RLX Technology Q2 2025 Earnings Report

RLX Technology EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.18
• Beat/Miss: Missed by -$0.16
• One Year Ago EPS: N/A

RLX Technology Revenue Results

• Actual Revenue: $122.88 million
• Expected Revenue: $725.00 million
• Beat/Miss: Missed by -$602.12 million
• YoY Revenue Growth: N/A

RLX Technology Announcement Details

• Quarter: Q2 2025
• Date: 8/22/2025
• Time: Before Market Opens
• Conference Call Date: Friday, August 22, 2025
• Conference Call Time: 8:00AM ET

RLX Technology (NYSE:RLX) Inc., together with its subsidiaries, engages in the manufacture and sale of e-vapor products in the People's Republic of China and internationally. It serves partner distributors and retail outlets. The company was founded in 2018 and is headquartered in Beijing, China.

RLX Technology Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: 40% year-over-year revenue growth to RMB880 million and non-GAAP operating profit of RMB116 million mark a seventh consecutive profitable quarter with expanding margins.
• Positive Sentiment: Operating cash inflow rose to RMB230 million and a third consecutive cash dividend was declared, underpinned by a negative cash conversion cycle and approximately US$2.2 billion in financial assets.
• Positive Sentiment: Tightening global regulations are reducing illegal e-vapor products, enabling RLX to capture market share with its compliant closed- and open-system offerings.
• Positive Sentiment: The March acquisition of a leading European e-vapor company has expanded RLX’s distribution, R&D, manufacturing and retail capabilities, enhancing its local market footprint.
• Neutral Sentiment: RLX is piloting modern oral nicotine products and doubling down on cartridge-based technology to diversify its portfolio and align with sustainability trends.

Presentation

[Operator]

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After management's remarks, there will be a question and answer session.

[Operator]

Today's conference call is being recorded and is expected to last about forty minutes. I will now turn the call over to your host, Mr. Sam Sung, Head of Capital Markets for the company. Please go ahead, Sam.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thanks very much. Hello, everyone, and welcome to IREX Technologies second quarter twenty twenty five earnings conference call. The company's financial and operational results were released through P1 newswire earlier today and have been made available online. You can also view the earnings press release by visiting our IR website at ir.reacttech.com. Participants on today's call will include our Chief Executive Officer, Ms. Kate Huang our Chief Financial Officer, Mr. Chao Lu and Li. Before we continue, please note that today's discussions will contain forward looking information made under the Safe Harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995.

[Sam Tsang, Head - Capital Markets at RLX Technology]

These statements typically contain words such as may, will, expects, targets, estimates, intend, believes, potential, continue or other similar expressions. Forward looking information involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control. The company's affiliates, advisors and representatives do not undertake any obligation to update this forward looking information, except as required under the applicable law. Please note that Iris Technologies' earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non GAAP financial measures.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Our expressed release contains a reconciliation of the unaudited non GAAP measures to the unaudited GAAP measures. I will now turn the call over to Ms. Kei Huang. Please go ahead.

[Wang Ying, CEO & Founder at RLX Technology]

Thank you, Sam, and thanks everyone for making time to join our earnings conference call today. First off, we were pleased to deliver impressive second quarter results amid shifting consumer trends and a rapidly evolving macro and regulatory environment, highlighted by a 40% year over year increase in net revenues to million and a non GAAP operating profit of RMB116 million. This strong performance underscores our effective strategic execution in our international expansion and outstanding ability to quickly adapt to change in regulation and consumer demand. With our matchless innovation and go to market capabilities, we are confident in our ability to lead this industry's realignment and continue driving sustainable growth. Let's move on to an overview of the global smokeless alternative market and the latest e vapor consumer behaviors and regulations relating to the e vapor segment, as well as our corresponding strategic initiatives. The transition towards smokeless nicotine products continues to gain traction worldwide. While e vapor remains a key driver of this shift with solid momentum. Other categories such as heat not burn devices and modern oral nicotine products also contributing collectively reshaping the tobacco alternative landscape. Most consumers enter the smokeless market by moving away from traditional cigarettes rather than switching between smokeless products. Since each smokeless segment addresses distinct consumer needs, These three categories are more complementary than directly competitive, creating an ecosystem where multiple smokeless segments can thrive simultaneously.

[Wang Ying, CEO & Founder at RLX Technology]

E vapor products are favored by those who value device performance, portability and often engage in outdoor activities. TINA burn products appeal to longtime smokers seeking an ethereum closer to conventional smoking. At the same time, modern oral nicotine fits seamless into the lifestyle of office workers and frequent travelers. Collectively, these categories are expected to capture a significantly larger share of the total nicotine market over the next five to ten years. With oral nicotine currently standing as a fastest growing segment.

