You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report. A.Operating Results We are a leading pre-owned consumer electronics transaction and service platform in China. We have created the infrastructure for pre-owned consumer electronics transaction and service by digitalizing and standardizing the industry, with a strong focus on mobile phones. While core to our success is our ability to effectively source supply, our offerings today span the entire value chain for pre-owned consumer electronics. Our business primarily consists of three components, AHS Recycle, PJT Marketplace and Paipai Marketplace. Together, they form a fully integrated, digitally powered ecosystem that spans the entire industry value chain. Our platform digitally integrates every step of the pre-owned consumer electronics value chain. We obtain supply of pre-owned consumer electronics, process pre-owned consumer electronics for resale using our proprietary inspection, grading, and pricing technologies in our centralized operations centers, and distribute the processed electronics to a variety of purchasers. We transact with consumers and small merchants at both the supply and demand sides of the value chain, ensuring that a diverse range of participants have access to our platform. Our end-to-end coverage of the value chain and diverse supply and demand combine with our quality and pricing benchmarks to standardize the industry in China. We generate net revenues from product sales and services we provide primarily through PJT Marketplace, Paipai Marketplace and our other channels such as offline AHS stores. Our net revenue increased by 25.9% from RMB12,965.8 million in 2023 to RMB16,328.4 million in 2024, and further by 28.9% to RMB21,048.3 million (US$3,009.9 million) in 2025. Our loss from operations was RMB173.3 million in 2023. Our income from operations was RMB29.0 million in 2024 and RMB456.2 million (US$65.2 million) in 2025. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results.” Key Factors Affecting Our Results of Operations Key factors affecting our results of operations include the following: 100 Our ability to increase the number of consumer products transacted The number of consumer products transacted is one of the main drivers for our revenue. Our platform attracts an increasing number of buyers and sellers to us to transact pre-owned consumer products. We have an omni-channel procurement network to secure supply both online and offline. We fulfill significant demand from small merchants and consumers nationwide through PJT Marketplace and Paipai Marketplace, respectively. Continued growth in the number of consumer products transacted may stem from improved user experience, efficient processes, enhanced transparency, and robust security measures. Our ability to effectively source the supply of pre-owned consumer electronic devices Our ability to source the supply of pre-owned consumer electronic devices is a key factor affecting our revenue. Our fully integrated online-offline sourcing network combined with our strategic partnerships with JD Group, major phone brands and retailers ensure that we are able to effectively source the supply to consistently meet the demand of buyers coming to us. We source supply from our website, mobile app, mobile mini programs and AHS stores with broad coverage from top-tier to lower-tier cities. The omni-channel procurement network allows us to quickly secure supply of consumer electronics and scale up our business. Our leading sourcing network together with our in-depth know-how of the industry laid our foundation of constant and steady demand. To further strengthen our supply chain, we are expanding our sourcing channels by opening more AHS stores and increasing our penetration into lower-tier cities across China. We are also enhancing our merchant empowerment services. In addition, we aim to strengthen our relationships with key partners, including JD Group and major phone brands, to continually vitalize and grow the supply of goods. Our ability to effectively distribute pre-owned consumer electronic devices Our ability to effectively distribute pre-owned consumer electronic devices sourced from both AHS channels and third-party channels directly affects our revenue. We have an effective distribution strategy for our own inventory based on increasingly automated inspection, grading and pricing, as well as accurate targeting of buyers. We sell high unit price products to consumers through Paipai Marketplace, AHS Select, AHS stores, AHS app and Weixin mini-program, and other channels that we operate, and offer mid-to-low unit price products to merchants and retailers through PJT Marketplace. We also effectively distribute supplies from third-party transactions through various methods. We use a combination of blind auction and fixed-price sale to motivate more merchants to participate in PJT Marketplace. The blind auction model promotes competitive bidding and potentially higher sale prices by keeping bidder and price information confidential, while the fixed-price model offers transparency, speed and certainty by allowing immediate purchases at clearly stated prices. Our ability to monetize our direct sales and third-party transactions on our online marketplaces The monetization level from both our direct sales and third-party transactions on our PJT Marketplace and Paipai Marketplace directly affects our revenue. We generate net product revenue from the direct sale of goods, and net service revenue from charging commission fees from merchants and/or customers for transacting in our online marketplaces. We sell our own inventory with a markup irrespective of conditions of the device, thanks to our advanced pricing mechanism that sets the industry standard. Since April 2022, we have started to pilot our consumer electronics repair and refurbishment operations, under which we sell pre-owned