RLX Technology Announces Unaudited Second Quarter 2022 Financial Results
RLX Technology (NYSE: RLX) reported a net revenue of RMB2,233.9 million (US$333.5 million) for Q2 2022, down from RMB2,541.4 million in Q2 2021. The gross margin decreased to 43.8% from 45.1% year-over-year. U.S. GAAP net income was RMB441.6 million (US$65.9 million), a significant decline from RMB824.3 million in the prior year. Despite regulatory challenges, the company is focused on R&D and compliance with new regulations. The operating expenses surged by 217.6% to RMB530.9 million, driven by increased share-based compensation.
- Significant cash and cash equivalents of RMB16,831.1 million (US$2,512.8 million) as of June 30, 2022.
- Compliance with new regulatory requirements, obtaining multiple Licenses for Manufacturing Enterprise in 2022.
- Net revenues decreased by 12.1% year-over-year.
- Gross profit declined to RMB977.9 million (US$146.0 million) from RMB1,146.5 million.
- Operating expenses increased by 217.6% primarily due to higher share-based compensation.
BEIJING, Sept. 21, 2022 /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, 2022.
Second Quarter 2022 Financial Highlights
- Net revenues were RMB2,233.9 million (US
$333.5 million ), compared with RMB2,541.4 million in the same period of 2021. - Gross margin was
43.8% , compared with45.1% in the same period of 2021. - U.S. GAAP net income was RMB441.6 million (US
$65.9 million ), compared with RMB824.3 million in the same period of 2021. - Non-GAAP net income[1] was RMB634.7million (US
$94.8 million ), compared with RMB651.8 million in the same period of 2021.
"Over the past several months, we have made meaningful strides in adapting our business and product development to the new regulatory framework. Specifically, we have obtained the License for Manufacturing Enterprise and received regulatory approvals for some of our new products, demonstrating our operational excellence and industry-leading R&D capabilities," said Ms. Ying (Kate) Wang, Co-founder, Chairperson of the Board of Directors, and CEO of RLX Technology. "Aligned with our efforts to comply with the new requirements, we remained dedicated to our core strategy, continuously investing in research and development. Since 2018, we have partnered with leading research institutions on scientific research and product development, laying a solid foundation for our sustainable future growth. Furthermore, amid the evolving e-vapor market and volatile macro conditions, we continued to streamline our business structure and optimize our operational processes, comprehensively enhancing our agility and efficiency. As always, we remain committed to fulfilling our users' demands for safe, high-quality products in strict compliance with regulatory requirements."
"We are pleased that we recorded net revenues of RMB2.2 billion in the second quarter. We believe this elevated level of revenue in the second quarter was primarily due to frontloading of sales in the downstream value chain in anticipation of the discontinuation of our older products as the industry transition period nears its end in the third quarter. Meanwhile, our ongoing efforts to optimize cost structure and maximize operational efficiency paid off in the second quarter. Non-GAAP expense ratio was down quarter over quarter, leading to improved profitability," said Mr. Chao Lu, Chief Financial Officer of RLX Technology. "In light of the regulatory changes, we are off to a slow start of the sales of our new products that are compliant with the National Standards in the new transaction system mandated by the regulators. Despite the macro headwinds, we will continue to steadily focus on cost optimization while reinforce our product competitiveness under the new regulatory regime to create sustainable, long-term growth for our shareholders."
Second Quarter 2022 Financial Results
Net revenues were RMB2,233.9 million (US
Gross profit was RMB977.9 million (US
Gross margin was
Operating expenses were RMB530.9 million (US
Selling expenses decreased by
General and administrative expenses increased by
Research and development expenses were RMB117.6 million (US
Income from operations was RMB446.9million (US
Income tax expense was RMB204.3 million (US
U.S. GAAP net income was RMB441.6 million (US
Non-GAAP net income was RMB634.7 million (US
U.S. GAAP basic and diluted net income per American depositary share ("ADS") were RMB0.348 (US
Non-GAAP basic and diluted net income per ADS[2] were RMB0.494 (US
Balance Sheet and Cash Flow
As of June 30, 2022, the Company had cash and cash equivalents, restricted cash, short-term bank deposits, net, short-term investments, and long-term bank deposits, net of RMB16,831.1 million (US
Regulatory Developments and Updates on Regulatory Approvals
Since the first quarter of 2022, the relevant government authorities in China have issued a series of implementing rules and guiding opinions to strengthen oversight of e-cigarette products and regulate the e-cigarette industry. These rules and opinions set forth that, among others, all e-cigarette manufacturing enterprises must apply with the department of tobacco monopoly administration under the State Council of the People's Republic of China (the "State Tobacco Monopoly Administration") and obtain a License for Manufacturing Enterprise, while e-cigarette products must satisfy various standards and technical requirements prescribed therein, and pass the technical review conducted by professional institutions organized by the State Tobacco Monopoly Administration before being launched for sale. Discussion of the relevant regulatory developments and the corresponding risks, uncertainties and/or factors in a more comprehensive and detailed manner is and will be included in the Company's filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's annual report on Form 20-F filed on April 29, 2022.
