RLX Technology Inc. (RLX) stock prices were up by 4.77% as of the market closing on June 1st, 2021, bringing the price per share up to USD$11.85 at the end of the trading day. Subsequent pre-market fluctuations saw the price rise by another 10.13%, bringing it up to USD$13.05.
Net Revenues
Net revenues were up by 48.2% in the first quarter of the fiscal year 2021 as compared to the same time period of the prior year, with the most recently disclosed financial reports for the 2021 quarter indicating USD$366.1 million in net revenue. The substantial increase can largely be attributed to an increase in net revenues from sale to offline distributors, which, in turn, was largely due to the expansion of the company’s distribution and retail network.
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Gross Margins and Profits
Gross profits for Q1 2021 were up by 59.1% as compared to the numbers reported for the first quarter of the prior fiscal year, with recent gross profits amounting to USD$168.5 million. Gross margins were also up, reported at 46% in the first quarter of fiscal 2021 up from the 42.9% reported a year earlier.
Selling and G&A Expenses
Selling expenses were up by 48.2% to USD$44.5 million in Q1 2021, owing largely to the increase in salaries and welfare benefits, higher branding material costs, and an increase in shipping expenses. An increase in salaries and welfare benefits also contributed to general and administrative costs increasing by 59.5% to USD$108.8 million in Q1 2021. This increase was also facilitated by an increase in share-based compensation expenses, which were partially offset by a decrease in legal and other consulting fees.
Solid Liquidity Position
As of March 31st, 2021, RLX reported having USD$2,203.6 million in cash and cash equivalents, restricted cash, short-term bank deposits, short-term investments, and long-term bank deposits. The massive increase from liquidity reports as of December 31st, 2020 is largely attributable to net proceeds generated through the company’s initial public offering in January 2021. Roughly USD$1647.2 million was denominated in U.S. dollars as of March 31st, 2021.
Future Outlook for RLX
Armed with a solid liquidity position, RLX is poised to capitalize on the promising numbers reported for the start of the fiscal year 2021, with the company anticipating a continued trajectory of success through to the end of the year and beyond. Current and potential investors are hopeful that management will leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