electronic devices with renewed components. We will continue to expand this refurbishment services at a larger scale, which may enhance margins along the value chain. In addition, we are strengthening our monetization strategy by expanding our multi-category recycling business, which 101 enables individuals to trade in used luxury goods, gold, jewelry, and other high-value consumer items for cashback. We also offer a range of complementary services, including the sale of electronic accessories and the provision of phone screen protection services, further diversifying our revenue streams. Our ability to leverage technology in our operations Our proprietary technologies are key to achieving shorter turnaround cycle, efficient operation and quality customer service. Our infrastructure provides end-to-end coverage of the value chain and standardizes the inspection, grading, and pricing process. Technology infrastructure at our operation centers supports our growth through automation and data insights, enabling efficient inspection, grading and pricing of devices at scale. Automation reduces manual processes in our operation centers, hence reducing the cost of running these centers. We have developed a proprietary automated inspection, grading and pricing system utilized by our operation centers. Our operation centers are able to assign quality grading to pre-owned devices on scale significantly faster and cheaper than manual inspection. As a result, we achieve improved efficiency and accuracy for our inspection, grading and pricing process. As of December 31, 2025, we operated eight centralized operation centers, equipped with proprietary data-driven processing technologies, in Dongguan, Changzhou, Wuhan, Chengdu, Tianjin, Shenyang, Xi’an, and Hong Kong. Our centralized operation centers in Changzhou and Dongguan have fully automated capabilities, with the latter being a more advanced second generation in multiple aspects, including inspection accuracy, operational efficiency, and storage capacity. See “Item 4. Information on the Company—B. Business Overview—Our Operation Centers and Stations” for more details. Big data and artificial intelligence enable us to optimize our pricing strategies and ensure efficient day-to-day operation of our AHS stores. By analyzing thousands of phone models, millions of transactions, and the purchasing behavior of millions of consumers and small merchants, we provide benchmarks for quality and pricing in the industry. Our data capabilities allow us to capture key in-store foot prints to optimize store management and provide standardized customer service offerings, which greatly improve the operation efficiencies of our AHS stores. We will continue to invest in technology to further scale our platform. Our ability to control operating expenses and enhance operational efficiency Our results of operations are affected by our ability to control our operating expenses. We expect that our operating expenses as a percentage of our total revenue will decrease over time. This expected improvement is primarily driven by the advantages of economies of scale as our business grows, as well as increased efficiency resulting from our robust technology and automation capabilities. To ensure the scaling of our business is carried out in an efficient and cost-effective manner, we have strengthened our strategic relationship with JD Group to benefit from its large and active consumer traffic at a reasonable cost. We will also further optimize fulfillment expenses through more efficient management of warehousing and logistics. We believe that our expanding scale, combined with ongoing technological innovation and automation, will enable us to further enhance our operational efficiency. 102 Key Operating Metrics We evaluate the number of devices transacted as key metrics affecting our results of operations. Number of consumer products transacted. Our number of consumer products transacted calculates the number of consumer products distributed to merchants and consumers through transactions on our PJT Marketplace, Paipai Marketplace and other channels we operate in a given period, prior to returns and cancellations, excluding the number of consumer products collected through AHS Recycle. A single consumer product may be counted more than once according to the number of times it is transacted on our PJT Marketplace, Paipai Marketplace and other channels we operate through the distribution process to end consumer. We track the number of consumer products transacted to measure our sourcing capabilities and our ability to distribute pre-owned consumer products. For the Years Ended December 31, 2023 2024 2025 Number of consumer products transacted (in million) 32.3 35.3 41.8 Key Components of Results of Operations Net revenues We generate net revenues from product sales and services we provide primarily through PJT Marketplace, Paipai Marketplace and our other channels such as offline AHS stores. The following table sets forth the breakdown of our net revenues by amounts and percentages of net revenues for the periods presented: For the Years Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues: Net product revenues 11,658,298 89.9 14,844,416 90.9 19,379,932 2,771,293 92.1 Net service revenues 1,307,484 10.1 1,483,984 9.1 1,668,324 238,567 7.9 Total net revenues 12,965,782 100.0 16,328,400 100.0 21,048,256 3,009,860 100.0 Net product revenues. We generate revenues from sale of phones and other consumer electronics goods through our PJT Marketplace, Paipai Marketplace and our other channels such as offline AHS stores. We procure pre-owned phones and other consumer electronics from consumers, small merchants, consumer electronic brands through our online and offline channels. We then process the pre-owned consumer electronics using our proprietary inspection, grading, and pricing technologies and sell them at a