Q1 2026 Chagee Holdings Ltd Earnings Call

May 29, 2026

Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Chagee's Q1 2026 Earnings Conference Call. At this time, all participants are in listen only mode. We will be hosting a question and answer session after management prepared remarks. Please note that today's event is being recorded. With that, I'll now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company. Please go ahead, ma'am.

Speaker #1: We will be hosting a question-and-answer session after management's prepared remarks. Please note that today's event is being recorded. With that, I'll now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company.

Speaker #1: Please go ahead, ma'am. Thank you. Hello, everyone, and welcome to Chagee's first quarter 2026 earnings call. With us today are Mr. Junjie Zhang, our CEO; Mr. Aidan Ng, our COO; and Mr. Aaron Huang, our CFO.

Alicia Guo: Thank you. Hello, everyone, and welcome to Chagee's Q1 2026 earnings call. With us today are Mr. Junjie Zhang, our CEO, Mr. Dengfeng Yin, our COO, and Mr. Hongfei Huang, our CFO. The company's financial and operating results were released by the newswire earlier today and are currently available online. Before we continue, I refer you to our safe harbor statements in the earnings release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today. Chagee does not undertake any obligations to update these statements. Also, this call includes discussions of certain Non-GAAP financial measure. Please refer to our earnings release, which contains a reconciliation of Non-GAAP measure to a GAAP measure. With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir. Hello, everyone.

Alicia Guo: Thank you. Hello, everyone, and welcome to Chagee's Q1 2026 earnings call. With us today are Mr. Junjie Zhang, our CEO, Mr. Adeng Yin, our COO, and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the newswire earlier today and are currently available online. Before we continue, I refer you to our safe harbor statements in the earnings release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today. Chagee does not undertake any obligations to update these statements. Also, this call includes discussions of certain Non-GAAP financial measure. Please refer to our earnings release, which contains a reconciliation of Non-GAAP measure to a GAAP measure. With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir.

Speaker #1: The company's financial and operating results were released by the newswire earlier today, and are currently available online. Before we continue, I refer you to our safe harbor statements in the earnings release.

Speaker #1: Which applies to this call, any forward-looking statements that we make on this call are based on assumptions as of today. And Chagee does not undertake any obligations to update these statements.

Speaker #1: Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures.

Speaker #1: With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir. Hello, 大家好。欢迎参加霸王茶姬2026年第一季财务的财报电话会。进入2026年，我们的战略方向比以往更加清晰，执行也更加聚焦。过去一段时间的思考与调整，让我们逐渐形成了一套更贴近用户、更注重长期价值的工作方式。 Hello, everyone. Welcome to Chagee's first quarter 2026 earnings call.

Junjie Zhang: Hello [Foreign language]

Alicia Guo: Welcome to Chagee's Q1 2026 Earnings Call. As we enter 2026, our strategic direction is clearer than ever and our execution is more focused. The reflections and adjustments of the past several months have allowed us to develop a way of working that is closer to our consumers and more committed to long-term value creation. Hello, everyone. Welcome to Chagee's Q1 2026 Earnings Call. As we enter 2026, our strategic direction is clearer than ever and our execution is more focused. The reflections and adjustments of the past several months have allowed us to develop a way of working that is closer to our consumers and more committed to long-term value creation. First, on our strategic priorities. In 2026, we're dedicating all our efforts to operations, focusing on executing every detail that truly matters to our consumers well.

Speaker #1: As we enter 2026, our strategic direction is clearer than ever, and our execution is more focused. The reflections and adjustments of the past several months have allowed us to develop a way of working that is closer to our consumers and more committed to long-term value creation.

Speaker #1: 首先，关于整体的战略重心，2026年我们把全部的精力投入到经营的本身，专注于做好用户真正关心的每一件小事。我们相信，一家企业能够穿越周期，归根结底还是取决于用户发自内心的认可。因此，我们今年的目标非常明确，就是把用户触点的每一个细节做到极致。 First, on our strategic priorities in 2026, we're dedicating all our efforts to operations, focusing on executing every detail that truly matters to our consumers' well.

Junjie Zhang: [Foreign language]

Speaker #1: We believe that the ability of a company to navigate cycles ultimately depends on genuine consumer recognition. Therefore, our goal this year is very clear: to perfect every single consumer touchpoint.

Alicia Guo: We believe that the ability of a company to navigate cycles ultimately depends on genuine consumer recognition. Therefore, our goal this year is very clear: to perfect every single consumer touch point. 其次，组织调整已经逐渐成效了。整体的效率我们现在还是有明显的提升的。过去几个季度，我们主动进行了组织优化

Speaker #1: 其次，组织调整已经逐渐成效了。整体的效率我们现在还是有明显的提升的。过去几个季度，我们主动进行了组织优化。目前可以明确地说，这些调整给我们带来实质性的很多变化。无论是资源的配置更加精准了，策略的执行也更加高效了，团队围绕主业的凝聚力和战斗力也显著增强了很多。这为我们持续实现高质量的增长打下了坚实的内在基础。 Second, our organizational adjustments are delivering results, and overall efficiency has improved significantly. Over the past few quarters, we have proactively optimized our organization; these changes have delivered tangible results.

Junjie Zhang: [Foreign language]

Junjie Zhang: 目前可以明确地说，这些调整给我们带来了实质性的很多变化。无论是资源的配置更加精准了，策略的执行也更加高效了，团队围绕主业的凝聚力和战斗力也显著增强了很多。这为我们持续实现高质量的增长打下了坚实的内在基础。

Junjie Zhang: [Foreign language]

Alicia Guo: Second, our organizational adjustments are delivering results, and overall efficiency has improved significantly. Over the past few quarters, we have proactively optimized our organization. These changes have delivered tangible results. Resource allocation is more precise, decision making and execution are more efficient, and our team's cohesion and effectiveness around our core mission have strengthened significantly. This has laid a solid foundation for us to continue achieving high quality growth.

Speaker #1: Resource allocation is more precise, decision-making and execution are more efficient, and our team's cohesion and effectiveness around our core mission have strengthened significantly. This has laid a solid foundation for us to continue achieving high-quality growth.

Speaker #1: 第三点，产品和营销优化已经清晰成型。执行重心明确，高度确认。我们已经完成了一套清晰完整可落地的产品规划和营销的路线图。我们的出发始终围绕着用户的需求，而不是从外部的竞争动向而来。所以接下来，所有工作将围绕产品、服务、环境、体验、价值主张而重点展开，把每一家门店、每一杯茶、每一次互动中落实到位，做到极致。这就是我们工作的全部重心。 Third, our product and marketing plans are now clearly defined, and our execution priorities are highly focused. We have completed a comprehensive and actionable roadmap for both products and marketing.

Junjie Zhang: 第三点，产品和营销优化已经清晰成型，执行重心明确，高度确认。我们已经完成了一套清晰、完整、可落地的产品规划和营销的路线图。我们的出发始终围绕用户的需求，而不是从外部的竞争动向而来。所以接下来，所有工作将围绕产品、服务、环境、体验、价值主张而重点展开，把每一家门店、每一杯茶、每一次互动中落实到位，做到极致，这就是我们工作的全部重心。

Junjie Zhang: [Foreign language]

Alicia Guo: Third, our product and marketing plans are now clearly defined, and our execution priorities are highly focused. We have completed a comprehensive and actionable roadmap for both products and marketing. Our starting point has always been consumer needs rather than external trends. Going forward, all of our work will center on five dimensions: product, service, environment, experience, and value proposition. Making every teahouse, every cup of tea, and every interaction consistently well executed is our only true priority.

Speaker #1: Our starting point has always been consumer needs, rather than external trends. Going forward, all of our work will center on five dimensions: products, service, environment, experience, and value proposition—making every teahouse, every cup of tea, and every interaction consistently well-executed as our only true priority.

Speaker #1: 那么随着一季度的业务回归，稳健增长，运营效率也持续在提升。从资本市场的角度来看，我们认为公司当前的股价是被严重低估的。为能合理地反映其长期的发展前景，在此我也请代表公司及管理层做出明确的一个承诺。公司董事会已经批准了一项股票的回购计划，授权我们在未来12个月内回购不超过1.5亿美元的美国存托股份（ADS）。我们希望通过这一实际的行动给大家传递公司真正的信心，也切实地回馈我们股东的信任。As our business returned to steady growth and operational efficiency continued to improve in the first quarter, from a capital market perspective, we believe our current share price is significantly undervalued.

Junjie Zhang: 随着一季度的业务回归稳健增长，运营效率也持续在提升。从资本市场的角度来看，我们认为公司当前的股价是被严重低估的，未能合理地反映其长期的发展前景。在此，我也谨代表公司及管理层做出明确的承诺。公司董事会已经批准了一项股票的回购计划，授权我们在未来12个月内回购不超过1.5亿美元的美国存托股份ADS。我们希望通过这一实际的行动，给大家传递公司真正的信心，也切实地回馈我们股东的信任。

Junjie Zhang: [Foreign language]

Alicia Guo: As our business returns to steady growth and operational efficiency continues to improve in Q1. From a capital market perspective, we believe our current share price is significantly undervalued and fails to properly reflect our long-term development prospects. At this point, on behalf of the company and the management team, I would like to make a clear commitment. Our board has approved a share repurchase program authorizing us to repurchase up to a $150 million ADS during a 12-month period as a concrete way to demonstrate our confidence and reward shareholders' trust.

