ATRenew (RERE) 22 Nov 222022 Q3 Earnings call transcript

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the ATRenew Incorporated Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will be hosting a question-and-answer session after managements' prepared remarks. Please note today's event is being recorded. the to turn today, first now Mr. will call the over speaker I of Investor Development Company. Ji, Corporate Jeremy Director and Relations the of Please go ahead, sir.

XXXX everyone, ATRenew's Hello, welcome earnings quarter you. conference Thank call. and third to

he we is today from Chen, Founder, CEO; by Chen, Speaking the will After call first followed that, Kerry be CFO. analysts. open Chairman our and and will our questions Rex to

at financial earnings this this XXXX quarter a results IR available release call investor third earlier be The were ir.atrenew.com. Our today. call site, accompanying and slides are also convenience. There our Web released for will your following transcript

Rex Kerry agenda, join session. Rex, today's performance will the and thoughts strategy, will For and of who our highlights. quarterly will share his financial address Q&A by followed the business Kerry Both

statement. the cover me Safe Let Harbor

today of statement to contains non-GAAP management not the will to information of non-GAAP Harbor as statements obligations during and today measures. our on based discussion press refer earnings assumptions this you release. statements GAAP forward-looking refer upgrade assumptions our our of release, earnings that Safe Also, will you take these of includes financial that does statements. of to on certain this Please makes any forward-looking to a on call consist I call ATRenew reconciliation are which in our and the discussions measures. Some hear Any measures

during on and are over this call like Finally, please updates. a for turn now call mentioned I'd comparisons otherwise Kerry business note basis. to conference figures to unless RMB all year-over-year and that in stated, all strategy are the

to to services. and consumer challenges, meet quarter, faced call. our to recycling proactively control remain then welcome their a trustworthy new Responding ATRenew's challenging adjusted teams these and quarter third Hello, convenient conference third and environment, strategies XXXX we for [indiscernible]. strict demand in operational the consumer measures phone macro for demand the everyone, earnings and

non-GAAP the of my quarter. last like adversity. our reached achieved staff the to perseverance the their and operating and As we non-GAAP result, face guidance loss express high-end our to opportunity quarter a of provided the second range a in efforts to gratitude revenues operating to in we this compared take for I'd profit

Let's look at a start by taking revenues. our

power third by in expectations products achieved openings XC significantly the this helps we our During authorized in big poor as self-operated data revenue from billion. over for products growth service and the We condition. year-over-year This of analysis. with in our or of increased pricing our growth our XP increased tighter stronger our to in progress from quarter, a we marketplaces. XX.X% contribution were increasing as The and growth that flattened year-over-year. steady store line was recycling retail by Revenues driven rebounded increase put control business XX.X% revenue RMBX.XX operations, sustainable believe revenues

result, commission rate marketplaces a year. last compared overall with stable same in period the the with third As remaining X.XX% quarter, the of our

efficiency. Turning to

operating reduce our our quarter, continue process fulfillment costs. the by continuing efficiency further to During and improving we increase to inspection

circular nature environment unfavorable RMBXX.X achieve in of counter profit quarter. third headwinds, demonstrates non-GAAP a This continuously effectiveness economy. period declined cost the fulfillment performance loss-making XX and of and basis various and points capability selling initiatives total million. of an to non-GAAP the contrast respectively. to Our facing basis X.X%, market reflect expenses our operating expenses, compared represents In of XXX structure. points decreases our the In again in improve revenue quarter, we These our to and the percentages of and monetization as the second was the last respective marketing This same year. improvements to cyclical the XX.X% of once

flow cash and inventory our improved also We management.

our business inventory as to During retail inventory the days the marking turnover improved resurgence. recovered XP, XX, of the were especially third XC year-on-year impact COVID recycle business a The adverse and our a improvement. management quarter-over-quarter reduced from quarter, we and

the the positive flow. cash activities in operating on of We third inflow operating obtained totaled and have cash with cash billion. resources and comprehensive quarter, reserves As during a at a With continuous to invest operating third we cash areas. of sufficient our development cash strategic RMBX.XX third the consecutive quarter abundant positive hand RMBXXX flow, end the businesses making consolidate the from million quarter, main

