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DATE

Friday, November 14, 2025 at 7 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Kate Wang
  • Chief Financial Officer — Chao Lu
  • Head of Capital Markets — Sam Tsang

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TAKEAWAYS

  • Net Revenue -- RMB1.1 billion, reflecting 49% year-over-year growth and 28% quarter-over-quarter growth.
  • Non-GAAP Operating Profit -- RMB188 million, marking the eighth consecutive quarter of positive non-GAAP operating profit.
  • Gross Profit Margin -- Expanded by four percentage points year over year and 3.7 percentage points quarter over quarter.
  • Cash Flow from Operating Activities -- RMB350 million, up from RMB157 million in the prior-year period.
  • Total Financial Assets -- RMB16.4 billion (approximately $2.2 billion) as of September 30, 2025, including cash, cash equivalents, investments, and deposits.
  • Shareholder Returns -- Over $500 million returned to shareholders since IPO via buybacks and dividends; $330 million in buybacks as of September 30, 2025.
  • Dividend Declared -- $0.1 per ordinary share or ADS for the quarter.
  • Revenue Mix -- 70%-80% of revenues from international markets.
  • Mainland China Revenue -- RMB320 million during the period, equivalent to approximately 13% of Q2 2021 levels.
  • Inventory, Receivable, and Payable Turnover -- 25, 11, and 53 days, respectively, for Q3, supporting a healthy negative cash conversion cycle.
  • International Expansion -- Full three-month financial consolidation of a European e-vapor company contributed this quarter.
  • Channel Innovation -- Franchise retail model in Asia Pacific engaged over 450 partners in one East Asian country, resulting in same-store sales growth.
  • R&D and Product Innovation -- Recent East Asia disposable e-vapor product launch delivered “exceptional demand” and industry design benchmarks.
  • Modern Oral Product Launch -- Initiated phased rollout in Intertek, Germany, described as the fastest-growing smokeless segment.
  • UK Market Adaptation -- Proactive migration from disposables to reusable products secured market position following June 2025 UK ban on disposables.
  • Strategy in Europe -- Post-June consolidation, priorities include building a multi-brand retail distribution platform and leveraging supply chain advantages.

SUMMARY

RLX Technology (RLX +9.01%) reported quarterly net revenue of RMB1.1 billion, fueled by international expansion and robust product innovation. Management highlighted that ongoing regulatory tightening in Mainland China contributed to a modest revenue rebound but stressed market recovery remains constrained by an unregulated e-vapor sector. The company’s recent European acquisition added to the improved gross margin and contributed a full quarter of financial results. Strategic capital deployment enabled the declaration of a quarterly dividend and continuation of significant share repurchases, directly benefiting shareholders.

  • Chief Financial Officer Chao Lu said, "We further strengthened our profitability this quarter, a testament to our disciplined execution and operational excellence."
  • Management described the modern oral product as offering “ultra-thin, fast-absorbing products launched in Intertek, Germany, garnered strong industry validation.”
  • International market initiatives, including Asia Pacific franchise channels, are directly credited with both enhanced brand presence and operational control.
  • Management indicated a prudent near-term revenue outlook for new product categories as consumer adoption is still being established.

INDUSTRY GLOSSARY

  • Modern Oral: Smokeless, non-combustible nicotine products designed for oral use, often in pouch form, representing a rapidly emerging segment within the broader nicotine delivery industry.
  • Disposable e-vapor: Single-use, non-refillable e-cigarette devices; prominent in category growth but subject to increasing regulatory scrutiny in some markets.

