Core Viewpoint - Shenzhen is implementing measures to enhance service consumption quality by upgrading traditional street communities and attracting domestic and international chain brands to establish flagship and experience stores [1] Group 1: Policy Measures - The Shenzhen government has issued measures to promote high-quality service consumption, focusing on the renovation and upgrade of traditional street communities [1] - Support will be provided to various districts for the enhancement of traditional street areas, aiming to attract chain brands and improve new business formats [1] Group 2: Community Development - The initiative aims to utilize idle storefronts along community streets to address the consumption needs of local residents [1] - The plan includes prioritizing the availability of services such as shopping, dining, delivery, repair, laundry, health care, fitness, and entertainment within communities [1]

Core Viewpoint - The Zhejiang Provincial Market Supervision Administration and four other departments have issued the "Zhejiang Province Three-Year Action Plan for Optimizing the Consumption Environment," which will take effect on July 6, 2025, focusing on enhancing consumer protection and regulating various industries [1] Group 1: Consumer Protection Initiatives - The plan includes the "Guarding Consumption" campaign aimed at strengthening regulation in the food sector, particularly targeting illegal additives [1] - It emphasizes the governance of "unfair clauses" in industries such as telecommunications, decoration, maintenance, and tourism [1] - A special rectification of the tourism market will be conducted to address unreasonable low pricing, forced consumption, and refusal to fulfill contracts [1] Group 2: Online Market Regulation - A 2025 online market supervision initiative will be launched to combat issues such as traffic fraud, fake reviews, vulgar marketing, and illegal advertising [1] - The organization of actions like "Safeguarding 2025," "Deep Blue," and "Sword Edge" will focus on fighting intellectual property infringement and the production and sale of counterfeit goods [1]

Financial Data and Key Metrics Changes - In Q1 2025, the company's revenue reached RMB1.94 billion, representing a 4% year-over-year increase [6] - The operating loss was approximately RMB18.8 million, a significant improvement from RMB129.6 million in the previous year, with margins improving to 4.2% from 7% [29] - Net cash outflow from operating activities was RMB97 million, compared to RMB220 million in the same period last year, indicating strong financial resilience [7][29] Business Line Data and Key Metrics Changes - The ZKH platform saw GMV from industry key accounts increase by 19.7% year-over-year, with over 20% growth in sectors like new energy vehicles and pharmaceuticals [9] - Sales and customer numbers from regional SME customers on the ZKH platform recorded double-digit growth, with notable regions like Guangdong and Zhejiang posting over 20% growth [10] - The GBB platform achieved a quarter-over-quarter sales growth of over 260% and customer growth accelerated to over 24,000, up 73% year-over-year [12][13] Market Data and Key Metrics Changes - The total GMV reached RMB2.17 billion, reflecting a modest decline due to a high comparison base from last year, but underlying GMV maintained robust double-digit year-over-year growth [23] - The company is expanding its U.S. operations with over 500 SKUs launched, and plans to scale this to over 1,500 items by the end of the year [15][16] Company Strategy and Development Direction - The company is focusing on a dual platform strategy to meet diverse customer demands, with the ZKH platform serving mid to large-sized enterprises and the GBB platform catering to micro and small businesses [8] - There is a strong emphasis on AI technology development, with over 10 AI-powered applications deployed to enhance operational efficiency and customer service [19][20] - The company plans to enter the European market in the second half of the year, focusing on online and offline strategies in Germany and Hungary [37][38] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in regaining growth momentum in the SOE and central SOE business in the second half of the year, following business optimization initiatives [11] - For Q2 through Q4, management anticipates double-digit growth for GMV and expects Q2 to see single-quarter breakeven, with positive profitability in Q3 and Q4 [51][52] - The company believes it has entered a new phase of long-term sustainable growth, supported by organizational strengthening and core competency solidification [22] Other Important Information - The gross profit margin slightly decreased to 17.2% from 18% in the prior year, primarily due to lower revenue contributions from the marketplace model [25] - Operating expenses decreased by 10.9% year-over-year to RMB412.9 million, reflecting reductions across all major expense categories [26] Q&A Session Summary Question: Impact of tariffs on domestic and U.S. business - Management indicated that U.S. tariffs are not a negative factor and may actually serve as a tailwind for expanding the U.S. business, with preparations made to source from Southeast Asia [34][35] Question: Timeline for entering new markets beyond the U.S. - The company plans to start its business in Europe in the second half of the year, focusing on online sales across Europe and offline in Germany and Hungary [37][38] Question: Updates on product strategy and key product categories - The company has 32 product lines across five categories and will focus on industrial-grade MRO products, particularly enhancing private label development [43][44] Question: Business and financial outlook for upcoming quarters - Management expects to achieve double-digit growth for GMV in the next three quarters and anticipates profitability improvements, with the entire group expected to break even for the year [51][52]

