RLX, a Chinese e-cigarette company, released its second-quarter financial report for 2022 on September 21 at 6:00 AM Eastern Time (18:00 Beijing Time) on NASDAQ. Below are the key takeaways compiled by 2FIRSTS.
Net income for the second quarter of 2022 was 2.2339 billion yuan ($333.5 million USD), a 12.1% decrease compared to the same period in 2021, which had a net income of 2.5414 billion yuan.
Reasons for the decrease: The company halted store expansions and new product releases during a transitional period to comply with regulatory requirements. The net profit for the second quarter of 2022, confirmed under the US Generally Accepted Accounting Principles (GAAP), was 441.6 million yuan, a 46.4% decrease compared to the same period in 2021, which saw a net profit of 824.3 million yuan.
The net profit for Q2 2022, unadjusted for GAAP standards, was 634.7 million yuan, a 2.6% decrease compared to 651.8 million yuan in the same period of 2021.
In the second quarter of 2022, the gross profit margin was 43.8%, compared to 45.1% during the same period in 2021.
Reasons for the decline: adjustment of product lines, increase in inventory, and impairment losses incurred in order to comply with regulatory requirements on properties, factories, and equipment.
In the second quarter of 2022, operating costs reached RMB 530.9 million (USD 79.3 million), representing a growth of 217.6% compared to the same period in 2021, where operating costs were RMB 167.2 million. The increase in operating costs was mainly due to a change in equity incentive expenses, with RMB 193.2 million (USD 28.8 million) in Q2 2022, compared to RMB 172.5 million in the same period last year.
In the second quarter of 2022, general and administrative expenses amounted to 290.7 million yuan (approximately 43.4 million US dollars), representing a 531.3% increase from the same period in 2021, which amounted to 46.1 million yuan. The significant increase was primarily due to increased compensation expenses based on stock and higher salaries and benefits.
In the second quarter of 2022, research and development expenses amounted to RMB 117.6 million (USD 17.6 million), compared to RMB 4.9 million in the same period last year. The increase was mainly due to compensation expenses, salary and welfare increases, and consulting fees.
In the second quarter of 2022, the operating revenue was 446.9 million yuan (66.7 million US dollars), a decrease of 54.4% compared to the same period in 2021, when it was 979.3 million yuan. However, interest income increased by double, from 160.7 million yuan in the same period in 2021 to 427.2 million yuan. Investment income also increased nearly twice, from 238.7 million yuan in the same period in 2021 to 406.3 million yuan.
As of the end of the second quarter of 2022, the cash and cash equivalents of the company stood at RMB 1.7091 billion, down 67.2% from the previous year's RMB 5.209 billion. Short-term deposits were RMB 5.315 billion, up 32.1% from the previous year's RMB 4.0221 billion.
As of the end of the second quarter of 2022, the total assets amounted to RMB 17.5163 billion, compared to RMB 16.3651 billion at the end of the previous year. The total liabilities were RMB 2.9084 billion, which is slightly higher than the RMB 2.8464 billion at the end of the previous year. The debt-to-asset ratio decreased from 17.4% at the end of the previous year to 16.6%.
According to the financial report, a subsidiary of Yooz, a Chinese e-cigarette brand, has been awarded a production license by the State Tobacco Monopoly Administration. The production quota for the license includes 15.05 million refillable e-cigarette devices, 328.7 million pod cartridges, and 6.1 million disposable e-cigarettes annually. The license is valid from July 18, 2022, to July 31, 2023.
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