Chagee reports $465m Q2 revenue, but net income drops 88%

Chagee, a tea drinks chain based in Shanghai, reported a 10.2% rise in Q2 2025 net revenue to RMB 3.3 billion (US$465 million) from a year earlier.

The company operated 7,038 teahouses across Greater China and overseas as of June 30, 2025, up 40.9% year-on-year.

Q2 operating income fell to RMB 108 million (US$15 million) from RMB 744 million a year earlier, while GAAP net income dropped 87.7% to RMB 77 million (US$10.8 million).

Chagee cited the lower profit to higher operating costs, including a surge in share-based compensation linked to its IPO.

Non-GAAP net income, which excludes share-based compensation, was RMB 630 million (US$87.9 million), nearly flat from the prior year.

The company’s cash, restricted cash, and time deposits totaled RMB 8.9 billion (US$1.2 billion) at the end of June, up from RMB 4.9 billion at the end of 2024.

🔗 Source: Chagee

🧠 Food for thought

1️⃣ Rapid expansion can mask underlying store performance issues

Chagee’s second quarter results illustrate how aggressive network growth can obscure fundamental business challenges at the store level.

While the company expanded its teahouse network by 40.9% to 7,038 locations, same-store GMV growth was negative at -23.0% 2. This means existing locations are generating significantly less revenue per store compared to the previous year.

The average monthly GMV per teahouse in Greater China was RMB404,352, but this metric includes both new and existing stores 1. The negative same-store performance suggests that while new locations are adding to total revenue growth of 10.2%, the core business fundamentals at existing locations are deteriorating.

This disconnect between expansion metrics and same-store performance often signals market saturation, increased competition, or operational execution problems that can be temporarily masked by the revenue contribution from new locations.

2️⃣ IPO-related compensation expenses can severely distort public company earnings

Chagee’s dramatic 87.7% decline in GAAP net income demonstrates how IPO-contingent equity awards can create significant earnings volatility for newly public companies.

The company reported GAAP net income of only RMB77.2 million compared to RMB628.7 million in the prior year, but non-GAAP net income was RMB629.8 million after adjusting for RMB552.5 million in share-based compensation expenses 1.