Hello ladies and gentlemen. Thank you for standing by for RLX Technology Inc.'s First Quarter 2026 Earnings Conference Call. At this time all participants are in listen only mode. After management's remarks there will be a question and answer session. 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.

Thank you very much. Hello, everyone, and welcome to Irish Technologies' first 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.RelaxTag.com. Participants on today's call will include our Chief Executive Officer, Ms. Case Wang, our Chief Financial Officer, Mr. Chao Lu, and me, Sam Tsang, Head of Capital Markets. Before we continue, please note that today's discussion will contain forward-looking information made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements usually contain words such as may, will, expect, anticipate, aim, estimate, intent, plan, belief, potential, continue, or other similar expressions. Poor-looking statements involve inherent risk and uncertainties. The accuracy of these statements may be impacted by a number of missed risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, many of which are factors beyond our control. The companies, its affiliates, advisors, and representatives do not undertake any obligation to update its word of information except as required under the applicable law. Please note that Rx Technologies earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Rx 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 only. In case of any discrepancy, management statements in the original language will prevail. I will now turn the call over to Ms. Case 1. Please go ahead.

Thank you, Sam, and thank you all for joining today's call. We are off to a robust start in 2026. Supported by a highly scalable global ecosystem and our ability to capture rising market opportunities. We achieved strong revenue growth, increasing by 96.2% year-over-year and 38.9% quarter-over-quarter. As we continue to accelerate our international expansion and deepen our global presence, Our international business sustained its rapid organic growth, while our non-China business demonstrated resilience and stability. We further refined our user-first approach through highly localized strategies and engagement with trusted regional business partners across the value chain to ensure the pure product market fit. We also integrated our R&B manufacturing and commercial operation into our cutting-edge hub, which we called Nexus, further enhancing our core capabilities and competitive edge. These initiatives along with our growing operational agility enable us to quickly align with evolving market dynamics and seamlessly meet global demand, further strengthening our presence across key international markets. Let me now walk you through our recent business update in more detail. The global regulatory landscape around tobacco and smokeless alternatives continues to evolve. The United Kingdom's landmark Tobacco and Waves Act, which officially became law in April 2026, is a notable example reflecting a growing global trend toward phasing out combustibles while maintaining regulated pathways for harm reduction alternatives. Under this rule, anyone born after 2009 will never be legally permitted to purchase combustible cigarettes. Importantly, the ban applies only to cigarettes and exempts regulated harm reduction alternatives, such as VIX. In effect, the UK is readily eliminating the future consumer base for cigarettes while preserving the existing regulatory framework for our category. We believe that this will now be an isolated development. Public health improvements are increasing being pursued worldwide by restricting tobacco while regulating harm reduction products. Companies like AIX technology with strong compliance capabilities, best-in-class product quality and a proactive regulatory approach, this represents a welcome structural tailwind rather than a headwind. The well-regulated market rewards scale, compliance, and innovation, areas where we already lead. As regulatory uncertainty diminish, the competitive landscape is expected to become more defined, and our differentiated position may become even more valuable. Moving on to our international expansion, Europe maintains a cornerstone of our global strategy given its increasingly mature regulatory environment and strong demand for high-quality alternatives. Our May 2025 strategic investments in a European company has delivered value that extends well beyond the financial strengthening our capability in navigating local market dynamics. Our successful integration in the operational appearance have given us the confidence to evaluate further expansion across the continent. Our expansion in Europe is driven by a dual engine strategy that plays equal importance on strategic M&A and organic growth. We are optimistic about the European potential. We maintain a highly selective approach to strategic investments, prioritizing long-term synergy rather than an immediate scale. We are focused on building a strong foundation through product and operational excellence, Developing products tailored to European consumer preference and the regulatory standards while deepening our distribution partnerships and expanding our presence across key retail channels. At the same time, we are crafting our reputation as a premium, reliable brand that resonates with local lifestyle and offers innovation that users can trust, ensuring that our presence is both impactful and long-lasting. We believe Europe is a high-value, high-barrier market. We are not seeking rapid entry, but rather building a durable presence with care and discipline. On the operational side, I'm pleased to announce that our integrated smart manufacturing facility Nexus is now fully operational. This is more than a manufacturing upgrade. Expanding our self-manufacturing capability and capacity and bringing R&D manufacturing and commercial operations on the one roof allows us to pursue complex, high precision, quality standards, and long-term strategic direction. Our self-manufacturing capability also serves as a closed-loop intellectual property fortress. Our problem-free technologies will maintain fully within our control, and they want it that it's difficult for competitors to replicate. In addition, this integrated hub has materially improved our operational efficiency, enabling faster decision-making and a more agile response to global market shifts. To sum up, we continue to integrate regulatory expertise and international market intelligence to build more resilient, more scalable global platforms. Against the backdrop, we remain focused on driving innovation and user-centric product development while further enhancing our distribution and retail capabilities and accelerating of expansion in Europe, and spontaneously defending and elevating our leading market share in Asia. Looking ahead, with a quality-led growth strategy and a strong commitment to innovation and compliance, we will continue to deliver sustainable long-term value for our global stakeholders. Now I will hand the call over to Chao to review our financial results in detail.

