Le Lézard
Classified in: Science and technology, Business
Subjects: ERN, MAT

RLX Technology Announces Unaudited Third Quarter 2023 Financial Results


BEIJING, Nov. 13, 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 third quarter ended September 30, 2023.

Third Quarter 2023 Financial Highlights

[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.

"The end of the third quarter of 2023 marked one year since the new regulatory framework for the e-vapor industry came into effect," said Ms. Ying (Kate) Wang, Co-founder, Chairperson of the Board of Directors, and CEO of RLX Technology. "As a legitimate industry participant, we have remained dedicated to developing our product portfolio to provide adult smokers with compliant, superior-quality products. While we have made some progress with our recovery, we are still facing external challenges, especially the impact of illegal products. We recognize that many users are still unaware of these new regulations, such as flavor restrictions, which has slowed their adoption of the new national standard products. To address these near-term obstacles, we will forge ahead with our core strategy: providing a wide variety of quality, compliant products across an extensive range of price points to meet users' various needs. Meanwhile, we are making efforts to enhance users' understanding of the new regulations and collaborating with regulators to combat illegal products and create a healthy and orderly market. As a trusted e-vapor brand for adult smokers, we believe that more users will gradually switch to our products as increased awareness of the new regulations and the dangers of substandard, illegal products rises."

Mr. Chao Lu, Chief Financial Officer of RLX Technology, commented, "In the third quarter of 2023, we continued to face significant headwinds due to competition from illegal products. Against this challenging backdrop, we resolutely executed our strategy and focused on improving profitability, which continues to be our top priority. Our strategic cost optimization initiatives have begun to demonstrate positive outcomes, including a consistent reduction in our non-GAAP operating loss and signs of recovery in our non-GAAP net profit margin. Notably, we achieved a second consecutive quarter of positive operating cash flow this quarter, underscoring our business' resilience in the post-regulatory era. Looking forward, we will remain committed to enhancing our financial performance and delivering sustainable value to our shareholders."

Third Quarter 2023 Financial Results

Net revenues were RMB428.1 million (US$58.7 million) in the third quarter of 2023, compared with RMB1,044.4 million in the same period of 2022. The decrease was primarily due to the discontinuation of our older products and the competition of illegal products in the market, which resurged after the regulator's special action ended in April 2023.

Gross profit was RMB105.7 million (US$14.5 million) in the third quarter of 2023, compared with RMB522.0 million in the same period of 2022.

Gross margin was 24.7% in the third quarter of 2023, compared with 50.0% 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 RMB145.0 million (US$19.9 million) in the third quarter of 2023, compared with RMB56.8 million in the same period of 2022. The increase was primarily due to the changes in share-based compensation expenses, which were RMB24.8 million (US$3.4 million) in the third quarter of 2023, compared with positive RMB176.6 million in the same period of 2022. The changes in share-based compensation expenses consisted of (i) positive RMB4.0 million (US$0.6 million) recognized in selling expenses, (ii) RMB29.8 million (US$4.1 million) recognized in general and administrative expenses, and (iii) positive RMB0.9 million (US$0.1 million) recognized in research and development expenses. The changes in share-based compensation expenses were primarily due to the changes in the fair value of the share incentive awards that the Company granted to its employees with the fluctuations of the Company's share price.

Selling expenses were RMB39.7 million (US$5.4 million) in the third quarter of 2023, compared with RMB52.5 million in the same period of 2022, primarily due to the decrease in salaries and welfare benefits.

General and administrative expenses were RMB74.5 million (US$10.2 million) in the third quarter of 2023, compared with positive RMB41.7 million in the same period of 2022, mainly driven by the changes in share-based compensation expenses.

Research and development expenses were RMB30.8 million (US$4.2 million) in the third quarter of 2023, compared with RMB46.0 million in the same period of 2022, mainly driven by the decrease in salaries and welfare benefits.

Loss from operations was RMB39.3 million (US$5.4 million) in the third quarter of 2023, compared with profit from operations of RMB465.2 million in the same period of 2022.

Income tax expense was RMB0.5 million (US$0.1 million) in the third quarter of 2023, compared with RMB70.9 million in the same period of 2022.

U.S. GAAP net income was RMB172.7 million (US$23.7 million) in the third quarter of 2023, compared with RMB505.2 million in the same period of 2022.

Non-GAAP net income was RMB197.5 million (US$27.1 million) in the third quarter of 2023, compared with RMB328.6 million in the same period of 2022.

U.S. GAAP basic and diluted net income per American depositary share ("ADS") were RMB0.130 (US$0.018) and RMB0.127 (US$0.017) in the third quarter of 2023, compared with U.S. GAAP basic and diluted net income per ADS of RMB0.381 and RMB0.379, respectively, in the same period of 2022.

