Starting in 2023, in response to the downturn in sales caused by changes in regulatory policies, domestic e-cigarette brands have had no choice but to shift their focus to overseas markets. After more than a year of adjustments, most companies have managed to revive their performance. Although they have yet to reach historical peaks, their current standing is significantly better than during the lows.
Recently, two leading companies released their financial data for the third quarter. These publicly listed enterprises serve as representative examples of the current state of domestic e-cigarette brands, providing insight into the overall development of the industry.
First, let’s examine the performance of RLX Technology Inc. , the parent company of the RELX brand.
On November 15, RLX Technology Inc. listed in the United States, revealed its unaudited financial report for the third quarter of 2024.
According to the report, RLX Technology Inc. net revenue for the third quarter of 2024 reached 756 million RMB (approximately 108 million USD), marking a quarter-over-quarter increase of 20.6% and a year-over-year increase of 51.6%. Under non-GAAP measures, the adjusted net profit for the third quarter was 260 million RMB (approximately 37.3 million USD), reflecting a quarter-over-quarter growth of 22.9% and a year-over-year growth of 30.0%.
As of September 30, the net revenue for the first three quarters of this year totaled 1.94 billion RMB (approximately 280 million USD), representing a year-on-year surge of 81.5%. Under non-GAAP measures, the adjusted net profit for the first three quarters was 680 million RMB (approximately 97 million USD), an increase of 44.8% compared to the same period last year.
In light of these impressive financial results, the executives provided explanations in the report, asserting that "efficient and flexible localization strategies have enabled us to establish market leadership in multiple countries, achieving a high degree of alignment between products and markets through close collaboration with local distributors and retailers."
RLX Technology Inc. believes that with the shift in revenue structure and cost optimization measures, its internationalization strategy has achieved significant success. "While revenues are rapidly growing, the company has also maintained stable operating expenses under non-GAAP measures, highlighting operational leverage," stated the Chief Financial Officer in the report.
Looking back at historical data, RLX Technology Inc. revenue peaked in 2021 at 8.52 billion RMB, followed by a sharp decline over the next two years, with revenues dropping to 5.28 billion RMB in 2022 and 1.244 billion RMB in 2023. However, the revenue for the first three quarters of this year has already far exceeded the total revenue for last year, while also maintaining a relatively high level of net profit, which is commendable.
However, the report did not specify which overseas markets RLX Technology Inc. has entered or which products have been launched, necessitating further observation in the future.
Now, let’s look at the performance of Smoore , a leading OEM that was previously the "golden partner" of the RELX brand.
In October, Smoore released its third-quarter financial data on the Hong Kong Stock Exchange.
The report indicated that Smoore revenue for the third quarter was 3.286 billion RMB, representing a year-on-year increase of 14.1% and a quarter-on-quarter increase of 16.5%. The after-tax profit for the third quarter was 380 million RMB, reflecting a year-on-year decline of 22.5% but a quarter-on-quarter increase of 10.2%.
As of September 30, Smoore revenue for the year reached 8.32 billion RMB, up 4.0% year-on-year, while the after-tax profit was 1.06 billion RMB, down 11.9% compared to the same period last year.
According to the company, the revenue growth in the third quarter was primarily driven by the increase in sales of its own brand products and the revenue growth of closed-system products in its enterprise customer business. The decline in profit was mainly attributed to increased R&D expenses, higher management costs, and a significant rise in the accrual of income tax expenses compared to the previous year.
Additionally, Smoore emphasized in its report that it will "continue to increase investment in the development of heated tobacco products and aerosol medical products."
Comparing the data from previous years, although Smoore also experienced a notable decline in performance, its decrease was far less severe than that of RLX Technology Inc. primarily because RLX Technology Inc. market is predominantly domestic, while Smoore clientele is global.
Currently, both companies are actively adjusting their market strategies, seeking to re-establish their presence in overseas markets while laying a solid foundation for future expansion.
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