Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2022 |
Entity File Number | 001-39902 |
Entity Registrant Name | RLX Technology Inc. |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 19/F, Building 1, Junhao Central Park Plaza |
Entity Address, Address Line Two | No. 10 South Chaoyang Park Avenue |
Entity Address, Address Line Three | Chaoyang District |
Entity Address, City or Town | Beijing |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 100026 |
Entity Common Stock, Shares Outstanding | 1,570,790,570 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001828365 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Auditor Name | PricewaterhouseCoopers Zhong Tian LLP |
Auditor Location | Beijing, the People’s Republic of China |
Auditor Firm ID | 1424 |
Business Contact | |
Document Information [Line Items] | |
Entity Address, Address Line One | 19/F, Building 1, Junhao Central Park Plaza |
Entity Address, Address Line Two | No. 10 South Chaoyang Park Avenue |
Entity Address, Address Line Three | Chaoyang District |
Entity Address, City or Town | Beijing |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 100026 |
Country Region | 86 |
City Area Code | 10 |
Local Phone Number | 2173 7265 |
Contact Personnel Name | Chao Lu |
Contact Personnel Email Address | ir@relxtech.com |
American Depository Shares | |
Document Information [Line Items] | |
Title of 12(b) Security | American Depositary Shares, eachrepresenting one Class A ordinary share,par value US$0.00001 per share |
Trading Symbol | RLX |
Security Exchange Name | NYSE |
Class A ordinary shares | |
Document Information [Line Items] | |
Title of 12(b) Security | Class A ordinary shares,par value US$0.00001 per share* |
Security Exchange Name | NYSE |
No Trading Symbol Flag | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Current assets | |||
Cash and cash equivalents | ¥ 1,268,512 | $ 183,917 | ¥ 5,208,967 |
Restricted cash | 20,574 | 2,983 | 500 |
Short-term bank deposits, net | 7,084,879 | 1,027,211 | 4,022,119 |
Receivables from online payment platforms | 3,000 | 435 | 10,006 |
Short-term investments | 2,434,864 | 353,022 | 3,621,637 |
Accounts and notes receivable, net | 51,381 | 7,450 | 14,024 |
Inventories | 130,901 | 18,979 | 589,088 |
Amounts due from related parties | 5,112 | 741 | 1,936 |
Prepayments and other current assets, net | 198,932 | 28,842 | 482,659 |
Total current assets | 11,198,155 | 1,623,580 | 13,950,936 |
Non-current assets | |||
Property, equipment and leasehold improvement, net | 87,871 | 12,740 | 143,155 |
Intangible assets, net | 7,552 | 1,095 | 8,366 |
Long-term investments, net | 8,000 | 1,160 | 12,000 |
Deferred tax assets, net | 63,894 | 9,264 | 20,856 |
Right-of-use assets, net | 75,008 | 10,875 | 176,258 |
Long-term bank deposits, net | 1,515,428 | 219,716 | 2,004,593 |
Long-term investment securities, net | 3,409,458 | 494,325 | |
Other non-current assets, net | 13,458 | 1,951 | 48,961 |
Total non-current assets | 5,180,669 | 751,126 | 2,414,189 |
Total assets | 16,378,824 | 2,374,706 | 16,365,125 |
Current liabilities | |||
Accounts and notes payable (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB1,288,845 and RMB 268,761 as of December 31, 2021 and 2022, respectively) | 269,346 | 39,052 | 1,288,845 |
Contract liabilities (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB286,651 and RMB3,829 as of December 31, 2021 and 2022, respectively) | 75,226 | 10,907 | 286,651 |
Salary and welfare benefits payable (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB107,614 and RMB53,438 as of December 31, 2021 and 2022, respectively) | 127,749 | 18,522 | 170,393 |
Taxes payable (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB590,718 and RMB93,700 as of December 31, 2021 and 2022, respectively) | 109,676 | 15,902 | 597,761 |
Accrued expenses and other current liabilities (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB304,594 and RMB132,762 as of December 31, 2021 and 2022, respectively) | 161,455 | 23,409 | 313,396 |
Amounts due to related parties (including amounts of the consolidated VIE without recourse to the primary beneficiary of nil and RMB423 as of December 31, 2021 and 2022, respectively) | 423 | 61 | |
Lease liabilities - current portion (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB80,319 and RMB36,905 as of December 31, 2021 and 2022, respectively) | 45,955 | 6,663 | 80,582 |
Total current liabilities | 789,830 | 114,516 | 2,737,628 |
Non-current liabilities | |||
Deferred tax liabilities (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB4,513 and RMB8,653 as of December 31, 2021 and 2022, respectively) | 8,653 | 1,255 | 4,513 |
Lease liabilities - non-current portion (including amounts of the consolidated VIE without recourse to the primary beneficiary of RMB102,830 and RMB30,593 as of December 31, 2021 and 2022, respectively) | 39,968 | 5,795 | 104,232 |
Total noncurrent liabilities | 48,621 | 7,050 | 108,745 |
Total liabilities | 838,451 | 121,566 | 2,846,373 |
Commitments and contingencies | |||
Shareholders' equity | |||
Ordinary shares (US$0.00001 par value; 15,000,000,000 shares authorized; 1,570,790,570 shares issued and 1,565,730,837 shares outstanding as of December 31, 2021; 1,570,790,570 shares issued and 1,528,356,928 shares outstanding as of December 31, 2022) | 104 | 15 | 103 |
Treasury stock | (627,886) | (91,035) | (127,516) |
Additional paid-in capital | 12,062,278 | 1,748,866 | 11,881,023 |
Statutory reserves | 27,811 | 4,032 | 2,319 |
Retained earnings | 3,324,616 | 482,024 | 1,908,889 |
Accumulated other comprehensive (loss)/income | 782,137 | 113,399 | (149,866) |
Total RLX Technology Inc. shareholders' equity | 15,569,060 | 2,257,301 | 13,514,952 |
Noncontrolling interests | (28,687) | (4,161) | 3,800 |
Total shareholders' equity | 15,540,373 | 2,253,140 | 13,518,752 |
Total liabilities and shareholders' equity | ¥ 16,378,824 | $ 2,374,706 | ¥ 16,365,125 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares |
Accounts and notes payable | ¥ 269,346 | ¥ 1,288,845 |
Contract liabilities | 75,226 | 286,651 |
Salary and welfare benefits payable | 127,749 | 170,393 |
Taxes payable | 109,676 | 597,761 |
Amounts due to related parties | 423 | |
Lease liabilities - current portion | 45,955 | 80,582 |
Deferred tax liabilities | 8,653 | 4,513 |
Lease liabilities - non-current portion | ¥ 39,968 | ¥ 104,232 |
Ordinary shares, shares authorized | shares | 15,000,000,000 | 15,000,000,000 |
Ordinary shares, shares issued | shares | 1,570,790,570 | 1,570,790,570 |
Ordinary shares, shares outstanding | shares | 1,528,356,928 | 1,565,730,837 |
VIE | ||
Accounts and notes payable | ¥ 268,761 | ¥ 1,288,845 |
Contract liabilities | 3,829 | 286,651 |
Salary and welfare benefits payable | 53,438 | 107,614 |
Taxes payable | 93,700 | 590,718 |
Accrued expenses and other current liabilities | 132,762 | 304,594 |
Amounts due to related parties | 423 | 0 |
Lease liabilities - current portion | 36,905 | 80,319 |
Deferred tax liabilities | 8,653 | 4,513 |
Lease liabilities - non-current portion | ¥ 30,593 | ¥ 102,830 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME | ||||
Net revenues | ¥ 5,332,779 | $ 773,180 | ¥ 8,520,978 | ¥ 3,819,712 |
Cost of revenues | (2,974,981) | (431,332) | (4,848,918) | (2,292,153) |
Excise tax on products | (52,668) | (7,636) | ||
Gross profit | 2,305,130 | 334,212 | 3,672,060 | 1,527,559 |
Operating expenses: | ||||
Selling expenses (including share-based compensation expenses of RMB142,325, RMB48,615 and nil allocated from Relx Inc. ("the former parent") and corporate expenses allocated to Relx Inc. of RMB1,744, nil and nil for the years ended December 31, 2020, 2021 and 2022, respectively) | (347,798) | (50,426) | (520,694) | (443,154) |
General and administrative expenses (including share-based compensation expenses of RMB593,473, RMB381,977 and nil allocated from Relx Inc. and corporate expenses allocated to Relx Inc. of RMB7,298, nil and nil for the years ended December 31, 2020, 2021 and 2022, respectively) | (576,811) | (83,630) | (672,748) | (771,971) |
Research and development expenses (including share-based compensation expenses of RMB193,300, RMB43,540 and nil allocated from Relx Inc. and corporate expenses allocated to Relx Inc. of RMB2,931, nil and nil for the years ended December 31, 2020, 2021 and 2022, respectively) | (317,110) | (45,977) | (179,913) | (299,285) |
Total operating expenses | (1,241,719) | (180,033) | (1,373,355) | (1,514,410) |
Income from operations | 1,063,411 | 154,179 | 2,298,705 | 13,149 |
Other income: | ||||
Interest income, net | 180,729 | 26,203 | 72,414 | 32,407 |
Investment income | 136,531 | 19,795 | 94,222 | 20,352 |
Others, net | 399,641 | 57,942 | 194,209 | 36,523 |
Income before income tax | 1,780,312 | 258,119 | 2,659,550 | 102,431 |
Income tax expense | (371,580) | (53,874) | (631,426) | (230,532) |
Net (loss)/income | 1,408,732 | 204,245 | 2,028,124 | (128,101) |
Less: net income/(loss) attributable to noncontrolling interests | (32,487) | (4,710) | 3,411 | |
Net (loss)/income attributable to RLX Technology Inc. | 1,441,219 | 208,955 | 2,024,713 | (128,101) |
Other comprehensive income/(loss): | ||||
Foreign currency translation adjustments | 937,428 | 135,914 | (149,188) | 141 |
Unrealized loss on long-term investment securities | (5,425) | (787) | ||
Total other comprehensive income/(loss) | 932,003 | 135,127 | (149,188) | 141 |
Total comprehensive (loss)/income | 2,340,735 | 339,372 | 1,878,936 | (127,960) |
Less: total comprehensive income/(loss) attributable to noncontrolling interests | (32,487) | (4,710) | 3,411 | |
Total comprehensive (loss)/income attributable to RLX Technology Inc. | ¥ 2,373,222 | $ 344,082 | ¥ 1,875,525 | ¥ (127,960) |
Net (loss)/income per ordinary share | ||||
- Basic | (per share) | ¥ 1.092 | $ 0.158 | ¥ 1.445 | ¥ (0.089) |
- Diluted | (per share) | ¥ 1.085 | $ 0.157 | ¥ 1.436 | ¥ (0.089) |
Weighted average number of ordinary shares | ||||
- Basic | 1,319,732,802 | 1,319,732,802 | 1,401,371,494 | 1,436,815,570 |
- Diluted | 1,328,144,092 | 1,328,144,092 | 1,409,690,879 | 1,436,815,570 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Sharebased compensation expense | ¥ 166,161 | ¥ 223,345 | ¥ 929,098 |
Relx inc (the former parent) | Selling expenses | |||
Sharebased compensation expense | 0 | 48,615 | 142,325 |
Corporate expense | 0 | 0 | 1,744 |
Relx inc (the former parent) | General and administrative expenses | |||
Sharebased compensation expense | 0 | 381,977 | 593,473 |
Corporate expense | 0 | 0 | 7,298 |
Relx inc (the former parent) | Research and development expenses | |||
Sharebased compensation expense | 0 | 43,540 | 193,300 |
Corporate expense | ¥ 0 | ¥ 0 | ¥ 2,931 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Ordinary shares CNY (¥) shares | Treasury Stock CNY (¥) shares | Additional Paid-in capital CNY (¥) | Statutory reserves CNY (¥) | (Accumulated deficit)/ retained earnings CNY (¥) | Accumulated other comprehensive (loss)/income CNY (¥) | Non- controlling interests CNY (¥) | CNY (¥) shares | USD ($) shares |
Balance at the beginning at Dec. 31, 2019 | ¥ 94 | ¥ 59,544 | ¥ 1,000 | ¥ 46,461 | ¥ (819) | ¥ 106,280 | |||
Balance at the beginning (in shares) at Dec. 31, 2019 | shares | 1,436,816,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net (loss)/income | (128,101) | (128,101) | |||||||
Share-based compensation | 929,098 | 929,098 | |||||||
Foreign currency translation adjustments | 141 | 141 | |||||||
Deemed settlement of amount due to Relx Inc. | 600,000 | 600,000 | |||||||
Others | 1,215 | 1,215 | |||||||
Balance at the end at Dec. 31, 2020 | ¥ 94 | 1,589,857 | 1,000 | (81,640) | (678) | 1,508,633 | |||
Balance at the end (in shares) at Dec. 31, 2020 | shares | 1,436,816,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net (loss)/income | 2,024,713 | ¥ 3,411 | 2,028,124 | ||||||
Issuance of ordinary shares upon Initial Public Offering ("IPO") | ¥ 9 | 10,034,956 | 10,034,965 | ||||||
Issuance of ordinary shares upon Initial Public Offering ("IPO") (in shares) | shares | 133,975,000 | ||||||||
Capital contribution from noncontrolling interests | 389 | 389 | |||||||
Share-based compensation | 223,345 | 223,345 | |||||||
Appropriation to statutory reserves | 1,319 | (1,319) | |||||||
Share-based awards to employees of Relx Inc. | 325,447 | 325,447 | |||||||
Deemed dividend to shareholders in connection with the share-based awards to employees of Relx Inc. | (292,582) | (32,865) | (325,447) | ||||||
Shares reserved for future exercise of share-based awards due to share distribution | shares | (224,936,000) | ||||||||
Share repurchase | ¥ (127,516) | (127,516) | |||||||
Share repurchase (in shares) | shares | (5,060,000) | ||||||||
Foreign currency translation adjustments | (149,188) | (149,188) | |||||||
Balance at the end at Dec. 31, 2021 | ¥ 103 | ¥ (127,516) | 11,881,023 | 2,319 | 1,908,889 | (149,866) | 3,800 | ¥ 13,518,752 | |
Balance at the end (in shares) at Dec. 31, 2021 | shares | 1,570,791,000 | 1,570,790,570 | 1,570,790,570 | ||||||
Balance at the end (in shares) at Dec. 31, 2021 | shares | (229,996,000) | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net (loss)/income | 1,441,219 | (32,487) | ¥ 1,408,732 | $ 204,245 | |||||
Share-based compensation | 166,161 | 166,161 | 24,091 | ||||||
Unrealized loss on long-term investment securities | (5,425) | (5,425) | $ (787) | ||||||
Appropriation to statutory reserves | 25,492 | (25,492) | |||||||
Exercising of share-based awards (in shares) | shares | 9,649,000 | ||||||||
Exercising of share-based award | ¥ 1 | 15,094 | 15,095 | ||||||
Share-based awards to employees of Relx Inc. | (80,649) | (80,649) | |||||||
Deemed dividend to shareholders in connection with the share-based awards to employees of Relx Inc. | 80,649 | 80,649 | |||||||
Share repurchase | ¥ (500,370) | ¥ (500,370) | |||||||
Share repurchase (in shares) | shares | (37,374,000) | (42,400,000) | (42,400,000) | ||||||
Foreign currency translation adjustments | 937,428 | ¥ 937,428 | $ 135,914 | ||||||
Balance at the end at Dec. 31, 2022 | ¥ 104 | ¥ (627,886) | ¥ 12,062,278 | ¥ 27,811 | ¥ 3,324,616 | ¥ 782,137 | ¥ (28,687) | ¥ 15,540,373 | $ 2,253,140 |
Balance at the end (in shares) at Dec. 31, 2022 | shares | 1,570,791,000 | 1,570,790,570 | 1,570,790,570 | ||||||
Balance at the end (in shares) at Dec. 31, 2022 | shares | (257,721,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Cash flows from operating activities: | ||||
Net (loss)/income | ¥ 1,408,732 | $ 204,245 | ¥ 2,028,124 | ¥ (128,101) |
Adjustments to reconcile Net (loss)/income to net cash generated from operating activities: | ||||
Depreciation of property, equipment and leasehold improvement | 76,041 | 11,025 | 40,865 | 19,671 |
Amortization of right-of-use assets | 83,051 | 12,041 | 67,907 | 39,382 |
Amortization of intangible assets | 5,367 | 778 | 4,774 | 3,396 |
Loss on disposal of long-term assets | 1,228 | 178 | 4,096 | |
Dividend income | (640) | (93) | ||
Deferred income tax | (38,898) | (5,640) | (15,553) | (11,260) |
Inventory write-downs | 179,694 | 26,052 | 89,071 | |
Interest expense | 1,402 | 203 | ||
Foreign exchange (gain)/loss | 5,818 | 844 | (1,327) | (15,407) |
Share-based compensation expenses | 166,161 | 24,091 | 223,345 | 929,098 |
Impairment of long-term investments | 4,000 | 580 | 0 | 1,000 |
Unrealized investment income of short-term investments | (68,876) | (9,986) | (15,787) | (4,349) |
Impairment of property, equipment, and leasehold improvement and intangible assets | 29,938 | 4,341 | ||
Impairment of other non-current assets | 12,591 | 1,825 | ||
Provision for credit losses | 25,039 | 3,630 | 2,562 | 0 |
Changes in operating assets and liabilities: | ||||
Accounts and notes receivable | (37,417) | (5,425) | 5,924 | 18,706 |
Receivables from online payment platforms | 7,006 | 1,016 | (9,144) | 8,683 |
Inventories | 278,493 | 40,378 | (349,036) | (109,812) |
Amounts due from related parties | (3,176) | (460) | (1,936) | |
Amounts due to related parties | 423 | 61 | ||
Prepayments and other current assets | 357,876 | 51,887 | (408,430) | 29,090 |
Other non-current assets | 11,159 | 1,618 | (17,582) | 1,495 |
Accounts and notes payable | (1,019,499) | (147,813) | (170,937) | 960,761 |
Contract liabilities | (211,425) | (30,654) | (33,783) | 302,024 |
Salary and welfare benefits payable | (42,644) | (6,183) | (9,165) | 137,240 |
Taxes payable | (490,645) | (71,137) | 234,117 | 360,861 |
Accrued expenses and other current liabilities | (173,278) | (25,123) | 193,916 | 86,059 |
Lease liabilities | (80,692) | (11,695) | (62,129) | (39,154) |
Net cash generated from operating activities | 486,829 | 70,584 | 1,799,892 | 2,589,383 |
Cash flows from investing activities: | ||||
Payments made on behalf of related parties | (70,696) | |||
Purchase of property, equipment, and leasehold improvement | (38,638) | (5,602) | (130,940) | (12,585) |
Purchase of intangible assets | (5,930) | (860) | (7,896) | (4,869) |
Purchase of short-term bank deposits | (18,525,804) | (2,685,989) | (3,245,043) | (2,021,693) |
Purchase of long-term bank deposits | (8,835,258) | (1,280,992) | (4,146,201) | |
Proceeds from maturities of short-term bank deposits | 16,012,167 | 2,321,546 | 1,141,344 | 1,725,949 |
Proceeds from maturities of long-term bank deposits | 9,569,537 | 1,387,452 | 637,570 | |
Purchase of short-term investments | (14,946,940) | (2,167,103) | (14,320,000) | (5,444,000) |
Purchase of long-term investment securities | (3,481,674) | (504,795) | (8,000) | |
Proceeds from maturities of short-term investments | 13,415,500 | 1,945,065 | 9,675,500 | 3,042,000 |
Sale of short-term investments | 2,704,000 | 392,044 | 2,512,000 | 973,000 |
Investment prepayment returned from Relx Inc. | 21,006 | |||
Net cash used in investing activities | (4,133,040) | (599,234) | (7,870,660) | (1,812,894) |
Cash flows from financing activities: | ||||
Proceeds from issuance of ordinary share upon IPO, net of issuance costs | 10,042,422 | |||
Capital contribution from non-controlling interest | 389 | |||
Proceeds from bank loan | 198,598 | 28,794 | ||
Repayments of bank loans | (200,000) | (28,997) | ||
Proceeds from exercise of employees' share options | 23,862 | 3,459 | ||
Financing proceeds received on behalf of Relx Inc. | 273,457 | |||
Financing proceeds paid back to Relx Inc. | (273,457) | |||
Funds provided by Relx Inc. | 1,439,183 | |||
Funds paid back to Relx Inc. | 0 | (11,174) | (1,264,004) | |
Cash payments for repurchase of shares | (500,370) | (72,547) | (127,516) | |
Other financing activities | 640 | 93 | (298) | |
Net cash generated from/(used in) financing activities | (477,270) | (69,198) | 9,904,121 | 174,881 |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 203,100 | 29,446 | (78,687) | 19,339 |
Net increase/(decrease) in cash, cash equivalents and restricted cash | (3,920,381) | (568,402) | 3,754,666 | 970,709 |
Cash, cash equivalents and restricted cash at the beginning of the year | 5,209,467 | 755,302 | 1,454,801 | 484,092 |
Cash, cash equivalents and restricted cash at the end of the year | 1,289,086 | 186,900 | 5,209,467 | 1,454,801 |
Including: | ||||
Cash and cash equivalents at the end of the year | 1,268,512 | 183,917 | 5,208,967 | 1,113,988 |
Restricted cash at the end of the year | 20,574 | 2,983 | 500 | 340,813 |
Supplemental disclosures of cash flow information: | ||||
Cash paid for income taxes | 743,528 | 107,801 | 471,255 | 11,314 |
Cash paid for interest | 1,402 | 203 | ||
Non-cash investing and financing activities: | ||||
Property, equipment and leasehold improvement financed by other payables | 154 | 22 | 2,551 | 5,238 |
Deemed settlement of amount due to Relx Inc. | ¥ 600,000 | |||
Deemed dividend to shareholders in connection with the share-based awards to employees of Relx Inc. | ¥ (80,649) | $ (11,693) | ¥ 325,447 |
Nature of operations and reorga
Nature of operations and reorganizations | 12 Months Ended |
Dec. 31, 2022 | |
Nature of operations and reorganizations | |
Nature of operations and reorganizations | 1. a) Nature of operations RLX Technology Inc. (the “Company”) is a holding company incorporated in the Cayman Islands and conducts its business mainly through its subsidiaries and a variable interest entity (the “VIE”) in the People’s Republic of China (the “PRC”). The Company, its subsidiaries, the VIE and VIE’s subsidiaries together are referred to as the “Group”. The Group is primarily engaged in the manufacturing and sales of e-vapor products in the PRC (the “PRC Business”). b) Reorganizations The Company is an exempted company with limited liability in connection with a group reorganization of Relx Inc.. i) First Reorganization The PRC Business was initially carried out by Shenzhen Wuxin Technology Co., Ltd. (“Shenzhen Wuxin”), established on January 2, 2018 (date of inception), and Beijing Wuxin Technology Co., Ltd. (“Beijing Wuxin”), established on February 22, 2018. On May 18, 2018, Beijing Wuxin closed a preferred share financing (the “Domestic PS Financing”) with two investors, Investor A and Investor B. On August 16, 2018, Relx Inc. was incorporated by Ms. Ying (Kate) Wang and Mr. Bing Du under the laws of the Cayman Islands as an exempted company with limited liability. By October 31, 2018, Relx Inc. completed a series of reorganization transactions (the “First Reorganization”) and obtained control over the PRC Business through contractual arrangements. The First Reorganization was completed with the steps described as below: ● Relx Inc. established a directly wholly owned subsidiary Relx HK Limited (“Relx HK”) on August 21, 2018. In October 2018, Relx HK established a wholly foreign-owned subsidiary in China, Beijing Yueke Technology Co., Ltd. (“Beijing Yueke”, or the “WFOE”). ● Beijing Yueke entered into a series of agreements with Beijing Wuxin and its shareholders, through which Beijing Yueke obtained control over Beijing Wuxin and its subsidiaries. Refer to Note 1 (c) VIE arrangements between Relx HK’s PRC subsidiaries for detailed information. ● Relx Inc. issued ordinary shares to Ms. Ying (Kate) Wang and Mr. Bing Du and issued Series Angel Preferred Shares (the “PS Angel”) to Investor A and Investor B, to replace their respective equity interest in Beijing Wuxin. As the shareholdings in Beijing Wuxin and Relx Inc. were with a high degree of common ownership immediately before and after the First Reorganization, the First Reorganization was determined to be a recapitalization transaction of the PRC Business and to lack economic substance, and therefore it was accounted for in a manner similar to a common control transaction. Consequently, the PRC Business’ assets and liabilities are presented on a carryover basis. After the First Reorganization, Relx Inc. completed multiple rounds of preferred shares financing (the “Relx Inc. PS”). Some of the proceeds were given to the Group as operating fund advances to support the growth of PRC Business, and other funds were used to pay for start-up and other expenses of newly developed operations in non-PRC countries and regions through other subsidiaries of Relx Inc., which are not part of the Group. The operating fund advances given to the Group were accounted for as increase to amounts due to related parties, and the fund the Group paid on behalf of the fellow subsidiaries were accounted for as an offset to such amounts due to Relx Inc.. 1. Nature of operations and reorganizations (Continued) b) Reorganizations (Continued) ii) Second Reorganization On September 24, 2020, the Company was established as a wholly owned subsidiary of Relx Inc.. Pursuant to a series of agreements entered into on September 25, 2020 and October 19, 2020 (the “Second Reorganization Agreements”), Relx Inc. transferred its 100% equity interests in Relx HK to the Company, upon completion of which, Relx HK became a wholly owned subsidiary of the Company and continues to hold the PRC Business through the same corporate structure in the PRC and the Company newly issued an ordinary share to Relx Inc. on October 19, 2020 (the “Second Reorganization”). Upon incorporation, the Company had 500,000,000 shares authorized, 1 ordinary share issued and outstanding outstanding Immediately before and after the Second Reorganization, the Company, Relx HK and its subsidiaries, the VIE and VIE’s subsidiaries involved in the Second Reorganization are ultimately controlled by Relx Inc.. Accordingly, the Second Reorganization is accounted for as a common control transaction and another recapitalization of the PRC Business. Therefore, the accompanying consolidated financial statements of the Company include the assets, liabilities, revenue, expenses and cash flows of the PRC Business for all the periods presented and are prepared as if the corporate structure of the Group after the Second Reorganization had been in existence throughout the periods presented. As of December 31, 2022, major subsidiaries, the VIE and VIE’s subsidiaries of Relx HK, the holding company of the PRC Business, were as follows: Percentage of direct or indirect Place of Date of economic incorporation incorporation ownership Principal activities Subsidiaries Beijing Yueke Technology Co., Ltd. Beijing, China October 25, 2018 100 % Investment holding Shanghai Wuke Information Technology Co., Ltd. (“Shanghai Wuke”) Shanghai, China July 26, 2019 100 % Investment holding VIE Beijing Wuxin Technology Co., Ltd. Beijing, China February 22, 2018 100 % Investment holding Subsidiaries of VIE Shenzhen Wuxin Technology Co., Ltd. Shenzhen, China January 2, 2018 100 % Selling e‑vapor products, research and development Ningbo Wuxin Information Technology Co., Ltd. (“Ningbo Wuxin”) Ningbo, China October 10, 2018 100 % Selling e‑vapor products 1. Nature of operations and reorganizations (Continued) b) Reorganizations (Continued) iii) Share splits and waiver of amount due to Relx Inc. On November 25, 2020, the Company issued additional 143,681,555 ordinary shares to Relx Inc. and the total number of ordinary shares issued and outstanding Concurrent with the November 2020 share split, a net amount due to Relx Inc. of RMB600,000, mainly originating from operating funds advanced by Relx Inc., offset by the payments made by the Company on behalf of the non-PRC related parties and the corporate expense allocated to Relx Inc., was waived. The accounting for the waiver was recorded in additional paid-in capital as a contribution to the Group from Relx Inc. and a deduction on the net amount due to Relx Inc. on November 25, 2020. iv) Share distribution On March 26, 2021, the Company announced that Relx Inc. has approved a share distribution pursuant to which Relx Inc. shall distribute its shares in the Company to its shareholders of record on March 26, 2021 (the “Record Date”) in proportion to Relx Inc.’s shareholding structure on the Record Date (the “Share Distribution”). On April 16, 2021, the Share Distribution was completed. Accordingly on April 16, 2021, Relx Holdings Limited owns 618,171,790 Class B ordinary shares of the Company and the other existing shareholders of Relx Inc. owns 952,618,780 Class A ordinary shares of the Company. The Class B ordinary shares then beneficially owned by Relx Holdings Limited represent all of the Company’s issued and outstanding Class B ordinary shares upon the completion of Share Distribution and constitute approximately 39.4% beneficial ownership or 86.6% voting power of the Company’s total issued and outstanding share capital immediately after the completion of Share Distribution. c) VIE arrangements between Relx HK’s PRC subsidiaries As of December 31, 2022, Relx HK, through the WFOE, entered into the following contractual arrangements with the VIE and its shareholders that enabled Relx HK to (i) have power to direct the activities that most significantly affect the economic performance of the VIE, and (ii) bear the risks and enjoy the rewards normally associated with ownership of the VIE. Accordingly, Relx HK is the ultimate primary beneficiary of the VIE. Consequently, the financial results of the VIE were included in the Group’s consolidated financial statements. 