Luckin Coffee Inc. (LKNCY) Q3 2026 Earnings Call Transcript

In addition, for non-get matters discussed today, the reconciliation information related to those matters can be found in our earnings press release. During today's call, Dr. Guo will speak in Chinese, and his comments will be translated into English. Now, I'd like to turn the call over to Dr. Guo Dengli, co-founder and CEO of Locking Coffee. Dr. Guo, please go ahead. 大家好,欢迎参加今天的业绩沟通会。感谢各位对瑞幸咖啡的持续关注和支持。 Good day, everyone, and welcome to today's EARNIST conference call. Thank you for your continued interest in support for Locking Coffee. In the third quarter, our execution of the high-quality scale growth strategy continued to yield positive results. We delivered solid business growth and further improved profitability. Non-Gap net profit exceeded RMB 2.1 billion, setting a new costly record.

为满足不断增长的市场需求,本季度我们继续保持行业领先的开店速度,门店竞争近2600家,持续提升各线及城市的网络覆盖和服务能力。 随着外卖渠道结构持续正常化,本季度盈利水平进一步改善。 营业利润超过27亿元,同比增长55%。 营业利润率15.4%,同比提升近4个百分点。

This quarter, total net net revenues grew 17% over the year to R&D $17.9 billion. Customer demands for coffee continue to grow, with both average monthly transaction customers and average cost per transaction customer reaching new heights. To meet these growing demands, we maintain an industry-leading pace of store expansion, adding nearly 2,600 net new stores during the quarter. This further expanded our store network and improved our ability to serve customers across all city tiers. As the delivery mix continued to normalize, profitability further improved. Operating profits exceeded R&D 2.7 billion, up 55% year-over-year, while operating margins reached 15.4%, up nearly 4 percentage points year-over-year.

从门店段来看,去年三季度受外卖大战高补贴拉动,外送杯量和整体单杯价格均有抬升,形成了较高基数。 今年以来,外卖平台快速收缩补贴,三季度自营门店同链销售受到了较大影响,同比下降11.1%。 但是我们也观察到,7月以来,铜电跌幅逐月收窄,改善趋势持续深化。这也完全符合我们此前沟通的趋势判断。更值得注意的是,随着外卖补贴及配送成本的大幅下降,自营门店盈利能力持续改善。 門店层面利润率不僅显著高于去年同期,也已基本恢复到了外卖大战前的水平。具体来看,与2024年三季度相比,当前外卖占比仍明显更高,同时门店规模接近翻倍,而本季度自营门店层级的营业利润率已和当时基本一致。 Thank you.

Looking at store performance, last year's full delivery subsidies boosted both delivery volume and overall average selling price per cup, creating a high comparison base for the third quarter. As platform subsidies fell sharply this year, third-folder same-store sales for self-operative stores were significantly impacted, declining 11.1% year-over-year. However, we have also seen the decline narrow month-by-month since July, with the pace of improvement continuing to pick up. This was fully in line with the trend we had previously communicated. More importantly, as delivery subsidies and delivery costs declined significantly, profitability at our self-operative stores continued to improve. Store-level operating margin was not only notably higher than a year ago, but also largely back to pre-substitual levels. To put this into perspective, compared with the third quarter of 2024, our delivery mix remains much higher, while our store network has nearly doubled in size. Yet, store-level operating margins at our self-operated stores has broadly returned to the same level as in that quarter. This results further validate our scale growth model and give us greater confidence in our long-term growth prospects. Taking into account our financial position and business outlook and to better reward shareholders, Our board has approved a new one-year share repurchase program with a total authorization of U.S. dollar 500 million. This also reflects our firm belief in Lockheed's long-term value. Next, I will walk you through our key operating highlights for the quarter of profit customers, products, and stores. Later, our CFO Engine will share more details on our financial performance. Starting with our store network, we maintained a competitive pace of store expansion.

具体来看,中国市场竞争2543家,门店总数达到38630家,其中自营25277, Thank you.

