ATRenew's Q2 2025 Earnings Call: Contradictions Emerge in Trade-In Profitability, Growth Expectations, AI Strategy, and Subsidy Impact

Date of Call: August 20, 2025

Financials Results

• Revenue: Total revenue RMB 4.99 billion, up 32.2% YOY; 1P product revenue RMB 4.56 billion, up 34% YOY; 3P service revenue RMB 430 million, up 15.4% YOY
• Gross Margin: 1P gross profit margin 13.2%, compared with 12.1% in Q2 2024; 1P-to-C retail revenue 34.4% of product revenue (vs 28.2% prior year)
• Operating Margin: Non-GAAP operating profit margin 2.4% in Q2 2025, compared to 2.5% in Q2 2024 (down 6 bps); margin stabilized vs prior quarter

Guidance:

• Q3 2025 revenue expected between RMB 5,050 million and RMB 5,150 million (+24.7% to +27.1% YOY)
• Company expresses strong confidence in meeting full-year operational objectives and expects revenue growth to slightly exceed last year
• Management expects scale effects to drive operating margin improvements beginning next year
• Announced 3-year shareholder return program (2025–2027) committing to return ~60% of annual non-GAAP net profit via dividends/repurchases; new repurchase authorization up to USD 50 million

Business Commentary:

* Revenue Growth and Operational Dynamics: - ATRenew Inc reported total revenue of RMB 4.99 billion for Q2 2025, representing a 32.2% year-over-year growth. - The growth was driven by continuous innovation, industry leadership, and the rapidly growing trajectory of the secondhand industry.

• 1P Product Revenue and C2B Recycling:
• Within the total revenue, 1P product revenue grew by 34% year-over-year to RMB 4.56 billion.
• This growth was benefited from national subsidies, e-commerce promotional campaigns, and expanded partnerships with high-quality consumer electronics brands.

• 3P Service Revenue and Take Rate:
• 3P service revenue increased by 15.4% year-over-year to RMB 430 million, with an overall take rate of 5.3%.
• The increase was driven by growth in multi-category recycling services and a consignment model for small- and medium-sized secondhand merchants.

• Fulfillment Capabilities and Store Expansion:
• The company operated 2,092 AHS stores nationwide, including 987 self-operated stores and 1,105 jointly operating stores.

• This expansion enhanced fulfillment capabilities, allowing for nearly 90% of orders to be handled by in-store and to-door teams in Tier 1 to Tier 4 cities.

• ESG Progress and Carbon Reduction Commitments:

• ATRenew released its fifth annual ESG report, committing to reduce Scope 1, 2, and 3 greenhouse gas emission intensity by 35%, 35%, and 50% respectively by 2030.
• This commitment reflects the company's dedication to sustainable practices and reducing its environmental footprint.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "revenue exceeding the high end of our guidance" and "total revenue... representing year-over-year growth of 32.2%"; CFO: "non-GAAP operating income over RMB 120 million" and "we have strong confidence in meeting our full year operational objectives." These statements emphasize beat, profitability and confident outlook.

Q&A:

• Question from Lixin Ju (BofA Securities): Seeing such strong growth momentum in the first half, what are the company's growth expectations for the second half? What are your measures to tackle the high base in Q3 due to last year's home appliances subsidy? Additionally, any updated full-year revenue and profit targets?
  Response: Management: Confident in meeting second-half revenue targets; prioritizing scaling recycling/fulfillment capabilities and building AHS Recycle brand to capture upgrade cycles and subsidy-driven demand, while accepting near-term investment for brand/capability with margin gains expected from scale next year.

• Question from Michael Kim (Zacks Small-Cap Research): From a supply standpoint, any notable trends in trade-in activity via JD.com or offline stores in terms of volumes or product mix? How have subsidies impacted volumes and what inning are we in for subsidy-driven growth?
  Response: Management: Smartphones lead C2B recycling with robust JD trade-in growth; national subsidies have driven replacement demand and double-digit growth in trade-ins—company will expand fulfillment and trade-in scenarios to capture continued subsidy-driven growth.

