Chagee revenue rises 4.5% to $514M as profit slides 34%

Key Takeaways:

• Q1 revenue rose 4.5% year over year to RMB3.55 billion
• Net income fell 34% to RMB447.7 million as costs surged
• Board authorized a $150 million share repurchase program

Chagee Holdings Ltd. reported first-quarter revenue of RMB3.55 billion ($514.1 million), up 4.5% from a year earlier, as the premium tea chain expanded its store network to 7,531 locations while net income dropped 34% on higher operating costs tied to company-owned store expansion.

"The first quarter demonstrated our ability to grow revenue despite a challenging macro environment in Greater China, while our overseas GMV grew 139% year over year," the company said in its earnings release. Chagee did not hold a conference call with analysts.

Net income fell to RMB447.7 million ($64.9 million) from RMB677.3 million a year earlier, with the net income margin narrowing to 12.6% from 20%. Non-GAAP net income, which excludes RMB59 million in share-based compensation expenses, was RMB506.7 million, compared with RMB677.3 million in the year-ago period when the company had no such expenses. Basic earnings per share were RMB2.36 ($0.34), down from RMB3.92.

Total operating expenses rose 16.6% to RMB3 billion, driven by a 217% jump in company-owned teahouse operating costs to RMB497.2 million as the chain added 599 company-owned locations. General and administrative expenses climbed 31% to RMB462 million, including RMB52.1 million in share-based compensation for administration and R&D staff. Revenue from franchised teahouses, which still account for 77% of total revenue, fell 13% to RMB2.74 billion as same-store GMV in Greater China declined 16.1%.

The company's overseas push is gaining traction. Overseas GMV reached RMB426.4 million, up 139% from a year earlier, while the number of overseas company-owned teahouses jumped to 236 from 41. Total GMV across all markets was RMB7.92 billion, down 3.8% from RMB8.23 billion in Q1 2025, though average monthly GMV per teahouse in Greater China improved 5.5% from the prior quarter to RMB356,080. Active members rose 11.7% from Q4 2025 to 50 million.

The results come as Chagee navigates a strategic shift from a franchise-heavy model toward company-owned stores, a capital-intensive move that is compressing near-term margins. The company held RMB7.15 billion in cash as of March 31, down from RMB7.89 billion at year-end 2025, after spending RMB675 million on investing activities during the quarter. On May 28, the board authorized a $150 million share repurchase program beginning June 1, signaling confidence in the company's cash position despite the earnings decline. Investors will watch whether the company can stabilize margins as it scales its company-owned store base and whether overseas expansion can offset continued softness in Greater China same-store sales.

This article is for informational purposes only and does not constitute investment advice.