Chagee Holdings Limited

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to ECHG's second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's prepared remarks. 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. Thank you.

Hello, everyone, and welcome to Chagi's second quarter 2025 earnings call. With us today are Mr. Junjie Zhang, our CEO, and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the newsware earlier today and are currently available online. Before we continue, I refer you to our SafeHopper 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 CHAGI 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 measure to GAAP measure. With that, I will turn to the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir.

Hello, everyone.

Thank you all for joining Chaji's second quarter 2025 earnings conference call. We truly appreciate your continued trust and support. which has enabled us to forge ahead steadily in this dynamic market environment.

Before we enter the formal discussion on performance, please allow me to share an important talent strategy development. In order to accelerate the North American market layout, we have recently successfully formed a new North American leadership team. We are very honored to welcome Emily Zhang, Ms. Jia Meng, Emily has a rich experience in international brand construction. She has served as the chief executive officer of VML, McKenna, World, Group, China, and Starbucks China.

Before we dive into our quarterly performance, I'm delighted to share an important update in our talent strategy. To accelerate our North American market expansion, we have successfully assembled a new North American leadership team. We're honored to welcome these Emily Chang as our chief commercial officer for North America. Emily brings extensive international brand building experience, having served as CEO at West at VML and McCann World Group China, and chief marketing officer at Starbucks China.

At the same time, we invited Aaron Harris, who is the chief development officer of North America. Additionally, we welcome Mr. Aaron Harris as our Chief Development Officer for North America.

As a chain restaurant industry expert, Aaron has successfully led market expansion for multiple national and international QSR brands. Most recently, as Senior Vice President of Development at Dutch Bros Coffee, his rich experience in scaled operations will drive our development in the U.S. market.

This is just a key talent introduction. It is also an important part of the company's global strategic layout. We have built a localized team in the core markets such as Asia-Pacific and North America, and have invested in systematic and preemptive organizational capabilities. In the second half of this year, the company will continue to expand its strategic investment in the overseas market and continue to improve the construction of global talent teams and operating systems. We believe that This is not just a key talent acquisition, but also an important move for our global strategic layout.

We have proactively established a local team in core markets such as Asia Pacific and North America. making systematic investments in organizational capabilities. In the second half of this year, we will continue to invest strategically in overseas markets, steadily enhancing the development of a global talent pipeline and operational system. With our elite local teams, we're confident that we will achieve a pivotal breakthrough and sustain strong growth momentum globally.

Next, I will give you a detailed introduction to the results of this quarter and the progress of the business. In the context of the ongoing changes in the global tea and drink market, we insist on the core development path of brand value and product innovation, to show the firmness and clear strategy execution of the document. In this quarter, the overall business of the company will maintain a healthy growth trend. The revenue will continue to double, the same number, the same growth. The profitability will remain stable.

Next, I will walk you through the operating results and business updates. Despite the evolving dynamics of the global tea beverage market, we have stayed committed to growth strategy driven by brand value and product innovation. This has reinforced our operational resilience and sharpened strategic focus. This quarter, we achieved solid progress with revenue sustained double-digit year-over-year growth and consistent profitability.

To achieve such a result, we are first of all proud of our brand strategy. Currently, the industry is often in the environment of exchanging market share with price stations. We insist on prioritizing value and differentiating positioning. This strategy has received positive feedback from the market. Under the premise of maintaining a consistent price strategy, our third-party takeaway GMV contribution has been improved. One of the most important factors behind these results is our consistent commitment to a clearly defined brand strategy.

In an environment where mainly in the industry compete for market share through aggressive price promotions, we remain committed to our differentiated value-first positioning, a strategy that is earning positive market feedback while maintaining a disciplined pricing framework. Our third-party delivery GMV has seen growing contributions, with strong repeat purchasing behavior among registered members.

These results validate our brand positioning and confirm that consumers recognize and appreciate the value we offer. We believe that by continuing to invest and upgrade the origin of the product, it will bring a higher quality product experience for consumers. This is also the most fundamental challenge of our value priority strategy.

