RLX Technology shares took a tumble back in March after China announced it would soon start regulating e-cigarettes, falling more than 40 percent. Over the past week, on expected high earnings, the company’s stock began to recover and was at $11.93 pre-market today after seeing a low $7.89 in March. Today, the company announced its unaudited financial results for the first quarter ended March 31, 2021.
Net revenues were RMB2.4 billion ($366.1 million), up 48.2 percent from RMB1.62 billion in the fourth quarter of 2020. Gross margin was 46 percent, compared to 42.9 percent in the fourth quarter of 2020. GAAP net loss was RMB267 million, compared with RMB236.7 million in the 2020 fourth quarter. Non-GAAP net income was RMB610.5 million, representing an increase of 45.6 percent from RMB419.3 million in the fourth quarter of 2020.
“2021 began, on a solid note, with strong growth in key performance metrics of our business,” said Ying (Kate) Wang, co-founder, chair of the board of directors and CEO of RLX Technology, in a press note. “Specifically, our expansion in distribution network fueled a strong sequential growth, further demonstrating sustained user demand for our e-vapor product portfolio.”
“As the go-to brand of e-vapor products in China, we remain dedicated to investing in deepening our scientific research, improving our technology and product development, expanding our distribution network and retail outlets as well as enhancing supply chain and production capabilities.
“In the first quarter, we opened our Quality Lab to further strengthen our quality assurance and control capabilities, and started developing our second and third exclusive production plants to enhance our production capabilities. We believe we are well positioned to further capture the growth potential in the e-vapor industry in China,” Wang concluded.
During an early morning earnings call, RLX CFO Chao Lu said the company is dedicated to investing in deepening its scientific research, improving its technology and product development, expanding its distribution network and retail outlets, as well as enhancing supply chain and production capabilities.
“Our robust results in the first quarter of 2021 exemplify our strong capabilities in meeting user demands for reliable, innovative and trustworthy products,” said Chao Lu, who joined the company in February. “Building on rapid revenue growth and continued efforts in improving operating leverage, our gross margin and non-GAAP net margin have remained steady in the first quarter. We will continue to pursue user value creation by enhancing our suite of product offerings and strengthening our brand leadership in the market.”
For the second quarter of 2021, RLX Technology expects net revenues to exceed RMB2.85 billion, and expects non-GAAP net income to exceed RMB720 million. The company’s expected GAAP net income will include share-based compensation expenses which depend on the company’s share price. The company currently also expects gross margin to remain steady.of