RLX Technology Q2 Earnings Call Highlights

RLX Technology (NYSE:RLX) reported second-quarter 2026 revenue growth of 14.8% year over year, supported primarily by international expansion, while management outlined plans to deepen its European distribution footprint and broaden its portfolio of smoke-free products.

Net revenue for the quarter reached RMB1.01 billion, compared with RMB880 million a year earlier. International markets accounted for approximately 70% of total revenue, Chief Financial Officer Chao Lu said. Revenue moderated sequentially from the first quarter, which management said had benefited from shipments pulled forward ahead of regulatory export adjustments.

Chief Executive Officer Kate Wang said the sequential moderation did not reflect weaker end-market demand. Rather, she attributed it to trade inventory normalization after distributors pre-stocked in the first quarter. Because distribution partners manage multi-brand portfolios, the earlier stocking activity temporarily reduced visibility into sellout rates, she said.

“Underlying demand across our key international markets remains healthy and resilient,” Wang said, adding that the company is prioritizing retail execution and upgrades to its global operating infrastructure.

Profitability Improves as Gross Margin Expands

Gross profit increased 47.8% year over year to RMB357.8 million. Gross margin was 35.4%, rising 790 basis points from the prior-year period and 360 basis points sequentially. Lu attributed the improvement to supply-chain optimization, higher manufacturing yields, and favorable shifts in geographic and product mix.

The company recorded its 11th consecutive quarter of positive non-GAAP operating profit. Non-GAAP income from operations rose 28.8% year over year to RMB149.6 million, while non-GAAP net income totaled RMB238.8 million.

Management cautioned that second-quarter gross-margin expansion was partly influenced by temporary product and revenue mix factors. As product mix and shipment flows normalize, the company expects gross margin to return to what it described as a healthy and balanced range. The company also noted that interest-rate movements and foreign-exchange effects could create fluctuations in reported results.

European Investment to Be Consolidated in Third Quarter

RLX said it made a controlling investment in July 2026 in a Western European distributor of next-generation smoke-free products and fast-moving consumer goods. The acquired platform directly serves more than 30,000 retail endpoints through its offline network and operates a B2B digital commerce platform connected to more than 20,000 independent merchants, according to Lu.

The investment follows RLX’s May 2025 acquisition of an established European e-vapor company with retail and online operations. Wang said the company is using a combination of acquisitions, partnerships and organic channel development to expand in Europe, which she called a cornerstone of RLX’s global strategy.

The Western European distribution business will be fully consolidated into RLX’s financial statements beginning in the third quarter. Management said the transaction is expected to provide a step-change increase in reported international revenue in the second half, while supporting longer-term supply-chain and commercial synergies.

However, Lu said the addition of a downstream distribution business will affect percentage gross margin because such businesses generally have lower gross-margin profiles than proprietary branded products. He said management expects the deal to expand operating-profit and net-profit scale on an absolute basis.

RLX said it does not intend to convert the acquired distributor into an exclusive channel for its own products. Instead, it plans to maintain the platform as an open, multi-brand marketplace while seeking to reduce distribution costs and improve sourcing terms through its supply-chain scale and brand relationships.

Capital Deployment Focuses on Growth, M and Returns

As of June 30, RLX had RMB13.9 billion in total capital resources, including cash equivalents, restricted cash, short-term bank deposits and liquid investment securities.

In response to an analyst question on capital allocation, management said it is prioritizing three areas:

• Organic growth investments, including multi-category research and development, Southeast Asian manufacturing capacity and product launches;
• Selective acquisitions that add capabilities in areas such as research and development, local manufacturing, brands and distribution; and
• Direct shareholder returns through share repurchases and dividends, subject to board approval and market conditions.

Management said it has no fixed valuation ceiling or revenue threshold for acquisitions. Instead, it said potential transactions must be benchmarked against comparable deals and RLX’s public valuation, offer a clear cash-payback timeline, be structurally non-dilutive and provide earnings-per-share accretion.

Multi-Category Expansion and Regulatory Focus

RLX is expanding beyond e-vapor products into oral nicotine pouches and heat-not-burn products. Wang said the company has commercialized an oral nicotine pouch line and is increasing manufacturing capacity and distribution. It has also developed heat-not-burn technologies and market-ready products, though commercial launches will depend on market and regulatory conditions.

The company is constructing a manufacturing hub in Southeast Asia that will support multiple product categories, including pouch production lines. Management said the facility is intended to improve tariff positioning, streamline logistics and reduce exposure to trade friction and geopolitical uncertainty.

In the U.S., RLX said its non-listed affiliates have submitted PMTA applications that are in advanced stages and awaiting regulatory decisions. Management said it will not make large-scale commercial investments in the U.S. until regulatory pathways and enforcement standards become more predictable.

For mainland China, management said tighter enforcement against illegal and non-compliant e-cigarette products should benefit compliant operators over the long term. Still, RLX expects full-year mainland China sales to be broadly flat year over year as approval timelines have become more conservative amid heightened regulatory oversight.

About RLX Technology (NYSE:RLX)

RLX Technology Inc (NYSE:RLX) is a China-based company specializing in electronic nicotine delivery systems. The company develops, manufactures and markets closed-pod vaping devices and prefilled cartridges, positioning its products as an alternative to traditional combustible tobacco. RLX emphasizes consistent nicotine delivery, flavor variety and convenience through its proprietary e-liquid formulations and device design.

RLX operates a vertically integrated business model that encompasses research and development, production, quality control and sales.

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