ZKH Group (ZKH) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 results with revenue and profitability improvements, enhanced cash flow, and accelerated digital and AI transformation, despite macroeconomic headwinds.

• Strategic business optimization and focus on long-term competitiveness, including stepping back from less aligned segments and strengthening private label offerings.

• Customer base expanded to over 48,000 in Q2 2024 and 63,000 in 1H2024, up 25.1% and 32.7% year-over-year, respectively, with SME and key account growth.

• Continued investments in product, supply chain, and digital capabilities to support future growth and operational efficiency.

Financial highlights

• Q2 2024 GMV reached RMB 2.75 billion, up 5.6% year-over-year; net revenues were RMB 2,250 million, up 8.5% year-over-year.

• Gross profit increased 14.3% to RMB 383 million; gross margin rose to 17.0% from 16.2% a year ago, driven by improved 1P margin and 3P take-rate.

• Adjusted net loss narrowed by 73.1% year-over-year to RMB 34.9 million, with adjusted net loss margin improving to 1.5% from 6.2%.

• Net cash generated from operating activities was RMB 122.1 million in Q2 2024, compared to net cash used of RMB 236.2 million in Q2 2023.

• Announced a US$50 million share repurchase program to be executed on the open market.

Outlook and guidance

• Excluding optimized business, core segments grew 15% in Q2 and July; full-year revenue growth expected in high single digits to low double digits.

• Gross profit for 2024 projected to grow 15–20% year-over-year; company expects to break even with slight profit for the year.

• Gross margin expected to increase by about 1.5 percentage points for the year, with continued improvement anticipated.

• Management remains committed to long-term growth, leveraging digitalized, one-stop MRO procurement solutions and strong market positioning.