Q1 2025 Chagee Holdings Ltd Earnings Call
Operator: Good morning and good evening, ladies and gentlemen.
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Speaker Change: Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to <unk> first quarter 2025.
Operator: Thank you for standing by and welcome to CHAGE's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
Speaker Change: The conference call.
Speaker Change: At this time all participant.
Operator: We will be hosting a question and answer session after management is preparing. Please note that today's event is being recorded.
Speaker Change: We'll be hosting your question actually.
Speaker Change: After managements prepared remarks.
Speaker Change: Please note that today's event these vehicles.
Operator: With that, I'll now turn the call over to the first speaker today, Ms. Alicia Gore, Investor Relations Director of the company. Please go ahead, ma'am.
Speaker Change: I'll now turn the call.
Alicia: Our speaker today is Alicia cool.
Alicia Cool: Mutations director of the company.
Speaker Change: Yeah.
Alicia Gore: Hello, everyone, and welcome to CHAGE's first quarter 2020. With us today are Mr. Junjie Zhang. and Mr. Aaron Wong are here.
Speaker Change: Thank you.
Speaker Change: And welcome to charges first quarter 2025 earnings call.
Speaker Change: Our Mr Jin Jiang Zhang our CEO.
Speaker Change: And Mr arable our CFO.
Alicia Gore: Company's financial and operating results were released by the news where that are currently available. Before we continue, I refer you to our Safe Harbor Statement in the early press. which applies to the Any forward-looking statements that we make on this call are based on assumptions as. and CHAGE does not undertake any obligation to update these statements. Also, this call includes discussions of certain non-GAAP financial measures.
Speaker Change: Company's financial and operating results were released by the news where earlier today and are currently available online.
Speaker Change: Before we proceed.
Speaker Change: I refer you to our CFO.
Speaker Change: Howard.
Speaker Change: Right.
Speaker Change: Richard.
Speaker Change: Yeah.
Speaker Change: Any forward looking statements that we make on this call are based on assumptions as of today and.
Speaker Change: <unk> does not undertake any obligation to update these statements.
Speaker Change: Also this call includes discussions of certain non-GAAP financial measure.
Junjie Zhang: Please refer to our earnings release, which contains a reconciliation of non-gap measures to get With that, I will turn the call to our CEO, Mr. Junjie Zhang, please go ahead. Hello to the best investors around the world. Thank you for your presentation on the Chage Holdings Day.
Speaker Change: Please refer to our earnings release, which contains a reconciliation of non-GAAP measures.
Speaker Change: Sure.
Speaker Change: With that I will turn the call to our CEO Mr. Jin Jiang Zhang Please go ahead.
Speaker Change: Okay.
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Junjie Zhang: Hello everyone and thank you all for joining us on First Earnings Call as a public company. In April this year, we successfully listed on Nasdaq. This is a key step in the company's strategic development journey. This listing not only provides us with a broader platform for development and financial support, but more importantly, it builds a window to the global capital market to show China's new market industry's innovative vitality.
Speaker Change: Hello, everyone and thank you all for joining us on first earnings call as a public company.
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Junjie Zhang: I would like to thank all the partners of BaWangTea. It is your persistence and hard work that led us to where we are today. Thank you to our partners at Jiamushang. It is your trust and recognition of the brand that allowed us to expand rapidly. Of course, I want to thank our tea friends. It is because of your support that we were able to continue to grow.
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Junjie Zhang: Finally, I would like to thank our shareholders wholeheartedly. Your trust and support allowed us to continue moving forward with confidence and create greater value for money. This April marked a pivotal moment in our journey as we joined NASDAQ, a significant achievement that predictions us for our next chapter of growth. This milestone does more than strengthen our financial foundation. and introduces the innovation and dynamism of Greater China's premium tea drinks brand to global investors. I'm profoundly grateful to the entire Chage team whose talent and dedication made this To our franchise partners, your confidence in our vision has been instrumental in our expansion.
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Speaker Change: This April March pivotal moment in our journey with you on that.
Speaker Change: It's significant achievements have positioned us for our next chapter of growth.
Speaker Change: This milestone that's more than strengthen our financial foundation and introduces the innovation and dynamism of greater China premium tea trees ranch for global investors.
Speaker Change: I'm profoundly grateful to the entire China team, whose talent and dedication made this possible.
Speaker Change: Our franchise partners your confidence in our vision has been instrumental in our expansion.
Junjie Zhang: and most importantly, to our customers, Chagee Friends. Your lawyer remains the bedrock of everything we build.
Speaker Change: And most importantly to our customers how would you frame.
Speaker Change: Your lawyer remains the bedrock of everything we built.
Junjie Zhang: Finally, I want to sincerely thank our shareholders. Your trust and support enables us to move forward with confidence and create greater longer term value.
Speaker Change: I want to sincerely. Thank you. Thank our shareholders Your trust and support enables us to move forward with confidence and creates greater longer term value.