In China, we added 2,500 and 43 manual stores during the quarter. Bringing our total store count to 38,630, including 25,277 self-operated stores and 13,353 partnership stores. Customer demand remains the key driver of our store expansion. Leveraging our digital capabilities, we continue to identify diverse needs across different markets and expand our network across cities of all tiers, as well as counties and towns. Our goal is simple. We make locking more accessible to customers, whether they are at work, shopping, relaxing, or on the low. This convenience effectively helps drive customer retention and repeat purchases. Importantly, even as our store base continues to grow, stores open this year have maintained healthy operating performance. This gives us a strong foundation for the further network expansion and the long-term market share gains.

Thank you. Thank you.

In international markets, we added 56 manual stores in the third quarter, bringing our total overseas income to 279. This includes 103 self-operated stores in Singapore, 22 in the U.S., and 154 partnership stores in Malaysia. In Singapore, we have now cut the 100 store mark, making lucky the second largest coffee chain in the country by store count. Building on our proven digital operating capabilities in China and adapting to local customer needs and market conditions, we have continued to optimize our local operations. Our store-level economics in Singapore have largely proven out, and the store performance continues to improve. We are also seeing growing recognition of our brand, products, and service among local customers. Our progress in Singapore demonstrates the potential to replicate our business model in overseas markets. It also gives us valuable experience as we continue to expand internationally at a better pace.

In the coffee field, we are注重強化瑞幸的專業心智與品牌調性,推出iSight歸下冷脆,並在此基礎上創新延展出多款冷脆新品,為消費者提供更多的專業咖啡選擇。 同時,我們將此前在Lib店獲得積極反饋的兩款特調產品推廣至全國限時供應,為客戶帶來更具特色的咖啡體驗。

On the product line, Coffee remains at the core of our business. We continue to strengthen our coffee expertise while bringing more innovation and a variety to our product lineup. Our goal is to give customers more reasons to come back and buy more often. In the third quarter, we launched 41 freshly made beverages and more than 20 snack items. In the coffee category, we focused on reinforcing Lockheed's coffee brand identity. We introduced our Ethiopian Geisha cold brew, followed by several new cold brew-based products, giving customers more high-quality coffee choices. We also wrote out two specialty drinks that received positive feedback in our lab stores, making them available nationwide for a limited time and offering customers a more distinctive coffee experience. Beyond coffee, we continue to expand our product range to meet different customer needs across different day parts and occasions. Our new Thai Milk Tea Series, launched in August, was particularly well-received. It's done over 13 million cups in its first week, setting a new sales record for new products launched this year. This highlights the potential of our non-coffee offerings to reach more customers and meet a broader range of consumption needs.

不断提升品牌好感度和吸引力,通过更便捷的门店网络和更丰富的产品选择,将消费者对瑞幸的喜爱转化为一次次购买,推动客户规模和消费频次稳步增长。 Thank you. Good morning, everyone. 再创新高。 更令人欣喜的是,今年以来,交易客户的人均倍量稳步提升,三季度同样创下新高。 这些用户趋势的持续向好,说明中国咖啡消费供给提升和频次增长的正向飞轮开始运转,进一步印证了我们对长期咖啡消费需求的判断,

On the customer front, we continue to find new ways to connect with consumers and make locking brands more appealing. With a more convenient store network and a wider range of products, we aim to turn customers' love for locking into more frequent purchases, During the quarter, we continue to engage with customers through sports events and IT collaborations, strengthening our brand image around wellness, youthfulness, and style. During the World Cup in July, as a sponsor of the Spanish and the Portuguese national teams, we launched a series of brand campaigns to celebrate lucky moments with football fans. In terms of IT, we launched a collaboration featuring Disney's Classic Lilith, showcasing our creative insights. The combination of IP-inspired design with new product launches made the customer experience more fun and engaging, and it was well-received by customers. Looking at our customer metrics, we added over 28 million new transacting customers in the third quarter, bringing our cumulative transacting customer base to over 520 million. Average monthly transaction customers exceeded $120 million, reaching another record high. What's even more encouraging is that average cost per transaction customer has continued to increase this year, reaching a new high in the third quarter as well. This positive customer trend suggests that a virtuous cycle between better coffee offerings and more frequent consumption is starting to take shape. This reinforces our view of long-term coffee demand and gives us a strong foundation to continue growing our business at scale.

