Tag: RLX Technology

  • RLX Technology Sees Boost in Revenue and Income

    RLX Technology Sees Boost in Revenue and Income

    Photo: RLX Technology

    RLX Technology reported net revenues of RMB551.6 million ($76.4 million) in the first quarter of 2024, up from RMB188.9 million in the same period of 2023. Gross margin was 25.9 percent, compared with 24.2 percent in the 2023 period. U.S. GAAP net income reached RMB132.6 million, compared with U.S. GAAP net loss of RMB56.3 million in the same period of 2023.

    “We started 2024 with a steady first quarter,” said Ying (Kate) Wang, co-founder, chairperson and CEO of RLX Technology in a statement. “Our international business is developing positively as we refine our regional strategies. Despite challenges posed by regulatory changes across various regions, we continue to identify opportunities and leverage our core strengths to prudently enter potential markets.

    “Domestically, we are encouraged by the positive impact of China’s recent regulatory crackdown on illegal products, but much progress remains to be made. We remain committed to collaborating with regulators and advocating for a well-regulated and healthy e-vapor industry. As a trusted e-vapor brand for adult smokers, we are dedicated to optimizing our product portfolio with premium, compliant, and innovative products that meet our users’ needs and drive growth in this evolving industry.”

    The first quarter marked RLX Technology’s fifth consecutive quarter of sequential revenue growth, according to Chief Financial Officer Chao Lu. “With our resilient business model, effective regional strategies, and consistent strong execution, we are confident of sustaining this growth trajectory and delivering sustainable value to our stakeholders,” he said.

    ADS[2] were RMB0.166 (US$0.023) and RMB0.159 (US$0.022), respectively, in the first quarter of 2024, compared with non-GAAP basic and diluted net income per ADS of RMB0.139 and RMB0.136, respectively, in the same period of 2023.

  • RLX Releases Corporate Sustainability Report

    RLX Releases Corporate Sustainability Report

    RLX Technology presented its “Corporate Social Responsibility Report.” The report outlines the firm’s annual progress in fulfilling various corporate social responsibilities, including rural revitalization, product-related responsibility, corporate governance, environmental responsibility and employee responsibility.

    According to the report, as of 2023, RLX has invested a total of CNY44.3 million ($6.2 million) in areas such as biodiversity conservation and rural revitalization. By the end of April 2023, RLX had effectively generated approximately 120,000 employment opportunities along the supply chain and accumulated research and development investments totaling CNY800 million.

    Navigating the delicate balance between compliance and innovation is the most crucial challenge for RLX, according to a company press release. In pursuit of a first-class user experience, the company says it not only strictly adheres to regulatory requirements by developing products in line with national standards to ensure quality and safety but is also comprehensively upgrading its research and development system. This involves establishing eight major laboratory matrices and rigorous factory quality control to enhance product innovation. The report reveals that as of April 2023, RLX has applied for nearly 900 patents globally.

    From child-proof locks to anti-dry burn functions, each of the eight laboratories plays a specific role in developing products that meet both regulatory requirements and user-experience expectations. The Innovation Lab, for example, focuses on material purification and flavor perception, significantly reducing the risk of alterations to product taste and flavor. The Quality and Safety Lab conducts tests such as drop and negative pressure tests to ensure product stability in extreme environments. This lab has received accreditation from China National Accreditation Service for Conformity Assessment.

    Since outlining its “1+4” scientific research path in 2020, RLX has initiated nearly 50 research projects to fill the gaps in the field of vape science. The report highlights several breakthrough achievements from the past year. In November 2022, the first domestic clinical study on electronic cigarettes initiated by RLX was published in the medical SCI journal Nicotine and Tobacco Research. By the end of April 2023, RLX had conducted 17 collaborative research projects, publishing 11 research papers in authoritative journals.

    “From 2022 to 2023, whether in the Chinese e-cigarette industry or at RLX Technology, it has been an extremely important period. We wholeheartedly respond to policies and actively address various changes, not only fulfilling strict compliance and providing reassuring products as ‘required actions’ but also contributing our modest efforts in ‘voluntary actions’ such as wildlife protection and rural revitalization to enhance social well-being,” said Kate Wang, founder and CEO of RLX.

  • RLX Technology Report Shows Revenue ‘Challenges’

    RLX Technology Report Shows Revenue ‘Challenges’

    Photo: RLX Technology

    RLX Technology reported net revenues of RMB428.1 million ($58.7 million) in the third quarter of 2023, compared with RMB1.04 billion in the same period of 2022. Gross margin was 24.7 percent in the third quarter of 2023, compared with 50 percent in the comparable 2022 quarter. GAAP net income was RMB172.7 million, down from RMB505.2 million in the prior-year period.

