{"text":[[{"start":8.56,"text":"The global computing memory shortage is causing headaches for smartphone and PC makers, affecting sales as most are forced to raise prices due to soaring costs. But that pain is playing into the hands of electronics recycler ATRenew Inc. (RERE.US), whose latest earnings report shows it recorded some of its strongest revenue growth in years during the second quarter, as consumers increasingly eschewed new products in favor of trade-ins and lower-cost used ones."}],[{"start":36,"text":"At the same time, ATRenew showed that China’s export machine isn’t just for new products, as it detailed a roadmap for exporting recycled Chinese smartphones and other electronics to the rest of the world. As that effort gains momentum, the company hit a milestone in June when its monthly overseas sales passed the HK$120 million ($15.3 million) mark."}],[{"start":58.88,"text":"ATRenew’s development follows a typical pattern for Chinese companies, which often start in focused product areas before expanding their scope and sales networks, first domestically and later globally. The company was founded in 2011 with an initial focus as a middleman buying smartphones and other electronics for sale to others, mostly merchants. Along the way it discovered it could earn better margins by refurbishing models rather than simply reselling them as-is. It has also found higher margins by selling directly to consumers compared with other merchants, and has been emphasizing that part of the business in recent years."}],[{"start":94.16,"text":"The result has been steady double-digit revenue growth of 20% or more since its listing in 2021, as the company recorded its first quarterly GAAP net profit in 2023 and first quarterly GAAP operating profit a year later. It continued that tradition in the second quarter, reporting its revenue rose 32.4% year-on-year in the period to 6.61 billion yuan ($974 million). The latest figure represented not only a record, but also easily exceeded the company’s previous guidance for revenue of up to 6.34 billion yuan."}],[{"start":128.84,"text":"Within the revenue total, product sales rose 35.9% to 6.19 billion yuan, accounting for 94% of the total, with the remainder coming from services."}],[{"start":137.12,"text":"Much of the strong performance came as ATRenew benefitted from sagging sales for new phones due to soaring memory prices. New smartphone shipments in China fell 4.3% year-on-year in the second quarter to 66 million units, marking a fifth consecutive quarter of declines, according to data tracking firm IDC. That weakness has created “significant growth in demand for high-quality, affordable pre-owned smartphones and other second-hand products,” said ATRenew founder and Chairman Chen Xuefeng, who also uses the English name Kerry."}],[{"start":171.4,"text":"“This year, against new device sales headwinds, e-commerce platforms, brand manufacturers, and recyclers have all increased their investments in trade-in scenarios, making C2B recycling for pre-owned consumer electronics more efficient,” he said. “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.”"}],[{"start":194.64,"text":"ATRenew continued to build up its direct-to-consumer business, which has grown rapidly in recent years and is on track to supply more than half of its product sales in the not-too-distant future. Revenue from the sale of compliant refurbished products rose 87.8% year-on-year during the quarter, lifting direct-to-consumer sales to 48.8% of overall product revenue during the period, up more than 14 percentage points from 34.4% a year earlier."}],[{"start":195.14,"text":"New frontier"}],[{"start":223.16,"text":"But perhaps the most exciting part of the latest report was ATRenew’s plans to develop the international market, as it estimated the overall global second-hand market could be worth over $100 billion in annual sales. The company unveiled its first detailed overseas development roadmap last month, when it opened its first offshore consumer-face store using its global ReRe brand in Hong Kong, and launched its FoneSquare B2B marketplace."}],[{"start":250.18,"text":"On its second-quarter earnings call, Chen said the company’s main international focus will be on FoneSquare, noting that it aims to make such B2B business account for about 90% of its overseas revenue over the long term. He added the company’s goal is to build FoneSquare into the equivalent of PJT Marketplace, its main B2B trading platform for the China market, over the next three years."}],[{"start":271.92,"text":"Chen said the company already has 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 this year,” he said. “FoneSquare 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.”"}],[{"start":297.36,"text":"Back at home, ATRenew’s results showed it continued to operate more profitably through its growing focus on direct-to-consumer sales, which it conducts with help from its large network of physical stores and growing team of door-to-door fulfillment workers. That team reached up to 3,000 people around this year’s annual June 18 shopping festival, up sharply from 2,248 at the end of March. But management added the team’s size has fallen from that peak since then, showing it can easily adjust the number of workers to fit market demand."}],[{"start":330.2,"text":"The company actually reduced its footprint of stores during the quarter, which management pointed out is “standard business practice” after a period of rapid buildup. It also experimented with luxury- and sports-themed stores, as it promotes its non-electronics categories like second hand luxury bags and gold, developed over the last two years. Revenue from that business, which ATRenew calls “multi-category,” grew over 30% in the second quarter, as strong growth for luxury goods offset a drop in gold product sales."}],[{"start":363.06,"text":"As the direct-to-consumer business gained momentum, ATRenew’s gross margin for 1P business rose to 15.7% from 13.2% a year earlier, lifting its overall non-GAAP operating profit margin by 69 basis points year-over-year to 3.1%. The improving margins lifted its adjusted income from operations by 70% year-on-year to 206 million yuan, while its net income rose 78.6% to 129 million yuan, both more than double its revenue growth rate for the period."}],[{"start":396.76,"text":"As a recycling specialist, ATRenew also places strong focus on environment, social and governance (ESG) principles, and highlighted its efforts with the release of its latest ESG report in June. That report showed the company reduced its Scope 1 and Scope 2 emissions intensity by 9.5% in 2025 from the previous year, as it works towards a 2030 target of a 35% reduction in Scope 1 and Scope 2 emission intensity from a 2024 baseline."}],[{"start":433.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788170142_3777.mp3"}