Junjie Zhang: Today, I am delighted to share our operating results for the first quarter of 2025, along with our strategic plans for the future. As a whole, we have continued a stable development pattern in the first quarter. Many key indicators have maintained good growth. In terms of income, the first quarter company achieved an income of RMB 33.93 billion, a 35.4% growth in comparison. CMV reached RMB 8.27 billion, a 38% growth in comparison. The net profit is RMB6.71 billion, and the growth rate is 13.8%. These results fully demonstrate the tenacity and sustainability of our business model. Overall, we maintained steady growth in the first quarter, with several key metrics showing strong improvement.
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Speaker Change: I'm delighted to share our operating results for the first quarter of 2020 five along with our strategic plans for the future.
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Speaker Change: Overall, we maintained steady growth in the first quarter with several key metrics showing strong improvement revenue for the quarter reached to RMB $3392 7 million up 35, 4% year over year total G. N V generated in the first quarter was our.
Junjie Zhang: Revenue for the quarter reached RMB 3,392.7 million, up 35.4 percent year-over-year. Total GMV generated in the first quarter was RMB 8,226.8 million, growing by 38 percent from a Net income was RMB 677.3 million, a 13.8 percent increase compared to the same period last These results demonstrate the resilience and sustainability of our business model.
Speaker Change: <unk> $8226 8 million growing by 38% from a year ago net income was RMB $677 3 million, a 13, 8% increase compared to the same period last time.
Speaker Change: These results demonstrate the resilience and sustainability of our business model.
Junjie Zhang: The company's stable performance improvement is mainly due to three major strategic supports. 协同发力 全球化布局的持续推进 product innovation and user eco-friendly development. These three major pillars are not only the key support for us to achieve excellent performance this quarter, but also the key to building a long-term competitive advantage for the company. Our solid performance is mainly driven by three strategic pillars working together. Continued global expansion, differentiated product innovation, and a healthy customer ecosystem. These pillars not only supported our strong results this quarter, but also formed the foundation of our long-term competitive advantage. First of all, we will continue to improve the global layout of the power grid.
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Speaker Change: Our solid performance is mainly driven by three strategic pillars, working together continued global expansion differentiated product innovation and a healthy customer ecosystem. This pillars not only supported our strong results this quarter, but also form the foundation of.
Speaker Change: Our long term competitive advantage.
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Junjie Zhang: JIE SHI YI QI ZHUNG MU The total number of stores in China has reached 6,512 stores. In comparison to last quarter, the number of stores has increased by 228 stores. In the first quarter of the country, GMO growth was 37.2%, reaching RMB80.5 billion. Overseas markets are expanding steadily. The total number of stores in Southeast Asia has increased to 169. Among them, Malaysia has increased by 9, Singapore has increased by 4, and the overseas market GMV has reached RMB 1.8 billion. The growth rate is 85.3%. First, on store network expansion, we continue to improve our global footprint.
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Speaker Change: First on store network expansion, we continue to improve our global footprint by the end of the first quarter. We had 6512 stores in greater China, a net increase of 228 storage from the previous quarter.
Junjie Zhang: By the end of the first quarter, we had 6,512 stores in Greater China, a net increase of 228 stores from the previous quarter. GMV in Greater China markets was RMB $8,048.4 million, up 37.2% year-over-year. Our overseas expansion progressed steadily, with the total number of stores in Southeast Asia rising to 169, including nine new stores in Malaysia and four in Singapore. GMV generated from overseas market reached RMB 178.4 million. representing an 85.3% growth year over year.
Speaker Change: <unk> in greater China market was RMB $8048 4 million up 37, 2% year over year.
Speaker Change: Our overseas expansion progress steadily with the total number of stores in South East Asia rising to 190 to 69.
Speaker Change: Including nine new stores in Malaysia, and four in Singapore.
Speaker Change: Jim regenerated from overseas market reached to RMB $178 4 million.
Speaker Change: Representing an 85, 3% growth year over year.
Junjie Zhang: We are particularly proud to announce that on April 11, 2025, we successfully opened our first store in Yogyakarta, India. The brand has officially opened its doors to the Indonesian market. The store not only offers high-quality milk tea, but also fresh tea drinks and special drinks. The brand's unique innovation and extraction technology brings a rich and rich tea fragrance. The door-to-door design cleverly integrates the local cultural elements of Indonesia. The wall paintings were created by local artists. They perfectly show the deep integration of tea culture and traditional culture in Indonesia.
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Junjie Zhang: In addition, our first store opened on May 11 in Los Angeles. On the opening day, the number of sales exceeded 5,000 cups. The performance is exciting.
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Junjie Zhang: It's worth mentioning that on April 11th, 2025, we reached a significant milestone with our first Indonesian local location at Jakarta. This store showcases our premium tea offering, fresh brewed selection and signature beverages. all enhanced by our preparatory tea expresso extraction method that delivers unparalleled depth and aroma. The space itself celebrates our cross-cultural vision through stunning murals by acclaimed local artists.
