LK = Luckin Coffee (NASDAQ: LK), a pioneer of a technology-driven new retail model to provide coffee and other products of high quality, high affordability, and high convenience to customers, today announced its unaudited financial results for the third quarter ended September 30, 2019. Reports Q3 revenue $208.9M, consensus $211.88M. Average monthly total items sold in Q3 were 44.2 million, representing an increase of 470.1% from 7.8 million in 3Q18. Average monthly transacting customers in the quarter were 9.3 million, representing an increase of 397.5% from 1.9 million in 3Q18. Total number of stores at the end of the quarter were 3,680 stores, representing an increase of 209.5% from 1,189 stores at the end of 3Q18.
THIRD QUARTER 2019 HIGHLIGHTS
Total net revenues from products in the quarter were RMB1,493.2 million (US$208.9 million), representing an increase of 557.6% from RMB227.1 million in the same quarter of 2018.
Average monthly total items sold in the quarter were 44.2 million, representing an increase of 470.1% from 7.8 million in the third quarter of 2018.
Cumulative number of transacting customers increased to 30.7 million, representing an increase of 413.4% from 6.0 million as of the end of the third quarter of 2018. During the third quarter of 2019, the Company acquired 7.9 million new transacting customers.
Average monthly transacting customers in the quarter were 9.3 million, representing an increase of 397.5% from 1.9 million in the third quarter of 2018.
Total number of stores at the end of the quarter were 3,680 stores, representing an increase of 209.5% from 1,189 stores at the end of the third quarter of 2018.
Average total net revenues from products per store in the quarter were RMB449.6 thousand (US$62.9 thousand), representing an increase of 79.5% from RMB250.5 thousand in the same quarter of 2018.
Store level operating profit in the quarter was RMB186.3 million (US$26.1 million), or 12.5% of net revenues from products, compared to a loss of RMB126.0 million in the third quarter of 2018.
“We are very pleased with our results in the third quarter. We exceeded the high-end of our guidance range, achieved a store level profit margin of 12.5% and experienced continuous growth across all key operating metrics. These achievements follow a clear trend: an increase in volumes, efficiency and, as a result, profitability. During the quarter, product revenue grew at 557.6%, which was 1.2x, 1.4x and 2.7x the growth rate of average monthly items sold, average monthly transacting customers, and number of stores, respectively,” said Ms. Jenny Zhiya Qian, Chief Executive Officer of Luckin Coffee.
“During the third quarter, sales from freshly-brewed coffee drinks continued to maintain very strong growth, and we believe we will reach our goal to become the largest coffee player in China by the end of this year. With our distinguished value proposition of high quality, high affordability and high convenience we believe that Luckin Coffee has become part of more and more Chinese consumers’ daily lives. China’s coffee market remains highly underpenetrated so we are very excited about the growth potential ahead of us,” said Ms. Qian.
Ms. Qian added, “At the same time, we continued to enrich our product offerings during the quarter. We launched Luckin Tea products nationwide in July 2019 and experienced strong incremental demand during the quarter, contributing to an increase in per store revenue and higher customer retention rate. We also started selling cups and other merchandise products and entered into a joint venture agreement with Louis Dreyfus Company to produce and sell co-branded Not From Concentrate juice products.”
Ms. Qian continued, “We also strategically launched Luckin Tea as an independent brand and developed our new retail partnership model. In addition, we are engaged in ongoing discussions with potential strategic partners to set up joint ventures in markets outside of China. We consider these initiatives as an evolution of our current business model and are part of our strategy to serve more customers.”
“With our disruptive technology-driven new retail model and our newly-launched retail partnership model, we believe we can rapidly expand into adjacent markets with limited capital expenditures while maintaining a high degree of operational control and efficiency. We are pleased to have taken meaningful steps accomplishing our goals this quarter and remain extremely excited about the future of our business,” concluded Ms. Qian.
THIRD QUARTER 2019 UNAUDITED FINANCIAL RESULTS
Total net revenues were RMB1,541.6 million (US$215.7 million) in the third quarter, representing an increase of 540.2% from RMB240.8 million in the third quarter of 2018. Total net revenues from products were RMB1,493.2 million (US$208.9 million) in the third quarter, representing an increase of 557.6% from RMB227.1 million in the third quarter of 2018. Net revenues from products growth was primarily driven by a significant increase in the number of transacting customers, an increase in effective selling price, and an increase in the number of products sold per transacting customer.
