Chagee Holdings Ltd. (CHA) Q1 2026 Earnings Call Transcript

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Chargy's first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. We will be hosting a question and answer session after management prepared remarks. Please note that today's event is being recorded. With that, I will now turn the call over to the first speaker today, Ms. Alicia Kuo, Investor Relations Director of the company. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to Chadi's first quarter 2026 earnings call. With us today are Mr. Junjie Zhang, our CEO, Mr. Aden Yin, our COO, and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the newsware earlier today and are currently available online. Before we continue, I refer you to our safe harbor statements in the earnings release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today, and Chaji does not undertake any obligations to update these statements. Also, this call includes discussions of certain non-GAAP financial measure. Please refer to our earnings release, which contains a reconciliation of non-gap measure to a gap measure. With that, I will turn a call to our CEO, Mr. Junjie Zhang. Please go ahead, sir. a better user, and more注重 the quality of the value of the value of the value of the value of the value of the value of the value. First of all, On our strategic priorities, in 2026, we're dedicating all our efforts to operations, focusing on executing every detail that truly matters to our consumers well. We believe that the ability of a company to navigate cycles ultimately depends on genuine consumer recognition.

Therefore, our goal this year is very clear, to perfect every single consumer touch point. 其次组织调整已经逐渐成效了,整体的效率我们现在还是有明显的提升的,过去几个季度我们主动进行了组织优化,目前可以明确的说这些调整给我们带来实质性的很多变化,无论是资源的配置更加精准了,策略的执行也更加高效了,团队围绕主业的凝聚力和战斗力也显著增强了很多。 This helped us to continue to develop a high-stress of high-stress.

more efficient, and our team's cohesion and effectiveness around our core mission have strengthened significantly. This has laid a solid foundation for us to continue achieving high quality growth. Third, our product and marketing plans are now clearly defined, and our execution process are highly focused. We have completed a comprehensive and actionable roadmap for both products and marketing. Our starting point has always been consumer needs rather than external trends. Going forward, all of our work will center on five dimensions, products, service, environment, experience, and value proposition, making every teahouse, every cup of tea, and every interaction consistently well executed is our only true priority. 公司董事会已经批准了一项股票的回购计划,授权我们在未来12个月内回购不超过1.5亿美元的美国存托股份ADS, 那我们希望通过这一实际的行动给大家传递公司真正的信心,也切实的回馈我们股东的信任。 As our business returned to steady growth and operational efficiency continued to improve in the first quarter, from a capital market perspective, we believe our current share price is significantly undervalued and fails to properly reflect our long-term development prospects. At this point, on behalf of the company and the management team, I would like to make a clear commitment. Our board has approved a share repurchase program, authorizing us to repurchase up to a 150 million U.S. dollar ADS during a 12-month period as a concrete way to demonstrate our confidence and reward shareholders' trust.

Chagi is in a strong, stable, and high-质量 development phase. We are all full of trust in the future.

Finally, I want to reiterate, our strategic direction is clear, and our team is operating with high efficiency. Chagi is entering a mature, stable, and sustainable phase of high quality growth. We're confident in every step we take forward toward the future. That concludes our strategic direction. Next, I will hand the call over to our COO Aiden, who will walk you through the specific operational progress in the first quarter. Thank you.

Thank you, Jiget.

Thank you,俊杰, and thank you all for joining our Earnings Call today.

Long-up净利率恢复至14.3% 总GMV达到了人民币79.18亿元 环比增长8.1% 中国区GMV环比增长了7.8% 海外GMV环比增长了14.6% 同比增长139% 从以上数据可以看出来

Let me begin by sharing our overall performance for the first quarter. Total revenue reached the RMB 3,546 million, representing a 4.5% increase year over year, and a 19.2% increase quarter over quarter. Growth margin came in at 55.6%. Non-GAAP net income was RMB 506.7 million. increasing more than four-fold sequentially. Non-GAAP net margin improved to 14.3%. Total GMV reached RMB 7,917.8 million, up 8.1% quarter-over-quarter. Greater China GMV grow 7.8% sequentially, while overseas GMV grew 14.6% sequentially and 139% year-over-year. It is clear that overseas markets are becoming an increasingly important growth engine. More importantly, our operating quality continues to improve. Same-store GMV growth in Greater China improves by 9.4 percentage points sequentially, And overall same-store sales, same-store GMV growth improved by 9.5 percentage points sequentially. These results shows that our strategy of focusing on consumer value is working in practice.

