Operator:

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to ATRenew Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] 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. Xiaoyi Jin: Thank you. Hello, everyone, and welcome to ATRenew's Fourth Quarter and Full Year 2025 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 fourth quarter and full year 2025 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 statement. Some of the information you will hear during the discussion today will consist of forward-looking statements, and I refer you to our safe harbor statement 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 update our assumptions on these statements. Also, the 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. I'd now like to turn the call over to Kerry for business and strategy updates. Xuefeng Chen Kerry: [Interpreted] Hello, everyone, and thank you for joining ATRenew's Fourth Quarter and Full Year 2025 Earnings Conference Call. We are pleased to review our rapidly improving quarterly operating results and share our outlook for 2026 in alignment with our long-term development strategy. I would like to begin by expressing my gratitude to our team for their hard work and dedication throughout 2025. By steadfastly strengthening our core capabilities and enhancing the user experience, we successfully seized upon the growing domestic demand for second-hand consumer electronics recycling and trade-in services, delivering robust growth across the company. In the fourth quarter, we once again achieved strong growth in both revenue and profit. Total net revenues reached RMB 6.25 billion, representing a 29% year-over-year growth. Non-GAAP operating profit reached RMB 180 million, up 38.1% year-over-year. For the full year 2025, total net revenues grew 28.9% year-over-year to RMB 21.05 billion, while non-GAAP operating profit reached RMB 560 million (sic) [ RMB 555 million ] up 35.5% year-over-year. Both revenue and profit exceeded the expectations we set internally at the beginning of the year. Looking closer at our fourth quarter performance. We continue to prioritize our 1P strategy, which drove a robust 30.7% growth in net product revenue. By coordinating with major flagship device launches and the e-commerce promotional campaigns, we effectively carried out recycling and trade-in programs. Throughout this period, we further strengthened our off-line presence and fulfillment capabilities, expanding our face-to-face reach through a network of 2,195 AHS stores and a team of 2,154 to-door service members. Notably, the proportion of offline fulfillment for JD.com's trade-in program increased compared to the first half of the year. Together with JD.com, we made joint efforts across multiple dimensions, including recycling prices, negotiated rates and fulfillment timeliness. Those efforts continue to define the industry best-in-class trade-in practices and reinforce consumer mind share. Furthermore, our to-door fulfillment timeliness improved during both peak and off-peak periods, while customer satisfaction metrics, including compliance rates were further optimized. Leveraging our enhanced front-end supply access, we further utilized our deep supply chain capabilities to deliver a broader range of combined refurbishment products to our retail users. This led to a 90.8% year-over-year surge in combined refurbishment product revenue in the fourth quarter. Notably, our on-demand refurbishment strategy contributed to 32% of refurbishment revenue for phones expanding our revenue virtual inventory, our retail virtual inventory and offering a diverse area of product options for our on-demand customers. Driven by our retail-first strategy, 1P to C retail revenue increased by 88% year-over-year and its share of total product revenues rose 12.7 percentage points year-over-year to a record high of 41.7%. This milestone further validates the ability of our end-to-end circular ecosystem to efficiently source from and resell back to consumers at scale. Moving forward, we will leverage the pricing capabilities developed through 1P to C retail to optimize pricing strategies at the recycling end, creating a more effective dynamic pricing mechanism and in turn, driving growth of our recycling business. As discussed in previous quarters, our overseas business primarily operates under our 1P business model, allowing us to broaden our export channels and connect firsthand supplies with higher-priced global demand. Our self-operated export channels continue to mature steadily, delivering sequential growth for 4 consecutive quarters in 2025, with peak monthly revenue recently reaching RMB 50 million. We have adopted an integrated inventory system for all China sourced supplies. This allows products to undergo a single inspection before being listed and sold across export markets. The continued online transformation of our overseas business has significantly improved inventory management and operational efficiency, establishing a solid foundation for further platformization. Meanwhile, compliance remains central to our approach. We have been invited to participate in developing cross-border standards for secondhand goods and policy consultations in multiple regions. Our adherence to standardized operations, paired with increased efficiency in our cooperations with regulation authorities such as customs ensures a controllable export process time line and continuously optimizes overseas restocking efficiency and capital utilization. Regarding our platform business, service revenue increased by 8.8% year-over-year in the fourth quarter