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ATRenew Inc.
5/20/2025
Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to ATRenew, Inc.' 's first quarter 2025 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 AT Renew's first quarter 2025 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 first quarter 2025 financial results were released early today. The earnings press release and investor slides accompanying this call are now 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 over our quarterly performance and business strategy, followed by Rex, who will address the financial highlights. Both Kerry and Rex will participate during the Q&A session. Please note that Please note our safe harbor statements. Some of the information you hear during our discussions today will consist of forward-looking statements, and I refer you to our safe harbor statements in the earnings press release. Any forward-looking statements 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. Although this call includes discussions 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, unless otherwise stated, all figures mentioned during this conference call are in RMB, and all comparisons are on a year-over-year basis. And now I'd like to turn the call over to Kerry for business and strategy updates.
Hello everyone and thank you for joining ATRE News first quarter 2025 earnings conference call.
We are excited to share the updates of our performance and business development. and to address your questions about the company's recent progress.
首先在经营业绩层面, 低季度总收入再次超出区间指引高端, 同比增长27.5%至46.53亿元。 在利润达成方面, Nungap 的经营利润同比增长39.5%至1.1亿元。 Nungap 的经营利润率为2.4%, 较去年
Firstly, in terms of operating results, total net revenues for the first quarter once again exceeded the high end of our guidance range, increasing 27.5% year-over-year to RMB 4,653.5 million. On the profitability side, our non-GAAP operating income increased by 39.5% year-over-year to over RMB 110 million. Non-GAAP operating margin reached 2.4%, indicating healthy progress compared to the first quarter of last year.
等級收入的快速健康增長, 主要得益於我們EP業務實現的加速增長。 我們持續投入EP自營業務與回收的交付能力建設, 鞏固一手貨源獲取與愛回收品牌的用戶心智, 並逐步實現更高比例的2C的嚴選銷售。
我会就在三点EP业务的增长驱动力进行进一步的说明。 The strong and stable growth of total revenue was primarily driven by the accelerated growth of our 1P business. We continue to invest in our 1P business and recycling fulfillment capabilities, enhance supply access and strengthen AHS recycle brand recognition among consumers to further improve the penetration of our 1P2C retail sales in our sales mix.
Let me provide more color for the three key drivers of the 1P business.
Firstly, in the first quarter, 1P business revenue grew by 28.8% year-over-year, excluding the high base impact from Apple's official trading program and overseas business as mentioned during the fourth quarter earnings call. Product revenue in the first quarter increased by over 50% year-over-year, exceeding our expectations.
趋势上受益于手机数码品类国家补贴的发放以及京东场景的用户换新需求拉动。 The recovery rate of C2B mobile phone numbers has also increased by more than 50%. We will continue to develop strategies to recover more from C-end consumers and sell more to C-end consumers. In terms of energy, we will continue to enhance the construction of offline service capabilities. Compared to the end of the first quarter of last year, we will compete with 458 second-hand recovery stores. The exchange range paid by our team is also expanded. The payment is also more timely. In terms of trends, supported by the national subsidies for smartphones and digital products, as well as increased demand for user upgrades in the scenario of our strategic partner JD.com platform,
our C2B consumer electronics recycling value grew by over 50% year-over-year. We are committed to advancing strategies on direct engagement with consumers at the front of recycling and retailing. On the capability side, we continue to enhance offline fulfillment capabilities, achieving a net addition of 458 AHS stores year-on-year by the end of March 2025, and broadening our door-to-door fulfillment coverage with more prompt service. The effort improves multiple metrics indicating C2B recycling customer satisfaction and ensures a high-quality experience for trading users via national subsidies.
In terms of Jindong strategic cooperation, we continue to play a unique supply chain advantage that has been built with Jindong for a long time, maintaining the user experience and delivery capability that is leading in the industry, further strengthening the delivery response that is already welcome, and lowering the threshold for users to participate in national supply. By cooperating with Alipay, we and Jindong help users to reduce the cost of buying new products in a good and cheap way, effectively stimulate users' consumption needs, and catch more high-quality second-hand mobile 3C products to achieve the improvement of second-hand recovery penetration rate. As a result, the performance growth of Alipay in the first quarter continues to run high in Jindong. 我们将继续努力提升已就换新供应链能力和服务能力的建设, 以进一步扩大在澳洲手机3C会员端的获取能力和份额。 In terms of our strategic partnership with JD.com, we've strengthened the long-term code development supply chain, delivering best-in-class user experience and efficient fulfillment.