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Speaker Change: It's worth mentioning that on April 11, 2025, we reached a significant milestone with our first the Indonesian low co location at Jakarta. This store showcases our premium tea offerings.
Speaker Change: <unk> route selection and signature beverages.
Speaker Change: Enhanced by our preparatory he espresso extraction methods that delivers unparalleled depth and our roadmap the space itself celebrates our cross cultural vision through a stunning neuro by acclaimed local artists.
Junjie Zhang: Thoughtfully weavering tea traditions with local. Just weeks later, on May 11th, we had grand opening for our first U.S. flagship store in Los Angeles. which serves over 5,000 cups on its opening day. A remarkable milestone that signals strong momentum in this key market.
Speaker Change: So hopefully we've ring T tradition with local heritage.
Speaker Change: Just weeks later on May 11th we had grand opening for our first U S flagship store in Los Angeles, which serves over 5000 cops on its opening day.
Speaker Change: A couple of milestone that signal a strong momentum in this key market.
Junjie Zhang: Secondly, in terms of product innovation, we have brought seasonal limited products back to the old users, constantly launching new products to attract new users. In the first quarter, we launched seven new products, including the Healthy Guidelines Qingying Boya Juexian and Qingying series. Qingying Boya Juexian was launched on March 21st in multiple provincial cities, and received good feedback. Shanxing City's CME growth is significantly higher than that of Weishanxing City.
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Junjie Zhang: 新推陈式拉筋效果优佳 新客在下午和晚间活跃度高,新博雅绝权。 新客占比创历史第三 我们在小陈旭也设立了青鹰专区 强化品牌认知 Second, in product innovation, we bring back seasonal limited products for existing users while continuously launching new products to attract new customers. This quarter, we extended our lineup with seven innovative offerings, including the low-caffeine Boya tea latte and our specialized low-caffeine collection. Our low-caffeine range delivered strong week-over-week GMV growth, with particularly encouraging results in pilot cities where customer receptions have been positive. Launch week performance showed higher GMV growth than other cities, driven by strong afternoon and evening consumption patterns. Notably, the Low Caffeine Boya Tea Latte now holds one-third highest new customer conversion rate.
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Speaker Change: Second in product innovation, we bring back this isn't a limited product for existing users while continuously launching new product to attract a new customer this.
Speaker Change: This quarter, we expanded our lineup with several innovative offerings, including the low caffeine Borja tea latte and our specialized the low caffeine collection are low caffeine range delivered strong week over week GMB growth with particularly encouraging results in pilot cities, where a customer.
Speaker Change: Receptions, where it has been positive.
Speaker Change: Lunch weak performance showed higher G M b growth than other cities driven by strong afternoon and evening consumption pattern.
Speaker Change: Notably the low caffeine buoy out he Latam now holds one third highest new customer conversion rate with further empty. We've tried this momentum by creating a dedicated low caffeine showcased within our mini program strengthening category presentation and highlighting is unique.
Junjie Zhang: We further amplified this momentum by creating a dedicated low-caffeine showcase within our mini program. Strengthening category recognition and highlighting its unique value proposition.
Speaker Change: Value proposition.
Junjie Zhang: 此外,春系限定寝食春衫以龙井茶为基底,限定期内杯量占比超过16%,复购率历史排名第三,用户喜爱度领先,龙井茶以其清新茶香管受欢迎。 花茶玫瑰丛中全网曝光高达3.4亿 凭借玫瑰元素和高辨识度包装脱颖而出 激活节日氛围并成功拉新年轻用户,品牌知名度持续领先,持续数据显示,我们在饮料茶饮行业生量和互动量均居榜首。 Xiaohongshu, search for No.1 Xiaohongshu, search for No.1 According to data from Social Touch, Chage maintains leadership in a premium tea beverage sector across both volume and engagement matrix, while holding the top position in key social media search rankings.
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Speaker Change: Furthermore, our seasonal specialty teams between show featuring premium alone team he represented over 16.
Speaker Change: Percent of total Cup sold during its limited availability and secured our third highest to repurchase rate clearly demonstrating a strong consumer appeal.
Speaker Change: Our Valentines day collection make ways homegrown achieved exceptional market visibility with 340 million online impressions extending out through its sophisticated rosy fused the flavors and distinctive packaging that resonated perfectly with the holiday spirit accord.
Speaker Change: <unk> two data from social touch charge you maintained the leadership in the premium tea beverage sector across both volume and engaging men matrix.
Speaker Change: Now holding the top position in key social media search rankings.
Junjie Zhang: Third, in terms of user growth, we have established an eco-friendly cycle. 直至一季度末,公司小程序用戶數突破1.92億。 With a record growth of 15 million users, the number of active users is close to 45 million, and the number of users is continuously increasing. This result is generally beneficial to the development of Qingying series products. Especially, the consumption ratio between afternoon tea and dinner is higher than other products. On the other hand, we continue to promote the operation activities, which also provides real value for user growth.