Net revenues from freshly brewed drinks were RMB1,145.4 million (US$160.2 million), representing 74.3% of total net revenues in the third quarter of 2019, compared to RMB192.7 million, or 80.0% of total net revenues, in the third quarter of 2018.
Net revenues from other products were RMB347.8 million (US$48.7 million), representing 22.6% of total net revenues in the third quarter of 2019, compared to RMB34.4 million, or 14.3% of total net revenues, in the third quarter of 2018.
Other revenues, which mainly include delivery fees, were RMB48.4 million (US$6.8 million), representing 3.1% of total net revenues in the third quarter of 2019, compared to RMB13.7 million, or 5.7% of total net revenues, in the third quarter of 2018.
Total operating expenses were RMB2,132.5 million (US$298.3 million), representing an increase of 193.6% from RMB726.4 million in the third quarter of 2018. The increase in operating expenses was the result of business expansion. Meanwhile, operating expenses as a percentage of net revenues decreased to 138.3% in the third quarter of 2019 from 301.7% in the third quarter of 2018, mainly driven by increased economies of scale and the Company’s technology-driven operations.
Cost of materials were RMB721.1 million (US$100.9 million), representing an increase of 375.5% from RMB151.6 million in the third quarter of 2018, as a result of the increase in sales of products. Cost of materials decreased to 48.3% as a percentage of net revenues from products in the third quarter of 2019 from 66.8% in the third quarter of 2018.
Store rental and other operating costs were RMB477.3 million (US$66.8 million), representing an increase of 176.6% from RMB172.5 million in the third quarter of 2018, mainly due to increases in the number of stores and headcount. Store rental and other operating costs decreased to 32.0% as a percentage of net revenues from products in the third quarter of 2019 from 76.0% in the third quarter of 2018.
Depreciation expenses were RMB108.5 million (US$15.2 million), representing an increase of 275.8% from RMB28.9 million in the third quarter of 2018, mainly as the result of increases in depreciation of leasehold improvements and the increase in the purchases of equipment for operation due to the increased number of stores. Depreciation expenses decreased to 7.3% as a percentage of net revenues from products in the third quarter of 2019 from 12.7% in the third quarter of 2018.
Sales and marketing expenses were RMB557.7 million (US$78.0 million), representing an increase of 147.6% from RMB225.3 million in the third quarter of 2018, mainly due to increases in advertising expenses as the Company launched new marketing initiatives, entered into new cities and launched Luckin Tea as an independent brand. The increase in sales and marketing expenses reflect strategic investments in branding which, management believes, will bring long-term benefits to the Company. All promotions and coupons provided to customers, other than free product promotion expenses, are reflected in net revenues from products and therefore not included in sales and marketing expenses. Sales and marketing expenses decreased to 36.2% as a percentage of net revenues in the third quarter of 2019 from 93.5% in the third quarter of 2018.
General and administrative expenses were RMB246.1 million (US$34.4 million), representing an increase of 108.0% from RMB118.3 million in the third quarter of 2018. The increase in general and administrative expenses was mainly driven by business expansion and share-based compensation to senior management. General and administrative expenses decreased to 16.0% as a percentage of net revenues in the third quarter of 2019 from 49.1% in the third quarter of 2018.
Store preopening and other expenses were RMB21.8 million (US$3.0 million), representing a decrease of 26.9% from RMB29.8 million in the third quarter of 2018, mainly due to decreased rental costs before opening as a result of improved efficiency for new store openings. Store preopening and other expenses decreased to 1.4% as a percentage of net revenues in the third quarter of 2019 from 12.4% in the third quarter of 2018.
CHK = Comstock Resources (CRK) is in talks to buy Chesapeake Energy’s (CHK) Haynesville shale assets in Louisiana in a deal that could be worth more than $1B, according to Reuters’ Arathy Nair, citing sources. The two oil companies have settled on a structure for the deal and hope to finalize an agreement by year end, the report added. In pre-market trading following the report, Chesapeake shares are up 12c, or 18%, to 79c. Morgan Stanley analyst Devin McDermott downgraded Chesapeake to Equal Weight from Overweight with a price target of $1.25, down from $2.25, after the company issued a “going concern” warning that it may exceed certain debt covenants within the next 12 months. He estimates Chesapeakes’ leverage, excluding the “ring-fenced” Brazos Valley subsidiary, at 5.0 times on a rolling 12-month basis and while he expects the company to successfully manage through the potential covenant breach, it will likely require strategic action or waivers, said McDermott, who sees “a wide range” of potential outcomes.0
DDOG = Datadog, Inc. (NASDAQ:DDOG), the monitoring and analytics platform for developers, IT operations teams and business users in the cloud age, today announced financial results for its third quarter ended September 30, 2019.
