RLX Technology Inc (RLX) 2023 Q3 法說會逐字稿

Hello, ladies and gentlemen, thank you for standing by for RLX Technology, Inc. Third Quarter 2023 Earnings Conference Call. (Operator Instructions) Today's conference call is being recorded and is expected to last about 40 minutes.

女士們、先生們，大家好，感謝您出席 RLX Technology, Inc. 2023 年第三季財報電話會議。 （操作員說明）今天的電話會議正在錄音，預計持續約 40 分鐘。

I will now turn the call over to your host, Mr. Sam Tsang, Head of Capital Markets for the company. Please go ahead, Sam.

我現在將電話轉交給東道主，該公司資本市場主管曾森先生。請繼續，山姆。

Thank you very much. Hello, everyone, and welcome to RLX Technology's third quarter 2023 earnings conference call. The company's financial and operational results were released through PR Newswire services earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.relxtech.com.

非常感謝。大家好，歡迎參加RLX科技2023年第三季財報電話會議。該公司的財務和營運業績今天稍早透過美通社服務發布，並已在網路上發布。您也可以造訪我們網站 ir.relxtech.com 的 IR 部分，查看收益新聞稿。

Participants on today's call will include our CEO, Ms. Kate Wang; our CFO, Chao Lu; and myself. Before we continue, please note that today's discussion will contain forward-looking statements 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, intend, believe, potential, continue or other similar expressions.

今天電話會議的參與者包括我們的執行長王凱特女士；我們的財務長陸超；和我自己。在我們繼續之前，請注意今天的討論將包含根據1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。這些陳述通常包含諸如可能、將、期望、目標、估計、打算等詞語。 、相信、潛在、繼續或其他類似的表達方式。

Forward-looking statements involve inherent risks and uncertainties. The accuracy of these statements maybe 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, its affiliates, advisers and representatives do not undertake any obligations to update this forward-looking information except as required under the applicable law.

前瞻性陳述涉及固有風險和不確定性。這些陳述的準確性可能受到許多業務風險和不確定性的影響，這些風險和不確定性可能導致實際結果與預期或預期的結果有重大差異，其中許多因素超出了我們的控制範圍。除適用法律要求外，本公司、其關聯公司、顧問和代表不承擔更新此前瞻性資訊的任何義務。

Please note that our RLX Technology's earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. RLX's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.

請注意，我們的 RLX Technology 收益新聞稿和本次電話會議包括對未經審計的 GAAP 財務指標以及未經審計的非 GAAP 財務指標的討論。 RLX 的新聞稿包含未經審計的非 GAAP 措施與未經審計的 GAAP 措施的調整表。

I will now turn the call over to Ms. Kate Wang. Please go ahead.

我現在將電話轉給王女士。請繼續。

Thank you, Sam, and thanks, everyone, for making time to join our earnings conference call today. Before I get into our third quarter results, I would like to briefly update you on our industry's macro and regulatory involvement. As most of you know, it has been a year since the new regulation framework came into effect, bringing a number of tenders to the industry.

謝謝山姆，也謝謝大家抽出時間參加我們今天的財報電話會議。在介紹第三季業績之前，我想向您簡要介紹我們行業的宏觀和監管參與。眾所周知，新的監管框架生效已經一年了，為該行業帶來了許多招標。

On the supply side, the new rules have pushed the industry participants across the value chain to adjust their businesses and standardize their operations under the authorities supervision. This no longer concerns some strong players, including us, who have already adapted to the new regulations and proactively develop new compliant products to meet users' needs.

從供給面看，新規促使價值鏈上的產業參與者在監管下調整業務、規範營運。這不再是包括我們在內的一些實力雄厚的企業的擔憂，他們已經適應了新的法規，並積極開發新的合規產品來滿足用戶的需求。

However, persistent regulatories among other industry participants continue to disturb the market order and adversely effect the industry's recovery with the negative impact of illegal flavored products lingering. On the demand side, the new regulations seem to have less impact on users and consumption that have shown that most e-vapor users are still unaware of the changes brought about by the new regulations.