Full Conference Call Transcript

Sam Tsang: The company's financial and operational results were released through PLE's wire services earlier today and have been made available online. You can also view the earnings press release by visiting our IR website at ir.reacestat.com. Participants on today's call will include our Chief Executive Officer, Ms. Kate Wang, our Chief Financial Officer, Mr. Chao Lu, and me, Sam Tsang, Head of Capital Markets. Before we continue, please note that today's discussion will include forward-looking information made under the Safe Harbor provisions of The U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, anticipate, aim, estimates, intend, plan, believe, potential, continue, or other similar expressions. Forward-looking statements 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 are factors beyond our control. The company, its affiliated advisers, and representatives do not undertake any obligation to update its forward-looking information except as required under applicable law. Please note that RLX Technology Inc.'s earnings press release and this conference call will include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. The press release contains a reconciliation of the unaudited non-GAAP financial measures to the unaudited GAAP financial measures. For today's call, management will use English as the main language.

They will also provide simultaneous interpretation on the Chinese line. Please note that the Chinese line is in listen-only mode and Chinese interpretation is for convenience purposes only. In case of any discrepancy, management statements in the original language will prevail. I will now turn the call over to Ms. Kate Wang. Please go ahead.

Kate Wang: Thank you, Sam, and thank you all for joining today's call. This quarter, we once again delivered robust results in a challenging global environment. Our net revenues surged 49% year over year, reaching RMB1.1 billion, with non-GAAP operating profit reaching RMB188 million. This performance underscores the strength of our industry-leading portfolio and our excellent execution across international markets, bolstered by a gradual recovery in China. It also validates the scalability of our globalization strategy and the outstanding technological innovation that secures our leadership in the e-vapor sector. Turning to Mainland China, regulatory enforcement strengthened markedly, yielding a positive shift in market dynamics.

For instance, enhanced customer inspections have curtailed illegal returns of exported products, channeling customers back to legitimate brands from non-compliant alternatives during this quarter's modest Mainland China revenue recovery. That said, the persistence of an unregulated electric e-vapor market remains a significant headwind, distorting competition and restraining volume recovery. Our revenue from Mainland China stands at RMB320 million this quarter, or approximately 13% of Q2 2021 levels, illustrating the scale of ongoing challenges. True market order can only be achieved through consistent enforcement actions, particularly against illegal online sales. As a leading compliant player, we continue to advocate for strict enforcement and remain committed to providing adult smokers in China with a superior, diversified portfolio of quality tobacco alternatives.

We are also advocating for regulatory adjustments around tobacco flavor formulation. This could align public policy with consumer preferences, helping to foster a more transparent, orderly market. Internationally, our strategy continues to gain momentum, with 70% to 80% of our revenues now derived from international markets. Amidst various headwinds, including the big push effect, disciplined execution, quality products, and deep legal insights continue to drive success. Our new Asia Pacific franchise retail model exemplifies this strategic and execution excellence. By uniting independent vape stores under a cohesive brand to enhance retail execution, amplify visibility, and elevate user experience, we generated meaningful same-store sales growth.

Furthermore, our robust R&D capabilities remain a core differentiator in international markets, enabling rapid innovation and local market adaptation. Notably, our recent East Asia product launch set industry benchmarks for disposable e-vapor products for design excellence, spurring category growth and exceptional demand. Our expansion into adjacent categories with the development of our modern oral product will strengthen our portfolio and pipeline, unleashing growth potential as we capture demand from previously untapped user segments. Beyond APAC, Europe remains a critical growth market, distinguished by regulatory maturity and an evolved user base. Our strategic equity investment in a leading European e-vapor firm enhances our market intelligence and positions us to capitalize on future opportunities effectively.

In The United Kingdom, where the government implemented a ban on disposable products in June 2025, we demonstrated strong business adaptability through our proactive strategy to migrate consumers to reusable and sustainable product formats. Reinforced by robust retail execution and strategic category management, we not only safeguarded our market position but also sustained top-line strength amid a sharp industry contraction. In summary, this quarter's results reflect our enduring strength, resilience, and leading innovation amid a complex macro environment. We are building more than financial value; we are cultivating a global brand with quality and sustainable leadership. Looking forward, we remain confident in our ability to shape the smoke-free industry and deliver lasting value to our stakeholders.

Now I will hand it over to Chao for a detailed review of our financial performance.

