GuruFocus -
- Net Revenue: RMB756 million, up 52% year over year and 21% quarter over quarter.
- Gross Profit Margin: Improved to 27.2%, a 3.2-percentage-point increase year over year.
- Operating Loss: RMB11 million, but positive non-GAAP operating profit of RMB82 million excluding share-based compensation.
- Non-GAAP Net Income: Increased by 30% year over year to RMB262 million.
- Non-GAAP Basic Net Income per ADS: RMB0.211.
- Non-GAAP Diluted Net Income per ADS: RMB0.200.
- Operating Cash Inflow: RMB157 million, up from RMB83 million year over year.
- Inventory Turnover Days: Reduced to 16 days from over 100 days in Q1 2023.
- Total (EPA:TTEF) Financial Assets: RMB15.4 billion as of September 30, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RLX Technology Inc (NYSE:RLX) reported a 52% year-over-year increase in net revenues for Q3 2024, driven by international expansion.
- The company achieved a gross profit margin improvement to 27.2%, marking a 3.2-percentage-point increase year over year.
- RLX Technology Inc (NYSE:RLX) successfully launched new product lines, including the [Feidiao] series, which received positive feedback from retailers and users.
- The company has established a comprehensive intellectual property management system, enhancing its global technology and brand protection.
- RLX Technology Inc (NYSE:RLX) announced its second cash dividend since its IPO, demonstrating a commitment to returning value to shareholders.
- The company recorded a total operating loss of RMB11 million in Q3 2024, despite positive non-GAAP operating profit.
- Illegal e-vapor products continue to dominate the Chinese market, accounting for 80% to 90% of the total market, posing challenges for compliant brands like RLX Technology Inc (NYSE:RLX).
- The e-vapor industry faces increased regulatory activity, complicating operations and requiring RLX Technology Inc (NYSE:RLX) to adapt to new regulations.
- The company anticipates a slight decline in interest and investment income in 2025 due to expected interest rate cuts by the US Federal Reserve.
- RLX Technology Inc (NYSE:RLX) faces challenges in the Chinese market with a decline in the number of compliant retail stores from 50,000 to about 10,000.
A: Sam Tsang, Head of Capital Markets, explained that RLX has entered multiple international markets, operating directly in five countries in East Asia, Southeast Asia, and Oceania. They are the number one brand in three of these countries. For 2025, RLX is considering entering countries in the EMEA region and Central America, contingent on stable regulatory environments and having the right team in place.
Q: How does RLX Technology perceive the future of the illegal e-vapor market in China, given recent regulatory actions?
A: Sam Tsang stated that RLX supports regulatory crackdowns on non-compliant e-vapor products. The regulatory framework has been consistent, and RLX collaborates with regulators to combat illegal products. The company sees these actions as necessary to ensure compliance and quality in the market.
Q: Has RLX Technology noticed any changes in consumer behavior or the competitive landscape in China's e-vaping market this year?
A: Sam Tsang noted that despite economic headwinds, RLX's sales and market share have been stable. The company has launched new product series to cater to users seeking value for money, indicating that the e-vapor category remains resilient in the Chinese market.
Q: How does RLX Technology view its interest income prospects given potential US Federal Reserve rate cuts?
A: Sam Tsang mentioned that RLX has a significant portion of its financial assets in USD and long-term vehicles, which should mitigate the impact of rate cuts. They expect a slight decline in interest and investment income in 2025 but believe the impact will be minor.
Q: How are RLX Technology's new products performing, and what are the future product plans?
A: Sam Tsang reported positive feedback for new products like the Daqian and Feidiao series in China and RELX Prime and RELX Bin internationally. RLX plans to continue innovating and expanding its product portfolio to meet diverse user needs and regulatory requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.