Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to ATRenew 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 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.

Thank you. Hello, everyone. Welcome to ATRenew's fourth quarter and full year 2023 earnings conference call. Speaking first today is Kerry Chen, our Founder, Chairman, and CEO. And he will be followed by Rex Chen, our CFO. After that, we will 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 at 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 about our quarterly performance and business strategy, followed by Rex, who will address the financial highlights. Both Kerry and Rex will join the Q&A session. Let me cover the safe harbor statements. 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 press release. Any forward-looking statement that management makes on this call are based on assumptions as of today, and that ATRenew does not take any obligations to upgrade our assumptions on 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 unless otherwise stated, all figures mentioned during this conference call are in RMB and all comparisons are on a year-over-year basis. I'd now like to turn the call over to Kerry for business and strategy updates.

[Foreign Language] [Interpreted] Hello, everyone, and welcome to ATRenew's fourth quarter and full year 2023 earnings conference call. In 2023, ATRenew 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 RMB13 billion, representing a year-over-year increase of 31.4%, significantly outpacing the growth rate of the secondhand industry and 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. Our total transaction volume in 2023 was 32.3 million units. We adhere to the strategy of prioritizing self-operated business that provides 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 merchant ecosystem and service capabilities. The overall platform take rate increased by 92 basis points to 5.39% in 2023. 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 secondhand supply chain capabilities, providing more valuable services on our platforms. At the same time, we were also more disciplined at the pace of our expansion and investments in new initiatives. At the profit level, we achieved a solid non-GAAP operating profit of RMB252 million with a non-GAAP operating profit margin of 1.9% exceeding our target for the year. Those achievements are firmly grounded in our strategic focus. Firstly, we appear to effective customer acquisition scenarios on the recycling front. Secondly, strengthening robust supply chain capabilities as a foundation. Thirdly, driving…

Okay. Hello, everyone. I'm pleased to report that 2023 was a year of significant achievements for our company. Both revenue and operating income saw better than expected results. Total net revenue increased by 31.4% to RMD13 billion. And adjusted operating income of 2023 totaled RMB251.7 million, a remarkable 36.5 times the number of 2022. Cash inflow from operating activities was healthy, totaling RMB236 million. As Kerry said, 2023 was our year of consolidation and efficiency. Moving on to the fourth quarter 2023, we are pleased to announce another profitable quarter as we recorded another new record in non-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 RMB and our comparisons are on a year-over-year basis unless otherwise stated. In the fourth quarter, total revenues increased by 29.9% to RMB3,873.6 million, driven by strong growth in net product revenues and a rebound in service revenues. Net product revenues increased by 31.1% to RMB3,522.5 million, while net service revenues was $351.1 million, representing an increase of 19.7%. Growth in net product revenues was primarily driven by an increase in sales of pre-owned consumer electronics through both PJT and the pipeline marketplaces, as well as offline channels, of which sales of 1P refurbished devices totaled RMB278.2, which increased by 41.5% sequentially. The increase in service revenues was primarily due to the recovery of Paipai and the PJT marketplaces, with efficient online and offline customer acquisition and better execution. Overall take rate of our marketplaces went up 56 basis points from the fourth quarter 2022 to 5.36% in the fourth quarter of 2023. Now, let's discuss our operating expenses. To provide greater clarity on the trends in our actual operating based expenses,…

We will now begin the question and answer session. [Operator Instructions] The first question comes from Joyce Ju with Bank of America. Please go ahead.

[Foreign Language] Thank you for taking my questions, and congratulations on the very solid results this quarter. I would like to ask about your overall growth guidance for 2024. Additionally, I also want to have some color on what is the growth target for the multi-category recycling business. Thanks a lot.

[Foreign Language] [Interpreted] Thank you for your questions. During 2022 and 2023, we saw a shift in consumer behavior. Our users focused transition from consumption upgrades to an emphasis on value for money. During this transformation, we noticed a swift rise in user demand for [indiscernible] and reflecting in exchange for cash. As we mentioned, our one year revenue grew 34.4% year-over-year in 2023 [indiscernible] through JD more than doubling compared to the previous year. We will continue to drive the core growth flywheel of 1P recycling business and to expand our industry value chain through 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 AHS Recycle to unleash growth of traffic and economy of scale further. In terms of our platform business, we strengthened the synergies between PJT Marketplace and Paipai 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 secondhand products to our users. Looking ahead to 2024, we placed 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 the 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 trade in and cost [indiscernible] as the mainstream consumption choice. Because of this, we are confident in achieving a 30% year-over-year revenue growth for our 1P business. In 2023, GMV for our multi-category recycling r business surpassed RMB1 billion. This business has grown rapidly in scale. We set a modest take rate for this business segment in 2023. We trust there is ample growth potential in the take rate. In 2024, our focus is enhancing user awareness of AHS Recycle as a leading national recycling brand. Our core strategy is still 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. Thank you for the question

The next question comes from Xiaoxin Chen with CICC. Please go ahead.

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

Okay. Thank you. So I will take your first question and Kerry, our CEO will take your second questions. Okay. So for your first question, in 2023 we once again achieved the breakthroughs in terms of cost efficiencies and other than capital measures, fulfillment, selling and marketing, G&A and administrative and technology and content expenses as a percentage of revenues were 8.5%, 7.3%, 1.5%, and 1.3%, respectively. These figures correspond to year-over-year decrease 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 operation stations have further improved our inspection quality and cost controls. The scale effect created by the use of automation technology at operating centers has also had a positive impact. We are now seeing lower costs related to sorting, quality inspection and warehousing. 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 non-GAAP fulfillment expense of RMB1.1 billion, a year over year increase of over 2%. Our total non-GAAP selling and marketing expenses in 2023 were RMB940 million. This was a year over year increase of 7.8%, also a lot lower than our revenue growth rate over the same period. This was mainly driven by [HR] (ph) efficiency improvements from deploying advanced digital CRM tools of the B2B sales team. The result was a 19% cost reduction compared to the previous year. In 2023, non GAAP general and administrative expenses were RMB190 million, a year-over-year increase of 21.9%. This was mainly due to office…

[Foreign Language] [Interpreted] I will answer the second question. 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 spontaneously. 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 nine fold increase compared to the third quarter. Our recycling volume is greater than our sales volume. This proves that user acceptance of Apple’s trade-in for new products is increasing and there is still much room for improvement in the penetration rate of trade-in 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 business. 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. 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. 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 ir@atrenew.com. Have a nice day.

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