ATRenew Inc. Reports Unaudited Third Quarter 2021 Financial Results

SHANGHAI,Nov. 18,2021 -- ATRenew Inc. ("ATRenew" or the "Company") (NYSE: RERE),a leading technology-driven pre-owned consumer electronics transactions and services platform in China,today announced its unaudited financial results for the third quarter ended September 30,2021.

Third Quarter 2021 Highlights

Total net revenues grew by 48.0% to RMB1,962.3 million (US$304.5 million) from RMB1,326.1 million in the third quarter of 2020.

Loss from operations was RMB150.5 million (US$23.4 million),compared to RMB84.7 million in the third quarter of 2020. Adjusted loss from operations (non-GAAP)[1]was RMB28.5 million (US$4.4 million) compared to RMB6.9 million in the third quarter of 2020.

Total Gross Merchandise Volume ("GMV[2]") increased by 56.6% to RMB8.3 billion from RMB5.3 billion in the third quarter of 2020. GMV for product sales increased by 58.3% to RMB1.9 billion from RMB1.2 billion in the third quarter of 2020. GMV for online marketplaces increased by 56.1% to RMB6.4 billion from RMB4.1 billion in the third quarter of 2020.

Number of consumer products transacted[3] increased by 23.4% to 7.9 million from 6.4 million in the third quarter of 2020.

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

[2] "GMV" represents the total dollar value of goods distributed to merchants and consumers through transactions on the Company's platform in a given period for which payments have been made,prior to returns and cancellations,excluding shipping cost but including sales tax.

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

Mr. Kerry Xuefeng Chen,the Founder,Chairman,and Chief Executive Officer of ATRenew,commented,"Despite the slowdown in new device sales,we delivered another strong quarter of robust scale and revenue growth,showcasing the vitality of China's circular economy. In response to macro policies,we are proactively pushing to further the country's goals for peak carbon emissions,carbon neutrality,and developing a circular economy by promoting standardization of the pre-owned consumer industry and driving the growth of a new type of real economy for compliant recycling and trade-ins of pre-owned consumer electronics."

"In terms of our operations,we upgraded our new generation automated inspection system,Matrix 2.0,further improving automation and operational efficiency while fortifying the technological infrastructure for further long-term development. Additionally,we continued to explore our city-level distribution model,achieved end-to-end coverage on recycling,operation,and sales,and made new breakthroughs in enhancing our pre-owned consumer electronics turnover efficiency."

Mr. Rex Chen,the Chief Financial Officer of ATRenew,added,"We continued our growth momentum with GMV and revenue growth beyond expectations in the third quarter. GMV for product sales increased by 58.3% year over year,primarily driven by organic growth in our AHS stores and strong support from our strategic partners including JD Group. As we improved our platform's service capabilities,our service revenue sustained healthy growth,increasing by 67.3% year over year. Our comprehensive take rate rose to 4.6%,and,more importantly,revenue contribution from services grew to 15.2% during the third quarter,diversifying our revenue mix. Looking forward to the fourth quarter and 2022,we are confident in our ability to increase efficiency through streamlining our operations,improving profitability and capital utilization efficiency,and creating long-term value for both shareholders and our environment."

Third Quarter 2021 Financial Results

REVENUE

Total net revenues increased by 48.0% to RMB1,962.3million (US$304.5 million) from RMB1,326.1 million in the same period of 2020.

Net product revenues increased by 45.0% to RMB1,665.0 million (US$258.4 million) from RMB1,148.4 million in the same period of 2020. The increase was primarily attributable to an increase in the sourcing volume and the corresponding sales of pre-owned consumer electronics through PJT Marketplace,Paipai Marketplace and the Company's offline channels.

Net service revenues increased by 67.3% to RMB297.3 million (US$46.1 million) from RMB177.7 million in the same period of 2020. The increase was primarily due to the increases in transaction volume on PJT Marketplace and Paipai Marketplace and an increase in the average commission rate.

