Q4 2023 ATRenew Inc Earnings Call

Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to AT Renew, Inc.'s 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Good morning, and good evening, ladies and gentlemen.

Thank you for standing by and welcome to <unk> renewable Inc's fourth quarter and full year 2023 earnings conference call.

At this time all participants are in a listen only mode. We will be hosting a question and answer session. After management's prepared remarks. Please don't today's event is being recorded.

Operator: We will be hosting a question and answer session after management's prepared remarks. Please note, today's event is being recorded. I will now turn the call over to the first speaker today, Mr. Jeremy Ji, Director of Corporate Development and Investor Relations of the company. Please go ahead, sir.

I will now turn the call over to your to the first speaker today, Mr. Jeremy G director of corporate development and Investor Relations of the company. Please go ahead Sir.

Jeremy Ji: Thank you. Hello, everyone. Welcome to AT Renews' fourth quarter and full year 2023 earnings conference call. Speaking first today is Kerry Chen, our founder, chairman, and CEO. And he'll be followed by Rex Chen, our CFO.

Thank you Hello, everyone and welcome to <unk> fourth quarter and full year 2023 earnings conference call.

Speaking first state is carry Chen our founder Chairman and CEO.

And he'll be followed by Rex Chen our CFO after that we'll open the call to questions from analysts.

Jeremy Ji: After that, we'll open the call to questions from analysts. The fourth quarter and full year 2023 financial results were released earlier today. The earnings release and investor slides accompanying this call are available on 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 on our quarterly performance and business strategy, followed by Rex, who will address the financial highlights. Both Kerry and Rex will participate in the Q&A session.

The fourth quarter and full year 2023 financial results were released earlier today.

The earnings release and the slides accompanying this call are available at our website IR top eight you really you don't call. You will also be a transcript holding this call for your convenience.

For today's agenda Cary will share his thoughts about the quarterly performance and business strategy, followed by Rex who will address the financial highlights.

Let's carry on Rex will join the Q&A session.

Jeremy Ji: Let me cover the state power statement. Some of the information you will hear during our discussion today will consist of forward-looking statements, and I refer you to our safe harbor statements in the earnings price report. Any forward-looking statement that management makes on this call is based on assumptions as of today, and AT Renewal does not have any obligation to upgrade our assumptions on these statements. Also, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings price release, which contains a reconciliation of non-GAAP measures to GAAP measures. Finally, please note that, as I said, all figures mentioned during this conference call are in RMB, and all comparisons are on a year-over-year basis. I now like to turn the call over to Kerry for business and strategy.

Let me cover the Safe Harbor statements.

Some of the information you'll hear during our 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 if you weren't even does not take any obligation to upgrade our assumptions of these statements.

Also this call includes discussion 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 our lifestyle otherwise stated all figures mentioned during this conference call are you RMB and all comparisons on a year over year basis.

I would like to turn the call over to Kerry <unk> business and strategy update.

Xiaoxin Chen: Hello, investors and translators. 2023 Welcome to the fourth quarter of the year and the full year of WanWuXinZheng Group's 2023 sales phone conference. Hello everyone, and welcome to AT Rainier's fourth quarter and full year 2023 earnings conference call.

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Xiaoxin Chen: In 2023, WanWu Xinsheng Group's income and profits skyrocketed, and its second-hand supply chain capacity continued to soar. The quality of the brand has continued to improve over the past year. In terms of income, the total annual income is nearly 1.3 billion yuan, and the growth rate is 31.4%, significantly exceeding the competition of the second-hand industry and the consumer market. Judging from the number of transactions, the total number of transactions in the group will be 32.3 million in 2023.

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Xiaoxin Chen: We adhere to the strategy of self-management, focusing on the better service and user experience of self-management businesses. 5% , We are actively adjusting development strategies to better develop the business ecosystem and service capabilities. 3P platform revenue has increased by 92% to 5.3% Tai Pi 59.659.6, compared to 46.2% year-on-year growth, is a solid foundation for future development. While maintaining a high-speed network, 2023 is also a year of efficiency. Wang WuXinZheng, ZhaGeng ErShou, and GuiYinLianLengLi to provide a more valuable platform. In terms of profit, Nangab's net profit of 2.52 billion yuan was achieved.

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Xiaoxin Chen: The net profit rate of 1.9% of Nangab's net profit was significantly higher than that of early last year. In 2023, AT Renew achieved record-breaking revenues and profits with a continuously strengthened pre-owned supply chain capability and an ongoing increase in brand recognition. Our total revenues reached 13 billion RMB, representing a year-over-year increase of 31.4%, significantly outpacing the growth rates of the second-hand industry and the consumer sector as a whole. I would like to express my gratitude to our colleagues on the front line and in all departments for their hard work.

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In 2023, he joined you achieved record breaking revenue and profits with a continuously strengthen pre owned supply chain capability and our ongoing inquiries and brand recognition our triple revenue equation, there can be RMB, representing a year over year increase of 31, 4% significantly.

Outpacing the growth rates of the secondhand industry and consumer sector has a home.

I'd like to express my gratitude to our colleagues on the frontline in all departments for their hard work.

Xiaoxin Chen: Our total transaction volume in 2023 was 32.3 million units. We adhere to the strategy of prioritizing self-operated businesses that provide better services and user experience. This focus has yielded significant results, with our 1P transaction volume increasing by 50% year-over-year in 2023. Regarding third-party platform businesses, we actively adjusted our development strategy and made efforts to develop the merchant ecosystem and service capabilities. The overall platform take rate increased by 92 basis points to 5.39% in 2023.

Our total transaction volume in 2020 story was subject to appoint three new units, we adhere to the strategy of prioritizing the self operated business.

Our lives better services and user experience.

This focus has yielded significant results with all of our Waikiki transaction volume increasing by 50% year over year in 2023 regarding the third party platform businesses, we actually adjusted our development strategy and make efforts to develop merchant ecosystem and service capabilities.

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Xiaoxin Chen: The number of registered merchants on PJT Marketplace reached 596,000, a strong growth of 46.2% compared to the previous year, which laid solid foundations for future development. 2023 was also a year of consolidation and efficiency. We further solidified our second-hand supply chain capabilities, providing more valuable services on our platforms. At the same time, we were also more disciplined in the pace of our expansion and investment in new initiatives. At the profit level, we achieved a solid non-gap operating profit of 252 million RMB, with a non-gap operating profit margin of 1.9%, exceeding our target for the year. This achievement is the basis to demonstrate our company's stability. We should continue to improve and recover for a long time. Second, stick to the foundation of supply chain capability. 3.

Solid foundation for future development.

Transcon, Here's where he was also a year of validation and efficiency, we further solidified or secondhand supply chain capabilities provide them more valuable services on our platform at the same time. We were also more disciplined at the pace of our expansion and investment in new initiatives.

At the profit level, we achieved solid non-GAAP operating profit of 252 million RMB with a non-GAAP operating profit margin of one 9% exceeding our target for the year.

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Xiaoxin Chen: Increase efficiency of battery and technology drive 4. Maintain the level of attention to new traffic, new opportunities, and consumer demand. Those achievements are firmly grounded in our strategic focus. Firstly, we adhere to effective customer acquisition scenarios on the research front, and secondly, we strengthen robots' supply chain capabilities as a foundation. Thirdly, driving efficiency improvement through technology. And fourthly, being agile in seizing new traffic opportunities and capturing new customer demands. , First, in terms of the coverage of the recycling scene, 2023, 1819AiHuiShou268 At the end of 2023, we covered 268 cities through 1819 AiHuiShou stores., , Increased user penetration; over the past year, AiHuiShou's brand is constantly improving its popularity and credibility among consumers. In particular, the recovery rate in the first and second-tier cities has improved further because of the high-quality brands and retail scenarios of AiHuiShou Intl. and our services, we have accurately locked the mainstream recovery scenarios of users.