“We are very pleased with our third quarter, which was highlighted by 88% year-over-year revenue growth, and continued traction with larger customers,” said Olivier Pomel, co-founder and CEO of Datadog. “Datadog has established itself as the leading monitoring and analytics platform and we have continued to extend our capabilities during the quarter. We announced over fifteen new products and functionalities at our annual user conference in July, including Network Performance Monitoring and Real User Monitoring.”
Pomel added, “Our recent IPO was an exciting milestone for Datadog and is a credit to the hard work of all our employees. We believe we are still in the early innings of a very large market opportunity, and we remain focused on solving our customers’ pain points.”
Third Quarter 2019 Financial Highlights:
Revenue was $95.9 million, an increase of 88% year-over-year.
GAAP operating loss was $(4.2) million; GAAP operating margin was (4.4)%.
Non-GAAP operating income was $0.6 million; non-GAAP operating margin was 0.7%.
GAAP net loss per basic and diluted share was $(0.04); non-GAAP net income per diluted share was $0.00.
Operating cash flow was $3.8 million, with free cash flow of $(3.7) million.
Cash, cash equivalents, and restricted cash were $771 million as of September 30, 2019.
Third Quarter & Recent Business Highlights:
- As of September 30, we had 727 customers with ARR of $100,000 or more, an increase of 93% from 377 as of September 30, 2018.
- In July, we hosted our annual user conference, Dash, which was attended by more than 1,200 people in New York City. We introduced over fifteen new products and functionalities, including the addition of Network Performance Monitoring, Real User Monitoring, Serverless Functions, Logs Rehydration, and more. These new products and features extend us further on our path to providing full-stack visibility to our customers, all in a tightly integrated platform.
- In September, we completed our initial public offering of 27.6 million shares at $27 per share, for total net proceeds of $709 million. Our Class A common stock is now traded on the Nasdaq Global Select Market under the symbol “DDOG”. We thank our customers, employees, as well as our new and existing investors, for helping to achieve this exciting company milestone.
- In October, we announced we are currently “In Process” on the Federal Risk and Authorization Management Program (FedRAMP) Marketplace, initiating the FedRAMP certification process. Achieving FedRAMP authorization will expand our addressable market, by allowing U.S. federal government departments and agencies to adopt and use Datadog’s cloud platform.
- Datadog has been recognized by Forrester Research as a Leader in its report, The Forrester Wave™: Intelligent Application and Service Monitoring, Q2 2019. For this report, Forrester evaluated 13 Intelligent Application and Service Monitoring (IASM) vendors across three main categories: current offering, strategy, and market presence. Datadog scored highest among all vendors in the strategy category.
- Fourth Quarter and Full Year 2019 Outlook:
Based on information as of today, November 12, 2019, Datadog is providing the following guidance for the fourth quarter and full year 2019:
Fourth Quarter 2019 Outlook:
— Revenue between $101 million and $103 million.
— Non-GAAP operating loss between $(8) million and $(6) million.
— Non-GAAP net loss per share between $(0.02) and $(0.01), assuming approximately 297 million weighted average shares outstanding.
Full Year 2019 Outlook:
— Revenue between $350 million and $352 million.
— Non-GAAP operating loss between $(20) million and $(18) million.
— Non-GAAP net loss per share between $(0.12) and $(0.11), assuming approximately 140 million weighted average shares outstanding.
Jefferies analyst Brent Thill raised his price target for Datadog to $36 from $34 saying the company in its first post-initial public offering quarter reported total revenue and operating income well above Street estimates. Metrics suggest continued momentum as the installed base expands its usage of both infrastructure monitoring and add-on modules, Thill tells investors in a research note. The analyst, however, sees a full valuation and keeps a Hold rating on the shares.
Stifel analyst Brad Reback said Datadog reported “solid financial results” in its first quarter of being public and that its guidance was also “well ahead” of consensus estimates. Reback, who continues to project Datadog can sustain 30%+ top-line growth with “increasing levels of profitability,” raised his price target on the stock to $43 from $40 and keeps a Buy rating on the shares.