ATRenew Inc. Reports Unaudited Third Quarter 2024 Financial Results

SHANGHAI,Nov. 20,2024 -- ATRenew Inc. ("ATRenew" or the "Company") (NYSE: RERE),a leading technology-driven pre-owned consumer electronics transactions and services platform in China,today announced its unaudited financial results for the three months ended September 30,2024.

Third Quarter 2024 Highlights

Total net revenuesgrew by 24.4% to RMB4,051.2million (US$577.3 million) from RMB3,256.8 million in the third quarter of 2023.

Income from operationswas RMB24.9million (US$3.5 million),compared to a loss from operations of RMB28.1 million in the third quarter of 2023. Adjusted income from operations (non-GAAP)[1] was RMB104.0 million (US$14.8million),compared to RMB73.8 million in the third quarter of 2023.

Number of consumer products transacted[2] was 9.1million compared to 8.2 million in the third quarter of 2023.

Mr. Kerry Xuefeng Chen,Founder,Chairman,and Chief Executive Officer of ATRenew,commented,"We are delighted to report that our total net revenues reached RMB4.05 billion in the third quarter of 2024,representing a robust year-over-year growth of 24.4%. We are particularly encouraged by the widespread adoption of our consumer electronics trade-in services,which provide consumers with a seamless experience and competitive pricing. Our AHS stores maintain their industry-leading position,serving as the preferred destination for users to recycle reusable consumer products and purchase quality-assured,value-for-money pre-owned electronic devices."

Mr. Rex Chen,Chief Financial Officer of ATRenew,added,"The third quarter marked another milestone in our path to enhanced profitability,as we achieved positive GAAP income from operations and our non-GAAP income from operations exceeded RMB100 million for the first time. These results reflect our successful initiatives to optimize operating expenses and the diminishing impact of amortization expenses from historical acquisitions. We also demonstrated our commitment to shareholder returns by repurchasing over US$12 million of our shares during the quarter. Looking ahead,we remain focused on driving operational efficiency and delivering sustainable value to our users and shareholders."

[1].See "Reconciliations of GAAP and Non-GAAP Results" for more information.

[2]."Number of consumer products transacted" represents the number of consumer products distributed to merchantsand consumers through transactions on the Company's PJT Marketplace,Paipai Marketplace and other channels theCompany operates in a given period,prior to returns and cancellations,excluding the number of consumer products collected through AHS Recycle; a single consumer product may be counted more than once according to the number of times it is transacted on PJT Marketplace,Paipai Marketplace and other channels the Company operates through the distribution process to end consumer.

Third Quarter 2024 Financial Results

REVENUE

Total net revenuesincreased by 24.4% to RMB4,256.8 million in the same period of 2023.

Net product revenues increased by 25.6% to RMB3,672.2 million (US$523.3 million) from RMB2,924.0 million in the same period of 2023. The increase was primarily attributable to an increase in the sales of pre-owned consumer electronics both through the Company's online and offline channels.

Net service revenues increased by 13.9% to RMB379.0 million (US$54.0 million),compared to RMB332.8 million in the same period of 2023. This increase was primarily due to an increase in the service revenue generated from PJT Marketplace and multi-category recycling business.

OPERATING COSTS AND EXPENSES

Operating costs and expenses were RMB4,028.1million (US$574.0 million),compared to RMB3,307.5 million in the same period of 2023,representing an increase of 21.8%.

Merchandise costs were RMB3,242.8 million (US$462.1 million),compared to RMB2,611.0 million in the same period of 2023,representing an increase of 24.2%. This was primarily due to the growth in product sales.

Fulfillment expenses were RMB347.3 million (US$49.5 million),compared to RMB287.7 million in the same period of 2023,representing an increase of 20.7%. The increase was primarily due to (i) an increase in personnel costs and logistics expenses as the Company conducted more recycling and transaction activities compared with the same period of 2023,and (ii) an increase in operation center related expenses as the Company expanded its store networks in the third quarter of 2024.

Selling and marketing expenses were RMB315.3 million (US$44.9 million),compared to RMB299.5 million in the same period of 2023,representing an increase of 5.3%. The increase was primarily due to (i) an increase in advertising expenses and promotional campaign related expenses,and (ii) an increase in share-based compensation expenses. The increase was partially offset by a decrease in amortization of intangible assets and deferred cost resulting from assets and business acquisitions as the maturity of some intangible assets and deferred cost in the third quarter of 2023.

