ATRenew Inc.

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 Gee. Director of Corporate Development and Investor Relations of the company. Please go ahead, sir.

Thank you. Hello, everyone. Welcome to ATR News fourth quarter and full year 2023 earnings conference call. Speaking first today is Kerry Chen, our founder, chairman, and CEO. And he'll be followed by Rex Chen, our CFO. After that, we'll 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 of 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 price release. Any forward-looking statement that management makes on this call are based on assumptions as of today, and that AT Renew 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, as 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.

Hello, investors and doctors. Hello, everyone. Welcome to the fourth quarter and the full-year call of the year of Wanwu New Life Group in 2023.

Hello, everyone. And welcome to AG Renews' fourth quarter and full year 2023 earnings conference call.

In 2023, the revenue and profits of Wanwu New Life Group will rise again. The second-hand supply chain capacity is constantly rising. Brand newness continues to increase for a year. In terms of revenue, The annual income reached a total income of nearly $13 billion, a 31.4% increase, significantly exceeding the increase of the second-hand industry and consumer market. Again, I would like to thank the first-tier colleagues and various departments for their hard work and efforts. From the amount of transactions, in 2023, the group will trade a total of 3,230,000 second-hand products. We insist that the strategy of self-sufficiency will focus on the service and user experience of better self-sufficiency business. Therefore, the number of transactions of a batch of self-sufficiency business throughout the year is the same as the growth of 50%. In terms of platform business, we actively adjust the development strategy to better develop the business ecosystem and service capabilities. The platform fee increased significantly from 92 points to 5.39%. The number of registered merchants in Tai Chi Tang reached 59.6 million, which is 46.2% of the previous year's growth, which is a solid foundation for future development. At the same time, while maintaining a high rate of growth, 2023 is also a year of efficiency. Everything is new, and the second-hand supply chain of Zageng provides In 2023, AT Renew 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 13 billion RMB, representing a year-over-year increase of 31.4%, significantly outpacing the growth rates of the second-hand 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 second-hand 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-debt operating profit of 252 million RMBs. 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 adhere to effective customer acquisition scenarios on the recycling front. Secondly, strengthening robot supply chain capabilities as a foundation. Thirdly, driving efficiency improvement through technology. And fourthly, being agile in seizing new traffic opportunities and capturing new customer demand.

and the online platform to strengthen user penetration. In the past year, the popularity and trust of the retail brand in consumers has been constantly improved, especially in the first and second-tier cities. We have achieved further improvement. Through the retail stores and the excellent brands and retail scenarios we serve, we accurately lock the mainstream retail scenarios of users.

Now I will walk you through these four strategic perspectives. First, on the recycling front, we continue to successfully execute our customer acquisition strategy by leveraging our precise recycling scenarios. By the end of 2023, we have presence in 268 cities in China, reaching consumers through 1,819 AHS stores offline. We have constantly enhanced our service accessibility in high-quality business districts and communities. We further penetrated the market by combining offline stores with online platforms. Over the past year, consumer awareness and trust in our AHS recycle brand have steadily increased, especially in big cities where recycling rates are improving. By leveraging our physical stores, premium service reputation, and retail partner teams, we precisely target user mainstream recycling scenarios. With competitive prices and higher efficiency, we obtain high-quality sources of trade-on goods, further fortifying the group's supply chain capability in the main business lines.

In June, 2023, we announced that we have reached an agreement with Apple to restore and restore Apple Trading's official cooperation with China. This strategic cooperation is only to satisfy users' needs for convenient recovery and lower cost replacement of new Apple products. Now, this service has covered Apple's official website and flagship stores. In the fourth quarter of the relatively slow sales, Apple's official recovery has contributed more than $300 million to iRecruiting. In addition, in terms of e-commerce cooperation, we continue to consolidate the ability to cooperate with the Jindong mobile phone 3C retail department, providing one-stop resale, multi-sale, folding resale, and other services to meet the needs of a large number of Jindong users