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Secondly, strengthening robot supply chain capabilities as a foundation certainly driving efficiency improvements through technology and foresee E. H L in seizing new traffic opportunities and capturing new customer demand demand.

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Xiaoxin Chen: With competitive prices and higher efficiency, we have obtained high-quality first-hand resources and consolidated the supply chain capability of the Group's second-hand mobile phone 3C business. Now, I will walk you through these four strategic perspectives. First, on the recycling front, we continue to successfully execute our customer acquisition strategy by leveraging our precise recycling scenarios. By the end of 2023, we will have a presence in 268 cities in China, reaching consumers through 1,819 AHS stores offline. We have constantly enhanced our service accessibility in high-quality business districts and communities. We further penetrated the market by combining offline stores with online platforms.

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By the end of 'twenty or 'twenty three we have presence in 268 cities in China, reaching consumers through 1819 H S stores offline, we have constantly enhance our service accessibility of high quality business trips and communities. We further penetrated the market by combining all four.

Fourth with online platforms.

Xiaoxin Chen: Over the past year, consumer awareness and trust in our AHS recycling brand have steadily increased, especially in big cities where recycling rates are improving. By leveraging our physical stores, premium service reputation, and retail partner teams, we precisely target users' mainstream recycling scenarios. With competitive prices and higher efficiency, we obtain high-quality sources of trade-on-goods, further strengthening the group's supply chain capability in the main business line. In June 2023, we announced that we had reached an agreement with Apple on China's recycling and exchange of new products. Apple trading's official cooperation.

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With competitive prices and higher efficiency, we obtain high quality sources afraid on food for their fortifying the group's supply chain credibility in the main business lines.

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Xiaoxin Chen: This strategic cooperation aims to meet the needs of users in terms of convenient recycling and lower-cost replacement of new Apple products. Now, this service is already covered by Apple's official website and QiXia flagship store, and it has contributed more than 300 million yuan in revenue to AiHuiShou in the relatively slow fourth quarter of sales. ,, 3C,,,,, 100% June 2023, we were pleased to announce the official collaboration with Apple for its recycling and trading services in mainland China. Our partnership is designed to meet user demands for convenient recycling and low-cost upgrades to brand new iPhone products. This service is now available on the brand's official websites and offline flagship stores.

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During the 20th Chinese rate, we were pleased to announce the official collaboration with alcohol for its worth talking in training and somebody says the mainland China. All the partnership is designed to meet user demand for convenient recycling and low cost upgrades two brand new iPhone products. This service is now available at the brand saw facial what types and offline flagship store.

Xiaoxin Chen: Notably, during the fourth quarter, despite flat iPhone sales, this collaboration contributed 300 million RMB to our revenues. Additionally, in terms of e-commerce partners, we have solidified our collaboration with JD's Mobile and Electronics Retail Department, offering one-stop single-device and multi-device trading services. This caters to JD Swap's user base, who seek more cost-effective shopping options and better recycling experiences when upgrading their gadgets. Overall, the gross recycling value of trading business on JD Channels doubled in 2023. , slogan , not only focusing on mobile phone 3C recovery but also expanding to high-value products such as luxury goods, gold, and old wine. The recovery service is designed to satisfy users' diversified recovery and conversion needs.

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Xiaoxin Chen: In the future, we will also expand the recovery service of low-value goods to promote a second flow of more limited goods. We mainly upgrade through our store experience and IT system to build up the ability to make appointments with platform and professional service providers and to build up the ability to recover on multi-platform. , by taking different routes which are coming from a different place or from home, so that customers' favorite items, which have different tastes and brands, can be revitalized. By extending our multi-category recycling efforts, we have further strengthened the appeal of our recycling scenarios for users. The updated slogan, AiHuiShou – Recycling More for You, reflects our commitment to expanding into additional categories beyond our core focus on consumer electronics.

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By expanding our multi catchword recycling efforts well have further strengthened our pet appeal off our second scenarios for users the updated slogan I'm pretty sure. We're cycling a more fully reflect our commitment to expanding into additional categories beyond our core focus on consumer electronics.

Xiaoxin Chen: We are dedicated to fulfilling the growing demand for recycling and cash-back for high-value categories such as luxury goods, gold, and vintage wines. Looking ahead, we aim to expand to lower-value item recycling while promoting the recycling and reuse of more idle goods. Building multi-category recycling capabilities primarily involves, and permanently involves upgrading store experiences and IT systems while co-establishing fulfillment capabilities with professional service providers. Our fulfillment strategies vary with the residual value of goods. With in-store drop-off and doorstep pickup options, users could circulate more used products with ease.

We are dedicated to fulfilling the growing demand for recycling and cash flow high while it'll catch back for higher while categories, such as luxury goods gold and vintage wife looking ahead, we aim to extend to lower value items were suffering while promoting the recycle and reuse off more idle.

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Xiaoxin Chen: 2023,252 202311,, AiHuiShou's brand is moving into the community, closer to the daily life of users and the cross-border communities and business circles. With the increase in the density of stores with multi-category capacity, we encourage users to cross-recycle between different categories. By the end of 2023, we will have introduced multi-category recycling services in 252 AHS stores. During the year, the GMV for non-electronic products at the recycling front exceeded 1 billion RMB.

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By the end of 'twenty two 'twenty three we have introduced module, that's where he's talking services into 252 H has force. They were the year did you have any for electronic products at the recycling front exceeded 1 billion RMB at the same time, we bring a transfer recycled ground closer to communities and users daily life.

Xiaoxin Chen: At the same time, we bring AHS recycling brands closer to communities and users' daily lives. Our extended presence in communities and commercial areas, coupled with an increasing density of multi-category recycling stores, encourages customers to reuse our services more often. Secondly, at the supply chain management level, we will manage the supply chain with high efficiency to ensure that the recycled goods will be reduced at a lower cost and achieve more accurate pricing and pricing in order to provide products to the demand level in a sustainable and stable way., Chinese language Business revenue reached RMB8.1 billion, 9.4% of the main bank's revenue Business contribution accounted for, Among them, in the fourth quarter of 20 This is mainly due to the smart supply chain system, which more accurately selects machines that are suitable for renovation.

Our extended presence in communities and commercial areas, coupled with our increasing density of multi password resets in the stores encourages customers to use our services more often.

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Xiaoxin Chen: Moving on to our supply chain processing capability, our highly efficient supply chain management ensures recycled goods are inspected at a lower cost while achieving accurate grading and pricing results. This allows a consistent and stable supply of goods.

Moving on to our supply chain processing capability.

Our highly efficient supply chain management ensures recycled goods are in fact, it at a lower cost while achieving accurate reading on pricing right now.

How's the consistent and stable supply of food. We have also improved our operation centers shifting and machining capacity and then after their space utilization efficiency. Furthermore, our main operation centers are equipped with combined with furbished men capabilities.

Xiaoxin Chen: We have also improved our operation centers' shipping and receiving capacity and enhanced their space utilization efficiency. Furthermore, our main operation centers are equipped with compliant refurbishment capabilities. The annual revenue from our self-operated compliant refurbishment business reached 810 million RMB, accounting for 9.4% of the core 1P recycling business segment revenue. Notably, in the fourth quarter of 2023, revenue from the refurbishment business increased by 41.5% compared with the previous year, while the gross profit margin was 1.6 percentage points higher. This is mainly attributable to our intelligent supply chain system, which enables more accurate identification of devices suitable for refurbishment, resulting in a higher number of devices in various conditions being selected for the process., to actively participate in the development and improvement of standards to promote industrial prosperity. In 2023, at the Shenzhen Electronics Industry Association-launched Electronics Product Innovation Industry Professional Committee, WanWuXinSheng, as the main draft unit, participated in the development of electronic products, communication requirements, labels, and information disclosure, quality management, technical specifications, and other group standards. It provides brand manufacturers with knowledge, property rights protection, product information security quality, user rights protection, and other industry references.

