Luckin Coffee Q2 Revenue Up 28.5% YoY, Monthly Transacting Customers Hit Record High, Comps Down 5.3% | Earnings Insight

Luckin Coffee delivered a second-quarter performance characterized by "continued scale expansion, sustained profit growth, but pressure on single-store operations."

In the second quarter of 2026, the company achieved net revenue of RMB 15.886 billion, a 28.5% year-over-year increase, exceeding the Bloomberg consensus estimate of RMB 15.43 billion; GAAP operating profit was RMB 2.123 billion, up 22.0% YoY; net profit was RMB 1.486 billion, up 16.1% YoY.

Profit growth continued to lag behind revenue growth, reflecting that the company's profitability is beginning to be squeezed by rapid store expansion, increased marketing spending, and rising costs.

Scale expansion remains the largest growth engine this quarter. In the second quarter, Luckin added a net 2,714 stores, bringing the total store count to 36,310; monthly transacting customers exceeded 112.7 million for the first time, a 22.9% YoY increase; GMV rose 29.8% YoY to RMB 18.4 billion, with the store network and user base continuing to set new records.

In contrast, the market is more focused on single-store operational performance. Comps for self-operated stores fell 5.3% YoY in the second quarter, weakening further from -0.1% in the first quarter. Although the company attributed this to the high base effect caused by heavy subsidies on food delivery platforms during the same period last year, as store density continues to rise and industry competition remains intense, when comps will stabilize has become a core indicator for the market to observe the quality of Luckin's growth.

Revenue Grows by Nearly 30%, Freshly Made Beverages Still Contribute 70% of Income

In the second quarter, Luckin achieved net revenue of RMB 15.886 billion, a 28.5% YoY increase.

Of this, revenue from freshly made beverages was RMB 11.155 billion, up 28.7% YoY, accounting for 70.2% of total revenue, remaining the company's core income source. Revenue from other products was RMB 892 million, up 45.1% YoY, with its share of revenue continuing to rise; revenue related to partnership stores was RMB 3.668 billion, up 27.9% YoY, accounting for 23.1% of total revenue, indicating that the partnership system and supply chain business continue to maintain stable growth.

Within partnership revenue, revenue from selling raw materials to partner stores was RMB 2.402 billion, delivery service fees were RMB 542 million, profit sharing and royalties were RMB 492 million, and equipment sales revenue was RMB 203 million, with the overall revenue structure remaining stable.

Meanwhile, Q2 GMV reached RMB 18.4 billion, a 29.8% YoY increase, slightly faster than revenue growth, reflecting that store expansion and user growth are still driving the overall increase in sales scale.

Net Addition of 2,714 Stores in a Single Quarter, Self-Operated Expansion Continues to Accelerate

As of the end of June, Luckin's total store count reached 36,310, an increase of 2,714 from the end of the first quarter, equivalent to an average net addition of about 30 stores per day.

Of these, self-operated stores increased by 1,927 to 23,734, and partner stores increased by 787 to 12,576, with self-operated stores remaining the absolute main force in this round of expansion. For Luckin, the self-operated model helps enhance brand and operational control, but it also means that fixed costs such as rent, labor, and depreciation rise simultaneously.

In terms of regional layout, China (including the Hong Kong Special Administrative Region) remains the focus of expansion, with a net addition of 2,668 stores in the quarter; overseas business continues to advance, with net additions of 7, 31, and 8 stores in Singapore, Malaysia, and the United States, respectively. Although the current contribution from overseas business is limited, the significantly accelerated pace of store openings in Malaysia shows that Luckin is attempting to replicate its domestic digital operations and supply chain capabilities in overseas markets.

By the end of the first half of the year, the company's store count had increased by 5,262 compared to the end of 2025, a semi-annual increase of nearly 17%. For a chain brand with over 36,000 stores, this expansion speed remains highly aggressive.

Users Hit Record High, But Growth in Mature Stores Continues to Slow

User scale became one of the most standout operational indicators this quarter.

Monthly transacting customers in the second quarter reached 112.7 million, a 22.9% YoY increase, with cumulative transacting customers approaching 500 million, driving continuous growth in product sales volume and GMV.