In June 2023, we were pleased to announce the official collaboration with Apple for its recycling and trading services in mainland China. Our partnership is designed to meet user demand for convenient recycling and low-cost upgrades to brand-new iPhone products. This service is now available at the brand's official website and offline flagship stores. Notably, during the fourth quarter, despite Slack's iPhone sales, this collaboration contributed 300 million RMB to our revenues. Additionally, in terms of e-commerce partners, we have solidified our collaboration with JD's mobile and electronics retail departments, offering one-stop single-device and multi-device trading services. This caters to JD's swathed user base who seek more cost-effective shopping options and better recycling experiences when upgrading their gadgets. Overall, the gross recycling value of trading business on JD channels doubled in 2023. 通过发力多品类的回收业务, 我们进一步夯视了回收场景的用户吸引力。 我们将爱回收的slogan升级为 爱回收,为你回收更多。

not only focusing on 3C recovery, but also expanding to high-value product recovery services such as luxury products, gold, and wine, to meet the diversified recovery and transformation needs of users. In the future, we will also expand the recovery service of low-value products to promote a second flow of more limited products. We mainly use the experience and IT system upgrade By extending our multi-category reflecting efforts,

We have further strengthened the appeal of our recycling scenarios for users. The updated slogan, I will show recycling more for you, reflects our commitment to expanding into additional categories beyond our core focus on consumer electronics. We are dedicated to fulfilling the growing demand for recycling and cashback for high-value categories such as luxury goods, gold, and vintage wines. Looking ahead, we aim to expand to lower value item recycling while promoting the recycle and reuse of more idle goods. Building multi-category recycling capabilities primarily involves upgrading store experiences and IT systems while co-establishing fulfillment capabilities with professional service providers. Our fulfillment strategies vary with the residual value of goods. With in-store drop-offs, and doorstep pickup options, users could circulate more used products with ease.

At the end of 2023, there will be 252 iRestore stores that will open up multi-series recovery services. In 2023, the total number of multi-series recovery services will exceed RMB1 billion. At the same time, we will bring iRestore brands into the community to improve the daily lives of users. By the end of 2023, we have introduced multi-category recycling services into 252 AHS stores. During the year, the GMV for non-electronic products at the recycling front exceeded 1 billion RMB.

At the same time, we bring AHS Recycle brand closer to communities and users' daily lives. Our extended presence in communities and commercial areas, coupled with an increasing density of multi-category recycling stores, encourages customers to reuse our services more often.

and achieve a more precise order and price, and continue to supply products to the demand end in a stable way. The ability to harvest and use space in major warehouses across the country has been further improved. In the major warehouses, we have also increased the operating capacity of Hegui Fanxing. The total revenue of Fanxing's business for the whole year has reached RMB 8.1 billion, and 9.4% of recovery income. In the fourth quarter of 2023, 41.5% increase in repair and refurbishment, and 1.6% increase in profit margin. The smart supply chain system is more accurate in selecting machines suitable for refurbishment.

Moving on to our supply chain processing capabilities. Our highly efficient supply chain management ensures recycled goods are inspected at a lower cost while achieving accurate grading and pricing results. This allows a consistent and stable supply of goods. We have also improved our operation center's shipping and receiving capacity and enhanced their space utilization efficiency. Furthermore, our main operation centers are equipped with compliant refurbishment capabilities The annual revenue from our self-operated combined refurbishment business reached 810 million RMB, accounting for 9.4% of the core 1P recycling business segment revenue. Notely, in the fourth quarter of 2023, revenue from the refurbishment business increased by 41.5% compared with the previous year, while the gross profit margin went 1.6 percentage points higher. This is mainly attributable to our intelligent supply chain system, which enables more accurate identification of devices suitable for refurbishment, resulting in a higher number of devices in various conditions being selected for the process.

In Shenzhen Electronics Industry Association's Electronics Product Transformation Industry Professional Committee, Wanwu Xinsheng, as the main start-up unit, participated in the design of the group standards for various aspects such as transformation, general requirements, labels, information disclosure, quality management, technical specifications, and so on, providing brand manufacturers with knowledge, property protection,

we actively participated in advantages to drive industry prosperity. In 2023, as a major drafting party, E3NEW played a key role in establishing the Electronic Product Refurbishment Industry Committee initiated by the Shenzhen Electronics Industry Association. We contributed to various group standards including general requirements for refurbishment, labeling and information disclosure, quality management, and technical specifications. These standards serve as industry references for intellectual property protection, product data security quality, as well as user rights protection.

