차지(CHA) 2026년 2분기 실적 발표 콘퍼런스 콜: 해외 GMV 2배 증가로 이익률 개선

차지(CHA)는 2026년 2분기 완만한 매출 성장을 기록한 가운데 조직 개편과 엄격한 비용 통제로 GAAP 기준 수익성이 대폭 개선되었다고 발표했다. 해외 시장은 가장 확실한 성장 동력 지위를 유지하며 대중화권의 둔화된 성장세를 상쇄했다.

핵심 요약

• 2분기 순매출은 전년 동기 대비 2.5% 증가한 34억 1,500만 위안을 기록했으나, 전분기 대비로는 3.7% 감소했다. 총 GMV는 전분기 대비 3.3% 감소한 76억 6,300만 위안을 기록했다.
• GAAP 순이익은 4억 6,480만 위안을 기록했으며, 순이익률은 전년 동기 2.3%에서 13.6%로 개선되었다. 비GAAP 순이익은 4억 8,870만 위안으로, 순이익률은 전분기와 동일한 14.3%를 나타냈다.
• 해외 GMV는 전년 동기 대비 114.3%, 전분기 대비 18.2% 증가한 5억 400만 위안을 기록했다. 대중화권 GMV는 전분기 대비 4.5% 감소한 71억 5,600만 위안으로 집계됐다.
• 차지의 6월 말 기준 찻집(매장) 수는 전년 동기 대비 8.5% 증가한 7,639개로, 1분기 대비 순증가 수는 108개다. 매장 네트워크는 대중화권 매장 7,240개와 해외 매장 399개로 구성됐다.
• 경영진은 7월 동일매장 매출이 전년 동기 대비 한 자릿수 낮은 대의 감소율을 기록했으나, 신제품 출시, 계절적 수요, 서비스 개선에 힘입어 8월 동일매장 매출은 플러스 전환될 것으로 전망했다.
• 차지는 8월 24일 기준 승인된 1억 5,000만 달러 규모의 자사주 매입 프로그램 중 약 3,000만 달러를 집행했다. 또한 경영진은 이사회 승인을 전제로 정기 배당을 포함한 다양한 주주 환원 방안을 검토 중이다.

주요 재무 실적

차지는 14분기 연속으로 GAAP 및 비GAAP 기준 모두에서 흑자를 유지했다. 비GAAP 일반관리비 비율은 전년 동기 13.2%, 1분기 11.6%에서 매출의 9.1%로 하락했다. 비GAAP 영업 및 마케팅 비용은 매출의 8.8%를 차지해 전년 동기 10.6%, 1분기 8.6%와 대비를 이뤘다.

사업 및 운영 성과

제품 라인업 확대로 고객 확보 지원

차지는 이번 분기에 분기 기준 역대 최대 규모인 17개 신제품을 출시했다. 기존 잎차 기반 생유 믹스티를 넘어 스페셜티 음료, 레몬티 라떼, 말차 라떼, 젤라또 등으로 라인업을 확장했다.

재출시된 말리노(Malino) 티는 첫 주 동안 매장당 하루 평균 110잔이 판매되어 20%에 육박하는 점유율을 기록했다. 용정차 라떼 재출시는 해당 출시 기간 동안 전체 GMV를 전분기 대비 25% 가까이 끌어올렸다.

스페셜티 음료는 출시 첫 3일 동안 매장당 하루 평균 124잔 판매되어 주말 GMV의 두 자릿수 성장을 견인했다. 레몬티 라떼는 출시 기간 동안 신규 회원 유입을 45% 증가시켰다.

젤라또 도입 매장은 8월 기준 190개 이상으로 늘어났다. 경영진은 시범 매장의 오프라인 GMV가 평균 20% 이상 증가했으며, 매장 유동인구 증가와 휴면 회원 활성화 효과도 함께 나타났다고 설명했다.

해외 시장, 핵심 성장 동력 유지

차지는 분기 말 기준 8개 해외 시장에서 매장을 운영 중이다. 이번 분기 한국 시장에 새로 진출했으며, 첫 3개 매장에서 오픈 3일 만에 1만 6,000잔 이상을 판매했다. 5월 기준 매장당 일평균 판매량은 1,648잔에 달했다.

'보야 티 라떼(BOYA Tea Latte)' 시리즈는 출시 후 15일 동안 아시아·태평양 지역 매장당 평균 판매량을 52% 증가시켰다. 베트남, 태국, 인도네시아에서는 전체 판매량의 30% 이상을 차지했다.

