Luckin Coffee Q3 Revenue Rose 65.7% as Store Count Reached 7,846

This is an English adaptation of a FoodBud historical article originally published on November 22, 2022.

Luckin Coffee reported its financial results for the third quarter of 2022, ended September 30, on November 22, 2022. Total net revenue reached RMB3.9 billion, or about US$547.5 million, up 65.7% from RMB2.35 billion in the same period of 2021.

Net income was RMB528.6 million, compared with a net loss of RMB23.5 million in Q3 2021. On a non-GAAP basis, net income was RMB514.9 million, or about US$72.4 million, compared with RMB54.6 million a year earlier.

Operating Metrics

Luckin added 651 net new stores in the quarter, a 9% sequential increase. By the end of Q3 2022, the company operated 7,846 stores, including 5,373 self-operated stores and 2,473 partnership stores.

Average monthly transacting customers reached 25.1 million, up 70.5% from 14.7 million in Q3 2021.

Self-operated store revenue was RMB2.76 billion, or about US$388.2 million, up 53.9% from RMB1.7947 billion a year earlier. Same-store sales at self-operated stores increased 19.4%, compared with 75.8% growth in Q3 2021.

Partnership store revenue was RMB899.1 million, or about US$126.4 million, up 116.1% from RMB416.1 million in the prior-year period.

Revenue Mix

Total net revenue was RMB3.8946 billion, or about US$547.5 million, up 65.7% from RMB2.3502 billion in Q3 2021.

Revenue from product sales was RMB2.9955 billion, or about US$421.1 million, up 54.9% from RMB1.9341 billion.

Freshly brewed drinks generated RMB2.6664 billion, or about US$374.8 million, representing 68.4% of total net revenue. In Q3 2021, the category contributed RMB1.7164 billion, or 73.0% of total net revenue.

Other products generated RMB198.3 million, or about US$27.9 million, representing 5.1% of total net revenue, compared with RMB107.5 million and 4.6% a year earlier.

Other business revenue was RMB130.9 million, or about US$18.4 million, representing 3.4% of total net revenue, compared with RMB110.2 million and 4.7% in Q3 2021.

Costs and Profitability

Total operating expenses were RMB3.3094 billion, or about US$465.2 million, up 40.4% from RMB2.3569 billion a year earlier.

Key cost lines included:

• Raw materials: RMB1.4405 billion, or about US$202.5 million, up 56.6%.
• Store rental and other operating costs: RMB770.4 million, or about US$108.3 million, up 49.4%.
• Depreciation and amortization: RMB104.2 million, or about US$14.6 million, down 23.4%.
• Delivery expenses: RMB432.8 million, or about US$60.8 million, up 62.1%.
• Sales and marketing expenses: RMB159.3 million, or about US$22.4 million, up 64.3%.
• General and administrative expenses: RMB383.5 million, or about US$53.9 million, up 19.4%.
• Store pre-opening and other expenses: RMB9.5 million, or about US$1.3 million, compared with RMB6.0 million a year earlier.

Self-operated store operating profit margin was 29.2%, compared with 25.2% in Q3 2021.

Operating income was RMB585.3 million, or about US$82.3 million, with an operating margin of 15.0%. In Q3 2021, Luckin recorded an operating loss of RMB6.7 million. Non-GAAP operating income was RMB693.8 million, or about US$97.5 million, with an operating margin of 17.8%, compared with RMB71.4 million and a 3.0% margin a year earlier.

Net income was RMB528.6 million, or about US$74.3 million. This included a one-time non-cash gain of RMB124.1 million, or about US$17.5 million, from the extinguishment of Series B senior secured notes. Q3 2021 net loss was RMB23.5 million.

Non-GAAP net income was RMB514.9 million, or about US$72.4 million, with a net margin of 13.2%. In Q3 2021, non-GAAP net income was RMB54.6 million, with a 2.3% net margin.

Basic and diluted net income per American depositary share, or ADS, were both RMB1.68, or about US$0.24, compared with a basic and diluted loss of RMB0.08 per ADS in Q3 2021. On a non-GAAP basis, basic and diluted net income per ADS were RMB1.68, or about US$0.24, and RMB1.60, or about US$0.24, respectively, compared with RMB0.24 for both basic and diluted earnings per ADS a year earlier.

Cash Position

Net cash used in operating activities was RMB416.9 million, or about US$58.6 million, in Q3 2022. This included RMB385.2 million, or about US$55.6 million, in settlement payments to litigation parties. Excluding those payments, net cash provided by operating activities was RMB802.1 million, or about US$112.8 million, compared with RMB8.3 million in Q3 2021.

As of September 30, 2022, Luckin Coffee held RMB3.9932 billion, or about US$561.4 million, in cash, cash equivalents and restricted cash, compared with RMB6.5553 billion as of December 31, 2021.

Note: ADS, note-extinguishment and financial figures are historical and reflect the company’s Q3 2022 reporting period.