higher price suggested by our pricing mechanism. We also give our buyers the option to trade in their pre-owned devices for new ones through cooperation with JD Group and brand partners. Net service revenues. We charge commission fees to merchants and/or customers for transacting in our online marketplaces. For PJT Marketplace, we charge both the merchants and buyers a commission fee that ranges from a total of approximately 6% to 7% in 2025 of the executed transaction price. Generally, the commission fee charged to the merchants is determined as a percentage based on the executed transaction price, and the commission fee charged to buyers is determined as a negotiated tiered amount. For Paipai Marketplace, commission fees are charged to merchants only. Such commission fee is determined as a percentage based on the executed transaction price, typically ranging from 3% to 5% of the executed transaction price. 103 Operating Expenses Our operating expenses primarily consist of merchandise costs, fulfillment expenses, selling and marketing expenses, general and administrative expenses, and research and development expenses. The following table sets forth the breakdown of our operating expenses, in absolute amounts and as percentages of total net revenues for each of the periods presented: For the Years Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating costs and expenses Merchandise costs 10,338,870 79.7 13,086,418 80.1 16,699,982 2,388,066 79.3 Fulfillment expenses 1,123,994 8.7 1,382,273 8.5 1,761,718 251,922 8.4 Selling and marketing expenses 1,250,860 9.6 1,367,028 8.4 1,653,702 236,476 7.9 General and administrative expenses 265,981 2.1 306,782 1.9 275,008 39,326 1.3 Research and development expenses 195,679 1.5 210,364 1.3 243,912 34,879 1.2 Total operating costs and expenses 13,175,384 101.6 16,352,865 100.2 20,634,322 2,950,669 98.1 Merchandise costs Merchandise costs primarily consist of cost of acquired products mainly through AHS Recycle and inbound shipping charges for our product sales. We expect our merchandise costs to continue to grow in line with our growth in revenue from product sales. Fulfillment expenses Fulfillment expenses consist primarily of expenses incurred in operating our platform, centralized operation centers, operation stations, offline AHS stores and warehousing operations, such as personnel expenses attributable to purchasing, receiving, inspecting and grading, packaging and preparing customer orders for shipment, as well as outbound shipping charges. Selling and marketing expenses Selling and marketing expenses consist primarily of amortization of intangible assets and deferred cost in relation to the acquisition of Paipai Marketplace and business cooperation agreement with other party, platform promotion expenses, channel commissions, advertising expenses, and payroll and related expenses for personnel involved in marketing and business development activities. Our selling and marketing expenses were RMB1,250.9 million, RMB1,367.0 million, and RMB1,653.7 million (US$236.5 million) in 2023, 2024 and 2025, respectively. General and administrative expenses General and administrative expenses consist primarily of personnel related expenses for general corporate functions, including accounting, finance, tax, legal and human relations; costs associated with these functions including facilities and equipment depreciation expenses, rental and other general corporate related expenses. We expect that our general and administrative expenses will increase in absolute amounts in the foreseeable future due to the increasing expenses related to the anticipated growth of our business and our operation as a public company. Research and development expenses Research and development expenses consist primarily of payroll and related expenses for research and development employees involved in designing, developing and maintaining technology platform, and improving artificial intelligence, big data and cloud technologies and services, and technology infrastructure costs. Technology infrastructure costs include equipment depreciation, data center costs and amortization and impairment of platform arising from acquisition of Paipai Marketplace. Our research and development expenses were RMB195.7 million, RMB210.4 million and RMB243.9 million (US$34.9 million) in 2023, 2024 and 2025, respectively. We expect our research and development expenses to continue to increase as we plan to invest more resources to technology and innovation. 104 Taxation Cayman Islands Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gain. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, our subsidiaries incorporated in Hong Kong are subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong for the year of assessment 2017/2018. Commencing from the year of assessment 2018/2019, the first 2 million of profits in Hong Kong dollars earned by our subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Under the Hong Kong tax laws, we are exempted from the Hong Kong income tax on our foreign-derived income. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to our company are not subject to any Hong Kong withholding tax. PRC Under the PRC Enterprise Income Tax Law, the statutory enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%. All of our Chinese Mainland subsidiaries are subject to the statutory income tax rate of 25% except for Shanghai Wanwuxinsheng which obtained qualification as High and New Technologies Enterprises, or HNTE in 2021 and was entitled to a preferential EIT rate of 15% from 2021 to 2023 if certain conditions are met. In December 2024, Shanghai Wanwuxinsheng renewed the qualification as HNTE and is entitled to a preferential EIT rate of 15% from 2024 to 2026. Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of Chinese Mainland with “de facto management body” within Chinese Mainland is considered a resident enterprise. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. Based on a review of surrounding facts and circumstances, we do not believe that it is likely that our operations outside of Chinese Mainland should be considered a resident enterprise for PRC tax purposes. If our holding company in the Cayman Islands or any of our subsidiaries outside of Chinese Mainland were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, we would be subject to enterprise income tax on our worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a Chinese Mainland resident enterprise for Chinese Mainland income tax purposes, such classification could result in unfavorable tax consequences to us and our non-Chinese Mainland shareholders or ADS holders.” The PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by “resident enterprises” to “non-resident enterprises” after January 1, 2008. In addition, under the tax arrangements between Chinese Mainland and Hong Kong, if a foreign investor is a Hong Kong resident enterprise and such foreign investor is determined by the competent PRC tax authority to have satisfied the conditions and requirements, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in such “resident enterprises”, or 10%, if the investor holds less than 25% in such “resident enterprises”. We did not record any dividend withholding tax, as it has no retained earnings for the years ended December 31, 2021, 2022, 2023, 2024 and 2025. 105 Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our net revenues for the years presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends. For the Years Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages, share numbers and per share data) Net revenues Net product revenues 11,658,298 89.9 14,844,416 90.9 19,379,932 2,771,293 92.1 Net service revenues 1,307,484 10.1 1,483,984 9.1 1,668,324 238,567 7.9 Total net revenues 12,965,782 100.0 16,328,400 100.0 21,048,256 3,009,860 100.0 Operating (expenses) income Merchandise costs (10,338,870 ) (79.7 ) (13,086,418 ) (80.1 ) (16,699,982 ) (2,388,066 ) (79.3 ) Fulfillment expenses (1,123,994 ) (8.7 ) (1,382,273 ) (8.5 ) (1,761,718 ) (251,922 ) (8.4 ) Selling and marketing expenses (1,250,860 ) (9.6 ) (1,367,028 ) (8.4 ) (1,653,702 ) (236,476 ) (7.9 ) General and administrative expenses (265,981 ) (2.1 ) (306,782 ) (1.9 ) (275,008 ) (39,326 ) (1.3 ) Research and development expenses (195,679 ) (1.5 ) (210,364 ) (1.3 ) (243,912 ) (34,879 ) (1.2 ) Other operating income, net 36,264 0.3 53,434 0.3 42,241 6,040 0.2 (Loss) income from operations (173,338 ) (1.3 ) 28,969 0.1 456,175 65,231 2.1 Interest expense (7,056 ) (0.1 ) (15,016 ) (0.1 ) (6,038 ) (863 ) — Interest income 37,875 0.4 26,861 0.2 20,503 2,932 0.1 Other income (loss), net (5,887 ) (0.1 ) (41,256 ) (0.3 ) (10,342 ) (1,479 ) — (Loss) income before income taxes (148,406 ) (1.1 ) (442 ) (0.1 ) 460,298 65,821 2.2 Income tax benefits(expenses) 42,530 0.3 56,877 0.3 (56,749 ) (8,115 ) (0.3 ) Share of loss in equity method investments (50,374 ) (0.4 ) (64,664 ) (0.4 ) (67,261 ) (9,618 ) (0.3 ) Net (loss) income (156,250 ) (1.2 ) (8,229 ) (0.2 ) 336,288 48,088 1.6 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net revenues Our net revenues, which consisted of net product revenues and net service revenues, increased by 28.9% from RMB16,328.4 million in 2024 to RMB21,048.3 million (US$3,009.9 million) in 2025. This increase was primarily due to an increase in the sales of pre-owned consumer electronics through the Company’s online channels. Net product revenues. Our net product revenues increased by 30.6% from RMB14,844.4 million in 2024 to RMB19,379.9 million (US$2,771.3 million) in 2025. This increase was attributable to an increase in the sales of pre-owned consumer electronics through the Company’s online and offline channels. Net service revenues. Our net service revenues increased by 12.4% from RMB1,484.0 million in 2024 to RMB1,668.3 million (US$238.6 million) in 2025. This increase was attributable to an increase in the service revenue generated from multi-category recycling business and Paipai Marketplace. Merchandise costs Our merchandise costs increased by 27.6% from RMB13,086.4 million in 2024 to RMB16,700.0 million (US$2,388.1 million) in 2025, primarily attributable to the growth in product sales. Fulfillment expenses Our fulfillment expenses increased by 27.4% from RMB1,382.3 million in 2024 to RMB1,761.7 million (US$251.9 million) in 2025, which was mainly due to (i) an increase in personnel costs driven by the growth of our business, (ii) an increase in logistics expenses and operating center related expenses as the Company conducted more recycling and transaction activities compared with 2024, and (iii) an increase in AHS stores related expenses and depreciation and amortization expenses as the Company expanded its store network in 2025. 106 Selling and marketing expenses Our selling and marketing expenses increased by 21% from RMB1,367.0 million in 2024 to RMB1,653.7 million (US$236.5 million) in 2025, primarily due to (i) an increase in advertising expenses and promotional campaign related expenses, and (ii) an increase in commission expenses in relation to channel service fees. The increase was partially offset by (i) a decrease in amortization of intangible assets resulting from assets and business acquisitions due to the maturity of major remaining intangible assets in the second quarter of 2025, and (ii) a decrease in share-based compensation expenses. General and administrative expenses Our general and administrative expenses decreased by 10.4% from RMB306.8 million in 2024 to RMB275.0 million (US$39.3 million) in 2025, which was mainly due to a decrease in share-based compensation. The decrease was partially offset by an increase in tax and surcharges. Research and development expenses Our research and development expenses increased by 15.9% from