Going core keep focuses strategic and our we clear consistent. forward,

earnings continue to previous will our focuses call. commitment four We conference discussed during the the we've as

city-level our to we promote First, continue service integration model. will

to category multi fulfillment we coverage expand continue will service and recycling offering. the the Second, capability of

Third, to through product our continue value-added consumer supplies more we retail our refurbishment. including XP to convert capabilities will of

will efficiency deploy our further to technologies. automation operating we by Lastly, increase continuing

Let's business of our discussing and city-level by our of will implementation foundations start growth strategy, increase integration which solidify the service our penetration the rate. further

of the Tianjin continues of Chengdu. measures electronics category. we business, of support business cities healthy recycling during demand such contributed pandemic operations to quarter core third to During localized front-end growth CXB phone our and offerings, between Complex By market better the city-level control that our have our affected in serve highly of BXB as our strategy integration electronics a able significant and and of mobile the proportion the a our integrating third capabilities quarter, were consumer recycling. service

achieve delightful the rebound However, on a a to also basis, quarter. number in greater last clusters than city a year-over-year second GMV saw among XX city GMV compared growth quarter. XX we clusters

still cluster the recording clusters. a better in The orders year-over-year increased national pilot cities respectively, GMV. clusters basis growth business cities [indiscernible] healthy [indiscernible], average national notably Hubei are outpaced of XX addition, the CXB yearly average the our which we first the In outpaced XX Of cluster, scale expansion a penetration in than two now on through our and growth in our from monitor North rate. basis, rates average year-on-year recycling XX north city national recycling number achieving city while quarterly

it spending was consumer economic increase in As pressure willingness recycle to cities. this some faces the downward cycle, in

appliance recycling of electronic cross cellphones, trading trade support users becomes industry to support and product products new cross first category the shopping we August, the cart main with best-in-class to experiences, the the category can our digital After line mix without and the promoting for checkout the on devices time in deepened and or with and up. end, consumers. both providing In JD improving market in China, other user experience six in unstable trading On strategic when to a JD the XX options to consuming orders. convenient categories the users enjoy sales page Users device in solution [ph], also seamlessly aim upgrade we incorporated trading In home page redirection, upgrade, JD further up page the the for can placing services leading recycling. more trading fully facilitated JD. trading to further app of to ones. on multi thus home scenarios partnership we while function preparation appliances. into of September, we launch its ratings computers, promote the provide for iPhone share the in trading JD's and Leveraging

to more of the our [indiscernible] this brand Secondly, of services value value cover Recycle goal service high expand capabilities recycling we categories. The brand. efforts AHS continue and to is will amplifying

AHS ask in brand and Recycle widely [indiscernible] believe why non-electronic the recycle products recognized industry. You is might from use would unique the recycling consumers? that We

don't for a going and go brand service to offline XX to products This to many What's to years give our when offline, consumers consumer but We needed. AHS online mission building recycling for have reputation second good build many to we have idle may buy options and spent through awareness we Recycle multi consumers echoes for recycling services to devices. reputation embrace stores. a dedicated our strong more, they has And choices further category recycling electronic recycling quality being gaining have goods. new itself as life nationwide all our forward. aim

may gold stores. our core for both local remain and adding designating tiered You recycling category number a storage to system new Having by vintage electronics we reliable stores, consumer we of services convenient stations. services multi-category storefront, fulfillment category as core and capable regional located accommodate a at and our as equipment, launching initiative. recycling this X,XXX June, tiered one started our commercial done bags, consumers, located the with began AHS those those system. At implementing manage facilities which so, we to our such new offer upgrade pre in luxury communities used centers Those have wine. the core branding we're store and Since services to on residual camera washers, this business, destinations electronic while value provide high service recycling recycling hand, staff in wonder and on under and of we training products