OPERATING COSTS AND EXPENSES

Operating costs and expenses increased by 49.5% to RMB2,123.5 million (US$329.6 million) from RMB1,420.1 million in the same period of 2020.

Merchandise costs increased by 46.8% to RMB1,443.9 million (US$224.1 million) from RMB983.7 million in the same period of 2020. The increase was primarily due to the growth in product revenues.

Fulfillment expenses increased by 61.7% to RMB273.4 million (US$42.4 million) from RMB169.1 million in the same period of 2020. The increase was primarily due to (i) an increase in personnel cost in connection with the Company's growing business; and (ii) the increases in logistics expenses and operation center related expenses,which were in line with the increase in sales of pre-owned consumer electronics.

Selling and marketing expenses increased by 59.8% to RMB299.0 million (US$46.4 million) from RMB187.1 million in the same period of 2020. The increase was primarily due to (i) an increase in sales promotion and coupon expenses in connection with business development; and (ii) an increase in personnel cost in connection with the Company's growing business; and (iii) an increase in sales commissions in connection with traffic acquisition and sourcing of pre-owned devices.

General and administrative expenses decreased by 0.2% to RMB42.0 million (US$6.5 million) from RMB42.1 million in the same period of 2020. There was no significant change compared with the previous quarter primarily due to the increase inshare-based compensation expenses offset by the decrease in other administrative expenses resulting from the improved management efficiency.

Technology and content expenses increased by 71.1% to RMB65.2 million (US$10.1 million) from RMB38.1 million in the same period of 2020. The increase was primarily due to the increase in personnel cost in connection to the expansion of the Company's research and development activities.

LOSS FROM OPERATIONS

Loss from operations was RMB150.5 million (US$23.4 million),compared to RMB84.7 million in the third quarter of 2020. Adjusted loss from operations (non-GAAP),excluding amortization of intangible assets and deferred cost resulting from assets and business acquisitions andrecognition of share-based compensation expense resulting from options granted to employees,was RMB28.5 million (US$4.4 million),compared to RMB6.9 million in the third quarter of 2020.

NET LOSS

Net loss was RMB121.7 million (US$18.9 million),compared to RMB94.2 million in the third quarter of 2020. Adjusted net loss (non-GAAP)[4] was RMB22.5 million (US$3.5 million),compared to RMB28.1 million in the third quarter of 2020.

BASIC AND DILUTED NET LOSS PER ORDINARY SHARE

Basic and diluted net loss per ordinary share were RMB0.75 (US$0.12),compared to RMB21.46 in the same period of 2020.

Adjusted basic and diluted net loss per ordinary share (non-GAAP)[5] were RMB0.14 (US$0.02),compared to RMB1.49 in the same period of 2020.

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

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

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

Cash and cash equivalents,short-term investments and funds receivable from third party payment service providers increased to RMB2,538.0 million (US$393.9 million) as of September 30,2021,from RMB1,140.2 million as of December 31,2020,primarily due to net proceeds from the Company's initial public offering in June 2021.

Business Outlook

For the fourth quarter of 2021,the Company currently expects its total revenues to be between RMB2,300.0 million and RMB2,350.0 million. This forecast only reflects the Company's current and preliminary views on the market and operational conditions,which are subject to change.

Environment,Social,and Governance

In July 2021,ATRenew established the "AHS Charity & Love · Digital Education Fund" in joint efforts with China Foundation for Poverty Alleviation and donated RMB5.05 million to flooded schools and students in Henan Province. This was followed by an orderly delivery of electronic teaching equipment in September.

In September,ATRenew initiated its internal training on the Sarbanes-Oxley Act and ESG,aiming to further improve corporate governance,implement financial reporting policies and procedures,raise awareness of securities market compliance,and promote sustainable practices among its middle and senior management.

Recent Development

In November,the Company changed its name to "ATRenew Inc." following the approval by the Company's shareholders through a special resolution at an extraordinary general meeting. The change of the Company's name is expected to strengthen brand recognition across global markets. The Company also launched a monthly corporate blog on www.atrenew.com,its new official website,and ir.atrenew.com,its investor relations website,to timely and transparently update its stakeholders.

