Luckin Earnings: How China Does Coffee

By Chris Lange Updated Jan 30, 1:14PM EST · Published Nov 13, 9:55AM EST

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Luckin Earnings: How China Does Coffee — © Peopleimages / Getty Images

Luckin Coffee Inc. (NASDAQ: LK), often described as China’s version of Starbucks, reported its third-quarter financial results before the markets opened on Wednesday. The coffee chain said that it had a net loss of $0.32 per share and $215.7 million in revenue, which compares with consensus estimates that called for a net loss of $0.37 per share and $211.88 million in revenue.

Total net revenues from products in the quarter increased 557.6% year over year. In terms of the breakdown, freshly brewed drinks represented 74.3% of total net revenues, or $160.2 million.

Net revenue was primarily driven by a significant increase in the number of transacting customers, an increase in effective selling price, and an increase in the number of products sold per transacting customer.

Average monthly total items sold in the quarter were 44.2 million, representing an increase of 470.1% from 7.8 million in the third quarter of 2018. Average monthly transacting customers in the quarter were 9.3 million, representing an increase of 397.5% from 1.9 million.

Ms. Jenny Zhiya Qian, CEO of Luckin Coffee, commented:

We are very pleased with our results in the third quarter. We exceeded the high-end of our guidance range, achieved a store level profit margin of 12.5% and experienced continuous growth across all key operating metrics. These achievements follow a clear trend: an increase in volumes, efficiency and, as a result, profitability. During the quarter, product revenue grew at 557.6%, which was 1.2x, 1.4x and 2.7x the growth rate of average monthly items sold, average monthly transacting customers, and number of stores, respectively.

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Shares of Luckin Coffee traded up more than 14% early Wednesday at $21.68, in a post-IPO range of $13.71 to $27.12. The consensus price target is $25.61.
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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.