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RLX Technology Announces Unaudited Second Quarter 2023 Financial Results

August 18, 2023 6:00 AM EDT

BEIJING, Aug. 18, 2023 /PRNewswire/ -- RLX Technology Inc. ("RLX Technology" or the "Company") (NYSE: RLX), a leading branded e-vapor company in China, today announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Highlights

  • Net revenues were RMB378.1 million (US$52.1 million) in the second quarter of 2023, compared with RMB2,233.9 million in the same period of 2022.
  • Gross margin was 26.1% in the second quarter of 2023, compared with 43.8% in the same period of 2022.
  • U.S. GAAP net income was RMB204.7 million (US$28.2 million) in the second quarter of 2023, compared with U.S. GAAP net income of RMB441.6 million in the same period of 2022.
  • Non-GAAP net income[1]was RMB86.2 million (US$11.9 million) in the second quarter of 2023, compared with RMB634.7 million in the same period of 2022.

[1] Non-GAAP net income is a non-GAAP financial measure. For more information on the Company's non-GAAP financial measures, please see the section "Non-GAAP Financial Measures" and the table captioned "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

"During the second quarter of 2023, we continued to firmly execute our core strategy amid the challenging market environment," said Ms. Ying (Kate) Wang, Co-founder, Chairperson of the Board of Directors, and CEO of RLX Technology. "Specifically, we remained dedicated to offering compliant, high-quality products while developing new products to meet users' evolving needs. Though the recent resurgence of illegal products has had a lingering impact on our sales, we believe the impact will be temporary rather than a major trend that could derail our recovery trajectory. As a trusted e-vapor brand for adult smokers, we remain confident that, supported by regulatory oversight, our premium products will continue to win users' trust and gradually supplant inferior and harmful illegal products. Moving forward, we will continue prioritizing product innovation, harm reduction, and quality control initiatives while further enhancing our product portfolio as we strive to create sustainable value for all stakeholders."

Mr. Chao Lu, Chief Financial Officer of RLX Technology, commented, "In light of the external challenges, especially the disruptions from illegal products, we deepened our focus on efficiency and profitability improvement during the second quarter. Thanks to our supply chain optimizations and product design enhancements, our topline improved sequentially to RMB378.1 million, and our gross margin rebounded by 1.9 percentage points from the first quarter of 2023. We also strengthened cost control, which helped significantly narrow our non-GAAP operating loss. Notably, our operating cash flow turned positive for the first time since the new regulations were enacted. We believe our strong cash position will continue to support us in navigating the evolving markets, and we will pursue further gains in cost optimization and efficiency improvement to accelerate the pace of recovery."

Second Quarter 2023 Financial Results

Net revenues were RMB378.1 million (US$52.1 million) in the second quarter of 2023, compared with RMB2,233.9 million in the same period of 2022. The decrease was primarily due to the discontinuation of our older products and the negative impact of illegal products in the market after regulators' special action ended in April, which disrupted users' adoption of our new products that comply with national standards.

Gross profit was RMB98.5 million (US$13.6 million) in the second quarter of 2023, compared with RMB977.9 million in the same period of 2022.

Gross margin was 26.1% in the second quarter of 2023, compared with 43.8% in the same period of 2022. The decrease was primarily due to the imposition of a 36% excise tax which came into effect on November 1, 2022.

Operating expenses were RMB47.2 million (US$6.5 million) in the second quarter of 2023, compared with RMB530.9 million in the same period of 2022. The decrease was primarily due to the change in share-based compensation expenses, which were positive RMB118.5 million (US$16.3 million) in the second quarter of 2023, compared with RMB193.2 million in the same period of 2022. The change in share-based compensation expenses consisted of (i) positive RMB15.3 million (US$2.1 million) recognized in selling expenses, (ii) positive RMB90.9 million (US$12.5 million) recognized in general and administrative expenses, and (iii) positive RMB12.2 million (US$1.7 million) recognized in research and development expenses. The change in share-based compensation expenses was primarily due to the changes in the fair value of the share incentive awards that the Company granted to its employees affected by the fluctuations of the Company's share price.

Selling expenses were RMB45.2 million (US$6.2 million) in the second quarter of 2023, compared with RMB122.6 million in the same period of 2022, primarily due to the decrease in share-based compensation expenses.

General and administrative expenses were positive RMB41.4 million (US$5.7 million) in the second quarter of 2023, compared with RMB290.7 million in the same period of 2022, mainly driven by the fluctuation of share-based compensation expenses.

Research and development expenses were RMB43.3 million (US$6.0 million) in the second quarter of 2023, compared with RMB117.6 million in the same period of 2022, mainly driven by the decrease in share-based compensation expenses.