Speaker #1: And failed to properly reflect our long-term development prospects. At this point, on behalf of the company and the management team, I would like to make a clear commitment: our board has approved a share repurchase program authorizing us to repurchase up to $150 million USD in ADS during a 12-month period.

Speaker #1: As a concrete way to demonstrate our confidence and reward shareholders' trust. 最后我想再次强调，当前公司的战略方向还是非常清晰的。团队也开始进行高效的运转了，海外布局有序地推进，长期正在迈入一个成熟的、稳定的、可持续的高质量发展的增长阶段。我们对未来的每一步都是充满信心的。 Finally, I want to reiterate: our strategic direction is clear, and our team is operating with high efficiency.

Junjie Zhang: 最后，我想再次强调，当前公司的战略方向还是非常清晰的，团队也开始进行高效的运转了，海外布局有序地推进，茶姬正在迈入一个成熟的、稳定的、可持续的、高质量发展的增长阶段。我们对未来的每一步都是充满信心的。

Junjie Zhang: [Foreign language]

Alicia Guo: Finally, I want to reiterate, our strategic direction is clear and our team is operating with high efficiency. Chagee is entering a mature, stable, and sustainable phase of high-quality growth. We're confident in every step we take forward toward the future.

Speaker #1: Chagee is entering a mature stable and sustainable phase of high-quality growth. We're confident in every step we take forward toward the future. 以上是我们整体的战略方向。下面请我们的COO为大家详细汇报一季度的执行层面的具体进展。谢谢大家。 That concludes our strategic direction.

Junjie Zhang: 以上是我们整体的战略方向。下面请我们的COO为大家详细汇报一季度的执行层面的具体进展。谢谢大家。

Junjie Zhang: [Foreign language]

Alicia Guo: That concludes our strategic direction. Next, I will hand the call over to our COO, Dengfeng Yin, who will walk you through the specific operational progress in Q1. Thank you.

Alicia Guo: That concludes our strategic direction. Next, I will hand the call over to our COO, Adeng Yin, who will walk you through the specific operational progress in Q1. Thank you.

Speaker #1: Next, I will hand the call over to our COO, Aiden, who will walk you through the specific operational progress in the first quarter. Thank you.

Speaker #1: 好，谢谢俊杰。也感谢大家参加我们的业绩发布会。Thank you, Jun Jie, and thank you all for joining our earnings call today. 首先我来分享一季度的整体表现。总收入人民币35.46亿元，同比增长4.5%，环比增长19.2%，毛利率达到了55.6%。Non-GAAP净利润人民币5.07亿元，环比增长超过4倍。Non-GAAP净利率恢复至14.3%。总GMV达到了人民币79.18亿元，环比增长8.1%。中国区GMV环比增长了7.8%，海外GMV环比增长了14.6%，同比增长139%。从以上数据可以看出来，海外市场正在成为越来越重要的增长引擎。Let me begin by sharing our overall performance for the first quarter.

Dengfeng Yin: 好，谢谢俊杰，也感谢大家参加我们的业绩发布会。

Adeng Yin: [Foreign language]

Alicia Guo: Thank you, Junjie, and thank you all for joining our earnings call today.

Dengfeng Yin: 首先我来分享一季度的整体表现。总收入人民币35.46亿元，同比增长4.5%，环比增长19.2%，毛利率达到了55.6%。Non-GAAP净利润人民币5.07亿元，环比增长超过4倍。Non-GAAP净利率恢复至14.3%。总GMV达到了人民币79.18亿元，环比增长8.1%。中国区GMV环比增长了7.8%，海外GMV环比增长了14.6%，同比增长139%。从以上数据可以看出来，海外市场正在成为越来越重要的增长引擎。

Adeng Yin: [Foreign language]

Alicia Guo: Let me begin by sharing our overall performance for Q1. Total revenue reached RMB 3,546 million, representing a 4.5% increase year over year, and a 19.2% increase quarter over quarter. Gross margin came in at 55.6%. Non-GAAP net income was RMB 506.7 million, increasing more than fourfold sequentially. Non-GAAP net margin improved to 14.3%. Total GMV reached RMB 7,917.8 million, up 8.1% quarter over quarter. Greater China GMV grew 7.8% sequentially, while overseas GMV grew 14.6% sequentially and 139% year over year. It is clear that overseas markets are becoming an increasingly important growth engine.

Speaker #1: Total revenue reached RMB 3,546 million, representing a 4.5% increase year over year and a 19.2% increase quarter over quarter. Gross margin came in at 55.6%.

Speaker #1: Non-GAAP net income was RMB 506.7 million, increasing more than fourfold sequentially. Non-GAAP net margin improved to 14.3%. Total GMV reached RMB 7,917.8 million, up 8.1% quarter over quarter.

Speaker #1: Greater China GMV grew 7.8% sequentially, while overseas GMV grew 14.6% sequentially and 139% year over year. It is clear that overseas markets are becoming an increasingly important growth engine.

Speaker #1: 分子的关注的是呢，我们的经营质量在持续改善。中国区同店增速环比改善了9.4个百分点，整体同店增速也环比改善了9.5个百分点。这些数据表明，我们聚焦用户价值的策略正在切实见效。围绕这一策略，本季度我们重点从四个方面推动了业绩修复。 More importantly, our operational quality continued to improve. Same store GMV growth in Greater China improved by 9.4 percentage points sequentially, and overall same store sales GMV growth improved by 9.5 percentage points sequentially.

Dengfeng Yin: 更值得关注的是，我们的经营质量在持续改善。中国区同店增速环比改善了9.4%，整体同店增速也环比改善了9.5个百分点。这些数据表明，我们聚焦用户价值的策略正在见效。围绕这一策略，本季度我们重点从四个方面推动了业绩修复。

Adeng Yin: [Foreign language]

Alicia Guo: More importantly, our operating quality continued to improve. Same store GMV growth in Greater China improved by 9.4 percentage points sequentially, overall same-store GMV growth improved by 9.5 percentage points sequentially. These results show that our strategy of focusing on consumer value is working in practice. This quarter, we concentrated our efforts on four key areas to drive performance recovery.

Speaker #1: These results show that our strategy of focusing on consumer value is working in practice. This quarter, we concentrated our efforts on four key areas to drive performance recovery.

Dengfeng Yin: 第一，组织效率的兑现。经过第一季度的持续优化，我们的组织效率实现了质的飞跃，在整体费用率下降的同时，推动了执行端变得更快、更准、更协同。一方面，组织调整显著提升了执行效率。另一方面，目标更加明确和坚定。从总部到门店，团队对执行重点形成了高度共识，将有限资源集中投放到最能创造用户价值的事项上。从数据上看，Non-GAAP的管理费用率环比下降了8.1个百分点，至11.6%。Non-GAAP的销售和营销费用率环比下降了3.6个百分点，至8.6%。

Adeng Yin: [Foreign language]

Speaker #1: 组织效率的兑现。经过第一季度的持续优化，我们的组织效率实现了质的飞跃。在整体费用率下降的同时，推动了执行端变得更快、更准、更协同。一方面，组织调整显著提升了执行效率；另一方面，目标更加明确和坚定，从总部到门店，团队对执行重点形成了高度共识，将有限资源集中投放到最能创造用户价值的事情上。从数据上看，Non-GAAP的管理费用率环比下降了8.1个百分点，至11.6%。Non-GAAP的销售和营销费用率环比下降了3.6个百分点，至8.6%。 First, our improved organizational efficiency. Through continued optimization in the first quarter, our organizational efficiency achieved a qualitative leap, making execution faster, more precise, and more coordinated, while overall expense ratio declined.

Alicia Guo: First, our improved organizational efficiency. Through continued optimization in Q1, our organizational efficiency achieved a qualitative leap, making execution faster, more precise, and more coordinated, while overall expense ratio declined. On one hand, organizational adjustments improved execution efficiency. On the other hand, our goals became clearer and more resolute, with teams from headquarters to teahouses forming a strong consensus on executing priorities, channeling limited resources into activities that best create consumer value. In Q1, our non-GAAP G&A expense ratio declined by 8.1 percentage points sequentially to 11.6%, and our non-GAAP sales and marketing expense ratio declined by 3.6 percentage points sequentially to 8.6%.

Speaker #1: On one hand, organizational adjustments improved execution efficiency. On the other hand, our goals became clearer and more resolute, with teams from headquarters to teahouses forming a strong consensus on executing priorities, channeling limited resources into activities that best create consumer value.

Speaker #1: In the first quarter, our non-GAAP G&A expense ratio declined by 8.1 percentage points sequentially, to 11.6%, and our non-GAAP sales and marketing expense ratio declined by 3.6 percentage points sequentially, to 8.6%.

Speaker #1: Yeah. 产品的拓展。第一季度我们共推出了12款新品，更重要的是，我们的品类边界正在拓宽，逐步覆盖了茶辣甜、茶特调等系列。产品创新率与消费者认可度持续提升。2月上新的大红袍系列销售表现优秀，首周GMV和B站贡献占比、首周复购率、直接拉新人次等各项指标均高于历史新品均值。在千万活动中，该系列中的百物红尘业绩环比增速突出，成为强劲的拉动引擎。此外，云交卡美罗凭借独特的焦糖风味和甜度DIY的参与感，创造了鲜明的记忆点与差异化优势，广受茶友欢迎，展现出成为长线畅销单品的潜力。 Second, our product expansion. In the first quarter, we launched a total of 12 new products. More importantly, our categories are broadening, gradually extending into tea lattes, specialty blends, and others.

