ATRenew Inc. Reports Unaudited Third Quarter 2022 Financial Results

SHANGHAI,Nov. 22,2022 -- 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 30,2022.

Third Quarter 2022 Highlights

Total net revenues grew by 29.2% to RMB2,536.0 million (US$356.5 million) from RMB1,962.3 million in the third quarter of 2021.

Loss from operations was RMB110.0 million (US$15.5 million),compared to RMB150.5 million in the third quarter of 2021. Adjusted income from operations (non-GAAP)[1] was RMB10.8 million (US$1.5 million) compared to adjusted loss from operations of RMB28.5 million in the third quarter of 2021.

Total Gross Merchandise Volume ("GMV[2]") increased by 14.5% to RMB9.5 billion from RMB8.3 billion in the third quarter of 2021. GMV for product sales increased by 31.6% to RMB2.5 billion from RMB1.9 billion in the third quarter of 2021. GMV for online marketplaces increased by 9.4% to RMB7.0 billion from RMB6.4 billion in the third quarter of 2021.

Number of consumer products transacted[3] increased by 5.1% to 8.3 million from 7.9 million in the third quarter of 2021.

Mr. Kerry Xuefeng Chen,Founder,Chairman,and Chief Executive Officer of ATRenew,commented,"In the third quarter of 2022,our topline growth exceeded 29%,with revenue reaching the high end of our guidance at RMB2,536 million. This was the result of our market penetration strategy of approaching primary supply sources,as well as the strong brand effect of AHS Recycle and the refinement of our city-level service integration strategy. In addition,we placed a firm focus on delivering high-quality service to our users,continuously optimizing our user experience and offering new product categories. Through our 1,804 offline stores across the country,we fortify our competitive moat of fulfillment capabilities. We continued to invest in automated quality inspection capabilities,achieving breakthroughs in both quality inspection efficiency and production capacity. Meanwhile,our second regional automated operation center was officially put into use in Southern China in October. Looking to the long-term development of the circular economy,we are well-positioned to meet the needs of an ever-wider range of users,thanks to our safe,convenient,and efficient recycling,transaction,and value-added services."

Mr. Rex Chen,Chief Financial Officer of ATRenew,added,"In the third quarter,we navigated the challenges brought about by the COVID resurgence while maintaining our commitment to our long-term growth strategy. As we achieved a record high in total net revenues,we strove to further improve cost efficiency and optimize capital allocation. As a result,we achieved gratifying results in terms of profitability,reaching a non-GAAP operating income of nearly RMB10.8 million. We also kept a healthy cash inflow from operating activities,something which we have achieved for three consecutive quarters,consolidating the foundation for our company's stable development going forward. With more sophisticated automated quality inspection technology,we are confident in our ability to maintain profitability and a healthy cash flow,and create sustainable value for our users,our society,and our shareholders."

1.See "Reconciliationsof 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'sPJTMarketplace,PaipaiMarketplace and other channels the Company operates in a given period,excluding the number of consumer products collected throughAHSRecycle; a single consumer product may be counted more than once according to the number of times it is transacted onPJTMarketplace,PaipaiMarketplace and other channels the Company operates through the distribution process to end consumer.

Third Quarter 2022 Financial Results

REVENUE

Total net revenuesincreased by 29.2% to RMB2,962.3 million in the same period of 2021.

Net product revenues increased by 33.7% to RMB2,225.7 million (US$312.9 million) from RMB1,665.0 million in the same period of 2021. The increase was primarily attributable to an increase in the sourcing volume and the corresponding sales of pre-owned consumer electronics through Paipai Marketplace,PJT Marketplace and the Company's offline channels.

Net service revenues increased by 4.4% to RMB310.3 million (US$43.6 million) from RMB297.3 million in the same period of 2021. The increase was primarily due to increases in transaction volume and monetization capability of PJT Marketplace.

OPERATING COSTS AND EXPENSES

Operating costs and expenses increased by 25.4% to RMB2,663.9 million (US$374.5 million) from RMB2,123.5 million in the same period of 2021.