Income from operations was RMB51.4 million (US$7.1 million) in the second quarter of 2023, compared with RMB446.9 million in the same period of 2022.

Income tax expense was RMB51.5 million (US$7.1 million) in the second quarter of 2023, compared with RMB204.3 million in the same period of 2022.

U.S. GAAP net income was RMB204.7 million (US$28.2 million) in the second quarter of 2023, compared with RMB441.6 million in the same period of 2022.

Non-GAAP net income was RMB86.2 million (US$11.9 million) in the second quarter of 2023, compared with RMB634.7 million in the same period of 2022.

U.S. GAAP basic and diluted net income per American depositary share ("ADS") were RMB0.154 (US$0.021) and RMB0.150 (US$0.021) in the second quarter of 2023, compared with U.S. GAAP basic and diluted net income per ADS of RMB0.348 and RMB0.347, respectively, in the same period of 2022.

Non-GAAP basic and diluted net income per ADS[2] were RMB0.064 (US$0.009) and RMB0.062 (US$0.009), respectively, in the second quarter of 2023, compared with non-GAAP basic and diluted net income per ADS of RMB0.494 and RMB0.492, respectively, in the same period of 2022.

[2] Non-GAAP basic and diluted net income per ADS is a non-GAAP financial measure. For more information on the Company's non-GAAP financial measures, please see the section "Non-GAAP Financial Measures" and the table captioned "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

Balance Sheet and Cash Flow

As of June 30, 2023, the Company had cash and cash equivalents, restricted cash, short-term bank deposits, net, short-term investments, long-term bank deposits, net and long-term investment securities, net of RMB15,786.6 million (US$2,177.1 million), compared with RMB15,369.2 million as of March 31, 2023. For the second quarter ended June 30, 2023, net cash generated from operating activities was RMB41.3 million (US$5.7 million).

Conference Call

The Company's management will host an earnings conference call at 8:00 AMU.S. Eastern Time on August 18, 2023 (8:00 PM Beijing/Hong Kong Time on August 18, 2023).

Dial-in details for the earnings conference call are as follows:

United States (toll-free):

+1-888-317-6003

International:

+1-412-317-6061

Hong Kong, China (toll-free):

+800-963-976

Hong Kong, China:

+852-5808-1995

Mainland China:

400-120-6115

Participant Code:

3325354

Participants should dial in 10 minutes before the scheduled start time and ask to be connected to the call for "RLX Technology Inc." with the Participant Code as set forth above.

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at https://ir.relxtech.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the call until August 25, 2023, by dialing the following telephone numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

5550144

About RLX Technology Inc.

RLX Technology Inc. (NYSE: RLX) is a leading branded e-vapor company in China. The Company leverages its strong in-house technology, product development capabilities, and in-depth insights into adult smokers' needs to develop superior e-vapor products.

For more information, please visit: http://ir.relxtech.com.

Non-GAAP Financial Measures

The Company uses non-GAAP net income and non-GAAP basic and diluted net income per ADS, each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. Non-GAAP net income represents net income excluding share-based compensation expenses. Non-GAAP basic and diluted net income per ADS is computed using non-GAAP net income attributable to RLX Technology Inc. and the same number of ADSs used in U.S. GAAP basic and diluted net income per ADS calculation.

The Company presents these non-GAAP financial measures because they are used by the management to evaluate its operating performance and formulate business plans. The Company believes that they help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that are included in net income. The Company also believes that the use of the non-GAAP measures facilitates investors' assessment of its operating performance, as they could provide useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by the management in its financial and operational decision making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. They should not be considered in isolation or construed as an alternative to net income, basic and diluted net income per ADS or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review its historical non-GAAP financial measures to the most directly comparable U.S. GAAP measures. The non-GAAP financial measures here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned "Unaudited Reconciliation of GAAP and non-GAAP Results" set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB7.2513 to US$1.00, the exchange rate on June 30, 2023, set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollar amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" and similar statements. Among other things, quotations from management in this announcement, as well as the Company's strategic and operational plans, contain forward- looking statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's growth strategies; its future business development, results of operations and financial condition; trends and competition in China's e-vapor market; changes in its revenues and certain cost or expense items; PRC governmental policies, laws and regulations relating to the Company's industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is current as of the date of this press release, and the Company does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

In China:

RLX Technology Inc.
Head of Capital Markets
Sam Tsang
Email: [email protected] 

Piacente Financial Communications
Jenny Cai
Tel: +86-10-6508-0677
Email: [email protected] 

In the United States:

Piacente Financial Communications.
Brandi Piacente
Tel: +1-212-481-2050
Email: [email protected] 

RLX TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands)