By optimizing the trading process, we've reduced barriers to national subsidies, enabling customers to trade-in used devices for new ones in a better and cheaper way. This not only stimulates demand, but also improves supplies of high-quality pre-owned consumer electronics to boost recycling penetration. As a result, the growth of the trade-in segment continues to outpace. Looking ahead, we will continue to enhance our trade-in supply chain and services to expand our market share in the pre-owned consumer electronics industry.
At the same time, we added the ability to build a brand. Through innovative new media content marketing and environmental response interaction, we encourage users to experience the rich service options of e-resale, and support e-resale existing channels to achieve faster recovery performance growth. Through e-resale brands, we proposed a new environmental initiative, and realized a comprehensive link between the two, encouraging more consumer brands to participate in the interaction, promoting more users' recognition of the value of the love recovery brand, improving users' perception of the love recovery brand and the quality of the use of the love recovery service. During the ninth day of the world's love recovery in April this year, 12 domestic first-tier consumer brands participated in the love recovery and anti-corruption movement, which launched a marketing activity with the theme of second-hand mobile phones and circular economy.
At the same time, we have strengthened AHS Recycle's brand presence through new media channels with creative marketing and influencer partnerships, encouraging users to experience AHS Recycle's wide range of recycling services and accelerating the growth of our recycling channels. We have launched the Revive Environmental Protection Initiative under the AHS Recycle brand and fully integrated it with our existing initiatives. This encourages more consumer brands to collaborate with us, enhancing user recognition of AHS Recycle's value proposition and increasing engagement with our services. In April, while celebrating the Earth Day, we collaborated with 12 leading domestic consumer brands to promote initiatives focused on recycling and the circular economy through joint campaigns across online and offline channels.
In the first quarter, we continue to play a mature end-to-end supply chain ability to strengthen the 2C retail of self-sufficiency products. In the first quarter, the income of EP2C increased by 73.5%, and the 2C ratio of EP income further increased to 33%. Among them, we see that the sale and repair projects are based on their own regulatory reform and preparation capabilities, and they magnify the 2C retail efficiency. By continuously leveraging our mature end-to-end supply chain,
We enhanced our direct-to-consumer retail operations under the 1P business. In the first quarter, 1P2C revenue grew by 73.5% year over year. Retail revenue accounted for 33% of 1P revenue, representing an upward trend. Backed by our refurbishment capabilities, we've seen the pilot program of on-demand refurbishment effectively leverage retail capabilities. creating strong synergies with our in-house compliant refurbishment operations. This approach allows us to offer competitively priced, quality-assured 1P refurbished products to users across PiPi, AHS election, and other retail partner channels. As a result, GMV has shown a healthy upward trend quarter-over-quarter. Additionally, the retail capability of AHS Recycle's official store network continues to expand, with revenue growing by over 160% year-over-year. This amplified our product's accessibility to consumers.
单独看苹果官方已就换新业务, 如此前的业绩电话会沟通, 由于有历史价格策略产生的高技术影响, 该业务板块一季度收入同比有所下降, 但得益于我们的操办能力与效率提升, 苹果业务的利润,
Looking specifically at the Apple official trading business, as mentioned in previous earnings calls, revenue declined year-over-year in the first quarter due to the high base driven by early stage pricing strategies. However, benefiting from our management capability and operational efficiencies, the margin in this segment improved significantly. For overseas revenues, as we adjusted our business scale, there was a notable improvement in margin as well.
平台业务方面,今年以来,除了看到线上线下用户对于已就换新的接触度的显著提升, 行业商家的需求也在发生一些积极的变化。 为此,我们的B2B B2C多品类回收业务进行了服务能力升级,
Regarding our marketplace businesses, we've seen a marked rise in trade-in service acceptance among both online and offline users, alongside positive shifts in merchant demand. In response, we have enhanced our B2B, B2C, and multi-category recycling services to deliver best-in-class user experience, thereby boosting user loyalty.
We continue to strengthen Pagetang's industry-based testing capabilities and improve customer service. By the end of the first quarter, Pagetang's total number of registered customers has exceeded one million. The number of trading customers shows a significant double-digit growth. The higher collection rate, the lower income and ratio increase in the warehouse, led to a 24-point increase in the collection rate of the Pagetang platform. We've strengthened our industry capabilities as fundamental infrastructure and enhanced services for merchants.