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Junjie Zhang: Third, we've cultivated a thriving user ecosystem that continues to expand. By the close of the first quarter, our registered members in mobile mini-programs grew to over 192 million, with 15 million new members joined during this quarter alone. Our active member count is now approaching 45 million, with steadily strengthening engagement matrix across all sectors. A significant driver of this growth has been our local caffeine selections, which have successfully captured increased afternoon and evening consumption occasions. Building on this momentum, our precision-targeted marketing campaigns and strategic brand partnership have established a powerful foundation for sustained customer acquisition and retention.
Speaker Change: Third with part of it it is thriving user ecosystem that continues to expand at the close of the first quarter. Our registered members in mobile mini program grow to over $192 million with 15 million New members joined during this quarter alone our active member count.
Speaker Change: It's now approaching $45 million with steadily strengthening engagement matrix across all segments.
Speaker Change: Significant driver of this growth has been our local caffeine selections.
Speaker Change: Which have successfully captured increase the afternoon and evening consumption occasions building.
Speaker Change: Building on this momentum our precision targeted marketing campaigns and strategic brand partnerships have establish a powerful foundation for sustained customer acquisition and retention.
Junjie Zhang: In the future, we will continue to deepen the three core strategies. Continuously optimize the power grid, improve the efficiency of single power operation, including improving the cost structure, optimizing manpower costs, and increasing the fee rate. We are committed to product innovation, deepening the field of original tea, strengthening the user experience, and enhancing brand value. We firmly believe that through our firm and unwavering commitment, Dongfan Tea will become a world-renowned enterprise. Baan Cha Ji will definitely grow into a landmark brand in the world of Chinese tea culture.
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Junjie Zhang: While creating a lasting return for shareholders, let's connect everyone's every day with a cup of tea.
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Speaker Change: Moving forward, we will continue to advance our three core strategies first we will optimize our store network, while driving optional efficiency at the store level streamlining our cost structure and right sizing labor and rental expenses.
Junjie Zhang: Second, we remain committed to product innovation that showcases our authentic leaf tea heritage. Third, we'll enhance the customer experience to reinforce our premium brand position.
Speaker Change: Second we remain committed to product innovation that showcases our authentic leaf tea heritage.
Speaker Change: Third we will enhance the customer experience to reinforce our premium brand positioning.
Junjie Zhang: We remain steadfast in our mission of aspiring to foster a global connection of people and cultures with every cup of our tea, positioning Chage as the authentic voice and premier representative of Chinese tea heritage on the world stage. As we pursue sustainable shareholder returns, we will persistently push the boundaries of what's possible in our pursuit of excellence and continue to foster a global connection of people and cultures through our teach.
Speaker Change: We remain steadfast in our mission of aspiring to foster a global connection of people and culture with every couple of our key positioning <unk> as the authentic voice and Premier representative of Chinese heritage on the World stage.
Speaker Change: As we pursue sustainable shareholder returns, we will persistently push the boundaries of what's possible in our pursuit of excellence and continue to foster a global connection of people and culture through our teeth.
Erin: Can you tell a yoshi saffell Erin we thought yacht Shanxi THL concerts, highwall gotcha with that I will turn the call over to our CFO Erin to go over the financials.
Aaron Wong: With that, I will turn the call over to our CFO, Aaron, to go over the financials. Thank you, Junjie, and hello, everyone. First, I would like to express my sincere appreciation for all the support and help from our staff, the business partners and the shareholders along the way. As a listed company, we will continue to focus on sustainability of business growth, the value creation for our shareholders. Before we get into the financials, please note that all numbers are in RMB and all comparisons are on year over year basis. Unless otherwise stated. We began 2025 with a solid execution across our key business priorities.
Speaker Change: Thank you JJ.
Erin: And Hello, everyone.
Speaker Change: First I would like to express my sincere appreciation for all the support and the help from our staff and business partners and its shareholders along the way.
Speaker Change: As a listed company.
Speaker Change: We'll continue to focus on sustainability of business grows the value creation for our shareholders before we get into the financials. Please note that all numbers are in RMB and all comparisons are all year over year basis, unless otherwise stated.
Speaker Change: We began selling 75 with a solid execution across our key business priorities.
Aaron Wong: We made a meaningful progress in network expansion, adding stores that are strengthening our market position, while delivering notable improvements in store operation efficiency. These achievements highlight our team's consistent execution capability. and the resilience of a business is fundamental. Building on the foundation, we continue to advance strategic initiatives designed to ensure our business remains adaptable and resilient amid the current market dynamics. First, we continue to optimize our supply chain efficiency across all markets. As we expand globally, we work with local suppliers where it makes operational sense, which helps us maintain product freshness and manage logistic costs.