然而，其他行業參與者的持續監管繼續擾亂市場秩序，對行業的復甦產生不利影響，非法調味品的負面影響揮之不去。從需求端來看，新規對使用者和消費的影響似乎較小，這表明大多數電子煙使用者仍然沒有意識到新規帶來的改變。

But some survey concept by Shanghai, Jiao Tong University reviewed that 40% of users now mainly use National Standard of compliance products, but 17% have not even tried compliant products. Furthermore, only 40% of the users share the new, that legitimate retailers, are only allowed to sell tobacco flavored product. Users lack of awareness of the new regulations has slowed the transition to compliant products that has the easy availability of legal flavored products. Advocating users above the new regulations, compliant products for the (inaudible) and the vendors of related products is pivotal to the industry's recovery, but this will take time and effort.

但上海交通大學的一些調查理念顯示，目前有40%的用戶主要使用符合國標的產品，但有17%的用戶甚至沒有嘗試過符合國標的產品。此外，只有 40% 的使用者同意合法零售商只允許銷售菸草味產品的新規定。使用者對新法規缺乏認識，減緩了向合規產品的過渡，這些產品可以輕鬆獲得合法風味的產品。倡導用戶高於新法規、（聽不清楚）和相關產品供應商的合規產品對於行業的復甦至關重要，但這需要時間和努力。

Amid this challenging environment, we continue to refine and broaden our product portfolio, while improving operational efficiency during the third quarter. I'm pleased to say that these efforts paid off, reflecting our strong execution of our effective cost strategy. We narrowed our operating loss and boosted cash flow during this quarter.

在這種充滿挑戰的環境中，我們繼續完善和擴大我們的產品組合，同時在第三季提高營運效率。我很高興地說，這些努力得到了回報，反映出我們對有效成本策略的強大執行。本季我們縮小了經營虧損並增加了現金流。

We are also seeing signs of equivalent, recovery in our top line, our CFO, will provide the details of those results in just a moment.

我們也看到了我們的營收出現同等復甦的跡象，我們的財務長將立即提供這些結果的詳細資訊。

Now let me share a bit more about our strategic efforts and the progress of our product portfolio improvement. In terms of cartridges, we now offer 5 distinctive series of compliant devices at various price points versus just 2 series, Phantom and Phantom Pro a year ago.

現在讓我多分享一下我們的策略努力和產品組合改進的進展。在墨盒方面，我們現在提供 5 個不同價位的獨特系列相容設備，而一年前只有 2 個系列：Phantom 和 Phantom Pro。

Last month, we launched RELX, our fifth compliant series, featuring an addressable power at more affordable price than Phantom Pro and Zeus. We have also quickly expanded our flavor offerings with 17 distinct tobacco flavors now available versus 2 back in October 2022. Our wide selection of compliant products is designed to sell diverse demand across every user's taste and budget.

上個月，我們推出了 RELX，這是我們的第五個相容系列，具有可尋址的功能，而且價格比 Phantom Pro 和 Zeus 更實惠。我們也迅速擴大了我們的口味產品範圍，現在有 17 種不同的煙草口味，而 2022 年 10 月只有 2 種。我們廣泛選擇合規產品，旨在滿足每個用戶口味和預算的不同需求。

We will continue to closely monitor market demand and the collect users feedback to inform our product refinements for the -- while leveraging our leading R&D capabilities and deep industry knowledge to develop our portfolio accordingly. Our product value proposition to users extended far beyond our broad production -- product selection. First, RLX has prioritized quality control and product safety since our inception, supported by our strong research, quality control and safety assessment capabilities, we can guarantee higher product quality and system.

我們將繼續密切關注市場需求並收集用戶反饋，為我們的產品改進提供信息，同時利用我們領先的研發能力和深厚的行業知識來相應地開發我們的產品組合。我們對使用者的產品價值主張遠遠超出了我們廣泛的生產—產品選擇。首先，RLX自成立以來就將品質控制和產品安全放在首位，憑藉強大的研究、品質控制和安全評估能力，我們可以保證更高的產品品質和系統。

All of our products and ingredients must meet international standards and obtain regulatory approval before hitting the market. Furthermore, as a fully compliant participant, we greatly value this consumption period and provide outstanding after sales services. If users have problems with our products, they can call our [Holland] or visit our stores for assistance. Our excellent customer service team can resolve and address users issues in a timely manner with professional service and with patient solutions.