매장 네트워크 및 회원 수

글로벌 매장 네트워크는 가맹점 6,756개, 직영점 883개로 구성되었다. 직영 매장 매출은 대중화권 및 해외 네트워크 확장에 힘입어 전년 동기 대비 222.2% 증가한 9억 4,060만 위안을 기록했다.

대중화권 매장당 월평균 GMV는 1분기 35만 6,080위안에서 33만 8,259위안으로 감소했다. 다만 경영진은 대중화권 동일매장 GMV 성장률이 전년 동기 대비 7%포인트 개선되었으며 전분기 대비로는 대체로 안정적인 수준을 유지했다고 밝혔다.

6월 말 기준 등록 회원 수는 2억 5,700만 명에 달했다. 활성 회원의 재구매율은 43% 이상을 유지했으며, 2회 이상 구매한 회원이 전체 주문의 78% 이상을 차지했다.

경영진 전망

경영진은 2026년을 급격한 확장보다는 조정과 안정화의 해로 정의했다. 차지는 하반기에 상반기 구조조정과 제품 시범 운용에서 얻은 교훈을 적용하는 한편, 제품 품질, 회원 참여도, 고객 경험에 중점을 둘 계획이다.

회사는 신제품 출시 주기를 유지하고 추가 카테고리에 진출하며 설탕 및 유제품 베이스 등 원재료 품질을 향상시킬 계획이다. 또한 대중화권에서는 질적 성장에 우선순위를 두고 해외에서는 절제된 성장을 추진하는 한편 매장 설비와 디자인을 업그레이드할 예정이다.

경영진은 7월의 한 자릿수 낮은 대 감소세 이후 8월 동일매장 매출이 전년 동기 대비 플러스로 돌아설 것으로 예상했다. 이러한 전망은 실적 발표 당시 관측된 추세에 기반한 것으로 외부 시장의 불확실성에 따라 변동될 수 있다.

리스크 및 주요 점검 사항

• 경영진은 거시경제 환경이 둔화되고 있으며 차(tea) 음료 시장의 경쟁이 더욱 심화되고 있다고 설명했다.
• 2분기 대중화권 GMV와 매장당 월평균 GMV가 전분기 대비 감소했다.
• 배달 플랫폼 간 경쟁으로 소비자 행태가 변하고 있으며, 트래픽 분배가 점차 다변화되고 파편화되고 있다.
• GAAP 수익성과 운영 효율성이 대폭 개선되었음에도 비GAAP 순이익률은 전년 동기 수준을 하회했다.
• 경영진은 동일매장 매출의 회복 전망을 논의하는 과정에서 외부 환경의 지속적인 불확실성을 인정했다.

Q&A 하이라이트

경영진은 7월의 실적 개선과 8월에 예상되는 동일매장 매출 플러스 성장이 신제품 출시, 여름철 수요, 젤라또 및 스페셜티 음료의 호조, 그리고 제조 효율성 및 매장 서비스 개선에 힘입은 것이라고 설명했다.

주주 환원과 관련해 차지는 2025년 4분기에 1억 7,700만 달러 규모의 특별배당금을 지급했다고 언급했다. 이사회와 경영진은 사업 확장 자금, 장기 전략, 시장 상황 등을 고려하면서 정기 배당을 포함해 보다 정례화된 주주 환원 체계를 검토하고 있다. 모든 안건은 이사회의 검토 및 승인을 거쳐야 한다.

실적 발표 전문(Transcript)

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Chagee's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. With that, I will now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company. Please go ahead, ma'am.

Alicia Guo

Thank you. Hello, everyone, and welcome to Chagee's Second Quarter 2026 Earnings Call. With us today are Mr. Junjie Zhang, our CEO, Mr. [indiscernible], 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 statement in the earnings press release, 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.

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.

With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir.

Junjie Zhang

[Interpreted] Hello, everyone. Welcome to Chagee's Second Quarter 2026 Earnings Call. As we enter 2026, our strategy has stayed focused on the fundamentals of the business centered on doing well by the things our consumers truly care about. In the first quarter, we completed a systematic review of our organization, product and marketing road map, laying the foundation for high-quality growth.

While the external environment saw some volatility in the second quarter, these changes have only reinforced our conviction. The ability to navigate cycles ultimately comes down to genuine consumer recognition. The more complex the market, the more important it is to return to the fundamentals. The more intense competition, the more important it is to perfect every consumer touch point. All of our work in the second quarter was built around this logic, not as reactive response, but as a more focused commitment to our proven path.

