RLX Technology Inc (RLX) Q1 2026 Earnings Call Highlights: Robust Revenue Growth and Strategic ...

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Net Revenue: RMB1.59 billion, up 96.2% year-over-year and 38.9% quarter-over-quarter. Gross Margin: 31.8%, up from 28.6% in the same period last year. Non-GAAP Operating Margin: 19.6%, compared to 13.3% in the same period last year. Non-GAAP Income from Operations: RMB310.3 million, a 187.9% increase year-over-year. Non-GAAP Net Income: RMB357.3 million, a 41.4% increase compared to RMB252.7 million last year. Total Financial Assets: RMB14.53 billion (approximately USD2.1 billion) as of March 31, 2026. Accounts and Notes Receivable Turnover Days: 15 days. Inventory Turnover Days: 32 days. Payable Turnover Days: 49 days.

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Release Date: May 20, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

RLX Technology Inc (NYSE:RLX) achieved strong revenue growth, increasing by 96.2% year-over-year and 38.9% quarter-over-quarter. The company's international business accounted for over 70% of total net revenues, demonstrating strong global expansion. Gross margin expanded to 31.8% in the first quarter, up from 28.6% in the same period last year, due to favorable product mix and supply chain optimization. RLX Technology Inc (NYSE:RLX) has a robust financial position with total financial assets of RMB14.53 billion, providing flexibility for future growth. The company's integrated smart manufacturing facility, Nexus, is fully operational, enhancing operational efficiency and competitive edge.

Negative Points

The sequential decrease in total financial assets from RMB15.73 billion to RMB14.53 billion reflects dividend payments, impacting cash reserves. The cancellation of the Chinese export tax rebate may affect production costs, although the long-term impact is expected to be minimal. RLX Technology Inc (NYSE:RLX) faces regulatory uncertainties in the US market, with no current operations there. The company remains cautious in its European M&A strategy due to inherent uncertainties in potential opportunities. The timing is not optimal for large-scale investment in the HMB heated tobacco category, limiting immediate growth opportunities in new product categories.

Q & A Highlights

Q: Can management provide an update on the integration of the European invested company and your operations in the UK market? Also, what are the implications of the recent FDA decisions on flavored vapes approval in the US for RLX's global strategy? A: Our integration approach in Europe focuses on strategic alignment rather than operational interference, leveraging local expertise to refine our strategy. We are empowering our European team with resources to scale operations. Regarding the FDA's decisions, we do not currently operate in the US but view the developments as potentially favoring credible industry players. In China, we support regulatory measures for a sustainable industry. Our focus remains on Asia and Europe, where we can drive tangible growth. - Sam Tsang, Head of Capital Markets

Story Continues

Q: What are the implications of the UK's smoking ban for people born after 2008 on your business, and how do you view the development of the vape industry in Europe? A: The UK's smoking ban is a significant milestone, positioning e-vapor as the only legal nicotine channel for future generations. This, combined with upcoming regulations, raises entry barriers, allowing compliant leaders like RLX to expand market share in the UK. - Sam Tsang, Head of Capital Markets

Q: Can you provide updates on your investment plan in Europe and market strategy for new categories like oral pouch and HMB? A: Our European strategy follows a dual engine approach, focusing on strategic M&A and organic growth. We are cautious in valuations and will update on materialized projects. For new categories, we are scaling up production for oral products and identifying distribution channels. We have no immediate plans for large-scale investment in HMB heated tobacco, focusing instead on e-vapor market share. - Sam Tsang, Head of Capital Markets

Q: Will the cancellation of the Chinese export tax rebate affect the company's production cost? A: The policy shift contributed to revenue increase in Q1 due to strategic inventory positioning by partners. The impact on retail prices is expected to be manageable, with minimal long-term effects on cost structure and margins. - Sam Tsang, Head of Capital Markets

Q: Can you provide more details on your overseas expansion and any new markets entered in the first quarter? A: In Q1, we entered two new markets in Southeast Asia and Europe. Our strategy involves leveraging brand equity in Asia and exploring strategic opportunities in Europe, focusing on tailored products and partnerships for long-term growth. - Sam Tsang, Head of Capital Markets

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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