RLX Technology’s third-quarter 2025 results reveal far more than a simple rebound. Behind the headline numbers—international revenue accounting for 72%, adjusted net profit rising 1.4% quarter-on-quarter, and sales expenses surging 91.3% year-on-year—lies a strategic overhaul that is reshaping the company’s identity.
On November 14, the company released its unaudited Q3 results. Net revenue reached RMB 1.1293 billion, up 49.3% year-on-year and 28.3% quarter-on-quarter. Adjusted net profit under non-GAAP standards came in at RMB 295.4 million, a 12.1% year-on-year increase.
Beneath the dual growth of revenue and profit, a closer reading of the financials shows a company navigating a deep transformation—sharper cost controls, a heavier R&D commitment, rapidly expanding international distribution, and rising tax and compliance requirements.
Momentum Against the Cycle: What’s Driving RLX’s Growth?
The Q3 revenue growth—well above industry averages—signals a decisive strategic shift. Gross margin climbed to 31.2%, four percentage points higher than the same period last year, reflecting improved product mix and healthier cost structures.
One figure stands out even more: RMB 15.3511 billion in cash, deposits, and investments. This substantial cash reserve gives RLX the flexibility to invest, expand, and withstand regulatory or competitive pressure far better than many of its peers.
Cost Discipline: Why Administrative Expenses Fell 30%
While revenue surged, general and administrative expenses fell to RMB 90 million, down about 30% year-on-year.
This drop highlights the company’s ongoing push for leaner operations—streamlining management layers, raising internal efficiency, and tightening global expense controls while growing overseas. RLX’s working capital metrics reinforce this discipline: inventory turnover at 25 days, receivable turnover at 11 days, and payable turnover at 53 days.
R&D as a Growth Engine: Spending Up 68.8%
R&D investment was another standout. RLX spent RMB 41.25 million on R&D in Q3, a 68.8% increase from a year earlier.
This spending is translating into new product categories and diversified revenue streams. The company’s self-developed oral dissolvable film has already launched in the UK, and its ultra-thin fast-dissolving product showcased at Germany’s INTERTABAC exhibition received strong industry feedback.
RLX is channeling R&D into enhancing user experience—more authentic vape flavors, improved ergonomics, and refined product aesthetics.
A Fierce Market: Why Sales Expenses Jumped 91.3%
In Q3, sales expenses nearly doubled to RMB 132 million. This surge reflects RLX’s aggressive international expansion and the intensifying competition in the global vaping sector.
The company is building localized retail networks, especially in Asia-Pacific, where it works with leading distributors to scale coverage rapidly. In the UK, RLX is shaping a multi-brand retail distribution platform, leveraging supply-chain capabilities to improve efficiency. Europe is benefiting from similar localization efforts and selective strategic investments.
A new franchise retail model in Asia-Pacific is also contributing to stronger same-store sales and a more unified brand presence.
Compliance as a Competitive Moat: Product Tax Up 24%
As global regulation tightens, compliance costs continue to rise. RLX paid nearly RMB 100 million in product consumption tax in Q3, a 24% year-on-year increase.
In today’s market, compliance is no longer merely a cost—it is a barrier to entry. Stricter rules worldwide are eliminating non-compliant operators, and RLX’s full-chain compliance—from R&D and manufacturing to distribution—positions it to capture market share vacated by smaller players.
Europe as a Growth Catalyst: International Revenue Reaches 72%
CFO Lu Chao highlighted that growth was driven by three engines: expanding market share in existing overseas markets, high-return investments in Europe, and a steady recovery in mainland China.
The European acquisition completed in May 2025 delivered “substantive revenue” in its first full quarter. Beyond revenue contribution, Europe is also lifting overall gross margin and strengthening RLX’s retail presence across the region.
The Road Ahead: Global Expansion of Oral Nicotine Products
Looking forward, RLX plans to continue broadening its product portfolio and accelerating global expansion. Several macro trends favor this strategy:
- Growing consumer demand for reduced-risk nicotine products
- Ongoing technological upgrades in vaping devices
- Increasing acceptance in emerging markets such as Southeast Asia and the Middle East
With international operations already accounting for 72% of revenue, RLX has effectively evolved from a Chinese e-cigarette leader into a global nicotine-product company.
As regulatory clarity improves worldwide, RLX’s compliance capabilities are turning into tangible financial benefits. Its strong execution in Europe and successful rollout of new products like oral dissolvable films show the company entering a new phase—one driven by diversified products and globalized expansion.