Speaker Change: Made a meaningful progress in network expansion, adding installs that experiencing market position, while delivering notable improvements in store operation efficiency.
Speaker Change: There is a tremendous highlighted our teams consistent execution capabilities.
Speaker Change: The resilience our business fundamentals.
Speaker Change: Building on the foundation, we continue to advance strategic initiatives designed to ensure our business remains adaptable and resilient to the current market dynamics.
Speaker Change: First we continue to optimize our supply chain efficiencies across all markets as we expand globally. When you work with local suppliers, where it make operational sense, which help us maintain product freshness and are managing.
Aaron Wong: This approach supports our commitment to delivering high quality products to consumers while maintaining operational efficiency. Second, we have prioritized cost optimization and operational efficiency across our business. By leveraging our growing scale, we've enhanced our negotiation position with suppliers and streamlined our operations. Third, we expect our Geographic diversification into Southeast Asia and the North American market will reduce our dependencies on any single market while creating new growth opportunities. These strategic initiatives have positioned us well to navigate the market uncertainties while we continue to deliver strong financial results.
Speaker Change: Adjusted costs.
Speaker Change: This approach supports our commitment to delivering high quality products to consumers, while maintain operational efficiency.
Speaker Change: Second we have.
Speaker Change: To prioritize the cost optimization and operational efficiencies across our business by leveraging our growing scale, we have enhanced our negotiation position with suppliers and the streamlined our operations.
Speaker Change: Third.
Speaker Change: We expect.
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Speaker Change: Geographic diversification into southeast Asia.
Speaker Change: And the North America market, well reduce our dependency on any single market, while creating new growth opportunities.
Speaker Change: These strategic initiatives have positioned us well to navigate some market uncertainties, while we continued to deliver strong financial results.
Aaron Wong: Next, let's go through the financials. Our net revenue for the first quarter increased by 35.4% year-over-year to $3,392.7 million, mainly driven by continued expansion of our T-House network. Among them, net revenues from Franchisee Keyhouse grows 31.8% to $3,149.9 million, representing 92.8% of our total revenue. Net revenue from company owned tea houses increased 107.7% to 242.8 million. accounts for 7.2% of total revenues. The average monthly GNV per tea house in Greater China was 431,973 RMB in the first quarter. While this represents a sequential decrease from the fourth quarter last year, it's important to note that this is primarily reflecting two factors.
Speaker Change: Next let's go through the financials.
Speaker Change: Our net revenues for the first quarter increased by 35, 4% year over year to 3390 to $2 7 million, mainly driven by continued expansion.
Speaker Change: House network.
Speaker Change: Among them.
Speaker Change: Net revenues from franchisees.
Speaker Change: Your house Rose 31, 8% to $3149 9 million, representing 92% 92, 8% of our total revenues.
Speaker Change: Net revenue from company owned Teahouses increased to 100 772.
Speaker Change: Sure.
Speaker Change: $42 8 million.
Speaker Change: Accounts for seven 2% of total revenues.
Speaker Change: The average amongst <unk> teahouse in greater China was 431973 RMB.
Speaker Change: In the first quarter.
Speaker Change: This represents a sequential decrease from the first quarter last year, it's important to note that this.
Speaker Change: Reflecting two fact tests.
Aaron Wong: First, seasonality. The first quarter typically experiences lower consumer traffic following the Chinese New Year holiday. And the second was strategic network expansion, which includes a higher proportion of tea houses in their honorable faces.
Speaker Change: Seasonality in the first quarter typically experiences.
Speaker Change: Similar traffic following the Chinese new year holiday period.
Speaker Change: And the second.
Speaker Change: Stringent strategic network expansion, which includes a higher proportion of houses in the automotive space.
Aaron Wong: turning into margin and expense. Operating income was $820.8 million, with an operating margin of 24.2%, compared to 28.2% in the first quarter of 2024, and 19.3% in the fourth quarter of 2024. This change reflects our strategic investment in brand building and marketing for new products launched, R&D to enhance our product offerings, digital infrastructure to improve customer experience, and talent acquisition to support global expansion. to elaborate. Operating costs for the company-owned tea houses were $157 million, up 170% from a year ago, but down 3.8% from the fourth quarter of 2025. As of March 31st, 2025, we operated a 191 company-owned tea house.
Speaker Change: Turning to margin and expenses.
Speaker Change: Operating income was $828 million with an operating margin of one to four 2% compared to 28, 2% in the first quarter of 2024, and a 19, 3% in the fourth quarter oftentimes is helpful.
Speaker Change: This change reflects our strategic investment in brand building and marketing for new products launched R&D to enhance our product offerings digital infrastructure to improve customer experience and the talent acquisition to support global expansion.
Speaker Change: To elaborate.
Speaker Change: Operating costs for the company owned teahouse, where $157 million.
Speaker Change: 170% from a year ago, but down three 8% from the fourth quarter of 2017 false.