In the first quarter of 2020, strong top line results with net revenues reaching RMB 1.59 billion, up 96% year over year, and 38.9% quarter over quarter. Growth was primarily driven by accretion from our acquired steady progress in our mainland China business as well as one-time international business remained our key for over 70% of total net revenues for several consecutive. We structurally improved our margin profile through disciplined cost management and scale efficiency, this product portfolio expanded to 31.8% in the first quarter by more favorable product mix. Ongoing from the revenue growth also translated into profitability. Our non-GAAP operating margin expanded to 19.6% compared to 13.9%. Non-GAAP net in RMB 303 million, a 41.4% increase in our ability to translate top-line momentum in a highly resilient financial position. As of March 31, 2026, our total financial assets including cash, cash equivalents and various deposits and investments reached RMB 14.53 billion, approximately US 2.11 billion. While this represents a sequential decrease from R&B $15.73 billion as of December 31st, 2025, the change primarily reflects our commitment to delivering shareholder value through dividend payments made during the quarter is strong, supported by efficient and well-controlled cash. In the first quarter, accounts and notes receivable turnover days were 15 days or 32 days and payable turnover days. The remainder of the year with a strong balance sheet, which provides us financial flexibility to execute our next phase of growth penetration.

Thank you. We will now begin the question and answer session. To ask a question, you may press star and then 1 on a touchtone phone. And to withdraw your question, please press star, then 2. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Again, it is star and then 1 to ask a question. Our first question today will come from Ling Zhao with UBS. Please go ahead.

Thank you. Congratulations, management, for the great quarter. I have two questions. So the first question is, can management provide an update on the integration of the European invested company and your operations in the U.K. market, please? And then the second question would be on the recent FDA decisions on flavored waves approval in the U.S. So does management see any implications for relaxed global strategy, especially on the potentials operating in the U.S.? On the other hand, how does the management assess the easing of e-cigarettes policies in China? Thank you.

Thank you very much, Joling, regarding your two questions. So the first question is about our European strategy and also our operations in the UK markets. So our approach to the integration is centered on strategic alignments rather than day-to-day operational interference. It is a synergetic relationship. We highly value the deep local expertise and market insights that our team from the acquired European companies brings to the table. We believe their understanding of the local landscape is instrumental in refining our broader European strategy. And at this stage, their insights are actively informing our strategic decisions. In return, we are empowering them by providing the necessary capital resources and global platform supports to scale their businesses. For instance, we have recently invested a new local warehouse facility to resolve previous previous capital constraints that hinder their growth. This infrastructure allows them to significantly scale up operations and improve distribution efficiency. Looking ahead, we intend to leverage our cash position to help them secure more downstream resources. By blending our global innovation capabilities with their localized execution, we can capture market share more efficiently. Regarding your second question about the FDA recent decisions, we currently do not have operations in the United States. We are considering these developments from a broader industry perspective. The recent FDA guidance suggests a potential shift toward a more defined enforcement strategy that may favor credible PMT applications from legitimate industry players. While this could make product launch more predictable for industry, we cannot speculate on future regulatory outcomes in that market. As for the China markets, we support regulators in combating illegal products and welcome measures that foster a healthier and more sustainable industry. We remain fully prepared in terms of product innovation and brand equity to respond to any regulatory changes. Our immediate strategic focus remains on deepening our presence in Asia and Europe and other established international regions where we have clear operational levers. We focus on resources and markets where we can drive tangible growth today. Thank you very much for your question.

Our next question today will come from Lydia Ling of Citi. Please go ahead.

Hi, management. Congratulations on the results. So my question would be on your European business. So actually we noticed that in the U.K. we actually put a smoking ban for people born after 2008. So what would be the implication to your business, and how do you think about whether the events would benefit the development of the vape industry, and what would be our outlook for the European business? I think we also mentioned that there would be our strategy focus. So what would be our outlook for the kind of growth in Europe in this year?

