Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2023 shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Period End Date | Dec. 31, 2023 |
Entity Registrant Name | Luckin Coffee Inc. |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Title of 12(g) Security | American depositary shares, each ADS represents eight Class A Ordinary Shares, par value US$0.000002 per share |
Entity Address, Postal Zip Code | 361008 |
Trading Symbol | LKNCY |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 28th Floor, Building T3, Haixi Jingu Plaza |
Entity Address, Address Line Two | 1-3 Taibei Road |
Entity Address, Address Line Three | Siming District |
Entity Address, City or Town | Xiamen City |
Entity Address, Country | CN |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Auditor Name | Centurion ZD CPA & Co. |
Auditor Firm ID | 2769 |
Auditor Location | Hong Kong, China |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Document Financial Statement Error Correction [Flag] | false |
Entity Shell Company | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | FY |
Entity Central Index Key | 0001767582 |
Amendment Flag | false |
Entity File Number | 001-38896 |
Document Accounting Standard | U.S. GAAP |
Common Class A [Member] | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 2,093,280,340 |
Common Class B [Member] | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 144,778,552 |
Business Contact [Member] | |
Document and Entity Information | |
Entity Address, Postal Zip Code | 361008 |
Entity Address, Address Line One | 28th Floor, Building T3, Haixi Jingu Plaza |
Entity Address, Address Line Two | 1-3 Taibei Road |
Entity Address, Address Line Three | Siming District |
Entity Address, City or Town | Xiamen City |
Entity Address, Country | CN |
Contact Personnel Name | Ms. Jing An |
Country Region | 86 |
City Area Code | 592 |
Local Phone Number | 3386666 |
Contact Personnel Email Address | ir@lkcoffee.com |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 2,925,709 | $ 412,077 | ¥ 3,534,304 |
Restricted cash | 66,080 | 9,307 | 7,860 |
Short-term investments, net | 100,000 | 14,085 | |
Accounts receivable, net | 80,665 | 11,361 | 58,782 |
Receivables from online payment platforms | 214,163 | 30,164 | 151,922 |
Inventories | 2,204,000 | 310,427 | 1,206,467 |
Prepaid expenses and other current assets, net | 1,544,918 | 217,597 | 1,077,719 |
Term deposit-current | 464,019 | 65,356 | |
Total current assets | 7,599,554 | 1,070,374 | 6,037,054 |
Non-current assets: | |||
Property and equipment, net | 4,169,141 | 587,211 | 1,867,378 |
Restricted cash | 46,854 | 6,599 | 35,755 |
Other non-current assets, net | 789,492 | 111,198 | 327,744 |
Deferred tax assets, net | 350,082 | 49,308 | 208,469 |
Operating lease right-of-use assets | 5,186,855 | 730,553 | 2,003,997 |
Term deposit-non current | 150,000 | 21,127 | |
Total non-current assets | 10,692,424 | 1,505,996 | 4,443,343 |
Total assets | 18,291,978 | 2,576,370 | 10,480,397 |
Current liabilities: | |||
Accounts payable | 814,655 | 114,742 | 441,376 |
Accrued expenses and other current liabilities | 2,556,977 | 360,143 | 1,375,425 |
Deferred revenues | 123,422 | 17,384 | 97,366 |
Payable for equity litigants settlement | 116,314 | 16,382 | 33,796 |
Operating lease liabilities | 1,851,310 | 260,752 | 880,873 |
Total current liabilities | 5,462,678 | 769,403 | 2,828,836 |
Non-current liabilities: | |||
Operating lease liabilities | 3,114,855 | 438,718 | 1,024,274 |
Total non-current liabilities | 3,114,855 | 438,718 | 1,024,274 |
Total liabilities | 8,577,533 | 1,208,121 | 3,853,110 |
Commitments and contingencies | |||
Mezzanine equity: | |||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | 1,578,040 | 222,262 | 1,578,040 |
Shareholders' equity: | |||
Additional paid-in capital | 16,276,991 | 2,292,566 | 16,037,406 |
Statutory reserves | 168,204 | 23,691 | 35,657 |
Accumulated deficits | (8,705,759) | (1,226,181) | (11,421,145) |
Accumulated other comprehensive income | 396,944 | 55,908 | 397,304 |
Total Company's ordinary shareholders' equity | 8,136,405 | 1,145,987 | 5,049,247 |
Total liabilities, mezzanine equity and shareholders' equity | 18,291,978 | 2,576,370 | 10,480,397 |
Common Class A [Member] | |||
Shareholders' equity: | |||
Ordinary shares | 23 | 3 | 23 |
Common Class B [Member] | |||
Shareholders' equity: | |||
Ordinary shares | 2 | 0 | 2 |
Convertible Preferred Stock [Member] | |||
Mezzanine equity: | |||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | ¥ 1,578,040 | $ 222,262 | ¥ 1,578,040 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) shares |
Current liabilities | ¥ 5,462,678 | $ 769,403 | ¥ 2,828,836 |
Non-current liabilities | 3,114,855 | 438,718 | 1,024,274 |
VIE | |||
Current liabilities | 4,300 | $ 600 | 2,900 |
Non-current liabilities | ¥ | ¥ 0 | ¥ 0 | |
Convertible senior preferred shares | |||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | ||
Mezzanine equity, shares authorized (in shares) | 307,692,307 | 307,692,307 | 307,692,307 |
Mezzanine equity, shares issued (in shares) | 307,692,307 | 307,692,307 | 307,692,307 |
Mezzanine equity, shares outstanding (in shares) | 307,692,307 | 307,692,307 | 307,692,307 |
Class A ordinary shares | |||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | ||
Equity, shares authorized (in shares) | 19,692,307,693 | 19,692,307,693 | 19,692,307,693 |
Equity, shares issued (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 |
Equity, shares outstanding (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 |
Class B ordinary shares | |||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | ||
Equity, shares authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 |
Equity, shares issued (in shares) | 144,778,552 | 144,778,552 | 144,778,552 |
Equity, shares outstanding (in shares) | 144,778,552 | 144,778,552 | 144,778,552 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) ¥ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | |
Net revenues: | ||||
Total net revenues | ¥ 24,903,166 | $ 3,507,537 | ¥ 13,292,982 | ¥ 7,965,323 |
Cost of materials | (10,892,214) | (1,534,136) | (5,178,963) | (3,198,552) |
Store rental and other operating costs | (5,167,482) | (727,825) | (2,829,987) | (2,036,772) |
Depreciation and amortization expenses | (604,580) | (85,153) | (391,936) | (465,384) |
Delivery expenses | (2,010,700) | (283,200) | (1,373,219) | (819,549) |
Sales and marketing expenses | (1,286,523) | (181,203) | (570,122) | (336,855) |
General and administrative expenses | (1,829,651) | (257,701) | (1,459,550) | (1,269,988) |
Store preopening and other expenses | (109,685) | (15,449) | (36,012) | (16,352) |
Impairment loss of long-lived assets | (5,200) | (700) | (221,810) | (21,368) |
Losses and expenses related to Fabricated Transactions and Restructuring | 28,515 | 4,016 | (75,204) | (339,557) |
Total operating expenses | (21,877,548) | (3,081,388) | (12,136,803) | (8,504,377) |
Operating (loss)/income | 3,025,618 | 426,149 | 1,156,179 | (539,054) |
Interest and investment income | 108,682 | 15,308 | 84,923 | 102,248 |
Interest and financing expenses | (23,484) | (35,490) | ||
Foreign exchange gain, net | 2,968 | 418 | 10,661 | 12,441 |
Other (expenses)/income, net | 62,283 | 8,772 | 60,680 | (16,513) |
Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes | 6,381 | |||
Reversal for SEC settlement | 0 | 0 | (1,146,474) | |
Provision for equity litigants settlement | (92,192) | (12,985) | (279,967) | (155,314) |
Gain from extinguishment of Series B Senior Secured Notes | 124,139 | |||
Income before income taxes | 3,107,359 | 437,662 | 1,126,750 | 514,792 |
Income tax (expense)/benefits | (259,426) | (36,539) | (638,504) | 63,861 |
Net income | 2,847,933 | 401,123 | 488,246 | 578,653 |
Less: Net (loss)/income attributable to non-controlling interests | 108 | |||
Net income attributable to the Company's ordinary shareholders | ¥ 2,847,933 | $ 401,123 | ¥ 488,246 | ¥ 578,545 |
Net income per share*: | ||||
Basic | (per share) | ¥ 1.12 | $ 0.16 | ¥ 0.20 | ¥ 0.29 |
Diluted | (per share) | ¥ 1.12 | $ 0.16 | ¥ 0.19 | ¥ 0.27 |
Weighted average shares outstanding used in calculating basic and diluted income per share: | ||||
Basic | shares | 2,532,109,710 | 2,532,109,710 | 2,473,078,408 | 2,051,263,478 |
Diluted | shares | 2,532,563,302 | 2,532,563,302 | 2,516,273,627 | 2,135,844,257 |
Net income | ¥ 2,847,933 | $ 401,123 | ¥ 488,246 | ¥ 578,653 |
Other comprehensive (loss)/income, net of tax of nil: | ||||
Foreign currency translation difference, net of tax of nil | (360) | (51) | (69,552) | 102,802 |
Total comprehensive income | 2,847,573 | 401,072 | 418,694 | 681,455 |
Less: total comprehensive income attributable to non-controlling interests | 108 | |||
Total comprehensive income attributable to the Company's ordinary shareholders | 2,847,573 | 401,072 | 418,694 | 681,347 |
Revenues from product sales | ||||
Net revenues: | ||||
Total net revenues | 18,677,390 | 2,630,700 | 10,223,720 | 6,659,218 |
Revenues from partnership stores | ||||
Net revenues: | ||||
Total net revenues | ¥ 6,225,776 | $ 876,882 | ¥ 3,069,262 | ¥ 1,306,105 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||
Other comprehensive (loss)/income, tax | ¥ 0 | ¥ 0 | ¥ 0 |
Foreign currency translation difference, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Ordinary shares Class A ordinary shares CNY (¥) shares | Ordinary shares Class A ordinary shares USD ($) shares | Ordinary shares Class B ordinary shares CNY (¥) shares | Ordinary shares Class B ordinary shares USD ($) shares | Additional paid-in capital CNY (¥) | Additional paid-in capital USD ($) | Accumulated other comprehensive income CNY (¥) | Accumulated other comprehensive income USD ($) | Statutory reserves CNY (¥) | Statutory reserves USD ($) | Accumulated deficits CNY (¥) | Accumulated deficits USD ($) | Total Company's ordinary shareholders' equity CNY (¥) | Total Company's ordinary shareholders' equity USD ($) | Non-controlling interests CNY (¥) | Class A ordinary shares shares | CNY (¥) | USD ($) |
Beginning balance at Dec. 31, 2020 | ¥ 20 | ¥ 2 | ¥ 14,744,569 | ¥ 364,054 | ¥ 603 | ¥ (12,452,882) | ¥ 2,656,366 | ¥ 68,518 | ¥ 2,724,884 | |||||||||
Beginning balance (in shares) at Dec. 31, 2020 | shares | 1,880,396,244 | 1,880,396,244 | 144,778,552 | 144,778,552 | ||||||||||||||
Net income | 578,545 | 578,545 | 108 | 578,653 | ||||||||||||||
Foreign currency translation difference | 102,802 | 102,802 | 102,802 | |||||||||||||||
Issuance of Class A ordinary shares | ¥ 1 | (1) | ||||||||||||||||
Issuance of Class A ordinary shares (in shares) | shares | 70,061,136 | 70,061,136 | ||||||||||||||||
Appropriation to statutory reserves | 2,014 | (2,014) | ||||||||||||||||
Share based compensation | 302,734 | 302,734 | 302,734 | |||||||||||||||
Purchase of non-controlling interest in a subsidiary | (9,310) | (9,310) | ¥ (68,626) | (77,936) | ||||||||||||||
Ending balance at Dec. 31, 2021 | ¥ 21 | ¥ 2 | 15,037,992 | 466,856 | 2,617 | (11,876,351) | 3,631,137 | 3,631,137 | ||||||||||
Ending balance (in shares) at Dec. 31, 2021 | shares | 1,950,457,380 | 1,950,457,380 | 144,778,552 | 144,778,552 | ||||||||||||||
Net income | 488,246 | 488,246 | 488,246 | |||||||||||||||
Foreign currency translation difference | (69,552) | (69,552) | (69,552) | |||||||||||||||
Issuance of Class A ordinary shares | ¥ 1 | (1) | ||||||||||||||||
Issuance of Class A ordinary shares (in shares) | shares | 53,123,768 | 53,123,768 | ||||||||||||||||
Appropriation to statutory reserves | 33,040 | (33,040) | ||||||||||||||||
Share based compensation | 398,008 | 398,008 | 398,008 | |||||||||||||||
Convertible senior notes restructuring | ¥ 1 | 601,407 | 601,408 | 601,408 | ||||||||||||||
Convertible senior notes restructuring (in shares) | shares | 76,220,808 | 76,220,808 | 76,220,808 | |||||||||||||||
Ending balance at Dec. 31, 2022 | ¥ 23 | ¥ 2 | 16,037,406 | 397,304 | 35,657 | (11,421,145) | 5,049,247 | 5,049,247 | ||||||||||
Ending balance (in shares) at Dec. 31, 2022 | shares | 2,079,801,956 | 2,079,801,956 | 144,778,552 | 144,778,552 | ||||||||||||||
Net income | 2,847,933 | 2,847,933 | 2,847,933 | $ 401,123 | ||||||||||||||
Foreign currency translation difference | (360) | (360) | (360) | |||||||||||||||
Issuance of Class A ordinary shares | 79 | 79 | 79 | |||||||||||||||
Issuance of Class A ordinary shares (in shares) | shares | 13,478,384 | 13,478,384 | ||||||||||||||||
Appropriation to statutory reserves | 132,547 | (132,547) | ||||||||||||||||
Share based compensation | 239,506 | 239,506 | 239,506 | |||||||||||||||
Ending balance at Dec. 31, 2023 | ¥ 23 | $ 3 | ¥ 2 | $ 0 | ¥ 16,276,991 | $ 2,292,566 | ¥ 396,944 | $ 55,908 | ¥ 168,204 | $ 23,691 | ¥ (8,705,759) | $ (1,226,181) | ¥ 8,136,405 | $ 1,145,987 | ¥ 8,136,405 | $ 1,145,987 | ||
Ending balance (in shares) at Dec. 31, 2023 | shares | 2,093,280,340 | 2,093,280,340 | 144,778,552 | 144,778,552 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ 401,123 | ¥ 2,847,933 | ¥ 488,246 | ¥ 578,653 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Foreign exchange gain, net | (418) | (2,968) | (10,661) | (12,441) |
Loss on disposal of property and equipment | 1,791 | 12,713 | 9,884 | 4,834 |
Depreciation and amortization | 85,153 | 604,580 | 391,936 | 465,384 |
Amortization of operating lease right-of-use assets | 197,076 | 1,399,217 | 854,646 | 672,910 |
Change in the fair value of derivative asset bifurcated from Series B Senior Secured Notes | 6,381 | |||
Impairment of long-lived assets | 700 | 5,200 | 221,810 | 21,368 |
Gain from extinguishment of Series B Senior Secured Notes | (124,139) | |||
Allowance for prepayments and accounts receivable | (450) | (3,194) | 18,069 | 4,467 |
Deferred income tax | (19,946) | (141,613) | 494,472 | (64,221) |
Interest expenses of convertible senior notes | 19,855 | 35,490 | ||
Share-based compensation expenses | 33,734 | 239,506 | 398,008 | 302,734 |
Reversal for SEC settlement | (1,146,474) | |||
Donation of inventory | 3,889 | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (3,054) | (21,685) | (20,994) | (22,431) |
Inventories | (139,202) | (988,322) | (604,055) | (316,673) |
Receivables from online payment platforms | (8,766) | (62,241) | 19,640 | (145,834) |
Prepaid expenses and other current assets | (68,928) | (489,374) | (60,514) | (101,868) |
Other non-current assets | (30,460) | (216,260) | (64,132) | (20,548) |
Accounts payable | 52,565 | 373,203 | 147,676 | 84,005 |
Accrued expenses and other liabilities | 95,116 | 675,313 | 107,095 | 254,094 |
Deferred revenues | 3,670 | 26,056 | 1,154 | 8,038 |
Operating lease liabilities | (203,104) | (1,442,016) | (875,653) | (637,243) |
Payable for equity litigants settlement | 11,880 | 84,348 | (1,398,906) | 155,314 |
Net cash provided by operating activities | 408,516 | 2,900,425 | 19,818 | 123,447 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchases of property and equipment | (387,360) | (2,750,220) | (781,676) | (173,217) |
Payment for land use right | (912) | (6,478) | (19,344) | |
Cash received from disposal of property and equipment | 279 | 1,982 | 2,974 | 1,490 |
Purchases of short-term investments | (218,313) | (1,550,000) | ||
Proceeds received from maturity of short-term investments | 204,228 | 1,450,000 | 250,000 | |
Repayment of contribution from noncontrolling interest in a subsidiary | (77,936) | |||
Floating interest received from structured deposits | 3,175 | 22,545 | ||
Purchases of term deposit | (92,611) | (657,527) | ||
Proceeds received from maturity of term deposit | 6,000 | 42,599 | ||
Net cash (used in)/provided by investing activities | (485,514) | (3,447,099) | (798,046) | 337 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from issuance of convertible senior preferred shares | 63,380 | 1,514,660 | ||
Repayment of convertible senior notes | (1,560,105) | |||
Repayment of Series B Secured Notes (the "New Notes") | (779,535) | |||
Net cash provided by/(used in) financing activities | (2,276,260) | 1,514,660 | ||
Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash | 1,042 | 7,398 | 77,133 | (22,215) |
Net (decrease)/ increase in cash and cash equivalents and restricted cash | (75,956) | (539,276) | (2,977,355) | 1,616,229 |
Cash and cash equivalents and restricted cash at beginning of years | 503,939 | 3,577,919 | 6,555,274 | 4,939,045 |
Cash and cash equivalents and restricted cash at end of years | 427,983 | 3,038,643 | 3,577,919 | 6,555,274 |
Supplemental disclosures of cash flow information: | ||||
Interests received | 14,332 | 101,753 | 88,517 | 103,863 |
Interests paid, net of capitalization | (34,148) | |||
Income taxes paid | (60,106) | (426,744) | (68,802) | (1,200) |
Supplemental disclosures of non-cash activities: | ||||
Purchase of property and equipment included in accrued expenses and other liabilities | 61,769 | 438,554 | 120,227 | 46,659 |
Obtaining right-of-use assets in exchange for lease liabilities | 628,730 | ¥ 4,463,919 | 1,552,538 | 947,853 |
Shares issued in restructuring of the Notes | ¥ 601,408 | |||
Reconciliation of cash, cash equivalents and restricted cash: | ||||
Cash and cash equivalents | 412,077 | 6,477,636 | ||
Current restricted cash | 9,307 | 58,200 | ||
Non-current restricted cash | 6,599 | 19,438 | ||
Total cash, cash equivalents and restricted cash in the statements of cashflows | $ 427,983 | ¥ 6,555,274 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2023 | |
ORGANIZATION | |
ORGANIZATION | 1. ORGANIZATION Luckin Coffee Inc. (the “Company”) was incorporated in the Cayman Islands on June 16, 2017 under the Cayman Islands Companies Act (2021 Revision) (the “Companies Act”) as an exempted company with limited liability. The Company through its consolidated subsidiaries and variable interest entity (the “VIE”) (collectively, the “Group”) are principally engaged in the provision of retail services for high-quality and affordable freshly brewed drinks and pre-made food and beverage items in the People’s Republic of China (the “PRC” or “China”). (a) Entity Date of incorporation Place of incorporation Percentage of direct or indirect ownership Principal activities Subsidiaries: Luckin Coffee Investment Inc. (“Luckin BVI”) June 16, 2017 British Virgin Islands 100 % Investment holding Luckin Coffee International Holdings Inc. (“Luckin International BVI”) February 20, 2020 British Virgin Islands 100 % Investment holding Luckin Coffee (SGP) PTE. LTD (“Luckin Singapore”) August 11, 2022 Singapore 100 % Singapore store operating Luckin Coffee (Hong Kong) Limited (“Luckin HK”) June 19, 2017 Hong Kong 100 % Investment holding Luckin Coffee Trading (Hong Kong) Limited (“Luckin Trading HK”) April 1, 2022 Hong Kong 100 % International trading of materials for products Luckin Coffee Roasting (Hong Kong) Limited (“Luckin Roasting”) April 12, 2019 Hong Kong 100 % Investment holding Luckin Coffee Roastery (Hong Kong) Limited (“Luckin Roastery”) April 30, 2019 Hong Kong 100 % Investment holding Beijing Luckin Coffee Co., Ltd. (“Beijing Wholly Foreign Owned Enterprise”, or, “Beijing WFOE”) (1) / (2) October 31, 2017 PRC 100 % Retail services for freshly brewed drinks and pre-made food and beverage items and technical and consultation services Luckin Investment (Tianjin) Co., Ltd. (“Luckin TJ”) (1) / (5) December 7, 2017 PRC 100 % Investment holding Luckin Coffee Group Co., Ltd. (formerly as “Luckin Coffee (China) Co., Ltd”, “Luckin China”) (1) / (2) / (4) March 28, 2018 PRC 100 % Headquarter Luckin Coffee Roasting (Pingnan) Co., Ltd. (1) April 28, 2019 PRC 100 % Manufacture of materials for products Luckin Coffee Food (Jiangsu) Co., Ltd (1) May 27, 2022 PRC 100 % Manufacture of materials for products Variable Interest Entity: Beijing Luckin Coffee Technology Ltd. (“VIE”) (3) June 14, 2017 PRC License holder (1) Including their subsidiaries, collectively as the “PRC subsidiaries”. (2) On July 27, 2018, Beijing WFOE transferred all its 100% equity interest in its subsidiaries to Luckin China. (3) As of December 31, 2023, Mr. Jinyi Guo and Mr. Gang Wu are nominal shareholders of the VIE, holding 83.33% and 16.67% of the equity interest, respectively. As of the date of the report, the Company has terminated the contractual agreements entered into by and among the Beijing WFOE and VIE. (4) As of December 31, 2023, Luckin China had 68 direct and indirect wholly-owned subsidiaries. (5) As of December 31, 2023, Luckin TJ had one direct wholly-owned subsidiary. 1. ORGANIZATION (CONTINUED) (b) Consolidation: Overall The VIE is not involved in the business operations or fund planning of the Group. However, Luckin Coffee Inc. and its subsidiaries may transfer cash to the VIE by loans or capital support, subject to satisfaction of applicable government registration and approval requirements, to satisfy the VIE’s miscellaneous cash demands, such as social insurance fees for employees whose social insurance accounts were registered under the VIE. In 2021, 2022 and 2023, the PRC subsidiaries transferred RMB18.8 million, RMB115.5 million and RMB11.1 million (US$1.6 million), respectively, to the VIE by loans or by capital support. In addition, the VIE may transfer cash as repayment of loans or, on an ad hoc basis, as working capital support to the PRC subsidiaries. In 2021, 2022 and 2023, the VIE transferred to the PRC subsidiaries RMB58.8 million, RMB104.1 million and RMB0.6 million (US$83.3 thousands), respectively. These funds were used for repayment of loans or to support operations of the PRC subsidiaries. In addition, the Group and the VIE do not currently have any plans to distribute earnings or settle amounts owed under the VIE Agreements. The following is a summary of the key VIE Agreements: Exclusive Option Agreement Pursuant to the Exclusive Option Agreement entered into amongst the VIE, the Nominee Shareholders and Beijing WFOE, the Nominee Shareholders granted Beijing WFOE or its designated party, an irrevocable and exclusive right to purchase all or part of the equity interests held by the Nominee Shareholders in the VIE at its sole discretion, to the extent permitted under the PRC laws, at an amount equal to the minimum consideration permitted under the applicable PRC law and administrative regulations. Any proceeds received by the Nominee Shareholders from the exercise of the options shall be remitted to Beijing WFOE or its designated party, to the extent permitted under PRC laws. In addition, the VIE and the Nominee Shareholders have agreed that without prior written consent of the Beijing WFOE, they will not create any pledge or encumbrance on their equity interests in the VIE, except for the pledge placed pursuant to the Share Pledge Agreement, or transfer or otherwise dispose of their equity interests in the VIE. The term of the agreement remains effective as long as each Nominee Shareholder remains as a shareholder of the VIE. Beijing WFOE may terminate the agreement at its sole discretion, whereas under no circumstances may the VIE or the Nominee Shareholders terminate the agreement. Share Pledge Agreement Pursuant to the Share Pledge Agreement entered into amongst Beijing WFOE, the VIE, and the Nominee Shareholders, the Nominee Shareholders pledged all of their equity interests in the VIE to Beijing WFOE as collateral to secure their obligations. Beijing WFOE shall have the right to collect dividends generated by the pledged shares during the term of the pledge. If the VIE or the Nominee Shareholders breach their respective contractual obligations under the share pledge agreement, Beijing WFOE, as pledgee, will be entitled to rights, including the right to dispose the pledged equity interests entirely or partially. The Nominee Shareholders agreed not to transfer or otherwise create any encumbrance on their equity interests in the VIE without prior consent of Beijing WFOE. The Equity Pledge Agreement will remain effective until all the obligations have been satisfied in full and the pledged equity interests have been transferred to Beijing WFOE and/or its designee. The Company completed the registration of the pledge of equity interests in the VIE with the relevant office of Administration for the Industry and Commerce in accordance with the PRC Property Rights Law. 1. ORGANIZATION (CONTINUED) Proxy Agreement and Power of Attorney Pursuant to the Proxy Agreement and Power of Attorney entered into amongst Beijing WFOE, the VIE, and the Nominee Shareholders, each Nominee Shareholder appointed Beijing WFOE to act on behalf of the Nominee Shareholders as exclusive agent and attorney with all respect to all matters concerning the shareholding including but not limited to (1) call and attend shareholders’ meetings of the VIE; (2) exercise all the shareholders’ rights, including voting rights; and (3) appoint at its sole discretion, a substitute or substitutes to perform any or all of its right of the VIE. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each Nominee Shareholder remains as a shareholder of the VIE unless Beijing WFOE issues adverse instructions in writing. The Proxy Agreement and Power of Attorney was subsequently reassigned to the Company. Master Exclusive Service Agreement Pursuant to the Master Exclusive Service Agreement entered into between Beijing WFOE and the VIE, Beijing WFOE or its designated entities affiliated has the exclusive right to provide the VIE with technical support and business support services in return for fees equal to 100% of the consolidated net profits of the VIE. Beijing WFOE has sole discretion in determining the service fee charged to the VIE under this agreement. Without Beijing WFOE’s prior written consent, the VIE shall not, directly and indirectly, obtain the same or similar services as provided under this agreement from any third party, or enter into any similar agreement with any third party. Beijing WFOE will have the exclusive ownership of all intellectual property rights developed by performance of this agreement. This agreement will remain effective until it is terminated at the discretion of Beijing WFOE or upon the transfer of all the shares of the VIE to Beijing WFOE and/or a third party designated by Beijing WFOE. The Company is obligated and hereby undertakes to provide unlimited financial support to the VIE, to the extent permissible under the applicable PRC law and regulations, whether or not any such operational loss is actually incurred. The Company will forego the right to seek repayment in the event the VIE are unable to repay such funding. Business Cooperation Agreement Pursuant to the Business Cooperation Agreement entered into amongst Beijing WFOE, the VIE and the Nominee Shareholders, the VIE and the Nominee Shareholders agreed and covenanted that, without obtaining Beijing WFOE’s written consent, the VIE shall not, and the Nominee Shareholders shall cause the VIE not to, engage in any transaction which may materially affect the VIE’s assets, obligations, rights or operation. The VIE shall accept, and the Nominee Shareholders shall cause the VIE to accept, suggestions raised by Beijing WFOE over the employee engagement and replacement, daily operation, dividend distribution and financial management systems of the VIE. The Business Cooperation Agreement will remain effective until it is terminated at the discretion of Beijing WFOE or upon the transfer of all the shares of the VIE to Beijing WFOE and/or its designated party. In the opinion of the Group’s management and the Group’s PRC legal counsel, (i) the ownership structure of the VIE is not in violation with any existing PRC laws and regulations in any material respect; and (ii) each of the VIE Agreements is valid, legally binding and enforceable to each party of such agreements and will not result in any violation of PRC laws or regulations currently in effect. 1. ORGANIZATION (CONTINUED) Business Cooperation Agreement (continued) Uncertainties in the PRC legal system could cause the relevant regulatory authorities to find the current VIE Agreements and businesses to be in violation of any existing or future PRC laws or regulations. If the Company, Beijing WFOE or any of its current or future VIE are found in violation of any existing or future laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, which may include but not limited to, confiscating the income of the primary beneficiary, and the VIE, revoking the business licenses or operating licenses of the primary beneficiary, and VIE, shutting down the Group’s servers, discontinuing or placing restrictions or onerous conditions on the Group’s operations, requiring the Group to undergo a costly and disruptive restructuring or enforcing actions that could be harmful to the Group’s business. Any of these actions could affect the legality and enforceability of the contractual arrangements with the VIE and, consequently, cause the primary beneficiary to lose the rights to direct the activities of the VIE or the right to receive their economic benefits and the ability to consolidate the financial results of the VIE. There are no assets that are pledged or collateralized for the VIE’ obligations and which can only be used to settle the VIE’s obligations, except for registered capital. Relevant PRC laws and regulations restrict the VIE from transferring a portion of their net assets, equivalent to the balance of its share capital and statutory reserve, to the Company in the form of loans and advances or cash dividends. Please refer to Note 11 for disclosure of restricted net assets. As the VIE is incorporated as limited liability company under the PRC Company Law, creditors of the VIE do not have recourse to the general credit of the Company for any of the liabilities of the VIE. There were no other pledges or collateralization of the VIE’s assets. The following table sets forth the assets, liabilities, results of operations and changes in cash and cash equivalents and restricted cash of the consolidated VIE structured by the Contractual Agreements: For the year ended December 31, 2022 2023 RMB RMB US$ Total assets 6,865 2 — Total liabilities 2,864 4,336 610 For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Total net revenues — — — — Net loss (22,750) (23,542) (9,233) (1,300) For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Net cash (used in)/provided by operating activities (58,781) — — — Net cash used in investing activities — — — — Net cash (used in)/ provided by financing activities — — — — Effect of foreign exchange rate changes on cash and cash equivalents — — — — Net increase/(decrease) in cash and cash equivalents (58,781) — — — Cash and cash equivalents and restricted cash at beginning of year 58,781 — — — Cash and cash equivalents and restricted cash at end of year — — — — |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). (b) Principles of consolidation The consolidated financial statements of the Group include the financial statements of the Company, its subsidiaries and the VIE for which the Company is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE have been eliminated upon consolidation. (c) Non-controlling interests For the Group’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Group. