Luckin Coffee Inc

Ladies and gentlemen, welcome to Lockeen Coffee's first quarter 2026 earnings conference call. All participants will be in listen only mode during management's prepared remarks, and there will be a question and answer session to follow. Please be advised that today's call is being recorded. Now I'd like to turn the call over to Ms. Nancy Song, head of investor relations at Lockeen Coffee. Nancy, please go ahead.

Thank you, and hello, everyone. Welcome to Locking Coffee's first quarter 2026 earnings conference call. We announced our financial results earlier today before the US market opened. The earnings release is now available on our IR website and the Y News website services. Today, you will hear from Dr. Guo Jingyi, co-founder and CEO of Locking Coffee, who will share a strategic overview of our business. Following that, Ms. Anjing, our CFO, will discuss our financial results in greater detail. Afterwards, we will open up the call for questions. During today's call, we will be making some forward-looking statements regarding future events and expectations. Any statements that are not historical facts, including but not limited to statements about our beliefs and expectations, are forward-looking statements. These payments involve inherent risks and uncertainties. Further information regarding these and other risks is included in our findings with the SEC. In addition, for non-GAAP matters discussed today, the reconciliation information related to those matters can be found in our earnings press release. During this call, Dr. Guo will speak in Chinese, and his comments will be translated into English. Now, I'd like to turn the call over to Dr. Guo Jingyi, the founder and CEO of Locking Coffee. Dr. Guo, please go ahead.

大家好,欢迎参加今天的业绩沟通会。 感谢各位对瑞幸咖啡的持续关注与支持。 Good day, everyone, and welcome to today's earnings conference forum.

Thank you for your continuous interest in and support for Locking Coffee.

2020年第一季度, We begin 2036 with robust momentum,

In the first quarter, we remained focused on executing our core strategy of high-quality scale growth and delivered solid results. Amid an increasingly diverse and dynamic competitive landscape, we leveraged our end-to-end digital capabilities to expand our store network, grow our customer base, increase consumption, and strengthen our supply chain. Together, These multi-dimensional scaling efforts raise a system-wide competitive advantage across our four pillars of people, products, and places.

In the first quarter, the company's total net income increased by 35%, reaching about $1.2 billion. We continue to maintain the leading opening rhythm in the industry and closely monitor the quality and efficiency of our stores. The basic stability of the same-store sales of self-employed door stores has been achieved. Door stores operate at the same rate in terms of cost. In terms of mass structure, the delivery ratio continues to fall in the first quarter, but it is still significantly higher than the same level as last year. Under this stage, the operating profit is about 7.1 billion yuan, and the operating profit rate is about 6%. In the long term, 我们相信,润性的规模运营体系优势将持续体现,并有效地驱动长期同链表现,运营效率与盈利水平的稳步提升。 In the first quarter, local net revenues grew 35% in the year to approximately RMB 12 billion.

We continue to expand our store network at an industry-leading pace. while remaining disciplined on store quality and operational efficiency. Same-store sales for our self-operated stores remained broadly stable, and the store-level operating expense ratios improved compared to last year. From a sales channel perspective, the delivery volume mix declined sequentially but remained well above last year's level, reflecting a temporary mixed-driven impact. As a result, operating income reached around RMB 710 million, representing an operating margin of around 6%. Looking ahead, we expect our scale advantages and operating capabilities to become increasingly evident, supporting improvements in sales performance, efficiency, and probability over time.

and firm confidence in the company's strategy and long-term development prospects. We officially launched the first $300 million one-year stock return plan. This is an important step in the company's continuous improvement of shareholder returns, and it also reflects our commitment to create long-term value for shareholders.

Grounded in our solid fundamentals and strong confidence in our strategy and long-term prospects, We launched our first share repurchase program of up to 300 million over a one-year period. This marks an important step in our efforts to enhance shareholder returns and reaffirms our commitment to long-term value creation.

接下来,我将围绕规模增长战略从人或厂三大核心维度介绍本季度的运营进展。 Later, CFO Anjing will share more detailed financial data.