• Question from Unidentified Analyst (Firm Not Specified): Could you share adjustments to the Apple's official business and overseas business and their financial impact? Also progress on new cooperation channels with brand manufacturers in recycling?
  Response: Management: Apple trade-in has been profitable since March 2024 and will remain a solid revenue and positive-profit contributor; the company is expanding partnerships with domestic brands (Honor, DJI, etc.) and exploring international operations.

Contradiction Point 1

Profitability Expectations for Apple's Trade-in Program

It involves changes in financial expectations, specifically regarding the profitability of Apple's trade-in program, which is an important part of the company's business strategy.

What adjustments were made to Apple's core and international operations and how did they impact financial performance? - Unidentified Analyst

2025Q2: Apple trade-in business has maintained profitability since March 2024. - Xuefeng Chen(CEO)

How effective has the national subsidy been in boosting recycling and trade-in programs? Is your second-hand recycling and resale business maintaining the same growth momentum? - Joyce Ju(Bank of America)

2025Q1: Profit margins improved for Apple's trade-in program. - Rex Chen(CFO)

Contradiction Point 2

Business Growth and Revenue Expectations

It involves changes in financial forecasts, specifically regarding revenue growth expectations, which are critical indicators for investors.

What are the company's growth expectations for the second half of the year? - Lixin Ju(BofA Securities)

2025Q2: ATRenew is confident in realizing revenue growth targets for the second half of the year. - Xuefeng Chen(CEO)

Will you share your plans to capture 2025 growth opportunities based on nationwide consumer electronics trading subsidies? - Joyce Ju(Bank of America)

2024Q4: We will prioritize investment in our core business over the next few years. - Kerry Chen(CEO)

Contradiction Point 3

Focus on AI and Technology

It involves differing statements regarding the company's focus on AI and technology integration, which could impact strategic direction and investment decisions.

Are there notable trends in trade-in activity via JD.com or offline stores, particularly in volumes and product mix? How have subsidies impacted volumes recently, and what inning are we in regarding subsidy-driven growth? - Sung-Chul Kim(Zacks Small-Cap Research)

2025Q2: ATRenew is confident in its ability to capture the market share through technology innovation. - Xuefeng Chen(CEO)

Have you considered using recent AI models like DeepSeek to optimize your business operations? - Wan Jiao(CICC)

2024Q4: ATRenew has focused on integrating AI into its operations since inception. - Kerry Chen(CEO)

Contradiction Point 4

Impact of National Subsidy

It highlights a shift in the company's perspective regarding the impact of national subsidies on trade-in volumes, which is crucial for understanding growth drivers and revenue expectations.

Any notable trends in trade-in activity volumes or product mix through JD.com or offline stores? How have subsidies impacted volumes recently, and what stage is subsidy-driven growth in? - Sung-Chul Kim (Zacks Small-Cap Research)

2025Q2: National subsidies have driven impressive double-digit growth in C2B recycling, particularly in JD's trade-in scenarios. - Xuefeng Chen(CEO)

Could management explain how trade-in subsidies are driving business growth? How do you measure the incremental revenue from trade-ins? What are expectations for trade-in business in Q4 2024 and 2025? - Joyce Ju (Bank of America)

2024Q3: The recycling and trading business through JD.com increased by over 40% in Q3, with the trading business doubling. - Xuefeng Chen Kerry(CEO)

Contradiction Point 5

Apple Trade-In Business Profitability

The company's statements regarding the profitability of the Apple trade-in business differ between quarters, which could impact investor expectations and strategic decisions.

What changes were made to Apple's domestic and international operations and how did they impact financial performance? What progress has been made on new partnerships with brand manufacturers in the recycling sector? - Unidentified Analyst

2025Q2: Apple trade-in business has maintained profitability since March 2024. - Xuefeng Chen(CEO)

Can management elaborate on how trade-in subsidies drive business growth, how the incremental revenue from trade-ins is quantified, and expectations for trade-in business in Q4 2024 and beyond? - Joyce Ju (Bank of America)

2024Q3: Apple trade-in business has achieved nearly RMB 200 million in profits in Q3 2024. - Xuefeng Chen Kerry(CEO)