RLX Technology Inc (RLX) 2024 Q4 法說會逐字稿

Ladies and gentlemen. Thank you for standing by for the RLX Technology, Inc.'s fourth quarter and full year 2024 earnings conference call. (Operator Instructions) 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 Tsang, Head of Capital Markets for the company.

女士們，先生們。感謝您參加 RLX Technology, Inc. 的 2024 年第四季和全年財報電話會議。（操作員指示）今天的電話會議正在錄音，預計持續約 40 分鐘。現在我將把電話轉給主持人、公司資本市場主管 Sam Tsang 先生。

Please go ahead, Sam.

請繼續，山姆。

Thank you very much. Hello, everyone, and welcome to RLX Technology's fourth quarter and full year 2024 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 our IR website at ir.relxtech.com. Participants on today's call will include our Chief Financial Officer, Mr. Chao Lu; and myself, Sam Tsang, Head of Capital Markets.

非常感謝。大家好，歡迎參加RLX Technology 2024年第四季和全年財報電話會議。該公司的財務和營運結果已於今天稍早透過美通社發布，並可在網路上查閱。您也可以造訪我們的 IR 網站 ir.relxtech.com 查看收益新聞稿。今天電話會議的參與者包括我們的財務長陸超先生；以及我本人，資本市場主管 Sam Tsang。

Before we continue, please note that today's business discussions will contain forward-looking information made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, targets, estimates, intend, belief, potential, continue or other similar expressions. Forward-looking information involves inherent risks and uncertainties.

在我們繼續之前，請注意，今天的業務討論將包含根據 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資訊。這些陳述通常包含可能、將、預期、目標、估計、打算、信念、潛在、繼續或其他類似的表達。前瞻性資訊涉及固有風險和不確定性。

The accuracy of these statements that could cause actual results to differ materially from those projected or anticipated, many of which are beyond our control. The company, its affiliates, advisers, and representatives do not undertake any obligation to update these forward-looking information, except as required under the applicable law.

這些陳述的準確性可能會導致實際結果與預測或預期的結果有重大差異，其中許多是我們無法控制的。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這些前瞻性資訊的任何義務。

Please note that 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. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to Mr. Chao Lu. Please go ahead.

請注意，RLX Technology 的收益新聞稿和本次電話會議包括未經審計的 GAAP 財務指標以及未經審計的非 GAAP 財務指標的討論。我們的新聞稿包含未經審計的非 GAAP 指標與未經審計的 GAAP 指標的對帳。現在我將電話轉給曹魯先生。請繼續。

Thank you, Sam, and thank you to everyone for joining our earnings conference call today. I will start with the overview of our 2024 performance and organizational initiatives, followed by an update on our overseas market, outlook for 2025 and the details of our 2024 financial results.

謝謝你，山姆，也謝謝大家今天參加我們的收益電話會議。我將首先概述我們的 2024 年業績和組織舉措，然後介紹我們的海外市場動態、2025 年展望以及 2024 年財務業績的詳細資訊。

2024 was a pivotal year for RLX as our first full year operating in international markets following the termination of our noncompete agreement with Relx Inc. in November 2023. Throughout the year, we focused on enhancing our organizational structure and business models to drive successful overseas initiatives while maintaining stability in the China market after entering a new regulatory framework in 2022.

2024 年是 RLX 的關鍵一年，因為這是我們在 2023 年 11 月終止與 Relx Inc. 的競業禁止協議後在國際市場運營的第一個完整年。全年我們專注於完善組織結構和商業模式，以推動海外舉措的成功，同時在 2022 年進入新的監管框架後保持中國市場的穩定。

As a result, we capped off strong 2024 results with our seventh consecutive quarter of sequential revenue growth, supported by our continued commitment to global expansion, and effective localized strategies catering to each region's unique user base. Our outstanding results demonstrate our business' resilience and our ability to deliver growth amid an evolving industry landscape.