Next, I will walk you through our forwarded progress across the three core dimensions of our scaled growth strategy, people, products, and places. Following that, our CFO Anjing will provide more detailed review of our financial performance.

In terms of the door chain, we base our health performance on the door chain. maintaining competitive opening speed, deepening the network coverage and convenience of high-end cities, strengthening the ability of brands to reach and meet the needs, and maintaining a long-term market leadership position. Until the first quarter, the total number of company stores reached 33,596, which is 39% of the total growth.

We continue to expand at a competitive pace while maintaining a clear focus on healthy store-level performance. We further deepen our network coverage across both high-tier and low-tier cities, enhancing convenience, strengthening brand accessibility, and improving our ability to capture demand, which ultimately reinforces our long-term market leadership. By the end of the first quarter, our total store count reached 33,596, representing 39% real-world growth. Our expanding store network will continue to support customer acquisition, buyer purchase frequency, and improved scale efficiencies over time.

To be specific, the Chinese market has increased by 2,531 stores, and the total number of stores has reached 33,419 stores, with 21,713 self-subsidized stores and 11,706 joint-subsidized stores. Gradually, the network layout of each county and city is relatively balanced. This national, deep-seated store network to make RuiXing's business more resilient, better able to deal with seasonal demand fluctuations, and maintain the stable development of the overall market. For example, during the Spring Festival this year, with the return of the population of high-end cities, the continued spread of coffee consumption habits, the consumer activity in the lower-end market was fully released. The performance of low-end cities, including stores, was outstanding. In China, we added 2,531 9-inch stores during the quarter, bringing our total store count to 33,419 stores.

This included 21,713 self-operated stores and 11,706 partnership stores, forming a well-balanced footprint across all city tiers nationwide. Our deeply penetrated national store network strengthens the structural resilience of our business, allowing us to better absorb seasonal and holiday demand volatility while sustaining stable overall performance For example, during this year's Chinese New Year holiday, as consumers in higher tier cities returned to their hometowns and coffee consumption habits continued to gain traction, demand in lower tier markets was fully activated, with our partnership stores performing particularly well. This performance underscores the significant long-term potential of China's coffee market and highlights the strength of our brand momentum, scale advantages, and a well-rounded product portfolio in driving growth.

国际市场方面,我们延续稳健的拓展节奏, 季度竞争17家,门店总数达到了177家, 其中包括新加坡自营门店82家, 12 U.S. self-employed stores and 83 Malaysian self-employed stores. In this quarter, we have completed the integration of internationalized business in China and Taiwan, and improved the operating management capabilities of overseas expansion. Under the support of systematization of China and Taiwan, we will continue to deepen the existing market with a flexible local operating model, optimize the performance of the three chains, accumulate overseas experience and user understanding,

Internationally, we continue to expand in a disciplined and measured manner. During the quarter, we added 17 new stores, burning our total overseas store count to 177. This includes 82 self-operated stores in Singapore, 12 self-operated stores in the U.S., and 83 franchise stores in Malaysia. During the quarter, we also completed the integration of our international centralized mid-office functions, further enhancing our global operating and management capabilities. Looking ahead, we will continue to deepen our presence in existing markets through flexible localized operating models, optimize store-level performance, and build further overseas operating experience and customer insights. while prudently exploring overseas expansion.

In terms of products, we continue to use the innovation drive and product layout as a guide to improve user activity, consumer frequency, and overall consumer size, and provide long-term support for the performance of the same point. In the first quarter, a total of 26 limited-edition drinks and more than a dozen green foods were launched. Since this year, We focus on strengthening the professional brand mentality of green coffee, and continue to enhance the coffee bean flavor and professional experience. We will also launch many classic products such as light-baked Americano, iced golden coffee, iced golden latte, and so on. Currently, our customized options cover three different flavors of coffee beans, with a conscious pairing of deep-baked coffee and iced golden coffee. to fully satisfy the consumer's professional quality needs. In addition, we have also launched new products such as Belgian black tea, plum Americano, and Qian Tang Longjing Latte, which have contributed to the vitality of different coffee series. In terms of non-coffee, we continue to enrich our product evidence and quality experience. In the first quarter, we launched the Snow Wrapping Knowledge series, which relies on the layout of the original production site to upgrade the matcha products all over the country.