我們所有的產品和成分在推出市場之前都必須符合國際標準並獲得監管部門的批准。此外，作為完全合規的參與者，我們非常重視這個消費期，並提供出色的售後服務。如果用戶對我們的產品有疑問，可以致電我們的【荷蘭】或親臨我們的門市尋求協助。我們優秀的客戶服務團隊能夠以專業的服務和耐心的解決方案及時解決和解決用戶的問題。

We also offer a 1-year warranty on all of our devices and cartridges. The unique advantages at immense value to our product and create peace of mind for users. In contrast, legal products are manufactured by unlicensed factories, leading to poor quality, a lack of quality control and potential health effects and issues. Illegal products may have dangerously high nicotine concentration levels, or contained levels of nickel or chromium, exceeding the standards as well as other banned ingredients. Illicit cartridges also frequently have oversized tanks, which can create serious safety hazard when using in conjunction with many compliant working devices.

我們也為所有設備和墨盒提供 1 年保固。獨特的優勢為我們的產品帶來了巨大的價值，讓使用者安心無憂。相較之下，合法產品是由無證工廠生產的，導致品質不佳、缺乏品質控制以及潛在的健康影響和問題。非法產品可能含有危險的高尼古丁濃度，或含有超出標準的鎳或鉻以及其他禁用成分。非法彈藥筒也經常有超大的儲罐，與許多合規工作設備一起使用時可能會造成嚴重的安全隱患。

We remain confident that our growing line of quality product will continue to earn more users recognition and ultimately, their loyalty as adult smokers realized our product security and about new habits. Meanwhile, we are trying to enhance users noises of new regulations and collaborating with regulators to combat legal products to create a healthy environment in the market.

我們仍然相信，隨著成年吸菸者意識到我們的產品安全性和新習慣，我們不斷增長的優質產品線將繼續贏得更多用戶的認可，並最終贏得他們的忠誠度。同時，我們正努力增強用戶對新規的呼聲，並配合監管部門打擊合法產品，創造健康的市場環境。

Before I conclude, I would like to share that our RELX Quality and Safe-Lab recently received Customer Testing Facilities certificate approval from Eurofins Technology, becoming the first e-vapor brand in China to gain this certification. The recognition by the industry-leading authority indicates that our lab capabilities of testing electrochemical and time needs a global standard, qualifying our test results for acceptance by 54 IECEE member countries and regions worldwide.

最後，我想跟大家分享的是，悅刻品質與安全實驗室最近獲得了歐陸科技頒發的客戶測試設施證書，成為中國第一個獲得該認證的電子煙品牌。此次業界領先權威機構的認可，顯示我們實驗室的電化學和時間測試能力需要全球標準，使我們的測試結果有資格被全球54個IECEE成員國和地區接受。

Through our ongoing efforts in scientific research and development, we continue to enhance our product safety assessment capabilities and quality control. In conclusion, we continue to forge ahead during the quarter made a challenging environment. We have made meaningful progress in our recovery over the past year with an intense focus on our core strategy to develop our portfolio and enhance the efficiencies.

透過持續不斷的科學研究開發，我們不斷提升產品安全評估能力與品質控制能力。總之，我們在本季創造了一個充滿挑戰的環境中繼續奮進。過去一年，我們在復甦方面取得了有意義的進展，並專注於我們開發投資組合和提高效率的核心策略。

Looking ahead, we see external headwinds persisting, especially the lingering active impact of the illegal products and the uncertainty in the consumption environment. As such, we will deepen our commitment to offering compliance high-quality products to adult smokers and educating users on the various benefit. Meanwhile, to catch potential growth opportunities in the international market, on November 10, 2023, we terminated an existing non-competition agreement with Relx Inc., which had been entered into December 16, 2020. Terminating this agreement gives us the flexibility to build an international presence in the future by conducting tobacco harm reduction product business outside China.

