RLX (RLX) Q3 2025: International Revenue Jumps to 80% of Mix as Europe, APAC Drive Margin Expansion

November 14, 2025 | By EarningsIQ Research

RLX leveraged a sharp international pivot to deliver robust revenue growth and margin expansion, with Asia-Pacific and Europe now accounting for the vast majority of sales. Disciplined execution and channel innovation in key markets offset persistent regulatory headwinds in China, while capital returns and a strong balance sheet underscore strategic optionality heading into 2026.

Summary

• International Mix Transformation: Nearly 80% of revenue now stems from outside China, reshaping RLX’s growth profile.
• Margin Expansion Through Portfolio Shift: Gross and operating margins rose on the back of European consolidation and APAC execution.
• Capital Allocation Remains Aggressive: Share repurchases and dividends continue as cash flow and liquidity strengthen.

Performance Analysis

RLX’s third quarter results underscore a decisive pivot toward international markets, with net revenues rising sharply year-over-year and sequentially. The company’s international segment, now comprising 70 to 80% of total revenue, was the primary growth engine, driven by organic gains in Asia-Pacific and the full consolidation of a leading European vapor company following a strategic equity investment. Mainland China, while showing a modest recovery amid tighter enforcement, remains a fraction of its pre-regulatory size and continues to face structural headwinds from unregulated market activity.

Profitability saw meaningful improvement, with gross margin expanding both YoY and QoQ, reflecting a favorable shift in geographic mix and enhanced margins across all major international regions. Operating leverage was evident as non-GAAP operating profit margin rose, supported by disciplined cost management and a lean organizational structure. Cash flow from operations surged, and RLX’s robust cash and investment position provides ample flexibility for both reinvestment and shareholder returns.

• Revenue Mix Shift: International markets now dominate, signaling a structural change in RLX’s business model.
• Margin Leverage: Geographic and product mix, plus European consolidation, contributed to multi-point margin gains.
• Capital Returns: The company maintained a high payout ratio through repurchases and dividends, returning over $500 million since IPO.

RLX’s ability to offset China volatility with international execution, while maintaining strong financial discipline, is the core story of the quarter.

Executive Commentary

Strategic Positioning

1. Globalization as Core Growth Lever

RLX’s globalization strategy has moved from aspiration to execution, with international markets now the main revenue source. The company’s Asia-Pacific franchise retail model, which unites independent vape stores under a single brand, has boosted same-store sales and provided tighter operational control. This approach is being replicated in other high-potential markets.

2. Portfolio Expansion and R&D Differentiation

Product innovation remains central, as RLX emphasized R&D around flavor authenticity, device ergonomics, and localized design. The launch of a new East Asia product line set industry benchmarks and unlocked new category growth. Expansion into adjacent segments, such as modern oral (smokeless) products, further diversifies the portfolio and taps into untapped user bases.

3. Navigating Regulatory Complexity

Regulatory shifts continue to shape RLX’s risk and opportunity landscape. In China, stricter enforcement has helped legitimate brands but left the total addressable market far below historical highs. In Europe, RLX’s proactive adaptation to the UK disposable vape ban—migrating consumers to reusable formats—demonstrates operational agility and risk management. The company is also advocating for regulatory adjustments to better align policy with consumer demand, particularly in flavor regulation.

4. Capital Allocation and Shareholder Returns

RLX’s capital allocation remains aggressive yet disciplined, with nearly all non-GAAP net profits returned to shareholders via buybacks and dividends over the past four years. The company’s $2.2 billion cash and investment balance provides optionality for further strategic investments, portfolio expansion, and sustained capital returns.

Key Considerations

RLX’s Q3 marks a strategic inflection point, with international momentum offsetting ongoing China volatility. Investors should focus on the sustainability of this mix shift and RLX’s ability to maintain innovation and compliance leadership as global regulatory scrutiny intensifies.

Key Considerations:

• International Execution: Sustained organic growth and channel innovation in APAC and Europe underpin the new revenue base.
• China Recovery Remains Constrained: Mainland revenue is just 13% of pre-regulation levels, and market normalization depends on enforcement consistency.
• Portfolio Diversification: Expansion into modern oral and new product launches create new vectors for growth and risk mitigation.
• Regulatory Adaptability: Successful navigation of the UK ban and active advocacy in China highlight RLX’s regulatory acumen.
• Financial Flexibility: Strong cash flow and disciplined capital returns provide downside protection and upside optionality.

Risks

Persistent regulatory risk remains the largest overhang, especially in China, where enforcement inconsistency and illicit trade distort competitive dynamics. Internationally, evolving regulations—such as flavor bans or restrictions on product formats—could disrupt growth trajectories. Integration risk in Europe and the need to maintain innovation pace are additional execution challenges flagged by both management and analysts on the call.

Forward Outlook

For Q4 2025, RLX signaled:

• Continued focus on selective international expansion, contingent on regulatory clarity and market readiness
• Further scaling of the European platform and phased rollout of modern oral products

For full-year 2026, management maintained a disciplined approach to guidance:

• Detailed revenue plans to be shared in coming quarters as market conditions evolve

Management highlighted several factors that will influence near-term performance:

• Ongoing product innovation and tailored channel strategies in APAC and Europe
• Potential for further regulatory tightening or liberalization, especially in China and the UK

Takeaways

RLX’s Q3 demonstrates a structural shift to international-driven growth, with margin gains and strong capital returns reinforcing the new business model. Ongoing regulatory uncertainty and the need for continuous innovation remain key variables for 2026 and beyond.

• International Pivot: RLX is now structurally less dependent on China, with APAC and Europe driving both growth and profit expansion.
• Innovation and Channel Strategy: Franchise retail models and new product launches are critical to sustaining differentiation and capturing new segments.
• Regulatory Watch: Investors should monitor regulatory developments in both China and Europe, as these will shape market access and category growth.

Conclusion

RLX’s Q3 results mark a pivotal moment, with international markets now firmly at the center of its growth and profit narrative. Disciplined execution, margin expansion, and a robust capital return framework position the company well, but regulatory volatility and innovation demands will remain the defining challenges for the next phase.

Industry Read-Through

RLX’s results highlight a broader industry shift: Global vape and smokeless tobacco companies must adapt to regulatory fragmentation, channel innovation, and consumer preference shifts across regions. The success of franchise retail models and rapid product localization in APAC may serve as a blueprint for peers. European market consolidation and adaptation to regulatory bans (such as the UK disposable restriction) will likely become a recurring theme. Companies with strong balance sheets and agile R&D can better absorb regulatory shocks and capture new category growth, while those reliant on legacy markets face heightened risk.

RLX Consumer Staples Tobacco International Expansion Regulatory Product Innovation Capital Returns