[Wang Ying, CEO & Founder at RLX Technology]

Against this backdrop, we are seeing a clear industry shift from single category to multi category portfolio. Historically leading brands concentrated on a single product type, but today diversification is becoming the potential standard among industry leaders. ILX has already established market leadership in the high brand recognition in the e vapor segment. Last year we expanded beyond this core focus with the pilot program for modern oral nicotine product and have complete our 2B prototype. Although the prototype has not yet officially launched in the 2C market, the feedback from distributors have been very positive, potentially broadening our portfolio to reduce risk and capture greater market share.

[Wang Ying, CEO & Founder at RLX Technology]

We remain committed to exploring additional categories, then align with both our capabilities and evolving consumer needs. With our strong execution track record, deep consumer insights and proven ability to innovate, we are well positioned to lead this transformative shift across the smokeless alternative industry. For our core e vapor business, we have clear strategies and execution plans to address evolving global trends and local market dynamics. One of this year's global development is what we call where consumers are increasingly gravitating towards devices with a higher puff count per unit. This trend has driven substantial increases in product capability capacity, while also reducing the millimeter cost

[Wang Ying, CEO & Founder at RLX Technology]

We have responded quickly to this change by launching a range of high capacity products tailored to local preference. At the same time, we are maintaining our focus on innovation beyond short term trends, ensuring that we have a pipeline of products that delivers superior performance, greater sustainability and stronger consumer value for the long term. While the big puffy facts have had an outside influence in recent quarters, we expected the market to gradually stabilize towards the end of this year as physical constraints such as handling comfort and possibility limited for the enlargement of devices. This stabilization will establish a new baseline from which the industry can resume healthy sustainable growth in 2026 and beyond. Then disposable products due to environmental impact, by another movement we are seeing in many major markets globally.

[Wang Ying, CEO & Founder at RLX Technology]

While disposable products have historically been an integral part of our portfolio, we recognize that the future lies in more sustainable solutions. This shift plays directly to one of IOX core strength, cartridge based technology in both closed system and open system products. We are advancing cartridge based technology by investing in new product development, optimizing e liquid and cartridge integration to achieve superior performance, while providing greater value for consumers. By doubling down on our strength, we aim to lead the industry's transition toward sustainable solutions, while capturing new market opportunities that emerge from this shift. On the operational front, we continue to refine and tailor our overseas regional operations for greater agility, enhancing our ability to adapt to local changes both effectively and efficiently.

[Wang Ying, CEO & Founder at RLX Technology]

We have invested in local retail support, which provides us with first hand retail and user insights into these markets. This empowered us to refine our go to market strategies and optimize our product portfolio for each market, while also helping our distributors make better day to day operational decisions. In addition to operational improvements, we have been actively pursuing partnerships with new capable distributors and retailers in key regions to broaden our reach and secure access to critical growth markets worldwide. In March 2025, we entered into an investment agreement with a leading compliant European e vapor company with a full suite of capabilities and services in the local market. This partnership brings us a wealth of new capabilities in Europe, while also expanding our operational footprint and enhancing our local market share.

[Wang Ying, CEO & Founder at RLX Technology]

In summary, the smokeless alternative market continues to evolve rapidly driven by regulatory clarity, changing consumer preferences and technological innovation. By implementing a multi category strategy, strengthening our global distribution network and emphasizing sustainable product innovation, all while maintaining our deep commitment to compliance. We are positioning IELTS to cap the opportunities of today while shaping the future of the industry. We remain committed to building a healthier and more sustainable world for our current customers and generations to come. Now let's move on to our financial results for the 2025. Chuck, please go ahead.

[Chao Lu, CFO at RLX Technology]

Thank you, Kate, and hello, everyone. Before I start the detailed discussion of our financials, please note that unless otherwise stated, all the financials I will present today are in RMB terms. First, top line. We delivered another strong quarter with net revenues reaching RMB880 million, representing a 40% year over year increase and a 9% quarter over quarter increase. This impressive performance highlights our successful internationalization strategy and our ability to capture opportunities presented by the accelerating global shift toward reduced risk smokeless alternative.

[Chao Lu, CFO at RLX Technology]

The consolidation of our recently acquired European e vapor company in June also contributed to our robust growth figure. Meanwhile, our China business also achieved significant year over year growth, thanks to stricter control aimed at combating illegal products, as well as our successful launch of a disposable product series in the second half of last year. Next turn to profitability. We drive a 2.3 percentage point expansion in our gross margin year over year to 27.5%, reflecting a favorable revenue mix from international markets and our continued cost optimization efforts. Sequentially, excluding the effects of amortization and depreciation of assets arising from fair value step up in business acquisitions in the 2025, which increased our cost of revenue.

