ZKH Group (ZKH) Q1 2025 earnings summary

Executive summary

• Total customers exceeded 60,000, up 30.3% year-over-year, with strong growth in key accounts and SMEs, but a significant decline in SOE and central SOE sales due to business optimization and a high prior-year base.

• First quarter revenue reached RMB 1,935.4 million, a 4% year-over-year increase, driven by product sales growth and improved customer engagement.

• Achieved single-month profitability in March despite seasonal headwinds and no government subsidies.

• U.S. international expansion saw revenue and customer base nearly double each month since January 2025.

• Deployed over 10 AI applications, enhancing customer service and operational efficiency.

Financial highlights

• Net revenues for 1Q2025 were RMB 1,935 million, up from RMB 1,860 million in 1Q2024.

• Net loss narrowed 26.6% year-over-year to RMB 66.7 million, with margin improving from -4.9% to -3.4%.

• Operating loss narrowed 37.7% year-over-year to RMB 80.8 million, with margin improving from -7.0% to -4.2%.

• Gross profit margin slightly decreased to 17.2% from 18% year-over-year, mainly due to lower marketplace revenue.

• Net cash outflow from operating activities improved to RMB 97 million from RMB 220 million year-over-year.

Outlook and guidance

• Business optimization for SOE and central SOE segments is complete; stabilization expected, with growth momentum anticipated in the second half of the year.

• Q2 expected to reach break-even; Q3 and Q4 to achieve positive profitability.

• Full-year 2025 GMV expected to be positive year-over-year, with domestic business profitable and group-level break-even.

• Continued expansion in the U.S., with European market entry planned for the second half of the year.

• AI-driven initiatives are expected to scale to 14,000 customers in FY2025, targeting sales growth in the hundreds of millions of RMB.