RLX Technology (RLX) Q1 2025 earnings summary

Executive summary

• Net revenues rose 47% year-over-year to RMB 808 million in Q1 2025, driven by international expansion and new product launches, despite a challenging regulatory environment.

• Gross margin improved to 28.6%, reflecting favorable revenue mix and cost optimization.

• Non-GAAP operating profit reached RMB 106 million, with a 9 percentage point increase in margin year-over-year.

• The company leveraged strong R&D, inventory management, and cost controls to outperform the industry.

• Management highlighted ongoing regulatory challenges and a shift toward larger-volume e-liquid products globally.

Financial highlights

• Net revenue reached RMB 808 million, up 47% year-over-year, with sequential growth flat due to seasonality.

• Gross profit was RMB 231 million, up 62% year-over-year, with gross margin at 28.6%.

• Non-GAAP operating profit was RMB 106 million, and non-GAAP net profit margin was 31.1% for Q1 2025.

• Operating cash inflow was RMB 207 million, up from RMB 4 million a year ago.

• Total financial assets stood at RMB 16.2 billion as of March 31, 2025, up from RMB 15.9 billion at year-end 2024.

Outlook and guidance

• Management expects regulatory and market challenges to persist throughout 2025, particularly due to bans on disposables and excise taxes.

• Expects industry dollar value growth to recover and align with e-liquid consumption growth starting next year.

• The company remains confident in its ability to drive high-quality business development and enhance shareholder value.

• Plans to evaluate further international expansion over the next one to two quarters due to regulatory uncertainty.

• Management remains committed to growth outpacing the industry, focusing on international expansion and product innovation.