展望未來，外部不利因素依然存在，特別是非法產品的正面影響和消費環境的不確定性仍然存在。因此，我們將深化承諾，為成年吸菸者提供合規的高品質產品，並教育使用者了解各種好處。同時，為了抓住國際市場的潛在成長機會，我們於2023年11月10日終止了與Relx Inc.於2020年12月16日簽訂的現有非競爭協議。終止該協議使我們能夠靈活地建立未來透過在中國境外開展菸草減害產品業務來擴大國際影響力。

As we move into 2024, we believe our expansion to international markets, effective products strategy and resilience in this model will propel our recovery, positioning RLX for long-term growth and sustainable value creation.

進入 2024 年，我們相信我們向國際市場的擴張、有效的產品策略和該模式的彈性將推動我們的復甦，使 RLX 實現長期成長和永續價值創造。

With that, I will now turn the call over to our CFO, Chao Lu, who will elaborate further on some of our last quarter's initiatives and go over our operational and financial results in more detail.

現在，我將把電話轉給我們的財務長 Chao Lu，他將進一步闡述我們上季度的一些舉措，並更詳細地討論我們的營運和財務業績。

Thank you, Kate, and hello, everyone. Before we start the detailed discussion of our financials, please note, unless otherwise stated, all the financials will present today are in RMB terms. I will now provide an overview of our operational and financial results for the third quarter of 2023.

謝謝你，凱特，大家好。在我們開始詳細討論我們的財務數據之前，請注意，除非另有說明，今天提供的所有財務數據均以人民幣計價。我現在將概述我們 2023 年第三季的營運和財務表現。

Against the challenging backdrop, Kate just described, our total revenue was down 59% year-over-year. However, this represents a significant narrowing from last quarter's 83% year-over-year decline. While the sales of our compliant products continue to be impacted by illegal products in the market, we noticed a quarter-over-quarter increase in device shipments, indicating that the demand for e-vapor products is still growing.

凱特剛剛描述說，在充滿挑戰的背景下，我們的總收入比去年同期下降了 59%。然而，這與上季 83% 的同比降幅相比已顯著收窄。雖然我們合規產品的銷售持續受到市場上非法產品的影響，但我們注意到設備出貨量較上季成長，顯示電子煙產品的需求仍在成長。

On the other hand, cartridge shipments remained low as many users still use illegally compatible flavored cartridges in conjunction with our compliant devices. We want to remind our users that using illegal cartridges may damage our devices and void the warranty. Due to the poor quality illegal cartridges often suffer severe leakage issues that can ruin devices and may cause other safety hazards.

另一方面，由於許多用戶仍然將非法相容口味的墨盒與我們的合規設備結合使用，因此墨盒出貨量仍然很低。我們想提醒用戶，使用非法墨盒可能會損壞我們的設備並使保固失效。由於品質低劣的非法墨盒經常遭受嚴重的洩漏問題，從而損壞設備並可能導致其他安全隱患。

As a fully compliant participant, in the e-vapor industry, we are dedicated to promoting the industry's recovery and long-term healthy growth. To that end, we continue to encourage users call 12313 if they find anyone selling illegal products. We are also conducting user education campaigns to increase awareness of the regulation and the dangers of illegal products. We hope these efforts will effectively reduce the sale and use of illegal products while better protecting every user.

作為電子煙行業完全合規的參與者，我們致力於推動行業的復甦和長期健康成長。為此，我們繼續鼓勵用戶如果發現有人銷售非法產品，請撥打12313。我們也進行用戶教育活動，以提高對法規和非法產品危險的認識。我們希望這些努力能有效減少非法產品的銷售和使用，同時更能保護每位使用者。

Turning now to profitability. In the third quarter, our gross profit margin remained stable at around 25% due to the unfavorable change in our revenue mix. However, on a like-for-like basis, our gross margin -- gross profit margin for our core e-vapor business to provincial distributors continue to improve quarter-over-quarter. Thanks to our cost optimization initiatives and product design improvements.

現在轉向獲利能力。第三季度，由於收入結構的不利變化，我們的毛利率穩定在25%左右。然而，在同類基礎上，我們的毛利率－我們的核心電子煙業務對省級經銷商的毛利率繼續逐季提高。感謝我們的成本優化措施和產品設計改進。

We are confident these efforts will continue to drive improvement in our gross margin. Since the introduction of the new regulation framework, we have been actively adjusting and streamlining our businesses and implementing stringent expense control of greater overall agility. I'm happy to report that as a result, our non-GAAP operating expenses decreased by 27% on a quarterly basis. It's also worth noting that our non-GAAP operating expenses decreased by 48% compared with the same period last year.