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of operations and comprehensive income to distinguish the interests from that of the Group. (d) Use of estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenues and expenses during the reporting periods. Accounting estimates reflected in the Group’s consolidated financial statements include, but not limited to, estimates for allowance for credit losses of accounts receivable and other receivables, inventory provision, and short-term investments, useful lives and impairment of long-lived assets, revenue recognized from breakage amount, refund liability, accounting for deferred income taxes and uncertain tax benefits, valuation allowance for deferred tax assets, fair value of share-based payments, provision of contingent liabilities, and valuations for derivative financial instruments, convertible senior preferred shares and convertible senior notes. Changes in facts and circumstances may result in revised estimates. (e) Foreign currency The functional currency of the PRC entities in the Group is Chinese Renminbi (“RMB”) as determined based on ASC 830, “Foreign Currency Matters”, while the functional currency of the Company and its subsidiaries incorporated outside of the PRC is the United States dollar (“US$”), the HongKong dollar (“HKD”), or the Singapore dollar (“SGD”). The financial statements of the Company and its subsidiaries incorporated outside of the PRC are translated from the functional currency to the reporting currency, the RMB. The Group uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Equity accounts other than earnings generated in current year are translated into RMB at the appropriate historical rates. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders’ equity. Foreign currency transactions denominated in currencies other than the functional currencies are translated into the functional currencies using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currencies using the applicable exchange rates at the balance sheet dates. Non-monetary items that are measured in terms of historical costs in foreign currency are translated into the functional currencies using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of operations and comprehensive income. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Convenience translation Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB 7.0999 on December 29, 2023, the last business day in fiscal year 2023, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other rate. (g) Cash and cash equivalents Cash and cash equivalents consist of demand deposits, highly-liquid investments placed with banks which are unrestricted as to withdrawal or use, and have original maturities of three months or less. (h) Short - term investments Short - term investments purchased primarily represent structured deposits that are principal - protected and provide returns in the form of both fixed and variable interests with original maturities of less than one year. ( i) Term deposits Term deposits represent term deposits or certificate of deposits which bear fixed interest rate. The term - deposits or certificate of deposits with remaining maturities less than one year were classified as “Term deposit - current”, while term deposits or certificate of deposits with remaining maturities exceeding one year for which the Group has the positive intent to hold for more than one year were classified as “Term deposit - noncurrent”. (j) Restricted cash Restricted cash is reported separately on the face of the Consolidated Balance Sheets and is included in the total cash and cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows. The Group’s restricted cash mainly represents security deposits held in bank accounts for bank guarantee letters and prepaid card business. Restricted cash is classified as current and non-current based on the duration of the restriction. (k) Accounts receivable Accounts receivable represents the amounts that the Group has an unconditional right to consideration. Accounts receivable that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for credit losses. As of December 31, 2022 and 2023, the allowance for credit losses for the Group’s account receivable was RMB0.2 million and RMB nil million (US$nil), respectively. (l) Expected Credit Losses The Group’s account receivable, receivables from online payment platforms, other receivables and other certain financial assets are within the scope of ASU No. 2016-13. The Group maintains an estimated allowance for credit losses to reduce them to the amount that it believes will be collected. When developing an estimation of expected credit losses, the Group applies the historical loss experience with appropriate adjustment. The Group considers available information relevant to assessing the collectability of cash flows. This information may include internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. The Group adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that these financial assets are likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. The balance of these financial assets is written off after all collection efforts have been exhausted. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Inventories Inventories are stated at the lower of cost or net realizable value. Cost of inventory are determined using the weighted average method. The Company recorded inventory reserves to write down the cost of inventory to the estimated net realizable value due to obsolete and slow-moving inventories, which is dependent upon factors such as historical and forecasted consumer demand, and application of the specific identification method. As of December 31, 2022 and 2023, inventory reserves were RMB33.4 million and RMB30.0 million (US$4.2 million), respectively. Write downs are recorded in cost of materials in the consolidated statements of operations and comprehensive income. (n) Property and equipment Property and equipment primarily consist of office buildings, store operating equipment, mechanical equipment, leasehold improvements, office equipment and others. Property and equipment are stated at cost less accumulated depreciation and any recorded impairment. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated useful life Store operating equipment 5 years Office equipment and others 3-5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets Mechanical equipment 10 years Office buildings 40-50 years Direct costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment items and the depreciation of these assets commences when the assets are ready for their intended use. Repair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful life of property and equipment are capitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost, accumulated depreciation and relevant impairment, with any resulting gain or loss reflected in the consolidated statements of operations and comprehensive income. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o) Impairment of long-lived assets other than goodwill The Group evaluates its long-lived assets, including property and equipment with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that indicate that the carrying amount of an asset or asset group may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows of the asset or asset group is less than the carrying amount of the assets or the asset groups, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets or the asset groups over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets or asset groups based on forecasted future sales and operating costs, using internal projections, when the market prices are not readily available. The adjusted carrying amount of the assets become new cost basis and are depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Group estimates of future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales and gross profits and estimating useful lives of the assets or asset groups. These estimates can be affected by factors such as future sales results, store closure plans, economic conditions, business interruptions, interest rates and government regulations that can be difficult to predict. If actual results and conditions are not consistent with the estimates and assumptions used in its calculations, the Group may be exposed to additional impairments of long-lived assets. For the years ended December 31, 2021, 2022 and 2023, the Group recognized impairment of long-lived assets other than goodwill of RMB21.4 million, RMB221.8 million and RMB5.2 million (US$0.7 million), respectively. Impairment loss of long-lived assets mainly represented RMB21.4 million for the asset group related to store operating equipment and others for the year ended December 31, 2021, and RMB221.8 million for the asset group related to Luckin Coffee EXPRESS machines for the year ended December 31, 2022 and RMB5.2 million mainly for the assets in relation to Luckin Tea for the year ended December 31, 2023. (p) Derivative financial instrument All contracts that meet the definition of a derivative are recognized on the Group’s consolidated balance sheets as either assets or liabilities and recorded at fair value. The Group’s derivative financial instruments primarily consisted of derivative asset bifurcated from the New Notes (see Note 12 Convertible Senior Notes for details). Changes in the fair value of derivatives are recognized in the Group’s consolidated statements of operations and comprehensive income as they were not qualified for hedge accounting. As of December 31, 2022 and 2023, there was no balance of the derivative instruments. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) Fair value Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurement for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a three-tier fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group’s financial instruments include cash and cash equivalents and restricted cash, term deposits, short term investments, accounts payable, receivables from online payment platforms, accounts receivable and other receivables and payables. Cash equivalents, short term investments, term deposits and security deposits held in bank accounts for bank guarantee letters which is included in restricted cash are measured at fair value based on the pervasive interest rates in the market, which are also the interest rates as stated in the contracts with the banks. The Group classifies the valuation techniques that use the pervasive interest rates input as Level 2 of fair value measurements. The carrying values of financial instruments except for above mentioned items are measured at amortized cost, which approximate their fair values due to their short-term maturities. (r) Revenue recognition For the year ended December 31, 2021 2022 2023 2023 RMB % RMB % RMB % US$ % (in thousands, except for percentages) Net revenues: Revenues from product sales 6,659,218 83.6 10,223,720 76.9 18,677,390 75.0 2,630,655 75.0 Freshly brewed drinks 5,909,655 74.2 9,079,349 68.3 16,877,880 67.8 2,377,200 67.8 Other products 395,573 5.0 686,837 5.2 1,241,868 5.0 174,913 5.0 Others 353,990 4.4 457,534 3.4 557,642 2.2 78,542 2.2 Revenues from partnership stores 1,306,105 16.4 3,069,262 23.1 6,225,776 25.0 876,882 25.0 Total net revenues 7,965,323 100.0 13,292,982 100.0 24,903,166 100.0 3,507,537 100.0 A description of the principal revenue generating activities of the Group is as follows: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Revenues from product sales The Group offers freshly brewed drinks and other products and services (including pre-made food, beverage and merchandise items, membership and delivery services) mainly through its physical self-operated stores and online e-commerce platforms. Total revenues from product sales were RMB6,659.2 million, RMB10,223.7 million and RMB18,677.4 million (US$2,630.7 million) for the years ended December 31, 2021, 2022 and 2023, respectively, including revenues from self-operated stores of RMB6,528.2 million, RMB9,786.2 million and RMB17,880.1 million (US$2,518.4 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Revenues from product sales include: ● Revenues from freshly brewed drinks . The Group offers an array of freshly brewed drinks, with a focus on freshly brewed coffee, supplemented with non-coffee drinks such as Luckin Exfreezo series. Net revenues from freshly brewed drinks were RMB 5,909.7 million, RMB 9,079.3 million and RMB 16,877.9 million (US $2,377.2 million) for the years ended December 31, 2021, 2022 and 2023, respectively. ● Revenues from other products . Other products mainly consist of food and beverage items, such as light meals and various merchandise, including premium instant coffee, inspirational cups and other consumer goods. Net revenues from other products were RMB 395.6 million, RMB 686.8 million and RMB 1,241.9 million (US $174.9 million) for the years ended December 31, 2021, 2022 and 2023, respectively. ● Revenues from others . Revenues from others mainly include delivery fees derived from self-operated stores paid by the customers and membership fees collected from the subscribed members. Revenues from others were RMB 354.0 million, RMB 457.5 million and RMB 557.6 million (US $78.5 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Customers place orders for products mainly through the Group’s self-developed APP, Weixin mini-program and other third-party platforms with different options to pay through third-party online payment platforms. The Group recognizes revenues at point in time when the Group satisfies its performance obligation upon the control of the promised products are transferred to the customers or distributors. Delivery service is provided if it is a delivery order. Delivery service is determined as an activity to fulfill the Group’s promise to transfer the products, rather than another distinct performance obligation as it is performed before the customers obtain control of the products. Revenues represent the amount of consideration that the Group is entitled to, including products settlement price and delivery fees charged to customers, net of value-added tax (“VAT”), surcharges, discounts and returns, if any. There is no significant financing component or variable consideration in the transaction price. The Group reasonably estimates the possibility of return based on the historical experience, and there were no material returns historically. When a customer receives a discount for purchasing a bundle of goods, that discount is allocated proportionately among the performance obligations using the relative stand-alone selling price method. The Group also provides subscription membership service, which provides the members the access to an evolving suite of benefits, such as extra discount, limited-time promotions and special offer on selected product offerings and new products, which represent a single stand-ready obligation. Membership fees are paid for at the time of or in advance of delivering the services. Revenues from such arrangements are recognized over the subscription period on a straight-line basis. The Group evaluates whether it is appropriate to record the gross amount of product sales and related costs acting as a principal or the net amount acting as an agent. The Group is a principal for the substantial majority of product sales as the Group produces or obtains control of the specified goods before they are transferred to the customers, except for a portion of revenue from products sold on the Group’s own e-commerce platform, for which the Group’s obligation is to facilitate third-party merchants in fulfilling their performance obligation for the goods displayed on the Group’s own e-commerce platform acting as an agent. Revenue from product sales as an agent of RMB2.0 million, RMB1.2 million and RMB0.1 million (US$12.4 thousands) for the years ended December 31, 2021, 2022 and 2023, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Revenues from partnership stores The Group cooperates with selective retail partners to operate the partnership stores. Under retail partnership model, the Group sells materials such as coffee beans, milk, food and related products to retail partners and shares simplified and standardized operation experience and provides use right of brand name and sales and supply chain management in exchange for a profit-sharing on retail sales. Retail partners are responsible for pre-opening capital investments and operating costs. Revenues from partnership stores mainly consist of sales of materials, equipment and store construction-related materials to the partnership stores, profit-sharing revenue from the partnership stores for using the Luckin Coffee or Luckin Tea brand as well as integrated store operation solution, and other services including delivery services and pre-opening services. For material sales, the Group’s performance obligation is to transfer required materials at fixed unit price to retail partners. The Group provides allowance for materials sales as consideration payable to retail partners when the partnership stores sell products to customers catering for the Group’s promotion strategy. Allowance for partnership stores is accounted for as a reduction of the transaction price, which is usually determined upon the completion of each order. Therefore, sales of materials are generally recognized on the partnership stores’ acceptance of materials, the settlement price is then deducted by the allowance provided to partnership stores that is determined upon the products are sold in partnership stores, if any. Revenue from material sales to partnership stores were RMB834.7 million, RMB2,011.2 million and RMB4,157.6 million (US$585.6 million) for the years ended December 31, 2021, 2022 and 2023, respectively. For equipment and store construction-related materials sales, the Group’s performance obligation is to transfer equipment at a fixed consideration with standard warranty provision and store construction-related materials to retail partners. The standard warranty is not a distinct performance obligation as it is intended to provide by the Group’s suppliers to the partners an assurance that the equipment complies with agreed-upon functionality described in the contract. Revenue from sales of equipment which needs installation and testing for the intended use is recognized at point in time when equipment is installed and tested to be ready to use. Revenue from sales of store construction-related materials is recognized at point in time upon receipt. Revenue from equipment and store construction-related materials sales to partnership stores were RMB178.8 million, RMB278.1 million and RMB877.2 million (US$123.5 million) for the years ended December 31, 2021, 2022 and 2023, respectively, and warrant liability was immaterial. For profit-sharing, the Group provides the integrated store operation solution, which includes the right to use brand name of Luckin Coffee or Luckin Tea, products and brand name promotion activities, unified ordering and payment collections platform, and basic operation guidance on store management and sanitary conditions, etc., in exchange for the profit-sharing based on the gross profit of retail sales. The Group recognizes the profit-sharing revenue from partnership stores at a variable consideration calculated using a tiered percentage approach, which is based upon the partnership stores’ monthly gross profits. The Group offers a price concession to its retail partners by waiving the new stores’ profit-sharing for a period of time ranging from the first one month to three months, which is subject to the Group’s adjustment. Price concession for profit-sharing is accounted for as a reduction of the transaction price and deducts the revenue directly. Revenue from partnership stores’ profit-sharing were RMB144.8 million, RMB427.9 million and RMB680.2 million (US$95.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively. The Group also provides other services including pre-opening services such as design of store decoration and provision of decoration materials and delivery service, which have distinct value to partnership stores and are recognized upon completion of the respective performance obligations. Other revenues from partnership stores were RMB147.8 million, RMB352.1 million and RMB510.8 million (US$71.9 million) for the years ended December 31, 2021, 2022 and 2023, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Contract balance When either party to a revenue contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. The Group presents any unconditional rights to consideration separately as a receivable. The Group does not have material contract asset. The balance of accounts receivable, net of RMB0.2 million and RMB nil million (US$ nil) allowance for doubtful accounts, were RMB58.8 million and RMB80.7 million (US$11.4 million) as of December 31, 2022 and 2023, respectively. Contract liability is mainly related to prepaid coupons to be provided to customers. Customers pay in advance for prepaid coupon. All prepaid coupons are stored in the “Coffee Wallet” of the customers’ registered accounts for future use with a three-year validity period. Cash received from the sales of prepaid coupons are recognized as deferred revenues which are contract liabilities under ASC 606 and recognized as revenue when the customer redeems the coupons. However, a portion of the contract liability recognized as revenue may relate to coupons that the Company expects to expire, which is considered as a breakage amount. When the Company determines that it expects to be entitled to breakage, the estimated breakage is recognized as revenue in proportion to the pattern of rights exercised by the customer. As of December 31, 2022 and 2023, the balance of deferred revenues was RMB97.4 million and RMB123.4 million (US$17.4 million), respectively. Majority of the balance of deferred revenue as of December 31, 2022 was recognized as revenue in the year of 2023. (s) Costs of materials, store rental and other operating costs Costs of materials consisted primarily of cost for coffee beans and coffee condiments, pre-made food and beverage items, packaging, supplies and warehouse. Store rental and other operating costs consisted primarily of rental expense of stores, staff costs, and utilities, etc. (t) Delivery expenses Delivery expenses are the delivery service fee for delivery orders. The Group incurred delivery expenses of RMB819.5 million, RMB1,373.2 million and RMB2,010.7 million (US$283.2 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Delivery expenses are separated out of sales and marketing expenses from the fiscal year 2021 to optimize the disclosure and better reflect the nature of expenses. This reclassification is retrospectively applied. (u) Sales and marketing expenses Sales and marketing expenses consisted primarily of advertising expenditure, commission fees for third-party delivery platforms and subcontract service fee. Advertising expenditures are expensed when incurred and are included in sales and marketing expenses, which amounted to RMB243.7 million, RMB338.0 million and RMB801.1 million (US$112.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively. (v) General and administrative expenses General and administrative expenses consist primarily of payroll and related expenses for employees involved in general corporate functions, research and development expenses, share-based compensation, professional fees and daily office expenses and rental fees for general corporate functions. Research and development expenses are included in general and administrative expenses, which are mainly payroll expenses, employee benefits, and other headcount-related expenses associated with platform development and data analysis to support the Group’s business operations. The Group charged RMB251.7 million, RMB301.4 million and RMB338.8 million (US$47.7 million) of research and development costs to expense for the years ended December 31, 2021, 2022 and 2023, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (w) Store preopening and other expenses Store preopening expenses mainly include store rental costs during the start-up of new stores. Other expenses include lease exit costs, such as the write offs of prepaid store rental costs, deposits and leasehold improvements. Costs incurred in connection with the start-up and closure of stores are expensed as incurred. (x) Leases The Group enters into lease agreements to have leasing for self-operated stores, office spaces, and other corporate assets that the Group utilizes. The Group categorizes leases with contractual terms longer than twelve months as either operating or finance lease. However, the Group did not enter into finance leases for any of the periods presented. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The rent under the majority of the current self-operated store lease agreements is generally payable in one of three ways: (i) fixed rent; (ii) the higher of a fixed base rent or a percentage of the store’s sales; or (iii) a percentage of the store’s sales. Right-of-use (“ROU”) assets represent the Group’s rights to use underlying assets for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease ROU assets The right-of-use assets are initially measured at cost, which comprise the initial amounts of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received. Operating lease liabilities Lease liabilities are initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the discount rate for the leases. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Lease payments included in the measurement of the lease liabilities comprise fixed lease payments, variable lease payments that depend on an index or a rate and any exercise price under a purchase option that the Group is reasonably certain to exercise. The Group generally has no renewal options and material residual value guarantees or material |
PRINCIPAL RISKS
PRINCIPAL RISKS | 12 Months Ended |
Dec. 31, 2023 | |
PRINCIPAL RISKS | |
