ZKH Group Limited Announces Fourth Quarter and Fiscal Year 2024 Unaudited Financial Results

, /PRNewswire/ -- ZKH Group Limited ("ZKH" or the "Company") (NYSE: ZKH), a leading maintenance, repair and operations ("MRO") procurement service platform in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2024.

Fourth Quarter and Fiscal Year 2024 Operational and Financial Highlights

"2024 presented a dynamic demand landscape, yet we delivered robust performance, further solidifying our leadership in China's MRO industry and expanding our global footprint." stated Mr. Eric Long Chen, Chairman and Chief Executive Officer of ZKH. "During the past year, we continued to enhance our profitability, bolstered by a growing customer base, increased customer loyalty, and advancements in digitalization and artificial intelligence. Notably, in 2024, we reached a significant milestone by broadening our international presence, particularly as our U.S. operations gained momentum. Looking ahead, we remain steadfast in our commitment to enhancing our products and supply chain capabilities and advancing our digitalization and artificial intelligence initiatives. While our strategic business optimization initiatives temporarily affected overall GMV growth, we believe the impact of these adjustments has gradually faded, placing us on a stronger path toward solid and sustainable growth, and we are confident that we will achieve full-year profitability for our domestic operations in 2025."

Mr. Max Chun Chiu Lai, Chief Financial Officer of ZKH, added, "Despite challenges in the demand environment and the impacts of business optimization, we concluded the year with resilient results, alongside overall enhancements in profitability. This is reflected in the improvement in both gross margin and net margin in 2024, driven by our expanded business scale and continued efforts to optimize our supply chain, sales force, and organizational structure. Our cash position has also strengthened, as we generated net cash of RMB170.7 million from operating activities in the fourth quarter and RMB229.1 million in 2024, marking our third consecutive quarter and our first full year of positive net cash inflow from operating activities. With this solid foundation, we are poised to leverage future growth opportunities and enhance shareholder returns."

Fourth Quarter 2024 Financial Results

Net Revenues. Net revenues were RMB2,370.2 million (US$324.7 million), representing a decrease of 3.0% from RMB2,444.0 million in the same period of 2023, mainly due to the optimization of certain businesses with low margins and long customer credit terms under the marketplace model.

• Net Product Revenues. Net product revenues were RMB2,303.5 million (US$315.6 million), representing a decrease of 0.9% from RMB2,325.0 million in the same period of 2023, primarily due to lower revenues generated on the GBB platform.
• Net Service Revenues. Net service revenues were RMB51.2 million (US$7.0 million), a decrease of 48.0% from RMB98.6 million in the same period of 2023, primarily due to the optimization of certain businesses with low margins and long customer credit terms under the marketplace model.
• Other Revenues. Other revenues were RMB15.5 million (US$2.1 million), a decrease of 23.7% from RMB20.4 million in the same period of 2023, mainly due to lower revenues from warehousing and logistic services and operating lease services for certain types of machinery and equipment.

Cost of Revenues. Cost of revenues was RMB1,965.2 million (US$269.2 million), representing a decrease of 3.0% from RMB2,026.8 million in the same period of 2023, mainly due to the effectiveness of the Company's measures to reduce overall product procurement costs.

Gross Profit and Gross Margin. Gross profit was RMB405.0 million (US$55.5 million), representing a decrease of 2.9% from RMB417.2 million in the same period of 2023. Gross margin was 17.1%, remaining flat compared with the same period of 2023, mainly due to lower revenue contribution from the marketplace model, while both the gross margin of the product sales model and the take rate of the marketplace model from the ZKH Platform increased, driven by business optimization, reduced procurement costs, and higher proportion of GMV from higher-margin private label products.

Operating Expenses. Operating expenses were RMB437.6 million (US$59.9 million), an increase of 3.2% from RMB423.9 million in the same period of 2023. Operating expenses as a percentage of net revenues were 18.5%, compared with 17.3% in the same period of 2023. Excluding the share-based compensation expenses, operating expenses as a percentage of net revenues were 17.9%, compared with 17.1% in the same period of 2023.