Merchandise costs increased by 33.8% to RMB1,932.2 million (US$271.6 million) from RMB1,443.9 million in the same period of 2021. The increase was primarily due to the growth in product sales.

Fulfillment expenses increased by 1.4% to RMB277.1 million (US$39.0 million) from RMB273.4 million in the same period of 2021. The increase was primarily due to (i) an increase in personnel cost in connection with the Company's growing business; and (ii) an increase in expenses in relation to the upgrade of technology server,which were partially offset by a decrease in operation center related expenses as the Company optimized its strategy for its city-level operation stations.

Selling and marketing expenses increased by 14.0% to RMB340.8 million (US$47.9 million) from RMB299.0 million in the same period of 2021. The increase was primarily due to (i) an increase in personnel cost in connection with the Company's growing business; and (ii) an increase in marketing expenses related to business development.

General and administrative expenses increased by 51.4% to RMB63.6 million (US$8.9 million) from RMB42.0 million in the same period of 2021. The increase was primarily due to (i) an increase in personnel cost in connection with the Company's growing business,(ii) an increase in office related expenses,and (iii) an increase in professional service fees.

Technology and content expenses decreased by 23.2% to RMB50.1 million (US$7.0 million) from RMB65.2 million in the same period of 2021. The decrease was primarily due to the changes in personnel cost in relation to the Company's adjustment to its spending in research and development.

LOSS FROM OPERATIONS

Loss from operations was RMB110.0 million (US$15.5 million),compared to RMB150.5 million in the third quarter of 2021.

Adjusted income from operations (non-GAAP)[1],excluding amortization of intangible assets and deferred cost resulting from assets and business acquisitions and recognition of share-based compensation expense resulting from options and restricted stock units granted to employees,was RMB10.8 million (US$1.5 million),compared to adjusted loss from operations of RMB28.5 million in the third quarter of 2021.

NET LOSS

Net loss was RMB30.1 million (US$4.2 million),compared to RMB121.7 million in the third quarter of 2021. Adjusted net income (non-GAAP)[1] was RMB77.4 million (US$10.9 million),compared to adjusted net loss of RMB22.5 million in the third quarter of 2021.

The management of the Company noted that the Company`s market capitalization has been lower than its net assets and is closely monitoring the possibility of the impairment of goodwill and intangible assets.

BASIC AND DILUTED NET LOSS PER ORDINARY SHARE

Basic and diluted net loss per ordinary share were RMB0.19(US$0.03),compared to RMB0.75 in the same period of 2021.

Adjusted basic and diluted net income per ordinary share (non-GAAP)[1] were RMB0.48 (US$0.07) and RMB0.46 (US$0.06),compared to negative RMB0.14 in the same period of 2021.

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

Cash and cash equivalents,restricted cash,short-term investments and funds receivable from third party payment service providers increased to RMB2,672.7 million (US$375.7 million) as of September 30,2022 from RMB2,421.9 million as of December 31,2021.

Business Outlook

For the fourth quarter of 2022,the Company currently expects its total revenues to be between RMB2,930.0 million and RMB3,030.0 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

During the third quarter of 2022,ATRenew received an Environmental,Social and Governance ("ESG") risk rating score of 17.6/100 from Morningstar Sustainalytics (the lower the score,the better),assessing ATRenew to be at "Low Risk" of experiencing industry-specific material ESG factors. The Company was ranked fourth in the Online and Direct Marketing Retail sector. Importantly,ATRenew attained "Negligible" ratings for its data privacy and security,business ethics,and environmental and social impact of products and services,all of which are key components of the assessment of material industry-specific ESG risks. Sustainalytics' evaluation identifies ATRenew's strong management performance across a comprehensive range of ESG metrics,demonstrating the Company's industry-leading position in ESG-related policies,programs,and initiatives. Morningstar Sustainalytics is a leading ESG research,ratings and data firm that supports investors around the world with the development and implementation of responsible investment strategies.