On June 10, 2022, one of the subsidiaries of the Company obtained a License for Manufacturing Enterprise from the State Tobacco Monopoly Administration to manufacture e-liquid in compliance with China's Administrative Measures for E-Cigarettes.
On July 22, 2022, another subsidiary of the Company obtained a License for Manufacturing Enterprise from the State Tobacco Monopoly Administration to own the RELX brand and manufacture RELX branded e-vapor rechargeable devices, cartridge products, and products sold in combination with e-vapor rechargeable devices and cartridge products in compliance with China's Administrative Measures for E-Cigarettes. The approved manufacturing capacity is 15,050,000 units of e-vapor rechargeable devices per year, 328,700,000 units of cartridge products per year, and 6,100,000 units of disposable e-vapor products per year. The valid term for the License for Manufacturing Enterprise obtained is from July 18, 2022, to July 31, 2023.
[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. |
[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. |
Conference Call
The Company's management will host an earnings conference call at 8:00 A.M. U.S. Eastern Time on September 21, 2022 (8:00 P.M. Beijing/Hong Kong Time on September 21, 2022).
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: | 3343721 |
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 September 28, 2022, by dialing the following telephone numbers:
United States: | +1-877-344-7529 |
International: | +1-412-317-0088 |
Replay Access Code: | 4561200 |
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. RLX Technology Inc. sells its products through an integrated offline distribution and retail model tailored to China's e-vapor market.
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 RMB6.6981 to US
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 Investor Relations
Sam Tsang
Email: ir@relxtech.com
The Piacente Group, Inc.
Jenny Cai
Tel: +86-10-6508-0677
Email: RLX@tpg-ir.com
In the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
Email: RLX@tpg-ir.com
RLX TECHNOLOGY INC. | ||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(All amounts in thousands) | ||||
As of | ||||
December 31, | June 30, | June 30, | ||
2021 | 2022 | 2022 | ||
RMB | RMB | US$ | ||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | 5,208,967 | 1,709,115 | 255,164 | |
Restricted cash | 500 | 500 | 75 | |
Short-term bank deposits, net | 4,022,119 | 5,314,994 | 793,508 | |
Receivables from online payment platforms | 10,006 | 2,653 | 396 | |
Short-term investments | 3,621,637 | 4,320,591 | 645,047 | |
Accounts and notes receivable, net | 14,024 | 17,144 | 2,560 | |
Inventories, net | 589,088 | 133,545 | 19,938 | |
Amounts due from related parties | 1,936 | 9,012 | 1,345 | |
Prepayments and other current assets, net | 482,659 | 216,798 | 32,367 | |
Total current assets | 13,950,936 | 11,724,352 | 1,750,400 | |
Non-current assets: | ||||
Property, equipment and leasehold improvement, net | 143,155 | 116,335 | 17,368 | |
Intangible assets, net | 8,366 | 8,178 | 1,221 | |
Long-term investments, net | 12,000 | 8,000 | 1,194 | |
Deferred tax assets, net | 20,856 | 20,856 | 3,114 | |
Right-of-use assets, net | 176,258 | 130,449 | 19,476 | |
Long-term bank deposits, net | 2,004,593 | 5,485,867 | 819,018 | |
Other non-current assets | 48,961 | 22,226 | 3,318 | |
Total non-current assets | 2,414,189 | 5,791,911 | 864,709 | |
Total assets | 16,365,125 | 17,516,263 | 2,615,109 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts and notes payable | 1,288,845 | 1,385,027 | 206,779 | |
