RLX Technology (NYSE:RLX) Announces Earnings Results, Misses Expectations By $0.06 EPS

Key Points

• RLX Technology missed quarterly expectations, reporting $0.03 in EPS versus the $0.09 consensus estimate and revenue of $148.73 million versus $173.99 million.
• Despite the miss, Q2 revenue increased 14.8% year over year to RMB 1.01 billion, while gross profit rose 47.8% and gross margin expanded to 35.4%. International markets generated about 70% of revenue, with a European distribution acquisition expected to broaden its retail reach.
• Management cautioned that normalized inventories and the lower-margin distribution business could pressure sequential revenue and percentage margins. The company plans to focus investment on Europe, Asia, oral nicotine pouches, selective acquisitions, buybacks and dividends, while maintaining a cautious stance on U.S. expansion.

RLX Technology (NYSE:RLX - Get Free Report) posted its earnings results on Friday. The company reported $0.03 earnings per share for the quarter, missing analysts' consensus estimates of $0.09 by ($0.06), FiscalAI reports. The firm had revenue of $148.73 million during the quarter, compared to the consensus estimate of $173.99 million. RLX Technology had a net margin of 20.76% and a return on equity of 6.15%.

Here are the key takeaways from RLX Technology's conference call:

• Q2 revenue rose 14.8% year over year to RMB 1.01 billion, while gross profit increased 47.8% to RMB 357.8 million. Gross margin expanded to 35.4%, supported by supply-chain optimization, manufacturing yields, and favorable product mix.
• International markets accounted for approximately 70% of revenue and remained the primary growth engine. The Western European distribution acquisition will be fully consolidated beginning in Q3, providing access to more than 30,000 retail endpoints and over 20,000 independent merchants through its B2B platform.
• Sequential revenue moderated as trade inventories normalized after Q1 shipments were pulled forward by regulatory export adjustments. Management also expects gross margin to settle into a more balanced range, while the lower-margin distribution business will dilute percentage margins despite increasing absolute operating profit and net income.
• RLX reported RMB 13.9 billion in cash and liquid resources and plans to prioritize high-return organic investments, selective accretive M&A, share repurchases, and dividends, subject to board approval. Management emphasized that acquisitions must be strategically synergistic, cash-payback oriented, non-dilutive, and EPS-accretive.
• The company is limiting near-term U.S. investment until PMTA enforcement becomes more predictable, while forecasting Mainland China sales to be broadly flat for the full year amid stricter regulatory approvals. Growth priorities are shifting toward Europe, Asia, and modern oral nicotine pouches, supported by a planned Southeast Asian multi-category manufacturing hub.

RLX Technology Trading Down 2.2%

RLX Technology stock traded down $0.04 during trading on Friday, reaching $1.96. The company had a trading volume of 8,777,373 shares, compared to its average volume of 2,433,973. The firm has a market capitalization of $3.03 billion, a price-to-earnings ratio of 19.55 and a beta of 1.20. The firm's 50-day simple moving average is $1.96 and its 200 day simple moving average is $2.13. RLX Technology has a 52 week low of $1.76 and a 52 week high of $2.84.

Analyst Upgrades and Downgrades

Separately, Weiss Ratings reaffirmed a "hold (c)" rating on shares of RLX Technology in a research report on Friday, July 17th. Two investment analysts have rated the stock with a Hold rating, According to MarketBeat.com, RLX Technology currently has an average rating of "Hold" and an average price target of $2.50.

Institutional Trading of RLX Technology

A number of hedge funds and other institutional investors have recently bought and sold shares of the stock. Schonfeld Strategic Advisors LLC purchased a new position in shares of RLX Technology during the 4th quarter valued at about $26,000. Insigneo Advisory Services LLC purchased a new stake in RLX Technology in the 4th quarter worth approximately $29,000. SmartHarvest Portfolios LLC purchased a new stake in RLX Technology in the 4th quarter worth approximately $40,000. BNP Paribas Financial Markets bought a new stake in RLX Technology during the 3rd quarter worth approximately $60,000. Finally, Cresset Asset Management LLC bought a new stake in RLX Technology during the 3rd quarter worth approximately $66,000. Hedge funds and other institutional investors own 22.68% of the company's stock.

About RLX Technology

RLX Technology Inc NYSE: RLX is a China-based company specializing in electronic nicotine delivery systems. The company develops, manufactures and markets closed-pod vaping devices and prefilled cartridges, positioning its products as an alternative to traditional combustible tobacco. RLX emphasizes consistent nicotine delivery, flavor variety and convenience through its proprietary e-liquid formulations and device design.

RLX operates a vertically integrated business model that encompasses research and development, production, quality control and sales.

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