This quarter, we concentrated our efforts on four key areas to drive performance recovery. 第一 组织效率的兑现 经过第一季度的持续优化 我们的组织效率实现了自的飞跃 在整体费用率下降的同时 推动了执行端变得更快 更准 更协同 一方面 组织调整显著提升了执行效率 另一方面 目标更加明确和坚定 从总部到门店 团队对执行重点形成了高度共识 将有限资源集中投放到最能创造用户价值的事情上

从数据上看呢 南加普的管理费用率环比下降了8.1%至11.6% 南加普的销售和营销费用率环比下降了3.6%至8.6% First, our improved organizational efficiency through continued optimization in the first quarter, our organizational efficiency achieved a qualitative leap, making execution faster, more precise, and more coordinated, while overall expense ratio declined. On one hand, organizational adjustments improved execution efficiency. On the other hand, our goals became clearer and more resolute, with teams from headquarters to tea houses forming a strong consensus on executing priorities, channeling limited resources into activities that best create consumer value. In the first quarter, our non-GAAP GNA expense ratio declined by 8.1 percentage points, sequentially to 11.6%.

And our non-GAAP sales and marketing expense ratio declined by 3.6 percentage points, sequentially to 8.6%. 第二 产品的拓展 第一季度我们共推出了12款新品 更重要的是我们的品类边界正在拓宽 逐步覆盖了茶辣田 茶特条等系列 产品创新率与消费者的认可度持续提升 二月上新的大恐怕系列销售表现优秀 首周GMV和杯战贡献占比 首周复过率 直接拉新人次等各项指标 均高于历史新品均值 在千万活动中 该系列中的百物红尘业绩环比 真数输出成为强劲的纳动引擎 此外 云交卡美罗 凭借独特的焦糖风味和甜度DIY的参与感 创造了鲜明的记忆点与差异化优势 广受差异欢迎 展现出成为长线畅销单品的潜力 Second, our product expansion.

In the first quarter, we launched a total of 12 new products. More importantly, our categories are broadening, gradually extending into tea lattes, special deals, and others. Our product innovation and consumer recognition continues to improve. The Da Hong Pao series, launched in February, delivered strong performance with first-week GMV contribution, cup contribution, repeat purchase rate, and direct new customer acquisition, all exceeding historical averages for new product launches. During the Tianwen campaign, the product's Da Hong Pao Tea Latte from this series saw especially strong sequential growth and became an important growth driver. Caramel puerh latte with its distinctive caramel flavor and interactive sweetness customization created a strong impression among consumers and was a clear point of differentiation. The product was well received by our consumers and showed strong potential to become a long-term bestseller.

The third, the product was a strong impression among consumers.

In the product, we launched the早-系列 and晚-系列活动 and managed to become a long-term bestseller. 找系列活动启动以来 成间时段杯量占比呈现翻倍增长 同时我们通过到电的买证活动 持续巩固私运流量 活动期间小程序渠道订单占比 新客占比均有提升 这表明我们的私运能力和拉性能力都在持续增强 For clearer and more effective marketing execution, on the marketing side, we introduced a morning buy one get one free campaign and launched a low caffeine beverage section for the evening, successfully expanding consumption scenarios in both the early morning and late evening. Since the campaign began, the share of cuts sold in the morning has doubled. At the same time, we continue to strengthen our private domain traffic through in-store promotions. As a result, the share of orders from our mini-program channel and the share of new customers both improved during the campaign period.

