RLX Technology Inc.

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology, Inc.' 's third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded and is expected to last for about 40 minutes. I will now turn the call over to your host, Mr. Sam Sung, head of capital markets for the company. Please go ahead, Sam.

Thank you very much. Hello, everyone, and welcome to RxTechnologies' first quarter 24 earnings conference call. The company's financial and operational results were released through PL Newswire services earlier today and have been made available online. You can also view the earnings press release by visiting the IL section of our website at il.relastech.com. Participants on today's call will include our Chief Executive Officer, Ms. Kate Wang, our Chief Financial Officer, Mr. Chao Lu, and myself, Sam Tseng, Head of Capital Markets. Before we continue, please note that today's discussions will contain forward-looking information made under the safe harbor provisions of the U.S. Price and Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue, or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which factors are beyond our control. The company's affiliates, advisors, and representatives do not undertake any obligation to update this forward-looking information, except as required under the act of law. Please note that RLX Technologies' earnings press release and this conference call include discussions of unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. RLX press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited gap measures. I will now turn the call over to Ms. Kate Wang. Please go ahead.

Thank you, Sam, and thank you to everyone for joining our earnings conference call today. I would like to begin with an overview of our strategy for thriving in markets outside of China. followed by an update on our current and recent developments in the China market, and a review of our intellectual property achievements. Finally, I will hand over to our CFO for a detailed financial review. We delivered a robust performance in the third quarter of 2024, demonstrating our ability to consistently excel in diverse markets, despite rapidly evolving demands and regulatory landscapes. This positions us as a leading brand beyond China. Following the termination of our non-competition agreement last year, we have successfully expanded into multiple international markets. During this period, two key trends have merged within the overseas evapour industry. First, we have observed an increase in regulatory activity across various markets. Governments are implementing new regulations, including bans on disposable products, new tax policies, and stricter enforcement against illegal goods. While these developments can foster sustainable growth within this industry, they also complicated operations for compliant brands like ILX, This makes it essential for us to develop dedicated local strategies, create multi-category product lines to facilitate user transitions, enhance inventory management across the value chain, and optimize costs to align with and adapt to regulatory changes. The second trend is a growing demand from consumers for enhanced product functionality and cost-effective daily evapour products. Certain segments for adult smokers are seeking more advanced features in evapour products, akin to the rising expectations in the consumer electronics sector, where personalization and technological innovation are paramount. Simultaneously, as inflation persists in several countries, some other user groups are demanding daily EV products that offer good value for money. To meet these diverse needs, brand manufacturers must possess strong user insights capabilities and enhance product development expertise to create tailored solutions for different local markets and different user segments. To address these trends comprehensively, we have developed an integrated business model supported by our talented workforce, which empowers our success in various local markets and product categories. This model includes targeted market strategies, a comprehensive product portfolio, refined supply chain management, and focused user engagement strategies. We have refined this model in China and are now successfully replicating it in international markets. making necessary adjustments based on local conditions. Looking ahead, we anticipate that the international e-vapor industry will experience an annual growth rate in the tens over the next few years. As more adult smokers transition from cigarettes to e-vapor products, Additionally, we expect a growing number of eVapor users to shift from due user of cigarettes and eVapor products to exclusive eVapor use. Given the increased regulatory activities and rising user demands, we believe that only leading players with an integrated model will succeed. We are confident in our ability to capture incremental market share in international evapomarkets over the coming years. Turning to the latest developments in China, we note that illegal evapoproducts continue to dominate the market. Our internal estimates indicate that These products account for 80% to 90% of the total evapomarket in China. Generally, illegal products of subpar quality and fail to meet national product standards often be non-tobacco flavored. Furthermore, they do not contribute to consumption tax revenues. As a compliant and responsible brand, we are actively combating these illicit sales through various initiatives, including targeting illegal sales on social media, delisting illegal zero-nit coating products from e-commerce platforms, and collaborating with authorities to shut down counterfeit production facilities. We remain committed to cooperating with regulators in this effort and appreciate their support. While addressing illicit sales, we have also launched a new product series to enhance our competitiveness. This quarter, we introduced the Failure Series, our first compliant disposable product line. since the implementation of national standards. We offer two disposable products with e-liquid volumes of 6 ml and 10 ml, designed for adult smokers seeking convenience at a lower entry cost compared to cartridge-based products. Feedback from retailers and users have been overwhelmingly positive. and we plan to extend this launch nationwide. Finally, I'm pleased to announce that our team has successfully passed the certification exam for the Enterprise Intellectual Property Compliance Management System requirements. This certification, which encompasses research and development Production and sales of eWIPR and electronic components signifies that ILX has established a comprehensive intellectual property management system. This includes trademarks, patents, original designs, and software copyrights, forming a robust framework for technology and brand protection on a global scale. In conclusion, IOX technology is well positioned to lead both domestically and internationally in an evolving e-whipper landscape. As regulatory shifts reshape this industry, we are leveraging our integrated model to remain agile, proactive, and focused on developing value to adult smokers worldwide. Moving forward, We will continue to prioritize regulatory compliance, in-house product innovation, and strategic adaptability to navigate compliance environments while meeting rising user expectations and driving sustainable growth for the company. I will now turn the call over to our CFO, Chao Lu, for a detailed financial review.