with an overall take rate of 4.79%, in line with expectations. PJT Marketplace maintained a solid pace of growth, while Paipai enhanced the retail experience for merchants during the strategic shift towards the consignment model, our multi-category recycling services once again achieved impressive growth in both scale and revenue. In B2B, PJT Marketplace continued to strengthen merchant services and economic benefits and build innovative capabilities, staying firmly on course with its strategic road map with take rate unchanged compared with the third quarter. First of all, as the largest B2B marketplace in the industry, PJT ensures sales efficiency for merchants. Our guaranteed sales service incentivized merchants to actively list products, driving the platform's warehousing inspection penetration rate to 81%, up 2 percentage points quarter-over-quarter. Additionally, we launched 9 front-end inspection nodes in key communication markets to provide local merchants with easier access to presale support and align inspection standards face-to-face for higher efficiency. We also observed a key trend. PJT value-for-money reputation is gaining traction in many lower-tier markets, especially among college students, fueling strong organic growth. Increasingly, individuals are buying secondhand phones featuring cost to optimize performance on the platform, either directly or through dedicated purchasing agents. Thanks to the surge in retail demand, as of the end of 2025, the total number of registered users on PJT Marketplace exceeded 1.66 million, growing at scale both year-over-year and quarter-over-quarter. In terms of our B2C marketplace business, the POP model faced challenges in 2025. Fortunately, we proactively deployed consignment capabilities to help small- and medium-sized merchants reach consumers directly with convenient and easy-to-use capabilities. Under this model, the Paipai team provides merchants with end-to-end support, including customer service, quality inspection, store operations, traffic management and aftersales services, standardizing the nonstandard pre-owned business. This simplifies operations for secondhand sellers, increases the online supply of pre-owned goods and make it easier for users to discover high-quality items. In the fourth quarter, GMV from consignment increased by 253% year-over-year, accounting for 24% of the total GMV of Paipai Marketplace business, a notable increase in proportion. In driving innovation, our multi-category business, which has been internally incubated since 2022, continues to exceed expectations. In the fourth quarter, user enthusiasm for multi-category recycling surge, driving overall recycling GMV up by 125.7% year-over-year with accelerated growth across all categories. Among them, gold recycling GMV rose by 136.3% year-over-year, benefiting from transparent pricing and convenient service accessibility. Through the optimization of tiered fee structures, the take rate of gold recycling achieved a modest sequential improvement. In addition, recycling services for secondhand luxury products continued with robust growth in the fourth quarter. Thanks to its unique business model and improving recycling experiences, its take rate expanded by 1.2 percentage points quarter-over-quarter, mainly due to increasing demand in the peak season and our improved pricing strategy. As we move into 2026, we are seeing meaningful changes in the external market environment. Recently, the continued rise in memory prices is directly pushing up new device prices, and this trend is creating new opportunities for the pre-owned industry. We see this playing out in 3 ways. First, pre-owned product prices are rising alongside new devices, keeping overall market pricing firm and healthy, which supports the long-term development of the industry. Second, memory price increases actually work more in favor of Apple's market share, and Apple products are the core drivers of our business. Third, trade-in penetration still has significant room to grow. New device prices going up and national subsidies in place, manufacturers and e-commerce players will place even greater emphasizes on trade-in programs and continue to increase their investment. Taking all of this together, our view is that the 2026 market environment is net positive for the pre-owned industry and supports continued steady and healthy industry development. With 2026 underway, we have clear expectations for our full year growth guided by ATRenew's 3-stage development strategy we are carrying forward. Stage 1, we will continue to solidify the healthy growth of our core secondhand consumer electronics business. Against the backdrop of extended government subsidies, rising prices for new devices and a thriving healthy secondhand market, we remain unwavering in our commitment to optimizing the user experience in recycling fulfillment and delivery. We will leverage our integrated sources of supply, further strengthen our underlying pricing capabilities, together with our combined refurbishment capabilities to drive more retail sales. We aim to achieve a higher proportion of direct engagement with consumers at the front of recycling and retailing, forming a closed-loop value chain and creating a self-reinforcing flywheel effect. Furthermore, we will continue to invest in AI-driven pricing operations and quality inspection to further reduce costs and enhance efficiency. Pursuing accelerated growth externally while striving for lower cost and higher efficiency internally is the core driver of our secondhand consumer electronics business. Stage 2, we will