Llamada de resultados del Q2 de 2026 de RLX Technology: Expansión del margen y crecimiento europeo

Puntos clave

• Los ingresos netos del T2 de 2026 aumentaron un 14,8% interanual hasta los 1.010 millones de RMB, impulsados principalmente por el crecimiento orgánico del volumen internacional y la adquisición de mayo de 2025. Los mercados internacionales generaron aproximadamente el 70% de los ingresos netos totales.
• El beneficio bruto aumentó un 47,8% interanual hasta los 357,8 millones de RMB. El margen bruto alcanzó el 35,4%, lo que supone un aumento de 790 puntos básicos interanuales y de 360 puntos básicos respecto al trimestre anterior, respaldado por la optimización de la cadena de suministro, mayores rendimientos de fabricación y un mix geográfico y de producto favorable.
• El resultado operativo no PCGA aumentó un 28,8% interanual hasta los 149,6 millones de RMB, lo que marca el undécimo trimestre consecutivo de beneficio operativo positivo no PCGA para RLX Technology. El beneficio neto no PCGA fue de 238,8 millones de RMB.
• Los ingresos se moderaron con respecto al trimestre anterior, después de que el T1 se beneficiara del adelanto de envíos relacionado con ajustes regulatorios de exportación. La dirección afirmó que la demanda subyacente en los principales mercados internacionales se mantuvo sólida.
• RLX completó una inversión de control en una plataforma de distribución de Europa Occidental en julio de 2026. El negocio se consolidará plenamente a partir del T3 de 2026, lo que aumentará los ingresos internacionales declarados pero reducirá el porcentaje de margen bruto del grupo, ya que la distribución conlleva un perfil de margen más bajo.
• La dirección prevé que las ventas de todo el año en China continental se mantengan prácticamente estables en comparación con el año anterior, mientras que se espera que la adquisición europea produzca un aumento sustancial de los ingresos declarados en el extranjero durante el segundo semestre.

Datos financieros clave

Rendimiento operativo y del negocio

La expansión internacional siguió siendo el principal motor de crecimiento de RLX Technology. La dirección atribuyó el crecimiento del T2 al volumen orgánico en el extranjero y a la contribución de la empresa europea de vapeo electrónico adquirida en mayo de 2025.

Los ingresos intertrimestrales disminuyeron debido a que los envíos del T1 se habían adelantado antes de los ajustes regulatorios de exportación. RLX afirmó que está priorizando las ventas al por menor y un inventario de canal saludable en lugar de presionar con volumen de bajo margen en los canales de distribución.

Europa sigue siendo fundamental para la estrategia de expansión de la empresa. El distribuidor de Europa Occidental adquirido en julio de 2026 atiende directamente a más de 30.000 puntos de venta minoristas y opera una plataforma B2B propia que conecta a más de 20.000 comerciantes independientes. RLX tiene la intención de mantenerlo como un mercado abierto multimarca al tiempo que utiliza la escala de su cadena de suministro y sus relaciones de marca para reducir los costes de distribución y mejorar las condiciones de aprovisionamiento.

RLX también se está expandiendo más allá de los productos de vapeo electrónico. Su moderna línea de bolsas de nicotina oral ya se ha comercializado, con capacidad de producción adicional planificada en un centro de fabricación en construcción en el sudeste asiático. Las instalaciones darán soporte a múltiples categorías de productos, mejorarán el posicionamiento arancelario y agilizarán la logística. RLX también cuenta con tecnologías de calentamiento de tabaco sin combustión y productos listos para el mercado a la espera de condiciones regulatorias y de mercado adecuadas.

Previsiones de la dirección

La dirección prevé que la consolidación de la plataforma de distribución de Europa Occidental a partir del T3 de 2026 impulse un aumento sustancial de los ingresos internacionales declarados en el segundo semestre. El crecimiento orgánico continuará gestionándose en torno a la venta final y la calidad del inventario en los canales.

Se espera que el margen bruto vuelva a lo que la dirección describió como un rango saludable y equilibrado a medida que se normalicen el mix de productos y los flujos de envío. La consolidación del negocio de distribución con menor margen reducirá el porcentaje de margen bruto, pero la dirección prevé que la transacción amplíe el beneficio operativo y el beneficio neto en términos absolutos.