General and administrative expenses were RMB69.3 million (US$9.9 million),compared to RMB69.8 million in the same period of 2023,representing a decrease of 0.7%,primarily due to a decrease in share-based compensation expenses. The decrease was partially offset by an increase in other personnel cost.

Technology and content expenses were RMB53.4 million (US$7.6 million),compared to RMB39.4 million in the same period of 2023,representing an increase of 35.5%. The increase was primarily due to an increase in personnel costs in connection with the ongoing maintenance of the Company's operation centers and system.

INCOME (LOSS) FROM OPERATIONS

Income from operations was RMB24.9million (US$3.5 million),compared to a loss from operations of RMB28.1 million in the same period of 2023.

Adjusted income from operations (non-GAAP)was RMB104.0 million (US$14.8million),compared to RMB73.8 million in the same period of 2023.

NET INCOME (LOSS)

Net income was RMB17.9million (US$2.6million),compared to a net loss of RMB44.2 million in the same period of 2023.

Adjusted net income (non-GAAP) was RMB90.1 million (US$12.8 million),compared to RMB47.6 million in the same period of 2023.

BASIC AND DILUTED NET INCOME PER ORDINARY SHARE

Basic and diluted net income per ordinary share were RMB0.11(US$0.02),compared tobasic and diluted net loss of RMB0.27 in the same period of 2023.

Adjusted basic and diluted net income per ordinary share (non-GAAP) were RMB0.56(US$0.08) and RMB0.55(US$0.08),compared to RMB0.30 and RMB0.29 in the same period of 2023.

CASH AND CASH EQUIVALENTS,RESTRICTED CASH,SHORT-TERM INVESTMENTS AND FUNDS RECEIVABLE FROM THIRD PARTY PAYMENT SERVICE PROVIDERS

Cash and cash equivalents,restricted cash,short-term investments and funds receivable from third party payment service providers were RMB2,350.5million(US$334.9million) as of September 30,2024,as compared to RMB2,854.4million as of December 31,2023.

Business Outlook

For the fourth quarter of 2024,the Company currently expects its total revenues to be between RMB4,740.0 million and RMB4,840.0 million,representing an increase of 22.4% to 24.9% year-over-year. This forecast only reflects the Company's current and preliminary views on the market and operational conditions,which are subject to change.

Recent Development

On August 29,ATRenew announced an improvement in its Environmental,Social and Governance (ESG) score as assessed by S&P Global's Corporate Sustainability Assessment in 2024,placing it in the 93rd percentile among its global RTS retailing industry peers. This is primarily attributable to ATRenew's commitment to ESG,particularly greater transparency in its climate strategy,human capital management,and business ethics.

During the third quarter of 2024,ATRenew repurchased a total of approximately 4.9 million ADSs for approximately US$12.1 million under its current share repurchase program which authorizes the Company to repurchase up to US$50 million worth of its shares (including ADSs) through June 27,2025. As of September 30,the Company had repurchased a total of approximately 8.2 million ADSs for approximately US$20.1 million under this share repurchase program.

Conference Call Information

The Company's management will hold a conference call on Wednesday,November 20,2024 at 07:00 A.M. Eastern Time (or 08:00 P.M. Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

1-412-317-6061

United States Toll Free:

1-888-317-6003

Mainland China Toll Free:

4001-206115

Hong Kong Toll Free:

800-963976

Access Code:

3668505

The replay will be accessible through November 27,2024 by dialing the following numbers:

International:

1-412-317-0088

United States Toll Free:

1-877-344-7529

Access Code:

3972162

A live and archived webcast of the conference call will alsobe available at the Company's investor relations website at ir.atrenew.com.

AboutATRenew Inc.

Headquartered in Shanghai,ATRenew Inc. operates a leading technology-driven pre-owned consumer electronics transactions and services platform in China under the brand ATRenew. Since its inception in 2011,ATRenew has been on a mission to give a second life to all idle goods,addressing the environmental impact of pre-owned consumer electronics by facilitating recycling and trade-in services,and distributing the devices to prolong their lifecycle. ATRenew's open platform integrates C2B,B2B,and B2C capabilities to empower its online and offline services. Through its end-to-end coverage of the entire value chain and its proprietary inspection,grading,and pricing technologies,ATRenew sets the standard for China's pre-owned consumer electronics industry. ATRenew is a participant in the United Nations Global Compact,and adheres to its principles-based approach to responsible business.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB7.0176to US$1.00,the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30,2024.

