Chagee Q3 2025 Earnings Report

Chagee EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.36
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

Chagee Revenue Results

• Actual Revenue: $450.67 million
• Expected Revenue: $458.31 million
• Beat/Miss: Missed by -$7.64 million
• YoY Revenue Growth: N/A

Chagee Announcement Details

• Quarter: Q3 2025
• Date: 11/28/2025
• Time: Before Market Opens
• Conference Call Date: Friday, November 28, 2025
• Conference Call Time: 7:00AM ET

Chagee (NASDAQ:CHA) Holding Limited operates the CHAGEE beverage brand, which specializes in freshly prepared tea drinks inspired by traditional Chinese tea culture. Its menu includes tea-based milk beverages, fruit tea and other drinks made with tea leaves, milk and related ingredients. The company positions CHAGEE as a premium, modern tea brand serving customers through branded retail locations.

Founded in 2017, Chagee has expanded its store network primarily through mainland China, while also serving customers in Southeast Asia. Its international markets include Malaysia, Singapore, Thailand and Indonesia. The company’s business model includes a combination of company-operated and franchised stores, supported by standardized products, store operations and brand marketing.

Chagee Holding Limited is led by founder, chairman and chief executive officer Junjie Zhang. The company’s shares trade on the Nasdaq Global Select Market under the symbol CHA.

Chagee Q3 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Revenue declined 9.4% YoY to ¥3,208.3 million and same-store GMV remains under pressure (domestic in-store sales down 27.9% and per-store monthly GMV fell), which management expects to persist in the near term.
• Positive Sentiment: The company delivered its 11th consecutive profitable quarter with GAAP net income of ¥397.9 million and non-GAAP net income of ¥502.8 million (15.7% non‑GAAP net margin), and ended the quarter with ~¥9,142 million in cash.
• Positive Sentiment: Store expansion accelerated to a global network of 7,338 stores (net +300 this quarter) with rapid overseas progress — overseas GMV +75.3% YoY and 54 net new overseas stores (total 262).
• Neutral Sentiment: Gross margin improved to 53.8% driven by scale and procurement optimization, but operating costs rose materially (G&A +59.7% YoY; company‑owned store operating costs +94.7%), producing mixed margin dynamics.
• Positive Sentiment: Product and user initiatives showed traction — registered members reached 222 million (+36.7% YoY), award-winning product launches and the 4.0 menu aim to boost retention and broaden store utilization.

Presentation

[Operator]

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Chagee's third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We'll be hosting a question-and-answer session after management prepares remarks. Please note that today's event is being recorded. With that, I'll now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company. Please go ahead, ma'am.

[Alicia Guo, Investor Relations Director at Chagee]

Thank you. Hello everyone, and welcome to Chagee's third quarter 2025 earnings call. With us today are Mr. Junjie Zhang, our CEO, and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the newswire earlier today and are currently available online.

[Alicia Guo, Investor Relations Director at Chagee]

Before we continue, I refer you to our Safe Harbor statement in the earnings press release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today, and Chagee does not undertake any obligations to update these statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measure to GAAP measure. With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Hello everyone, thank you all for joining Chagee's third quarter 2025 earnings conference call.

[Translator]

First and foremost, I would like to express my sincere gratitude to every member of the Chagee team. In a dynamic and challenging market, our resilience and strong execution have driven steady progress and built a durable foundation for the long-term future we envision.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Over the past few years, we have consistently asked one core question: Why does Chagee exist? Our answer is clear. That is, bringing people together through tea. This founding mission and commitment drives us to focus on user value as the starting point for all strategies. Every decision and initiative aims to expand and deepen a community of people who connect with our brand values. Guided by this belief, we will steadfastly execute our high-quality development strategy.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

We're dedicated to delivering high-quality products. Rather than chasing traffic and trends, we prioritize our product excellence. Our ongoing raw material upgrades ensure tea that is authentic, wholesome, warm, and culturally rich, serving as a cornerstone of every experience and a key trust pillar for our brand. We emphasize the user experience, creating engaging content, and building emotional connections to make each cup a shareable story. Our offering goes beyond a beverage to a distinctive experience rooted in Eastern aesthetics. Store quality remains our focus, and global expansion will depend on each store's health and profitability. We pursue healthy growth across store network, identify high potential locations, and strive to make every Chagee store the go-to place for friends gathering over tea.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

In the face of short-term market fluctuations, we maintain our strategic resolve. We're deeply confident in the vast potential of global tea beverage and in the distinctive path Chagee has chosen, the one driven by culture and quality.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

These are my reflections on the core of our business and future direction. Now, I will turn the call over to our CFO Aaron, who will detail the specific results of our strategic execution this quarter. Thank you.

