Atour Lifestyle Holdings Ltd. Sponsored ADR (ATAT.US) FY2025 conference call: Retail revenue is expected to increase by 25%-30% compared to 2026.

Recently, Atour Lifestyle Holdings Ltd. Sponsored ADR (ATAT.US) held its FY2025 financial report conference call. Atour Lifestyle Holdings Ltd. Sponsored ADR stated that in terms of revenue outlook, the scale and brand reputation of the retail business in 2025 reached new highs. The FY2025 retail revenue was 36.7 billion RMB (+67% YoY), leading in the bedding category on major third-party platforms. The sales volume of the Deep Sleep Memory Pillow Pro series surpassed 10 million units. The company expects a year-on-year growth of 25%-30% in retail revenue in 2026. The company achieved the strategic goal of "Experience 2000 Selected Hotels in China" in 2025 and officially launched a new three-year strategic plan of "China Experience Brand Leading Excellence". The retail business accounts for nearly 40% of the group's total revenue, and the synergy between hotels and retail businesses continues to strengthen. In 2025, 488 new hotels were opened, with a total of 2015 hotels in operation (+24.5% YoY); there are 779 reserve projects. The number of registered individual members reached 112 million. Q&A: Q: How is the signing willingness of franchisees given the slowing overall supply growth in the industry? What is the opening guide for new stores in 2026? A: We have also observed fluctuations in the overall supply growth in the industry. However, looking deeper, this is a result of the industry going through a profound structural upgrade after years of rapid expansion, gradually moving towards a new stage of high-quality development. Franchisees have indeed become more rational and cautious, but I believe this rational transformation is actually positive for the long-term healthy development of the industry. When franchisees become more cautious in rent negotiations, site selection, and brand selection, they are essentially promoting the market screening process of survival of the fittest. The mutual selection between mature brands and quality franchisees will lay a more solid foundation for cooperation. For Atour Lifestyle Holdings Ltd. Sponsored ADR itself, high-quality supply in the market is still scarce. We never advocate growth driven solely by scale; high-quality, unique growth is what we have always pursued in the long run. We maintain a positive and optimistic outlook on the signing momentum in 2026 and will ensure that each new signing project is more competitive in the market. In terms of new openings, thanks to the continuous advancement of the selected hotel strategy, new hotels opened in 2025 have significantly improved in location selection and property quality. In 2026, we will continue to adhere to strict quality requirements, focusing on core cities and key business districts, aiming to achieve a similar opening scale as last year while ensuring higher quality. Q: What is the outlook for the hotel industry in 2026? Can you share the RevPAR performance from the first quarter to date and your view on the annual RevPAR trend? A: The hotel industry experienced a moderate recovery in 2025, with ongoing recovery in supply and demand dynamics, and a gradual improvement in the RevPAR recovery trend throughout the year. The overall supply growth in the industry may further slow down in 2026, while leisure demand remains strong. For example, during this year's Spring Festival holiday, ADR and occupancy rates performed well, exceeding the levels of the same period last year. Based on this, we expect that Q1 RevPAR will continue to show improvement and maintain a positive momentum. We will not provide specific guidance for the full-year 2026 RevPAR, as the market environment can change rapidly throughout the year. However, favorable policies and the continued recovery of business travel provide positive factors. Our goal remains clear, which is to stay firm in our strategic position amid market fluctuations, continuously deepen Atour Lifestyle Holdings Ltd. Sponsored ADR's differentiated experience advantages, maintain a more balanced and detailed ADR and OCC revenue management strategy, consolidate and enhance RevPAR recovery performance, and solidify the brand's long-term value. Q: Retail business showed strong growth last year, can you share this year's retail business plan, new product plans, and revenue targets? A: In recent years, Atour Lifestyle Holdings Ltd. Sponsored ADR has always adhered to an innovative and product-driven development philosophy. We not only launched the industry's first Deep Sleep Standard but also drove a breakthrough growth in the retail business, leading the progress and upgrade of the sleep industry in China. Looking ahead, Atour Lifestyle Holdings Ltd. Sponsored ADR will enter a stage of deepening core capabilities and comprehensively consolidating competitive advantages. We must take a unique development path to avoid falling into homogenized competition with followers. In terms of category planning, Atour Lifestyle Holdings Ltd. Sponsored ADR will continue to focus on the Deep Sleep track. Firstly, we will continue to strengthen core categories, aiming to maintain an absolute leading position in the pillow category and establish decisive advantages; the core category of mattress cores is expected to achieve faster growth than pillows, further increasing market share. Secondly, new categories such as fitted sheets and home wear will accelerate breakthroughs, achieving scale growth through explosive product iterations and category matrix expansion. In addition, mattresses and other sleep accessories as extended categories will collectively enhance the Deep Sleep ecosystem layout of Atour Lifestyle Holdings Ltd. Sponsored ADR. In terms of revenue outlook, the scale and brand reputation of the retail business in 2025 reached new highs. We expect a year-on-year growth of 25%-30% in retail revenue in 2026. While maintaining healthy growth in scale, we place more emphasis on the continuous consolidation of core competitiveness. By constantly strengthening product and brand capabilities, we aim to achieve more sustainable development in the retail business in the long run. Q: The actual net profit margin for the whole year in 2025 was better than the initial expectations, can you discuss the expected trend of the net profit margin in 2026? A: Indeed, the group's Adjusted net profit margin for the whole year of 2025 was approximately 17.9%. At the beginning of the year, we expected that changes in revenue structure and higher effective tax rates would have a certain drag on the profit margin. However, through refined operational management, the profit margins of various business segments continued to improve, coupled with the concentrated reflection of policy subsidies in Q4, the net profit margin in 2025 remained roughly the same as in 2024. Looking ahead to 2026, as the business continues to develop, the revenue structure of franchise hotels, supply chains, and retail businesses will continue to change. Based on the new three-year strategy "China Experience Brand Leading Excellence", we will allocate resources with a longer-term perspective. For example, by expanding talent to strengthen key positions and enhancing digital operational capabilities to support the group's long-term development. Therefore, we expect that G&A and R&D expenses ratios will both rise this year. With this starting point, we tentatively project that the group's net profit margin in 2026 will decrease slightly year-on-year. Q: 92 hotels were closed in the whole year of 2025, slightly higher than initial expectations, can you share the closure plan for 2026? A: Regarding hotel closures, as we have always communicated with the market, the core consideration for closure decisions is the consistency of the experience, aiming to continuously strengthen the operational quality and experience standards of the operating hotels. In 2025, we strictly controlled the quality of operating hotels and closed a total of 92 hotels. In 2026, to ensure the overall quality level of the hotel network, we will continue to maintain a certain proactive elimination rate, terminating cooperation with hotels that do not meet the Atour Lifestyle Holdings Ltd. Sponsored ADR experience standards, in order to further consolidate the long-term brand value. However, based on the optimization adjustments completed in 2025, the existing hotel portfolio is more solid, so we expect the number of hotel closures in 2026 to decrease. Our current planned target is to close approximately 80 hotels throughout the year.