On Thursday, troubled Chinese beverage chain Luckin Coffee released its unaudited financial report for the first half of 2021, posting doubled revenue and narrowed losses.

Why it matters: This is Luckin’s first normalized financial report after the company admitted to reporting fraudulent sales numbers of $310 million in April 2020. The company filed bankruptcy in the US in February but managed to remain relevant in China’s competitive beverage market. 

READ MORE: The Big Sell | Luckin is not dead

Details: The company recorded RMB 3.2 billion ($492.9 million) revenue in the first half of 2021, leaping 106% year on year from RMB 1.5 billion in the same period of 2020.

  • The company warned that its performance in the first half of 2020 was “materially adversely affected” by the Covid-19 pandemic and advised investors to consider these factors when evaluating the growth metrics.
  • Chairman and CEO Guo Jinyi attributed the revenue growth to revenue increase from self-operated stores, increased order frequency, higher prices, and improved cost structure.
  • Revenue from core business product sales jumped 89% year on year to RMB 2.7 billion. Net loss fell 86.4% to RMB 211.4 million in the reporting period.
  • The company operates 5,259 stores as of June, including 4,018 self-operated stores and 1,241 franchised “partnership stores.”
  • Luckin is shifting to an asset-light model by growing more franchised stores. Luckin takes up to 40% of a franchised store’s profits once it reaches an agreed earnings threshold, depending on the size of the store.
  • The number of self-operated stores decreased by 5.8%, and partnership stores increased by 50.6% in the period. Self-operated stores achieved an operating profit margin of 16.3%. 
  • Revenue from partnership stores surged 357.8% year on year to RMB 441.2 million. 
  • Partnership store revenue accounted for 13.9% of Luckin’s total revenue in the first half, up from 6.2% in the same period last year.
  • The company’s average monthly transacting customers increased 35.1% year on year, from 7.8 million to 10.5 million, in the first half of 2020.

Context:  Luckin is attempting a comeback over the past year by settling the financial fraud. 

  • The firm agreed to pay a $180 million penalty to the US Securities and Exchange Commission to settle charges of sales fabrication in December 2020.
  • In September, Luckin settled a US class-action lawsuit, resolving some US investors’ claims against the company. Settlement amounts will be calculated based on a global settlement of $187.5 million.

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.