Chagee Holdings Earnings Call: Scale Meets Reset Year

Chagee Holdings Limited Unsponsored ADR ((CHA)) has held its Q4 earnings call. Read on for the main highlights of the call.

Chagee Holdings’ latest earnings call struck a cautiously constructive tone, as management balanced solid fundamentals against clear near-term pressures. The company emphasized profits, cash strength, and overseas momentum, but did not shy away from a sharp same-store sales slump and higher costs, framing 2026 as a reset year focused on quality over breakneck growth.

Expanding Store Network Anchors Growth Strategy

Chagee closed the year with 7,453 tea houses across Greater China and overseas, up 15.7% from 6,440 a year earlier, underscoring its scale advantage. Company-owned locations jumped to 615 from 169 at end-2024, with a net 248 additions in the latest quarter, signaling a strategic tilt toward greater operational control.

Massive Membership and Flagship Product Drive Moat

The brand now counts nearly 240 million registered members, giving it a powerful traffic and data engine for targeted marketing. Revenue remains highly concentrated in its core fresh tea leaf latte, the Boya Tea Latte, which accounts for over 90% of sales and serves as a key pillar of its competitive moat.

GMV Growth Led by Strong Overseas Q4

Full-year 2025 gross merchandise value reached RMB 31.6 billion, up 7.2% year over year despite softer same-store performance. In Q4, total GMV was RMB 7,322.9 million, with overseas GMV surging 84.6% to RMB 371.9 million, and international stores delivering higher average monthly GMV than domestic outlets.

Company-Owned Stores Lift Revenue Mix

Net revenue from company-owned tea houses in Q4 climbed to RMB 539.6 million, an impressive 126.2% increase from RMB 238.6 million a year ago. Management highlighted this as evidence that the deliberate build-out of self-operated stores, both in China and abroad, is starting to reshape the revenue structure.

Gross Margins Edge Higher Despite Headwinds

Fourth-quarter gross profit reached RMB 1,581.9 million, translating into a gross margin of 53.2%, up from 51.6% a year earlier. The improvement was driven by lower packaging, equipment, and supply chain costs, showing that cost initiatives are bearing fruit even as top-line growth slows.

Net Profit Streak Intact but Margins Narrow

The company delivered its 12th straight profitable quarter at the net income level, with Q4 GAAP net income of RMB 33.9 million and non-GAAP profit of RMB 100 million, a 3.4% margin. For the full year, GAAP net income reached RMB 1,186.3 million and non-GAAP earnings RMB 1,909.9 million, though profitability momentum clearly cooled in the latest quarter.

Robust Cash Pile Underpins Strategic Flexibility

Cash, cash equivalents, restricted cash, and time deposits totaled RMB 7,892.4 million at quarter-end, up from RMB 4,868.7 million at the end of 2024, a roughly 62% increase. This liquidity buffer gives Chagee ample room to invest through the cycle, fund international expansion, and absorb the costs of its ongoing business model transition.

New Product Launch Demonstrates Re-Engagement Power

Management pointed to the ‘Signature Four Tea’ launch as evidence that innovation can still move the needle even in a tougher environment. The product reactivated 51% of dormant members and generated a 15.2% week-on-week GMV uplift in its launch week, underscoring the potential of focused, high-impact launches.

International Expansion Gathers Pace

In 2025 the company entered Indonesia, the U.S., Vietnam, and the Philippines, expanding its presence to seven countries. It added a net 83 overseas stores in Q4 for a total of 345 and plans about 200 net new overseas tea houses in 2026, positioning international markets as a key growth lever.

Same-Store Sales Slump Becomes Central Risk

Same-store sales in Q4 fell 25.5% year over year, which management called its biggest challenge for 2025 and a major source of revenue pressure. The drop highlights weaker traffic and softer cup volumes, putting a spotlight on the need for better execution in store productivity and customer engagement.

Revenue Growth Stalls Amid Soft Consumer Demand

Q4 2025 net revenue declined to RMB 2,974.5 million from RMB 3,334.4 million in the prior-year quarter, a fall of about 10.8%. For the full year, net revenue rose only 4% to RMB 12.9 billion, reflecting a slowdown from prior high-growth years as domestic demand and same-store trends turned more challenging.

Operating Loss Reflects Restructuring Costs

The company swung to an operating loss of RMB 35.5 million in Q4, compared with operating income of RMB 642.5 million a year earlier. Management attributed roughly RMB 320 million of Q4 impact to organizational restructuring and business model transition costs, framing the loss as largely one-off in nature.

Margin Compression Mirrors Investment Cycle

Non-GAAP net margin dropped to 3.4% in Q4 from 9.3% a year ago, while non-GAAP operating income slid to RMB 30.5 million, just a 1% margin. These figures reflect a step-up in investments and restructuring as the company shifts its model and repositions for what it hopes will be a more sustainable growth phase.

Operating Expenses Surge on Expansion and Overheads

General and administrative expenses jumped 89% year over year to RMB 635.6 million, with non-GAAP G&A at 19.7% of revenue versus 10.1% previously. Operating costs for company-owned tea houses rose 130.8% to RMB 376.8 million, while other operating costs increased 26.9% to RMB 231.4 million, taking their share to 7.6% of revenue from 5.5%.

Delivery Price War and Volatile Market Weigh on Demand

Management cited aggressive price competition on third-party delivery platforms and broader market volatility as key external headwinds. These factors hurt offline operations, slowed product rollout cadence, and contributed to declining cup volumes, compounding the pressure on same-store sales.

Strategic Pause Delays Revenue Recovery

Chagee also acknowledged that its own deliberate slowdown in new product launches and comprehensive internal adjustments in the second half of 2025 weighed on growth. The strategic pause created measurable revenue headwinds and pushed back the timeline for a full strategy rollout, even as it was meant to set up a more robust platform for future execution.

Guidance Points to Flat 2026 With Focus on Quality

For 2026, management is guiding to “high-quality” growth, aiming to stabilize same-store sales in the first half and improve them in the second, while keeping revenue and profit broadly flat year on year. The plan calls for about 300 net new tea houses in Mainland China and roughly 200 overseas, rolling out a GMV-based franchise revenue-sharing model, and prioritizing market share, brand upgrade, product innovation, new usage scenarios, better in-store experience, and organizational efficiency under tighter cost controls.

Chagee’s earnings call painted a picture of a company in transition, leaning on its large network, huge member base, and strong cash position while working through weaker same-store sales and margin compression. For investors, the story in the near term is one of consolidation and operational repair, with 2026 set up as a test of whether disciplined execution can convert scale into renewed, sustainable growth.