此外,在可持续发展方面,我们始终将社会责任融入企业发展。 本季度,我们着重推进公益活动,关注不同群体的身心健康与成长。 在新加坡,我们不仅致力于服务当地消费者,也积极投身社会公益。 我们与新加坡心理卫生学院及旗下慈善机构板桥医院慈善基金开展多次合作,通过公益联名、周边筹款、门店公益化作展示等活动,支持心理健康议题推广与社区关怀。 本季度,在新加坡百电开业之际,我们与两家机构进一步建立了长期公益合作关系,持续提升公众对精神健康的认知, Thank you. Thank you.

Turning to sustainability, we have always seen social responsibility as an important part of our business. This quarter, we focused on charitable initiatives that support the health, well-being, and personal development of different groups. In Singapore, we are not only committed to serving local customers, but also to giving back to the community. We have worked closely with the Institute of Mental Health and its affiliated charity, the Woolbridge Hospital Charity Fund, to promote mental health awareness and community care. Our efforts have included fundraising through co-branded merchandise, charitable art displays in our stores, and other community initiatives. This quarter, as we marked the opening of our 100th store in Singapore, we took our partnerships a step further by establishing long-term collaborations with both organizations. Together, we aim to raise public awareness of In China, we launched the Starlight Program, a three-year initiative in Fu'an, Huizhou, to support youth football. Through providing nutritional support, training equipment, and organizing exchange activities, We hope to give more children in rural communities the chance to play the sport they love, stay healthy, use confidence, and grow. In addition, following the landslide disaster at Zilongport in Tiza, we work with the China Foundation for Rural Development to promptly make a donation in support of emergency relief and post-disaster reconstruction. Looking ahead, as blogging continues to grow, we want to do more than bring great products to more customers. We also want to stay close to the communities we serve, respond to the needs of different groups, give back to people across our value chain, and create greater social value through inclusive, locally focused sustainability initiatives.

总结而言,三季度的经营成果既得益于咖啡消费需求的持续增长,也体现了锐性把握市场机会,扩大业务规模,并保持健康盈利的系统性能力,展望未来。 We will continue to focus on high-质量-增长, 保持行业领先的扩张节奏, 积极把握中国咖啡市场的长期增长机遇, 同时,不断强化品牌新制、产品创新、 便捷交付和综合性价比的随心竞争力, 依托数字化能力提升经营效率, 更好地满足客户需求, 持续扩大市场份额, 为股东创造长期价值。

To conclude, our third quarter results were driven by the continued growth in coffee demand, and it reflects Blockin's ability to capture market opportunities, scale our business, and maintain healthy profitability. Looking ahead, we will stay focused on our high-quality scale growth strategy. We will continue to expand our store network at an industry-leading pace and capitalize on the long-term growth opportunities in China's coffee market. At the same time, we will keep strengthening our brand, bringing new products to customers, making our stores more convenient, and offering great value for money. Leveraging our digital capabilities, we will continue to improve operating efficiency, better meet customer needs, gain market share, and create long-term value for our shareholders. Finally, I want to thank our customers. For their trust and love for the Locking brand, our partners and investors for their continued support, and especially our more than 220,000 Locking team members for their hard work. We will keep working to bring great coffee and a convenient experience to more customers, and make Locking Coffee a part of more people's daily lives.

接下来,有请安靖向大家介绍详细的财务数据。

The sell-level operating margin at our self-operated store largely returned to pre-subsidy award level, where we achieved record high profit across the board at the group level. These results further show that our high-quality, skilled growth strategy continue to bear fruit. Let's now look at our financial performance in detail. In the third quarter, total net revenues increased by 17% year-over-year to R&B $17.9 billion, supported by a 20% year-over-year increase in GLB to R&B $20.7 billion. This growth was driven by higher cut volumes across both self-operated stores and partnership stores, supported by a large store network and a growth in monthly transacting customers. Revenues from productive sales increased by 90% year-over-year to R&B $13.6 billion, many reflecting solid performance of our self-operated stores. We can tell our protected cells into three straighters. That's the news from Freshly Blue Drinks for R&B 12.4.