On the product front, we continue to drive higher engagement, purchase frequency, and overall consumption through ongoing innovation and an increasingly diversified product portfolio, supporting long-term same-store performance. In the first quarter, We launched 26 new freshly brewed beverages and more than 10 snack items. Since the beginning of the year, we have focused on strengthening Latin coffee's provisioning as a professional coffee brand by continuously upgrading our bean flavor profiles and overall coffee experience. We introduced a range of classic offerings, including Light Rose Americano, Ethiopian Blanc Americano, and Ethiopian blonde latte. Our customization options now cover multiple roast profiles, including espresso blend, dark roast, and Ethiopian blonde, allowing us to meet increasingly sophisticated consumer preferences. In addition, we continue to refresh our coffee lineup with new products, such as the Belgian dark chocolate flavored latte, raspberry Americano, and the Chiantao Longjing Latte, keeping our menu innovative and engaging. In non-coffee categories, we continue to enrich our product metrics and enhancing quality, including the launch of our cheese-covered cereal and the full upgrade of our matcha lime-lime, supported by origin-based sources. This innovation further expanded our coverage of food all day multi-occasion consumption demand, which strongly supports new customer acquisition and repeat purchases from existing customers.

In terms of customers, we insist that we continue to create a comprehensive consumer experience with high quality, high cost-effectiveness, high convenience, and high emotional value, and transform the network advantage of the store into a sustainable growth of customer size and consumer size. In the first quarter, In addition to continuously expanding the coffee bean selection, we have also launched more SKU coffee cup options such as cold and hot drinks. These super-large-capacity products are widely loved by customers after being launched, and the initial coffee cup rate is outstanding. This experience upgrade that surrounds the needs of users also provides good support for the overall customer base price of this quarter. In addition, we have worked with famous artists the cross-border alliance of ChaoWan IP, and the recent 5th anniversary of the launch of SengYe, which continues to deepen the emotional connection and resonance between brands and young users. Under the promotion of these measures, in the first quarter, the number of new trading customers exceeded 21 million, and the total number of trading customers increased by 25%, exceeding 93 million. On the customer front, we remain committed to a customer-first approach, delivering a compelling value proposition across quality, affordability, convenience, and emotional engagement.

This enables us to translate our store network advantages into sustainable growth in both customer scale and consumption. During the first quarter, we further upgraded our customization offerings. In addition to the expanded coffee bean selection, we also rolled up larger cup sizes across a broader range of hot and iced SKUs. These larger size offerings have been well received by customers, with encouraging early adoption rates and a positive contribution to overall average selling price during the quarter. We continue to deepen emotional connections with younger consumers through collaborations with well-known artists and the pop culture IP, as well as our creative Coconut Latte 6th Anniversary Campaign. Supported by these initiatives, We added more than 21 million new transacting customers during the quarter. An average monthly transacting customers increased 25% year-over-year to over 93 million. Benefiting from product innovation, brand engagement, and network convenience, average cost purchased per customer increased year-over-year across both new and existing customers. validating the positive flywheel between scale expansion and demand growth.

此外,在可持续供应链方面, 我们深化以咖啡豆为核心的自主供应链建设, 强化原产地布局,将规模优势转化为系统性的经营韧性。 近期,瑞幸咖啡青岛创新生产中心正式投产, to become the third headquarter of the company. Since then, Xiamen and Kunshan, Qingdao, Pingnan, and Kunshan have joined forces to further form the 15.5 trillion tons of ready-to-use power station. The core supply chain's elasticity and stability have significantly increased, and it has provided more solid support for business scale expansion. At the same time, we rely on the supply chain's size advantage to deepen the industrial chain. to facilitate the industrial upgrade of the original production area. In this production season, we have increased domestic purchasing power, and purchased more than 30,000 tons of Yunnan coffee beans, which has built a more diverse and stable supply system for both domestic and foreign production areas. We have also provided stable income and long-term confidence to Yunnan coffee growers. We have also built a cooperative platform for industrial research and research, and supported the diversification of coffee professional competitions,

