A：Ms. Alicia Guo is the Director of Investor Relations for the company.

A：Mr. Jun Jie Zhang is the CEO of the company.Mr. Aaron Huang is the CFO of the company.

A：Our financial and operational results for the second quarter of 2026 were released earlier today and are available online. Before we continue, I refer you to our safe harbor statement in the earnings release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today, and Cha Ji does not undertake any obligation 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.

A：As of August 24, we have executed approximately $30 million in share repurchases. We hope that through continued buybacks, we will convey the company's firm confidence in long-term value and effectively return the trust of shareholders.

A：Non GAAP net profit was 0.489 billion yuan, non cap net profit margin was 44.34, stable month on month.

A：Total GMV in the second quarter was RMB 7.6 billion, down 3.3 from the previous quarter. Among them, GMV in China was RMB 7.156 billion, a decrease of 4.5 from the previous month; overseas markets performed well, reaching RMB 0.504 billion, an increase of 18.2 from the previous month and a year-on-year increase of 114.3.

A：This quarter we accelerated the launch of new products, a total of 17 new products, the highest number of new in a single season in history. New products not only broaden to tea special, lemon milk, matcha jelaf and other series, and some classic products after the return of the market response is enthusiastic, the first week of new products store average daily cup volume reached 110 times, the first consumer member penetration rate is also a new high.

A：In the category expansion, such as tea special and other new categories on the line after the average daily sales significantly increased. At the same time, we continue to build a high-value brand core in marketing. Through strategic cooperation with the Alaya Drama Festival, the opening of the first rechargeable Imagine tea space, and the country's first museum theme store and other cultural and product-combining experience upgrade activities, we have effectively transmitted The brand value and concept have strengthened the connection with users, and promoted the attraction of members and consumption connections. As of the end of the second quarter, the total number of registered members reached 0.257 billion, the re-purchase rate of active members remained above 43%, and members who purchased more than twice contributed more than 78% of the order volume.

A：In July, the company partnered with the Hubei Provincial Museum to launch the country's first museum-themed tea house, drawing on traditional culture and intangible cultural heritage.

A：As of the end of June, the company had a total of 257 million registered members, with a repurchase rate among active members remaining above 43%, and members who made two or more purchases accounting for more than 78% of total orders.

A：The non-GAAP management费用率 has decreased, with a 4.1 percentage point drop from 13.2% in the same period last year to 9.91% in the latest reported quarter, and a环比下降2.5 percentage points from the previous quarter's 13.2%.

A：The non-GAAP sales and marketing expense ratio has also shown improvement, narrowing from 10.6% in the prior year to 8.8% in the latest quarter, and remained within a stable single-digit range at 8.6% reported in the first quarter.

A：As of the second quarter, the company operates a global network of 7,639 stores, with 7,240 in China and 399 overseas.

A：The company's tea house network strategy domestically is to prioritize quality, while overseas expansion is conducted in a稳健节奏. As of the second quarter, the company has entered eight海外市场 including Singapore, Malaysia, Thailand, Indonesia, the Philippines, Vietnam, the United States, and South Korea.

A：Following its first entry into the Korean market, the company's three stores achieved a total sales volume of over 16,000 cups in their first three days, with preopening downloads of the app exceeding 46,000, and a May single store daily average of 1,648 cups, demonstrating strong brand competitiveness and吸引力.

A：Future directions include maintaining a steady product development pace, upgrading raw ingredients, and leading the health industry. Service enhancements focus on membership programs and user experience. In stores, the emphasis is on quality, overseas expansion, and improving equipment to ensure product consistency and operational efficiency. The brand strategy entails staying aligned with market trends, updating branding, ensuring product consistency, optimizing experiences, and enhancing training systems.

A：Theme store GMV growth in greater china improved by seven percent points year over year.Net revenues increased by two point five percent year over year.

A：Revenue from franchise lead to tea houses was two thousand four hundred and seventy four million, representing seventy two point five percent of total net revenue. Net revenue from company owned tea houses was nine hundred and forty point six million, up from three hundred十一 point two million a year ago.