RMB210.4 million in 2024 to RMB243.9 million (US$34.9 million) in 2025, which was mainly due to an increase in personnel costs. Other operating income, net Our other operating income, net decreased from RMB53.4 million in 2024 to RMB42.2 million (US$6.0 million) in 2025, which was mainly attributable to a decrease in government subsidies and reimbursements from our depositary bank. Income from operations As a result of the foregoing, we incurred income from operations of RMB456.2 million (US$65.2 million) in 2025, as compared to income from operations of RMB29.0 million in 2024. Interest expense We had interest expense of RMB15.0 million in 2024 and RMB6.0 million (US$0.9 million) in 2025. The decrease was primarily attributable to the decrease in average daily balance of our short-term borrowings. Interest income We had interest income of RMB26.9 million in 2024 and RMB20.5 million (US$2.9 million) in 2025. The decrease was primarily attributable to the decrease in average daily balance of restricted cash and short-term investments. Other loss, net We had net other loss of RMB41.3 million in 2024 and net other loss of RMB10.3 million (US$1.5 million) in 2025. The loss decrease was primarily attributable to the increase in fair value changes of short-term investments and long-term investments. Income tax benefits (expenses) We had income tax benefits of RMB56.9 million in 2024 and income tax expenses RMB56.7 million (US$8.1 million) in 2025. Such increase was primarily due to the increase in net income generated from some of our domestic companies in PRC. 107 Share of loss in equity method investments We had share of loss in equity method investments of RMB64.7 million in 2024 and RMB67.3 million (US$9.6 million) in 2025. The difference was attributable to the increase in the investees’ net loss in 2025. Net (loss) income As a result of the foregoing, our net income was RMB336.3 million (US$48.1 million) in 2025, as compared to a net loss of RMB8.2 million in 2024. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net revenues Our net revenues, which consisted of net product revenues and net service revenues, increased by 25.9% from RMB12,965.8 million in 2023 to RMB16,328.4 million in 2024. This increase was primarily due to an increase of RMB3,186.1 million in our net product revenues and an increase of RMB176.5 million in our net service revenues. Net product revenues. Our net product revenues increased by 27.3% from RMB11,658.3 million in 2023 to RMB14,844.4 million in 2024. This increase was attributable to an increase in the sales of pre-owned consumer electronics through our online channels. Net service revenues. Our net service revenues increased by 13.5% from RMB1,307.5 million in 2023 to RMB1,484.0 million in 2024. This increase was attributable to an increase in the service revenue generated from PJT Marketplace and multi-category recycling business. Merchandise costs Our merchandise costs increased by 26.6% from RMB10,338.9 million in 2023 to RMB13,086.4 million in 2024, primarily attributable to the growth of our net product sales. Fulfillment expenses Our fulfillment expenses increased by 23.0% from RMB1,124.0 million in 2023 to RMB1,382.3 million in 2024, which was mainly due to (i) an increase in personnel costs and logistics expenses as we conducted more recycling and transaction activities compared with the year of 2023, and (ii) an increase in operation related expenses as we expanded our store networks and operation center capacity. Selling and marketing expenses Our selling and marketing expenses increased by 9.3% from RMB1,250.9 million in 2023 to RMB1,367.0 million in 2024, primarily due to (i) an increase in advertising expenses and promotional campaign related expenses, (ii) an increase in share-based compensation expenses, and (iii) an increase in commission expenses in relation to channel service fees. The increase was partially offset by a decrease in amortization of intangible assets and deferred cost resulting from assets and business acquisitions as well as the maturity of some intangible assets and deferred cost since the second quarter of 2023. General and administrative expenses Our general and administrative expenses increased by 15.3% from RMB266.0 million in 2023 to RMB306.8 million in 2024, which was mainly due to (i) an increase in personnel cost, and (ii) an increase in office related expenses. The increase was partially offset by a decrease in share-based compensation expense. 108 Research and development expenses Our research and development expenses increased by 7.5% from RMB195.7 million in 2023 to RMB210.4 million in 2024, which was mainly due to an increase in personnel costs in connection with the ongoing upgrade of our operation centers and system. Other operating income, net Our other operating income, net increased from RMB36.3 million in 2023 to RMB53.4 million in 2024, which was mainly attributable to the increase in government subsidies. Income (loss) from operations As a result of the foregoing, we incurred income from operations of RMB29 million in 2024, as compared to loss from operations of RMB173.3 million in 2023. Interest expense We had interest expense of RMB7.1 million in 2023 and RMB15.0 million in 2024. The increase was primarily attributable to the increase in average daily balance of our short-term borrowings. Interest income We had interest income of RMB37.9 million in 2023 and RMB26.9 million in 2024. The decrease was primarily attributable to the decrease in interest rate and average daily balance of our short-term investments and restricted cash. Other loss, net We had net other loss of RMB5.9 million in 2023 and RMB41.3 million in 2024. The loss increase was primarily attributable to the fair value changes of some of short-term investments and long-term investments. Income tax benefits We had income tax benefits of RMB42.5 million in 2023 and RMB56.9 million in 2024. The increase was primarily because Shanghai Wanwuxinsheng renewed its tax benefit qualification in 2024 from 25% to 15% and one-time tax benefits were remeasured and recognized in 2024, which was partially offset by the decrease in tax calculation basis on the amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Share of loss in equity method investments We had share of loss in equity method investments of RMB50.4 million in 2023 and RMB64.7 million in 2024. The difference was attributable to the increase in the investees’ net loss in 2024. Net loss As a result of the foregoing, our net loss was RMB8.2 million in 2024, as compared to RMB156.3 million in 2023. 