Dengfeng Yin: 第二，产品的拓展。第一季度我们共推出了12款新品，更重要的是，我们的品类边界正在拓宽，逐步覆盖了茶拿铁、茶特调等系列，产品创新力与消费者的认可度持续提升。2月上线的大红袍系列销售表现优秀，首周GMV和杯占贡献占比、首周复购率、直接拉新人次等各项指标均高于历史新品均值。在千万活动中，该系列中的白雾红尘业绩环比真实输出成为强劲的拉动引擎。此外，云焦卡美罗凭借独特的焦糖风味和甜度DIY的参与感，创造了鲜明的记忆点与差异化优势，广受茶友欢迎，展现出成为长线畅销单品的潜力。

Adeng Yin: [Foreign language]

Alicia Guo: Second, our product expansion. In Q1, we launched a total of 12 new products. More importantly, our categories are broadening, gradually extending into tea lattes, specialty teas, and others. Our product innovation and consumer recognition continue to improve. The Da Hong Pao series, launched in February, delivered strong performance, with first-week GMV contribution, cup contribution, repeat purchase rate, and direct new customer acquisition all exceeding historical averages for new product launches. During the Qwen campaign, the product Da Hong Pao tea latte from this series saw especially strong sequential growth and became an important growth driver. Caramel pearl latte, with its distinctive caramel flavor and interactive sweetness customization, created a strong impression among consumers and was a clear point of differentiation. The product was well received by our consumers and shows strong potential to become a long-term best seller.

Speaker #1: Our product innovation and consumer recognition continue to improve. The 大红袍 series, launched in February, delivered strong performance, with first-week GMV contribution, cup contribution, repeat purchase rate, and direct new customer acquisition all exceeding historical averages for new product launches.

Speaker #1: During the 天问 campaign, the product 大红袍 tea latte from this series saw especially strong sequential growth and became an important growth driver. Caramel Pour Latte, with its distinctive caramel flavor and interactive sweetness customization, created a strong impression among consumers and was a clear point of differentiation.

Speaker #1: The product was well received by our consumers and showed strong potential to become a long-term bestseller. 营销的新兴落地。在营销层面，我们开展了早期的和晚期的活动，成功拓宽了早间和晚间的消费场景。早期的活动启动以来，晨间时段杯量占比呈现翻倍增长，同时我们通过到店的买赠活动，持续巩固市运流量。活动期间，小程序渠道订单占比、新客占比均有提升，这表明我们的私域能力和拉新能力都在持续增强。 Third, clearer and more effective marketing execution.

Alicia Guo: The product was well received by our consumers and shows strong potential to become a long-term best seller.

Dengfeng Yin: 第三，营销的精细落地。在营销层面，我们开展了早系列和晚系列活动，成功拓宽了早间和晚间的消费场景。早系列活动启动以来，晨间时段杯量占比呈现翻倍增长。同时，我们通过到店的买赠活动，持续巩固私域流量。活动期间，小程序渠道订单占比、新客占比均有提升。这表明我们的私域能力和拉新能力都在持续增强。

Adeng Yin: [Foreign language]

Alicia Guo: Third, clearer and more effective marketing execution. On the marketing side, we introduced a morning buy one get one free campaign and launched a low caffeine beverage section for the evening, successfully extending consumption scenarios in both the early morning and late evening. Since the campaign began, the share of cups sold in the morning has doubled. At the same time, we continue to strengthen our private domain traffic through in-store promotions. As a result, the share of orders from our mini program channels and the share of new customer both improved during the campaign period. This demonstrates steady progress in both private domain traffic conversion and new customer acquisition.

Speaker #1: On the marketing side, we introduced a morning buy one get one free campaign and launched a low caffeine beverage section for the evening successfully expanding consumption scenarios in both the early morning and late evening.

Speaker #1: Since the campaign began, the share of cups sold in the morning has doubled. At the same time, we continue to strengthen our private domain traffic through in-store promotions.

Speaker #1: As a result, the share of orders from our menu program channel and the share of new customers both improved during the campaign period. This demonstrates steady progress in both private domain traffic conversion and new customer acquisition.

Speaker #1: 第一次呢，门店网络与质量优先。我们高度重视顾客体验和品牌标准。主动放缓了拓店节奏。聚焦单店经营质量，全面推进门店升级。同时，新的商业模式已全面启动。公司与加盟商利益更加一致，我们相信只有每一家门店都能传递一致的品牌价值，霸王茶姬才能真正赢得用户的长期信任，从数据上看，第一季度末全球门店数总计7531家，其中中国区7157家，海外374家。 Fourth, growing our teahouse network with quality remains our top priority. We place great importance on customer experience and brand standards. So we have deliberately slowed our pace of teahouse expansion and focused on improving operating quality while comprehensively upgrading our teahouses.

Dengfeng Yin: 第四点，门店网络与质量优先。我们高度重视顾客体验和品牌标准，主动放缓了拓店节奏，聚焦单店经营质量，全面推进门店升级。同时，新的商业模式已全面启动，公司与加盟商利益更加一致。我们相信，只有每一家门店都能传递一致的品牌价值，霸王茶姬才能真正赢得用户的长期信任。从数据上看，第一季度末，全球门店数总计7531家，其中中国区7157家，海外374家。

Adeng Yin: [Foreign language]

Alicia Guo: Fourth, growing our tea house network with quality remains our top priority. We place great importance on customer experience and brand standards. We have deliberately slowed our pace of tea house expansion and focused on improving operating quality while comprehensively upgrading our tea houses. At the same time, our new business model has been fully implemented, further aligning the interests of the company and our franchisees. We believe that only when every tea house delivers a consistent brand value can Chagee truly earn consumer long term trust. At the end of Q1, our global tea house network totaled 7,531 locations, including 7,157 in Greater China and 374 overseas.

Speaker #1: At the same time, our new business model has been fully implemented, further aligning the interests of the company and our franchisees. We believe that only when every teahouse delivers a consistent brand value that Chagee truly earns can Chagee truly earn consumers' long-term trust.

Speaker #1: At the end of the first quarter, our global teahouse network totaled 7,531 locations, including 7,157 in Greater China and 374 overseas. 海外市场也在稳步扩张。目前我们的门店在新加坡36家，马来西亚221家，泰国32家，印尼41家，菲律宾13家，越南22家，美国9家。保持稳健的增长节奏。运营表现也符合我们的预期。 Our overseas markets continue to expand steadily.

Dengfeng Yin: 海外市场也在稳步扩张。目前我们的门店在新加坡36家，马来西亚221家，泰国32家，印尼41家，菲律宾13家，越南22家，美国9家。保持稳健的增长节奏，运营表现也符合我们的预期。

Adeng Yin: [Foreign language]

Alicia Guo: Our overseas markets continue to expand steadily. Currently, our tea house presence includes 36 in Singapore, 221 in Malaysia, 32 in Thailand, 41 in Indonesia, 13 in Philippines, 22 in Vietnam, and nine in the United States. Our overseas tea house network maintains a steady growth pace with operating performance in line with our expectations.

Speaker #1: Currently, our teahouse presence includes 36 in Singapore, 221 in Malaysia, 32 in Thailand, 41 in Indonesia, 13 in the Philippines, 22 in Vietnam, and 9 in the United States.

Speaker #1: Our overseas teahouse network maintained a steady growth pace, with operating performance in line with our expectations. 最后啊，我想回到俊杰刚才提到的战略方向上。我们的战略核心是把用户关心的每一件小事做到极致。而用户是否真正认可，不看我们说了什么，而看我们做了什么。一季度末，我们的会员总数已经达到了2.48亿，活跃会员接近5000万人。环比四季度增长了超过11%。更让我们感到踏实的是，活跃会员的复购率保持在42.3%。购买两次以上的会员贡献了超过76%的订单量。每一次回购都是茶友对霸王茶姬产品和体验的真实认可。2.48亿茶友用一次次回购告诉我们，他们信任这个品牌，愿意一次又一次回到我们的门店。这是我们最宝贵的资产，也是我们穿越周期最坚持的底气。战略已经清晰，执行正在兑现。用户的信任就是我们最好的答案。 Finally, let me return to the strategic direction that Junjie laid out earlier.

