We will also optimize costs and efficiency through automated quality inspections and improve transaction transparency, building a more efficient B2B marketplace than traditional trading platforms, aiming to give pre-owned goods a second life globally.

While exports are growing fast, software still needs time to improve, and we appreciate your patience and support. We also launched our overseas consumer brand, a review named RERE, that is, revalue what you own, renew the way you choose. We will cautiously explore the 2C business model through recycling kiosks and physical stores with a small amount of investment. We will share more updates on our overseas business as appropriate.

In the year of 2020, we will continue to have a two-time market experience in business, marketing and sales, and sales. We look forward to giving users a better experience, more choices, and more value in pre-owned transactions. Now I'd like to turn the call over to our CFO REC for financial updates.

Thank you. Good day, everyone. I'm pleased to share our outstanding financial performance for the second quarter of 2026. Both revenues and profits reached record highs. During the quarter, the ongoing rollout of China's trade-in programs for consumer electronics, together with the June 18th Shopping Festival, further boosted consumer demand for device upgrades and expanded the supply of first-hand devices available for recycling. We explicitly captured these market opportunities, continued to support recycling and trading scenarios, and fully leveraged the synergies between our supply chain and retail capabilities. As a result, we sustained solid growth momentum over the quarter. In the second quarter, total revenue exceeded the high end of our guidance, increasing by 32.4% year-over-year to 6.61 billion RMB, while non-gap operating income surged by 70.1% to over 200 million RMB.

In the details of the financials, please note that all figures are in RMB and all comparisons are on a year-over-year basis unless otherwise stated. Good morning and welcome to the growth in online sales of free consumer electronics The ATRenew Inc. earnings conference call. Service revenues were 410 million in the second quarter, representing a decrease of 4.2%. The decrease was primarily due to the discretionary discounts on service fees provided to merchants during the extended June 18th grant promotion event period. In the trading costs, we will discuss the gap coaching and the gap. In terms of the gap coaching and the gap coaching, please take a look at the 6K report of the net.

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-gap operating expenses, which better reflect how management views our operating results. The reconciliations of GAAP to non-GAAP results are available in our earnings release and the great funding form 6K furnished with the USSEC.

Merchandise costs increased by 31.9% to $5.22 billion in line with the growth in product sales. Growth profit margin for our 1P business was 15.7%, compared with 13.2% in the same period last year. The growth margin improvement in our 1P business, this was primarily driven by high-efficiency C2B resecting 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 1P2C revenue accounting for 48.8% of product revenue in the second quarter of 2026, up from 34.4% in the same period last year.

The Fulfillment Exfences increased by 31.1% to 540 million. Nengap Fulfillment Exfences increased by 30.5% to 530 million. Under the Nangap measures, its increase was finally driven by higher personnel costs, resulting from the growth of our business compared to the same period in 2025, as well as higher logistics expenses in line with the increased product sales. Additionally, operating center-related expenses rose along with the increasing volumes of recycling and transactions. Nangap fulfillment expenses as a percentage of total revenues decreased to 8.1% from 8.2%. Gap selling and marketing expenses increased by 24.8% to 510 million. Non-gap selling and marketing expenses increased by 29.9% to 500 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 7.6% from 7.8%.

GED morning, the management fee increases 23.5% to 9,570,000,000. NGAP管理費用增加 13.6% to 8,530,000,000. The general and administrative expenses increased by 23.5% to 95.7 million. NGAP GNA expenses also increased by 13.6% to 85.3 million. Primarily due to an increase in personnel costs. Nangap GNA expenses as a percentage of total revenues decreased to 1.3% from 1.5%. Nangap GNA expenses as a percentage of total revenues decreased to 1.3% from 1.5%. Research and development expenses increased by 23.5% to 77.2 million. Non-GAAP R&D expenses increased by 24.2% to 72.3 million, probably due to an increase in personnel costs. Non-GAAP R&D expenses as a percentage of total revenues decreased to 1.1% from 1.2%. As a result, our non-gap operating income exceeded 200 million in the second quarter of 2026, Compared to Nangap opening income of 120 million in the second quarter of 2025, representing an increase of 70.1% year-over-year increase.

Nangap operating profit margin was 3.1% for the quarter, compared to 2.4% in the second quarter of 2025, representing an increase of 69 basis points.

As of June 30, 2026, cash and cash equivalents restricted cash short-term investments and funds receivable from third-party payment service providers totaled $2.16 billion. Our financial reserves are sufficient to support reinvestment in business development and shareholder returns.

During the second quarter of 2026, we repurchased a total of approximately 1 million ADS for approximately 4.2 million U. S. dollars. On June 30, 2025, the board has authorized a shared repurchase program under which the company may repurchase up to $50 million of our shares over 12 months. The board has authorized the extension of this shared repurchase program for 12 months from June 30, 2026, with key terms and change. As of June 30, 2026, we repurchased approximately 14.8 million U. S. dollars under this program. In the third year's report, we expect the total revenue will be 63.4 billion to 64.4 billion. The total revenue will be 23.1% to 25.1%. The previous report will only be the first step of the market and the market.

We expect to have a change. Now turning to the business outlook, for the third quarter of 2026, We anticipate total revenues to be between 6.34 billion RMB to 6.44 billion RMB, representing an increase of 23.1% to 25.1% year-over-year. Please note that this focus may only reflect 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.

Please repeat your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster.

