CHA — Chagee Holdings Limited American Depositary Shares

Summary of Chagee's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total GMV: RMB 31.6 billion for 2025, up 7.2% from RMB 29.5 billion in 2024.
• Q4 GMV: RMB 7.32 billion, reflecting challenges in the domestic market but strong overseas growth.
• Net Revenue: Q4 2025 net revenue was RMB 2.97 billion, down from RMB 3.33 billion in Q4 2024. Full-year revenue increased 4% to RMB 12.9 billion.
• Same-Store Sales: Declined by 25.5% year-over-year in Q4, marking a significant challenge.
• Gross Margin: Improved to 53.2% in Q4, up from 51.6% a year ago, due to lower costs in packaging and supply chain.
• Operating Loss: RMB 35.5 million in Q4, compared to an operating income of RMB 642.5 million in the prior year, largely due to restructuring costs.
• Net Income: GAAP net income for Q4 was RMB 33.9 million; non-GAAP net income was RMB 100 million, with a non-GAAP net margin of 3.4%.
• Cash Position: Ended Q4 with RMB 7.89 billion in cash and equivalents, up from RMB 4.87 billion at the end of 2024.

2. Strategic Updates and Business Highlights

• Chagee has expanded to 7,453 tea house locations, a 15.7% increase from the previous year.
• The company is focusing on high-value brand positioning and enhancing consumer experiences through five key areas: brand upgrade, product innovation, scenario expansion, experience enhancement, and organizational improvements.
• A new business model was rolled out to create shared risk and reward with franchisees, transitioning to a GMV-based revenue sharing model.
• International markets showed strong growth, with overseas GMV increasing 84.6% year-over-year in Q4.

3. Forward Guidance and Outlook

• For 2026, Chagee aims to stabilize same-store sales and prioritize operational health over rapid expansion.
• Plans to open approximately 300 new tea houses in Mainland China and around 200 overseas, focusing on quality and profitability.
• The management expects a year of high-quality growth, with revenue and profit broadly flat year-on-year, while targeting same-store sales recovery.

4. Bad News, Challenges, or Points of Concern

• Significant decline in same-store sales (25.5% in Q4) due to external market pressures and internal strategy adjustments.
• The company faced intense competition from third-party delivery platforms, impacting offline sales.
• Organizational restructuring and a deliberate slowdown in new product launches contributed to short-term revenue pressures.
• There is a recognition of the need for improved agility in response to market changes.

5. Notable Q&A Insights

• Management acknowledged underestimating the complexity of operations with over 3,000 employees, which delayed strategic execution.
• The focus for 2026 will be on enhancing consumer experiences and optimizing existing tea houses rather than aggressive expansion.
• The new business model aims to align interests with franchisees, providing better support during downturns.
• Management expressed confidence in their international expansion strategy, emphasizing a long-term commitment to building a global brand rather than seeking immediate financial returns.

This summary encapsulates the key points from Chagee's Q4 2025 earnings call, highlighting both the challenges faced and the strategic direction moving forward.