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ATRenew Explores Growth Opportunities with New Apple Partnership

ATRenew Explores Growth Opportunities with New Apple Partnership

Key Highlights:

  • ATRenew experienced a 38% increase in revenue during the second quarter due to improved efficiencies
  • Revenue growth is projected to slow down in the current quarter as Chinese consumers anticipate the release of new Apple and Huawei smartphones in mid-September

By Doug Young

ATRenew Inc., a company specializing in recycling used smartphones and other second-hand products, has announced a new partnership with Apple Inc., the world’s most valuable company. This collaboration aims to appeal to environmentally conscious consumers while also presenting potential revenue opportunities for ATRenew.

ATRenew recently reported its strongest revenue growth in over a year, driven by China’s return to normalcy following the easing of COVID-19 restrictions. However, the company anticipates a slowdown in revenue growth after the second quarter.

Expanding Partnership with Apple

ATRenew’s partnership with Apple began on June 30, making ATRenew Apple’s second third-party recycling partner in China. As part of the collaboration, ATRenew will provide recycling supply chain services to Apple China’s website and flagship stores. Additionally, ATRenew has been authorized to bid for and distribute “as-is” iPhones acquired through private-party sales.

ATRenew’s Chairman, Chen Xuefeng (also known as Kerry), expects the partnership to gain momentum with the release of Apple’s latest iPhone model in September. He believes this collaboration could generate an additional annual revenue of 1 billion to 1.5 billion yuan for ATRenew, potentially contributing up to 15% of its total revenue.

Steady Profitability Growth

ATRenew’s revenue in the second quarter reached 2.96 billion yuan, representing a growth rate of 38.1% compared to the same period last year. The company’s product revenue, which accounts for nearly 90% of the total, experienced a stronger growth rate of 42%. However, its services revenue grew at a slower pace of 12%. ATRenew forecasts a moderate growth rate of 26% in revenue for the current quarter.

To enhance profitability, ATRenew has implemented measures to improve operational efficiency, such as automating inspection processes for used phones and expanding city-level recycling initiatives. These efforts have enabled the company to lower fulfillment expenses and achieve a record non-GAAP operating margin of 1.8%.

Although ATRenew still operates at a loss on an operating level, it has consistently generated adjusted profits. In the latest quarter, the company recorded a 36.4 million yuan adjusted profit. Outside of smartphone recycling, ATRenew is also making progress in expanding its recycling services to include vintage liquor, designer bags, and gold.

Despite these positive developments, ATRenew’s shares experienced a slight decline upon the announcement, likely due to concerns about slowing revenue growth. However, the company’s price-to-sales ratio remains in line with other global players in the recycling sector.