109 Critical Accounting Estimates We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The following descriptions of critical accounting estimates should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this annual report. When reviewing our financial statements, you should consider (i) our selection of critical accounting estimates, (ii) the judgments and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions. Income taxes Description Current income taxes are provided for in accordance with the laws of the tax authorities. Deferred income taxes are provided using assets and liabilities method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized. In making such a determination, the management consider all positive and negative evidence, including future reversals of projected future taxable income and results of recent operation. Deferred tax assets are then reduced by a valuation allowance through a charge to income tax expense. Judgments and Uncertainties We have provided a full valuation allowance for the deferred tax assets as of December 31, 2024 and 2025, as we are not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not. We take the position that full valuation allowance shall be provided considering all the positive and negative evidences with our judgments. We consider the facts and evidence include the amounts available in the carryback periods, reversal patterns of existing taxable temporary differences, our projections of future income and available qualified tax-planning strategies, which have uncertainties in the future period. Sensitivity of Estimate to Change While we consider the facts above, our projections of future income qualified tax-planning strategies may be changed due to the macroeconomic conditions and our business development. The deferred tax assets could be utilized in the future years if we make profits in the future, the valuation allowance shall be reversed and has a material impact on our income taxes and ETR in our financial statements. We recognized valuation allowance of RMB262.3 million, RMB182.0 million and RMB160.6 million (US$23.0 million) as of December 31, 2023, 2024 and 2025, respectively. Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2.29 “Recent accounting pronouncements” to our consolidated financial statements included elsewhere in this annual report. 110 B.Liquidity and Capital Resources To date, we have financed our investing activities mainly through operating activities, historical equity and debt financing activities. As of December 31, 2025, we had RMB1,537.5 million (US$219.9 million) in cash and cash equivalents, of which 91.6% were held in Renminbi, 0.5% were held in Hong Kong dollars, 7.7% were held in U.S. dollar, and the remainder was primarily held in Japan Yen. As of December 31, 2025, we had unused one-year revolving credit facilities with several Chinese commercial banks to borrow up to RMB852.1 million. The outstanding balance of short-term borrowings was RMB322.9 million. In 2023, we entered into two separate programs with a Chinese commercial bank to facilitate trade-in collaboration with two consumer electronics brands. As of December 31, 2025, the outstanding payment obligations confirmed as valid under the outstanding program amounted to RMB210.4 million. We believe our cash on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. As of the date of this annual report, we have not identified any specific targets for investments or acquisitions. If we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. We expect that a substantial majority of our future revenues will be denominated in RMB. Under existing Chinese Mainland foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain procedural requirements are fulfilled. Therefore, our Chinese Mainland subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain procedural requirements. However, current Chinese Mainland regulations permit our Chinese Mainland subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our Chinese Mainland subsidiaries are required to set aside at least 10% of their after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain statutory reserve funds until the total amount set aside reaches 50% of their registered capital. These reserves are not distributable as cash dividends. Historically, our Chinese Mainland subsidiaries have not paid dividends to us, and they will not be able to pay dividends until they generate accumulated profits. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered or filed with SAFE, its local branches and/or certain local banks (as applicable). As a Cayman Islands exempted company and offshore holding company, we are permitted under Chinese Mainland laws and regulations to provide funding to our Chinese Mainland subsidiaries in China only through loans or capital contributions, subject to approval, filing and/or reporting with respect to government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from financing activities to make loans or capital contributions to our Chinese Mainland subsidiaries. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Chinese Mainland regulation of loans to and direct investment in Chinese Mainland entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of financing activities to make loans or additional capital contributions to our Chinese Mainland subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” 111 Cash Flows The following table sets forth the movements of our cash flows for the periods presented: For the Years Ended December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Net cash provided by (used in) operating activities 243,898 642,807 (414,569 ) (59,283 ) Net cash provided by (used in) investing activities 172,013 (424,401 ) (136,152 ) (19,470 ) Net cash provided by (used in) financing activities 68,703 (307,708 ) (13,680 ) (1,957 ) Effect of foreign exchange rate changes on cash and cash equivalents 2,456 1,289 179 26 Net increase (decrease) in cash, cash equivalents and restricted cash 487,070 (88,013 ) (564,222 ) (80,684 ) Cash, cash equivalents and restricted cash at the beginning of the year 1,703,626 2,190,696 2,102,683 300,680 Cash, cash equivalents and restricted cash at the end of the year 2,190,696 2,102,683 1,538,461 219,996 Operating activities Net cash used in operating activities in 2025 was RMB414.6 million (US$59.3 million). The difference between our net cash used in operating activities and our net income of RMB336.3 million (US$48.1 million) in 2025 was primarily the result of adding back non-cash items, mainly including depreciation and amortization of RMB116.3 million (US$16.6 million), share of loss in equity method investment of RMB67.3 million (US$9.6 million), non-cash lease expenses of RMB67.0 million (US$9.6 million), share-based compensation of RMB52.9 million (US$7.6 million), and provision for allowance for credit losses of RMB21.4 million (US$3.1 million), as well as changes in working capital items, including the increase in inventories of RMB571.4 million (US$81.7 million), the increase in prepayments and other receivables, net of RMB395.3 million (US$56.5 million), the increase in amount due from related parties, net of RMB294.2 million (US$42.1 million), the increase in funds receivable from third party payment service providers of RMB148.2 million (US$21.2 million), and the increase in accounts receivables, net of RMB71.4 million (US$10.2 million), offset by the increase in accounts payable of RMB 164.3 million (US$23.5 million), the increase in contract liabilities of RMB132.9 million (US$19.0 million), and the increase in accrued expenses and other current liabilities of RMB105.8 million (US$15.1 million). Net cash provided by operating activities in 2024 was RMB642.8 million. The difference between our net cash provided by operating activities and our net loss of RMB8.2 million in 2024 was primarily the result of adding back non-cash items, mainly including depreciation and amortization of RMB267.1 million, share-based compensation of RMB166.7 million, share of loss in equity method investment of RMB64.7 million, non-cash lease expenses of RMB53.1 million and fair value change loss of investments of RMB35.6 million, as well as changes in working capital items, including the decrease in inventories of RMB461.5 million, the increase in accrued expenses and other currents liabilities of RMB43.0 million and the increase in accrued payroll and welfare of RMB33.3 million, offset by the decrease in accounts payable of RMB360.9 million, the decrease in deferred tax liabilities of RMB58.4 million and the decrease in operating lease liabilities of RMB51.1 million. Net cash provided by operating activities in 2023 was RMB243.9 million. The difference between our net cash provided by operating activities and our net loss of RMB156.3 million in 2023 was primarily the result of adding back non-cash items, mainly including depreciation and amortization of RMB333.7 million, share-based compensation of RMB134.4 million, share of loss in equity method investment of RMB50.4 million, write-down of inventories of RMB45.7 million and non-cash lease expenses of RMB47.1 million as well as changes in working capital items, including an increase in accounts payable of RMB459.0 million, the decrease in accounts receivables, net of RMB93.8 million and the decrease in funds receivable from third party payment service providers of RMB63.2 million, offset by an increase in inventories of RMB629.4 million, the decrease in accrued expenses and other current liabilities of RMB89.7 million and the decrease in contract liabilities of RMB75.7 million. The increase in accounts payable is mainly due to the increased inventories in support of the future transaction development. Prepayments and other 112 receivables mainly relate to customer deposits. Contract liabilities exists when we have received consideration but has not transferred the related goods or services to the customer. Investing activities Cash used in investing activities in 2025 was RMB136.1 million (US$19.5 million), consisting primarily of loans to related parties of RMB485.0 million (US$69.4 million), purchases of short-term investments of RMB275.0 million (US$39.3 million), purchase of property, plant and equipment of RMB144.3 million (US$20.6 million) and long-term investments of RMB14.9 million (US$2.1 million), partially offset by collection of loan repayments from related parties of RMB485.0 million (US$69.4 million) and proceeds from maturity of short-term investments of RMB290.2 million (US$41.5 million). Cash used in investing activities in 2024 was RMB424.4 million, consisting primarily of purchases of short-term investments of RMB421.6 million, loans to related parties of RMB184.0 million, long-term investments of RMB150.2 million and purchase of property, plant and equipment of RMB59.9 million, partially offset by proceeds from maturity of short-term investments of RMB210.0 million and collection of loan repayments from related parties of RMB190.0 million. Cash provided by investing activities in 2023 was RMB172.0 million, consisting