Operator
Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Chaji's second quarter 2026 earnings conference call. We will be hosting a question and answer session after management's 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 Guo, Investor Relations Director of the company. Please go ahead, ma'am.
Thank you. Hello, everyone, and welcome to Chaiji's second quarter 2026 earnings call. With us today are Mr. Junjie Zhang, our CEO, Mr. Aiden Ying, 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 statement in the earnings rate price 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-gap financial measure please refer to our earnings release which contains a reconciliation of non-gap measure to gap measure. With that, I will turn the call to our CEO, Mr. Juin Jie Zhang. Please go ahead, sir.
Hello, everyone. Welcome to Chagi's second quarter 2026 earnings call. 进入2026年,我们战略聚焦经本质,专注做好用户关心的每一件事,一季度完成组织产品与营销线路的梳理,为高质量增长助击,二季度外部环境虽有些波动,但这恰恰验证了我们的判断, As we entered 2026, our strategy has stayed focused on the fundamentals of the business.
centered on doing well by the things our consumers truly care about in the first quarter we completed a systematic review of our organization product and marketing roadmap laying the foundation for high quality growth while the external environment saw some volatility in a second quarter these changes have only reinforced our conviction the ability to navigate cycles ultimately comes down to genuine consumer recognition. The more complex the market, the more important it is to return to the fundamentals. The more intense the competition, the more important it is to perfect every consumer touchpoint. All of our work in the second quarter was built around this logic, not as reactive response, but as a more focused commitment to our proven path. 要进行迭代
过去高格调的和大声势的这种核心的逻辑 现在已然失效了 单价用户所追求的更多是自我的表达 个性的彰显和回归本质的心灵疗愈 所以品牌应该化作和个体共鸣的温柔触点 以真诚贴心的细致细腻的方式来回应用户 渠道端呢 外卖大战驱动下消费习惯发生了迁移 公寓市场大幅度的扩大 现在已经成为各大品牌的主要战场之一了 在流量端呢 分发的路径逐渐现在多元化 碎片化 要求品牌在精确追随用户迁移和高效配置资源上有更大的要求
The tea beverage industry is going through a structural change. On the supply side, the fresh milk tea category is now crowded with more players and a competitive landscape has shaped from shared growth in an expanding market to competition over a fake space, raising the intensity of competition. On the demand side, shifting generational value require brands to find new ways of telling their story. The old playbook built on high-profile positioning and loud marketing has lost its effectiveness. What consumers are looking for today is individual self-expression and a genuine sense of comfort. Brands need to become a gentle touch point that resonates with the individual. Connecting through sincerity and responding to consumers with care. On the channel side, intensified competition among delivering platforms is reshaping consumer behavior. The public domain has expanded meaningfully and become a key competitive arena for brands. Meanwhile, traffic distribution has become increasingly diversified and fragmented. Brands must closely track where consumers are moving and allocate resources efficiently. In response to these changes, we're building our capabilities across four dimensions. First, strengthening our core capabilities. At the front end, we're enhancing our innovation capabilities, striving for excellence, embracing new directions, and fully unlocking the creativity of our branding and product teams. In the middle office, we're reinforcing our support infrastructure. Innovation alone is not enough. We also need strong capabilities to mobilize resources and deliver our goals. We're therefore continuing to upgrade our operating system, channel capabilities, consumer operations and IT infrastructure to support our growing scale
第二 调整产品的结构 我们在原鲜奶茶之外 积极在探索更多的品类 比如二季度 大家看到上星的茶特条品类 Gilato品类的 我们也希望可以通过更多 尝试 更多产品的品类形态 以满足用户日益多元的需求 第二 调整产品的结构 我们在原意鲜奶茶之外 积极在探索更多的品类 比如二季度大家看到 三星的茶特条品类 吉拉特品类的 那我们也希望可以通过更多 尝试更多产品的品类形态 以满足用户日益多元的需求 这要求我们持续改革 无论在供应链的能力 还是运营体系的能力 we have to provide more interesting products for the variety of products and for products to improve, we have to offer more direct service products.
