ZKH Group Limited (NYSE: ZKH) reported Q2 2026 net revenue of RMB2.44 billion, up 12.8% from RMB2.17 billion a year earlier, while diluted earnings per ADS reached RMB0.17 versus a loss of RMB0.33. Gross margin expanded to 17.6%, and ZKH recorded its first operating profit as gross profit grew faster than revenue and operating expenses edged lower. The main counterpoint was cash conversion, with operating activities using RMB122.4 million during the quarter.
Core Financial Results
Revenue growth was accompanied by a larger 20.3% increase in gross profit, as cost of revenue rose more slowly than sales. Operating expenses declined 0.8% to RMB425.6 million and fell to 17.4% of revenue from 19.8%, allowing ZKH to move from an operating loss to a small profit.
The improvement extended across both GAAP and non-GAAP measures. Net profit was RMB26.7 million, while non-GAAP adjusted net profit reached RMB38.5 million after excluding share-based compensation.
| Metric | Q2 2026 | Q2 2025 | Year-over-Year Change |
|---|---|---|---|
| Net revenue | RMB2,443.8 million | RMB2,166.8 million | +12.8% |
| Gross profit and margin | RMB429.6 million / 17.6% | RMB357.0 million / 16.5% | +20.3% / +110.3 bps |
| Operating profit/(loss) and margin | RMB4.0 million / 0.2% | RMB(72.0) million / (3.3)% | Turned profitable |
| Net profit/(loss) and margin | RMB26.7 million / 1.1% | RMB(53.5) million / (2.5)% | Turned profitable |
| Diluted earnings/(loss) per ADS | RMB0.17 | RMB(0.33) | Turned positive |
| Non-GAAP EBITDA | RMB41.9 million | RMB(38.7) million | Turned positive |
| Non-GAAP adjusted net profit/(loss) | RMB38.5 million | RMB(36.5) million | Turned profitable |
| Operating cash flow | RMB(122.4) million | RMB(110.7) million | Outflow increased |
Non-GAAP adjusted net profit excludes RMB11.8 million of share-based compensation. Non-GAAP EBITDA adds back interest expense, income taxes, depreciation and amortization.
Business and Platform Performance
GMV rose faster than revenue, but performance diverged across platforms and business models. The main ZKH platform expanded while GBB contracted, and marketplace transactions grew substantially faster than first-party product sales.
| Operating Metric | Q2 2026 | Q2 2025 | Year-over-Year Change |
|---|---|---|---|
| Total GMV | RMB2,877.5 million | RMB2,420.2 million | +18.9% |
| ZKH platform GMV | RMB2,635.0 million | RMB2,144.4 million | +22.9% |
| GBB platform GMV | RMB242.5 million | RMB275.9 million | -12.1% |
| Product sales model GMV | RMB2,446.0 million | RMB2,133.9 million | +14.6% |
| Marketplace model GMV | RMB431.5 million | RMB286.3 million | +50.7% |
| Marketplace share of GMV | 15.0% | 11.8% | +3.2 percentage points |
| Marketplace take rate | 11.8% | 14.2% | -241.3 bps |
| Transacting customers | 73,547 | 74,854 | -1.7% |
Management attributed the GMV expansion to deeper penetration of small and medium-sized enterprises, key accounts and central state-owned enterprises. SME GMV on the ZKH platform increased approximately 30%, while industry key accounts and central SOE customers maintained double-digit growth. Communications and electronics, fine chemicals and pharmaceuticals, and utilities grew faster than overall GMV.
Private-label products also supported growth and margin improvement. ZKH added more than 700 private-label SKUs, and private-label GMV increased by more than 25% to approximately 10% of total GMV.
Marketplace growth improved the platform’s transaction mix, but monetization did not keep pace: the marketplace take rate declined to 11.8% from 14.2%. Separately, first-half international GMV increased tenfold year over year, although that is a six-month metric rather than a Q2 growth rate.
Profitability Improved Faster Than Cash Conversion
ZKH’s first operating profit was driven by both gross-margin expansion and expense leverage. Fulfillment expenses declined to 3.7% of revenue from 4.2%, while sales and marketing fell to 6.2% from 6.9%. Research and development dropped to 1.4% from 1.9%, primarily because of lower employee benefit expenses, and general and administrative costs decreased to 6.1% of revenue from 6.8% despite higher service fees and credit losses.
The fulfillment network comprised more than 30 distribution centers, 109 warehouses, over 200 self-operated delivery vehicles and more than 6,000 smart vending machines at customer sites. The company also completed a hazardous-materials warehouse in Cangzhou. Management said operational scale and broader AI adoption contributed to efficiency, including estimated productivity gains of 12,759 hours during the quarter, but it did not quantify AI’s direct contribution to earnings.
Cash flow remained weaker than reported profit. Operating cash outflow widened to RMB122.4 million from RMB110.7 million, while cash and cash equivalents, restricted cash and short-term investments declined to RMB1.67 billion at June 30 from RMB1.92 billion at the end of 2025.
Accounts receivable increased to RMB3.45 billion from RMB3.26 billion over the same six-month period, and the associated credit-loss allowance rose to RMB178.9 million from RMB159.9 million. Inventory decreased to RMB646.9 million from RMB669.8 million. The release did not provide a detailed quarterly working-capital bridge, so the operating cash outflow cannot be attributed to a single balance-sheet item.
As of June 30, ZKH had cumulatively repurchased approximately 2.49 million ADSs for US$7.67 million under its US$50 million authorization. The program has been extended through June 13, 2027.
Management View
CEO Eric Long Chen described growth as broad-based and said the company expects it to accelerate further in the second half of 2026. He highlighted SME demand, continued growth among larger enterprise customers, private-label expansion and wider use of AI-based procurement tools.
CFO Jerry Qian Wang attributed the first operating profit to greater scale and operating leverage, supported by cost discipline and AI adoption. These expectations were qualitative; ZKH did not provide new quantitative revenue or earnings guidance in the supplied results.
Risks Investors Need to Monitor
- Profitability remains narrow: Although ZKH reached operating profitability, its operating margin was only 0.2% and net margin was 1.1%. A modest change in gross margin or expenses could therefore have a material effect on earnings.
- Cash conversion trails accounting profit: Operating cash outflow increased despite positive net income, while the combined balance of cash, restricted cash and short-term investments declined from year-end.
- Platform and model economics are diverging: GBB platform GMV fell 12.1%, and the marketplace take rate declined even as marketplace GMV grew 50.7%. Sustaining marketplace growth without further monetization pressure is an important area to track.
- Receivables and credit losses increased: Accounts receivable and the related loss allowance both rose from December 2025, while higher credit losses contributed to general and administrative expenses.
- Customer growth was negative: The number of transacting customers declined 1.7% even as GMV increased, making continued spending growth and customer retention important to the company’s expansion trajectory.
Summary
ZKH’s Q2 2026 results marked a meaningful shift from operating and net losses to GAAP profitability, supported by higher GMV, private-label growth, gross-margin expansion and lower expenses as a percentage of revenue. The next test is whether the company can preserve these gains while improving operating cash flow, stabilizing GBB and customer trends, and managing the lower marketplace take rate and rising receivables.
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