To strengthen this advantage and deepen our competitive mode, we will launch a comprehensive upgrade plan for essential raw materials in the second half of the year, focusing on key ingredients such as tea, milk, and syrups. We believe that ongoing investment and sourcing improvements will deliver an elevated product experience to our customers, reflecting the core of our value-first strategy.

On the global stage, our strategy continues to deliver strong momentum.

The overseas markets have demonstrated strong growth momentum and are becoming an increasingly important growth engine for the company.

This achievement is mainly reflected in three key aspects. First of all, our unique local products and marketing innovation have achieved significant results. In April this year, we launched Gu Xiang Pei Cha in Southeast Asia and became an online product. Not only did we get strong feedback from consumers, but we also received a lot of love from customers. In June, we launched the Bojue Tea series in collaboration with the British Library, which received an exciting market response. This series of products triggered a wide and active interaction in social media. At the same time, we also gained a huge response from the offline fast-food experience shop built in Singapore and Malaysia, which successfully attracted customers to participate and greatly improved the brand's influence and favorability. This hot trend has also directly transformed into a strong purchasing power, promoting the active growth of the Singapore market during the activities.

This progress has been driven by a combination of localized product and marketing innovation, disciplined geographic expansion and operational excellence. In April, our Hojicha Jemai milk tea captured customer attentions across Southeast Asia, propelling us to the top position in share of voice among tea brands in the region. In Malaysia, the product sold out in major cities within two weeks of lunch. In June, our Earl Grey series, co-branded with the British Library, performed equally well. The collection sparked vibrant engagement on social media. Simultaneously, our pop-up experiential events in Singapore and Malaysia drew tens of thousands of visitors, providing immersed brand experiences and significantly elevating brand visibility. Cap sales during these events recorded decent sequential growth, especially in Singapore.

其次,我们的市场拓展战略正在扎实稳健地向前推进,并取得了阶段性成果。 上半年我们在印尼及美国战略市场的布局推进工作取得积极进展,同时深化了泰国市场的战略合作伙伴。

At the same time, we continue to make steady and solid progress with our overseas store expansion. In the first half of the year, we advanced our strategic positioning in critical markets, including Indonesia and United States.

while further strengthening our strategic collaboration The Japanese market continues to lead, and the Malaysian stores are performing well. The profit and loss are above expected. What is particularly worth mentioning is that we have achieved a certain price increase in overseas market products. This fully proves the continuous increase in brand profit and loss.

Operational quality across all regions continues to improve. Our Singapore stores sustain solid and stable sales momentum, consistently delivering leading daily average sales. Profitability in our Malaysian stores exceeded expectations. More importantly, we have achieved a sequential increase in the sales price for our products in the overseas markets, demonstrating the strength of our premium brand positioning.

In the domestic market, we have also made a breakthrough. In the second quarter, we launched a unique non-Chinese cultural theme store and activities, such as Guangdong's Qianci Art concept activity and Shandong's Fengzhen Cultural Express. We're pushing boundaries by integrating modern consumer experience with traditional cultural elements.

In the second quarter, we introduced the themed concept stores such as the Samaric Inlay Arts activity in Guangdong and the Kite Culture pop-up store in Shandong, successfully blending heritage tea culture with contemporary retail design. This demonstrates that our globalization strategy is not just about growing our footprint, but equally about reinforced brand value and elevating operational quality.

Product innovation has always been the core driving force of our development. This season's new product, Yi Ji Hong Cheng, has a outstanding sales performance in the first week. It has the same power as the new product, and during the innovation period, it has jointly promoted the implementation of GMA. In addition, Xia Meng Meilong, which has returned to its original status, is also very popular, and is on the top of the list of the most popular single version of this season.

Product innovation remains at the heart of our growth. In the second quarter, our new product, Lychee Black Milk Tea, showcased strong first-week sales. Alongside other recent introductions, the two products drove a meaningful sequential increase in GMV during their launch period. Moreover, the time-limited return of Melon Oolong Milk Tea proved highly popular, ranking prominently among the quarter's most favorite products.

