This article first appeared on GuruFocus .
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GMV:Increased 18.9% year-over-year to RMB2.9 billion.
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Net Revenues:Grew 12.8% year-over-year to RMB2.4 billion.
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Gross Profit:Increased 20.3% year-over-year to RMB430 million.
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Gross Margin (as % of GMV):Improved to 14.9%, up from 14.8% in the same period last year and 14.4% in the first quarter of 2026.
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Operating Expenses:Decreased 0.8% year-over-year to RMB425 million, representing 17.4% of net revenues, down from 19.8% in the prior year period.
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Fulfillment Expenses:RMB90 million, or 3.7% of net revenues, down from 4.2% in the same period last year.
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Sales and Marketing Expenses:RMB151 million, or 6.2% of net revenues, down from 6.9% in the prior year period.
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R&D Expenses:RMB35 million, or 1.4% of net revenues, down from 1.9% in the prior year period.
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General and Administrative Expenses:RMB150 million, or 6.1% of net revenues, down from 6.8% in the prior year period.
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Operating Profit:Turned positive for the first time.
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Non-GAAP EBITDA:Reached RMB42 million, compared with negative RMB39 million in the same period last year.
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Non-GAAP Adjusted Net Profit:Reached RMB39 million, compared with negative RMB37 million a year ago.
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Cash Position:Cash and cash equivalents, restricted cash, and short-term investments totaled RMB1.7 billion as of June 30, 2026.
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Operating Cash Flow:Net cash used in operating activities for the first half of 2026 decreased to RMB156 million from RMB208 million in the first half of 2025.
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International GMV:Exceeded RMB95 million in the first half of the year.
Release Date: August 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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ZKH Group Ltd ( NYSE:ZKH ) achieved its first-ever quarterly operating profit, marking a significant financial milestone.
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GMV growth accelerated to 18.9% year-over-year, with expectations for further acceleration in the second half of 2026.
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Gross margin improved to 14.9% of GMV, driven by a favorable customer mix and higher private label contribution.
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International business showed strong momentum, with first-half GMV exceeding RMB95 million, a tenfold year-over-year increase.
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AI initiatives, such as the AI Materials Manager, gained traction, serving over 8,600 customers and generating revenue.
Negative Points
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Operating cash flow remained negative in the first half of 2026, with net outflows of RMB156 million.
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The company's international business is still in early stages, with profitability only expected in the second half of 2026.
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Despite growth, the company's net revenue growth (12.8%) lagged behind GMV growth (18.9%), indicating potential pricing pressure.
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The company's share repurchase program has been slow, with only USD7.67 million utilized out of the USD50 million authorized.
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The company faces intense competition in the fragmented MRO market, requiring continuous investment in capabilities and AI.
Q & A Highlights
Q: Could management walk us through the key drivers behind the GMV growth acceleration to around 19% this quarter? Which subsectors, customer segments, or product lines are seeing stronger momentum, and what is the outlook for the second half and full year? A: Eric Chen (Chairman and CEO) attributed the acceleration to three key drivers: 1) High-growth industries, with steel and nonferrous metals GMV doubling year-over-year, and utilities, fine chemicals/pharmaceuticals, and communications/electronics each growing over 30%. 2) Strong performance in the SME customer segment (revenue over RMB1 billion), which grew 30% year-over-year and now accounts for about 30% of total GMV. This segment offers higher gross margins and reflects the company's shift from a sales-driven to a supply-chain-driven model. 3) Private label growth of over 25%, reaching 10% of total GMV, with gross margins approximately 10% higher than non-private label products. Looking ahead, based on July and August order trends, the company expects Q3 GMV growth to exceed Q2's 18.9% and is confident in achieving its full-year GMV growth target of 15% to 20%.