Second, broadening our product mix, beyond loosely fresh milk tea, we're actively exploring additional categories including the special deals and gelato, recently launched in the second quarter. We want to test more product formats to meet our consumers' increasingly diverse needs. This requires us to continue reforming our supply chain capabilities and operating system to provide a solid foundation for category expansion Third, to increase users'触达 One is to use a wide variety of content marketing to create users to expand our users' content One is to use a wide variety of users to expand our users'触达面 Third, to increase users' content Enhancing consumer reach, on one hand, we're using flexible and diverse content marketing to connect with consumers and expand our traffic funnel. On the other hand, we are expanding our reach through penetration across more consumer scenarios.
The fourth is the value of the value of the customer. According to the customer's demand, the value of the customer needs to move forward and move forward. So through the consumption of value and experience, the user will be the real user. This is the basic.
Fourth, we're evolving our value proposition. As consumer needs evolve, our brand value proposition also needs to iterate with the times. Through emotional resonance and experience-driven retention, We aim to turn new consumers into loyal, long-term Charlie friends
以茶会友是我们始终不变的价值观 把茶做到极致 把帮忙茶几推向全球 塑造高价值品牌与良好的用户体验 这是我们始终如一的翻向和标准 为了这一标准 我们持续构建的能力 每一步都坚定且踏实 我们相信 越是在复杂的环境中 以茶会友是我们始终不变的价值观 把茶做到极致 把帮忙茶几推向全球 塑造高价值品牌与良好的用户体验 这是我们始终如一的翻向和标准 为了这一标准呢 我们持续构建的能力 每一步都坚定且踏实 我们相信啊 越是在复杂的环境中 我们越要回归本质 做好产品 服务好用户 打磨好每一家门店 随着我们在产品创新 营销创新 组织效率 用户运营和海外拓展等多方面的持续生根 我们有信心在任何市场的环境下都实现高质量可持续的增长
Connecting through tea is our enduring value, perfecting the art of tea, bringing Chagi to the world, and building a premium brand with exceptional user experiences. This is our unrivering direction and standard. We continue to build our capabilities towards this goal. With every step deliberate and grounded, we believe that the more complex the environment the more important it is to return to the fundamentals, making great products, serving our consumers well, and refining every tea house. As we continue to deepen our capabilities across product innovation, marketing innovation, organizational efficiency, consumer operations, and overseas expansion, we're confident in achieving high quality, sustainable growth in any market environment. Last quarter, we announced a share repurchase program of up to 150 million U.S. dollars. As of August 24th, we have executed approximately 30 million U.S. dollars in repurchases. Through continued action, we want to demonstrate the company's firm confidence in its long-term value and deliver a tangible return on our shareholders' trust. Next, I will hand the call over to our COO Aiden, who will walk you through the execution during the quarter. Thank you. Thank you,俊杰, and thank you all for joining our earnings call today.
Long-gap减利率为人民币 4.89亿元, long-gap减利率为14.3%,环比保持稳定。 Let me begin by sharing our overall performance for the second quarter.
Total revenue reached RMB 3,415 million, representing a 2.5% increase year over year, and a 3.7% decrease quarter over quarter. Gap net income was R&B 465 million, representing a net income margin of 13.6%, a substantial improvement from 2.3% in the same period last year. Non-gap net income was R&B 489 million.
Non-gap net margin was 14.3%, stable on a sequential basis. 二季度总GNV为人民币76.6亿元,环比降低33%,中国区GNV为人民币71.56亿元,环比降低10.5%,海外市场表现突出,GNV达到人民币5.04亿元,环比增长18.2%,同比增长114.3%,继续成为我们重要的增长引擎。 Total GMV for the second quarter was RMB 7,660 million, down 3.3% sequentially.
Greater China GMV was RMB 7,156 million, down 4.5% sequentially. Overseas markets stood out, with GMB reaching RMB 504 million, up 18.2% sequentially, and 114.3% year over year, continuing to serve an important growth engine for us.