Short-term loan | - | 100,000 | 14,930 | |
Contract liabilities | 286,651 | 459,051 | 68,534 | |
Salary and welfare benefits payable | 170,393 | 141,937 | 21,191 | |
Taxes payable | 597,761 | 420,582 | 62,792 | |
Accrued expenses and other current liabilities | 313,396 | 252,513 | 37,699 | |
Lease liabilities - current portion | 80,582 | 56,944 | 8,502 | |
Total current liabilities | 2,737,628 | 2,816,054 | 420,427 | |
Non-current liabilities: | ||||
Deferred tax liabilities | 4,513 | 4,513 | 674 | |
Lease liabilities - non-current portion | 104,232 | 87,847 | 13,115 | |
Total non-current liabilities | 108,745 | 92,360 | 13,789 | |
Total liabilities | 2,846,373 | 2,908,414 | 434,216 | |
Shareholders' Equity: | ||||
Total RLX Technology Inc. shareholders' equity | 13,514,952 | 14,641,773 | 2,185,958 | |
Noncontrolling interests | 3,800 | (33,924) | (5,065) | |
Total shareholders' equity | 13,518,752 | 14,607,849 | 2,180,893 | |
Total liabilities and shareholders' equity | 16,365,125 | 17,516,263 | 2,615,109 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF | |||||||||
(All amounts in thousands, except for share and per share data, or otherwise noted) | |||||||||
For the three months ended | For the six months ended | ||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |||
2021 | 2022 | 2022 | 2022 | 2021 | 2022 | 2022 | |||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||
Net revenues | 2,541,402 | 1,714,450 | 2,233,893 | 333,511 | 4,939,898 | 3,948,343 | 589,472 | ||
Cost of revenues | (1,394,916) | (1,057,447) | (1,256,010) | (187,517) | (2,689,339) | (2,313,457) | (345,391) | ||
Gross profit | 1,146,486 | 657,003 | 977,883 | 145,994 | 2,250,559 | 1,634,886 | 244,081 | ||
Operating expenses: | |||||||||
Selling expenses | (126,005) | (75,947) | (122,634) | (18,309) | (417,540) | (198,581) | (29,647) | ||
General and administrative expenses | (46,056) | 66,395 | (290,745) | (43,407) | (758,870) | (224,350) | (33,495) | ||
Research and development expenses | 4,911 | (24,007) | (117,567) | (17,552) | (206,723) | (141,574) | (21,136) | ||
Total operating expenses | (167,150) | (33,559) | (530,946) | (79,268) | (1,383,133) | (564,505) | (84,278) | ||
Income from operations | 979,336 | 623,444 | 446,937 | 66,726 | 867,426 | 1,070,381 | 159,803 | ||
Other income： | |||||||||
Interest income, net | 16,069 | 27,151 | 42,724 | 6,379 | 25,483 | 69,875 | 10,432 | ||
Investment income | 23,868 | 32,239 | 40,631 | 6,066 | 38,795 | 72,870 | 10,879 | ||
Others, net | 9,185 | 116,857 | 115,586 | 17,257 | 6,018 | 232,443 | 34,703 | ||
Income before income tax | 1,028,458 | 799,691 | 645,878 | 96,428 | 937,722 | 1,445,569 | 215,817 | ||
Income tax expense | (204,154) | (112,636) | (204,316) | (30,504) | (380,447) | (316,952) | (47,320) | ||
Net income | 824,304 | 687,055 | 441,562 | 65,924 | 557,275 | 1,128,617 | 168,497 | ||
Less: net income attributable to noncontrolling | - | (18,226) | (19,499) | (2,911) | - | (37,725) | (5,632) | ||
Net income attributable to RLX Technology | 824,304 | 705,281 | 461,061 | 68,835 | 557,275 | 1,166,342 | 174,129 | ||
Other comprehensive (loss)/income: | |||||||||
Foreign currency translation adjustments | (184,772) | (45,824) | 580,438 | 86,657 | (9,249) | 534,614 | 79,816 | ||
Total other comprehensive (loss)/income | (184,772) | (45,824) | 580,438 | 86,657 | (9,249) | 534,614 | 79,816 | ||
Total comprehensive income | 639,532 | 641,231 | 1,022,000 | 152,581 | 548,026 | 1,663,231 | 248,313 | ||