Conference Call Information

The Company's management will hold a conference call on Thursday,November 18,at 07:00 A.M. Eastern Time (or 08:00 P.M. Beijing Time on Thursday,2021) to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

1-412-317-6061

United States Toll Free:

1-888-317-6003

Mainland China Toll Free:

4001-206115

Hong Kong Toll Free:

800-963976

Access Code:

4411075

The replay will be accessible through November 25,by dialing the following numbers:

International:

1-412-317-0088

United States Toll Free:

1-877-344-7529

Access Code:

10161932

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

About ATRenew Inc.

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

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB6.4434 to US$1.00,the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30,2021.

Use of Non-GAAP Financial Measures

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

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

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

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

Safe Harbor Statement

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

Investor Relations Contact

In China:

ATRenew Inc.

Investor Relations

Email: ir@atrenew.com

In the United States:

ICR LLC.

Email: atrenew@icrinc.com

Tel: +1-212-537-0461

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of

December 31

As of September 30,

2020

2021

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

918,076

1,895,666

294,203

Short-term investments

97,866

380,163

59,000

Amount due from related parties

289,156

324,893

50,423

Inventories

176,994

500,479

77,673

Funds receivable from third party payment service providers

124,262

262,122

40,681

Prepayments and other receivables,net

268,284

823,080

127,740

Total current assets

1,874,638

4,186,403

649,720

Non-current assets:

Amount due from related parties

—

46,231

7,175

Long-term investments

96,362

205,260

31,856

Property and equipment,net

69,562

85,858

13,325

Intangible assets,net

1,367,841

1,159,876

180,010

Goodwill

1,803,415

1,415

279,886

Other non-current assets

14,520

98,271

15,251

Total non-current assets

3,351,700

3,398,911

527,503

TOTAL ASSETS

5,226,338

7,585,314

1,177,223

LIABILITIES,MEZZANINE EQUITY AND EQUITY (DEFICIT)

Current liabilities:

Short-term borrowings

369,657

141,957

22,031

Accounts payable

27,201

49,142

7,627

Accrued expenses and other current liabilities

396,612

435,328

67,562

Accrued payroll and welfare

115,400

114,659

17,795

Convertible bonds

160,000

—

—

Amount due to related parties

114,669

33,568

5,210

Total current liabilities

1,183,539

774,654

120,225

Non-current liabilities:

Long-term borrowings

32,624

5,977

928

Deferred tax liabilities

341,960

327,500

50,827

Total non-current liabilities

374,584

333,477

51,755

TOTAL LIABILITIES

1,558,123

1,108,131

171,980

TOTAL MEZZANINE EQUITY

8,879,894

—

—

TOTAL (DEFICIT) EQUITY

(5,211,679)

6,477,183

1,005,243

TOTAL LIABILITIES,MEZZANINE EQUITY AND EQUITY

(DEFICIT)

5,223

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

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

Three months ended September 30,

Nine months ended September 30,

2020

2021

2020

2021

RMB

RMB

US$

RMB

RMB

US$

Net revenues

Net product revenues

1,148,354

1,664,972

258,400

2,801,705

4,578,938

710,640

Net service revenues

177,733

297,328

46,145

412,406

765,509

118,805

Operating expenses (1)(2)

Merchandise costs

(983,703)

(1,443,851)

(224,082)

(2,373,972)

(3,934,905)

(610,688)

Fulfillment expenses

(169,062)

(273,394)

(42,430)

(476,407)

(771,938)

(119,803)

Selling and marketing expenses

(187,126)

(299,007)

(46,405)

(528,581)

(837,882)

(130,037)

General and administrative expenses

(42,120)

(42,043)

(6,525)

(140,778)

(381,731)

(59,244)

Technology and content expenses

(38,096)

(65,196)

(10,118)

(111,785)

(202,598)

(31,443)

Total operating expenses

(1,420,107)

(2,123,491)

(329,560)

(3,631,523)

(6,129,054)

(951,215)