Pardon me, everyone. This is the conference operator. It does appear that we've lost the speaker line audio. If you can please stand by, we will reconnect the lines. Please remain on the line. Thank you. And everyone, we thank you for holding. We have reconnected the speaker line. Please proceed with your presentation.

Thank you. Thank you. Increased up by 17% year-over-year to R&B $12.9 billion. Same-strong-self-growth was negative 11.1% for this quarter, merely reflecting the high conversion phase from last year's heavy subsidies. Store-level operating profit increased up by 56% year-over-year to R&B $3 billion, With a store-level operating margin of 23.3%, up 5.8 percentage points from the prior year period. Revenues from partnership stores increased by 12% year-over-year to R&B 4.2 billion, or 24% of the total net revenues. This group was mainly driven by higher cost volumes at partnership stores, partially offset by reduced delivery service fees due to a lower delivery mix. Selling for materials remained the largest contributor, followed by a delivery service fee and a profit sharing and a relative fees. The cost of materials at the percentage of total net revenue was 38%, compared to 36% in the same period of last year, many due to changes in average selling sizes resulting from the shifts in delivery mix. In absolute terms, cost of materials increased by 24% year-over-year to RMB 6.9 billion, mainly due to higher crop volumes at self-operative stores and the higher sale for materials to partnership stores. The result of the other operating costs as a percentage of the total net revenue was 22%, compared to 20% in the same period of 2035. The difference merely reflects the greater economies of scale in the five-year period, when overall volumes were boosted by the subsidy war. In absolute terms, these expenses increased by 27% a year-over-year to R&B $3.9 billion, many reflecting higher payroll and rental expenses associated with continuous storage expansion and increase of cost volumes. Delivery expenses as a percentage of the total net revenue decreased to 10% from 19% in the same period of 2025, reflecting a significant shift from delivery toward pick-up orders. In actual terms, delivery expenses decreased by 38% year-over-year to RMB $1.8 billion. Sales and marketing expenses as a percentage of the total net revenue was 5.5 compared to 4.9% in the same period of 2025. In actual terms, sales and marketing expenses increased by 30% year-over-year to earn the $976 million, many due to higher traffic-related investment following the surplus war. General and administrative expenses, as a percentage of the total net revenues, were 6%, compared to a lot of 5% in the same quarter of 2025. The difference was mainly due to higher share-based compensation expenses as a percentage of revenue. In absolute terms, DNA expenses rose 36% year-over-year to earn the $1.1 billion, mainly due to higher share-based compensation and payroll costs, Together with increased R&D investments, over-gap operating profits increased by 55% year-over-year to R&D 2.8 billion, with operating margin expanding by 3.8 percentage points to 15.4%. On a net-gap basis, operating profits increased by 58% year-over-year to RMB per billion, with net-gap operating margin expanded by 4.4 percentage points to 11%. Net-profit increased by 45% year-over-year to RMB 1.9 billion, with net-margin expanded by 2 percentage points to 10.4%. On a net-gap basis, net profit increased by 51% to R&B $2.1 billion, setting a new record, new quality record, with net-gap net margin expanding by 2.7 percentage points to 12%. Finally, looking at our balance sheet and cash flow, we generated R&B $4.1 billion in net cash from operating activities during the third quarter of 2026. As of September 30, 2006, our total cash position, which includes cash and cash equivalents, which received cash, $70,000, and a short-term investment, was R&B $40.3 billion, compared to R&B $9 billion at December 31, 2025. Our net cash position remains strong at R&B 11.1 billion. This leaves us well-placed to invest in our business expansion and continue to deliver shareholder returns. As of September 30, 2026, we have repurchased about 96 million Class A auditor shares or 12 million medias For a total consideration of $391 million, and there's $500 million authorization that is in place. As you mentioned earlier, we have announced a new one-year sharing purchase program of $500 million to reinforce our commitment to long-term value creation. The new program will take effect once our existing $500 million program has been fully utilized. In closing, we are pleased with our resilient quarter results, but even more encouraged by our healthy customer trends, which precision us well, to gain market share in the years ahead. We will stay focused on executing our core strategy, maintaining core just cost-discipline, and deliver high quality growth as scale. With that, we will open the call for questions. Operator, please go ahead.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star than 1 on your telephone keypad. To remove yourself from queue, please press star than 2. Our first question today comes from Michelle Chang at Goldman Sachs. Please go ahead.