As of the end of the first quarter, the number of registered merchants in PJT exceeded one million, with a double-digit year-over-year increase in active trading merchants. The proportion of higher fee OPT services i.e. shipping quality inspection services grew, raising PJT marketplaces take rate for second-hand consumer electronic transactions by 24 basis points. This reflects PJT's growing nationwide prominence as an essential infrastructure within the industry and as a leading exchange for second-hand electronic products.
开机党引领二手销售方式的创新,增加更多样的线上线下出货方式。 今年3月, In Huajiang, Shenzhen, we opened the first offline flagship store in Pajitang, leading the transparent upgrade of the 2-hand 3C industry. The store is located at 1,200 square meters, and there are nearly 10,000 professional 2-hand mobile phones on site. Pajitang flagship store adopts the trans-market integrated mode of storage and front mode. By constructing the scene of looking, checking, and collecting, the sales channel is three to five days shorter than the traditional sales channel. PGT is pioneering the innovation of second-hand sales models by expanding diverse online and offline sales channels for merchants.
We launched our first offline flagship store in Shenzhen's Huaqiangbei, driving transparency in the pre-owned consumer electronics industry. The 1,200-square-meter store displays nearly 10,000 second-hand phones that have undergone professional inspection. The flagship store operates under a warehouse-to-retail model, seamlessly integrating storage and sales functions. By offering all-in-one browse, inspect, purchase experience, It significantly reduces the traditional three to five days of restocking cycle, helping merchants reduce inventory costs and minimize logistics delays. On-site procurement also reduces after-sales disputes. We will continue to empower more industry merchants, open up our local and national merchant resources to enrich the offline product selection.
In addition, in recent years, we have been testing, shooting, and simplifying the entry-level inspection process of self-employed business owners. With lower cost management, the small warehouse located in the city trading center is closer to the business owners, and the business services are more convenient. At the same time, we explore the cooperation of live broadcast platform broadcasters to open a batch and three batches of goods, goods plates and supply chains. The broadcasters in the 3C industry of second-hand mobile phones help C-end users In addition, we recently began piloting compact authentication warehouses within our self-operated CT2 Streamline
the quality inspection process for merchants. These compact warehouses, located closer to major trading hubs, allow us to operate at lower costs while offering more convenient and accessible services to merchants. At the same time, we are exploring collaborations with influencers on live streaming platforms. We opened our 1p and 3p inventory and supply chain on the PJT marketplace to those influencers. which enables them to help users find high-quality and cost-effective devices, creating the specialty buyer model and enhancing the service loop between PJT and consumers. Moving forward, we will open up more platform capabilities to merchants to boost quality product sales and promote distribution capabilities and compliant growth of pre-owned consumer electronics across regional centers.
PaiPai provides second-hand sales transformation for small and medium-sized businesses in more second-hand industries. By expanding recruitment, increasing the sales scale of platform goods, strengthening the background construction of business, optimizing business experience and pricing, comprehensively increasing the sales rate of goods, and at the same time strengthening and perfecting the service strategy of post-sale and service, to increase the flow and customer purchase experience. On a scale, PaiPai second-hand sales of all products in the first quarter As part of the ongoing transformation of the pipe high consignment business, we are focused on better serving small merchants in the second-hand industry.
This includes expanding merchants to increase the variety and volume of available products. strengthening back-end systems to improve greater accuracy in pricing and the overall merchant experience, while driving higher product turnover. In terms of scale, sales across all categories in the PiPi consignment business grew by 2.2 times year-over-year in the first quarter. Looking ahead, we plan to further integrate consignment products into more of our self-operated distribution channels, providing small and medium-sized merchants with broader access to retail opportunities.
In terms of multi-product recovery service development, in the first quarter, multi-product recovery transaction GMV and revenue have achieved nearly 200% of the same growth. The growth trend is still strong. Among them, the performance of gold recovery growth is relatively fast. In terms of luxury product recovery, the recovery rate has improved significantly. Under the comprehensive impact, the comprehensive recovery rate of multi-product recovery is equally stable. In terms of user experience, throughout the development of multi-category recycling services, both gross transaction value and revenue nearly tripled year over year in the first quarter.
Gold recycling saw faster growth, while the recycling service fee for luxury goods increased slightly. As a result of these combined factors, the overall multi-career resulting take rate remains stable year over year. In terms of user experience, we have continued to optimize our SOPs and internal capabilities across multiple areas, including pre-resulting consultation, pricing, and delivery. As a result, overall customer satisfaction and user experience have improved meaningfully.
