RLX Technology's Q2 2025 Earnings Call: Navigating Contradictions in Expansion, Regulations, and Dividend Strategies

Overseas business growth and expansion strategy, impact of regulatory changes on business strategy, domestic market regulatory environment and market share, regulatory environment and market share, and dividend strategy are the key contradictions discussed in RLX Technology's latest 2025Q2 earnings call.



Impressive Revenue and Profitability Growth:
- RLX Technology reported net revenues of RMB 880 million in Q2 2025, marking a 40% year-over-year increase and a 9% quarter-over-quarter increase.
- Driven by successful internationalization strategy and the global shift towards reduced risk smokeless alternatives, contributing to the robust growth figures.

Profitability Expansion and Cost Optimization:
- RLX's gross margin expanded to 27.5%, reflecting a 2.3 percentage point year-over-year increase, due to favorable revenue mix from international markets and cost optimization efforts.
- The company's non-GAAP operating margin improved by more than 5 percentage points year-over-year, reaching 13.2%, supported by contributions from its fast-growing international business and enhanced operating leverage.

Regulatory Compliance and Market Share Increase:
- The global regulatory landscape for RLX products is becoming increasingly well-defined, benefiting compliant products in tight markets.
- The enforcement of stricter regulations is leading to a decline in the share of gray and black markets, allowing the company to gain market share with its compliant offerings.

Overseas Business Expansion and Diversification:
- RLX achieved moderate year-over-year growth organically in its overseas business, showcasing resilience in gaining market share from various types of competitors.
- Expansion into the European market and new strategic investments in key regions are broadening the company's global reach and enhancing its distribution capabilities.

Cash Flow Management and Dividend Strategy:
- RLX registered operating cash inflow of RMB 230 million in Q2 2025, a significant increase from RMB 197 million in the same period last year.
- The company announced its third cash dividend since its IPO, reaffirming its commitment to delivering value to shareholders while maintaining a disciplined capital management strategy.