17款新品 为历史以来单机上新 数量最高 品类已从原液鲜奶茶 拖宽子 茶特条 柠檬奶 抹茶 杰拉特等系列 其中原液鲜奶茶方面 两款经典产品成功回归 夏蒙美龙上新 首周电日均杯量达到了 114倍 杯占比近20% 首次消费会员渗透率 也为经典新品最高 This quarter, we continued to advance our high-quality growth strategy
across four key dimensions. First, we accelerated new product launches. We launched a total of 17 new products this quarter. the highest number in a single quarter in our history. Our offerings have expanded from loose leaf fresh milk tea to include special deals, lemon tea latte, matcha latte, gelato, and other series. Within loose tea fresh milk tea, we successfully brought back two classic products, melon oolong tea milk, reached an average of 110 cups per teahouse per day in this first week, with a cup share of nearly 20% and the highest first-time member penetration of any new product this year.
The return of Long Jing Tea Latte drove overall GMV up nearly 25% sequentially during the tomb sweeping day period, outperforming last year. 品类拓展方面,查特调走走训练,精准匹配了周末休闲场景,上星3日电日均倍量达到124倍,带动了周末经济为涨幅达到双位数,柠檬奶上星期间带动首次消费会员增长了45%, the oil industryike On the other hand, we have the DLATO In the area of all-women and the yeast� beer itarot It shows us the daily The various products have seen the win-win From now on, the DLATO It is the Enjoy service It is even compared to the DLATO The second product is the DLATO
and the expansion of the special deals designed for weekend leisure occasions, average 124 cups per tea house per day during its first three days, and contributed to double deal weekend GMB growth. The launch of the Lemon Tee Lalle also increased the first-time member acquisition by 45% during the launch period, underscoring for its effectiveness in attracting new customers. In addition, we piloted gelato in selected teahouses, combining loose tea leaves with Italian gelato craftsmanship. As of August, gelato has been introduced in more than 190 and have been well received by our tragedy friends. Recent pilot store performance indicates meaningful improvement. With average offline channel GMV increasing by more than 20%, Gelato has also demonstrated a strong ability to attract new customers, reactivate dormant members, and increase in-store traffic. 第二 营销持续构建高价值品牌类合 深耕品牌质感与文化共鸣 推进了一系列高影像的合作 探索文化与茶影像结合的体验升级 例如 6月份我们与阿拉雅系约达成战略合作 并于7月开设首个XD Imagine茶空间
我们也联手湖北省博物馆 开设全国首家博物馆组织店,聚焦传统文化与非裔传承,让茶饮成为文化载体,品牌价值与里面清晰传递,不仅构建了与用户的情感链接,更有效转化为会员吸引力与消费联系,二季度末,我们的注册会员总数已经达到了2.57亿,活跃会员复购率始终保持在43%以上。 Stream 12, our marketing continues to build a high value brand core,
depting brand character and cultural resonance through a series of high-impact collaborations, exploring upgrades at the intersection of culture and tea. In June, we formed a strategic partnership with the Awryah Theodore Festival, and opened our first Chachi Imagine Tea space in July. We also partnered with the Hubei Provincial Museum to launch the country's first museum-themed tea house, drawing on traditional culture and intangible cultural heritage to position tea as a meaningful cultural medium. By clearly communicating with our brand values and philosophy, we have strengthened emotional connections with consumers and translated that engagement into consumer acquisition and loyalty. As of the end of June, our total registered members reached 257 million.
The repurchase rate among active members remained above 43%, while members who made two or more purchases accounted for more than 78% of total orders. 第三组织效能持续释放 本季度我们实现了non-gap管理费用率为9.1% 较去年同期的13.2%下降了4.1个百分点 环比也下降了2.5个百分点 本季度non-gap销售及营销费用率从去年同期的10.6%收到至8.8% 稳定在各位数的健康区间
与一季度8.6%的水平保持基本意思 我们优化费用率并非简单压缩支出 而是提升资源投放效率 咨询端我们变得更快速 更精准 更先通 将有限资源集中投放到最能创造用户价值的方向 Third, we continue to benefit from our more streamlined and efficient organizational structure In a second quarter, our non-GAAP GNA expense ratio declined to 9.1 percent compared with 13.2 percent in a prior year and down 2.5 percentage points sequentially. Our non-GAAP sales and marketing expense ratio narrowed down to 8.8 percent from 10.6 percent a year ago. remaining within a healthy single-digit range and broadly in line with the 8.6 percent level reported in the first quarter. These improvements are not simply cutting spending. They reflect a more disciplined and efficient approach to resource allocation. We're executing faster with greater precision and stronger coordination while focusing our resources on initiatives that creates the most value for consumers. 泰国、印尼、菲律宾、越南、美国、韩国。 240 tea houses in Greater China, and 399 overseas.