我們相信這些努力將繼續推動我們毛利率的提高。新監理架構推出以來，我們積極調整和精簡業務，實施嚴格的費用控制，提高整體彈性。我很高興地報告，我們的非 GAAP 營運費用按季度減少了 27%。另外值得注意的是，我們的非 GAAP 營運費用與去年同期相比下降了 48%。

Moreover, we reduced our non-GAAP net operating loss to just RMB 15 million from RMB 133 million in the first quarter of 2023 and RMB 67 million last quarter. Our non-GAAP basic net income per ADS was 0.149 and non-GAAP diluted net income per ADS was 0.146 for the same period. We remain confident that our profitability will continue to rise in the upcoming quarters as we strive to enhance our supply chain and operational efficiency. Encouragingly, we maintained positive operating cash flow for the second consecutive quarter with operating cash inflow of RMB 67 million in the third quarter of 2023, mainly due to improved management of our working capital and inventory.

此外，我們將非 GAAP 淨營運虧損從 2023 年第一季的 1.33 億元人民幣和上一季的 6,700 萬元人民幣減少至 1,500 萬元。同期，我們的非 GAAP 每股 ADS 基本淨利為 0.149，非 GAAP 稀釋後每 ADS 淨利為 0.146。我們仍然相信，隨著我們努力提高供應鏈和營運效率，我們的獲利能力將在未來幾季繼續上升。令人鼓舞的是，我們連續第二季保持正經營現金流，2023年第三季經營現金流入為人民幣6,700萬元，這主要是由於我們改善了營運資金和庫存管理。

Our cash position remains strong. As of September 30, 2023, we have cash and cash equivalents, restricted cash, short-term bank deposits, net short-term investments, long-term bank deposits net and net long-term investment securities net totaling RMB 15.1 billion. Our strong cash position will continue to support us in navigating the market dynamics. We aim to achieve additional cost savings and efficiency enhancements to accelerate our recovery.

我們的現金狀況依然強勁。截至2023年9月30日，我們擁有現金及現金等價物、限制性現金、短期銀行存款、短期投資淨額、長期銀行存款淨額及長期投資證券淨額合計人民幣151億元。我們強大的現金狀況將繼續支持我們應對市場動態。我們的目標是進一步節省成本並提高效率，以加速我們的復甦。

Lastly, we are very pleased to report that our Board of Directors has approved a cash dividend of USD 0.01 per ordinary share or USD 0.01 per ADS to holders of ordinary shares and holders of ADS.

最後，我們非常高興地報告，董事會已批准向普通股股東和美國存託股持有人派發每股普通股 0.01 美元或每份美國存託股 0.01 美元的現金股息。

This concludes our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

我們今天準備好的演講到此結束。我們現在開始提問。接線員，請繼續。

(Operator Instructions) The first question today comes from Lydia Ling with Citi.

（操作員說明）今天的第一個問題來自花旗銀行的Lydia Ling。

This is Lydia from Citi. So my first question is regarding your overseas development, as just you mentioned, you have terminated a non-competition agreement with Relx Inc. So what's the rationale there considered to expand like export overseas expansion at this point? And how it works with your -- with the existing overseas business by your parent company? And do you have any detailed plan or target for overseas business that you could share to us? And also how do you think about the potential upside to our company? So this is my first question.

我是花旗銀行的莉迪亞。那麼我的第一個問題是關於您的海外發展，正如您剛才提到的，您已經終止了與Relx Inc.的競業限制協議。那麼您現在考慮擴大出口海外擴張的理由是什麼？它如何與您的母公司現有的海外業務合作？您對海外業務有什麼詳細的計畫或目標可以分享給我們嗎？您如何看待我們公司的潛在優勢？這是我的第一個問題。

And the second question is happy to see the cash dividend declaration. So how do you consider the payout ratio? And what's the dividend policy looking forward?