In addition, on the sustainable supply chain front, we continue to strengthen our proprietary supply chain centered around coffee beans, deepening our presence in origin regions and translating our scale into greater system-wide resilience. Recently, our Qingdao Innovation Production Center commenced operations, becoming our third roasting facility to come online. With facilities in Qingdao, Qingnan, and Kunshan fully operational, and Xiamen under construction, we are building a coordinated roasting network with total annual capacity reaching 155,000 tons. This further enhances the flexibility and reliability of our core supply chain, providing strong support for our continued scale expansion. At the same time, we continue to leverage our scale to deepen collaboration across the value chain and support the development of coffee origin regions. During the current harvest season, we increased our domestic sourcing occurring over 30,000 tons of coffee beans from Yunnan. This not only strengthens the diversity and resilience of our sourcing network across both domestic and international origins, but also provides stable income and long-term confidence for local growers. In addition, through partnerships with research institutions and support for professional coffee competition, We're integrating our supply chain capabilities into our ESG initiatives, contributing to the sustainable and high-quality development of China's coffee industry.

To sum up, the Chinese coffee market is still in a fast-growing stage where demand continues to be released. The long-term growth space is very wide. At this stage, We firmly focus on high-quality growth, maintaining the dynamic balance of expansion speed, door-to-door quality, and operating efficiency, relying on digitized drive, high efficiency, high convenience of the business model to grasp the structural opportunities of the industry, and achieve long-term sustainable growth. In the face of a complex and diversified market economy, and the high technical impact of last year's delivery subsidies, we believe In summary,

China's coffee market remains in a rapid growth phase, with consumer demand continuing to extend and a significant long-term potential ahead. At this stage, we remain firmly focused on high-quality scale growth, maintaining a dynamic balance among expansion pace, store quality, and operational efficiency. Our digitally-driven business models build on high efficiency and provisions as well to capture structural growth opportunities and deliver sustainable long-term growth. Amid a dynamic and evolving competitive landscape, as well as a high comparison base created by last year's delivery subsidies, we believe our industry-leading scale will enable us to navigate near-term volatility while unlocking long-term growth and profitability. Looking ahead, We will continue to drive innovation across product development, brand engagement, and customer experience to further lock consumption potential, support sustained business growth, and strengthen our leadership position in the market.

最后,再次感谢各位消费者,合作伙伴,与投资者的信任与支持。 感谢19万运行伙伴的辛勤付出,

Finally, we would like to thank our customers, partners, and investors for your continued trust and support, as well as our 190,000 Lock-In team members for your dedication and hard work. We remain committed to supporting the healthy development of China's coffee industry, building a world-class coffee brand, and creating sustainable long-term value for our customers, partners, and shareholders.