We're now present in 8 overseas markets, including Singapore, Malaysia, Thailand, Indonesia, the Philippines, Vietnam, and the United States, and South Korea. 本季度我们首次进入韩国市场,所有三天开业前三日总销售杯量超过了16000倍,开业前APP下载量超过了16000倍,五月单店日均杯量达到了1648倍,这一表现充分验证了包含茶区品牌的区域竞争力与吸引力。 Thus, 期间,亚太艺 USD 上新了博� mattelion系列新品, 待动前4天,亚太区域整体电筋杯量增长52%, 其中越南,泰国,印尼的博� souls by electlen brothers,
or印尼的博洋系列 杯占比均超过了30% 展现了核心产品系列的 跨区域生存力
148 in May, demonstrating the strong regional appeal and competitiveness of the Chagi brand. During World's Tea Day, we introduced new offerings under the Boya Tea Latte series across the Asia-Pacific region. The series increased average caps sold per teahouse across the region by 52% during its first 15 days.
In Vietnam, Thailand, and in New Asia, the Boyati latte series accounted for more than 30% of cup volume, underscoring the cross-market appeal of our core product offerings. 健康产业方向 服务端我们持续优化会员体系与用户体验 门店端我们坚持中国区与质量优先 海外稳不扩张 同时我们迭代我们的设备 保证产品质量提升运营效率 空间环境端我们持续升级门店差异化设计 让第三空间成为用户愿意体内的场所 品牌端我们紧贴市场趋势 通过品牌升级,产品一致性,体验优化及培训体系迭代, 实现回归查本质的极致体验。
the development of healthier tea beverages. On service, we will further optimize our membership program and overall consumer experience. Across our tea house network, we will prioritize high quality growth in greater China while expanding overseas in a disciplined manner. We will also upgrade equipment to help ensure product consistency and improve operating efficiency. On experience, we will continue to differentiate our teahouses through thoughtful design, creating a third space where consumers genuinely want to spend time. Finally, on brand, we will stay closely aligned with market trends and continue elevating the tea experience through your brand enhancements, consistent product quality, and improved consumer experience, and an involving training system.
My thoughts are just here. Next, I'd like to invite our CFO for you to talk about the details of the financial details. Thank you.
That concludes my remarks. Now, let me turn the call over to our CFO, Aaron, who will walk you through the detailed financials. Thank you.
Thank you, Aidan, and hello everyone. Thank you for joining our earnings call. Before we begin, please note that all amounts are in RMB and all comparisons are on a year-over-year basis unless otherwise stated. As Junji and Aidan outlined, the second quarter presented a softer macro backdrop and a more challenging competitive landscape across the industry. our results reflect that environment. What I want to emphasize is that even as top-line growth is moderated, we maintain the operating discipline we established earlier this year, and our profitability held largely intact. We view this as evidence that our cost structure and organizational efficiency gains are durable, not at one time, and that they give us a stable foundation to keep executing our strategy priority, regardless of the external environment. With that contact, let me walk through the quarter in detail. Total GMV was $7,660.3 million in the second quarter, some 3.3% sequentially from $7,917.8 million in the first quarter. As of June 30th, 2026, our Tea House Network totaled 7,639 locations across Greater China and overseas, up 8.5% from 7,038 a year ago. Of these, 6,756 were franchisee teahouses, and 883 were company-owned teahouses. In Greater China, average monthly GMV per tier houses was 338,259 in the second quarter compared to 356,080 in the first quarter. Meanwhile, overseas total GMV grow 114.3% year over year and 18.2% quarter over quarter. from $426.4 million in the first quarter to $504.0 million in this quarter. Overseas markets remain our clearest growth engine. Thin-store GMV growth in Greater China improved by 7% points year-over-year and was broadly flat sequentially. Overall, same-store GMV growth improved by 6.9% points from a year ago and remained relatively stable compared with the prior quarter. On the revenue line, our net revenues increased by 2.5% year-over-year to $3,414.6 million in the second quarter. Net revenue from franchisee to teahouses were $2,474 million, representing 72.5% of total net revenue, compared to $3,020.7 million a year ago. Net revenue from company-owned tea houses were $940.6 million, up 202.2% from $311.2 million a year ago, mainly as a result of continued