This demonstrates steady progress in both private domain traffic conversion and new customer acquisition. 第四点,门店网络与质量优先,我们高度重视顾客体现和品牌标准,主动放缓了拓电节奏,聚焦单店经营质量,全面推进门店升级,同时,新的商业模式已全面启动。 公司与加募商利益更加一致 我们相信只有每一家门店都能传递一致的品牌价值 傍王茶几才能真正赢得用户的长期信任 从数据上看来

第一季度MORE全球门店数总计7530一家 其中中国区7157家 海外374家 Fourth, growing our teahouse network with quality remains our top priority. We place great importance on customer experience and brand standards, so we have deliberately slowed our pace of teahouse expansion and focused on improving operating quality while comprehensively upgrading our teahouses. At the same time, our new business model has been fully implemented, further aligning the interests of the company and our franchisees. We believe that only when every teahouse deliver a consistent brand value, that can truly earn consumer long-term trust. At the end of the first quarter, our global teahouse network totals 7,531 locations, including 7,157 in Greater China, and 374 overseas. Our overseas markets continue to expand steadily. Currently, our tea house presence includes 36 in Singapore, 221 in Malaysia, 32 in Thailand, 41 in Indonesia, 13 in Philippines, 22 in Vietnam, and 9 in the United States.

Our overseas tea house network maintains a steady growth pace with operating performance in line with our expectations. 最后我想回到俊杰刚才提到的战略方向上 我们的战略核心是把用户关系的每一件小事做到极致 而用户是否真正认可 不看我们说了什么 而看我们做了什么 一激动望 我们的会员总数已经达到了2.48亿 活跃会员接近5000万人 环比四季度增长了超过11% 更让我们感到踏实的是 活跃会员的复购率保持在42.3% 购买两次以上的会员贡献了超过76%的订单量 每一次回购 都是茶友对霸王茶区产品和体验的真实认可 2.48 million朋友

愿意一次又一次 回到我们的门店 这是我们最宝贵的资产 也是我们超越周期 最坚持的底气 战略已经清晰 执行正在对线 用户的信任 就是我们最好的答案

Finally, let me return to the strategic direction that Jin Jie laid out earlier Our strategic core is to perfect every small detail that consumers truly care about. Whether consumers genuinely recognize this is not measured by what we say, but by what they do. At the end of the first quarter, the number of our total registered members reached 248 million, with nearly 50 million active members, an increase of over 11 percent quarter over quarter. What gives us even greater confidence is that the repurchase rate among active members remains stable at 42.3%, and members who made two or more purchases contribute over 76% of total orders. Every repeat purchase is generating recognition from our strategy friends. 248 million strategy friends are telling us through their repeated purchases that they trust this brand and are willing to return to our tea house again and again. This is our most valuable asset and our strongest foundation for navigating market cycles. Our strategy is clear, our execution is delivering, and consumer trust is our best answer.

用一次次回购告诉我们 他们信任这个品牌

In the experience, it makes the third space really become a place where users want to stop. In the cost of the cost, it is a place where users want to stop. It is a place where users want to become a human being. In the production of the company, China continues to keep the quality of the world. In the海外, we are not able to expand.

Looking ahead, our direction remains unwavering. On product, we will maintain a steady launch cadence while continuing to expand into new categories, such as special deals. On service, we will continue to optimize our membership system and consumer experience. On environment, we will continue to upgrade tea house differentiation through design. On experience, we will make the third place a place where consumers genuinely want to spend time. On brand value proposition, we will continue to embrace the spirit of connecting through tea creating emotional resonance with our customers on tea house operation we will continue to prioritize quality in our greater china markets while steadily expanding overseas that concludes my remarks now let me turn the call over to our cfo erin who will walk you through the detailed financials thank you thank you aiden and hello everyone excuse me for my voice