with the are of distribution through On abilities our other we inspection hand, constructing partners. capable and collaborations

and to a MFP introduced be an recycling our to [ph] channels or wine partners inspection reliable established gold offering chose chain goods build supply consumer electronics the with jointly supply vintage new which selectively operative on selling and chains users. for for platform wanted example, jointly as the and We quality choice with luxury categories. [ph], we're Take an we and smartphones seeking open an and have for ensure now

pictures simply You check take we product themselves traditional consuming need that user offer structured based method our on online quality lacks multi-category may could by also offer on The standardization. press [indiscernible] AHS quick Why recycling. navigation. experience to Recycle and [indiscernible] quotation. for is relatively differentiated through experience the wonder data, and users to app to requires cumbersome, what is time with only click is The

users for our of are operation, also Another consumer in pricing users sold After in experience sold methods multi saw XX% have difference electronics core rates goods protected their generated with malicious goods category miscommunication came profit improving. AHS User who the physical stronger a of higher. reduce idle already month during an luxury been traditional value through electronic conditions XX% each Recycle stores value we logistics our devices have they and bargaining, XX recycle to is encounter of and high consumers quotation and a transactions recycling price face-to-face of satisfaction and RMBXXX,XXX month showed than stores. store, trust User are mailing which the from RMBXX,XXX business might recycling physical over has luxury of of sense a At in days. extra of the similarities. of profiles conversion months. online products transaction is per AHS product those the more convenient XX of services that and back past at and recycling. who where XX

The refurbishment capabilities profit margin to continue is value expand priority the third along our further and strategic improving chain. value-added

marketplace, devices April. regulation. with process released the leverage Since quality standardize and Then and for with of to the in with compliance is upgrade warranties compliance opinion peoples into in participated to margin distribution. additional allowed development intellectual phones, X%. profit undergoing regarding development. production and of manufacturers and number we Since replacing value-added and confidence. compliance is second official parts collection official regulated PJT with a operating on we preowned aligned or customers in conversations compared our refurbishment provide in components continued polishing so the [indiscernible] contribution expand compliant screens refurbishment. We including guidance refurbished preliminary to and informed of both came for we expectations. electronics previously thrive a have [technical currently keep line the inspections and received, the with in phones our XP The replacing identify foreign of and and strategy difficulty] supply the capacity industry rights third-party the rapid the publication our services refurbishment batteries. be property began and refurbishment the regulations guidelines, protection before certified The After on is We from margin. from to quarter, consumer to suitable and margin to from This mobile This repair and doubled with us boost technology devices to

suitable devices. entire SKUs margin of anticipate further increase tablets Going could the more as forward, in operating to the the of coverage laptops In chain. of and smartphones, be coverage XXXX, strengthen improved The we including value scope. service continue larger our service into selecting a efficiency will and we we

southern We China also refurbishment plan from capacity China. eastern to to expand

with demand goal products to long-term sources stabilized merchants is to services. diversified providing consumers, fulfilling provide supply Our of them high-quality and while by directly

the RERE to our and brand space. profit continue develop will increase refurbed We [indiscernible]

adjustment center invest including of consequently to strategic For and fourth devoted will to our our automation final the of we operating improve officially to and operation focus, continue and inspection Dongguan higher in improvements we was automated Dongguan. in second this transportation Since unmanned aspects, digitalized efficiency, installation of XX% in Thanks and efficiency. is operation operation [ph] put year, our use overall China, the the realized capabilities accuracy trial process technology beginning which use management automated an in It the efficiency Chengdu. inspection, innovative The transport off of many and AGV to efficiency. and than sorting that vehicles. has center in our

have locating quality to quality accuracy next generation capabilities to Automatic capabilities. be loss by to We are device The and further having product efficiency This production our inspection is due necessary process Inspection the matrix our expected improvements the of implemented of reduced of assistance the performance Quality which these respectively automated improved operational operations the is on capacity XX% operation reduced by precision has Dongguan The effect Based approximately. upgraded the XX% scale cost to our of XX%, exceeded the generation. X.X at to our capabilities consolidate capabilities, return and of robotic further inspection inspection for compared and level. the units. previous X-hour System automated center group and to had XX,XXX order, quality