第二個問題很高興看到現金分紅申報。那麼您如何考慮支付比例呢？未來的股利政策如何？

Thanks very much, Lydia. So the first question is on the international expansion. And the second one is on the dividend. So our only operator is e-vapor business only in China, due to regulatory uncertainties and a relatively low social acceptance in the overseas market when it was IPO. But in the last 2 to 3 years, we have witnessed positive developments globally that changed our decision. First, many countries have established an encouraging and stable regulatory framework for this category becoming attractive and stable markets for a leading and compliance brand to enter and develop the presence.

非常感謝，莉迪亞。所以第一個問題是關於國際擴張。第二個是關於股息。所以我們唯一的業者只是在中國的電子煙業務，因為監管的不確定性以及IPO時海外市場的社會接受度相對較低。但在過去的兩三年裡，我們目睹了全球的積極發展，這改變了我們的決定。首先，許多國家已經為這個類別建立了令人鼓舞和穩定的監管框架，成為領先和合規品牌進入和發展業務的有吸引力和穩定的市場。

Second, global adult smokers are increasingly perceiving e-vapor products as a mainstream effective harm reduction nicotine alternative evidenced by growing user penetration in many regions. These two external developments have been highly encouraging. For RLX itself, our franchise has become a household name with clear national market leadership. Internally, we have upgraded our organizational capabilities with adequate capabilities and resources to expand our franchise to areas outside China. To achieve our mission, we decided to terminate our non-competition agreement with Relx Incorporation, which enable us to seize growth opportunities in the international markets and establish a significant global presence outside China. We will share more details on our international expansion in the coming quarter.

其次，全球成年吸菸者越來越多地將電子煙產品視為一種主流的有效減少危害的尼古丁替代品，許多地區的使用者滲透率不斷提高就證明了這一點。這兩項外部發展非常令人鼓舞。對於 RLX 本身而言，我們的特許經營權已成為家喻戶曉的品牌，在全國市場上具有明確的領導地位。在內部，我們升級了組織能力，擁有足夠的能力和資源，將我們的特許經營權擴展到中國以外的地區。為了實現我們的使命，我們決定終止與 Relx Incorporation 的不競爭協議，這使我們能夠抓住國際市場的成長機會，並在中國以外的地區建立重要的全球影響力。我們將在下一季分享更多有關國際擴張的細節。

So regarding your second question is on our dividend policy. As indicated in our earnings release, our Board approved our first cash dividend of USD 0.01 per ordinary share or per ADS to reward our value shareholders' continuous support. Despite macro volatilities and uncertainties, we are highly confident in our franchise future building on our international expansion, steady profit generation, robust operating cash flows and adequate capital reserve. The cash dividends and our announced share buyback program demonstrates our confidence in our prospects and commitments to returning shareholders despite the short-term volatility in the stock market. We plan to maintain a consistent and sustainable dividend payout policy that may grow progressively with our earnings.

關於你的第二個問題是關於我們的股利政策。正如我們的財報所示，我們的董事會批准了我們的首次現金股息，每股普通股或每份美國存託股票 0.01 美元，以獎勵我們價值股東的持續支持。儘管存在宏觀波動和不確定性，但我們對基於國際擴張、穩定的利潤創造、強勁的經營現金流和充足的資本儲備的特許經營未來充滿信心。儘管股市短期波動，但現金股利和我們宣布的股票回購計畫表明了我們對前景的信心以及對回報股東的承諾。我們計劃維持一致且可持續的股息支付政策，該政策可能會隨著我們的利潤而逐步增長。

The next question comes from Charlie Chen with China Renaissance.

下一個問題來自華興資本的陳查理。

I have two questions here. The first one is about the industry. I can see the company actually grow revenue by roughly like 10% or so quarter-on-quarter. So I think in the past few quarters, China's e-cigarette industry has experienced kind of the regulators crackdown, resurrection of the illegal products, et cetera, et cetera. So I just wanted to have some color, what do you think will be the normalized industry growth going forward? Or is that too early to say? Or you have kind of the setup pattern of the future growth of this industry? So that's the first question.