thank you for joining our earnings call before we begin please note that all amount in rmb and all comparisons are on year-over-year basis unless otherwise stated as junji and aiden just to outline, 2026 was about disciplined execution, a sharper operating focus, and a visible progress in restoring growth quality. I'm delighted to say that this strategy is already translating into improved financial performance. For the first quarter of 2026, our total GMV was $7,917.8 million, and 8.1% sequential increase from 7,322.9 million in the fourth quarter of 2025. As of March 31st, 2026, our Tea House network totaled 7,531 locations across Greater China and overseas, up 12.7% from 6,681 a year ago. Of these, 6,741 were franchisee teahouses, and 790 were company-owned teahouses, refracting the continued conversion of selected locations into company-owned stores as a part of a networking optimization strategy. In Greater China, average monthly GMV per tier house was 356,080 RMB in the first quarter, representing a quarter-over-quarter increase of 5.5% from 337,358 yuan in the fourth quarter of 2025. At the same time, overseas total GMV for the first quarter grew 139% year-over-year and 14.6% quarter-over-quarter to $426.4 million. On the revenue line, our net revenues for the first quarter of 2026 were $3,546 million, compared to $3,392.7 million in the same quarter of 2025, and up 19.2% sequentially. Net revenue from franchisee to teahouses were $2,743.9 million, representing 77.4% of total revenue, compared to $3,149.9 million a year ago, and up 12.7% sequentially. Net revenue from company-owned teahouses were $802.1 million, up 230.4% from $242.8 million a year ago, mainly as a result of our continued development of company-owned teahouses network across greater China and overseas markets. Turning to margin, our gross margin, our gross profit, calculated by excluding cost of materials, storage, and logistics from net revenue, reached $1,971.5 million this quarter, resulting in a gross margin of 55.6%. This marks an improvement from 53.1% a year ago. This improvement was primarily supported by increased revenue contribution from company-owned teahouses, which generated a higher gross margin. Operating expenses remained well-controlled relative to the scale of business. Share-based compensation expenses this quarter were $59 million, reflecting our commitment to long-term employee engagement and aligning their goal with shareholders. To provide greater clarity on underlying operational performance, we will continue to reference non-GAAP operating results with full reconciliation available in our Earning Release and Form Operating income was $547.2 million, representing an operating income margin of 15.4% and marking a sequential turnaround from an operating loss in the previous quarter. Excluding share-based compensation expenses, non-GAAP operating income was $606.2 million, representing a 17.1% margin compared to a 1% margin in the previous quarter. This sequential improvement reflects both the stronger operational leverage and the benefit of organization adjustment and the strategic investment we have made to support future growth. Operating costs for company-owned teahouses were $497.2 million, up 216.6% from $150 million a year ago. As of March 31, 2026, we operated 790 company-owned teahouses, up from $615 in the fourth quarter of 2025 and $191 in the first quarter of 2025. Other operating costs decreased by 7.8% to $159 million, largely due to lower payroll expenses given by organizational restructuring and the continued headcount optimization. On a non-GAAP basis, other operating costs accounts for 4.3% of revenue, compared to 5.1% a year ago. Sales and marketing expenses for the quarter were $306.2 million, up 2.3% from $299.3 million a year ago, mainly due to our investment in strategic brand activities, new product launches, and marketing campaigns. On a non-GAAP basis, sales and marketing expenses representing 8.6% of revenue compared to 8.8% a year ago and 12.2% in the previous quarter. General and administrative expenses reached $462 million, up 30.9% year-over-year from $352.8 million. The increase in G&A is primarily reflecting our continued investment in global corporate infrastructure as we further expanded our international business footprint. On a non-GAAP basis, G&A expenses represented 11.6% of revenue compared to 10.4% a year ago and 19.7% in the previous quarter. Income tax expenses represented 21.2% of income before income tax, slightly higher than 19% a year ago. This was primarily driven by the impact of share-based compensation expenses recognized during the quarter. Notably, we continued to deliver profitability on both GAAP and non-GAAP basis, extending our track record of 13 consecutive quarters of positive net income, gap net income was $447.7 million. Non-gap net income, excluding $59 million of share-based conversation expenses, was $506.7 million, with a non-gap net margin of 14.3%, compared to 20% a year ago, and 3.4% in the fourth quarter of 2025. For the first quarter, basic and diluted net income per ordinary share was RMB 2.36 yuan and RMB 2.34 yuan, respectively. On a non-GAAP basis, basic net income per ordinary share was RMB 2.67 and the diluted net income per ordinary share was RMB 2.65 yuan. Turning to liquidity, we ended the quarter with $7,146.3 million in cash and the cash equivalent, restricted cash and the time deposit. Compared to $7,892.4 million as of December 31st, 2025, we maintained a robust balance sheet, which provides us with the flexibility to fund expansion plan and continue to return value to our shareholders. As we move through 2026, we remain focused on executing our established strategy, strengthening our brand value, and maintaining disciplined investment to support sustainable growth. We are always committed to creating long-term value for our shareholders. With that, I will turn the call back to the operator to begin Q&A. Operator, please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 and wait for our name to be announced. When asking your questions in Chinese, please translate your questions in English for the convenience of everyone on the call. Our first question comes from the line of Lillian Loh of Morgan Stanley. Please go ahead.