With product innovation and user operation, our member ecosystem continues to develop healthily. By the end of the second quarter, the number of registered members has decreased and the number of members has increased. These results not only reflect our professional ability in user operation, but also prove the market resonance of the health tea brand.

Driven by the dual engines of product innovation and user operations, our member ecosystem continues healthy development. By the end of the second quarter, number of registered members achieved strong growth both sequentially and year over year. This reflects not only our ability to operate with efficiency at scale, but also the deep market renaissance of our mission to champion health-oriented tea beverages.

In this challenging market environment, we always believe that maintaining quality is the most important thing. No matter how the external environment changes, we will continue to provide consumers with a cup of healthy tea without burden. We will never compromise quality standards for short-term growth. As the representative of modern tea in China, we, the people of Shuanchong, will not only pass on the essence of Chinese tea culture, but also present it to global consumers in a innovative way. We will continue to work hard and use every cup of healthy, high-quality tea to deliver the true taste. In the face of ongoing market challenges, we remain steadfast in our belief that quality is the foundation of lasting growth.

As market conditions shift, our promise is clear. We will consistently offer tea that is both wholesome and promising in quality. Short-term results will never come at the expense of our enduring commitment to excellence. As a representative of modern tea, Chinese tea, our mission is twofold. To preserve the essence of Chinese tea culture and to modernize it for global consumers through innovation and creativity. We will honor our craft, true hold to our values, and use every cup of high-quality tea as a gesture of sincerity. We firmly believe that genuine care for both our product and our customer is the key to earning during market trust and sharing the authentic experience of Chinese tea with the world.

接下来,我将把时间交给我们的Zafo Aaron, 他将为大家详细介绍公司的财务与经营数据的结果。

This concludes my remarks. Now I will turn the call to our CFO, Aaron, who will provide detailed insights to our financial performance. Thank you.