    “The end of the third quarter of 2023 marked one year since the new regulatory framework for the e-vapor industry came into effect,” said Ying (Kate) Wang, co-founder, chairperson and CEO of RLX Technology, in a statement.

    “As a legitimate industry participant, we have remained dedicated to developing our product portfolio to provide adult smokers with compliant, superior-quality products. While we have made some progress with our recovery, we are still facing external challenges, especially the impact of illegal products. We recognize that many users are still unaware of these new regulations, such as flavor restrictions, which has slowed their adoption of the new national standard products.

    “To address these near-term obstacles, we will forge ahead with our core strategy: providing a wide variety of quality, compliant products across an extensive range of price points to meet users’ various needs. Meanwhile, we are making efforts to enhance users’ understanding of the new regulations and collaborating with regulators to combat illegal products and create a healthy and orderly market. As a trusted e-vapor brand for adult smokers, we believe that more users will gradually switch to our products as increased awareness of the new regulations and the dangers of substandard, illegal products rises.”

    “In the third quarter of 2023, we continued to face significant headwinds due to competition from illegal products,” added RLX Technology Chief Financial Officer Chao Lu. “Against this challenging backdrop, we resolutely executed our strategy and focused on improving profitability, which continues to be our top priority.

    “Our strategic cost optimization initiatives have begun to demonstrate positive outcomes, including a consistent reduction in our non-GAAP operating loss and signs of recovery in our non-GAAP net profit margin. Notably, we achieved a second consecutive quarter of positive operating cash flow this quarter, underscoring our business’ resilience in the post-regulatory era. Looking forward, we will remain committed to enhancing our financial performance and delivering sustainable value to our shareholders.”

     

  • Net Revenues for 2Q 2023 Fall for RLX Technology

    Net Revenues for 2Q 2023 Fall for RLX Technology

    Kate Wang / Credit: RELX

    RLX Technology announced its unaudited financial results for the second quarter ended June 30, 2023.

    Net revenues were RMB378.1 million ($52.1 million) in the second quarter of 2023 compared with RMB2.2 billion in the same period of 2022.

    The decrease was primarily due to the discontinuation of its older products and the negative impact of illegal products in the market after regulators’ special action ended in April, which disrupted users’ adoption of our new products that comply with national standards, according to the company.

    Gross margin was 26.1 percent in the second quarter of 2023 compared with 43.8 percent in the same period of 2022. The decrease was primarily due to the imposition of a 36 percent excise tax, which came into effect on Nov. 1, 2022.

    U.S. GAAP net income was RMB204.7 million in the second quarter of 2023 compared with U.S. GAAP net income of RMB441.6 million in the same period of 2022.

    Non-GAAP net income was RMB86.2 million in the second quarter of 2023 compared with RMB634.7 million in the same period of 2022.

    “During the second quarter of 2023, we continued to firmly execute our core strategy amid the challenging market environment,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we remained dedicated to offering compliant, high-quality products while developing new products to meet users’ evolving needs.

    “Though the recent resurgence of illegal products has had a lingering impact on our sales, we believe the impact will be temporary rather than a major trend that could derail our recovery trajectory. As a trusted e-vapor brand for adult smokers, we remain confident that, supported by regulatory oversight, our premium products will continue to win users’ trust and gradually supplant inferior and harmful illegal products. Moving forward, we will continue prioritizing product innovation, harm reduction and quality control initiatives while further enhancing our product portfolio as we strive to create sustainable value for all stakeholders.”

    Chao Lu, chief financial officer of RLX Technology, added that the external challenges, especially the disruptions from illegal products, helped to deepen the company’s focus on efficiency and profitability improvement during the second quarter.

    “Thanks to our supply chain optimizations and product design enhancements, our topline improved sequentially to RMB378.1 million, and our gross margin rebounded by 1.9 percentage points from the first quarter of 2023. We also strengthened cost control, which helped significantly narrow our non-GAAP operating loss,” said Chao. “Notably, our operating cash flow turned positive for the first time since the new regulations were enacted. We believe our strong cash position will continue to support us in navigating the evolving markets, and we will pursue further gains in cost optimization and efficiency improvement to accelerate the pace of recovery.”

    The company hosted an earnings conference call at 8:00 a.m. U.S. Eastern Time on Aug. 18, 2023 (8:00 p.m. Beijing/Hong Kong Time on Aug. 18, 2023).