1. Nature of operations and reorganizations (Continued) c) VIE arrangements between Relx HK’s PRC subsidiaries (Continued) Agreements that provide Relx HK with effective control over the VIE Powers of Attorney Equity Interest Pledge Agreement Agreement that allows Relx HK to receive economic benefits from the VIE Exclusive Business Cooperation Agreement 1. Nature of operations and reorganizations (Continued) c) VIE arrangements between Relx HK’s PRC subsidiaries (Continued) Agreement that provides Relx HK with the option to purchase the equity interests in the VIE Exclusive Option Agreement Exclusive Assets Option Agreement d) Risks in relation to the VIE structure It is possible that the Group’s operations of certain of its businesses through the VIE could be found by the PRC authorities to be in violation of the PRC laws and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. The National People’s Congress approved the Foreign Investment Law on March 15, 2019 and the State Council approved the Regulation on Implementing the Foreign Investment Law (the “Implementation Regulations”) on December 12, 2019, effective from January 1, 2020. The Supreme People’s Court of China issued a judicial interpretation on the Foreign Investment Law on December 27, 2019, effective from January 1, 2020. The Foreign Investment Law and the Implementation Regulations do not touch upon the relevant concepts and regulatory regimes that were historically suggested for the regulation of VIE structures, and thus this regulatory topic remains unclear under the Foreign Investment Law. There are substantial uncertainties with respect to the implementation and interpretation of the Foreign Investment Law and the Implementation Regulations, and it is also possible that variable interest entities will be deemed as foreign invested enterprises and be subject to restrictions in the future. Such restrictions may cause interruptions to the Group’s operations, products and services and may incur additional compliance cost, which may in turn materially and adversely affect the Group’s business, financial condition and results of operations. 1. Nature of operations and reorganizations (Continued) d) Risks in relation to the VIE structure (Continued) In addition, if the legal structure and contractual arrangements were found to be in violation of any other existing PRC laws and regulations, the PRC government could: ● revoke the Group’s business and operating licenses; ● require the Group to discontinue or restrict operations; ● restrict the Group’s right to collect revenues; ● block the Group’s platforms; ● require the Group to restructure the operations in such a way as to compel the Group to establish a new enterprise, re-apply for the necessary licenses or relocate its businesses, staff and assets; ● impose additional conditions or requirements with which the Group may not be able to comply; or ● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s businesses. The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s businesses. In addition, if the imposition of any of these penalties causes the Group to lose the right to direct the activities of any of the VIE (through its equity interests in its subsidiaries) or the right to receive their economic benefits, the Group will no longer be able to consolidate the relevant VIE and its subsidiaries, if any. In the opinion of management, the likelihood of loss in respect of the Group’s current ownership structure or the contractual arrangements with the VIE is remote. There is no VIE for which the Company has variable interests but is not the primary beneficiary. 1. Nature of operations and reorganizations (Continued) d) Risks in relation to the VIE structure (Continued) The following consolidated financial information of the VIE and its subsidiaries taken as a whole as of December 31, 2021 and 2022 and for the years ended December 31, 2020, 2021 and 2022 was included in the consolidated financial statements of the Group as follows: As of December 31, 2021 2022 RMB RMB Current assets Cash and cash equivalents 387,410 956,918 Restricted cash 500 20,574 Short-term bank deposits, net 439,900 130,000 Receivables from online payment platforms 10,006 2,817 Short-term investments 3,621,637 2,434,864 Accounts and notes receivable, net 14,024 50,259 Inventories 589,088 130,122 Amounts due from group companies 75,769 98,515 Amounts due from related parties 1,936 5,112 Prepayments and other current assets, net 412,405 80,267 Total current assets 5,552,675 3,909,448 Non ‑ current assets Property, equipment and leasehold improvement, net 142,657 75,780 Intangible assets, net 6,000 4,718 Long-term investments, net 12,000 8,000 Deferred tax assets, net 20,751 54,736 Right-of-use assets, net 174,584 57,261 Long-term bank deposits, net 39,987 1,167,325 Other non-current assets, net 48,557 10,871 Total non-current assets 444,536 1,378,691 Total assets 5,997,211 5,288,139 Current liabilities Accounts and notes payable 1,288,845 268,761 Contract liabilities 286,651 3,829 Salary and welfare benefits payable 107,614 53,438 Taxes payable 590,718 93,700 Accrued expenses and other current liabilities 304,594 132,762 Amounts due to group companies 173,207 261,729 Amounts due to related parties — 423 Lease liabilities - current portion 80,319 36,905 Total current liabilities 2,831,948 851,547 Non-current liabilities Deferred tax liabilities 4,513 8,653 Lease liabilities - non-current portion 102,830 30,593 Total non-current liabilities 107,343 39,246 Total liabilities 2,939,291 890,793 1. Nature of operations and reorganizations (Continued) d) Risks in relation to the VIE structure (Continued) For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Third-party revenues 3,819,712 8,520,978 5,330,992 Inter-group revenues (a) — — 4,533 Third-party cost of revenues (2,292,153) (4,848,190) (2,965,169) Inter-group cost of revenues (b) — — (144) Excise tax on products — — (52,668) Third-party operating expenses (1,513,892) (1,182,492) (713,520) Inter-group operating expenses (c) — (122,568) (459,549) Other (expenses)/income (186,529) (367,311) 132,736 Net (loss)/income (172,862) 2,000,417 1,277,211 (a) Starting from 2022, the consolidated VIE and its subsidiaries provide operation services to entities within the Group with an amount of RMB4,533. The inter-group service revenue is eliminated at the consolidated level. (b) Starting from 2022, the entities within the Group sell products to the consolidated VIE, the inter-group cost of revenue was RMB144. The inter-group cost of revenues is eliminated at the consolidated level. (c) The subsidiaries of the Group and the primary beneficiary of the consolidated VIE provide operation supporting services to entities within the Group. For the years ended December 31, 2020, 2021 and 2022, the service fees charged by other group companies to the consolidated VIE were nil, RMB122,568 and RMB459,549. The inter-group service charge is eliminated at the consolidation level. For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Net cash used in operating activities with group company — — (512,685) Other operating activities 2,576,363 1,842,887 641,865 Net cash provided by operating activities 2,576,363 1,842,887 129,180 Loans to group companies (179,027) (96,058) (450,769) Repayment of loans from group companies — 191,620 342,000 Other investing activities (1,517,078) (2,755,324) 343,317 Net cash (used in)/provided by investing activities (1,696,105) (2,659,762) 234,548 Borrowings under loans from group companies 33,507 — 390,358 Repayment of borrowings under loans from group companies (176,021) — (164,408) Other financing activities (298) (10,785) (763) Net cash (used in)/provided by financing activities (142,812) (10,785) 225,187 The above includes intercompany balances and transactions which have been eliminated on the Company’s consolidated financial statements. Under the contractual arrangements with the VIE and through its equity interests in its subsidiaries, the Group has the power to direct the activities of the VIE and the VIE’s subsidiaries and the transfer of assets out of the VIE and the VIE’s subsidiaries. Therefore, the VIE assets are considered to be fully available to the Company. As the consolidated VIE and VIE’s subsidiaries are incorporated as limited liability companies under the PRC Company Law, the creditors of the liabilities of the consolidated VIE and the VIE’s subsidiaries do not have recourse to the general credit of the Company. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 31, 2022 | |
Significant accounting policies | |
Significant accounting policies | 2. a) The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to reflect the financial position, results of operations and cash flows of the Group. Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. b) The Group’s consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and VIE’s subsidiaries for which the Company or its subsidiary is the primary beneficiary. A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All transactions and balances among the Company, its subsidiaries, the VIE and VIE’s subsidiaries have been eliminated upon consolidation. For the Company’s consolidated subsidiaries and VIEs, non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of operations and comprehensive (loss)/income to distinguish the interests from that of the Company. c) The preparation of the Group’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include product warranty, allowance for credit losses, revenue recognition, inventories write-downs, discount rate for lease accounting, valuation allowance for deferred tax assets, impairments on property, equipment and leasehold improvement, valuation of available-for-sale debt securities and the valuation of share-based compensation. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. d) The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its overseas subsidiaries incorporated in Hong Kong is United States dollars (“US$”). The functional currency of the Group’s PRC entities is RMB. 2. d) In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC have been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date. Equity amounts other than earnings generated in current period are translated at historical exchange rates. Revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as foreign currency translation adjustments and shown as a component of other comprehensive income/(loss) in the consolidated statements of comprehensive (loss)/income. Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in others, net in the consolidated statements of comprehensive (loss)/income. e) Convenience translation Translations of the consolidated balance sheets, consolidated statements of comprehensive (loss)/income and consolidated statements of cash flows from RMB into US$ as of and for the year ended December 31, 2022 are solely for the convenience of the reader and were calculated at the noon buying rate of US$1.00 = RMB6.8972 on December 30, 2022 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate or at any other rate. f) Fair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: ● Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. ● Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. ● Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Refer to Note 22 for additional information. 2. g) Cash and cash equivalents mainly represent cash at bank, demand deposits which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amount of cash. h) Cash that is legally restricted as to withdrawal or for use or pledged as security is reported separately on the face of the Group’s consolidated balance sheets. In November 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, (“ASU 2016-18”) The Group’s restricted cash mainly represents security deposits held in designated bank accounts for issuance of bank acceptance notes relating to notes payable. i) Bank deposits Short-term bank deposits, net Short-term bank deposits are time deposits with original maturities of longer than three months but less than one year or the long-term bank deposits with a maturity date within one year. Interest earned is recorded as interest income, net in the consolidated statements of comprehensive (loss)/income during the years presented. Long-term bank deposits, net Long-term bank deposits represent time deposits placed with banks with original maturities more than one year. And those matured within one year are reclassified to short-term bank deposits, net. j) Short-term investments For short-term investments in financial instruments with a variable interest rate indexed to the performance of underlying assets, the Group elects the fair value option at the date of initial recognition and carries these investments subsequently at fair value. Changes in fair values are reflected in investment income in the consolidated statements of comprehensive (loss)/income. Fair value is estimated based on quoted prices of similar products provided by financial institutions at the end of each reporting period. The Group classifies these inputs as Level 2 fair value measurement. Long-term investment securities, net Long-term investment securities, net include debt-classified securities held by the Group with original maturities of more than one year. The Group classifies the long-term investment securities as held-to-maturity or available-for-sale, whose classification determines the respective accounting methods stipulated by ASC 320. Held-to-maturity debt securities include debt instruments with fixed interest rates issued by financial institutions for which the Group has the positive intent and ability to hold those securities to maturity. The Group accounts for the held-to-maturity debt securities at amortized cost less allowance for credit losses. Available-for-sale debt securities include debt instruments with a variable interest rate indexed to the performance of underlying assets, which are reported at fair value, with changes in fair values reflected in other comprehensive income/(loss) in the consolidated statements of comprehensive (loss)/income. Fair value is estimated based on quoted prices of similar products provided by financial institutions at the end of each reporting period. The Group classifies these inputs as Level 2 fair value measurement. 2. Significant accounting policies (Continued) j) The allowance for credit losses on available-for-sale debt securities is accounted for in accordance with ASC 326. At each reporting period, available-for-sale debt securities are evaluated at the individual security level to determine whether there is a decline in the fair value below its amortized cost basis (an impairment). In circumstances where the Group intends to sell, or is more likely than not required to sell, the security before it recovers its amortized cost basis, the difference between fair value and amortized cost is recognized as a loss in the consolidated statements of comprehensive (loss)/income, with a corresponding write-down of the security’s amortized cost. In circumstances where neither condition exists, the Group then evaluates whether a decline is due to credit-related factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. To determine the portion of a decline in fair value that is credit-related, the Group compares the present value of the expected cash flows of the security discounted at the security’s effective interest rate to the amortized cost basis of the security. A credit-related impairment is limited to the difference between fair value and amortized cost, and recognized as an allowance for credit loss on the consolidated balance sheets with a corresponding adjustment to net (loss)/income. Any remaining decline in fair value that is non-credit related is recognized in other comprehensive income/(loss), net of tax. Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Interest earned for both categories of long-term investment securities is recorded as interest income, net in the consolidated statements of comprehensive (loss)/income during the years presented. Long-term investments,net The Group elects to record an equity investment without readily determinable fair values and not accounted for by the equity method at its cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (“measurement alternative”). As of December 31, 2022, the Group’s long-term investments consist of investments in privately held companies which do not have readily determinable fair values and therefore the Group recognized these investments at cost adjusted for changes from observable transactions for identical or similar investments of the same investee, less impairment. The Group regularly evaluates the long-term investments for impairment based on performance and financial position of the investees as well as other evidence of market value for each reporting period. Such evaluation includes, but not limited to, reviewing the investees’ cash position, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized in others, net in the consolidated statements of comprehensive (loss)/income equal to the excess of the investment’s carrying value over its fair value. The impairment on long-term investments for the years ended December 31, 2020, 2021 and 2022 was RMB1,000, nil and RMB4,000. k) Accounts and notes receivable are recognized and carried at the original invoiced amount less an allowance for credit losses. The Group maintains an allowance for credit losses in accordance with ASC 326 and records the allowance for credit losses as an offset to accounts and notes receivable. Expected credit losses of nil, RMB141 and RMB201 were recorded as general and administrative expenses in the consolidated statements of comprehensive (loss)/income for the years ended December 31, 2020, 2021 and 2022. Refer to Note 2(af) “Allowance for credit losses” for additional information about adoption of ASC 326. l) Inventories of the Group consist of raw materials and finished goods. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. Inventories write-downs are made for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess of net realizable value. Certain factors could impact the realizable value of inventory, so the Group continually evaluates the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration of historical usage, expiration date, expected demand, anticipated sales price, new product development schedules, product obsolescence, customer concentrations and other factors. Inventories write-downs are recorded in cost of revenue in the consolidated statements of comprehensive (loss)/income. 2. Significant accounting policies (Continued) m) Property, equipment and leasehold improvement are stated at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the following estimated useful lives: Category Estimated useful lives Electronic equipment 3-5 years Furniture and office equipment 3-5 years Machinery and equipment 2-10 years Transportation equipment 5 years Leasehold improvement Shorter of the term of the lease or the estimated useful lives of the assets Expenditures for maintenance and repairs are expensed as incurred, whereas the costs of renewals and betterment that extend the useful lives of property, equipment and leasehold improvement are capitalized as additions to the related assets. The gain or loss on the disposal of property, equipment and leasehold improvement is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in others, net in the consolidated statements of comprehensive (loss)/income. n) Intangible assets purchased from third parties mainly consist of license of copyright, software and trademark. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. Finite-lived intangible assets are tested for impairment if impairment indicators arise. Amortization of finite-lived intangible assets is computed using the straight-line method over their estimated useful lives, which are as follows: Category Estimated useful lives License of copyright 2 years Purchased software 2-3 years Trademark 2 years o) Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge of nil, nil and RMB42,529 was recognized for the years ended December 31, 2020, 2021 and 2022. The impairment recognized in 2022 was primarily due to the impact of regulatory changes. p) The Group leases office space, warehouses, stores and office equipment for fixed periods ranging from 1 month to 60.5 months, some of which have extension options. Extension options are not recognized by the Group in the determination of lease liabilities unless renewals are reasonably certain. The Group has elected the short-term lease measurement and recognition exemption. The Group recognizes lease payments for its short-term lease on a straight-line basis over the lease term and reassesses the extension options of them to be qualify for the short-term lease measurement. 2. Significant accounting policies (Continued) p) As of December 31, 2021 and 2022, all the Group’s leases are classified as operating leases. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. In determining the present value of the unpaid lease payments, ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowing rate as the discount rate for the lease. The Group’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. q) The Group follows five steps for revenue recognition: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Group’s revenues are primarily derived from sales of the Group’s products to offline distributors who are responsible for sales to retailers and end users. Refer to Note 17 to the consolidated financial statements for disaggregation of the Group’s revenue for the years ended December 31, 2020, 2021 and 2022. Sale of products to offline distributors Under the distribution agreements, the offline distributors purchase products from the Group, take delivery and are responsible for commercial distribution and offline terminal sales to retailers and end users in authorized distribution areas. After taking control of the products, the offline distributor is responsible for carrying out direct interactions with retailers and end users, delivering the products and providing customer support. Based on these indicators, the Group determined the offline distributors (as opposed to the end users) to be its customers according to ASC 606-10-55-39. Previously, the offline distributors made full payment to the Group at the time of order placement and take control of the products after receipt. The Group has also entered into rebate agreements with offline distributors in order to incentivize the offline distributors to increase their purchases from the Group. The sales rebates are usually calculated as a percentage of the purchase amount, which is accounted for as variable consideration according to ASC 606-10-32-5. Under the tripartite agreements entered among the Group, retailers and the Group’s offline distributors, the Group provides a subsidy to branded stores operated by retailers, which is the Group’s customers’ customer in the distribution chain. The amount of subsidy is subject to a negotiation between the Group and the retailers. In addition, the Group provides non-cash subsidy to retailers and offline distributors for promotional activities in the form of rebate. The amount of subsidy is based on a certain percentage of the cost of specific promotional activities, which varies from activity to activity. These subsidies are payable to the Group’s customers or customers’ customers. The Group determined the subsidy should be recorded as a reduction of revenue, according to ASC 606-10-32-25. Accordingly, the Group recognizes revenue from sales to offline distributors upon delivery of the products to offline distributors’ warehouses in an amount equal to the contract sales prices, less applicable allowances for estimated sales rebates and approved subsidies. 2. q) Starting from 2022, the Group sells the product to the offline distributors with Tobacco Monopoly License (“licensed offline distributors”). The licensed offline distributors make full payment to the Group after receiving the product, the payment period is approximately one month. According to the agreements between the Group and the licensed offline distributors, the licensed offline distributors took control of the products upon receipt but was entitled to certain rights of return and price concession after receipt of products. The Group made estimation for sales returns and price concession based on contract terms and historical patterns. The Group determined the sales return and price concession should be recorded as a reduction of revenue, according to ASC606-10-55-23. Accordingly, the Group recognized revenue from licensed offline distributors upon delivery of the products to licensed offline distributors’ warehouses in an amount equal to the contract sales prices, less applicable allowances for estimated of sales return and price concession. Others For direct sales through offline stores operated by the Group, the Group recognized revenues when goods are delivered to the end users. Contract balances A receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due. A contract asset is recorded when the Group has transferred products to the customer before payment is received or is due, and the Group’s right to consideration is conditional on future performance or other factors in the contract. No contract asset was recorded as of December 31, 2021 and 2022. Contract liabilities are recognized if the Group receives consideration in advance of performance, which is mainly in relation to the orders unshipped, where there is still an obligation to be fulfilled by the Group. The contract liabilities will be recognized as revenue when all of the revenue recognition criteria are met. All contract liability balances at the beginning of the years were recognized as revenue in the following year due to generally short-term duration of contracts. For the years ended December 31, 2020, 2021 and 2022, the Group did not have any revenue recognized from performance obligations satisfied (or partially satisfied) in previous years. Practical Expedients The transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied has not been disclosed, as substantially all the Group’s contracts have a duration of one year or less. Payment terms with licensed offline distributors generally require settlement within 30 days or less. The Group has determined that its contracts generally do not include a significant financing component r) Cost of revenues consists primarily of consignment manufacturing costs, material costs, inventories write-downs and depreciation of the machinery and equipment used on production lines, as well as related costs that are directly attributable to the production of products. 2. Significant accounting policies (Continued) s) The Group provides product warranty on all e-vapor products sold based on the contracts with its customers at the time of sale of products. The Group accrues a warranty reserve for the products sold, which includes the best estimate of defective rate and projected costs to repair or replace items under warranty. These estimates are primarily based on the estimates of the nature, frequency and average costs of future claims. The warranty reserve is included within the accrued expenses and other current liabilities in the consolidated balance sheets. Warranty cost is recorded as a component of cost of sales in the consolidated statements of comprehensive (loss)/income. The Group reevaluates the adequacy of the warranty accrual on a regular basis. t) Research and development expenses primarily consist of salaries, welfare benefits and share-based compensation expenses for research and development personnel as well as material expenses and depreciation of equipment associated with research and development activities. Costs incurred for the preliminary project stage of internal use software are expensed in research and development expenses when incurred. Costs incurred during the application development stage are capitalized when certain criteria are met as stated in ASC 350-40 “Internal-use Software” u) Selling expenses primarily consist of advertising expenses, salaries, welfare benefits and shared-based compensation expenses for sales personnel, and shipping expenses. The advertising expenses amounted to RMB88,123, RMB192,541 and RMB57,954 for the years ended December 31, 2020, 2021 and 2022, respectively. The shipping expenses amounted to RMB31,806, RMB67,632 and RMB40,710 for the years ended December 31, 2020, 2021 and 2022, respectively. v) General and administrative expenses primarily consist of salaries, welfare benefits and share-based compensation expenses for general and administrative personnel and professional service fees. w) Subsidy income represents cash subsidies received from the PRC local government by the Group. Such amounts are recognized in others, net in the consolidated statements of comprehensive (loss)/income upon receipt. The Group recorded RMB23,911, RMB197,311 and RMB338,112 of subsidy income for the years ended December 31, 2020, 2021 and 2022, respectively. x) All share-based awards granted to directors, executive officers, employees, consultants and nonemployees who provide services to Relx Inc., including restricted ordinary shares, restricted share units and share options, are measured at fair value on grant date and are classified as equity awards in accordance with ASC 718 — “Compensation-Stock Compensation”. The Group early adopted ASU 2018-07, “Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting” on January 2, 2018 (date of inception) to account for share-based payments for acquiring goods and services from nonemployees at grant date fair value. 2. Significant accounting policies (Continued) x) For all share-based awards granted with service conditions that have a graded vesting schedule, share-based compensation expenses are recognized using the straight-line method, over the requisite service period. The Group adopted ASU 2016-09 to recognize the impact of forfeiture within compensation expense, when they occur. Restricted share units and share options granted with a service condition and a performance condition are measured at the grant date fair value. In circumstances where the service inception date precedes the grant date, share-based compensation expenses are measured beginning on the service inception date and is re-measured on each subsequent reporting date before the grant date, based on the estimated fair value of the related awards. Prior to the Share Distribution, all the share options and restricted ordinary shares were granted by Relx Inc. using Relx Inc.’s underlying ordinary shares. The fair value of the ordinary shares of Relx Inc. is determined by using the income approach, with a discount for lack of marketability, given that the shares underlying the awards were not publicly traded. Upon completion of the Share Distribution, the options were granted by the Company using its own underlying ordinary shares. The fair value of the ordinary shares of the Company is equal to its market price. The Group uses the binomial option pricing model to estimate fair value of the share options. The determination of the fair value of share options is affected by the fair value of the underlying ordinary shares as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected grantee’s share option exercise behavior, risk free interest rates and expected dividends. The shares issued prior to the Share Distribution to directors, executive officers, employees and consultants are those of Relx Inc. and the proportion of the share-based compensation expenses attributable to the Group is accounted for as a capital contribution from Relx Inc.. The Company’s share options granted to employees of Relx Inc. in connection with the Share Distribution are recorded as a deemed dividend from the Group to its shareholders at the fair value determined as of the grant date. Refer to Note 18 for details. y) PRC Contribution Plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the regulatory contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB23,649, RMB75,028 and RMB86,666 for the years ended December 31, 2020,2021 and 2022, respectively. z) Income taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statem |