Hello, thank you for the opportunity to ask. I am Morgan Stanley's professor, Lillian. 谢谢俊杰总Aden和Aden刚才的介绍 也非常欣喜看到公司在一季度实现了一个非常稳定的恢复 以及各项措施的精准落地 刚才各位也比较详细地解释了我们在策略上的一些举措 那么可能想就一季度咱们这个重变GMV的恢复再问的细节一些 想理解什么样的因素驱动了我们一季度比较良好的单电GMV的提升 特别是在行业其实在整个高基数慢慢进入到二季度之后 大家也都看到一些同样的压力 我们在这种情况下怎么样实现了一个逆势的反转 有多少是新品的拉动 有多少是单价或者是人流的恢复 Let me translate my question. So thanks to everyone's management of the detailed explanation of FirstQ performance. I just want to follow up on the more detailed factors that has driven the good sequential improvement on the unit GMB improvement in China and overall trying to understand what factors has been putting in place in terms of the new product, the traffic, pricing, etc., and what can be sustained. Thank you very much.

Thank you, Lillian. Let me answer this question. Very good question. In the first季, the total total of the total of 16% of the total of 16% of the total of 16% of the total of 16% of the total of 16% of the total of 16% of the total of 16%. That's the whole thing, it also shows a clear recovery. We also made some re-referring, and the re-referring for the next step.

Thank you, Lillian, for the question. In Q1, our overall theme store GMV growth was down 16%, but that was about 10% better than Q4 last year. So the trend has clearly improved, and that the recovery was mainly driven by a few things. First, we got an incremental list from the Tianwen campaign. During the peak period from February 6 to 10, the Tianwen channel contributed about 3 million orders per day on average our ability to effectively capture this traffic and converted into performance results was driven by two factors first a more agile response mechanism and second the continued improvement in executing efficiency following the earlier adjustments 第二个更关键的就是我们的新品 然后就像刚才艾琳讲的 就是我们一季度上了12款新品 整个对杯量和GMV的环比增长都有明显的拉动

那另外呢 今期我们也在做早间和晚间的场景的拓展 比如这个刚才提到的云叫卡梅罗和醒世春山 Second, our new product launch helped as well.

As Aiden mentioned, we launched 12 new products in the first quarter, which helped to drive sequential growth in both carb volume and GMV. In addition, recently we continue to expand morning and evening consumption scenario, Taking Caramel Pour Tea Latte and Long Jing Tea Latte as examples, their combined cup contribution during morning hours reached 45% during the campaign period, representing a relatively significant incremental contribution.

This is very high.

Lastly, in the overseas markets, the decline in theme store GMV growth has also narrowed significantly. We launched locally tailored products in different markets. For example, the caramel oolong tea latte in Singapore captured an 18% capture during the campaign period. The Hojicha Genmai launched in multiple markets in March, generated an average of 440 daily cups per tea house in Singapore during its first week of lunch. These initiatives all played a positive role in improving overall same store performance. Thank you. Next question, please.

Next question. The next question comes from the line of CJ Lim from CICC. Please go ahead.

Thank you, management. Congrats on stabilizing earnings results again. My question is, will the new business model, which is a tech rate based on GMB, affect profitability and how to evaluate the impact?

Thank you. 但对物料的加价率就大幅的减少,同时也有一个折扣率的保障对加盟门店,那在新模式上面,我们的收入结构也发生了变化,我们的产品销售就是原料产品销售这一块,包括原料的食品原料,包装原料,包括门店设备,其他耗材这部分收入肯定是明显的占比下降,然后加盟服务费的收入的占比上升。 What I need to say is that the income structure of the change we've talked about earlier in the design of is a平均 mode, so we don't have a direct impact on the company in the利润. If we look at the end of the year, we're going to keep 55.6%.