Thank you for the question. Here, I'd like to reiterate a counterintuitive view. When new devices are selling well, recycling and trading programs are just supplementary value-added services. But when new devices sell softened, trading programs become the most critical and effective promotional tool. Major manufacturers and platforms place greater emphasis on and allocate more resources to trading. This year, against new device sales, headwinds, e-commerce platforms, brand manufacturers, and recyclers have all increased their investments in trading scenarios, making C2B recycling for pre-owned consumer electronics more efficient. With strong sourcing channels and convenient recycling fulfillment, we have built an industry-leading supply base and further strengthened our supply-side advantage in the pre-owned value chain.

This is a great deal of the Q3. The ATRenew Inc. earnings conference call. We monitor this closely. Our third quarter guidance has already factored in the potential impact.

In the second quarter we saw the average price in the average order volume of our 1P business On profitability, we continue to make disciplined investments in fulfillment capabilities and consumer brand marketing in the second quarter. Benefiting from economies of scale and more refined operations, we deliver the expected year-over-year improvement in non-GAAP operating profit margin. Overall, we expect to maintain strong growth in both revenue and profit this year.

Okay, thank you for the question.

Okay, thank you. First, it ensures the premium transaction experience for end users and transcends brand awareness. In addition, the industry's inevitable shift toward greater compliance will further support the development of our 1P business.

In the second quarter, net service revenue decreased by 4.2% year-over-year, mainly due to two factors. First, we increased subsidies for merchants, including logistics fees incentives for new users as CJT Marketplace expanded into more fermented markets.

Second, during the promotional campaign, we provided discounts or waivers on service fees to PayPayPort merchants to boost their transactions. In the future, we will see that with PayGiton's growth of the market, more small-bit can easily enter the big market market market market. Using our digital-compatible and platform-based platform, through a different-stage way of the platform, Looking ahead, we expect that as CJT continues to penetrate lower tier markets, more small-sized merchants will gain easier access to the national pre-owned trading market. By leveraging our quality inspection technology, platform services, and differentiated membership programs, we expect to boost PJTs operational efficiency and grow its platform service revenue in line with the healthy expansion of China's pre-owned consumer electronics and smartphone industry.

For our PyPy D2C business, we are shifting towards 1P curated retail and 3P consignment models, which will affect revenue in the short term. Under the 1P model, we are co-building capabilities with JD. com to meet consumer demand for curated pre-owned products, helping users upgrade their devices with high-quality affordable options. Under the confinement model, Kaipi is continuously exploring ways to support small merchants. We are expanding merchant recruitment, boosting merchant vitality, and providing robust support for their store operations, traffic management, and after-sales services. In our multi-cat recycling services, we are advancing refined operations to reinforce consumer mindshare of the AHS brands through themed stores and differentiated user experiences. We are confident to continue growing faster than broader industry.

That's it for the question. Thank you.

We will now turn the call over to the internet, and we will now turn the call over to the internet. We will now turn into Dubai, and Malaysia, and Malaysia. We will continue to improve the 4Square product and user experience. We will continue to launch the next stage of the customer's service.

The main path of our overseas strategy is D2B, which is complemented by our 2C business. D2B remains the core revenue contributor, accounting for around 90% of our overseas revenue. Our goal is to build Fungsquare into a global version of PJT Marketplace in three years. We will expand our supply and buyers network, bring our automation technologies overseas, and improve our open platform. We already have a mature B2B system in Hong Kong, covering inspection operations and sales. We plan to start building new regional capabilities in Dubai in the second half of this year. PhoneSquare is now officially available in Hong Kong app stores, and we plan to gradually expand into Middle Eastern markets like Dubai and Southeast Asian markets like Malaysia.

We continue to optimize PhoneSquare's functionality and user experience and expect to launch the next phase of our user growth initiative soon.

Great, thank you. In addition, we are cautiously exploring overseas to see opportunities, and the RayRay brand. Whether through RayRay QOX already deployed in Europe or our first RayRay store in Hong Kong, recently opened in Hong Kong, our overseas to-see business is still at an early stage of exploration. We will share further updates as we make progress. Thank you.

Thanks again.

Thank you. This is a very normal work. The reason is that we need to make our new business plan and prepare our new business plan. We have a good job. We will now turn the call over to management for a new business plan. We will see more of the new business plan. To begin with, I'd like to note that AHS team has solid capabilities in innovation and pacing for store operations. There are two factors to consider in making phase store account adjustments. First is the need to solidify our operations after rapid expansion. Accordingly, we have repositioned some poorly located stores and closed some underperforming ones. This is standard business practice. Secondly, we are preparing and accumulating experience for our new store strategy.

Our luxury-themed and sports-themed stores have already seen good data validation. Moving forward, we will adopt a tiered store strategy, upgrading select locations into specialized category-themed stores. You will soon see us rolling out more of these themed stores across different categories. I also want to emphasize that our budget to build store-based fulfillment capabilities remains disciplined, with no incremental investment. We are strengthening these capabilities by reallocating resources within our existing budget. Thank you. The demand for recycling and trading services has been strong this year. We expanded our two-door team to meet higher fulfillment demand in top-tier cities. During the June 18th shopping festival, we used flexible workforce solutions to quickly expand the team to nearly 3,000 people.

After the peak period, the two-door capacity adjusted back down, helping us control front-end operating expenses. We will continue to strengthen our in-store and to-store fulfillment capabilities to provide users with a trusted and convenient experience. Thank you. Thank you. at atrenew. com. Have a good day. Thank you.