EX-99.1 2 tm2134541d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

RLX Technology Announces Unaudited Third Quarter 2021 Financial Results

 

BEIJING, December 3, 2021 /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, 2021.

 

Third Quarter 2021 Financial Highlights

 

·Net revenues were RMB1,676.7 million (US$260.2 million), representing a decrease of 34.0% from RMB2,541.4 million in the second quarter of 2021.

·Gross margin was 39.1%, compared to 45.1% in the second quarter of 2021.

·U.S. GAAP net income was RMB976.4 million (US$151.5 million), compared with RMB824.3 million in the second quarter of 2021.

·Non-GAAP net income1 was RMB452.7 million (US$70.3 million), compared with RMB651.8 million in the second quarter of 2021.

 

“In the third quarter, we continued to develop our business through concerted efforts deepening our scientific research abilities, adding to our differentiated product portfolio, and enhancing our sustainability initiatives. We also strengthened our core capabilities by expanding our talent pool, optimizing our retail network and making digitalization upgrades to our operating infrastructure,” said Ms. Ying (Kate) Wang, Co-founder, Chairperson of the Board of Directors and Chief Executive Officer of RLX Technology. “Looking ahead, with the formal confirmation of the amendment to the implementation rules of tobacco monopoly law announced last week bringing innovative tobacco products including e-cigarettes under the regulatory framework, together with the draft administrative measures for electronic cigarettes and the draft national electronic cigarette product standards announced earlier this week, we believe the sector will enter a new era of development, an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection. These developments will pave way for long-term sustainable growth in this sector.”

 

“In the past quarter, we placed even more focus on investments in R&D, organizational upgrades and operational efficiency improvements in existing channels, shifting from the efforts on distribution network expansion in previous quarters,” said Mr. Chao Lu, Chief Financial Officer of RLX Technology. “As a result, we have a richer product portfolio in the pipeline and healthier inventory levels across our value chain.”

 

“We believe our quarterly revenue drop was temporary, and the investments we made in products, talents, research, and compliance in the third quarter and beyond will place us in advantageous positions under the new regulatory paradigm. We expect these investments to yield steady and sustainable growth soon,” Mr. Lu added.

 

Third Quarter 2021 Unaudited Financial Results

 

Net revenues decreased by 34.0% to RMB1,676.7 million (US$260.2 million) in the third quarter of 2021 from RMB2,541.4 million in the second quarter of 2021. The decrease was as a result of volatile market conditions, including (i) the negative publicity on the e-vapor industry since the latter half of the second quarter, (ii) the fact that the draft new rules announced on March 22, 2021 had not been formally confirmed in this quarter, and (iii) evolving COVID-19 restrictions in response to outbreaks in China, which had an adverse impact on our sales and channel inventory management.

 

 

 

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.

 

 

 

Gross profit decreased by 42.8% to RMB656.0 million (US$101.8 million) in the third quarter of 2021 from RMB1,146.5 million in the second quarter of 2021.

 

Gross margin was 39.1% in the third quarter of 2021, compared to 45.1% in the second quarter of 2021. The decrease was primarily due to (i) an increase in direct cost related to promotional activities and (ii) an increase in inventory provision.

 

Operating expenses were positive RMB241.3 million (US$37.5 million) in the third quarter of 2021, representing a decrease of 244.4% from RMB167.2 million in the second quarter of 2021. The significant decrease in operating expenses was primarily due to the recognition of share-based compensation expenses of positive RMB523.7 million (US$81.3 million), consisting of (i) share-based compensation expenses of positive RMB90.8 million (US$14.1 million) recognized in selling expenses, (ii) share-based compensation expenses of positive RMB320.1 million (US$49.7 million) recognized in general and administrative expenses, and (iii) share-based compensation expenses of positive RMB112.8 million (US$17.5 million) recognized in research and development expenses. The significant fluctuations 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 as affected by the significant fluctuations of the share price of the Company.

 

Selling expenses decreased by 55.1% to RMB56.5 million (US$8.8 million) in the third quarter of 2021 from RMB126.0 million in the second quarter of 2021. The decrease was mainly driven by the (i) fluctuation of share-based compensation expenses and (ii) a decrease in salaries and welfare benefits, partially offset by an increase in branding material expenses.