Thank you, Jay. And good evening, good morning, everyone. Thank you for joining our earnings call. Before we dive into the detail, please note that all amounts are in RMB and all comparisons are on a year-over-year basis. unless otherwise stated. In the second quarter, our revenue reached 3.3 billion, up by 10.2% year-over-year. GMV came in at 8.1 billion, a year-over-year increase of 15.5%. Non-GAAP net income was 629.8 million, up by 0.1% year-over-year. For the first half of 2025, Non-GAAP net income rose by 6.8% year-over-year to $1.3 billion. By end of the second quarter, our total membership exceeded $200 million, increasing by $14.5 million from the first quarter and 42.7% year-over-year. These results underscore the resilience of our business model and the strength of our execution under dynamic market conditions. now let me provide some context around the market condition we face this quarter the intensified delivery platform subsidy competition in china created a headwinds for our business while we remain disciplined in protecting our pricing integrity and the premium premium brand positioning we recognize that this competitive environment weighed on near-term performance at the same times We are advancing our strategic expansion into international markets. This involves deliberate investment in organizational infrastructure, including talent acquisition, just Jay shared, and operational capabilities. While these initiatives are currently affecting profitability in short term, they are very critical investment as we work towards achieving operational leverage in these new markets. Next, let me go through these financials. Our total net revenue for the second quarter increased by 10.2% year-over-year to $3,331.9 million, mainly driven by the continued expansion of our tea house network. Among them, net revenue from franchisee tea house grew by 6.1% to $3,020.7 million. representing 90.7% of our total net revenue. Net revenue from company-owned tea houses increased by 77.3% to $311.2 million, accounting for 9.3% of the total revenue. The increase was primarily driven by expansion of company-owned tea house network. Our total GMV for the second quarter increased 15.5% year-over-year. The average monthly GMV per teahouse in Greater China was 404,352 RMB, a year-over-year declining reflecting both high base from last year's outstanding quarter and a more severe competitive environment. Even so, our commitment to maintain premium position and brand integrity remains central as we navigate to the current backdrop and prepare for improving market conditions. Meanwhile, our overseas markets have gained a significant detraction, with GMV increasing 77.4% year over year and 31.8% quarter over quarter. This growth is mainly driven by strategic store expansion and our growing brand awareness. Positioning the overseas market as a key pillar of our future growth. In the first half of 2025, we expanded our overseas presence by adding a net 52 stores compared to year-end 2024, bringing our total of 208 stores as of June 30, 2025. The opening of a store in Indonesia attracted approximately 35,000 new members registered during the launch week. In Thailand, the average daily cup sales rose by 54% following our grand openings, with 15,000 new members joined in just the first three days. Our Los Angeles store in the United States set a record with 5,000 cups sold a single day. Turning to margin, Our gross profit, calculated by excluding cost of materials, storage, and logistics from net revenue, reached $1.8 billion this quarter, resulting in a strong gross margin of 53.9%. This remarks solid improvements both year-over-year, up from 48.4% in the second quarter of last year and sequentially from 53.1% in the first quarter of 2025. This margin expansion was primarily driven by two key factors. First, we continue to benefit from growing economy of scale as our business expands. Second, lower purchasing costs achieved through our ongoing procurement optimization initiatives have played a significant role. On operating expenses, share-based compensation expenses rose significantly this quarter. which is reflected across our expenses categories. The significant amount of share-based compensation expenses recognized in the second quarter of 2025 were related to the vesting of share-based awards with the performance condition related to IPO success. The breakdown includes $505.6 million in G&A, $31.1 million in sales and marketing expenses, and $15.8 million in other operating costs. To provide greater clarity on underlying performance, we will also reference non-GAAP operating results with full reconciliation available in our early release and Form 6K. Operating income was $107.6 million. including share-based compensation expenses. Operating income was $660.1 million, representing a 19.8% margin. This margin change reflecting step-up investment in the brand building and the marketing to support a new product launch, R&D to ensure our offering, digital infrastructure, and to elevate customer experience, and the talent recruitment for global expansion. Operating costs for company-owned tea house was $184.1 million, up 72.8% from a year ago, and up 17.2% from the first quarter of 2025. As of June 30, 2025, we operated 239 company-owned tea houses, up from 191 at the first quarter of 2025. On a personal basis, Operating costs have decreased compared to the first quarter of 2025, showing improved efficiency at the store level. The other operating costs increased by 36.2% to $173.7 million, largely due to higher payroll supporting the expansion of the franchisee network. On a non-GAAP basis, other operating costs account for 1.7% of revenue compared to 1.2% a year ago. Sales and marketing expenses for the quarter were $385 million, up 54.6% from a year ago, reflecting higher advertising costs tied to new tea product launch and related campaigns, along with payroll growth to support business expansion. On a non-GAAP basis, sales and marketing representing 10.6% of revenue compared to 8.2% a year ago. G&A expenses reached $944.6 million, up 301.1% year-over-year, driven by SBC costs I just mentioned related to the IPO, and expanded the team to support global operations. increased R&D for product upgrades and innovation, and a higher IT service cost to enhance operation efficiency. On a non-GAAP basis, G&D expenses represented 13.2% of revenue compared to 7.8% a year ago. Income tax expenses represented 62.1% of income before tax, significantly higher than 20.1% a year ago, this was primarily driven by the impact of share-based compensation expenses recognized during the quarter. We achieved our 10th consecutive quarter of profitability with net income of $77.2 million. Non-GAAP net income excluding share-based compensation expenses was $629.8 million. with a non-GAAP net margin of 18.9% compared to 20.8% last year. The margin decline reflects our continuing investment in new product and overseas markets and the net losses from overseas operations that are still ramping up. Our Greater China business remains healthy, delivering a profitability growth from last year. During the quarter, basic net income per ordinary share was RMB $0.36, and the diluted net income per ordinary share was $0.35. We ended the quarter with $8.9 billion in cash and cash equivalent, restricted cash and time deposit, up from $4.9 billion at the end of 2024. While near-term headwinds persist, We are confident in our strategic trajectory. Our overseas operations are gaining encouraging consumer traction, and we are building the organizational and operational foundation to sustaining our long-term growth. The investments we are making today in people, infrastructure, and their capabilities will position us to capture significant opportunities as these markets mature and the operational leverage takes hold. At this time, we will not be providing the formal financial guidance for the whole year. Our priority is to execute our long-term growth strategy and delivering lasting value to our shareholders. We may revisit the possibility of offering guidance in the future as the condition evolves. In closing, I want to reaffirm our unwavering commitment to our premium brand strategy in today's dynamic competitive landscape. We remain focused on delivering healthy, high-quality tea offering that our customers trust and value. We are deeply grateful for the continued support of our team, charged friends, and valued shareholders. Through disciplined capital allocation and our commitment to strengthening or diversifying our global business, We will continue to create sustainable long-term value for our shareholders. Our focus remains on protecting margin and delivering profitable growth that is standing the test of time. With that, I will turn the call back to the operator to begin the Q&A session. Operator, please go ahead.