在供应链的销售端,万物新生B2C与B2B相结合的优势进一步扩大。 The GMV of the leading 2C retail GMV of the entire year reached RMB 28.8 billion. With the advantage of the supply chain, our Taipei B2C business has further strengthened the retail ability of EP2C, satisfying the needs of C-end users for high-quality second-hand goods. The entire year, EP2C's new product created a revenue of RMB 5.6 billion, and provided consumers with

On distribution, our advantages of an integrated B2C plus B2B platform were further magnified. In 2023, GMV of the core self-operated retail business totaled 2.88 billion RMB. Leveraging our supply chain strength, HIPAA has strengthened its 1P2 consumer retail capabilities, meeting consumer demand for high-quality pre-owned products. To highlight, 1P2 consumer-compliant refurbished product sales contributed 560 million RMB in revenue.

In 2023, we launched a new generation of vending models through the Tai Chi Tang platform to open the small and medium-sized businesses in the industry to buy and sell stores. Businesses only need to release goods and confirm the price. Store operations, sales, customer service, and after-sales service are handled by the B2C platform. This strategy can greatly reduce the threshold of B2C business participation, enrich the supply and supply of B2C platform, and ensure the user's purchase experience.

In 2023, we introduced a new consignment model to address the challenges faced by second-hand industry merchants, difficulties in operating to consumer e-commerce stores, and the struggles of small businesses. Through PJT Marketplace, we effectively connect high stores with small and medium-sized merchants, thus removing barriers that previously hindered small merchants from integrating their supply into our platform. Merchants now only need to list their products and confirm pricing, while the platform takes care of the store operations, sales, customer services, and after-sales support. This initiative significantly lowers the entry barriers for B2C merchants, enriches the platform's supply sources, and ensures a seamless purchasing experience for users. GME for the consignment business summed up 17 million RMB in 2023.

In the 4th quarter of 2023, the B2B platform business in Tai Chi Tang was rebounded overall, mainly due to the warm-up of trading activities. The number of trading traders increased by 35.3% in the same ratio. In addition, we also adjusted to the low-pay rate of the stock exchange business in history. further reduced the cost and improved the comprehensive fee rate of B2B platforms. Therefore, in the fourth quarter, the income of Paiji Tang B2B platforms increased by 14.9%, and the overall fee rate increased by 69 points to 6.02%. The overall fee rate of the whole year reached 6.17%. The level of 2022 significantly increased by 189 points, In the fourth quarter of 2003, the overall business of PJT marketplace rebounded, primarily due to a recovery in trading activities and the 35.3% year-over-year increase in the number of active merchant users.

Additionally, we took the strategic decision to restructure the low commission rate spare stock business, and this reduced our costs and optimized the overall take rate of B2B platform. As a result, in the fourth quarter of 2023, service revenues from PJT marketplace increased by 14.9% year-on-year, and the overall take rate rose by 69 basis points to 6.02%. On an annual basis, its overall take rate reached 6.17%, a significant improvement of 189 basis points compared to the 2022 level. We are proud of the proven business model of PJT Marketplace as it is an indispensable infrastructure of the industry.

In the future, we will further expand the ability of the supply chain to become the best second-hand supplier of the industry. At the same time, we will provide models that are suitable for 2C retail, and provide a stable supply to online goods e-commerce, live broadcast rooms, offline mobile phone retail stores, and service stores. In a large environment where consumer spending is slower and consumers spend more carefully, all new products will be supplied by second-hand products with price competitiveness and quality assurance.

Looking ahead, we will further open up our supply chain advantages and become a high-quality supplier for pre-owned products in the industry. At the same time, we will provide models suitable for B2C retail and steady supply through online e-commerce platforms, live streaming channels, as well as offline mobile phone retail networks and service stations. In an environment where consumers are more cautious with their expenses, ATRENEO aims to leverage its competitive pricing and quality assurance of Crayon products to foster mutual success with our partners.

