Chagee Holdings Q1 FY26 earnings call CHA

CEO Junjie Zhang framed 2026 as a year dedicated entirely to operations, centering all work on five dimensions — products, service, environment, experience and value proposition. Management said organizational optimization over prior quarters delivered tangible results: more precise resource allocation, faster decision-making and stronger team cohesion. The stated goal is to 'perfect every single consumer touch point,' with genuine consumer recognition — repeat purchases — treated as the true measure of success. This is an interpreted call: CEO and COO prepared remarks were delivered via a Mandarin-to-English interpreter, while CFO Aaron Huang spoke English directly.

The sequential improvement in unit GMV was attributed to three levers. The Qian Wen campaign (peak Feb 6–10) contributed about 3 million orders per day on average, captured via a more agile response mechanism and improved execution efficiency. Twelve new product launches lifted both card volume and GMV. Extended consumption scenarios — a morning Buy-One-Get-One-Free campaign and a low-caffeine evening section — pushed the morning card share to double its prior level, with Caramel and Long Jing tea lattes reaching a combined 45% cup contribution during morning hours in the campaign period. Overseas same-store GMV declines also narrowed materially.

Effective at the start of 2026, Chagee switched franchised Greater China teahouses to a GMV-based revenue-sharing model: the brand takes a higher fee rate on franchisee GMV while cutting the markup on materials significantly and securing franchisees' discount rates. This shifts revenue mix away from product sales (raw materials, packaging, equipment) toward franchising services, but management said profitability is unaffected — gross margin held at 55.6%. Excluding the company-owned teahouse GP-margin uplift, franchisee GP margin was flat sequentially versus Q4 and slightly down versus prior levels. The stated intent is a 'community of shared interest' improving franchisee resilience.

Overseas GMV grew 139% YoY and 14.6% QoQ to RMB 426.4M, with the network at 374 teahouses: Singapore 36, Malaysia 221, Thailand 32, Indonesia 41, Philippines 13, Vietnam 22 and the United States 9. Localized products supported the recovery — Caramel Oolong Tea Latte captured an 18% cup share in Singapore during the campaign, and the Hojicha Genmai launched across multiple markets in March averaged 440 daily cups per teahouse in Singapore in its first week. Management said overseas operating performance was in line with expectations.

Total registered members reached 248 million at quarter-end, with nearly 50 million active members, up over 11% QoQ. The repurchase rate among active members held stable at 42.3%, and members with two or more purchases contributed over 76% of total orders. Management characterized this repeat-purchase base as the company's most valuable asset and its strongest foundation for navigating market cycles.

Operating leverage and organizational restructuring drove a sharp cost improvement: non-GAAP G&A ratio fell 8.1 pp sequentially to 11.6% and non-GAAP S&M ratio fell 3.6 pp sequentially to 8.6%. Non-GAAP other operating costs were 4.3% of revenue versus 5.1% a year ago, aided by headcount optimization. The company ended the quarter with RMB 7,146.3M in cash, restricted cash and time deposits (roughly USD 1.04 billion), down from RMB 7,892.4M at year-end 2025, and cited 13 consecutive quarters of positive net income.

Management stated the current share price is significantly undervalued relative to the business recovery and long-term prospects, and the Board approved a repurchase of up to USD 150 million of ADS over 12 months. Buyback pace will flex with market conditions and valuation; management kept the future choice between buybacks and dividends open while committing to optimize capital allocation and improve shareholder returns.