21-05-2025
ZKH Group Ltd (ZKH) Q1 2025 Earnings Call Highlights: Strong Customer Growth and Improved Cash ...
Revenue: RMB1.94 billion, a 4% increase year-over-year.
Operating Loss: Approximately RMB80 million, a 37.7% improvement year-over-year.
Net Loss: Around RMB66 million, a 26.6% improvement year-over-year.
Net Cash Outflow from Operating Activities: RMB97 million, compared to RMB220 million in the same period last year.
Total GMV: RMB2.17 billion, with underlying GMV maintaining robust double-digit year-over-year growth.
Gross Profit Margin: Slightly decreased to 17.2% from 18% in the prior year period.
Operating Expenses: Decreased by 10.9% year-over-year to RMB412.9 million.
Marketplace Take Rate: Increased by 235.9 basis points year-over-year to 14%.
Private Label Products GMV: Exceeded RMB190 million, a 40% increase year-over-year.
GBB Platform Customer Growth: Over 24,000 customers, up 73% year-over-year.
GBB Platform Sales Growth on Tmall: Over 260% quarter-over-quarter.
Warning! GuruFocus has detected 2 Warning Sign with ZKH.
Release Date: May 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
ZKH Group Ltd (NYSE:ZKH) experienced a 30.3% year-over-year increase in the total number of customers, surpassing 60,000.
Sales to industry key accounts and regional SME customers achieved double-digit growth.
The company achieved single-month profitability in March despite seasonal impacts and investments in US operations.
Net cash outflow from operating activities improved significantly, reducing from RMB220 million to RMB97 million year-over-year.
The GBB platform, in partnership with Tmall, achieved over 260% quarter-over-quarter sales growth, with customer growth accelerating by 73% year-over-year.
Sales to state-owned enterprises (SOEs) and central SOE customers declined significantly year-over-year due to a high comparison base and business optimization initiatives.
The company's operating loss was approximately RMB80 million, and the net loss was around RMB66 million, despite improvements.
Gross profit margin slightly decreased to 17.2% from 18% in the prior year period.
Marketplace revenue declined due to the prior year's high comparison base.
Operating expenses, although reduced, still included approximately RMB10 million in US-related expenses, impacting overall cost efficiency.
Q: Could management share the impacts from tariffs on your domestic and US business, and the measures taken by the company? Is there a timeline for entering new markets beyond the US, such as Europe? A: Eric Long Chen, Chairman and CEO, explained that US tariffs are not a negative factor but rather a tailwind for expanding the US business. The US primarily imports MROs from China and Southeast Asia, and ZKH has prepared by building a reserve of suppliers from these regions. The company plans to start its business in Europe in the second half of the year, focusing online across Europe and offline in Germany and Hungary. Southeast Asia operations have begun, with a focus on serving Chinese companies there.
Q: Could you please share updates on this year's product strategy, including key product categories and private label brands? A: Eric Long Chen stated that ZKH has 32 product lines across five categories: spare parts, chemicals, processing, manufacturing, general consumables, and administrative materials. The focus for 2025 will be on industrial-grade MRO products and strengthening private labels, particularly in chemicals and processing. Private labels will involve proactive R&D and design to enhance competitiveness and support overseas business.
Q: Can management share updates regarding the company's business and financial outlook for the upcoming quarters? A: Eric Long Chen mentioned that ZKH achieved its Q1 targets and expects business with SOEs and central SOEs to accelerate in the next quarters. For Q2 to Q4, especially Q3 and Q4, the company aims for double-digit GMV growth. Profitability is expected to break even in Q2, with positive profitability in Q3 and Q4. For 2025, GMV will be positive year-over-year, with domestic business profitability and overall breakeven for the group.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