Revenue from our self operated and five refurbishment business reached 800, and a one and 10 million RMB I'll call me, a falling knife on 4% of the core one thing we're suffering business segment's revenue, mostly in the fourth quarter of 2023 revenue from the refurbishment business increased by 41, 5% compared with.

The previous year, while the gross profit margin was one six percentage points higher. This is mainly attributable to our intelligence supply chain system, which enables more accurate identification all devices physical phone refurbishment, resulting in a higher number off the wife is embarrassed foundation being selected for the project.

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Xiaoxin Chen: We actively participated in the formulation of industry standards while leveraging our supply chain advantages to drive industry prosperity. In 2023, as a major drafting party, IT Renew played a key role in establishing the Electronic Product Refurbishment Industry Committee initiated by the Shenzhen Electronics Industry Association. We contributed to various group standards, including general requirements for refurbishment, labeling, and information disclosure, quality management, and technical specifications. These standards serve as industry references for intellectual property protection, product data security quality, as well as user rights protection.

We actively participated in the formulation of industry standards, while leveraging our supply chain advantages to drive industry prosperity in 'twenty or 'twenty three as a major of drafting party issuing you played a key role in establishing the electronic product refurbishment industry Committee initiated by the Xinjiang <unk>.

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We contribute it to various groups tenders, including general requirement for refurbishment labeling and information disclosure quality management and technical specialists efficacious.

Extend our survey of industry references for intellectual property protection.

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Xiaoxin Chen: At the sales end of the supply chain, the advantages of B2C and B2B are further expanded. 2CGNV28.8,, PaiPai B2CEP2C, C-end users' demand for high-quality second-hand goods, QC HeGuiFanXin's product created a revenue of 5.6 billion yuan and On distribution, our advantages of an integrated B2C plus B2C platform were further magnified. In 2023, the GMV of the core self-operated retail business totaled 2.88 billion RMB.

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Distribution or advantages of our integrated B to C class B to B platform well further magnified in 2023 do you have any of the poorer self operated retail business totaled $2 88 billion RMB that ratio of our supply chain strengths that I had strengthened its one pizza consumer.

Xiaoxin Chen: Leveraging its supply chain strengths, PiPi has strengthened its 1P2 consumer retail capabilities, meeting consumer demand for High-Quality Pre-Owned Products. To highlight, 1P2 consumer-compliant refurbished product sales contributed 560 million RMB in revenue. In 2023, we will address the issue of small business owners facing difficulties in operating QC e-stores in the second-hand industry., TaiTai B2C,TaiTai B2C,,,,,,,,,,,,,,,, B2CGMV7000, In 2023, we introduced a new confinement model to address the challenges faced by second-hand industry merchants, difficulties in operating two consumer e-commerce stores, and the struggles of small businesses. Through TJT Marketplace, we effectively connect high-end stores with small and medium-sized merchants, thus removing barriers that previously hindered small merchants from integrating their supply into our platform.

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High quality play long products to highlight one piece of consumer combined with furbish product sales contributed 560 million RMB in revenue.

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In 'twenty or 'twenty, three we introduced a new consignment model to address the challenges faced by second hand industry merchant difficulties operation to come from an e-commerce stores and the struggle of small businesses through.

P J T marketplace, where effectively come that have high scores with small and medium sized merchants, that's removing barriers that previously hidden dark small merchants from intuit working their supply into our platform.

Xiaoxin Chen: Merchants now only need to list their products and confirm pricing, while the platform takes care of store operations, sales, customer services, and after-sales support. This initiative significantly lowers the entry barriers for B2C merchants, enriches the platform's supply sources, and ensures a seamless purchasing experience for users. GME for the consignment business sounded up to 70 million RMB in 2023.

Marcia Smile only need to lease their product and confirmed pricing while the platform takes care of the store operations felt customer services and after sales support.

This initiative significantly lowers the entry barriers for people who've seen merchant you Richard the platform supply sources and ensure the seamless purchasing experience for users generally fall into consignment business summed up 717 million RMB in 'twenty three.

Xiaoxin Chen: In the 4th quarter of 2023, the business of the Tai Chi party's B2B platform went into a rebound, mainly due to the warm-up of trading activities. The number of trading companies has increased by 35.3% In addition, we have also adjusted the low-paid back-up warehouse business in history to further reduce costs and improve the comprehensive cost-performance ratio of B2B platforms. Therefore, the annual income of the Pajitang B2B platform has increased by 14.9% The overall cost-performance ratio has increased by 69 points to 6.02% The overall cost-performance ratio has reached 6.17% and significantly increased to 189 base Therefore, we can be proud to say that the business model of Tai Chi Tang's B6B platform has been fully verified. It is an indispensable basic facility in the second-hand industry.

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Xiaoxin Chen: In the fourth quarter of 2023, the overall business of PJT marketplace rebounded, primarily due to a recovery in trading activities and a 35.3% yield increase in the number of active merchant users. Additionally, we took the strategic decision to restructure the low commission rate for their stock business, and this reduced our cost and optimized the overall take rate of the B2B platform. As a result, in the fourth quarter of 2023, service revenues from PJT Marketplace increased by 14.9% year-on-year, and the overall take rate rose by 69 basis points to 6.02%. On an annual basis, its overall take rate reached 6.17%, a significant improvement of 189 basis points compared to the 2022 level.

In the fourth quarter of twentysomething, great. The overall business of I P. J T marketplace rebounded primarily due to a recovery in trading activities and the 35, 3% in your worthy of increase in the number of active merchants users.

Additionally, we took the strategic decision to restructure the low commission rate.

Their stock business.

This reduced our costs and optimize the overall take rate off the type b to B platform.

As a result in the fourth quarter of 2023 service revenues from P. J T marketplace increased by 14, 9% year on year and the overall take rate rose by 69 basis points to 6.0% to 2% on an annual basis, It's all I'll take rate reached 617%.

And if he can't improvement of 489 basis points compared to the 'twenty to 'twenty. Two level. We are proud of the proven business model P. J T marketplace athletes and indispensable him for a structure of the industry.

Xiaoxin Chen: We are proud of the proven business model of PJT Marketplace as it's an indispensable infrastructure of the industry. In the future, we will further develop the ability to open up the supply chain and become the best second-hand supplier in the industry. At the same time, we will provide a platform that is suitable for 2C retail and provide it to our customers in a stable manner.

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Xiaoxin Chen: ,, ?? In an environment where the consumption rate is slowing down and the consumer's spending is more cautious, WanWuXinSheng will succeed together with its partners through the supply of high-quality products with competitive prices and quality assurance. Looking ahead, we will further open up our supply chain advantages and become a high-quality supplier for pre-owned products in the industry. At the same time, we will provide models suitable for B2C retail and steady supply through online e-commerce platforms, live streaming channels, as well as offline mobile phone retail networks and service stations.

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Looking ahead, we will further open up our supply chain advantages and become a high quality supplier for pre owned products in the industry at the same time well provide models suitable for patency rates house and that is supply through our online E. Commerce platform last spring channels as well as offline mobile phone we'd have enough work.

And service stations.

Xiaoxin Chen: In an environment where consumers are more cautious with their expenses, H-Renew aims to leverage its competitive pricing and quality assurance of pre-owned products to foster mutual success with our partners. Third, in terms of technology and efficiency, we continue to promote the application of automated technology. First, we continue to improve the automation accuracy rate and use Matrix 3.0 as a representative automation automation system, which, in the whole year, reduced by 19% their loss in self-caterialization and others. Moreover, the productivity of the two automated warehouses in Huanan and Huadong has been further improved. That's the third point.

In an environment, where consumers are more cautious with their expenses. It's really you aim to languish as competitive pricing and quality assurance all crayon products to foster mutual success with our partners.