The tea beverage industry is going through a structural change. On the supply side, the fresh milk tea category is now quoted with more players and a competitive landscape has shaped from shared growth in an expanding market to competition over a fixed base, raising the intensity of competition. On demand side, shifting generational value require brands to find new ways of telling their story. The old playbook built on high-profile positioning and loud marketing has lost its effectiveness. While customers are looking for today, it is individual self-expression and a genuine sense of comfort. Brands need to become a gentle touch points that resonates with the individual, connecting through sincerity and responding to consumers with care.

On the channel side, intensified competition among delivering platforms is reshaping consumer behavior. The public domain has expanded meaningfully and become a key competitive arena for brands. Meanwhile, traffic distribution has become increasingly the diversified and fragmented. Brands must closely track where consumers are moving and allocate resources efficiently.

In response to these changes, we're building our capabilities across 4 dimensions: First, strengthening our core capabilities. At the front end, we're enhancing our innovation capabilities, striving for excellence, embracing new directions and fully unlocking the creativity of our branding and product teams. In the middle office, we're reinforcing our support infrastructure. Innovation alone is not enough. We also need strong capabilities to mobilize resources and deliver our goals. We're therefore continuing to upgrading our operating system channel capabilities, consumer operations and IT infrastructure to support our growing scale.

Second, broadening our product mix beyond [indiscernible] fresh milk tea, we're actively exploring additional categories, including the special deals and gelato recently launched in the second quarter. We want to test more product formats to meet our consumers' increasingly diverse needs. This requires us to continue reforming our supply chain capabilities and operating system to provide a solid foundation for category expansion.

Third, enhancing consumer reach. On one hand, we're using flexible and diverse content marketing to connect with consumers and expand our traffic funnel. On the other hand, we are expanding our reach through penetration across more consumer scenarios.

Fourth, we're evolving our value proposition. As consumer needs evolve, our brand value proposition also needs to iterate with the times. Through emotional resonance and experience-driven retention, we aim to turn new customers into loyal long-term Chagee friends.

Connecting through tea is our [indiscernible], bringing Chagee to the world and building a premium brand with exceptional user experiences. This is our unwavering direction and standard. We continue to build our capabilities towards fiscal with every step deliberate and grounded. We believe that the more complex the environment, the more important it is to return to the fundamentals, making great products serving our consumers well and refining every teahouse. As we continue to deepen our capabilities across product innovation, marketing innovation, organizational efficiency, consumer operations and overseas expansion, we're confident in achieving high-quality sustainable growth in any market environment.

Last quarter, we announced a share repurchase program of up to USD 150 million. As of August 24, we have executed approximately USD 30 million in repurchases. Through continued action, we want to demonstrate the company's firm confidence in its long-term value and deliver a tangible return on our shareholders' trust.

Next, I will hand the call over to our COO, Eden, who will walk you through the execution during the quarter. Thank you.

Unknown Executive

[Interpreted] Thank you, Junjie Zhang, and thank you all for joining our earnings call today. Let me begin by sharing our overall performance for the second quarter. Total revenue reached RMB 3,415 million representing a 2.5% increase year-over-year and a 3.7% decrease quarter-over-quarter. GAAP net income was RMB 465 million, representing a net income margin of 13.6%, a substantial improvement from 2.3% in the same period last year. Non-GAAP net income was RMB 489 million. Non-GAAP net margin was 14.3%, stable on a sequential basis.

Total GMV for the second quarter was RMB 7,660 million, down 3.3% sequentially. Greater China GMV was RMB 7,156 million, down 4.5% sequentially. Overseas markets stood out with GMV reaching RMB 504 million, up 18.2% sequentially and 114.3% year-over-year, continuing to serve an important growth engine for us.

This quarter, we continued to advance our high-quality growth strategy across 4 key dimensions. First, we accelerated new product launches. We launched a total of 17 new products this quarter, the highest number in a single quarter in our history. Our offerings have expanded from loose leaf fresh milk tea to include special deals, lemon tea latte, Matcho latte, gelato and other series. Within loose tea fresh milk tea, we successfully brought back 2 classic products, Malino tea reached an average of 110 cups per teahouse per day in its first week with a cap share of nearly 20% and the highest first-time member penetration of any new product this year. The return of Long Jing tea latte drove overall GMV up nearly 25% sequentially during the [indiscernible] day period, outperforming last year.