[Aaron Huang, CFO at Chagee]

See you, Junjie. Hello, everyone. Thank you for joining our earnings call. Before we dive into the detail, please note that all amounts are in RMB and all comparisons are on a year-over-year basis, unless otherwise stated. So, in the third quarter, our total net revenue was RMB 3,208.3 million, a decrease of 9.4% year-over-year, and 3.7% sequentially. Total GMV for the quarter was RMB 7,929.5 million. Despite the challenging macro environment and the intensified competition, we maintained our focus on profitable growth and disciplined execution. Non-GAAP net income was RMB 502.8 million, with a non-GAAP net margin of 15.7%, reflecting underlying resilience of our business model.

[Aaron Huang, CFO at Chagee]

Let me highlight several key operational achievements. First, our global tea house network reached 7,338 stores, with a net addition of 300 tea houses in the third quarter. Overseas expansion accelerated, introducing 54 net new tea houses as we successfully enter new markets, including the Philippines and Vietnam. Second, product innovation continued to drive momentum. In the home market, we launched the low caffeine jasmine green tea latte, becoming a top three bestseller, driving strong user acquisition.

[Aaron Huang, CFO at Chagee]

BO•YA Jasmine Green Milk Tea earned the Best Natural or Organic Beverage title at the 2025 World Beverage Innovation Awards, underscoring our strong product quality and leadership in healthy beverage innovation. In Asia Pacific, the Peach Oolong milk tea launch performed exceptionally well, validating our regional product strategy. Furthermore, our member ecosystem remains robust. Total registered members reached 222 million by the end of the third quarter, representing an increase of 15 million sequentially and 36.7% year-over-year. Our franchisee network also demonstrated remarkable stability.

[Aaron Huang, CFO at Chagee]

The store closure rate remained low at 0.3% for three consecutive quarters, underscoring the health and confidence of our franchisee partners. Now, let me provide a more detailed financial analysis. Starting with revenue, our total net revenue for the third quarter was RMB 3,208.3 million, mainly driven by the continued expansion of our tea house network. Among them, net revenue from franchisee tea houses was RMB 2,811.6 million, representing 87.6% of our total net revenue. Net revenue from company-owned tea houses increased by 63.8% to RMB 396.7 million, accounting for 12.4% of total revenue.

[Aaron Huang, CFO at Chagee]

The increase was primarily driven by the expansion of our company-owned tea houses network in both Greater China and overseas markets. In Greater China, total GMV decreased by 6.2% year-over-year to RMB 7,629.2 million. The average monthly GMV per tea house in Greater China was RMB 378,506, a year-over-year decline, reflecting both high base in last year and a more severe competitive environment, including the impact of delivery platform subsidy competition.

[Aaron Huang, CFO at Chagee]

Even so, our commitment to maintain premium position and brand integrity remains central. Meanwhile, overseas markets continue to show substantial progress, with GMV increasing 75.3% year-over-year and 27.7% quarter-over-quarter to RMB 300.3 million. This growth is mainly driven by strategic store expansion and growing brand awareness, positioning the overseas market as a key pillar of our future growth. In the third quarter, we expanded our overseas presence by adding a net 54 stores, bringing our total store number to 262 stores as of September 30th, 2025.

[Aaron Huang, CFO at Chagee]

This growth was fueled by our successful entries into the Philippines and Vietnam, as well as continued steady expansion in Malaysia, Thailand, and Indonesia. During the quarter, we added 18 new stores in Malaysia and nine each in both Thailand and Indonesia. Our commitment to being an exceptional employer has earned prestige awards in key markets, including HR Asia Best Companies to Work for in Asia 2025 in Malaysia and the certified OJT Center Plus NS Mark Gold status in Singapore. These honors strengthen our brand and help us attract the top talent needed for growth.

[Aaron Huang, CFO at Chagee]

While our store expansion continues, we recognize pressure on GMV performance at existing stores, with domestic and overseas in-store sales GMV declining by 27.9% and 23.4%, respectively. This softness is attributed to a high base from the same period last year and intensified competitive pressure. However, our franchisee fundamentals remain solid, as evidenced by consistently low closure rate. We expect same store GMV growth to remain under pressure in the near term.