 

General and administrative expenses decreased by 649.8% to positive RMB253.2 million (US$39.3 million) in the third quarter of 2021 from RMB46.1 million in the second quarter of 2021. The decrease was mainly driven by the (i) fluctuation of the share-based compensation expenses and (ii) a decrease in salaries and welfare benefits.

 

Research and development expenses decreased by 808.3% to positive RMB44.6 million (US$6.9 million) in the third quarter of 2021 from positive RMB4.9 million in the second quarter of 2021. The decrease was mainly driven by the (i) fluctuation of the share-based compensation expenses and (ii) a decrease in salaries and welfare benefits, partially offset by (i) an increase in software and technical expenses and (ii) an increase in consulting expenses.

 

Income from operations was RMB897.3 million (US$139.3 million) in the third quarter of 2021, compared with RMB979.3 million in the second quarter of 2021.

 

Income tax expense was RMB121.4 million (US$18.8 million) in the third quarter of 2021, compared with RMB204.2 million in the second quarter of 2021. The decrease was primarily due to a decrease in taxable income.

 

U.S. GAAP net income was RMB976.4 million (US$151.5 million) in the third quarter of 2021, compared with RMB824.3 million in the second quarter of 2021.

 

Non-GAAP net income was RMB452.7 million (US$70.3 million) in the third quarter of 2021, representing a decrease of 30.5% from RMB651.8 million in the second quarter of 2021.

 

U.S. GAAP basic and diluted net income per American depositary share (“ADS”) were RMB0.724 (US$0.112) and RMB0.717 (US$0.111), respectively, in the third quarter of 2021, compared to U.S. GAAP basic and diluted net income per ADS of RMB0.595 and RMB0.591, respectively, in the second quarter of 2021.

 

 

 

Non-GAAP basic and diluted net income per ADS2 were RMB0.334 (US$0.052) and RMB0.332 (US$0.051), respectively, in the third quarter of 2021, compared to non-GAAP basic and diluted net income per ADS of RMB0.470 and RMB0.467, respectively, in the second quarter of 2021.

 

Balance Sheet and Statements of Cash Flows

 

As of September 30, 2021, the Company had cash and cash equivalents, restricted cash, short-term bank deposits, short-term investments and long-term bank deposits of RMB14,720.3 million (US$2,284.6 million), compared to RMB14,880.8 million as of June 30, 2021. As of September 30, 2021, approximately US$1,643.1 million (RMB10,586.9 million) was denominated in U.S. dollars.

 

For the third quarter ended September 30, 2021, net cash used in operating activities was RMB142.9 million (US$22.2 million).

 

Conference Call

 

The Company’s management will host an earnings conference call at 7:00 A.M. U.S. Eastern Time on December 3, 2021 (8:00 P.M. Beijing/Hong Kong Time on December 3, 2021).

 

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: 4250889

 

Participants should dial-in at least 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 December 10, 2021, by dialing the following telephone numbers:

 

United States: +1-877-344-7529
International: +1-412-317-0088
Replay Access Code: 10161974

 

 

 

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.

 

 

 

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 and 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 "branded store plus" 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/(loss) 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/(loss). 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/(loss), basic and diluted net income/(loss) 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 RMB6.4434 to US$1.00, the exchange rate on September 30, 2021 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollars 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 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, except for share and per share data, or otherwise noted)

       

