RLX Technology Inc.

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology, Inc.' 's second quarter 2025 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 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, Ben.

Thanks very much. Hello, everyone, and welcome to Irish Technology's 7th Quarter 2025 Earnings Conference Call. The company's financial and operational results were released through PR on Newswire earlier today and have been made available online. You can also view the earnings press release by visiting our IR website at ir.relaxtech.com. Participants on today's call will include our Chief Executive Officer, Ms. Kate Wang, our Chief Financial Officer, Mr. Chao Lu, and me. Before we continue, please note that today's discussions will contain further information made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intent, belief, potential, continue, or other similar expressions. Forward-looking information involving hearing 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 companies, its affiliates, advisors, and representatives do not undertake any obligation to update this further information, except as required under the equitable law. Please note that our technologies, earnings press release and discussion call, include discussions of unaudited GAAP financial measures, as well as unaudited non-GAAP financial measures. Our express release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to Ms. Case Wong. Please go ahead.

Thank you, Sam. And thanks, everyone, for making time to join our earnings conference call today. First off, we were pleased to deliver impressive second quarter results amidst shifting consumer trends and the rapidly evolving macro and regulatory environment. highlighted by a 40% year-over-year increase in net revenues to 880 million RMB and a non-GAAP operating profit of 116 million RMB. This strong performance underscores our effective strategic execution in our international expansion. and outstanding ability to quickly adapt to change in regulations and consumer demand. With our matchless innovation and go-to-market capabilities, we are confident in our ability to lead this industry's realignment and continue driving sustainable growth. Let's move on to an overview of the global smokeless alternative market and the latest EVAPOR consumer behaviors and regulations relating to the EVAPOR segment, as well as our corresponding strategic initiatives. The transition towards smokeless nicotine products continues to gain traction worldwide. Well, e-vapor remains a key driver of this shift with solid momentum. Other categories such as heat-not-burn devices and modern oral nicotine products are also contributing collectively reshaping the tobacco alternative landscape. Most consumers enter the smokeless market by moving away from traditional cigarettes rather than switching between smokeless products. Since each smokeless segment addresses distinct consumer needs, these three categories are more complementary than directly competitive, creating an ecosystem where multiple smokeless segments can thrive simultaneously. EVA products are favored by those who value device performance, portability, and often engage in outdoor activities. Tina Byrne products appeal to long-time smokers seeking an endurance closer to conventional smoking. At the same time, modern oral nicotine stimulates into the lifestyle of office workers and frequent travelers. Collectively, these categories are expected to capture a significantly larger share of the total nicotine market over the next five to 10 years. With oral nicotine currently standing as the fastest growing segment. Against this backdrop, we are seeing a clear industry shift from single category to multi-category portfolio. Historically leading brands concentrated on a single product type, but today diversification is becoming the potential standard among industry leaders. ILX has already established market leadership and high brand recognition in the EVAPOR segment. Last year, we expanded beyond this core focus with a pilot program for modern oral nicotine products and have completed our 2B prototype. Although the prototype has not yet officially launched in the 2C market, The feedback from distributors have been very positive, potentially broadening our portfolio to reduce risk and capture greater market share. We remain committed to exploring additional categories that align with both our capabilities and evolving consumer needs. With our strong execution track record, deep consumer insights, and proven ability to in-know it, we are well-positioned to lead this transformative shift across the smokerless, authentic industry. For our core eWay performance, we have clear strategies and execution plans to address evolving global trends and local market dynamics. One of this year's global developments is what we call the big puff effect, where consumers are increasingly gravitating toward devices with a higher puff count per unit. This trend has driven substantial increases in product capacity, while also reducing the millimeter cost of evapour consumption. We have responded quickly to this change by launching a range of high-capacity products tailored to local preference. At the same time, we are maintaining our focus on innovation beyond short-term trends, inferring that we have a pipeline product that delivers superior performance, greater sustainability, and stronger consumer value for the long term. While the big puff effect has had an outside influence in recent quarters, we expected the market to gradually stabilize towards the end of this year as physical constraints such as handling comfort, and portability limited for the enlargement of devices. This stabilization will establish a new baseline from which the industry can resume healthy sustainable growth in 2026 and beyond. Then disposable products due to environmental impact by another movement we are seeing in many major markets globally. While disposable products have historically been an integral part of our portfolio, we recognize that the future lies in more sustainable solutions. This shift plays directly to one of IOX's core strengths, cartridge-based technology in both closed-system and open-system products. We are advancing cartridge-based technology by investing in new product development, optimizing e-liquid and cartridge integration to achieve superior performance while providing greater value for consumers. By doubling down on our strength, we aim to lead the industry's transition toward sustainable solutions while capturing new market opportunities that emerge from this shift. On the operational front, we continue to refine and tailor our overseas regional operations for greater agility, enhancing our ability to adapt to local changes both effectively and efficiently. We have invested in local retail support, which provides us with firsthand retail and user insights into these markets. This empowered us to refine our market strategies and optimize our product portfolio for each market, while also helping our distributors make better day-to-day operational decisions. In addition to operational improvements, we have been actively pursuing partnerships with new capable distributors and retailers in key regions broaden our reach and secure access to critical growth markets worldwide. In March 2025, we entered into an investment agreement with the leading compliant European eVapor company with a full suite of capabilities and services in the local market. This partnership brings us a wealth of new capabilities in Europe, while also expanding our operational footprint and enhancing our local market share. In summary, the smokeless alternative market continues to evolve rapidly, driven by regulatory clarity, changing consumer preferences, and technological innovation. By implementing a multi-category strategy, strengthening our global distribution network, and emphasizing sustainable product innovation, all while maintaining our deep commitment to compliance, we are positioning IOS to capture the opportunities of today while shaping the future of the industry. We remain committed to building a healthier and more sustainable world for our current customers and generations to come. Now let's move on to our financial results for the second quarter of 2025. Charles, please go ahead.