Para China continental, la dirección prevé que las ventas de todo el año se mantengan prácticamente estables en comparación con el año anterior. La previsión refleja plazos de aprobación regulatoria más conservadores a pesar de una aplicación de la ley más estricta contra los productos de cigarrillos electrónicos ilegales.

RLX planea asignar capital al crecimiento orgánico, fusiones y adquisiciones que generen valor y retribución al accionista. Las recompras de acciones y los dividendos siguen sujetos a la aprobación del consejo de administración y a las condiciones del mercado. Los objetivos de adquisición deben tener un horizonte claro de recuperación de efectivo, no ser dilutivos desde el punto de vista estructural y contribuir al incremento del BPA, según la dirección.

Riesgos y aspectos a vigilar

• Las regulaciones internacionales son cada vez más detalladas y restrictivas. La dirección citó posibles normativas en el Reino Unido relacionadas con el empaquetado neutro, los dispositivos estandarizados, las restricciones de exhibición en tiendas, las descripciones de sabores y las operaciones de tiendas fantasma.
• La adquisición de distribución en Europa cambiará el mix de ingresos de RLX y reducirá el porcentaje de margen bruto consolidado, aun cuando la dirección prevé un mayor beneficio absoluto.
• Los movimientos de los tipos de interés y la exposición a los tipos de cambio pueden generar fluctuaciones debido a que RLX rinde cuentas en renminbi mientras genera ingresos en dólares estadounidenses y libras esterlinas.
• Las fricciones comerciales, los cambios arancelarios y la incertidumbre geopolítica siguen siendo factores considerados tras la inversión de la empresa en la fabricación en el sudeste asiático.
• RLX está a la espera de decisiones regulatorias sobre las solicitudes de PMTA presentadas por filiales que no cotizan en bolsa. La empresa no tiene previsto un despliegue comercial a gran escala en Estados Unidos hasta que las vías regulatorias y de cumplimiento ofrezcan una mayor visibilidad a largo plazo.

Puntos destacados de la sesión de preguntas y respuestas con analistas

Asignación de capital y M&A: RLX priorizará las inversiones orgánicas de alto rendimiento, incluidas la I+D multicategoría, la fabricación en el sudeste asiático y el lanzamiento de productos. También considerará adquisiciones de mayor envergadura que refuercen la I+D, la fabricación, las marcas propias o las capacidades de acceso al mercado. La dirección no fijó un límite máximo de valoración ni un umbral de ingresos.

Crecimiento en el extranjero en el segundo semestre: La dirección prevé un crecimiento orgánico disciplinado y una contribución sustancial a los ingresos declarados a partir de la consolidación de la plataforma de Europa Occidental recientemente adquirida a partir del T3 de 2026.

Competencia en Europa: RLX considera que la ejecución multicategoría en vapeo electrónico, nicotina oral moderna y productos de calentamiento sin combustión es cada vez más importante. La dirección destacó la eficiencia de la cadena de suministro, el desarrollo de productos, las relaciones con el comercio minorista especializado y un mayor control sobre la distribución local como sus fortalezas competitivas.

Bolsas de nicotina: RLX tiene previsto conectar su cartera de bolsas de nicotina directamente con su red de distribución ampliada y sus plataformas B2B en Europa Occidental y del Norte una vez que se incremente la nueva capacidad de producción.

China y Estados Unidos: La dirección considera que las medidas de China contra los productos ilegales son positivas a largo plazo, pero prevé plazos de aprobación conservadores a corto plazo. En Estados Unidos, RLX mantendrá un enfoque basado en el ROI y esperará a tener una visibilidad regulatoria más clara antes de comprometer un capital significativo.

Transcripción completa de la llamada de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Hello, ladies and gentlemen. Thank you for standing by for RLX Technology Inc.'s Second Quarter 2026 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. Please go ahead, Sam.

Sam Tsang

Thank you very much. Hello, everyone, and welcome to RLX Technology's Second Quarter 2026 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 include our Chief Executive Officer, Ms. Kate Wang; our Chief Financial Officer, Mr. Chao Lu; and me, Sam Tsang, Head of Capital Markets.

Before we continue, please note that today's discussions 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, anticipate, aim, estimate, intend, plan, 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 are factors that are beyond our control.

