Chagee Holdings Limited (NASDAQ: CHA) saw its stock price plummet 5.45% in pre-market trading on Friday following the release of its second quarter 2025 financial results. The premium tea drinks brand reported weaker-than-expected revenue and showed signs of slowing growth, disappointing investors.

For the quarter ended June 30, 2025, Chagee reported total net revenues of RMB3.33 billion ($465.1 million), representing a 10.2% year-over-year increase. However, this figure fell short of the FactSet analyst estimate of RMB3.67 billion. The company's same-store GMV growth in Greater China declined by 23% compared to the same period last year, indicating challenges in maintaining growth at existing locations.

While Chagee's non-GAAP earnings per share of RMB3.30 ($0.46) beat analyst expectations, the company's profitability metrics showed significant pressure. Operating income for Q2 2025 was RMB107.6 million ($15.0 million), representing an operating margin of just 3.2%, down from 24.6% in the same quarter of 2024. GAAP net income decreased by 87.7% to RMB77.2 million ($10.8 million). These figures suggest that Chagee is facing challenges in maintaining its profit margins as it continues to expand its teahouse network, which grew by 40.9% year-over-year to reach 7,038 locations.