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01/11 03:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed but overall positive outlook. Strong points include a 58.2% increase in profits from other revenues, significant growth in registered loyalty club members, and a successful franchise expansion. The Q&A section reveals effective liquidity management and strategic focus on improving margins. However, concerns about increased costs and a decline in company-owned store revenues are balanced by optimistic guidance and strategic measures to enhance profitability. The market is likely to react positively, especially with the promising franchise model and strategic partnerships.
Net new store openings Returned to positive net new store openings in Q3 2025.
System sales Achieved a 12.8% year-over-year growth in Q3 2025.
Same-store sales growth for company-owned and operated stores Positive 3.3% year-over-year growth in Q3 2025, driven by the Light & Fit Lunch Box platform and Coffee Plus Freshly Prepared Food strategy.
Food revenues Increased by 24.2% year-over-year in Q3 2025, with food revenue contribution reaching a historical high of 36.5% of sales, up from 31.5% in Q3 2024.
Delivery revenues Increased by 23.1% year-over-year in Q3 2025, benefiting from promotional offers by delivery aggregators.
Profits from other revenues Achieved a year-over-year increase of 58.2% in Q3 2025.
Adjusted company-owned and operated store contribution margin Remained at 8.1% for the first 9 months of 2025, same as the first 9 months of 2024.
Adjusted corporate EBITDA Loss reduced by 10.4% year-over-year in Q3 2025.
Adjusted net loss Loss reduced by 11.5% year-over-year in Q3 2025.
Registered Loyalty club members Reached 27.9 million as of September 2025, reflecting a 22.3% year-over-year growth.
Monthly average transacting customers Reached 3.85 million in Q3 2025, a 16.7% increase from 3.3 million in Q3 2024.
Digital orders as a percentage of total orders Rose to an all-time high of 91.0% in Q3 2025, up from 86.6% in Q3 2024.
Company-owned and operated store revenues Dropped by 5.5% year-over-year in Q3 2025, primarily due to planned closure of underperforming stores, partially offset by a 3.3% increase in same-store sales growth.
Revenues from franchised business and retail business Increased by 25.0% year-over-year in Q3 2025.
Number of franchised stores Increased from 382 as of September 30, 2024, to 479 as of September 30, 2025.
Food and packaging costs as a percentage of revenues from company-owned and operated stores Increased by 1.6 percentage points year-over-year to 30.6% in Q3 2025.
Delivery costs as a percentage of revenues from company-owned and operated stores Increased by 2.9 percentage points year-over-year to 13.2% in Q3 2025, due to higher delivery revenue mix.
Marketing expenses as a percentage of total revenues Decreased by 0.7 percentage points year-over-year to 4.4% in Q3 2025.
Adjusted general and administrative expenses Increased by 23.2% year-over-year in Q3 2025, primarily due to higher outside service fees and credit loss of accounts receivable, partially offset by lower staff compensation and depreciation costs.
Adjusted corporate EBITDA margin Negative 4.2% in Q3 2025, compared to positive 0.6% in Q3 2024.
Total cash and cash equivalents, time deposits, and restricted cash RMB 159.3 million as of September 30, 2025, down from RMB 184.2 million as of December 31, 2024, primarily due to business expansion and additional bank borrowings.
Light & Fit Lunch Box platform products: Launched in Q2, these products enhanced the Coffee Plus Freshly Prepared Food strategy, driving a 3.3% same-store sales growth for company-owned and operated stores. Food revenues increased by 24.2% year-over-year, with food revenue contribution reaching a historical high of 36.5% of sales.
Cold Blue platform: Launched in Q2, followed by monthly innovations in Q3, targeting younger consumers with a balanced portfolio of coffee and non-coffee SKUs. This strategy contributed to beverage sales growth.
Smile Bagel series: Introduced as part of the afternoon tea offerings, reinforcing leadership in the bagel category and enhancing competitive differentiation.
Store expansion: Expanded store footprint into 91 cities, including Yanji, Yangzhou, and Wuhu. Over 300 stores converted under the individual franchise program since December 2023, with over 8,400 applications received.
Strategic channel development: Developed 64 stores in high-traffic locations such as train stations, airports, and universities by the end of September 2025.
