Chagee's Impressive Second Quarter Earnings Reveal Growth

Chagee Holdings Limited Reports Second Quarter Earnings

Chagee Holdings Limited (NASDAQ: CHA) is making waves in the premium tea drinks market with its recent unaudited financial results for the second quarter ending June 30, 2025. The company has shown remarkable performance, thanks to its commitment to delivering healthy and delicious freshly-made tea drinks. As the number of its teahouses increases, so does the company’s market presence.

Operational Highlights for the Second Quarter

Growth in Teahouse Network

Chagee has expanded its network to a notable 7,038 teahouses in various regions, marking an impressive 40.9% increase compared to the previous year. This substantial growth reflects the brand's unwavering determination to establish a solid foothold in both Greater China and international markets.

Strong Gross Merchandise Volume (GMV)

The total gross merchandise volume (GMV) generated in the second quarter reached RMB 8,103.1 million, representing a significant 15.5% increase from the same quarter of the previous year. This financial growth is attributed to the successful expansion of the teahouse network, which has contributed to increased consumer engagement and sales performance.

Registered Members Surge

Chagee's Mobile Mini Program has garnered a total of 206.9 million registered members, reflecting a remarkable 42.7% increase from the previous year. This surge in membership is indicative of the brand's growing popularity and the effectiveness of its digital engagement strategies.

Financial Performance Overview

Revenue Growth

Chagee's net revenues have risen by 10.2% to RMB 3,331.9 million (approximately US$ 465.1 million) compared to RMB 3,023.3 million in the same quarter last year. This positive trend is fueled by the expansion of franchised teahouses, which accounted for 90.7% of total revenues this quarter.

Operating Income and Net Income

The company reported an operating income of RMB 107.6 million (US$ 15.0 million), which equates to an operating margin of 3.2%. This contrasts sharply with last year’s operating income of RMB 743.9 million, signaling challenges that the company navigated over the past year. Additionally, the GAAP net income has decreased dramatically by 87.7%, amounting to RMB 77.2 million (US$ 10.8 million), emphasizing the need for strategic adjustments moving forward.

Non-GAAP Metrics

Positive news also emerges from non-GAAP net income, which reached RMB 629.8 million (US$ 87.9 million), presenting a slight year-over-year increase of 0.1%. This figure highlights Chagee's ongoing operational effectiveness, discounted by share-based compensation expenses related to previous IPO incentives.

Operational Cost Insights

Understanding Expenses

The total operating expenses in the second quarter surged by 41.5% to RMB 3,224.3 million (US$ 450.1 million) compared to RMB 2,279.4 million last year. Costs related to materials, storage, and logistics saw a minimal decrease of 1.5%, attributed to efficient procurement strategies despite higher logistics costs from the broader teahouse network.

Investments in Growth

Chagee's commitment to expanding its company-owned teahouses is evident, with revenues from these locations soaring by 77.3% to RMB 311.2 million (US$ 43.4 million) this quarter. The impact of administrative and selling costs also rose, driven by enhanced visibility and marketing efforts.

Future Developments

North American Leadership Enhancements

To bolster its operations and market entry in North America, Chagee recently made key executive appointments. Emily Chang became the Chief Commercial Officer for North American operations, bringing extensive expertise from various sectors including food and beverage. Additionally, Aaron Harris has taken the role of Chief Development Officer, ready to leverage his rich experience to foster rapid market expansion.

Strategic Direction for 2025

This leadership strategy aligns with Chagee's ambitions to penetrate the North American market effectively, combining regional knowledge with successful practices in scaling beverage brands. As the company strives to enhance its market presence, analysts and investors will closely monitor these shifts.

Frequently Asked Questions

What were Chagee's total revenues for Q2 2025?

Chagee reported net revenues of RMB 3,331.9 million (US$ 465.1 million) for the second quarter of 2025.

How many teahouses does Chagee operate?

As of June 30, 2025, Chagee operates 7,038 teahouses.

What is Chagee's growth strategy for North America?

Chagee aims to enhance its market entry in North America by appointing experienced executives and expanding its network.

What challenges did Chagee face in Q2 2025?

Despite an increase in revenues, Chagee experienced a significant decrease in net income compared to the previous year.

How did Chagee's membership numbers change?

Chagee's Mobile Mini Program registered 206.9 million members, a 42.7% increase from the prior year.

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