primarily of proceeds from maturity of short-term investments of RMB792.2 million and collection of deposit on loans from third parties of RMB124.2 million, partially offset by purchases of short-term and long-term investments of RMB542.7 million, loan to third parties of RMB131.7 million and purchase of property and equipment of RMB85.2 million. Financing activities Cash used in financing activities in 2025 was RMB13.7 million (US$2.0 million), consisting primarily of repayment of short-term borrowings of RMB466.0 million (US$66.6 million), repurchase of ordinary shares of RMB92.3 million (US$13.2 million) and deferred finance cost of RMB21.7 million (US$3.1 million), partially offset by proceeds from short-term borrowings of RMB563.9 million (US$80.6 million). Cash used in financing activities in 2024 was RMB307.7 million, consisting primarily of repayment of short-term borrowings of RMB969.6 million and repurchase of ordinary shares of RMB184.3 million, partially offset by proceeds from short-term borrowings of RMB844.6 million. Cash provided by financing activities in 2023 was RMB68.7 million, consisting primarily of proceeds from short-term borrowings of RMB623.9 million, partially offset by repayment of short-term borrowings of RMB398.0 million and repurchase of ordinary shares of RMB160.1 million. Material Cash Requirements Our material cash requirements as of December 31, 2025 and any subsequent interim period primarily include capital expenditures, purchase of inventories, contractual obligations, payment of employee’s payroll and welfare expenses, and various fulfillment, selling, general and administrative expenses to support our daily business operations. We intend to fund those requirements with our existing cash and cash equivalents, restricted cash, debt financing and short-term investments. Our capital expenditures consist primarily of purchase of property and equipment. Our capital expenditures were RMB85.2 million, RMB59.9 million and RMB145.0 million (US$20.7 million) in 2023, 2024 and 2025, respectively. We intend to fund our future capital expenditures with our existing cash balance and debt financing. We will continue to make well-planned capital expenditures to meet the expected growth of our business. Our purchase of inventories primarily includes pre-owned consumer electronics and brand-new electronic devices. Our inventories purchase amount were RMB10,965.4 million, RMB14,291.7 million and RMB17,643.6 million (US$2,523.0 million) in 2023, 2024 and 2025, respectively. Our purchase of inventories will continue to increase due to the growth in our transaction volume. 113 Our contractual obligations as of December 31, 2025 mainly include short term borrowings and lease commitments, which consist of the commitments under the lease agreements for our office premises and other facilities. The following table sets forth details of our contractual obligations: For the Years Ending December 31, Total 2026 2027 2028 2029 2030 and after (RMB in thousands) Operating lease commitments 142,386 67,336 31,524 11,501 6,271 25,754 Other commitments(1) 836 802 34 — — — Short-term borrowings 322,855 322,855 — — — — (1)Other commitments result from those lease contracts that are not qualified for operating leases under ASC Topic 842. Our payment of employee’s payroll and welfare expenses include payment of employees’ salaries and payment of various government statutory employee benefit plans, including medical insurance, maternity insurance, workplace injury insurance, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. Our payment of employee’s payroll and welfare expenses were RMB1,003.1 million in 2023, RMB1,187.5 million in 2024 and RMB1,485.9 million (US$212.5 million) in 2025. For details of other various fulfillment, selling, general and administrative expenses, see “—Results of Operations—Fulfillment expenses,” “—Results of Operations—Selling and marketing expenses” and “—Results of Operations—General and Administrative Expenses.” Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of December 31, 2025. Holding Company Structure ATRenew Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our Chinese Mainland subsidiaries. As a result, ATRenew Inc.’s ability to pay dividends depends upon dividends paid by our Chinese Mainland subsidiaries. If our existing Chinese Mainland subsidiaries or any newly formed Chinese Mainland subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our Chinese Mainland subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under Chinese Mainland law, each of our Chinese Mainland subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition to that, our Chinese Mainland subsidiaries may allocate a portion of their after-tax profits determined in accordance with applicable PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and the Chinese Mainland subsidiaries may allocate a portion of their after-tax profits determined in accordance with applicable PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and such discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of Chinese Mainland is subject to examination by the banks designated by SAFE. As of December 31, 2025, our Chinese Mainland subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. Off-Balance Sheet Arrangements We do not have any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. We do not have any guarantees, retained or contingent interest in assets transferred to an unconsolidated entity, contractual 114 arrangements that support the credit, liquidity or market risk for transferred assets; obligations that arise or could arise from variable interests held in an unconsolidated entity. C.Research and Development See “Item 4. Information on the Company—B. Business Overview—Technology Infrastructure” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2026 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.