Chagee (NASDAQ:CHA) reported second-quarter 2026 revenue growth and sharply higher profitability as the tea beverage company navigated a softer macroeconomic backdrop and intensifying competition in its core market.
Total revenue rose 2.5% year over year to RMB 3.41 billion, while GAAP net income reached RMB 464.8 million, producing a 13.6% net income margin compared with 2.3% a year earlier. Non-GAAP net income was RMB 488.7 million, or a 14.3% margin, which was flat sequentially. The company said it has now recorded positive net income for 14 consecutive quarters.
GMV Declines Sequentially as Overseas Markets Expand
Total gross merchandise value was RMB 7.66 billion in the quarter, down 3.3% from the first quarter. Greater China GMV declined 4.5% sequentially to RMB 7.16 billion, while average monthly GMV per tea house in the region fell to RMB 338,259 from RMB 356,080 in the prior quarter.
Overseas markets remained a growth driver. International GMV totaled RMB 504 million, rising 18.2% sequentially and 114.3% year over year. Chagee’s network totaled 7,639 tea houses as of June 30, up from 7,038 a year earlier and 108 more than in the preceding quarter. The network included 7,240 locations in Greater China and 399 overseas, with 6,756 franchisee-operated tea houses and 883 company-owned locations.
The company entered South Korea during the quarter, opening three tea houses in Seoul. Those locations sold more than 16,000 cups combined over their first three days, while app downloads before their openings exceeded 46,000, according to COO Aiden Yin. Average daily cup volume per Seoul tea house reached 1,648 in May.
Chagee said it operates in eight overseas markets, including Singapore, Malaysia, Thailand, Indonesia, the Philippines, Vietnam, the United States and South Korea.
New Products and Membership Efforts
Management said the company introduced 17 products during the quarter, its highest number of launches in a single quarter. The lineup expanded beyond its Original Leaf Fresh Milk Tea offerings to include special deals, Lemon Tea Latte, Matcha Latte and Geelato.
The relaunched Melon Oolong Tea Milk sold an average of 110 cups per tea house per day in its first week and accounted for nearly 20% of cup sales, Yin said. The return of Longjing Tea Latte helped lift GMV nearly 25% sequentially during the Tomb Sweeping Day period.
Chagee also piloted Geelato, a product combining loose tea leaves with Italian gelato craftsmanship, in selected locations. By August, Geelato had been introduced to more than 190 tea houses. The company said recent pilot-store results showed offline-channel GMV increasing more than 20%, while the product helped attract new customers, reactivate dormant members and increase store traffic.
Registered members totaled 257 million at the end of June. The repurchase rate among active members remained above 43%, and members making two or more purchases represented more than 78% of total orders.
Costs Fall as Company-Owned Network Grows
Gross profit, calculated excluding material, storage and logistics costs from revenue, was RMB 1.84 billion, resulting in a 54% gross margin that was unchanged from a year earlier.
Operating income rose to RMB 524.7 million, representing a 15.4% margin, compared with a 3.2% margin in the prior-year period. On a non-GAAP basis, operating income was RMB 548.6 million, or a 16.1% margin, down from 17.1% in the first quarter.
- Non-GAAP sales and marketing expenses were 8.8% of revenue, versus 10.6% a year earlier and 8.6% in the first quarter.
- Non-GAAP general and administrative expenses were 9.1% of revenue, versus 13.2% a year earlier and 11.6% in the first quarter.
- Company-owned tea house operating costs rose 207.8% year over year to RMB 566.8 million, reflecting continued network development.
- Cash, cash equivalents, restricted cash and time deposits totaled RMB 6.80 billion at quarter-end.
CEO Junjie Zhang said Chagee views 2026 as “a year of adjustment and stabilization,” rather than a period focused on rapid expansion. Management said its priorities include product-category exploration, consumer-experience upgrades, operational improvements and disciplined overseas expansion.
For the third quarter, Yin said same-store sales showed a low-single-digit year-over-year decline in July, which he characterized as a meaningful improvement from the first half. Based on trends through the call, the company expected same-store sales to turn positive year over year in August.
Chagee also continued its shareholder-return initiatives. Zhang said the company had repurchased about $30 million of shares as of Aug. 24 under its previously announced authorization of up to $150 million. Huang said management and the board were reviewing possible regular dividend plans, following a $177 million special dividend paid in the fourth quarter of the prior year.
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.