Thank you for taking my questions and congrats for the good results. My question is about the store opening up site. How should we think about in the domestic market, the long-term store opening up site? And given our current already very large scale, how should we think about the pace of the store opening? Thank you.

Thank you for your questions. The way we look at it, Lockheed's long-term potential for store expansion is really driven by China's coffee demand growth. Instead of a fixed number of stores, as I mentioned before, coffee consumption habits are still developing in China. If you look at more mature coffee markets, there is still significant room for growth in China, both in terms of how many people drink coffee and how often they drink it. And as more people form the habit of drinking coffee, and overall demand continues to grow, there will be more room for us to open new stores with healthy unit economics. So looking at Lockin's own business, our customer base continues to grow, and average monthly transaction customers have been reaching new highs. What's more encouraging is that even as we continue As we continue to bring in a large number of new customers, average tops per customer continue to increase steadily. These trends further support our view of a long-term growth in coffee demand and give us greater confidence in our ability to keep extending our store network.

瑞幸已经建立起强大的咖啡品牌新制,并始终围绕客户需求,通过产品创新,便捷的门店网络,以及有竞争力的综合性价比,不断吸引和服务更多的消费者。 同时,我们也持续丰富产品的品类,满足更多的场景,消费的场景和时段的需求,为拓展门店网络,提供有力的支撑。

Our confidence comes not only from the long-term growth potential of the market, but also from our own ability to identify and capture store extension opportunities. Over the years, Locking has built a very strong coffee brand. We've always focused on customer needs, bringing the innovative products, convenience store network, and a great value for money. This has helped us attract and serve more customers. At the same time, we continue to expand our product range to meet customer needs across more occasions and different times of the day, supporting further store expansion. With our predominantly self-operated model and well-established store development and operating systems, we can plan our store network based on overall customer demand, identify suitable locations where demand exists, and open new stores efficiently.

So,展望未来,我们始终认为中国咖啡市场门店的天花板仍然非常高,而就会随着消费需求的增长不断地抬升。 因此,我们有信心可以保持有竞争力的开店节奏,坚持以客户需求为驱动,以健康的门店经济模型为基础,不断扩大瑞幸的门店网络规模,持续提升长期市场份额。谢谢。

So looking ahead, we continue to believe that there is still significant room for more coffee stores in China, and this opportunity will keep growing as consumer demand increases. So we are confident that we can maintain a competitive pace of store expansion. We'll continue to let customers demand where we open stores while making sure store economics remain healthy. This will allow us to keep extending our store network and gaining market share over the long term. Thank you.

Thank you.

And our next question today comes from Jesse Xu at J.P. Morgan. Please go ahead.

Good morning, everyone. Thank you. Thanks for taking my questions. Jesse Xu from JPMorgan. Congratulations on a very strong set of third-quarter results. Given the high base for young year comparison, the decline in same-store sales was kind of expected. Within all the incoming questions from investors, I think the first question would always be same-store sales trend. With third-quarter performance broadly in line with expectations, can we understand more about the driver or any colors that you can share? More importantly, how should we think about the trend from here as the impact of the delivery subsidy gradually phase, and how should we think about the same-store sales trend into 4Q and beyond? Thank you.

Thank you.

