RLX Technology Q1 Earnings Call Highlights

Key Points

• RLX reported a strong Q1 2026 with revenue up 96.2% year over year to RMB 1.59 billion, driven mainly by international growth, the European investment, and stable performance in mainland China.
• Profitability improved meaningfully, with gross margin rising to 31.8% and non-GAAP operating margin expanding to 19.6%; non-GAAP income from operations jumped 187.9% from a year earlier.
• Management highlighted Europe and regulatory changes as key opportunities, citing the now fully operational Nexus manufacturing hub, expansion into new markets, and U.K. tobacco/vape rules that could favor compliant e-vapor players.

RLX Technology NYSE: RLX reported a sharp increase in first-quarter 2026 revenue, driven by international expansion, contributions from a European investment and continued stability in mainland China, executives said on the company’s earnings call.

Chief Executive Officer Kate Wang said the company was “off to a robust start in 2026,” citing a 96.2% year-over-year increase in revenue and a 38.9% sequential increase. Wang attributed the performance to RLX’s global expansion strategy, localized market efforts and the buildout of its integrated operating hub, Nexus.

“Our international business sustains its rapid organic growth, while our mainland China business demonstrated resilience and stability,” Wang said.

International Business Drives Revenue Growth

Chief Financial Officer Chao Lu said net revenues for the first quarter reached RMB 1.59 billion, up 96.2% from the prior-year period and 38.9% from the previous quarter. He said the increase was primarily driven by momentum in international operations, accretion from the company’s acquired European entity, steady progress in mainland China and a one-time impact from changes in China’s export policy.

Lu said RLX’s international business has accounted for more than 70% of total net revenues for several consecutive quarters, making it the company’s key growth driver.

Profitability also improved during the quarter. Gross margin expanded to 31.8%, compared with 28.6% in the same period last year, which Lu said reflected a more favorable product mix and supply chain optimization. Non-GAAP operating margin rose to 19.6% from 13.3% a year earlier.

Non-GAAP income from operations increased 187.9% year over year to RMB 310.3 million, while non-GAAP net income rose 41.4% to RMB 357.3 million, compared with RMB 252.7 million in the first quarter of 2025.

Europe Remains a Strategic Focus

Wang said Europe remains a “cornerstone” of RLX’s global strategy, supported by what she described as a more mature regulatory environment and demand for higher-quality alternatives to combustible tobacco products.

The company’s May 2025 strategic investment in a European company has helped RLX navigate local market dynamics, Wang said. During the question-and-answer portion of the call, she said the integration is focused on strategic alignment rather than day-to-day operational control.

“It is a synergetic relationship,” Wang said, adding that RLX is providing capital resources and global platform support while relying on the local team’s market expertise.

Wang said RLX recently invested in a new local warehouse facility to address prior capital constraints and improve distribution efficiency. She said the company intends to use its cash position to help the European business secure more downstream resources.

RLX is pursuing what Wang called a “dual-engine strategy” in Europe, combining strategic mergers and acquisitions with organic growth. She said the company remains selective on investments and is prioritizing long-term synergy over immediate scale.

Regulatory Developments Seen as Structural Tailwind

Management discussed regulatory changes in the United Kingdom, including the Tobacco and Vapes Act, which Wang said became law in April 2026. She said the law prevents anyone born after 2009 from legally purchasing combustible cigarettes, while exempting regulated harm-reduction alternatives such as vapes.

Wang said the law reflects a broader global trend of restricting combustible tobacco while preserving regulated pathways for alternatives. She characterized this as a potential structural tailwind for companies with compliance capabilities, product quality controls and proactive regulatory engagement.

In response to a question from Citi analyst Lydia Ling, Wang said the U.K.’s generational smoking ban reinforces the role of e-vapor products as a harm-reduction tool, while other upcoming rules, including the Vaping Products Duty in October 2026 and an HMRC licensing scheme, are expected to raise barriers to entry.

Wang said RLX believes such measures could reduce the presence of non-compliant and black-market brands, allowing compliant companies to expand market share in the U.K.

Nexus Manufacturing Hub Now Fully Operational

Wang said RLX’s integrated smart manufacturing facility, Nexus, is now fully operational. She described the facility as more than a manufacturing upgrade, saying it brings research and development, manufacturing and commercial operations under one roof.

According to Wang, Nexus expands the company’s self-manufacturing capacity and supports higher precision quality standards. She also said the facility strengthens RLX’s control over proprietary technologies and improves operational efficiency by enabling faster decision-making and more agile responses to global market shifts.

“This integrated hub has materially improved our operational efficiency,” Wang said.

Balance Sheet and Market Expansion

Lu said RLX ended the quarter with total financial assets, including cash equivalents, deposits and investments, of RMB 14.53 billion, or approximately $2.11 billion, as of March 31, 2026. That was down from RMB 15.73 billion at the end of 2025, a change he said primarily reflected dividend payments made during the first quarter.

The company also reported accounts and notes receivable turnover days of 15 days, inventory turnover days of 32 days and payable turnover days of 49 days.

During the Q&A session, Wang said RLX entered two new markets in the first quarter, located in Southeast Asia and Europe. She said the company is using its brand strength in Asia to expand into neighboring markets, while taking a more localized approach in Europe due to differences in consumer preferences and regulation.

Asked about the recent cancellation of China’s export tax rebate, Wang said anticipated policy changes contributed in part to the company’s first-quarter revenue increase, as downstream partners positioned inventory before the cancellation took effect in April 2026. She said the front-loading effect was “largely behind us” and described the volume shift as moderate.

Wang said the policy change has little impact on organic end-user demand and is expected to have a manageable impact on final retail prices. She said RLX will use cost pass-through mechanisms when necessary and expects the long-term impact on overall costs and margins to be minimal.

Management also addressed potential expansion into new product categories. Wang said RLX is scaling production capacity for modern oral products and identifying new distribution channels, while the company does not currently plan a large-scale launch in heated tobacco products, despite having technical reserves in the category.

“Our primary focus remains on capturing more market share within the e-vapor sector,” Wang said.

About RLX Technology NYSE: RLX

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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