Q: The company achieved operating profitability for the first time this quarter. Can you elaborate on the key drivers behind this financial milestone and the outlook for profitability in the second half? A: Jerry Wang (CFO) explained that the significant improvement in profitability was driven by a combination of factors. Gross profit grew 20.3% year-over-year, faster than GMV, lifting the gross margin as a percentage of GMV to 14.9% from 14.8% a year ago and 14.4% in Q1 2026. This was supported by an improved customer and product mix, including a higher contribution from private label offerings. Simultaneously, total operating expenses decreased 0.8% year-over-year, with operating expenses as a percentage of net revenues improving to 17.4% from 19.8%. This operating leverage led to a positive operating profit, non-GAAP EBITDA of RMB42 million (vs. negative RMB39 million a year ago), and non-GAAP adjusted net profit of RMB39 million (vs. negative RMB37 million a year ago). The company expects GMV and revenue growth to accelerate further in the second half, driving continued improvement in operating expense ratios and profitability.
Q: Against the backdrop of the ongoing AI wave, have you observed any incremental changes in purchasing behavior? How will ZKH capture these opportunities, and what is the latest progress on the AI subsidiary? A: The CTO highlighted three notable trends in customer purchasing behavior: 1) Customers are shifting from keyword searches to describing requirements in natural language, expecting AI systems to clarify needs and recommend products. 2) There is increasing demand for high-quality, structured data (product parameters, specifications, alternatives) for AI to participate meaningfully in procurement decisions. 3) SMEs are becoming more receptive to self-service and smart procurement, which AI can handle, reducing service costs. The AI Materials Manager has served over 8,600 customers (up 93% year-over-year) and has begun generating revenue. The company plans to launch an industry-leading edge model for industrial vision with Intel around September-November 2026 and establish collaborations with domestic chip makers. Regarding the AI subsidiary, it is proceeding according to plan to provide a more independent and flexible organizational structure and talent model, with the goal of developing it into a smart infrastructure company for the industrial sector while maintaining deep synergy with ZKH.
Q: Could management update us on the company's internationalization progress, including GMV contribution, and the outlook for future international markets? Also, could you provide an update on the shareholder return plan? A: Eric Chen (Chairman and CEO) stated that international GMV exceeded RMB95 million in the first half of 2026, a tenfold increase year-over-year, with strong growth expected to continue in the second half. The international strategy has two parts: 1) Supporting Chinese manufacturers expanding overseas with one-stop MRO solutions, leveraging existing customer relationships and strengthening last-mile fulfillment capabilities. 2) Deepening localized operations, primarily in the U.S. (Texas), alongside strong growth in online sales via Amazon. The company is focused on efficiency and return on investment, expecting the international business to turn profitable in the second half of 2026. Regarding shareholder returns, the company authorized a USD50 million share buyback program in June 2025, valid through June 2027. As of the end of Q2 2026, it had repurchased approximately 2.49 million ADSs for about USD7.67 million. The company intends to evaluate stepping up the pace of buybacks and will consider starting dividend payments once profits scale more meaningfully.
Q: Can you provide more detail on the performance of the SME customer segment and its strategic importance to the company's growth and profitability? A: Eric Chen (Chairman and CEO) clarified that "SME customers" refers to companies with revenue over RMB1 billion, which are relatively smaller compared to central and local SOEs. This segment's GMV grew 30% year-over-year in Q2, outperforming the company's overall growth. The growth of this segment is strategically important for several reasons: 1) These customers are increasingly demanding in their service requirements, which is eliminating traditional trading companies and favoring ZKH's comprehensive capabilities. 2) The business is evolving from being sales-driven to supply-chain-driven, allowing ZKH to sell what it recommends and has available, increasing efficiency. 3) Gross margins for SME customers are higher than for large customers, which is conducive to improving overall gross margins. 4) These customers are often located on the outskirts of cities, making delivery and fulfillment easier. SME customers currently account for about 30% of total GMV, while large customers (key accounts and SOEs) account for 60%, and the company expects the SME share to continue to rise.
Q: What is the current status of the company's private label business, and how is it contributing to growth and profitability? A: Eric Chen (Chairman and CEO) reported that the private label business is an important driver of both competitive differentiation and profitability. In Q2 2026, the company added more than 700 private label SKUs, driving private label GMV growth of over 25% year-over-year and increasing its share of total GMV to approximately 10%. The gross margins for private label products are approximately 10% higher than non-private label products, so the increasing share of private labels is conducive to improving overall gross margins. The company is building out end-to-end capabilities from product development through testing and validation, with an in-house testing system covering multiple core product lines. The long-term goal is
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