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Xiaoxin Chen: ,, wuliu chengben, 2023,Langev8.5% Compared to 2022, 10.9% of the total year achieved significant optimization and further highlighted the scalability efficiency of WanWu Xinsheng Group. Thirdly, in terms of technology and efficiency, we continue to promote the application of automation technology. Firstly, we have enhanced the accuracy of quality inspection. The automated quality inspection system, represented by matrix 3.0, has reduced losses caused by quality inspection errors by 19% throughout the year.

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Firstly in terms of putting a lot of technology and efficiency. We continue to promote with application automation technology. Firstly, we have enhanced the accuracy of quality inspection. The automated quality inspection systems represented biometrics 3.0, that's reduced losses caused by quality and spectrum Arris.

But 19% throughout the year secondly, with all the focus on what Peter says, we improved capacity utilization in our automated operation centers in South and East, China Thirdly through optimizing supply chain management for receiving and delivering goes in different locations, we reduced logistics costs.

Xiaoxin Chen: Secondly, with our focus on one-piece business, we improved capacity utilization in our automated operation centers in South and East China. Thirdly, by optimizing supply chain management for receiving and delivering goods in different locations, we reduced logistics costs. As a result of these initiatives, our net gap fulfillment expense as a percentage of total revenue has continued its downward trend, reaching 8.5% for the full year 2023, significantly down from 10.9% in 2022, and this underscores our dedication to achieving further cost reduction at scale. Besides, we are very happy to see that 3C, In addition to the domestic market, Hong Kong and Japan are also starting to use our self-reliant In October 2023, we further explored overseas cooperation and reached agreement with European partners.

As a result of these initiatives our knockout fulfillment expense as a percentage of total revenue has continued its downward trend, reaching eight 5% for the full year of 2023.

If he can lead off from 10, 9% in 2022, and this underscores our dedication to achieving further cost reduction at scale.

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Xiaoxin Chen: We promoted our self-recycling machine in the Swedish market. This plan meets the needs of international partners in the recycling business of CQB's second-hand electronic products. In the future, we will continue to maintain an exploratory pace and make valuable changes to the world's second-hand electronic products. In the overseas market, we are delighted to see strong interest in our automated technology for Korean-owned consumer electronics. Beyond the mainland China market, our quality inspection technology has been successfully deployed in Hong Kong and Japan. In October 2023, we expanded our global footprint by collaborating with a European partner to bring our one-stop recycling kiosk solution to Sweden. Our one-stop solution effectively addresses the international demand for C2B recycling services.

In the overseas market, we are delighted to see strong interest in our automated technology for Crinone consumer electronics B all.

The mainland China market, our quality inspection technology has been successfully deployed in Hong Kong and Japan.

In November 2023, excuse me October 'twenty to 'twenty, three we expanded our global footprint by collaborating with our European partner to bring our one stop one stop recycling kiln.

Solution to Sweden.

The one stop solution effectively addresses the international demand for CECO be recycling services moving forward, we remain committed to our growth trajectory will continue to explore the global circulation offering your own product.

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Xiaoxin Chen: Moving forward, we remain committed to our growth trajectory and will continue to explore the global circulation of pre-owned products. Looking ahead to the first quarter of 2024 and the whole year, we believe that the circular economy industry, where everything is new, will continue to grow steadily as time goes by. It is not affected by economic fluctuations and technological changes.

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Xiaoxin Chen: We can see that the demand for convenient, high-priced, and trustworthy recycling at the recycling end has been confirmed. At the purchasing end, users will be more considerate of their budget for spending, and the demand for commodity goods will be strengthened. At the end of the transaction, it is not uncommon for a second-hand trader to successfully achieve the transaction demand for a provincial business. At the fourth meeting of the Central Financial Commission in the second half of February this year, the Secretary-General emphasized the promotion of a new round of large-scale equipment updates and consumer goods renewal.

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Xiaoxin Chen: As the leading enterprise in the field, WanWuXinsheng has the opportunity to benefit from this trend and better serve the renewal project of JD and its brands. , We will build a solid business model based on a long-term core strategy to improve the brand user mentality of AiHuiShou and solve the most essential pain points of the user, and jointly explore the business ability of high-quality second-hand products with industry partners. We will gradually realize profits and achieve steady growth in the long-term patient process. Looking ahead to the first quarter and the full year of 2024, we believe that We identified several key trends in the sector. On the recycling front, we see a definite demand for convenient, high-priced, and trustworthy recycling services.

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Okay.

Looking ahead to the first quarter and the full year of 2024, we believe that a T renew operates yeah.

So can the economy that is empowered to economic fluctuations and technological changes.

Several key trends in the sector, although we're toggling from we see a definite demand for convenience high priced and trustworthy recycling services.

I'm, a purchasing and we see a stronger demand for value for money goods from savvy consumers.

Xiaoxin Chen: On the purchasing end, we see a stronger demand for value-for-money goods from savvy consumers. On the fulfillment end, we see an unchanging need from second-hand merchants for efficient and hassle-free trading and logistics solutions. In late February this year, President Xi emphasized the promotion of a new round of large-scale equipment upgrading and consumer goods trade-in. As a leading company in this field, we are strategically positioned to capitalize on this upward trend and better facilitate JD and brand owners' trade-in programs. Once again, it demonstrates that recycling and trade-in are encouraged by national policies as a long-term stable industry with high certainty and low policy risks.

On the fulfillment and we see I'm trying to read from secondhand merchants for efficient and hassle free trading and logistics our logistics solutions.

In late February this year President he emphasized the promotion of a new round of large scale equipment upgrading and consumer foods treating as a leading company in this field. We are strategically positioned to capitalize on this upward trend and bathroom facilitate JD and Brett owners trading program.

Once again, it demonstrates that recycling and trading are encouraged find national policy as a long term stable industry with high certainty and low policy risks going forward well appear to our long term core strategy and fortify our business Foundation well in housing brand awareness for Asia recycled we aim to have.

Xiaoxin Chen: Going forward, we will adhere to our long-term core strategy and fortify our business foundations while enhancing brand awareness for AHS Recycle. We aim to address users' fundamental pain points and collaborate with industry partners to explore the untapped potential of high-quality second-hand products. We will maintain patience in the long run while steadily releasing profits and achieving growth. Last but not least, I would like to add a state-of-the-art honor. In November 2023, Wanwu Xinsheng won the Lutu Society's Global Business Award of 2023, and this voting will determine if the jury will forward a majority or a negative vote.

Rescue is a fundamental pain points and collaborate with industry partners to explore the untapped potential of high quality secondhand products well maintained patients in the long run while steadily releasing profits and we're achieving growth.

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Xiaoxin Chen: This is Wanwu Xinsheng Group's first international stage performance with Archaeology, Schneider Electric, and Baishi Energy. It is also an important recognition by Reuters and professional judges on the innovation and technological development of everything new. We will continue to deepen the circular economy track and drive innovation with technology., Finally, I am delighted to announce an international accolade.

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Finally, I am delighted to announce and international accolade and November 'twenty to 'twenty three it's really it was honored as highly commended either judging panel at Reuters Global business responsibility I'll walk in the circular transition category. This marks a milestone for uranium as it is the first time, we have to shoulder to shoulder.

Xiaoxin Chen: In November 2023, AT Rainier was commended by the judging panel at the Reuters Global Business Responsibility Awards in the Circular Transition category. This marks a milestone for AT Rainier, as it is the first time we have stood shoulder to shoulder with global multinational companies such as Oracle, Schneider Electric, and PepsiCo. The recognition from Reuters and the expert panel is a testament to our innovation and our technological achievements. Moving forward, we will continue to deepen our commitment to the circular economy, driving sustainable industry development through technological innovation. CFO Rex Now I'd like to turn the call over to our CFO Rex for financial updates. Okay, hello everyone.

