ATAT (Trans): Retail growth guidance raised to 50%–55%

The following is Dolphin Research's Trans of $Atour(ATAT.US) Q3 2026 earnings call

I. Key takeaways from the print

1. Shareholder returns

a. Declared the second cash dividend in 2026 of approx. $690 mn. Full-year dividends total about $142 mn. b. Buybacks exceeded $120 mn year-to-date, bringing dividends plus buybacks to over $260 mn. That is more than 110% of 2025 net profit. c. Going forward, the target is to return roughly 100% of the prior year's net profit via dividends and buybacks each year. The pace will be adjusted dynamically based on market conditions.

2. Guidance

a. 2026 full-year total revenue to grow 33%–35% YoY. b. Full-year retail revenue growth guidance raised from 40% to 50%–55%.

3. Key financials this quarter

a. Aggregate: revenue of RMB 3.4 bn (+30.5% YoY), adj. net profit of RMB 615 mn (+26.2% YoY). Adj. EBITDA was RMB 883 mn (+28.8% YoY). b. Hotels: franchised & managed revenue was RMB 1.9 bn (+20.4% YoY), driven by unit growth and supply chain. Leased hotel revenue was RMB 134 mn (-18.6% YoY), with store count down from 24 to 17. c. Retail: revenue of RMB 1.4 bn (+51% YoY).

4. Margins and cash

a. Hotel GPM was 37.9%, up 60 bps YoY. The mix shift away from lower-margin leased hotels helped. b. Retail GPM was 52.1%, down 60 bps YoY and up 70 bps QoQ. Variance reflects quarterly product mix differences, while overall margins remain stable. c. Adj. NPM was 17.9% (-70 bps YoY) and EBITDA margin 25.7% (-40 bps YoY). This was mainly due to mix shift from faster-growing retail and investments in talent and org. capability. d. Cash and equivalents were RMB 2.7 bn at quarter-end, with net cash of RMB 2.5 bn.

II. Details from the call

2.1 Management remarks

1. Industry view: the consumer market continues to polarize structurally, and consumers are more cautious in decision-making. They place more weight on real experience, brand reputation and emotional affinity. Experience value and brand trust are becoming core differentiators.

2. Hotel operations

a. Summer travel demand was resilient in Q3, though some regions saw brief weather disruptions. RevPAR was 100.45% vs. the same period in 2025, with ADR particularly firm. b. Network: 128 openings in Q3, ending with 2,288 operating hotels and 778 in the pipeline. Expansion remains quality-first. c. Channels: CRS accounted for 61.5% of room nights, and corporate accounts 20.7%.

3. Brands

a. 'Atour 3.6': over 200 operating hotels, with the first store opened just over a year ago. Q3 RevPAR exceeded RMB 410, and build/operating costs are structurally competitive. b. 'Atour Original': after moving to independent ops, RevPAR exceeded RMB 520. The brand recently partnered with an outdoor lifestyle label to attract new customer segments. c. 'Atour Light Residence 3.3': RevPAR topped RMB 360 and suits conversions of urban stock properties. The Light Residence 3 series has 200 operating hotels, targeting a 1,000-store brand. d. 'Sahe': performing strongly in mid-to-upscale and above. Management believes local brands still have room in the high-end market and will soon launch a new upscale brand.

4. Retail (Atour Planet)

a. Revenue was RMB 1.36 bn (+51% YoY). Stockout issues seen in prior years have eased significantly this year. b. Pillows: the Deep Sleep Memory Pillow Pro series has sold over 13 mn units cumulatively. The Pro 4.0 surpassed RMB 100 mn in sales within 17 days of launch. c. Quilts: Q3 revenue grew over 70% YoY, with the Deep Sleep Temperature-Control Quilt Pro 3.0 validating category momentum. d. Strategic categories: Deep Sleep loungewear 2.0 and Deep Sleep fitted sheet 2.0 delivered strong sales.

5. Membership: total registered individual members exceeded 124 mn. In Q3, the company launched its first co-branded membership with the retail ecosystem, extending to local shopping and other life-use scenarios. It maintains guarantees of best price, best benefits and best room availability, and deepens hotel-retail synergy centered on deep sleep. 6. Organization: the firm will fundamentally rebuild traditional organizational and management approaches to reinforce long-term competitiveness.

2.2 Q&A

Q: A second dividend has been announced this year. How do you think about long-term shareholder returns?

A: Going forward, the annual shareholder return target is about 100% of the prior year's net profit, executed via dividends plus buybacks. The two dividends this year total approx. $142 mn, and cumulative buybacks exceed $120 mn. Combined, that is over $260 mn, more than 110% of 2025 net profit. Management expressed confidence in healthy long-term development and sustained cash generation. Q: How is RevPAR tracking in Q4? Any view on 2027?

A: No 2027 RevPAR guidance is provided for now, with management seeing slower supply growth and resilient demand. The company remained steady through Q3 amid industry divergence. Into Q4, the National Day and Mid-Autumn holidays unlocked long-haul travel demand, while post-holiday business and MICE recovery supported corporate travel. Additional structural tailwinds include fall breaks, inbound tourism and ice-and-snow travel, and slower supply growth should further improve supply-demand. Q: Store openings varied by quarter this year. Any change to the full-year opening target? How about 2027 and beyond?

A: The company maintains its full-year target of about 480 openings, with about 80 closures unchanged. There were 128 openings in Q3, a faster pace than in H1, supported by pipeline projects under construction. There is no specific opening number for 2027 and beyond, but management is confident in steady expansion. This is supported by a robust pipeline, differentiated product portfolio, steady experience advantages and improving capability to secure quality projects. Q: What is the recent trend in signings? How do you sustain the ability to secure quality hotel projects?

A: No signing numbers were disclosed; franchisees are more cautious, and the company relies on products and multi-brand strategy to win quality projects. Franchisees now assess location, property, brand and returns more comprehensively, and management believes hotels remain resilient, with the strongest counter-cyclical attributes among consumer assets for similar investment sizes. In a stock-competition market, quality projects are scarce, so Atour leverages cultural and experiential differentiation for pricing power. Multi-tier brands such as Atour Light Residence, Atour Original and Sahe improve adaptability across property types and boost competitiveness within trade areas. Q: Is the full-year retail revenue growth target of 40% being updated?

A: Full-year retail revenue growth guidance is raised to 50%–55%. As scale expanded in recent years, retail operating margin continued to improve steadily. The long-term goal is to enhance profit quality and operating efficiency alongside healthy growth. Q: What are the long-term growth drivers for Atour Planet?

A: Only qualitative direction was provided: amplify product strength and content advantages, avoid price wars, and address R&D and supply chain gaps. On one hand, the company iterates products around real user pain points and avoids discount-driven promotions. It builds sleep-category mindshare and long-term trust through content. On the other hand, while launching new products, it builds a long-term product pipeline, accumulates R&D and technical capabilities and brings in more high-quality suppliers to support subsequent category innovation and upgrades.

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