ZKH Group Limited Q4 FY2025 earnings call

Throughout 2025, the company advanced strategic optimization and strengthened core capabilities. In the fourth quarter, GMV grew 8.5% year-over-year. The number of transacting customers approached 74,000 in the fourth quarter, up 60% year-over-year. GMB from key accounts and SME customers on the ZKH platform maintained year-over-year growth. Overseas, GMV from relevant business grew by approximately 50% in the fourth quarter, with the number of customers increasing by around 20% and the network expanding to 17 countries. By the end of 2025, the number of SKUs on the platform had expanded to 23 million, up 33% from the end of 2024, concentrated in professional MRO categories. Private label product business saw continued expansion with 349 new SKUs launched in the fourth quarter. The company had established partnerships with nearly 20,000 suppliers by the end of 2025, and further strengthened warehousing and end-to-end delivery network. Actively promoted AI-based digitalization capability construction, with total data assets expanding to the petabyte level, token transfer volume tripling in 2025, and RPA digital employees exceeding 5,000 by the end of 2025.

In the fourth quarter, GMV grew by 8.5% year-over-year to RMB 2.92 billion, and total revenues grew by 7.9% year-over-year to RMB 2.56 billion. For the full year, GMV declined by 3.3% year-over-year to RMB 10.1 billion, and total revenues increased by 2.6% year-over-year to RMB 9 billion. Gross profit margin in the fourth quarter was 15.5% compared with 17.1% in the same period last year, and for the full year, it was 16.4% compared with 17.2% in 2024. Private label GMV rose 21% year-over-year in the full year, increasing its contribution to total GMB from 6.7% in 2024 to 8.3%.

Based on order pipeline and shipment trends, expect year-over-year GMV growth to accelerate into double digits in the first quarter of this year. Aim to achieve full-year profitability in 2026. Continue to drive high-quality growth, expand margins, and maintain disciplined execution.

Change in product structure leading to potential margin impact due to price fluctuations of some products. Impact of international局势 (like oil price hikes) on supply chain and margins.

Q: About the decline in gross margin in Q4 and long-term goals.

A: Decline in Q4 gross margin was due to product mix change (some low-margin products' purchase in advance) and slight increase in ratio of certain customers. For long-term, aim to achieve higher margins by way of lowering costs on purchasing, private labels, and cost optimization regarding certain sectors.

Q: Company's growth targets for private labels in 2026 and relationship with non-private label suppliers.

A: Target for private labels in 2026 is to grow by another 30% and drive its share of GMB to roughly 10%. Won't do private labels for all categories, will identify categories suitable for private labels to create better value for customers.

Q: Company's most important objectives for 2026 and strategies for China domestic business.

A: Most important objective is to achieve profitable growth and build core competitiveness. Strategies include creating customer value by digging into product competitiveness, systematically expanding small and medium-sized manufacturing enterprises through online mode, content marketing, etc., improving business quality by focusing on real MRO products and managing revenue and cash flow, expanding R&D capabilities and focusing on innovation, and team building.