RLX Technology (NYSE:RLX) reported a strong finish to fiscal 2025, highlighting accelerating revenue growth, expanding margins, and a revenue mix increasingly weighted toward overseas markets. On its fourth-quarter and full-year 2025 earnings call, management emphasized international expansion, progress in Europe, steady growth in mainland China, and continued capital returns to shareholders.
Fourth-quarter revenue up 40% as international sales dominate the mix
Chief Financial Officer Chao Lu said fourth-quarter net revenues rose 40.3% year-over-year to RMB 1.14 billion. For the full year, total net revenues increased 44% to RMB 3.96 billion. CEO Kate Wang pointed to the company’s shifting geographic mix as a key milestone, stating that international sales represented 76.5% of fourth-quarter revenue, reflecting RLX’s transition from a single-market company to a more global business.
Margins expand; non-GAAP profitability extends to nine consecutive quarters
Profitability improved alongside revenue growth. Lu said fourth-quarter gross margin expanded to 31.4% from 27% a year earlier, while full-year gross margin increased to 29.9%. He attributed the improvement to a favorable product mix and supply chain optimization.
RLX posted its ninth consecutive quarter of positive non-GAAP operating profit, with non-GAAP operating income of RMB 158 million in the fourth quarter. For the full year, non-GAAP operating income doubled to RMB 570 million, and full-year non-GAAP net income rose to RMB 1.16 billion. Lu also emphasized a “lean organization” designed to create operating leverage as the business scales.
Global expansion: Asia growth playbook and Europe as a strategic priority
Wang said RLX is pursuing “multidimensional global expansion,” highlighting market share gains in the Asia Pacific region and a push to deepen its presence in Europe. As one example in East Asia, she said RLX started from “absolute zero” at the beginning of 2025 in a specialty store channel in key markets, launched two localized product series, opened 425 franchise stores, captured over 20% of the specialty store channel, and increased channel revenue by over 200%. Management said it aims to refine the “single store economic model” in 2026 and potentially replicate franchise expansion in other Asian markets when conditions are favorable.
In Europe, Wang described the region as a “high-value market with very strict standards,” and said RLX’s European expansion became its top strategic priority in early 2026. She noted that RLX invested in a European firm in May 2025 to secure local distribution and has moved senior leaders to focus on Western Europe while building partnerships with local distribution and retail players.
During Q&A, management provided additional color on the European platform’s performance in the U.K. amid regulatory change. The company said it shifted its portfolio toward compliant pod and open systems and viewed the broader U.K. market’s contraction in tracked FMCG-channel retail value as primarily driven by a product-mix shift toward refillable and pod systems that lower cost per use—rather than weakening consumer demand. Management said its European business grew in that environment by acquiring new customers and expanding shelf space in wholesale channels, which it characterized as taking market share.
Looking ahead, management expects the U.K. market to consolidate around established compliant brands and said the new U.K. excise tax expected in October 2026 could accelerate that consolidation by pressuring unregulated players.
Management also discussed its approach to additional European investments, describing a two-track strategy of organic growth and strategic M&A. The company said it is focusing on two target profiles: distributors with their own retail networks and complementary brands that fit its portfolio. While RLX said it is actively looking for targets and aims to close more transactions this year, it noted that potential deals are not included in budgets due to uncertainty.
Mainland China: compliant market tailwinds in 2025; normalized growth expected in 2026
RLX said its mainland China business remained “strong, steady, and highly resilient.” Wang and management attributed 2025 domestic growth partly to stricter customs enforcement that reduced illicit supply. The company said 2025 domestic revenue grew by over 20% year-over-year, supported by improved product offerings, distribution optimization, and upgraded retail operations.
For 2026, management said it expects domestic growth to continue but at a more normalized pace given a high base from 2025. It also cited ongoing challenges from illegal products produced by unverified workshops, and said it intends to continue working with regulators and focusing on compliant products that improve performance, satisfaction, and value.
AI, nicotine pouches, and capital returns remain key themes
Wang outlined an “AI-empowered FMCG ecosystem,” saying RLX is embedding artificial intelligence into core operations to improve product development, forecasting, and supply chain execution. Management also argued that the company is insulated from energy and freight volatility due to the products’ high value-to-weight ratio, while developing an AI-enabled ERP system to dynamically optimize supply chain decisions.
On modern oral products, management said RLX began rolling out nicotine pouch offerings in Europe in the second half of 2025 using a multi-brand strategy. In the U.K., it said it remains in early stages and is intentionally controlling marketing while ramping production at a new facility in Southeast Asia. Management said feedback from consumers and distributors has been “overwhelmingly positive” and that its 2026 focus is channel expansion, noting that oral products rely on different retail channels than vape products.
Lu highlighted strong cash generation and shareholder returns. The company generated RMB 1.1 billion in operating cash flow for the full year and ended 2025 with total financial assets of RMB 15.73 billion (about $2.2 billion), describing its position as a “fortress-like balance sheet.” Lu also said RLX’s fourth-quarter cash conversion cycle was negative 15 days.
Management said RLX has returned over $500 million to investors, including $330 million in share repurchases and $171 million in cash dividends. In response to questions about future shareholder returns, the company said it intends—subject to board approval and operating results—to distribute non-GAAP net profit as dividends, while also evaluating ways to optimize its capital structure and pursue disciplined M&A and strategic investments to support geographic expansion and product diversification.
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.