Cash and cash equivalents
Cash and cash equivalents | 12 Months Ended |
Dec. 31, 2022 | |
Cash and cash equivalents | |
Cash and cash equivalents | 3. Cash and cash equivalents represent cash at bank and demand deposits placed with banks which have original maturities of three months or less and are readily convertible to known amount of cash. Cash and cash equivalents balance as of December 31, 2021 and 2022 primarily consist of the following: As of December 31, 2021 2022 RMB RMB Short‑term bank deposits with initial terms within three months 1,687,344 52,767 Cash at bank 3,521,623 1,215,745 Cash and cash equivalents 5,208,967 1,268,512 |
Bank deposits, net
Bank deposits, net | 12 Months Ended |
Dec. 31, 2022 | |
Bank deposits, net | |
Bank deposits, net | 4. Bank deposits, net As of December 31, 2021 2022 RMB RMB Short-term bank deposits, net 4,022,119 7,084,879 Long-term bank deposits, net 2,004,593 1,515,428 Total (a) 6,026,712 8,600,307 (a) Bank deposits of RMB350,000 and RMB154,922 were held as collateral for the Group’s notes payable as of December 31, 2021 and 2022 (Note 13). The allowance for credit losses recorded in bank deposits as of December 31, 2021 and 2022 were RMB2,267 and RMB5,559. |
Investment securities
Investment securities | 12 Months Ended |
Dec. 31, 2022 | |
Investment securities | |
Investment securities | 5. As of December 31, 2021 2022 RMB RMB Short-term investments_ Fair value option 3,621,637 2,434,864 Long-term investment securities, net_ Held-to-maturity — 2,851,966 Long-term investment securities, net_ Available-for-sale — 557,492 Total 3,621,637 5,844,322 Short-term investments of RMB432,753 and nil were held as collateral for the Group’s notes payable as of December 31, 2021 and 2022 (Note 13). The allowance for credit losses recorded in long-term investment securities as of December 31, 2021 and 2022 were nil and RMB3,739. |
Accounts and notes receivable,
Accounts and notes receivable, net | 12 Months Ended |
Dec. 31, 2022 | |
Accounts and notes receivable, net | |
Accounts and notes receivable, net | 6. As of December 31, 2021 2022 RMB RMB Accounts receivable, net 12,494 51,381 Notes receivable 1,530 — Accounts and notes receivable, net 14,024 51,381 The allowance for credit losses recorded as of December 31, 2021 and 2022 were RMB141 and RMB201. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Inventories | 7. Inventories are consisted of the following: As of December 31, 2021 2022 RMB RMB Finished goods 524,568 123,672 Raw materials 64,520 7,229 Inventories 589,088 130,901 For the years ended December 31, 2020, 2021 and 2022, write-downs of inventories to net realizable value amounted to nil , RMB 89,071 and RMB 179,694 , respectively, which were recognized in cost of sales. |
Prepayments and other current a
Prepayments and other current assets, net | 12 Months Ended |
Dec. 31, 2022 | |
Prepayments and other current assets, net | |
Prepayments and other current assets, net | 8. The following is a summary of prepayments and other current assets: As of December 31, 2021 2022 RMB RMB Value Added Tax (“VAT”) recoverable 65,268 38,974 Prepaid selling expenses 6,507 1,230 Prepayments to suppliers 279,628 4,054 Deferred charges 27,218 452 Deposits for rental 7,725 13,216 Prepaid service fees 14,485 7,770 Interest receivable 39,024 95,204 Receivable from financial institution 35,357 35,241 Others 7,601 20,893 Prepayments and other current assets 482,813 217,034 Less: allowance for credit losses (154) (18,102) Prepayments and other current assets, net 482,659 198,932 (a) The allowance for credit losses recorded as of December 31, 2021 and 2022 were RMB154 and RMB17,948. The movement in the allowance for credit losses were as follow: 2021 2022 RMB RMB Balance as of January 1 — 154 Amounts charged to expenses 154 17,948 Balance as of December 31 154 18,102 |
Property, equipment and leaseho
Property, equipment and leasehold improvement, net | 12 Months Ended |
Dec. 31, 2022 | |
Property, equipment and leasehold improvement, net | |
Property, equipment and leasehold improvement, net | 9. The following is a summary of property, equipment and leasehold improvement, net: As of December 31, 2021 2022 RMB RMB Leasehold improvement 65,811 94,336 Machinery and equipment 129,387 121,547 Furniture and office equipment 7,332 7,289 Electronic equipment 2,224 2,149 Transportation equipment 871 871 Total property, equipment and leasehold improvement 205,625 226,192 Less: accumulated depreciation (62,470) (122,033) Less: accumulated impairment — (16,288) Property, equipment and leasehold improvement, net 143,155 87,871 Depreciation expenses were RMB19,671, RMB40,865 and RMB76,041 for the years ended December 31, 2020, 2021 and 2022, respectively. The Group recorded nil, nil and RMB28,561 impairment losses for the years ended December 31, 2020, 2021 and 2022, respectively. |
Intangible assets, net
Intangible assets, net | 12 Months Ended |
Dec. 31, 2022 | |
Intangible assets, net | |
Intangible assets, net | 10. The following table summarizes the Group’s intangible assets, net: As of December 31, 2021 2022 RMB RMB License of copyright 3,530 3,530 Purchased software 13,753 19,115 Trademark — 567 Total intangible assets 17,283 23,212 Less: accumulated amortization (8,917) (14,283) Less: accumulated impairment — (1,377) Intangible assets, net 8,366 7,552 Amortization expenses for the years ended December 31, 2020, 2021 and 2022 were RMB3,396, RMB4,774 and RMB5,367, respectively. The Group recorded nil, nil and RMB1,377 impairment losses for the years ended December 31, 2020, 2021 and 2022, respectively. The estimated amortization expenses for each of the following three years are as follows: Amortization expenses of intangible assets RMB 2023 4,708 2024 2,621 2025 223 Total expected amortization expenses 7,552 |
Long-term investments, net
Long-term investments, net | 12 Months Ended |
Dec. 31, 2022 | |
Long-term investments, net. | |
Long-term investments, net | 11. The following sets forth the summary of the Group’s long-term investments: As of December 31, 2021 2022 RMB RMB Measurement alternative investments: Investee A 1,000 1,000 Investee B 4,000 4,000 Investee C 8,000 8,000 Total measurement alternative investments 13,000 13,000 Less: impairment (1,000) (5,000) Long-term investments, net 12,000 8,000 In July 2019, the Group acquired 13.34% equity interests of investee A and 20.00% equity interests of investee B for cash consideration of RMB1,000 and RMB4,000, respectively. In March 2021, the Group acquired 5.00% equity interests of investee C for cash consideration of RMB8,000. The investments are accounted for under measurement alternative according to ASU 2016-01 as the shares held by the Company were not considered as in-substance common stock and the shares do not have readily determinable fair value. The Group recognized impairment loss of RMB1,000, nil and RMB4,000 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Other non-current assets, net
Other non-current assets, net | 12 Months Ended |
Dec. 31, 2022 | |
Other non-current assets, net | |
Other non-current assets, net | 12. The following is a summary of other non-current assets as of December 31, 2021 and 2022: As of December 31, 2021 2022 RMB RMB Prepayments on long‑term assets (a) 31,379 13,398 Deposits for rental 17,582 6,423 Other non ‑ current assets 48,961 19,821 Less: impairment — (6,363) Other non ‑ current assets, net 48,961 13,458 (a) The Group made certain prepayments for the purchase of manufacturing equipment and software. (b) The Group recorded nil , nil and RMB 12,591 impairment losses for the years ended December 31, 2020, 2021 and 2022, respectively. |
Accounts and notes payable
Accounts and notes payable | 12 Months Ended |
Dec. 31, 2022 | |
Accounts and notes payable | |
Accounts and notes payable | 13. The Group measures accounts payable and notes payable at amortized cost considering they are arising from transactions with suppliers in the normal course of business and are due in customary trade terms not exceeding one year. Accounts and notes payable consist of the following: As of December 31, 2021 2022 RMB RMB Accounts payable 506,092 52,493 Notes payable (a) 782,753 216,853 Total accounts and notes payable 1,288,845 269,346 (a) The Group’s notes payable mainly include short-term notes, typically with terms of 90 to 92 days which are provided to the Group’s suppliers and manufacturers. Notes payable as of December 31, 2021 were secured by short-term bank deposits of RMB 350,000 and short-term investments of RMB 432,753 held in commercial banks. Notes payable as of December 31, 2022 were secured by restricted cash of RMB 18,579 and long-term bank deposits of RMB 154,922 held in commercial banks . |
Accrued expenses and other curr
Accrued expenses and other current liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued expenses and other current liabilities | |
Accrued expenses and other current liabilities | 14. Accrued expenses and other current liabilities The following is a summary of accrued expenses and other current liabilities as of December 31, 2021 and 2022: As of December 31, 2021 2022 RMB RMB Deposits from offline distributors, retailers and others 188,143 11,017 Professional service fee payables (a) 29,041 15,154 Product warranty (b) 4,185 5,051 Payables on equipment 6,866 7,020 Patent application fee payables 1,032 1,508 Accrued liabilities to suppliers 61,535 72,909 Payable related to employees’ exercise of share-based awards — 20,509 Payable related to termination of lease contracts — 6,191 Others 22,594 22,096 Accrued expenses and other current liabilities 313,396 161,455 (a) Professional service fees mainly consist of recruitment, audit and legal services performed by non-related parties. (b) Product warranty activities were as follows: Product warranty RMB Balance as of January 1, 2020 1,374 Provided during the year 36,350 Utilized during the year (32,284) Balance as of December 31, 2020 5,440 Provided during the year 59,599 Utilized during the year (60,854) Balance as of December 31, 2021 4,185 Provided during the year 52,693 Utilized during the year (51,827) Balance as of December 31, 2022 5,051 |
Lease
Lease | 12 Months Ended |
Dec. 31, 2022 | |
Lease | |
Lease | 15. The Group has operating leases for office space, warehouses, stores and office equipment that the Group utilizes under lease arrangement. The Group also leases space for a manufacturing facility which houses production equipment owned by the Company and operated by a third-party manufacturer of the Company’s products. A summary of supplemental information related to operating leases is as follows: As of December 31, 2021 2022 RMB RMB Lease right‑of‑use assets, net 176,258 75,008 Lease liabilities - current portion 80,582 45,955 Lease liabilities - non-current portion 104,232 39,968 Total lease liabilities 184,814 85,923 Weighted average remaining lease term 2.76 years 2.24 years Weighted average annual discount rate 4.75 % 4.75 % 15. A summary of lease cost recognized in the Group’s consolidated statements of comprehensive (loss)/income and supplemental cashflow information related to operating leases is as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Operating lease expense 43,469 74,869 89,629 Short‑term lease expense 1,611 3,174 5,596 Total lease cost 45,080 78,043 95,225 Supplemental cash flow information for the Group’s leases was as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Cash payments for operating lease liabilities, included in operating cash flows 42,637 68,825 77,189 Increase in lease liabilities arising from obtaining right‑of‑use assets 40,860 152,422 35,311 Decrease in lease liabilities due to termination of lease contracts — — (53,510) As of December 31, 2022, the remaining lease terms for these operating leases are generally from 2 months to 46 months. The aggregate future minimum rental payments under non-cancelable agreement were as follows: Rental RMB 2023 48,721 2024 21,738 2025 12,473 2026 8,017 Total minimum lease payment 90,949 Less: imputed interest (5,026) Total lease liability balance 85,923 |
Income tax expense
Income tax expense | 12 Months Ended |
Dec. 31, 2022 | |
Income tax expense | |
Income tax expense | 16. Income tax expense Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company in the Cayman Islands to its shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, the subsidiary of the Group in Hong Kong is subject to 16.5% Hong Kong profit tax for its taxable income earned. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. 16. Income tax expense (Continued) PRC In accordance with the Enterprise Income Tax Law (“EIT Law”), Foreign Investment Enterprises (“FIEs”) and domestic companies are subject to Enterprise Income Tax (“EIT”) at a uniform rate of 25%. The subsidiaries and the VIE of the Group in the PRC are subject to a uniform income tax rate of 25% for years presented. A subsidiary established in Shenzhen met the criteria for a preferential income tax rate of 15%. According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in research and development activities are entitled to claim an additional tax deduction amounting to 50% of the qualified research and development expenses incurred in determining its tax assessable profits for that year. This tax deduction was increased from 50% to 75%, effective from 2018 to 2022 according to a new tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2018, which was further extended to December 31, 2023 and the tax deduction rate was increased from 75% to 100% in certain qualified manufacture industry as the State Tax Bureau of the PRC announced in March 2021 (“Super Deduction”). Shenzhen Wuxin is recognized as “High and New Technology Enterprises” in accordance with the Notice of the Ministry of Science, the Ministry of Finance and the State Administration of Taxation on Amending and Issuing the Administrative Measures for the Determination of High and New Tech Enterprises and is entitled to enjoy a preferential enterprise income tax rate of 15% rather than the 25% uniform statutory tax rate. The preferential tax treatment continues as long as it can retain its “High and New Technology Enterprise” status, for the three-year period from 2020 to 2022, and may not be available in a future period. The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its entities registered outside of the PRC should be considered as resident enterprises for the PRC tax purposes. In general, all of the tax returns of the Company’s PRC entities in China remain subject to examination by the tax authorities for up to five years from the date of filing. The Company may also be subject to the examinations of the tax filings in other jurisdictions, which are not material to the consolidated financial statements. The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between the mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the immediate holding company in Hong Kong is the beneficial owner of the FIE and owns directly at least 25% of the shares of the FIE). In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to parent company and withholding taxes should be accrued accordingly. All FIEs are subject to the withholding tax from January 1, 2008. The presumption may be overcome if the Group has sufficient evidence to demonstrate that the undistributed dividends from its PRC subsidiaries will be re-invested and the remittance of the dividends from its PRC subsidiaries will be postponed indefinitely. 16. Income tax expense (Continued) PRC (Continued) Aggregate undistributed earnings and reserves of the Group entities located in the PRC that are available for distribution to the Company as of December 31, 2021 and 2022 are approximately RMB 1,857,399 and RMB3,153,855, respectively. The Group plans to indefinitely reinvested undistributed earnings earned from its PRC subsidiaries in its operations in PRC. Therefore, as of December 31, 2021 and 2022, no withholding income tax for undistributed earnings of its subsidiaries were provided, and the unrecognized tax liabilities were RMB185,740 and RMB315,386. Composition of income tax expense The current and deferred components of income taxes appearing in the consolidated statements of comprehensive (loss)/income are as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Current tax expense 241,792 646,979 410,478 Deferred tax benefit (11,260) (15,553) (38,898) Income tax expense 230,532 631,426 371,580 The following table presents a reconciliation of the differences between the statutory income tax rate and the Company’s effective income tax rate for the years ended December 31, 2020, 2021 and 2022: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 % % % Statutory income tax rate of the PRC 25 25 25 Tax effect of permanent differences (a) 227 2 1 Addition to Valuation Allowance — 1 — Tax effect of preferential tax rates (9) (1) (1) Tax effect of Super Deduction and others (18) (3) (4) Effective income tax rate 225 24 21 (a) The permanent book-tax differences mainly consisted of share-based compensation. The following table sets forth the effect of tax holiday to the Group: For the Year Ended December 31 , 2020 2021 2022 RMB RMB RMB Tax holiday effect 9,669 36,430 24,365 Basic net income per share effect 0.01 0.03 0.02 Diluted net income per share effect 0.01 0.03 0.02 16. Income tax expense (Continued) Deferred tax assets and deferred tax liabilities The following table presents the tax impact of significant temporary differences that give rise to the deferred tax assets and liabilities as of December 31, 2021 and 2022: As of December 31, 2021 2022 RMB RMB Deferred tax assets: Net operating tax loss carry forwards 18,018 34,306 Inventory write-downs 21,479 33,128 Product warranty 1,046 1,263 Accrued expenses and others 13,051 28,464 Less: Valuation Allowance (15,415) (16,145) Total deferred tax assets, net 38,179 81,016 Deferred tax liabilities: Accelerated depreciation of property, equipment and leasehold improvement (15,943) (18,130) Unrealized investment income of short-term investments (5,893) (7,645) Total deferred tax liabilities (21,836) (25,775) Presentation in the consolidated balance sheet : Deferred tax assets, net 20,856 63,894 Deferred tax liabilities (4,513) (8,653) Net deferred tax assets 16,343 55,241 The Group offsets deferred tax assets and liabilities pertaining to a particular tax-paying component of the Group within a particular jurisdiction. The movements in the valuation allowance were as follows: 2021 2022 RMB RMB Balance as of January 1 — 15,415 Addition 15,415 730 Balance as of December 31 15,415 16,145 A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion or all of the deferred tax assets will not be realized in the foreseeable future. In making such determination, we evaluate a variety of positive and negative factors including our operating history, accumulated deficit, the existence of taxable temporary differences and reversal periods. The Company evaluated its income tax uncertainty under ASC 740. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the financial statements. The Company elects to classify interest and penalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of comprehensive (loss)/income. The Company does not expect the amount of unrecognized tax benefits to increase significantly in the next 12 months. In general, the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, the PRC subsidiaries’ tax years of 2017 – 2022 remain open to examination by the respective tax authorities. The Company may also be subject to the examination of the tax filings in other jurisdictions, which are not material to the consolidated financial statements. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2022 | |
Revenues | |
Revenues | 17. The Group’s revenue by channel for the respective periods are detailed as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Sales of products by channel - Sales to offline distributors 3,742,285 8,361,073 5,168,559 - Others 77,427 159,905 164,220 Total revenues 3,819,712 8,520,978 5,332,779 |
Share-based compensation
Share-based compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-based compensation | |
Share-based compensation | 18. Share-based compensation Share-based compensation expenses for the years presented relates to (a) share awards to directors, executive officers, employees and consultants of the Group, (b) restricted ordinary shares held in escrow by Relx Inc. to Ms. Ying (Kate) Wang, Mr. Long (David) Jiang and Mr. Yilong Wen (together, “Co-founders”), and three founding employees (together with Co-founders, the “Founding Members”) of the Group, (c) ordinary shares transaction completed in Series D Financing of Relx Inc., respectively. For the years ended December 31, 2020, 2021 and 2022, total share-based compensation expenses allocated and recognized by the Group were amounted to RMB929,098, RMB223,345 and RMB166,161, respectively. (a) Equity Incentive Plans On September 30, 2018 and May 22, 2019, the Board of Directors of Relx Inc. respectively approved 2019 equity incentive plan and 2020 equity incentive plan (together, the “Relx Inc. Incentive Plans”) to attract, motivate, retain and reward certain directors, executive officers, employees and consultants for their contribution to the Group and to Relx Inc.’s non-PRC operations. According to the resolutions of Relx Inc.’s Board of Directors in September 2018, February 2019 and April 2019, the total number of Class B ordinary shares of Relx Inc. available for issuance under Relx Inc. Incentive Plans increased to 22,493,577. The awards granted under Relx Inc. Incentive Plans have a contractual term of ten years from the stated grant date, and are generally scheduled to be vested in four The awards will vest in four to seven equal annual installments, with the number of vested awards for each installment determined based on the grantee’s performance rating during each year. No objective measurement metrics used to determine the performance rating was provided on the stated grant date, and the actual performance rating will only be subjectively determined by Relx Inc.’s chief executive officer after the end of the corresponding year for each annual installment in the period from January 2, 2018 (date of inception) to December 31, 2018 and the year ended December 31, 2019; and from January 1, 2020, the performance rating will be subjectively determined by the compensation committee of Relx Inc. at the end of the corresponding year for each annual installment. Therefore, the stated grant date does not meet the definition of the accounting grant date as there was no mutual understanding of the key terms and conditions. For each annual installment, the accounting grant date is considered to be the date the performance evaluation for corresponding year is completed and communicated, which is the date used to measure the share-based compensation expense. As the awards contain a performance condition that if not satisfied during the year preceding the accounting grant date results in forfeiture of the award, the awards have a service inception date preceding the grant date pursuant to ASC 718-10-55-108; Subject to Relx Inc.’s repurchase right, in the event that the grantee voluntarily terminates employment with the Group within the stated vesting period, any awards vested in prior years will be forfeited and any shares issued from exercised awards will be repurchased at the exercise price paid by the grantee. The Group considered this repurchase feature equivalent to a forfeiture provision that creates an in-substance cliff vesting in four 18. Share-based compensation (Continued) (a) Equity Incentive Plans (Continued) In accordance with ASC 718 Compensation — Stock Compensation, the share-based awards under Relx Inc. Incentive Plans are classified as equity awards. Share-based compensation expenses were accrued beginning on the service inception date (i.e. the stated grant date) and will be re-measured on each subsequent reporting date before the accounting grant date is established. The estimates of the awards’ fair values will be fixed when the accounting grant date occurs and will continue to be amortized over the remaining requisite service period. On December 28, 2020, the Board of Directors of the Company approved a resolution to adopt the 2021 share incentive plan (the “2021 Plan”), effective upon the completion of IPO of the Group. After the successful IPO of the Group, the Company assumes all outstanding share incentive awards issued under Relx Inc. Incentive Plans and to administer the assumed awards pursuant to the 2021 Plan. The maximum aggregate number of ordinary shares that may be issued pursuant to all awards under the 2021 Plan (the “Award Pool”) will consist of (i) 22,493,577 Class A ordinary shares to be assumed from outstanding share incentive awards issued under Relx Inc. Incentive Plans, and (ii) 5,747,262 Class A ordinary shares initially, which may be further increased as determined by the Board of Directors. On January 11, 2021, the Board of Directors of the Company approved a resolution to subdivide each of its authorized ordinary shares (including all issued and unissued ordinary shares) into ten ordinary shares, which was accounted for as a share split (refer to Note1, the “Share Split”). On April 16, 2021, the Share Distribution was completed (refer to Note1, the “Share Distribution”). In connection with the Share Distribution and Share Split, the Company granted share awards under the 2021 Plan to assume all the outstanding share incentive awards issued under Relx Inc. Incentive Plans with the same remaining requisite vesting periods and vesting conditions on April 16, 2021, and each granted share is subdivided into ten shares. Relx Inc. Incentive Plans were cancelled when the option grants were all completed. The Award Pool will consist of (i) 224,935,770 Class A ordinary shares assumed from outstanding share incentive awards issued under Relx Inc. Incentive Plans, and (ii) 57,472,620 Class A ordinary shares initially, which may be further increased as determined by the Board of Directors. The Company accounted for the awards granted under the 2021 Plan in connection with the Share Distribution as a modification under ASC 718 and assessed that there was no incremental fair value before and after the modification date based on the valuation of the third-party valuer. In connection with the Share Distribution, the Company also granted option awards under the 2021 Plan to nonemployees who provide services to Relx Inc. to assume the outstanding share incentive awards issued under the Relx Inc. Incentive Plans with the same remaining requisite vesting periods and vesting conditions on April 16, 2021. Immediately before and after the Share Distribution, the Company and Relx Inc. are ultimately controlled by their common shareholders. In connection with the share-based awards to employees of Relx Inc., the Company does not require service or any form of payment in return from Relx Inc. for such awards. Therefore, such share awards granted to employees of Relx Inc. were measured at fair value on the grant date and recognized as a dividend to the Shareholders. In accordance with ASC 718 Compensation - Stock Compensation, the share-based awards to employees of Relx Inc will be re-measured on each subsequent reporting date before the accounting grant date is established. The estimates of the awards’ fair values will be fixed when the accounting grant date occurs and the re-measured results will be accounted as the adjustment to the amount of the dividend to the Shareholders. On November 1, 2022, the Company announced a resolution to amend the unexercised options by adjusting downward the exercise price to US$0 per share, and the scope of the employees subject to adjustment of exercise price is certain full-time employees who hold options of the Company and will continue to serve the Company or its subsidiaries or affiliates as of January 1, 2023. The Company accounted for the adjustment as a modification under ASC 718, assessed the incremental fair value before and after the modification date based on the valuation of the third-party valuer and recognized the incremental compensation cost accordingly. 