In summary, our main business achieved a faster growth than expected in the first quarter of this year. With the best recovery experience in the industry, we caught up with the development opportunities brought by the national stock market. In the second quarter, we are confident to continue to strengthen the construction of delivery and brand power, and form a longer recovery consumption and recovery mindset for users, and further grasp the main thrust of industry development. In the long term, as users improve their recovery and out-of-hand recognition, In summary, our core businesses achieved faster than expected growth in the first quarter of this year.
we seized growth opportunities arising from national subsidies by providing best-in-class trade-in experience. As we enter the second quarter, we are confident in further strengthening our fulfillment capabilities and brand influence. This will enhance users' awareness of trade-in and recycling, enabling us to seize the industry growth opportunities. In the long run, as user recognition of recycling and second-hand products continues to rise, the industry is on a positive growth trajectory. With our long-term and steadfast scenarios plus supply chain strategy, we are committed to obtain more user mindshare, enhancing user experience, ensuring the efficient circulation of second-hand products, and creating greater value. Now I'd like to turn the call over to CFO Rex for financial updates.
Hello, everyone. We are pleased to share with you the financial performance of the company's first quarter of 2025. Following the fall of the national policy, the company's contractual exchange capacity has been strengthened, and the sales capacity has been challenged. We have once again broken through and led the high-end segment. In the first quarter of 2025, the revenue of the first quarter exceeded 16.5 billion yuan, which increased by 27.5%. The net profit of the gap increased by 39.5%, which exceeded 1.1 billion yuan.
Hello, everyone. We are pleased to report strong financial performance in the first quarter of 2025. Driven by the national subsidy policies, our enhanced fulfillment capabilities, and expanded retail network, total revenue in the first quarter once again exceeded the high end of our guidance, increasing by 27.5% to over $4,650 million, and adjusted operating income increased by 39.5% to over $110 million. 在解读财务数据之前,请注意,除非另有说明,所有金额均以人民币为单位,所有增速数据均为同比。 Before taking a detailed look at the financials, please note that all amounts are in RMB and all comparisons are on a year-over-year basis unless otherwise stated.
第一季度,集团总收入的增长动力主要来自产品收入的持续稳健增长,产品收入增长28.8%至42.6亿元。
In the first quarter, the growth of total revenues was primarily driven by sustained growth in our net product revenues. Net product revenues increased by 28.8% to RMB 4,260 million, primarily due to an increase in the sales of free-owned consumer electronics through our online channels.
服务收入为3.9亿元,同比增长14.2% Net service revenues were 390 million,
representing an increase of 14.2%. The increase was primarily due to an increase in the service revenue generated from multi-category recycling business and PJT marketplace. The growth in service revenue went along with the upward trend in our marketplace's overall growth transaction value, delivering an overall marketplace take rate of 5.25% in the first quarter of 2025. During the quarter, our multi-category recycling business contributed over $50 million of revenue, accounting for 13.3% of service revenues.
The percentage significantly increased from 5.6% in the same period of 2024. Now, let's discuss our operating expenses.
To provide greater clarity on the trends in our actual operating-based expenses, we will mainly discuss our non-GAAP operating expenses, which better reflect how management views our results of operations. The reconciliations of GAAP and non-GAAP results are available in our earnings release and the corresponding form 6K furnished with the U.S. SEC.
商品成本增加23.7%是36.2元,与产品销售的增长一致。 我们EP业务的毛利率为15.2%,而上年同期为10.9%。 Merchandise costs increased by 22.7% to $3,620 million.
In line with the growth of product sales, growth profit margin for our 1P business was 15.2% compared with 10.9% in the same period last year. The improvement of growth margin in our 1P business was primarily due to our C2B recycling supply chain capabilities, compliant refurbishment capabilities, and diversified retail channels. In addition, we optimized the business strategy of Apple's official trade-in program Despite a decrease in business scale from the high base in the first quarter of 2024, the growth margin in the first quarter of 2025 achieved a significant turnaround from losses compared to the same period last year.
履约费用增长38.1%至4.3亿元,能盖付履约费用增长40.2%至4.3亿元,能盖付履约费用增长的主要原因有,一,与2020年同期相比, Fulfillment expenses increased by 38.1% to 430 million.