因此，由於我們持續致力於全球擴張以及針對每個地區獨特用戶群的有效本地化策略，我們連續第七個季度實現連續收入成長，為 2024 年的強勁業績畫上了句號。我們出色的業績證明了我們業務的韌性和在不斷變化的行業格局中實現成長的能力。

Building a solid foundation for international growth was a top priority for 2024. We critically (technical difficulty) structure and strengths relative to our peers and identified key areas for improvement. Based on this review, we optimized our operational and management framework to support our long-term growth objectives.

為國際成長奠定堅實基礎是 2024 年的首要任務。我們批判性地（技術難度）評估了我們相對於同行的結構和優勢，並確定了需要改進的關鍵領域。基於此次審查，我們優化了營運和管理框架，以支持我們的長期成長目標。

Moreover, people remain our most valuable assets. Therefore, we have invested heavily in upgrading our team, bringing in experts in FMCG, in-house product development and regulatory compliance. Their passion for growing RLX's business and advancing the e-vapor industry has empowered us to deliver effective sustainable business models that will propel our long-term success and growth.

此外，人才仍然是我們最寶貴的資產。因此，我們投入巨資升級我們的團隊，引進快速消費品、內部產品開發和法規合規方面的專家。他們對發展 RLX 業務和推動電子煙行業發展的熱情使我們能夠提供有效的可持續商業模式，從而推動我們的長期成功和成長。

On the operational side, tailoring our product portfolio and business strategies to local markets was essential. We deeply analyzed local market environment and consumer behavior, then utilized our insights to develop the right products to cater specifically to the needs of each market's adult smokers.

在營運方面，根據當地市場調整我們的產品組合和業務策略至關重要。我們深入分析了當地的市場環境和消費者行為，然後利用我們的見解開發出合適的產品，以滿足每個市場成年吸菸者的特定需求。

For example, in Southeast Asia, we successfully launched two open system e-vapor product series, Relx Prime and Spin Mini in the second half of 2024. These new product series have received strong positive feedback in Southeast Asia, reinforcing our belief that localized innovation is a critical driver for long-term growth.

例如，在東南亞，我們在 2024 年下半年成功推出了兩個開放式系統電子蒸氣煙產品系列，Relx Prime 和 Spin Mini。這些新產品系列在東南亞獲得了強烈的正面回饋，增強了我們的信念，即在地化創新是長期成長的關鍵驅動力。

We also refined our route-to-market strategy by optimizing our distribution channels based on the specific characteristics of each market. Each market has its own development path, and we have been focusing on enhancing the efficiency of the distribution structure, finding the right partners, and ensuring the product channel fits.

我們也根據每個市場的具體特點優化分銷管道，並完善了我們的市場路線策略。每個市場都有自己的發展路徑，我們一直致力於提高分銷結構的效率，尋找合適的合作夥伴，並確保產品通路契合。

Turning now to the market environment and the trends that are emerging for 2025. As we expanded internationally throughout 2024, we encountered regulatory shifts across multiple markets. While these regulatory changes presented challenges, we view them as opportunities to strengthen our competitive position.

現在來談談市場環境和 2025 年出現的趨勢。隨著我們在 2024 年進行國際擴張，我們遇到了多個市場的監管變化。雖然這些監管變化帶來了挑戰，但我們將其視為加強我們競爭地位的機會。

Our ability to anticipate and quickly respond to evolving regulations is a key differentiator supporting our success beyond China. We proactively assess and adapt our strategies to ensure compliance while continuing to meet user demand. We also carefully monitor our existing products and channel inventory levels while building a robust product pool to remain prepared to react to abrupt, unexpected regulatory changes.

我們預測並快速應對不斷變化的法規的能力是我們在中國以外取得成功的關鍵因素。我們積極評估和調整我們的策略以確保合規，同時繼續滿足用戶需求。我們也仔細監控現有產品和通路庫存水平，同時建立強大的產品池，隨時準備好應對突然的、意外的監管變化。

Looking ahead to 2025, we have observed a slight slowdown in product innovation as the industry enters a more mature stage of development. We believe that going forward, success will be less reliant on blockbuster new products, and instead depend on refined and efficient operations, channel development and product optimization. We are confident that we are well positioned to thrive in this environment.