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To answer your question, please press star one on one again. We will now take the first question from the line of Lillian Lu from Morgan Stanley. Please go ahead.

Hello. Thank you for the opportunity to ask the question. Thanks a lot for Junjie Zong and Aaron's detailed introduction, and I look forward to a big step forward in the global expansion. I have a question actually on China right now. Obviously, we saw it in the second quarter result is there was impact from delivery platform subsidy program. So my question is related. One is what kind of... operational impact we've been seeing. For example, the impact on general ASP, the franchise stores' profit margin, and the stability. And related to that, what company strategy going forward related to dealing with platforms, subsidy program, how we define our positioning in the industry, and how we look at the second half general operation focus. Then I will translate my question. 谢谢俊杰总和Aaron详细的介绍。 我们也期望这个公司在整个的全球化更进一步。 我的问题实际上是关于中国。 当然从二季度以来,大家也看到了外卖平台大战对公司业务的一些干扰。 那么我想再进一步理解一下 First of all, in the second quarter, what kind of impact will the outsourcing platform's subsidies have on the company's operations, especially the stability of the joiners, the overall profit situation of the joiners' stores, and the actual price of the company? More importantly, in the next step, in the case of the continued subsidies of the outsourcing platform, how do we deal with Thank you. Okay, thank you for your question.

In fact, recently, the big war on the delivery platform has been a hot topic all over the world. But this is how we see it. The first is that through short-term subsidies, the main competitive behavior for the long-term market development is definitely irresistible. Short-term competition may be meaningful, but for the long-term, it is definitely an unpleasant phenomenon. So how does the platform do this? We do not comment on it. But for limited beverage companies themselves, for tea machines, If this war takes place, to put it bluntly, it will be helpful for the growth of GMV in our stores. It will also be helpful for our goods sales. However, it will have a huge impact on the profits and discount of our stores. At the same time, it will also have a huge impact on the positioning of the tea brand, the high-quality products, and the high-quality brands. Therefore, our basic view for this trade war is that Short-term users are the core users of TeaG. Users who are attracted by low prices can't build a brand in the long run. So to put it bluntly, Cha Ji is one of the few players who didn't participate in this food delivery war. So we have a few principles. The first principle is that the company will never blindly follow the trend of the price war. So we will insist that the core strategy is to be a high-value brand and provide high-quality products and services to consumers. This is our first principle. We will not fight the price war, and we will not reduce the quality and service quality of our products. This is our first point. The second point is that since a long time ago, the positioning of high-end brands has been closely related to the image of our price and brand. Tea machines have not always been able to win customers by discounting and sending coupons. We have always used higher quality products and higher-quality services, as well as more visual and experiential stores and offline experiences to gain customers' trust. Third, we will continuously enhance the efficiency of optimization operations. While avoiding dependence on subsidies, the company will continue to increase efficiency through the innovation of technology and the optimization of operations to reduce costs. Cha Ji will gradually launch our 4.0 in the fourth quarter of this year. The fourth point is that from the end of this year to the end of the year, Thank you, Mr. Jin Jie.

