AiHuiShou International Co. Ltd. (NYSE:RERE)
Q2 2021 Earnings Call
Aug 17, 2021, 8:00 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the AiHuiShou International Co. Ltd. second-quarter 2021 earnings conference call.
[Operator instructions] As a reminder, this call is being recorded. I will now turn the call over to the first speaker today, Mr. Jeremy Ji, director of corporate development and investor relations of the company. Please go ahead, sir.
Thank you. Hello, everyone, and welcome to AiHuiShou [inaudible] second-quarter 2021 earnings conference call. With us today are Mr. Kerry Chen, our founder, chairman, and CEO; and Mr.
Rex Chen, our CFO. Our second-quarter 2021 financial results were released earlier today and are available on our company’s IR website at ir.aihuishou.com. For today’s agenda, Kerry will share his thoughts on the Q2 performance, followed by Rex, who will discuss the financial highlights for the second quarter of 2021. Both Kerry and Rex will join the Q&A session.
Before we continue, I refer you to our safe harbor statements in the earnings press release, which applies to this conference call. Any forward-looking statements that the company makes on this call are based on the assumptions as of today, and the company does not undertake any obligations to update these statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures.
Finally, please note, unless otherwise stated, all figures mentioned during this conference call are renminbi and all comparisons are on a year-over-year basis. With that, I will turn the call to Kerry for business and strategy updates. Please go ahead.
Kerry Chen — Founder, Chairman, and Chief Executive Officer
Hello, everyone, and thank you for joining us on our first earnings call as a public company. We are very pleased to have the opportunity to share our business update and strategy with you as we implement our mission to give a second life to all idle group. Our IPO on the New York Stock Exchange in June marks a major milestone in our 10-year development history as a technology-driven preowned consumer electronic transactions and services platform. Our four business lines, namely, AHS Recycle, PJT Marketplace, Paipai Marketplace, and AHS Device spanned across the entire industry value chain.
These offerings, connecting all industry participants to realize the closed-loop value chain, cover both the supply and the demand side of the industry. Our platform combines C2B, B2B, and B2C capabilities to provide standardized inspection grading, pricing, and aftersales services. In the past decade, we have dedicated our efforts through improving the scalability, standardization, and efficiency of preowned consumer product transactions. Our second-quarter results exceeded expectations.
Second-quarter GMV reached RMB 7.8 billion, up 69.6% from the same period last year. Total net revenue recorded RMB 1.87 billion, which represented a year-over-year increase of 56.2%. The number of consumer products transacted on our platform was 7.8 million, up 27.9%. These results are a testament to the enormous growth potential of deploying owned consumer electronic transaction industry and the demonstration of our supply chain capabilities and our efforts in setting industry centers as well are well acknowledged.
Our GMV for the last 12 months increased by 64.9% to RMB 26 billion. LTM revenue increased by 46.2% to RMB 6.4 billion, and the LTM number of consumer products transacted increased by 33.7% to over 28 million. Turning to strategic areas. First, on our 1P business.
We expanded our geographic coverage and trading channels rapidly during this quarter. we continue to optimize user experience for device trading with our strategic partner JD Group to correlate consumer readiness to participate in the trading process. We aim to make our one-stop trading experience as the go-to solution for new phone purchases in China. Also, to better address the issue of rising retail prices for new devices, we cooperated with JD Group during the June 18 shopping fest to launch a multi-device trading campaign that awarded discount for the trading of multiple devices.
These efforts allow us to offer consumers trading at more attractive prices and enhance our ability to source more supply. As a result, the year-over-year increase in GMV for our one-stop trading business exceeded 170%. Second, we continue to expand our service coverage, open new off-line stores, and expand third-party merchant services in lower-tier cities. As of June 30, 2021, the number of off-line stores further increased to 862, covering 184 cities in China.
Among them, 485 were self-operated AHS stores, 365 were jointly operated AHS stores and 12 were Paipai selection stores. Our business philosophy is to open quality stores and manage them well. Stores with our brand awareness and fulfill the online to off-line trading orders, and they build a strong mode of efficient sourcing. By integrating our online platform with off-line stores and services, we are able to provide an optimal trustworthy user experience.
Furthermore, the well-established stores generate solid cash flow and profit. These are great assets. In the second quarter, we accelerated the penetration of city-level operation stations. As of June 30, 2021, we had 30 city-level operation centers.
Backed by our preowned consumer electronics supply chain capabilities, we integrate offerings at our off-line Paipai selection stores and online sales channels to establish a new city-level distribution model for Paipai Marketplace. We expect this to become a new driving force for our business growth in the second half of 2021. In terms of our online marketplaces, we continue to go deep, expanding our reach to buyers and sellers in lower-tier cities. During the quarter, we acquired over 10,000 registered sellers on PJT Marketplace.
As for Paipai Marketplace, we source additional devices from deferred suppliers and performed integrated quality inspections and operations before selling directly to individual consumers, thus further consolidating the industry chain. Third, in terms of new distribution channels of Paipai other than JD.com, including [inaudible] and Kuaishou. Our strategic investment into this field exceeded RMB 20 million. We have built up our partnerships with Kuaishou, the leading live streaming platform, as we empower small merchants on Kuaishou with our 35 preowned consumer electronic supply offerings, inspection, and operation capabilities.
We are able to effectively establish livestreaming-driven sales channels. In mid-July, we launched the recycle portal on Kuaishou through Kuaishou. Going forward, we will enhance our collaboration with livestreaming channels to provide users with premium recycling services and integrated operation centers to establish a new city-level distribution model for the online marketplace. Notably, we have also strengthened our corporate governance by establishing an ESG committee under the board of directors and releasing our 2020 ESG report, which is currently available on our IR website.
The report establishes an index of GRI standards based on characteristics of the preowned consumer electronics industry and outlines an industry-leading calculation methodology for carbon emissions in the sector. In accordance with China’s 14th five-year plan for the development of the circular economy released by the National Development and Reform Commission in July, we aim to further develop our supply chain capabilities for preowned electronic devices to promote sustainability and standardization of the industry. Looking ahead, we will continue to improve our ESG initiatives, optimize corporate governance and operate our business with strict risk management measures to anticipate and adapt to regulatory changes. As we move forward into the third quarter and beyond, we will continue to enhance our supply chain capabilities, increase the penetration rate for China’s trading services and improve the reflecting and trading experiences for consumers.
We believe that supply chain constraints on quality…