Thank you, Jingyi. Good day, everyone. Thank you for joining today's call. We deliver solid top-line growth while maintaining central discipline in the first quarter. Despite the impact of a higher delivery mix, underlying operating efficiency improved both at the store and group levels. As we continue to scale our business and strengthen our market leadership, we believe we are well positioned to drive operation leverage and profitability over time, supported by our sustained quality growth. Let's now look at our financial performance in detail. In the first quarter, total net revenues increased by 35% year-over-year to around RMB 12 billion, primarily driven by a 35.8% year-over-year increase in GMV to RMB 14.1 billion. This growth was supported by higher volumes across our self-operated and partnership stores, a result of our expanding store network and a growing base of active transacting customers. Revenues from productive sales increased by 32% year-over-year to RMB around $9 billion, mainly reflecting the solid performance of our self-operated stores Working down our productive sales into three streams. Net revenues from fractionable drinks were RMB 8.3 billion, representing about 69% of the total net revenues. Net revenues from other products were RMB 566 million, or about 5% of the total net revenues. Net revenues from others were R&D 157 million, or roughly 1% of total net revenues. Looking at productive sales from the perspective of company-owned stores, revenues from self-operated stores increased by 33% year-over-year to R&D 8.6 billion. Same-store sales growth was largely stable for this quarter. amid the rapid expansion of our store network. Store-level operating profit increased by 6% year-over-year at RMB 1.2 billion, with self-operated store-level operating margin of 13.6%. Revenues from partnership stores increased by 45% year-over-year to about RMB 3 billion, accounting for 25% of the total net revenues. This strong growth was mainly supported by increased sales of materials and improved contributions from profitable partnership stores, particularly reflecting the altered performance of partnership stores in the lower tier cities during the Chinese New Year holiday seasons. Cost of materials as a percentage of the total net revenues remained stable year over year at around 40%. In absolute terms, cost of our materials increased by 36 percent year-over-year to RMB 4.9 billion in line with our business expansion. Store rental and other operating costs as a percentage of our total net revenues decreased to 25.5 percent from 26.3 percent in the same period of 2025. In absolute terms, These expenses increased by 31% year-over-year to RMB 3.1 billion, driven by higher payroll costs from volume growth and deriving rental expenses due to continued store expansion. Delivery expenses increased by 9% year-over-year to RMB 1.3 billion, driven by a significant increase in delivery orders through food delivery platforms. As a result, delivery expenses as a percentage of the total net revenues increased to around 11% from around 8% in the same period of 2025. However, our delivery cost per order declined year over year, reflecting better efficiency as we scale our operation. Sales and marketing expenses as a percentage of the total net revenues were 6.1%, compared to 5.6% in the same period of 2025. In absolute terms, sales and marketing expenses rose 48% year-over-year to RMB 732 million, mainly driven by increased advertising and promotion expenses, as well as higher commission fees paid to food and delivery platforms as delivery volumes increased. General and administrative expenses as a percentage of total net revenues decreased to around 7% from around 8% in the same quarter of 2025. In absolute terms, T&A expenses rose 25% year-over-year to RMB 800, basically $1 million, mainly driven by higher payroll costs and share-based compensation, as well as increased investment in research and its development. Our GAAP operating profit was RMB 760 million, with an operating margin of around 6%, compared to RMB 735 million, around 8.3% in the prior year period, mainly reflecting higher delivery-related expenses as delivery volume increased. On a non-GAAP basis, operating profit was RMB 898 million, with a margin of Net profit was at RMB 506 million, with a net margin of 4.2%, compared to RMB 524 million and 5.9% in the prior year period. On a net gap basis, net profit was RMB 686 million, with net margin of 5.7%. Looking at our balance sheet and cash flow, we generated around RMB $791 million in net operating cash during the first quarter of 2026. As of March 31st, 2026, our total cash position, which includes cash and cash equivalents, restricted cash, term deposits, and short-term investments, was about RMB $9.1 million. Compared to our R&B 9 billion as of December 31, 2025, our healthy cash position provides flexibility to support a continued business expansion while allowing us to enhance shareholder returns. In closing, this quarter's continued momentum validates our long-term growth strategy. We remain dedicated to qualitatively expansion while optimizing operational efficiency at every step ultimately delivering sustainable value to our shareholders. With that, we will open the call for questions. Operator, please go ahead.

Ladies and gentlemen, we will now begin the Q&A session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset. before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Jesse Zhu of JP Morgan. Jesse, please go ahead.

