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Inside Luckin Kaffes hungry rocket ship of an F-1



Minutes after retrieving a new $ 150 million, China-based Luckin Coffee filed to become public in the United States. The company intends to list on the Nasdaq with the ticker symbol "LK."

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What Luckin will be worth, and how much money it intends to increase is, at this time, unknown. Initial IPO archives traditionally contain no more than one placeholder figure for how much can be raised in a debut. Luckin managed $ 100 million in his F-1 filing for his own placeholder.

(Note: An F-1 is basically the same as an S-1

, except for foreign HQ companies, hence "F" prefix. Practically, the information described in F-1s is exchanged with Form F-1s.)

But what we have is a look at how fast Luckin grows and how much this growth has cost. One thing is clear: Luckin doesn't go public late; This company is still baking.

Financial highlights, Lowlights

Lucking Coffee is a burning, growth-oriented operation. However, Luckin, even in the current technological era, where losses in the growth name are not considered confusing, spend a lot of money. Let's examine.

Growth

Luckin actually had no income in 2017. This is because it was founded in October of the same year. There are thus 2018 revenues of $ 125.3 million 336.178 percent higher than what the company recorded in the previous year.

What we care more about is then the quarterly figures. Here are quarterly revenue and sequential growth rates beginning in Q1 2018, ending Q1 2019, in the yuan:

  • Q1 2018: 13.0 million yuan
  • Q2 2018: 121.5 million yuan (+834.6 percent from Q1 ) [19659013] Q3 2018: 240.8 million yuan (+98.2 percent from Q2)
  • Q4 2018: 465.4 million yuan (+93.3 percent from the third quarter)
  • Q1 2019: 478.5 million yuan (+2.8 percent from Q4)

For reference, the final 478.5 million yuan figure is $ 71.3 million.

Reading this figure we can see two things. First, Luckin grew dizzyingly fast in 2018. And his growth rate went from astronomical to slowly on a sequential basis. If a mature SaaS company grew below 3 percent from the previous quarter, it would be in hot water.

So, Luckin succeeded in thanking losses when growth fell?

Loss

While Luckin had no significant nothing in 2017, it had costs. However, they were modest compared to 2018 expenses. Let's stick to our earlier reporting timeframe and review the company's net profit : 1

  • Q1 2018: 132.2 million yuan (net loss equivalent to 1020.7 percent of revenue in Q1 2018)
  • Q2 2018: 333.0 million yuan (net loss corresponding to 274.1 percent of revenue in 2 Q3 2012)
  • Q3 2018: 484.9 million yuan (net loss corresponding to 201.4 percent of revenue in the quarter 2018)
  • 4. Q1 2018: 669.0 million yuan (net loss equivalent to 143.7 percent of the quarter in the quarter)
  • 1. Q1 2019: 558.1 million yuan (net loss equivalent to 115.3 percent of revenues in Q1 2019]

Yes, Luckin reduced its losses in Q1 2019, the same period that increased revenue growth slowly to near zero. Still $ 88.2 million in the three month period.

Luckin's slow growth rate from the quarter 2018 to the first quarter of 2019 did not help the net loss enough to bring the figure below 100 percent of revenue.

Cash use

Perhaps it's good news for Luckin among their cash flow figures Not really.

In 2018, Luckin Coffee used $ 195.3 million in cash to fund the operating deficit, burning a corresponding $ 191.2 million to fund its investment activities. Today, the company's operational cash flow came to $ 93.5 million in the first quarter of 2019. In reverse, Luckin's investment flow was positive in the first three months of 2019, and collected 11 , $ 4 million.

So What?

What a fantastic F-1. I have no idea what this company is worth, how big it will be, or what it is current health.

Luckin's vertical growth in 2018 brought big losses. No one expected anything else. But how investors will appreciate the company when it is operational cash flow, so shockingly negative is not clear.

And if the company's growth purchased to date has been effective, it is not yet clear. In its F-1 filing, Luckin notes that customers' acquisition cost has fallen from 103.5 yuan to just 16.9 from the first quarter of 2018 to the first quarter of 2019. But "its new transactional customers" grew during 2018 just to fall into order from 6.5 million to 4.3 million from the 4th quarter of 2018 to the first quarter of 2019.

If that is why the company's growth collapsed from the fourth quarter last year to the first quarter of 2019, we can assume that Luckin may have a customer need problem. And it spared so much more before buying customers, the effect of a leaking bucket can be serious.

According to private markets, Luckin is worth just under $ 3 billion. Let the games begin!


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