ZKH Group Limited

In the first quarter of 2026, GMV increased 12.9% year over year to RMB 2.45 billion and total revenue grew 9.2% year over year to RMB 2.11 billion. Gross profit rose 6.6% to RMB 354 million, while gross margin fell to 16.7% from 17.2% a year ago; GMV-based gross margin improved sequentially by 90 basis points. Operating expenses decreased 8.8% to RMB 376.5 million, operating loss narrowed 72.2% to RMB 22.5 million, non-GAAP EBITDA was RMB 4.2 million, and adjusted net profit was RMB 1.7 million versus an adjusted loss of RMB 50.2 million last year. Cash and cash equivalents, restricted cash and short-term investments totaled RMB 1.84 billion, and net cash used in operating activities was RMB 34 million versus RMB 97.1 million in the prior-year quarter. Management expects GMV growth to accelerate further in the second quarter and reiterated its goal of double-digit GMV growth and full-year profitability in 2026; it also said the international business is targeted to breakeven this year.

The CEO framed the quarter as evidence that the business is exiting the recovery phase and improving in quality as it scales. He emphasized three strategic themes: better customer mix, stronger product capabilities, and tighter operating discipline, especially in fulfillment and AI adoption. Tone was constructive and confident, with repeated references to confidence in double-digit GMV growth, improving gross margin structure over time, and full-year profitability in 2026.

The CFO highlighted the hard numbers behind the turnaround: GMV of RMB 2.45 billion, revenue of RMB 2.11 billion, gross profit of RMB 354 million, and adjusted net profit of RMB 1.7 million. He pointed to lower operating expenses of RMB 376.5 million, including fulfillment expenses of RMB 77.6 million, R&D of RMB 29.3 million, and G&A of RMB 131.9 million, as key drivers of the improved margin profile. He also emphasized liquidity, citing RMB 1.84 billion in cash, restricted cash and short-term investments, and said operating cash outflow narrowed to RMB 34 million from RMB 97.1 million last year.

Analysts focused on gross margin sustainability, growth in advanced manufacturing sectors, and the overseas business. Management said gross margin is being shaped by category mix, customer mix and private labels, noting that higher-margin SME and private-label mix should help over time, but that they are not optimizing for a single quarter’s margin. On advanced manufacturing, management said sectors such as electrical manufacturing, communications, electronics, new energy and non-ferrous metals all grew more than 20% year over year, while overseas strategy will emphasize serving Chinese firms expanding abroad, building local U.S. capabilities, and avoiding spending ahead of returns, with a breakeven target for the international business this year.