ZKH Group (NYSE:ZKH) used its fiscal fourth-quarter and full-year 2025 earnings call to highlight improving momentum in the back half of the year, a return to quarterly profitability, and continued investment in product breadth, fulfillment infrastructure, and AI-driven efficiency.
Second-half rebound and return to profitability
Founder, Chairman, and CEO Eric Chen said 2025 was marked by “strategic optimization efforts” that began to show “clear signs of stabilization and recovery” in the second half. He said both GMV and revenue “largely recovered” to prior-year levels in the third quarter and then accelerated into “solid year-over-year growth” in the fourth quarter.
Q4 and full-year financial results
CFO Max Lai said the company ended the year with stronger momentum, citing accelerated top-line growth, improved operating efficiency, and a return to profitability in the fourth quarter. Key figures discussed on the call included:
- Q4 GMV: RMB 2.92 billion, up 8.5% year-over-year and 11.3% sequentially.
- Q4 revenue: RMB 2.56 billion, up 7.9% year-over-year and 9.8% sequentially.
- Full-year GMV: RMB 10.1 billion, down 3.3% year-over-year, which Lai attributed primarily to optimization impacts that “continued to weigh on results in the first half.”
- Full-year revenue: RMB 9.0 billion, up 2.6% year-over-year.
On profitability and expense trends, Lai said operating expenses declined and operating leverage improved, supported by scale and AI applications. In the fourth quarter, total operating expenses fell 3% year-over-year to RMB 424.6 million and improved to 16.6% of net revenues from 18.5% a year earlier. For the full year, operating expenses declined 8.7% year-over-year and improved to 18.8% of net revenues from 21.1%.
In the fourth quarter, operating loss narrowed 13.4% year-over-year to RMB 28.2 million, with operating margin improving to -1.1% from -1.4%. Non-GAAP EBITDA was RMB 19.7 million, compared with a loss of RMB 13.3 million in the prior-year period. Lai said non-GAAP adjusted net profit was RMB 14.9 million, versus a non-GAAP adjusted net loss of RMB 50 million a year earlier.
For the full year, operating loss narrowed 37% year-over-year to RMB 213.3 million, with operating margin improving to -2.4% from -3.9%. Non-GAAP EBITDA improved to RMB -79.3 million from RMB -192.9 million, and adjusted net loss narrowed 46.1% to RMB 85.9 million.
On liquidity, Lai said cash and cash equivalents, restricted cash, and short-term investments totaled RMB 1.92 billion as of Dec. 31, 2025. Operating cash flow in the fourth quarter was RMB 116.1 million, which he attributed to improved operating performance and “disciplined working capital management.”
Customer growth, category expansion, and international progress
Chen described customer expansion as a key driver of fourth-quarter performance. The number of transacting customers approached 74,000 in the quarter, up 60% year-over-year, which he called the fastest quarterly growth in recent years. He added that both key accounts and SME customers delivered year-over-year GMV growth on the platform.
Within key accounts, management said it had “covered over 680 of China’s top 1,000 manufacturers,” and cited more than 20% year-over-year GMV increases from customers in electrical equipment manufacturing, chemicals, steel and non-ferrous metals, and transportation. Chen also noted that certain state-owned enterprise (SOE) customers that had been affected by earlier optimization efforts showed recovery, returning to year-over-year growth and increasing more than 20% sequentially.
For SME customers, management said fourth-quarter GMV grew more than 20% year-over-year, driven by deeper regional service coverage, stronger digital marketing, and expanded use of AI tools for customer identification, demand matching, and conversion efficiency.
Internationally, Chen said the company made “encouraging progress” serving Chinese manufacturers expanding abroad. Sequentially, GMV from that business rose approximately 50% and customer count increased about 20%, while the fulfillment network expanded to 17 countries. Looking to 2026, he said the company plans to deepen localized service capabilities and further expand its global footprint.
On product breadth, Chen said platform SKUs reached 23 million by the end of 2025, up 33% from the end of 2024, with growth concentrated in specialized MRO categories such as factory automation, chemical reagents, and instrumentation. He also cited more than 20% year-over-year GMV growth in several professional categories during the fourth quarter, including power transmission equipment, instrumentation, and chemical reagents.
Margins, private label, and the role of AI
Lai said fourth-quarter gross margin was 15.5%, down from 17.1% a year earlier, which he attributed to a “temporary unfavorable change in product mix.” Full-year gross margin was 16.4%, compared with 17.2% in 2024, which he said reflected a lower contribution from the marketplace model under net revenue recognition. On a GMV basis, he said gross profit margin improved about 15 basis points year-over-year to 14.6%.
During Q&A, management elaborated that the fourth-quarter gross margin decline was driven mainly by product mix shifts tied to commodity price fluctuations, which led some customers to pull forward purchases of lower-margin items such as wires and cables. Management also cited a slight increase in the contribution from SOE customers. Management said gross margin had shown a gradual recovery trend from January through March, while noting that oil and petroleum price volatility linked to conflict in the Middle East could create short-term pressure even as it may support sales opportunities over time. Management emphasized that it remained focused on improving overall profitability, while acknowledging gross margin differences across product lines.
On private label, Chen said the business expanded with 349 new SKUs launched in the fourth quarter. For the full year, private label GMV rose 21% year-over-year, and its contribution to total GMV increased to 8.3% from 6.7% in 2024. While reiterating a long-term goal of 30% GMV share, management said its 2026 target is for private label GMV to grow another 30% and for private label share to reach roughly 10%. On supplier relationships, management said private label would not be pursued across all categories, and it expects private label and branded products to coexist as the platform scales.
Management also detailed AI investments and operational applications. Chen said the company’s total data assets have expanded to the petabyte level. Token consumption doubled year-over-year in 2025, with monthly usage exceeding 80 billion tokens, and management expects token usage to increase by at least tenfold over the next two to three years while average cost per million tokens declines. The company also discussed its MRO-focused large language model, H-Nimble, launched in 2025 and filed with the Cyberspace Administration of China in September, which management said has entered scaled deployment.
On applications, management cited an AI material management agent that has helped nearly 10,000 customers standardize more than 15 million lines of material data, reducing a task that previously required about 15 person-days per 1,000 lines to roughly three minutes. Management also said an AI product recommendation agent served more than 30,000 customers in 2025 and generated over RMB 200 million in sales.
Internally, Chen said RPA “digital employees” exceeded 5,000 by the end of 2025 and helped save nearly 1 million man-hours. The AI Smart Workbench autonomously executed more than 520,000 system operations in 2025, and management said productivity in customer service and procurement improved by approximately 45% and 50% year-over-year, respectively.
2026 priorities: profitability, mix, and cash discipline
Looking ahead, Chen said the company’s most important objective for 2026 is to achieve full-year profitability. He outlined priorities including improving product competitiveness, deepening penetration with medium-to-large customers to increase wallet share and gross profit, expanding SME customer development through online and offline marketing efforts, and accelerating overseas expansion tied to Chinese manufacturers going abroad.
Management also emphasized a focus on “real MRO” and highly specialized MRO products, improving customer and product mix toward higher gross profit profiles, and tightening cash flow management through optimization of accounts receivable and inventory while further improving operating efficiency.
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.
