🧾 What This Document Is

This is Chagee's official earnings release for the last quarter (Q4) and full year of 2025. It’s a public report to investors detailing how the company performed financially and operationally. Think of it as the company's annual "report card."

🏢 What The Company Does

👉 In simple terms, Chagee is a fast-growing chain of modern tea shops, similar to a coffee shop but focused on freshly-made tea drinks. They operate thousands of stores, mostly through franchising, and are expanding aggressively overseas. They compete in the huge and competitive "new-style tea" market in China.

📊 The Big Picture: Growth vs. Profit

2025 was a year of two stories for Chagee: expansion and a weaker profit.

👍 The Good News:

They kept growing their physical footprint, ending the year with 7,453 teahouses (a 15.7% increase).
Total sales value (GMV) for the year rose to RMB 31.58 billion (about $4.5 billion USD).
Their overseas business exploded, with Q4 GMV up 84.6% year-over-year.
Their cash pile swelled to a massive RMB 7.89 billion ($1.13 billion USD).

⚠️ The Challenging News:

Full-year profit fell sharply. Operating income dropped from RMB 2.89 billion in 2024 to RMB 1.35 billion in 2025.
The fourth quarter itself posted a small operating loss of RMB 35.5 million.
A key metric, "Same Store GMV Growth," was negative for the entire year (-25.5% in Q4), meaning existing stores are generating less sales than the year before.

💰 Financial Highlights: The Numbers

Full Year 2025:

Revenue: RMB 12.91 billion ($1.85 billion USD), up 4.0%.
Operating Income: RMB 1.35 billion ($192.7M USD), down from RMB 2.89 billion in 2024. Operating margin fell from 23.3% to 10.4%.
Net Profit (GAAP): RMB 1.19 billion ($169.6M USD), down from RMB 2.51 billion.
Net Profit (Non-GAAP): RMB 1.91 billion ($273.1M USD), which adds back big one-time costs like stock-based pay for employees.

Q4 2025:

Revenue: RMB 2.97 billion ($425.3M USD), down from RMB 3.33 billion.
Operating Loss: RMB 35.5 million ($5.1M USD), hit by restructuring and stock compensation costs.

🔍 Why Did Profits Fall? The Cost Story

The main reason for the profit drop was costs rising faster than sales. Here’s what ate into earnings:

Franchise Revenue Dropped: Money from franchised stores fell, blamed on slower new product launches and competition from delivery apps.
Company-Owned Store Costs Soared: Costs to run their own stores jumped 130.8% in Q4 because they opened many new ones (especially overseas).
General & Administrative Expenses Nearly Doubled: These corporate costs surged 89% due to investments in global expansion, a company reorganization, and more stock-based pay for executives.

🚀 Key Moves & Strategic Shifts

Chagee isn't just sitting still. They are actively changing their model:

Going Global: They are aggressively opening company-owned stores outside China, with the overseas store count growing from 126 to 207 in a year.
Owning More Stores: They are shifting from a pure franchise model to owning more stores themselves (615 company-owned vs. 6,838 franchised), especially overseas.
Changing How They Count Customers: They updated how they measure "active members" to include orders from all platforms (like Meituan), giving a fuller picture of their 44.7 million engaged users.

📦 Financial Position: A Fortress Balance Sheet

👉 This is a major strength. Chagee ended 2025 with a huge cash reserve: RMB 7.89 billion ($1.13 billion USD) in cash, restricted cash, and deposits. Their total assets grew to RMB 11.46 billion. This war chest gives them significant resources to fund global expansion and weather market competition.

💸 Cash Flow Story

Operating cash flow for the year was strong at RMB 1.64 billion ($235.1M USD), though down from the prior year. They invested heavily in new stores and equipment (RMB 825 million used in investing activities), but this was more than covered by cash from financing activities (RMB 2.05 billion), likely from their IPO or other funding rounds.

⚖️ Strengths & Risks

👍 Strengths:

Massive and growing cash position.
Rapid international expansion providing a new growth engine.
Strong brand recognition in the premium tea market.

⚠️ Risks:

Declining store productivity: Negative same-store sales growth is a red flag for brand health and market saturation in China.
Profit pressure: The shift to owned stores and global expansion is expensive and compressing margins in the short term.
Intense competition: The tea and beverage market in China is fiercely competitive.

🧠 The Analogy

Chagee is like a successful local restaurant chain that decided to build its own flagship locations in new countries while its original hometown market is getting crowded. It's spending a lot of its savings to do this (hurting short-term profits), but it now has a big cash nest egg and a map for future growth if it can make the new locations work.

📇 Key Contacts & People

Investor Relations: Robin Yang, Partner, ICR, LLC
- Email: [email protected]
- Phone: +1 (212) 537-5825
Media Relations: Brad Burgess, SVP, ICR, LLC
- Email: [email protected]

🧩 Final Takeaway

Chagee is in a transformative year: prioritizing global expansion and store ownership over short-term profitability, funded by a very strong balance sheet. The key question for investors is whether this expensive growth strategy will eventually lead to renewed profit growth in a challenging market.

Chagee Holdings Ltd. — 6-K Filing