Lastly, believe received sustainable and low sector. confirms capabilities protection, We from a and direct ESG ESG. provide a testament an to rating September Morningstar this sustainable risk a privacy company our to of also product update in contribute year, society service capabilities. a retail We our contributions tax marketing rating strong development, compliance in on risk and management environmental online disclosure, our Sustainalytics value and to to I want risk and corporate the carbon emission in This to ESG as aspects data at changes governance. can and ESG that development with practices It other testament responsible less is greater stands policy security, from regulations.

grants through microenvironment. flexibility Our an we governance as uncertain our more growing navigate responsible ask business

recycling I circular and will development go to way shareholders. we our create As for the consumers China will set the its and we the neutrality on begins for economy peak to value to earnest, best-in-class growth that, carbon that Rex, society the for its and over long-term create confident CFO, over hand financials. in carbon call are With experiences

everyone. Hello,

and will start the spending. We some city-level at to leveraged COVID-related our in prudent high-end that report remained service integration third revenue our though our environment. of our are quarter challenges delighted the was the financial of face our these In Even of operating we guidance. sharing strategy maintained highlights. headwinds, I by

expansion of GMV access we online [indiscernible] comparisons as skill billion, growth. otherwise by a into Please RMBX.X quarter Before retire product rebounding more driven at driven basis, to business we expansion. fourth GMV GMV. on has that look are we sales XXXX. mainly GMV billion, that numbers, note to periodical XP Total marketplace the revenue parameter increased a grew in XX.X% please unless in and reporting XX.X% note growth to by will the Total the RMBX.XX of amounts detailed go net by all to RMB are stated. over both our by revenues and year-over-year a from product sales the been the all year-on-year starting inclined GMV

a providing healthy as also become operating refractive with positive quality experience However, operating cash bigger assured convenient the generally and from and XP where products, keen activities maintain solid users safe, we we growth more incrementally the to of We're less fair a becomes and our business our picture. prioritized of obsessed margin. flow with recycling

products of compliance. removed XP, products, our [indiscernible] marketplaces, from including [indiscernible] refurbished we merchant resources part and with a our titled towards our As some users related tactics, self-sourced XC

million. and of main especially of further and cost securing the attributable efficiencies we quarter operating operating future, with [indiscernible] In This consecutive accurately realize In positive resulted operating marketing have for the [indiscernible] RMBXXX.X quarter will parts activities profit-making to the the leveraging and capture scenarios. effects, effects. was have by to fulfillment flow. from automated cash primarily from XXXX, to [indiscernible] In quarter efficiency, logistics in shopping million, a facilities we non-GAAP with profitability, inspection and terms in third improve of of that scale RMBXX.X continue improved recycling had income another cost us we

the at increased by by RMBX,XXX.X X.X% driven Now offline net channels. RMBXXX.X net revenues increased to primarily Marketplace, financials. product was by electronics in product our volume, a In revenues to let's Net million. Growth total sales increase RMBX,XXX million, in service detailed while and of quarter, million. third sourcing take look the to PJT increased by an revenues XX.X% revenues preowned the marketplace Paipai corresponding consumer and through XX.X%

service transaction to in driven to So of devices primarily in to monetization Marketplace. by XC PJT was growth Growth distribution revenues. and the this refurbished increasing XP, revenues also improvements product of in capabilities contributed compliance volumes increases

marketplaces further So, users and base comfortable by commission based overall, trust commission were on change the optimized X.XX%. to as rate operational established of merchant stickiness. down our user cutting to became we more We strategy fees the

operating to actual expenses. on Next, turning clarity to provide the in trends based our operating greater expenses our