Non-GAAP fulfillment expenses increased by 40.2% to 430 million. Under the non-GAAP measures, the increase was primarily due to an increase in personnel costs and logistics expenses as we conducted more recycling and transaction activities compared with the same period of 2024, and an increase in operation-related expenses as we expanded our store networks and operation center capacity in the first quarter of 2025. Non-GAAP fulfillment expenses as a percentage of total revenues increased to 9.1% from 8.3%.
销售费用增加30.4%至4.2亿元。 Nungap销售费用增加72.8%至3.9亿元。 主要原因为广告和推广活动相关的费用增加, 以及渠道服务相关的佣金费用增加。 Nungap销售费用率从6.1%上升至8.3%。 Selling and marketing expenses increased by 30.4% to 420 million yuan.
Non-GAAP selling and marketing expenses increased by 72.8% to 390 million. The increase was primarily due to an increase in advertising expenses and promotional campaign-related expenses, and an increase in commission expenses in relation to channel service fees. Non-GAAP selling and marketing expenses as a percentage of total revenues increased to 8.3% from 6.1%.
General and administrative expenses decreased by 14.1% to 63 million.
Non-GAAP GNA expenses increased by 2.2% to 59 million, primarily due to an increase in personnel costs. Nungap G&A expenses as a percentage of total revenues decreased to 1.3% from 1.6%.
Technology and content expenses increased by 9.6% to 55 million.
Non-GAAP technology and content expenses increased by 16.5% to 53 million. The increase was primarily due to an increase in personnel costs. Non-GAAP technology and content expenses as a percentage of total revenues decreased to 1.1% from 1.2%.
利润层面低季度的 Non-GAAP经营利润为1.1% 同比增长39.5% Non-GAAP经营利润率为2.4%
As a result, our non-GAAP operating income was 110 million in the first quarter of 2025, representing an increase of 39.5% year-over-year. Non-GAAP operating profit margin was 2.4%, compared to 2.2% in the first quarter of 2024.
在2025年一季度,我们使用了约120万美元为购进40万个ABS, During the first quarter of 2025, we repurchased a total of approximately 0.4 million ADSs for approximately
$1.2 million and our current share repurchase program, which authorizes us to repurchase up to $50 million worth of our shares, including ADSs, through June 27, 2025. As of March 31, 2025, we had repurchased a total of approximately 10.7 million ADSs for approximately $27.1 million under this share repurchase program.
As of March 31, 2025, cash and cash equivalents restricted cash, short-term investment, and funds receivable from third-party payment service providers totaled 2.78 billion RMB.
Our financial reserves are sufficient to support reinvestment in business development and shareholder returns.
关于2025年第二季度的指引,我们预期总收入将在47.1亿元至48.1亿元,对应同比增长24.7%至27.4%。 以上指引仅反映当前我们对市场和运营状况的初步看法,预期有可能有变化。 Now turning to business outlook, for the second quarter of 2025,
We anticipate total revenues to be between RMB 4,710 million and RMB 4,801 million, representing a year-over-year increase of 24.7% to 27.4%. Please note that this forecast only reflects our current and preliminary views on the market and operational conditions, which are subject to change.
以上是我们的业绩重点分享,欢迎各位提问交流。
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 a question, please state your question in Chinese first Then repeat your question in English for the convenience of everyone on the call. We will pause momentarily to assemble our roster. And your first question comes from Joyce Ju with Bank of America. Please go ahead.
Thank you for accepting my question. First of all, congratulations on your achievement. I have two questions. The first question is to ask how the national stock exchange rate of the recovery and exchange rate of the exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and exchange rate of the recovery and Thanks, management, for taking my questions, and congrats for achieving a strong quarter. My first question is on the national subsidy. How effective has the national subsidy been in promoting recycling and trading programs? Do you see the same growth momentum in your secondhand recycling and resale business as a result? Secondly, in the first quarter, we see that both revenue and non-GAAP operating margins showed strong performance. Could you please help to explain the increase in the non-GAAP fulfillment margin and self-marketing margins. Is there any adjustment to this year's total revenue and margins target? Thank you.
谢谢提问。 我先回答第一个问题, 第二个问题Rex来回答。 第一个问题是, 据统计我们一季度, 国内智能手机新机出货量同比增长了9%, 连续五个季度实现了正增长。 Thank you for the questions.
