Chinese milk tea chain Chagee has reported a double-digit revenue growth in the second quarter thanks to network expansion, but its profit also dropped significantly.

The Nasdaq-listed company’s net revenues rose 10.5 per cent to RMB3.331 billion (US$465.1 million) during the quarter ended June 30, with the teahouse network soaring 40 per cent to 7038 locations.

Total gross merchandise value (GMV) increased 15.5 per cent to RMB8.103.1 billion, with GMV in overseas markets soaring 77 per cent. Meanwhile, same-store GMV decreased 23 per cent on the back of a 38 per cent growth in the year-ago period.

On the bottom line, GAAP net income decreased by 87.7 per cent to RMB77.2 million. Non-GAAP net income, which adjusts for share-based compensation expenses in the amount of RMB552.5 million, was up 0.1 per cent to RMB629.8 million.

During the quarter, the company strengthened its North American expansion capabilities through key leadership appointments, including Emily Chang as chief commercial officer for the region and Aaron Harris as chief development officer.

Looking ahead, management said the comprehensive international expansion strategy will position the company for sustainable growth, with proactive strategies in key regions including Indonesia, Thailand, and North America, plus planned entry into Japan and Korea next year.