The company's, its affiliates, advisers and representatives do not undertake any obligation to update these forward-looking information, except as required under the applicable law.

Please note that RXL 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.

For today's call, management will use English as the main language. We will also provide simultaneous interpretation on the Chinese line. Please note that the Chinese line is in listen-only mode and Chinese interpretation is for convenience purposes only. In case of any discrepancy, management statements in the original language will prevail.

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

Wang Ying

Thank you, Sam, and thank you all for joining today's call. We delivered solid second quarter financial and operational results, supported by our commitment to quality-driven resilience and compliant global growth.

Our top line grew 14.8% year-over-year in the second quarter, mainly driven by our expanding international footprint. Gross profit increased 47.8% year-over-year to RMB 367.8 million. As expected, revenue and gross profit moderated sequentially, not due to any softening in demand, but rather reflecting a trade inventory normalization following the first quarter's shipment pull forward driven by regulatory export adjustments. Because our distribution partners manage multi-brand portfolios, first quarter pre-stocking temporarily secured visibility into sell-out rates, leading to the shipment adjustments we saw this quarter.

Underlying demand across our key international markets remains healthy and resilient. Against this backdrop, we focused on two strategic priorities: sharpening retail execution and optimizing our global operational infrastructure. These deliberate refinements are designed to lay the foundation for our next era of sustainable, profitable growth. Rather than chasing low-margin volume, we are directing our capital towards building an agile, compliant global platform that can absorb regulatory shifts and quickly adapt to evolving demand.

Regulatory oversight across our international market is becoming more detailed and more restrictive enforced, from customs enforcement priorities to refined frameworks. The United Kingdom is a case in point. Proposed regulations cover plain packaging, standardized device authentic retail display bans, restricted flavor descriptions, and limits on dark store operations.

As an industry leader, we welcome these regulatory shifts. It poses the operational agility required to address them proactively. Engaging these stakeholders to foster high standard sustainable compliance frameworks.

Over the long term, clear and consistently enforced boundaries push out non-compliant, low-quality competition and raise barrier to entry. Our robust compliance infrastructure, R&D, and supply chain enables us to meet those standards early, enhancing our platform's operational predictability and long-term sustainability.

Our hands-on operational experience across international markets has taught us valuable lessons. In mature environments, traditional wholesaling model are no longer sufficient to sustain high-quality margin growth. As hardware technology and product standards stabilize, competition is shifting from pure product development to route-to-market execution.

Direct retail, promise proximity, and channel agility. As such, we are aggressively upgrading our distribution architecture through a targeted mix of direct channel investments, strategic distribution alliance, operational support, and channel innovation, and moving away from reliance on a single rigid distribution model.

In Asia, where our brand equity and consumer trust remains exceptionally strong, we are selectively broadening our footprint through localized commercial entities and proprietary channel models.

In Europe, where barriers to entry are higher, we are expanding through capital-efficient strategic partnerships and equity investments. By combining our world-class supply chain with local distribution leaders, we empower existing trading ecosystems while securing direct sell-out visibility and dedicated retail shelf space, establishing a durable competitive moat.

Europe is the cornerstone of our global growth strategy, where we are methodologically expanding our presence on the dual engine model with balanced targeted M&A with organic growth across channels.

In May 2025, we acquired a long-established European e-vapor company with an integrated local retail and online footprint and have been supporting its expansion as a collaborative partner ever since. Over the past year, this integration has brought us deep localized market insights and demonstrated the immense commercial value of aligning our global supply chain with trusted local operators.

Building on that acquisition, in July 2026, we made a strategic controlling investment in a leading B2B and FMCG physical distribution leaders in Western Europe. This entity has a robust offline footprint, directly serving retail end points across the market.

In B2B digital commerce, its proprietary ordering app connects with over 50% of independent retail points of sales in the country. Our integration philosophy centers on empowerment, not operational disruption. We do not intend to restructure their core operations or convert the platform into an exclusive outlet for our own products. They will remain an open multi-brand marketplace serving the broader retail ecosystem.

By applying our global supply chain scale and portfolio of brand relationships, we are confident that we can reduce these platforms' distribution costs and optimize sourcing terms.