[Chao Lu, CFO at RLX Technology]

Our gross margin remained stable quarter over quarter, showcasing our maintain steady profitability amid intense competition and regulatory changes in international markets. The 2025 marked our seventh consecutive consecutive quarter of positive non GAAP operating profit at million, with non GAAP operating margin expanding by more than five percentage points year over year to 13.2. This improvement was driven by contributions from our fast growing international business and enhanced operating leverage. Looking forward, we are positioned to further improve profitability as we scale globally by maintaining by remaining focused on efficiency and maintaining a lean organizational structure. Next on cash.

[Chao Lu, CFO at RLX Technology]

In terms of cash flow, we achieved operating cash inflow of RMB230 million in the 2025, a significant increase from $197,000,000 in the same period last year, underscoring both our scale growth and disciplined working capital management. Our negative cash conversion cycle remains a competitive strength with inventory turnover at thirty one days, receivable turnover at sixteen days and payable turnover at sixty seven days. Our cash position remains solid. As of 06/30/2025, our total financial assets, including cash and equivalents, restricted cash, various short term and long term deposits and investments stood at billion, approximately 2,200,000,000.0 in U. S.

[Chao Lu, CFO at RLX Technology]

Dollar terms, providing us with the flexibility to continue investing in strategic growth and innovation while navigating regulatory shifts. Finally, we are pleased to announce our third cash dividend since our IPO, reaffirming our commitment to delivering value to our shareholders. We remain dedicated to generating sustainable, growing profit and enhancing returns for our shareholders. In conclusion, our outstanding Q2 twenty twenty five results demonstrated executional excellence as well as the resilience of our business model. As the industry evolves, we are leveraging our market leadership, innovative product offerings and localized strategies to unlock new growth opportunities.

[Chao Lu, CFO at RLX Technology]

With a diversified market presence, disciplined financial management and a clear strategic roadmap, we are confident in our ability to continue delivering sustainable growth and significant value to stakeholders, in a year of industry transition. This concludes our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

[Operator]

For the benefit of all participants on today's call, if you would ask your question to management in Chinese, please immediately repeat your question in English. The first question today comes from Lydia Lin with Citi. Please go ahead.

[Lydia Ling, Director - Equity Research at Citi]

Management. Lydia from Citi. And so I have two questions. So first on the regulation side. So it looks like some overseas market has started tightening regulation.

[Lydia Ling, Director - Equity Research at Citi]

So do you feel that the management of the non compliant products has become more standardized? And do you expect or have you seen positive impact on your compliant products and also your business development? And then my second question is on the overseas business. So your group revenue has some sequential improvement in the second quarter. So how is the organic growth of the overseas business in the second quarter?

[Lydia Ling, Director - Equity Research at Citi]

And if you also give us some updates on the progression of the overseas expansion and also your outlook for the second half and beyond? Thank you.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thank you very much, Lydia. Regarding the first question, the global regulatory landscape for e vapor products is becoming increasingly well defined and straight and forth, bringing greater clarity to compliance requirements such as product standards and excise tax. For leading and compliance corporations like our company, this shift is delivering tangible benefits. We anticipate that the brand share and distribution share of the current gray and black markets will decline as regulators continue to enforce regulations, particularly by implementing Sprater Custom Control and tax collection practices and shutting down illegal operations and stores. This transition toward compliance also presents an opportunity for us to gain market share.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Many markets are implementing structured product standards this year. With clearer rules and strong enforcement, we are seeing a transition from illegal products offered by competitors to our compliance offerings, including our project based closed system and open system products. Lastly, reputable retail channels, particularly key accounts such as convenience stores and petrol stations are steering away from gray market products. Instead, they are prioritizing partnerships with compliant businesses with a leading market share in house. This trend not only creates a more stable operating environment, but also open up significant growth opportunities for the company.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Regarding your question about our organic growth of overseas business, despite the China export data reporting a year over year decline in the low teens for the first half of the year, our company achieved moderate year over year growth organically in overseas business, showcasing our resilience and ability to capture increasing market share from various types of competitors. We have gained market share progressively in many Asian markets in the 2025. Our successful expansion into the European market this quarter marked a major step forward in the overseas business and made a meaningful contribution to our revenue growth during the quarter. For the 2025, our priority will be to strengthen distribution and retail capabilities in Asia and Europe, while optimizing our product portfolio to boost our competitiveness. Looking ahead, we plan to expand into additional European countries and selected Asian countries and perhaps an additional continent by early twenty twenty six.

[Sam Tsang, Head - Capital Markets at RLX Technology]

However, this plan remains in its early stages and will depend on further developments. Thank you for your questions.

[Operator]

The next question comes from Charlie Chen with China Research. Please go ahead.