Thank you so much for your question. We still deliver platform competition heating up quite a bit in the second quarter and attract a lot of attention globally. Well, competition can be really good for the market and the heavy reliance on the subsidy right now isn't really sustainable for the industry as a whole. So we don't really count on the platform or the discount to attract more customers. It might help us with the GMV in a short period of time, but it doesn't really help with the profitability to our partners or to our franchisees as well. We believe that it puts a lot of pressure on the merchant margin and shakes up delivery platforms' income stability and creates financial stress for the platform as well. The key issue with the subsidy is that they mainly attract price-sensitive customers who don't have strong brand loyalty and will switch quickly to whoever offers lowest price. That makes it really hard to build lasting customer relationships. So for the company, we have three principles. The first principle is to build around, we stay firmly committed to delivering high quality products and services. We're not going to get pulled into price wars. Instead, our focus is on offering superior product quality and an outstanding customer experience. And secondly, we're not doubling down our premium brand positioning. We believe real long-term value comes from brand building trust and delivering greater user experience, not from short-term price cuts or discounts or coupons. Our strategy is all about enhancing the high-value brand image. And thirdly, we are focusing on optimizing operational efficiency to boost our competitiveness Without relying on subsidies, we keep investing in technology and process improvement to improve efficiency. For example, the 4.0 automated machine will be rolled out at the end of the year. It will largely lower the labor cost and increase the efficiency of the operation at the store level. So when we pass those savings on to the customers and partners who truly appreciate our quality so we can stay reasonably competitive on price without compromising our core value. And also, at last, our R&D, product R&D will have something different at the end of the year, and the menu will be changed totally. So we welcome you guys to look forward to our changes at the end of the year. Thank you for your question.

Thank you. We will now take the next question. From the line of Sherpa Wei, please go ahead.

Sorry, Sandra. Can we hold on for a second? The CEO has a little comment to add. My apologies, of course.

The current development stage in China is turning from China-made into a Chinese brand. At the same time, Chinese people are also turning from a low-priced product to a high-quality product. In this process, if we continue to use low-priced price stations to produce low-quality products, this is not in line with China's current development pattern. In the short term, it may be a process It will attract more consumers, but in the long run, it does not fit China's path to quality life and high quality development. So I firmly believe that we will move towards a high quality and quality life brand life style to make high quality products and high value positioning. This is something we are determined to do. This is also in line with our determination to go global and make Chinese brands and Chinese quality products. Thank you.

So actually we believe right now China has been transferring from the Chinese manufacturing or made in China mode to the brand positioning mode at the moment. So we believe the lower pricing strategy doesn't really consistent with the high quality life experience or branding positioning for the Chinese market overall trend at the moment. So keeping the lower voice, it does not really help with the higher value positioning. So we firmly believe that we're going to stick to the high quality brand positioning and also offer a high quality product to our customers. Thank you. Sandra, please go ahead with the next question.

Thank you. We will now take the next question from the line of Xiaopo Wei from Citi. Please go ahead.

Hi, can you hear me? Yes. Hello?

Yes, please.

Okay, good. Yeah, I have two questions on overseas business. In the prepared remarks, you mentioned the very exciting new hire in the U.S. leadership and also many exciting new products in the overseas market locally. So could you update us on the expansion plan for overseas and China in the next few quarters? Secondly, in the operation of overseas market, did you observe anything you want to share with us? And how could you translate those observations to the future strategy for the overseas business? Let me translate in Chinese. Thank you, Mr. Junjie and Mr. Aaron. As I said at the beginning, the company is also sharing some important employees in the leadership position in the United States and some very good scenes in the overseas market. Can you share with us how we are going to open up overseas in the next few quarters, and what are the plans for opening up in China? The second is that in the second quarter, what are we going to do All right. Thanks for the question.