Chao Lu: Thank you, Kate, and hello, everyone. Before we dive into the financial details, please note that all figures I present today are denominated in RMB unless otherwise stated. We are pleased to report another strong quarter marked by robust revenue growth and improved profitability. In 2025, our strategic emphasis on international markets continued to drive exceptional results. Net revenues reached RMB1.1 billion, reflecting impressive increases of 49% year over year and 28% quarter over quarter. Importantly, we reinforced our market leadership in core regions while proactively capturing organic growth and strategic investment opportunities. Selected Asian markets delivered strong organic growth, fueled by successful product innovation and introduction, and effective local execution.

Additionally, our investment in a premier European e-vapor company contributed significantly this quarter. Having consolidated these entities' financials since June, its full three-month performance is now reflected in our results. Meanwhile, a mild recovery in the Mainland China market provided a positive backdrop during this period. Let's turn to profitability. We further strengthened our profitability this quarter, a testament to our disciplined execution and operational excellence. Our gross profit margin expanded by four percentage points year over year and 3.7 percentage points quarter over quarter. This improvement was driven by the consolidation of our equity investments in the European market, favorable shifts in geographic revenue mix, and margin enhancements in all key international regions.

Additionally, we achieved our eighth consecutive quarter of positive non-GAAP operating profit, reaching RMB188 million. Our non-GAAP operating profit margin expanded by six percentage points year over year, reflecting both enhanced operating leverage and rigorous cost management. Looking ahead, we remain committed to driving further profitability improvement as we scale globally by relentlessly prioritizing operating efficiency and maintaining a lean organizational structure. Moving on to financial flexibility, we maintained our strong cash position, supported by solid financial fundamentals and disciplined capital allocation. Our cash flow generated from operating activities surged in Q3, rising to RMB350 million from RMB157 million in the same period last year.

This performance reflects our efficient working capital management, characterized by a healthy negative cash conversion cycle with inventory turnover days at 25, receivable turnover days at 11, and payable turnover days at 53. As of September 30, 2025, our total financial assets, including cash and cash equivalents, restricted cash, short-term bank deposits net, short-term investments net, long-term bank deposits net, and long-term investment securities net, stood at RMB16.4 billion, approximately $2.2 billion. This strong liquidity position provides ample flexibility to pursue strategic investments that accelerate our global expansion and fuel innovation while also enabling us to enhance shareholder value through disciplined capital deployment and a sustainable return.

That brings me to shareholder return, which I believe is something that you are focused on. With a consistent disciplined capital allocation approach, we have returned nearly all of our non-GAAP net profits to shareholders through strategic share repurchases and dividends over the past four years. As of September 30, 2025, we have repurchased approximately $330 million in ordinary shares represented by ADSs. For this quarter, we are declaring a cash dividend of $0.1 per ordinary share or ADS. Furthermore, since our IPO, including the cash dividend announced today, we have returned over $500 million to shareholders through repurchases and dividends.

Our capital framework is purpose-built to support durable profit growth while maximizing long-term returns for shareholders, balancing reinvestment in strategic growth with responsible financial stewardship. In closing, this quarter's results are a clear testament to our outstanding execution and distinctive competitive advantages across global markets. We are not just navigating challenges; we are transforming them into opportunities through innovation and tailored local strategy. As we unlock new growth avenues, we remain focused on delivering sustainable value that benefits all stakeholders today and into the future. Thank you for your attention. We now welcome your questions. Operator, please proceed.

Operator: We will now begin the question and answer session. Please press *1 on your telephone keypad to ask a question. For the benefit of all participants on today's call, if you ask your question in Chinese, please immediately repeat your question in English. The first question today comes from Olivia Singh with Citi. Please go ahead.