PRINCIPAL RISKS | 3. PRINCIPAL RISKS (a) Credit risk Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short - term investment, term deposits, accounts receivable and receivables from online payment platforms. As of December 31, 2022 and 2023, the aggregate amounts of cash and cash equivalents and restricted cash of RMB3,316.8 million and RMB3,724.9 million (US$524.6 million), respectively, were held at major financial institutions located in the PRC and US$31.5 million and US$3.9 million (RMB27.8 million), respectively, were deposited with major financial institutions located outside the PRC. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions. On May 1, 2015, China’s new Deposit Insurance Regulation came into effect, pursuant to which banking financial institutions, such as commercial banks, established in China are required to purchase deposit insurance for deposits in RMB and in foreign currency placed with them. Such Deposit Insurance Regulation would not be effective in providing complete protection for the Group’s accounts, as its aggregate deposits are much higher than the compensation limit. However, the Group believes that the risk of failure of any of these Chinese banks is remote. Bank failure is uncommon in China and the Group believes that those Chinese banks that hold the Group’s cash and cash equivalents and restricted cash are financially sound based on public available information. Accounts receivable and receivables from online payment platforms are unsecured and denominated in RMB. Accounts receivable represents the amounts that the Group has an unconditional right to consideration. Receivables from online payment platforms are derived when the third-party payment platforms, on behalf of the Company, collect the proceeds of sales made by the Group to its customers. They are exposed to credit risk. The risk is mitigated by credit evaluations the Group performs on the selected corporate customers and online payment platforms that are highly reputable, and the deposits from partners as guarantees. There has been no default of payments in history. 3. PRINCIPAL RISKS (CONTINUED) (b) Business, customer, political, social and economic risks The Group participates in a dynamic and competitive industry and believes that changes in the following areas could have a material adverse effect on the Group’s future financial position, results of operations or cash flows: (i) Supplier risk — The Group’s operations rely on some suppliers for its major raw materials including coffee beans, dairy, sugar and syrup, pre-made products and coffee machine equipment. There can be no assurance that the Group will be able to secure the raw materials, pre-made products and coffee machine equipment supply from these suppliers. Any termination or suspension of the supply arrangements, any change in cooperation terms, or the deterioration of cooperation relationships with these suppliers may materially and adversely affect the Group’s results of operations. No supplier accounted for 10% or more of the Group’s total purchasing for the years ended December 31, 2021, 2022 and 2023. (ii) Customer risk – The success of the Group’s business going forward will rely in part on the Group’s ability to continue to obtain and expand business from existing customers while also attracting new customers. No customer accounted for 10% or more of the Group’s revenues for the years ended December 31, 2021, 2022 and 2023. (iii) Economic risk – The Group’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 20 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective. (c) Foreign currency exchange rate risk From July 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The appreciation/ (depreciation) of the US$ against RMB was approximately (2.3)%, 8.2% and 2.9% for the years ended December 31, 2021, 2022 and 2023, respectively. The functional currency and the reporting currency of the Company, Luckin BVI and Luckin HK, Luckin Roasting, Luckin Trading HK and Luckin Roastery are the US$ and the RMB, respectively. The functional currency of the PRC subsidiaries and the VIE is the RMB. All of the Group’s revenues and costs are denominated in RMB, while a portion of cash and cash equivalents are denominated in U.S. dollars. Any significant revaluation of RMB may materially and adversely affect the Group’s cash flows, revenues, earnings and financial position in U.S. dollars. (d) Currency convertibility risk The Group transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “ PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. (e) Interest rate risk The Group is exposed to interest rate risk on its interest-bearing assets and liabilities. As part of its asset and liability risk management, the Group reviews and takes appropriate steps to manage its interest rate exposures on its interest-bearing assets and liabilities. The Group has not been exposed to material risks due to changes in market interest rates, and not used any derivative financial instruments to manage the interest risk exposure during the years presented. |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2023 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | 4. ACCOUNTS RECEIVABLE, NET As of December 31, 2022 2023 RMB RMB US$ Receivables due from partners 20,235 31,611 4,452 Receivables due from corporate customers 38,738 49,054 6,909 Accounts receivable 58,973 80,665 11,361 Allowance for credit losses (191) — — Accounts receivable, net 58,782 80,665 11,361 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORIES | |
INVENTORIES | 5. INVENTORIES As of December 31, 2022 2023 RMB RMB US$ Raw materials 886,336 1,487,226 209,471 Packaging and other supplies 289,537 651,634 91,781 Pre-made food and beverage items 30,594 65,140 9,175 1,206,467 2,204,000 310,427 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | 12 Months Ended |
Dec. 31, 2023 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET As of December 31, 2022 2023 RMB RMB US$ Deductible input VAT 747,067 1,113,018 156,765 Prepaid rental and deposits 169,485 191,972 27,039 Prepayments for materials and advertising fees 108,638 134,956 19,008 Prepaid operating expenses 36,573 81,293 11,450 Interest receivables 204 4,183 589 Others 15,752 19,496 2,746 1,077,719 1,544,918 217,597 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 7. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: As of December 31, 2022 2023 RMB RMB US$ Store operating equipment 1,341,127 2,417,877 340,551 Leasehold improvements 1,126,562 2,235,034 314,798 Office equipment and others 177,259 315,291 44,408 Office buildings 811,666 480,792 67,718 Assets subject to operating leases — 346,223 48,764 Mechanical equipment 80,481 82,303 11,592 Construction in progress 53,103 345,904 48,720 3,590,198 6,223,424 876,551 Less: accumulated depreciation (1,546,362) (2,036,969) (286,901) Less: impairment (176,458) (17,314) (2,439) 1,867,378 4,169,141 587,211 Depreciation expense was RMB465.2 million, RMB391.7 million and RMB604.0 million (US$85.1 million) for the years ended December 31, 2021, 2022 and 2023, respectively. In June 2018, the Group entered into a project cooperation agreement and a strategic cooperation agreement with Xiamen municipal government and UCAR Inc. (collectively as the “Tri-Party Agreement”), pursuant to which the Group acquired the new headquarters building under favorable pricing terms that came with commitments, including meeting certain requirements around tax contribution, operating performance and capital investments. On February 19, 2024, the Company entered into a new cooperation agreement with Xiamen municipal government, in which the commitments for the favorable pricing terms were modified. As of the date of this annual report, the Group is in the process of obtaining the real property ownership certificate for its headquarters. As of December 31, 2022, the balance of impairment for property and equipment was RMB176.5 million, which consisted of RMB 175.7 million for store operating equipment (including RMB167.1 million for the asset group related to Luckin Coffee EXPRESS) and RMB 0.8 million for office equipment and others. During the year ended December 31, 2022 , impairment for property and equipment of RMB220.7 million (US$32.0 million) was provided, which was mainly related to a full impairment for Luckin Coffee EXPRESS machines due to historical underperformance and updated strategy and business projections for Luckin Coffee EXPRESS machines determined by the management. Impairment provision of RMB107.8 million for Luckin Coffee EXPRESS and RMB 17.0 million for store operating equipment and others were written off for the year ended December 31, 2022. As of December 31, 2023, the balance of impairment for property and equipment was RMB17.3 million (US$2.4 million), which mainly consisted of RMB 11.7 million for store operating equipment and RMB 5.6 million for office equipment and others (including RMB 4.5 million for assets in relation to Luckin Tea). During the year ended December 31, 2023, impairment for property and equipment of RMB5.2 million (US$0.7 million) was provided, which was mainly related to a full impairment for assets in relation to Luckin Tea due to the permanent closure of related business. Impairment provision of RMB164.6 million for store operating equipment and others, which primarily consisted of provision for Luckin Coffee EXPRESS, were written off for the year ended December 31, 2023. |
OTHER NON-CURRENT ASSETS, NET
OTHER NON-CURRENT ASSETS, NET | 12 Months Ended |
Dec. 31, 2023 | |
OTHER NON-CURRENT ASSETS, NET | |
OTHER NON-CURRENT ASSETS, NET | 8. OTHER NON-CURRENT ASSETS, NET As of December 31, 2022 2023 RMB RMB US$ Long-term guarantee deposits (1) 181,477 397,737 56,020 Prepayments for equipment, net 119,009 354,005 49,861 Land use rights, net (2) 26,081 31,950 4,500 Prepaid leasehold improvements 1,177 2,874 405 Interest receivable non-current — 2,926 412 327,744 789,492 111,198 (1) Long-term guarantee deposits mainly represent rental and renovation deposits over 1 year. (2) Land use rights represent payments to the local government authorities for use of lands for 50 years , net of accumulated amortization. As of December 31, 2022 and 2023, the carrying amounts of land use rights are RMB 26.1 million and RMB 32.0 million, respectively, which represent the result of their original values of RMB 26.7 million and RMB 33.1 million, netting off accumulated amortization of RMB 0.6 million and RMB 1.2 million, respectively. Land use rights are amortized on a straight-line basis with amortization expenses of RMB 0.15 million, RMB 0.2 million and RMB 0.6 million (US $0.1 million) for the years ended December 31, 2021, 2022 and 2023, respectively. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2022 2023 RMB RMB US$ Payroll and welfare payables 372,795 746,185 105,098 Payables for the purchase of property and equipment 120,227 529,448 74,571 Payables for office supplies and utilities 238,466 455,001 64,086 Payables for delivery costs 210,779 260,153 36,642 Payables for advertising expenditures 55,261 132,211 18,622 Other taxes payables 105,970 102,241 14,400 Payables for professional service fees (1) 132,430 37,065 5,220 Others 139,497 294,673 41,504 1,375,425 2,556,977 360,143 (1) For the year ended December 31, 2023, the Company reversed RMB 44.7 million (US$ 6.3 million) of accrued professional service fees following the settlement with certain underwriters relating to indemnification of their defense costs in connection with the Fabricated Transactions. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 10. (a) Related parties Names of related parties Relationship with the Company Shanghai Tianshu Zhixin Semiconductor Co., Ltd (“Tianshu”) An entity significantly influenced by the Company’s controlling shareholder Goumei (Zhejiang) Information Technology Co., Ltd (“Goumei”) An entity significantly influenced by the Company’s controlling shareholder (b) Other than disclosed elsewhere, the Group had the following significant related party transactions for the years ended December 31, 2021, 2022 and 2023: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Services received from: —Goumei — 13,947 48,258 6,797 Assets purchased from —Tianshu — — 33,850 4,768 Total — 13,947 82,108 11,565 (c) As of December 31, 2022 2023 RMB RMB US$ Amounts due to: —Goumei 3,932 4,530 638 —Tianshu — 27,080 3,814 Total 3,932 31,610 4,452 |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
RESTRICTED NET ASSETS | |
RESTRICTED NET ASSETS | 11. RESTRICTED NET ASSETS The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries and VIE. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries and VIE. In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely the general reserve fund, the enterprise expansion fund and the staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual net profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and the staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The PRC subsidiaries were established as foreign-invested enterprises and therefore, are subject to the above mandated restrictions on distributable profits. For the years ended December 31, 2021, 2022 and 2023, profit appropriation to statutory reserve for the Group’s entities incorporated in the PRC was approximately RMB2.0 million, RMB33.0 million and RMB132.5 million (US$18.7 million), respectively. No appropriation to other reserve funds was made for any of the periods presented. Foreign exchange and other regulations in the PRC may further restrict the Company’s VIE from transferring funds to the Company in the form of dividends, loans and advances. Amounts restricted include paid-in capital and statutory reserves of the Company’s PRC subsidiaries and the VIE, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2022 and 2023, restricted net assets of the Company’s PRC subsidiaries and the VIE were RMB7,647.7 million and RMB10,061.4 million (US$1,417.1 million), respectively. |
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES | 12 Months Ended |
Dec. 31, 2023 | |
CONVERTIBLE SENIOR NOTES | |
CONVERTIBLE SENIOR NOTES | 12. CONVERTIBLE SENIOR NOTES On January 14, 2020, the Company closed the offering of US$400 million in aggregate principal amount of convertible senior notes due 2025 (the “Primary Notes Offering”) and on January 17, 2020, the Company completed the issuance of an additional US$60 million in aggregate principal amount of convertible senior notes due 2025 (the “Additional Notes Offering” and the notes offered under the Primary Notes Offering and the Additional Notes Offering collectively, the “Notes”), both of which were with a stated annual interest rate of 0.75%. The Company received aggregate net proceeds of approximately US$449.7 million from the Primary Notes Offering and the Additional Notes Offering. The Notes did not have any embedded conversion option which shall be bifurcated and separately accounted for as a derivative under ASC 815, nor did they contain a cash conversion feature. The Company accounted for the Notes in accordance with ASC 470, as a single debt instrument. No beneficial conversion feature (the “BCF”) was recognized as the set conversion price for the Notes was greater than the fair value of the ADSs price at date of issuance. The Company early adopted ASU No. 2020-06 using a modified retrospective method of transition. In applying the modified retrospective method, the Company should apply the guidance to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The convertible senior notes issued on January 14, 2020 automatically became immediately due and payable as a normal liability upon the appointment of the Joint Provisional Liquidators (the “JPLs”) on July 15, 2020 which constituted an event of default (“Event of Default”) pursuant to the indenture with respect to the Notes (see below). Therefore, the adoption of ASU 2020-06 does not have an impact on the Notes which has turned to a normal liability upon the default event before the beginning of the fiscal year 2021. Upon the occurrence of this Event of Default, 100% of the principal of, and accrued and unpaid interest on the Notes automatically became immediately due and payable. 12. CONVERTIBLE SENIOR NOTES (CONTINUED) Pursuant to the indenture with respect to the Notes, the Company was obligated to pay additional interest at a rate equal to 0.5% per annum of the principal amount of the Notes outstanding for: (1) each day during the six-month period beginning on, and including, the date that is six months after the last date of original issuance of the Notes, as the Company failed to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, as applicable ((i) after giving effect to all applicable grace periods thereunder and (ii) other than reports on Form 6-K); and (2) for so long as the restrictive legend on the Notes has not been removed as of the 380th day after the last date of original issuance of the Notes. The Company accrued the additional interest payable in the amount of US$1.1 million and US$2.0 million and charged against the interest expenses accordingly during the years ended December 31, 2020 and 2021, respectively. Due to the Event of Default, 100% of the principal of the Notes in the amount of US$460 million, the unpaid interest in the amount of US$3.3 million and US$6.8 million, and the additional interest in the amount of US$1.1 million and US$3.1 million were due and accrued as of December 31, 2020 and 2021, respectively. The Notes balances included the principal, the unpaid interest and the additional interest were recorded as non-current liabilities with total amount of US$464.4 million as of December 31, 2020 and current liabilities with total amount of US$469.9 million as of December 31, 2021. The accrued interest, additional interest and the unamortized issuance cost of the Notes with total amount of US$5.5 million, US$0.3 million and US $nil Subsequently in January 2022, a restructuring of the Notes was substantially consummated (as disclosed below), pursuant to which, the Notes were cancelled and the Company issued instructions to distribute certain consideration to all eligible holders of the Notes. The Group derecognized the Notes and recognized newly issued instruments upon the effectiveness of the restructuring in January 2022 and issuance of additional ADSs in April 2022 pursuant to the top-up mechanism of the restructuring. Following the restructuring of the Notes, the originally non-current liabilities recorded under the Notes before was compromised. As of December 31, 2022 and 2023, the balance of liabilities related to the Notes was both nil. Restructuring of the Notes On March 16, 2021, the Company announced that it entered into a restructuring support agreement (the “RSA”) with holders of a majority of the Notes in respect of a restructuring of the Company’s financial obligations under the supervision of the JPLs. On September 21, 2021, the Company announced that, in accordance with the terms of the RSA, it had filed a petition and summons for directions in the Cayman Court regarding a scheme of arrangement in respect of the Notes (the “Scheme”), which is a court approved arrangement in the Cayman Islands pursuant to the Companies Act. On December 1, 2021, the Company announced that at a meeting regarding the Scheme held on November 30, 2021, creditors representing approximately 97.7% in aggregate outstanding principal amount of the Notes voted unanimously to approve the Scheme and that accordingly, the Scheme was approved by the requisite majority of creditors. On December 14, 2021, the Company announced that the Cayman Court had sanctioned the Scheme. Effectiveness of the Restructuring On January 31, 2022, the Company announced that the Restructuring had been substantially consummated and the effective date of the Restructuring contemplated in the Scheme had occurred on January 28, 2022 (the “Restructuring Effective Date”). On January 28, 2022, the Notes were cancelled, and, in aggregate, the Company has issued consideration (collectively, the “Scheme Consideration”) totaling US$245.5 million of cash, US$109.9 million of 9.00% Series B Senior Secured Notes due 2027 (the “New Notes”) and 9,527,601 ADSs representing 76,220,808 class A ordinary shares, which included 291,699 ADSs issued on April 4, 2022 pursuant to the top-up mechanism under the Scheme, of which 25,004 ADSs were not claimed by creditors and therefore 200,032 Class A Ordinary Shares underlying such unclaimed ADSs were returned to the Company. The New Notes represent the Company’s only offshore debt securities. On January 31, 2022, the Company announced that (i) the Restructuring Effective Date occurred on January 28, 2022; (ii) on the Restructuring Effective Date (a) the Notes were cancelled; and (b) the Company issued the Scheme Consideration to all eligible Scheme creditors and the Holding Period Trustee (as applicable), in accordance with the terms of the Scheme. 12. CONVERTIBLE SENIOR NOTES (CONTINUED) In August 2022, the Group fully redeemed the New Notes. The aggregate redemption price of the New Notes was US$115.6 million, which constitutes the aggregate principal amount outstanding plus the aggregate accrued interest. The aggregate redemption price was paid from the Group’s available offshore cash balance. Following the redemption of the New Notes, US$18.3 million (approximately RMB124.1 million) gain from extinguishment of Series B Senior Secured Notes was recognized in the consolidated statement of operations and comprehensive income. According to ASC815, several options were identified and shall be bifurcated from the New Notes and separately accounted for as a derivative with fair value changes to be charged in the consolidated statements of operations and comprehensive income. Derivative asset bifurcated from the New Notes was US$5.4 million on the date of initial recognition, and marked to fair value of US$4.5 million on the derecognition date, with the fair value loss of approximately US$0.9 million (RMB 6.4 million) recorded in “Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes” for the year ended December 31, 2022. The derivative was derecognized as the Group paid off all of the outstanding amounts of the New Notes in August 2022. |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2023 | |
ORDINARY SHARES | |
ORDINARY SHARES | 13. ORDINARY SHARES Prior to the completion of the Company’s IPO, the outstanding ordinary shares consisted of Ordinary Shares and Angel Shares. Upon the completion of the Company’s IPO, 750,000 Ordinary Shares, 1,428,750 Angel Shares, 544,688 Series A Preferred Shares, 279,152 Series B Preferred Shares and 173,182 Series B-1 Preferred Shares were automatically converted into 3,175,772 Class B ordinary shares at the conversion ratio of 1:1 and were divided into 1,587,886,000 shares at the par value of US$0.000002 per share, after the 1-to-500 share split. 15,211 Series B-1 Preferred Shares were automatically converted into 15,211 Class A ordinary shares at the conversion ratio of 1:1 and were divided into 7,605,500 shares at the par value of US$0.000002 per share, after the 1-to-500 share split. The Company issued an aggregate 33,000,000 ADSs through the IPO, representing 264,000,000 Class A ordinary shares for total proceeds net of underwriting discounts and commissions of US$527.7 million (RMB3,640.9 million). The Company also issued 23,529,412 Class A ordinary shares to Louis Dreyfus Company B.V. at the price of US$2.125 per share, through private placement concurrent with the IPO for total proceeds of US$50 million (RMB345.0 million). In addition, the underwriters exercised their over-allotment option on June 14, 2019 and June 18, 2019. As a result, the Company newly issued an aggregate of 4,950,000 ADSs, representing 39,600,000 Class A ordinary shares for total proceeds net of underwriting discounts and commissions of US$79.5 million (RMB548.0 million). In November 2019, 310,198,928 Class B ordinary shares were converted into Class A ordinary share at the conversion ratio of 1:1. In December 2019, the Company issued 19,753,888 Class A ordinary shares to The Bank of New York Mellon, the depositary of the Company on the vest of share options to the eligible employees. On January 9, 2020, the Company issued an aggregate 10,350,000 ADSs through the follow-on offering, representing 82,800,000 Class A ordinary shares (reflecting the full exercise of the over-allotment option by the underwriters to purchase an additional 4,950,000 ADSs) at a public offering price of US$42.00 per ADS for a total for total proceeds net of underwriting discounts and commissions of US$419.5 million (RMB2,888.5 million). In 2020, 1,132,908,520 Class B ordinary shares were converted into Class A ordinary share at the conversion ratio of 1:1. In 2021, the Company issued 70,061,136 Class A ordinary shares for the vested options and restricted share units to the eligible employees. In 2022, the Company issued 76,220,808 Class A ordinary share following the restructuring of the Notes and 53,123,768 Class A ordinary shares for the vested options and restricted share units to the eligible employees, respectively. In 2023, the Company issued 13,478,384 Class A ordinary shares for the vested options and restricted share units to the eligible employees. The outstanding ordinary shares as of December 31, 2023 consisted of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote; and each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. |
SENIOR PREFERRED SHARES
SENIOR PREFERRED SHARES | 12 Months Ended |
Dec. 31, 2023 | |
SENIOR PREFERRED SHARES | |
SENIOR PREFERRED SHARES | 14. Senior Preferred Shares On April 15, 2021, the Company entered into an investment agreement (the “Investment Agreement”) with an affiliate of Centurium Capital, as the lead investor, and Joy Capital to raise funds through a private placement, totaling US$240 million from Centurium Capital and US$10 million from Joy Capital, of convertible senior preferred shares of the Company (“Senior Preferred Share(s)”) (collectively, the “Transactions”). On November 30, 2021, the Company issued 295,384,615 Senior Preferred Shares to the affiliate of Centurium Capital with the proceeds of US$240 million (RMB1,527.4 million) at a subscription price equal to US$0.8125 per share under the Investment Agreement. On January 7, 2022, the Company issued 12,307,692 Senior Preferred Shares to Joy Capital with the proceeds of US$10 million (RMB63.7 million) at a subscription price equal to US$0.8125 per share under the Investment Agreement. The Senior Preferred Shares are with rights, preferences and privileges pursuant to the certificate of designation, some of which are summarized below: Liquidation Preferences In the event of any Liquidation (as defined below), the holders of Senior Preferred Shares then issued and outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders before any distribution or payment out of the assets of the Company shall be made to the holders of junior securities of the Company including ordinary shares by reason of their ownership thereof, an amount in cash equal to the greater of (a) 100% of the original aggregate subscription price of the Senior Preferred Shares held by such holders, plus any declared but unpaid dividends on all such Senior Preferred Shares and (b) the aggregate value that such holders of Senior Preferred Shares would have received had all holders of Senior Preferred Shares, immediately prior to such liquidation, converted all Senior Preferred Shares then issued and outstanding (together with any declared but unpaid dividends thereon) into the Class A ordinary shares or the ADSs (the “Conversion Securities”) at the applicable conversion price. “Liquidation” is defined as the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. If there shall occur any reclassification, statutory exchange, reorganization, recapitalization, consolidation or merger involving the Company with or into another person (excluding a merger solely for the purpose of changing the Company’s jurisdiction of incorporation), then any distribution following such event(s) with respect to the Senior Preferred Shares shall be subject to Liquidation preference described in the preceding paragraph. Dividend Ranking With respect to payment of dividends or distribution of assets upon any Liquidation, all the Senior Preferred Shares shall rank senior to all ordinary shares in issue from time to time. Voting Rights Each holder of issued and outstanding Senior Preferred Shares shall be entitled to vote with holders of issued and outstanding Class A ordinary shares, voting together as a single class, with respect to any and all matters presented to the shareholders, and such holder shall be entitled to a number of votes equal to the number of Class A ordinary shares into which such holder’s Senior Preferred Shares are convertible. Conversion Rights Each Senior Preferred Share is convertible, at the option of its holder at any time after the original issue date, into that number of Conversion Securities determined by dividing (i) the sum of the original issue price, US$0.8125 per Senior Preferred Share, plus any declared but unpaid dividends on each such Senior Preferred Share, by (ii) the conversion price in effect immediately prior to such conversion, which shall initially be the original issue price, US$0.8125 per Senior Preferred Share, and is subject to adjustment from time to time based on a variety of events pursuant to the Certificate of Designation including any subsequent equity financing, regulatory event, etc. The initial conversion ratio of Senior Preferred Shares to Convertible Securities shall be 1:1. 14. Accounting of Senior Preferred Shares The Group classified the Senior Preferred Shares as mezzanine equity in the consolidated balance sheets because the Senior Preferred Shares are considered redeemable in the event of any Liquidation, including certain liquidation events outside of the Company’s control (the “Involuntary Liquidation Event”) since the holders of Senior Preferred Shares shall be entitled to be paid out of an amount in cash according to liquidation preference. Therefore, the Group classifies the Senior Preferred Shares as mezzanine equity outside of permanent equity in accordance with SEC’s Accounting Series Release 268, Presentation in Financial Statements of Redeemable Preferred Stocks (ASR 268) and ASC 480 “Distinguishing Liabilities from Equity”. The Group early adopted ASU No. 2020-06 to eliminate the analysis requirement of separation of beneficial conversion and cash conversion features from convertible instruments. The mezzanine equity was initially measured based on its fair value at date of issue. At each reporting date, the Group evaluates the probability of occurrence of any Involuntary Liquidation Event that entitles the holders of the Senior Preferred Shares to be paid an amount in cash (the “redemption value”) subject to liquidation preference. If it is probable that an Involuntary Liquidation Event will occur and Senior Preferred Shares will become redeemable, the Group recognizes changes in carrying value immediately as the Involuntary Liquidation Event occurs and adjusts the carrying value of the instrument to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of Senior Preferred Shares shall be affected by charges against retained earnings, or additional paid-in capital in the absence of retained earnings. Accordingly, if the Senior Preferred Shares are not currently redeemable and it is not probable that the Senior Preferred Shares will become redeemable, subsequent adjustment of the amount presented in temporary equity is unnecessary. As of December 31, 2023, the Company evaluated that the Senior Preferred Shares were not currently redeemable and it is not probable that the Senior Preferred Shares would become redeemable as there was no noted indicator of any Involuntary Liquidation Event, and recorded the Senior Preferred Shares as carrying value accordingly. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 15. SHARE BASED COMPENSATION For the years ended December 31, 2021, 2022 and 2023, total share-based compensation expenses recognized were RMB302.7 million, RMB398.0 million and RMB239.5 million (US$33.7 million), respectively. Share-based compensation expenses were allocated in operating expenses by function as follows: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Sales and marketing expenses 9,185 17,452 11,422 1,609 General and administrative expenses 293,549 380,556 228,084 32,125 302,734 398,008 239,506 33,734 2019 Equity Incentive Plan On January 18, 2019, the shareholders and Board of Directors of the Company approved the 2019 share option plan (the “2019 Plan”), which is administrated by the Board of Directors and has a term of 10 years from the date of adoption. Under the 2019 Plan, the Company issued approximately 79,015,500 options to purchase the Ordinary Shares of the Company, after the 1-to-500 share split, to its eligible employees, officers, directors or any other individual as determined by the board of directors. The purpose of the 2019 Plan is to attract and retain exceptionally qualified individuals and to motivate them to exert their best efforts on behalf of the Group by providing incentives through granting awards. 15. SHARE BASED COMPENSATION (CONTINUED) 2019 Equity Incentive Plan (continued) The options granted under the 2019 Plan have a contractual term of 10 years. The options granted to the employees are to be vested over four years. For options granted in 2019, the vesting schedule of four years is subject to four equal annual rate of 25%, with the first 25% of the share options vesting on December 31, 2019, which is the first vesting date and 25% vesting on each anniversary A summary of the employee equity award activity under the 2019 Plan is stated below: Weighted- average Weighted- remaining Aggregate Number of average contractual intrinsic options exercise price term Value US$ Years US$ Outstanding as of December 31, 2019 72,529,960 0.0002 9.05 Granted 25,917,240 0.0002 — Exercised — 0.0002 — — Forfeit (38,418,992) 0.0002 — Outstanding as of December 31, 2020 60,028,208 0.0002 8.83 Granted 2,795,600 0.0002 — Exercised — 0.0002 — — Forfeit (2,370,736) 0.0002 — Outstanding as of December 31, 2021 60,453,072 0.0002 7.91 Granted — — Exercised (32,008,561) 0.0002 88,097 Forfeit — 0.0002 Outstanding as of December 31, 2022 28,444,511 0.0002 7.24 Granted — — Exercised (24,108,314) 0.0002 Forfeit (243,016) 0.0002 82,205 Outstanding as of December 31, 2023 4,093,181 0.0002 6.34 Fully vested and expected to vest as of December 31, 2023 66,695,568 0.0002 Exercisable as of December 31, 2023 3,935,132 0.0002 The weighted average grant date fair value of options granted during the years ended December 31, 2021 was US$1.07 per share. There were no options granted in the years ended December 31, 2022 and 2023. As of December 31, 2023, there was US$42 thousands of unrecognized share-based compensation expense for share options granted, which are expected to be recognized over a weighted average period of 1.0 years. The aggregated intrinsic value for share options exercised during the year ended December 31, 2023 and for share options fully vested and expected to vest and exercisable as of December 31, 2023 was calculated based on the closing price of the Company’s Ordinary Shares on the last trading day in 2023 of US$27.28 per ADS (equivalent to US$3.41 per Ordinary Share). 15. SHARE BASED COMPENSATION (CONTINUED) 2021 Equity Incentive Plan On January 25, 2021, the Company announced the adoption of a 2021 Equity Incentive Plan (the “2021 Plan”) to retain, attract and motivate employees and directors by providing them with equity incentives. The 2021 Plan has a ten-year term, and has a maximum number of 222,769,232 Class A ordinary shares, represented by 27,846,154 American Depositary Shares, available for issuance pursuant to all awards under the 2021 Plan. The Company may grant options, restricted shares, restricted share units and other form of awards pursuant to the 2021 Plan. Substantially all the RSUs granted under the 2021 Plan are subjected to both performance condition and service condition. Before 2023, the RSUs granted were mainly vested within one year. Starting from 2023, the RSUs granted to directors and employees are mostly vested in four years. The vesting schedule of four years are 15%- 25%- 25%- 35% or 25%-25%-25%-25%. Each tranche of the RSUs granted has a separate grant date, because the board of directors has discretion in determining and approving the performance objectives, a mutual understanding of the terms and conditions does not exist until the Company’s objectives are approved and communicated with the employees. Compensation expenses are recognized in a straight-line basis from the grant date of each tranche to the vesting date of such tranche. As of December 31, 2023, 49,494,272 shares have been legally granted but not expensed since the unsatisfaction of accounting grant date. A summary of the employee equity award activity under the 2021 Plan from accounting perspective is stated below: Weighted-Average Grant-Date Number Fair Value of RSUs US$ Unvested as of December 31, 2020 — — Granted 40,842,760 1.09 Vested (31,943,824) 1.10 Forfeited or cancelled (6,368,184) 1.06 Unvested as of December 31, 2021 2,530,752 1.09 Granted 45,722,392 1.26 Vested (43,329,376) 1.26 Forfeited or cancelled (739,472) 1.30 Unvested as of December 31, 2022 4,184,296 1.23 Granted 10,551,248 3.05 Vested (13,239,120) 2.52 Forfeited or cancelled (117,792) 3.08 Unvested as of December 31, 2023 1,378,632 2.56 The weighted average grant-date fair value of the restricted share units granted during the years ended December 31, 2021, 2022 and 2023 was US$1.09, US$1.26 and US$3.05 per share, respectively. As of December 31, 2023, there was US$1.4 million of unrecognized share-based compensation expense related to restricted share units, which are expected to be recognized over a weighted average period of 0.49 Fair value of employee share options The fair value of share options was determined using the binomial option valuation model, with the assistance from an independent third-party appraiser. The binomial model requires the input of highly subjective assumptions, including the expected share price volatility and the suboptimal early exercise factor. For expected volatilities, the Company has made reference to historical volatilities of several comparable companies. The suboptimal early exercise factor was estimated based on the Company’s expectation of exercise behavior of the grantees. The dividend yield is estimated based on the Company’s expected dividend policy over the expected term of the options. The risk-free rate for periods within the contractual lives of the options is based on the market yield of U.S. Treasury Bonds in effect at the time of grant. The exercised multiple is estimated based on the changes in intrinsic value of the options and the likelihood of early exercises by employees. The estimated fair value of the ordinary shares, at the option grant dates, were determined with the assistance from an independent third-party appraiser. 15. SHARE BASED COMPENSATION (CONTINUED) The assumptions used to estimate the fair value of the share options granted to employees were as follows: 2021 Risk-free interest rate 1.04 % Expected volatility 74.49 % Expected dividend yield 0.00 % Exercise multiple 2.20 Expected post-vesting forfeiture rate 0.00 % Fair value of share option US$ 1.07 |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2023 | |
TAXATION | |
TAXATION | 16. TAXATION Enterprise income tax (“EIT”) Cayman Islands The Company is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries and VIE in the PRC. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain arising in Cayman Islands. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. British Virgin Islands Luckin BVI is incorporated in the British Virgin Islands and conducts its primary business operations through the subsidiaries and VIE in the PRC. Under the current laws of the British Virgin Islands, Luckin BVI is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed. Hong Kong Luckin HK, Luckin Roasting and Luckin Roastery are incorporated in Hong Kong and are subject to Hong Kong profits tax rate. Under the two-tiered profits tax rates regime, the first 2.0 million Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%, and profits above HKD2.0 million will be taxed at 16.5%. Additionally, upon payments of dividends by the Company to its shareholders, no HK withholding tax will be imposed. Singapore Under the current laws of Singapore, the Group’s subsidiaries in Singapore are subject to 17% income tax rate on any taxable income accruing in or derived from Singapore, or received in Singapore from outside Singapore. PRC Under the PRC Enterprise Income Tax Law (the “EIT Law”), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%. Most of the Group’s PRC subsidiaries and consolidated VIE are subject to the statutory income tax rate of 25%. The EIT Law and its implementation rules permit certain High and New Technologies Enterprises, or HNTEs, to enjoy a reduced 15% enterprise income tax rate subject to these HNTEs meeting certain qualification criteria. Luckin Coffee Information Technology (Xiamen) Ltd, Co. renewed the privilege of HNTEs and enjoyed a reduced 15% enterprise income tax rate from November 2023 to November 2026. 16. TAXATION (CONTINUED) PRC (continued) From January 1, 2020 to December 31, 2024, enterprises registered in the Hainan Free Trade Port that are engaged in encouraged industries and are substantially in operation will be subject to a reduced 15% enterprise income tax rate. Luckin Trading (Hainan) Ltd, Co. and Luckin Coffee (Haikou) Ltd, Co. were qualified as such enterprises and enjoyed 15% preferential income tax rate. From 2019, the State Administration of Taxation provides a preferential corporate income tax rate of 20%, an exemption at 75% or 87.5% for the assessable taxable profits under RMB 1.0 million, an exemption at 50% or 75% for the assessable taxable profits between RMB 1.0 million and RMB 3.0 million, for qualified small enterprises with low profits. The actual preferential corporate income tax rates after considering the exemption were 2.5%, 2.5% and 5% for assessable taxable profits less than RMB 1.0 million, respectively, for the year ended December 31, 2021, 2022 and 2023, while the rates were 10%, 5% and 5% for the assessable taxable profits between RMB1.0 million and RMB3.0 million from 2021 to 2023. The policy of the actual preferential corporate income tax rates of 5% after considering the exemption will continue to be implemented until December 31, 2027. Dividends, interests, rent or royalties payable by the Company’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax. The components of (loss)/income before tax are as follows: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ (Loss)/income before tax Non-PRC 617,090 (331,744) (123,731) (17,427) PRC (102,298) 1,458,494 3,231,090 455,089 Total (loss)/income before tax 514,792 1,126,750 3,107,359 437,662 Income tax expenses/(benefits) Current income tax expenses 360 144,032 401,039 56,485 Deferred tax expenses/(benefits) (64,221) 494,472 (141,613) (19,946) Income tax (benefits)/expenses (63,861) 638,504 259,426 36,539 16. TAXATION (CONTINUED) PRC (continued) The reconciliation of tax computed by applying the statutory income tax rate of 25% for the years ended December 31, 2021, 2022 and 2023 to income tax expense were as follows: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Earnings before income taxes 514,792 1,126,750 3,107,359 437,662 Income tax expenses computed at PRC statutory income tax rate of 25% 128,698 281,688 776,840 109,416 Additional deduction for R&D expenses (11,095) (13,516) (19,397) (2,732) Non-deductible share-based compensation expenses 58,581 80,440 45,722 6,440 Non-deductible expenses and non-taxable income 9,415 (9,967) 5,378 757 Deferred tax assets writeoff related to closure entities — 8,266 (401) (56) Expiration of tax loss — — 43,438 6,118 Effect of tax rate changes on deferred tax — — 725 102 Recognition of uncertain tax benefits — 29,325 24,536 3,456 Change of valuation allowance 60,352 220,774 (609,815) (85,891) Effect of preferential tax rate (158,362) (18,626) (48,123) (6,778) Effect of International tax rates (155,242) 76,378 29,047 4,091 Prior-year tax filing difference 3,792 (16,258) 11,476 1,616 Income tax (benefits)/expenses (63,861) 638,504 259,426 36,539 Deferred Taxes The significant components of deferred taxes were as follows: As of December 31, 2022 2023 RMB RMB US$ Deferred tax assets Donation 1,264 680 96 Accrued expenses 29,867 31,368 4,418 Accrued welfare 29,662 55,920 7,876 Impairment loss of long-lived assets and investments 327,764 4,568 643 Allowance for doubtful accounts 5,398 5,756 811 Tax losses 1,149,639 694,459 97,813 Valuation allowance (1,335,125) (442,669) (62,349) Total deferred tax assets, net 208,469 350,082 49,308 16. TAXATION (CONTINUED) Deferred Taxes (Continued) Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income. The Group evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of December 31, 2022, the Company and most of its subsidiaries and VIE were in cumulative loss position, except some new entities with immaterial taxable income. As of December 31, 2023, Company re-evaluated the realization of deferred tax assets given the largely reduced uncertainty of the Company’s business performance after a certain number of the Company’s operation entities have turned cumulative profits from cumulative losses. The valuation allowance of RMB1,335.1 million and RMB442.7 million (US$62.3 million) as of December 31, 2022 and 2023 was primarily provided for the deferred income tax assets of certain subsidiaries, which were not able to utilize portion or all of the benefits of the deferred tax assets due to lack of sufficient sources of qualified taxable income. The change of valuation allowance in 2023 includes RMB282.6 million derecognition of deferred tax assets in relation to temporary difference for certain entity since new information was received in current year. The derecognition of such temporary differences would not impact the Company’s income tax expenses due to full valuation allowance provided as December 31, 2022. Valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that some portion or all of the benefits of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. In making such determination, the Group evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods. As of December 31, 2023, the Group had accumulated tax losses of RMB2,729.5 million (US$384.4 million) derived from entities in the mainland PRC, which can be carried forward per tax regulation to offset future taxable income. The PRC taxable losses will expire from 2024 to 2028 if not utilized. Unrecognized Tax Position As of December 31, 2022 and 2023, unrecognized tax benefits were RMB80.9 million and RMB79.5 million (US$11.2 million), among which, RMB 54.7 million and RMB57.6 million (US$8.1 million) of unrecognized tax benefits as of December 31,2022 and 2023,respectively, would impact the effective tax rate if ultimately recognized after considering valuation allowance. The unrecognized tax benefits were primarily related to deemed sales of free coupons to customers. The unrecognized tax benefits represent a reduction of the deferred income tax assets for tax loss carry forwards since the uncertain tax position would reduce the tax loss carry forwards under the tax law and the estimated income tax expenses the Group would be required to pay should its revenue for tax purposes be recognized in accordance with current PRC tax laws and regulations. The amounts of unrecognized tax benefits will change in the next 12 months, pending clarification of current tax law or audit by the tax authorities, however, an estimate of the range of the possible change cannot be made at this time. A roll-forward of unrecognized tax benefits is as follows: As of December 31, 2022 2023 RMB RMB US$ Balance at beginning of year 54,956 80,930 11,399 Additions/(Deduction) based on tax positions related to the current year 25,974 (1,410) (199) Balance at end of year 80,930 79,520 11,200 The Company’s tax returns continue to remain effectively subject to examination by China tax authorities for the years 2019 through 2023. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
NET INCOME PER SHARE | |
NET INCOME PER SHARE | 17. NET INCOME PER SHARE Basic and diluted net income per share for the years presented were calculated as follows: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Numerator: Net income 578,653 488,246 2,847,933 401,123 Less: Net income attributable to non-controlling interests 108 — — — Net income attributable to ordinary shareholders 578,545 488,246 2,847,933 401,123 Denominator: Weighted average number of shares – basic 2,051,263,478 2,473,078,408 2,532,109,710 2,532,109,710 Adjustments for dilutive options and RSUs 84,580,779 43,195,219 453,592 453,592 Weighted average number of shares – diluted 2,135,844,257 2,516,273,627 2,532,563,302 2,532,563,302 Basic net income per share attributable to ordinary shareholders 0.29 0.20 1.12 0.16 Diluted net income per share attributable to ordinary shareholders 0.27 0.19 1.12 0.16 Generally, basic net income per share is computed using the weighted average number of ordinary shares and Senior Preferred Shares outstanding during the respective year. Senior Preferred Shares were considered as participating securities under ASC 260, therefore, they are included in the computation of basis shares. Diluted net income per share is computed using the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the respective year. The potentially dilutive ordinary shares included RSUs and options to purchase ordinary shares of 84,580,779, 43,195,219 and 453,592 for the years ended December 31, 2021, 2022 and 2023 on a weighted average basis, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
LEASES | |
LEASES | 18. LEASES The Group enters into lease agreements to have leasing for self-operated stores, office spaces, and other corporate assets that the Group utilizes. Supplemental balance sheet information related to operating lease was as follows: As of December 31, 2022 2023 RMB RMB US$ Right-of-use assets 2,003,997 5,186,855 730,553 Operating lease liabilities – current 880,873 1,851,310 260,752 Operating lease liabilities – non-current 1,024,274 3,114,855 438,718 Total operating lease liabilities 1,905,147 4,966,165 699,470 The weighted average remaining lease terms and discount rates for the operating lease as of December 31, 2023 were as follows: Remaining lease term and discount rate: Weighted average remaining lease term (years) 1.78 Weighted average discount rate 3.943 % 18. LEASES (CONTINUED) During the years ended December 31, 2022 and 2023, the Group incurred total operating lease expenses of RMB 854.6 million and RMB 1,399.2 million (US$ 197.1 million), respectively, and operating lease payment of RMB 875.7 million and RMB 1,442.0 million (US $203.1 million), respectively. As of December 31, 2023, the Group has entered into operating leases that have not yet commenced of RMB143.7 million (US$20.2 million), primarily related to store leases. These leases will commence between fiscal year 2024 and fiscal year 2028 with lease terms ranging from 12 months to 122 months. Future minimum lease payments under non-cancellable operating leases with initial terms in excess of one year consisted of the following as of December 31, 2023: RMB US$ 2024 1,851,310 260,752 2025 1,510,927 212,810 2026 997,107 140,440 2027 569,961 80,277 2028 and thereafter 386,414 54,425 Less: interest (349,554) (49,234) Total 4,966,165 699,470 |
PROVISION FOR SEC SETTLEMENT
PROVISION FOR SEC SETTLEMENT | 12 Months Ended |
Dec. 31, 2023 | |
PROVISION FOR SEC SETTLEMENT. | |
PROVISION FOR SEC SETTLEMENT | 19. PROVISION FOR SEC SETTLEMENT On December 16, 2020, the SEC announced its settlement with the Company (“SEC Settlement”) regarding the Fabricated Transactions. Under the terms of the settlement, the Group, without admitting or denying the allegations of the SEC, consented to the entry of an order (i) requiring it to pay a civil money penalty in the amount of US$180 million to the SEC, which shall be offset by any cash payments made by the Group to its security holders pursuant to any schemes of arrangement approved by the Cayman Court in the proceeding for the provisional liquidation and restructuring, provided that such payments are made within 18 months subject to extensions granted by the SEC up to 24 months and the final distribution plan is not reasonably objectionable to the SEC staff, and (ii) permanently enjoining it from violations of certain federal securities laws, including Section 10(b) of the Securities Exchange Act of 1934. On February 4, 2021, the United States District Court for the Southern District of New York issued a judgment (the “Judgement”) approving the SEC Settlement. On March 16, 2021, the Company announced that it entered into a restructuring support agreement with holders of a majority of the Notes. However, the Company was unable to predict with certainty the total amount of cash that would be paid to security holders according to the Cayman Court proceeding within the timeframe stipulated in the SEC Settlement and whether any ultimately approved distribution plan would be subject to any successful reasonable objections by the SEC Staff as contemplated by the SEC Settlement. Consequently, as of December 31, 2020, the full amount of the SEC penalty in the amount of US$180 million (RMB1,174.5 million) was recorded as non-current liability. On December 17, 2021, the Scheme in relation to the Restructuring of the Notes became effective, pursuant to which the Company’s best estimate was that the final total cash payment to the bond holders would well exceed US$180 million. Also, during December 2021, the Company had informal communications with SEC on predicted distribution plan and the proposed proof of cash payment to Scheme creditors. The SEC did not state any objection and agreed to the method of payment confirmation proposed by the Company. Therefore, based on all available conditions as of December 31, 2021, it was very probable that the SEC staff would be satisfied that the cash payment to the bond holders to be made in January 2022, estimated at the time to exceed US $180 million, would fully offset the SEC civil penalty as stated in the Judgement. Accordingly, the Company fully reversed the provision for the SEC Settlement during the year ended December 31, 2021 and no outstanding balance of penalty was existed as of December 31, 2021. 19. PROVISION FOR SEC SETTLEMENT (CONTINUED) On February 3, 2022, the Company received a Notice of Satisfaction of Penalty Provision of the Final Judgment (the “Satisfaction Notice”) on SEC Penalty of US $ 180 million from SEC who acknowledged the Company that the final distribution plan was not objectionable to the SEC, and proof of cash payments of at least US $180 million made by the Company and distributed to its security holders has been provided to the Commission. Accordingly, the Company has satisfied the penalty provisions of the Final Judgment and no outstanding balance of penalty shall be paid to SEC as of December 31, 2022. For the years ended December 31, 2021, 2022 and 2023, provision for SEC settlement of negative RMB1,146.5 million, nil and nil were charge in the Group’s consolidated statements of operations and comprehensive income, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES. | 20. COMMITMENTS AND CONTINGENCIES (a) Capital commitments The Group’s capital commitments primarily relate to investing activities contracted but not yet reflected in the financial statements. The following table sets forth the Group’s contractual obligations and commercial commitments as of December 31, 2023: Payment Due by Period Less than More than Total 1 year 2–3 years 4–5 years 5 years (in thousands of RMB) Factory and office building construction commitments 67,162 59,941 7,221 — — Fixed assets purchasing commitment 549,715 549,715 — — — Total 616,877 609,656 7,221 — — Other than those shown above, the Group did not have any significant capital commitments as of December 31, 2023. (b) Legal proceedings From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. The Group assesses these contingent liabilities, which inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Group or unasserted claims that may result in legal proceedings, the Group, in consultation with its legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of the reasonably possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed since they do not involve guarantees. The Group made adequate disclose of contingency loss of which an unfavorable outcome of legal proceeding is determined to be reasonably possible but not probable, or if the amount of loss cannot be reasonably estimated. 20. COMMITMENTS AND CONTINGENCIES (CONTINUED) (b) Legal proceedings (continued) U.S. Department of Justice Investigation (the “DOJ”) The Group was contacted by the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) following the Group’s public disclosure on April 2, 2020 relating to the Fabricated Transactions. The SDNY indicated that it had commenced an investigation into the Fabricated Transactions. The Group apprised the SDNY of the relevant Chinese laws that restrict the Group from providing evidence and information without prior approval from the Chinese Ministry of Justice, and is committed to cooperating with the DOJ to the extent permissible under the applicable PRC laws. The Group cannot predict the outcome or the duration of this investigation or any other legal proceedings or any enforcement actions or other remedies that may be imposed on the Group arising out of this investigation. No liability or loss was recognized as of December 31, 2022 and 2023 and for the year then ended. Ministry of Finance Investigation On May 6, 2020, the Ministry of Finance of the PRC initiated its investigation into the accounting information of two entities of the Group. On July 31, 2020, the Ministry of Finance of the PRC announced its investigation has been substantially completed. The Ministry of Finance of the PRC further announced that they would impose and publish its relevant penalty decision to the Group in due course. The Group cannot predict the outcome or the duration of this investigation or any other legal proceedings or any enforcement actions or other remedies that may be imposed on the Group arising out of this investigation. No liability or loss was recognized as of December 31, 2022 and 2023 and for the year then ended. U.S. Class Actions On February 13, 2020, April 2, 2020, April 8, 2020, and April 10, 2020, putative securities class action complaints were filed in the United States District Court for the Eastern and Southern Districts of New York against the Company, certain of its current and former directors and executives, and the underwriters of the Company’s initial public offering and follow-on offering. These lawsuits were consolidated in the Southern District of New York, and is captioned In re Luckin Coffee Inc. Securities Litigation 20. COMMITMENTS AND CONTINGENCIES (CONTINUED) (b) Legal proceedings (continued) On May 26, 2020, June 18, 2020, and June 23, 2020, putative securities class actions complaints were filed in the Supreme Court of the State of New York, County of New York, against the Company, certain of its current and former directors and executives, and the underwriters of the Company’s initial public offering and follow-on offering. The lawsuits variously alleged that the Company made false and misleading statements and material omissions in its prior registration statements and other public statements by failing to disclose the Fabricated Transactions disclosed in the Company’s April 2, 2020 announcement, and the impact of those Fabricated Transactions on the Company’s financial statements, in violation of Sections 11, 12 and 15 of the Securities Act. On October 16, 2020, the court appointed co-lead plaintiffs and consolidated the lawsuits under the caption In re Luckin Coffee Inc. Securities Litigation U.S. “Opt Out” Claims The Company had also been named as a defendant in the following opt-out lawsuits alleging violations of U.S. securities laws: Kingstown Capital Management. v. Luckin Coffee et al. Lai Ye v. Luckin Coffee et al. Nuveen Winslow Large-Cap Growth ESG Fund et al. v. Luckin Coffee et al. Bequai v. Luckin Coffee Certain individuals and institutions claiming to be ADS investors have made informal demands for the company to pay alleged losses resulting from the Fabricated Transactions disclosed on April 2, 2020, but have not commenced legal proceedings. In the aggregate, the investors that have made informal demands have asserted losses in excess of US$325 million. On April 13, 2023, two of those investors commenced legal proceedings against the Company in the High Court of the Repulic of Singapore, seeking to recover an alleged loss of US$145.8 million in the aggregate. These legal proceedings are currently in an early stage of development, and the Company intends to use its best efforts to defend. U.S. Derivative Action The Company was a nominal defendant in a consolidated putative derivative action filed in the Supreme Court of the State of New York captioned In re Luckin Coffee Inc. Derivative Litigation, 652800/2020 (N.Y. Sup. Ct.). The Federal Class Settlement includes releases of derivative claims on behalf of members of the Federal Class. On November 8, 2022, the parties filed a stipulation of discontinuance with prejudice to conclude the derivative litigation, which the court so-ordered on November 9, 2022. Canadian Class Action On or about April 14, 2020, an Application for Authorization to Bring a Class Action was filed against Luckin Coffee Inc. by Martin Banoon (the “Applicant”) in the Superior Court of Quebec file no. 500-06-001058-201. The Applicant sought authorization to institute a class action on behalf of the proposed class members comprised of holders of Luckin Coffee’s ADS, as a result of Fabricated Transactions. On August 9, 2022, the Superior Court of Quebec entered judgment approving the Applicant’s request to discontinue the proceeding. 20. COMMITMENTS AND CONTINGENCIES (CONTINUED) (b) Legal proceedings (continued) Cayman Bondholder Action In May 2020, a group of bondholders commenced proceedings in the Cayman Court seeking to recover approximately US$155,000 of losses from the Company. By summons dated May 1, 2020, the bondholders applied ex parte for a worldwide freezing order (the “WFO”) against the Company, which order was granted by the Cayman Court on May 8, 2020. On July 1, 2020 to July 3, 2020 the Cayman Court heard the Company’s application to set aside the WFO. By order dated July 22, 2020, the Cayman Court discharged the WFO. The litigation was automatically stayed on the appointment of the JPLs on July 15, 2020 by operation of section 97 of the Companies Act. On August 12, 2020 the Cayman Court further ordered that the bondholders could seek to appeal the discharge order until 14 days after the discharge of the JPLs. However, there can be no further action in these proceedings as the indebtedness under the Notes has been effectively compromised due to the successful Restructuring as of January 28, 2022. In July 2022, these proceedings were discontinued by a consent order issued by the Cayman Court upon parties’ agreement. (c) Provision for U.S. securities litigation The Company has been named as a defendant in various U.S. securities litigations described in “Note 20. Commitments And Contingencies – (b) legal proceedings. Where possible, the Company contests liability and/or the amount of damages appropriate in each pending matter. Where available information indicates that it is probable that a liability had been incurred as of the date of the consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues a provision for that loss in accordance with ASC450. The Company’s estimate of probable losses from these litigations is based on either the amount of a settlement (if a settlement has been reached), the Company’s most recent offer made to a claimant (if no settlement has been reached but settlement negotiations have begun) or the implied recovery represented by the Federal Class Action Settlement (where no settlement negotiations have begun). The actual loss could be greater or smaller than our current estimate. The Company recorded a provision for equity litigation of US$187.5 million (approximately RMB1,226.1 million) in the year ended December 31, 2020. The Company recorded an additional US$24.4 million (approximately RMB155.3 million), US$41.9 million (approximately RMB280.0 million) and US$12.6 million (approximately RMB92.2 million) in the year ended December 31, 2021, 2022 and 2023. As of December 31, 2022 and 2023, the balance of payable for equity litigants settlement was US$4.9 million (approximately RMB33.8 million) and US$16.4 million (approximately RMB116.3 million), respectively. |