development of the company-owned tea houses network across greater China and overseas markets. Turning to margin, our gross profit, calculated by excluding cost of material, storage, and logistics from net revenue, reached $1,843.4 million this quarter, resulting in a gross margin of 54% flat year-over-year. Our organizational enhancements drove a meaningful year-over-year decline in operating expenses. Share-based compensation expenses totaled $23.9 million in the quarter, and it reflects our focus on retaining and motivating employees while aligning their interests with those of shareholders. To provide greater clarity on underlying operational performance, we will continue to reference non-GAAP operating results. with full reconcilations available in our earnings release in the Form 6K. Operating income was $524.7 million, representing an operating income margin of 15.4%, increased significantly from 3.2% in the same period of a year ago. Benefiting from our strategic organizational adjustment and the continued discipline cost management. Excluding share-based compensation expenses, non-GAAP operating income was $548.6 million, representing a 16.1% margin compared to a 17.1% margin in the first quarter of 2026. Operating costs for company-owned teahouses were $566.8 million, up 207.8% from $184.1 million a year ago, consistent with the continued build-out of our company-owned network. growth. Other operating costs decreased by 33.3% to $115.8 million, largely due to a decrease of RMB $30.2 million in payroll expenses driven by organizational structure enhancement and headcount optimization. On a known gap basis, other operating costs accounts for 3.4% of revenues compared to 4.7% a year ago and 4.3% in the first quarter. Sales and marketing expenses for the quarter were $301.5 million, down 21.7% from $385 million a year ago, mainly due to a more streamlined branding and marketing team, together with improved efficiency in advertising, placement, and precision marketing. On a non-GAAP basis, sales and marketing expenses represented 8.8% of revenue compared to 10.6% a year ago and 8.6% in the previous quarter. General and administrative expenses reached $334.5 million, down 64.6% year-over-year from $944.6 million. The decrease primarily 3 reflected lower share-based compensation expenses, reduced payroll, facility, and professional service costs, and the absence of IPO-related expenses incurred in the prior year period. On a non-GAAP basis, G&A expenses represented 9.1% of revenues compared to 13.2% in the same period a year ago, and 11.6% in the first quarter. Income tax expenses represented 20% of income before income tax, compared to 62.1% a year ago and 21.2% in the first quarter. The year-over-year normalization primarily reflecting a reduced impact from share-based compensation expenses. Notably, we continued to deliver profitability on both GAAP and non-GAAP basis, extending our track record to 14 consecutive quarters of positive net income. GAAP net income was $464.8 million. Non-GAAP net income, excluding $23.9 million of share-based compensation expenses, was $488.7 million, with a non-GAAP net margin of 14.3% compared to $18.9 a year ago, and flat sequentially. For the second quarter, basic and diluted net income per ordinary share was R&B 2.44 and R&B 2.42, respectively. On a non-gap basis, basic and diluted net income per ordinary share was R&B 2.57 and R&B 2.54, respectively. Turning to liquidity, we ended the quarter with $6,795.5 million in cash and cash-equivalent restricted cash and time deposits. This reflects the impact of our share repurchase program commencing on June 1, 2026 alongside our continued investment in Teahouse network. product. We maintain a healthy balance sheet that gives us flexibility to keep executing our strategic priorities while retaining capital to shareholders. As we move through the remainder of 2026, we will execute against our new product pipelines, enhancements, enhancements, and service experience, and maintain a focus on quality as we expand our tea house network in Greater China and overseas. Our confidence in the company long-term value remains firm, and we are committed to return value to our shareholders in a meaningful way. With that, we are ready to begin Q&A.