Loyalty program growth: Registered Loyalty club members reached 27.9 million, a 22.3% year-over-year growth, with an average of over 27,000 members per store.
Delivery revenue growth: Delivery revenues increased by 23.1% year-over-year, supported by promotional offers from delivery aggregators.
Digital orders: Digital orders rose to 91.0% of total orders in Q3 2025, up from 86.6% in Q3 2024.
Cost management: Maintained stable labor, rental, and property management costs as a percentage of revenues, despite higher discounts and delivery costs.
Convertible notes issuance: Issued approximately USD 89.9 million senior secured convertible notes due September 2029, restructuring unsecured convertible notes due 2027 and repurchasing variable rate convertible senior notes due 2026.
Franchise model: Showcased attractive store unit economics with a 2-3 year payback period, reinforcing market confidence in the franchise model.
Competitive Pressure: The coffee sector is facing intensified competition from the rapidly expanding tea beverage categories. Leading tea brands are entering the coffee space, increasing market competition.
Delivery Costs: Delivery costs as a percentage of revenues from company-owned and operated stores increased by 2.9 percentage points year-over-year, primarily due to a higher delivery revenue mix.
Store Closures: Revenues from company-owned and operated stores dropped by 5.5% year-over-year due to the planned closure of underperforming stores.
General and Administrative Expenses: Adjusted general and administrative expenses increased by 23.2% year-over-year, driven by higher outside service fees, credit loss of accounts receivable, and other operational costs.
Cash Liquidity: Total cash and cash equivalents decreased from RMB 184.2 million to RMB 159.3 million, primarily due to cash disbursements for business expansion.
Profitability Challenges: Adjusted corporate EBITDA margin was negative 4.2% in Q3 2025 compared to positive 0.6% in Q3 2024, indicating profitability challenges.
Future Store Expansion: The company plans to further enhance operational efficiencies, optimize store unit economics, and accelerate the expansion of its successful sub-franchising model. This includes leveraging supply chain capabilities and rigorous cost controls to support growth.
Profitability Goals: The company is committed to sustainable profit growth and generating long-term value for shareholders. It aims to refine store unit economics with attractive payback periods of 2 to 3 years on average.
Market Positioning and Product Strategy: Tims China plans to reinforce its coffee leadership through premium offerings and expand its non-coffee SKUs to compete for tea drinkers' market share. Seasonal and innovative product launches will continue to drive consumer engagement and sales growth.
Digital and Delivery Growth: The company will continue to enhance digital capabilities to meet growing demand for delivery and takeaway services, which currently account for 91% of total orders.
Financial Strategy: The company successfully issued approximately USD 89.9 million senior secured convertible notes due September 2029 and restructured other convertible notes to focus on store network development and brand growth.
The selected topic was not discussed during the call.
The earnings call presents a mixed but overall positive outlook. Strong points include a 58.2% increase in profits from other revenues, significant growth in registered loyalty club members, and a successful franchise expansion. The Q&A section reveals effective liquidity management and strategic focus on improving margins. However, concerns about increased costs and a decline in company-owned store revenues are balanced by optimistic guidance and strategic measures to enhance profitability. The market is likely to react positively, especially with the promising franchise model and strategic partnerships.
The earnings call indicates positive sentiment due to strong franchise revenue growth, improved operational efficiencies, and successful marketing campaigns driving same-store sales recovery. Despite a decrease in company-owned store revenues, the strategic focus on sub-franchising and digital orders shows promise. Positive EBITDA and cash flow self-sufficiency add to the optimism. The Q&A section reveals confidence in liquidity and growth, although some responses lack detail. Overall, the company's growth strategies and financial health suggest a positive stock price movement over the next two weeks.
The earnings call reveals several positive factors: improved EBITDA and contribution margins, increased profits from other revenues, and strategic product launches. Despite challenges like liquidity constraints and underperforming stores, the company's focus on differentiation and strategic expansions, alongside a 29.7% growth in loyalty members, are promising. The Q&A highlights a strategic approach to competition and improving same-store sales. Overall, these factors, coupled with positive guidance and strategic initiatives, suggest a positive stock price movement.
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