Olivia Singh: Hi, management. Thanks for the presentation and congratulations on the results. So I have two questions. The first one is, as we now enter close to the year-end, based on current progression in your international expansion, could you share your revenue outlook for 2026 for the company and also the industry? Also, could you give us some breakdown for the international business, like how is the organic growth in the third quarter and for your invested European e-vapor business, how did it perform in the third quarter? This is my first question. The second question is, given that the e-vapor industry has matured, what areas are prioritized in R&D to sustain your growth and differentiation? Thank you.

Chao Lu: Thank you, Olivia, for your questions. For the first question, let me address it in three parts. Regarding the 2026 revenue outlook, we are committed to expanding our branded footprint selectively across international markets, contingent on regulatory parity and market readiness. Although the timeline remains fluid, we will maintain our disciplined strategic approach. We will share detailed plans as we finalize them in the coming quarters. Regarding our Q3 2025 international growth, our international revenue grew steadily and outpaced industry averages, driven by robust organic growth in the Asia Pacific region. This reflects the strength of our tailored product innovation and route-to-market strategy, enabling us to deepen market penetration and consumer loyalty.

Finally, regarding our European investment performance, our invested e-vapor company in Europe has maintained operational stability despite recent regulatory challenges, including the UK disposable product ban. We are optimistic about our synergies and anticipate scaling this company as we advance market integration. Regarding your second question about innovation and differentiation, amid a maturing industry landscape, we have sharpened our focus on meaningful product evolution that delivers value. Our R&D initiatives emphasize enhancing core user experiences, particularly in flavor authenticity, device ergonomics, and aesthetic design. We have optimized product performance through technological refinements and strengthened regional market presence via a localized flavor portfolio.

This strategy culminated in a breakthrough product launch in East Asia this quarter, distinguished by innovative design and user appeal. We believe this R&D approach is foundational for sustained differentiation and long-term success. Thank you for your questions.

Operator: The next question comes from Yun Guo with CITIC. Please go ahead.

Yun Guo: Thanks, management. This is Yun Guo from CITIC, and congratulations on the results. My question is about the channel innovation in select Asian markets. Can the management elaborate more?

Chao Lu: Sure, definitely. Our channel innovation centers on transforming vape store experiences. Independent vape stores dominate category sales but face branding inefficiencies. Through a franchise model, we provide renovation subsidies that upgrade store enhancements under unified branding. These initiatives have engaged over 450 partners in an East Asian country this year, driving significant revenue growth while enhancing our brand presence and operational control. Thank you for your question.

Operator: The next question comes from Zoe Zhou with CICC. Please go ahead.

Zoe Zhou: Hi, management. This is Zoe Zhou from CICC. My question is about our Europe business. First, could you give us some update on the UK vape company integration? And what is the strategy for your preferred expansion? Thanks.

Chao Lu: Thanks very much, Zoe. Following the June consolidation, we are in the early stages of integration, currently prioritizing the preservation of brand equity and operational strength. Our strategy is to transform the UK operations into a multi-brand retail distribution platform, leveraging supply chain and capital advantages to enhance efficiency. We are actively leveraging local expertise to expand channel development and product localization across Europe while remaining open to strategic investments that may accelerate geographic and portfolio diversification. Thank you for your question.

Operator: The next question comes from Ling Zhou with UBS. Please go ahead.

Ling Zhou: Congratulations, management, for the strong results in Q3. My question is, what is the current expansion status of the modern oral business, and what are the subsequent promotional strategies of RLX? Thank you.

Chao Lu: Sure. Thank you very much, Ling, for your question. Modern oral is the smokeless industry's fastest-growing segment, reflecting a clear market opportunity. Our ultra-thin, fast-absorbing products launched in Intertek, Germany, garnered strong industry validation. We plan to roll out this category in phases starting this quarter. At this stage, our near-term revenue expectations remain prudent as we build market data and consumer adoption. Thank you very much for your question.

Operator: Due to time constraints, now I would like to turn the call back over to the company for closing remarks.

Chao Lu: Thank you once again for joining us today. If you have further questions, please feel free to contact RLX Technology Inc.'s Investor Relations team through the contact information provided on our website.

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