Recent Development

On December 28,2021,ATRenew announced a share repurchase program,effective immediately,to repurchase up to US$100 million of its shares over a twelve-month period. During the third quarter 2022,the Company repurchased 530,018 American depositary shares ("ADSs") in the open market at an average price of US$2.76 per ADS,with a total cash consideration of US$1.5 million. As at the end of the third quarter 2022,the Company repurchased a total of 8,165,669 ADSs for approximately US$33.0 million under its share repurchase program.

Conference Call Information

The Company's management will hold a conference call on Tuesday,November 22,2022 at 07:00 A.M. Eastern Time (or 08:00 P.M. Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

1-412-317-6061

United States Toll Free:

1-888-317-6003

Mainland China Toll Free:

4001-206115

Hong Kong Toll Free:

800-963976

Access Code:

7165816

The replay will be accessible through November 29,2022 by dialing the following numbers:

International:

1-412-317-0088

United States Toll Free:

1-877-344-7529

Access Code:

1277252

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 RMB7.1135 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 30,2022.

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

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

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

ATRENEWINC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

As of December 31,

As of September 30,

2021

2022

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

1,356,342

1,270,326

178,580

Restricted cash

150,000

—

—

Short-term investments

510,467

1,013,094

142,419

Amount due from related parties,net

410,088

125,673

17,667

Inventories

478,751

454,078

63,833

Funds receivable from third party payment service providers

405,095

389,242

54,719

Prepayments and other receivables,net

840,102

690,421

97,058

Total current assets

4,150,845

3,942,834

554,276

Non-current assets:

Long-term investments

241,527

229,670

32,286

Property and equipment,net

103,843

118,340

16,636

Intangible assets,net

1,075,811

832,634

117,050

Goodwill

1,803,415

1,819,926

255,841

Other non-current assets

127,321

103,352

14,529

Total non-current assets

3,351,917

3,103,922

436,342

TOTAL ASSETS

7,502,762

7,046,756

990,618

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term borrowings

94,999

75,744

10,648

Accounts payable

41,311

56,771

7,981

Contract liabilities

211,964

148,953

20,939

Accrued expenses and other current liabilities

296,627

407,150

57,236

Accrued payroll and welfare

105,787

127,402

17,910

Amount due to related parties

73,976

36,567

5,141

Total current liabilities

824,664

852,587

119,855

Non-current liabilities:

Operating lease liabilities,non-current

34,501

38,769

5,450

Deferred tax liabilities

223,138

182,788

25,696

Total non-current liabilities

257,639

221,557

31,146

TOTAL LIABILITIES

1,082,303

1,074,144

151,001

TOTAL SHAREHOLDERS' EQUITY

6,420,459

5,972,612

839,617

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

7,618

ATRENEWINC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

Three months ended September 30,

Nine months ended September 30,

2021

2022

2021

2022

RMB

RMB

US$

RMB

RMB

US$

Net revenues

Net product revenues

1,664,972

2,225,690

312,883

4,578,938

5,988,755

841,886

Net service revenues

297,328

310,338

43,627

765,509

899,496

126,449

Operating expenses (1)(2)

Merchandise costs

(1,443,851)

(1,932,211)

(271,626)

(3,934,905)

(5,226,067)

(734,669)

Fulfillment expenses

(273,394)

(277,147)

(38,961)

(771,938)

(848,568)

(119,290)

Selling and marketing expenses

(299,007)

(340,826)

(47,913)

(837,882)

(942,025)

(132,428)

General and administrative expenses

(42,043)

(63,631)

(8,945)

(381,731)

(153,816)

(21,623)

Technology and content expenses

(65,196)

(50,091)

(7,042)

(202,598)

(173,356)

(24,370)

Total operating expenses

(2,123,491)

(2,663,906)

(374,487)

(6,129,054)

(7,343,832)

(1,032,380)

Other operating income,net

10,697

17,855

2,510

15,427

42,543

5,981

Loss from operations

(150,494)

(110,023)

(15,467)

(769,180)

(413,038)

(58,064)

Interest expense

(2,928)

(1,566)

(220)