On category expansion, the special deals designed for weekend leisure occasions averaged 124 cups per teahouse per day during its first 3 days and contributed to double-digit weakened GMV growth. The launch of the lemon tea latte also increased the first-time member acquisition by 45% during the launch period underscoring for its effectiveness in attracting new customers.

In addition, we piloted gelato in selected teahouses, combining loose tea leaves with Italian gelato craftsmanship. As of August, gelato has been introduced in more than 190 teahouses and have been well received by our Chagee friends. Great and pilot store performance indicates meaningful improvement with average offline channel GMV increasing by more than 20%. Gelato has also demonstrated a strong ability to attract new customers, reactivate dormant members and increased in-store traffic.

Second, our marketing continues to build a high-value brand core deepening brand capture and cultural residents through a series of high-impact collaborations, exploring upgrades at the intersection of culture and tea. In June, we formed a strategic partnership with the [indiscernible] Theater Festival and opened our first Chagee imaging teaspace in July. We also partnered with the Hubei Provincial Museum to launch the country's first museum teahouse drawing on traditional culture and intangible cultural heritage to position tea as a meaningful cultural medium. By clearly communicating with our brand values and philosophy, we have strengthened emotional connections with consumers and translated that engagement into consumer acquisition and loyalty. As of the end of June, our total registered members reached 257 million. The repurchase rate among active members remain above 43%, while members who made 2 or more purchases accounted for more than 78% of total orders.

Third, we continue to benefit from our more streamlined and efficient organizational structure. In the second quarter, our non-GAAP G&A expense ratio declined to 9.1% compared with 13.2% in the prior year and down 2.5 percentage points sequentially. Our non-GAAP sales and marketing expense ratio narrowed down to 8.8% from 10.6% a year ago, remaining within a healthy single-digit range and broadly in line with the 8.6% level reported in the first quarter. These improvements are not simply cutting spending, they reflect a more disciplined and efficient approach to resource allocation. We're executing faster with greater precision and stronger coordination while focusing our resources on initiatives that creates the most value for consumers.

Fourth, we continue to prioritize high-quality growth across our tea health network while advancing our teahouse expansion. As of the end of June, our global network totaled 7,639 teahouses, representing a net increase of 108 locations from the prior quarter. This includes 7,240 teahouses in Greater China and 399 overseas. We're now present in 8 overseas markets, including Singapore, Malaysia, Thailand, Indonesia, the Philippines, Vietnam and the United States and South Korea.

This quarter marked our first entry into South Korean market. Our 3 teahouses sold over 16,000 cuts combined in their first 3 days, with preopening app downloads exceeding 46,000. Average daily cup volume per teahouse reached 1,648 in May, demonstrating the strong regional appeal and competitiveness of the Chagee brand. During World Tea Day, we introduced new offerings under the BOYA Tea Latte series across the Asia Pacific region. The series has increased average caps sold per teahouse across the region by 52% during its first 15 days. In Vietnam, Thailand and Indonesia, the BOYA Tea Latte series accounted for more than 30% of cup volume, underscoring the cross-market appeal of our core product offerings.

Looking ahead, we remain focused on a clear set of priorities. On products, we will maintain a consistent launch cadence, expand into new categories and continue enhancing ingredients, including sugar and dairy bases to lead the development of healthier tea beverages. On service, we will further optimize our membership program and overall consumer experience. Across our teahouses network, we will prioritize high-quality growth in Greater China while expanding overseas in a disciplined manner.

We will also upgrade equipment to help ensure product consistency and improve operating efficiency.

On experience, we will continue to differentiate our teahouses through thoughtful design, creating a third space where consumers generally want to spend time. Finally, on brand. we will stay closely aligned with market trends and continue elevating the key experience through brand enhancements, consistent product quality and improved consumer experience and an involving training system.

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.

Hongfei Huang

Thank you, Edan, and hello, everyone. 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, unless otherwise stated.

as Junjie Zhang and Edan outlined, the second quarter presented a softer macro backdrop and a more challenging competitive landscape across the industry, and our results reflect the that environment. What I want to emphasize is that even as top line growth moderated, we maintained our operating discipline, we established earlier this year, and our profitability has largely intact. We view this as evidence that our cost structure and organizational efficiency gains are durable, not a onetime and that they give us a stable foundation to keep executing our strategy priority regardless of the external environment.