continue to strengthen AHS Recycle's position as China's leading recycling brand. Over the past 2 years, we have rapidly built strong new media brand marketing capabilities and cultivated the AHS Recycle brand on 2 user engagement platforms, Douyin and Xiaohongshu. Through these efforts, we have strengthened brand awareness for pre-owned consumer electronics among a broader consumer base, and our luxury goods recycling identity resonated with users who prioritize quality lifestyles. While brand marketing remains a strategically important investment in the early stage of secondhand industry development, we will remain prudent with brand marketing investments and progress at our own pace, given that pre-owned consumer electronics and other high-value categories remain relatively low-frequency businesses. At the same time, we will drive penetration of the AHS Recycle brand into communities nationwide through LOVERE, the ecosystem extension of AHS Recycle. Leveraging more than 50,000 LOVERE recycling kiosks across communities, we expanded partnerships with 245 consumer brands to co-establish a collaborative ecosystem and jointly pioneer green consumption. LOVERE is not only a critical and unique community infrastructure. Furthermore, by leveraging our user operations and strategies tailored for high-frequency community scenarios, we are confident that it will increasingly become a key growth driver for our core business. Stage 3, we will leverage our accumulated strength in China to achieve strategic breakthroughs in international markets. This builds on the deep industry experience along with strong standardization, automation and platform capabilities we have built over the past 15 years in China. Starting from our export business and the capabilities we've built along the way, we expect to improve our overseas platform capabilities to enhance industry efficiency and unlock new avenues for future growth. Furthermore, building on our experience with recycling kiosks, we are actively working with partners to develop localized recycling solutions overseas, bringing the technology and supply chain capabilities we have built at home to global markets. We look forward to bringing more news to you. In conclusion, we remain confident in healthy development of the pre-owned industry and the continued growth of our business in 2026. Now I'd like to turn the call to our CFO, Rex, for financial updates. Chen Chen: [Interpreted] Good day, everyone. I'm pleased to report our fourth quarter and full year results of 2025, marked by both revenue and profits reaching record highs. Over the past year, we effectively leveraged the strategic opportunities arising from China's trade-in programs and industry dynamics. By consistently enhancing fulfillment capabilities, we deliver best-in-class trade-in experiences while solidifying our brand presence as China's leading recycling brand, further reinforcing our market leadership. In the fourth quarter, our total revenue exceeded the high end of our guidance, increasing by 29% to RMB 6.25 billion, while non-GAAP operating income surged by 38.1% to over RMB 180 million. For the full year, revenue grew by 28.9% to RMB 21.05 billion, while non-GAAP operating income rose by 35.5% to nearly RMB 560 million. These results underscore our robust fulfillment capabilities on the recycling side and the growing influence of our brand, which has been pivotal amid the rapid development of China's circular economy. Before taking a detailed look at the financials, please note that all amounts are in RMB and all comparisons are on a year-over-year basis, unless otherwise stated. In the fourth quarter, total revenue growth was primarily driven by continued net product revenue growth. Net product revenues increased by 30.7% to RMB 5.83 billion, largely attributable to the growth in online sales of pre-owned consumer electronics. Net product revenue for the full year reached RMB 19.38 billion, representing a year-over-year increase of 30.6%. Net service revenues were RMB 420 million in the fourth quarter, representing an increase of 8.8%. The increase was largely driven by PJT Marketplace and the multi-category recycling business. The overall take rate of our marketplaces was 4.79% for the fourth quarter of 2025. During the quarter, our multi-category recycling business contributed nearly RMB 80 million of revenue, accounting for 18.8% of service revenues. Net service revenue for the full year reached RMB 1.67 billion, representing an increase of 12.4%. Our multi-category recycling business contributed RMB 250 million, representing an increase of 93.4% year-over-year. This accounted for 14.9% of total service revenues in 2025 compared to 8.6% in 2024. Now let's discuss our operating expenses. To provide greater clarity on the trends of our actual operating base 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 measures are available in our earnings release and the corresponding Form 6-K furnished with the U.S. SEC. In the fourth quarter of 2025, merchandise costs increased by 28.9% to RMB 5.03 billion, in line with the growth in product sales. Gross profit margin for our 1P business was 13.7% compared with 12.5% in the same period last year. The gross margin improvement in our 1P business was primarily driven by high-efficiency C2B recycling scenarios, compliant refurbishment capabilities incorporated in our supply chain and an increasingly diversified retail channel mix. This allowed us to increase the proportion of higher-margin retail sales with 1P to C revenue accounting for 41.7% of product revenue in the fourth quarter of 