我在這裡有兩個問題。第一個是關於產業的。我可以看到該公司的收入實際上環比增長了大約 10% 左右。所以我認為在過去的幾個季度裡，中國的電子煙產業經歷了監管機構的打壓、非法產品的死灰復燃等等。所以我只是想談談，您認為未來產業的正常成長會是怎麼樣？還是現在說還太早？或者您對這個產業未來的成長有怎樣的設定模式？這是第一個問題。

And my second question is with all those cost-saving efforts we can see your company's non-GAAP EBIT margin has loss has narrowed quarter-on-quarter. So originally, in the past, we recall that management guided or aimed to have breaking even non-GAAP EBIT margin in the fourth quarter. So do you still think this target is achievable based on current circumstances?

我的第二個問題是，透過所有這些節省成本的努力，我們可以看到貴公司的非公認會計準則息稅前利潤率虧損已按季度縮小。因此，最初，我們記得管理層在過去指導或目標是在第四季度實現盈虧平衡的非公認會計準則息稅前利潤率。那麼從目前的情況來看，您還認為這個目標可以實現嗎？

So the first question is on the growth of our industry. And the second one is on the profitability of our company. So I think the user demand for National Standard products have improved overall compared to what you mentioned in March 2023 before the regulators initiate a special crackdown on illegal product. However, after the special action ended, our industry faced waves of challenges from illegal products as the illegal sales have become more secretive. At the beginning of this year, retailers will publicly display illegal products on shelves. Now after the special action, they only sell these products to users they are familiar with. Therefore, it's difficult to accurately estimate the demand for this category and predict the need for the National Standard products. We are confident in our regulators' enforcement and believe more users will gradually use National Standard products in the medium and long term.

所以第一個問題是關於我們產業的成長。第二個是關於我們公司的獲利能力。所以我認為，與你提到的2023年3月監管部門對非法產品進行專項打擊之前相比，用戶對國標產品的需求總體上有所改善。然而，專案行動結束後，隨著非法銷售行為變得更加隱秘，我們的產業面臨非法產品的一波又一波的挑戰。今年年初，零售商將在貨架上公開展示非法產品。現在專案行動之後，他們只把這些產品賣給熟悉的使用者。因此，很難準確估計該品類的需求量並預測國標產品的需求量。我們對監理機關的執法充滿信心，相信中長期來看會有更多的使用者逐步使用國標產品。

So regarding your second question, I think as discussed in our second quarter earnings conference call, we have significantly optimized our cost structure and streamlined our operations over the past 2 quarters. As a result, the absolute amount of our gross profit improved by 7% quarter-over-quarter, and our non-GAAP operating expenses for the third quarter decreased by 27% quarter-over-quarter and 38% year-over-year. With our topline recovery and cost reduction efforts, we realized positive non-GAAP operating profit in September. We expect our non-GAAP operating profit to remain positive in the fourth quarter with our topline and cost structure don't change significantly in this or next month.

關於你的第二個問題，我認為正如我們在第二季度收益電話會議中所討論的那樣，我們在過去兩個季度顯著優化了成本結構並簡化了營運。因此，我們的毛利絕對值較上季提高了 7%，第三季的非 GAAP 營運費用較上季下降了 27%，年減了 38%。透過我們的收入恢復和成本削減努力，我們在 9 月實現了正的非 GAAP 營業利潤。我們預計第四季度的非公認會計原則營業利潤將保持正值，我們的營收和成本結構在本月或下個月不會發生重大變化。

Furthermore, our operating cash flow has been positive for 2 consecutive quarters. In the third quarter of 2023, we achieved an operating cash inflow of RMB 67 million compared to a RMB 41 million inflow in the second quarter and a RMB 231 million cash outflow in the first quarter, demonstrating our abilities to adapt to the changes in macro and industry development quickly.

此外，我們的經營現金流連續兩季為正。 2023年第三季度，我們實現經營性現金流入6700萬元，而第二季度流入4100萬元，第一季現金流出2.31億元，體現了我們適應宏觀變化的能力。和產業發展較快。

The next question comes from Peihang Lyu with CICC.

下一個問題來自中金公司的呂培航。

This is Peihang at CICC. I have two questions here. The first one is about the product. Could you give us some color on the sales of the recent approved GB products in the third quarter? And how is the sales proportion for each major product? And my second question is about the channel, after the renewal of retail license and what is the most updated number of domestic outlets? And how is your profitability and your operating situation from your perspective?