With that context, let me walk through the quarter in detail. Total GMV was RMB 7,663 million in the second quarter, down 3.3% sequentially from RMB 7,917.8 million in the first quarter. As of June 30, 2026, our teahouse network totaled 7,639 locations across the Greater China and overseas, up 8.5% from 7,038 a year ago. Of this 6,756 were franchise teahouses and 883 were company-owned teahouses.

In Greater China, average monthly GMV per teahouses was RMB 338,259 in the second quarter compared to RMB 356,080 in the first quarter. Meanwhile, overseas total GMV grew 114.3% year-over-year and 18.2% quarter-over-quarter from RMB 426.4 million in the first quarter to RMB 504.0 million in this quarter.

Overseas markets remains our clearest growth engine.

Same-store GMV growth in Greater China improved by 7 percentage points year-over-year and was broadly flat sequentially. Overall, same-store GMV growth improved by 6.9% points from a year ago remained relatively stable compared with the prior quarter.

On the revenue line, our net revenues increased by 2.5% year-over-year to RMB 3,414.6 million in the second quarter. Net revenue from franchisee teahouses were RMB 2,474 million, representing 72.5% of total net revenue compared to RMB 3,020.7 million a year ago. Net revenue from company-owned teahouses were RMB 940.6 million, up 222.2% from RMB 311.2 million a year ago, mainly as a result of continued development of the company-owned tea houses network across Greater China and overseas markets.

Turning to margin. Our gross profit calculated by excluding cost of material, storage and logistics from net revenue reached RMB 1,843.4 million this quarter, resulting in a gross margin of 54%, flat year-over-year. Our organizational enhancements drove a meaningful year-over-year decline in operating expenses.

Share-based compensation expenses totaled RMB 23.9 million in the quarter, and it reflects our focus on retaining and motivating employees while aligning their interest with those of shareholders. To provide a greater clarity of our underlying operational performance. We will continue to reference non-GAAP operating results with full reconciliations available in our earnings release and the Form 6-K.

Operating income was RMB 524.7 million, representing an operating income margin of 15.4%, increased significantly from 3.2% in the same period of a year ago, benefiting from our strategic organizational adjustment and a continued disciplined cost management. Excluding share-based compensation expenses, non-GAAP operating income was RMB 548.6 million, representing a 16.1% margin compared to a 17.1% margin in the first quarter of 2026.

Operating costs for company-owned teahouses were RMB 566.8 million, up 207.8% from RMB 184.1 million a year ago, consistent with the continued buildout of our company-owned network.

Other operating costs decreased by 33.3% to RMB 115.8 million, largely due to a decrease of RMB 30.2 million in payroll expenses driven by organizational structure enhancement and headcount optimization.

On a GAAP basis, other operating costs accounts for 3.4% of revenues compared to 4.7% a year ago and 4.3% in the first quarter.

Sales and marketing expenses for the quarter were RMB 301.5 million, down 21.7% from RMB 385 million a year ago, mainly due to a more streamlined branding and marketing team, together with improved efficiency in advertising placement and precision marketing.

On a non-GAAP basis, sales and marketing expenses represented 8.8% of revenue compared to 10.6% a year ago and 8.6% in the previous quarter.

General and administrative expenses reached RMB 334.5 million, down 64.6% year-over-year from RMB 944.6 million. The decrease primarily reflected lower share-based compensation expenses, reduced payroll facility and the professional service costs and [indiscernible] of IPO-related expenses incurred in the prior year period.

On a non-GAAP basis, G&A expenses represented 9.1% of revenues compared to 13.2% in the same period a year ago and 11.6% in the first quarter.

Income tax expenses represented 20% of income before income tax compared to 62.1% a year ago and 21.2% in the first quarter, the year-over-year normalization primarily reflecting a reduced impact from share-based compensation expenses.

Notably, we continue to deliver profitability on both GAAP and a non-GAAP basis, extending our track record to 14 consecutive quarters of positive net income.

GAAP net income was RMB 464.8 million. Non-GAAP net income, excluding RMB 23.9 million of share-based compensation expenses was RMB 488.7 million, with a non-GAAP net margin of 14.3% compared to 18.9% a year ago and flat sequentially.

For the second quarter, basic and diluted net income per ordinary share was RMB 2.44 and RMB 2.42 respectively. On a non-GAAP basis, basic and diluted net income per ordinary share was RMB 2.57 and RMB 2.54, respectively.