展望2025年，隨著產業進入更成熟的發展階段，我們觀察到產品創新略有放緩。我們相信，未來的成功將不再依賴轟動一時的新產品，而是取決於精細高效的營運、通路建立和產品優化。我們有信心，我們有能力在這樣的環境中蓬勃發展。

With our in-house e-liquid development team and production capabilities, we can home in on key product elements like flavor, taste, and quality control to deliver high-quality products that meet user expectations, both domestically and overseas. Before I move on to our financial performance, I am pleased to share that our ESG efforts continue to win recognition from leading global ESG rating agencies in 2024.

憑藉我們內部的電子液體開發團隊和生產能力，我們可以專注於風味、口感和品質控制等關鍵產品元素，以提供滿足國內外用戶期望的高品質產品。在介紹我們的財務表現之前，我很高興地告訴大家，我們的 ESG 工作在 2024 年繼續贏得全球領先的 ESG 評級機構的認可。

We received an AA rating from MSCI, upgraded from a single A rating. This is the highest MSCI ESG rating in the global tobacco industry, making RLX the highest scoring company in the global e-cigarette industry for three consecutive years.

我們獲得了 MSCI 的 AA 評級，從單一的 A 評級升級而來。這是MSCI在全球菸草產業獲得的最高ESG評級，也使得RLX連續三年成為全球電子煙產業得分最高的公司。

Driven by our dedication to social responsibility and value creation for all stakeholders, we will remain committed to integrating ESG best practices as we broaden our global footprint. Now let's move on to our financial results for the fourth quarter and full year of 2024. Please note that unless otherwise stated, all the financials we present today are in RMB terms.

我們致力於履行社會責任並為所有利害關係人創造價值，在擴大全球影響力的同時，我們將繼續致力於整合 ESG 最佳實踐。現在讓我們來看看 2024 年第四季和全年的財務表現。請注意，除非另有說明，我們今天提供的所有財務數據均以人民幣計算。

Starting with our top line. On a full year basis, our revenues were RMB2.7 billion, growing by an impressive 73.3% year-over-year, thanks to our international expansion success. For the fourth quarter, we achieved revenues of RMB813.5 million, a 56.3% year-over-year increase.

從我們的頂線開始。由於國際擴張的成功，我們全年實現營業收入27億元人民幣，較去年同期成長73.3%。第四季度，我們實現營業收入8.135億元人民幣，年增56.3%。

The seasonal impact of the Christmas holiday contributed positively to our quarterly results, as Christmas is traditionally a peak period for retail sales of e-vapor products. Additionally, some of our overseas distributors increased inventory ahead of the Chinese New Year holiday, which further boosted our fourth quarter sales.

聖誕假期的季節性影響對我們的季度業績產生了積極貢獻，因為聖誕節傳統上是電子煙產品零售的高峰期。此外，我們的部分海外經銷商在春節假期前增加了庫存，進一步促進了我們第四季度的銷售。

Turning to profitability. Our full year gross profit margin improved to 26.4% in 2024, marking a 2-percentage- point increase. Notably, in the fourth quarter of 2024, our gross profit margin increased by 3.3-percentage- points year-over-year to 27.2%. This improvement was primarily due to favorable changes in our revenue mix from international markets and cost optimization initiatives.

轉向盈利能力。2024年，我們的全年毛利率提升至26.4%，增加了2個百分點。值得注意的是，2024年第四季度，我們的毛利率年增3.3個百分點至27.2%。這項改善主要歸功於來自國際市場的收入結構和成本優化措施的有利變化。

In 2024, we recorded an operating loss of RMB 107.1 million. However, excluding the impact of stock-based compensation, our non-GAAP operating income for the full year was RMB262.5 million. For the fourth quarter alone, we achieved a non-GAAP operating profit of RMB112.6 million, marking a sequential rise for the fifth consecutive quarter and a significant milestone in our return to non-GAAP operating profitability for the full year.

