By Brian Lantier, CFA
NYSE: RERE
READ THE FULL RERE RESEARCH REPORT
Before the market opened on May 19, ATRenew (NYSE: RERE) released its first-quarter results for 2026, highlighting that the diversification of its product lines, strong consumer branding, and access to premium products continue to drive growth, even as the broader domestic smartphone market in China has contracted. ATRenew continues to gain mindshare among consumers, and the company’s strong affiliation with Apple products helped drive demand in Q1.
Total net product revenues at ATRenew jumped 34.4% from the same period of 2025 to RMB5.73 billion ($830 million) and were only down 1.7% sequentially from the seasonally strong fourth quarter of 2025. The strong performance of the iPhone 17 was likely the primary driver of this outperformance, but we noted that the company cited strength across all consumer electronics lines, so we think the demand for other Apple products, including MacBooks, may have temporarily boosted revenue in the quarter.
Net product revenues for ATRenew exceeded our forecast by 4.5%, or RMB249 million, largely due to higher unit volume, and we believe higher average pricing, driven by a higher proportion of Apple products and higher pricing across all brands as a result of higher memory costs.
After adjusting for non-cash share-based compensation expenses of RMB4.4 million in the quarter and small amortization of intangibles (RMB780 thousand), adjusted non-GAAP income was reported at RMB140.1 million or $20.3 million for the quarter or $0.08/ADS, which was about $2.3 million ahead of our forecast or a little over a $0.01/ADS.
Model adjustments: We have adjusted our model to reflect the very strong Q1 results and the company’s guidance for Q2 revenues of between RMB6.24 billion and RMB6.34 billion. As a result of this updated guidance, our total revenue forecast for 2026 is now RMB26.4 billion (up from a previous estimate of RMB26.0 billion), representing roughly 25.5% topline growth. We are maintaining our 2027 revenue estimate of RMB31.1 billion, but we are monitoring the timing of Apple’s iPhone 18 launch. If Apple staggers the launch, we believe we may have to increase our Q3 revenue forecast, while decreasing our Q4 revenue forecast and pushing some of that revenue into 2027.
Management has also provided further details on the company’s share of losses in equity method investments, and we have now modeled those losses at about RMB47 million and RMB18.5 million in 2027. As a result of these adjustments, at current exchange rates, our full-year adjusted earnings per ADS estimate is now $0.40/ADS, and our 2027 forecast is $0.49/ADS. We believe the company is likely seeing trends in the business that give management greater confidence in the topline and margin forecasts, but we would like to see these trends continue for another quarter or two before making meaningful adjustments to our assumptions.
For the time being, we are leaving our target unchanged at $8.00/ADS. With the stock trading at just 10 times our 2027 adjusted earnings per ADS estimate, we believe ATRenew offers a unique small-cap growth value in an expensive market and we would encourage investors to review our full updated research report for further information on ATRenew and its position in the market.
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