Financial Data and Key Metrics Changes - The company's GMV declined by 12.1% year over year, while total revenues decreased by 3.7% to RMB 2.17 billion, largely due to last year's high comparison base [21][22] - The gross margin on a GMV basis reached 14.8%, representing a 0.8 percentage point year over year increase, marking the sixth consecutive quarter of gross margin expansion [5][22] - Net loss narrowed to approximately RMB 53 million, a 20% year over year reduction, with the net loss margin improving to 2.5% from 2.9% [5][26] Business Line Data and Key Metrics Changes - GMV from industry key accounts rose by approximately 11% year over year, with the number of transacting customers increasing by around 22% [7] - GMV from regional SME customers grew by approximately 7% year over year, with the number of transacting customers growing by 13% [9] - GMV in sectors such as automotive, new energy, and electrical equipment manufacturing grew by more than 15% [8] Market Data and Key Metrics Changes - The U.S. revenue grew by 260% in the second quarter from the first quarter, indicating strong market entry performance [16] - The company has begun receiving orders from Chinese customers' overseas plants in 10 countries, including Thailand and Mexico, diversifying its supplier network [18] Company Strategy and Development Direction - The company is focused on enhancing its core competencies, including product capabilities, AI, and last-mile delivery, while expanding its overseas business [6][19] - A strategic emphasis on high-margin private label products aims to increase their share in total GMV to approximately 30% [12] - The company is adopting a localized operating strategy in the U.S. and European markets to capitalize on supply chain strengths [15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in a potential turnaround in top-line growth in the second half of the year, as the impact of previous business adjustments diminishes [21][34] - The company anticipates that growth drivers will increasingly come from overseas markets, particularly Europe and America [33] Other Important Information - The average number of orders processed per customer service representative grew by 48% year over year, while warehouse fulfillment costs decreased by approximately 18% [6] - The company has repurchased approximately 2,650,000 ADS for about dollars under its share buyback program [26] Q&A Session Summary Question: Growth strategy in the Chinese MRO market - Management acknowledged recent business pressures due to optimization but highlighted new customer acquisitions compensating for losses from adjusted business [31][32] Question: Competitive advantages in the MRO sector - Management emphasized advantages in product capabilities, IT capabilities, and a nationwide supply chain, along with strong R&D capabilities [39][41][44] Question: Overseas business challenges and strategies - Management discussed two models for overseas expansion, emphasizing the challenges of building a brand in advanced economies while leveraging strong supply chains [48][49]
ZKH(ZKH) - 2025 Q2 - Earnings Call Transcript