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]
ZKH(ZKH) - 2025 Q1 - Earnings Call Transcript