Use of Non-GAAP Financial Measures

The Company also uses certain non-GAAP financial measures in evaluating its business. For example,the Company uses adjusted income from operations,adjusted net income and adjusted net income per ordinary share as supplemental measures to review and assess its financial and operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation,or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Adjusted income from operations is loss from operations excluding the share-based compensation expenses and amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net income is net loss excluding the share-based compensation expenses and amortization of intangible assets and deferred cost resulting from assets and business acquisitions and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net income per ordinary share is adjusted net income attributable to ordinary shareholders divided by weighted average number of shares used in calculating net loss per ordinary share.

The Company presents non-GAAP financial measures because they are used by the Company's management to evaluate the Company's financial and operating performance and formulate business plans. The Company believes that adjusted income from operations and adjusted net income help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that are included in loss from operations and net loss. The Company also believes that the use of non-GAAP financial measures facilitates investors' assessment of the Company's operating performance. The Company believes that adjusted income from operations and adjusted net income provide useful information about the Company's operating results,enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company's operations. The share-based compensation expenses,amortization of intangible assets and deferred cost resulting from assets and business acquisitions and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions have been and may continue to be incurred in the Company's business and is not reflected in the presentation of non-GAAP financial measures. Further,the non-GAAP measures may differ from the non-GAAP measures used by other companies,including peer companies,potentially limiting the comparability of their financial results to the Company's. In light of the foregoing limitations,the non-GAAP financial measures for the period should not be considered in isolation from or as an alternative to income from operations,net income,and net income attributable to ordinary shareholders per share,or other financial measures prepared in accordance with U.S. GAAP.

The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures,which should be considered when evaluating the Company's performance. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures,please see the section of the accompanying tables titled,"Reconciliations of GAAP and Non-GAAP Results."

Safe Harbor Statement

This press release contains statements that may constitute "forward-looking" statements pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to" and similar statements. Among other things,quotations in this announcement,contain forward-looking statements. ATRenew may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"),in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about ATRenew's beliefs,plans and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,including but not limited to the following: ATRenew's strategies; ATRenew's future business development,financial condition and results of operations; ATRenew's ability to maintain its relationship with major strategic investors; its ability to facilitate pre-owned consumer electronics transactions and provide relevant services; its ability to maintain and enhance the recognition and reputation of its brand; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in ATRenew's filings with the SEC. All information provided in this press release is as of the date of this press release,and ATRenew does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

Investor Relations Contact

In China:

ATRenew Inc.

Investor Relations

Email: [email protected]

In the United States:

ICR LLC.

Email: [email protected]

Tel: +1-212-537-0461

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands,except share and per share and otherwise noted)

As of December 31,

As of September 30,

2023

2024

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

1,978,696

1,347,338

191,994

Restricted cash

210,000

132,000

18,810

Short-term investments

410,547

630,123

89,792

Amount due from related parties,net

89,592

218,771

31,175

Inventories

1,017,155

678,026

96,618

Funds receivable from third party payment service

providers

253,107

241,047

34,349

Prepayments and other receivables,net

567,622

754,617

107,532

Total current assets

4,526,719

4,001,922

570,270

Non-current assets:

Long-term investments

467,095

558,221

79,546

Property and equipment,net

148,223

159,236

22,691

Intangible assets,net

270,631

100,496

14,321

Other non-current assets

80,411

149,115

21,249

Total non-current assets

966,360

967,068

137,807

TOTAL ASSETS

5,493,079

4,968,990

708,077

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

349,931

307,291

43,789

Accounts payable

532,293

105,314

15,007

Contract liabilities

119,715

81,571

11,624

Accrued expenses and other current liabilities

465,123

478,145

68,135

Accrued payroll and welfare

146,371

148,945

21,224

Amount due to related parties

78,032

116,255

16,566

Total current liabilities

1,691,465

1,237,521

176,345

Non-current liabilities:

Operating lease liabilities,non-current

22,495

80,366

11,452

Deferred tax liabilities

67,658

42,099

5,999

Total non-current liabilities

90,153

122,465

17,451

TOTAL LIABILITIES

1,781,618

1,359,986

193,796

TOTAL SHAREHOLDERS' EQUITY

3,711,461

3,609,004

514,281

TOTAL LIABILITIES AND SHAREHOLDERS'

EQUITY

5,077

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands,except share and per share and otherwise noted)

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

RMB

RMB

US$

RMB

RMB

US$

Net revenues

Net product revenues

2,923,970

3,672,239

523,290

8,135,824

10,383,813

1,479,682

Net service revenues

332,787

378,999

54,007

956,386

1,095,264

156,074

Operating (expenses) income (1)(2)