However, user growth has not fully translated into sales growth for mature stores. Comps for self-operated stores fell 5.3% YoY in the second quarter, compared to a 13.8% growth in the same period last year, while the first quarter saw a 0.1% decline.

The company stated that the negative turn in comps was mainly due to the high comparison base formed by substantial subsidies provided by food delivery platforms during the same period last year. However, from a trend perspective, Luckin's comps have continuously declined from 14.3% in Q3 2025 and 1.3% in Q4 2025 to -0.1% in Q1 2026 and -5.3% in Q2 2026, with pressure on mature store growth becoming increasingly evident.

As the number of stores continues to increase, the contribution of new stores to overall revenue growth is rising, and whether mature stores can resume growth will determine the quality of Luckin's future expansion.

Store Profitability Remains Resilient, Group Margins Continue to Contract

Despite pressure on comps, the profitability of self-operated stores remains stable. In the second quarter, operating profit from self-operated stores was RMB 2.469 billion, up 25.9% YoY, with an operating profit margin of 21.3%, only 0.2 percentage points lower than the same period last year, indicating that scale procurement, supply chain, and digital operations continue to support store profitability.

However, margins at the group level continue to decline. The GAAP operating margin in the second quarter decreased from 14.1% in the same period last year to 13.4%, and the net profit margin decreased from 10.4% to 9.4%; Non-GAAP operating margin and net profit margin also decreased to 15.1% and 11.0%, respectively.

The main reason for the margin decline is that expense growth outpaced revenue. The company's operating expenses in the second quarter increased by 29.6% YoY, slightly higher than the revenue growth rate. Among these, material costs grew by 34.3%, store rent and operating costs grew by 35.6%, and administrative expenses grew by 33.8%.

Sales and marketing expenses grew particularly significantly, increasing by 56.1% YoY to RMB 925 million, with their share of revenue rising from 4.8% to 5.8%. The company stated that the increase in expenses mainly came from advertising and promotional investments, as well as commissions paid to third-party food delivery and live-streaming platforms.

In contrast, delivery expenses decreased by 3.1% YoY, becoming the only major expense item to achieve a YoY decline, indicating that fulfillment efficiency continues to improve.

Cash Reserves Exceed RMB 10 Billion, Share Buyback Nearly Two-Thirds Complete

As of the end of June 2026, Luckin's total cash and cash equivalents, restricted cash, time deposits, and short-term investments amounted to RMB 10.926 billion, an increase of about RMB 2 billion from the end of 2025, maintaining ample cash reserves.

Net cash flow from operating activities in the second quarter was RMB 2.625 billion, with operating cash flow continuing to demonstrate strong cash-generating capability.

Notably, by the end of the second quarter, the company added RMB 1.945 billion in short-term bank borrowings, whereas this item was zero at the end of last year. The company did not disclose the specific use of the borrowings, so future capital arrangements remain worthy of attention.

Regarding shareholder returns, the USD 300 million share repurchase program launched in April this year is approximately 65% complete, with a cumulative repurchase of 48.9 million Class A ordinary shares, amounting to approximately USD 195 million. Driven by both profit growth and share repurchases, basic and diluted earnings per ADS in the second quarter rose to RMB 4.64, higher than RMB 4.00 in the same period last year.

From Competing on Store Openings to Competing on Efficiency

Management stated that it will continue to rely on store expansion, product innovation, user operations, and digital capabilities to consolidate its market leading position, and remains optimistic about the long-term growth space of the Chinese coffee market.

However, as the store scale exceeds 36,000, Luckin's growth logic is gradually changing. The model of relying on rapid store openings to drive revenue growth in recent years is giving way to a test of single-store operational efficiency and profitability.

The focus of the market in the future will not only be on how many more stores Luckin can open, but more importantly, when comps will stop declining, whether new stores can maintain good ramp-up efficiency, and whether the company can continue to defend its profit margins against the backdrop of rising marketing investments and costs. These indicators will also determine the quality of Luckin's next stage of growth.