A：Gross profit, calculated by excluding costs of material storage and logistics from net revenue, reached one thousand eight hundred and forty three point four million, resulting in a gross margin of fifty four percent flat year over year.Operating expenses total to twenty three point nine million in the quarter. Operating income was five hundred and twenty four point seven million, representing an Operating income margin of fifteen point four percent, an increase from three point two percent in the same period of a year ago. Excluding share based compensation expenses, non GAAP Operating income was five hundred and forty eight point six million, presenting a sixteen point one percent margin compared to a seventeen point one percent margin in the first quarter of twenty twenty six.

A：Company-owned tea houses' operating costs were five hundred and sixty six point eight million, up two hundred and seven point eight percent from one hundred and eighty four point one million a year ago. Other Operating costs decreased by thirty three percent to one hundred and fifteen point eight million.Sales and marketing expenses for the quarter were three hundred and one point five million, down twenty one point seven percent from three hundred and eighty five million a year ago.

A：General and administrative expenses reached three hundred and thirty four point five million, down sixty four point six percent year over year from nine hundred and forty four point six million.

A：Income tax expenses represented twenty percent of income before income tax compared to sixty two point one percent a year ago. The year-over-year normalization primarily reflecting reduced impact from the share-based compensation expenses.Net income was four hundred and sixty four point eight million, and non GAAP net income, excluding twenty three point nine million share-based compensation expenses, was four hundred and eighty eight point seven million. The non GAAP net margin was fourteen point three percent compared to eighteen point nine a year ago.

A：We ended the quarter with six thousand seven hundred and ninety five point five million in cash and cash equivalents, restricted cash, and time deposits.

A：As we move through the remainder of 2026, we will execute against our new product pipelines, enhance memberships and service experience, and maintain a focus on quality as we expand our tea house network in greater china and overseas. We remain confident in the company's long-term value and are committed to returning value to our shareholders in a meaningful way.

A：Thank you for your question. Since the third quarter, we have seen positive rebound signals. In July, same-store sales have shown a low single-digit decline, a significant improvement over the first half of the year. According to the current data, the same store is expected to turn positive year-on-year in August. The improvement of this trend fully proves that the effect of our previous strategic adjustment is gradually showing.

A：First, the new product strategy continues to play an important role. In the third quarter, we followed the upward rhythm of the second quarter and launched a number of new products, such as champagne, bala peach, lemon milk, etc., and successfully promoted the popular model of FAW Hongchen late Qing Dynasty. At the same time, as the third quarter is the peak season for restricted tea consumption, our recent introduction of new products such as decompression first stubble special adjustment is also more suitable for summer high temperature weather, effectively driving offline traffic and overall performance.

A：Secondly, the store service experience has been continuously optimized. We have always emphasized returning to the essence. Since this year, we have continuously polished the service details at the store end, improved the production efficiency and enhanced the user experience. These seemingly small details are implemented and transformed into real user re-purchase and word-of-mouth recommendation.

A：Overall, the improved operating trend in July and August gives us more confidence in the second half of the year. Although there are still uncertainties in the external market environment, our product reserves are more solid and our strategic direction is clearer. We believe that this recovery trend is sustainable.

A：Thank you for your questions. In fact, we see shareholder returns as one of the core considerations of our capital allocation strategy. In the fourth quarter of last year, we implemented a special dividend totaling US $0.177 billion, which fully demonstrated the company's sincerity and determination to give back to shareholders.

A：With the optimization of organizational structure and continuous improvement of operational efficiency, our free cash flow position remains healthy, laying a solid foundation for exploring a more normalized and sustainable shareholder return mechanism. At present, the board of directors and management are actively and prudently studying diversified return plans, including conventional dividends, in the light of the company's medium-and long-term strategic planning, the capital needs of business development at home and abroad, and changes in the market environment. We recognize that while maintaining high-quality growth, it is important for shareholders to effectively share the company's operating results. Therefore, it is our unswerving direction to continuously improve the level of shareholder returns. The management is discussing the specific plan and will report to the board of directors in due course and disclose it to the market after review and approval by the board of directors.