[Aaron Huang, CFO at Chagee]

Turning to margin, our gross profit, calculated by excluding cost of material storage and logistics from net revenue, reached RMB 1,726.5 million this quarter, resulting in a strong gross margin of 53.8%. This marks a solid improvement both year-over-year, up from 50.1% in the third quarter of last year. The margin improvement results primarily from two factors. First is the benefit of expanding economic scale, and the second is decreased purchase costs driven by our persistent procurement optimization initiatives.

[Aaron Huang, CFO at Chagee]

On operating expenses, share-based compensation expenses this quarter were RMB 104.9 million. This results in our commitment to long-term employee engagement and align their goals with shareholders to provide greater clarity on underlying operational performance. We will reference non-GAAP operating results with a full reconciliation available in our earnings release and Form 6-K. Operating income was RMB 454.4 million, representing an operating margin of 14.2%.

[Aaron Huang, CFO at Chagee]

Excluding share-based compensation expenses, non-GAAP operating income was RMB 559.3 million, representing a 17.4% margin. The above-mentioned margin differences reflect our step-up investment in talent recruitment for global expansion, including brand building to support new product launch R&D to enhance our offering and digital infrastructure to elevate customer experience. The operating costs for company-owned tea houses were RMB 271.4 million, up 94.7% from a year ago and up 47.4% from the second quarter of 2025.

[Aaron Huang, CFO at Chagee]

As of September 30th, 2025, we operated 367 company-owned tea houses, up from 239 in the second quarter of 2025. On a per-store basis, operating costs have decreased compared to the second quarter of 2025, showing continued improved efficiency at the store level. Other operating costs increased by 7.3% to RMB 178.9 million, largely due to higher payroll supporting the expansion of our global store network. On a non-GAAP basis, other operating costs account for 5.4% of revenue compared to 4.7% a year ago. Sales and marketing expenses for the quarter were RMB 304.5 million, down 13.4% from a year ago, achieved through disciplined branding promotion.

[Aaron Huang, CFO at Chagee]

On a non-GAAP basis, sales and marketing expenses representing 9.2% of revenue compared to 9.9% a year ago. General and administrative expenses reached RMB 517.4 million, up 59.7% year-over-year, driven by an expanded workforce and additional office facilities supporting global operations. On a non-GAAP basis, G&A expenses represented 13.4% of revenue compared to 9.1% a year ago. Income tax expenses represented 21.4% of income before tax, slightly higher than 20% a year ago.

[Aaron Huang, CFO at Chagee]

This was primarily driven by the impact of share-based compensation expenses recognized during the quarter. We achieved our 11th consecutive quarter of profitability, with GAAP net income of RMB 397.9 million. Non-GAAP net income, excluding share-based compensation expenses, was RMB 502.8 million, with a non-GAAP net income margin of 15.7% compared to 18.3% last year. This demonstrates our ability to maintain healthy profitability and margins while continuing to invest for future growth.

[Aaron Huang, CFO at Chagee]

During the quarter, basic net income per ordinary share was RMB 2.07, and diluted net income per ordinary share was RMB 2.03. On a non-GAAP basis, basic net income per ordinary share was RMB 2.63, and diluted was RMB 2.57. Turning to liquidity, we ended the quarter with roughly RMB 9,142 million in cash and cash equivalents, which is cash and time deposits. This robust balance sheet, coupled with our 11th consecutive quarter of profitability, provides a solid foundation.

[Aaron Huang, CFO at Chagee]

Our board has approved a special cash dividend of $0.92 per ordinary share or ADS, totaling approximately $177 million. Payable on or around December 15th, 2025, to shareholders of record as of December 8th, 2025. This distribution underscores our commitment to enhance shareholder value and reinforce investor confidence in our business model. Our strong cash generation ability enables us to return capital while continuing to invest in growth. This special dividend also demonstrates our conviction in the company trajectory and our dedication to reinforce market confidence in our long-term prospects.

[Aaron Huang, CFO at Chagee]

At this time, we will not be providing formal financial guidance. Our strategic focus is on key pillars that foster sustainable long-term shareholder value. We are dedicated to continuing product innovation and strategic brand investment to enhance market presence. At the same time, we are boosting operational efficiency to optimize resources and drive improved performance, positioning the company for agile and sustained growth. We are confident in delivering our long-term strategy and growth potential.

[Aaron Huang, CFO at Chagee]

We will be persistent with prudent management, strategic investment in future drivers, and a commitment to creating durable value for shareholders. We believe our solid financial foundation, clear strategic roadmap, and exceptional team will help us capitalize on long-term opportunities despite market dynamics. With that, I will turn the call back to the operator to begin the Q&A session.