2025, up from 29% in the same period of last year. 1P to C revenue accounts for 36.8% of product revenue in the full year of 2025, up from 27.2% in 2024. Merchandise costs for the full year increased by 27.6% to RMB 16.7 billion with a 1P gross margin of 13.8% compared to 11.8% in 2024. In the fourth quarter of 2025, fulfillment expenses increased by 21.7% to RMB 480 million. Non-GAAP fulfillment expenses increased by 22.4% to RMB 480 million. Under the non-GAAP measures, the increase was mainly driven by higher personnel and logistics expenses, reflecting a greater volume of recycling and transaction activities compared to the same period in 2024. Additionally, operation-related costs rose as we expanded our store network and enhanced operation center capacity in the fourth quarter of 2025. Non-GAAP fulfillment expenses as a percentage of total revenues decreased to 7.7% from 8.1%. Non-GAAP fulfillment expenses for the full year increased by 28.3% to RMB 1.75 billion, while the non-GAAP fulfillment expenses as a percentage of total revenues remained stable at 8.3%. In the fourth quarter of 2025, selling and marketing expenses increased by 23.3% to RMB 460 million. Non-GAAP selling and marketing expenses increased by 44.1% to RMB 460 million. The increase was primarily driven by an increase in commission expenses associated with channel service fees. As a result, our non-GAAP selling and marketing expenses as a percentage of total revenues increased to 7.4% from 6.6%. Non-GAAP selling and marketing expenses for the full year increased by 47.3% to RMB 1.6 billion, while non-GAAP selling and marketing expenses as a percentage of total revenues increased to 7.6% from 6.6%. In the fourth quarter of 2025, general and administrative expenses decreased by 34.1% to RMB 60 million. Non-GAAP G&A expenses also decreased by 25.6% to RMB 57.6 million, primarily due to a decrease in personnel costs. Non-GAAP G&A expenses as a percentage of total revenue decreased to 0.9% from 1.6%. Non-GAAP G&A expenses increased by 4.1% to RMB 216 million, while non-GAAP G&A expenses as a percentage of total revenues decreased to 1.2% from 1.5% in 2025. In the fourth quarter of 2025, research and development expenses increased by 9.8% to RMB 62.6 million. Non-GAAP R&D expenses increased by 14% to RMB 60.3 million. The increase was primarily driven by elevated personnel expenses. Non-GAAP R&D expenses as a percentage of total revenues decreased to 1% from 1.1%. Non-GAAP R&D expenses for the full year increased by 21.4% to RMB 230 million, while non-GAAP R&D expenses as a percentage of total revenues decreased to 1.1% from 1.2%. As a result, our non-GAAP operating income exceeded RMB 180 million in the fourth quarter of 2025 compared to non-GAAP operating income of RMB 130 million in the fourth quarter of 2024, representing an increase of 38.1%. Non-GAAP operating profit margin was 2.9% for the quarter compared to 2.7% in the fourth quarter of 2024, representing an increase of 19 basis points. Our non-GAAP operating income for the full year was nearly RMB 560 million compared to non-GAAP operating income of RMB 410 million for the full year of 2024, representing an increase of 35.5%. Non-GAAP operating profit margin was 2.6% in 2025 compared to 2.5% in 2024, representing an increase of 13 basis points. During the fourth quarter of 2025, we repurchased a total of approximately 1.3 million ADSs for approximately USD 5.8 million. Today, along with our earnings release, we announced the fiscal year 2025 cash dividend in the amount of USD 0.1 per ADS. The total amount is expected to be approximately USD 23.5 million. Now turning to business outlook. For the first quarter of 2026, we anticipate total revenues to be between RMB 5,860 million and RMB 5,960 million, representing an increase of 25.9% to 28.1% 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: [Operator Instructions] The first question today comes from Wan Jiao with CICC. Wan Jiao: [Interpreted] Congratulations for the strong quarter. I have one question. During the recent 2 sessions, the government confirmed the scale of national subsidies for consumer trading programs. However, storage prices have been rising for several quarters. And in March, we've seen manufacturers raising more devices prices. How do you view the impact on the pre-owned consumer electronics industry this year? And will you revise your 2026 guidance? Xuefeng Chen Kerry: [Interpreted] I'd like to take the first question. For 2026, the government has extended trading subsidies for mobile phones, tablets and smart watches. Smart glasses have now also been added to the list. In 2025, the trade-in subsidy has been applied to the new device sales, which were priced under RMB 6,000, which we were not eligible to compensate this kind of national subsidy. However, as we were able to capture the upgrade, the need from consumer trading process that we will benefit from the similar process in 2026. For our pre-owned consumer electronics businesses, our role hasn't been changed. We help users monetize their old devices, and we make trade-in hassle free. To be clear, we are not involved -- but with that said, with the broader policy push, including measures insurance subsidies for retail users continues to strengthen public awareness of trade-ins that growing awareness drives momentum that works directly in our favor. In 2025, driven by large-scale AI deployment and applications, the industry began to see memory shortages and significant price increases, putting component cost pressure on new device manufacturers, particularly in smartphones. In 