• Fulfillment Expenses. Fulfillment expenses were RMB95.1 million (US$13.0 million), a decrease of 11.8% from RMB107.8 million in the same period of 2023. The decrease was primarily attributable to lower employee benefit costs, warehouse rental costs, and distribution expenses. Fulfillment expenses as a percentage of net revenues were 4.0%, compared with 4.4% in the same period of 2023.
• Sales and Marketing Expenses. Sales and marketing expenses were RMB151.6 million (US$20.8 million), a decrease of 10.9% from RMB170.0 million in the same period of 2023. The decrease was primarily attributable to lower marketing and promotion expenses and travel expenses. Sales and marketing expenses as a percentage of net revenues were 6.4%, compared with 7.0% in the same period of 2023.
• Research and Development Expenses. Research and development expenses were RMB41.4 million (US$5.7 million), an increase of 9.5% from RMB37.8 million in the same period of 2023. The increase was primarily attributable to higher employee benefit costs and expenses related to technology and information services, such as cloud services. Research and development expenses as a percentage of net revenues were 1.7%, compared with 1.5% in the same period of 2023.
• General and Administrative Expenses. General and administrative expenses were RMB149.5 million (US$20.5 million), an increase of 38.1% from RMB108.2million in the same period of 2023. The increase was primarily attributable to higher employee benefit costs and share-based compensation expenses. General and administrative expenses as a percentage of net revenues were 6.3%, compared with 4.4% in the same period of 2023.

Loss from Operations. Loss from operations was RMB32.6 million (US$4.5 million), compared with RMB6.8 million in the same period of 2023. Operating loss margin was 1.4%, compared with 0.3% in the same period of 2023.

Non-GAAP EBITDA. Non-GAAP EBITDA was negative RMB13.3 million (US$1.8 million), compared with RMB43.3 million in the same period of 2023. Non-GAAP EBITDA margin was negative 0.6%, compared with 1.8% in the same period of 2023.

Net (Loss)/Profit. Net loss was RMB29.1 million (US4.0 million), compared with net profit of RMB20.2 million in the same period of 2023. Net loss margin was 1.2%, compared with net profit margin of 0.8% in the same period of 2023.

Non-GAAP Adjusted Net (Loss)/Profit. Non-GAAP adjusted net loss was RMB15.0 million (US$2.1 million), compared with non-GAAP adjusted net profit of RMB27.5 million in the same period of 2023. Non-GAAP adjusted net loss margin was 0.6%, compared with non-GAAP adjusted net profit margin of 1.1% in the same period of 2023.

Basic and Diluted Net (Loss)/Profit per ADS^[6] and Non-GAAP Adjusted Basic and Diluted Net (Loss)/Profit per ADS^[7]. Basic and diluted net loss per ADS were RMB0.18 (US$0.02), compared with basic and diluted net profit per ADS of RMB0.98 in the same period of 2023. Non-GAAP adjusted basic and diluted net loss per ADS were RMB0.09(US$0.01), compared with non-GAAP adjusted basic and diluted net profit per ADS of RMB0.45 in the same period of 2023.

Fiscal Year 2024 Financial Results

Net Revenues. Net revenues were RMB8,761.3 million (US$1,200.3 million), representing an increase of 0.5% from RMB8,721.2 million in 2023, primarily driven by higher revenues from the product sales model, partially offset by a decline in revenues from the marketplace model due to the optimization of certain businesses with low margins and long customer credit terms.

• Net Product Revenues. Net product revenues were RMB8,449.5 million (US$1,157.6 million), representing an increase of 1.3% from RMB8,341.6 million in 2023. The increase was mainly attributable to higher revenues generated from the ZKH platform and the GBB platform, primarily driven by increased customer numbers.
• Net Service Revenues. Net service revenues were RMB244.7 million (US$33.5 million), a decrease of 20.4% from RMB307.4 million in 2023, primarily due to the optimization of certain businesses with low margins and long customer credit terms under the marketplace model.
• Other Revenues. Other revenues were RMB67.1 million (US$9.2 million), a decrease of 7.0% from RMB72.2 million in 2023, mainly attributable to lower revenues generated from the Company's warehousing and logistic services and operating lease services for certain types of machinery and equipment.

Cost of Revenues. Cost of revenues was RMB7,250.8 million (US$993.4 million), representing a decrease of 0.2% from RMB7,268.7 million in 2023, mainly due to the effectiveness of the Company's measures to reduce overall product procurement costs.

Gross Profit and Gross Margin. Gross profit was RMB1,510.5 million (US$206.9 million), an increase of 4.0% from RMB1,452.4 million in 2023. Gross margin was 17.2%, compared with 16.7% in 2023, primarily due to improved gross margin of the product sales model from the ZKH Platform, resulting from business optimization, reduced procurement costs, and higher proportion of GMV from higher-margin private label products.

