Chagee (NASDAQ:CHA) reported higher first-quarter 2026 revenue and a sequential rebound in profitability, as management said organizational changes, new product launches and more focused marketing helped improve operating efficiency and stabilize growth.
Total revenue for the quarter was RMB 3.55 billion, up 4.5% from a year earlier and 19.2% from the fourth quarter of 2025, COO Dengfeng “Aidan” Yin said on the company’s earnings call. Total GMV reached RMB 7.92 billion, up 8.1% sequentially. Gross margin was 55.6%, while non-GAAP net income rose to RMB 506.7 million, with a non-GAAP net margin of 14.3%.
Management Points to Efficiency Gains
Yin said Chagee’s operating quality improved during the quarter, with same-store GMV growth in Greater China improving by 9.4 percentage points sequentially and overall same-store GMV growth improving by 9.5 percentage points sequentially.
The company attributed the improvement in part to organizational adjustments made over recent quarters. Yin said non-GAAP general and administrative expense ratio declined by 8.1 percentage points sequentially to 11.6%, while non-GAAP sales and marketing expense ratio fell by 3.6 percentage points sequentially to 8.6%.
Zhang said the adjustments have led to more precise resource allocation and faster execution, adding that the company is focusing resources on activities that create consumer value.
Product Launches and Marketing Campaigns Support Recovery
Chagee launched 12 new products during the quarter, Yin said, including items in tea latte and special tea categories. The Da Hong Pao series, launched in February, performed above historical new-product averages in first-week GMV contribution, cup contribution, repeat purchase rate and new customer acquisition, according to management.
Yin also highlighted the caramel oolong tea latte, saying its caramel flavor and customizable sweetness helped differentiate the product and gave it potential to become a longer-term bestseller.
On marketing, the company launched morning and evening campaigns, including a morning buy-one-get-one-free promotion and a low-caffeine beverage section for evening consumption. Yin said the share of cups sold in the morning doubled after the campaign began. The company also said mini-program order share and new customer share improved during the campaign period.
During the question-and-answer session, management said overall same-store GMV growth was down 16% in the first quarter, but that represented an improvement of about 10 percentage points from the fourth quarter. Management cited campaign-driven order volume, new products and localized overseas launches as contributors to the sequential recovery.
Store Network Expands, With Overseas Growth Accelerating
Chagee ended the quarter with 7,531 tea houses globally, up 12.7% from 6,681 a year earlier, CFO Hongfei “Aaron” Huang said. The network included 7,157 locations in Greater China and 374 overseas. Of the total, 6,741 were franchised tea houses and 790 were company-owned tea houses.
Greater China average monthly GMV per tea house was RMB 356,080, up 5.5% from the prior quarter. Overseas GMV reached RMB 426.4 million, up 139% year over year and 14.6% sequentially.
Yin said overseas markets are becoming “an increasingly important growth engine.” The company’s overseas footprint included 36 locations in Singapore, 221 in Malaysia, 32 in Thailand, 41 in Indonesia, 13 in the Philippines, 22 in Vietnam and 9 in the United States.
Management said the company has deliberately slowed its pace of tea house expansion to prioritize customer experience, brand standards and single-store operating quality.
Company-Owned Stores Lift Revenue Mix
Net revenue from franchised tea houses was RMB 2.74 billion, representing 77.4% of total revenue. Revenue from company-owned tea houses was RMB 802.1 million, up 230.4% from a year earlier, which Huang said reflected continued development of company-owned locations across Greater China and overseas markets.
Gross profit was RMB 1.97 billion, producing a gross margin of 55.6%, up from 53.1% a year earlier. Huang said the improvement was primarily supported by increased revenue contribution from company-owned tea houses, which generate higher gross margins.
Operating income was RMB 547.2 million, equal to a 15.4% operating margin and a sequential turnaround from an operating loss in the previous quarter. Non-GAAP operating income was RMB 606.2 million, with a 17.1% margin, compared with 1% in the prior quarter.
GAAP net income was RMB 447.7 million. Huang said the company has delivered 13 consecutive quarters of positive net income on both GAAP and non-GAAP bases. Chagee ended the quarter with RMB 7.15 billion in cash, restricted cash and time deposits, down from RMB 7.89 billion at the end of 2025.
Share Repurchase Plan Announced
Zhang said Chagee’s board approved a share repurchase program authorizing the company to buy back up to $150 million of American depositary shares over 12 months. He said management believes the current share price is “significantly undervalued” and does not fully reflect the company’s long-term prospects.
In response to a question from JPMorgan analyst Jessie Xu, Zhang said the company would adjust the pace of repurchases based on market conditions and valuation. He also said Chagee’s balance sheet remains healthy, with approximately RMB 7.15 billion, or about $1.04 billion, in cash, restricted cash and time deposits at the end of March.
Looking ahead, management said Chagee will continue to prioritize product launches, membership system improvements, tea house upgrades and overseas expansion while maintaining a quality-first approach in Greater China.
About Chagee (NASDAQ:CHA)
Our Mission With every cup of our tea, we aspire to foster a global connection of people and cultures. Our Vision To modernize the tea-drinking experience through technology and innovation. Our Core Values “Customer First” is the foundational philosophy of how we make decisions and run our business. “Caring for Partners” is the core value that defines how we interact with consumers, franchise partners, suppliers, and employees. “Quality, Health, and Convenience” is the guiding principle of how we make our products.