2026, as memory prices rose more rapidly, Android manufacturers had to raise new device prices, while Apple kept its pricing relatively stable. This widening gap has reinforced Apple's position in the preowned market, and we have seen the share of Apple products in our business increase on a sequential basis. More broadly, rising new device prices created both opportunities and challenges. On the one hand, trade-ins are likely to become a higher priority for e-commerce platforms and manufacturers. Certain trade-in scenarios can be combined with national subsidies and by offering more competitive recycling prices, we can serve more users' trade-in needs and drive rapid growth in supply sourcing. On the other hand, competitive pricing and high-quality user experiences have become even more crucial as more consumers adopt the preowned alternatives. On pricing, we remain committed to our retail-first strategy, maintaining our target of retail revenue at 50% of our 1P business. We are exploring using 2C curative sales prices as a benchmark to set more competitive trade-in prices. On experience, our user experience committee established last year will continue to run frequent and rigorous reviews across key satisfactory metrics, ensuring we remain responsive to user feedback and act on it swiftly. Looking ahead to the full year, we expect the growth of our total net revenue to continue outpacing the double-digit growth of the broader industry. Continued scale expansion and disciplined cost control positions us to return margins to an upward trajectory. Operator: The next question comes from [ Rafale Fe ] with [ DBS ]. Unknown Analyst: [Foreign Language] I'll translate in English. May I ask the management what is the store opening target in 2026. Xuefeng Chen Kerry: [Interpreted] Looking back at 2025, we recognized early that national subsidies would accelerate pre-owned industry growth. So we invested decisively in offline fulfillment, expanding our store network and scaling up our 2-door service team. In 2025, we had a net addition of 451 AHS standard stores. Going forward, we -- our priority remains the expansion of our standard stores with consumer electronics as the core. We will also increase the proportion of multi-category recycling services for high-value products across our stores, which will drive higher per store profit contribution. In lower-tier cities, we will continue to grow through local franchisee partners and city partners to jointly develop the pre-owned market, allowing us to extend our store coverage in an asset-light way. Beyond stores, we also built a nationwide to-door service team. Daily order generating headcount grew by over 1,000, effectively expanding our store network with a flexible workforce. This on-demand capacity allowed us to quickly fill the fulfillment gap when trading volumes surged. With both our store network and door team working together, our face-to-face trading fulfillment ratio exceeded 70% and user experience continued to improve. For 2026, we will follow the same approach. We will enhance store quality in high-tier cities, expand our store footprint in lower-tier cities and flexibly adjust our 2-door service team to match seasonal demand. Our AHS stores serves not only as fulfillment locations, but also as important touch points for our brands. Our store network and online traffic need to grow in tandem and reinforce each other. Over the medium to long term, our target of 5,000 stores remains unchanged, but we will adjust the pace of store openings as needed based on online traffic growth and our broader brand strategy. Operator: The next question comes from Brian Lantier with Zacks Small-Cap Research. Brian Lantier: [indiscernible] more color on the long-term improvement trajectory. Chen Chen: [Interpreted] The pre-owned consumer electronics industry has stable fundamentals and a well-established brand landscape. Rising new device prices reinforce our commitment to the 1P retail strategy. And we expect both recycling and retail prices to trend upward. Meanwhile, as higher-margin retail product revenue represents a growing share of our mix, we anticipate gradual 1P gross margin expansion as well. Over the long term, what matters to us is the improvement in our non-GAAP operating margin driven by economies of scale. This plays out in several areas. One comes from our automated quality inspection technology, which can reduce quality inspection costs for order by approximately 30% compared to manual inspection. We continue to refine our automation road map and are scaling these capabilities at our Dongguan and Changzhou operation centers to drive efficiency gains. We are also beginning to deploy automated logistics infrastructure on a smaller scale. Together, these efforts are expected to improve our non-GAAP fulfillment expense ratio. On the selling and marketing side, the industry is still at an early stage. We do not need to -- though we do need to increase our pricing attractiveness with sales vouchers. Over the medium to long term, we plan to maintain disciplined spending in brand marketing to solidify AHS Recycle as a top brand for recycling services in consumers' minds. As the industry matures and brand trust deepens, we see a clear opportunity to improve our selling and marketing expense ratio. Operator: There are no further questions at this time. I'd like to turn the conference back over to management for closing remarks. Xiaoyi Jin: 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, feel free to e-mail us at ir@atrenew.com. Have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]