non-GAAP for line We our RMBXXX.X with increased reflect third of costs Group are our will by XX.X% with and Form furnished by the Gross XP how our XX.X% to level was product in expenses, margin X.X% results XP view X-K business was RMBX,XXX.X reconciliations of better non-GAAP also available This SEC. at Fulfillment release operations. sales the was the revenues. growth increased quarter. management million. million. to GAAP XX.X%. earnings the in our Gross discuss which the expenses margin results operating of the and Merchandise in The corresponding

sales first, an compensation from operation expenses growing expenses, non-GAAP second, expenses Selling by its in the strategy technology as due non-GAAP increase were in the refer cost to, expenses the as in And share-based related Excluding million. center personnel reduced increased PR, last business. million. in connection X.X% RMBXXX was stores of self-operated operation city-level revenue of and same measures, compared in expenses increase to and partially operating fulfillment fulfillment increase by for its store-related increased to to stations. XX.X% which offset as we relation of SBC an second, an and non-GAAP primarily XX% will the the quarter increases second with in prolonged marketing expenses from of XXXX; line the were RMBXXX.X with server XXX optimized which consumer expenses, in AH to total cost which decrease the year. with electronics company's to a self-operated the personnel increasing center the period company And XX.X% of technology The percentage upgrade by a and addition

increase XX.X% second, SBC Excluding with assets, XX.X% non-GAAP Under of by increased expenses in and connection company's increases personnel The marketing revenues first intangible same business. non-GAAP marketing total marketing the an were business expenses of expenses in from the And and in and to in related the RMBXX.X expenses a million. amortization to the as by non-GAAP selling XX.X% last G&A measures, year. period decreased to to with development. X.X% the primarily percentage due increased growing selling cost increase expenses million. RMBXXX.X

increased a revenues the compared expenses million. expenses, to by percentage the non-GAAP service growing The by same of to an XX.X% SBC second, expenses from to content RMBXX.X in business; increase due G&A company's primarily to increase last in decreased Technology expenses costs G&A slightly million, RMBXX.X increased in XX.X% X.X% professional and with non-GAAP Excluding personnel connection X.X% an with first and year. fees. period as total

in development. technology the assets, decreased in to of in amortization change intangible Excluding and expenses adjustment due relation company’s with measures, and Under to personnel SBC by non-GAAP was content million. primarily to its the expenses the RMBXX.X cost research decrease XX% spending non-GAAP and

same total So revenues technology last X% with expenses in X.X% and was a year. the period as content compared of non-GAAP percentage

activities non-GAAP X.X% was negative again, totaled in third which margin As a our a had X.X% quarter in period quarter last compared was the the RMBXXX.X income of RMBXX.X same operating during result, this once operating inflow cash XXXX. Non-GAAP And million. from million year. operating we with

and As investments of cash payment third-party receivable equivalents, totaled XXXX, short-term cash September providers XX, RMBX.XX service and funds billion. from

growth sustainable cash on outlook. safeguards a hand sufficient So

December XX, the confidence strong solid we in XXXX recap, fundamentals out million momentum. share and management's a US$XXX announced a of program As repurchase growth on company's

XXXX, During of for in million the of the we third US$X. total market quarter consideration repurchased a open ADSs million. have cash X.X [ph]

Now turning to outlook.

transmissible the its XXXX. views fourth facilities operation total million company's and impose which ready Operator, The concludes activities remarks This on for quarter Omicron of company and the preliminary of merchants today. of current are For change. our transaction take impacts stores expects conditions, the market might are RMBX,XXX our the the variant Thus, revenues RMBX,XXX we in prepared this questions. of adverse the between as to well subject already reflects XXXX, and currently to be as million. to operational and now forecast highly

go Sachs. question [Operator first Please Instructions] [indiscernible] Our comes from Goldman from ahead.