As of


December 31,

June 30,

June 30,


2022

2023

2023


RMB

RMB

US$

ASSETS




Current assets:




Cash and cash equivalents

1,268,512

1,761,694

242,949

Restricted cash

20,574

15,750

2,172

Short-term bank deposits, net

7,084,879

5,221,295

720,049

Receivables from online payment platforms

3,000

4,948

682

Short-term investments

2,434,864

2,210,005

304,774

Accounts and notes receivable, net

51,381

87,412

12,055

Inventories

130,901

90,178

12,436

Amounts due from related parties

5,112

38,352

5,289

Prepayments and other current assets, net

198,932

397,337

54,795

Total current assets

11,198,155

9,826,971

1,355,201

Non-current assets:




Property, equipment and leasehold improvement, net

87,871

78,755

10,861

Intangible assets, net

7,552

6,977

962

Long-term investments, net

8,000

8,000

1,103

Deferred tax assets, net

63,894

63,894

8,812

Right-of-use assets, net

75,008

79,710

10,993

Long-term bank deposits, net

1,515,428

2,306,679

318,106

Long-term investment securities, net

3,409,458

4,271,197

589,025

Other non-current assets, net

13,458

8,029

1,107

Total non-current assets

5,180,669

6,823,241

940,969

Total assets

16,378,824

16,650,212

2,296,170





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts and notes payable

269,346

132,193

18,230

Contract liabilities

75,226

94,531

13,036

Salary and welfare benefits payable

127,749

94,050

12,970

Taxes payable

109,676

82,290

11,348

Amounts due to related parties

423

-

-

Accrued expenses and other current liabilities

161,455

120,058

16,557

Lease liabilities - current portion

45,955

49,286

6,797

Total current liabilities

789,830

572,408

78,938






Non-current liabilities:




Deferred tax liabilities

8,653

8,653

1,193

Lease liabilities - non-current portion

39,968

38,878

5,361

Total non-current liabilities

48,621

47,531

6,554

Total liabilities

838,451

619,939

85,492





Shareholders' Equity:




Total RLX Technology Inc. shareholders' equity

15,569,060

16,056,370

2,214,279

Noncontrolling interests

(28,687)

(26,097)

(3,601)

Total shareholders' equity

15,540,373

16,030,273

2,210,678





Total liabilities and shareholders' equity

16,378,824

16,650,212

2,296,170






 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)

(All amounts in thousands, except for share and per share data)











For the three months ended


For the six months ended


June 30,

March 31,

June 30,

June 30,


June 30,

June 30,

June 30,


2022

2023

2023

2023


2022

2023

2023


RMB

RMB

RMB

US$


RMB

RMB

US$










Net revenues

2,233,893

188,877

378,123

52,146


3,948,343

567,000

78,193

Cost of revenues

(1,256,010)

(78,693)

(171,733)

(23,683)


(2,313,457)

(250,426)

(34,535)

Excise tax on products

-

(64,458)

(107,853)

(14,874)


-

(172,311)

(23,763)

Gross profit

977,883

45,726

98,537

13,589


1,634,886

144,263

19,895










Operating expenses:









Selling expenses

(122,634)

(85,761)

(45,226)

(6,237)


(198,581)

(130,987)

(18,064)

General and administrative expenses

(290,745)

(256,504)

41,368

5,705


(224,350)

(215,136)

(29,669)

Research and development expenses

(117,567)

(76,682)

(43,317)

(5,974)


(141,574)

(119,999)

(16,549)

Total operating expenses

(530,946)

(418,947)

(47,175)

(6,506)


(564,505)

(466,122)

(64,282)










Income/(loss) from operations

446,937

(373,221)

51,362

7,083


1,070,381

(321,859)

(44,387)










Other income:









Interest income, net

42,724

148,803

162,888

22,463


69,875

311,691

42,984

Investment income  

40,631

21,385

20,588

2,839


72,870

41,973

5,788

Others, net

115,586

129,157

21,380

2,948


232,443

150,537

20,760

Income/(loss) before income tax

645,878

(73,876)

256,218

35,333


1,445,569

182,342

25,145

Income tax (expense)/benefit  

(204,316)

17,571

(51,502)

(7,102)


(316,952)

(33,931)

(4,679)

Net income/(loss)

441,562

(56,305)

204,716

28,231


1,128,617

148,411

20,466

Less: net (loss)/income attributable to
     noncontrolling interests

(19,499)

661

1,929

266


(37,725)

2,590

357

Net income/(loss) attributable to RLX
     Technology Inc.

