Futu News APP learned that on October 30, Luckin Coffee (LKNCY.US) held its 24Q3 earnings conference. CEO Guo Jinyi stated that in the third quarter of this year, despite the still complex market environment, with a unique business model, expanding scale advantages, continuous product innovation capabilities, and industry-leading brand advantages, the company's performance continues to grow steadily, achieving over 10 billion in revenue for the first time in a single quarter, with both revenue and profit reaching historical highs. The achievement of these results is attributed to the collective efforts of all employees of Luckin Coffee and the strong support of over 0.3 billion cumulative consumer users. In the future, focusing on established strategies, the company will deepen its domestic store layout, continuously expand market share, further consolidate its leading position, and strive to allow more consumers to enjoy high-quality, cost-effective products to drive the continued healthy development of the Chinese coffee market.

Specifically: In the third quarter of this year, the growth momentum of the second quarter was sustained, with steady expansion of stores, achieving new highs in both revenue and profit, and continued positive performance. Total net revenue of 10.181 billion yuan, a year-on-year increase of 41.4%. Operating profit of 1.557 billion yuan, operating margin of 15.3%. Net income of 1.303 billion yuan, net income margin of 12.8%. Self-operated store profit of 1.746 billion yuan, self-operated store profit margin of 23.3%. The total net increase in the number of stores in the third quarter was 1,382, with cumulative user base surpassing 0.3 billion. Average monthly delivery user count of 79.85 million.

CFO An Jing believes that Luckin Coffee achieved remarkable performance in the third quarter of 2024. Rigorous methods and stable tax accuracy have maintained the strength and flexibility of the balance sheet to effectively cope with the current macro environment. Looking ahead, the company will continue to focus on improving product quality, expanding store network, and strengthening brand building to drive the company's sustainable development and growth.

【Q&A】

Q: After 20 years, various core indicators are also recovering, same store growth was high last year, fluctuating in the past few quarters, what are the reasons for the fluctuations, is there a trend of continued narrowing, and how do you foresee?

A: The company has been closely monitoring this indicator over the past few quarters. As you mentioned, same-store sales growth rate (SSG) experienced significant fluctuations, mainly due to our strategic positioning in the rapidly growing Chinese coffee market and intensified industry competition. Since June 2020, our rapid expansion of store network and 9.9 yuan promotional activities have significantly impacted our SSG. Overall, we believe the fluctuations in SSG are within our expectations. We believe that last year's rapid expansion will ultimately support our long-term development.

As we all know, we now have over 20,000 stores, providing us with a considerable scale advantage this quarter. Same-store sales growth (SSG) of self-operated stores was -13.1%, showing improvement compared to the previous quarters. This improvement is mainly due to the smaller deviation in average selling price this quarter compared to the same period last year, as well as the narrower price difference between the previous quarters and their corresponding periods last year. Now, as we transition to a more flexible expansion pace, the price gap continues to narrow, and we expect SSG to improve in the coming quarters. Looking ahead, as the company enters a more stable and sustainable growth phase, we will continue to closely monitor same-store sales. These indicators will not only serve as key references for evaluating our market performance, but we believe they will provide valuable insights for our strategic decisions. By leveraging these insights, our goal is to refine our store opening strategy to ensure new locations match market demands. In addition, through sales trend analysis, we will actively seek opportunities for product innovation and enhancing our overall competitiveness to ensure stable and sustainable growth.

Q: Regarding going global, the financial report mentioned the progress of internationalization and future plans?

A: Internationalization is an issue we have always been concerned about, and we have a systematic approach to it. I would like to take this opportunity to systematically share with everyone some of our views on international business. Our vision is to build a world-class coffee brand, making Luckin Coffee a part of people's daily lives. We believe that a world-class coffee brand should not only achieve world-class levels in financial indicators such as revenue, profit, and market cap, but also in store numbers, coverage, brand image, and international influence. Currently, we are working hard towards this goal.

From a global market perspective, the Chinese market has a large customer base, strong consumption power, and vast market space. In recent years, with the accelerated cultivation of coffee consumption habits, the market potential continues to expand. We believe that the ceiling of the Chinese coffee industry is still rising, firmly believing that China will eventually become the world's largest coffee consumption market. Facing this historic opportunity, we will focus on the domestic market, deepen the layout of the store network, consolidate and expand Luckin Coffee's industry-leading advantages to gain the maximum dividend from the rapid development of the Chinese coffee industry.

Compared with the domestic market, the coffee consumption habits in overseas markets have already been formed, and the market is relatively mature. Our overseas business is still in the early exploration and investment stage, requiring increased investment in stores, networks, supply chains, brand building, etc., to enhance core competitiveness in cost structure and customer experience, in order to win the recognition and favor of local consumers. From the early exploration in Singapore, although there has been some financial losses, it has accumulated valuable experience for us and helped us understand the complexity of overseas business. Overseas markets are full of opportunities as well as challenges, indeed requiring patience, time, and continuous investment. We have the patience and confidence to do this well. At the same time, we are also actively exploring opportunities in the USA and other markets. Considering the mature and competitive nature of the US market, we will make cautious decisions when implementing market expansion strategies.

Next, we will closely monitor our overseas business and communicate progress with the market in a timely manner. At the same time, we will also explore and innovate in organizational and business models to expand overseas business in a more suitable way and with more flexible strategies.

Q: Is there any update on the company's progress in the international capital markets as a whole?

A: As we have communicated before, the company will continue to focus on the USA capital markets. However, our current top priority is still to implement the company's business strategy. In the complex market and regulatory environment, the company currently does not have a clear timetable for returning to the main board or regaining main board listing status. For now, we will continue to focus on business development, strive for higher market share by providing excellent products and services to customers, and provide sustainable long-term value for company shareholders.