    A live and archived webcast of the conference call will be available on the company’s investor relations website at https://ir.relxtech.com.

    A replay of the conference call will be accessible approximately two hours after the conclusion of the call until Aug. 25, 2023.

  • RLX Reeling From Illicit Flavored Vape Products

    RLX Reeling From Illicit Flavored Vape Products

    relx vaping products
    Creit: RELX

    RLX Technology reported net revenues of RMB188.9 million ($27.5 million) for the first quarter of 2023, down from RMB1.71 billion in the same period of 2022. Gross margin was 24.2 percent during the quarter, compared with 38.3 percent in the comparable 2022 period. GAAP net loss was RMB56.3 million, compared with GAAP net income of RMB687.1 million in the same period of 2022. Non-GAAP net income totaled RMB183.6 million, down from RMB361.8 million in the same period of 2022.

    RLX Technology attributed its struggles to fierce competition from illicit products. “We experienced an incredibly challenging first quarter as illegal-flavored products caused users’ slow shift to products that meet the national standards and drove our total revenues down to RMB188.9 million. Our gross margin declined as we incurred the full effect of the new excise tax in the first quarter,” said RLX Technology Chief Financial Officer Chao Lu in a statement.

    “We are pleased that market conditions have improved, following the regulators’ strict actions to combat illegal products since March 2023. As a result, our sales are showing signs of recovery. Looking ahead, we will continue improving our operational efficiency and believe our profitability will gradually recover. Our resilient business model and solid cash position will support us as we navigate the market dynamics, enabling us to deliver sustainable value to our stakeholders as the industry regains momentum.”

    According to RLX Technology co-founder, CEO and Board Chair Ying (Kate) Wang, the company remained focused on optimizing its product offerings under the new regulatory framework during the first quarter.

    “While we strive to develop diversified, new, approved products that cater to users’ various demands, the prevalence of illegal products has posed near-term challenges to our sales and disrupted the recovery pace of the industry as a whole.

    “The increasing efforts put forth by the regulators to crack down on illegal products have been encouraging, and we are hopeful that these will be effective in supporting the creation of fair and orderly market conditions, prompting a return to sustainable growth for law-abiding companies such as RLX Technology.

    “If illegal products can be pushed out of the market, we believe adult users will gradually adapt to products that meet national standards. As a trusted e-vapor brand for adult smokers, we remain committed to providing compliant, superior products that meet our users’ needs as we continue exploring growth opportunities in the evolving industry.”

     

  • Regulations Hurt RLX Technology’s 2022 Revenues

    Regulations Hurt RLX Technology’s 2022 Revenues

    Kate Wang / Credit: RELX

    RLX Technology’s 2022 financial performance was heavily impacted by new industry regulations and e-cigarette taxes, along with Covid-related disruptions, in China.  

    The company reported net revenues of RMB340 million ($49.3 million) in the fourth quarter of 2022, down from RMB1.9 billion in the same period of 2021. Its GAAP net loss was RMB225.1 million, compared with GAAP net income of RMB494.4 million in the comparable 2021 quarter.

    For the full fiscal year, net revenues declined to RMB5.33 billion in 2022 from RMB8.52 billion in 2021. U.S. GAAP net income was RMB1.41 billion, down from RMB2.03 billion in the prior year.

    “2022 was a year full of unprecedented challenges,” said RLX Technology co-founder, chairperson and CEO Ying Wang in a statement. “A combination of Covid-related disruptions and the introduction of a substantial package of industry regulations and policy updates throughout the year impacted the e-vapor sector and our operations.

    “We retained our core strategy in this volatile operating environment while proactively adapting our business to the new regulations. In the fourth quarter, we continued to invest in R&D and product innovation and development, offering superior products to adult smokers. We believe our core competencies will enable us to attract continued support from users.

    “Looking ahead, given the benefits of the clearer regulatory framework and China’s reopening, we remain confident in the long-term growth of our industry. We are well-positioned to adapt to these shifting market forces and capture new opportunities while further deepening our commitment to honoring our social responsibilities.”

    RLX Technology was particularly affected by the vast wave of coronavirus infections as China suddenly relaxed its zero-Covid policy toward the end of 2022. In addition, its gross margin in the fourth quarter suffered as a result of the imposition on Nov. 1, 2022, of a 36 percent excise tax on e-cigarettes in China.

    “Despite the headwinds, we strove to improve operational efficiency to mitigate the adverse impact on our business,” said RLX Technology Chief Financial Officer Chao Lu. “As a result, we maintained a healthy level of profitability during 2022. We believe our company’s resilience will enable us to overcome near-term obstacles, and we remain dedicated to creating long-term sustainable value for our stakeholders.”