2024年，我們錄得經營虧損人民幣1.071億元。但剔除股票薪酬的影響，我們全年非公認會計準則營業收入為人民幣2.625億元。僅在第四季度，我們便實現非美國通用會計準則營業利潤1.126億元，這是公司連續第五個季度環比增長，也是公司全年恢復非美國通用會計準則營業盈利的重要里程碑。

Our profitability improvements were primarily driven by incremental contributions from our international business as well as the operating leverage gained as we scaled our operations in the new markets. Moving forward, we expect further improvement in our non-GAAP operating margin as we scale our business. Additionally, we are carefully managing our headcount in the middle and back-office functions as we expand regionally.

我們的獲利能力提高主要得益於國際業務的增量貢獻以及我們在新市場擴大業務規模所獲得的經營槓桿。展望未來，隨著業務規模的擴大，我們預期非 GAAP 營業利潤率將進一步提高。此外，隨著我們區域業務的擴張，我們也在謹慎管理中後台部門的員工數量。

As a result, we expect our operating expenses to grow more slowly than revenue, which will further enhance our profitability. In terms of cash flow, we achieved an operating cash inflow of RMB497 million in the fourth quarter of 2024, up from RMB305 million in the same quarter of the previous year, reflecting our ongoing business growth and improvements in working capital efficiency.

因此，我們預計營運費用的成長速度將低於收入的成長速度，這將進一步提高我們的獲利能力。現金流方面，2024年第四季我們實現經營現金流入4.97億元人民幣，高於去年同期的3.05億元人民幣，反映了我們業務的持續成長和營運資金效率的提高。

As we mentioned on the last call, we are currently experiencing a negative cash conversion cycle. Inventory turnover days stood at 25 days in the fourth quarter of 2024, increased from 16 days in the third quarter of 2024 due to the seasonal impact of the Christmas and the Chinese New Year holiday. Our cash position remains solid.

正如我們在上次電話會議中提到的，我們目前正經歷負現金轉換週期。2024 年第四季的庫存週轉天數為 25 天，由於聖誕節和農曆新年假期的季節性影響，高於 2024 年第三季的 16 天。我們的現金狀況依然穩定。

As of December 31, 2024, our total financial assets, including cash and cash equivalents, restricted cash and various short-term and long-term deposits and investments stand at RMB15.9 billion. In 2024, we returned approximately USD122.9 million to our shareholders, including approximately USD109 million through our share repurchase program and USD14 million through cash dividends we announced in November 2024.

截至2024年12月31日，我們的總金融資產（包括現金及現金等價物、受限現金以及各種短期和長期存款和投資）為人民幣159億元。2024年，我們向股東返還了約1.229億美元，其中透過股票回購計畫返還約1.09億美元，透過2024年11月宣布的現金股利返還1,400萬美元。

Supported by our solid fundamental cash position, we will deepen our commitment to delivering value to our shareholders. Our objective is to return substantially all of our non-GAAP net profit through share repurchase programs and cash dividends.

在我們穩固的基本現金狀況的支持下，我們將深化為股東創造價值的承諾。我們的目標是透過股票回購計畫和現金股利返還大部分非公認會計準則淨利。

In conclusion, our strategic foresight and disciplined execution helped us navigate external uncertainties and strengthened our brand image among global adult smokers. While some of these efforts may not yield visible results in the short term, we believe their long-term positive impact on our global competitiveness will prove invaluable.

總而言之，我們的策略遠見和嚴格的執行幫助我們應對外部的不確定性，並加強了我們在全球成年吸菸者中的品牌形象。儘管其中一些努力可能不會在短期內產生明顯成效，但我們相信，它們對我們的全球競爭力的長期正面影響將被證明是無價的。

As industry concentration continues to increase, our comprehensive industry-leading capabilities position us to capture additional market growth and leverage the category's overall growth to create value for all our stakeholders. This concludes our prepared remarks today. We will now open the call to questions. Operator, please go ahead.

隨著行業集中度不斷提高，我們全面的行業領先能力使我們能夠抓住額外的市場成長，並利用該類別的整體成長為所有利害關係人創造價值。今天的準備好的發言到此結束。我們現在開始提問。接線員，請繼續。

(Operator Instructions) Christine Peng, UBS.