Speaker Change: As of March 31st 2025, we operated a 191 company owned <unk> House.
Aaron Wong: up from 169 at the end of the 2020. On a per store basis, operating costs have decreased compared to the full year 2024, showing improved efficiency at the store level. Other operating costs increased by 79.6% to $172 million. to $2.5 million. This was primarily driven by higher payroll, utility, office expenses, and the travel costs to support a rapid expansion of our franchisee T-House network. as a percentage of total net revenue. The other operating costs were 5.1%, up from 3.8% in the second quarter of 2020. Sales and marketing expenses for the quarter were $299.3 million, up 166% from a year ago.
Speaker Change: Up from 169 at the end of 'twenty to 'twenty four.
Speaker Change: This first store basis operating costs have decreased compared to the full year 2024 shall we can improve the efficiency at a store level.
Speaker Change: Other operating costs increased by 79, 6% to 170.
Speaker Change: Two.
Speaker Change: $5 million.
Speaker Change: This was primarily driven by higher payroll utility office expenses and travel costs to support the rapid.
Speaker Change: Expansion of our franchisee network.
Speaker Change: As a percentage of total net revenue the.
Speaker Change: Other operating costs were five 1% upfront three 8% in the same quarter of 2024.
Speaker Change: Sales and marketing expenses for the quarter with $299 3 million.
Speaker Change: 166% from a year ago.
Aaron Wong: This increase was primarily driven by higher advertising costs related to the launch of the new tea product and associated marketing campaigns, as well as increased payroll expenses due to the expansion of our sales and marketing team. As a percentage of total net revenue, sales and marketing expenses were 8.8% compared to 4.5% in the same course of 2020. General and administrative expenses reached $352.8 million, an increase of 62.1% from a year. The gross was mainly attributable to higher R&D. Expenses for upgrading existing tea recipes and rolling out our new product increased IT service costs to support business development and operationally efficient.
Speaker Change: This increase was primarily driven by higher advertising costs related to the launch of the new <unk> product and the associated to the marketing campaigns as well as increased payroll expenses due to the expansion of our sales and marketing team.
Aaron Wong: As a percentage of total net revenue sales and marketing expenses were eight 8% compared to four 5% in the second quarter of 2024.
Speaker Change: General and administrative expenses reached $352 8 million, an increase of 62, 1% from a year ago.
Speaker Change: The growth was mainly attributable to higher.
Speaker Change: R&D.
Speaker Change: Expenses for operating existing key recipe and are rolling out our new product increased service cost to support business development.
Speaker Change: And operational efficiency.
Aaron Wong: and higher payroll expenses, resulting from an expanded administrative team to support our growing business. G&A expenses accounted for 10.4% of total net revenues, compared to 8.7% in the same quarter of last year. As a result, net income increased by 13.8% to $6.5 billion. $177.3 million, resulting in a net income margin of 20% compared to 23.7% a year ago and 19.3% in the fourth quarter of 2025. The decline of the net income margin versus last year, Q1, due to, firstly, continued investing in branding and marketing, especially in new products and the overseas market. And secondly, net loss incurred by overseas operations, which were still at a rampant upstate.
Speaker Change: Higher payroll expenses, resulting from it.
Speaker Change: And expanded administrative and team to support our growing business.
Speaker Change: <unk> expenses accounted for 10, 4% of total net revenues compared to eight 7% in the same quarter of last year.
Speaker Change: As a result net income increased by 13, 8% to $677 three minutes.
Speaker Change: Resulting in a net income margin of 20%.
Speaker Change: Per the 223, 7% a year ago, and a 19, 3% in the fourth quarter of 2000.
Speaker Change: Paul.
Paul: The decline of the net income margin versus last year Q1, due to firstly, continuing investing in branding and marketing, especially in new products and the obesity market and secondly, net loss in occurred by oversee operations, which were still ramping up stage.
Aaron Wong: Basic and diluted net income per ordinary share was 3.92 RMB during the first quarter. As of March 31st, 2025, our cash and cash equivalent, restricted cash, and the time deposit totaled $5,392.4 million up from $4,868.7 million at the end of 2024.
Paul: Basic and diluted net income.
Paul: The ratio was three 9% to RMB during the first quarter.
Paul: As of March 31st 2025, our cash and cash equivalents restricted cash and time deposits totaled.
Paul: <unk> thousand $392 4 million up from 404806 to $8 7 million at the edge.
Paul: End of 'twenty.
Aaron Wong: Our IPO in April raised a total gross percentage. premisely U.S. dollar 472.9. including the over allotment option, providing significant flexibility to fund our growth initiatives and navigate market uncertainties.
Paul: Paul.
Paul: Our IPO in April raised total gross proceeds of.
Speaker Change: Our promus elite U S dollars $472 9 million.
Speaker Change: Including the over allotment option, providing significant flexibility to fund our growth initiatives and navigate market uncertainties.