Thank you very much, Lydia, for your question. We view the UK's generational smoking ban as a significant milestone in the government's long-term commitments to a smoke-free future. It's crucial to know that while the ban targets combustible cigarettes, the purchase age for e-vapor remains at 18. This effectively positioned e-vapor as the only legal nicotine consumption channel for future generations who were born after 2008 as they reached adulthood, reinforcing its role as the primary harm reduction tool. The combination of this ban with the upcoming vaping product duty in October 2026 and the HMRC licensing scheme, which significantly raised the barriers to entry, would believe this will effectively clear the markets of non-compliant black market brands, allowing established compliance leaders like Rx to reclaim and expand our market share in the UK markets.

Our next question today will come from Zoe Zhao of CICC. Please go ahead.

Thanks, management. Can you give us some updates on your investment plan in Europe and market strategy for new categories like Oroporch and H&B. Thank you.

Thank you, Sui, for your question. So our European strategies continues to follow a deal engine approach. Our management team has significantly shifted the focus towards European operations, successfully entering into new regions and channel this quarter. We are leveraging and growing understanding of the European consumer to enhance outcome. Regarding M&A, we are actively evaluating opportunities that offer clear long-term strategies. We remain highly disciplined and cautious in our evaluations. While we will see many potential opportunities, these projects involve hearing uncertainties. Therefore, we do not include unannounced projects in our recent guidance and will share updates only when they are materialized. Regarding the new categories that you mentioned, for the modern oral products, we are steadily scaling up our production capacity and actively identifying new distribution channels. We have high confidence in the competitiveness of our oral products and is highly differentiated. Once our overseas manufacturing infrastructure is fully established, we expect to see a significant uplifts in sales volume. For H&B Heated Tobacco, while we possess the necessary technical results for this category, our current market dynamics assessment suggests that the timing is not optimal for a large-scale investment. Therefore, we do not have any immediate launch plan for this category. Primary focus remains on capturing more market share within the e-maper sector where we see the most immediate and substantial opportunities for growth. Thank you for your question.

And our next question today will come from Yan Gao of CITIX. Please go ahead.

Thanks, management. My question is that will the compilation of Chinese export tax rebates affect the company's production costs? Thank you.

Thank you, Goyun, for your question. In the short term, the anticipated policy shifts partially contributed to our significant revenue increase in the first quarter. As the cancellation took effect in April 2026, we saw downstream partners engage in strategic infantry positioning during the first quarter to mitigate potential price adjustments. This front-loading effect is now largely behind us, and we observed that the total volume of such push forward is relatively moderate. It is important to clarify that this policy change has little impact on organic end-user demand. It only caused a temporary shift in the timing of channel orders. Because the e-vapor value chain involves multiple layers, the actual impact of this test change on final retail prices is expected to be manageable. We will implement appropriate cost pass-through mechanisms when necessary, and we believe the long-term impact on our overall cost structure and margins would be minimal. Thank you for your question.

Again, it is Star and then One to ask a question, and our next question today will come from Charlie Chen of CCBI. Please go ahead.

Thanks, management, to take my questions. I just would like management to give us more color on the current status of your overseas expansion. And also, do you have entered any new market in the first quarter? Thank you very much.

Thank you very much, Charlie, for your question. So in the first quarter of this year, we successfully entered into two markets located in Southeast Asia and Europe. Our global expansion strategy is progressing well in line with our segmented approach based on our varying degrees of market maturity. In Asia, where we have established ourselves as the number one brand, our focus is on leveraging our significant brand equity and scale as a competitive mode. Our top-of-mind brand awareness among adult users in these regions allow us to enter new neighboring markets with a high degree of efficiency and consumer trust. We are essentially replicating our proven success models models while further deepening our distribution network. In Europe, we are in an active race of strategic exploration and adaption. While the landscape is diverse, we are increasingly confident as we refine our understanding of local consumer preferences and the evolving regulatory framework. Our approach here is more nuanced, focusing on delivering tailored, high-quality products and building deep-rooted partnership with local stakeholders to ensure long-term and compliance growth. Thank you for our question.

This will conclude our question and answer session. At this time, I'd like to turn the conference back over to Sam Zeng for any closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Rx Technology's Investor Relations team through the contact information provided on all websites of the Ashanti Financial Communications.

The conference has now concluded, and we do thank you for attending today's presentation. You may now disconnect your lines.