PARENT COMPANY ONLY CONDENSED F
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2023 | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 21. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION Condensed balance sheets As of December 31, 2022 2023 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 214,992 30,752 4,331 Amounts due from subsidiaries 12,534,774 13,043,055 1,837,076 Prepaid expenses and other current assets 6,910 2,778 391 Total current assets 12,756,676 13,076,585 1,841,798 Non-current assets: Investments in subsidiaries and VIE (5,736,325) (2,926,400) (412,175) Other non-current assets — — — Total non-current assets (5,736,325) (2,926,400) (412,175) Total assets 7,020,351 10,150,185 1,429,623 LIABILITIES AND SHAREHOLDERS’ DEFICITS Current liabilities: Amounts due to subsidiaries 247,743 309,318 43,567 Accrued expenses and other current liabilities 111,525 10,108 1,425 Convertible senior notes — — — Payable for equity litigants settlement 33,796 116,314 16,382 Total current liabilities 393,064 435,740 61,374 Total liabilities 393,064 435,740 61,374 21. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (CONTINUED) Condensed balance sheets (continued) As of December 31, 2022 2023 RMB RMB US$ LIABILITIES AND SHAREHOLDERS’ EQUITY Mezzanine equity: Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 issued outstanding 1,578,040 1,578,040 222,262 Total Mezzanine equity 1,578,040 1,578,040 222,262 Shareholders’ equity: Class A ordinary shares (US$0.000002 par value;19,692,307,693 and 19,692,307,693 shares 2,079,801,956 issued outstanding 23 23 3 Class B ordinary shares (US$0.000002 par value; 5,000,000,000 and 5,000,000,000 shares 144,778,552 144,778,552 issued outstanding 2 2 0 Additional paid-in capital 16,073,063 16,445,195 2,316,257 Accumulated deficit (11,421,145) (8,705,759) (1,226,181) Accumulated other comprehensive income 397,304 396,944 55,908 Total shareholders’ equity 5,049,247 8,136,405 1,145,987 Total liabilities and shareholders’ equity 7,020,351 10,150,185 1,429,623 21. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (CONTINUED) Condensed statements of comprehensive income For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ General and administrative expenses (85,567) (39,773) (46,722) (6,581) Sales and marketing expenses — — (566) (80) Losses and expenses related to Fabricated Transactions and restructuring (246,410) (69,233) 32,422 4,567 Foreign exchange loss (138) (8,817) 3,320 468 Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes — (6,381) — — Share of (losses)/income from subsidiaries and VIE (40,522) 791,186 2,949,195 415,385 Gain from extinguishment of Series B Senior Secured Notes — 124,139 — — Interest income 296 576 2,476 349 Other (expense)/income (4,784) — — — Interest and financing expenses (35,490) (23,484) — — Provision for SEC settlement 1,146,474 — — — Provision for equity litigants settlement (155,314) (279,967) (92,192) (12,985) Net income before income taxes 578,545 488,246 2,847,933 401,123 Net income 578,545 488,246 2,847,933 401,123 Net income attributable to the Company’s ordinary shareholders 578,545 488,246 2,847,933 401,123 Net income 578,545 488,246 2,847,933 401,123 Other comprehensive income/(loss), net of tax of nil: Foreign currency translation difference, net of tax of nil 102,802 (69,552) (360) (51) Total comprehensive income 681,347 418,694 2,847,573 401,072 21. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (CONTINUED) Condensed statements of cash flows For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Net cash provided by/(used in) operating activities 1,383,630 (587,039) (184,240) (25,950) Net cash (used in)/provided by investing activities — — — — Net cash provided by/(used in) financing activities 1,514,660 (2,276,260) — — Net (decrease)/increase in cash and cash equivalents 2,898,290 (2,863,299) (184,240) (25,950) Cash and cash equivalents at beginning of the years 180,001 3,078,291 214,992 30,281 Cash and cash equivalents at end of the years 3,078,291 214,992 30,752 4,331 Basis of presentation Condensed financial information is used for the presentation of the Company, or the parent company. The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company used the equity method to account for investments in its subsidiaries and VIE. The parent company records its investments in its subsidiaries and VIE under the equity method of accounting as prescribed in ASC 323, Investments-Equity Method and Joint Ventures The subsidiaries and VIE did not pay any dividends to the Company for the years presented. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 22. SUBSEQUENT EVENT In January 2024, 12,307,688 Senior Preferred Shares were converted to 1,538,461 ADSs at the request of the holder of such Senior Preferred Shares pursuant to the Certificate of Designation. To consummate such conversion, 12,307,688 Senior Preferred Shares had been re-designated as 12,307,688 Class A Ordinary Shares. In March 2024, the Company terminated its contractual arrangements with VIE because (i) the foreign restricted licenses and permits held through the VIE are not necessary for the Company’s business operations as currently conducted, and (ii) the Company believes the termination of these arrangements help to optimize its corporate governance structure. Due to the termination, the financial results of the VIE will no longer be consolidated into the Company’s consolidated financial statements for accounting purpose from the termination date. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | (a) Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). |
Principles of consolidation | (b) Principles of consolidation The consolidated financial statements of the Group include the financial statements of the Company, its subsidiaries and the VIE for which the Company is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE have been eliminated upon consolidation. |
Non-controlling interests | (c) Non-controlling interests For the Group’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Group. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of operations and comprehensive income to distinguish the interests from that of the Group. |
Use of estimates | (d) Use of estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenues and expenses during the reporting periods. Accounting estimates reflected in the Group’s consolidated financial statements include, but not limited to, estimates for allowance for credit losses of accounts receivable and other receivables, inventory provision, and short-term investments, useful lives and impairment of long-lived assets, revenue recognized from breakage amount, refund liability, accounting for deferred income taxes and uncertain tax benefits, valuation allowance for deferred tax assets, fair value of share-based payments, provision of contingent liabilities, and valuations for derivative financial instruments, convertible senior preferred shares and convertible senior notes. Changes in facts and circumstances may result in revised estimates. |
Foreign currency | (e) Foreign currency The functional currency of the PRC entities in the Group is Chinese Renminbi (“RMB”) as determined based on ASC 830, “Foreign Currency Matters”, while the functional currency of the Company and its subsidiaries incorporated outside of the PRC is the United States dollar (“US$”), the HongKong dollar (“HKD”), or the Singapore dollar (“SGD”). The financial statements of the Company and its subsidiaries incorporated outside of the PRC are translated from the functional currency to the reporting currency, the RMB. The Group uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Equity accounts other than earnings generated in current year are translated into RMB at the appropriate historical rates. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders’ equity. Foreign currency transactions denominated in currencies other than the functional currencies are translated into the functional currencies using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currencies using the applicable exchange rates at the balance sheet dates. Non-monetary items that are measured in terms of historical costs in foreign currency are translated into the functional currencies using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of operations and comprehensive income. |
Convenience translation | (f) Convenience translation Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB 7.0999 on December 29, 2023, the last business day in fiscal year 2023, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other rate. |
Cash and cash equivalents | (g) Cash and cash equivalents Cash and cash equivalents consist of demand deposits, highly-liquid investments placed with banks which are unrestricted as to withdrawal or use, and have original maturities of three months or less. |
Short-term investments | (h) Short - term investments Short - term investments purchased primarily represent structured deposits that are principal - protected and provide returns in the form of both fixed and variable interests with original maturities of less than one year. |
Term deposits | ( i) Term deposits Term deposits represent term deposits or certificate of deposits which bear fixed interest rate. The term - deposits or certificate of deposits with remaining maturities less than one year were classified as “Term deposit - current”, while term deposits or certificate of deposits with remaining maturities exceeding one year for which the Group has the positive intent to hold for more than one year were classified as “Term deposit - noncurrent”. |
Restricted cash | (j) Restricted cash Restricted cash is reported separately on the face of the Consolidated Balance Sheets and is included in the total cash and cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows. The Group’s restricted cash mainly represents security deposits held in bank accounts for bank guarantee letters and prepaid card business. Restricted cash is classified as current and non-current based on the duration of the restriction. |
Accounts receivable | (k) Accounts receivable Accounts receivable represents the amounts that the Group has an unconditional right to consideration. Accounts receivable that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the allowance for credit losses. As of December 31, 2022 and 2023, the allowance for credit losses for the Group’s account receivable was RMB0.2 million and RMB nil million (US$nil), respectively. |
Expected Credit Losses | (l) Expected Credit Losses The Group’s account receivable, receivables from online payment platforms, other receivables and other certain financial assets are within the scope of ASU No. 2016-13. The Group maintains an estimated allowance for credit losses to reduce them to the amount that it believes will be collected. When developing an estimation of expected credit losses, the Group applies the historical loss experience with appropriate adjustment. The Group considers available information relevant to assessing the collectability of cash flows. This information may include internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. The Group adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that these financial assets are likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. The balance of these financial assets is written off after all collection efforts have been exhausted. |
Inventories | (m) Inventories Inventories are stated at the lower of cost or net realizable value. Cost of inventory are determined using the weighted average method. The Company recorded inventory reserves to write down the cost of inventory to the estimated net realizable value due to obsolete and slow-moving inventories, which is dependent upon factors such as historical and forecasted consumer demand, and application of the specific identification method. As of December 31, 2022 and 2023, inventory reserves were RMB33.4 million and RMB30.0 million (US$4.2 million), respectively. Write downs are recorded in cost of materials in the consolidated statements of operations and comprehensive income. |
Property and equipment | (n) Property and equipment Property and equipment primarily consist of office buildings, store operating equipment, mechanical equipment, leasehold improvements, office equipment and others. Property and equipment are stated at cost less accumulated depreciation and any recorded impairment. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated useful life Store operating equipment 5 years Office equipment and others 3-5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets Mechanical equipment 10 years Office buildings 40-50 years Direct costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment items and the depreciation of these assets commences when the assets are ready for their intended use. Repair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful life of property and equipment are capitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost, accumulated depreciation and relevant impairment, with any resulting gain or loss reflected in the consolidated statements of operations and comprehensive income. |
Impairment of long-lived assets other than goodwill | (o) Impairment of long-lived assets other than goodwill The Group evaluates its long-lived assets, including property and equipment with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that indicate that the carrying amount of an asset or asset group may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows of the asset or asset group is less than the carrying amount of the assets or the asset groups, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets or the asset groups over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets or asset groups based on forecasted future sales and operating costs, using internal projections, when the market prices are not readily available. The adjusted carrying amount of the assets become new cost basis and are depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Group estimates of future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales and gross profits and estimating useful lives of the assets or asset groups. These estimates can be affected by factors such as future sales results, store closure plans, economic conditions, business interruptions, interest rates and government regulations that can be difficult to predict. If actual results and conditions are not consistent with the estimates and assumptions used in its calculations, the Group may be exposed to additional impairments of long-lived assets. For the years ended December 31, 2021, 2022 and 2023, the Group recognized impairment of long-lived assets other than goodwill of RMB21.4 million, RMB221.8 million and RMB5.2 million (US$0.7 million), respectively. Impairment loss of long-lived assets mainly represented RMB21.4 million for the asset group related to store operating equipment and others for the year ended December 31, 2021, and RMB221.8 million for the asset group related to Luckin Coffee EXPRESS machines for the year ended December 31, 2022 and RMB5.2 million mainly for the assets in relation to Luckin Tea for the year ended December 31, 2023. |
Derivative financial instrument | (p) Derivative financial instrument All contracts that meet the definition of a derivative are recognized on the Group’s consolidated balance sheets as either assets or liabilities and recorded at fair value. The Group’s derivative financial instruments primarily consisted of derivative asset bifurcated from the New Notes (see Note 12 Convertible Senior Notes for details). Changes in the fair value of derivatives are recognized in the Group’s consolidated statements of operations and comprehensive income as they were not qualified for hedge accounting. As of December 31, 2022 and 2023, there was no balance of the derivative instruments. |
Fair value | (q) Fair value Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurement for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a three-tier fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group’s financial instruments include cash and cash equivalents and restricted cash, term deposits, short term investments, accounts payable, receivables from online payment platforms, accounts receivable and other receivables and payables. Cash equivalents, short term investments, term deposits and security deposits held in bank accounts for bank guarantee letters which is included in restricted cash are measured at fair value based on the pervasive interest rates in the market, which are also the interest rates as stated in the contracts with the banks. The Group classifies the valuation techniques that use the pervasive interest rates input as Level 2 of fair value measurements. The carrying values of financial instruments except for above mentioned items are measured at amortized cost, which approximate their fair values due to their short-term maturities. |
Revenue recognition | (r) Revenue recognition For the year ended December 31, 2021 2022 2023 2023 RMB % RMB % RMB % US$ % (in thousands, except for percentages) Net revenues: Revenues from product sales 6,659,218 83.6 10,223,720 76.9 18,677,390 75.0 2,630,655 75.0 Freshly brewed drinks 5,909,655 74.2 9,079,349 68.3 16,877,880 67.8 2,377,200 67.8 Other products 395,573 5.0 686,837 5.2 1,241,868 5.0 174,913 5.0 Others 353,990 4.4 457,534 3.4 557,642 2.2 78,542 2.2 Revenues from partnership stores 1,306,105 16.4 3,069,262 23.1 6,225,776 25.0 876,882 25.0 Total net revenues 7,965,323 100.0 13,292,982 100.0 24,903,166 100.0 3,507,537 100.0 A description of the principal revenue generating activities of the Group is as follows: 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Revenues from product sales The Group offers freshly brewed drinks and other products and services (including pre-made food, beverage and merchandise items, membership and delivery services) mainly through its physical self-operated stores and online e-commerce platforms. Total revenues from product sales were RMB6,659.2 million, RMB10,223.7 million and RMB18,677.4 million (US$2,630.7 million) for the years ended December 31, 2021, 2022 and 2023, respectively, including revenues from self-operated stores of RMB6,528.2 million, RMB9,786.2 million and RMB17,880.1 million (US$2,518.4 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Revenues from product sales include: ● Revenues from freshly brewed drinks . The Group offers an array of freshly brewed drinks, with a focus on freshly brewed coffee, supplemented with non-coffee drinks such as Luckin Exfreezo series. Net revenues from freshly brewed drinks were RMB 5,909.7 million, RMB 9,079.3 million and RMB 16,877.9 million (US $2,377.2 million) for the years ended December 31, 2021, 2022 and 2023, respectively. ● Revenues from other products . Other products mainly consist of food and beverage items, such as light meals and various merchandise, including premium instant coffee, inspirational cups and other consumer goods. Net revenues from other products were RMB 395.6 million, RMB 686.8 million and RMB 1,241.9 million (US $174.9 million) for the years ended December 31, 2021, 2022 and 2023, respectively. ● Revenues from others . Revenues from others mainly include delivery fees derived from self-operated stores paid by the customers and membership fees collected from the subscribed members. Revenues from others were RMB 354.0 million, RMB 457.5 million and RMB 557.6 million (US $78.5 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Customers place orders for products mainly through the Group’s self-developed APP, Weixin mini-program and other third-party platforms with different options to pay through third-party online payment platforms. The Group recognizes revenues at point in time when the Group satisfies its performance obligation upon the control of the promised products are transferred to the customers or distributors. Delivery service is provided if it is a delivery order. Delivery service is determined as an activity to fulfill the Group’s promise to transfer the products, rather than another distinct performance obligation as it is performed before the customers obtain control of the products. Revenues represent the amount of consideration that the Group is entitled to, including products settlement price and delivery fees charged to customers, net of value-added tax (“VAT”), surcharges, discounts and returns, if any. There is no significant financing component or variable consideration in the transaction price. The Group reasonably estimates the possibility of return based on the historical experience, and there were no material returns historically. When a customer receives a discount for purchasing a bundle of goods, that discount is allocated proportionately among the performance obligations using the relative stand-alone selling price method. The Group also provides subscription membership service, which provides the members the access to an evolving suite of benefits, such as extra discount, limited-time promotions and special offer on selected product offerings and new products, which represent a single stand-ready obligation. Membership fees are paid for at the time of or in advance of delivering the services. Revenues from such arrangements are recognized over the subscription period on a straight-line basis. The Group evaluates whether it is appropriate to record the gross amount of product sales and related costs acting as a principal or the net amount acting as an agent. The Group is a principal for the substantial majority of product sales as the Group produces or obtains control of the specified goods before they are transferred to the customers, except for a portion of revenue from products sold on the Group’s own e-commerce platform, for which the Group’s obligation is to facilitate third-party merchants in fulfilling their performance obligation for the goods displayed on the Group’s own e-commerce platform acting as an agent. Revenue from product sales as an agent of RMB2.0 million, RMB1.2 million and RMB0.1 million (US$12.4 thousands) for the years ended December 31, 2021, 2022 and 2023, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Revenues from partnership stores The Group cooperates with selective retail partners to operate the partnership stores. Under retail partnership model, the Group sells materials such as coffee beans, milk, food and related products to retail partners and shares simplified and standardized operation experience and provides use right of brand name and sales and supply chain management in exchange for a profit-sharing on retail sales. Retail partners are responsible for pre-opening capital investments and operating costs. Revenues from partnership stores mainly consist of sales of materials, equipment and store construction-related materials to the partnership stores, profit-sharing revenue from the partnership stores for using the Luckin Coffee or Luckin Tea brand as well as integrated store operation solution, and other services including delivery services and pre-opening services. For material sales, the Group’s performance obligation is to transfer required materials at fixed unit price to retail partners. The Group provides allowance for materials sales as consideration payable to retail partners when the partnership stores sell products to customers catering for the Group’s promotion strategy. Allowance for partnership stores is accounted for as a reduction of the transaction price, which is usually determined upon the completion of each order. Therefore, sales of materials are generally recognized on the partnership stores’ acceptance of materials, the settlement price is then deducted by the allowance provided to partnership stores that is determined upon the products are sold in partnership stores, if any. Revenue from material sales to partnership stores were RMB834.7 million, RMB2,011.2 million and RMB4,157.6 million (US$585.6 million) for the years ended December 31, 2021, 2022 and 2023, respectively. For equipment and store construction-related materials sales, the Group’s performance obligation is to transfer equipment at a fixed consideration with standard warranty provision and store construction-related materials to retail partners. The standard warranty is not a distinct performance obligation as it is intended to provide by the Group’s suppliers to the partners an assurance that the equipment complies with agreed-upon functionality described in the contract. Revenue from sales of equipment which needs installation and testing for the intended use is recognized at point in time when equipment is installed and tested to be ready to use. Revenue from sales of store construction-related materials is recognized at point in time upon receipt. Revenue from equipment and store construction-related materials sales to partnership stores were RMB178.8 million, RMB278.1 million and RMB877.2 million (US$123.5 million) for the years ended December 31, 2021, 2022 and 2023, respectively, and warrant liability was immaterial. For profit-sharing, the Group provides the integrated store operation solution, which includes the right to use brand name of Luckin Coffee or Luckin Tea, products and brand name promotion activities, unified ordering and payment collections platform, and basic operation guidance on store management and sanitary conditions, etc., in exchange for the profit-sharing based on the gross profit of retail sales. The Group recognizes the profit-sharing revenue from partnership stores at a variable consideration calculated using a tiered percentage approach, which is based upon the partnership stores’ monthly gross profits. The Group offers a price concession to its retail partners by waiving the new stores’ profit-sharing for a period of time ranging from the first one month to three months, which is subject to the Group’s adjustment. Price concession for profit-sharing is accounted for as a reduction of the transaction price and deducts the revenue directly. Revenue from partnership stores’ profit-sharing were RMB144.8 million, RMB427.9 million and RMB680.2 million (US$95.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively. The Group also provides other services including pre-opening services such as design of store decoration and provision of decoration materials and delivery service, which have distinct value to partnership stores and are recognized upon completion of the respective performance obligations. Other revenues from partnership stores were RMB147.8 million, RMB352.1 million and RMB510.8 million (US$71.9 million) for the years ended December 31, 2021, 2022 and 2023, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (r) Revenue recognition (continued) Contract balance When either party to a revenue contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. The Group presents any unconditional rights to consideration separately as a receivable. The Group does not have material contract asset. The balance of accounts receivable, net of RMB0.2 million and RMB nil million (US$ nil) allowance for doubtful accounts, were RMB58.8 million and RMB80.7 million (US$11.4 million) as of December 31, 2022 and 2023, respectively. Contract liability is mainly related to prepaid coupons to be provided to customers. Customers pay in advance for prepaid coupon. All prepaid coupons are stored in the “Coffee Wallet” of the customers’ registered accounts for future use with a three-year validity period. Cash received from the sales of prepaid coupons are recognized as deferred revenues which are contract liabilities under ASC 606 and recognized as revenue when the customer redeems the coupons. However, a portion of the contract liability recognized as revenue may relate to coupons that the Company expects to expire, which is considered as a breakage amount. When the Company determines that it expects to be entitled to breakage, the estimated breakage is recognized as revenue in proportion to the pattern of rights exercised by the customer. As of December 31, 2022 and 2023, the balance of deferred revenues was RMB97.4 million and RMB123.4 million (US$17.4 million), respectively. Majority of the balance of deferred revenue as of December 31, 2022 was recognized as revenue in the year of 2023. |