18. Share-based compensation (Continued) (a) Equity Incentive Plans (Continued) Share Options The summary of the options granted to the directors, executive officers, employees and consultants of the Group as of December 31, 2020, 2021 and 2022 is presented below: Granted (For Purposes of Measuring Share ‑ based Contractually Granted Compensation Expense) As of January 1, 2020 32,163,500 11,271,880 Granted 92,497,250 — As of December 31, 2020 124,660,750 11,271,880 Granted 1,920,500 4,563,790 As of December 31, 2021 126,581,250 15,835,670 Granted — 27,846,178 As of December 31, 2022 126,581,250 43,681,848 Weighted Average Aggregate Weighted Remaining Intrinsic Number Average Exercise Contractual Value (US$) in of Options Price (US$) Life (Years) thousand Outstanding as of January 1, 2020 11,271,880 0.189 9.15 10,563 Granted — — — — Forfeited (214,370) 0.596 — — Outstanding as of December 31, 2020 11,057,510 0.181 8.13 97,280 Granted 4,563,790 0.670 7.87 14,741 Forfeited (1,695,896) 0.222 — — Outstanding as of December 31, 2021 13,925,404 0.336 7.35 49,627 Granted 27,846,178 0.171 7.41 59,041 Forfeited (303,241) 0.780 — — Outstanding as of December 31, 2022 41,468,341 0.171 7.06 88,297 Vested and exercisable as of December 31, 2020 — — — — Vested and exercisable as of December 31, 2021 1,115,739 0.009 7.00 4,341 Vested and exercisable as of December 31, 2022 11,126,832 0.200 6.24 23,361 As of December 31 , 18. Share-based compensation (Continued) (a) Equity Incentive Plans (Continued) RSU The summary of the restricted share units (RSU) activity under the 2021 Plan during the years ended December 31, 2020, 2021 and 2022 is presented below: Granted (For Purposes of Measuring Share-based Contractually Granted Compensation Expense) As of January 1, 2020 — — Granted — — Forfeited — — As of December 31, 2020 — — Granted 8,514,375 — Forfeited — — As of December 31, 2021 8,514,375 — Granted 22,467,333 4,434,659 Forfeited — (80,321) As of December 31, 2022 30,981,708 4,354,338 For the years ended December 31, 2020, 2021 and 2022, the share-based compensation expenses recognized by the Group for share awards under the Equity Incentive Plans were RMB716,411, RMB211,947 and RMB166,161, respectively. As of December 31, 2022, there was unrecognized compensation expense amounted to RMB914,853 attributable to the Group related to unvested share awards which are expected to be recognized over a weighted average period of 1.91 years. For the years ended December 31, 2020, 2021 and 2022, the number of vested options were nil, 1,115,739 and 10,011,093, the number of exercised options were nil,nil, and 9,648,928. For the years ended December 31, 2020, 2021 and 2022, no RSU were vested. The fair value for each of the share options granted under the Equity Incentive Plans for the years ended December 31, 2020, 2021 and 2022 was estimated on the grant dates or at the end of each reporting period when an accounting grant date was not established with the assistance of a qualified professional appraiser, using a binomial option pricing model with the following assumptions used: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 Risk-free interest rate 0.72%~0.89 % 1.01%~1.74 % 3.93%~3.99 % Expected terms (in years) 8-10 7-9 5-8 Expected volatility 50.85%~52.57 % 50.33%~53.78 % 86.07%~87.99 % Expected dividend yield — — — Fair value of underlying ordinary share (US$) 8.979 3.900 2.300 The risk-free interest rate is estimated based on the daily treasury long-term rate of U.S. Department of the Treasury with a maturity period close to the expected term of the options. The expected volatility as of December 31, 2020, 2021 and 2022 is estimated based on the annualized standard deviation of daily stock price of the company and comparable companies with a time horizon close to the expected term. Expected term is the remaining life from the valuation date to the maturity of the contract life of the options. Relx Inc. and the Company have no history or expectation of paying dividends on its ordinary shares, accordingly, the expected dividend yield is estimated to be 0%. 18. Share-based compensation (Continued) (b) Restriction of Relx Inc.’s ordinary shares held by the Founding Members On May 18, 2018, upon the completion of the Domestic PS Financing, the Founding Members agreed to put all their ordinary shares in Beijing Wuxin into escrow (“Beijing Wuxin’s Restricted Ordinary Shares”) and the Group released the shares from escrow to them only if specified service criteria are met. One half two second On September 27, 2018, all the Founding Members’ ordinary shares in Beijing Wuxin (including the shares under the Beijing Wuxin’s Restricted Ordinary Shares arrangement) were replaced by the ordinary shares of Relx Inc. (the “Relx Inc.’s Restricted Ordinary Shares”) in conjunction with the First Reorganization and Relx Inc.’s Restricted Ordinary Shares continued to subject to the same remaining vesting schedule as the original restriction arrangement. Relx Inc.’s Restricted Ordinary Shares continued to be subject to accelerated vesting under certain circumstances including a successful IPO of Relx Inc.. As disclosed in Note 1(b)(i), the change in the terms of Beijing Wuxin’s Restricted Ordinary Shares was a modification as it was conducted in conjunction with the First Reorganization which was similar to under a common control and the modification impact was evaluated not material. The Group continued to recognize the share-based compensation expenses related to Relx Inc.’s Restricted Ordinary Shares in its consolidated statements of comprehensive (loss)/income with the amount allocated by Relx Inc.. On December 17, 2020, the Founding Members, Relx Inc. and Relx Inc.’s preferred shareholders entered into a series of agreements regarding the corporate restructuring following a successful IPO of the Group, pursuant to which, Relx Inc.’s Restricted Ordinary Shares held by the Founding Members, which were subject to accelerated vesting upon a successful IPO of Relx Inc., will now be fully vested to the Founding Members upon a successful IPO of the Group. The amendment on the accelerated vesting condition was a modification under ASC 718 and the accounting impact of the modification was not material, as the modification was on vesting conditions of the awards and had no impact on the awards’ fair value immediately before and after the modification. In January 2021, the Company completed its IPO on the New York Stock Exchange (“NYSE”). Upon the completion of IPO, the Group recognized RMB11,398 share-based compensation expenses related to Relx Inc.’s Restricted Ordinary Shares because the accelerated vesting condition was achieved. The following table sets forth the summary of restricted shares activities of Relx Inc. (*): Weighted ‑ Average Number of Restricted Shares Grant Date Granted Fair Value US$ Outstanding as of January 1, 2020 65,571,473 0.09 Granted — — Vested (40,982,171) 0.09 Forfeited — — Outstanding as of December 31, 2020 24,589,302 0.09 Granted — — Vested (24,589,302) 0.09 Forfeited — — Outstanding as of December 31, 2021 — — (*) The share-based compensation expenses discussed below only include the expenses attributable to the Group. 18. Share-based compensation (Continued) (b) Restriction of RELX’s ordinary shares held by the Founding Members (continued) The number of Relx Inc.’s Restricted Ordinary Shares vested during the years ended December 31, 2020, 2021 and 2022 were 40,982,171, 24,589,302 and nil, respectively. For the years ended December 31, 2020,2021 and 2022, share-based compensation expenses recognized and associated with the Beijing Wuxin’s Restricted Ordinary Shares or Relx Inc.’s Restricted Ordinary Shares attributable to the Group were RMB8,214, RMB11,398 and nil, respectively. In order to determine the fair value of Relx Inc.’s Restricted Ordinary Shares, the Group first determined Relx Inc.’s equity value and then allocated the equity value to each element of Relx Inc.’s capital structure (preferred shares and ordinary shares) using a combination of the probability-weighted expected return method and the option pricing method. In determining the equity value of Relx Inc., the Group used the discounted cash flow (DCF) method of the income approach as the primary valuation approach, and to cross-check the reasonableness of results derived under the income approach by the market approach. The DCF analysis is performed using the projected cash flows developed by Relx Inc. based on its best estimates as of the valuation date. The determination of fair value requires complex and subjective judgments to be made regarding projected financial and operating results, unique business risks, the liquidity of shares and operating history and prospects at the time of valuation. The major assumptions used in the DCF analysis are discount rate and discount for lack of marketability (DLOM). The discount rates applied in the DCF analysis are based on the weighted average cost of capital (WACC) determined after considering factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors; while the DLOM was estimated based on the value of a put option determined by using the Finnerty model. The value of a put option serves as a proxy for the premium a willing buyer would pay to guarantee the marketability and price of the underlying asset in the future. (c) Share-based compensation related to Relx Inc.’s Series D Financing On September 25, 2020, Relx Inc. completed a series D financing (the ‘‘Series D Financing of Relx Inc.’’) whereby the Founding Members through Relx Holdings Limited (a shareholder of Relx Inc., beneficially owned by the Founding Members) sold an aggregate of 3,754,294 ordinary shares of Relx Inc. with a transaction price of US$ 28.97 per share to a group of investors. The excess of transaction price over the fair value of Relx Inc.’s ordinary shares sold by Founding Members were accounted for as a share-based compensation to the Founding Members (the ‘‘Share-based compensation related to Relx Inc.’s Series D Financing’’). The Group recognized share-based compensation expenses of RMB204,473 allocated by Relx Inc. in relating to share-based compensation related to Relx Inc.’s Series D Financing in 2020. |
Shareholders' equity
Shareholders' equity | 12 Months Ended |
Dec. 31, 2022 | |
Shareholders' equity | |
Shareholders' equity | 19. Ordinary shares As of December 31,2022, the issued share capital consisted of 1,570,790,570 ordinary shares at a par value of US$ 0.00001 per share (previously US$0.0001 per share before the Share split as detailed in Note 1), of which 1,262,075,580 shares were designated as Class A ordinary shares, 308,714,990 as Class B ordinary shares. The rights of the holders of Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Each share of Class A ordinary shares is entitled to one vote per share and is not convertible into Class B ordinary shares under any circumstances. Each share of Class B ordinary shares is entitled to ten votes per share and is convertible into one Class A ordinary share at any time by the holder thereof. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity that is not an affiliate of such holder, such Class B ordinary shares would be automatically converted into an equal number of Class A ordinary shares. 309,456,800 Class B ordinary shares were converted into an equal number of Class A ordinary shares in 2022. In January 2021, the Company completed its IPO, 133,975,000 American depositary shares (“ADSs”), representing 133,975,000 Class A Ordinary shares, were issued and sold to the public, with proceeds of approximately US$1,553.0 million, net of underwriter commissions and relevant offering expenses. 19. Treasury stock On December 8, 2021, the Company announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to US$500 million of its shares over a period until December 31, 2023. As of December 31, 2022, the Company has repurchased approximately 42.4 million ADSs (equivalent to approximately 42.4 million ordinary shares) for approximately US$96.9 million under this program. The Company accounts for repurchased ordinary shares under the cost method and includes such treasury stock as a component of the shareholders’ equity. Retained earnings Relevant PRC laws and regulations permit payments of dividends by the Group’s entities incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s entities in the PRC are required to annually appropriate 10% of their net after-tax income to the statutory general reserve fund prior to payment of any dividends, unless such reserve funds have reached 50% of their respective registered capital. Furthermore, cash transfers from the Company’s PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currency conversion. Shortages in the availability of foreign currency may restrict the ability of the PRC subsidiaries and consolidated affiliated entities to remit sufficient foreign currency to pay dividends or other payments to the Company, or otherwise satisfy their foreign currency denominated obligations. As a result of these and other restrictions under PRC laws and regulations, the Company’s subsidiaries, the VIE and VIE’s subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances. Amounts of net assets restricted include paid-in capital and statutory reserve funds of the Company’s PRC subsidiaries and the net assets of the VIEs in which the Company has no legal ownership, totaling RMB51,149 and RMB73,571(US$ 10,667) as of December 31, 2021 and 2022, respectively. Even though the Company currently does not require any such dividends, loans or advances from the PRC entities for working capital and other funding purposes, the Company may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to its shareholders. Except for the above, there is no other restriction on the use of proceeds generated by the Company’s subsidiaries, the VIE and VIE’s subsidiaries to satisfy any obligations of the Company. For the year ended December 31, 2022, the Company performed a test on the restricted net assets of its consolidated subsidiaries and VIE (the “restricted net assets”) in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3) “General Notes to Financial Statements” and concluded that the restricted net assets do not exceed 25% of the consolidated net assets of the Company as of December 31, 2022 and the condensed financial information of the Company are not required to be presented. |
Net (loss)_income per ordinary
Net (loss)/income per ordinary share | 12 Months Ended |
Dec. 31, 2022 | |
Net (loss)/income per ordinary share | |
Net (loss)/income per ordinary share | 20. Basic net (loss)/income per ordinary share is the amount of net (loss)/income available to each share of ordinary shares outstanding during the reporting period. Diluted net (loss)/income per share is the amount of net (loss)/income available to each share of ordinary shares outstanding during the reporting period adjusted to include the effect of potentially dilutive ordinary equivalent shares. Pursuant to the Second Reorganization Agreements, the Company effected a share split by issuing additional 143,681,555 shares to Relx Inc. on November 25, 2020. On January 11, 2021, the Company effected a share split to subdivide each of its authorized ordinary shares into ten ordinary shares (Refer to Note 1(b)(iii)). The effects of the share splits in November 2020 and January 2021 were retrospectively presented on January 2, 2018 (date of inception), including in calculating the net (loss)/income per ordinary share. 20. For the years ended December 31, 2020, 2021 and 2022, the basic and diluted net (loss)/income per ordinary share reflecting the effects of the share splits are presented as follows. For the year ended For the year ended For the year ended December 31, December 31, December 31, 2020 2021 2022 RMB RMB RMB Numerator: Net (loss)/income attributable to RLX Technology Inc. (128,101) 2,024,713 1,441,219 Numerator for basic and diluted net (loss)/income per ordinary share (128,101) 2,024,713 1,441,219 Denominator: Weighted average number of ordinary shares (a) 1,436,815,570 1,401,371,494 1,319,732,802 Denominator used for net (loss)/income per ordinary share - basic 1,436,815,570 1,401,371,494 1,319,732,802 Adjustments for dilutive options and RSUs — 8,319,385 8,411,290 Denominator for net (loss)/income per ordinary share - diluted 1,436,815,570 1,409,690,879 1,328,144,092 Net (loss)/income per ordinary share - Basic (0.089) 1.445 1.092 - Diluted (0.089) 1.436 1.085 (a) The shares repurchased by the company are excluded from the number of shares outstanding for purposes of computing basic and diluted earnings per share in accordance with ASC 260. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related party transactions | |
Related party transactions | 21. The table below sets forth the major related parties and their relationships with the Group: Related parties Relationship with the Group Relx Inc. and entities within Relx Inc.’s non-PRC operations Under common control of beneficial owner Ms. Ying (Kate) Wang Shareholder of Relx Inc., Chief Executive Officer of the Group Related Party A A party that is controlled by an individual who has indirectly significant influence on the Group (a) Major related parties’ transactions were as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Expenses allocated from/(to) related parties: Corporate expenses allocated to Relx Inc. (i) (11,973) — — Share-based compensation expenses allocated from Relx Inc. (ii) 929,098 474,132 — Expenses allocated to Relx Inc.’s non-PRC operations. (iii) — — (4,883) Expenses allocated from Relx Inc.’s non-PRC operations. (iii) — — 399 Sales to related parties : Related Party A (iv) 1,416 — — Entity within Relx Inc’s non-PRC operations (v) — 42,267 66,752 Total 918,541 516,399 62,268 (i) Historically, all corporate back office expenses and salaries of directors and executive officers were paid by the Group. In 2020, a portion of these payments related to start-up and operating activities of Relx Inc.’s non-PRC operations was allocated to Relx Inc. and accounted for as amounts due from Relx Inc.. Starting from 2021, Relx Inc. established its own back office operations and the arrangement for shared costs was terminated. 21. Related party transactions (Continued) (ii) Prior to the Share Distribution, share-based compensation expenses were incurred by Relx Inc. and were allocated and pushed down to the Group’s consolidated statements of comprehensive (loss)/income. These allocations were based on percentage of revenue between the Group and Relx Inc.’s non-PRC operations. Refer to Notes 1 and 18. (iii) In 2022, certain employees concurrently worked for the Group and Relx Inc.’s non-PRC operations, staff costs and related expenses were shared by the Group and Relx Inc.’s non-PRC operations. A portion of these staff costs and related expenses was allocated to/from Relx Inc.’s non-PRC operations. (iv) In the first quarter of 2020, the Group sold e-vapor products to Related Party A in the ordinary course of the Group’s operating activities at the then selling price to end users. The Group recognized net revenue of RMB 1,416 for the year ended December 31, 2020. (v) Since June 2021, the Group has sold certain raw materials to an entity within Relx Inc.’s non-PRC operations, in the ordinary course of the Group’s operating activities, with a total transaction amount of RMB 42,267 and RMB 66,752 for the years ended December 31, 2021 and 2022, respectively. (b) For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Financing (received from)/provided to related parties: - Financing proceeds received on behalf of Relx Inc. (i) (273,457) — — - Financing proceeds paid back to Relx Inc. (i) 273,457 — — - Funds provided by Relx Inc. (ii) (1,439,183) — — - Funds paid back to Relx Inc. (ii) 1,264,004 11,174 — - Investment prepayment returned from Relx Inc. (iii) — (21,006) — - Payments made on behalf of Relx Inc.’s non-PRC operations (iv) 61,110 — — - Others 298 — — Total (113,771) (9,832) — (i) In connection with the Series D Financing on September 25, 2020, the Group, through Beijing Wuxin, and a preferred shareholder of Relx Inc. entered into convertible loan agreements with one investor to obtain interest free convertible loans, in the aggregate principal amount of RMB 273,457 (the ‘‘September 2020 Loan’’). The Group accordingly received the principal of September 2020 Loan on behalf of Relx Inc. on September 25, 2020. The September 2020 Loan, which was denominated in RMB, should be repaid to such investor once the investor obtains the required foreign exchange approval. The investor should, in turn, use the proceeds to pay the US$ equivalent of RMB 273,457 to the preferred shareholder of Relx Inc. and Relx Inc., to obtain 692,911 shares of Series D-1 preferred shares and 554,329 shares of Series D-2 preferred shares of Relx Inc., respectively. The September 2020 Loan should be repaid by the Group to such investor if such approval cannot be obtained in a specified timeframe. The Group received the RMB 273,457 proceeds for the September 2020 Loan and were accounted for as increase to amounts due to related parties. The September 2020 Loan of RMB 273,457 was repaid by the Group to such investor on November 2, 2020. (ii) After the First Reorganization, as Relx Inc. raised US$ proceeds from its equity financing, Relx Inc. provided funding to the Group to support the Group’s business. These fund advances were accounted for as increase to amounts due to related parties. During the years ended December 31, 2020, 2021 and 2022, the Group received funds of RMB 1,439,183 , nil and nil from Relx Inc. and paid back RMB 1,264,004 , RMB 11,174 and nil , respectively. 21. Related party transactions (Continued) (iii) The Group made investment prepayment to an investee on behalf of Relx Inc., as the investee was setting up its overseas holding structure to enable Relx Inc. to hold the investee’s overseas shares. This prepayment was accounted for as an increase to amount due from the related parties as of December 31, 2019. The prepayment was returned to the Group in March 2021. (iv) In 2020, the Group made payments made on behalf of Relx Inc.’s non-PRC operations, consisting mainly of material costs, employee expenses and freight expenses. Such payments were accounted for as increase to amounts due from related parties, based on actual amounts incurred. Starting from 2021, there was no such payment arrangement between the Group and Relx Inc.. (c) As of December 31, 2021 2022 RMB RMB Amounts due from related parties Current - Expenses allocated to Relx Inc.’s non-PRC operations. (i) — 5,112 - Sales of products to related party (ii) 1,936 — Total 1,936 5,112 Amounts due to related parties Current - Expenses allocated from Relx Inc.’s non-PRC operations. (i) — (423) Total — (423) (i) The net amount of these balances with related parties was RMB 4,689 as of December 31, 2022, which is the outstanding amount of expenses allocation. (ii) The amount of the balance with related party was RMB 1,936 as of December 31, 2021, and the balance was settled in January of 2022. |
Fair value measurement
Fair value measurement | 12 Months Ended |
Dec. 31, 2022 | |
Fair value measurement | |
Fair value measurement | 22. Fair value measurement The fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. The Group adopted ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (the “ASU 2018-13”) on January 1, 2020. The adoption of ASU 2018-13 had no significant impact on the Group’s consolidated financial statements. 22. Fair value measurement (Continued) The Group did not have any other financial instruments that were required to be measured at fair value on a recurring basis as of December 31, 2021 and 2022 except for short-term investments and available-for-sale debt securities. The following table summarizes the Group’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as of December 31, 2021 and 2022: Level 1 Level 2 Level 3 RMB RMB RMB As of December 31, 2022 Short-term investments_ Fair value option (i) — 2,434,864 — Long-term investment securities, net_ Available-for-sale (ii) — 557,492 — As of December 31, 2021 Short-term investments — 3,621,637 — (i) Short-term investments represent structured deposits and the Group values these short-term investments based on quoted prices of similar products provided by banks at the end of each year, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. (ii) Long-term investment securities, net include debt-classified securities held by the Group with original maturities of more than one year. The Group classifies the long-term investment securities as held-to-maturity or available-for-sale, whose classification determines the respective accounting methods stipulated by ASC 320 and the Group values these long-term investment securities classified as available-for-sale based on quoted prices of similar products provided by banks at the end of each year, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. Apart from the short-term investments and long-term investment securities,net, the Group’s financial instruments consist of cash and cash equivalents, restricted cash, short-term bank deposits, net, long-term bank deposits, net, accounts and notes receivable, net, receivables from online payment platforms, amounts due from related parties, prepayments and other current assets, net, accounts and notes payable, accrued expenses and other current liabilities and amounts due to related party. As of December 31, 2021 and 2022, the Group had no financial assets or financial liabilities that are measured at fair value on a non-recurring basis apart from the long-term investments, which were measured using significant unobservable inputs (Level 3) and written down from their respective carrying values to fair values with impairment charges incurred and recorded in the consolidated statements of comprehensive (loss)/income. The fair values of long-term investments were measured under the income approach, based on the Group’s best estimation. Significant inputs used in the income approach primarily included future estimated cash flows and discount rate, derived from a review of the investee’s operation results, expected growth rates and cost of capital, which are highly judgmental due to the subjectivity of the unobservable inputs (Level 3) used in the valuation methodologies used to determine fair value. Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in future periods. The Group’s non-financial assets, such as intangible assets, fixed assets and leasehold improvement, would be measured at fair value on a non-recurring basis whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The fair values of non-financial long-lived assets were measured under income approach, based on the Company’s best estimation. Significant inputs used in the income approach primarily included future estimated cash flows and discount rate. Impairment recorded for long-term investments for the years ended December 31, 2020, 2021 and 2022 was RMB1,000, nil and RMB4,000, respectively. Impairment recorded for the acquired intangible assets, fixed assets and leasehold improvement based on management’s assessment for the years ended December 31, 2020, 2021 and 2022 was nil, nil and RMB29,938. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | 23. (a) Commitments As of December 31, 2022, future minimum commitments under non-cancelable agreements were as follows: Rental RMB 2023 2,268 The operating commitments as of December 31, 2022 presented above mainly consist of the short-term lease commitments and leases that have not yet commenced but that created significant rights and obligations for the Company, which are not included in operating lease right-of-use assets and lease liabilities. (b) Litigation From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of any unresolved matters, individually and in the aggregate, is reasonably possible to have a material adverse effect on the Group’s financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. The Group records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis. The Group has not recorded any material liabilities in this regard as of December 31, 2021 and 2022. |
