CHA · Chagee Holdings Limited American Depositary Shares

Chagee's first-quarter 2026 results reflect a mixed performance. Net revenues rose 4.5% year-over-year to RMB3,546 million, led by a dramatic 230.4% increase in company-owned teahouse revenue, as the company converted franchise stores to company-owned units. However, total GMV in Greater China declined 6.9% to RMB7,491 million amid economic headwinds and intense competition, while overseas GMV surged 139% to RMB426 million, highlighting successful international expansion. Operating income fell 33.4% to RMB547.2 million, and GAAP net income dropped 33.9% to RMB447.7 million, primarily due to higher company-owned teahouse costs (up 216.6%) and a 30.9% rise in general and administrative expenses, which included share-based compensation of RMB59 million. Non-GAAP net income, excluding stock-based pay, was RMB506.7 million, still 25.2% lower year-over-year. Margin compression was evident: GAAP net margin fell from 20.0% to 12.6%, while non-GAAP margin declined to 14.3%. On the positive side, teahouse count reached 7,531 stores (up 12.7% YoY), and active members grew 11.7% sequentially to 50 million. The company's board authorized a $150 million share repurchase program, signaling confidence. Management's commentary attributed the Greater China GMV softness to macroeconomic and competitive pressures, while emphasizing the strategic shift toward company-owned stores to better control brand quality. The international business, though small, is growing rapidly and may offer future diversification.