Third, in terms of technology and efficiency, we continue to promote the application of automated technology. First, we continue to increase the accuracy of the automation, using Matrix 3.0 as a representative automation automation system, due to the loss caused by the loss caused by the loss reduction, reduced by 19%. On the other hand, to improve the ability to focus on self-sufficiency, Huanan and Huadong, two automated warehouses, have been further improved in terms of productivity. Thirdly, through the optimization and management of the supply chain and the collection of goods from all over the country, we have reduced the loss caused by Thirdly, in terms of technology and efficiency,

we continue to promote the application of automation technology. Firstly, we have enhanced the accuracy of quality inspection. The automated quality inspection system, represented by Matrix 3.0, has reduced losses caused by quality inspection errors by 19% throughout the year. Secondly, with our focus on one-piece business, we improved capacity utilization in our automated operation centers in South and East China. Thirdly, Through optimizing supply chain management for receiving and delivering goods in different locations, we reduced logistics costs. As a result of these initiatives, our net gap fulfillment expense as a percentage of total revenue has continued its downward trend, reaching 8.5% for the full year 2023, significantly down from 10.9% in 2022. And this underscores our dedication to achieving further cost reduction at scale.

In addition, we are very happy to see that the overseas market has shown a strong interest in the automation technology of second-hand mobile phones. In addition to the domestic market, Hong Kong and Japan have also begun to apply our own research and development technology. In October 2023, we further explored overseas cooperation with European partners, and promoted our own recycling machine in the Ruidian market. This plan has met the needs of international partners in CQB's second-hand electronic product recycling business. In the future, we will continue to maintain the exploration rhythm, focusing on the value of second-hand electronic products around the world.

In the overseas market, we are delighted to see strong interest in our automated technology for Korean-owned consumer electronics. Beyond the mainland China market, our quality inspection technology has been successfully deployed in Hong Kong and Japan. In October 2023, we expanded our global footprint by collaborating with a European partner to bring our one-stop recycling kiosk solution to Sweden. Our one-stop solution effectively addresses the international demand for C2B recycling services. Moving forward, we remain committed to our growth trajectory and will continue to explore the global circulation of pre-owned products.

Looking forward to the first quarter and the whole year of 2024, we believe that the circular economy where everything is new will continue to grow steadily with the passage of time. It is not affected by economic fluctuations and technological changes. We see that at the recovery stage, residents are certain of the recovery needs for convenience, high price and trust. At the purchase stage, Users are more concerned about the budget for spending, which is strengthening the demand for goods that are worth a lot of money. At the end of the trade agreement, it is not easy for second-hand merchants to reach the demand for trading effectively for provincial and new businesses. At the 4th meeting of the Central Financial Commission in late February this year, the General Secretary emphasized the promotion of large-scale equipment updates and consumer goods for the new round. As the leading enterprise in this field, Wanwu Xinsheng has the opportunity to benefit from this trend, and better serve Jingdong and the brand's rescue change project. And once again, it proves that recovery change is encouraged by national policy. It is a long-term stable, high-certainty policy, low-risk track. We will build a solid business platform based on the long-term core strategy, Looking ahead to the first quarter and the full year of 2024,

We believe that AT Renew operates in a sustained circular economy that is impervious to economic fluctuations and technological changes. We identify several key trends in the sector. On the recycling front, we see a definite demand for convenient, high-priced, and trustworthy recycling services. On the purchasing end, we see a stronger demand for value-for-money goods from savvy consumers. On the fulfillment end, we see an unchanging need from second-hand merchants for efficient and hassle-free trading and logistics solutions. In late February this year, President Xi emphasized the promotion of a new round of As a leading company in this field, we are strategically positioned to capitalize on this upward trend and better facilitate JD and brand owners' trading programs. Once again, it demonstrates that recycling and trading are encouraged by national policies as a long-term stable industry with high certainty and low policy risks. Going forward, we will adhere to our long-term core strategy and fortify our business foundations while enhancing brand awareness for AHS recycles. We aim to address users' fundamental pain points and collaborate with industry partners to explore the untapped potential of high-quality second-hand products. We will maintain patience in the long run while steadily releasing profits and achieving growth.

and the world-famous companies such as Jaguar, Schneider Electric, and Baishi. It is also an important recognition of the innovation, technical development, and other aspects of the innovation and technical development of Lutus and professional evaluation of everything. We will continue to deepen the circular economic channel to drive the sustainable development of the industry with technological innovation.