(14,993)

(5,085)

(715)

Interest income

1,851

11,042

1,552

6,284

14,819

2,083

Other income,net

6,882

58,353

8,203

2,934

52,469

7,376

Loss before income taxes

(144,689)

(42,194)

(5,932)

(774,955)

(350,835)

(49,320)

Income tax benefits

22,841

13,318

1,872

61,760

40,307

5,666

Share of gain (loss) in equity method

investments

161

(1,214)

(171)

284

(6,164)

(867)

Net loss

(121,687)

(30,090)

(4,231)

(712,911)

(316,692)

(44,521)

Accretion of convertible redeemable

preferred shares

—

—

—

(508,627)

—

—

Net loss attributable to ordinary

shareholders of the Company

(121,231)

(1,221,538)

(316,521)

Net loss per ordinary share:

Basic

(0.75)

(0.19)

(0.03)

(16.61)

(1.94)

(0.27)

Diluted

(0.75)

(0.19)

(0.03)

(16.61)

(1.94)

(0.27)

Weighted average number of shares used

in calculating net loss per ordinary share

Basic

162,659,593

162,297,853

162,853

73,551,073

163,214,601

163,601

Diluted

162,601

Net loss

(121,521)

Foreign currency translation adjustments

(1,303)

(28,397)

(3,992)

849

(38,783)

(5,452)

Total comprehensive loss

(122,990)

(58,487)

(8,223)

(712,062)

(355,475)

(49,973)

Accretion of convertible redeemable

preferred shares

—

—

—

(508,627)

—

—

Total comprehensive loss attributable to

ordinary shareholders

(122,223)

(1,220,689)

(355,973)

ATRENEWINC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS (CONTINUED)

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

Three months ended

September 30,

Nine months ended

September 30,

2021

2022

2021

2022

RMB

RMB

US$

RMB

RMB

US$

(1) Includes share-based compensation

expenses as follows:

Fulfillment expenses

(6,801)

(6,142)

(864)

(49,292)

(28,423)

(3,996)

Selling and marketing expenses

(3,599)

(3,969)

(558)

(29,863)

(23,522)

(3,307)

General and administrative expenses

(15,864)

(17,346)

(2,438)

(297,934)

(50,330)

(7,073)

Technology and content expenses

(4,359)

(4,632)

(651)

(31,939)

(14,361)

(2,019)

(2) Includes amortization of intangible assets

and deferred cost resulting from assets and

business acquisitions as follows:

Selling and marketing expenses

(89,783)

(87,120)

(12,247)

(242,300)

(264,001)

(37,113)

Technology and content expenses

(1,580)

(1,580)

(222)

(4,740)

(4,740)

(666)

Reconciliationsof GAAP and Non-GAAP Results

(Amounts in thousands,

2021

2022

2021

2022

RMB

RMB

US$

RMB

RMB

US$

Loss from operations

(150,064)

Add:

Share-based compensation expenses

30,623

32,089

4,511

409,028

116,636

16,395

Amortization of intangible assets

and deferred cost resulting from

assets and business acquisitions

91,363

88,700

12,469

247,040

268,741

37,779

Adjusted (loss) income from

operations (non-GAAP)

(28,508)

10,766

1,513

(113,112)

(27,661)

(3,890)

Net loss

(121,521)

Add:

Share-based compensation expenses

30,779

Less:

Tax effects of amortization of

intangible assets and deferred cost

resulting from assets and business

acquisitions

(22,841)

(13,318)

(1,872)

(61,760)

(40,307)

(5,666)

Adjusted net (loss) income (non-

GAAP)

(22,542)

77,381

10,877

(118,603)

28,378

3,987

Adjusted net (loss) income per

ordinary share (non-GAAP):

Basic

(0.14)

0.48

0.07

(1.61)

0.17

0.02

Diluted

(0.14)

0.46

0.06

(1.61)

0.17

0.02

Weighted average number of

shares used in calculating net loss

per ordinary share

Basic

162,593

169,499,714

169,714

73,073

170,702,595

170,595

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