ZKH Group Limited reported third‑quarter 2025 results that showed net revenue of RMB 2,328.4 million, a 2.1% year‑over‑year increase, but still fell short of the consensus estimate of RMB 2.53 billion. Gross profit reached RMB 390.2 million, a 0.5% rise, while the gross‑margin percentage slipped to 16.8% from 17.0% a year earlier, reflecting a lower share of higher‑margin marketplace revenue. Operating loss narrowed to RMB 32.3 million, a 69.3% improvement over the same period in 2024, and net loss fell to RMB 24.3 million, a 70.3% reduction from the prior year’s loss. The company also added 48% more customers, bringing the total to 70,800, driven largely by growth in its private‑label segment.
The revenue miss can be traced to a combination of macro‑economic softness in China’s industrial procurement market and intensified competition from larger e‑commerce platforms. While the company’s AI‑driven procurement and customer‑service tools boosted productivity—customer‑service productivity rose 42% and procurement productivity 52%—the lower mix of high‑margin marketplace transactions offset the gains from private‑label growth, which increased 16.7% year‑over‑year and now accounts for 8.2% of total GMV.
Gross‑margin contraction was largely a result of the shift toward lower‑margin marketplace sales, while operating loss improvement was driven by disciplined cost control and operational efficiencies. Management highlighted that the company achieved monthly breakeven in September and expects to reach quarterly profitability in Q4 2025. The firm’s AI Smart Workbench has already generated over RMB 100 million in incremental revenue through its ProductRecom Agent, underscoring the strategic importance of AI integration.
CEO Eric Long Chen emphasized that the company is “in a stabilization and recovery phase” and that “higher‑margin private‑label GMV grew in the mid‑teens year over year, further enhancing our profit mix.” He added that the firm is targeting a 30% private‑label GMV share and is pursuing international expansion, with the overseas business expected to break even in 2026.
Market reaction was muted, with analysts noting the revenue shortfall as the primary driver of investor caution. Despite the company’s narrowing losses and operational gains, the miss against consensus of RMB 2.53 billion and a non‑GAAP loss per share of 0.07 versus an expected 0.19 highlighted concerns about top‑line growth, leading to a slightly negative market response.
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