Costs of materials, store rental and other operating costs | (s) Costs of materials, store rental and other operating costs Costs of materials consisted primarily of cost for coffee beans and coffee condiments, pre-made food and beverage items, packaging, supplies and warehouse. Store rental and other operating costs consisted primarily of rental expense of stores, staff costs, and utilities, etc. |
Delivery expenses | (t) Delivery expenses Delivery expenses are the delivery service fee for delivery orders. The Group incurred delivery expenses of RMB819.5 million, RMB1,373.2 million and RMB2,010.7 million (US$283.2 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Delivery expenses are separated out of sales and marketing expenses from the fiscal year 2021 to optimize the disclosure and better reflect the nature of expenses. This reclassification is retrospectively applied. |
Sales and marketing expenses | (u) Sales and marketing expenses Sales and marketing expenses consisted primarily of advertising expenditure, commission fees for third-party delivery platforms and subcontract service fee. Advertising expenditures are expensed when incurred and are included in sales and marketing expenses, which amounted to RMB243.7 million, RMB338.0 million and RMB801.1 million (US$112.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively. |
General and administrative expenses | (v) General and administrative expenses General and administrative expenses consist primarily of payroll and related expenses for employees involved in general corporate functions, research and development expenses, share-based compensation, professional fees and daily office expenses and rental fees for general corporate functions. Research and development expenses are included in general and administrative expenses, which are mainly payroll expenses, employee benefits, and other headcount-related expenses associated with platform development and data analysis to support the Group’s business operations. The Group charged RMB251.7 million, RMB301.4 million and RMB338.8 million (US$47.7 million) of research and development costs to expense for the years ended December 31, 2021, 2022 and 2023, respectively. |
Store preopening and other expenses | (w) Store preopening and other expenses Store preopening expenses mainly include store rental costs during the start-up of new stores. Other expenses include lease exit costs, such as the write offs of prepaid store rental costs, deposits and leasehold improvements. Costs incurred in connection with the start-up and closure of stores are expensed as incurred. |
Leases | (x) Leases The Group enters into lease agreements to have leasing for self-operated stores, office spaces, and other corporate assets that the Group utilizes. The Group categorizes leases with contractual terms longer than twelve months as either operating or finance lease. However, the Group did not enter into finance leases for any of the periods presented. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The rent under the majority of the current self-operated store lease agreements is generally payable in one of three ways: (i) fixed rent; (ii) the higher of a fixed base rent or a percentage of the store’s sales; or (iii) a percentage of the store’s sales. Right-of-use (“ROU”) assets represent the Group’s rights to use underlying assets for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease ROU assets The right-of-use assets are initially measured at cost, which comprise the initial amounts of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received. Operating lease liabilities Lease liabilities are initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the discount rate for the leases. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Lease payments included in the measurement of the lease liabilities comprise fixed lease payments, variable lease payments that depend on an index or a rate and any exercise price under a purchase option that the Group is reasonably certain to exercise. The Group generally has no renewal options and material residual value guarantees or material restrictive covenants for its leases. Lease liabilities are measured at amortized cost using the effective interest rate method. They are re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Group assessment of option purchases, contract extensions or termination options. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (x) Leases (continued) Asset retirement obligations The Group recognizes an asset and a liability for the fair value of required asset retirement obligations (“ARO”) when such obligations are incurred. The Group’s AROs are primarily associated with leasehold improvements, which, at the end of a lease, it is contractually obligated to remove in order to comply with the lease agreement. At the inception of a lease with such conditions, the Group records an ARO liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. As such, the Group amortizes the asset on a straight-line basis over the lease term and accretes the liability to its nominal value using the effective interest method over the lease term. Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement costs incurred is recognized as a gain or loss in store rental and other operating expenses on its consolidated statements of operations and comprehensive income. The Group leases offices to third parties. The arrangements are in nature of operating leases, therefore, the assets subject to operating lease are measured at their carrying value under property, plant and equipment on the Group’s consolidated balance sheets and continue to depreciate based on the estimated useful life. Rental income is recognized over the lease term on a straight-line basis. |
Government subsidies | (y) Government subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. There are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities. The government subsidies with no further conditions to be met are recognized as income in “Other income/(expenses), net” or as a reduction of specific operating costs and expenses for which the grants are intended to compensate. If the government subsidies are related to an asset, it is recognized as a deduction of the carrying amount of the asset when it is probable that the conditions are met and then recognized ratably over the expected useful life of the related asset as a reduction to the related amortization or depreciation in the consolidated statements of operations and comprehensive income. Government subsidies of RMB47.1 million, RMB78.0 million and RMB71.2 million (US$10.0 million) were recorded in “Other income/( expenses |
Income taxes | (z) Income taxes The Group follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes The Group accounts for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of operations and comprehensive income as income tax expenses. The accrued interest and penalties related to unrecognized tax benefit for the years ended December 31, 2021, 2022 and 2023 were RMB nil, RMB4.5million and RMB7.6 million (US$1.1 million), respectively, which represent the Group’s best estimate, in accordance with current PRC tax laws and regulations. |
Employee benefit expenses | (aa) Employee benefit expenses As stipulated by the regulations of the PRC, full-time employees of the Group are entitled to various government statutory employee benefit plans, including medical insurance, maternity insurance, workplace injury insurance, unemployment insurance, pension benefits and housing provident fund through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries. The total expenses the Group incurred for the plan were RMB247.3 million, RMB333.5 million and RMB530.3 million (US$74.7 million) for the years ended December 31, 2021, 2022 and 2023, respectively. |
Comprehensive income | (bb) Comprehensive income Comprehensive income is defined as the change in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Amongst other disclosures, ASC 220, Comprehensive Income |
Segment reporting | (cc) Segment reporting The Group follows ASC 280, Segment Reporting |
Net income per share | (dd) Net income per share In accordance with ASC 260, Earnings per Share, |
Share-based compensation | (ee) Share-based compensation The Group applies ASC 718, Compensation-Stock Compensation |
Comparative information | (ff) Comparative information Certain items in prior years’ consolidated financial statements or disclosures have been reclassified to conform to the current period’s presentation to facilitate comparison. Revenues from self-operated stores include net revenue from the sales of freshly brewed and non-freshly brewed items through self-operating stores, and delivery fees derived from self-operated stores paid by the Company’s customers. Before 2023, the definition of revenues from self-operated stores did not include delivery fees derived from self-operated stores paid by the Company’s customers. Comparative figures from previous periods presented were also adjusted to be consistent. |
Recent accounting pronouncements | (gg) Recent accounting pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
ORGANIZATION (Tables)
ORGANIZATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ORGANIZATION | |
Schedule of principal subsidiaries and VIE | Entity Date of incorporation Place of incorporation Percentage of direct or indirect ownership Principal activities Subsidiaries: Luckin Coffee Investment Inc. (“Luckin BVI”) June 16, 2017 British Virgin Islands 100 % Investment holding Luckin Coffee International Holdings Inc. (“Luckin International BVI”) February 20, 2020 British Virgin Islands 100 % Investment holding Luckin Coffee (SGP) PTE. LTD (“Luckin Singapore”) August 11, 2022 Singapore 100 % Singapore store operating Luckin Coffee (Hong Kong) Limited (“Luckin HK”) June 19, 2017 Hong Kong 100 % Investment holding Luckin Coffee Trading (Hong Kong) Limited (“Luckin Trading HK”) April 1, 2022 Hong Kong 100 % International trading of materials for products Luckin Coffee Roasting (Hong Kong) Limited (“Luckin Roasting”) April 12, 2019 Hong Kong 100 % Investment holding Luckin Coffee Roastery (Hong Kong) Limited (“Luckin Roastery”) April 30, 2019 Hong Kong 100 % Investment holding Beijing Luckin Coffee Co., Ltd. (“Beijing Wholly Foreign Owned Enterprise”, or, “Beijing WFOE”) (1) / (2) October 31, 2017 PRC 100 % Retail services for freshly brewed drinks and pre-made food and beverage items and technical and consultation services Luckin Investment (Tianjin) Co., Ltd. (“Luckin TJ”) (1) / (5) December 7, 2017 PRC 100 % Investment holding Luckin Coffee Group Co., Ltd. (formerly as “Luckin Coffee (China) Co., Ltd”, “Luckin China”) (1) / (2) / (4) March 28, 2018 PRC 100 % Headquarter Luckin Coffee Roasting (Pingnan) Co., Ltd. (1) April 28, 2019 PRC 100 % Manufacture of materials for products Luckin Coffee Food (Jiangsu) Co., Ltd (1) May 27, 2022 PRC 100 % Manufacture of materials for products Variable Interest Entity: Beijing Luckin Coffee Technology Ltd. (“VIE”) (3) June 14, 2017 PRC License holder (1) Including their subsidiaries, collectively as the “PRC subsidiaries”. (2) On July 27, 2018, Beijing WFOE transferred all its 100% equity interest in its subsidiaries to Luckin China. (3) As of December 31, 2023, Mr. Jinyi Guo and Mr. Gang Wu are nominal shareholders of the VIE, holding 83.33% and 16.67% of the equity interest, respectively. As of the date of the report, the Company has terminated the contractual agreements entered into by and among the Beijing WFOE and VIE. (4) As of December 31, 2023, Luckin China had 68 direct and indirect wholly-owned subsidiaries. (5) As of December 31, 2023, Luckin TJ had one direct wholly-owned subsidiary. |
Schedule of assets, liabilities, results of operations and changes in cash and cash equivalents and restricted cash | For the year ended December 31, 2022 2023 RMB RMB US$ Total assets 6,865 2 — Total liabilities 2,864 4,336 610 For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Total net revenues — — — — Net loss (22,750) (23,542) (9,233) (1,300) For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Net cash (used in)/provided by operating activities (58,781) — — — Net cash used in investing activities — — — — Net cash (used in)/ provided by financing activities — — — — Effect of foreign exchange rate changes on cash and cash equivalents — — — — Net increase/(decrease) in cash and cash equivalents (58,781) — — — Cash and cash equivalents and restricted cash at beginning of year 58,781 — — — Cash and cash equivalents and restricted cash at end of year — — — — |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives of property and equipment | Category Estimated useful life Store operating equipment 5 years Office equipment and others 3-5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets Mechanical equipment 10 years Office buildings 40-50 years |
Schedule of revenue recognition | For the year ended December 31, 2021 2022 2023 2023 RMB % RMB % RMB % US$ % (in thousands, except for percentages) Net revenues: Revenues from product sales 6,659,218 83.6 10,223,720 76.9 18,677,390 75.0 2,630,655 75.0 Freshly brewed drinks 5,909,655 74.2 9,079,349 68.3 16,877,880 67.8 2,377,200 67.8 Other products 395,573 5.0 686,837 5.2 1,241,868 5.0 174,913 5.0 Others 353,990 4.4 457,534 3.4 557,642 2.2 78,542 2.2 Revenues from partnership stores 1,306,105 16.4 3,069,262 23.1 6,225,776 25.0 876,882 25.0 Total net revenues 7,965,323 100.0 13,292,982 100.0 24,903,166 100.0 3,507,537 100.0 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable | As of December 31, 2022 2023 RMB RMB US$ Receivables due from partners 20,235 31,611 4,452 Receivables due from corporate customers 38,738 49,054 6,909 Accounts receivable 58,973 80,665 11,361 Allowance for credit losses (191) — — Accounts receivable, net 58,782 80,665 11,361 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORIES | |
Schedule of inventories | As of December 31, 2022 2023 RMB RMB US$ Raw materials 886,336 1,487,226 209,471 Packaging and other supplies 289,537 651,634 91,781 Pre-made food and beverage items 30,594 65,140 9,175 1,206,467 2,204,000 310,427 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | |
Schedule of prepaid expenses and other current assets, net | As of December 31, 2022 2023 RMB RMB US$ Deductible input VAT 747,067 1,113,018 156,765 Prepaid rental and deposits 169,485 191,972 27,039 Prepayments for materials and advertising fees 108,638 134,956 19,008 Prepaid operating expenses 36,573 81,293 11,450 Interest receivables 204 4,183 589 Others 15,752 19,496 2,746 1,077,719 1,544,918 217,597 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | As of December 31, 2022 2023 RMB RMB US$ Store operating equipment 1,341,127 2,417,877 340,551 Leasehold improvements 1,126,562 2,235,034 314,798 Office equipment and others 177,259 315,291 44,408 Office buildings 811,666 480,792 67,718 Assets subject to operating leases — 346,223 48,764 Mechanical equipment 80,481 82,303 11,592 Construction in progress 53,103 345,904 48,720 3,590,198 6,223,424 876,551 Less: accumulated depreciation (1,546,362) (2,036,969) (286,901) Less: impairment (176,458) (17,314) (2,439) 1,867,378 4,169,141 587,211 |
OTHER NON-CURRENT ASSETS, NET (
OTHER NON-CURRENT ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
OTHER NON-CURRENT ASSETS, NET | |
Schedule of other non-current assets, net | As of December 31, 2022 2023 RMB RMB US$ Long-term guarantee deposits (1) 181,477 397,737 56,020 Prepayments for equipment, net 119,009 354,005 49,861 Land use rights, net (2) 26,081 31,950 4,500 Prepaid leasehold improvements 1,177 2,874 405 Interest receivable non-current — 2,926 412 327,744 789,492 111,198 (1) Long-term guarantee deposits mainly represent rental and renovation deposits over 1 year. (2) Land use rights represent payments to the local government authorities for use of lands for 50 years , net of accumulated amortization. As of December 31, 2022 and 2023, the carrying amounts of land use rights are RMB 26.1 million and RMB 32.0 million, respectively, which represent the result of their original values of RMB 26.7 million and RMB 33.1 million, netting off accumulated amortization of RMB 0.6 million and RMB 1.2 million, respectively. Land use rights are amortized on a straight-line basis with amortization expenses of RMB 0.15 million, RMB 0.2 million and RMB 0.6 million (US $0.1 million) for the years ended December 31, 2021, 2022 and 2023, respectively. |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2022 2023 RMB RMB US$ Payroll and welfare payables 372,795 746,185 105,098 Payables for the purchase of property and equipment 120,227 529,448 74,571 Payables for office supplies and utilities 238,466 455,001 64,086 Payables for delivery costs 210,779 260,153 36,642 Payables for advertising expenditures 55,261 132,211 18,622 Other taxes payables 105,970 102,241 14,400 Payables for professional service fees (1) 132,430 37,065 5,220 Others 139,497 294,673 41,504 1,375,425 2,556,977 360,143 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
Schedule of significant related party transactions | (a) Related parties Names of related parties Relationship with the Company Shanghai Tianshu Zhixin Semiconductor Co., Ltd (“Tianshu”) An entity significantly influenced by the Company’s controlling shareholder Goumei (Zhejiang) Information Technology Co., Ltd (“Goumei”) An entity significantly influenced by the Company’s controlling shareholder (b) Other than disclosed elsewhere, the Group had the following significant related party transactions for the years ended December 31, 2021, 2022 and 2023: For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Services received from: —Goumei — 13,947 48,258 6,797 Assets purchased from —Tianshu — — 33,850 4,768 Total — 13,947 82,108 11,565 (c) As of December 31, 2022 2023 RMB RMB US$ Amounts due to: —Goumei 3,932 4,530 638 —Tianshu — 27,080 3,814 Total 3,932 31,610 4,452 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SHARE BASED COMPENSATION | |
Schedule of share-based compensation expenses were allocated in operating expenses by function | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Sales and marketing expenses 9,185 17,452 11,422 1,609 General and administrative expenses 293,549 380,556 228,084 32,125 302,734 398,008 239,506 33,734 |
Summary of assumptions used to estimate the fair value of the share options granted to employees | 2021 Risk-free interest rate 1.04 % Expected volatility 74.49 % Expected dividend yield 0.00 % Exercise multiple 2.20 Expected post-vesting forfeiture rate 0.00 % Fair value of share option US$ 1.07 |
2019 Plan | |
SHARE BASED COMPENSATION | |
Summary of the employee equity award activity | Weighted- average Weighted- remaining Aggregate Number of average contractual intrinsic options exercise price term Value US$ Years US$ Outstanding as of December 31, 2019 72,529,960 0.0002 9.05 Granted 25,917,240 0.0002 — Exercised — 0.0002 — — Forfeit (38,418,992) 0.0002 — Outstanding as of December 31, 2020 60,028,208 0.0002 8.83 Granted 2,795,600 0.0002 — Exercised — 0.0002 — — Forfeit (2,370,736) 0.0002 — Outstanding as of December 31, 2021 60,453,072 0.0002 7.91 Granted — — Exercised (32,008,561) 0.0002 88,097 Forfeit — 0.0002 Outstanding as of December 31, 2022 28,444,511 0.0002 7.24 Granted — — Exercised (24,108,314) 0.0002 Forfeit (243,016) 0.0002 82,205 Outstanding as of December 31, 2023 4,093,181 0.0002 6.34 Fully vested and expected to vest as of December 31, 2023 66,695,568 0.0002 Exercisable as of December 31, 2023 3,935,132 0.0002 |
2021 plan | |
SHARE BASED COMPENSATION | |
Summary of the employee equity award activity | Weighted-Average Grant-Date Number Fair Value of RSUs US$ Unvested as of December 31, 2020 — — Granted 40,842,760 1.09 Vested (31,943,824) 1.10 Forfeited or cancelled (6,368,184) 1.06 Unvested as of December 31, 2021 2,530,752 1.09 Granted 45,722,392 1.26 Vested (43,329,376) 1.26 Forfeited or cancelled (739,472) 1.30 Unvested as of December 31, 2022 4,184,296 1.23 Granted 10,551,248 3.05 Vested (13,239,120) 2.52 Forfeited or cancelled (117,792) 3.08 Unvested as of December 31, 2023 1,378,632 2.56 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
TAXATION | |
Schedule of components of (loss)/income before tax | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ (Loss)/income before tax Non-PRC 617,090 (331,744) (123,731) (17,427) PRC (102,298) 1,458,494 3,231,090 455,089 Total (loss)/income before tax 514,792 1,126,750 3,107,359 437,662 Income tax expenses/(benefits) Current income tax expenses 360 144,032 401,039 56,485 Deferred tax expenses/(benefits) (64,221) 494,472 (141,613) (19,946) Income tax (benefits)/expenses (63,861) 638,504 259,426 36,539 |
Schedule of reconciliation of tax computed by applying the statutory income tax rate | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Earnings before income taxes 514,792 1,126,750 3,107,359 437,662 Income tax expenses computed at PRC statutory income tax rate of 25% 128,698 281,688 776,840 109,416 Additional deduction for R&D expenses (11,095) (13,516) (19,397) (2,732) Non-deductible share-based compensation expenses 58,581 80,440 45,722 6,440 Non-deductible expenses and non-taxable income 9,415 (9,967) 5,378 757 Deferred tax assets writeoff related to closure entities — 8,266 (401) (56) Expiration of tax loss — — 43,438 6,118 Effect of tax rate changes on deferred tax — — 725 102 Recognition of uncertain tax benefits — 29,325 24,536 3,456 Change of valuation allowance 60,352 220,774 (609,815) (85,891) Effect of preferential tax rate (158,362) (18,626) (48,123) (6,778) Effect of International tax rates (155,242) 76,378 29,047 4,091 Prior-year tax filing difference 3,792 (16,258) 11,476 1,616 Income tax (benefits)/expenses (63,861) 638,504 259,426 36,539 |
Schedule of Significant components of deferred taxes | As of December 31, 2022 2023 RMB RMB US$ Deferred tax assets Donation 1,264 680 96 Accrued expenses 29,867 31,368 4,418 Accrued welfare 29,662 55,920 7,876 Impairment loss of long-lived assets and investments 327,764 4,568 643 Allowance for doubtful accounts 5,398 5,756 811 Tax losses 1,149,639 694,459 97,813 Valuation allowance (1,335,125) (442,669) (62,349) Total deferred tax assets, net 208,469 350,082 49,308 |
Schedule of unrecognized tax benefits roll-forward | As of December 31, 2022 2023 RMB RMB US$ Balance at beginning of year 54,956 80,930 11,399 Additions/(Deduction) based on tax positions related to the current year 25,974 (1,410) (199) Balance at end of year 80,930 79,520 11,200 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
NET INCOME PER SHARE | |
Schedule of basic and diluted income per share | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Numerator: Net income 578,653 488,246 2,847,933 401,123 Less: Net income attributable to non-controlling interests 108 — — — Net income attributable to ordinary shareholders 578,545 488,246 2,847,933 401,123 Denominator: Weighted average number of shares – basic 2,051,263,478 2,473,078,408 2,532,109,710 2,532,109,710 Adjustments for dilutive options and RSUs 84,580,779 43,195,219 453,592 453,592 Weighted average number of shares – diluted 2,135,844,257 2,516,273,627 2,532,563,302 2,532,563,302 Basic net income per share attributable to ordinary shareholders 0.29 0.20 1.12 0.16 Diluted net income per share attributable to ordinary shareholders 0.27 0.19 1.12 0.16 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
LEASES. | |
Schedule of supplemental balance sheet information related to operating lease | As of December 31, 2022 2023 RMB RMB US$ Right-of-use assets 2,003,997 5,186,855 730,553 Operating lease liabilities – current 880,873 1,851,310 260,752 Operating lease liabilities – non-current 1,024,274 3,114,855 438,718 Total operating lease liabilities 1,905,147 4,966,165 699,470 |
Schedule of the weighted average remaining lease terms and discount rates for the operating lease | Remaining lease term and discount rate: Weighted average remaining lease term (years) 1.78 Weighted average discount rate 3.943 % |
Schedule of future minimum lease payments under non-cancellable operating leases | RMB US$ 2024 1,851,310 260,752 2025 1,510,927 212,810 2026 997,107 140,440 2027 569,961 80,277 2028 and thereafter 386,414 54,425 Less: interest (349,554) (49,234) Total 4,966,165 699,470 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of contractual obligations and commercial commitments | The following table sets forth the Group’s contractual obligations and commercial commitments as of December 31, 2023: Payment Due by Period Less than More than Total 1 year 2–3 years 4–5 years 5 years (in thousands of RMB) Factory and office building construction commitments 67,162 59,941 7,221 — — Fixed assets purchasing commitment 549,715 549,715 — — — Total 616,877 609,656 7,221 — — |
PARENT COMPANY ONLY CONDENSED_2
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | |
Schedule of condensed balance sheets | As of December 31, 2022 2023 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 214,992 30,752 4,331 Amounts due from subsidiaries 12,534,774 13,043,055 1,837,076 Prepaid expenses and other current assets 6,910 2,778 391 Total current assets 12,756,676 13,076,585 1,841,798 Non-current assets: Investments in subsidiaries and VIE (5,736,325) (2,926,400) (412,175) Other non-current assets — — — Total non-current assets (5,736,325) (2,926,400) (412,175) Total assets 7,020,351 10,150,185 1,429,623 LIABILITIES AND SHAREHOLDERS’ DEFICITS Current liabilities: Amounts due to subsidiaries 247,743 309,318 43,567 Accrued expenses and other current liabilities 111,525 10,108 1,425 Convertible senior notes — — — Payable for equity litigants settlement 33,796 116,314 16,382 Total current liabilities 393,064 435,740 61,374 Total liabilities 393,064 435,740 61,374 As of December 31, 2022 2023 RMB RMB US$ LIABILITIES AND SHAREHOLDERS’ EQUITY Mezzanine equity: Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 issued outstanding 1,578,040 1,578,040 222,262 Total Mezzanine equity 1,578,040 1,578,040 222,262 Shareholders’ equity: Class A ordinary shares (US$0.000002 par value;19,692,307,693 and 19,692,307,693 shares 2,079,801,956 issued outstanding 23 23 3 Class B ordinary shares (US$0.000002 par value; 5,000,000,000 and 5,000,000,000 shares 144,778,552 144,778,552 issued outstanding 2 2 0 Additional paid-in capital 16,073,063 16,445,195 2,316,257 Accumulated deficit (11,421,145) (8,705,759) (1,226,181) Accumulated other comprehensive income 397,304 396,944 55,908 Total shareholders’ equity 5,049,247 8,136,405 1,145,987 Total liabilities and shareholders’ equity 7,020,351 10,150,185 1,429,623 |