Turning to liquidity. We ended the quarter with RMB 6,795.5 million in cash and cash equivalents, restricted cash and time deposits. This reflects the impact of our share repurchase program commencing on June 1, 2026, alongside our continued investment in teahouse network. We maintain a healthy balance sheet that gives us flexibility to keep executing our strategic priorities while returning capital to shareholders.

As we move through the remainder of 2026, we will execute against our new product pipelines, enhancement memberships and the service experience and maintain a focus on quality as we expand our teahouses network in Greater China and overseas.

Our confidence in the company's long-term value remains firm, and we are committed to return value to our shareholders in a meaningful way. With that, we are ready to begin Q&A.

Alicia Guo

[Operator Instructions] We received some questions ahead of today's call. We will now address some of the key topics raised. Our first question relates to the outlook of the second half of the year. How does management view the second half of the year amid the current competitive market environment? Our CEO, Junjie Zhang will address this question.

Junjie Zhang

[Interpreted] Thanks for the question. As we just shared, the market environment has changed significantly and competition in the industry has become more intense, but we have always believed that the more complex the market becomes, the more important high-quality growth is. We see 2026 as a year of adjustment and stabilization. In Q1, we completed the organizational restructuring and conducted a systematic review of our growth strategy. In Q2, we have started to explore areas such as new product category expansion and user experience upgrades. Our core objective this year is not to pursue rapid expansion in scale, but to build a stronger foundation for sustainable growth in the next stage.

In the second half, our work will become more focused and practical along the direction of adjustment and exploration will put into execution the results and learnings from the first half one by one. No matter how external environment changes, we will stay focused on the fundamentals making good products and doing things that matter most to our members. We remain confident in steady development in the second half.

Alicia Guo

Our next question relates to same-store trends. Could you share how same-store have trended so far in the third quarter? Our COO, Aden, will address this question.

Unknown Executive

[Interpreted] Thanks for the question. Since the start of Q3, we have seen positive signs of recovery. Same-store sales in July showed a low single-digit decline, representing a meaningful improvement from the first half. Based on trends so far, we expect same-store sales in August to turn positive year-over-year. We believe the improvement reflects that the benefit of our earlier strategic adjustments are gradually coming through.

There are a few drivers behind this trend. First, our new product strategy continues to contribute. In Q3, we maintained the pace of new launches from Q2, introducing several new products, including Guava Peach Ice tea and Limon tea Latte while also relaunching papular bestsellers, such as leachate black and milk tea and [indiscernible] milk tea. At the same time, since Q3 forth and peak season for tea consumption, recently launched products such as gelato and special deals are also better suited to the summer heat, effectively driving in-store traffic and overall performance.

Second, we continue to refine in-store service and customer experience. We have consistently emphasized a return to fundamentals. And throughout this year, we have continued to refine service details at the teahouse level, improving preparation efficiency and strengthening customer experience. We're translating these seemingly small details into real tangible outcomes in the form of repeat purchases and word of mouth.

Overall, the improved trends in July and August gave us greater confidence in same-store performance for the second half of the year while uncertainty remains in the external environment. Our product pipeline is stronger and our strategic direction is clearer, and we believe this recovery is sustainable.

Alicia Guo

The last question relates to payout. Does the company have any further payout plans. Our CFO, Aaron will address this question.

Hongfei Huang

[Interpreted] Thanks for the question. Shareholder returns have always been one of the key considerations in our capital allocation strategy. In the fourth quarter of last year, we paid a special dividend of USD 177 million, which reflects our commitment to returning value to shareholders.

Entering 2026, with the organizational optimization and continued improvement in operating efficiency, our free cash flow has remained healthy. This provides a solid foundation for us to explore a more regular and sustainable shareholder return mechanism. Currently, the Board and management are actively and prudently reviewing different options, including regular dividends, while considering our medium- to long-term strategy, funding needs for teahouse development and changes in the market environment.

We fully understand that it is important for shareholders to share in the results of the company where we maintain high-quality growth, therefore, continuously enhancing shareholder returns remain a firm direction for us. Management team is currently evaluating the specific details. We will bring a proposal to the Board at the appropriate time, subject to the Board's review and approval, provide an upgrade to the market.

Alicia Guo

That concludes today's Q&A session. If you have any further questions, please feel free to contact us or request us through our IR website. Thank you all for your time today. We look forward to reconnecting on our next call. Have a wonderful day.

Operator

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