Dengfeng Yin: 最后，我想回到俊杰刚才提到的战略方向上。我们的战略核心是把用户关心的每一件小事做到极致。而用户是否真正认可，不看我们说了什么，而看我们做了什么。一季度末，我们的会员总数已经达到了2.48亿，活跃会员接近5000万人，环比四季度增长了超过11%。更让我们感到踏实的是，活跃会员的复购率保持在42.3%，购买两次以上的会员贡献了超过76%的订单量。每一次回购，都是茶友对霸王茶姬产品和体验的真实认可。2.48亿茶友用一次次回购告诉我们，他们信任这个品牌，愿意一次又一次回到我们的门店。这是我们最宝贵的资产，也是我们穿越周期最坚持的底气。战略已经清晰，执行正在兑现。用户的信任就是我们最好的答案。

Adeng Yin: [Foreign language]

Alicia Guo: Let me return to the strategic direction that Junjie laid out earlier. Our strategic core is to perfect every small detail that consumers truly care about. Whether consumers genuinely recognize this is not measured by what we say, but by what they do. At the end of Q1, the number of our total registered members reached 248 million, with nearly 50 million active members, an increase of over 11% quarter-over-quarter. What gives us even greater confidence is that the repurchase rate among active members remained stable at 42.3%, and members who made two or more purchases contribute over 76% of total orders. Every repeat purchase is genuinely recognition from our Chagee friends. 248 million Chagee friends are telling us through their repeated purchases that they trust this brand and are willing to return to our tea house again and again.

Speaker #1: Our strategic core is to perfect every small detail that consumers truly care about. Whether consumers share or newly recognize this is not measured by what we say, but by what they do.

Speaker #1: At the end of the first quarter, the number of our total registered members reached 248 million, with nearly 50 million active members, an increase of over 11% quarter over quarter.

Speaker #1: What gives us even greater confidence is that the repurchase rate among active members remains stable at 42.3%, and members who made two or more purchases contribute over 76% of total orders.

Speaker #1: Every repeat purchase is generating recognition from our Chagee friends. Two hundred forty-eight million Chagee friends are telling us through their repeated purchases that they trust this brand and are willing to return to our teahouse again and again.

Speaker #1: This is our most valuable asset and our strongest foundation for navigating market cycles. Our strategy is clear, our execution is delivering, and consumer trust is our best answer.

Alicia Guo: This is our most valuable asset and our strongest foundation for navigating market cycles. Our strategy is clear, our execution is delivering, and consumer trust is our best answer. Looking ahead, our direction remains unwavering. On product, we will maintain a steady launch cadence while continuing to expand into new categories such as specialty teas. On service, we will continue to optimize our membership system and consumer experience. On environment, we will continue to upgrade teahouse differentiation through design. On experience, we will make the third place a place where consumers genuinely want to spend time. On brand value proposition, we will continue to embrace the spirit of connecting through tea, creating emotional resonance with our customers. On teahouse operation, we will continue to prioritize quality in our Greater China market, while steadily expanding overseas. That concludes my remarks.

Speaker #1: 答案未来。我们的战略方向依然清晰坚定，在产品上我们会保持稳健的上行节奏。持续拓展茶特调等更多的新品类。在服务上继续优化会员体系和用户体验。在环境上持续升级门店的差异化设计。在体验上让第三空间真正成为用户愿意停留的地方。在价值主张上坚持以茶会友与用户形成情感共鸣。在门店运营上中国区继续以质量优先，海外稳步扩张。 Looking ahead, our direction remains unwavering. Our product on product we will maintain a steady launch cadence while continuing to expand into new categories such as special deals.

Speaker #1: On service, we will continue to optimize our membership system and consumer experience. On environment, we will continue to upgrade teahouse differentiation through design. On experience, we will make the third place a place where consumers genuinely want to spend time.

Speaker #1: On brand value proposition, we will continue to embrace the spirit of connecting through tea, creating emotional resonance with our customers. On teahouse operations, we will continue to prioritize quality in our Greater China market, while steadily expanding overseas.

Speaker #1: 我的发言呢就到这里。接下来有请我们CFO为大家详细解读本季度的财务细节。谢谢大家。 That concludes my remarks. Now let me turn the call over to our CFO, Aaron, who will walk you through the detailed financials. Thank you.

Alicia Guo: That concludes my remarks.

Alicia Guo: Now let me turn the call over to our CFO, Hongfei Huang, who will walk you through the detailed financials. Thank you.

Alicia Guo: Now let me turn the call over to our CFO, Aaron Huang, who will walk you through the detailed financials. Thank you.

Speaker #1: Thank you, Aiden, and hello, everyone. Excuse me for my voice. Thank you for joining our earnings call. Before we begin, please note that all amounts are in RMB, and all comparisons are on a year-over-year basis.

Hongfei Huang: Thank you, Aden. Hello, everyone. Excuse me for my voice. Thank you for joining our earnings call. Before we begin, please note that all amounts in RMB and all comparisons are on year-over-year basis unless otherwise stated. As Junjie and Aden just outlined, 2026 was about disciplining the execution, a sharper operating focus, and visible progress in restoring growth quality. I am delighted to say that this strategy is already translating into improved financial performance. For Q1 2026, our total GMV was RMB 7,917.8 million and 8.1% sequential increase from RMB 7,322.9 million in Q4 2025. As of 31 March 2026, our teahouse network totaled 7,531 locations across Greater China and overseas, up 12.7% from 6,681 a year ago.

Aaron Huang: Thank you, Aden. Hello, everyone. Excuse me for my voice. Thank you for joining our earnings call. Before we begin, please note that all amounts in RMB and all comparisons are on year-over-year basis unless otherwise stated. As Junjie and Aden just outlined, 2026 was about disciplining the execution, a sharper operating focus, and visible progress in restoring growth quality. I am delighted to say that this strategy is already translating into improved financial performance. For Q1 2026, our total GMV was RMB 7,917.8 million and 8.1% sequential increase from RMB 7,322.9 million in Q4 2025. As of 31 March 2026, our teahouse network totaled 7,531 locations across Greater China and overseas, up 12.7% from 6,681 a year ago.

Speaker #1: Unless otherwise stated. As Jun Jie and Aiden just outlined, 2026 was about disciplined execution, a sharper operating focus, and visible progress in restoring gross quality.

Speaker #1: I'm delighted to see that this strategy is already translating into improved financial performance. For the first quarter of 2026, our total GMV was $7,917.8 million.

Speaker #1: An 8.1% sequential increase from RMB 7,322.9 million in the fourth quarter of 2025. As of March 31, 2026, our teahouse network totaled 7,531 locations across Greater China and overseas.

Speaker #1: Up 12.7% from 6,681 a year ago. Of these, 6,741 were franchisee teahouses and 790 were company-owned teahouses, reflecting the continued conversion of selected locations into company-owned stores as part of a network optimization strategy.

Hongfei Huang: Of these, 6,741 were franchisee Teahouses, and 790 were company-owned Teahouses, reflecting the continued conversion of selected locations into company-owned stores as a part of our networking optimization strategy. In Greater China, average monthly GMV per Teahouse was CNY 356,080 in Q1, representing a quarter-over-quarter increase of 5.5% from CNY 337,358 in Q4 2025. At the same time, overseas total GMV for Q1 grew 139% year-over-year and 14.6% quarter-over-quarter to CNY 426.4 million. On the revenue line, our net revenues for Q1 2026 were CNY 3,546 million, compared to CNY 3,392.7 million in the same quarter of 2025 and up 19.2% sequentially. Net revenue from franchisee Teahouses were CNY 2,743.9 million, representing 77.4% of total revenue, compared to CNY 3,149.9 million a year ago and up 12.7% sequentially.

Aaron Huang: Of these, 6,741 were franchisee Teahouses, and 790 were company-owned Teahouses, reflecting the continued conversion of selected locations into company-owned stores as a part of our networking optimization strategy. In Greater China, average monthly GMV per Teahouse was CNY 356,080 in Q1, representing a quarter-over-quarter increase of 5.5% from CNY 337,358 in Q4 2025. At the same time, overseas total GMV for Q1 grew 139% year-over-year and 14.6% quarter-over-quarter to CNY 426.4 million. On the revenue line, our net revenues for Q1 2026 were CNY 3,546 million, compared to CNY 3,392.7 million in the same quarter of 2025 and up 19.2% sequentially. Net revenue from franchisee Teahouses were CNY 2,743.9 million, representing 77.4% of total revenue, compared to CNY 3,149.9 million a year ago and up 12.7% sequentially.

Speaker #1: In Greater China, average amongst the GMV per teahouse was 356,000 and 80 RMB in the first quarter. Representing a quarter over quarter increase of 5.5% from 337,358 yuan.

Speaker #1: In the fourth quarter of 2025. At the same time, overseas, total GMV for the first quarter grew 139% year over year and 14.6% quarter over quarter to $426.4 million.

Speaker #1: On the revenue line, our net revenues for the first quarter of 2026 were $3,546 million, compared to $3,392.7 million in the same quarter of 2025.

Speaker #1: And up 19.2% sequentially. Net revenue from franchisee teahouses was 2,743.9 million, representing 77.4% of total revenue, compared to 3,149.9 million a year ago.

Speaker #1: And up 12.7% sequentially. Net revenue from company-owned teahouses was ¥802.1 million, up 230.4% from ¥242.8 million a year ago. Mainly as a result of our continued development of company-owned teahouse networks across Greater China and overseas markets.

Hongfei Huang: Net revenue from company-owned Teahouses was CNY 802.1 million, up 230.4% from CNY 242.8 million a year ago, mainly as a result of our continued development of company-owned Teahouses network across Greater China and overseas markets. Turning to margin. Our gross profit, calculated by excluding cost of materials, storage, and logistics from net revenue, reached CNY 1,971.5 million this quarter, resulting in a gross margin of 55.6%. This marks an improvement from 53.1% a year ago. This improvement was primarily supported by increased revenue contribution from company-owned Teahouses, which generate a higher gross margin. Operating expenses remained well controlled relative to scale of business. Share-based compensation expenses this quarter were CNY 59 million, reflecting our commitment to long-term employee engagement and aligning their goals with shareholders. To provide greater clarity on underlying operational performance, we will continue to reference Non-GAAP operating results with full reconciliation available in our earnings release and the Form 6-K.