   As of 
   December 31,   September 30,   September 30, 
   2020   2021   2021 
   RMB   RMB   US$ 
ASSETS               
Current assets:               
Cash and cash equivalents   1,113,988    6,368,034    988,303 
Restricted cash   340,813    500    78 
Short-term bank deposits   493,282    2,503,153    388,483 
Receivables from online payment platforms   862    1,923    298 
Short-term investments   1,473,349    3,138,215    487,043 
Accounts and notes receivable   20,089    6,984    1,084 
Inventories, net   329,123    622,990    96,687 
Amounts due from related parties   21,006    21,382    3,318 
Prepayments and other current assets   74,383    372,198    57,764 
Total current assets   3,866,895    13,035,379    2,023,058 
Non-current assets:               
Property, equipment and leasehold improvement, net   74,500    143,879    22,330 
Intangible assets, net   5,393    8,533    1,324 
Long-term investments   4,000    12,000    1,862 
Deferred tax assets   6,000    815    127 
Right-of-use assets, net   91,743    195,493    30,340 
Long-term bank deposits   -    2,710,378    420,644 
Other non-current assets   11,354    38,074    5,909 
Total non-current assets   192,990    3,109,172    482,536 
Total assets   4,059,885    16,144,551    2,505,594 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Current liabilities:               
Accounts and notes payable   1,459,782    1,449,385    224,941 
Contract liabilities   320,434    115,956    17,996 
Salary and welfare benefits payable   179,558    341,094    52,937 
Taxes payable   363,644    480,648    74,595 
Accrued expenses and other current liabilities   116,929    259,554    40,282 
Amounts due to related parties   11,174    -    - 
Lease liabilities-current portion   45,073    79,837    12,391 
Total current liabilities   2,496,594    2,726,474    423,142 
                
Non-current liabilities:               
Deferred tax liabilities   5,210    5,210    809 
Lease liabilities-non-current portion   49,448    121,284    18,823 
Total non-current liabilities   54,658    126,494    19,632 
Total liabilities   2,551,252    2,852,968    442,774 

               
Shareholders’ Equity:               
Ordinary shares  (US$0.00001 par value; 15,000,000,000 shares authorized; 1,436,815,570 shares issued and outstanding as of December 31, 2020; 1,570,790,570 shares issued and 1,345,854,800 shares outstanding as of September 30, 2021)   94    103    16 
Additional paid in capital   1,589,857    11,806,405    1,832,326 
Statutory reserves   1,000    1,000    155 
(Accumulated deficit)/ retained earnings   (81,640)   1,449,183    224,910 
Accumulated other comprehensive (loss)/income   (678)   31,984    4,962 
Total RLX Technology Inc. shareholders’ equity   1,508,633    13,288,675    2,062,369 
Noncontrolling interests   -    2,908    451 
Total shareholders’ equity   1,508,633    13,291,583    2,062,820 
                
Total liabilities and shareholders’ equity   4,059,885    16,144,551    2,505,594 

 

 

 

RLX TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
COMPREHENSIVE INCOME/(LOSS)

(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, 
   2020   2021   2021   2021   2020   2021   2021 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net revenues   1,120,159    2,541,402    1,676,723    260,223    2,201,261    6,616,622    1,026,884 
Cost of revenues   (682,617)   (1,394,916)   (1,020,753)   (158,418)   (1,367,838)   (3,710,092)   (575,797)
Gross profit   437,542    1,146,486    655,970    101,805    833,423    2,906,530    451,087 
                                    
Operating expenses:                                   
Selling expenses   (86,650)   (126,005)   (56,525)   (8,773)   (246,471)   (474,066)   (73,574)
General and administrative expenses   (254,815)   (46,056)   253,231    39,301    (324,926)   (505,639)   (78,474)
Research and development expenses   (38,546)   4,911    44,607    6,923    (90,396)   (162,116)   (25,160)
Total operating expenses   (380,011)   (167,150)   241,313    37,451    (661,793)   (1,141,821)   (177,208)
    　    　    　    　    　    　    　 
Income from operations   57,531    979,336    897,283    139,256    171,630    1,764,709    273,879 
                                    