With global multinational companies, such as Oracle Schneider electric and Pepsico the recognition from Reuters and the expert panel is a testament to our innovation and our technological achievements moving forward, we will continue to deepen our commitment to the circular economy driving sustainable industry development.

Technological innovation.

So I mean, she goes to the CFO Rex just how he shops how would you.

Now I'd like to turn the call over to our CFO rack for a financial update.

Okay, Hello, everyone I'm pleased to report September 10th Street was a year of significant achievements for our company.

Xiaoxin Chen: I'm pleased to report that 2023 was a year of significant achievement for our company. Both revenue and operating income saw better than expected results. Total net revenue increased by 31.4% to $13 billion. Adjusted operating income of 2023 totaled $251.7 million, a remarkable 36.5 times the number of 2022. Cash inflow from operating activities was healthy, totaling $236 million.

Revenue and operating income so partisan expected results total net revenue increased approximately one 4% to <unk> 2 billion.

Adjusted operating income over time to the street totaled $251 7 million a remarkable so T. Six five times the number of company to cashing fruit from operating activities was housing totaling $236 million or as a percent temporary street was our year of consolidation.

Xiaoxin Chen: As Kerry said, 2023 was our year of consolidation and efficiency. Moving on to the fourth quarter of 2023, we are pleased to announce another profitable quarter as we recorded another new record in GAAP operating income on revenues that once again exceeded the top end of our guidance. Now, let's take a detailed look at the financials. Please note that all amounts are in IMB and our comparisons are on a year-over-year basis unless otherwise stated.

And it for sure.

Moving on to the fourth quarter of 2000 ton Street, we are pleased to announce another profitable quarter as we recorded another new record non-GAAP operating income on revenues.

We exceeded the top end of our guidance now, let's take a detailed look at your financials. Please note that all amounts are in RMB and all comparisons are year over year basis, unless otherwise stated in the fourth quarter total revenues decreased 29, 9% to three solid $873 six.

Xiaoxin Chen: In the fourth quarter, total revenues increased by 29.9% to $3,873.6 million, driven by strong growth in net gross revenues and rebounding service revenues. Net product revenues increased by 31.1% to 3,522.5 million, while net service revenues were 351.1 million, representing an increase of 19.7%. Growth in net product revenues was primarily driven by an increase in the sales of pre-owned consumer electronics through both PJT and pipeline marketplaces, as well as offline channels, of which sales of 1P refurbished devices totaled 278.2 million, which increased by 41.5% sequentially. The increase in service revenue was primarily due to the recovery of PaiPai and the PJT marketplace, with efficient online and offline customer acquisition and better execution. The overall ticker rate of our marketplaces went up 56 basis points from the fourth quarter of 2022 to 5.36% in the fourth quarter of 2023.

Driven by strong growth in net product revenues and a rebounding service revenues.

Product revenues increased by one point or 1% to Susana for 132 5 million, while net service revenues was 351% of women, representing an increase of 19, 7%.

<unk> net product revenues was primarily driven by an increase U S yourself prolonged consumer electronics through both P. J T or an apartment marketplaces as well as upfront channels of which Joseph Wuxi refurbished devices totaled 207 to $8 2 million, which increased by 41.

<unk>, 5% sequentially.

The increase in service revenues.

Primarily due to the recovery of part of the P. J T market Crazy as.

With your fishing online and offline customer acquisition and the project execution.

Well, if you could write off our market prices went up from 36 basis points from the fourth quarter from 72% to 556% in the fourth quarter, putting it on the street.

Now lets discuss our operating expenses to provide greater clarity on the trends in your actual operating basically expenses. We will also discuss our non-GAAP operating expenses, which better reflect how management views our results of our Christmas So reconsolidation of GAAP and non-GAAP results are available.

Xiaoxin Chen: Now, let's discuss our operating expenses to provide greater clarity on the trends in our actual operating-based expenses. We will also discuss our NGAP operating expenses, which better reflect how management views our results of operations. The reconciliations of the GAAP Addend and GAAP Results are available in our earnest release and the corresponding Form 6K furnished with the SEC.

Please stand as a corresponding form 6K furnished with the SEC.

<unk> costs increased by two 9% to <unk> 115 million.

The increase was in line with our grocery product sales gross margin at a group level was 18, 7% in the fourth quarter gross margin for our wouldn't be opinion was 10, 6%.

Xiaoxin Chen: Merchandise costs increased by 32.9% to 3,150 million yuan. The increase was in line with the growth in product sales. Growth margin at the group level was 18.7% in the fourth quarter, and growth margin for our 1P business was 10.6%. In the fourth quarter, AHS Recycle provided its official trading services for Apple. With the release of the iPhone 15, we implemented a proactive approach to attract customers with aggressive pricing strategies, causing gross margin compression. We believe that as our market share within these channels grows, gross profit will gradually return to normal levels. Fulfillment expenses increased by 9.5% to 301.1 million, excluding share-based compensation expenses, which we will refer to as SBC from PR. Nangap fulfillment expenses increased by 14% to 295.6 million.

Fourth quarter interest recycled provided its official treating services platform with the release of iPhone from Chief services, we permitted a proactive approach to our customers with aggressive pricing strategies, causing gross margin compression, we believe such as our market share was easiest channel squirrels. So gross.

The world will gradually return to normal levels.

Fulfillment expenses increased by nine 5% to 300 to one point of women at <unk>.

Excluding share based compensation expenses, we will which we will refer to as SPC from Jong min.

Fulfillment expenses increased by 14% to 295 6 million under the non-GAAP measures. So increase was primarily due to an increase in personnel and the logistics costs as we conducted the motorcycles and the transaction.

Activities young yet and then kept fulfillment expenses as a percentage of total revenues decreased to seven 6% from eight 7%. So overall decreasing as a retail fulfillment expenses of a threat. So in part of the economies of scale and efficiency improvements through automated operations.

Xiaoxin Chen: Under the Nangap measures, the increase was primarily due to an increase in personnel and logistic costs as we conducted more recycling and transaction activities year-on-year. Nangap fulfillment expenses as a percentage of total revenues decreased to 7.6% from 8.7%. So the overall decrease in the rate of fulfillment expenses reflects the impact of economies of scale and efficiency improvements through automated operations. Specifically, as the number of WMC orders grew, the average performance cost per order was reduced. Selling and marketing expenses decreased by 46.6% to $317 million, excluding SPC expenses and amortization and impairment losses of goodwill and intangible assets, and gapped selling and marketing expenses increased by 11.5%. It is reported that China's GDP has fallen 11.3 percent to 246.6 million yuan, primarily due to an increase in expenses related to marketing activities. The gap selling and marketing expenses as a percentage of total revenues decreased to 6.4% from 7.5%. General and Administrative expenses decreased by 18.8% to 62.2 million, excluding SBC expenses.

Specifically there is a number of other squirrel, so average of fulfillment cost, although it wasn't reduced selling and marketing expenses decreased by 46, 6% to 317 million, excluding SBC expenses and amortization of the permanent loss of goodwill intangible assets non-GAAP sitting in the muck.

Expenses increased 11 point.

Zero percent to $246 6 million, primarily due to an increase the expenses related to marketing activities.

Selling and marketing expenses as a percentage of total revenues decreased to six 4% from seven 5%.

General and administrative expenses decreased by 18, 8% to $62 2 million, excluding SBC expenses Mcgough of G&A expenses decreased by 17, 4% to $45 2 million, primarily due to a decrease in headquarter.

Expenses and fees related to professional services and then got the G&A expenses as a percentage of total revenues decreased to one 2% from one 8%.