Aaron Huang: Net revenue from company-owned Teahouses was CNY 802.1 million, up 230.4% from CNY 242.8 million a year ago, mainly as a result of our continued development of company-owned Teahouses network across Greater China and overseas markets. Turning to margin. Our gross profit, calculated by excluding cost of materials, storage, and logistics from net revenue, reached CNY 1,971.5 million this quarter, resulting in a gross margin of 55.6%. This marks an improvement from 53.1% a year ago. This improvement was primarily supported by increased revenue contribution from company-owned Teahouses, which generate a higher gross margin. Operating expenses remained well controlled relative to scale of business. Share-based compensation expenses this quarter were CNY 59 million, reflecting our commitment to long-term employee engagement and aligning their goals with shareholders.

Speaker #1: Turning to margin, our gross margin—our gross profit calculated by excluding cost of materials, storage, and logistics from net revenue—reached RMB 1,971.5 million this quarter.

Speaker #1: Resulting in a gross margin of 55.6%. This marks an improvement from 53.1% a year ago. This improvement was primarily supported by increased revenue contribution from company-owned teahouses.

Speaker #1: Which generates a higher gross margin. Operating expenses remained well controlled relative to the scale of the business. Share-based compensation expenses this quarter were $59 million, reflecting our commitment to long-term employee engagement and aligning their goals with shareholders.

Speaker #1: To provide greater clarity on underlying operational performance, we will continue to reference non-GAAP operating results, with full reconciliation available in our earnings release and Form 6-K.

Aaron Huang: To provide greater clarity on underlying operational performance, we will continue to reference Non-GAAP operating results with full reconciliation available in our earnings release and the Form 6-K.

Speaker #1: Operating income was $547.2 million, representing an operating income margin of 15.4%, and marking a sequential turnaround from an operating loss in the previous quarter.

Hongfei Huang: Operating income was CNY 547.2 million, representing an operating income margin of 15.4% and marking a sequential turnaround from an operating loss in the previous quarter. Excluding share-based compensation expenses, Non-GAAP operating income was CNY 606.2 million, representing a 17.1% margin compared to a 1% margin in the previous quarter. This sequential improvement reflects both a stronger operating leverage and the benefit of organization adjustment and a strategic investment we have made to support future growth. Operating costs for company-owned tea houses were CNY 497.2 million, up 216.6% from CNY 150 million a year ago. As of 31 March 2026, we operated 790 company-owned tea houses, up from 615 in Q4 2025, and 191 in Q1 2025. Other operating costs decreased by 7.8% to CNY 159 million, largely due to lower payroll expenses driven by organizational restructuring and the continued headcount optimization.

Aaron Huang: Operating income was CNY 547.2 million, representing an operating income margin of 15.4% and marking a sequential turnaround from an operating loss in the previous quarter. Excluding share-based compensation expenses, Non-GAAP operating income was CNY 606.2 million, representing a 17.1% margin compared to a 1% margin in the previous quarter. This sequential improvement reflects both a stronger operating leverage and the benefit of organization adjustment and a strategic investment we have made to support future growth. Operating costs for company-owned tea houses were CNY 497.2 million, up 216.6% from CNY 150 million a year ago. As of 31 March 2026, we operated 790 company-owned tea houses, up from 615 in Q4 2025, and 191 in Q1 2025. Other operating costs decreased by 7.8% to CNY 159 million, largely due to lower payroll expenses driven by organizational restructuring and the continued headcount optimization.

Speaker #1: Excluding share-based compensation expenses, non-GAAP operating income was $606.2 million, representing a 17.1% margin, compared to a 1% margin in the previous quarter. This sequential improvement reflects both stronger operating leverage and the benefits of organizational adjustments and strategic investments we have made to support future growth.

Speaker #1: Operating costs for company-owned teahouses were $497.2 million, up 216.6% from $150 million a year ago. As of March 31, 2026, we operated 790 company-owned teahouses, up from 615 in the fourth quarter of 2025 and 191 in the first quarter of 2025.

Speaker #1: Other operating costs decreased by 7.8% to $159 million, largely due to lower payroll expenses driven by organizational restructuring and continued headcount optimization. On a non-GAAP basis, other operating costs account for 4.3% of revenue.

Hongfei Huang: On a non-GAAP basis, other operating costs accounts for 4.3% of revenue compared to 5.1% a year ago. Sales and marketing expenses for the quarter were CNY 306.2 million, up 2.3% from CNY 299.3 million a year ago, mainly due to our investment in strategic brand activities, new product launch, and marketing campaigns. On a non-GAAP basis, sales and marketing expenses representing 8.6% of revenue, compared to 8.8% a year ago, and 12.2% in the previous quarter. General and administrative expenses reached CNY 462 million, up 30.9% year over year from CNY 352.8 million. The increase in G&A primarily reflecting our continued investment in global corporate infrastructure as we've further expanded our international business footprint. On a non-GAAP basis, G&A expenses represented 11.6% of revenue compared to 10.4% a year ago, and 19.7% in the previous quarter.

Aaron Huang: On a non-GAAP basis, other operating costs accounts for 4.3% of revenue compared to 5.1% a year ago. Sales and marketing expenses for the quarter were CNY 306.2 million, up 2.3% from CNY 299.3 million a year ago, mainly due to our investment in strategic brand activities, new product launch, and marketing campaigns. On a non-GAAP basis, sales and marketing expenses representing 8.6% of revenue, compared to 8.8% a year ago, and 12.2% in the previous quarter. General and administrative expenses reached CNY 462 million, up 30.9% year over year from CNY 352.8 million. The increase in G&A primarily reflecting our continued investment in global corporate infrastructure as we've further expanded our international business footprint. On a non-GAAP basis, G&A expenses represented 11.6% of revenue compared to 10.4% a year ago, and 19.7% in the previous quarter.

Speaker #1: Compared to 5.1% a year ago. Sales and marketing expenses for the quarter were $306.2 million, up 2.3% from $299.3 million a year ago, mainly due to our investment in strategic brand activities.

Speaker #1: New product launch and marketing campaigns. On a non-GAAP basis, sales and marketing expenses represented 8.6% of revenue, compared to 8.8% a year ago and 12.2% in the previous quarter.

Speaker #1: General and administrative expenses reached $462 million, up 30.9% year over year from $352.8 million. The increase in G&A primarily reflects our continued investment in global corporate infrastructure.

Speaker #1: As we further expanded our international business footprint, on a non-GAAP basis, G&A expenses represented 11.6% of revenue, compared to 10.4% a year ago and 19.7% in the previous quarter.

Speaker #1: Income tax expenses represented 21.2% of income before income tax, slightly higher than 19% a year ago. This was primarily driven by the impact of share-based compensation expenses recognized during the quarter.

Hongfei Huang: Income tax expenses represented a 21.2% of income before income tax, slightly higher than 19% a year ago. This was primarily driven by the impact of share-based compensation expenses recognized during the quarter. Notably, we continued to deliver profitability on both GAAP and a Non-GAAP basis, extending our track record of 13 consecutive quarters of positive net income. GAAP net income was RMB 447.7 million. Non-GAAP net income, excluding RMB 59 million of share-based compensation expenses, was RMB 506.7 million, with a Non-GAAP net margin of 14.3% compared to 20% a year ago and a 3.4% in Q4 2025. For Q1, basic and diluted net income per ordinary share was RMB 2.36 and RMB 2.34, respectively. On a Non-GAAP basis, basic net income per ordinary share was RMB 2.67, and the diluted net income per ordinary share was RMB 2.65.

Aaron Huang: Income tax expenses represented a 21.2% of income before income tax, slightly higher than 19% a year ago. This was primarily driven by the impact of share-based compensation expenses recognized during the quarter. Notably, we continued to deliver profitability on both GAAP and a Non-GAAP basis, extending our track record of 13 consecutive quarters of positive net income. GAAP net income was RMB 447.7 million. Non-GAAP net income, excluding RMB 59 million of share-based compensation expenses, was RMB 506.7 million, with a Non-GAAP net margin of 14.3% compared to 20% a year ago and a 3.4% in Q4 2025. For Q1, basic and diluted net income per ordinary share was RMB 2.36 and RMB 2.34, respectively. On a Non-GAAP basis, basic net income per ordinary share was RMB 2.67, and the diluted net income per ordinary share was RMB 2.65.

Speaker #1: Notably, we continued to deliver profitability on both GAAP and non-GAAP basis, extending our track record of 13 consecutive quarters of positive net income.

Speaker #1: GAAP net income was $447.7 million. Non-GAAP net income, excluding $59 million of share-based compensation expenses, was $506.7 million, with a non-GAAP net margin of 14.3%, compared to 20% a year ago.

Speaker #1: And a 3.4% in the fourth quarter of 2025. For the first quarter, basic and diluted net income per ordinary share was RMB 2.36.