Other income：                                   
Interest income, net   11,242    16,069    22,633    3,513    24,729    48,117    7,468 
Investment income   5,842    23,868    27,463    4,262    8,731    66,258    10,283 
Others, net   10,507    9,185    150,498    23,357    23,461    156,515    24,291 
Income before income tax   85,122    1,028,458    1,097,877    170,388    228,551    2,035,599    315,921 
Income tax expense   (77,288)   (204,154)   (121,442)   (18,848)   (119,907)   (501,889)   (77,892)
Net income   7,834    824,304    976,435    151,540    108,644    1,533,710    238,029 
Less: net income attributable to noncontrolling interests   -    -    2,520    391    -    2,520    391 
Net income attributable to RLX Technology Inc.   7,834    824,304    973,915    151,149    108,644    1,531,190    237,638 
Other comprehensive (loss)/income:                                   
Foreign currency translation adjustments   (357)   (184,772)   41,911    6,504    156    32,662    5,069 
Total other comprehensive (loss)/income   (357)   (184,772)   41,911    6,504    156    32,662    5,069 
Total comprehensive income   7,477    639,532    1,018,346    158,044    108,800    1,566,372    243,098 
Less: total comprehensive income  attributable to noncontrolling interests   -    -    2,520    391    -    2,520    391 
Total comprehensive income attributable to RLX Technology Inc.   7,477    639,532    1,015,826    157,653    108,800    1,563,852    242,707 
                                    
Net income per ordinary share/ADS                                   
Basic   0.005    0.595    0.724    0.112    0.076    1.078    0.167 
Diluted   0.005    0.591    0.717    0.111    0.076    1.073    0.167 
                                    
Weighted average number of ordinary shares/ADSs                                   
Basic   1,436,815,570    1,385,410,036    1,345,928,878    1,345,928,878    1,436,815,570    1,419,969,217    1,419,969,217 
Diluted   1,436,815,570    1,394,565,595    1,357,908,401    1,357,908,401    1,436,815,570    1,427,055,536    1,427,055,536 

 

 

 

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, 
   2020   2021   2021   2021   2020   2021   2021 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net income   7,834    824,304    976,435    151,540    108,644    1,533,710    238,029 
Add: share-based compensation expenses                                   
Selling expenses   9,760    (51,473)   (90,768)   (14,087)   19,055    (21,538)   (3,343)
General and administrative expenses   214,572    (41,404)   (320,126)   (49,683)   226,047    256,964    39,880 
Research and development expenses   13,834    (79,666)   (112,847)   (17,514)   27,905    (54,201)   (8,412)
Non-GAAP net income   246,000    651,761    452,694    70,256    381,651    1,714,935    266,154 
                                    
Net income attributable to RLX Technology Inc.   7,834    824,304    973,915    151,149    108,644    1,531,190    237,638 
Add: share-based compensation expenses   238,166    (172,543)   (523,741)   (81,284)   273,007    181,225    28,125 
Non-GAAP net income attributable to RLX Technology Inc. for computing non-GAAP net income per ordinary share/ADS   246,000    651,761    450,174    69,865    381,651    1,712,415    265,763 
                                    
Non-GAAP net income per ordinary share/ADS                                   
- Basic   0.171    0.470    0.334    0.052    0.266    1.206    0.187 
- Diluted   0.171    0.467    0.332    0.051    0.266    1.200    0.186 
Weighted average number of ordinary shares/ADSs                                   
- Basic   1,436,815,570    1,385,410,036    1,345,928,878    1,345,928,878    1,436,815,570    1,419,969,217    1,419,969,217 
- Diluted   1,436,815,570    1,394,565,595    1,357,908,401    1,357,908,401    1,436,815,570    1,427,055,536    1,427,055,536 

 

 

 

RLX TECHNOLOGY INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(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, 
   2020   2021   2021   2021   2020   2021   2021 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net cash generated from/(used in) operating activities   798,828    649,441    (142,852)   (22,170)   1,299,262    1,334,154    207,057 
Net cash used in investing activities   (746,205)   (3,620,360)   (38,534)   (5,980)   (2,642,398)   (6,473,141)   (1,004,616)
Net cash generated from/(used in) financing activities   324,272    (6,174)   389    60    1,375,540    10,031,637    1,556,886 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash   15,915    (146,515)   23,372    3,627    30,005    21,083    3,272 
Net increase/(decrease) in cash and cash equivalents and restricted cash   392,810    (3,123,608)   (157,625)   (24,463)   62,409    4,913,733    762,599 
Cash, cash equivalents and restricted cash at the beginning of the period   153,691    9,649,767    6,526,159    1,012,844    484,092    1,454,801    225,782 
Cash, cash equivalents and restricted cash at the end of the period   546,501    6,526,159    6,368,534    988,381    546,501    6,368,534    988,381