Xiaoxin Chen: Gap G&A expenses decreased by 17.4% to 45.2 million, primarily due to a decrease in headquarter office expenses and fees related to professional services. Nangab GNA expenses as a percentage of total revenues decreased to 1.2% from 1.8%. Technology and content expenses increased by 17.1% to $63.8 million, excluding SBC expenses and amortization and impairment losses of goodwill and intangible assets, and Gap Technology and Content Expansion, increased by 50.6% to 58.3 million. The increase was primarily due to an increase in personnel costs in connection with the upgrades of the company's operations center and systems. NGAP technology and content expenses as a percentage of total revenues increased to 1.5% from 1.3%. As a result, our NGAP operating income was 81.6 million in the fourth quarter of 2023, representing a significant increase of 135.8% year-on-year. NGAP's operating profit margin was 2.1%, compared to 1.2% in 4Q2022, to provide some content regarding our balance sheet.

The orange and the content expenses increased by 17, 1% to 63 8 million, excluding SBC expenses and amortization of any permanent loss of goodwill and.

Intangible assets.

Technology and content expenses.

Increased by 53, 6% to eight 3 million increase was primarily due to an increase in personnel costs in connection with the upgrades of the Companys operations Center and it systems.

<unk> taken the origin content expenses as a percentage of total revenues increased to one 5% from one 3%.

As a result, I wouldn't in GAAP operating income was 801 6 million in the fourth quarter of <unk>, representing a significant increase of 165% of young men.

Operating profit margin was two 1% compared to one 2% for Q2 two.

To provide some context regarding our balance sheet.

Or were you inventory so amongst two wouldn't be.

At the end of the fourth quarter I'll come to the street, representing a sequential increase of 344 point of Pizza ingredient competitor, we see end of third quarter of 2000 ton history. This increase was primarily due to a surge in recycling volume generated from airports Fisher treating program. However, it had a limited impact.

Xiaoxin Chen: Our inventories amounted to $1 billion at the end of the fourth quarter of 2023, representing a sequential increase of $344.8 million compared with the end of the third quarter of 2023. This increase was primarily due to a surge in recycling volume generated from Apple's official trading program. However, it had a limited impact on our operating cash flow since we had a payment term of $1.2 billion. This is a story that can't be told with just a few words.

Our operating cash flow since we have a payment term of.

45 days and effectively manage the relevant payables through bank guarantees.

As of December 31st two consensus free cash in a country of covenants restricted cash short term investments in the funds receivable from so the party payment of service provide us totaled $2 90. It is our strong cash position <unk> got a sustainable gross outlook.

During the fourth quarter up from the 10th Street where to put.

We purchased a full $4 5 million a DSS in the open market for a total consideration of 801 million your stores by December 31st to punt on the Street, we had repurchased a total of 18 point of Fort Meade introduces for $56 5 million in your stores and our share repurchase programs.

Xiaoxin Chen: 45 days and effectively manage relevant payables through bank guarantees. As of December 31, 2013, cash-in-the-cash requirements, restricted cash, short-term investments, and funds receivable from third-party payment service providers totaled $2.9 billion. Our strong cash position safeguards are sustainable, close to all terms. During the fourth quarter of 2023, we repurchased 4.5 million ADSes in the open market for a total consideration of 8.1 million US dollars. By December 31, 2023, we had repurchased a total of 18.4 million ADSes for 56.5 million US dollars under our share repurchase program. Today, we are delighted to announce a new share buyback program that allows us to repurchase up to 20 million US dollars worth of our shares over the next 12 months based on our confidence in our value creation, business growth, momentum, and strong cash flow. Now turning to the business outlook, for the first quarter of 2024, we anticipate total revenues to be between 3,550 million and 3,650 million, representing an increase of 23.6% to 27.1% 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.

Today, we are.

Delighted to announce a new share buyback program, so that allow us to repurchase up to 20 minutes, you'll start us what's off hour shifts over the next 12 months is based on our competency overdue creation fitness gross momentum and strong cash flow now turning to the Finnish ultra <unk> for the first quarter of 274.

Just to pay to total revenues to be between 3000 550 million.

We saw about $615 million, representing an increase of 23, 6% percent to 27, 1% year over year.

Please note this forecast 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.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

When asking a question. Please state your question in Chinese first then repeat your question in English for the convenience of everyone in the call.

Operator: Operator, we are now ready to take questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

At this time, we will pause momentarily to assemble our roster.

Lixin Ju: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster. The first question comes from Joyce Ju with Bank of America. Please go ahead.

The first question comes from Joyce Ju with Bank of America.

Please go ahead.

Okay.

Do you feel like you're going to close into the shipyard.

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Yeah, I think it worked out well.

Thank you Sally.

Lixin Ju: Thank you for accepting our questions and congratulating the company on its breakthrough performance. I would like to know what you think about the growth of this year and what are the growth goals for our multi-product business. I will translate my question myself. Additionally, I also want to have some color on what the growth targets are for the multi-category recycling business. Thanks a lot.

Thank you for taking my questions and congratulations on the very solid this quarter am I wanted to ask about your overall growth.

Guidance for 2024.

Additionally, also once you have some colors on what is a growth target for the Moe M O take critically recycling business. Thanks a lot.

Okay.

If you don't catch up till now.

Xiaoxin Chen: Thank you very much for the question. In 2022 and 2023, we have seen users' consumption habits change from being eager to upgrade their quality to pursuing cost-effectiveness. At the same time, we have also seen users' desire to recover and change and the need to exchange for new ones continue to grow. This reflects that in 2023, Zhiyin's annual income reached a 34.4% growth rate. The global exchange rate of JD's channels exceeded a 100% growth rate.

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Xiaoxin Chen: We will continue to promote the main growth wheel of self-sustaining recycling through a larger business scale, a more extensive industrial chain, higher efficiency, achieve more operating profits, and firmly invest in the brand construction of AiHuiShou, so as to further realize the growth of traffic and the scale-up effect. In terms of platform business, we will continue to strengthen the coordination between PaiqiTang and PaiPai. We will expand the supply of 2C products by upgrading B2C PaiPai JiMai services to small and medium-sized stores to satisfy the consumer's purchasing needs to a greater extent, so that the options for purchasing second-hand goods are more abundant. ,,?? We believe the central government's support for the new large-scale consumer goods and E-JiuHuanXin will be beneficial to the development of the JD brand and the manufacturer brands we cooperate with. We will jointly improve the consumer mentality of E-JiuHuanXin and cultivate E-JiuHuanXin as a more mainstream consumption option. We are confident that we will continue to achieve 30% or more share price growth. Thank you for your questions.

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Thank you for your question during 'twenty to 'twenty, two and 2023 we saw a shift in consumer behavior.

Xiaoxin Chen: During 2022 and 2023, we saw a shift in consumer behavior. Our users' focus transitioned from consumption upgrades to an emphasis on value for money. During this transformation, we noticed a swift rise in user demand for trade-ins and recycling in exchange for cash.

Oh, our users focused transition from consumption upgrades to emphasize on value for money. During this transformation, we noticed those shaped rise suites to write 30 months Australians and recycling in exchange for cash as we mentioned on once Europe, Israel 34, 4% year over year in 2023 was treated.

Xiaoxin Chen: As we mentioned, our 1-year revenue grew 34.4% year-over-year in 2023, with trade-ins through JD more than doubling compared to the previous year. We will continue to drive the core growth flywheel of the 1B Recycling business and to extend our industry value chain through the economy of scale. We aim to expand our operating profit margin further by bringing our operational efficiency to the next level. We are steadfast in investing in the brand of NHS Recycle to unleash the growth of traffic and the economy of scale further.

So J D more than doubling compared to the previous year.

We will continue to drive the core growth flywheel of lumpy with Safran business.

And to the extent or industrial value chain through economy economy of scale and to expand our operating profit margin further.

I bring our operational efficiency to the next level, we are steadfast in investing in the brand of any trust recycles to unleash growth of traffic and you call me off bellwether in terms of our platform is that with Franklin synergy between T J P marketplace and marketplaces.