Significant accounting polici_2
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Significant accounting policies | |
Basis of presentation | a) The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to reflect the financial position, results of operations and cash flows of the Group. Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. |
Principles of consolidation | b) The Group’s consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and VIE’s subsidiaries for which the Company or its subsidiary is the primary beneficiary. A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All transactions and balances among the Company, its subsidiaries, the VIE and VIE’s subsidiaries have been eliminated upon consolidation. For the Company’s consolidated subsidiaries and VIEs, non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of operations and comprehensive (loss)/income to distinguish the interests from that of the Company. |
Use of estimates | c) The preparation of the Group’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include product warranty, allowance for credit losses, revenue recognition, inventories write-downs, discount rate for lease accounting, valuation allowance for deferred tax assets, impairments on property, equipment and leasehold improvement, valuation of available-for-sale debt securities and the valuation of share-based compensation. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. |
Functional currency and foreign currency translation | d) The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its overseas subsidiaries incorporated in Hong Kong is United States dollars (“US$”). The functional currency of the Group’s PRC entities is RMB. In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC have been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date. Equity amounts other than earnings generated in current period are translated at historical exchange rates. Revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as foreign currency translation adjustments and shown as a component of other comprehensive income/(loss) in the consolidated statements of comprehensive (loss)/income. Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in others, net in the consolidated statements of comprehensive (loss)/income. |
Convenience translation | e) Convenience translation Translations of the consolidated balance sheets, consolidated statements of comprehensive (loss)/income and consolidated statements of cash flows from RMB into US$ as of and for the year ended December 31, 2022 are solely for the convenience of the reader and were calculated at the noon buying rate of US$1.00 = RMB6.8972 on December 30, 2022 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate or at any other rate. |
Fair value measurement | f) Fair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: ● Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. ● Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. ● Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Refer to Note 22 for additional information. |
Cash and cash equivalents | g) Cash and cash equivalents mainly represent cash at bank, demand deposits which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amount of cash. |
Restricted cash and consolidated statements of cash flows | h) Cash that is legally restricted as to withdrawal or for use or pledged as security is reported separately on the face of the Group’s consolidated balance sheets. In November 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, (“ASU 2016-18”) The Group’s restricted cash mainly represents security deposits held in designated bank accounts for issuance of bank acceptance notes relating to notes payable. |
Bank deposits | i) Bank deposits Short-term bank deposits, net Short-term bank deposits are time deposits with original maturities of longer than three months but less than one year or the long-term bank deposits with a maturity date within one year. Interest earned is recorded as interest income, net in the consolidated statements of comprehensive (loss)/income during the years presented. Long-term bank deposits, net Long-term bank deposits represent time deposits placed with banks with original maturities more than one year. And those matured within one year are reclassified to short-term bank deposits, net. |
Investments | j) Short-term investments For short-term investments in financial instruments with a variable interest rate indexed to the performance of underlying assets, the Group elects the fair value option at the date of initial recognition and carries these investments subsequently at fair value. Changes in fair values are reflected in investment income in the consolidated statements of comprehensive (loss)/income. Fair value is estimated based on quoted prices of similar products provided by financial institutions at the end of each reporting period. The Group classifies these inputs as Level 2 fair value measurement. Long-term investment securities, net Long-term investment securities, net include debt-classified securities held by the Group with original maturities of more than one year. The Group classifies the long-term investment securities as held-to-maturity or available-for-sale, whose classification determines the respective accounting methods stipulated by ASC 320. Held-to-maturity debt securities include debt instruments with fixed interest rates issued by financial institutions for which the Group has the positive intent and ability to hold those securities to maturity. The Group accounts for the held-to-maturity debt securities at amortized cost less allowance for credit losses. Available-for-sale debt securities include debt instruments with a variable interest rate indexed to the performance of underlying assets, which are reported at fair value, with changes in fair values reflected in other comprehensive income/(loss) in the consolidated statements of comprehensive (loss)/income. Fair value is estimated based on quoted prices of similar products provided by financial institutions at the end of each reporting period. The Group classifies these inputs as Level 2 fair value measurement. The allowance for credit losses on available-for-sale debt securities is accounted for in accordance with ASC 326. At each reporting period, available-for-sale debt securities are evaluated at the individual security level to determine whether there is a decline in the fair value below its amortized cost basis (an impairment). In circumstances where the Group intends to sell, or is more likely than not required to sell, the security before it recovers its amortized cost basis, the difference between fair value and amortized cost is recognized as a loss in the consolidated statements of comprehensive (loss)/income, with a corresponding write-down of the security’s amortized cost. In circumstances where neither condition exists, the Group then evaluates whether a decline is due to credit-related factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. To determine the portion of a decline in fair value that is credit-related, the Group compares the present value of the expected cash flows of the security discounted at the security’s effective interest rate to the amortized cost basis of the security. A credit-related impairment is limited to the difference between fair value and amortized cost, and recognized as an allowance for credit loss on the consolidated balance sheets with a corresponding adjustment to net (loss)/income. Any remaining decline in fair value that is non-credit related is recognized in other comprehensive income/(loss), net of tax. Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Interest earned for both categories of long-term investment securities is recorded as interest income, net in the consolidated statements of comprehensive (loss)/income during the years presented. Long-term investments,net The Group elects to record an equity investment without readily determinable fair values and not accounted for by the equity method at its cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer (“measurement alternative”). As of December 31, 2022, the Group’s long-term investments consist of investments in privately held companies which do not have readily determinable fair values and therefore the Group recognized these investments at cost adjusted for changes from observable transactions for identical or similar investments of the same investee, less impairment. The Group regularly evaluates the long-term investments for impairment based on performance and financial position of the investees as well as other evidence of market value for each reporting period. Such evaluation includes, but not limited to, reviewing the investees’ cash position, recent financing, projected and historical financial performance, cash flow forecasts and financing needs. An impairment loss is recognized in others, net in the consolidated statements of comprehensive (loss)/income equal to the excess of the investment’s carrying value over its fair value. The impairment on long-term investments for the years ended December 31, 2020, 2021 and 2022 was RMB1,000, nil and RMB4,000. |
Accounts and notes receivable, net | k) Accounts and notes receivable are recognized and carried at the original invoiced amount less an allowance for credit losses. The Group maintains an allowance for credit losses in accordance with ASC 326 and records the allowance for credit losses as an offset to accounts and notes receivable. Expected credit losses of nil, RMB141 and RMB201 were recorded as general and administrative expenses in the consolidated statements of comprehensive (loss)/income for the years ended December 31, 2020, 2021 and 2022. Refer to Note 2(af) “Allowance for credit losses” for additional information about adoption of ASC 326. |
Inventories | l) Inventories of the Group consist of raw materials and finished goods. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. Inventories write-downs are made for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess of net realizable value. Certain factors could impact the realizable value of inventory, so the Group continually evaluates the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration of historical usage, expiration date, expected demand, anticipated sales price, new product development schedules, product obsolescence, customer concentrations and other factors. Inventories write-downs are recorded in cost of revenue in the consolidated statements of comprehensive (loss)/income. |
Property, equipment and leasehold improvement, net | m) Property, equipment and leasehold improvement are stated at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the following estimated useful lives: Category Estimated useful lives Electronic equipment 3-5 years Furniture and office equipment 3-5 years Machinery and equipment 2-10 years Transportation equipment 5 years Leasehold improvement Shorter of the term of the lease or the estimated useful lives of the assets Expenditures for maintenance and repairs are expensed as incurred, whereas the costs of renewals and betterment that extend the useful lives of property, equipment and leasehold improvement are capitalized as additions to the related assets. The gain or loss on the disposal of property, equipment and leasehold improvement is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in others, net in the consolidated statements of comprehensive (loss)/income. |
Intangible assets, net | n) Intangible assets purchased from third parties mainly consist of license of copyright, software and trademark. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. Finite-lived intangible assets are tested for impairment if impairment indicators arise. Amortization of finite-lived intangible assets is computed using the straight-line method over their estimated useful lives, which are as follows: Category Estimated useful lives License of copyright 2 years Purchased software 2-3 years Trademark 2 years |
Impairment of long-lived assets | o) Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge of nil, nil and RMB42,529 was recognized for the years ended December 31, 2020, 2021 and 2022. The impairment recognized in 2022 was primarily due to the impact of regulatory changes. |
Leases | p) The Group leases office space, warehouses, stores and office equipment for fixed periods ranging from 1 month to 60.5 months, some of which have extension options. Extension options are not recognized by the Group in the determination of lease liabilities unless renewals are reasonably certain. The Group has elected the short-term lease measurement and recognition exemption. The Group recognizes lease payments for its short-term lease on a straight-line basis over the lease term and reassesses the extension options of them to be qualify for the short-term lease measurement. As of December 31, 2021 and 2022, all the Group’s leases are classified as operating leases. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. In determining the present value of the unpaid lease payments, ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowing rate as the discount rate for the lease. The Group’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. |
Revenue recognition | q) The Group follows five steps for revenue recognition: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Group’s revenues are primarily derived from sales of the Group’s products to offline distributors who are responsible for sales to retailers and end users. Refer to Note 17 to the consolidated financial statements for disaggregation of the Group’s revenue for the years ended December 31, 2020, 2021 and 2022. Sale of products to offline distributors Under the distribution agreements, the offline distributors purchase products from the Group, take delivery and are responsible for commercial distribution and offline terminal sales to retailers and end users in authorized distribution areas. After taking control of the products, the offline distributor is responsible for carrying out direct interactions with retailers and end users, delivering the products and providing customer support. Based on these indicators, the Group determined the offline distributors (as opposed to the end users) to be its customers according to ASC 606-10-55-39. Previously, the offline distributors made full payment to the Group at the time of order placement and take control of the products after receipt. The Group has also entered into rebate agreements with offline distributors in order to incentivize the offline distributors to increase their purchases from the Group. The sales rebates are usually calculated as a percentage of the purchase amount, which is accounted for as variable consideration according to ASC 606-10-32-5. Under the tripartite agreements entered among the Group, retailers and the Group’s offline distributors, the Group provides a subsidy to branded stores operated by retailers, which is the Group’s customers’ customer in the distribution chain. The amount of subsidy is subject to a negotiation between the Group and the retailers. In addition, the Group provides non-cash subsidy to retailers and offline distributors for promotional activities in the form of rebate. The amount of subsidy is based on a certain percentage of the cost of specific promotional activities, which varies from activity to activity. These subsidies are payable to the Group’s customers or customers’ customers. The Group determined the subsidy should be recorded as a reduction of revenue, according to ASC 606-10-32-25. Accordingly, the Group recognizes revenue from sales to offline distributors upon delivery of the products to offline distributors’ warehouses in an amount equal to the contract sales prices, less applicable allowances for estimated sales rebates and approved subsidies. Starting from 2022, the Group sells the product to the offline distributors with Tobacco Monopoly License (“licensed offline distributors”). The licensed offline distributors make full payment to the Group after receiving the product, the payment period is approximately one month. According to the agreements between the Group and the licensed offline distributors, the licensed offline distributors took control of the products upon receipt but was entitled to certain rights of return and price concession after receipt of products. The Group made estimation for sales returns and price concession based on contract terms and historical patterns. The Group determined the sales return and price concession should be recorded as a reduction of revenue, according to ASC606-10-55-23. Accordingly, the Group recognized revenue from licensed offline distributors upon delivery of the products to licensed offline distributors’ warehouses in an amount equal to the contract sales prices, less applicable allowances for estimated of sales return and price concession. Others For direct sales through offline stores operated by the Group, the Group recognized revenues when goods are delivered to the end users. Contract balances A receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due. A contract asset is recorded when the Group has transferred products to the customer before payment is received or is due, and the Group’s right to consideration is conditional on future performance or other factors in the contract. No contract asset was recorded as of December 31, 2021 and 2022. Contract liabilities are recognized if the Group receives consideration in advance of performance, which is mainly in relation to the orders unshipped, where there is still an obligation to be fulfilled by the Group. The contract liabilities will be recognized as revenue when all of the revenue recognition criteria are met. All contract liability balances at the beginning of the years were recognized as revenue in the following year due to generally short-term duration of contracts. For the years ended December 31, 2020, 2021 and 2022, the Group did not have any revenue recognized from performance obligations satisfied (or partially satisfied) in previous years. Practical Expedients The transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied has not been disclosed, as substantially all the Group’s contracts have a duration of one year or less. Payment terms with licensed offline distributors generally require settlement within 30 days or less. The Group has determined that its contracts generally do not include a significant financing component |
Cost of revenue | r) Cost of revenues consists primarily of consignment manufacturing costs, material costs, inventories write-downs and depreciation of the machinery and equipment used on production lines, as well as related costs that are directly attributable to the production of products. |
Product warranty | s) The Group provides product warranty on all e-vapor products sold based on the contracts with its customers at the time of sale of products. The Group accrues a warranty reserve for the products sold, which includes the best estimate of defective rate and projected costs to repair or replace items under warranty. These estimates are primarily based on the estimates of the nature, frequency and average costs of future claims. The warranty reserve is included within the accrued expenses and other current liabilities in the consolidated balance sheets. Warranty cost is recorded as a component of cost of sales in the consolidated statements of comprehensive (loss)/income. The Group reevaluates the adequacy of the warranty accrual on a regular basis. |
Research and development expenses | t) Research and development expenses primarily consist of salaries, welfare benefits and share-based compensation expenses for research and development personnel as well as material expenses and depreciation of equipment associated with research and development activities. Costs incurred for the preliminary project stage of internal use software are expensed in research and development expenses when incurred. Costs incurred during the application development stage are capitalized when certain criteria are met as stated in ASC 350-40 “Internal-use Software” |
Selling expenses | u) Selling expenses primarily consist of advertising expenses, salaries, welfare benefits and shared-based compensation expenses for sales personnel, and shipping expenses. The advertising expenses amounted to RMB88,123, RMB192,541 and RMB57,954 for the years ended December 31, 2020, 2021 and 2022, respectively. The shipping expenses amounted to RMB31,806, RMB67,632 and RMB40,710 for the years ended December 31, 2020, 2021 and 2022, respectively. |
General and administrative expenses | v) General and administrative expenses primarily consist of salaries, welfare benefits and share-based compensation expenses for general and administrative personnel and professional service fees. |
Subsidy income | w) Subsidy income represents cash subsidies received from the PRC local government by the Group. Such amounts are recognized in others, net in the consolidated statements of comprehensive (loss)/income upon receipt. The Group recorded RMB23,911, RMB197,311 and RMB338,112 of subsidy income for the years ended December 31, 2020, 2021 and 2022, respectively. |
Share-based compensation | x) All share-based awards granted to directors, executive officers, employees, consultants and nonemployees who provide services to Relx Inc., including restricted ordinary shares, restricted share units and share options, are measured at fair value on grant date and are classified as equity awards in accordance with ASC 718 — “Compensation-Stock Compensation”. The Group early adopted ASU 2018-07, “Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting” on January 2, 2018 (date of inception) to account for share-based payments for acquiring goods and services from nonemployees at grant date fair value. For all share-based awards granted with service conditions that have a graded vesting schedule, share-based compensation expenses are recognized using the straight-line method, over the requisite service period. The Group adopted ASU 2016-09 to recognize the impact of forfeiture within compensation expense, when they occur. Restricted share units and share options granted with a service condition and a performance condition are measured at the grant date fair value. In circumstances where the service inception date precedes the grant date, share-based compensation expenses are measured beginning on the service inception date and is re-measured on each subsequent reporting date before the grant date, based on the estimated fair value of the related awards. Prior to the Share Distribution, all the share options and restricted ordinary shares were granted by Relx Inc. using Relx Inc.’s underlying ordinary shares. The fair value of the ordinary shares of Relx Inc. is determined by using the income approach, with a discount for lack of marketability, given that the shares underlying the awards were not publicly traded. Upon completion of the Share Distribution, the options were granted by the Company using its own underlying ordinary shares. The fair value of the ordinary shares of the Company is equal to its market price. The Group uses the binomial option pricing model to estimate fair value of the share options. The determination of the fair value of share options is affected by the fair value of the underlying ordinary shares as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected grantee’s share option exercise behavior, risk free interest rates and expected dividends. The shares issued prior to the Share Distribution to directors, executive officers, employees and consultants are those of Relx Inc. and the proportion of the share-based compensation expenses attributable to the Group is accounted for as a capital contribution from Relx Inc.. The Company’s share options granted to employees of Relx Inc. in connection with the Share Distribution are recorded as a deemed dividend from the Group to its shareholders at the fair value determined as of the grant date. Refer to Note 18 for details. |
Employee benefits | y) PRC Contribution Plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the regulatory contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB23,649, RMB75,028 and RMB86,666 for the years ended December 31, 2020,2021 and 2022, respectively. |
Taxation | z) Income taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statement of comprehensive (loss)/income in the period of change. The Group records a valuation allowance against the amount of deferred tax assets if, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized. Uncertain tax positions The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance is also provided on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Group’s uncertain tax positions and determining its provision for income taxes. The Group recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under others, net in its consolidated statements of comprehensive (loss)/income. The Group did not recognize any interest and penalties associated with uncertain tax positions for the years ended December 31, 2020, 2021 and 2022. As of December 31, 2021 and 2022, the Group did not have any significant unrecognized uncertain tax positions. |
Related parties | aa) Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation. |
Statutory reserves | ab) The Company’s subsidiaries, the VIE and subsidiaries of the VIE established in the PRC are required to make appropriations to certain non-distributable reserve funds. In accordance with the laws applicable to the Foreign Investment Enterprises established in the PRC, the Company’s subsidiaries registered as wholly foreign-owned enterprise have to make appropriations from their annual after-tax profits (as determined under generally accepted accounting principles in the PRC (“PRC GAAP”)) to reserve funds including general reserve fund, enterprise expansion fund and staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the annual after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the general reserve fund has reached 50% of the registered capital of the company. Appropriations to the enterprise expansion fund and staff bonus and welfare fund are made at the respective company’s discretion. In addition, in accordance with the PRC Company Laws, the Group’s VIE registered as Chinese domestic company must make appropriations from its annual after-tax profits as determined under the PRC GAAP to non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the annual after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the company. Appropriation to the discretionary surplus fund is made at the discretion of the company. The use of the general reserve fund, enterprise expansion fund, statutory surplus fund and discretionary surplus fund are restricted to offsetting of losses or increasing of the registered capital of the respective company. The staff bonus and welfare fund are liabilities in nature and are restricted to fund payments of special bonus to employees and for the collective welfare of all employees. None of these reserves are allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor can they be distributed except under liquidation. For the years ended December 31, 2020,2021 and 2022, the profit appropriation to statutory surplus fund for the Group’s entities incorporated in the PRC was nil, RMB1,319 and RMB25,492, respectively. No appropriation to other reserve funds was made for any of the periods presented. |