Thank you. Good evening, Mr. Guo, Ms. An, and Nancy. I'm Jessi, an analyst at Moven Datong. Thank you for accepting my question. Congratulations to Kaimeng Hong. You achieved very good results in the first quarter of this special change, especially that the profit end exceeded the period, and the recovery plan was also very surprising. In the first quarter, we can see that it maintained a relatively fast opening rhythm. Thanks for taking my question. This is Jessie Xu from JP Morgan. Congrats on a very strong set of results in a very dynamic and competitive quarter, especially on margin say. Share repurchase is also a positive surprise. I'm sure shareholders are very happy today. My question is on growth and quality. So first quarter seems to be another fast quarter as we recorded another 2.5K net opening, a similar pace to the past few quarters. At the same time, same-store sales stayed relatively stable, which is not bad. So if we look into the rest of the year, how should we think about the expansion pace and what's your strategy in balancing scale market share and average store performance? Thank you.

Thank you. Thank you very much for your question. Let me answer this question. First of all, we always focus on the core strategy of the company, which is to increase the size of high-quality products. In the continuous expansion process, we pay great attention to the key indicators such as dynamic balance, opening speed, opening quality, operating efficiency, and power generation performance.

Thank you for your question. I will answer your question. So first, on the store expansion and the same store sales, we remain focused on our core strategy of high-quality scale growth. So as we continue to expand, we focus on maintaining a dynamic balance across these important metrics between the pace of expansion, store quality, operating efficiency, and the same store performance.

Based on the performance of the first quarter, we continued the pre-set strategy and maintained a relatively fast expansion overall. In essence, the expansion of the store is based on our strategic investment in the long-term demand judgment of Chinese coffee consumption. Therefore, under the premise of ensuring the health of the single-storied model, a competitive speed is pushed into the construction of the store network. This is also an important means to continue to strengthen the recent scale advantages and long-term market deployment.

So in the first quarter, we continue to execute our established strategy and maintain a relatively fast pace of expansion. And fundamentally, our store expansion is a strategic investment based on our long-term view of China's coffee consumption demand. So while maintaining a healthy unit in that mix, We are building our store network at a competitive pace to strengthen Lockheed Coffee's scale advantage and long-term marketing position.

So in the past year or so, in the face of the strong growth opportunity brought by the Chinese coffee consumption demand during the entire trade war, Ruixin is in a fast-growing stage overall. At the same time, it has continued this rhythm in the first stage. So under this background, . . . . .

Recently, the delivery wall has created very strong growth opportunities in China's coffee consumption. So, accordingly, we've been in the face of a relatively rapid expansion, and this momentum continued into the first quarter. So in this backdrop, some level of fluctuation in our same-store performance is normal, and also this is very well in line with our business expectations. Having said that, same-store sales for our self-operated stores remained broadly stable in the first quarter. We believe it also reflects the resilience of our overall operations.

另外从需求侧来看,如刚才我提到的, During this year's Spring Festival, the summer market has been particularly bright. This has further verified the ability of our country's relatively balanced door-to-door network to meet demand and transform demand. At the same time, we believe that demand is not static. In addition to the gradual improvement of coffee consumption habits, we continue to invest in supply and demand, including the expansion of door-to-door network and the continued innovation of products.

And from a demand perspective, as mentioned earlier, the strong performance in lower-tier markets during the Chinese New Year further validated the ability of our nationwide well-balanced store network as we capture and convert demand. At the same time, we don't view demand as static. In addition to a natural increase in the consumer's purchase frequency as coffee consumption habits develop, our ongoing supply side investments, including our store network expansion and our product innovation, also helps with simulation and the creation of new demand. This underpins our confidence in our long-term safe store performance as well.

In the next few months, as we enter the stage of a comparison between last year's sales subsidies and a higher one, the indicator of the same chain may still be affected by certain basic factors in the short term, and there will be certain fluctuations. But at the same time, we are also continuing to make corrections through a series of measures, including strengthening the creativity of products, improving the professionalism of coffee products, rich in non-coffee products, and so on, as well as to optimize the institutionalized experience. Consequently, continuous expansion of consumption scenarios, improved conversion efficiency and consumption frequency,

In the following quarters, as we move into the comparison period impacted by last year's elevated delivery subsidies, our spin store sales may face some short-term volatility. But at the same time, we are actively managing this through product innovation, continued enhancement of our professional coffee offerings, expansion of our non-coffee portfolio, as well as further improved customization. So with all these efforts, We think we will help with broadening the consumption scenarios, improve conversion, and increase frequency.