Xiaoxin Chen: In terms of our platform business, we strengthened the synergies between TJP Marketplace and Taipei Marketplace and provided small merchants with upgraded consignment services. This helped us build up a more robust 2C supply and meant we could offer a more diverse selection of high-quality second-hand products for our users. Looking ahead to 2024, we place user experience as our top priority while providing the utmost support to the recycling and trading offerings of JD.com and Apple's official trading program. We believe that support from the central government for large-scale trading policies on consumer goods will benefit our collaborations with JD and brand partners. Together, we elevate consumer awareness of trading and cost-weighted burden-saving consumption choice. Because of this, we are confident in achieving a 30% year-over-year revenue growth for our one-tiered business. By 2023, Europe, the exchange amount between international Germany and China had already exceeded RMB11 billion.

And provide a small merchant with upgraded assignment services.

This helped us build a more robust to see supply and that we could offer a more diverse selection of high quality secondhand product for our users.

Looking ahead, some 21 before we place you would experience as our top priority, while providing the utmost support to the way stocks and trading offerings of JD dotcom and apples offshore trading program, what's the beef that apart from the central government for large scale trading policies on consumer foods, well benefit all collaboration.

With J D and brand partners together, we elevated consumer awareness of trading and corporate is outbound mainframe consumption twice.

Something we're confident in achieving a 30% year over year revenue growth for our <unk> business.

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Xiaoxin Chen: We are at a high-speed growth stage. In 2024, we will further enhance users' awareness of AiHuiShou as the number one recycling brand in China by providing more in-product services and opening more AiHuiShou stores. We will continue to enhance user experience, increase price competitiveness, encourage more users to use multi-product recycling, and improve the conversion of 1P mobile phone 3C recycling. By 2023, GMV for our multi-category recycling business will surpass 1 billion RMB. This business has grown rapidly in scale. We set a mild take rate for this business segment in 2023. We trust there is ample growth potential in the take rate.

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Wait for the segments in 2023, we truck there is ample growth potential in the take rate in 'twenty 'twenty four or focus is enhancing user awareness of any transfer cycle as a leading national recycling, Brad I'll of course drug who used to be able to build an even better user experience to achieve this we will provide more.

Xiaoxin Chen: In 2024, our focus is enhancing user awareness of AHS Recycle as a leading national recycling brand. Our core strategy is to build an even better user experience. To achieve this, we will provide more structured product data on our platform and improve our pricing capabilities. This will drive more recycling transactions across a wider range of categories.

Health care products later, all of our platform and improve our pricing capabilities. This with one or more of a second transactions across a wider range of categories.

Okay.

Yes.

Xiaoxin Chen: Thank you for the question. The next question comes from Jiang Jin Chen with CICC. Please go ahead.

Okay.

Thank you for the question.

The next question comes from Jim Jim.

Xiaoxin Chen: Thank you. Thank you. Thank you. Thanks for taking my question, and congratulations on the good results. I have two questions.

Chin with CIC.

Please go ahead.

Yes.

Next question comes back.

And congratulations on the good results I have two questions first could you provide more color on the higher than expected the profitability this year and what's your profitability targets for 2024.

Xiaoxin Chen: First, could you provide more color on the higher-than-expected profitability this year, and what's your profitability target for 2024 and for the medium to long term? Second, in late 2023 and early 2024, the iPhone 15 series faced some challenges from Huawei. Third, how does management view the challenging competitive landscape among mobile phone manufacturers, and how did your Apple trade-in business perform in Q4 2023, and what are your scale and profit targets for 2024? Thank you. Thanks for taking my question, and congratulations on the good results. I have two questions.

And for the medium to long term I'm second in late 2023, and only 20000 for the iPhone 15 curious faced some challenges from Huawei, How does management view the challenging landscape, our mom to mobile phone manufacturers and how did you Oh trading business perform.

In Q4 2023.

Are you a scale and profit targets for 2024.

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Xiaoxin Chen: First, could you provide more color on the higher-than-expected profitability this year, and what's your profitability target for 2024 and for the medium to long term? Second, in late 2023 and early 2024, the iPhone 15 series faced some challenges from Huawei. Third, how does management view the challenging competitive landscape among mobile phone manufacturers, and how did your Apple trade-in business perform in Q4 2023, and what are your scale and profit targets for 2024? Thank you. Okay, thank you.

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Xiaoxin Chen: So I will take your first question, and Kerry, our CEO, will take your second question. Okay, so first the question. In 2023, we once again achieved breakthroughs in terms of cost efficiencies, other than capital measures, fulfillment, selling and marketing, G&A, and administrative, and technology and content expenses as a percentage of revenues for 8.5%, 7.3%, 1.5%, and 1.3%, respectively. These figures correspond to year-over-year decreases of 2.4%, 1.6%, 0.1%, and 0.6%, respectively. In terms of fulfillment, we achieved a remarkable efficiency improvement. Our efficient system of regional operating centers and centralized self-operated operating stations has further improved our inspection quality and cost controls. The skill effect created by the use of automation technology at operating centers has also had a positive impact.

Okay. Thank you. So I would take you off course, the crushing and the carry our Seo where if you're taking the questions.

Okay. So first a question.

Chemistry, we once again achieved a breakthrough in terms of corporate efficiencies.

Got the measures procurement.

Selling and marketing general and.

The administrative and the technology and the content expenses.

Revenues for each 0.5% seven plus 3% or one 5% in the one 3% respectively.

Figures correspond to year over year decrease of two 4% to one 6% sort of kind of 1% and 6% respectively.

In terms of fulfillment, we achieved a remarkable efficiency improvement.

Fishing system of production to offer incentives and a centralized so pirquitas operation species has further improved our inspection quality and of course can choose the skewing effect created by the use of automation and technology. That's shopping centers has also had a positive impact right now seem nor cost or their teachers sorting.

Xiaoxin Chen: We are now seeing lower costs related to sorting, quality inspection, and warehouse. When compared to our previous approach of using decentralized, jointly-operated stations, we have also leveraged big data to optimize small-item delivery with low-cost shipping. This has driven down shipping and receiving costs. Overall, our operating center expenses and logistics costs decreased by 9% and 8%, respectively, during 2023. This resulted in a net gap of 1.1 billion, a year-over-year increase of over 2%.

CT inspection and the warehousing.

Compared to our previous approach of using centralized jointly operated species. We have also leveraged the big data to optimize small items delivered with low cost of shipping.

This has driven down shifting into receiving calls, although our pretty center expenses and logistics costs decreased pardon My center and 8% respectively can be put on the street. This resulted in a couple of pretty.

Pretty much expense of 1.1 billion a year over year increase of over a 2%. Our total makeup sitting in the marketing expenses Street 114 million. This was a year over year increase of seven 8% also on multiple to what.

Xiaoxin Chen: Our total net gap selling and marketing expenses in 2023 were 940 million. This was a year-over-year increase of 7.8%, but a lot lower than our revenue growth rate over the same period. This was mainly driven by HR efficiency improvements from deploying advanced digital CIM tools for the B2B sales team. The result was a 19% cost reduction compared to the previous year. In 2023, net gap general and administrative expenses were 190 million, a year-over-year increase of 21.9%. This was mainly due to office rent and various other administrative costs, including employee travel, training, and benefits.

Our revenue growth rate over the same period. This was mainly driven by efficiency improvements from deploying advanced with digital CRM tools off the <unk> sales team.

<unk> was a 19% cost reduction compared to the pervious year.

Trying to screen and then got the general and administrative expenses were 190 million a year over year increase of 21.9%. This was mainly due to office rent and diverse.

It is true to your costs recruiting and part E treble trinian benefits.