Comprehensive income | ac) Comprehensive income is defined as the change in equity of the Group during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Accumulated other comprehensive (loss)/income, as presented on the accompanying consolidated balance sheets, mainly consists of accumulated foreign currency translation adjustments, and unrealized loss on available-for-sale debt securities. |
Segment reporting | ad) Based on the criteria established by ASC 280 “Segment Reporting”, the Group’s chief operating decision maker has been identified as its Chief Executive Officer, who reviews consolidated results of the Group when making decisions about allocating resources and assessing performance. For the purpose of internal reporting and management’s operation review, the chief operating decision maker does not segregate the Group’s business by market or product. Hence, the Group has only one operating and reportable The Company is domiciled in the Cayman Islands while the Group mainly operates its businesses in the PRC and earns substantially all of the revenues from the PRC, therefore, no geographical segments are presented. |
Concentration and risk | ae) Foreign exchange risk The revenues and expenses of the Group’s entities in the PRC are generally denominated in RMB and their assets and liabilities are denominated in RMB. The RMB is not freely convertible into foreign currencies. Remittances of foreign currencies into the PRC or remittances of RMB out of the PRC as well as exchange between RMB and foreign currencies require approval by foreign exchange administrative authorities with certain supporting documentation. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into other currencies. Credit risk Financial instruments that potentially expose the Group to credit risk consist primarily of cash and cash equivalents, restricted cash, short-term bank deposits, long-term bank deposits, accounts and notes receivable, receivables from online payment platforms, short-term investments, long-term investment securities and amounts due from related parties. The carrying amounts of these financial instruments represent the maximum amount of loss due to credit risk. The Group places its cash and cash equivalents, restricted cash, short-term bank deposits, short-term investments, long-term investment securities and long-term bank deposits in reputable financial institutions with high credit ratings and quality. There has been no recent history of default in relation to these financial institutions and credit risk is immaterial. Accounts and notes receivable and other receivables are typically unsecured and are mainly derived from the ordinary course of business in the PRC. The risk with respect to these financial instruments is mitigated by credit evaluations the Group performs on its customers and its ongoing monitoring processes of outstanding balances. Concentration of customers and suppliers There was revenue from one offline distributor A which represented greater than 10% of the net revenue for the year ended December 31, 2020. There were accounts and notes receivable due from one offline distributor B which individually represented greater than 10% and totally contributed to 27% of the Group’s total accounts and notes receivable as of December 31, 2020. There was revenue from one offline distributor A which represented greater than 10% of the net revenue for the year ended December 31, 2021. There were accounts and notes receivable due from two offline distributors (distributor B and distributor C) which individually represented greater than 10% and totally contributed to 28% of the Group’s total accounts and notes receivable as of December 31, 2021. There was revenue from one offline distributor A which individually represented greater than 10% of the net revenue for the year ended December 31, 2022. There were accounts receivable due from two offline distributors (distributor D and distributor E) which individually represented greater than 10% and totally contributed to 33% of the Group’s total accounts and notes receivable as of December 31, 2022. There was purchase from one supplier A which represented greater than 10% and contributed to 78% of the total purchases amount for the year ended December 31, 2020 and the corresponding accounts and notes payable due to that supplier represented greater than 10% and contributed to 83% of the Group’s total accounts and notes payable as of December 31, 2020. There was purchase from one supplier A which represented greater than 10% and contributed to 75% of the total purchases amount for the year ended December 31, 2021 and the corresponding accounts and notes payable due to that supplier represented greater than 10% and contributed to 89% of the Group’s total accounts and notes payable as of December 31, 2021. There was purchase from one supplier A which represented greater than 10% and contributed to 80% of the total purchases amount for the year ended December 31, 2022 and the corresponding accounts and notes payable due to that supplier represented greater than 10% and contributed to 86% of the Group’s total accounts and notes payable as of December 31, 2022. |
Allowance for credit losses | af) Allowance for credit losses On January 1, 2021, the Group adopted ASC 326, Financial Instruments—Credit Losses, which requires recognition of allowances upon origination or acquisition of financial assets at an estimate of expected credit losses over the contractual term of the financial assets (the current expected credit loss or the “CECL” model). The Group’s financial assets subject to the CECL model mainly include short-term bank deposits, long-term bank deposits, long-term investment securities, accounts and notes receivable, prepayments and other current assets and related party receivables, and the allowance for these financial assets is driven by estimated default rate of underlying receivables. The Group estimates the default rate of receivables on a pool basis by taking into consideration the overall trend of historical delinquency rate and collection rate, correlated industrial and macro-economic factors, and other information deemed relevant in assessing future performance of the receivables portfolio. The Group monitors the delinquency status by vintage of origination and write off delinquent receivables timely when the receivables become uncollectible. Allowance for credit losses of nil, RMB2,562 and RMB25,039 were recorded in the consolidated statements of comprehensive (loss)/income during the years ended December 31, 2020, 2021 and 2022. |
Net (loss)/income per ordinary share | ag) Net (loss)/income per ordinary share Basic net (loss)/income per share is computed by dividing net (loss)/income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For the calculation of diluted net (loss)/income per share, the weighted average number of ordinary shares is adjusted by the effect of potential dilutive ordinary shares, including ordinary shares issuable upon the exercise of outstanding share options and restricted share units using the treasury stock method. The effect mentioned above is not included in the calculation of the diluted net (loss)/income per share when inclusion of such effect would be anti-dilutive. The shares repurchased by the Company are excluded from the number of shares outstanding for purposes of computing basic and diluted net (loss)/income per share in accordance with ASC 260. |
Recently issued accounting pronouncements | ah) Recently adopted accounting pronouncements In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Group adopted this standard beginning January 1, 2022 and the impact was not material to the consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance. The amendments in this ASU require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments in this ASU are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. The Group adopted this standard beginning January 1, 2022 and the impact was not material to the consolidated financial statements. |
Nature of operations and reor_2
Nature of operations and reorganizations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Nature of operations and reorganizations | |
Summary of major subsidiaries, VIE and VIE's subsidiaries | As of December 31, 2022, major subsidiaries, the VIE and VIE’s subsidiaries of Relx HK, the holding company of the PRC Business, were as follows: Percentage of direct or indirect Place of Date of economic incorporation incorporation ownership Principal activities Subsidiaries Beijing Yueke Technology Co., Ltd. Beijing, China October 25, 2018 100 % Investment holding Shanghai Wuke Information Technology Co., Ltd. (“Shanghai Wuke”) Shanghai, China July 26, 2019 100 % Investment holding VIE Beijing Wuxin Technology Co., Ltd. Beijing, China February 22, 2018 100 % Investment holding Subsidiaries of VIE Shenzhen Wuxin Technology Co., Ltd. Shenzhen, China January 2, 2018 100 % Selling e‑vapor products, research and development Ningbo Wuxin Information Technology Co., Ltd. (“Ningbo Wuxin”) Ningbo, China October 10, 2018 100 % Selling e‑vapor products |
Summary of consolidated financial information of the VIE and its subsidiaries | The following consolidated financial information of the VIE and its subsidiaries taken as a whole as of December 31, 2021 and 2022 and for the years ended December 31, 2020, 2021 and 2022 was included in the consolidated financial statements of the Group as follows: As of December 31, 2021 2022 RMB RMB Current assets Cash and cash equivalents 387,410 956,918 Restricted cash 500 20,574 Short-term bank deposits, net 439,900 130,000 Receivables from online payment platforms 10,006 2,817 Short-term investments 3,621,637 2,434,864 Accounts and notes receivable, net 14,024 50,259 Inventories 589,088 130,122 Amounts due from group companies 75,769 98,515 Amounts due from related parties 1,936 5,112 Prepayments and other current assets, net 412,405 80,267 Total current assets 5,552,675 3,909,448 Non ‑ current assets Property, equipment and leasehold improvement, net 142,657 75,780 Intangible assets, net 6,000 4,718 Long-term investments, net 12,000 8,000 Deferred tax assets, net 20,751 54,736 Right-of-use assets, net 174,584 57,261 Long-term bank deposits, net 39,987 1,167,325 Other non-current assets, net 48,557 10,871 Total non-current assets 444,536 1,378,691 Total assets 5,997,211 5,288,139 Current liabilities Accounts and notes payable 1,288,845 268,761 Contract liabilities 286,651 3,829 Salary and welfare benefits payable 107,614 53,438 Taxes payable 590,718 93,700 Accrued expenses and other current liabilities 304,594 132,762 Amounts due to group companies 173,207 261,729 Amounts due to related parties — 423 Lease liabilities - current portion 80,319 36,905 Total current liabilities 2,831,948 851,547 Non-current liabilities Deferred tax liabilities 4,513 8,653 Lease liabilities - non-current portion 102,830 30,593 Total non-current liabilities 107,343 39,246 Total liabilities 2,939,291 890,793 For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Third-party revenues 3,819,712 8,520,978 5,330,992 Inter-group revenues (a) — — 4,533 Third-party cost of revenues (2,292,153) (4,848,190) (2,965,169) Inter-group cost of revenues (b) — — (144) Excise tax on products — — (52,668) Third-party operating expenses (1,513,892) (1,182,492) (713,520) Inter-group operating expenses (c) — (122,568) (459,549) Other (expenses)/income (186,529) (367,311) 132,736 Net (loss)/income (172,862) 2,000,417 1,277,211 (a) Starting from 2022, the consolidated VIE and its subsidiaries provide operation services to entities within the Group with an amount of RMB4,533. The inter-group service revenue is eliminated at the consolidated level. (b) Starting from 2022, the entities within the Group sell products to the consolidated VIE, the inter-group cost of revenue was RMB144. The inter-group cost of revenues is eliminated at the consolidated level. (c) The subsidiaries of the Group and the primary beneficiary of the consolidated VIE provide operation supporting services to entities within the Group. For the years ended December 31, 2020, 2021 and 2022, the service fees charged by other group companies to the consolidated VIE were nil, RMB122,568 and RMB459,549. The inter-group service charge is eliminated at the consolidation level. For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Net cash used in operating activities with group company — — (512,685) Other operating activities 2,576,363 1,842,887 641,865 Net cash provided by operating activities 2,576,363 1,842,887 129,180 Loans to group companies (179,027) (96,058) (450,769) Repayment of loans from group companies — 191,620 342,000 Other investing activities (1,517,078) (2,755,324) 343,317 Net cash (used in)/provided by investing activities (1,696,105) (2,659,762) 234,548 Borrowings under loans from group companies 33,507 — 390,358 Repayment of borrowings under loans from group companies (176,021) — (164,408) Other financing activities (298) (10,785) (763) Net cash (used in)/provided by financing activities (142,812) (10,785) 225,187 |
Significant accounting polici_3
Significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Significant accounting policies | |
Summary of estimated useful lives of property, equipment and leasehold improvement | Category Estimated useful lives Electronic equipment 3-5 years Furniture and office equipment 3-5 years Machinery and equipment 2-10 years Transportation equipment 5 years Leasehold improvement Shorter of the term of the lease or the estimated useful lives of the assets |
Summary of estimated useful lives of intangible assets | Category Estimated useful lives License of copyright 2 years Purchased software 2-3 years Trademark 2 years |
Cash and cash equivalents (Tabl
Cash and cash equivalents (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Cash and cash equivalents | |
Summary of cash and cash equivalents balance | As of December 31, 2021 2022 RMB RMB Short‑term bank deposits with initial terms within three months 1,687,344 52,767 Cash at bank 3,521,623 1,215,745 Cash and cash equivalents 5,208,967 1,268,512 |
Bank deposits, net (Tables)
Bank deposits, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Bank deposits, net | |
Schedule of bank deposits, net | As of December 31, 2021 2022 RMB RMB Short-term bank deposits, net 4,022,119 7,084,879 Long-term bank deposits, net 2,004,593 1,515,428 Total (a) 6,026,712 8,600,307 (a) Bank deposits of RMB350,000 and RMB154,922 were held as collateral for the Group’s notes payable as of December 31, 2021 and 2022 (Note 13). |
Investment securities (Tables)
Investment securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investment securities | |
Schedule of short-term investment | As of December 31, 2021 2022 RMB RMB Short-term investments_ Fair value option 3,621,637 2,434,864 Long-term investment securities, net_ Held-to-maturity — 2,851,966 Long-term investment securities, net_ Available-for-sale — 557,492 Total 3,621,637 5,844,322 |
Accounts and notes receivable_2
Accounts and notes receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts and notes receivable, net | |
Schedule of accounts and notes receivable, net | As of December 31, 2021 2022 RMB RMB Accounts receivable, net 12,494 51,381 Notes receivable 1,530 — Accounts and notes receivable, net 14,024 51,381 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventories | |
Schedule of inventories | As of December 31, 2021 2022 RMB RMB Finished goods 524,568 123,672 Raw materials 64,520 7,229 Inventories 589,088 130,901 |
Prepayments and other current_2
Prepayments and other current assets, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepayments and other current assets, net | |
Schedule of Prepayments and other current assets, net | As of December 31, 2021 2022 RMB RMB Value Added Tax (“VAT”) recoverable 65,268 38,974 Prepaid selling expenses 6,507 1,230 Prepayments to suppliers 279,628 4,054 Deferred charges 27,218 452 Deposits for rental 7,725 13,216 Prepaid service fees 14,485 7,770 Interest receivable 39,024 95,204 Receivable from financial institution 35,357 35,241 Others 7,601 20,893 Prepayments and other current assets 482,813 217,034 Less: allowance for credit losses (154) (18,102) Prepayments and other current assets, net 482,659 198,932 |
Schedule of movement in the allowance for credit losses | 2021 2022 RMB RMB Balance as of January 1 — 154 Amounts charged to expenses 154 17,948 Balance as of December 31 154 18,102 |
Property, equipment and lease_2
Property, equipment and leasehold improvement, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, equipment and leasehold improvement, net | |
Schedule of property, equipment and leasehold improvement, net | As of December 31, 2021 2022 RMB RMB Leasehold improvement 65,811 94,336 Machinery and equipment 129,387 121,547 Furniture and office equipment 7,332 7,289 Electronic equipment 2,224 2,149 Transportation equipment 871 871 Total property, equipment and leasehold improvement 205,625 226,192 Less: accumulated depreciation (62,470) (122,033) Less: accumulated impairment — (16,288) Property, equipment and leasehold improvement, net 143,155 87,871 |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible assets, net | |
Summary of intangible assets | As of December 31, 2021 2022 RMB RMB License of copyright 3,530 3,530 Purchased software 13,753 19,115 Trademark — 567 Total intangible assets 17,283 23,212 Less: accumulated amortization (8,917) (14,283) Less: accumulated impairment — (1,377) Intangible assets, net 8,366 7,552 |
Summary of estimated amortization expenses | Amortization expenses of intangible assets RMB 2023 4,708 2024 2,621 2025 223 Total expected amortization expenses 7,552 |
Long-term investments, net (Tab
Long-term investments, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-term investments, net. | |
Summary of Group's long term investments | As of December 31, 2021 2022 RMB RMB Measurement alternative investments: Investee A 1,000 1,000 Investee B 4,000 4,000 Investee C 8,000 8,000 Total measurement alternative investments 13,000 13,000 Less: impairment (1,000) (5,000) Long-term investments, net 12,000 8,000 |
Other non-current assets, net (
Other non-current assets, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other non-current assets, net | |
Summary of other non-current assets, net | As of December 31, 2021 2022 RMB RMB Prepayments on long‑term assets (a) 31,379 13,398 Deposits for rental 17,582 6,423 Other non ‑ current assets 48,961 19,821 Less: impairment — (6,363) Other non ‑ current assets, net 48,961 13,458 (a) The Group made certain prepayments for the purchase of manufacturing equipment and software. |
Accounts and notes payable (Tab
Accounts and notes payable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts and notes payable | |
Summary of accounts and notes payable | As of December 31, 2021 2022 RMB RMB Accounts payable 506,092 52,493 Notes payable (a) 782,753 216,853 Total accounts and notes payable 1,288,845 269,346 (a) The Group’s notes payable mainly include short-term notes, typically with terms of 90 to 92 days which are provided to the Group’s suppliers and manufacturers. Notes payable as of December 31, 2021 were secured by short-term bank deposits of RMB 350,000 and short-term investments of RMB 432,753 held in commercial banks. Notes payable as of December 31, 2022 were secured by restricted cash of RMB 18,579 and long-term bank deposits of RMB 154,922 held in commercial banks . |
Accrued expenses and other cu_2
Accrued expenses and other current liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued expenses and other current liabilities | |
Summary of accrued expenses and other current liabilities | As of December 31, 2021 2022 RMB RMB Deposits from offline distributors, retailers and others 188,143 11,017 Professional service fee payables (a) 29,041 15,154 Product warranty (b) 4,185 5,051 Payables on equipment 6,866 7,020 Patent application fee payables 1,032 1,508 Accrued liabilities to suppliers 61,535 72,909 Payable related to employees’ exercise of share-based awards — 20,509 Payable related to termination of lease contracts — 6,191 Others 22,594 22,096 Accrued expenses and other current liabilities 313,396 161,455 (a) Professional service fees mainly consist of recruitment, audit and legal services performed by non-related parties. (b) Product warranty activities were as follows: |
Summary of product warranty activities | Product warranty RMB Balance as of January 1, 2020 1,374 Provided during the year 36,350 Utilized during the year (32,284) Balance as of December 31, 2020 5,440 Provided during the year 59,599 Utilized during the year (60,854) Balance as of December 31, 2021 4,185 Provided during the year 52,693 Utilized during the year (51,827) Balance as of December 31, 2022 5,051 |
Lease (Tables)
Lease (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Lease | |
Summary of supplemental information related to operating leases | As of December 31, 2021 2022 RMB RMB Lease right‑of‑use assets, net 176,258 75,008 Lease liabilities - current portion 80,582 45,955 Lease liabilities - non-current portion 104,232 39,968 Total lease liabilities 184,814 85,923 Weighted average remaining lease term 2.76 years 2.24 years Weighted average annual discount rate 4.75 % 4.75 % |
Summary of lease cost recognized in the Group's consolidated statements of comprehensive (loss)/income and supplemental cashflow information related to operating leases | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Operating lease expense 43,469 74,869 89,629 Short‑term lease expense 1,611 3,174 5,596 Total lease cost 45,080 78,043 95,225 |
Summary of supplemental cash flow information for the Group's leases | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Cash payments for operating lease liabilities, included in operating cash flows 42,637 68,825 77,189 Increase in lease liabilities arising from obtaining right‑of‑use assets 40,860 152,422 35,311 Decrease in lease liabilities due to termination of lease contracts — — (53,510) |
Summary of aggregate future minimum rental payments under non cancelable agreement | Rental RMB 2023 48,721 2024 21,738 2025 12,473 2026 8,017 Total minimum lease payment 90,949 Less: imputed interest (5,026) Total lease liability balance 85,923 |
Income tax expense (Tables)
Income tax expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income tax expense | |
Summary of current and deferred components of income taxes | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Current tax expense 241,792 646,979 410,478 Deferred tax benefit (11,260) (15,553) (38,898) Income tax expense 230,532 631,426 371,580 |
Summary of reconciliation of the differences between the statutory income tax rate and the Company's effective income tax rate | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 % % % Statutory income tax rate of the PRC 25 25 25 Tax effect of permanent differences (a) 227 2 1 Addition to Valuation Allowance — 1 — Tax effect of preferential tax rates (9) (1) (1) Tax effect of Super Deduction and others (18) (3) (4) Effective income tax rate 225 24 21 (a) The permanent book-tax differences mainly consisted of share-based compensation. |
Schedule of effect of tax holiday | For the Year Ended December 31 , 2020 2021 2022 RMB RMB RMB Tax holiday effect 9,669 36,430 24,365 Basic net income per share effect 0.01 0.03 0.02 Diluted net income per share effect 0.01 0.03 0.02 |
Summary of tax impact of significant temporary differences that give rise to the deferred tax assets and liabilities | As of December 31, 2021 2022 RMB RMB Deferred tax assets: Net operating tax loss carry forwards 18,018 34,306 Inventory write-downs 21,479 33,128 Product warranty 1,046 1,263 Accrued expenses and others 13,051 28,464 Less: Valuation Allowance (15,415) (16,145) Total deferred tax assets, net 38,179 81,016 Deferred tax liabilities: Accelerated depreciation of property, equipment and leasehold improvement (15,943) (18,130) Unrealized investment income of short-term investments (5,893) (7,645) Total deferred tax liabilities (21,836) (25,775) Presentation in the consolidated balance sheet : Deferred tax assets, net 20,856 63,894 Deferred tax liabilities (4,513) (8,653) Net deferred tax assets 16,343 55,241 |
Schedule of movements in the valuation allowance | 2021 2022 RMB RMB Balance as of January 1 — 15,415 Addition 15,415 730 Balance as of December 31 15,415 16,145 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenues | |
Summary of revenue by channel | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Sales of products by channel - Sales to offline distributors 3,742,285 8,361,073 5,168,559 - Others 77,427 159,905 164,220 Total revenues 3,819,712 8,520,978 5,332,779 |
Share-based compensation (Table
Share-based compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-based compensation | |
Summary of the options granted | Granted (For Purposes of Measuring Share ‑ based Contractually Granted Compensation Expense) As of January 1, 2020 32,163,500 11,271,880 Granted 92,497,250 — As of December 31, 2020 124,660,750 11,271,880 Granted 1,920,500 4,563,790 As of December 31, 2021 126,581,250 15,835,670 Granted — 27,846,178 As of December 31, 2022 126,581,250 43,681,848 Weighted Average Aggregate Weighted Remaining Intrinsic Number Average Exercise Contractual Value (US$) in of Options Price (US$) Life (Years) thousand Outstanding as of January 1, 2020 11,271,880 0.189 9.15 10,563 Granted — — — — Forfeited (214,370) 0.596 — — Outstanding as of December 31, 2020 11,057,510 0.181 8.13 97,280 Granted 4,563,790 0.670 7.87 14,741 Forfeited (1,695,896) 0.222 — — Outstanding as of December 31, 2021 13,925,404 0.336 7.35 49,627 Granted 27,846,178 0.171 7.41 59,041 Forfeited (303,241) 0.780 — — Outstanding as of December 31, 2022 41,468,341 0.171 7.06 88,297 Vested and exercisable as of December 31, 2020 — — — — Vested and exercisable as of December 31, 2021 1,115,739 0.009 7.00 4,341 Vested and exercisable as of December 31, 2022 11,126,832 0.200 6.24 23,361 |
Summary of the restricted share units (RSU) activity under the 2021 Plan | Granted (For Purposes of Measuring Share-based Contractually Granted Compensation Expense) As of January 1, 2020 — — Granted — — Forfeited — — As of December 31, 2020 — — Granted 8,514,375 — Forfeited — — As of December 31, 2021 8,514,375 — Granted 22,467,333 4,434,659 Forfeited — (80,321) As of December 31, 2022 30,981,708 4,354,338 |
Summary of assumptions used in the option pricing model | For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 Risk-free interest rate 0.72%~0.89 % 1.01%~1.74 % 3.93%~3.99 % Expected terms (in years) 8-10 7-9 5-8 Expected volatility 50.85%~52.57 % 50.33%~53.78 % 86.07%~87.99 % Expected dividend yield — — — Fair value of underlying ordinary share (US$) 8.979 3.900 2.300 |
Summary of restricted shares activity | Weighted ‑ Average Number of Restricted Shares Grant Date Granted Fair Value US$ Outstanding as of January 1, 2020 65,571,473 0.09 Granted — — Vested (40,982,171) 0.09 Forfeited — — Outstanding as of December 31, 2020 24,589,302 0.09 Granted — — Vested (24,589,302) 0.09 Forfeited — — Outstanding as of December 31, 2021 — — (*) The share-based compensation expenses discussed below only include the expenses attributable to the Group. |
Net (loss)_income per ordinar_2
Net (loss)/income per ordinary share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Net (loss)/income per ordinary share | |
