RELX Revenue Growth Slows as New Regulations Remain Delayed
Due to uncertainty in the domestic vaping regulatory environment, RELX Technology's revenue growth slowed in the second quarter of 2020. Net revenue reached RMB 2.54 billion (US$393.6 million), up 6% from RMB 2.4 billion in the first quarter of 2021, driv
RELX Technology’s revenue growth slowed in the second quarter of 2020 due to uncertainty surrounding China’s domestic vaping regulatory environment.
Net revenue reached RMB 2.54 billion (US$393.6 million), up 6% from RMB 2.4 billion in the first quarter of 2021, driven by the expansion of the company’s distribution and retail network.
The company said the slower quarter-on-quarter revenue growth was mainly due to external factors, including negative publicity surrounding the vaping industry in the latter half of the second quarter, as well as the release in China of draft new rules for vaping products on March 22, 2021. Those rules have not yet been formally confirmed, and no new implementation details have been disclosed, which adversely affected sales.
The company has also been targeted by investor lawsuits alleging that RLX Technology overstated its financial condition and misrepresented potential regulatory risks when filing for its U.S. initial public offering.
Gross margin was 45.1%, compared with 46% in the first quarter of 2021.
“In the second quarter of 2021, our business continued to grow as we stepped up efforts to further strengthen underage protection and product safety,” said Kate Wang, co-founder, chairperson of the board, and chief executive officer of RLX Technology, in a statement. “Through our strategic focus on technology investment and brand building, we strive to make RELX a trusted brand for adult smokers through state-of-the-art products, industry-leading technology, and scientific advancement. Looking ahead, we will further increase our investment in scientific research, strengthen our distribution and retail network, enhance our supply chain and production capacity, and create greater value for users and shareholders.”
RLX held its earnings conference call on August 20, 2021. A live and archived webcast of the call was made available on the company’s investor relations website. A replay of the call remained available through August 27, 2021.
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