Finally, I am delighted to announce an international accolade. In November 2023, AT Renew was honored as highly commended by the judging panel at the Reuters Global Business Responsibility Awards in the circular transition category. This marks the milestone for AT Renew, as it is the first time we have stood shoulder to shoulder with global multinational companies such as Oracle, Schneider Electric, and PepsiCo. The recognition from Reuters and the expert panel is a testament to our innovation and our technological achievements. Moving forward, we will continue to deepen our commitment to the circular economy, driving sustainable industry development through technological innovation. Now, I'd like to turn the call over to our CFO Rex for financial updates.

OK. Hello, everyone. of significant achievements for our company. Both revenue and operating income saw better than expected results. Total net revenue increased by 31.4% to $13 billion. Adjusted operating income of 2023 totaled $251.7 million, a remarkable 36.5 times the number of 2022. Cash inflow from operating activities was healthy, totaling $236 million. As Kerry said, 2023 was our year of consolidation and efficiency. Moving on to the first quarter of 2023, we are pleased to announce another profitable quarter as we recorded another new record in the gap 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 R&P and our comparisons are on a year-over-year basis and are otherwise stated. In the fourth quarter, total revenues increased by 29.9% to 3,873.6 million. German buyers strong growth in net product revenues and rebounding service revenues. Net product revenues increased by 31.1% to 3,522.5 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 the sales of pre-owned consumer electronics through both PJT and PiPi marketplaces, as well as offline channels, of which sales of 1P refurbished devices totaled 278.2 million, which increased by 41.5% sequentially. The increase in service revenues was primarily due to the recovery of PiPi and PJT marketplaces, with efficient online and offline customer acquisition and better execution. Overall tick rate of our marketplaces went up 56 basis points from the fourth quarter 2022 to 5.36% in the fourth quarter 2023. Now let's discuss our operating expenses. To provide greater clarity on trends in our actual operating basis expenses, We will also discuss our NGAP operating expenses, which better reflect how management views our results of operations. The reconsolidations of GAAP and NGAP results are available in our earnings release and the corresponding Form 6K furnished with the SEC. Merchandise costs increased by 32.9% to 3,150 million. The increase was in line with the growth in product sales. Gross margin at the group level was 18.7% in the fourth quarter. Gross margin for our 1P business was 10.6%. In the fourth quarter, AHS Recycle provided its official trading services for Apple. With the release of the iPhone 15 services, we implemented a proactive approach to attract customers with aggressive pricing strategies, causing gross margin compression. We believe that as our market share within these channels grows, The gross profit will gradually return to normal levels. Fulfillment expenses increased by 9.5% to $301.1 million, excluding share-based compensation expenses, which we will refer to as SPC from PRR. Gap fulfillment expenses increased by 14% to $295.6 million. Under the NGAP measures, the increase was primarily due to an increase in personnel and logistical costs as we conducted more recycling and transaction activities year-on-year. NGAP fulfillment expenses as a percentage of total revenues decreased to 7.6% from 8.7%. The overall decrease in the rate of fulfillment expenses reflects the impact of economies of scale and efficiency improvements through automated operations. Specifically, as the number of WMC orders grow, the average fulfillment cost per order was reduced. Selling and marketing expenses decreased by 46.6% to $317 million, excluding SPC expenses and amortization and impairment loss of goodwill and the intangible assets. Then gap selling and marketing expenses increased by 11.0% to $246.6 million, primarily due to an increase expenses related to marketing activities. NGAP selling and marketing expenses as a percentage of total revenues decreased to 6.4% from 7.5%. General and administrative expenses decreased by 18.8% to 62.2 million. Excluding SBC expenses, NGAP G&A expenses decreased by 17.4% to 45.2 million. primarily due to a decrease in headquarter office expenses and fees related to professional services. Non-GAAP GMA expenses as a percentage of total revenues decreased to 1.2% from 1.8%. Technology and content expenses increased by 17.1% to 63.8 million, excluding SBC expenses and amortization and impairment loss of goodwill and intangible assets. Nungap technology and content expenses increased by 50.6% to 58.3 million. The increase was primarily due to an increase in personnel costs in connection with the upgrades of the company's operation center and systems. Nungap technology and content expenses as a percentage of total revenues increased to 1.5% from 1.3%. As a result, our Nungap operating income was $81.6 million in the fourth quarter of 2023, representing a significant increase of 135.8% year-on-year. The gap operating profit margin was 2.1% compared to 1.2% in 4Q 2022. To provide some content regarding our balance sheet, our inventories amounted to $1 billion at the end of the fourth quarter of 2023, representing a sequential increase of $344.8 million compared with the end of the third quarter of 2023. This increase was primarily due to a surge in recycling volume generated from Apple's official trading program. However, it had a limited impact on our operating cash flow since we have a payment term of 45 days and effectively manage relevant payables through bank guarantees. As of December 31st, 2003, cash-in-cash requirements restricted cash, short-term investments, and funds receivable from third-party payment service providers totaled $2.9 billion. Our strong cash position safeguards totaled $2.93. We repurchased 4.5 million ADSS in the open market for a total consideration of $8.1 million. By December 31st, 2003, we had repurchased a total of 18.4 million ADSS for 56.5 million U.S. dollars under our share repurchase programs. Today, we are delighted to announce a new share buyback program that allows us to repurchase up to 20 million U.S. dollars worth of our shares over the next 12 months based on our confidence in our value creation, business growth momentum, and strong cash flow. Now turning to the business outlook, For the first quarter of 2024, we anticipate total revenues to be between $3,550 million and $3,650 million, representing an increase of 23.6% to 27.1% year over year. Please note that this forecast already reflects our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. When asking the question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone in the call. At this time, we will pause momentarily to assemble our roster. The first question comes from Joyce Ju with Bank of America. Please go ahead.