Schedule of basic and diluted net (loss)/income per ordinary share | For the year ended For the year ended For the year ended December 31, December 31, December 31, 2020 2021 2022 RMB RMB RMB Numerator: Net (loss)/income attributable to RLX Technology Inc. (128,101) 2,024,713 1,441,219 Numerator for basic and diluted net (loss)/income per ordinary share (128,101) 2,024,713 1,441,219 Denominator: Weighted average number of ordinary shares (a) 1,436,815,570 1,401,371,494 1,319,732,802 Denominator used for net (loss)/income per ordinary share - basic 1,436,815,570 1,401,371,494 1,319,732,802 Adjustments for dilutive options and RSUs — 8,319,385 8,411,290 Denominator for net (loss)/income per ordinary share - diluted 1,436,815,570 1,409,690,879 1,328,144,092 Net (loss)/income per ordinary share - Basic (0.089) 1.445 1.092 - Diluted (0.089) 1.436 1.085 (a) The shares repurchased by the company are excluded from the number of shares outstanding for purposes of computing basic and diluted earnings per share in accordance with ASC 260. |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related party transactions | |
Schedule of the major related parties and their relationship | Related parties Relationship with the Group Relx Inc. and entities within Relx Inc.’s non-PRC operations Under common control of beneficial owner Ms. Ying (Kate) Wang Shareholder of Relx Inc., Chief Executive Officer of the Group Related Party A A party that is controlled by an individual who has indirectly significant influence on the Group |
Schedule of major related parties transactions | (a) Major related parties’ transactions were as follows: For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Expenses allocated from/(to) related parties: Corporate expenses allocated to Relx Inc. (i) (11,973) — — Share-based compensation expenses allocated from Relx Inc. (ii) 929,098 474,132 — Expenses allocated to Relx Inc.’s non-PRC operations. (iii) — — (4,883) Expenses allocated from Relx Inc.’s non-PRC operations. (iii) — — 399 Sales to related parties : Related Party A (iv) 1,416 — — Entity within Relx Inc’s non-PRC operations (v) — 42,267 66,752 Total 918,541 516,399 62,268 (i) Historically, all corporate back office expenses and salaries of directors and executive officers were paid by the Group. In 2020, a portion of these payments related to start-up and operating activities of Relx Inc.’s non-PRC operations was allocated to Relx Inc. and accounted for as amounts due from Relx Inc.. Starting from 2021, Relx Inc. established its own back office operations and the arrangement for shared costs was terminated. (ii) Prior to the Share Distribution, share-based compensation expenses were incurred by Relx Inc. and were allocated and pushed down to the Group’s consolidated statements of comprehensive (loss)/income. These allocations were based on percentage of revenue between the Group and Relx Inc.’s non-PRC operations. Refer to Notes 1 and 18. (iii) In 2022, certain employees concurrently worked for the Group and Relx Inc.’s non-PRC operations, staff costs and related expenses were shared by the Group and Relx Inc.’s non-PRC operations. A portion of these staff costs and related expenses was allocated to/from Relx Inc.’s non-PRC operations. (iv) In the first quarter of 2020, the Group sold e-vapor products to Related Party A in the ordinary course of the Group’s operating activities at the then selling price to end users. The Group recognized net revenue of RMB 1,416 for the year ended December 31, 2020. (v) Since June 2021, the Group has sold certain raw materials to an entity within Relx Inc.’s non-PRC operations, in the ordinary course of the Group’s operating activities, with a total transaction amount of RMB 42,267 and RMB 66,752 for the years ended December 31, 2021 and 2022, respectively. (b) For the year ended For the year ended For the year ended December 31, 2020 December 31, 2021 December 31, 2022 RMB RMB RMB Financing (received from)/provided to related parties: - Financing proceeds received on behalf of Relx Inc. (i) (273,457) — — - Financing proceeds paid back to Relx Inc. (i) 273,457 — — - Funds provided by Relx Inc. (ii) (1,439,183) — — - Funds paid back to Relx Inc. (ii) 1,264,004 11,174 — - Investment prepayment returned from Relx Inc. (iii) — (21,006) — - Payments made on behalf of Relx Inc.’s non-PRC operations (iv) 61,110 — — - Others 298 — — Total (113,771) (9,832) — (i) In connection with the Series D Financing on September 25, 2020, the Group, through Beijing Wuxin, and a preferred shareholder of Relx Inc. entered into convertible loan agreements with one investor to obtain interest free convertible loans, in the aggregate principal amount of RMB 273,457 (the ‘‘September 2020 Loan’’). The Group accordingly received the principal of September 2020 Loan on behalf of Relx Inc. on September 25, 2020. The September 2020 Loan, which was denominated in RMB, should be repaid to such investor once the investor obtains the required foreign exchange approval. The investor should, in turn, use the proceeds to pay the US$ equivalent of RMB 273,457 to the preferred shareholder of Relx Inc. and Relx Inc., to obtain 692,911 shares of Series D-1 preferred shares and 554,329 shares of Series D-2 preferred shares of Relx Inc., respectively. The September 2020 Loan should be repaid by the Group to such investor if such approval cannot be obtained in a specified timeframe. The Group received the RMB 273,457 proceeds for the September 2020 Loan and were accounted for as increase to amounts due to related parties. The September 2020 Loan of RMB 273,457 was repaid by the Group to such investor on November 2, 2020. (ii) After the First Reorganization, as Relx Inc. raised US$ proceeds from its equity financing, Relx Inc. provided funding to the Group to support the Group’s business. These fund advances were accounted for as increase to amounts due to related parties. During the years ended December 31, 2020, 2021 and 2022, the Group received funds of RMB 1,439,183 , nil and nil from Relx Inc. and paid back RMB 1,264,004 , RMB 11,174 and nil , respectively. (iii) The Group made investment prepayment to an investee on behalf of Relx Inc., as the investee was setting up its overseas holding structure to enable Relx Inc. to hold the investee’s overseas shares. This prepayment was accounted for as an increase to amount due from the related parties as of December 31, 2019. The prepayment was returned to the Group in March 2021. (iv) In 2020, the Group made payments made on behalf of Relx Inc.’s non-PRC operations, consisting mainly of material costs, employee expenses and freight expenses. Such payments were accounted for as increase to amounts due from related parties, based on actual amounts incurred. Starting from 2021, there was no such payment arrangement between the Group and Relx Inc.. |
Schedule of major balances with related parties | As of December 31, 2021 2022 RMB RMB Amounts due from related parties Current - Expenses allocated to Relx Inc.’s non-PRC operations. (i) — 5,112 - Sales of products to related party (ii) 1,936 — Total 1,936 5,112 Amounts due to related parties Current - Expenses allocated from Relx Inc.’s non-PRC operations. (i) — (423) Total — (423) (i) The net amount of these balances with related parties was RMB 4,689 as of December 31, 2022, which is the outstanding amount of expenses allocation. (ii) The amount of the balance with related party was RMB 1,936 as of December 31, 2021, and the balance was settled in January of 2022. |
Fair value measurement (Tables)
Fair value measurement (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair value measurement | |
Schedule of assets that are measured at fair value on a recurring basis | Level 1 Level 2 Level 3 RMB RMB RMB As of December 31, 2022 Short-term investments_ Fair value option (i) — 2,434,864 — Long-term investment securities, net_ Available-for-sale (ii) — 557,492 — As of December 31, 2021 Short-term investments — 3,621,637 — (i) Short-term investments represent structured deposits and the Group values these short-term investments based on quoted prices of similar products provided by banks at the end of each year, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. (ii) Long-term investment securities, net include debt-classified securities held by the Group with original maturities of more than one year. The Group classifies the long-term investment securities as held-to-maturity or available-for-sale, whose classification determines the respective accounting methods stipulated by ASC 320 and the Group values these long-term investment securities classified as available-for-sale based on quoted prices of similar products provided by banks at the end of each year, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies | |
Schedule of future minimum commitments under non cancelable agreements | As of December 31, 2022, future minimum commitments under non-cancelable agreements were as follows: Rental RMB 2023 2,268 |
Nature of operations and reor_3
Nature of operations and reorganizations - First Reorganization (Details) | May 18, 2018 item |
Nature of operations and reorganizations | |
Preferred Share Financing, Number of Investors | 2 |
Nature of operations and reor_4
Nature of operations and reorganizations - Second Reorganization (Details) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 12, 2021 | Jan. 11, 2021 | Nov. 25, 2020 | Sep. 25, 2020 | Jan. 02, 2018 |
Nature of operations and reorganizations | |||||||
Ordinary shares, shares authorized | 15,000,000,000 | 15,000,000,000 | 15,000,000,000 | 5,000,000,000 | 500,000,000 | 500,000,000 | |
Ordinary shares, shares issued | 1,570,790,570 | 1,570,790,570 | 143,681,557 | 2 | 1 | ||
Ordinary shares, shares outstanding | 1,528,356,928 | 1,565,730,837 | 143,681,557 | 2 | 1 | ||
Ordinary shares, par value (in USD per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Relx HK | |||||||
Nature of operations and reorganizations | |||||||
Equity interests (as a percent) | 100% |
Nature of operations and reor_5
Nature of operations and reorganizations - Summary of major subsidiaries, VIE and VIE's subsidiaries (Details) | Dec. 31, 2022 |
Beijing Yueke Technology Co., Ltd. | |
Nature of operations and reorganizations | |
Percentage of direct or indirect economic ownership (as a percent) | 100% |
Shanghai Wuke Information Technology Co., Ltd. ("Shanghai Wuke") | |
Nature of operations and reorganizations | |
Percentage of direct or indirect economic ownership (as a percent) | 100% |
Beijing Wuxin Technology Co., Ltd. | |
Nature of operations and reorganizations | |
Percentage of direct or indirect economic ownership (as a percent) | 100% |
Shenzhen Wuxin Technology Co., Ltd. | |
Nature of operations and reorganizations | |
Percentage of direct or indirect economic ownership (as a percent) | 100% |
Ningbo Wuxin Information Technology Co., Ltd. ("Ningbo Wuxin") | |
Nature of operations and reorganizations | |
Percentage of direct or indirect economic ownership (as a percent) | 100% |
Nature of operations and reor_6
Nature of operations and reorganizations - Share splits and waiver of amount due to the Parent (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Jan. 12, 2021 USD ($) shares | Jan. 11, 2021 USD ($) $ / shares shares | Nov. 25, 2020 $ / shares shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 $ / shares | Dec. 31, 2021 CNY (¥) shares | Nov. 25, 2020 CNY (¥) shares | Sep. 25, 2020 $ / shares shares | Jan. 02, 2018 $ / shares shares |
Nature of operations and reorganizations | ||||||||||
Issuance of ordinary shares upon Initial Public Offering ("IPO") (in shares) | 143,681,555 | |||||||||
Ordinary shares, shares issued | 1,570,790,570 | 1,570,790,570 | 1,570,790,570 | 143,681,557 | 2 | 1 | ||||
Ordinary shares, shares outstanding | 1,528,356,928 | 1,528,356,928 | 1,565,730,837 | 143,681,557 | 2 | 1 | ||||
Ordinary share, par value | $ / shares | $ 0.00001 | $ 0.0001 | $ 0.00001 | $ 0.00001 | $ 0.0001 | $ 0.0001 | ||||
Share split ratio | 10 | |||||||||
Common stock, value | $ 150 | $ 50 | ¥ 104 | $ 15 | ¥ 103 | |||||
Ordinary shares authorized | 15,000,000,000 | 5,000,000,000 | 15,000,000,000 | 15,000,000,000 | 15,000,000,000 | 500,000,000 | 500,000,000 | |||
Net amount due to the Parent waived | ¥ | ¥ 600,000 | |||||||||
Class B ordinary shares | ||||||||||
Nature of operations and reorganizations | ||||||||||
Ordinary shares, shares issued | 308,714,990 | 308,714,990 | ||||||||
Share split ratio | 1 | |||||||||
Re-designate ordinary shares | 1,436,815,570 |
Nature of operations and reor_7
Nature of operations and reorganizations - Share distribution (Details) | Apr. 16, 2021 shares |
Class A ordinary shares | |
Nature of operations and reorganizations | |
Number of shares distribution | 952,618,780 |
Class B ordinary shares | |
Nature of operations and reorganizations | |
Percentage of voting power of the Company's total issued | 86.60% |
Beneficial Ownership | Class B ordinary shares | |
Nature of operations and reorganizations | |
Percentage of voting power of the Company's total issued | 39.40% |
Relx Holdings Limited | Class B ordinary shares | |
Nature of operations and reorganizations | |
Number of shares distribution | 618,171,790 |
Nature of operations and reor_8
Nature of operations and reorganizations - VIE arrangements between Relx HK's PRC subsidiaries (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Equity Interest Pledge Agreement | |
Nature of operations and reorganizations | |
Initial term of agreement (in years) | 10 years |
Exclusive Business Cooperation Agreement | |
Nature of operations and reorganizations | |
Initial term of agreement (in years) | 10 years |
Exclusive Option Agreement | |
Nature of operations and reorganizations | |
Initial term of agreement (in years) | 10 years |
Exclusive Assets Option Agreement | |
Nature of operations and reorganizations | |
Initial term of agreement (in years) | 10 years |
Nature of operations and reor_9
Nature of operations and reorganizations - Consolidated financial information of the VIE and its subsidiaries (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Current assets | |||||
Cash and cash equivalents | ¥ 1,268,512 | ¥ 5,208,967 | ¥ 1,113,988 | $ 183,917 | |
Restricted cash | 20,574 | 500 | 340,813 | 2,983 | |
Short-term bank deposits, net | 7,084,879 | 4,022,119 | 1,027,211 | ||
Receivables from online payment platforms | 3,000 | 10,006 | 435 | ||
Short-term investments | 2,434,864 | 3,621,637 | 353,022 | ||
Accounts and notes receivable, net | 51,381 | 14,024 | 7,450 | ||
Inventories | 130,901 | 589,088 | 18,979 | ||
Amounts due from related parties | 5,112 | 1,936 | 741 | ||
Prepayments and other current assets, net | 198,932 | 482,659 | 28,842 | ||
Total current assets | 11,198,155 | 13,950,936 | 1,623,580 | ||
Non-current assets | |||||
Property, equipment and leasehold improvement, net | 87,871 | 143,155 | 12,740 | ||
Intangible assets, net | 7,552 | 8,366 | 1,095 | ||
Long-term investments, net | 8,000 | 12,000 | 1,160 | ||
Deferred tax assets, net | 63,894 | 20,856 | 9,264 | ||
Right-of-use assets, net | 75,008 | 176,258 | 10,875 | ||
Long-term bank deposits, net | 1,515,428 | 2,004,593 | 219,716 | ||
Other non-current assets, net | 13,458 | 48,961 | 1,951 | ||
Total non-current assets | 5,180,669 | 2,414,189 | 751,126 | ||
Total assets | 16,378,824 | 16,365,125 | 2,374,706 | ||
Current liabilities | |||||
Accounts and notes payable | 269,346 | 1,288,845 | 39,052 | ||
Contract liabilities | 75,226 | 286,651 | 10,907 | ||
Salary and welfare benefits payable | 127,749 | 170,393 | 18,522 | ||
Taxes payable | 109,676 | 597,761 | 15,902 | ||
Accrued expenses and other current liabilities | 161,455 | 313,396 | 23,409 | ||
Amounts due to related parties | 423 | 61 | |||
Lease liabilities - current portion | 45,955 | 80,582 | 6,663 | ||
Total current liabilities | 789,830 | 2,737,628 | 114,516 | ||
Non-current liabilities | |||||
Deferred tax liabilities | 8,653 | 4,513 | 1,255 | ||
Lease liabilities - non-current portion | 39,968 | 104,232 | 5,795 | ||
Total noncurrent liabilities | 48,621 | 108,745 | 7,050 | ||
Total liabilities | 838,451 | 2,846,373 | $ 121,566 | ||
Net revenues | 5,332,779 | $ 773,180 | 8,520,978 | 3,819,712 | |
Cost of revenues | 2,974,981 | 431,332 | 4,848,918 | 2,292,153 | |
Excise tax on products | (52,668) | (7,636) | |||
Operating expenses | (1,241,719) | (180,033) | (1,373,355) | (1,514,410) | |
Net (loss)/income | 1,408,732 | 204,245 | 2,028,124 | (128,101) | |
Net cash provided by operating activities | 486,829 | 70,584 | 1,799,892 | 2,589,383 | |
Net cash used in investing activities | (4,133,040) | (599,234) | (7,870,660) | (1,812,894) | |
Net cash generated from/(used in) financing activities | (477,270) | $ (69,198) | 9,904,121 | 174,881 | |
VIE | |||||
Current assets | |||||
Cash and cash equivalents | 956,918 | 387,410 | |||
Restricted cash | 20,574 | 500 | |||
Short-term bank deposits, net | 130,000 | 439,900 | |||
Receivables from online payment platforms | 2,817 | 10,006 | |||
Short-term investments | 2,434,864 | 3,621,637 | |||
Accounts and notes receivable, net | 50,259 | 14,024 | |||
Inventories | 130,122 | 589,088 | |||
Amounts due from group companies | 98,515 | 75,769 | |||
Amounts due from related parties | 5,112 | 1,936 | |||
Prepayments and other current assets, net | 80,267 | 412,405 | |||
Total current assets | 3,909,448 | 5,552,675 | |||
Non-current assets | |||||
Property, equipment and leasehold improvement, net | 75,780 | 142,657 | |||
Intangible assets, net | 4,718 | 6,000 | |||
Long-term investments, net | 8,000 | 12,000 | |||
Deferred tax assets, net | 54,736 | 20,751 | |||
Right-of-use assets, net | 57,261 | 174,584 | |||
Long-term bank deposits, net | 1,167,325 | 39,987 | |||
Other non-current assets, net | 10,871 | 48,557 | |||
Total non-current assets | 1,378,691 | 444,536 | |||
Total assets | 5,288,139 | 5,997,211 | |||
Current liabilities | |||||
Accounts and notes payable | 268,761 | 1,288,845 | |||
Contract liabilities | 3,829 | 286,651 | |||
Salary and welfare benefits payable | 53,438 | 107,614 | |||
Taxes payable | 93,700 | 590,718 | |||
Accrued expenses and other current liabilities | 132,762 | 304,594 | |||
Amounts due to group companies | 261,729 | 173,207 | |||
Amounts due to related parties | 423 | 0 | |||
Lease liabilities - current portion | 36,905 | 80,319 | |||
Total current liabilities | 851,547 | 2,831,948 | |||
Non-current liabilities | |||||
Deferred tax liabilities | 8,653 | 4,513 | |||
Lease liabilities - non-current portion | 30,593 | 102,830 | |||
Total noncurrent liabilities | 39,246 | 107,343 | |||
Total liabilities | 890,793 | 2,939,291 | |||
Excise tax on products | (52,668) | ||||
Other (expenses)/income | 132,736 | (367,311) | (186,529) | ||
Net (loss)/income | 1,277,211 | 2,000,417 | (172,862) | ||
Net cash used in operating activities with group company | (512,685) | ||||
Other operating activities | 641,865 | 1,842,887 | 2,576,363 | ||
Net cash provided by operating activities | 129,180 | 1,842,887 | 2,576,363 | ||
Loans to group companies | (450,769) | (96,058) | (179,027) | ||
Repayment of loans from group companies | 342,000 | 191,620 | |||
Other investing activities | (343,317) | 2,755,324 | 1,517,078 | ||
Net cash used in investing activities | 234,548 | (2,659,762) | (1,696,105) | ||
Borrowings under loans from group companies | 390,358 | 33,507 | |||
Repayment of borrowings under loans from group companies | (164,408) | (176,021) | |||
Other financing activities | 763 | 10,785 | 298 | ||
Net cash generated from/(used in) financing activities | 225,187 | (10,785) | (142,812) | ||
VIE | Third-party | |||||
Non-current liabilities | |||||
Net revenues | 5,330,992 | 8,520,978 | 3,819,712 | ||
Cost of revenues | 2,965,169 | 4,848,190 | 2,292,153 | ||
Operating expenses | 713,520 | 1,182,492 | 1,513,892 | ||
VIE | Inter-group | |||||
Non-current liabilities | |||||
Net revenues | 4,533 | ||||
Cost of revenues | 144 | ||||
Operating expenses | 459,549 | ¥ 122,568 | ¥ 0 | ||
Third-party | Inter-group | |||||
Non-current liabilities | |||||
Service fee charged to entities | 4,533 | ||||
Inter-company | Inter-group | |||||
Non-current liabilities | |||||
Cost of revenues | ¥ 144 |
Significant accounting polici_4
Significant accounting policies - Convenience translation (Details) | Dec. 31, 2022 $ / ¥ |
Convenience translation | |
Noon buying rate | 6.8972 |
Significant accounting polici_5
Significant accounting policies - Investments and Accounts and notes receivable, net (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Significant accounting policies | |||
Impairment recorded for long-term investments | ¥ 4,000 | ¥ 0 | ¥ 1,000 |
Allowance for doubtful accounts | ¥ 201 | ¥ 141 | ¥ 0 |
Significant accounting polici_6
Significant accounting policies - Property equipment and leasehold improvement, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Transportation equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 5 years |
Minimum | Electronic equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 3 years |
Minimum | Furniture and office equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 3 years |
Minimum | Machinery and equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 2 years |
Maximum | Electronic equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 5 years |
Maximum | Furniture and office equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 5 years |
Maximum | Machinery and equipment | |
Significant accounting policies | |
Estimated useful lives (in years) | 10 years |
Significant accounting polici_7
Significant accounting policies - Intangible assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
License of copyright | |
Significant accounting policies | |
Estimated useful lives (in years) | 2 years |
Trademark | |
Significant accounting policies | |
Estimated useful lives (in years) | 2 years |
Minimum | Purchased software | |
Significant accounting policies | |
Estimated useful lives (in years) | 2 years |
Maximum | Purchased software | |
Significant accounting policies | |
Estimated useful lives (in years) | 3 years |
Significant accounting polici_8
Significant accounting policies - Impairment of long-lived assets (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Impairment of long lived assets | |||
Impairment charge | ¥ 42,529 | ¥ 0 | ¥ 0 |
Significant accounting polici_9
Significant accounting policies - Lease (Details) | Dec. 31, 2022 |
Minimum | |
Significant accounting policies | |
Term of lease (in months) | 1 month |
Maximum | |
Significant accounting policies | |
Term of lease (in months) | 60 months 15 days |
Significant accounting polic_10
Significant accounting policies - Revenue recognition (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Significant accounting policies | ||
Contract asset | ¥ 0 | ¥ 0 |
Revenue, Remaining Performance Obligation, Optional Exemption, Performance Obligation [true false] | true | |
Payment terms (in days) | 30 days | |
Revenue, Practical Expedient, Financing Component [true false] | true | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||
Significant accounting policies | ||
Payment period of licensed offline distributors (in months) | 1 month |
Significant accounting polic_11
Significant accounting policies - Additional details (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) segment | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Selling expenses | ||||
Advertising expenses | ¥ 57,954 | ¥ 192,541 | ¥ 88,123 | |
Shipping expenses | 40,710 | 67,632 | 31,806 | |
Subsidy income. | ||||
Subsidy income | 338,112 | 197,311 | 23,911 | |
Employee benefits | ||||
Employee benefit expenses | ¥ 86,666 | 75,028 | 23,649 | |
Statutory reserves. | ||||
Minimum percentage of general reserve fund | 10% | 10% | ||
Maximum percentage of general reserve fund | 50% | 50% | ||
Minimum percentage of statutory surplus fund | 10% | 10% | ||
Maximum percentage of statutory surplus fund | 50% | 50% | ||
Profit appropriation to statutory surplus fund | ¥ 25,492 | 1,319 | 0 | |
Segment reporting | ||||
Number of operating segment | segment | 1 | 1 | ||
Number of reportable segment | segment | 1 | 1 | ||
Number of geographical segments | segment | 0 | 0 | ||
Provision for Loan and Lease Losses | ||||
Provision for credit losses | ¥ 25,039 | $ 3,630 | ¥ 2,562 | ¥ 0 |
Significant accounting polic_12
Significant accounting policies - Concentration and risk (Details) | 12 Months Ended | ||
Dec. 31, 2022 customer item Distributor | Dec. 31, 2021 Distributor item | Dec. 31, 2020 Distributor item | |
Revenue | Customer concentration | Offline distributor A | |||
Significant accounting policies | |||
Number of distributor | 1 | 1 | 1 |
Accounts and notes receivable | Credit concentration | Offline distributor | |||
Significant accounting policies | |||
Number of distributor | 2 | 1 | |
Number of customer | customer | 2 | ||
Total concentration risk | 33% | 28% | 27% |
Purchases | Supplier concentration | One supplier A | |||
Significant accounting policies | |||
Number of suppliers | item | 1 | 1 | 1 |
Total concentration risk | 80% | 75% | 78% |
Accounts and notes payable due | Supplier concentration | One supplier A | |||
Significant accounting policies | |||
Total concentration risk | 86% | 89% | 83% |
Cash and cash equivalents (Deta
Cash and cash equivalents (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) |
Cash and cash equivalents | ||||
Shortterm bank deposits with initial terms within three months | ¥ 52,767 | ¥ 1,687,344 | ||
Cash at bank | 1,215,745 | 3,521,623 | ||
Cash and cash equivalents | ¥ 1,268,512 | $ 183,917 | ¥ 5,208,967 | ¥ 1,113,988 |
Bank deposits, net (Details)
Bank deposits, net (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Short-term bank deposits, net | ¥ 7,084,879 | $ 1,027,211 | ¥ 4,022,119 |
Long-term bank deposits, net | 1,515,428 | $ 219,716 | 2,004,593 |
Total | 8,600,307 | 6,026,712 | |
Allowance for credit losses | 5,559 | 2,267 | |
Short-term bank deposits | |||
Assets pledged to secure notes payable | ¥ 154,922 | ¥ 350,000 |
Investment securities (Details)
Investment securities (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investment securities | ||
Investment securities | ¥ 5,844,322 | ¥ 3,621,637 |
Allowance for credit losses | 3,739 | 0 |
Short-term investments | ||
Investment securities | ||
Assets pledged to secure notes payable | 0 | 432,753 |
Long-term investment securities | Held-to-maturity | ||
Investment securities | ||
Investment securities | 2,851,966 | |
Long-term investment securities | Available-for-sale | ||
Investment securities | ||
Investment securities | 557,492 | |
Short-term investments | ||
Investment securities | ||
Investment securities | ¥ 2,434,864 | ¥ 3,621,637 |
Accounts and notes receivable_3
Accounts and notes receivable, net (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Accounts and notes receivable, net | |||
Accounts receivable, net | ¥ 51,381 | ¥ 12,494 | |
Notes receivable | 1,530 | ||
Accounts and notes receivable, net | 51,381 | $ 7,450 | 14,024 |
Allowance for credit losses | ¥ 201 | ¥ 141 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) |
Inventories | ||||
Finished goods | ¥ 123,672 | ¥ 524,568 | ||
Raw materials | 7,229 | 64,520 | ||
Inventories | 130,901 | $ 18,979 | 589,088 | |
Write-downs of inventories | ¥ 179,694 | ¥ 89,071 | ¥ 0 |
Prepayments and other current_3
Prepayments and other current assets, net - Schedule of prepayments and other current assets, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | |
Prepayments and other current assets, net | |||
Value Added Tax ("VAT") recoverable | ¥ 38,974 | ¥ 65,268 | |
Prepaid selling expenses | 1,230 | 6,507 | |
Prepayments to suppliers | 4,054 | 279,628 | |
Deferred charges | 452 | 27,218 | |
Deposits for rental | 13,216 | 7,725 | |
Prepaid Service Fees | 7,770 | 14,485 | |
Interest receivable | 95,204 | 39,024 | |
Receivable from financial institution | 35,241 | 35,357 | |
Others | 20,893 | 7,601 | |
Prepayments and other current assets | 217,034 | 482,813 | |
Less: allowance for credit losses | (18,102) | (154) | |
Prepayments and other current assets, net | 198,932 | 482,659 | $ 28,842 |
Allowance for credit losses | ¥ 17,948 | ¥ 154 |
Prepayments and other current_4
Prepayments and other current assets - Schedule of movements in the allowance of prepayments and other current assets for credit losses (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Prepayments and other current assets, net | ||
Balance as of January 1 | ¥ 154 | |
Amounts charged to expenses | 17,948 | ¥ 154 |
Balance as of December 31 | ¥ 18,102 | ¥ 154 |
Property, equipment and lease_3
Property, equipment and leasehold improvement, net - Schedule of property, equipment and leasehold improvement, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | ¥ 226,192 | ¥ 205,625 | |||
Less: accumulated depreciation | (122,033) | (62,470) | |||
Less: accumulated impairment | (16,288) | ||||
