Luckin Coffee(LKNCY) - 2023 Q3 - Quarterly Report

Luckin Coffee Inc. Q2 2023 Financial Results Second Quarter 2023 Highlights Luckin Coffee reported a record-breaking quarter with an 88.0% YoY revenue surge, significant store and customer growth, and a record-high GAAP operating margin of 18.9% Q2 2023 Key Financial and Operational Metrics (YoY) | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Total Net Revenues | RMB 6,201.4M | RMB 3,298.7M | +88.0% | | GAAP Operating Income | RMB 1,172.8M | RMB 241.6M | +385.4% | | GAAP Operating Margin | 18.9% | 7.3% | +11.6 p.p. | | Avg. Monthly Transacting Customers | 43.1M | 20.7M | +107.9% | | Total Stores (End of Quarter) | 10,836 | 7,195 | +50.6% | | Net New Store Openings | 1,485 | N/A | N/A | | Same-Store Sales Growth (Self-operated) | 20.8% | 41.2% | -20.4 p.p. | - Revenues from self-operated stores increased by 85.2% to RMB 4,495.3 million, with a store-level operating profit margin of 29.1%[4] - Revenues from partnership stores grew by 91.1% to RMB 1,485.8 million[4] Company Statement The CEO highlighted a record-breaking quarter driven by product innovation, reaching key milestones like 10,000 stores and launching a new brand initiative to expand market leadership - In June 2023, the company reached a record 50 million transacting customers and opened its 10,000th store, becoming the first coffee chain in China to do so[5] - The company announced a new brand initiative, 'LUCK IN HAND,' to build on its market momentum[5] - Future strategy focuses on leveraging scale advantages to offer value, increase market share, and continue global expansion[5] Detailed Financial Results Total net revenues grew 88.0% YoY to RMB 6.2 billion, while operating expenses as a percentage of revenue decreased, leading to a significant net income of RMB 998.7 million Q2 2023 Revenue Breakdown (RMB) | Revenue Source | Q2 2023 | Q2 2022 | % of Total (Q2'23) | | :--- | :--- | :--- | :--- | | Total Net Revenues | 6,201.4M | 3,298.7M | 100.0% | | Revenues from product sales | 4,715.6M | 2,521.2M | 76.0% | | - Freshly brewed drinks | 4,235.0M | 2,256.8M | 68.2% | | Revenues from partnership stores | 1,485.8M | 777.5M | 24.0% | Q2 2023 Profitability (RMB) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | GAAP Operating Income | 1,172.8M | 241.6M | | Non-GAAP Operating Income | 1,236.3M | 342.6M | | Net Income/(Loss) | 998.7M | (114.7M) | | Non-GAAP Net Income | 1,062.2M | 267.5M | - Total operating expenses as a percentage of net revenues decreased to 81.1% in Q2 2023 from 92.7% in Q2 2022, indicating improved operational efficiency and economies of scale[7] - Net cash provided by operating activities was RMB 1,444.4 million, a significant improvement from net cash used in operating activities of RMB 553.1 million in Q2 2022[12] Key Operating Data The company demonstrated strong operational growth with total stores reaching 10,836, average monthly transacting customers surging to 43.1 million, and robust same-store sales growth Key Operating Data Trends | | Dec 31, 2022 | Mar 31, 2023 | Jun 30, 2023 | | :--- | :--- | :--- | :--- | | Total stores | 8,214 | 9,351 | 10,836 | | Self-operated stores | 5,652 | 6,310 | 7,188 | | Partnership stores | 2,562 | 3,041 | 3,648 | | Same-store sales growth | 9.2% | 29.6% | 20.8% | | Avg. monthly transacting customers (thousands) | 24,559 | 29,489 | 43,070 | Financial Statements The consolidated financial statements detail a strong financial position with total assets of RMB 14.0 billion, a profitable income statement, and robust operational cash flow Consolidated Balance Sheet The balance sheet shows significant growth in total assets to RMB 14.0 billion, driven by increases in cash and property, reflecting the company's rapid expansion Balance Sheet Summary (in thousands RMB) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | 4,671,951 | 3,534,304 | | Total current assets | 7,848,194 | 6,037,054 | | Total assets | 14,020,325 | 10,480,397 | | Total current liabilities | 4,131,886 | 2,828,836 | | Total liabilities | 5,711,241 | 3,853,110 | | Total shareholders' equity | 6,731,044 | 5,049,247 | Consolidated Statements of Operations The income statement shows an 88.0% YoY revenue increase to RMB 6.2 billion and a significant shift to a net income of RMB 998.7 million from a prior-year loss Q2 Income Statement Highlights (in thousands RMB) | Account | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total net revenues | 6,201,429 | 3,298,727 | | Total operating expenses | (5,028,613) | (3,057,104) | | Operating income | 1,172,816 | 241,623 | | Net income/(loss) | 998,704 | (114,707) | | Basic Net income/(loss) per ADS (RMB) | 3.12 | (0.40) | Consolidated Statements of Cash Flows The company generated RMB 1.44 billion in cash from operations, a substantial improvement from the prior year, while increasing investment in expansion activities Q2 Cash Flow Summary (in thousands RMB) | Activity | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | 1,444,410 | (553,120) | | Net cash used in investing activities | (876,930) | (69,547) | | Net cash used in financing activities | - | - | | Net increase/(decrease) in cash | 576,878 | (547,671) | Reconciliation of Non-GAAP Measures The reconciliation adjusts GAAP figures for items like share-based compensation, showing a Non-GAAP net income of RMB 1,062.2 million to clarify core operating performance Q2 2023 GAAP to Non-GAAP Reconciliation (in thousands RMB) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Income | 1,172,816 | 63,448 (SBC) | 1,236,264 | | Net Income | 998,704 | 63,448 (SBC) | 1,062,152 | - Key adjustments to derive non-GAAP figures include share-based compensation expenses, while the prior year also included adjustments for litigation provisions and fair value changes of a derivative asset[38]