Schedule of condensed statements of comprehensive (loss)/ income | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ General and administrative expenses (85,567) (39,773) (46,722) (6,581) Sales and marketing expenses — — (566) (80) Losses and expenses related to Fabricated Transactions and restructuring (246,410) (69,233) 32,422 4,567 Foreign exchange loss (138) (8,817) 3,320 468 Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes — (6,381) — — Share of (losses)/income from subsidiaries and VIE (40,522) 791,186 2,949,195 415,385 Gain from extinguishment of Series B Senior Secured Notes — 124,139 — — Interest income 296 576 2,476 349 Other (expense)/income (4,784) — — — Interest and financing expenses (35,490) (23,484) — — Provision for SEC settlement 1,146,474 — — — Provision for equity litigants settlement (155,314) (279,967) (92,192) (12,985) Net income before income taxes 578,545 488,246 2,847,933 401,123 Net income 578,545 488,246 2,847,933 401,123 Net income attributable to the Company’s ordinary shareholders 578,545 488,246 2,847,933 401,123 Net income 578,545 488,246 2,847,933 401,123 Other comprehensive income/(loss), net of tax of nil: Foreign currency translation difference, net of tax of nil 102,802 (69,552) (360) (51) Total comprehensive income 681,347 418,694 2,847,573 401,072 |
Schedule of condensed statements of cash flows | For the year ended December 31, 2021 2022 2023 RMB RMB RMB US$ Net cash provided by/(used in) operating activities 1,383,630 (587,039) (184,240) (25,950) Net cash (used in)/provided by investing activities — — — — Net cash provided by/(used in) financing activities 1,514,660 (2,276,260) — — Net (decrease)/increase in cash and cash equivalents 2,898,290 (2,863,299) (184,240) (25,950) Cash and cash equivalents at beginning of the years 180,001 3,078,291 214,992 30,281 Cash and cash equivalents at end of the years 3,078,291 214,992 30,752 4,331 |
ORGANIZATION (Details)
ORGANIZATION (Details) ¥ in Millions | 12 Months Ended | ||||
Jul. 27, 2018 | Dec. 31, 2023 CNY (¥) subsidiary | Dec. 31, 2023 USD ($) subsidiary | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
ORGANIZATION. | |||||
Amount transferred from PRC subsidiaries to the VIE by loans or by capital support | ¥ 11.1 | $ 1,600,000 | ¥ 115.5 | ¥ 18.8 | |
Amount transferred from VIE to PRC subsidiaries | ¥ 0.6 | $ 83,300 | ¥ 104.1 | ¥ 58.8 | |
Mr. Jinyi Guo | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in variable interest entities | 83.33% | 83.33% | |||
Mr. Gang Wu | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in variable interest entities | 16.67% | 16.67% | |||
Luckin BVI | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin International BVI | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Singapore | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin HK | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Trading HK | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Roasting | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Roastery | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Beijing WFOE | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin TJ | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin China | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Coffee Roasting (Tianjin) Co., Ltd. | |||||
ORGANIZATION. | |||||
Number of subsidiaries | 1 | 1 | |||
Luckin Coffee Roasting (Pingnan) Co., Ltd | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin Coffee Food (Jiangsu) Co., Ltd | |||||
ORGANIZATION. | |||||
Percentage of direct or indirect ownership by the Company in subsidiaries | 100% | 100% | |||
Luckin coffee | |||||
ORGANIZATION. | |||||
Number of subsidiaries | 68 | 68 | |||
Luckin China | Beijing WFOE | |||||
ORGANIZATION. | |||||
Percentage of equity interest in subsidiaries transferred | 100% | ||||
Beijing WFOE and VIE | |||||
ORGANIZATION. | |||||
Percentage fees to be paid from the consolidated net profits | 100% | 100% |
ORGANIZATION - Consolidated VIE
ORGANIZATION - Consolidated VIE Structured by the Contractual Agreements (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
Variable Interest Entity [Line Items] | |||||
Total assets | ¥ 18,291,978 | ¥ 10,480,397 | $ 2,576,370 | ||
Total liabilities | 8,577,533 | 3,853,110 | 1,208,121 | ||
Total net revenues | 24,903,166 | $ 3,507,537 | 13,292,982 | ¥ 7,965,323 | |
Net loss | 2,847,933 | 401,123 | 488,246 | 578,653 | |
Net cash (used in)/provided by operating activities | 2,900,425 | 408,516 | 19,818 | 123,447 | |
Net cash used in investing activities | (3,447,099) | (485,514) | (798,046) | 337 | |
Net cash (used in)/ provided by financing activities | (2,276,260) | 1,514,660 | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 7,398 | 1,042 | 77,133 | (22,215) | |
Net increase/(decrease) in cash and cash equivalents | (539,276) | (75,956) | (2,977,355) | 1,616,229 | |
Cash and cash equivalents and restricted cash at beginning of years | 3,577,919 | 503,939 | 6,555,274 | 4,939,045 | |
Cash and cash equivalents and restricted cash at end of years | 3,038,643 | 427,983 | 3,577,919 | 6,555,274 | |
VIE | |||||
Variable Interest Entity [Line Items] | |||||
Total assets | 2 | 6,865 | |||
Total liabilities | 4,336 | 2,864 | $ 610 | ||
Net loss | ¥ (9,233) | $ (1,300) | ¥ (23,542) | (22,750) | |
Net cash (used in)/provided by operating activities | (58,781) | ||||
Net increase/(decrease) in cash and cash equivalents | (58,781) | ||||
Cash and cash equivalents and restricted cash at beginning of years | ¥ 58,781 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Convenience translation, Restricted cash, Accounts receivable and Inventories (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 29, 2023 $ / ¥ | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Buying rate | 7.0999 | ||||
Allowance for credit losses | ¥ 0 | ¥ 191 | $ 0 | ||
Inventory wrote off | ¥ 30,000 | $ 4,200 | ¥ 33,400 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment (Details) | Dec. 31, 2023 |
Store operating equipment | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 5 years |
Mechanical equipment | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 10 years |
Minimum [Member] | Office equipment and others | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 3 years |
Minimum [Member] | Office buildings | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 40 years |
Maximum [Member] | Office equipment and others | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 5 years |
Maximum [Member] | Office buildings | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Estimated useful lives of the assets | 50 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment of long-lived assets other than goodwill (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Impairment loss of long-lived assets | ¥ 5,200 | $ 700 | ¥ 221,810 | ¥ 21,368 |
Store operating equipment and others | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Impairment loss of long-lived assets | ¥ 21,400 | |||
Luckin coffee express machines | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Impairment loss of long-lived assets | 221,800 | |||
Luckin Tea | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Impairment loss of long-lived assets | ¥ 5,200 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition (Details) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 24,903,166 | $ 3,507,537,000 | ¥ 13,292,982 | ¥ 7,965,323 | |
Total net revenues, percentage | 100% | 100% | 100% | 100% | |
Allowance for doubtful accounts | ¥ 0 | ¥ 191 | $ 0 | ||
Receivables due from partners | 80,665 | 58,782 | 11,361,000 | ||
Deferred revenues | 123,400 | 97,400 | $ 17,400,000 | ||
Revenues from product sales | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 18,677,390 | $ 2,630,700,000 | ¥ 10,223,720 | ¥ 6,659,218 | |
Revenues from product sales | Product concentration risk | Product and services benchmark | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues, percentage | 75% | 75% | 76.90% | 83.60% | |
Revenues from freshly brewed drinks | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 16,877,880 | $ 2,377,200,000 | ¥ 9,079,349 | ¥ 5,909,655 | |
Revenues from freshly brewed drinks | Product concentration risk | Product and services benchmark | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues, percentage | 67.80% | 67.80% | 68.30% | 74.20% | |
Revenues from other products | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 1,241,868 | $ 174,900,000 | ¥ 686,837 | ¥ 395,573 | |
Revenues from other products | Product concentration risk | Product and services benchmark | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues, percentage | 5% | 5% | 5.20% | 5% | |
Revenues from others | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 557,600 | $ 78,500,000 | ¥ 457,534 | ¥ 353,990 | |
Revenues from others | Product concentration risk | Product and services benchmark | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues, percentage | 2.20% | 2.20% | 3.40% | 4.40% | |
Revenues from partnership stores | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 6,225,776 | $ 876,882,000 | ¥ 3,069,262 | ¥ 1,306,105 | |
Revenues from partnership stores | Product concentration risk | Product and services benchmark | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues, percentage | 25% | 25% | 23.10% | 16.40% | |
Revenues from self-operated stores | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 17,880,100 | $ 2,518,400,000 | ¥ 9,786,200 | ¥ 6,528,200 | |
Partnership stores - material sales | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | 4,157,600 | 585,600,000 | 2,011,200 | 834,700 | |
Partnership stores - Other services | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | 510,800 | 71,900,000 | 352,100 | 147,800 | |
Partnership stores - profit sharing | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 680,200 | $ 95,800,000 | 427,900 | 144,800 | |
Partnership stores - profit sharing | Minimum [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Term of profit-sharing freed (in months) | 1 month | 1 month | |||
Partnership stores - profit sharing | Maximum [Member] | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Term of profit-sharing freed (in months) | 3 months | 3 months | |||
Revenue from product sales on a net basis | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 100 | $ 12,400 | 1,200 | 2,000 | |
Partnership stores - equipment sales | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Total net revenues | ¥ 877,200 | $ 123,500,000 | ¥ 278,100 | ¥ 178,800 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Sales and marketing expenses and General and administrative expenses ,Income taxes (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Delivery expenses | ¥ 2,010,700 | $ 283,200 | ¥ 1,373,219 | ¥ 819,549 |
Sales and marketing expenses | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Advertising expenditure | 801,100 | 112,800 | 338,000 | 243,700 |
General and administrative expenses | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Research and development costs | ¥ 338,800 | $ 47,700 | ¥ 301,400 | ¥ 251,700 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Government subsidies and Income taxes (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Government subsidies | ¥ 71.2 | $ 10 | ¥ 78 | ¥ 47.1 | |
Government Assistance, Statement of Income or Comprehensive Income [Extensible Enumeration] | Other (expenses)/income, net | Other (expenses)/income, net | |||
Accrued interest and penalties | ¥ 7.6 | ¥ 4.5 | ¥ 0 | $ 1.1 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee benefit expenses and Segment reporting (Details) ¥ in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) segment | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Employee benefit expenses | ¥ 530.3 | $ 74.7 | ¥ 333.5 | ¥ 247.3 |
Number of reportable segments | 1 | 1 |
PRINCIPAL RISKS (Details)
PRINCIPAL RISKS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
PRINCIPAL RISKS | ||||||
Cost of purchased materials | ¥ 10,892,214 | $ 1,534,136 | ¥ 5,178,963 | ¥ 3,198,552 | ||
Total cost of purchased materials | 100% | 100% | 100% | 100% | ||
Credit risk | ||||||
PRINCIPAL RISKS | ||||||
Cash and cash equivalents and short-term investments | ¥ 3,724,900 | ¥ 3,316,800 | $ 524,600 | |||
Credit risk | Outside PRC | ||||||
PRINCIPAL RISKS | ||||||
Cash and cash equivalents and short-term investments | ¥ 27,800 | $ 3,900 | $ 31,500 | |||
Economic risk | ||||||
PRINCIPAL RISKS | ||||||
Minimum term of PRC government's economic reform policies (in years) | 20 years | 20 years | ||||
Foreign currency exchange rate risk | ||||||
PRINCIPAL RISKS | ||||||
(Depreciation) / Appreciation of US$ against RMB | 2.90% | 2.90% | 8.20% | (2.30%) |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
ACCOUNTS RECEIVABLES | |||
Receivables due from partners | ¥ 80,665 | $ 11,361 | ¥ 58,782 |
Accounts receivable | 80,665 | 11,361 | 58,973 |
Allowance for credit losses | 0 | 0 | (191) |
Accounts receivable, net | 80,665 | 11,361 | 58,782 |
Partners | |||
ACCOUNTS RECEIVABLES | |||
Receivables due from partners | 31,611 | 4,452 | 20,235 |
Accounts receivable, net | 31,611 | 4,452 | 20,235 |
Corporate customers | |||
ACCOUNTS RECEIVABLES | |||
Receivables due from corporate customers | ¥ 49,054 | $ 6,909 | ¥ 38,738 |
INVENTORIES (Details)
INVENTORIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
INVENTORIES | |||
Raw materials | ¥ 1,487,226 | $ 209,471 | ¥ 886,336 |
Packaging and other supplies | 651,634 | 91,781 | 289,537 |
Pre-made food and beverage items | 65,140 | 9,175 | 30,594 |
Inventory, net | ¥ 2,204,000 | $ 310,427 | ¥ 1,206,467 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | |||
Deductible input VAT | ¥ 1,113,018 | $ 156,765 | ¥ 747,067 |
Prepaid rental and deposits | 191,972 | 27,039 | 169,485 |
Prepayments for materials and advertising fees | 134,956 | 19,008 | 108,638 |
Prepaid operating expenses | 81,293 | 11,450 | 36,573 |
Interest receivables | 4,183 | 589 | 204 |
Others | 19,496 | 2,746 | 15,752 |
Prepaid expenses and other current assets, net | ¥ 1,544,918 | $ 217,597 | ¥ 1,077,719 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | ¥ 6,223,424 | ¥ 3,590,198 | $ 876,551 | |||
Less: accumulated depreciation | (2,036,969) | (1,546,362) | (286,901) | |||
Less: impairment | (17,300) | (176,458) | (2,400) | |||
Property, plant and equipment, net | 4,169,141 | 1,867,378 | 587,211 | |||
Depreciation | 604,000 | $ 85,100 | 391,700 | ¥ 465,200 | ||
Luckin coffee express | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Impairment loss | $ | 107,800 | |||||
Impairment provision written off | 164,600 | |||||
Luckin Tea | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Less: impairment | 4,500 | |||||
Self-operating stores | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Impairment loss | 17,000 | |||||
Store operating equipment | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 2,417,877 | 1,341,127 | 340,551 | |||
Less: impairment | 11,700 | |||||
Impairment loss | 175,700 | |||||
Leasehold improvements | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 2,235,034 | 1,126,562 | 314,798 | |||
Office equipment and others | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 315,291 | 177,259 | 44,408 | |||
Less: impairment | 5,600 | |||||
Impairment loss | 800 | |||||
Office buildings | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 480,792 | 811,666 | 67,718 | |||
Assets subject to operating leases | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 346,223 | 48,764 | ||||
Mechanical equipment | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 82,303 | 80,481 | 11,592 | |||
Construction in progress | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Property and equipment, gross | 345,904 | 53,103 | $ 48,720 | |||
Luckin coffee express machines | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Impairment loss | ¥ 5,200 | $ 700 | 167,100 | $ 32,000 | ||
Luckin coffee express machines | Luckin coffee express | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Impairment loss | 220,700 | |||||
Store operating equipment and others | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Impairment loss | ¥ 176,500 |
OTHER NON-CURRENT ASSETS, NET_2
OTHER NON-CURRENT ASSETS, NET (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
OTHER NON-CURRENT ASSETS, NET | |||||
Long-term guarantee deposits(1) | ¥ 397,737 | ¥ 181,477 | $ 56,020 | ||
Prepayments for equipment, net | 354,005 | 119,009 | 49,861 | ||
Land use rights, net(2) | 32,000 | 26,081 | 4,500 | ||
Prepaid leasehold improvements | 2,874 | 1,177 | 405 | ||
Interest receivable non-current | 2,926 | 412 | |||
Other non-current assets, net | 789,492 | 327,744 | $ 111,198 | ||
Original values | 33,100 | 26,700 | |||
Accumulated amortization | ¥ 1,200 | 600 | |||
Period of land use rights (in years) | 50 years | 50 years | |||
Amortization of land use rights | ¥ 600 | $ 100 | ¥ 200 | ¥ 150 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Detail) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
Payroll and welfare payables | ¥ 746,185 | $ 105,098 | ¥ 372,795 |
Payables for the purchase of property and equipment | 529,448 | 74,571 | 120,227 |
Payables for office supplies and utilities | 455,001 | 64,086 | 238,466 |
Payables for delivery costs | 260,153 | 36,642 | 210,779 |
Payables for advertising expenditures | 132,211 | 18,622 | 55,261 |
Other taxes payables | 102,241 | 14,400 | 105,970 |
Payables for professional service fees | 37,065 | 5,220 | 132,430 |
Others | 294,673 | 41,504 | 139,497 |
Accrued expenses and other current liabilities | 2,556,977 | 360,143 | ¥ 1,375,425 |
Accrued professional fees reversed | ¥ 44,700 | $ 6,300 |
RELATED PARTY TRANSACTIONS - Si
RELATED PARTY TRANSACTIONS - Significant related party transactions (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | |
Services received from: | |||
RELATED PARTY TRANSACTIONS | |||
Total | ¥ 82,108 | $ 11,565 | ¥ 13,947 |
Services received from: | Goumei | |||
RELATED PARTY TRANSACTIONS | |||
Total | 48,258 | 6,797 | ¥ 13,947 |
Assets purchased from related party | Tianshu | |||
RELATED PARTY TRANSACTIONS | |||
Total | ¥ 33,850 | $ 4,768 |
RELATED PARTY TRANSACTIONS - Re
RELATED PARTY TRANSACTIONS - Related Party Balances (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
RELATED PARTY TRANSACTIONS | |||
Total | ¥ 31,610 | $ 4,452 | ¥ 3,932 |
Goumei | |||
RELATED PARTY TRANSACTIONS | |||
Total | 4,530 | 638 | ¥ 3,932 |
Tianshu | Related Party | |||
RELATED PARTY TRANSACTIONS | |||
Total | ¥ 27,080 | $ 3,814 |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2023 USD ($) | |
RESTRICTED NET ASSETS | |||||
Minimum percentage of after-tax profits appropriated to the general reserve fund | 10% | 10% | |||
Maximum percentage of after-tax profits appropriated to the general reserve fund | 50% | 50% | |||
Statutory reserves allocated | ¥ 132,500 | $ 18.7 | ¥ 33,000 | ¥ 2,000 | |
Appropriation to other reserve funds | 0 | 0 | ¥ 0 | ||
Restricted net assets of PRC subsidiaries and the VIE | ¥ 10,061,400 | ¥ 7,647,700 | $ 1,417.1 |
CONVERTIBLE SENIOR NOTES (Detai
CONVERTIBLE SENIOR NOTES (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||||
Apr. 04, 2022 shares | Jan. 28, 2022 USD ($) shares | Dec. 01, 2021 | Jul. 15, 2020 | Jan. 17, 2020 USD ($) | Jan. 14, 2020 USD ($) | Dec. 31, 2019 shares | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 USD ($) | Aug. 31, 2022 USD ($) | |
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Aggregate principal amount | $ 115,600 | |||||||||||||
Interest expenses | ¥ | ¥ 19,855 | ¥ 35,490 | ||||||||||||
Percentage of aggregate principal amount of creditors to approve the scheme | 97.70% | |||||||||||||
Fair value loss | ¥ | (6,381) | |||||||||||||
Gain from extinguishment | ¥ | 124,139 | |||||||||||||
Convertible senior notes due 2025 | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Aggregate principal amount | $ 60,000 | $ 400,000 | ||||||||||||
Interest rate (as a percent) | 0.50% | 0.75% | ||||||||||||
Net proceeds from Notes Offering | $ 449,700 | |||||||||||||
Beneficial conversion feature | $ 0 | |||||||||||||
Additional interest rate | 0.50% | 0.75% | ||||||||||||
Interest expenses | $ 0 | $ 300 | $ 5,500 | |||||||||||
Total amount due | 469,900 | $ 464,400 | ||||||||||||
Series B Senior Secured Notes | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Gain from extinguishment | 18,300 | 124,100 | ||||||||||||
Class A ordinary shares | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Issuance of Class A ordinary shares (in shares) | shares | 19,753,888 | |||||||||||||
Restructuring support agreement | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Cash consideration principle amount | $ 245,500 | |||||||||||||
Derivative asset bifurcated from the New Notes | 5,400 | |||||||||||||
Marked to fair value | 4,500 | |||||||||||||
Fair value loss | $ 900 | ¥ 6,400 | ||||||||||||
Restructuring support agreement | 9% Series B - senior secured notes due 2027 | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Interest rate (as a percent) | 9% | |||||||||||||
Net proceeds from Notes Offering | $ 109,900 | |||||||||||||
Additional interest rate | 9% | |||||||||||||
Restructuring support agreement | Convertible senior notes due 2025 | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Aggregate principal amount | $ 460,000 | |||||||||||||
Percentage of principal and accrued and unpaid interest on Notes which automatically became due and payable | 100% | |||||||||||||
Threshold number of days for additional interest | 380 days | |||||||||||||
Additional interest payable | 3,100 | 1,100 | ||||||||||||
Percentage of principal of notes upon default | 100% | |||||||||||||
Accrued and unpaid interest | 6,800 | 3,300 | ||||||||||||
Interest expenses | $ 2,000 | $ 1,100 | ||||||||||||
Restructuring support agreement | Class A ordinary shares | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Issuance of shares including shares issued under top-up mechanism (in shares) | shares | 76,220,808 | |||||||||||||
Restructuring support agreement | ADSs | ||||||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||||||
Issuance of Class A ordinary shares (in shares) | shares | 291,699 | |||||||||||||
Issuance of shares including shares issued under top-up mechanism (in shares) | shares | 9,527,601 | |||||||||||||
Number of shares claimed by creditors | shares | 25,004 | |||||||||||||
Number of shares unclaimed which are returned | shares | 200,032 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) $ / shares in Units, ¥ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||
Jan. 09, 2020 USD ($) $ / shares shares | Jan. 09, 2020 CNY (¥) shares | Jun. 18, 2019 USD ($) shares | Jun. 18, 2019 CNY (¥) shares | May 17, 2019 USD ($) $ / shares shares | May 17, 2019 CNY (¥) shares | Dec. 31, 2019 shares | Nov. 30, 2019 shares | Dec. 31, 2023 Vote shares | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Dec. 31, 2020 shares | |
IPO | ||||||||||||
ORDINARY SHARES | ||||||||||||
Total proceeds, net of underwriting discounts and commissions | $ 527.7 | ¥ 3,640.9 | ||||||||||
Overallotment option | ||||||||||||
ORDINARY SHARES | ||||||||||||
Total proceeds, net of underwriting discounts and commissions | $ 79.5 | ¥ 548 | ||||||||||
Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Conversion ratio | 1 | 1 | ||||||||||
Conversion into Class A ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Conversion ratio | 1 | 1 | 1 | |||||||||
Ordinary shares | Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 750,000 | 750,000 | ||||||||||
Angel shares | Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 1,428,750 | 1,428,750 | ||||||||||
Series A convertible redeemable preferred shares | Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 544,688 | 544,688 | ||||||||||
Series B convertible redeemable preferred shares | Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 279,152 | 279,152 | ||||||||||
Series B-1 Preferred shares | Conversion into Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 173,182 | 173,182 | ||||||||||
Series B-1 Preferred shares | Conversion into Class A ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares converted | 15,211 | 15,211 | ||||||||||
Class B ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares issued upon conversion | 3,175,772 | 3,175,772 | ||||||||||
Number of shares after share split | 1,587,886,000 | |||||||||||
Par value per share (in US dollars per share) | $ / shares | $ 0.000002 | |||||||||||
Share split ratio | 500 | 500 | ||||||||||
Number of voting rights entitled | Vote | 10 | |||||||||||
Class B ordinary shares | Conversion into Class A ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares issued upon conversion | 1,132,908,520 | |||||||||||
Conversion ratio | 1 | 1 | ||||||||||
Class A ordinary shares | ||||||||||||
ORDINARY SHARES | ||||||||||||
Number of shares issued upon conversion | 15,211 | 15,211 | 310,198,928 | |||||||||
Number of shares after share split | 7,605,500 | |||||||||||
Par value per share (in US dollars per share) | $ / shares | $ 0.000002 | |||||||||||
Share split ratio | 500 | 500 | ||||||||||
Aggregate shares issued | 19,753,888 | |||||||||||
Number of voting rights entitled | Vote | 1 | |||||||||||
Issue of class A ordinary shares for vested options and RSU | 13,478,384 | 53,123,768 | 70,061,136 | |||||||||
Convertible senior notes restructuring (in shares) | 76,220,808 | |||||||||||
Class A ordinary shares | IPO | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 264,000,000 | 264,000,000 | ||||||||||
Class A ordinary shares | Follow on Offering | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 82,800,000 | 82,800,000 | ||||||||||
Class A ordinary shares | Private placement | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 23,529,412 | 23,529,412 | ||||||||||
Issue price per share (in US dollars per share) | $ / shares | $ 2.125 | |||||||||||
Total proceeds, net of issuance costs | $ 50 | ¥ 345 | ||||||||||
Class A ordinary shares | Overallotment option | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 39,600,000 | 39,600,000 | ||||||||||
ADSs | ||||||||||||
ORDINARY SHARES | ||||||||||||
Issue price per share (in US dollars per share) | $ / shares | $ 42 | |||||||||||
Total proceeds, net of underwriting discounts and commissions | $ 419.5 | ¥ 2,888.5 | ||||||||||
ADSs | IPO | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 33,000,000 | 33,000,000 | ||||||||||
ADSs | Follow on Offering | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 10,350,000 | 10,350,000 | ||||||||||
ADSs | Overallotment option | ||||||||||||
ORDINARY SHARES | ||||||||||||
Aggregate shares issued | 4,950,000 | 4,950,000 | 4,950,000 | 4,950,000 |
SENIOR PREFERRED SHARES (Detail
SENIOR PREFERRED SHARES (Details) $ / shares in Units, ¥ in Thousands, $ in Millions | 12 Months Ended | ||||||
Jan. 07, 2022 CNY (¥) shares | Jan. 07, 2022 USD ($) $ / shares shares | Nov. 30, 2021 CNY (¥) shares | Nov. 30, 2021 USD ($) $ / shares shares | Apr. 15, 2021 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SENIOR PREFERRED SHARES | |||||||
Proceeds from issuance of convertible senior preferred shares | ¥ | ¥ 63,380 | ¥ 1,514,660 | |||||
Convertible Senior Preferred Shares | |||||||
SENIOR PREFERRED SHARES | |||||||
Percentage of the original aggregate subscription price of the Senior Preferred Shares | 100% | ||||||
Initial conversion ratio of Senior Preferred Shares to Ordinary shares | 1 | ||||||
Convertible Senior Preferred Shares | Centurium Capital | |||||||
SENIOR PREFERRED SHARES | |||||||
Value of temporary equity to be issued under the investment agreement | $ | $ 240 | ||||||
Senior Preferred Shares issued (in shares) | shares | 295,384,615 | 295,384,615 | |||||
Proceeds from issuance of convertible senior preferred shares | ¥ 1,527,400 | $ 240 | |||||
Issue price per share (in US dollars per share) | $ / shares | $ 0.8125 | ||||||
Convertible Senior Preferred Shares | Joy Capital | |||||||
SENIOR PREFERRED SHARES | |||||||
Value of temporary equity to be issued under the investment agreement | $ | $ 10 | ||||||
Senior Preferred Shares issued (in shares) | shares | 12,307,692 | 12,307,692 | |||||
Proceeds from issuance of convertible senior preferred shares | ¥ 63,700 | $ 10 | |||||
Issue price per share (in US dollars per share) | $ / shares | $ 0.8125 |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details) - 2019 Plan | 12 Months Ended | 24 Months Ended | |||||
Jan. 18, 2019 shares | Dec. 31, 2023 shares | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Dec. 31, 2020 shares | Dec. 31, 2019 | Dec. 31, 2021 | |
SHARE BASED COMPENSATION | |||||||
Term (in years) | 10 years | ||||||
Vesting period (in years) | 4 years | 4 years | 4 years | 4 years | |||
Granted | 79,015,500 | 0 | 0 | 2,795,600 | 25,917,240 | ||
Share split ratio | 500 | ||||||
First vesting date | |||||||
SHARE BASED COMPENSATION | |||||||
Vesting percentage (as a percent) | 40% | 40% | 25% | ||||
Second vesting date | |||||||
SHARE BASED COMPENSATION | |||||||
Vesting percentage (as a percent) | 40% | 40% | 25% | 40% | |||
Third vesting date | |||||||
SHARE BASED COMPENSATION | |||||||
Vesting percentage (as a percent) | 10% | 10% | 25% | ||||
Fourth vesting date | |||||||
SHARE BASED COMPENSATION | |||||||