(操作員指示) Christine Peng，瑞銀。

So I have two questions for the management. So the first question is about the overseas market expansion. So you have shared with us a lot of the initiatives that you have been doing in 2024. So going to 2025, what are the new initiatives you're going to implement to further drive the market share gains in overseas market?

所以我有兩個問題想問管理階層。所以第一個問題是關於海外市場擴張。您與我們分享了您在 2024 年採取的許多措施。那麼展望2025年，您將採取哪些新措施來進一步推動海外市場份額的成長？

Thanks very much, Christine. Thanks for asking. So we designed our product portfolio and business strategies to align with the unique characteristics of each market. On the product side, we analyze local preferences to develop tailored flavor portfolios and product formats. Our in-house e-liquid team specializes in crafting flavors inspired by traditional foods and cultural nuances, ensuring strong resonance with regional tastes.

非常感謝，克里斯汀。謝謝你的提問。因此，我們設計了我們的產品組合和業務策略，以符合每個市場的獨特特徵。在產品方面，我們分析當地偏好，以開發客製化的口味組合和產品形式。我們的內部電子液體團隊擅長製作受傳統食品和文化細微差別啟發的口味，確保與當地口味產生強烈共鳴。

For our route-to-market strategies, we adopt a dynamic approach, continuously reassessing plans to reflect market conditions and distribution channel criteria tics. This includes identifying high potential sales channels such as convenience stores and liquor stores and focusing resources on the most promising opportunities.

對於我們的市場策略，我們採用動態方法，不斷重新評估計劃以反映市場條件和分銷管道標準。這包括識別便利商店和酒類商店等高潛力銷售管道，並將資源集中在最有前景的機會上。

We also collaborate with distribution partners who possess deep local knowledge and resources, enabling us to build efficient and robust networks. Data-driven insights play a crucial role in our decision-making. By analyzed marketing trends and consumer behavior, we ensure our product aligned with local preferences, affordability and purchasing habits, creating an optimal fit between products and channels.

我們也與擁有深厚本地知識和資源的分銷合作夥伴合作，使我們能夠建立高效、強大的網絡。數據驅動的洞察力在我們的決策中發揮著至關重要的作用。透過分析市場趨勢和消費者行為，我們確保我們的產品符合當地的偏好、可負擔性和購買習慣，從而實現產品和通路之間的最佳契合。

Thank you, management. So I have another question, it is regarding the shareholder return. So any update regarding the shareholder return from 2025 and onwards?

謝謝管理層。所以我還有另一個問題，是關於股東的回報。那麼從 2025 年起股東報酬有什麼更新嗎？

Thank you very much. So I mean, we have also explained that in our opening remarks, we've returned a significant portion of our non-GAAP net profit to shareholders through share repurchase and cash dividends. As of December last year, we have cumulatively returned USD332 million to shareholders, including USD305 million through share repurchases and USD27 million through dividends. This year, we intend to continue these initiatives, reflecting our commitment to shareholder value. Thank you very much.

非常感謝。所以我的意思是，我們在開場白中也解釋過，我們透過股票回購和現金分紅將非公認會計準則淨利潤的很大一部分返還給了股東。截至去年12月，我們已累計向股東返還3.32億美元，其中透過股票回購返還3.05億美元，透過股利返還2,700萬美元。今年，我們打算繼續這些舉措，以體現我們對股東價值的承諾。非常感謝。

Lydia Ling, Citi.

花旗銀行的 Lydia Ling。

This is Lydia from Citi. So I also have two questions. First, I actually want to follow up on the overseas side. Do you (technical difficulty) could share with us your detailed expansion plan for this year and earnings growth rate target for this year? And secondly, also like do you have any light, could share your insights regarding the industry's product evolution in this year?

我是花旗銀行的 Lydia。所以我也有兩個問題。首先，我其實想跟進一下海外方面的狀況。您能否（技術難題）與我們分享今年詳細的擴張計劃和今年的盈利增長率目標？其次，您能否分享您對今年該產業產品發展的見解？

And my second question would be on the regulation side. And actually, there are like the regulatory uncertainties in overseas markets. So is it possible that you could elaborate your views on potential regulatory changes? And how would you actually address these challenges? Yes, any color would be very helpful.