  • RLX Technology Reports Revenue Down From 2021

    RLX Technology Reports Revenue Down From 2021

    RLX Technology reported net revenues of RMB1.04 billion ($146.8 million) in the third quarter of 2022, down from RMB1.68 billion in the same period of 2021. The decrease was due primarily to the suspension of store expansions and the discontinuation of older products during the transition to the new national standards, according to the Chinese vapor product manufacturer.

    Gross profit was RMB522 million for the quarter, compared with RMB656 million in the same period of 2021. Gross margin was 50  percent, compared with 39.1 percent in the prior-year period. RLX Technology attributed the improvement to a favorable change in channel mix. Because the company gradually terminated partnerships with distributors who did not obtain wholesale licenses during the transition period, its sales contribution from retail stores increased as RLX began to directly provide products to these retail stores. The company benefited also from a decrease in direct cost related to promotional activities.

    “During the third quarter of 2022, we remained dedicated to preparing for a smooth transition to the new national standards, which came into full effect on Oct. 1, 2022. Specifically, we wound down shipments of our older products and gradually switched to the National Transaction Platform on a regional basis. We have now achieved full geographical coverage nationwide,” said Ying Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.

    Third Quarter 2022 Financial Highlights

    • Net revenues were RMB1.044.4 billion ($146.8 million), compared with RMB1.676.7 billion in the same period of 2021.

    • Gross margin was 50.0%, compared with 39.1% in the same period of 2021.

    • U.S. GAAP net income was RMB505.2 million ($71.0 million), compared with RMB976.4 million in the same period of 2021.

    • Non-GAAP net income was RMB328.6 million ($46.2 million), compared with RMB452.7 million in the same period of 2021.

    “In addition to our efforts to proactively adapt to the new standards, we have focused on fulfilling our social responsibilities, which we see as one of our core competitive advantages. We recently published our annual corporate social responsibility report, summarizing our endeavors with respect to market responsibility, R&D investment, environmental protection, employee career development, and corporate governance. I am proud to share that our latest S&P CSA ESG score ranked ahead of 67 percent of our global peers, representing a powerful commendation of our commitment to sustainability and ESG best practices.”

    “We delivered net revenues of approximately RMB1 billion in the third quarter, recording a sequential decrease mainly due to the discontinuation of older products during the transition to the new national standards, as well as the second quarter’s high comparison basis mainly attributable to frontloading of sales in anticipation of the discontinuation of older products. We remain confident that our diversified portfolio will continue to satisfy adult smokers’ needs and that our sales will gradually recover,” said  Chao Lu, chief financial officer of RLX Technology.

    “Meanwhile, our continuous efforts to improve operational efficiency are proving effective, evidenced by a 30.9 percent quarter-over-quarter decrease in non-GAAP operating expenses. However, our profitability in the coming quarters will be adversely affected by the application of 36 percent consumption tax to e-cigarettes manufacturers since November 1, 2022. Cost control measures will remain at the forefront of our strategic initiatives as we navigate the evolving regulatory environment while maintaining our sustainable long-term growth.”

  • RLX Technology Releases its Annual ESG Report

    RLX Technology Releases its Annual ESG Report

    RELX vaporizer

    RLX Technology has released its annual corporate social responsibility report Envisaging a Better Future, highlighting its efforts in market responsibility, research and development investment, environment protection, employees career and corporate governance.

    According to the report, RLX has strengthened its commitment to product quality and vaping science. Since its inception, RLX has invested RMB800 million ($111.1 million) in research and development. RLX operates eight laboratories and has developed a research chain covering product quality, physiochemical research, toxicology research, long-term impact assessment and clinical research.

    In March 2021, RLX launched the first e-cigarette clinical research project in China. In February 2022, RLX started the first clinical study on the safety of e-cigarettes in China. The results of various research projects were published in prominent academic journals such as Ecotoxicology and Environmental Safety and the Chinese Journal of Drug Abuse Prevention and Treatment.

    By June 2022, RLX had applied for over 610 patents covering vaping device design, e-liquid formula, electric control, smart device and released content.

    Environment protection is another highlight in RLX’s CSR report. In September 2021, RLX started the Pods Reborn recycling program with China Siyuan Foundation for Poverty Alleviation. By June 2022, the program had been carried out in 188 Chinese cities. More than 16,000 stores have been equipped with a used pods recycling bin.