Vesting percentage (as a percent) | 10% | 10% | 25% |
SHARE BASED COMPENSATION - Expe
SHARE BASED COMPENSATION - Expenses were allocated in operating expenses by function (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
SHARE BASED COMPENSATION | ||||
Total share-based compensation expenses recognized | ¥ 239,506 | $ 33,734 | ¥ 398,008 | ¥ 302,734 |
Sales and marketing expenses | ||||
SHARE BASED COMPENSATION | ||||
Total share-based compensation expenses recognized | 11,422 | 1,609 | 17,452 | 9,185 |
General and administrative expenses | ||||
SHARE BASED COMPENSATION | ||||
Total share-based compensation expenses recognized | ¥ 228,084 | $ 32,125 | ¥ 380,556 | ¥ 293,549 |
SHARE BASED COMPENSATION - Opti
SHARE BASED COMPENSATION - Options granted to employees (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | 24 Months Ended | ||||||
Jan. 25, 2021 | Jan. 18, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2021 | |
Aggregated intrinsic value | ||||||||
Legally granted shares | 49,494,272 | |||||||
2019 Plan | ||||||||
Number of options | ||||||||
Outstanding, at the beginning of period | 28,444,511 | 60,453,072 | 60,028,208 | 72,529,960 | 72,529,960 | |||
Granted | 79,015,500 | 0 | 0 | 2,795,600 | 25,917,240 | |||
Exercised | (24,108,314) | (32,008,561) | ||||||
Forfeit | (243,016) | (2,370,736) | (38,418,992) | |||||
Outstanding, at the end of period | 4,093,181 | 28,444,511 | 60,453,072 | 60,028,208 | 72,529,960 | 60,453,072 | ||
Fully vested and expected to vest as of December 31, 2022 | 66,695,568 | |||||||
Exercisable at the end of period | 3,935,132 | |||||||
Weighted-average exercise price | ||||||||
Outstanding, at the beginning of period | $ 0.0002 | $ 0.0002 | $ 0.0002 | $ 0.0002 | $ 0.0002 | |||
Granted | 0.0002 | 0.0002 | ||||||
Exercised | 0.0002 | 0.0002 | 0.0002 | 0.0002 | ||||
Forfeit | 0.0002 | 0.0002 | 0.0002 | 0.0002 | ||||
Outstanding, at the end of period | 0.0002 | $ 0.0002 | $ 0.0002 | $ 0.0002 | $ 0.0002 | 0.0002 | ||
Fully vested and expected to vest as of December 31, 2022 | 0.0002 | |||||||
Exercisable at the end of period | $ 0.0002 | |||||||
Weighted-average remaining contractual term | ||||||||
Weighted-average remaining contractual term of outstanding stock options | 6 years 4 months 2 days | 7 years 2 months 26 days | 7 years 10 months 28 days | 8 years 9 months 29 days | 9 years 18 days | |||
Aggregated intrinsic value | ||||||||
Exercised | $ 88,097 | |||||||
Forfeit | $ 82,205 | |||||||
Closing price | $ 1.07 | $ 1.07 | ||||||
Weighted average grant date fair value of options granted | $ 1.07 | |||||||
Unrecognized share-based compensation expense for share options | $ 42 | |||||||
Weighted average period of which unrecognized share-based compensation expense for share options granted, which are expected to be recognized | 1 year | |||||||
Term (in years) | 10 years | |||||||
Vesting period (in years) | 4 years | 4 years | 4 years | 4 years | ||||
2019 Plan | ADSs | ||||||||
Aggregated intrinsic value | ||||||||
Closing price | $ 27.28 | |||||||
2019 Plan | Ordinary shares | ||||||||
Aggregated intrinsic value | ||||||||
Closing price | $ 3.41 | |||||||
2019 Plan | First vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 40% | 40% | 25% | |||||
2019 Plan | Second vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 40% | 40% | 25% | 40% | ||||
2019 Plan | Third vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 10% | 10% | 25% | |||||
2019 Plan | Fourth vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 10% | 10% | 25% | |||||
2021 plan | ||||||||
Number of RSUs | ||||||||
Unvested, at the beginning of period | 4,184,296 | 2,530,752 | ||||||
Granted | 10,551,248 | 45,722,392 | 40,842,760 | |||||
Vested | (13,239,120) | (43,329,376) | (31,943,824) | |||||
Forfeited or cancelled | (117,792) | (739,472) | (6,368,184) | |||||
Unvested, at the end of period | 1,378,632 | 4,184,296 | 2,530,752 | 2,530,752 | ||||
Weighted-Average Grant-Date Fair Value | ||||||||
Unvested, at the beginning of period | $ 1.23 | $ 1.09 | ||||||
Granted | 3.05 | 1.26 | $ 1.09 | |||||
Vested | 2.52 | 1.26 | 1.10 | |||||
Forfeited or cancelled | 3.08 | 1.30 | 1.06 | |||||
Unvested, at the end of period | 2.56 | 1.23 | 1.09 | $ 1.09 | ||||
Aggregated intrinsic value | ||||||||
Total weighted average grant-date fair value RSUs (in US dollars per share) | $ 3.05 | $ 1.26 | 1.09 | |||||
Weighted average period of which unrecognized share-based compensation expense for share options granted, which are expected to be recognized | 5 months 26 days | |||||||
Term (in years) | 10 years | 1 year | ||||||
Vesting period (in years) | 4 years | |||||||
2021 plan | ADSs | ||||||||
Aggregated intrinsic value | ||||||||
Maximum number of shares authorized | 27,846,154 | |||||||
2021 plan | Ordinary shares | ||||||||
Aggregated intrinsic value | ||||||||
Maximum number of shares authorized | 222,769,232 | |||||||
2021 plan | Scenario One | First vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 15% | |||||||
2021 plan | Scenario One | Second vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | Scenario One | Third vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | Scenario One | Fourth vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 35% | |||||||
2021 plan | Scenario Two | First vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | Scenario Two | Second vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | Scenario Two | Third vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | Scenario Two | Fourth vesting date | ||||||||
Aggregated intrinsic value | ||||||||
Vesting percentage (as a percent) | 25% | |||||||
2021 plan | RSUs | ||||||||
Aggregated intrinsic value | ||||||||
Weighted average grant date fair value of options granted | $ 3.05 | $ 1.26 | $ 1.09 | |||||
Unrecognized share-based compensation expense for share options | $ 1,400 |
SHARE BASED COMPENSATION - Fair
SHARE BASED COMPENSATION - Fair value of employee share options (Details) - 2019 Plan | 12 Months Ended |
Dec. 31, 2021 $ / shares | |
SHARE BASED COMPENSATION | |
Risk-free interest rate | 1.04% |
Expected volatility | 74.49% |
Expected dividend yield | 0% |
Exercise multiple | $ 2.20 |
Expected post-vesting forfeiture rate | 0% |
Fair value of share option | $ 1.07 |
TAXATION - Enterprise income ta
TAXATION - Enterprise income tax ("EIT") (Details) $ in Thousands, $ in Thousands, ¥ in Millions | 12 Months Ended | |||||
Dec. 31, 2023 USD ($) | Dec. 31, 2023 HKD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2019 CNY (¥) | |
TAXATION | ||||||
Tax rate (as a percent) | 25% | 25% | 25% | 25% | 25% | |
Minimum | ||||||
TAXATION | ||||||
Profit to qualify for tax rate | ¥ | ¥ 1 | |||||
Hong Kong | ||||||
TAXATION | ||||||
payments of dividends by the Company | $ 0 | |||||
Hong Kong | First 2,000,000 Hong Kong Dollar ("HKD") of profits | ||||||
TAXATION | ||||||
Tax rate (as a percent) | 8.25% | 8.25% | 8.25% | |||
Profit to qualify for tax rate | $ 2,000 | |||||
Hong Kong | Above 2,000,000 Hong Kong Dollar ("HKD") of profits | ||||||
TAXATION | ||||||
Tax rate (as a percent) | 16.50% | 16.50% | 16.50% | |||
Profit to qualify for tax rate | $ 2,000 | |||||
PRC | ||||||
TAXATION | ||||||
Tax rate (as a percent) | 25% | 25% | 25% | |||
Preferential tax rate (as a percent) | 15% | 15% | 15% | |||
Preferential corporate income tax rate | 20 | |||||
Withholding tax rate (as a percent) | 10% | 10% | 10% | |||
PRC | Assessable Taxable Profit Less Than 1 Million | ||||||
TAXATION | ||||||
Preferential corporate income tax rate | 5 | 5 | 5 | 2.5 | 2.5 | |
PRC | Taxable profits between RMB1.0 million and RMB3.0 million | ||||||
TAXATION | ||||||
Preferential corporate income tax rate | 5 | 5 | 5 | 5 | 10 | |
PRC | Maximum | Assessable Taxable Profit Less Than 1 Million | ||||||
TAXATION | ||||||
Exemption range in taxable profits | 87.50% | |||||
Profit to qualify for tax rate | ¥ | ¥ 1 | ¥ 1 | ¥ 1 | ¥ 1 | ||
PRC | Maximum | Taxable profits between RMB1.0 million and RMB3.0 million | ||||||
TAXATION | ||||||
Exemption range in taxable profits | 75% | |||||
Profit to qualify for tax rate | ¥ | 3 | 3 | 3 | ¥ 3 | ||
PRC | Minimum | Assessable Taxable Profit Less Than 1 Million | ||||||
TAXATION | ||||||
Exemption range in taxable profits | 75% | |||||
PRC | Minimum | Taxable profits between RMB1.0 million and RMB3.0 million | ||||||
TAXATION | ||||||
Exemption range in taxable profits | 50% | |||||
Profit to qualify for tax rate | ¥ | ¥ 1 | ¥ 1 | ¥ 1 | ¥ 1 | ||
Cayman Islands | ||||||
TAXATION | ||||||
payments of dividends by the Company | $ 0 | |||||
British Virgin Islands | ||||||
TAXATION | ||||||
payments of dividends by the Company | $ 0 | |||||
Singapore | ||||||
TAXATION | ||||||
Tax rate (as a percent) | 17% | 17% | 17% |
TAXATION - The components of (l
TAXATION - The components of (loss)/income before tax (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
TAXATION | ||||
Total (loss)/income before tax | ¥ 3,107,359 | $ 437,662 | ¥ 1,126,750 | ¥ 514,792 |
Income tax (expenses)/benefits | ||||
Current income tax expenses | (401,039) | (56,485) | (144,032) | (360) |
Deferred tax expenses/(benefits) | (141,613) | (19,946) | 494,472 | (64,221) |
Income tax (benefits)/expenses | 259,426 | 36,539 | 638,504 | (63,861) |
Non-PRC | ||||
TAXATION | ||||
Total (loss)/income before tax | (123,731) | (17,427) | (331,744) | 617,090 |
PRC | ||||
TAXATION | ||||
Total (loss)/income before tax | ¥ 3,231,090 | $ 455,089 | ¥ 1,458,494 | ¥ (102,298) |
TAXATION - Reconciliation of ta
TAXATION - Reconciliation of tax (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
TAXATION | ||||
Statutory income tax rate (as a percent) | 25% | 25% | 25% | 25% |
Earnings before income taxes | ¥ 3,107,359 | $ 437,662 | ¥ 1,126,750 | ¥ 514,792 |
Income tax expenses computed at PRC statutory income tax rate of 25% | 776,840 | 109,416 | 281,688 | 128,698 |
Additional deduction for R&D expenses | (19,397) | (2,732) | (13,516) | (11,095) |
Non-deductible share-based compensation expenses | 45,722 | 6,440 | 80,440 | 58,581 |
Non-deductible expenses | 5,378 | 757 | (9,967) | 9,415 |
Deferred tax assets writeoff related to closure entities | (401) | (56) | 8,266 | |
Expiration of tax loss | 43,438 | 6,118 | ||
Effect of tax rate changes on deferred tax | 725 | 102 | ||
Recognition of uncertain tax benefits | 24,536 | 3,456 | 29,325 | |
Change of valuation allowance | (609,815) | (85,891) | 220,774 | 60,352 |
Effect of preferential tax rate | (48,123) | (6,778) | (18,626) | (158,362) |
Effect of International tax rates | 29,047 | 4,091 | 76,378 | (155,242) |
Prior-year tax filing difference | 11,476 | 1,616 | (16,258) | 3,792 |
Effect of tax rate | (725) | (102) | ||
Income tax expense | ¥ 259,426 | $ 36,539 | ¥ 638,504 | ¥ (63,861) |
TAXATION - Components of deferr
TAXATION - Components of deferred taxes (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | |
Deferred tax assets | |||
Donation | ¥ 680 | $ 96 | ¥ 1,264 |
Accrued expenses | 31,368 | 4,418 | 29,867 |
Accrued welfare | 55,920 | 7,876 | 29,662 |
Impairment loss of long-lived assets and investments | 4,568 | 643 | 327,764 |
Allowance for doubtful accounts | 5,756 | 811 | 5,398 |
Tax losses | 694,459 | 97,813 | 1,149,639 |
Valuation allowance | (442,700) | (62,349) | (1,335,125) |
Total deferred tax assets, net | 350,082 | 49,308 | 208,469 |
Accumulated tax losses | 2,729,500 | 384,400 | |
Valuation allowance | 442,700 | $ 62,349 | ¥ 1,335,125 |
Change in valuation allowance | ¥ 282,600 |
TAXATION - Unrecognized tax pos
TAXATION - Unrecognized tax position (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2023 USD ($) | |
TAXATION | ||||
Unrecognized tax benefits | ¥ 79,520 | ¥ 80,930 | $ 11,200 | |
Unrecognized tax benefits, if ultimately recognized, that will impact the effective tax rate | 57,600 | 54,700 | $ 8,100 | |
TAXATION | ||||
Balance at beginning of year | 80,930 | $ 11,399 | 54,956 | |
Additions/(Deduction) based on tax positions related to the current year | (1,410) | (199) | 25,974 | |
Balance at end of year | ¥ 79,520 | $ 11,200 | ¥ 80,930 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) ¥ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | |
Numerator: | ||||
Net income | ¥ 2,847,933 | $ 401,123 | ¥ 488,246 | ¥ 578,653 |
Less: Net income attributable to non-controlling interests | ¥ | 108 | |||
Net income attributable to ordinary shareholders | ¥ 2,847,933 | $ 401,123 | ¥ 488,246 | ¥ 578,545 |
Denominator: | ||||
Weighted average number of shares - basic | 2,532,109,710 | 2,532,109,710 | 2,473,078,408 | 2,051,263,478 |
Adjustments for dilutive options and RSUs | 453,592 | 453,592 | 43,195,219 | 84,580,779 |
Weighted average number of shares - diluted | 2,532,563,302 | 2,532,563,302 | 2,516,273,627 | 2,135,844,257 |
Basic net (loss)/income per share attributable to ordinary shareholders | (per share) | ¥ 1.12 | $ 0.16 | ¥ 0.20 | ¥ 0.29 |
Diluted net (loss)/income per share attributable to ordinary shareholders | (per share) | ¥ 1.12 | $ 0.16 | ¥ 0.19 | ¥ 0.27 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 453,592 | 453,592 | 43,195,219 | 84,580,779 |
LEASES - Supplemental balance s
LEASES - Supplemental balance sheet information related to operating lease (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
LEASES | |||
Right-of-use assets | ¥ 5,186,855 | $ 730,553 | ¥ 2,003,997 |
Operating lease liabilities - current | 1,851,310 | 260,752 | 880,873 |
Operating lease liabilities - non-current | 3,114,855 | 438,718 | 1,024,274 |
Total operating lease liabilities | ¥ 4,966,165 | $ 699,470 | ¥ 1,905,147 |
LEASES - The weighted average r
LEASES - The weighted average remaining lease terms and discount rates (Details) ¥ in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | |
Remaining lease term and discount rate: | |||
Weighted average remaining lease term (years) | 1 year 9 months 10 days | 1 year 9 months 10 days | |
Weighted average discount rate | 3.943% | 3.943% | |
Operating lease payments | ¥ 1,442 | $ 203.1 | ¥ 875.7 |
Total operating lease expenses | 1,399.2 | 197.1 | ¥ 854.6 |
Operating leases that have not yet commenced | ¥ 143.7 | $ 20.2 | |
Minimum | |||
Remaining lease term and discount rate: | |||
Term of operating leases that have not yet commenced (in months) | 12 months | 12 months | |
Maximum | |||
Remaining lease term and discount rate: | |||
Term of operating leases that have not yet commenced (in months) | 122 months | 122 months |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
LEASES | |||
2024 | ¥ 1,851,310 | $ 260,752 | |
2025 | 1,510,927 | 212,810 | |
2026 | 997,107 | 140,440 | |
2027 | 569,961 | 80,277 | |
2028 and thereafter | 386,414 | 54,425 | |
Less: interest | (349,554) | (49,234) | |
Total | ¥ 4,966,165 | $ 699,470 | ¥ 1,905,147 |
PROVISION FOR SEC SETTLEMENT (D
PROVISION FOR SEC SETTLEMENT (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||||
Feb. 03, 2022 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 17, 2021 USD ($) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 16, 2020 USD ($) | |
PROVISION FOR SEC SETTLEMENT | ||||||||||
Settlement of civil money penalty amount to SEC | $ 180,000 | |||||||||
Payable for SEC settlement | ¥ 1,174,500 | $ 180,000 | ||||||||
Provision for SEC settlement | ¥ | ¥ 0 | ¥ 0 | ¥ (1,146,474) | |||||||
Penalty from SEC | ||||||||||
PROVISION FOR SEC SETTLEMENT | ||||||||||
Penalty loss | $ 180,000 | |||||||||
Outstanding balance of penalty | $ 0 | $ 0 | ||||||||
Minimum | ||||||||||
PROVISION FOR SEC SETTLEMENT | ||||||||||
Settlement of civil money penalty amount to SEC | $ 180,000 | $ 180,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Capital commitments (Details) ¥ in Thousands | Dec. 31, 2023 CNY (¥) |
COMMITMENTS AND CONTINGENCIES | |
Less than 1 year | ¥ 609,656 |
2-3 years | 7,221 |
Total | 616,877 |
Factory and office building construction commitments | |
COMMITMENTS AND CONTINGENCIES | |
Less than 1 year | 59,941 |
2-3 years | 7,221 |
Total | 67,162 |
Fixed assets purchasing commitment | |
COMMITMENTS AND CONTINGENCIES | |
Less than 1 year | 549,715 |
Total | ¥ 549,715 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Contingency (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||||
Apr. 13, 2023 USD ($) | Oct. 26, 2021 USD ($) | May 31, 2020 USD ($) | Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2020 CNY (¥) | Dec. 31, 2020 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 06, 2020 entity | Apr. 02, 2020 USD ($) | |
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Provision for equity litigants settlement | ¥ 92,192 | $ 12,985 | ¥ 279,967 | ¥ 155,314 | ||||||||||
Payable for equity litigants settlement | 116,314 | 33,796 | $ 16,382 | |||||||||||
Fabrication of Transactions | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Sought value for losses from Company | $ 145,800 | |||||||||||||
Asserted losses | $ 325,000 | |||||||||||||
U.S. Opt Out Claims | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Settlement amount | $ 175,000 | |||||||||||||
U.S. Department of Justice Investigation | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Liability or loss recognized at the end of year | 0 | $ 0 | ||||||||||||
U.S. Securities Litigation | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Provision for equity litigants settlement | ¥ 1,226,100 | $ 187,500 | ||||||||||||
Additional equity litigation provision | 92,200 | 280,000 | ¥ 155,300 | 12,600 | 41,900 | $ 24,400 | ||||||||
Payable for equity litigants settlement | ¥ 116,300 | ¥ 33,800 | 16,400 | 4,900 | ||||||||||
Ministry of Finance Investigation | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Liability or loss recognized at the end of year | $ 0 | $ 0 | ||||||||||||
Number of entities of the Group | entity | 2 | |||||||||||||
Cayman Bondholder Action | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
Sought value for losses from Company | $ 155,000 |
PARENT COMPANY ONLY CONDENSED_3
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION - Condensed balance sheets (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Dec. 31, 2023 CNY (¥) shares | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 $ / shares | Dec. 31, 2021 CNY (¥) | May 17, 2019 $ / shares |
Current assets: | ||||||
Cash and cash equivalents | ¥ 2,925,709 | $ 412,077 | ¥ 3,534,304 | ¥ 6,477,636 | ||
Prepaid expenses and other current assets | 1,544,918 | 217,597 | 1,077,719 | |||
Total current assets | 7,599,554 | 1,070,374 | 6,037,054 | |||
Non-current assets: | ||||||
Other non-current assets | 789,492 | 111,198 | 327,744 | |||
Total non-current assets | 10,692,424 | 1,505,996 | 4,443,343 | |||
Total assets | 18,291,978 | 2,576,370 | 10,480,397 | |||
Current liabilities: | ||||||
Amounts due to subsidiaries | 294,673 | 41,504 | 139,497 | |||
Accrued expenses and other current liabilities | 2,556,977 | 360,143 | 1,375,425 | |||
Payable for equity litigants settlement | 116,314 | 16,382 | 33,796 | |||
Total current liabilities | 5,462,678 | 769,403 | 2,828,836 | |||
Total liabilities | 8,577,533 | 1,208,121 | 3,853,110 | |||
Mezzanine equity: | ||||||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | 1,578,040 | 222,262 | 1,578,040 | |||
Shareholders' equity: | ||||||
Additional paid-in capital | 16,276,991 | 2,292,566 | 16,037,406 | |||
Accumulated deficit | (8,705,759) | (1,226,181) | (11,421,145) | |||
Accumulated other comprehensive income | 396,944 | 55,908 | 397,304 | |||
Total Company's ordinary shareholders' equity | 8,136,405 | 1,145,987 | 5,049,247 | |||
Total liabilities and shareholders' equity | 18,291,978 | 2,576,370 | 10,480,397 | |||
Class A ordinary shares | ||||||
Shareholders' equity: | ||||||
Shares | ¥ 23 | $ 3 | ¥ 23 | |||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | $ 0.000002 | ||||
Equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | |||||
Equity, shares authorized (in shares) | 19,692,307,693 | 19,692,307,693 | 19,692,307,693 | |||
Equity, shares issued (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 | |||
Equity, shares outstanding (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 | |||
Class B ordinary shares | ||||||
Shareholders' equity: | ||||||
Shares | ¥ 2 | $ 0 | ¥ 2 | |||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | 0.000002 | ||||
Equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | |||||
Equity, shares authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 | |||
Equity, shares issued (in shares) | 144,778,552 | 144,778,552 | 144,778,552 | |||
Equity, shares outstanding (in shares) | 144,778,552 | 144,778,552 | 144,778,552 | |||
Convertible senior preferred shares | ||||||
Mezzanine equity: | ||||||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | ¥ 1,578,040 | $ 222,262 | ¥ 1,578,040 | |||
Shareholders' equity: | ||||||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | 0.000002 | ||||
Mezzanine equity, shares authorized (in shares) | 307,692,307 | 307,692,307 | 307,692,307 | |||
Mezzanine equity, shares issued (in shares) | 307,692,307 | 307,692,307 | 307,692,307 | |||
Mezzanine equity, shares outstanding (in shares) | 307,692,307 | 307,692,307 | 307,692,307 | |||
Parent Company | Reportable Legal Entities | ||||||
Current assets: | ||||||
Cash and cash equivalents | ¥ 30,752 | $ 4,331 | ¥ 214,992 | |||
Prepaid expenses and other current assets | 2,778 | 391 | 6,910 | |||
Total current assets | 13,076,585 | 1,841,798 | 12,756,676 | |||
Non-current assets: | ||||||
Investments in subsidiaries and VIE | (2,926,400) | (412,175) | (5,736,325) | |||
Total non-current assets | (2,926,400) | (412,175) | (5,736,325) | |||
Total assets | 10,150,185 | 1,429,623 | 7,020,351 | |||
Current liabilities: | ||||||
Accrued expenses and other current liabilities | 10,108 | 1,425 | 111,525 | |||
Payable for equity litigants settlement | 116,314 | 16,382 | 33,796 | |||
Total current liabilities | 435,740 | 61,374 | 393,064 | |||
Total liabilities | 435,740 | 61,374 | 393,064 | |||
Mezzanine equity: | ||||||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | 1,578,040 | 222,262 | 1,578,040 | |||
Shareholders' equity: | ||||||
Additional paid-in capital | 16,445,195 | 2,316,257 | 16,073,063 | |||
Accumulated deficit | (8,705,759) | (1,226,181) | (11,421,145) | |||
Accumulated other comprehensive income | 396,944 | 55,908 | 397,304 | |||
Total Company's ordinary shareholders' equity | 8,136,405 | 1,145,987 | 5,049,247 | |||
Total liabilities and shareholders' equity | 10,150,185 | 1,429,623 | 7,020,351 | |||
Parent Company | Reportable Legal Entities | Related Party | ||||||
Current assets: | ||||||
Amounts due from subsidiaries | 13,043,055 | 1,837,076 | 12,534,774 | |||
Current liabilities: | ||||||
Amounts due to subsidiaries | 309,318 | 43,567 | 247,743 | |||
Parent Company | Reportable Legal Entities | Class A ordinary shares | ||||||
Shareholders' equity: | ||||||
Shares | ¥ 23 | $ 3 | ¥ 23 | |||
Equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | 0.000002 | ||||
Equity, shares authorized (in shares) | 19,692,307,693 | 19,692,307,693 | 19,692,307,693 | |||
Equity, shares issued (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 | |||
Equity, shares outstanding (in shares) | 2,093,280,340 | 2,093,280,340 | 2,079,801,956 | |||
Parent Company | Reportable Legal Entities | Class B ordinary shares | ||||||
Shareholders' equity: | ||||||
Shares | ¥ 2 | $ 0 | ¥ 2 | |||
Equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | 0.000002 | ||||
Equity, shares authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 | |||
Equity, shares issued (in shares) | 144,778,552 | 144,778,552 | 144,778,552 | |||
Equity, shares outstanding (in shares) | 144,778,552 | 144,778,552 | 144,778,552 | |||
Parent Company | Reportable Legal Entities | Convertible senior preferred shares | ||||||
Mezzanine equity: | ||||||
Convertible senior preferred shares (US$0.000002 par value; 307,692,307 and 307,692,307 shares authorized as of December 31, 2022 and 2023, respectively; 307,692,307 and 307,692,307 issued and outstanding as of December 31, 2022 and 2023, respectively) | ¥ 1,578,040 | $ 222,262 | ¥ 1,578,040 | |||
Shareholders' equity: | ||||||
Mezzanine equity, par value (in US dollars per share) | $ / shares | $ 0.000002 | $ 0.000002 | ||||
Mezzanine equity, shares authorized (in shares) | 307,692,307 | 307,692,307 | 307,692,307 | |||
Mezzanine equity, shares issued (in shares) | 307,692,307 | 307,692,307 | 307,692,307 | |||
Mezzanine equity, shares outstanding (in shares) | 307,692,307 | 307,692,307 | 307,692,307 |
PARENT COMPANY ONLY CONDENSED_4
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION - Condensed statements of comprehensive loss (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
Operating(loss)/income | ||||
General and administrative expenses | ¥ (1,829,651) | $ (257,701) | ¥ (1,459,550) | ¥ (1,269,988) |
Sales and marketing expenses | (1,286,523) | (181,203) | (570,122) | (336,855) |
Losses and expenses related to Fabricated Transactions and restructuring | 28,515 | 4,016 | (75,204) | (339,557) |
Foreign exchange loss | 2,968 | 418 | 10,661 | 12,441 |
Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes | (6,381) | |||
Gain from extinguishment of Series B Senior Secured Notes | 124,139 | |||
Other (expense)/income | 62,283 | 8,772 | 60,680 | (16,513) |
Interest and financing expenses | (23,484) | (35,490) | ||
Provision for SEC settlement | 1,146,474 | |||
Provision for equity litigants settlement | (92,192) | (12,985) | (279,967) | (155,314) |
Income before income taxes | 3,107,359 | 437,662 | 1,126,750 | 514,792 |
Net income attributable to the Company's ordinary shareholders | 2,847,933 | 401,123 | 488,246 | 578,545 |
Net (loss)/income | 2,847,933 | 401,123 | 488,246 | 578,545 |
Other comprehensive income/(loss), net of tax of nil: | ||||
Foreign currency translation difference, net of tax of nil | (360) | (51) | (69,552) | 102,802 |
Total comprehensive income attributable to the Company's ordinary shareholders | 2,847,573 | 401,072 | 418,694 | 681,347 |
Foreign currency translation adjustments, tax | 0 | 0 | 0 | |
Parent Company | Reportable Legal Entities | ||||
Operating(loss)/income | ||||
General and administrative expenses | (46,722) | (6,581) | (39,773) | (85,567) |
Sales and marketing expenses | (566) | (80) | ||
Losses and expenses related to Fabricated Transactions and restructuring | 32,422 | 4,567 | (69,233) | (246,410) |
Foreign exchange loss | (3,320) | (468) | 8,817 | 138 |
Fair value changes of derivative asset bifurcated from Series B Senior Secured Notes | (6,381) | |||
Share of (losses)/income from subsidiaries and VIE | 2,949,195 | 415,385 | 791,186 | (40,522) |
Gain from extinguishment of Series B Senior Secured Notes | 124,139 | |||
Interest income | 2,476 | 349 | 576 | 296 |
Other (expense)/income | 4,784 | |||
Interest and financing expenses | (23,484) | (35,490) | ||
Provision for SEC settlement | 1,146,474 | |||
Provision for equity litigants settlement | (92,192) | (12,985) | (279,967) | (155,314) |
Income before income taxes | 2,847,933 | 401,123 | 488,246 | 578,545 |
Net (loss)/income | 2,847,933 | 401,123 | 488,246 | 578,545 |
Net income attributable to the Company's ordinary shareholders | 2,847,933 | 401,123 | 488,246 | 578,545 |
Net (loss)/income | 2,847,933 | 401,123 | 488,246 | 578,545 |
Other comprehensive income/(loss), net of tax of nil: | ||||
Foreign currency translation difference, net of tax of nil | (360) | (51) | (69,552) | 102,802 |
Total comprehensive income attributable to the Company's ordinary shareholders | 2,847,573 | $ 401,072 | 418,694 | 681,347 |
Other comprehensive (loss)/income, tax | 0 | 0 | 0 | |
Foreign currency translation adjustments, tax | ¥ 0 | ¥ 0 | ¥ 0 |
PARENT COMPANY ONLY CONDENSED_5
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION - Condensed statements of cash flows (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 CNY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 CNY (¥) | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | ||||
Net cash provided by/(used in) operating activities | ¥ 2,900,425 | $ 408,516 | ¥ 19,818 | ¥ 123,447 |
Net cash (used in)/provided by investing activities | (3,447,099) | (485,514) | (798,046) | 337 |
Net cash provided by/(used in) financing activities | (2,276,260) | 1,514,660 | ||
Net increase/(decrease) in cash and cash equivalents | (539,276) | (75,956) | (2,977,355) | 1,616,229 |
Cash and cash equivalents and restricted cash at beginning of years | 3,577,919 | 503,939 | 6,555,274 | 4,939,045 |
Cash and cash equivalents and restricted cash at end of years | 3,038,643 | 427,983 | 3,577,919 | 6,555,274 |
Parent Company | Reportable Legal Entities | ||||
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | ||||
Net cash provided by/(used in) operating activities | (184,240) | (25,950) | (587,039) | 1,383,630 |
Net cash provided by/(used in) financing activities | (2,276,260) | 1,514,660 | ||
Net increase/(decrease) in cash and cash equivalents | (184,240) | (25,950) | (2,863,299) | 2,898,290 |
Cash and cash equivalents and restricted cash at beginning of years | 214,992 | 30,281 | 3,078,291 | 180,001 |
Cash and cash equivalents and restricted cash at end of years | ¥ 30,752 | $ 4,331 | ¥ 214,992 | ¥ 3,078,291 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 1 Months Ended |
Jan. 31, 2024 shares | |
American Depositary Shares | |
Subsequent Event [Line Items] | |
Temporary equity shares on conversion | 1,538,461 |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Temporary equity shares | 12,307,688 |
Subsequent Event [Member] | Common Class A [Member] | |
Subsequent Event [Line Items] | |
Common shares re-designated | 12,307,688 |