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

We also saw that users' desire to recover and change lines and the need for resuscitation continued to grow. This shows that in our whole year of self-sufficiency in 2023, the revenue reached 34.4% of the same price growth. The resuscitation of the Jindong channel exceeded 100% of the same price growth. We will continue to promote the main growth wheel of self-sufficiency recovery. Through larger business scale, more extended industrial chain, higher efficiency, to achieve more operating profits, and firmly invest in the brand construction of愛回收, in order to achieve the further release of traffic growth and scale effects. In terms of platform business, we will continue to strengthen the partnership between Paiji Tang and Pai Pai, to upgrade the B2C Pai Pai J-Mai service, to support small and medium-sized businesses, and to expand the supply of 2C products. We believe that the central government's commitment to We are confident that we will continue to achieve more than 30% of the same growth in the private sector business of EP.

Thank you for your question. During 2022 and 2023, we saw a shift in consumer behavior. Our users' focus transitioned from consumption upgrades to an emphasis on value for money. During this transformation, we noticed a swift rise in user demand for trillions and recycling in exchange for cash. As we mentioned, our one-year revenues grew 34.4% year-over-year in 2023. with trading through JD more than doubling compared to the previous year. We will continue to drive the core growth flywheel of 1B recycling business and to extend 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 NHS Recycle to unleash growth of traffic and economy of scale further. In terms of platform business, we strengthened the synergies between TJP Marketplace and PiPi 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 place 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 trading and cultivate it as a mainstream consumption choice. Because of this, we are confident in achieving a 30% year-over-year revenue growth for our 1T business.

Regarding multi-products recovery, in 2023, the multi-products education scale has exceeded RMB1 billion. We are in a high-speed growth stage. In 2024, through more multi-products services, we will further strengthen users' awareness In 2023, GMV for our multi-capware recycling business surpassed 1 billion RMB. This business has grown rapidly in scale. We set a model 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.

Okay, thank you.

Thank you for the question.

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

Thanks for taking my question, and congratulations on the 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 and 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 trade-in business perform in Q4 2023? And what are your scale and profit targets for 2024? Thank you. The second question is about the iPhone. We know that the iPhone 15 series will be released in China. At the end of 2023 and the beginning of the second quarter, there will be a lot of competition, such as Huawei's pressure. How do you see the change in the pattern between brands and manufacturers? Apple will also change its business. How will the performance of the fourth quarter be in 2023? And in 2024, what size and profit goals will we have? Thank you.

