By Michael Kim
NYSE:RERE
READ THE FULL RERE RESEARCH REPORT
Pre-market open on 11/20/25, ATRenew (NYSE:RERE) reported 3Q25 earnings results. On a GAAP basis, RERE reported net income of $12.8 million for 3Q25, or $0.05 per ADS (Exhibit 1). That said, excluding non-cash share-based compensation and intangible assets amortization expenses, adjusted EPS came in at $0.06 (rounded down), or about a penny above our $0.06 (rounded up) estimate (Exhibit 2). Relative to our model, the bottom-line beat was mostly a function of higher-than-expected revenue and operating income.
Focusing on the top line, total revenue of RMB 5,149 million ($723.3 million) came in at the high point of management’s prior guidance range (RMB 5,050 million to RMB 5,150 million) and 1% above our RMB 5,105 million ($710.8 million) estimate on accelerating online sales of pre-owned consumer electronics. Total expenses of RMB 5,028 million ($706.3 million) were slightly higher than our RMB 5,013 million ($697.9 million) estimate. Despite lower selling & marketing and G&A expenses, higher than anticipated merchandise and fulfillment costs (mostly a function of the step up in sales during the quarter) drove the unfavorable variance.
After updating our model for 3Q25 actuals, we are edging up our 2025 and 2026 adjusted EPS estimates from $0.23/$0.37 to $0.24/$0.39. Our revisions primarily reflected: 1) the 3Q25 EPS beat; 2) higher revenue growth driven by accelerating trade-in activity (for 4Q25, senior officials anticipate total revenues to be in the range of RMB 6,080 million and RMB 6,180 million, or $855 million to $869 million at current FX rates, implying year-over-year growth of 25% to 27%); and 3) a slightly higher margin outlook given a rebound in take rates and a more favorable business mix.
As a result of our modestly higher earnings outlook and after incorporating a lower discount rate in our DCF model, we are raising our price target from $7.00 to $8.00 implying considerable upside potential from current levels. Our thinking is based on RERE’s lower risk profile in light of building scale and diversification reflecting ongoing initiatives to further broaden the company’s product, distribution, and geographic footprints.
Following our review of 3Q25 results, we highlight the following key takeaways:
1. Trade-in transactions fueling sustainable growth: Trade-in scenarios remain a key driver of volume growth. Importantly, while national trade-in subsidies are limited to sales of new devices priced under RMB 6,000 (~$844), thereby excluding higher-priced models, government support stimulates upgrade/trade-in activity within the pre-owned space, while manufacturers including Apple provide brand-funded incentives for trade-ins. As a result, RERE maintains access to a growing source of low-cost supply. Focusing on JD.com, AHS Recycle’s trade-in penetration rate continues to rise (currently 10%+), with more consumers opting to capitalize on trade-in programs given rising prices for new devices, as well as the company’s focus on optimizing pricing, elevating user experiences, and stepped-up branding initiatives. Indeed, JD.com's trade-in program continues to be a preferred choice for users looking to recycle and upgrade their devices. Additionally, senior officials remain focused on partnering with other consumer electronics brands and e-commerce platforms to drive a more diversified source of recycling/trade-in transaction volumes.
2. Differentiated fulfillment network: During 3Q25, RERE opened 103 new locations bringing the company’s nationwide network of AHS stores to 2,195 across nearly 300 cities in China as of September 30, 2025. Beyond competitive pricing, offline stores enhance customer relationships, experiences, and accessibility. Moreover, over 1,000 AHS stores (including nearly 90% of self-operated locations) offer multi-category recycling services, thereby supplementing economics and growth – related volumes in 3Q25 nearly doubled on a year-over-year basis. Finally, management remains focused on continuing to expand/enhance the company’s door-to-door capabilities continuing to drive reduced transaction times, improve customer experiences, and generate incremental revenue contributions.
3. Building the brand: To be sure, ATRenew remains China’s largest pre-owned consumer electronics transactions platform reflecting the company’s vertically-integrated supply chain and fulfillment capabilities. Looking ahead, a key priority for senior management remains building the AHS brand to raise customer awareness, enhance loyalty, and support engagement. Specific initiatives include partnering with consumer brands and deepening community relationships to position AHS as the leading recycling ecosystem. Furthermore, the company recently launched initiatives centered on higher-frequency activities, products, and incentives to reinforce the broader benefits of the circular economy, while promoting AHS Recycle’s brand and services.
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