While expanding our distribution reach, we are also accelerating our transformation into a multi-category, next-generation smoke-free product platform, extending beyond our leadership in e-vapor into a broader smoke-free portfolio. We have commercialized our modern oral nicotine pouch line and are steadily ramping up manufacturing capacity and the channel distribution.

In the heat-not-burn category, we hold extensive proprietary technology and patent reserves, as well as the pipeline of market-ready products awaiting optimal market and regulatory conditions for commercial launch.

To support these multi-category expansion and reduce our exposure to trade friction in the macroeconomic and geopolitical uncertainties, we are currently constructing a state-of-the-art manufacturing hub in Southeast Asia. The facility will cover multi-product categories, improve our tariff positions, and streamline logistics, supporting long-term sales resilience across our international markets.

Our mandate is clear: leverage our R&D capabilities, regulatory infrastructure, and newly strengthened route-to-market networks to capture market share and establish leading position across the global smoke-free ecosystem.

To sum up, we made meaningful progress this quarter, executing from a position of balance sheet strength. Our solid capital position gives us flexibility and the patience to say no to suboptimal, marginal, dilutive projects.

We remain financially disciplined, ensuring capital is deployed exclusively towards high-quality, value-accretive assets. By pairing direct channel control with multi-category product innovation, we are building a more resilient, diversified global platform structured to deliver sustainable long-term growth as the industry matures.

Now I will hand the call over to Chao to review our financial results in detail.

Chao Lu

Thank you, Kate, and hello, everyone. We delivered solid second quarter top line results with net revenues reaching RMB 1.01 billion, representing a 14.8% year-over-year increase from RMB 880 million in the prior year period.

Our top line growth was primarily driven by organic volume expansion in international markets, alongside incremental contributions from our acquisition completed in May 2025. For the quarter, international revenues remained our principal growth engine, accounting for approximately 70% of total net revenues.

As anticipated, second quarter net revenues moderated sequentially from first quarter 2026, which benefited from a one-time policy adjustment boost.

Turning to profitability. Gross profit rose 47.8% year-over-year to RMB 357.8 million in the second quarter. Gross margin expanded sequentially to 35.4%, up 790 basis points year-over-year and up 360 basis points sequentially, mainly due to supply chain optimization, manufacturing yield improvement, and favorable geographic and product mix shift.

We delivered our 11th consecutive quarter of positive non-GAAP operating profit, driven by top line expansion, favorable product mix and disciplined operating cost control. Non-GAAP income from operations reached RMB 149.6 million, up 28.8% year-over-year. Non-GAAP net income for the quarter stood at RMB 238.8 million.

Now let me provide additional financial and strategic context regarding the Western European transaction Kate highlighted earlier. In July 2026, we made a controlling investment in one of Western Europe's leading distributors of next-generation smoke-free products and FMCG goods. This entity brings two strategic assets to us, an extensive offline network directly serving over 30,000 retail endpoints across key national accounts and specialized retail, and a proprietary B2B digital commerce platform, connecting over 20,000 independent merchants. We expect to unlock significant operational and supply chain synergies from this transaction.

Furthermore, we are confident we can enhance this platform's margin profile over time by integrating RLX's global supply chain scale and brand portfolio. The entity's financial and operational results will be fully consolidated into RLX Technology's financial statements starting in the third quarter of 2026.

Behind our financial and operational progress is a deep commitment to corporate sustainability and long-term value creation. We published our 2025 ESG report this quarter, highlighting our advancements across corporate governance, product quality and safety, youth access prevention protocols, supply chain labor ethics, and environmental stewardship. From expanding employee welfare initiatives to enforcing ESG compliance across our supplier base, we continue to elevate our standards.

Furthermore, by embedding eco-friendly materials and adhering to responsible marketing practices, we ensure our expansion in both ethical and sustainable. Integrating these ESG principles into our core operations strengthens trust amongst adult consumers, regulators, employees and commercial partners, creating enduring value for all stakeholders.

Our robust balance sheet continues to serve as the bedrock of our global expansion strategy. As of June 30, 2026, our total capital resources, comprising cash, cash equivalent, restricted cash, short-term bank deposits and liquid investment securities stood at RMB 13.9 billion.