Other operating income,net

9,272

10,697

1,660

17,744

15,427

2,394

Loss from operations

(84,748)

(150,494)

(23,355)

(399,668)

(769,180)

(119,376)

Interest expense

(4,738)

(2,928)

(454)

(15,877)

(14,993)

(2,327)

Interest income

971

1,851

287

8,241

6,284

975

Other (loss) income,net

(16,125)

6,882

1,068

(8,720)

2,934

455

Loss before income taxes

(104,640)

(144,689)

(22,454)

(416,024)

(774,955)

(120,273)

Income tax benefits

11,689

22,841

3,545

35,631

61,760

9,585

Share of (loss) income in equity method

investments

(1,268)

161

25

(7,350)

284

44

Net loss

(94,219)

(121,687)

(18,884)

(387,743)

(712,911)

(110,644)

Accretion of convertible redeemable

preferred shares

(308,860)

—

—

(961,106)

(508,627)

(78,938)

Net loss attributable to ordinary

shareholders of the Company

(403,079)

(121,884)

(1,348,849)

(1,221,538)

(189,582)

Net loss per ordinary share:

Basic

(21.46)

(0.75)

(0.12)

(71.81)

(16.61)

(2.58)

Diluted

(21.46)

(0.75)

(0.12)

(71.81)

(16.61)

(2.58)

Weighted average number of shares used

in calculating net loss per ordinary share

Basic

18,782,620

162,659,593

162,593

18,620

73,551,073

73,073

Diluted

18,073

Net loss

(94,644)

Foreign currency translation adjustments

1,396

(1,303)

(202)

782

849

132

Total comprehensive loss

(92,823)

(122,990)

(19,086)

(386,961)

(712,062)

(110,512)

Accretion of convertible redeemable

preferred shares

(308,938)

Total comprehensive loss attributable to

ordinary shareholders

(401,683)

(122,086)

(1,067)

(1,220,689)

(189,450)

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (CONTINUED)

(Amounts in thousands,

2020

2021

2020

2021

RMB

RMB

US$

RMB

RMB

US$

(1) Includes share-based compensation expenses as follows:

Fulfillment expenses

—

(6,801)

(1,055)

—

(49,292)

(7,650)

Selling and marketing expenses

—

(3,599)

(559)

—

(29,863)

(4,635)

General and administrative expenses

—

(15,864)

(2,462)

—

(297,934)

(46,239)

Technology and content expenses

—

(4,359)

(677)

—

(31,939)

(4,957)

(2) Includes amortization of intangible assets and deferred cost

resulting from assets and business acquisitions as follows:

Selling and marketing expenses

(76,258)

(89,783)

(13,934)

(232,544)

(242,300)

(37,604)

Technology and content expenses

(1,580)

(1,580)

(245)

(4,740)

(4,740)

(736)

Reconciliations of GAAP and Non-GAAP Results

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

Three months ended September 30,

2020

2021

2020

2021

RMB

RMB

US$

RMB

RMB

US$

Loss from operations

(84,376)

Add:

Share-based compensation expense

—

30,623

4,753

—

409,028

63,481

Amortization of intangible assets and deferred cost resulting from

assets and business acquisitions

77,838

91,363

14,179

237,284

247,040

38,340

Adjusted loss from operations

(6,910)

(28,508)

(4,423)

(162,384)

(113,112)

(17,555)

Net loss

(94,644)

Add:

Share-based compensation expense

—

30,340

Less:

Tax effect of amortization of intangible assets and deferred cost

resulting from assets and business acquisitions

(11,841)

(3,545)

(35,631)

(61,760)

(9,585)

Adjusted net loss

(28,070)

(22,542)

(3,497)

(186,090)

(118,603)

(18,408)

Adjusted net loss per ordinary share:

Basic

(1.49)

(0.14)

(0.02)

(9.91)

(1.61)

(0.25)

Diluted

(1.49)

(0.14)

(0.02)

(9.91)

(1.61)

(0.25)

Weighted average number of shares used in calculating net loss

per ordinary share

Basic

18,073

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