Aihuishou Q4 Report: Increasing Presence in the Retail Sector

Beijing time, March 11th, $ATRenew (RERE.US)$ released its Q4 and full-year financial report for 2025. The annual revenue reached 21.05 billion yuan, representing a year-on-year increase of 28.9%. Non-GAAP operating profit was 555 million yuan, up 35.5% year-on-year. For the first time, it achieved comprehensive profitability under GAAP standards for the year, with an annual net profit of 336 million yuan. Quarterly revenues increased sequentially, from 4.65 billion yuan in Q1 to 6.25 billion yuan in Q4, with each quarter reaching or exceeding the high end of the guidance range.

These figures are impressive. Over the past year, the company's stock price rose from $2.7 to $6, reflecting the growth narrative that 'the leading player in the second-hand 3C market benefits from trade-in policy guidance and is gradually moving toward profitability.' However, there are actually three key changes in this earnings report worth highlighting.

– In the fourth quarter, the company’s 1P (to C) product revenue increased by 88% year-over-year, accounting for 41.7% of self-operated income, a new historical high. Aihuishou is no longer just a platform that helps you sell your old phone; its presence in the retail sector is growing.

– The company achieved its first full-year GAAP profitability with a net profit of 336 million yuan, while also issuing its first cash dividend (0.1 USD per ADS). This follows through on the three-year shareholder return plan announced last August, and extends the cooperation agreement with JD.com until 2030. Management is signaling with proactive shareholder rewards that the turning point in profitability has passed, and profits are sustainable.

– AI-driven memory price increases are pushing up the prices of new devices, which is a clear positive for the second-hand industry. CEO Chen Xuefeng’s assessment during the earnings call was that the market environment in 2026 will be overall beneficial for the second-hand industry. For Q1 2026 guidance, the company expects total revenue to be between 5.86 billion yuan and 5.96 billion yuan, corresponding to year-over-year growth of 25.9% to 28.1%, maintaining rapid growth.

To understand the future changes of this company, we must start with their core category—3C products.

Previously, the market understood Aihuishou’s model as: collecting phones from individual consumers (C-end), wholesaling them B2B through Paimai Hall to merchants, and earning the spread and service fees. However, B2B wholesale is essentially a low-margin business, where even if scaled up, profitability hits a ceiling. But starting this quarter, the rapid growth of 1P product revenue changed this perception. As Aihuishou pushes into curated retail, selling directly to end consumers through channels, it achieves a higher proportion of a “C-end acquisition, C-end sale” value chain. Instead of capturing only the service value at the collection end, it now captures the entire price difference across the supply chain from purchase price to retail price.

In Q4 2024, Aihuishou's 1P product revenue accounted for approximately 29%, but one year later it had jumped to 41.7%, an increase of 12.7% year-over-year. On an annual basis, the share rose from 27.2% to 36.8%. Management refers to this as a 'retail-first strategy' and reiterated the unchanged target of having retail revenue account for 50% of 1P business. Simultaneously, revenue from compliant refurbished products grew by 90.8% year-over-year in Q4, consignment business GMV surged by 253% year-over-year, and overseas self-operated exports recently reached a peak of 50 million yuan in a single month.

It can be said that the company’s retail layout has now been fully rolled out.

Changes in the business structure have already begun to show in the financials. CFO Chen Chen disclosed during the earnings call that the full-year 1P gross margin for 2025 was 13.8%, compared to 11.8% in 2024, a one-year increase of 2 percentage points. This was mainly attributed to the combined effects of the C2B recycling scenario, compliance refurbishment capabilities, and diversified retail channels. Simply put, the latter two factors are essentially components of the retail-focused strategy—goods collected from the front-end are sold directly to end consumers through retail channels, with each step increasing the monetization value of individual devices.

The above represents the results delivered in 2025. Entering 2026, the external environment has given this strategy an additional boost: memory price increases.

AI servers have consumed a large portion of memory production capacity, with contract prices for memory expected to surge 80%—90% quarter-over-quarter by Q1 2026, significantly driving up the cost of new devices. According to Counterpoint's forecast, the average price of new domestic models will increase by 15%—25% after March, and IDC predicts that flagship models could see price hikes exceeding 30%. The storage cost for budget phones has already skyrocketed to 43%.

Chen Xuefeng’s assessment of industry trends driven by rising memory prices at the earnings meeting is as follows: the market environment in 2026 will be more beneficial than detrimental for the second-hand industry overall. First, prices for second-hand products will rise alongside new devices, making the market more resilient; second, higher prices for new devices will lead manufacturers and e-commerce platforms to place greater emphasis on trade-in programs, combined with government subsidies, which will accelerate the growth of recycled inventory.

Additionally, a relatively fast-growing metric in financial reports—inventory—has also caught our attention. In Q4 2025, inventory figures surged from 600 million yuan in the same period last year to 1.07 billion yuan. If new device prices are indeed adjusted after the first quarter, the value of inventory itself will also be re-evaluated, which is not entirely a negative factor.

In terms of foundational capabilities supporting retail growth, Aihuishou maintained steady performance in Q4 2025. By the end of 2025, the company operated 2,195 offline stores across 298 cities nationwide, while its door-to-door service team averaged 2,154 daily orders, further expanding the reach of face-to-face deliveries.

There is another long-term variable in the market that has been rarely discussed. In December 2025, a mandatory national standard titled 'Data Security Technology – Requirements for Information Erasure in Electronics' was announced, set to take effect in 2027, with Aihuishou being one of the main drafters. The mandatory nature implies that all players involved in the circulation of second-hand electronics must meet a unified data erasure compliance threshold. For industry leaders, this is not an added cost but rather a strengthening competitive barrier, which will expedite industry consolidation and push non-compliant small-scale participants out of the market.

Currently, Aihuishou’s market capitalization stands at approximately $1.2 billion (equivalent to about 10.5 billion yuan), with a price-to-sales (PS) ratio of around 0.4x and a Non-GAAP price-to-earnings (PE) ratio under 20x. For a company with nearly 30% revenue growth and profits just beginning to enter the release cycle, it cannot be considered expensive. The gross margin for 1P sales was only 11.8% in 2024, but it rose to 13.8% in 2025. Management has set a target of achieving 50% to-C business by 2026, and if achieved, there is potential for further gross margin improvement.

On the cost side, automation-based quality inspection reduces per-order costs by approximately 30% compared to manual processes. Large-scale applications are currently underway at the Dongguan and Changzhou operations centers, resulting in a drop in Non-GAAP fulfillment expenses from 8.1% in the same period last year to 7.7% in Q4 this year. On the growth side, retail-driven initiatives are boosting gross margins, while automation and economies of scale are compressing expense ratios on the cost side. The profit elasticity squeezed out from both ends, coupled with favorable industry tailwinds from rising memory prices in 2026, may represent the most noteworthy changes for this company going forward.

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