Aaron Wong: We will not be providing a formal quarterly financial guidance at this time. Instead, we are focused on executing our long-term growth strategies and delivering lasting value to our shareholders. We may consider providing such guidance in the future as we see fit.
Speaker Change: We will not be providing formal positive financial guidance at this time.
Speaker Change: We are focused on executing our long term growth strategies and to delivering lasting value to our shareholders. We may consider providing such guidance in the future as we see fit.
Operator: With that, I will hand it back to operator to begin the Q&A session. Operator, please go ahead. Thank you.
Speaker Change: With that I will.
Speaker Change: And back to the operator to begin the Q&A session. Operator. Please go ahead Greg.
Operator: We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for a name to be announced.
Speaker Change: We'll now begin the question and answer session to ask a question. Please press star one on your telephone and wait for.
Speaker Change: Trending to be announced.
Sergio Lin: Our first question comes from the line of Sergio Lin from CICC. Please go ahead. Okay. Thank you, management. Congrats for the solid revenue and profit growth in Q1. So, I have a question on the overseas markets.
Speaker Change: Our first question comes from the line of suits here leading from.
Speaker Change: ICC. Please go ahead ma'am.
Speaker Change: Okay. Thank you Manish Raj congrats for the solid revenue and profit growth in Q1. So I have a question on the overseas markets could you provide an update on your current overseas market expansion and development. Thank you.
Junjie Zhang: Could you provide an update on your current overseas market expansion and development? Thank you. Thanks. That's a good question. As of March 31, 2025, our 169 overseas stores, including 157 in Malaysia, 10 in Singapore, and 2 in Thailand, represent only 2.5% of our global network, but it demonstrates exceptional quality. Overseas GMV reached RMB178 million, growing 85.3% year-over-year. highlighting the tremendous growth potential of the overseas market. Taking Singapore as an example, our test stores achieved an average monthly GNV of approximately RMB 1.8 million personal in Q1 2025. substantially higher than the greater China market average. This demonstrates the higher spending power and the profitability potential in the early stage of development in the overseas market.
Speaker Change: Thanks Thats good question.
Speaker Change: Marshall.
Marshall: The first of 275, or 109, oversea stores, including 157 million in Malaysia, Thailand, and Singapore, and Australia, and Thailand represents only two 5%.
Marshall: Global network, but are demonstrating exceptional growth quality OSB.
Marshall: <unk> reached RMB $107 million to $8 million growing 85, 3% year over year.
Marshall: Highlighting the tremendous growth potential of the OSV market.
Marshall: Taking a Singapore as an example, our test stores achieved an average monthly <unk> of.
Marshall: Appropriately.
Marshall: RMB, one 8 million principal in Q1 to 25.
Marshall: Substantially higher than the greater China market average.
Marshall: This demonstrates.
Marshall: The higher spending power and the profitability potential in the early stage of development in the OSV market.
Junjie Zhang: providing crucial support for long-term growth generally. We have achieved strong results in our strategic market. In Singapore, we have added four new stores in Q1, with a total store count now 10 stores. These stores delivered an excellent per-store GMV performance in Q1.
Marshall: Providing crucial support for long term growth trajectory.
Marshall: We have achieved strong results in our strategy.
Steve: Strategic markets Steve.
Speaker Change: In Singapore, we have added four new stores in Q, what was the total store count to now 10 stores. These stores delivered.
Speaker Change: Excellent post <unk> performance in Q1 in Indonesia, Jakarta, Freshest store opened on April 11.
Junjie Zhang: In Indonesia, Shakada Fresh Store opened on April 11th with exceptional performance. over 10,000 cups in the first three days. 5,000 plus registered users in the first week. Daily average now of 2,000-plus cups in April.
Speaker Change: With exceptional performance.
Speaker Change: Over 10000 Cups in the first three days.
Speaker Change: 5000, plus registered users in the first week daily average now.
Speaker Change: So 1000 plus cuts in April.
Junjie Zhang: In the United States, Los Angeles flagship stores opened in May, with over 5,000 cups sold on the opening day, generating strong market enthusiasm. These results show that we can tailor our product offerings and in-store experience to local market demands, delivering authentic regional characteristics. This helps us build our brand and connect with customers globally. At the current stage, we are focused on building our team and system over time. This helps us create a strong foundation for healthy, long-term, sustainable growth. When it comes to opening a new store abroad, we care more about quality and the key performance rather than just how fast we can expect.
Speaker Change: In the United States, Los Angeles flagship stores opened in May with over 5000 Cups sold on the opening day generating strong market entrances.
Speaker Change: These results showing that we can tailored our product offerings and the in store experience to local market demands delivering authentic regional characteristic for consumers.
Speaker Change: To help us build our brand in the connected customer for globally.
Speaker Change: At the current stage, we are focused on building our team and system overseas.
Speaker Change: Help us create a strong foundation for healthy long term sustainable growth.