Thank you, Aaron. We received a number of questions ahead of today's call. We will now address some of the key topics raised. Our first question relates to the outlook of the second half of the year. How does management view the second half of the year amid the current competitive market environment? Our CEO 俊杰 will address this question. Thanks for the question. as we just shared the market environment has changed significantly and competition in the industry has become more intense but we have always believed that the more complex the market becomes the more important high quality growth is we see 2026 as a year of adjustment and stabilization in q1 we completed the organizational restructuring and conducted a systematic review of our growth strategy. In Q2, we have started to explore areas such as new product category expansion and user experience upgrades. Our core objective this year is not to pursue rapid expansion in scale, but to build a stronger foundation for sustainable growth in the next stage.
So, in the next year, our work will be more focused and more.
In the second half, our work will become more focused and practical along the direction of adjustment and exploration will put into execution the results and learnings from the first half one by one no matter how external environment changes will stay focused on the fundamentals making good products and doing things that matter most to our members remain confident in steady development in the Our next question relates to same store trends. Could you share how same store have trended so far in the third quarter? Our COO Aiden will address this question.
For the趨勢 of the改善, the results are still in the future.
Thanks for the question. Since the startup Q3, we have seen positive signs of recovery. Same store sales in July showed a low single digit decline, representing a meaningful improvement from the first half. Based on trends so far, we expect same store sales in August to turn positive year over year. We believe the improvement reflects that the benefit of our earlier strategic adjustments are gradually coming through. There are a few drivers behind this trend. First, our new product strategy continues to contribute. In Q3, we maintained the pace of new launches from Q2, introducing several new products, including Guava Peach Ice Tea and Limon Tea Latte, while also relaunching popular bestsellers such as Lychee Black Milk Tea and Tie Guan Yin Milk Tea. At the same time, since Q3 falls in peak season for tea consumption, recently launched products such as Gelato and Special Deals are also better suited to the summer heat, effectively driving in-store traffic and overall performance. Second, we continue to refine in-store service and customer experience. We have consistently emphasized a return to fundamentals, and throughout this year, we have continued to refine service details at the teahouse level, improving preparation efficiency and strengthening customer experience. We're translating these seemingly small details into real, tangible outcomes in the form of repeat purchases and world of miles. Overall, the improving trends in July and August gave us greater confidence in same-store performance for the second half of the year. While uncertainty remains in the external environment, our product pipeline is stronger and our strategic direction is clearer, and we believe this recovery is sustainable. The last question relates to payout. Does the company have any further payout plans? Our CFO Aaron will address this question. Thanks for the question. Shareholder returns have always been one of the key considerations In the fourth quarter of last year, we paid a special dividend of $177 million, which reflects our commitment to returning value to shareholders. 可持续的股东回报机制奠定了建设的基础 目前董事会和管理层正结合公司中长期的战略规划
海内外业务发展的资金需求 以及市场环境变化 积极审慎的研究包括常规分红在内的多元化回报方案 我们充分认识到 在保持高质量增长的同时 让股东切实分享公司的经营成果至关重要 所以持续提升股东回报水平是我们坚定不移的方向 管理层目前正在讨论具体方案 我们会适时向董事会承报具体情况 并在其审阅批准后向市场披露详情
entering 2026 with the organizational optimization and continued improvement in operating efficiency our free cash flow has remained healthy this provides a solid foundation for us to explore a more regular and sustainable shareholder return mechanism currently the board and management are actively and prudently reviewing different options including regular dividends while considering our medium to long-term strategy funding needs for teahouse development and changes in the market environment we fully understand that it is important for shareholders to share in the results of the company where we maintain high quality growth therefore continuously enhancing shareholder returns remain a firm direction for us management team is currently evaluating the specific details we will bring a proposal to the board at the appropriate time subject to the board reveal and approval provide an upgrade to the market that concludes today's q a session if you have any further questions please feel free to contact us or request us through our ir website Thank you all for your time today. We look forward to reconnecting on our next call. Have a wonderful day.
Operator
This concludes today's event. Thank you for participating. You may now disconnect.