Thank you for your question. First, July and August of last year marked the peak of the full delivery subsidy wall, so the high comparison base had a greater impact on our third quarter sales this year. As platform subsidies came off sharply this year, delivery volume, which typically carries a higher average selling price per cup, also dropped significantly. While pickup volume recovered, the overall impact continued to weigh on the same-store sales in terms of both cup volume and per-cup average selling prices. But as we mentioned earlier, same-store sales trends improved throughout the quarter with a decline narrowing month by month from July to September. As we move into the fourth quarter, the pace of improvement has picked up further. Most or more importantly, as customers gradually shift back to pickup, our overall carb mix is becoming healthier, allowing us to better leverage our strength in store network coverage and operational efficiency.

但是在不同发展阶段 我们认为它所代表的意义也有所不同 对于已经相对成熟的餐饮企业和行业 铜电增长毫无疑问是收入和利润增长的重要来源 而对于中国咖啡消费这样刚刚起步发展的行业 对于瑞幸这样仍处于快速扩张阶段的公司 So, this is a very important topic.

So, I want to take this opportunity to share how we think about Sintero Sales Groups. So this is an important metric in the restaurant industry, but we believe its significance varies depending on a company's stage of development. For more mature restaurant business, same-store sales growth is a key driver of revenue and profit growth. But for a coffee market like China, where consumption is still in early stages of development, And for a company like Lucky, which is still scaling regularly, growth comes actually not only from the existing stores, but also from new store openings and improvements in overall operating efficiency. So we don't look at same-store sales growth in isolation or as an aesthetic measure. We take a longer view and focus on the pace and quality of growth across the business as a whole.

結合公司过去几年的经营情况,我们认为,在快速发展的过程中,瑞幸可能呈现波浪式的铜电指标变化。在经过一个竞争较为激烈,快速开电的阶段后,铜电可能会受到一定的短期压力。随着开电节奏趋于稳健,消费需求持续增长,铜电也有望逐步快速恢复。 比如说2023年的下半年到2024年的上半年,我们加速开店,铜电阶段性承压,到了2024年的下半年,开店节奏相对缓和了一些,铜电表现快速恢复,并在年底转正。2025年外卖大战前也延续了铜电的健康表现。

Looking at our own performance over the past few years, we believe locking same-store sales performance may follow a wave-like pattern as we continue to grow rapidly. When competition is intense and we are opening stores at a fast pace, same-store sales may come under some short-term pressure. But as the pace of store openings moderates and the consumer demand continues to grow, we would expect same-store sales growth to quickly improve. We have seen this before. For example, from the second half of 2003 to the first half of 2004, we accelerated store openings, which put some pressure on the same-store sales performance. Then, in the second half of 2004, at the pace of store expansion moderated, safe-store sales growth quickly improved and turned positive by year-end. This healthy trend continued into 2005 before the subsidy was started. Thank

you. Thank you.

Yeah, so coming back to the third quarter, while same-store sales growth was affected by the high comparison base and reduced platform subsidies, overall consumer demand remained healthy. Both average monthly transaction customers and average cost per customer reached new highs, while same-store sales performance is improving. At the same time, store-level profitability continues to improve. As I mentioned earlier, operating margins at our self-operating stores improved significantly year-over-year and largely returned to where it was before the subsidy wall. This shows why we shouldn't judge the quality of our growth based on short-term same-store sales movement alone. Instead, we need to take a longer-term view of China's coffee market and understand how Locking's business model works while looking at customer metrics, business scale, and probability to get a more complete picture.

Thank you.

Yeah, so for Lucky to conclude, with the same store sales performance as an important management metric that helps us dynamically adjust the pace of store expansion based on market opportunities, competition, and customer demands, we take this metric seriously and are confident that we can continue to improve it. In the meantime, our top priority remains growing market share over the long term while maintaining healthy store economics. This is how we aim to achieve healthy, sustainable growth across the business. Thank you.

Due to time constraints, no further questions will be taken at this time. This concludes the question and answer session. I'd like to turn the call back to the management team for any closing remarks.

Thank you, everyone, for joining our call today. If you have any further questions, please feel free to contact our IR team. This concludes today's call. We look forward to speaking with you again next quarter. Thank you.

Thank you. That does conclude today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.