我的第二個問題是關於監管方面的。事實上，海外市場存在監管不確定性。那麼您能否詳細說明一下對潛在監管變化的看法？您實際上將如何應對這些挑戰？是的，任何顏色都會很有幫助。

Thanks very much, Lydia. Regarding your first question, which is about our international expansion, we plan to expand to more countries in 2025, likely in the second half of this year. Several countries in Asia Pacific and Europe are under our consideration for this expansion. However, the macroeconomic environment, political stability and regulatory landscapes remain unpredictable. We will make more informed decisions by midyear based on further developments.

非常感謝，莉迪亞。關於您的第一個問題，關於我們的國際擴張，我們計劃在 2025 年擴展到更多國家，可能是在今年下半年。我們正在考慮將業務擴展到亞太地區和歐洲的幾個國家。然而，宏觀經濟環境、政治穩定性和監管環境仍然難以預測。我們將根據進一步的發展在年中之前做出更明智的決定。

Regarding the global industry product regulations, the typical innovation cycle in e-vapor lasts around three years. Between 2020 and 2022, disposable products reshaped the markets, driving growth and transitions within product categories.

就全球產業產品法規而言，電子煙的典型創新週期約為三年。2020 年至 2022 年間，一次性產品將重塑市場，推動產品類別的成長與轉型。

From 2023 to 2025, the focus has shift to high-power innovations such as steel mesh technology, which enhanced user satisfaction and introduced higher e-liquid volume products. This trend has also driven the decline of average sales price per e-liquid limiter, particularly as potential bans on disposables in Europe accelerates the transition. We believe 2025 will mark the conclusion of this innovation cycle as the shift to high-puff or high-volume products stabilize.

2023年至2025年，重點轉向鋼網技術等高功率創新，從而提高用戶滿意度並推出更高電子液體容量的產品。這一趨勢也推動了每個電子煙液限制器平均銷售價格的下降，特別是隨著歐洲可能對一次性用品實施禁令，加速了這一轉變。我們相信，隨著向高煙霧或大容量產品的轉變趨於穩定，2025 年將標誌著這一創新週期的結束。

For our company, sales volume in millimeter has grown faster than revenue due to lower average selling price. We expect this trend to normalize by end of this year or early next year. We anticipate meaningful market share growth in sales volume and moderate revenue growth. Over the medium term, we are confident that these metrics will grow in parallel, supporting sustainable and healthy business growth.

對我們公司而言，由於平均銷售價格較低，毫米銷售的成長速度快於營收的成長速度。我們預計這一趨勢將在今年年底或明年年初恢復正常。我們預期銷售量的市佔率將大幅成長，收入也將適度成長。從中期來看，我們相信這些指標將同步成長，支持永續、健康的業務成長。

Regarding your second question about the regulatory changes and challenges in our industry, the regulatory landscape varies by region. In Southeast Asia, regulations are becoming more stringent with clear definitions that reduce ambiguity for industry players.

關於您的第二個問題關於我們行業的監管變化和挑戰，監管環境因地區而異。在東南亞，法規日趨嚴格，定義清晰，減少了產業參與者的歧義。

However, political stability in some countries has created additional uncertainties and delayed approval process. In Europe, environmental concerns have led to bans on disposable products in countries such as UK and France, while other regulations aim to minimize the appeal e-vapor products to underage. Additionally, some European nations are introducing tax on e-vapor products.

然而，一些國家的政治穩定性帶來了額外的不確定性並延遲了審批過程。在歐洲，出於對環境問題的考慮，英國、法國等國家已經禁止使用一次性產品，而其他法規旨在盡量減少電子蒸氣產品對未成年人的吸引力。此外，一些歐洲國家正在對電子煙產品徵稅。

To address these challenges, we proactively evaluate our product portfolio and adjust our strategies to ensure compliance while meeting user demand. By closely monitoring inventory and collaborating with our business partners, we can swiftly adapt to regulatory changes. This agility combined with our ability to anticipate evolving regulations, strengthens our competitive advantages, and position us for long-term sustainable growth. Thank you for your question.

