Chinese pre-owned electronics recycling and trading major ATRenew on Monday extended its quarterly profit for the seventh straight quarter as it gets a tailwind from a nationwide consumer goods trade-in program while its effort to branch out into non-electronics gathers steam.
The operator of China’s top pre-owned consumer electronics transactions and services platform recorded 80.22 million yuan ($11.09 million) in adjusted operating profit in the first quarter, an 80.8 percent jump from a year earlier, according to a filing with the New York Stock Exchange. Its first-quarter revenue grew up 27.1 percent to 3.65 billion yuan, meeting the top end of its guidance.
This brings its operating profit streak to the seventh consecutive quarter on a non-GAAP basis adjusting for spending on employee share incentives, the amortization of intangible assets and deferred costs from acquisitions.
Buoyed by the government-backed trade-in campaign, the company saw the amount of recycled items for trade-ins via online retailer JD.com increase 43 percent on year over the past quarter. ATRenew is JD.com’s exclusive supply chain partner for recycling preowned consumer electronics and facilitating the replacement.
China’s state planner said on Tuesday that 27 localities including the capital city of Beijing have rolled out action plans for equipment upgrades and consumer goods replacement, issuing incentives such as trade-in subsidies and consumption coupons.
As the old-for-new initiative is turning into an important enabler for boosting domestic demand, users have shown growing enthusiasm toward getting involved in the initiative, said Kerry Xuefeng Chen, founder and chairman of ATRenew. He vowed stepped-up efforts to ride the wave of China’s transition toward a circular economy in which recycling and other strategies would be employed to enable sustainable use of natural resources.
Along with the popularity of a low-carbon lifestyle, demand for cost-effective used items has been on the rise. ATRenew’s self-operated business through consumer-oriented retail channels including Paipai on JD.com, live streaming platforms, AHS stores, and official websites registered an over 80 percent gain in sales over the first quarter.
Adding to its expertise in recycling used electronics, the mainstay of ATRenew, a shift toward non-electronics was shown to have gained momentum.
Since ATRenew’s multi-category strategy came on stream in 2022, the platform operator has maintained impressive growth in the amount of recycled non-electronics. Its recycling portfolio has been broadened to include second-hand bags, wristwatches, gold, famed liquor, shoes, and clothing, thanks to its vast network of brick-and-mortar outlets.
SEE ALSO: ATRenew Posts Record Profit as Quality Control Automation Push Drives Efficiency
For the first quarter, the transaction value of its multi-category recycling business amounted to 600 million yuan, quadrupling that for the same period of 2023. In a sign of high user stickiness, 18 percent of the users who have opted for the platform to recycle luxury items completed recycling other stuff within 30 days, per the company.
As measured by user satisfaction, gold recycling, known for transparent prices and reliable transactions, sat atop the platform’s net promoter score rankings.
Additionally, the company booked 280 million yuan in its compliant refurbishing business, accounting for a bigger part of its quarterly revenue.
Its growing focus on automation also proves efficient in lowering expenses. As its automated operation center in Dongguan, a manufacturing hub in South China’s Guangdong Province, becomes in fuller swing, the company’s fulfillment costs as a percentage of operating income by non-GAAP measurement fell 0.8 percentage points year-on-year to 8.3 percent in the first quarter, read ATRenew’s disclosure.
The synergy of revenue magnification and cost control efficiency has apparently resulted in improved profitability.
The company’s adjusted operating profit margin stood at 2.2 percent for the first quarter, up 70 basis points from the year-ago period, according to Chen Chen, chief financial officer of ATRenew.
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