RLX Technology Inc. Q2 FY2025 earnings call

• RLX delivered impressive second quarter results with a 40% Y/Y net revenue increase to RMB 880 million and non-GAAP operating profit of RMB 116 million. • The smokeless alternative market is evolving with trends like transition to smokeless nicotine products, and RLX has a multi-category strategy. • For e-vapor, the 'big puff effect' trend led to launching high-capacity products, and focus on sustainable solutions via cartridge-based technology. • Overseas operations are being refined with local retail support and partnerships, including an investment in a European e-vapor company in March 2025.

In the second quarter of 2025, RLX Technology achieved net revenues of RMB 880 million, representing a 40% year-over-year increase. The gross margin expanded 2.3 percentage points year-over-year to 27.5%. The second quarter marked the seventh consecutive quarter of positive non-GAAP operating profit at RMB 116 million, with non-GAAP operating margin expanding to 13.2%.

• Anticipate further improvement in profitability as scaling globally while focusing on efficiency and lean structure. • Plan to expand into additional European countries and selected Asian countries, and possibly another continent by early 2026. • Aim to leverage market leadership, innovative products, and localized strategies for new growth opportunities.

• The global regulatory landscape for RLX products could change, impacting compliance requirements and market share. • Intense competition in international markets and potential unforeseen regulatory shifts could affect performance.

Q: On regulation side, how does the regulatory landscape benefit RLX and organic growth of overseas business?

A: The global regulatory landscape is more defined, benefiting compliant companies like RLX with brand and distribution share gains. Organic overseas growth has seen moderate Y/Y growth with market share gains in Asian markets and a major step forward in Europe with the investment in a European e-vapor company.

Q: About domestic market, color on current situation and RLX's business performance?

A: Moderate recovery in domestic compliance market due to stricter border controls and successful disposable product launch. Domestic revenue grew in line with industry, cartridge pods grew faster, and disposable product Fadio launched in H2 2024 helped recovery.

Q: About dividends and share repurchase?

A: No additional dividends foreseen this year; plan to distribute $0.01 per ordinary share/ADS. Share repurchase program has been ongoing, with plans to continue progressive shareholder return and evaluate efficient means for future returns.

Q: Details on the investment agreement with European e-vapor company?

A: In March 2025, RLX entered an investment agreement with a leading compliant European e-vapor company, which has been consolidated into financials since June. The acquired company has a 17-year track record and full industry chain, allowing RLX to leverage its distribution and retail capabilities in Europe, expand operational footprint, and increase local market share.