Shares for Chinese coffee chain startup Luckin Coffee surged 13.1% Wednesday after reporting better-than-expected Q3 results.

Why it matters: The results reassured investors concerned with the company’s subsidy-fueled expansion.

The company’s net losses slowed during the period, reflecting an improved cost control strategy.

Details: Luckin’s net loss per American Depositary Share (ADS) was RMB 2.24 ($0.32), beating consensus analyst estimates of $0.37, and compared with a loss of RMB 3.60 in same year-ago period.

Luckin’s total net revenues were RMB 1.54 billion ($215.7 million), up 540.2% year on year from RMB 240.8 million in Q3 2018, topping analyst expectations of $211.88 million.

Net revenue uptick was driven by growth in its core beverage business, for which the number of transacting customers, effective selling price, and number of products sold per transacting customer increased.

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