Financial Data and Key Metrics Changes - In Q1 2025, the company's revenue reached RMB1.94 billion, representing a 4% year-over-year increase [6][24] - The operating loss was approximately RMB18.8 million, a significant improvement from RMB129.6 million in the previous year [30] - The net loss was around RMB66 million, showing a year-over-year improvement of 37.7% [6] - Net cash outflow from operating activities was RMB97 million, compared to RMB220 million in the same period last year, indicating improved cash flow resilience [7][30] Business Line Data and Key Metrics Changes - The ZKH platform saw GMV from industry key accounts increase by 19.7% year-over-year, with over 20% growth in sectors like new energy vehicles and pharmaceuticals [9][11] - Sales to regional SME customers recorded double-digit growth, with notable regions like Guangdong and Zhejiang posting over 20% growth [10] - Sales to SOE and central SOE customers declined significantly year-over-year, attributed to a high comparison base and business optimization initiatives [5][10] - The GBB platform achieved a quarter-over-quarter sales growth of over 260% and customer growth accelerated to over 24,000, up 73% year-over-year [12][13] Market Data and Key Metrics Changes - The total GMV reached RMB2.17 billion, reflecting a modest decline due to a high comparison base from the previous year [23] - The marketplace revenue declined due to the prior year's high comparison base, while product sales revenue saw a high single-digit year-over-year increase [24] - The gross profit margin slightly decreased to 17.2% from 18% in the prior year, but the gross profit margin from the product sales model improved [25] Company Strategy and Development Direction - The company is focusing on a dual platform strategy to meet diverse customer demands, with the ZKH platform serving mid to large-sized enterprises and the GBB platform catering to micro and small businesses [8] - There is a strong emphasis on AI technology development, with over 10 AI-powered applications deployed to enhance operational efficiency and customer service [17][21] - The company plans to expand its product portfolio and deepen supply chain integration while implementing AI technologies across operations [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in regaining growth momentum in the SOE and central SOE business in the second half of the year [11] - For Q2 through Q4, management anticipates double-digit growth for GMV and expects Q2 to see single-quarter breakeven, with positive profitability in Q3 and Q4 [51][52] - The company believes it has entered a new phase of long-term sustainable growth, supported by organizational strengthening and core competency solidification [22] Other Important Information - The company has initiated global supplier recruitment efforts, securing high-quality suppliers in Southeast Asia to enhance sourcing flexibility [16] - The strategic partnership with Tmall has been fruitful, with plans to expand the number of stores on Tmall significantly by the end of the year [12] Q&A Session Summary Question: Impact of tariffs on domestic and U.S. business - Management indicated that U.S. tariffs are not a negative factor and could serve as a tailwind for expanding the U.S. business, with preparations made for sourcing from Southeast Asia [34][35] Question: Timeline for entering new markets beyond the U.S. - Management plans to start business in Europe in the second half of the year, focusing on online and offline strategies in Germany and Hungary [37][38] Question: Updates on product strategy and key product categories - The company has 32 product lines across five categories and will focus on industrial-grade MRO products, particularly enhancing private label development [44][45] Question: Business and financial outlook for upcoming quarters - Management expects to achieve double-digit growth for GMV in the next three quarters and anticipates profitability improvements, with the entire group breaking even for the year [51][52]