    As part of the Amur Tiger and Leopard Conservation Project, RLX has planted 20 ha of eco-fields in Jilin Province to ensure sufficient food supply for these endangered species. RLX has also organized a patrol team to remove animal traps. By the end of 2021, the RLX Tech Patrol Team had patrolled 12,600 kilometers.

    In April 2022, RLX launched its net-zero carbon emission plan Aim for Zero to achieve carbon neutrality in its direct operations by 2033 and along the value chain by 2050.

    As part of this project, RLX will take eight major initiatives including plastic reduction, waste reduction, promoting the Pods Reborn program, establishing a green supply chain partner mechanism, reducing product carbon footprint and introducing zero-carbon products, creating a zero-carbon plant and a green store and reducing carbon footprint in office and during business travel.

    By the end of 2021, RLX had opened more than 24,000 stores in more than 300 cities, creating about 370,000 jobs across the industry chain.

    “In more than four years of entrepreneurship, one of the things we are particularly proud of is our dedication to fulfilling our social responsibility,” said Kate Wang, founder and CEO of RLX Tech in a statement. “RLX Tech sees social responsibility as one of its core competitive advantages. It is also our duty as corporate citizens.”

  • Federal Judge Dismisses Investor Suit Against RLX

    Federal Judge Dismisses Investor Suit Against RLX

    Photo: Gorodenkoff

    A U.S. federal judge dismissed a class-action lawsuit brought against RLX Technology by investors who claimed that the company overestimated its financial prospects before its initial public offering, reports Lexis Legal News.

    Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York found that RLX Technology did not misrepresent or omit known information about the future regulation of e-cigarettes in China.

    “[T]he Offering Materials adequately disclosed the possibility of stricter regulations—Indeed, the possible outright prohibition—of e-cigarettes in China,” Engelmayer wrote. The judge also found that the plaintiffs lacked standing to bring a claim because they did not purchase their shares in the IPO.

    Founded in 2018, Beijing-based RLX went public on the New York Stock Exchange in January 2021. The offering raised $1.39 billion, according to data provider Dealogic. Its stock price fell sharply after Chinese regulators in March proposed treating vapor products like regular cigarettes.

    The value of RLX shares dropped nearly 48 percent from $19.46 per share on March 19 to $10.15 at closing on March 22. As of November, the shares were valued at just over $4.

    Certain investors later alleged that RLX in its offering documents made misleading statements about China’s regulations of e-cigarette products that made the company’s value appear to be greater than it is.

    It allegedly stated that its products were not subject to regulation and would not fall under China’s Tobacco Monopoly Law and failed to disclose that Chinese regulators were developing new standards for e-cigarettes under which they would be regulated in a manner similar to the way ordinary cigarettes are regulated.

    It also allegedly stated that it expected to continue profiting from China’s growing vaping market, but allegedly failed to disclose how its profits would be affected by the new Chinese regulations of the vaping industry.

  • RLX Revenue Down as Firm Adjusts to New Rules

    RLX Revenue Down as Firm Adjusts to New Rules

    Photo: RLX Technology

    RLX Technology reported net revenues of RMB2.23 billion ($333.5 million) for the second quarter of its fiscal year 2022, compared with RMB2.54 billion in the same period of 2021. Gross profit was RMB977.9 million, compared with RMB1.15 billion in the comparable 2021 period.

    The company attributed the decrease in net revenues primarily to the suspension of store expansions and new product launches to comply with regulatory requirements.

    Chinese authorities have recently moved the vapor business under the regulatory framework for tobacco products. E-cigarette manufacturers now require operating licenses from the State Tobacco Monopoly Administration, while vapor products must satisfy various standards and technical requirements before entering the market.

    On June 10, 2022, one RLX Technology subsidiary obtained an STMA license to manufacture e-liquids. On July 22, 2022, another subsidiary was licensed to own the RELX brand and manufacture RELX branded e-vapor rechargeable devices, cartridge products and products sold in combination with e-vapor rechargeable devices and cartridge products.

    “Over the past several months, we have made meaningful strides in adapting our business and product development to the new regulatory framework,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we have obtained the License for Manufacturing Enterprise and received regulatory approvals for some of our new products, demonstrating our operational excellence and industry-leading R&D capabilities.”

    “In light of the regulatory changes, we are off to a slow start of the sales of our new products that are compliant with the National Standards in the new transaction system mandated by the regulators,” said Chao Lu, chief financial officer of RLX Technology. “Despite the macro headwinds, we will continue to steadily focus on cost optimization while reinforce our product competitiveness under the new regulatory regime to create sustainable, long-term growth for our shareholders.”