Property, equipment and leasehold improvement, net | 87,871 | 143,155 | $ 12,740 | ||
Depreciation expense | 76,041 | $ 11,025 | 40,865 | ¥ 19,671 | |
Impairment of other non-current assets | 28,561 | 0 | ¥ 0 | ||
Leasehold improvement | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | 94,336 | 65,811 | |||
Machinery And Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | 121,547 | 129,387 | |||
Furniture And Office Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | 7,289 | 7,332 | |||
Electronic Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | 2,149 | 2,224 | |||
Transportation Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property, equipment and leasehold improvement | ¥ 871 | ¥ 871 |
Intangible assets, net - Group
Intangible assets, net - Group Intangible assets (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Intangible assets, net | |||||
Total intangible assets | ¥ 23,212 | ¥ 17,283 | |||
Less: accumulated amortization | (14,283) | (8,917) | |||
Less: accumulated impairment | (1,377) | 0 | ¥ 0 | ||
Intangible assets, net | 7,552 | 8,366 | $ 1,095 | ||
Amortization expense | 5,367 | $ 778 | 4,774 | 3,396 | |
Impairment losses | 1,377 | 0 | ¥ 0 | ||
License of copyright | |||||
Intangible assets, net | |||||
Total intangible assets | 3,530 | 3,530 | |||
Purchased software | |||||
Intangible assets, net | |||||
Total intangible assets | 19,115 | ¥ 13,753 | |||
Trademark | |||||
Intangible assets, net | |||||
Total intangible assets | ¥ 567 |
Intangible assets, net - Amorti
Intangible assets, net - Amortization expenses (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Estimated amortization expenses | |||
2023 | ¥ 4,708 | ||
2024 | 2,621 | ||
2025 | 223 | ||
Intangible assets, net | ¥ 7,552 | $ 1,095 | ¥ 8,366 |
Long-term investments, net- Gro
Long-term investments, net- Group long-term investments (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Long-term investments, net | |||
Total measurement alternative investments | ¥ 13,000 | ¥ 13,000 | |
Less: impairment | (5,000) | (1,000) | |
Long-term investments, net | 8,000 | $ 1,160 | 12,000 |
Investee A | |||
Long-term investments, net | |||
Total measurement alternative investments | 1,000 | 1,000 | |
Investee B | |||
Long-term investments, net | |||
Total measurement alternative investments | 4,000 | 4,000 | |
Investee C | |||
Long-term investments, net | |||
Total measurement alternative investments | ¥ 8,000 | ¥ 8,000 |
Long-term investments, net - Ad
Long-term investments, net - Additional Information (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021 CNY (¥) | Jul. 31, 2019 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Long-term investments, net | ||||||
Cash consideration | ¥ 3,481,674 | $ 504,795 | ¥ 8,000 | |||
Impairment loss | ¥ 4,000 | $ 580 | ¥ 0 | ¥ 1,000 | ||
Investee A | ||||||
Long-term investments, net | ||||||
Equity interests acquired (as a percent) | 13.34% | |||||
Cash consideration | ¥ 1,000 | |||||
Investee B | ||||||
Long-term investments, net | ||||||
Equity interests acquired (as a percent) | 20% | |||||
Cash consideration | ¥ 4,000 | |||||
Investee C | ||||||
Long-term investments, net | ||||||
Equity interests acquired (as a percent) | 5% | |||||
Cash consideration | ¥ 8,000 |
Other non-current assets, net_2
Other non-current assets, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | |
Other non-current assets, net | ||||
Prepayments on long-term assets | ¥ 13,398 | ¥ 31,379 | ||
Deposits for rental | 6,423 | 17,582 | ||
Other non-current asset | 19,821 | 48,961 | ||
Less: impairment | (6,363) | |||
Other non-current assets | 13,458 | 48,961 | $ 1,951 | |
Impairment loss on other non-current assets | ¥ 12,591 | ¥ 0 | ¥ 0 |
Accounts and notes payable (Det
Accounts and notes payable (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Accounts and notes payable | |||
Accounts payable | ¥ 52,493 | ¥ 506,092 | |
Notes payable(a) | 216,853 | 782,753 | |
Total accounts and notes payable | 269,346 | $ 39,052 | 1,288,845 |
Restricted cash | |||
Accounts and notes payable | |||
Notes payable(a) | 18,579 | ||
Short-term investments | |||
Accounts and notes payable | |||
Assets pledged to secure notes payable | 0 | 432,753 | |
Long-term bank deposits | |||
Accounts and notes payable | |||
Notes payable(a) | 154,922 | ||
Short-term bank deposits | |||
Accounts and notes payable | |||
Assets pledged to secure notes payable | ¥ 154,922 | ¥ 350,000 | |
Minimum | |||
Accounts and notes payable | |||
Terms of short-term notes payable (in days) | 90 days | ||
Maximum | |||
Accounts and notes payable | |||
Terms of short-term notes payable (in days) | 92 days |
Accrued expenses and other cu_3
Accrued expenses and other current liabilities - Accrued expenses and other current liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Accrued expenses and other current liabilities | |||
Deposits from offline distributors, retailers and others | ¥ 11,017 | ¥ 188,143 | |
Professional service fee payables | 15,154 | 29,041 | |
Product warranty | 5,051 | 4,185 | |
Payables on equipment | 7,020 | 6,866 | |
Patent application fee payables | 1,508 | 1,032 | |
Accrued liabilities to suppliers | 72,909 | 61,535 | |
Payable related to employees' exercise of share-based awards | 20,509 | ||
Payable related to termination of lease contracts | 6,191 | ||
Others | 22,096 | 22,594 | |
Accrued expenses and other current liabilities | ¥ 161,455 | $ 23,409 | ¥ 313,396 |
Accrued expenses and other cu_4
Accrued expenses and other current liabilities - Product warranty activities (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product warranty activities | |||
Balance at the beginning | ¥ 4,185 | ¥ 5,440 | ¥ 1,374 |
Provided during the year | 52,693 | 59,599 | 36,350 |
Utilized during the year | (51,827) | (60,854) | (32,284) |
Balance at the end | ¥ 5,051 | ¥ 4,185 | ¥ 5,440 |
Lease - Supplemental informatio
Lease - Supplemental information related to operating leases (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Lease | |||
Lease right-of-use assets, net | ¥ 75,008 | $ 10,875 | ¥ 176,258 |
Lease liabilities - current portion | 45,955 | 6,663 | 80,582 |
Lease liabilities - non-current portion | 39,968 | $ 5,795 | 104,232 |
Total lease liabilities | ¥ 85,923 | ¥ 184,814 | |
Weighted average remaining lease term | 2 years 2 months 26 days | 2 years 2 months 26 days | 2 years 9 months 3 days |
Weighted average annual discount rate | 4.75% | 4.75% | 4.75% |
Lease - Summary of lease cost r
Lease - Summary of lease cost recognized in statements of comprehensive (loss) income (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of lease cost | |||
Operating lease expense | ¥ 89,629 | ¥ 74,869 | ¥ 43,469 |
Short-term lease expense | 5,596 | 3,174 | 1,611 |
Total lease cost | ¥ 95,225 | ¥ 78,043 | ¥ 45,080 |
Lease - Supplemental cash flow
Lease - Supplemental cash flow information related to operating leases (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lease | |||
Cash payments for operating lease liabilities, included in operating cash flows | ¥ 77,189 | ¥ 68,825 | ¥ 42,637 |
Increase in lease liabilities arising from obtaining right-of-use assets | 35,311 | ¥ 152,422 | ¥ 40,860 |
Decrease in lease liabilities due to termination of lease contracts | ¥ (53,510) |
Lease - Additional Information
Lease - Additional Information (Details) | Dec. 31, 2022 |
Minimum | |
Lease | |
Remaining lease terms for operating leases (in months) | 2 months |
Maximum | |
Lease | |
Remaining lease terms for operating leases (in months) | 46 months |
Lease - Aggregate future minimu
Lease - Aggregate future minimum rental payments (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Aggregate future minimum rental payments under non cancelable agreement | ||
2023 | ¥ 48,721 | |
2024 | 21,738 | |
2025 | 12,473 | |
2026 | 8,017 | |
Total minimum lease payment | 90,949 | |
Less: imputed interest | (5,026) | |
Total lease liabilities | ¥ 85,923 | ¥ 184,814 |
Income tax expense - Additional
Income tax expense - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2018 | |
Income tax | ||||
Statutory tax rate (as a percent) | 25% | 25% | 25% | |
High and New Technology Enterprise | Shenzhen Wuxin Technology Co., Ltd. [Member] | ||||
Income tax | ||||
Preferential tax rate | 15% | |||
Cayman Islands | ||||
Income tax | ||||
Withholding tax | ¥ 0 | |||
Hong Kong | ||||
Income tax | ||||
Statutory tax rate (as a percent) | 16.50% | |||
Withholding income tax on dividends distributed two | 5% | |||
PRC | ||||
Income tax | ||||
Statutory tax rate (as a percent) | 25% | |||
Additional tax deduction on qualified research and development expenses (as a percent) | 75% | 50% | ||
Additional tax deduction on qualified research and development expenses in certain qualified manufacture industry (as a percent) | 100% | |||
Withholding income tax on dividends distributed one | 10% | |||
Percentage of share in FIE for withholding tax at a rate of no more than five percent | 25% | |||
Undistributed earnings and reserves for distribution | ¥ 3,153,855 | ¥ 1,857,399 | ||
Withholding income tax for undistributed earnings of subsidiaries | 0 | 0 | ||
Unrecognized tax liabilities | ¥ 315,386 | ¥ 185,740 | ||
Shenzhen | ||||
Income tax | ||||
Preferential tax rate | 15% |
Income tax expense - Current an
Income tax expense - Current and deferred components of income taxes (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Current and deferred components of income taxes | ||||
Current tax expense | ¥ 410,478 | ¥ 646,979 | ¥ 241,792 | |
Deferred tax benefit | (38,898) | $ (5,640) | (15,553) | (11,260) |
Income tax expense | ¥ 371,580 | $ 53,874 | ¥ 631,426 | ¥ 230,532 |
Income tax expense - Reconcilia
Income tax expense - Reconciliation of the differences between the statutory income tax rate and the effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of the differences between the statutory income tax rate and the Company's effective income tax rate | |||
Statutory income tax rate of the PRC | 25% | 25% | 25% |
Tax effect of permanent differences | 1% | 2% | 227% |
Addition to Valuation Allowance | 1% | ||
Tax effect of preferential tax rates | (1.00%) | (1.00%) | (9.00%) |
Tax effect of Super Deduction and others | (4.00%) | (3.00%) | (18.00%) |
Effective income tax rate | 21% | 24% | 225% |
Income tax expense - Tax holida
Income tax expense - Tax holiday (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income tax expense | |||
Tax holiday effect | ¥ 24,365 | ¥ 36,430 | ¥ 9,669 |
Basic | |||
Income tax expense | |||
Net income per share effect | ¥ 0.02 | ¥ 0.03 | ¥ 0.01 |
Diluted | |||
Income tax expense | |||
Net income per share effect | ¥ 0.02 | ¥ 0.03 | ¥ 0.01 |
Income tax expense - Deferred t
Income tax expense - Deferred tax assets and deferred tax liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) |
Deferred tax assets: | |||
Net operating tax loss carry forwards | ¥ 34,306 | ¥ 18,018 | |
Inventory write-downs | 33,128 | 21,479 | |
Product warranty | 1,263 | 1,046 | |
Accrued expenses and others | 28,464 | 13,051 | |
Less: Valuation Allowance | (16,145) | (15,415) | |
Total deferred tax assets, net | 81,016 | 38,179 | |
Deferred tax liabilities: | |||
Accelerated depreciation of property, equipment and leasehold improvement | (18,130) | (15,943) | |
Unrealized investment income of short-term investments | (7,645) | (5,893) | |
Total deferred tax liabilities | (25,775) | (21,836) | |
Presentation in the consolidated balance sheet: | |||
Deferred tax assets, net | 63,894 | $ 9,264 | 20,856 |
Deferred tax liabilities | (8,653) | $ (1,255) | (4,513) |
Net deferred tax assets | ¥ 55,241 | ¥ 16,343 |
Income tax expense - Valuation
Income tax expense - Valuation allowance (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income tax expense | ||
Balance as of January 1 | ¥ 15,415 | |
Addition | 730 | ¥ 15,415 |
Balance as of December 31 | ¥ 16,145 | ¥ 15,415 |
Revenues (Details)
Revenues (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Revenues | ||||
Total revenues | ¥ 5,332,779 | $ 773,180 | ¥ 8,520,978 | ¥ 3,819,712 |
Sales to offline distributors | ||||
Revenues | ||||
Total revenues | 5,168,559 | 8,361,073 | 3,742,285 | |
Others | ||||
Revenues | ||||
Total revenues | ¥ 164,220 | ¥ 159,905 | ¥ 77,427 |
Share-based compensation (Detai
Share-based compensation (Details) ¥ in Thousands | 12 Months Ended | ||||||||||
Nov. 01, 2022 $ / shares | Apr. 16, 2021 shares | Jan. 12, 2021 | Jan. 11, 2021 | Dec. 28, 2020 shares | Dec. 31, 2022 CNY (¥) installment | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Apr. 30, 2019 shares | Feb. 28, 2019 shares | Sep. 30, 2018 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Sharebased compensation expense | ¥ | ¥ 166,161 | ¥ 223,345 | ¥ 929,098 | ||||||||
Share split ratio | 10 | ||||||||||
Class B ordinary shares | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share split ratio | 1 | ||||||||||
Parent Incentive Plans | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Sharebased compensation expense | ¥ | ¥ 166,161 | ¥ 211,947 | ¥ 716,411 | ||||||||
Contractual term (in years) | 10 years | ||||||||||
Share split ratio | 10 | 10 | |||||||||
Exercise price per share | $ / shares | $ 0 | ||||||||||
Parent Incentive Plans | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Vesting period (in years) | 4 years | ||||||||||
Equal annual installments for vesting | installment | 4 | ||||||||||
Parent Incentive Plans | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Vesting period (in years) | 7 years | ||||||||||
Equal annual installments for vesting | installment | 7 | ||||||||||
Parent Incentive Plans | Class B ordinary shares | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares available for issuance | 22,493,577 | 22,493,577 | 22,493,577 | ||||||||
Parent Incentive Plans | Class A ordinary shares | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares available for issuance | 224,935,770 | ||||||||||
Number of additional shares authorized | 57,472,620 | ||||||||||
2021 Plan | Class A ordinary shares | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of shares available for issuance | 22,493,577 | ||||||||||
Number of additional shares authorized | 5,747,262 |
Share based compensation - Summ
Share based compensation - Summary of options granted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Contractually Granted - beginning balance | 126,581,250 | 124,660,750 | 32,163,500 | |
Granted | 1,920,500 | 92,497,250 | ||
Contractually Granted - ending balance | 126,581,250 | 126,581,250 | 124,660,750 | 32,163,500 |
Granted (for Purpose of Measuring Share-based Compensation Expense) - beginning balance | 15,835,670 | 11,271,880 | 11,271,880 | |
Granted | 27,846,178 | 4,563,790 | ||
Forfeited | (303,241) | (1,695,896) | (214,370) | |
Granted (for Purpose of Measuring Share-based Compensation Expense) - ending balance | 43,681,848 | 15,835,670 | 11,271,880 | 11,271,880 |
Number of Options | ||||
Beginning balance | 13,925,404 | 11,057,510 | 11,271,880 | |
Granted | 27,846,178 | 4,563,790 | ||
Forfeited | (303,241) | (1,695,896) | (214,370) | |
Ending balance | 41,468,341 | 13,925,404 | 11,057,510 | 11,271,880 |
Vested and exercisable | 11,126,832 | 1,115,739 | ||
Weighted Average Exercise Price | ||||
Beginning balance | $ 0.336 | $ 0.181 | $ 0.189 | |
Granted | 0.171 | 0.670 | ||
Forfeited | 0.780 | 0.222 | 0.596 | |
Ending balance | 0.171 | 0.336 | $ 0.181 | $ 0.189 |
Vested and exercisable | $ 0.200 | $ 0.009 | ||
Weighted average remaining contractual life (years) | ||||
Weighted average remaining contractual life | 7 years 21 days | 7 years 4 months 6 days | 8 years 1 month 17 days | 9 years 1 month 24 days |
Granted | 7 years 4 months 28 days | 7 years 10 months 13 days | ||
Vested and exercisable | 6 years 2 months 26 days | 7 years | ||
Aggregate intrinsic value | ||||
Beginning balance | $ 49,627 | $ 97,280 | $ 10,563 | |
Granted | 59,041 | 14,741 | ||
Ending balance | 88,297 | 49,627 | $ 97,280 | $ 10,563 |
Vested and exercisable | $ 23,361 | $ 4,341 | ||
Nonemployees | ||||
Number of Options | ||||
Beginning balance | 2,968,109 | |||
Ending balance | 5,973,185 | 2,968,109 | ||
Restricted Share Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Forfeited | (80,321) | |||
Number of Options | ||||
Forfeited | (80,321) |
Share-based compensation - Summ
Share-based compensation - Summary of the restricted share units (RSU) activity under the 2021 Plan (Details) - Restricted share units (RSU) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Contractually Granted - Beginning balance | 8,514,375 | |
Granted | 22,467,333 | 8,514,375 |
Contractually Granted - Ending balance | 30,981,708 | 8,514,375 |
Granted | 4,434,659 | |
Granted (For Purposes of Measuring Share-based Compensation Expense) - Ending balance | 4,354,338 |
Share-based compensation - Ince
Share-based compensation - Incentive Plans (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Sharebased compensation expense | ¥ 166,161 | ¥ 223,345 | ¥ 929,098 |
Parent Incentive Plans | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Sharebased compensation expense | 166,161 | ¥ 211,947 | ¥ 716,411 |
Unrecognized compensation expense | ¥ 914,853 | ||
Unrecognized compensation cost is expected to be recognized over a weighted-average period (in years) | 1 year 10 months 28 days | ||
Equity Incentive Plans | Stock option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares options vested | 10,011,093 | 1,115,739 | 0 |
Number of shares options exercise | 9,648,928 | 0 | 0 |
Equity Incentive Plans | Restricted Share Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares options vested | 0 | 0 | 0 |
Share-based compensation - Opti
Share-based compensation - Option pricing model (Details) - Parent Incentive Plans - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate, minimum (as a percent) | 3.93% | 1.01% | 0.72% |
Risk free interest rate, maximum (as a percent) | 3.99% | 1.74% | 0.89% |
Expected volatility, minimum (as a percent) | 86.07% | 50.33% | 50.85% |
Expected volatility, maximum (as a percent) | 87.99% | 53.78% | 52.57% |
Expected dividend yield | 0% | ||
Fair value of underlying ordinary share of the Parent (US$) | $ 2.300 | $ 3.900 | $ 8.979 |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected terms (in years) | 5 years | 7 years | 8 years |
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected terms (in years) | 8 years | 9 years | 10 years |
Share-based compensation - Rest
Share-based compensation - Restriction of the Parent's ordinary shares held by the Founding Members (Details) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Dec. 17, 2020 CNY (¥) | May 18, 2018 | Jan. 31, 2021 CNY (¥) shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 CNY (¥) shares | Dec. 31, 2020 $ / shares | |
Weighted-Average Grant Date Fair Value | ||||||||
Sharebased compensation expense | ¥ | ¥ 166,161 | ¥ 223,345 | ¥ 929,098 | |||||
Restricted shares | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Impact on the awards' fair value | ¥ | ¥ 0 | |||||||
Number of Shares | ||||||||
Beginning balance | 24,589,302 | 24,589,302 | 65,571,473 | |||||
Vested | 0 | (24,589,302) | (40,982,171) | |||||
Ending balance | 24,589,302 | |||||||
Weighted-Average Grant Date Fair Value | ||||||||
Beginning balance | $ / shares | $ 0.09 | $ 0.09 | ||||||
Vested | $ / shares | $ 0.09 | 0.09 | ||||||
Ending balance | $ / shares | $ 0.09 | |||||||
Vested | 0 | 24,589,302 | 40,982,171 | |||||
Sharebased compensation expense | ¥ | ¥ 11,398 | ¥ 0 | ¥ 11,398 | ¥ 8,214 | ||||
Restricted shares | Second anniversary of grant date | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 50% | |||||||
Restricted shares | Year 1 after the second anniversary of grant date | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 25% | |||||||
Restricted shares | Year 2 after the second anniversary of grant date | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 25% |
Share-based compensation - Shar
Share-based compensation - Share Based Compensation Related to Parent's Series D Financing (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Nov. 25, 2020 shares | Sep. 25, 2020 $ / shares shares | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued | 143,681,555 | |||||
Share-based compensation expenses | ¥ 166,161 | $ 24,091 | ¥ 223,345 | ¥ 929,098 | ||
Share-based compensation related to Parent's Series D Financing | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based compensation expenses | ¥ | ¥ 204,473 | |||||
Share-based compensation related to Parent's Series D Financing | Relx inc (the former parent) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued | 3,754,294 | |||||
Transaction price (in USD per share) | $ / shares | $ 28.97 |
Shareholders' equity (Details)
Shareholders' equity (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 25, 2020 $ / shares shares | Jan. 31, 2021 USD ($) shares | Dec. 31, 2022 CNY (¥) Vote shares | Dec. 31, 2022 USD ($) Vote shares | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 $ / shares | Dec. 31, 2021 CNY (¥) shares | Dec. 08, 2021 USD ($) | Jan. 11, 2021 $ / shares | Sep. 25, 2020 $ / shares shares | Jan. 02, 2018 $ / shares shares | |
Shareholders' equity | ||||||||||||
Ordinary shares, shares issued | 143,681,557 | 1,570,790,570 | 1,570,790,570 | 1,570,790,570 | 2 | 1 | ||||||
Ordinary share, par value | $ / shares | $ 0.0001 | $ 0.00001 | $ 0.00001 | $ 0.00001 | $ 0.0001 | $ 0.0001 | ||||||
Ordinary share par or stated value before shares split | $ / shares | $ 0.0001 | |||||||||||
Conversion ratio of Class B ordinary shares to Class A ordinary share | 1 | 1 | ||||||||||
Number of shares issued | 143,681,555 | |||||||||||
Proceeds from issuance of ordinary share upon IPO, net of issuance costs | $ 1,553,000 | ¥ 10,042,422 | ||||||||||
Authorized amount per share repurchase program | $ | $ 500,000 | |||||||||||
Share repurchase (in shares) | 42,400,000 | 42,400,000 | ||||||||||
Share repurchase | ¥ | ¥ 500,370 | ¥ 127,516 | ||||||||||
Minimum percentage of general reserve fund | 10% | 10% | ||||||||||
Maximum percentage of general reserve fund | 50% | 50% | ||||||||||
Net assets restricted | ¥ 73,571 | $ 10,667 | ¥ 51,149 | |||||||||
Class A ordinary shares | ||||||||||||
Shareholders' equity | ||||||||||||
Ordinary shares, shares issued | 1,262,075,580 | 1,262,075,580 | ||||||||||
Number of votes entitled for each share | Vote | 1 | 1 | ||||||||||
Class A ordinary shares | IPO | ||||||||||||
Shareholders' equity | ||||||||||||
Number of shares issued | 133,975,000 | |||||||||||
Class B ordinary shares | ||||||||||||
Shareholders' equity | ||||||||||||
Ordinary shares, shares issued | 308,714,990 | 308,714,990 | ||||||||||
Number of votes entitled for each share | Vote | 10 | 10 | ||||||||||
Converted ordinary shares issued | 309,456,800 | 309,456,800 | ||||||||||
ADS | ||||||||||||
Shareholders' equity | ||||||||||||
Share repurchase (in shares) | 42,400,000 | 42,400,000 | ||||||||||
Share repurchase | $ | $ 96,900 | |||||||||||
ADS | IPO | ||||||||||||
Shareholders' equity | ||||||||||||
Number of shares issued | 133,975,000 |
Net (loss)_income per ordinar_3
Net (loss)/income per ordinary share (Details) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |||||
Jan. 11, 2021 | Nov. 25, 2020 shares | Dec. 31, 2022 $ / shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | Dec. 31, 2020 CNY (¥) ¥ / shares shares | |
Net (loss)/income per ordinary share | ||||||
Additional shares issued for share split (in shares) | 143,681,555 | |||||
Share split ratio | 10 | |||||
Numerator: | ||||||
Net (loss)/income attributable to RLX Technology Inc. | ¥ | ¥ 1,441,219 | ¥ 2,024,713 | ¥ (128,101) | |||
Numerator for basic and diluted net (loss)/income per ordinary share | ¥ | ¥ 1,441,219 | ¥ 2,024,713 | ¥ (128,101) | |||
Denominator: | ||||||
Weighted average number of ordinary shares | 1,319,732,802 | 1,401,371,494 | 1,436,815,570 | |||
Adjustments for dilutive options and RSUs | 8,411,290 | 8,319,385 | ||||
Denominator for net (loss)/income per ordinary share - diluted | 1,328,144,092 | 1,409,690,879 | 1,436,815,570 | |||
Net (loss)/income per ordinary share | ||||||
- Basic | (per share) | $ 0.158 | ¥ 1.092 | ¥ 1.445 | ¥ (0.089) | ||
- Diluted | (per share) | $ 0.157 | ¥ 1.085 | ¥ 1.436 | ¥ (0.089) |
Related party transactions - Ma
Related party transactions - Major Related Party Transaction (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Expenses allocated from/(to) related parties: | |||
Corporate expenses allocated to RELX Inc. | ¥ (11,973) | ||
Sharebased compensation expenses allocated from RELX Inc. | ¥ 474,132 | 929,098 | |
Total | ¥ 62,268 | 516,399 | 918,541 |
Related Party A | |||
Expenses allocated from/(to) related parties: | |||
Total | ¥ 1,416 | ||
Related Party B | |||
Expenses allocated from/(to) related parties: | |||
Total | 66,752 | ¥ 42,267 | |
Relx Inc. | |||
Expenses allocated from/(to) related parties: | |||
Expenses allocated to related parties | (4,883) | ||
Expenses allocated from related parties | ¥ 399 |
Related party transactions - Fi
Related party transactions - Financing Received From and Provided to Related Parties (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||||
Nov. 02, 2020 | Sep. 25, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Financing (received from)/provided to related parties: | |||||
Financing proceeds received on behalf of RELX Inc. | ¥ (273,457) | ||||
Financing proceeds paid back to RELX Inc. | 273,457 | ||||
Funds provided by RELX Inc. | ¥ 0 | ¥ 0 | (1,439,183) | ||
Funds paid back to RELX Inc. | ¥ 0 | 11,174 | 1,264,004 | ||
Investment prepayment returned from Relx Inc. | (21,006) | ||||
Payments made on behalf of Relx Inc.'s non-PRC operations | 61,110 | ||||
Others | 298 | ||||
Total | ¥ (9,832) | ¥ (113,771) | |||
Investor | Series D1 Preferred Shares | Relx Inc (the former parent) [Member] | |||||
Financing (received from)/provided to related parties: | |||||
Number of series preferred shares obtained | 692,911 | ||||
Investor | Series D2 Preferred Shares | Relx Inc (the former parent) [Member] | |||||
Financing (received from)/provided to related parties: | |||||
Number of series preferred shares obtained | 554,329 | ||||
September 2020 Loan | |||||
Financing (received from)/provided to related parties: | |||||
Financing proceeds received on behalf of RELX Inc. | ¥ 273,457 | ||||
Financing proceeds paid back to RELX Inc. | ¥ 273,457 |
Related party transactions - _2
Related party transactions - Major Balances with Related Parties (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2022 USD ($) | Nov. 25, 2020 CNY (¥) | |
Amounts due from related parties, Current | |||||
Expenses allocated to Relx Inc.'s non-PRC operations | ¥ 5,112 | ||||
Sales of products to related party | ¥ 1,936 | ||||
Amounts due to related parties, Current | |||||
Due from Related Parties, Current, Total | 5,112 | 1,936 | $ 741 | ||
Total | (423) | $ (61) | |||
Net amount due to the Parent waived | ¥ 600,000 | ||||
Net revenue from related party | 62,268 | 516,399 | ¥ 918,541 | ||
Related Party A | |||||
Amounts due to related parties, Current | |||||
Net revenue from related party | ¥ 1,416 | ||||
Relx Inc. | |||||
Amounts due to related parties, Current | |||||
Total | (423) | ||||
Net amount of balance with related party | ¥ 4,689 | ¥ 1,936 |
Fair value measurement (Details
Fair value measurement (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | |
Assets measured at fair value | ||||
Long-term investment securities, net | ¥ 8,000 | $ 1,160 | ¥ 12,000 | |
Recurring | Level 2 | ||||
Assets measured at fair value | ||||
Short-term investments | 2,434,864 | ¥ 3,621,637 | [1] | |
Recurring | Level 2 | Available-for-sale | ||||
Assets measured at fair value | ||||
Long-term investment securities, net | ¥ 557,492 | |||
[1] Short-term investments represent structured deposits and the Group values these short-term investments based on quoted prices of similar products provided by banks at the end of each year, and accordingly, the Group classifies the valuation techniques that use these inputs as Level 2. |
Fair value measurement - Additi
Fair value measurement - Additional Information (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | |
Fair value measurement | ||||
Impairment of long-term investments | ¥ 4,000 | $ 580 | ¥ 0 | ¥ 1,000 |
Impairment on acquired intangible assets and fixed assets | 29,938 | 0 | ¥ 0 | |
Nonrecurring | ||||
Fair value measurement | ||||
Financial assets, measured at fair value | 0 | 0 | ||
Financial liabilities, measured at fair value | ¥ 0 | ¥ 0 |
Commitments and contingencies_2
Commitments and contingencies (Details) ¥ in Thousands | Dec. 31, 2022 CNY (¥) |
Aggregate future minimum rental payments under non cancelable agreement | |
2023 | ¥ 2,268 |