Non-GAAP basic and diluted net income per ADS[2] were RMB0.149 (US$0.020) and RMB0.146 (US$0.020), respectively, in the third quarter of 2023, compared with non-GAAP basic and diluted net income per ADS of RMB0.247 and RMB0.246, 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 September 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 RMB15,132.5 million (US$2,074.1 million), compared with RMB15,786.6 million as of June 30, 2023. For the third quarter ended September 30, 2023, net cash generated from operating activities was RMB67.5 million (US$9.2 million).

Recent Development

To catch potential growth opportunities in the international market, on November 10, 2023, the Company terminated an existing non-competition agreement with Relx Inc., which had been entered into on December 16, 2020. The termination of this agreement gives the Company the flexibility to build an international presence in the future by conducting tobacco harm reduction product business outside China.

Dividend Payment

The Company announced that its Board of Directors approved a cash dividend of US$0.01 per ordinary share, or US$0.01 per ADS, to holders of ordinary shares and holders of ADSs, respectively, as of the close of business on December 1, 2023 Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. The payment date is expected to be on or around December 15, 2023 and on or around December 22, 2023 for holders of ordinary shares and holders of ADSs, respectively.

Conference Call

The Company's management will host an earnings conference call at 7:00 AM U.S. Eastern Time on November 13, 2023 (8:00 PM Beijing/Hong Kong Time on November 13, 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:

4247290

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 November 20, 2023, by dialing the following telephone numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

9409580

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 RMB7.2960 to US$1.00, the exchange rate on September 29, 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,

September 30,

September 30,


2022

2023

2023


RMB

RMB

US$

ASSETS




Current assets:




Cash and cash equivalents

1,268,512

2,523,977

345,940

Restricted cash

20,574

53,207

7,293

Short-term bank deposits, net

7,084,879

3,156,599

432,648

Receivables from online payment platforms

3,000

4,362

598

Short-term investments

2,434,864

2,568,599

352,056

Accounts and notes receivable, net

51,381

84,023

11,516

Inventories

130,901

78,323

10,735

Amounts due from related parties

5,112

155,540

21,319

Prepayments and other current assets, net

198,932

488,636

66,973

Total current assets

11,198,155

9,113,266

1,249,078

Non-current assets:




Property, equipment and leasehold improvement, net

87,871

67,829

9,297

Intangible assets, net

7,552

5,988

821

Long-term investments, net

8,000

434,949

59,615

Deferred tax assets, net

63,894

63,894

8,758

Right-of-use assets, net

75,008

57,883

7,934

Long-term bank deposits, net

1,515,428

2,659,451

364,508

Long-term investment securities, net

3,409,458

4,170,629

571,632

Other non-current assets, net

13,458

6,054

830

Total non-current assets

5,180,669

7,466,677

1,023,395

Total assets

16,378,824

16,579,943

2,272,473





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts and notes payable

269,346

240,001

32,895

Contract liabilities

75,226

68,253

9,355

Salary and welfare benefits payable

127,749

80,961

11,097

Taxes payable

109,676

82,460

11,302

Amounts due to related parties

423

-

-

Accrued expenses and other current liabilities

161,455

105,839

14,507

Lease liabilities - current portion

45,955

35,703

4,894

Total current liabilities

789,830

613,217

84,050





Non-current liabilities:




Deferred tax liabilities

8,653

8,653

1,186

Lease liabilities - non-current portion

39,968

29,612

4,059

Total non-current liabilities

48,621

38,265

5,245

Total liabilities

838,451

651,482

89,295









Shareholders' Equity:




Total RLX Technology Inc. shareholders' equity

15,569,060

15,942,807

2,185,144

Noncontrolling interests

(28,687)

(14,346)

(1,966)

Total shareholders' equity

15,540,373

15,928,461

2,183,178





Total liabilities and shareholders' equity

16,378,824

16,579,943

2,272,473

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME

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











For the three months ended


For the nine months ended


September 30,

June 30,

September 30,

September 30,


September 30,

September 30,

September 30,


2022

2023

2023

2023


2022

2023

2023


RMB

RMB

RMB

US$


RMB

RMB

US$










   Net revenues

1,044,424

378,123

428,069

58,672


4,992,767

995,069

136,386

   Cost of revenues

(522,451)

(171,733)

(222,056)

(30,435)


(2,835,908)

(472,482)

(64,759)

   Excise tax on products

-

(107,853)

(100,313)

(13,749)


-

(272,624)

(37,366)

   Gross profit

521,973

98,537

105,700

14,488


2,156,859

249,963

34,261










   Operating expenses:









   Selling expenses

(52,544)

(45,226)

(39,698)

(5,441)


(251,125)

(170,685)

(23,394)

   General and administrative expenses

41,746

41,368

(74,519)

(10,213)


(182,604)

(289,655)

(39,701)

   Research and development expenses

(45,978)

(43,317)

(30,785)

(4,218)


(187,552)

(150,784)

(20,667)

   Total operating expenses

(56,776)

(47,175)

(145,002)

(19,872)


(621,281)

(611,124)

(83,762)










   Income/(loss) from operations

465,197

51,362

(39,302)

(5,384)


1,535,578

(361,161)

(49,501)










   Other income?