Speaker Change: When it comes to opening new store abroad, we care more about quality and the key performance rather than just the how fast we can expect.
Junjie Zhang: Moving forward, we will continue to expand our global footprint while maintaining steady growth in the greater China market. By strategically enhancing the contribution of overseas stores, we aim to propel Chage towards the goal of becoming a world-leading tea drink brand.
Speaker Change: Moving forward, we will continue to expand our global footprint, while maintaining steady growth in greater China market by strategically enhancing the contribution of the overseas dose we add into.
Speaker Change: Propel charging to us to go up becoming a widening tea drink brand.
Operator: Next question, please. Thank you.
Speaker Change: Next question please.
Jiwei Liu: One moment for the next question. Our next question comes from Jiwei Liu from Citix. Please go ahead. Thanks, management. I have one question about Simstore sales growth. Could you provide more details on your 1Q Simstore sales growth trend? Thanks. Thank you. Thank you for the question.
Speaker Change: Thank you one moment for that next question.
Speaker Change: Yeah.
Liu: Our next question comes from <unk> Liu from Citigroup. Please go ahead Sir.
Liu: Thanks management.
Speaker Change: One question about same store sales growth.
Liu: We will provide more details on your lung to same store sales growth. Thanks.
Liu: Thanks.
Liu: Thank you. Thank you for your question.
Junjie Zhang: Yeah, SSSG is measured for stores that have been open for at least 13 months and have generated sales in both periods. in the first quarter of 2025. So about 300. 3,300 stores met these criteria. This made up around 50.6% of our total store portfolio at the end of the quarter. SSSG experienced a decline as our store-level performance started to fall and normalize. As a result, Q1 SSFT was negative 18.9% after we rapidly scaled our new tea house expansion from 4,000 plus to 6,600 plus just within one year. This unprecedented growth strategy helped Chage to rapidly take the leading market share in the premium category of freshly made tea drinks, far ahead of our closest peers.
Liu: Yes.
Liu: As a measure of the four stores that have been opened at least 13 months and they have generated sales in both periods.
Liu: Being compared.
Speaker Change: In the first quarter I will turn into <unk>.
Speaker Change: So about 300.
Speaker Change: 3300 stores.
Speaker Change: These criterias.
Speaker Change: These are made up of around 56% of our total portfolio at the end of the quarter.
Speaker Change: SSG experienced declining.
Speaker Change: As our store level performance, starting with some following a normalized substantially.
Speaker Change: As our results Q1.
Speaker Change: <unk> was negative 18, 9% after we rapidly scaled our new teahouse expansion from 4000, plus two 6600, plus just within one year.
Speaker Change: This unprecedented growth strategy helped hitachi to rapidly taken a leading market share in the premium category of refresh it made a few drinks.
Speaker Change: <unk>.
Speaker Change: Our closest peers.
Junjie Zhang: Now, Chagee is transitioning from a rapid market penetration strategy to a save-and-store sales growth strategy. So to do so, we focus on new products, more usage occasions, exciting marketing events, and excellent full customer experience through day-by-day operations. So we work closely with our partners to grow in a healthy way by creating high brand value to win consumers instead of just by cutting prices. So we have seen consistent and healthy growth in the stem cell cells over the last several years in some of the more mature markets. For example, in Yunnan and Guangxi provinces, where we have operated for over six, seven years, the same store sales grow in Q1, still reach high single digit to high team level.
Speaker Change: Now charging is transitioning from a rapid market penetration strategy. So as same store sales growth strategy.
Speaker Change: So to do so we focus on new products.
Speaker Change: More usage occasions, exciting marketing events and excellence of full customer experience throw to anybody day operations.
Speaker Change: So we work closely with our partners to grow in our house away by creating high brand value to consumers.
Speaker Change: Status of just by cutting prices.
Speaker Change: So we have seen kind of assistance in the house. It grows in the same store sales over.
Speaker Change: Over the last several years.
Speaker Change: Some of the more mature markets for example.
Speaker Change: And the quality.
Speaker Change: Provinces, where we have operated there for over six seven years now.
Speaker Change: Same store sales growth in Q1, still rich highest single digit to high teen level.
Junjie Zhang: Thanks.
Speaker Change: Thanks.
Operator: Thank you for the questions.
Speaker Change: Thank you for the questions.
Operator: That concludes the Q&A session, so I'd like to hand the call back to management for closing. Thank you again for joining our call today. If you have any further questions, please feel free to contact us or request through our IRY.
Speaker Change: That concludes the Q&A session I would like to hand, the call back to management for closing.
Speaker Change: Thank you again for joining our call today. If you have any further questions. Please feel free to contact us or request through our IR website.
Operator: We will look forward to speak with everyone in our next call. Have a good day. Thank you. Bye.
Speaker Change: Look forward to speak with everyone in our next call have a good day. Thank you bye.
Speaker Change: Okay.
Speaker Change: Yeah.
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