In closing, our second quarter performance underscores our operational and financial strength. Supported by this quarter's structural gross margin expansion, disciplined capital allocation and a healthy balance sheet, we are well positioned to strengthen our market leadership and deliver long-term value to our shareholders.

Thank you. Operator, we are now ready to take questions.

Operator

[Operator Instructions] The first question today comes from Christine Peng with UBS.

Preguntas y respuestas

Christine Peng

Thank you, management, for the results summary as well as the strategy outlook. So I have two questions for the management. So the first question is about the capital allocation strategy. Obviously, Mr. Lu just mentioned there is abundant cash resources on the balance sheet. So I was just wondering what's going to be the capital allocation strategy going forward by leveraging on this very strong cash balance.

The second question is about the acquisition strategy, which has become a very important driver of the company's development going forward. So I was wondering what is the criteria in terms of valuation multiple as well as the revenue and profit contribution from the acquisition going forward?

Sam Tsang

Thank you, Christine, for your two questions. So the first question is on the capital allocation strategy. Our capital allocation strategy is financially disciplined and designed to drive sustainable long-term total shareholder returns. We allocate capital across three core priorities. The first one is organic growth and high ROI core business initiatives. This includes funding multi-category R&D, supply chain localization, specifically our manufacturing hubs currently under construction in Southeast Asia and strategic product launches. When regulations and tariff shifts in a given market, we take an ROI-gated approach. Sustainable organic growth remains our primary engine.

Second, we selectively deploy capital into highly accretive M&A. We target assets that boost strategic capabilities across R&D, local manufacturing, proprietary brands, and route-to-market distribution, while meeting clear financial standards.

Third, we remain committed to direct shareholder returns. Our strong cash generation and liquid capital reserves allow us to consistently reserve excess capital for systematic share repurchases and dividend distributions, subject to Board approvals and prevailing market conditions.

Regarding your second question about our M&A criteria, we do not have a specific valuation cap or top line contribution threshold, but we do adhere to strict financial and operational standards.

On valuation, we benchmark targets directly against transaction comparables and our own public trading multiple. Every potential transaction must have a clear time line for a cash payback, be structurally non-dilutive and generate EPS accretion.

In terms of execution, we actively empower our investing company by providing capital support, supply chain integration, procurement optimization, and operational capabilities to unlock structural value. While we prioritize strategic fit and synergy potential across arbitrary size stores, our fitness operational bandwidth means we intentionally focus on larger-scale opportunities that can move the financial needle and meaningfully enhance our global infrastructure.

In summary, we deploy capital only where discipline -- where valuation discipline and clear strategic synergies full align. Thank you very much for your questions.

Operator

The next question comes from Lydia Ling with Citi.

Lydia Ling

Management, this is Lydia from Citi. I also have two questions. So first one is on what's your expectation on the overseas growth in the second half of the year and especially considering the -- both from the acquisition as well as the organic growth in the overseas market?

And my second question is on the margin side and what's your outlook for the second half, especially like considering the acquisition impact on your operation or profitability?

Sam Tsang

Thank you very much, Lydia, for your questions regarding our growth outlook and margin expectations. So regarding our growth outlook for the second half of the year, we are taking a quality focused pragmatic approach to driving international growth.

On organic performance, we are prioritizing retail sell-through velocity and channel inventory health rather than pushing volume into channels at any cost. This prudent recalibration established a solid, sustainable baseline for our ongoing operations.

In addition to our organic baseline, the financial consolidation of our newly acquired Western Europe distribution platform starting in the third quarter will deliver a step change increase in reported international revenue growth for the second half.

Beyond the immediate top line expansion, we anticipate compounding commercial synergies across medium to long term. While our organic growth rates reflects disciplined inventory management, the consolidation of our European platform, combined with operational synergies, gives us full confidence in delivering strong overall overseas performance in the second half.

Regarding our margin trajectory, the gross margin expansion observed in the second quarter was primarily driven by temporary product and revenue mix shift. As our product mix and shipment flows normalize in the second quarter, we expect gross margin to settle back a healthy balanced range.

While non-operating factors such as macroeconomic interest rate movements and foreign exchange dynamics from reporting in renminbi, while generating revenue in U.S. dollars and sterling may create minor headline fluctuations, we maintain strict operational cost controls.