Merchandise costs

(2,611,018)

(3,242,843)

(462,101)

(7,188,902)

(9,181,300)

(1,308,325)

Fulfillment expenses

(287,704)

(347,270)

(49,486)

(822,913)

(985,325)

(140,408)

Selling and marketing expenses

(299,491)

(315,293)

(44,929)

(933,835)

(990,607)

(141,160)

General and administrative expenses

(69,826)

(69,302)

(9,875)

(203,794)

(215,671)

(30,733)

Technology and content expenses

(39,430)

(53,396)

(7,609)

(131,905)

(153,391)

(21,858)

Other operating income,net

22,640

1,751

250

32,512

23,082

3,289

Income (loss) from operations

(28,072)

24,885

3,547

(156,627)

(24,135)

(3,439)

Interest expense

(2,186)

(3,615)

(515)

(5,498)

(12,332)

(1,757)

Interest income

11,083

8,686

1,238

24,658

20,611

2,937

Other (loss) income,net

(4,428)

47

7

(6,719)

(41,305)

(5,886)

Income (loss) before income taxes and share

of loss in equity method investments

(23,603)

30,003

4,277

(144,186)

(57,161)

(8,145)

Income tax benefits

10,047

5,949

848

33,607

24,536

3,496

Share of loss in equity method investments

(30,632)

(18,069)

(2,575)

(48,449)

(53,028)

(7,556)

Net income (loss)

(44,188)

17,883

2,550

(159,028)

(85,653)

(12,205)

Net income (loss) per ordinary share:

Basic

(0.27)

0.11

0.02

(0.99)

(0.53)

(0.08)

Diluted

(0.27)

0.11

0.02

(0.99)

(0.53)

(0.08)

Weighted average number of shares used in

calculating net income (loss) per ordinary

share

Basic

161,338,983

161,405,774

161,393,190

162,011,110

162,110

Diluted

161,983

164,258,720

164,720

161,110

Net income (loss)

(44,205)

Foreign currency translation adjustments

(5,676)

(7,093)

(1,011)

15,897

(7,183)

(1,024)

Total comprehensive income (loss)

(49,864)

10,790

1,539

(143,131)

(92,836)

(13,229)

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS) (CONTINUED)

(Amounts in thousands,except share and per share and otherwise noted)

Three months endedSeptember 30,

2023

2024

2023

2024

RMB

RMB

US$

RMB

RMB

US$

(1) Includes share-based compensation

expenses as follows:

Fulfillment expenses

(5,362)

(3,021)

(430)

(17,910)

(15,992)

(2,279)

Selling and marketing expenses

(5,165)

(12,220)

(1,741)

(13,266)

(56,792)

(8,093)

General and administrative expenses

(19,239)

(13,854)

(1,974)

(56,182)

(45,924)

(6,544)

Technology and content expenses

(5,218)

(3,657)

(521)

(15,649)

(13,611)

(1,940)

(2) Includes amortization of intangible assets

and deferred cost resulting from assets and

business acquisitions as follows:

Selling and marketing expenses

(66,412)

(46,263)

(6,592)

(222,337)

(169,154)

(24,104)

Technology and content expenses

(482)

(130)

(19)

(1,446)

(981)

(140)

Reconciliations of GAAP and Non-GAAP Results

(Amounts in thousands,

2023

2024

2023

2024

RMB

RMB

US$

RMB

RMB

US$

Income (loss) from operations

(28,439)

Add:

Share-based compensation

expenses

34,984

32,752

4,666

103,007

132,319

18,856

Amortization of intangible assets

and deferred cost resulting from

assets and business acquisitions

66,894

46,393

6,611

223,783

170,135

24,244

Adjusted income from operations

(non-GAAP)

73,806

104,030

14,824

170,163

278,319

39,661

Net income (loss)

(44,205)

Add:

Share-based compensation

expenses

34,244

Less:

Tax effects of amortization of

intangible assets and deferred cost

resulting from assets and business

acquisitions

(10,047)

(6,972)

(994)

(33,607)

(25,559)

(3,642)

Adjusted net income (non-

GAAP)

47,643

90,056

12,833

134,155

191,242

27,253

Adjusted net income per

ordinary share (non-GAAP):

Basic

0.30

0.56

0.08

0.83

1.18

0.17

Diluted

0.29

0.55

0.08

0.80

1.16

0.17

Weighted average number of

shares used in calculating net

income per ordinary share

Basic

161,110

Diluted

166,112,358

164,720

167,332

165,040,389

165,389