translate solid the categories see for revenue my Congratulations and future there Thank the look with motivation together contribution regarding the And the be growth much the And how in impact the you. from consumption about me pressures, outside revenues how be under the drivers [indiscernible] and future the XP recycle growth line Let values, was part? growth we myself. contributed how the should XP and we question are driver the in that we future how is phone? growth. top will at and the another multi from for also regarding will expecting also, COVID much But contributed down category much from phase. some trading

Okay. for questions. Thank the you

measures being of. in part business to me control XP core as Let third due business Beijing nature recovery the our answer economy is beyond recycling growth Shanghai were growth grew demonstrating XP track affected the second rate the two business factors. to our by quarter. pandemic Notably, business our XP expectations, of Overall, The a of recovered the circular recycling countercyclical a first such after in normal and first. locations, quarter, negatively question during

stores a of essentially as within First, operating control more hours grants our us abundant we offline lifted. measures at This products. standard pandemic supply are

compliance [indiscernible] model to industry, the retailing in a this initiated direct shifting published for effort started the consignment Procuratorate This in a intellectual Second, guidance April rights was electronics strategic model. the of People's XP, focus as the from property launch in we first year. refurbishment following XC an XXXX, our by

Before of products. we not supply guidance, the high-quality did preowned sufficient have of launch this a

strategy marketplaces leveraged we launch of and supply guidance, the merchant capabilities further to their started our such, our was to prioritize the As our to Since partners chain help sell and products. refurbish brings and directly preowned customers. over more value electronics margin sell chain preowned to better consumers. these retail also This additional supply priced high-quality electronics to profit products of and the provides

During the third supply to quarter, RERE to customers. refurbishment we utilized distribute retail our products chain branded refurbed

demonstrated ASC and success increase was Our over in RMBX,XXX. to RMBXX by sales million the [ph]

to In terms merchants high-quality marketplace, growth. of platform business substandard and on business, profitable On took initiative our we quality. supply service strategy and with PJT adjusted we the focus and remove

give addition, rights. we property initiative to scale business we strong and quality retail leaves with maintenance and products On intellectual consumer consignment electronics a power XP control its protection took sales and and customers us at down which to sold proportion In pursue for more provided refurbished and pipeline, third-party This of quality chain. the value consumer better assurance pricing measures will for services. higher the over

strategic this the facing long-term our we efficiency company monthly prioritizing platform, more our at to and development running beneficial as from leaves a challenges with which operating purely company's also the consumption. is to pandemic [indiscernible] business resurgence addition In development, compared optimized

services preowned assured and quality recycling products becoming trustworthy consumers. among increasingly Our are popular

long-term. is the believe business investing greater for growth is growth XP our worth business the XP prospects in demonstrating we of business and Our --

consumer growth business. service capabilities. to store of demand operating other our new recycling recycling hand, the recycling, revenue now our stores, stable from future consumer to an On hand, discuss system and come we This devices X,XXX the of sales. of our it turn development come applied for introducing from growth. extension will an is electronics business this these to multi-category our on services cater tiered will core a readily in the multi-category And of In locations. stream to attempt effort multi-category one Let's recycling

RMBXXX,XXX, this profit XX third service for an GMV the On we across Shanghai stores of piloted average, in During store. located a RMBXX,XXX additional of we Beijing. quarter, each monthly and generated and

across fourth we price to and experience, goods and to expect During improve more ship the further business quarter, will consumer conversion CD in our during share we over refine idle ratio inquiries continue and detailed we our stores core structured across our SKU question. terms China, fourth user database, the breakthroughs in color the recycling for their continue to quarter. quarter, you about fourth have of AHS will including the [Indiscernible] the out. rates, aim XXX multi-category enhance extending we coverage, to Thank

Joyce Instructions] from ahead. Please next Ju Bank question America. comes [Operator from go Our of

Hi. Thank you my for taking question.