Regarding our European acquisition, as we mentioned earlier, starting in the third quarter, we will consolidate the Western Europe downstream distribution platform. Distribution businesses naturally operates on a lower percentage gross margin profile than proprietary brand operations. Consequently, while percentage margins will reflect this structural mix shift on an absolute dollar basis, this transaction will meaningfully expand our operating profit and net profit scale. Thank you for your questions.

Operator

The next question comes from Yun Guo with Citic.

Yun Guo

Management, I also have two questions. And the first question is about the U.S. market. British American Tobacco is preparing to sell flavored e-cigarettes in the U.S. starting in the fourth quarter. What is our forward strategy for the U.S. market?

And the second question is about the domestic market. With the regulations on the illegal e-cigarettes becoming increasingly strict in China, what is the impact on the company?

Sam Tsang

Thank you for all your questions. One is on the U.S. market and the other one is on the China market. So for the U.S. market, we closely monitor U.S. regulatory developments and peers' action regarding PMTA enforcement. While adult smoker demand for diverse alternative proceeds, regulatory compliance and visibility remain the critical determinants for long-term commercial commitments in the U.S.

Our strategic stance towards the U.S. market is disciplined, agile, and strictly ROI-driven. Notably, our non-listed affiliates previously submitted PMTA applications, which are currently in advanced stages, awaiting regulatory approvals.

However, we will not commit large-scale capital growth to aggressively commercial rollouts until regulatory pathway and enforcement standards provide long-term credibility. In the interim, we are directing our capital and management bandwidth towards regulatory transparent markets across Europe and Asia, alongside scalable reduced risk categories such as modern oral nicotine pouches.

Regarding your question on the Mainland China markets, we view the tightening domestic regulatory environment and crack down on illegal non-compliant products as an overwhelming positive long-term development for the industry and for our company as well.

Eliminating illicit trade restores order to retail channels, removes bad actors and redirect consumer demand back to legal tax-paying brands like us. In the near term, as regulatory bodies intensify enforcement and refine administrative oversight, procedural time line for government approval has become more conservative.

Accordingly, we have adopted a prudent baseline in our internal forecasting and expect Mainland China sales for the full year to be broadly flat year-over-year. We remain in full compliance and continue to work closely with the regulators to support a transparent, legally compliant industry ecosystem. Thank you for your questions.

Operator

The next question comes from Zoe Zou with CICC.

Yuying Zou

Management, this is Zoe from CICC. I have two questions. First, with Philip Morris' growth rapidly in Europe, how do you see competition evolving ahead?

Secondly, could you walk us through the strategic plan for new categories like oral pouch?

Sam Tsang

Sure. Thanks Zoe, for your questions. So one is on the European market competition and the second one is on the oral nicotine pouches.

So for the first one, while we do not directly comment on our peers, multi-category execution across vaping, modern oral, and heat-not-burn tobacco products has clearly become mandatory for all major industry participants. While legacy tobacco companies have the capital to pay for key account listing fees, RLX holds distinct competitive advantages.

First, we are a pure-play non-cigarette business, meaning we are fully committed to harm reduction and replace combustible cigarettes without any internal channel conflict.

Second, we possess strong supply chain efficiency and product innovation capabilities, which combined with our deep relationships in specialty vape retail, position us to expand further into large chain channels.

Furthermore, through our strategic investments, we are actively strengthening our route-to-market and shelf space control. Combining our agile supply chain with direct control of local distribution gives us strong confidence in capturing market share across Europe.

So regarding our plans of the nicotine pouches, we think that modern oral nicotine pouches represents a principal growth driver in our business expansion. We have embedded specialized pouch production lines into our manufacturing hub currently under construction in Southeast Asia.

Once construction is complete and production ramp-ups, this facility will ensure supply chain resilience, scale and cost efficiency. Upon scaling, we will plug our oral pouch line directly into our strengthened European distribution architect, giving immediate access to retail point of sales and B2B platforms across Western and Northern Europe. Supported by a dedicated internal team, we are leveraging our proprietary R&D capabilities to continuously optimize product attributes. We are confident that our modern oral pouches will become a meaningful contributor to revenue and profits in the future. Thank you very much for your questions.

Operator

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

Sam Tsang

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.

Operator

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