461,061

(56,966)

202,787

27,965


1,166,342

145,821

20,109

Other comprehensive loss:









Foreign currency translation adjustments

580,438

(148,096)

563,078

77,652


534,614

414,982

57,229

Unrealized income on long-term investment securities

-

2,873

5,539

764


-

8,412

1,160

Total other comprehensive income/(loss)

580,438

(145,223)

568,617

78,416


534,614

423,394

58,389

Total comprehensive income/(loss)

1,022,000

(201,528)

773,333

106,647


1,663,231

571,805

78,855

Less: total comprehensive (loss)/income
     attributable to noncontrolling interests

(19,499)

661

1,929

266


(37,725)

2,590

357

Total comprehensive income/(loss) attributable
     to RLX Technology Inc.

1,041,499

(202,189)

771,404

106,381


1,700,956

569,215

78,498










Net income/(loss) per ordinary share/ADS 









 Basic

0.348

(0.043)

0.154

0.021


0.877

0.111

0.015

 Diluted

0.347

(0.043)

0.150

0.021


0.867

0.108

0.015










Weighted average number of ordinary
     shares/ADSs









Basic

1,323,877,777

1,316,798,713

1,318,628,588

1,318,628,588


1,329,964,500

1,317,718,705

1,317,718,705

Diluted

1,330,060,097

1,316,798,713

1,353,296,802

1,353,296,802


1,345,014,312

1,348,021,483

1,348,021,483

 

 

RLX TECHNOLOGY INC.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share and per share data)







For the three months ended


For the six months ended


June 30,

March 31,

June 30,

June 30,


June 30,

June 30,

June 30,


2022

2023

2023

2023


2022

2023

2023


RMB

RMB

RMB

US$


RMB

RMB

US$

Net income/(loss)

441,562

(56,305)

204,716

28,231


1,128,617

148,411

20,466

Add: share-based compensation expenses









       Selling expenses

17,896

23,955

(15,338)

(2,115)


(24,043)

8,617

1,188

       General and administrative expenses

151,069

201,343

(90,923)

(12,539)


(79,018)

110,420

15,228

       Research and development expenses

24,213

14,654

(12,229)

(1,686)


(28,998)

2,425

334

Non-GAAP net income

634,740

183,647

86,226

11,891


996,558

269,873

37,216










Net income/(loss) attributable to RLX Technology
     Inc.

461,061

(56,966)

202,787

27,965


1,166,342

145,821

20,109

Add: share-based compensation expenses

193,178

239,952

(118,490)

(16,340)


(132,059)

121,462

16,750

Non-GAAP net income attributable to RLX
     Technology Inc.

654,239

182,986

84,297

11,625


1,034,283

267,283

36,859










Non-GAAP net income per ordinary share/ADS









- Basic

0.494

0.139

0.064

0.009


0.778

0.203

0.028

- Diluted

0.492

0.136

0.062

0.009


0.769

0.198

0.027

Weighted average number of ordinary
     shares/ADSs









- Basic

1,323,877,777

1,316,798,713

1,318,628,588

1,318,628,588


1,329,964,500

1,317,718,705

1,317,718,705

- Diluted

1,330,060,097

1,345,828,279

1,353,296,802

1,353,296,802


1,345,014,312

1,348,021,483

1,348,021,483

 

 

RLX TECHNOLOGY INC.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(All amounts in thousands)













For the three months ended


For the six months ended



June 30,

March 31,

June 30,

June 30,


June 30,

June 30,

June 30,



2022

2023

2023

2023


2022

2023

2023



RMB

RMB

RMB

US$


RMB

RMB

US$


Net cash generated from/(used in) operating
     activities

1,444,388

(230,686)

41,339

5,701


1,752,557

(189,347)

(26,112)


Net cash (used in)/generated from investing
     activities

(4,145,885)

381,954

431,683

59,532


(5,096,649)

813,637

112,206


Net cash (used in)/generated from financing
     activities

(145,189)

4,346

(199,080)

(27,454)


(306,801)

(194,734)

(26,855)


Effect of foreign exchange rate changes on cash,
     cash equivalents and restricted cash

171,597

10,409

48,393

6,673


151,041

58,802

8,109


Net (decrease)/increase in cash and cash
     equivalents and restricted cash

(2,675,089)

166,023

322,335

44,452


(3,499,852)

488,358

67,348


Cash, cash equivalents and restricted cash at
     the beginning of the period

4,384,704

1,289,086

1,455,109

200,669


5,209,467

1,289,086

177,773


Cash, cash equivalents and restricted cash at
     the end of the period

1,709,615

1,455,109

1,777,444

245,121


1,709,615

1,777,444

245,121


 

Cision View original content:https://www.prnewswire.com/news-releases/rlx-technology-announces-unaudited-second-quarter-2023-financial-results-301904346.html

SOURCE RLX Technology Inc.



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