Speaker #1: And RMB 2.34 yuan, respectively. On a non-GAAP basis, basic net income per ordinary share was RMB 2.67, and diluted net income per ordinary share was RMB 2.65 yuan.

Speaker #1: Turning to liquidity, we ended the quarter with $7,146.3 million in cash and cash equivalents, restricted cash, and time deposits, compared to $7,892.4 million as of December 31, 2025. We maintained a robust balance sheet, which provides us with the flexibility to fund expansion plans and to continue returning value to our shareholders.

Hongfei Huang: Turning to liquidity, we ended the quarter with CNY 7,146.3 million in cash, the cash equivalent restricted cash, and the time deposit. Compared to CNY 7,892.4 million as of 31 December 2025, we maintained a robust balance sheet, which provides us with the flexibility to fund expansion plan and continue to return value to our shareholders. As we move through 2026, we remain focused on executing our established strategy, strengthening our brand value, and maintaining disciplined investment to support sustainable growth. We are always committed to creating long-term value for our shareholders. With that, I will turn the call back to the operator to begin Q&A. Operator, please go ahead.

Aaron Huang: Turning to liquidity, we ended the quarter with CNY 7,146.3 million in cash, the cash equivalent restricted cash, and the time deposit. Compared to CNY 7,892.4 million as of 31 December 2025, we maintained a robust balance sheet, which provides us with the flexibility to fund expansion plan and continue to return value to our shareholders. As we move through 2026, we remain focused on executing our established strategy, strengthening our brand value, and maintaining disciplined investment to support sustainable growth. We are always committed to creating long-term value for our shareholders. With that, I will turn the call back to the operator to begin Q&A. Operator, please go ahead.

Speaker #1: As we move through 2026, we remain focused on executing our established strategy: strengthening our brand value and maintaining disciplined investment to support sustainable growth.

Speaker #1: We are always committed to creating long-term value for our shareholders. With that, I will turn the call back to the operator to begin Q&A.

Speaker #1: Operator, please go ahead.

Speaker #2: Thank you. We will now begin the question-and-answer session. To ask a question, please press star one one (*11) and wait for your name to be announced.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one one and wait for a name to be announced. When asking a question in Chinese, please translate your question in English for the convenience of everyone on the call. Our first question comes from the line of Lillian Luo of Morgan Stanley. Please go ahead.

Speaker #2: I'm asking you questions in Chinese. Please translate your questions into English for the convenience of everyone on the call. Our first question comes from the line of Lilian Luo of Morgan Stanley.

Speaker #2: Please go ahead. Let me translate my question. Thanks, everyone, and management, for the detailed explanation of Q1 performance. I just want to follow up on the more detailed factors that have driven the good sequential improvement in unit GMV in China and overall.

Lillian Luo: 谢谢这个提问的机会，我是Morgan Stanley的分析师Lillian。谢谢俊杰总、Aden和Aaron刚才的介绍。也非常欣喜看到公司在第一季度实现了一个非常稳定的恢复，以及各项措施的精准落地。刚才各位也比较详细地解释了我们在策略上的一些举措。那么想就第一季度咱们同店GMV的恢复再问得细节一些，想理解什么样的因素驱动了我们一季度比较良好的同店GMV的提升？特别是在整个行业，高基数慢慢进入到二季度之后，大家也都看到一些同店的压力。我们在这种情况下怎么样实现了一个逆势的反转？有多少是新品的拉动，有多少是单价或者是人流的恢复？就想了解得更细节一些。谢谢。

Lillian Lou: [Foreign language]

Lillian Luo: Thanks everyone management of the detailed explanation of Q1 performance. I just want to follow up on the more detailed factors that has driven the good sequential improvement on the unit GMV improvement in China and overall, trying to understand what factors has been putting in place in terms of the new products, the traffic, pricing, etc. What can be sustained. Thank you very much.

Lillian Lou: Thanks everyone management of the detailed explanation of Q1 performance. I just want to follow up on the more detailed factors that has driven the good sequential improvement on the unit GMV improvement in China and overall, trying to understand what factors has been putting in place in terms of the new products, the traffic, pricing, etc. What can be sustained. Thank you very much.

Speaker #2: Trying to understand what factors have been put in place in terms of the new product, traffic, pricing, etc., and what can be sustained. Thank you very much.

Hongfei Huang: 谢谢Lillian。由我来回答这个问题吧。非常好的问题。第一季度的话，我们同店数据整体是负的16%，但相较去年第四季度的话就收窄了大约10个点左右，整体也呈现了明显的修复趋势。主要我们也做了一些复盘，然后归结为几个动因吧。

Aaron Huang: [Foreign language]

Speaker #3: 谢谢Lilian。我由我来回答这个问题吧。非常好的问题。然后第一季度的话，我们同店数据整体是负的16%。但相较去年第四季度的话，就收窄了大约10个点左右。那整体的话也呈现了明显的修复趋势。那主要我们也做了一些复盘，然后归结为几个动因吧。

Speaker #1: Thank you, Lilian, for the question. In Q1, our overall same-store GMV growth was down 16%, but that was about 10 percentage points better than Q4 last year.

Alicia Guo: Thank you Lillian for the question. In Q1, our overall same-store GMV growth was down 16%, that was about 10 percentage points better than Q4 last year. The trend has clearly improved. The recovery was mainly driven by a few things.

Speaker #1: So the trend has clearly improved, and the recovery was mainly driven by a few things.

Speaker #3: 那一个是请问活动带来的增量。那我们在综述周志可能在2月6号到10号尽管时间很短，这个活动高峰期间整个千问渠道的话日均大概贡献了300万单，给到我们这个品牌。那我们当然就是团队非常厉害，能够有效地承接快速响应，承接该部分的流量，并实现业绩的转化。然后整个的过程也是得益于我们组织变革以后的更敏捷的响应。然后另外一方面，当然我们在执行效率上，在落地机制上也得到了持续的改善。

Hongfei Huang: 一个那是签到活动带来的增量。我们在中秋周四，可能在2月6号到10号，尽管时间很短，这个活动高峰期间，整个签到渠道的话，日均大概贡献了300万单给到我们这个品牌。那我们团队非常厉害，能够有效地快速响应，承接该部分的流量，并实现业绩的转化。整个的过程也是得益于我们组织变革以后的更敏捷的响应。另外一方面，我们在执行效率上，在落地机制上也得到了持续的改善。

Aaron Huang: [Foreign language]

Speaker #1: First, we got an incremental lift from the Qianwen campaign. During the peak period from February 6th to 10th, the Qianwen channel contributed about 3 million orders per day on average.

Alicia Guo: First, we got an incremental lift from the Tianwen campaign. During the peak period from 6 February to 10 February, the Tianwen channel contributed about 3 million orders per day on average. Our ability to effectively capture this traffic and convert it into performance results was driven by two factors. First, a more agile response mechanism, and second, the continuous improvement in executing efficiency following the earlier adjustments.

Speaker #1: Our ability to effectively capture this traffic and convert it into performance results was driven by two factors: first, a more agile response mechanism, and second, continued improvement in execution efficiency following the earlier adjustments.

Speaker #3: 第二个更关键的就是我们的新品。然后就像刚才Aiden讲的，就是我们一季度上了12款新品。整个对杯量和GMV的环比增长都有明显的拉动。那另外呢，近期我们也在做早间和晚间的场景的拓展。比如这个刚才提到的云轿、卡梅罗和醒世春山。那活动期间早间时段的杯占比都带到了45%。形成了较为显著的增量贡献。

Hongfei Huang: 第二个更关键的就是我们的新品。就像刚才Aden讲的，我们一季度上了12款新品，整个对杯量和GMV的环比增长都有明显的拉动。另外，近期我们也在做早间和晚间的场景的拓展，比如刚才提到的云焦卡美罗和醒时春山。活动期间早间时段的杯占比都达到了45%，形成了较为显著的增量贡献。

Aaron Huang: [Foreign language]

Speaker #1: Second, our new product launch helped as well. As Aiden mentioned, we launched 12 new products in the first quarter, which helped to drive sequential growth in both car volume and GMV.

Alicia Guo: Second, our new product launch helped as well. As Dengfeng Yin mentioned, we launched 12 new products in Q1, which helped to drive sequential growth in both cup volume and GMV. In addition, recently we continue to expand morning and evening consumption scenario, taking caramel pearl tea latte and longan tea latte as examples. Their combined cup contribution during morning hours reached 45% during the campaign period, representing a relatively significant incremental contribution.

Alicia Guo: Second, our new product launch helped as well. As Adeng Yin mentioned, we launched 12 new products in Q1, which helped to drive sequential growth in both cup volume and GMV. In addition, recently we continue to expand morning and evening consumption scenario, taking caramel pearl tea latte and longan tea latte as examples. Their combined cup contribution during morning hours reached 45% during the campaign period, representing a relatively significant incremental contribution.

Speaker #1: In addition, recently we continued to expand morning and evening consumption scenarios. Taking Caramel Pour Tea Latte and Longing Tea Latte as examples, their combined cup contribution during morning hours reached 45% during the campaign period, representing a relatively significant incremental contribution.