Let me answer it. So let me first discuss a little bit more detail on the overseas development market by market that will give you a full picture of where we are now in the overseas market. So I will not talk about domestic growth, but more focus on the overseas market. In the international market, now we have 208 stores in total, including 178 in Malaysia. and 16 Singapore, and 8 Indonesia, 5 Thailand, and 1 US. So in overall, we have 39 new stores added in the second quarter. So we also successfully entered Indonesia, you know, first ever with new A stores in one quarter. So in the same time, we made a new strides in North America too. So opened our very first store in Los Angeles in May. with the second U.S. store now soft opening in August. So overall, you know, from a look at, from an overall GME perspective, the international markets keep up the strong growth, as I just mentioned that in the quarter that we have a 77.4% growth year over year. To break it down by market, we see a lot of very good signal in the performance. country by country. In Singapore, we see that daily sales stayed very strong in the second quarter, holding steadily above 1,500 cups a day a store. So we are still continuing optimizing the single store model to really maximize our potential in Singapore. By June, our average payback period of mature store in Singapore improved to less than 12 months. So we see there was soon as a overall country where we go break even in coming quarter. So that's really very robust business development in Singapore. In Malaysia, we have a 178 store now running very smoothly and overall the profitability performance of our store exceeded our plan. our internal plan. In Thailand, you know, we relaunched our market with three net new stores in the quarter. Average store performance is very well, and at a daily basis, it's 800 cups a day a store. So we see a very welcome by the local customers. In Los Angeles, our first store opening, you know, I just mentioned that, you know, with the 5,000 cups sold a day, It's a very long line, like three, four hours. And now still keep at 1,000 cups a day for the first store. So we're going forward. We'll push hard on two fronts, strengthening our presence in those mature markets like Malaysia. And we will continue to have rapid growth in those markets. But in the meantime, we prepare entering more countries. like today is the first grand opening day in Philippine. So we see that the more and more exciting news coming in. For the second half, the first one, the Philippine will be the last country in this year as a new country, as a new market we enter into. And then for the Vietnam as well, as just I mentioned. And then in Q4 to Q3, we definitely established a team there. We were ramping up the growth and we estimated that for the full year, we will open more than 200 stores as all in the total overseas markets. So that's for the overall overseas market expansion. And as from You know, business perspective, there are some highlights that, you know, Jay mentioned as well. For example, we have a lot of local product launch. You know, it's not a product that actually, you know, launched it before in China, like, you know, Ho Chi Cha that's very popular in Singapore. We see, you know, a lot of local relevant campaigns well received by local customers. So I think, as Jay just mentioned, that we are played as a very important lifestyle brand, and we are focused on building a relevant experience to local customers, not just like simply say it's a Chinese brand. So I think that's something that we see real well by the different markets. Operator, next question, please. Thank you.

Thank you. We will now take the next question from the line of CJ Lin from CICC. Please go ahead.

Thank you, management, for taking that question. So my question is on SSSG. So could you please provide more color on the SYNSTOR sales performance in Q2? and what's your view of the think-tank growth trend going forward? Thank you. Thank you. Thank you. It's a good question.

Yeah, there's SimStore GMV continued softening this quarter mainly due to two reasons. The first reason that we talked about it before, because we've comparing against a very strong second quarter in last year. And secondly, of course, the overall delivery platform price were intensified Um, you know, um, we choose not to engage heavily, um, to protect our, you know, brand positioning. Um, so that's definitely, we'll have a little more, uh, you know, come welcome, you know, challenges, uh, leads to, um, temporary customer, uh, diversion and the impacted, uh, you know, uh, sales a little bit, um, given the high base from the comparable period last year, we. Expected, you know, continued pressure on the same store GMV in the second half of 2025. So we are moderating store expansion in 2025, which eases gross pressure on the same stores. Also, we believe that a subsidy driven price will not last indefinitely, right? So its impact will gradually fade. And as Jay just mentioned, that we will do what we are strong at. We will focus on the product quality elevation. And we will continue to improve better sugar, better milk, and better tea. So really providing the high quality product to our customers and to bring the customer back. Focus on the customer experience. stay away from those price competition and really focus on our customer long-term strategy. Delivering high-quality product and experience to build a premium brand and earning the customer trust through the consistent excellence. So I think we believe that that is something that the charges should play and we are very confident that that would be appreciated by customers as well. Thank you.

Thank you. I would like to hand the conference back to our management for closing remarks.

Thank you. Thank you again for joining our call today because we're short of time. If you have any other further questions, please feel free to contact us or request through our IR website. We look forward to speaking with everyone in our next call. Have a good day. Thank you.

Bye-bye.

this concludes today's event thank you for participating you may now disconnect