Less: total comprehensive income attributable | - | (18,226) | (19,499) | (2,911) | - | (37,725) | (5,632) | ||
Total comprehensive income attributable to | 639,532 | 659,457 | 1,041,499 | 155,492 | 548,026 | 1,700,956 | 253,945 | ||
Net income per ordinary share/ADS | |||||||||
Basic | 0.595 | 0.528 | 0.348 | 0.052 | 0.382 | 0.877 | 0.131 | ||
Diluted | 0.591 | 0.521 | 0.347 | 0.052 | 0.381 | 0.867 | 0.129 | ||
Weighted average number of ordinary | |||||||||
Basic | 1,385,410,036 | 1,336,118,854 | 1,323,877,777 | 1,323,877,777 | 1,457,602,981 | 1,329,964,500 | 1,329,964,500 | ||
Diluted | 1,394,565,595 | 1,354,294,220 | 1,330,060,097 | 1,330,060,097 | 1,462,159,428 | 1,345,014,312 | 1,345,014,312 | ||
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 six months ended | |||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||
2021 | 2022 | 2022 | 2022 | 2021 | 2022 | 2022 | ||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||
Net income | 824,304 | 687,055 | 441,562 | 65,924 | 557,275 | 1,128,65217 | 168,497 | |
Add: share-based compensation expenses | ||||||||
Selling expenses | (51,473) | (41,939) | 17,896 | 2,672 | 69,230 | (24,043) | (3,590) | |
General and administrative expenses | (41,404) | (230,087) | 151,069 | 22,554 | 577,089 | (79,018) | (11,797) | |
Research and development expenses | (79,666) | (53,211) | 24,213 | 3,615 | 58,647 | (28,998) | (4,329) | |
Non-GAAP net income | 651,761 | 361,818 | 634,740 | 94,765 | 1,262,241 | 996,558 | 148,781 | |
Net income attributable to RLX Technology Inc. | 824,304 | 705,281 | 461,061 | 68,835 | 557,275 | 1,166,342 | 174,129 | |
Add: share-based compensation expenses | (172,543) | (325,237) | 193,178 | 28,841 | 704,966 | (132,059) | (19,716) | |
Non-GAAP net income attributable to RLX Technology Inc. | 651,761 | 380,044 | 654,239 | 97,676 | 1,262,241 | 1,034,283 | 154413 | |
Non-GAAP net income per ordinary share/ADS | ||||||||
- Basic | 0.470 | 0.284 | 0.494 | 0.074 | 0.866 | 0.778 | 0.116 | |
- Diluted | 0.467 | 0.281 | 0.492 | 0.073 | 0.863 | 0.769 | 0.115 | |
Weighted average number of ordinary shares/ADSs | ||||||||
- Basic | 1,385,410,036 | 1,336,118,854 | 1,323,877,777 | 1,323,877,777 | 1,457,602,981 | 1,329,964,500 | 1,329,964,500 | |
- Diluted | 1,394,565,595 | 1,354,294,220 | 1,330,060,097 | 1,330,060,097 | 1,462,159,428 | 1,345,014,312 | 1,345,014,312 | |
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, | |||
2021 | 2022 | 2022 | 2022 | 2021 | 2022 | 2022 | |||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||
Net cash generated from operating activities | 649,441 | 308,169 | 1,444,388 | 215,640 | 1,477,006 | 1,752,557 | 261,649 | ||
Net cash used in investing activities | (3,620,360) | (950,764) | (4,145,885) | (618,964) | (6,434,607) | (5,096,649) | (760,910) | ||
Net cash (used in)/generated from financing | (6,174) | (161,612) | (145,189) | (21,676) | 10,031,248 | (306,801) | (45,804) | ||
Effect of foreign exchange rate changes on cash, cash | (146,515) | (20,556) | 171,597 | 25,620 | (2,289) | 151,041 | 22,551 | ||
Net (decrease)/increase in cash and cash | (3,123,608) | (824,763) | (2,675,089) | (399,380) | 5,071,358 | (3,499,852) | (522,514) | ||
Cash, cash equivalents and restricted cash at | 9,649,767 | 5,209,467 | 4,384,704 | 654,619 | 1,454,801 | 5,209,467 | 777,753 | ||
Cash, cash equivalents and restricted cash at | 6,526,159 | 4,384,704 | 1,709,615 | 255,239 | 6,526,159 | 1,709,615 | 255,239 | ||
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SOURCE RLX Technology Inc.
FAQ
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