A：The total net revenues for the second quarter of 2026 exceeded the high end of the guidance, increasing 32.4% year over year to 6.61 billion RMB. Product revenue grew 35.9% year over year to 6.9 billion RMB, and land gap operating profit grew 70.1% over year to 210 million RMB.

A：The key external shifts and trends include the decline in new device sales, macroeconomic headwinds in consumption, a significant growth in demand for high-quality affordable pre-owned smartphones and other second-hand products, increasing regulation such as taxation and device refurbishment, and the accelerating trend of exporting domestic pre-owned devices.

A：The 1P model has started with first-hand supply from C2B channels, and through compliant refurbishment and B2C retail for premium quality products, has enhanced the company's end-to-end capabilities across the value chain.

A：The e-commerce platform catalyzes opportunities as brand e-commerce platforms and offline retailers prioritize and invest in trading programs. The company's recycling demand was strong during the June 18 shopping festival, and the recycling value of mobile phones and consumer electronics increased 57% year over year.

A：Revenue from one refurbished product increased 87.8% over year, driven by higher new device prices, stable market sentiments, and refined pricing strategies and operations.

A：Service revenue decreased 4.2% over year in the second quarter, and the company maintained its industry-leading position in B2B. B2D 3D services faced pressure from merchant activity and multicultural functioning, but the company navigated headwinds from gold price fluctuations and continued to focus on refined operations.

A：By the end of June, total registered merchants on the platform exceeded 2.27 million. PGT's CP warehousing section penetration rates reached 84.4% this quarter, up around 5.8% year over year, with rapid scale expansion and solid growth in service revenue.

A：The decrease in platform service revenue for PIPU was mainly due to subsidies provided to pul merchants to boost activity during the promotional campaign and the company's strategic reduction of service fees.

A：A select number of AHS stores were upgraded to luxury themes with improved store design, functional areas, refined pricing, and enhanced category-specific service capabilities. The luxury resetting service revenue grew 77.3% over the year.

A：The company's three-stage development strategy includes: Stage 1 - solidify the healthy growth of the core second-hand consumer electronics business; Stage 2 - strengthen the company's position as China's leading recycling brand in the pre-owned industry; Stage 3 - advance breakthroughs in the overseas strategy.

A：The overseas strategy involves building an international B2B marketplace for pre-owned phones with a global scale of over 100 billion US dollars, using the success in the domestic market. It includes launching 'Phone Square', relying on growing supply and automated quality inspection technology, and cautious exploration of the two C business models through recycling kiosks and physical stores.

A：The financial performance for the second quarter of 2026 was outstanding with record-high gross revenues and profits. Total revenue exceeded the high end of the guidance, increasing by 32.4% over year to 6.61 billion RMB, while non-GAAP operating income surged by 70.1% to over 200 million RMB.

A：The main driver of total revenue growth in the second quarter was the continued growth in net product revenue, which increased by 35.9% to 6.9 billion RMB, largely attributable to the growth in online sales of second-hand consumer electronics.

A：The company anticipates that the new device sales headwinds could be mitigated by increased focus on trade-in activities and stronger supply chains. They expect an extended volume shipment cycle into the fourth quarter due to current market expectations of Apple introducing more premium models. New device prices, if they rise due to higher costs, could make trading and recycling more valuable for users.

A：The company believes that if new device prices increase due to higher costs for offset memory, trading and recycling of used electronics could become more valuable to users. This would allow prices for high-quality used products to have room for upside. The second quarter already showed a year-over-year increase in the average order volume of the MP P business.

A：The decline in service revenue was mainly due to two factors: increased subsidies for merchants, including incentives for new users and extended programs into more markets, and discounts or service waivers provided to boost transactions during a promotional campaign. The company expects that as Tgt continues to penetrate lower-tier markets, it will facilitate more small merchants' access to the national green-owned trading market, which should increase operational efficiency and platform service revenue.

A：The company's overseas strategy is primarily B2B, which will be complemented by expansion into new markets, improvement of automation technology, and enhancing the open platform. They have an existing B2B system in Hong Kong and plan to build new regional capabilities in Dubai and expand hardware availability in Hong Kong and Middle Eastern and Southeast Asian markets like Dubai and Malaysia. The company is also exploring opportunities under the Ray Way brand and has recently opened its first Riverway store in Hong Kong.

A：The store number changes were influenced by two main factors: the need to consolidate operations after rapid expansion by repositioning poorly located stores and closing underperforming orders, and the preparation for a new store strategy that includes luxury and sports-themed stores. The company plans to adopt an 'Adele' store strategy, upgrading select locations into specialized categories. The store building budget remains disciplined, with incremental investment and reallocation of existing budget resources for enhanced capabilities.