這裡是中金公司的北航。我在這裡有兩個問題。第一個是關於產品的。您能為我們介紹一下最近核准的GB產品在第三季的銷售情況嗎？各主要產品的銷售比例如何？我的第二個問題是關於通路的，零售牌照更新後，國內最新的網點數量是多少？從您的角度來看，您的獲利能力和經營狀況如何？

So the first question is on our new products. And the second question is on the retail orders that we have. So for the first question, our user survey actually shows that 2 flavors that we launched a couple of months ago, chéng sè Relx (foreign language) are becoming increasingly popular among users. These flavors are now available at more stores nationwide. And in October, the first contribution of these two flavors to our Phantom series has already reached the mid-teens. Additionally chéng sè Relx Net Promoter Score now ranks #3 among our Phantom series just likely behind our best-selling (foreign language) flavors. We anticipate that the sales contribution of chéng sè Relx and (foreign language) will continue to rise. And in October, we also launched our fifth cartridge series, (inaudible), which is compatible with our Zeus device, but are more affordable than its cartridges. By the end of October, we have launched the [leading] series in more than 17 provinces.

第一個問題是關於我們的新產品。第二個問題是關於我們的零售訂單。所以對於第一個問題，我們的用戶調查實際上顯示，我們幾個月前推出的兩種口味，chéng sè Relx（外語）越來越受到用戶的歡迎。這些口味現已在全國更多商店出售。到了十月份，這兩種口味對我們幻影系列的首次貢獻已經達到了十幾歲。此外，chéng sè Relx 淨推薦值現在在我們的 Phantom 系列中排名第三，可能僅次於我們最暢銷的（外語）口味。我們預計chéng sè Relx和（外語）的銷售貢獻將持續上升。十月份，我們還推出了第五個墨盒系列（聽不清楚），它與我們的 Zeus 設備相容，但比它的墨盒更便宜。截至10月底，我們已在超過17個省份推出了【領先】系列。

And regarding your second question is about the number of retail orders. Number of retail orders has remained stable in the past few months, following regulator special crackdown in -- cracking down our illegal products -- on illegal products. Furthermore, more users have begun trying compliance products. As we explained in our opening remarks, only 40% of participants were aware that after October last year, retailers could only sell tobacco-flavored cartridges legally. As more and more users gradually become aware of the new regulations and the benefit of National Standards, such as required approvals before product launches and the assurance that all ingredients in the e-liquids are on the right lease, they will be increasingly interested in using national standard products. This will improve our retail products effectivity, enhance their profitability. Our self-operated stores profitability could reflect the overall sales profitability. These stores profitability has been increasing quarter-over-quarter and they have started to turn profits on the operational level in the past couple of months.

關於你的第二個問題是關於零售訂單的數量。經過監管部門對非法產品的專案打擊，零售訂單數量在過去幾個月保持穩定。此外，越來越多的用戶開始嘗試合規產品。正如我們在開場白中解釋的那樣，只有 40% 的參與者意識到去年 10 月之後零售商只能合法銷售菸草味煙彈。隨著越來越多的用戶逐漸意識到新法規和國家標準的好處，例如產品上市前所需的批准以及確保電子煙油中的所有成分均在正確的範圍內，他們將越來越有興趣使用國家標準產品。這將提高我們零售產品的效率，並增強其獲利能力。我們的自營店獲利能力可以反映整體的銷售獲利能力。這些商店的獲利能力逐季增長，並在過去幾個月開始在營運層面實現盈利。

Due to time constraints, now I would like to turn the call back over to the company for closing remarks.

由於時間有限，現在我想將電話轉回公司進行總結發言。

Thank you once again for joining us today. If you have further questions, please feel free to contact our RLX Technology's Investor Relations team through the contact information provided on our website, our TPG Investor Relations. Thank you.

再次感謝您今天加入我們。如果您還有其他疑問，請隨時透過我們網站 TPG 投資者關係上提供的聯絡資訊聯絡 RLX Technology 的投資者關係團隊。謝謝。

This concludes the conference call. You may now disconnect your lines. Thank you.

電話會議到此結束。現在您可以斷開線路。謝謝。