On May 20, RLX Technology, the parent company of the "RELX" e-vaporizer brand, released its unaudited financial results for the first quarter of 2026. The report shows the company achieved net revenues of RMB 1.5858 billion (approximately USD 229.9 million), representing a year-over-year increase of 96.2% and a sequential increase of 38.9%. Under non-GAAP measures, net profit was RMB 357.3 million (approximately USD 51.8 million), a year-over-year rise of 41.4%. The near-doubling of revenue alongside a profit increase exceeding 40%, resulting in a growth rate gap of over 50 percentage points, forms the most noteworthy feature of this earnings report. A closer examination of the growth structure reveals that international business has become RLX Technology's primary revenue source. In the first quarter, revenue from international operations accounted for 72.3% of total revenue. This indicates, on one hand, that the company has successfully shifted its strategic focus from a domestic orientation to a global one. On the other hand, it also suggests that the recovery pace of the domestic market remains relatively subdued. Europe and emerging markets were pivotal drivers of growth this quarter. In May 2025, RLX Technology completed an investment and acquisition of a European entity, and this acquisition began contributing consolidated revenue during the reported period. In emerging markets such as Southeast Asia and North Asia, the company maintained its market share advantage due to its early strategic positioning. The disparity between the 96.2% revenue growth and the 41.4% non-GAAP net profit growth can be attributed to several factors. Firstly, changes on the expense side warrant attention. Total operating expenses for the quarter were RMB 260 million, higher than the same period last year, primarily due to increased personnel compensation and share-based compensation expenses related to the overseas acquisition, as well as depreciation and amortization from business expansion. While the overseas acquisition rapidly expanded revenue scale, it also concurrently elevated operating costs. Secondly, the quarter's revenue growth was not entirely driven by organic business. CFO Lu Chao explicitly noted in the report that "one-time impacts from export policy adjustments also contributed to revenue growth during this period." This statement implies that a portion of the growth stemmed from a concentrated release effect during a policy window, and its sustainability remains uncertain. On a positive note, the company's gross margin improved by 3.2 percentage points year-over-year to 31.8%, and non-GAAP operating profit surged 187.9% year-over-year to RMB 310.3 million. This suggests, to some extent, that operating leverage is gradually materializing as the revenue scale expands. It is noteworthy that the regulatory environment in the European market is tightening. The UK government has confirmed it will impose a new excise duty on e-cigarette products starting October 1, 2026, formally bringing e-cigarettes into the excise duty framework. Several other European countries have also been progressively advancing taxation on e-liquids. The increased tax burden may exert pressure on the profitability of the company's European operations in the future. As of March 31, 2026, RLX Technology held cash and various investment reserves of approximately RMB 14.5297 billion (about USD 2.1064 billion), indicating an overall sound financial position. This capital reserve provides a buffer for subsequent global expansion. However, for a company primarily reliant on overseas market traction, achieving sustainable growth amidst frequent regulatory changes across multiple countries will be a more critical medium- to long-term challenge. The first-quarter performance demonstrates that RLX Technology has gained significant momentum on its international expansion path. Yet, beneath the surface of high revenue growth, the pace of profit realization, efficiency in expense control, and regional policy uncertainties remain key questions that management must address.
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