Chagee Holdings Limited American Depositary Shares Q3 FY2025 earnings call

• Focus on user value as the starting point for all strategies, with decisions and initiatives aimed at expanding and deepening a community connecting with the brand. - Prioritize product excellence with ongoing raw material upgrades for authentic, wholesome tea. - Emphasize user experience through engaging content and emotional connections. - Store quality remains a focus with global expansion dependent on store health and profitability. - Global teahouse network reached 7,338 with 300 net new teahouses in the quarter, including 54 net new overseas stores. - Product innovation: Low caffeine Jasmine Green Tea Latte was a top 3 best seller, BOYA Jasmine Green milk tea won an award, and Asia Pacific tea launch performed well. - Member ecosystem robust with 222 million registered members. - Franchisee network stable with low closure rate of 0.3% for 3 consecutive quarters. - Received honors like HR Asia's Best Companies to Work For in Asia 2025 in Malaysia.

Total net revenue for the third quarter was RMB 3,208.3 million, a decrease of 9.4% year-over-year and 3.7% sequentially. Net revenue from franchisee to teahouse was RMB 2,811.6 million, representing 87.6% of total net revenue. Net revenue from company-owned teahouses was RMB 396.7 million, accounting for 12.4% of total revenue. Overseas GMV increased 75.3% year-over-year to RMB 300.3 million. Domestic GMV decreased 6.2% year-over-year. Gross profit was RMB 1,726.5 million with a gross margin of 53.8%, an improvement from 50.1% in the third quarter of the previous year.

• No formal financial guidance provided. - Strategic focus on key pillars for sustainable long-term shareholder value, including product innovation, strategic brand investment, and operational efficiency to optimize resources and drive improved performance.

• Softness in same-store sales GMV: Domestic same-store sales GMV declined by 27.9% and overseas by 23.4%, attributed to high base from last year and intensified competitive pressure. - Pressure on GMV performance at existing stores expected to remain in the near term.

Q: Could you please speak more about how will the high-quality development strategy be executed?

A: Regarding the high-quality development strategy, it will be executed across 4 core dimensions: brand, product, experience and channels. In brand building, upgrading the brand and growing specialty houses. In product, defining strict premium tea centers, enhancing raw materials, improving food quality, and cross-category innovation. In experience, driving cross-category innovation and enhancing membership experience. In channels, steady teahouse expansion and pushing ahead with standout flagship teahouses.

Q: Could you share more color on the overseas network expansion as well as a store operating in the non-China regions?

A: Overseas markets are a pivotal growth driver. This quarter, entered Philippines and Vietnam. Malaysia has over 200 stores. Localized products and marketing campaigns successful, e.g., collaboration with Pop Mart in Southeast Asia, Green Grab series in Malaysia, Peach Oolong Milk Tea performing well in Indonesia and Thailand. Will continue to deepen presence in entered markets, steadily expand into new markets, and improve per store profitability and brand impact.