ZKH Group Q2 Earnings Call Highlights

ZKH Group (NYSE:ZKH) said second-quarter growth accelerated as demand from small and medium-sized enterprise customers, state-owned enterprises and several industrial sectors increased, while operating leverage helped the company post its first quarterly operating profit.

Gross merchandise value, or GMV, rose 18.9% year over year to RMB2.9 billion in the second quarter, while net revenue increased 12.8% to RMB2.4 billion. Chief Financial Officer Jerry Wang said both figures represented their fastest growth in recent quarters.

Founder, Chairman and Chief Executive Officer Eric Chen said GMV on the ZKH platform rose 23% year over year. The company expects GMV growth to accelerate again in the third quarter and said it is targeting full-year GMV growth of 15% to 20%, based on current order trends.

Customer and Industry Growth

Regional SME customers remained a major contributor to growth, with GMV in that segment increasing 30% from a year earlier. Chen said the segment offers higher gross margins and reflects improving product coverage and service capabilities. He noted that SME customers accounted for about 30% of total GMV, while larger key accounts and state-owned enterprises represented roughly 60%.

Business with state-owned enterprises, including centrally administered SOEs, returned to growth of more than 20% year over year following adjustments made last year, according to Chen. The company also reported double-digit GMV growth among central SOEs and industry key accounts.

Performance varied across industrial sectors, with steel and ferrous metals GMV doubling year over year. Communications and electronics, fine chemicals and pharmaceuticals, and utilities each posted GMV growth of more than 30%, management said.

During the question-and-answer session, Chen provided additional sector detail, saying non-ferrous metals grew more than 103%, utilities increased 57%, fine chemicals and pharmaceuticals rose 37%, food and agricultural products increased 37%, and communications and electronics grew 35%.

ZKH also continued to build its electrical automation business. GMV from electrical automation customers rose 160% year over year, while GMV from semiconductor customers increased more than 100-fold, according to Chen. The company said it expanded its automation offerings across sensors, programmable logic controllers, industrial safety, industrial internet of things and robotics, and it has broadened collaboration with Intel in edge control, visual inspection and industrial-control solutions.

Margins Turn Higher as Expenses Decline

Gross profit increased 20.3% year over year to RMB430 million, outpacing GMV growth. Gross profit as a percentage of GMV rose to 14.9%, compared with 14.8% a year earlier and 14.4% in the first quarter.

Wang attributed the improvement to a more favorable customer and product mix, as well as a larger contribution from private-label products. ZKH added more than 700 private-label stock-keeping units during the quarter. Private-label GMV grew more than 25% year over year and represented about 10% of total GMV. Chen said the company’s long-term goal is for private-label products to reach 30% of GMV.

Total operating expenses declined 0.8% from a year earlier to RMB425 million. Operating expenses fell to 17.4% of net revenue, from 19.8% in the prior-year quarter.

• Fulfillment expenses were RMB90 million, or 3.7% of revenue, compared with 4.2% a year earlier.
• Sales and marketing expenses were RMB151 million, or 6.2% of revenue, compared with 6.9%.
• Research and development expenses were RMB35 million, or 1.4% of revenue, compared with 1.9%.
• General and administrative expenses were RMB150 million, or 6.1% of revenue, compared with 6.8%.

The company reported positive operating profit for the first time. Non-GAAP EBITDA was RMB42 million, compared with a RMB39 million loss in the prior-year period, while non-GAAP adjusted net profit was RMB39 million, compared with a RMB37 million loss a year earlier.

As of June 30, ZKH had RMB1.7 billion in cash and cash equivalents, restricted cash and short-term investments. Net cash used in operating activities for the first half was RMB156 million, improving from RMB208 million in the first half of 2025.

International Expansion and AI Initiatives

First-half international GMV exceeded RMB95 million and increased more than tenfold year over year, the company said. ZKH is pursuing overseas growth by supporting Chinese manufacturers expanding abroad and by developing localized operations, particularly in the U.S. and Texas, according to Chen.

The company also cited sales of Northsky private-label products through Amazon, including material-handling forklifts and industrial fans. Wang said ZKH expects its international business to become profitable in the second half of 2026, while continuing to manage spending with an emphasis on return on investment.

On the technology front, ZKH launched Domino, its industrial-supplies big-data engine, in June. The company said the platform is powered by more than 1 billion product parameters and includes automated data labeling, self-learning and traceability functions.

Chief Technology Officer David Liu said the company’s AI Materials Manager has served more than 8,600 customers, up 93% year over year, and has begun generating revenue. The tool has processed more than 24 million rows of materials data, according to management. ZKH also said internal AI applications saved more than 12,000 employee hours during the quarter, while AI-assisted coding accounted for more than 70% of coding activity.

Liu said ZKH is proceeding with plans to establish an AI subsidiary, which management said would provide a more independent organizational structure and flexibility for talent recruitment and future capital activities. The subsidiary is intended to maintain links to ZKH’s industrial data, customer use cases and supply-chain resources.

Share Repurchases

Chen said ZKH’s $50 million share-repurchase program, authorized in June 2025 and valid through June 2027, remained in effect. As of the end of the second quarter, the company had repurchased about 2.49 million American depositary shares for approximately $7.67 million.

The company intends to increase the pace of repurchases, Chen said, and may consider dividends once profits scale more meaningfully.

About ZKH Group (NYSE:ZKH)

ZKH Group Limited develops and operates a maintenance, repair, and operating (MRO) products trading and service platform that offers spare parts, chemicals, manufacturing parts, general consumables, and office supplies in the People's Republic of China. The company provides MRO procurement and management services; digitalized MRO procurement solutions; and logistics and warehousing services. It also engages in the production and sale of intelligent warehousing equipment. ZKH Group Limited was founded in 1998 and is based in Shanghai, the People's Republic of China.

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