EX-99.1 2 tm2330536d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

RLX Technology Announces Unaudited Third Quarter 2023 Financial Results

 

BEIJING, November 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

 

·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.
·Gross margin was 24.7% in the third quarter of 2023, compared with 50.0% 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 income1 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.

 

“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.

 

 

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 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 ADS2 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: ir@relxtech.com

 

Piacente Financial Communications 

Jenny Cai 

Tel: +86-10-6508-0677 

Email: RLX@tpg-ir.com

 

In the United States:

 

Piacente Financial Communications 

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,   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