Now I will translate myself.

medium China The path to to on question is XX first Double And in COVID expectations? Shopping is, recent long-term more the during recently? you the consumption including please from profitability and margin momentum second color could disruptions the comment and you Festival could impact question us about give

this Users CFO provide business. questions. and [indiscernible] could our the and revenue using recycling When business our This consumer phone across to home of I'll showed the and regular electronics further to JD's year electronics core take unit services the moderate has collaborated growth electronics electronics home product been straightforward. became grand for take promotion This more one and growth. first the Rex with first you Promotions appliances have Thank second. now categories. we the for appliances promotion, and JD new trade-in can trade-in home reduce will traffic scenarios. [indiscernible] the consumer in Leveraging from mobile rate reporting on penetration home trade-in [indiscernible] we stream appliances. economic JD our appliances, in increase JD's burden. steady its diversified preparing

advanced during for product Grand for accounted benefiting further traded of Day XX, appliance the the category the October cross we all hours This devices for sales. consumers consumer demand the orders number our of increased Promotion Grand off service capabilities kicked Promotion. options. Home XX when During JD's the paid to satisfy at trade-in pm Singles XXX% year-on-year. their mutually new XX% first customers by trade-in in on used orders X and new JD who the shopping year, economic That’s

frontline product. addition, an profit of [indiscernible] excluding platform we overall personnel In XP operating X% supplemented prioritized expenses, as realized margin and costs refurbished and

terms its smartphone mobile for we in downward account total for maintained When share. Apple Apple our value, XX% XX% pressure, of transaction Mobile growth market has transaction -- overall other In phones brands value. retained phone quarter. new of brands support, were in its Apple's third account of products shipments the whereas our entered industry-leading device

believe Although demand the confident its the and line a capacity, that chain with production up will models demand service more seamless that are rebound that remained iPhone We and Apple resumed can we demand Pro trade-in recently, was consumer supply better under for strong. Promax and we process. of XX pressure fulfill as gradually

For of a the that could declining We need that be our incentive for manufacturers cost-efficient consumers encouraging. products. new to believe in find solutions also shop that [indiscernible], Android consumption, context for incentive trade-in stronger

question drivers to two main are your Over [indiscernible]. Okay, second for to our There to related mid-term long-term the profitability. profitability.

margin, First particular, is to due to in the gross from XP in contribution refurbishment. new improvement initiative the business compliant our

our measures and the quarter able with consumers impacted offline operation XP pricing. meet to gradually stores stable was as Our control less resumed, of business were during pandemic we demand by recycling

[ph] retail condition poor widening provide by margin. satisfy XP allowed compliant batteries the continue better Meanwhile, consignment components -- on and the preowned screens. developing This these products lead product will skills mix, In we business in our to needs quarter, last with and the us the are shift refurbishing we We products to will us mentioned sales. we improve strategic high-quality transfer gross further from as improve that certified has product XP in thus addition the allow to our third-party track model of a commercialize. buyers refurbed quality and recondition to capabilities replacing our reputation to in

improve operating operating efficiency of selling fulfillment This quarter. realized to RMBXX.X continued million. our of the attributable our We has the during expenses. third was and our non-GAAP Secondly, profit optimization expenses to

revenues of the by fulfillment points year-on-year stores the to new to non-GAAP implementation of This offline to percentage and total as mainly percentage for refinements So system expenses X.X a [indiscernible]. the management's structure a due net operating our XX.X%. was decreased in made

we year improvements, to and further would mentioned the anticipate anticipate the as We line the quarter our we profitable in fourth top also and forecasted. income As our achieve refurbishment between billion efficiency [indiscernible] in to operating non-GAAP we a [indiscernible] be cost a on realizing RMBX.XX RMBX.XX above non-GAAP quarter. fourth basis billion

our expect in profitability you. coming to and total escalate we Thank ahead, Looking further quarters. revenues the

there no the at questions are like further closing back would for time, conference remarks. I this As to our to team management hand

all joining shortly, a available for followed again site us. of Web you ready. Thank today's call by on transcript be you. A replay our when will Thank

a any good have feel questions, free directly Have us email additional please you day. ir@atrenew.com. at to If

concluded. now presentation. you for is conference attending today's The Thank

You may disconnect. now