[Charlie Chen, Head of Research at China Renaissance Securities]

Thank you, management to take my questions. I have a question regarding the domestic market. So can you give us more color on the current situation of the China market right now in addition to the regulatory side? And also how is Relac's business performance in Chinese markets so far? Thank you.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thanks very much, Charlie. So we have observed a moderate recovery in domestic compliance market this year, primarily driven by straighter customer control at China's border, which has limited the reselling of overseas business back into the domestic markets. This is certainly encouraging news, though there remains significant room for improvement. At present, over 80% to 90% of the domestic market continues to be dominated by illegal products, the majority of which are produced by small local workshops. These products are often of supplier quality, contribute no test revenue to the society and are potentially associated with criminal activities.

[Sam Tsang, Head - Capital Markets at RLX Technology]

As the largest compliance brand in the domestic legal markets, we have been actively collaborating with regulators, providing over 4,000 and pieces of evidence concerning illegal retailers and manufacturers in this year. We believe that as stray to regulations on these local manufacturers and retailers are enforced, compliance product share of the overall domestic line with the overall industry during the 2025, with our market share in the compliance segment remaining consistently strong. This is reflected by growth in the excise test on products line of our income statement. From a product perspective, cartridge pods have demonstrated faster growth than devices, reflecting a trend of existing users increasingly adopting compliance products with growing retention. Additionally, alongside the crackdown on non compliance products, the launch of our disposable products Fadeo in the 2024 has played a key role in driving the incremental recovery of our domestic business. Thank you for question.

[Operator]

The next question comes from Yuyin Zhu with CICC. Please go ahead.

[Yuying Zhou, Analyst at China International Capital Corporation (CICC)]

Thanks management. This is Doohi from CICC. My first question is about dividend. We noted that company has historically announced dividends in November, but this year dividends were announced in August. Will there be any additional dividend this year?

[Yuying Zhou, Analyst at China International Capital Corporation (CICC)]

And we also noticed that the company's share repurchase program will expire by the end of this year. And is there any plan to extend or launch a new share repurchase program? Thank you.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thank you, Sou Yi for your question. Turning to the Board's decision and approval, we do not foresee there will be additional dividends announcements this year. Same as the last two years, our plan in 2025 is to distribute a cash dividend of $01 per ordinary share or ADS. Regarding the share repurchase program, we have been purchasing our shares since December 2021. By the 2024, we had repurchased over US300 million dollars of our shares or ADS.

[Sam Tsang, Head - Capital Markets at RLX Technology]

We have also made additional share repurchase throughout 2025 through open market purchases and privately negotiated transactions. Looking ahead, we plan to remain a progressive shareholder return program. Our scale and profitability have been growing in the past three years and recent quarter's achievements have been encouraging. As always, we will diligently evaluate our financials and strive to generate robust shareholder returns and profitability growth. We are also looking at more efficient means for providing future shareholder return. Thank you for your question.

[Operator]

The next question comes from Yun Gao with CITIC. Please go ahead.

[Yun Guo, Senior Analyst at CITIC Securities Company]

Thanks management. This is Yun Guo from Citi. My question is about investment agreement. We noticed that the company entered into investment agreement with an EV company based in Europe during the 2025 and its annual proposal. Could management provide more details to this agreement?

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thank you very much, Guo Yuan, for your question. So in March 2025, we entered into an investment agreement with a leading compliant e vapor company in Europe, which has been consolidated into our financial statements starting in June. The acquired company has a seventeen year track record and operates a full industry chain business model and encompasses research and development, manufacturing, warehousing distribution, retailing and e commerce. RealNet placed significant value on the company's brand, business and operations. Following the acquisition, we have adopted a new approach in regions where the company operates.

[Sam Tsang, Head - Capital Markets at RLX Technology]

We now position ourselves as a retailer, distribution partner and brand operator rather than focusing solely on selling relaxed branded products in these regions. Within the acquired company channel, relaxed products will compete on a square footing with other brands. Looking ahead, we aim to leverage the company's distribution and retail capabilities to gain first hand insights into European market trends. This smart partnership has also enabled us to build capabilities previously like in Europe, expand our operational footprint and increase local share. These advancements will allow us to strengthen retail capabilities, achieve localized operations and foster greater diversity and flexibility in our business strategy. Thank you for question.

[Operator]

Thank Mike. Now I would like to turn the call back over to the company for closing remarks.

[Sam Tsang, Head - Capital Markets at RLX Technology]

Thank you once again for joining us today. If you have further questions, please feel free to contact Rx Technologies' Investor Relations team through the contact information provided on our website or Piacente Financial Communications.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Sam Tsang, Head - Capital Markets
• Wang Ying, CEO & Founder
• Chao Lu, CFO

Analysts

• Lydia Ling, Director - Equity Research at Citi
• Charlie Chen, Head of Research at China Renaissance Securities
• Yuying Zhou, Analyst at China International Capital Corporation (CICC)
• Yun Guo, Senior Analyst at CITIC Securities Company