Speaker #3: 最后呢，就是在海外市场方面的话，我们也很欣喜地看到同店下滑幅度也在比较有意义的收窄。尤其是在马来西亚市场。那其实整体在各个市场层面上都因地制宜地推出了本土的限定产品。比如说新加坡的山茶乌龙，然后活动期间杯量占到了18%。然后3月在马来和其他市场上新的古香北茶，包括新加坡在内吧，整个首周店均日杯销量都达到400多杯。这些对整体同店表现改善都起到了非常积极的作用。

Hongfei Huang: 最后就是在海外市场方面的话，我们也很欣喜地看到同店下滑幅度也在比较有意义地收窄，尤其是在马来西亚市场。其实整体在各个市场层面上都因地制宜地推出了本土的限定产品，比如说新加坡的山茶乌龙，活动期间杯量占到了18%。然后三月在马来和其他市场上新的古香北茶，包括新加坡在内，整个首周店均日杯销量都达到400多杯。这些对整体同店表现改善都起到了非常积极的作用。

Aaron Huang: [Foreign language]

Speaker #1: Lastly, in the overseas markets, the decline in same-store GMV growth has also narrowed significantly. We launched locally tailored products in different markets. For example, the caramel 乌龙 tea latte in Singapore captured an 18% cup share during the campaign period.

Alicia Guo: Lastly, in the overseas markets, the decline in same store GMV growth has also narrowed significantly. We launched locally tailored products in different markets. For example, the Caramel Oolong Tea Latte in Singapore captured an 18% cup share during the campaign period. The Hojicha Genmai Milk Tea, launched in multiple markets in March, generated an average of 440 daily cups per teahouse in Singapore during its first week of launch. These initiatives all played a positive role in improving overall same store performance. Thank you. Next question, please.

Speaker #1: The Hojicha Genmai launched in multiple markets in March, and generated an average of 440 daily cups per tea house in Singapore during its first week of launch.

Speaker #1: These initiatives all played a positive role in improving overall same-store performance. Thank you. Next question, please.

Speaker #4: Next question. The next question comes from the line of RCJ Lin from CICC. Please go ahead.

Operator: Next question. The next question comes from the line of Sijie Lin from CICC. Please go ahead.

Speaker #1: 谢谢俊杰总、尹总、艾瑞总。我是中金分析师林思杰，也恭喜咱们取得了一个逐步稳下来的不错的业绩表现。那我想请教的是，刚才管理层提到我们启用并落地了新的商业模式，就是这个GMV抽成的模式。想问这个对公司的利润是否有影响，会有怎样的影响？因为看到我们Q1的毛利率还是很好的。那我来翻译成英文。So thank you, management. Congrats on a stabilizing earnings result again. My question is: will the new business model, which is a tech rate based on GMV, affect profitability, and how should we evaluate the impact?

Sijie Lin: 谢谢俊杰总、云鹏总。我是中金公司的林思洁，也是恭喜咱们取得了一个逐步稳下来的不错的业绩表现。那我想请教的是，刚才管理层提到我们启用和落地了新的商业模式，就是这个GMV抽成那个模式，想问这个对公司的利润是否有影响？有什么样的影响？因为看到我们Q1的毛利率还是很好的。那我来翻译成英文。

Sijie Lin: [Foreign language]

Alicia Guo: Thank you management. Congrats on stabilizing earnings results again. My question is, will the new business model, which is a take rate based on GMV, affect profitability and how to evaluate the impact? Thank you.

Sijie Lin: Thank you management. Congrats on stabilizing earnings results again. My question is, will the new business model, which is a take rate based on GMV, affect profitability and how to evaluate the impact? Thank you.

Speaker #1: Thank you.

Speaker #3: 谢谢思杰你的问题。那就是就像我们刚才在上次年报中披露的，在年初的时候我们正式启用了新的商业模式，切换到基于GMV的收入分成模式。然后我们品牌公司就抽取的费率有提升。但对物料的加价率就大幅地减少。同时也有一个折扣率的保障，对加盟门店。那在新模式下面呢，我们的收入结构也发生了变化。我们的产品销售就是原料产品销售这一块，包括原料的食品原料、包装原料，包括门店设备、其他耗材这部分收入肯定是明显的占比下降。然后加盟服务费的收入的占比上升。那需要说明的是，这个收入结构的变化我们在设计上之前讲过，我们是平移的模式。所以并未对公司产生在利润上产生直接的短期影响。那从一季度的业绩来看的话，我们的毛利率维持在了55.6，环比略有上升。

Hongfei Huang: 谢谢思洁你的问题。就像我们上次年报中披露的，在年初的时候我们正式启用了新的商业模式，切换到基于GMV的收入分成模式，然后我们品牌公司就抽取的费率有提升，但对物料的加价率就大幅地减少，同时也有一个折扣率的保障，对加盟门店。那在新模式下面，我们的收入结构也发生了变化。我们的产品销售，就是原料产品销售这一块，包括原料的食品原料、包装原料，包括门店设备、其他耗材，这部分收入肯定是明显地占比下降，然后加盟服务费的收入的占比上升。需要说明的是，这个收入结构的变化，我们在设计上之前讲过，我们是平移的模式，所以并未对公司在利润上产生直接的短期影响。那从一季度的业绩来看的话，我们的毛利率维持在了55.6%，环比略有上升。

Aaron Huang: [Foreign language]

Speaker #1: Thank you, 思杰, for the question. As previously disclosed in our annual report, since the beginning of the year we officially switched to a GMV-based revenue sharing model for our franchise tea houses in Greater China.

Alicia Guo: Thank you Sijie for the question. As previously disclosed in our annual report, since the beginning of the year, we officially switched to a GMV based revenue share model for our franchise teahouse in Greater China. Under the new model, the brand takes a higher fee rate based on the franchise teahouse GMV. The markup on materials has come down significantly and also lock up or secure the discount rate for our franchisees. As a result, our revenue mix has changed accordingly. The proportion of revenue from product sales, including raw materials and packaging, teahouse equipment, and other supplies, has declined, while the proportion of revenue from franchising services has increased. However, this change in revenue mix does not affect the company's profitability. Based on our Q1 results, our gross margin remained at 55.6%, with a slight sequential increase.

Speaker #1: Under the new model, the brand takes a higher fee rate based on the franchise tea house GMV, but the markup on materials has come down significantly.

Speaker #1: And also lock up or secure the discount rate for our franchisees. As a result, our revenue mix has changed accordingly. The proportion of revenue from product sales, including raw materials and packaging, tea house equipment, and other supplies, has declined.

Speaker #1: While the proportion of revenue from franchising services has increased, this change in revenue mix does not affect the company's profitability. Based on our Q1 results, our gross margin remained at 55.6%, with a slight sequential increase.

Speaker #3: 我想做一些说明，就是这个的环比略有提升。最主要的贡献还更多的在于我们直营门店的比重的上涨。因为直营门店的毛利率是比较高的。因为不涉及到这个收取分成之类的一些处理。那并不是来自于跟加盟商之间的这个更多的这个收入charge。所以我想更好的就是能够理解我们在加盟商的门店模式上基本上是跟第四季度是持平的情况，略有下降。就是能够有一部分的利益，因为在折扣上面让给了我们的加盟商。

Hongfei Huang: 我先做一些说明。这个的环比略有提升，最主要的贡献还更多地在于我们直营门店的比重的上涨，因为直营门店的毛利率是比较高的。因为不涉及到收取分成之类的一些处理，那并不是来自于跟加盟商之间的更多的收入charge。所以我想更好的能够理解，我们在加盟商的门店模式上，基本上是跟第四季度持平的情况，略有下降。能够有一部分的利益在折扣上我们让给了我们的加盟商。

Aaron Huang: [Foreign language]

Speaker #1: Let me further explain the reason for the gross margin increase, which is a result of the increase in the self-owned tea house GP margin.

Alicia Guo: Let me further explain the reason of the gross margin increase, which is the result from the increase of the self-owned teahouse GP margin increase. If we exclude the self-owned teahouse GP margin, the franchisee teahouse GP margin is flat sequentially versus Q4, or a little bit slightly decrease from the previous GP margin.

Speaker #1: If we exclude the self-owned tea house GP margin, the franchisee tea house GP margin is flat versus the sequentially versus Q4 and also or a little bit slightly decrease from the previous GP margin.

Speaker #3: 我们认为新模式下面公司和加盟商真正实现的是利益共同体。对于加盟商而言呢，原材料及设备采购成本大幅下降，且集团共担风险，有助于提升门店的盈利能力和抗风险能力。那对于公司而言呢，收入和门店业绩深度绑定。当门店销售提升，有利于也有利于公司的收入和毛利率的提升，从而达到双赢的效果。那我们也希望就是持续通过更紧密的与加盟商的合作，持续优化我们的模型模式，打造长期可持续的盈利模式。

Hongfei Huang: 我们认为新模式下面公司和加盟商真正实现的是利益共同体。对于加盟商而言，原材料及设备采购成本大幅下降，且集团共担风险，有助于提升门店的盈利能力和抗风险能力。那对于公司而言，收入和门店业绩深度绑定，当门店销售提升，也有利于公司的收入和毛利率的提升，从而达到双赢的效果。

Aaron Huang: [Foreign language]

Hongfei Huang: 我们也希望持续通过更紧密地与加盟商的合作，持续优化我们的模式，打造长期可持续的盈利模式。

Aaron Huang: [Foreign language]

Speaker #1: Lastly, we believe that under the new model, the company and its franchisees truly become a community of shared interests. For franchisees, lower raw material and equipment procurement costs, along with shared risk with the brand, should help improve tea house profitability and resilience.

