RLX Technology’s Earnings Call: Resilience Amid Challenges

Rlx Technology, Inc. ((RLX)) has held its Q1 earnings call. Read on for the main highlights of the call.

RLX Technology’s recent earnings call painted a picture of resilience and strategic growth amid challenging industry conditions. The company showcased strong revenue growth and improved profitability, driven by innovative product offerings and strategic market expansion. Despite the positive performance, RLX acknowledged the broader industry’s struggle with regulatory pressures and shifting user trends, which are expected to result in negative revenue growth this year.

Significant Revenue Growth

RLX Technology reported a remarkable 47% year-over-year increase in net revenues, reaching RMB808 million in Q1 2025. This impressive growth was primarily fueled by the company’s strategic expansion into international markets, which has opened new avenues for revenue generation.

Improved Profitability

The company’s financial health improved significantly, with the gross profit margin rising to 28.6%, marking a 2.7 percentage point increase from the previous year. RLX also achieved a non-GAAP operating profit of RMB106 million, highlighting its effective cost management and operational efficiency.

Strong Cash Flow

RLX Technology’s financial stability was further underscored by a substantial operating cash inflow of RMB207 million in Q1 2025, a significant leap from RMB4 million in the same period last year. This improvement reflects enhanced working capital efficiency and robust financial management.

Successful Product Innovation

The introduction of Big Puff products, featuring larger e-liquid capacity, has been a game-changer for RLX. These products have gained global popularity, particularly among former disposable e-vapor users, showcasing the company’s innovative edge in product development.

Regulatory Challenges

The e-vapor industry continues to face stringent regulatory scrutiny, with bans on disposable products in key markets like the U.K. and New Zealand, and additional taxes in Spain. These challenges have impacted exports from China, posing significant hurdles for industry players, including RLX.

Industry Revenue Decline

Despite an increase in e-liquid consumption, the industry has experienced revenue growth stagnation due to the lower average selling price per milliliter of Big Puff products. This trend has contributed to a broader revenue decline across the e-vapor sector.

Seasonal Revenue Stagnation

RLX’s quarter-over-quarter revenue growth was subdued, largely due to seasonal factors. Net revenues remained consistent with the previous quarter, reflecting the seasonal nature of the business.

Forward-Looking Guidance

Looking ahead, RLX Technology remains optimistic about its growth prospects. The company anticipates a return to normal industry growth in 2026, leveraging its in-house product development capabilities to stay ahead of market trends. RLX’s strategic focus on international markets has already contributed to a 46.5% year-over-year revenue increase, and the company is committed to expanding its global footprint while managing regulatory risks and adapting to evolving market dynamics.

In conclusion, RLX Technology’s earnings call highlighted a robust performance amid challenging industry conditions. The company’s strategic market expansion, innovative product offerings, and improved profitability underscore its resilience and adaptability. While regulatory challenges and industry-wide revenue decline pose significant hurdles, RLX remains focused on leveraging its strengths to navigate these challenges and drive future growth.