[Aaron Huang, CFO at Chagee]

Operator, please go ahead.

[Operator]

Thank you. We will now begin the question and answer session. To ask questions on the phone, please press star one one and wait for your name to be announced. To cancel your request, you can press star one one again. One moment for the first question. Our first question comes from the line of Sijie Lin from CICC. Please ask your question.

[Sijie Lin, Analyst at CICC]

[Non-English content]

[Translator]

So thank you, Junjie Zhang and Aaron Huang. I'm Sijie from CICC, could you please speak more about how will the high-quality development strategy be executed? Thank you.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Thank you for your question. Regarding our high-quality development strategy, we have a clear execution path across four core dimensions: brand, product, experience, and channels. First, in high-value brand building, we're upgrading our brand to speed up the launch of brand experience tea house and streamline the customer journey. At the same time, we're growing specialty houses like tea culture-themed locations and intangible cultural heritage-themed tea houses to deepen our cultural roots and highlight what makes the brand stand out.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Meanwhile, we're building a high-quality product system with four core priorities. First, we'll define and uphold strict premium tea standards. Second, we'll enhance our core raw materials. Third, we'll improve food quality from end to end. Finally, we will introduce the 4.0 menu and guarantee uniform quality for all customers wherever they are.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Next, we're driving cross-category innovation and new consumption scenarios. With the 4.0 menu, we're adding exciting new categories like specialty to mix things up. We're also expanding into additional consumption scenarios, including breakfast and evening hours, to improve store utilization across different times. In addition, we'll fine-tune how products are shown while they are being prepared to make the experience even better for customers.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

We're also enhancing the membership experience with the revamped membership system to build a true member community and mutual benefit network. This will boost the stickiness and repeat purchases for our 222 million members. At the same time, we're optimizing store facilities and technologies to improve efficiency and customer satisfaction.

[Junjie Zhang, CEO at Chagee]

[Non-English content]

[Translator]

Finally, we're reshaping a strong channel strategy. Our tea house network is expanding at a healthy pace, with 300 new tea houses added this quarter, and we will maintain a steady pace to tea house expansion. We're also pushing ahead with standout flagship tea houses, such as the Chagee Tea House in Hong Kong and the pop-up store at 2025 Shanghai Masters. These showcases really highlight what the brand stands for and enhance our brand awareness. Thank you. Operator, next question, please.

[Operator]

Thank you. One moment for the next question. Our next question comes from Xiaopo Wei of Citigroup. Please ask your question.

[Xiaopo Wei, Analyst at Citigroup]

[Non-English content]

[Translator]

Could you share more color on the overseas market network expansion as well as the store operating in the non-China regions? Thank you.

[Aaron Huang, CFO at Chagee]

All right. Thank you, Xiaopo. Our overseas markets are a pivotal growth driver. The momentum is solid across our tea house. This quarter, we enter into the two new markets, Philippines and Vietnam, while our store counts in Malaysia have exceeded 200 currently. This is a big milestone. Our local operations are showing strong signals. Our localized products and marketing campaigns will achieve the greatest success.

[Aaron Huang, CFO at Chagee]

For example, our September collaboration with Pop Mart generated a tremendous response across the Southeast Asian. In Malaysia, the Green Grape series made up 50% of cups sold on the first day, making our all-time high. During the campaign first week, tea houses in Singapore achieved average daily sales of over 500 cups of the product. Our Peach Oolong Milk Tea also performed exceptionally well. It captured over 30% of cups sold in Indonesia within 15 days since launch and about 16% in Thailand, making a top seller in both markets.

[Aaron Huang, CFO at Chagee]

These are successful localization efforts combined with our steady store expansion pace, giving us strong confidence in overseas growth in Southeast Asia. Moving forward, we will continue deepening our presence in those markets we've entered, steadily expanding into new markets, and keep improving per-store profitability and the brand impact. Operator, next questions, please.

[Operator]

Thank you. As there are no further questions, I would like to hand the conference back to management for closing remarks.

[Alicia Guo, Investor Relations Director at Chagee]

Thank you again for joining our call today. If you have any questions, please feel free to contact us or request through our IR website. We look forward to our next call with everyone. Have a great day.

Participants

Executives

• Aaron Huang, CFO
• Alicia Guo, Investor Relations Director
• Junjie Zhang, CEO

Analysts

• Sijie Lin, Analyst at CICC
• Xiaopo Wei, Analyst at Citigroup
• Translator