ATRenew (NYSE:RERE) Issues Quarterly Earnings Results, Beats Expectations By $0.01 EPS

Key Points

• ATRenew beat quarterly expectations: EPS was $0.10 versus the $0.09 consensus, while revenue reached $972.82 million against expectations of $930.34 million.
• Record operating performance: Q2 revenue rose 32.4% year over year to CNY 6.61 billion, and non-GAAP operating profit increased 70.1% to CNY 210 million. Growth was led by the higher-margin 1P business and stronger refurbished-product sales.
• Outlook remains positive but mixed: Service revenue declined 4.2% due to promotions and merchant-fee reductions, while management guided for Q3 revenue of CNY 6.34 billion to CNY 6.44 billion. Shares traded down 10.9%, despite analysts maintaining a “Moderate Buy” consensus and a $5.50 target price.

ATRenew (NYSE:RERE - Get Free Report) released its quarterly earnings data on Thursday. The company reported $0.10 earnings per share for the quarter, beating analysts' consensus estimates of $0.09 by $0.01, FiscalAI reports. ATRenew had a net margin of 1.90% and a return on equity of 11.48%. The company had revenue of $972.82 million during the quarter, compared to analysts' expectations of $930.34 million.

Here are the key takeaways from ATRenew's conference call:

• Q2 revenue and profitability reached record highs: revenue rose 32.4% year over year to CNY 6.61 billion, while non-GAAP operating profit increased 70.1% to CNY 210 million and margin expanded 69 basis points to 3.1%.
• The higher-margin 1P business continued to drive growth, with product revenue up 35.9%, 1P refurbished-product revenue up 87.8%, and 1P2C retail reaching 48.8% of product revenue versus 34.4% a year earlier. Management said improved retail mix lifted 1P gross margin to 15.7% from 13.2%.
• Net service revenue declined 4.2% year over year to CNY 410 million, mainly because of merchant subsidies, waived or reduced fees during the 618 promotion, and pressure on B2C platform merchant activity. Management expects Paipai’s shift toward 1P retail and 3P consignment to cause some short-term revenue adjustment.
• Recycling demand benefited from trade-in programs and the 618 shopping festival: mobile phone and consumer-electronics recycling value rose 57% during the promotional period, while orders increased 45%. The company also highlighted a 77.3% increase in luxury recycling service revenue and plans to expand themed stores.
• ATRenew launched the overseas B2B marketplace FoneSquare and consumer brand ReRe, targeting expansion from Hong Kong into Dubai and Southeast Asia, but said the initiatives remain in early development. Q3 revenue guidance is CNY 6.34 billion–CNY 6.44 billion, up 23.1%–25.1% year over year, while management did not provide specific full-year guidance.

ATRenew Trading Down 10.9%

ATRenew stock opened at $4.09 on Friday. ATRenew has a 12-month low of $3.50 and a 12-month high of $6.47. The stock has a market cap of $897.35 million, a P/E ratio of 16.36 and a beta of 0.31. The company has a 50-day moving average price of $4.09 and a 200 day moving average price of $4.69.

Analyst Upgrades and Downgrades

Several analysts have commented on the company. CICC Research assumed coverage on ATRenew in a report on Thursday. They issued an "outperform" rating on the stock. Weiss Ratings reiterated a "hold (c)" rating on shares of ATRenew in a report on Wednesday, July 29th. Wall Street Zen downgraded ATRenew from a "strong-buy" rating to a "buy" rating in a research report on Saturday, July 25th. Finally, UBS Group began coverage on ATRenew in a report on Tuesday, July 21st. They issued a "buy" rating and a $5.50 price objective on the stock. Two research analysts have rated the stock with a Buy rating and one has given a Hold rating to the stock. Based on data from MarketBeat.com, ATRenew currently has an average rating of "Moderate Buy" and a consensus target price of $5.50.

Hedge Funds Weigh In On ATRenew

A number of hedge funds and other institutional investors have recently bought and sold shares of RERE. Wellington Management Group LLP acquired a new position in shares of ATRenew in the fourth quarter worth $23,190,000. Price T Rowe Associates Inc. MD lifted its stake in ATRenew by 60.3% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 3,857,684 shares of the company's stock worth $20,447,000 after purchasing an additional 1,450,764 shares during the last quarter. Arrowstreet Capital Limited Partnership grew its position in shares of ATRenew by 98.8% in the 3rd quarter. Arrowstreet Capital Limited Partnership now owns 2,950,152 shares of the company's stock valued at $13,571,000 after buying an additional 1,466,383 shares during the last quarter. JPMorgan Chase & Co. increased its position in shares of ATRenew by 117.2% during the fourth quarter. JPMorgan Chase & Co. now owns 808,934 shares of the company's stock worth $4,287,000 after purchasing an additional 436,577 shares in the last quarter. Finally, Bank of America Corp DE lifted its stake in ATRenew by 69.6% in the third quarter. Bank of America Corp DE now owns 749,676 shares of the company's stock valued at $3,449,000 after buying an additional 307,679 shares during the last quarter. 19.29% of the stock is currently owned by hedge funds and other institutional investors.

About ATRenew

ATRenew Inc, through its subsidiaries, operates pre-owned consumer electronics transactions and services platform in the People's Republic of China. It primarily sells mobile phones, laptops, tablets, drones, digital cameras; and vintage bags, watches, liquor, gold, and various household goods through its online platforms and offline stores, as well as provides services to third-party merchants to sell the products through its platforms. The company was formerly known as AiHuiShou International Co Ltd.

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