Thank you for the question. As previously disclosed in our annual report, Since the beginning of the year, we officially switched to a GMV-based revenue sharing model for our franchise, the Tea House in Greater China. Under the new model, the brand takes a higher fee rate based on the franchise, the Tea House GMV, but the markup on materials has come down significantly and also lock up or secure the discount rate for our franchisees. As a result, our revenue mix has changed accordingly. The proportion of revenue from product sales, including raw materials and packaging, tea house equipment, and other supplies has declined, while the proportion of revenue from franchising services has increased. However, this change in revenue mix does not affect the company's profitability. Based on our Q1 results, our gross margin remained at 55.6%, with a slight sequential increase. Let me further explain the reason of the gross margin increase, which is the result from the increase of the self-owned the T-house GP margin increase. If we exclude the self-owned T-house GP margin, the franchisee T-house GP margin is flat versus the sequentially versus Q4 and also or a little bit slightly decrease from the previous GP margin.

We think that in the new model, the companies and companies Thank you very much. We also want to continue to work with a closer and closer to the company, and continue to improve our model, and build up a long-term success model.

Lastly, we believe that under the new model, the company and its franchisees truly become a community of shared interests. For franchisees, lower raw material and equipment procurement costs, along with shared risk with the brand, should help improve teahouse profitability and resilience so for the company a revenue is now more closely tied to teahouse performance so when teahouse sales improve both our revenue and gross margin can benefit creating a willing outcome our goal is to build a long-term sustainable profit model through closer collaboration i hope this answers your question next question please

Our next question comes from Jesse Xu from JP Morgan, please ask your question. 活跃度和升量跟去年感觉相比也是有明显的改善 能够看得出这个组织变革后我们利益效率的提升

然后特别是这次1.5亿美元的回购额度也是非常大的惊喜 那能否请管理层分享一下我们决定做回购的原因 以及未来在股东回报方面 包括回购或者分红的一些想法 Thanks for taking my question This is Jesse Shee from JP Morgan Very happy to see visible improvement in product launches, consumer engagement, and also market impact in the first quarter. The $150 million US dollar repurchase program is indeed a positive surprise. What's your thoughts behind this decision? Would you prefer repurchase or cash dividend in the future?

Anything you can share on shareholder return would be great. 好的 谢谢Jesse 麻烦这个问题的话 我们请俊杰回答一下 好 谢谢 谢谢您的提问 其实这个就像我们刚才 也分享过的 第一是董事会已经审批了 这一项股票的回购计划 也授权我们在12个月内 能够回购高达1.5亿美金的 公司在 现在对于市场 情况与估值水平 首先肯定是 We will adjust the pace of repurchases, depending on market conditions and valuation during the authorization. Second, our balance sheet structure remains healthy and our liquidity position is strong at the end of March we had about RMB 7.15 billion in cash restricted cash and time deposits or roughly 1.04 billion US dollars

那么第三呢 我们认为公司单前的股价 绝对是没有充分反映 我们公司的业务的基本面 和持续修复的这个趋势 以及长期增长的空间呢 也没有体现出来 那么第三呢我们认为公司单前的股价啊绝对是没有充分反映我们公司的业务的基本面和持续修复的这个趋势以及长期增长的空间呢也没有体现出来 因此呢,我们此次回购啊,也希望可以传递给这个无论是董事会以及管理层对于这个公司未来的这个前景的坚定信心,以及持续为股东创造价值的这个信心啊,提升长期的回报,这个也是我们做这件事情的关键。 Thirdly, we believe the current share price does not fully reflect the continued recovery in our business fundamentals or our long-term growth potential.

Through this buyback, we want to show the board and management's strong confidence in the company's future growth prospects, as well as our commitment to create value and and delivering better long-term results for shareholders. Looking ahead, we will continue to optimize our capital allocation strategy While ensuring the health development of our core business, we aim to deliver a tangible improvement in shareholder returns and ensure that the market fully understands our value. That's it from that's my answer and thank you all the shareholders and investors to join our call. today thank you as there are no further questions I would like to hand the conference back to management for closing remarks thank you as there is there are no further questions I'd like to hand the conference back to to the management and thank you for the calling today we look forward to speaking with everyone again on our next call have a great day thank you thank you have a great day.

This concludes today's event. Thank you for participating. You may now disconnect.