I will take the first and Rex will take the second. Regarding our first question, according to industry research, the shipment of new smartphones in the domestic market increased by 9% year-over-year in the first quarter, marking positive growth for the fifth consecutive quarter. Meanwhile, new consumer electronic sales on our partner platform, JD.com, has strong growth momentum. The subsidies for trade-in programs, combined with our strong positioning in key recycling channels,
have jointly driven the accelerated growth of our 1P business. is around 1,500 yuan. Users have more motivation not only to receive national subsidies, but also to actually add up the recovery service. Looking at the medium and long term, we believe that the determination of the country to promote consumption is certain. In all the transactions of our mobile phone, mobile phone is the most important product category, with a ratio of about 70%. The exchange period of mobile phones is about two years. We have previously shared the view that the national subsidies will definitely boost the mobile phone restructuring business.
Backed by industry-leading brand awareness, fulfillment capabilities, and unique advantages in essential application scenarios in recycling, AHS Recycle is well-positioned to benefit from the increasing adoption of recycling in mainstream channels. Currently, the national subsidy cap for mobile phone trade-ins is 500 RMB. However, our average recycling price in 1P business is approximately 1,500 RMB. This creates a stronger incentive for users to not only take up the national subsidy, but also leverage the trade-in service of Ahrefs Recycle. Looking ahead to the medium to long term, we remain confident in China's strong and consistent commitment to stimulating consumption. In our total transaction volume for pre-owned consumer electronics, mobile phones are the largest category, accounting for approximately 70%. The average replacement cycle for phones is about two years, and there are approximately 300 million new phones and tens of millions of new laptops and digital devices being shipped annually in China. Currently, the penetration rate for recycling and trade-in program remains in single digits. But in the long run, we believe there is potential for domestic penetration to raise to over 20%.
The main brands and e-commerce platforms we've collaborated with are participating in national subsidy programs,
with more flexible pricing strategies. Therefore, during the June 18th Shopping Festival this year, we expect to maintain business growth through trade-in services and are committed to strengthening our delivery capabilities to better serve users in recycling and trade-in.
Let me answer the second question. In the first quarter, our GAAP net profit rate increased. This is mainly due to the balance control of our price strategy and comprehensive spending rate. As Kerry shared before, Apple's official supply chain business and overseas business in the first quarter of 2024 have high technical and higher loss effects. But in the first quarter of this year, with the optimization of our business strategy and price strategy, the profit rate of the top two industries has significantly improved. At the same time, we also play an advantage in the supply chain.
Regarding the second question, the year-on-year improvement of non-GAAP operating profit margin in the first quarter was mainly due to our pricing strategy and balanced control of the overall expense ratio. As Kerry noted, in the first quarter of 2024, Apple's official training program and our overseas business reported high revenue and losses. However, in the first quarter of 2025, As we optimize business and pricing strategies, the profit margin of the two businesses has significantly improved. Meanwhile, by leveraging our supply chain strengths, the proportion of 1P2C retail revenue increased by 8% year-over-year.
同期,随着自营业务规模的快速增长, 我们阶段性的撤走自营门店的发展, 在旅约和处置段均增加人手, 因此,能盖的旅约费用率同比增加0.9%,
During the same period, as our 1P business expanded rapidly, we strategically focused on self-operated stores and increased staff fulfillment and operation functions. Thus, the non-GAAP fulfillment expense ratio rose by 0.9% year-over-year.
Non-GAAP sales rate increased by 2.2%, mainly due to promotion and advertising expenses. This quarter, as business needs increased, we increased discount and promotion expenses. The non-gap selling expenses ratio has increased by 2.2%, mainly due to higher promotion and advertising expenses.
With rising business demands, we increased coupon-related promotion expenses this quarter. Meanwhile, to raise brand awareness, we made investments aligned with business growth, such as a new media platform of AHS Recycle brand. Additionally, in strengthening recycling and trade-in collaboration with JD.com, channel commissions rose as expected.
Due to the detailed management and development operation of the group,
Benefiting from our refined management of general and administrative expenses, as well as technology and content expenses, both non-GAAP expenses ratios decreased in the first quarter. As a result, the non-GAAP operating profit margin for the first quarter increased by 0.2% year-over-year.
Looking at the full year of 2025, we remain committed to our goal of accelerating total revenue growth.
We will continue to strengthen our fulfillment capacity and brand influence to support growth in trade-in volumes driven by national subsidy programs and maintain competitive pricing strategies. In the future, we aim to gradually improve our NANGAP operating profit margin, reflecting our effective operating leverage.