Xiaoxin Chen: OpenGAP technology and content expenses were $170 million in 2023. Thanks to the gradual maturation of our platform's technology and the official launch of our South China Automation Operating Center, we did not see significant cost growth in this category. In addition, the cloud migration initiative we launched in 2022 was completed in 2023. This contributed to an overall decrease in technology and content expenses as a percentage of revenue, representing an improvement in scale. The breakdown above highlights the enhancements that led to the increase in our NGAP operating profit in 2023. For path to profitability growth, our primary focus is 1P gross margin and operating efficiency. Our long-term goal is to improve our net-gap operating profit margin by 1% every year. In terms of our 1P business, we prioritize the ability to control our first-hand supply while also enhancing user awareness of our C2B brand, AHS Recycle. We source first-hand supplies at a competitive recycling price.

I wouldn't have got picking the origin of content expenses were 170 million in 25th Street sinks to the graduate mature Rishi off our platforms pretty margined. So official launch of our soft China automation operating center, we did not see significant cost growth in this category.

She is a cloud migration initiative, we launched in 2022 was completed in 2020 Street. This contributed to an overall decrease you can pick in Oregon, and the content expenses as a percentage of revenue representing an improvement you're skewing effect so far.

Bruce So breakdown about highlights enhancements South America is increasing our win they've got operating properties trying to finish street.

Our path to profitability growth our primary focus.

Gross margin and operating efficiency, our longtime go into you prove I wouldn't have GAAP operating profit margin by 1% every year in terms of our Wuxi business.

Prioritize our ability to control first time supply while also enhancing user awareness of our CGP Brit paid interest sort of cycle. We saw firsthand a surprise. So it is a competitive wood recycling prices. Meanwhile, we continue to unleash our self operated at refurbishment opinion says why are we diversified.

Xiaoxin Chen: Meanwhile, we continue to unleash our self-operated refurbishment business while we diversify the standard of supply to the pipeline. We expect a large proportion of 2C sales as we seek a higher profit margin on 1P revenue. I'd also like to add more color to our collaboration with Apple. In the fourth quarter, our Apple business achieved sales of 300 million. However, as this business is relatively new and is still being refined, its gross profit margin is below an ideal level.

They ended up some product pipeline.

We expect a larger proportion of two <unk>.

As we seek a higher profit margin off of Wuxi revenue.

I'd also like to add more color on our.

Collaboration with Apple in the fourth quarter, our Apple business achieved sales of 300 million. However, this fitness season relatively new heavy stupid <unk> defined as gross profit margins below ideal level going forward, we plan to optimize our pricing mechanism to strike a balance between profitability and growth.

Xiaoxin Chen: Going forward, we plan to optimize our pricing mechanism to strike a balance between profitability and growth. In terms of operating efficiency, we are constantly optimizing our cost-to-revenue ratios. Our automation capabilities will continue to improve our fulfillment efficiency. The inspection cost per device was diluted due to an increase in ASD.

In terms of operating efficiency, we're constantly optimizing our cost to revenue ratios.

Automation capabilities will continue to improve our fulfillment efficiency.

Especially in cost per device was diluted due to increasing asps.

Xiaoxin Chen: In terms of setting and the market, we try to maximize the effectiveness of our P2P sales. At the same time, we plan to strategically leverage social media traffic to attract customers. The algorithms and location-based service capabilities of short video platforms such as Douyin will help us target potential users with great accuracy.

In terms of setting in the marketing we try to maximize.

The effectiveness of our <unk> sales team.

Same time, who tend to stretch, particularly leveraged social media terrific to attract customers.

So probably reserves and a location pay the service capabilities of short video platforms, such as though you will harvest target of potential users with greater accuracy.

<unk> has added a benefit to further strengthen our sourcing capabilities and our market position.

Xiaoxin Chen: This approach has added benefits to further strengthen our sourcing capabilities and market position. We recognize that the key to building a successful second-hand business also lies in our ability to acquire supplies through brand power. As such, our AHS Recycle brand.

<unk> Sciences so.

So Q2 building a successful secondhand opinions also lies.

Our ability to acquire a surprise through Brendan Pas as such our eight years of recycled Brent isn't part pivotal for our long term government deposits at this at this stage, we believe strategically allocating appropriately put at risk.

Xiaoxin Chen: Pivotal for our long-term development path. At this stage, we believe strategically allocating appropriate resources to social media traffic will solidify our long-term competitive position in this dynamic market. OK. I will answer the second question. Apple's official website and 47 offline flagship stores in China have successfully reopened.

The sources to social media terrific, where sort of our long term competitive position.

I remember in your market.

Okay.

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Xiaoxin Chen: With the large-scale sales of the 4th quarter and the retail price that users love, we have received a lot of positive feedback from users on social media. We think that the retail price and user service have improved a lot. At the same time, we have a lot of first-hand, high-quality resources.

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Xiaoxin Chen: The business contributed RMB3 billion in sales revenue in the fourth quarter. In the third quarter, the number of users increased by ninefold when the app was first launched. In fact, the number of users is much larger than the number of sales. This shows that users' acceptance of Apple's old and new devices is increasing. The penetration rate of the old and new devices still has a lot of room for improvement. In terms of profit, we will keep the price strategy flexible according to the feedback of the market so that we can continue to optimize. ,,, I will answer the second question.

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I will answer the second question, we have systematically rolled out or recycling and trading services Apple official website.

Xiaoxin Chen: We have systematically rolled out our recycling and trading services on Apple's official website and at 47 flagship stores. The service and pricing were highly commended by users on social media front pages. In terms of scale, we secured a significant amount of first-hand supply by leveraging the substantial volume of new iPhone shipments in the fourth quarter and by maintaining competitive recycling prices. The business contributed RMB300 million in product sales revenue during the fourth quarter. This was a slight increase compared to the third quarter.

Forty-seventh vaccines for the service and pricing were highly commended by users on social media spontaneously in terms of scale, we secured a significant amount of first time supply and leveraging the substantial volume of new iPhone shipments in the fourth quarter and by maintaining competitive for a second.

The business contributed 300 Amelia Army in product sales revenue during the fourth quarter before this was a nine fold increase compared to the third quarter.

Xiaoxin Chen: Our reselling volume is greater than our sales volume, which proves that users' acceptance of Apple's trading for new products is increasing, and there is still much room for improvement in the penetration rate of trading products. We will maintain flexible adjustments to our pricing strategy based on market feedback to optimize our gross profit margin. Importantly, we do not handle front-end fulfillment and marketing for the Apple video. As a result, even though this business segment has a narrow gross profit margin, it has the potential to contribute a relatively higher operating profit margin.

All of a sudden volume is greater than our sales volume that occurred that users acceptance of all.

Trading for new products is increasing and there is still much room for improvement in the penetration rate Australian products.

Well maintain flexible adjustments to our pricing strategy based on market feedback to optimize our gross profit margin.

Pardon me, we do not handle sometimes fulfillment and marketing for the Apple business as a result, even though this business segment has been narrowed as well profit margin. It has the potential to contribute a lot to see higher operating profit margin.

Operator: Okay, thank you. Thank you for the questions. Due to the time limit on the call, I'd like to hand the conference back to management for closing remarks. Thank you. Thank you all again for joining us today. A replay of today's call will be available on our website shortly, followed by a transcript. If you have any additional questions, please feel free to email us at R at 18renew.com. Have a nice day! The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Lixin Ju, Chen Chen, Xuefeng Kerry, Jeremy Ji, Weiting Tang, Xiaoxin Chen, AiHuiShou Intl

Yeah.

Okay.

Thank you for the question.

Due to the time limit on the call I'd like to hand, the conference back to management for closing remarks.

Thank you. Thank you all again for joining us today.

Play with today's call will be opened up all of our IR website shortly followed by a transcript.

You have any additional questions. Please feel free to email us.

H you renewed call have a nice day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yeah.

Okay.

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