   Interest income, net

56,237

162,888

158,259

21,691


126,112

469,950

64,412

   Investment income  

38,104

20,588

21,028

2,882


110,974

63,001

8,635

   Others, net

16,573

21,380

33,246

4,557


249,016

183,783

25,190

   Income before income tax

576,111

256,218

173,231

23,746


2,021,680

355,573

48,736

   Income tax expense 

(70,871)

(51,502)

(534)

(73)


(387,823)

(34,465)

(4,724)

   Net income

505,240

204,716

172,697

23,673


1,633,857

321,108

44,012

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

1,883

1,929

1,709

234


(35,842)

4,299

589

   Net income attributable to RLX Technology Inc.

503,357

202,787

170,988

23,439


1,669,699

316,809

43,423

   Other comprehensive income/(loss):









   Foreign currency translation adjustments

618,060

563,078

(81,069)

(11,111)


1,152,674

333,913

45,767

   Unrealized income on long-term investment securities

-

5,539

3,508

481


-

11,920

1,634

   Total other comprehensive income/(loss)

618,060

568,617

(77,561)

(10,630)


1,152,674

345,833

47,401

   Total comprehensive income

1,123,300

773,333

95,136

13,043


2,786,531

666,941

91,413

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

1,883

1,929

1,709

234


(35,842)

4,299

589

   Total comprehensive income attributable to RLX
Technology Inc.

1,121,417

771,404

93,427

12,809


2,822,373

662,642

90,824










   Net income per ordinary share/ADS 









   Basic

0.381

0.154

0.130

0.018


1.258

0.241

0.033

   Diluted

0.379

0.150

0.127

0.017


1.244

0.236

0.032










   Weighted average number of ordinary shares/ADSs









   Basic

1,322,824,853

1,318,628,588

1,316,452,743

1,316,452,743


1,327,552,588

1,317,292,081

1,317,292,081

   Diluted

1,329,164,753

1,353,296,802

1,344,359,144

1,344,359,144


1,341,861,541

1,344,018,578

1,344,018,578

 

RLX TECHNOLOGY INC.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

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







For the three months ended


For the nine months ended


September 30,

June 30,

September 30,

September 30,


September 30,

September 30,

September 30,


2022

2023

2023

2023


2022

2023

2023


RMB

RMB

RMB

US$


RMB

RMB

US$

Net income

505,240

204,716

172,697

23,673


1,633,857

321,108

44,012

Add: share-based compensation expenses









       Selling expenses

(24,189)

(15,338)

(4,045)

(554)


(48,232)

4,571

627

       General and administrative expenses

(128,200)

(90,923)

29,771

4,080


(207,219)

140,190

19,215

       Research and development expenses

(24,242)

(12,229)

(936)

(128)


(53,240)

1,490

204

Non-GAAP net income

328,609

86,226

197,487

27,071


1,325,166

467,359

64,058










Net income attributable to RLX Technology Inc.

503,357

202,787

170,988

23,439


1,669,699

316,809

43,423

Add: share-based compensation expenses

(176,631)

(118,490)

24,790

3,398


(308,691)

146,251

20,046

Non-GAAP net income attributable to RLX
    Technology Inc.

326,726

84,297

195,778

26,837


1,361,008

463,060

63,469










Non-GAAP net income per ordinary share/ADS









- Basic

0.247

0.064

0.149

0.020


1.025

0.352

0.048

- Diluted

0.246

0.062

0.146

0.020


1.014

0.345

0.047

Weighted average number of ordinary shares/ADSs









- Basic

1,322,824,853

1,318,628,588

1,316,452,743

1,316,452,743


1,327,552,588

1,317,292,081

1,317,292,081

- Diluted

1,329,164,753

1,353,296,802

1,344,359,144

1,344,359,144


1,341,861,541

1,344,018,578

1,344,018,578

 

 

RLX TECHNOLOGY INC.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(All amounts in thousands)













For the three months ended


For the nine months ended



September 30,

June 30,

September 30,

September 30,


September 30,

September 30,

September 30,



2022

2023

2023

2023


2022

2023

2023



RMB

RMB

RMB

US$


RMB

RMB

US$


Net cash (used in)/generated from operating activities

(1,016,862)

41,339

67,452

9,245


735,695

(121,895)

(16,707)


Net cash generated from/(used in) investing activities

211,064

431,683

967,342

132,585


(4,885,585)

1,780,979

244,103


Net cash used in financing activities

(19,822)

(199,080)

(229,492)

(31,454)


(326,623)

(424,226)

(58,145)


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

22,772

48,393

(5,562)

(762)


173,813

53,240

7,298


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

(802,848)

322,335

799,740

109,614


(4,302,700)

1,288,098

176,549


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

1,709,615

1,455,109

1,777,444

243,619


5,209,467

1,289,086

176,684


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

906,767

1,777,444

2,577,184

353,233


906,767

2,577,184

353,233


 

SOURCE RLX Technology Inc.


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