总结一下,我们相信在高速发展的过程中, 同电表现即使短期有所波动, 但从更长的周期来看, 整体趋势走向必然会是健康向上的。 我们对长期的同电表现充满了信心。 这是对于第一个问题的回答,谢谢。

And so in conclusion, while same-store performance may fluctuate in the short term with our rapid growth, but we believe the long-term trend will be, will remain healthy and upward. We remain confident in our same-store performance in the long run. This is my response to the, your first question. Yes. Thank you.

Our next question comes from Linda Wong with Macquarie.

Linda, please go ahead with your question. I have a question about the recovery plan. We are also very happy that the company has launched this share recovery plan. I want to ask, what is the core consideration and strategic motivation of the company to start recovery at this time? At the same time, I also want to understand that in the future, will the company consider using cash bonus and other share recovery methods? So let me translate into English. This is Linda Huang from Macquarie. So we are very pleased to see the company's launch of the share repurchase scheme. So I would like to know that about the key considerations and the strategic motivation behind initiating this repurchase program. And additionally, I also want to know that whether the company will consider adopting other shareholder reward initiatives. such as the cash dividend distributions going forward. Thank you very much.

谢谢您的提问。 首先我们在这个阶段 推出了三亿美金的股票回购的计划。 核心还是源于我们对于中国咖啡市场 长期潜力的一个坚定的看好, 以及对于公司未来增长前景 和长期价值的充分的信心。 After more than six years of development, RuiHsing has established a solid foundation. Business performance continues to improve. The current situation is also healthier. These have provided a solid foundation for our regular return.

Thank you for your question. So, fundamentally, our decision to launch the 300 million share value program at this stage reflects our strong confidence in the long-term potential of China's coffee market, also in our own growth prospects and our ability to create long-term value. Over the past six years, we've built a very solid fundamentals. with improving our trading performance and increasingly healthy cash flows, which supports our ability to return capital to shareholders.

As the company enters a more mature development stage, we are also continuously improving the importance of capital configuration and capital use efficiency. Under the premise of ensuring long-term strategic investment and supporting business documents, We hope to improve the long-term value of shareholders in a more positive and sustainable way. So this repurchase is an important step to optimize the capital configuration of the company and strengthen the return on shares.

As we enter a more mature stage of development, we are placing greater emphasis on capital allocation discipline and the efficient use of our capital. While continuing to support our strategic investments and steady business growth, we aim to enhance long-term shareholder value in a more proactive and sustainable way. So our FedEx program is a key step in optimizing our capital structure and strengthening shareholder returns.

In addition, regarding the return arrangement of future shareholders, we have always maintained an open and positive attitude. Due to the influence of historical reasons that are well known, the company does not yet have the conditions to divide the money in the short term, but we will combine the performance of the business in the future, the status of the cash flow, and the long-term development needs. The comprehensive assessment includes the return of shares in the stock market, on the basis of balanced business development and shareholder feedback, continue to create long-lasting value for shareholders. Thank you.

Looking ahead, we remain open to various shareholder return options. Due to historical reasons, we are not able to pay dividends in the short term, but we will continue to evaluate all the alternatives, including FedEx and further dividends, in the context of our operating performance, cash flows, and long-term development needs. Our goal is to continue delivering sustainable and long-term value to our shareholders while maintaining an appropriate balance between our business growth and shareholder returns. Thank you.

非常感谢。 我相信这里也是很多投资人所乐见的。 感谢管理层。 好,谢谢。 Thank you.

Due to time constraints, no further questions will be taken at this time. This concludes the question and answer session. I'd like to turn the call back to the management team for any closing remarks.

Thank you, everyone, for joining our call today. If you have any further questions, please feel free to contact our IR team. This concludes today's call. We look forward to speaking with you again next quarter. Thank you.

Once again, the conference has now concluded. You may disconnect your line. Thank you.