Operating Expenses. Total operating expenses were RMB1,849.2 million (US$253.3 million), a decrease of 0.1% from RMB1,851.2 million in 2023. Operating expenses as a percentage of net revenues were 21.1%, compared with 21.2% in 2023. Excluding the share-based compensation expenses, operating expenses as of a percentage of net revenues were 19.9%, compared with 21.0% in 2023.

• Fulfillment Expenses. Fulfillment expenses were RMB391.7 million (US$53.7 million), a decrease of 10.8% from RMB439.0 million in 2023. The decrease was primarily attributable to lower employee benefit costs, warehouse rental costs, and distribution expenses. Fulfillment expenses as a percentage of net revenues were 4.5%, compared with 5.0% in 2023.
• Sales and Marketing Expenses. Sales and marketing expenses were RMB641.5 million (US$87.9 million), a decrease of 8.5% from RMB700.8 million in 2023. The decrease was primarily attributable to lower employee benefit costs, marketing and promotion expenses and travel expenses. Sales and marketing expenses as a percentage of net revenues were 7.3%, compared with 8.0% in 2023.
• Research and Development Expenses. Research and development expenses were RMB169.5 million (US$23.2 million), a decrease of 3.6% from RMB175.9 million in 2023. The decrease was primarily attributable to lower employee benefit costs and traveling expenses, partially offset by higher expenses related to technology and information services, such as cloud services. Research and development expenses as a percentage of net revenues were 1.9%, compared with 2.0% in 2023.
• General and Administrative Expenses. General and administrative expenses were RMB646.5 million (US$88.6 million), an increase of 20.7% from RMB535.5 million in 2023. The increase was primarily attributable to higher share-based compensation expenses and allowance for credit losses, partially offset by lower employee benefit costs and travel expenses. General and administrative expenses as a percentage of net revenues were 7.4%, compared with 6.1% in the same period of 2023.

Loss from Operations. Loss from operations was RMB338.8 million (US$46.4 million), compared with RMB398.7 million in 2023. Operating loss margin was 3.9%, compared with 4.6% in 2023.

Non-GAAP EBITDA. Non-GAAP EBITDA was negative RMB193.3 million (US$26.5 million), compared with negative RMB211.9 million in 2023. Non-GAAP EBITDA margin was negative 2.2%, compared with negative 2.4% in 2023.

Net Loss. Net loss was RMB268.0 million (US$36.7 million), compared with RMB304.9 million in 2023. Net loss margin was 3.1%, compared with 3.5% in 2023.

Non-GAAP Adjusted Net Loss. Non-GAAP adjusted net loss was RMB159.5 million (US$21.9 million), compared with RMB287.5 million in 2023. Non-GAAP adjusted net loss margin was 1.8%, compared with 3.3% in 2023.

Basic and Diluted Net Loss per ADS and Non-GAAP Adjusted Basic and Diluted Net Loss per ADS. Basic and diluted net loss per ADS were RMB1.64 (US$0.22), compared with RMB22.08 in 2023. Non-GAAP adjusted basic and diluted net loss per ADS were RMB0.97 (US$0.13), compared with RMB6.58 in 2023.

Balance Sheet and Cash Flow

As of December 31, 2024, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB2.06 billion (US$282.3 million), compared with RMB2.12 billion as of December 31, 2023.

Net cash generated from operating activities was RMB170.7 million (US$23.4 million) in the fourth quarter of 2024, compared with net cash used in operating activities of RMB59.3 million in the same period of 2023. Net cash generated from operating activities was RMB229.1 million (US$31.4 million) in 2024, compared with net cash used in operating activities of RMB567.9 million in 2023.

Exchange Rate

This announcement contains translations of certain Renminbi ("RMB") amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB7.2993 to US$1.00, the exchange rate in effect as of December 31, 2024, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been, or could be, converted into US$ or RMB, as the case may be, at any particular rate, or at all.

Conference Call Information

The Company's management will hold a conference call on Tuesday, March 18, 2025, at 8:00 A.M. U.S. Eastern Time or 8:00 P.M. Beijing Time to discuss its financial results and operating performance for the fourth quarter and fiscal year 2024.

The replay will be accessible through March 25, 2025 by dialing the following numbers:

A live and archived webcast of the conference call will also be available on the Company's investor relations website at