And your next question comes from Xiaowan. with CICC.
Please go ahead. Thank you for taking my question. As you mentioned earlier, your goal is to accelerate store openings this year with target of a net add of 800 HHS recycled stores. Can you share details on the progress of store opening in the first quarter? Thank you.
Okay, thank you for the question. As of March 31, 2025, there will be 1,800 86 stores, of which 917 are self-serve stores, and 969 are joint stores. The total number of stores is 458 compared to last year's Q1 new competition. Compared to the end of 2024, we have improved the satisfaction of users by effectively taking over the stock of some areas in the three high-end cities, and have cut some stores into self-serve modes to improve the recovery performance of these stores with more efficient self-serve management and operation capabilities.
As of March 31, 2025, there were a total of 1,886 AHS recycle stores nationwide, including 917 self-operated stores and 969 joint-operated stores. The total number of stores has increased by a net of 458 compared to the same period last year. Compared to the end of 2024, in certain areas of three high-tier cities, We transitioned some of our joint-operated stores to a self-operated model to effectively handle the incremental trading volumes from national subsidies and improve user satisfaction. This change allows us to leverage the more efficient self-managed operational capabilities to quickly boost the recycling performance of these stores.
同期,我们快速建设上门交付能力建设。 Over the same period, our two-door fulfillment team expanded by 360 people year-over-year to 1,000 people, strengthening our fulfillment capabilities in more markets. We are increasing the proportion of face-to-face services by extending both in-store and two-door services.
In our NPS service, Users are much more satisfied with these two face-to-face offline service featuring instant confirmation than with logistics-based pickup. We will continue to enhance our offline fulfillment capabilities to provide the best in-class 3D experience. Thank you for the question.
And your next question comes from Michael Kim with Zach's Small Cap Research. Please go ahead.
Great. Good morning and good evening, everyone. Just one question from me. Just in terms of your initiatives to enhance the AHS recycle brand, can you discuss how much traction you've seen as a result of your increased focus on marketing and advertising, and then just related to that, how should we be thinking about incremental expenses or customer acquisition costs as you continue to prioritize improving brand awareness and loyalty? Thanks.
Okay, thank you for your question. 汉回收的回收第一品牌新制的建设 主要是通过 We believe that high-quality recovery delivery services and positive responses to user feedback are the basis of brand beauty. In addition, we consider that the current recovery service penetration rate is still very low. We promote and promote through some sacred new media promotion activities.
AHS Recycle has solidified its position as the leading brand in recycling by providing best in curve fulfillment services. We believe that high quality services and proactive response to user feedback are the cornerstones of brand reputation. Given the current low penetration rate of recycling services, we have strategically employed well-planned new media campaigns to promote our services and enhance brand awareness.
On the one hand, we record and produce really interesting recovery service work, and introduce to more extensive users the recovery service that is safe, convenient, and has a good price. On the other hand, we rely on the location of the site to send the nearby recovery door to the user, and transfer the order from the recovery small program to the door of the official website. In addition, we support the collaboration of door stores and the joint production of local users with the same name. For the collaboration of door stores, On the one hand, we introduce engaging content showcasing our recycling services, emphasizing AHS Recycle's competitive pricing, security, and convenience.
On the other hand, by leveraging geo-targeting, we guide users to nearby AHS recycle stores, driving orders through our mini program, official website, and AHS stores. Furthermore, we enhance the new media presence of our joint-operated stores by co-creating content that resonates with local users, thereby attracting more customers to the stores. As a result, in the first quarter, the product revenue from AHS mini program and official websites grew faster than our overall 1P business.
What is worth emphasizing is that with the promotion of the national stock market, more users have been able to access or use the second-hand recovery service. We believe that as we build the love recovery brand with a rhythm and provide the industry-leading recovery service experience, love recovery will further enhance the market share and user awareness.
The national subsidy has also played a role in increasing user awareness and adoption of our services. Looking ahead, we will continue to strengthen the AHS Recycle brand and refine our industry-leading recycling service offerings to capture greater market share and reinforce user perception.
Okay, thank you.
As there are no further questions at this time, I'd like to turn the conference back to management for closing remarks.
Thank you. Thank you all again for joining us. A replay of today's call will be available on our IR website shortly, followed by a transcript already. If you have any additional questions, please feel free to email us at ir.agradio.com. Have a good day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.