Alicia Guo: Lastly, we believe that under the new model, the company and its franchisees truly become a community of shared interests. For franchisees, lower raw material and equipment procurement costs, along with shared risk with the brand, should help improve teahouse profitability and resilience. For the company, our revenue is now more closely tied to teahouse performance. When teahouse sales improves, both our revenue and gross margin can benefit, creating a winning outcome. Our goal is to build a long-term, sustainable profit model through closer collaboration. I hope this answers your question. Next question, please. Operator, next question please.

Speaker #1: So for the company, revenue is now more closely tied to tea house performance. So when tea house sales improve, both our revenue and gross margin can benefit.

Speaker #1: Creating a willing outcome, our goal is to build a long-term, sustainable profit model through closer collaboration. Hope this answers your question. Next question, please.

Speaker #1: Operator, next question, please.

Speaker #4: Yeah, one moment, please. For the next questions, our next question comes from Jasee Xu from JP Morgan. Please ask your question.

Operator: Yeah. One moment please, for the next questions. Our next question comes from Jessie Xu from JP Morgan. Please ask your question.

Speaker #5: 谢谢。今天各位管理层早上好，感谢接受我的提问。我是摩根大通的 Jasee Xu。恭喜公司在一季度取得了还不错的开门红。今年以来确实能够感受到公司在产品推新和运营上面都下了不少的功夫，活跃度和声量跟去年相比也是有明显的改善，能够看得出组织变革后我们运营效率的提升。特别是这次 $1.5 亿美元的回购额度，也是非常大的惊喜。能否请管理层分享一下我们决定做回购的原因，以及未来在股东回报方面，包括回购或者分红的一些想法？ Thanks for taking my question. This is Jasee Xu from JP Morgan. Very happy to see visible improvement in product launches, consumer engagement, and also market impact in the first quarter.

Jessie Xu: 谢谢。俊杰总，各位管理层早上好，感谢接受我的提问，我是摩根大通的Jesse Xu。恭喜公司在一季度取得了还不错的开门红，今年以来确实能够感受到公司在产品推新和运营上面都下了不少的功夫。活跃度和声量跟去年感觉相比也是有明显的改善，能够看得出组织变革后我们运营效率的提升。特别是这次$1.5亿美元的回购额度也是非常大的惊喜。那能够请管理层分享一下我们决定做回购的原因，以及未来在股东回报方面，包括回购或者分红这些想法。Thanks for taking my question.

Jessie Xu: [Foreign language]

Jessie Xu: This is Jessie Xu from JPMorgan. Very happy to see visible improvement in product launches, consumer engagement, and also market impact in Q1. The $150 million repurchase program is indeed a positive surprise. What's your thought behind this decision? Would you prefer repurchase or cash dividend in the future? Anything you can share on shareholder return would be great. Thank you.

Speaker #5: The $150 million U.S. dollar repurchase program is indeed a positive surprise. What are your thoughts behind this decision? Would you prefer repurchase or cash dividend in the future?

Speaker #5: Anything you can share on shareholder return would be great. Thank you.

Speaker #1: 好的，谢谢Jasee。麻烦这个问题的话，我们请俊杰回答一下。

Dengfeng Yin: 好的，谢谢 Jesse。麻烦这个问题的话，我们请俊杰回答一下。

Jessie Xu: [Foreign language]

Speaker #4: 谢谢您的提问。其实这个就像我们刚才也分享过的，第一是董事会已经审批了这一项这个股票的回购计划，也授权我们在12个月内能够回购高达1.5亿美金的ADS。那公司在这个现在对于市场情况与估值水平，这个首先肯定是动态的会来这个调整，授权期内的回购的节奏，这个我们会看情况而来定。

Junjie Zhang: 好，谢谢您的提问。其实这个就像我们刚才也分享过的。第一是董事会已经审批了这一项股票的回购计划，也授权我们在12个月内能够回购高达1.5亿美金的ADS。那公司在这个现在对于市场情况与估值水平，首先肯定是动态地回来这个调整授权期内的回购的节奏，这个我们会看情况而来定。

Junjie Zhang: [Foreign language]

Speaker #1: Thank you for the question. As we just shared, the board has approved a share repurchase program, authorizing the company to purchase up to $150 million of the ADS over the next 12 months.

Alicia Guo: Thank you for the question. As we just shared, the board has approved a share repurchase program authorizing the company to purchase up to $150 million US dollar of the ADS over the next 12 months. We will adjust the pace of repurchases depending on market conditions and valuation during the authorization period.

Speaker #1: We will adjust the pace of repurchases depending on market conditions and valuation during the authorization period.

Speaker #4: 那么第二个是公司目前的资产和负债的结构情况是非常健康的。我们资金也比较充裕，截至3月底现金这个受限的资金和定期存款加起来大概有71.5亿人民币。那折合这个是10.04亿美元左右。

Junjie Zhang: 那么第二个是公司目前的资产和负债的结构情况是非常健康的，我们资金也比较充裕。截至3月底，现金、受限的资金和定期存款加起来大概有71.5亿人民币，折合这个是10.04亿美元左右。

Junjie Zhang: [Foreign language]

Speaker #1: Second, our balance sheet structure remains healthy and our liquidity position is strong. As of the end of March, we had about RMB 7.15 billion in cash, restricted cash, and time deposits.

Alicia Guo: Second, our balance sheet structure remains healthy and our liquidity position is strong. As of the end of March, we had about RMB 7.15 billion in cash, restricted cash and time deposits, or roughly $1.04 billion.

Speaker #1: Or roughly 1.04 billion US

Speaker #4: 那么第三呢，我们认为公司当前的股价绝对是没有充分反映我们公司的业务的基本面和持续修复的这个趋势。以及长期增长的空间呢，也没有体现出来。因此呢，我们此次回购也希望可以传递给这个无论是董事会以及管理层对于这个公司未来的这个前景的坚定信心。以及持续为股东创造价值的这个信心。那提升长期的回报的程度，这个也是我们做这件事情的关键。

Junjie Zhang: 那么第三，我们认为公司当前的股价绝对是没有充分反映我们公司的业务的基本面和持续修复的这个趋势，以及长期增长的空间也没有体现出来。因此我们此次回购，也希望可以传递给无论是董事会以及管理层，对于公司未来的前景的坚定信心，以及持续为股东创造价值的信心，提升长期的回报。这个也是我们做这件事情的关键。

Junjie Zhang: [Foreign language]

Speaker #1: Thirdly, we believe the current share price does not fully reflect the continued recovery in our business fundamentals or our long-term growth potential. Through this buyback, we want to show the board and management’s strong confidence in the company’s future growth perspective, as well as our commitment to creating value and delivering better long-term results for shareholders.

Alicia Guo: Thirdly, we believe the current share price does not fully reflect the continued recovery in our business fundamentals or our long-term growth potential. Through this buyback, we want to show the board and management strong confidence in the company's future growth prospects, as well as our commitment to create value and delivering better long-term results for shareholders.

Speaker #4: 对，那么展望未来呢，我们将在保障核心业务、健康发展的前提下，持续优化资产的配置策略。那切实的去提升所有股东的回报，并且确保市场能够充分理解我们的价值。

Junjie Zhang: 那么展望未来，我们将会在保障核心业务健康发展的前提下，持续优化资产的配置策略，切实地去提升所有股东的回报，并且确保市场能够充分理解我们的价值。

Junjie Zhang: [Foreign language]

Speaker #1: Looking ahead, we will continue to optimize our capital allocation strategy while ensuring the healthy development of our core business. We aim to deliver tangible improvement in shareholder returns and ensure that the market fully understands our value.

Alicia Guo: Looking ahead, we will continue to optimize our capital allocation strategy while ensuring the healthy development of our core business. We aim to deliver tangible improvement in shareholder returns and ensure that the market fully understands our value.

Speaker #4: 对，那么我就先说这么多，再次感谢诸位股东以及线上所有的听众。谢谢你们。

Junjie Zhang: 对，那么我就先说这么多。再次感谢诸位股东以及线上所有的听众，谢谢你们。

Junjie Zhang: [Foreign language]

Speaker #1: That's it from me. That's my answer. And thank you to all the shareholders and investors for joining our call today.

Alicia Guo: That's my answer. Thank you all the shareholders and investors who joined our call today.

Speaker #4: Thank you. As there are no further questions, I would like to hand the conference back to management for closing remarks.

Operator: Thank you. As there are no further questions, I would like to hand the conference back to management for closing remarks.

Speaker #1: Thank you. As there are no further questions, I'd like to hand the conference back to management. And thank you for calling today.

Alicia Guo: Thank you. As there are no further questions, I'd like to hand the conference back to the management, and thank you for the call today. We look forward to speaking with everyone again on our next call. Have a great day. Thank you.

Speaker #1: We look forward to speaking with everyone again on our next call. Have a great day. Thank you.

Speaker #2: Okay, thank you all. Have a great day.

Hongfei Huang: Thank you all. Have a great day.

Aaron Huang: Thank you all. Have a great day.

Operator: This concludes today's event. Thank you for participating. You may now disconnect.