Chagee’s (CHA) Overseas Boom Masks A Bruising Home Market Fight

On August 28, Chagee Holdings Limited (NASDAQ: CHA ) reported second-quarter results that read like two different companies stitched together. At home in Greater China, gross merchandise value slipped and franchised teahouse revenue caved under economic headwinds and stiffer competition. Overseas, the story flipped, with GMV more than doubling from a year earlier as the tea chain planted its flag in South Korea. Investors got a business proving it can grow abroad while defending its margins at home.

Overseas GMV climbed 114.3% year over year to RMB 504.0 million in the quarter, up 18.2% from the first quarter, and management called it the company's clearest growth engine right now. Chagee's debut in South Korea backed that up: three teahouses sold more than 16,000 cups combined in their first three days, while over 46,000 people downloaded the app before doors even opened. The company now operates in eight overseas markets, and the BOYA Tea Latte series lifted average cups sold per teahouse across Asia Pacific by 52% in its first 15 days on shelves.

Back home, the profit story is just as sharp. GAAP operating income jumped 387.6% to RMB 524.7 million, pushing the operating margin to 15.4% from 3.2% a year earlier. Non-GAAP G&A expenses fell to 9.1% of revenue from 13.2%, and sales and marketing spending dropped 21.7% as the company trimmed its branding team and tightened ad placement. That discipline extended Chagee's streak to 14 consecutive quarters of positive net income. Product launches kept traffic flowing too, with 17 new items debuting this quarter, the most in company history, and a gelato pilot across more than 190 teahouses lifting offline GMV over 20% in those stores. The company has also bought back roughly $30 million of stock under its $150 million authorization as of August 24, and is weighing a regular dividend.

Greater China told a rougher story. Total GMV fell 3.3% sequentially to RMB 7,660.3 million, and Greater China GMV alone dropped 4.5% sequentially. Average monthly GMV per teahouse slid to RMB 338,259 from RMB 356,080 in the first quarter, and franchised teahouse revenue fell 18.1%, which CFO Aaron Huang tied directly to shrinking GMV amid economic headwinds and intense competition. CEO Junjie Zhang's own read on the market was blunt: the fresh milk tea category is now "crowded with more players," and growth has shifted from an expanding pie to a fight over a fixed one.

Active members shrank too, falling to 47.1 million from 50.0 million in the first quarter, even as the total pool of registered members kept growing, reaching 257 million as of June 30. The margin picture isn't uniformly rosy either. Non-GAAP net margin actually narrowed to 14.3% from 18.9% a year earlier, a reminder that some of the GAAP improvement reflects lower share-based compensation and the absence of prior-year IPO-related costs rather than pure operating strength. COO Aiden Yin noted that same-store sales in July were still down in the low single digits, an improvement from earlier in the year but still negative heading into the back half of 2026.