為了應對這些挑戰，我們積極評估我們的產品組合併調整我們的策略以確保合規性並滿足用戶需求。透過密切監控庫存並與我們的業務合作夥伴合作，我們可以迅速適應監管變化。這種敏捷性與我們預測不斷變化的法規的能力相結合，增強了我們的競爭優勢，並使我們實現長期可持續成長。感謝您的提問。

Yun Guo, CITIC.

郭雲，中信人。

This is Yun from CITIC Securities. And my question is about product innovation. The open system e-cigarettes benefit from the ban on the disposable e-cigarettes in Europe. So what's your opinion for the open system e-cigarettes and how competitive are the company's open system e-cigarette products? And recently, the HNB product is quite popular. And do you plan to enter to this market?

我是中信證券的雲。我的問題是關於產品創新。開放式系統電子煙受益於歐洲對一次性電子煙的禁令。那麼，您對於開放式系統電子煙怎麼看呢？該公司開放式系統電子煙產品的競爭力如何？而且最近HNB產品也挺火爆的。你有計劃進入這個市場嗎？

Thank you very much, Yun Guo, for your questions. The first one is on our open system products. So we believe the open system e-vapor products will experience stable demand growth in price-sensitive markets where affordability is key. Our product development strategy focuses on five priorities. Puff experience, affordability, convenience, user satisfaction and harm reduction. Our open system products, including Relx Prime and Relx Spin Mini are designed to address affordability and convenience.

非常感謝郭雲的提問。第一個是關於我們開放系統產品。因此，我們相信，在價格敏感且可負擔性是關鍵的市場中，開放式電子蒸氣產品的需求將穩定成長。我們的產品開發策略重點在於五個面向。抽吸體驗、經濟實惠、方便快速、使用者滿意度和減少危害。我們的開放系統產品，包括 Relx Prime 和 Relx Spin Mini，旨在解決經濟性和便利性問題。

Relx Prime features added electric storage button, significantly expanding usage time, and improving efficiency compared to other products on the market. Relx Spin Mini offers a dual flavors pod system catering to local user preferences by providing cost-effective solutions with superior user experiences.

Relx Prime新增了電動儲能按鈕，相較於市面上其他產品，使用時間大幅延長，效率提升。Relx Spin Mini 提供雙重口味的 pod 系統，透過提供具有卓越使用者體驗的經濟高效的解決方案來滿足當地用戶的喜好。

These innovations position us as a strong competitor in the open system market and allow us to meet evolving consumer needs. Regarding HNB products, we observed that the e-vapor industry is growing faster globally than the Heat No Burn products. Heat No Burn products tend to succeed in developed markets only with strong purchasing -- due to strong purchasing power due to their relatively high cost.

這些創新使我們成為開放系統市場的強大競爭對手，並使我們能夠滿足不斷變化的消費者需求。關於加熱不燃燒產品，我們觀察到，全球電子蒸汽煙產業的成長速度比加熱不燃燒產品更快。加熱不燃燒產品往往只有在擁有強大購買力的情況下才能在已開發市場取得成功——這是由於其成本相對較高而導致的強大購買力。

Additionally, middle age and younger adult smokers prefer e-vapor products for their convenience and overall experience. As a result, we currently have no plans to enter the Heat No Burn markets, and we'll continue prioritizing e-vapor products where we hold a stronger competitive advantage. Thank you for your questions.

此外，中年和年輕的成年吸菸者更喜歡電子蒸氣產品，因為它們方便且整體體驗更好。因此，我們目前沒有計劃進入加熱不燃燒市場，我們將繼續優先考慮我們具有更強競爭優勢的電子蒸氣產品。感謝您的提問。

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

由於時間限制，現在我想將電話轉回給公司做結束語。

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

再次感謝您今天的參與。如果您還有其他問題，請隨時透過我們網站或 Piacente Financial 通訊提供的聯絡資訊聯絡 RLX Technology 的投資者關係團隊。

This concludes this conference call. You may now disconnect your line. Thank you.

本次電話會議到此結束。現在您可以斷開線路了。謝謝。