Okay, thank you. So I will take your first question, and Carrie, our CEO, will take your second question. Okay, so for our first question, in 2023, we once again achieved breakthroughs in terms of cost efficiencies, and then the gap measures, fulfillment, selling and marketing, and administrative and technology and content expenses as a percentage of revenues for 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 operations stations have further improved our inspection quality and cost controls. The skill effect created by the use of automation technology at operating centers has also had a positive impact. We are now seeing lower cost 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 of shipping. This has driven down shipping and receiving costs. Overall, our operating center expenses and the logistics costs decreased by 9% and 8%, respectively, during 2023. This resulted in a net gap improvement expense of $1.1 billion, a year-over-year increase of already 2%. Our total net gap selling and marketing expenses in 2023 were $940 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 efficiency improvements from deploying advanced digital CRM tools of the B2B sales team. The results was a 19% cost reduction compared to the previous year. In 2023, the general and administrative expenses were $190 million, a year-over-year increase of 21.9%. This was mainly due to office rent and various other administrative costs, including the employee travel, training, and benefits. All the gap technology and content expenses were 170 million in 2023. Thanks to the gradual maturation of our platforms technology and the official launch of our South China Automation Operating Center, we did not see significant cost growth in this category. In addition, the cloud migration initiative we launched in 2022 was completed in 2023. This contributed to an overall decrease in technology and content expenses as a percentage of revenue, representing an improvement in scale effect. The breakdown above highlights the enhancements that led to the increase in our NGAP operating profit in 2023. For path to profitability growth, our primary focus are OMP growth margin and operating efficiency. Our long-term goal is to improve our NGAP operating profit margin by 1% every year. In terms of our 1P business, we prioritize the ability to control our first-hand supply while also enhancing user awareness of our C2B brand, AHS Recycle. We source the first-hand supplies with competitive recycling prices. Meanwhile, we continue to unleash our self-operated refurbishment businesses while we diversify the standard of supply to Pi Pi. We expect a large proportion of 2C sales as we seek a higher profit margin of 1p revenue. I'd also like to add more color on our collaboration with Apple. In the first quarter, our Apple business achieved a sales of $300 million. However, as this business is relatively new and is still being refined, its gross profit margin is below an ideal level. Going forward, we plan to optimize our pricing mechanism to strike a balance between profitability and growth. In terms of operating efficiency, we are constantly optimizing our cost-to-revenue ratios. Our automation capabilities will continue to improve our fulfillment efficiency. The inspection cost per device was diluted due to an increase in ASP. In terms of selling and marketing, we try to maximize the effectiveness of our B2B sales team. At the same time, we plan to strategically leverage social media traffic to attract customers The algorithms and the location-based service capabilities of short video platforms such as Douyin will help us target potential users with great accuracy. This approach has added a benefit to further strengthen our sourcing capabilities and the market position. We recognize that the key to building a successful second-hand business also lies in our ability to acquire suppliers through brand power. Our AHS Recycle brand is pivotal for our long-term development path. At this stage, we believe strategically allocating appropriate resources to social media traffic will solidify our long-term competitive position in this dynamic market. Okay.

China's online official website and the 47 official flagship stores' recovery and resumption of new business have been continuously exposed. As the fourth quarter's new machines are mass-produced, as well as our popular recovery prices, we have received a large number of positive reviews from users in social media, which has led to a positive improvement in recovery prices and user service. At the same time, we have mastered a large number of first-hand quality goods. The business contributed 300 million RMB of product sales revenue in the fourth quarter. Compared to the third quarter, the business has increased by nine times when it first launched. In fact, our return is much greater than the sales. This proves that users are increasing their acceptance of Apple's resuscitation. Resuscitation penetration has a lot of room for improvement. In terms of profits, we will, according to the feedback from the market, 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 300 million RMB in product sales revenue during the fourth quarter. This was a mindful increase compared to the third quarter. Our recycling volume is greater than our sales volume. This proves that users' 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 growth 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 growth profit margin, it has the potential to contribute a relatively higher operating profit margin.

Okay, thank you.

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.