ZKH Group Ltd. Reports Narrowed Q1 Loss Amid Revenue Growth

In a recent financial update, ZKH Group Ltd., a prominent maintenance, repair, and operations (MRO) procurement service platform based in China, has reported a narrowed loss for the first quarter of 2025. The company, listed on the New York Stock Exchange, has shown signs of financial improvement, despite continuing to operate at a loss.

Financial Highlights

For the first quarter ended March 31, 2025, ZKH Group Ltd. reported a net loss of RMB66.723 million, or RMB0.01 per share, compared to a loss of RMB90.901 million, or RMB0.02 per share, in the same period last year. This represents a significant reduction in losses year-over-year. Excluding certain items, the company’s adjusted earnings were reported at a loss of RMB50.176 million, or RMB0.01 per share.

Revenue for the quarter rose by 4.0%, reaching RMB1.935 billion from RMB1.860 billion in the previous year. This growth in revenue is a positive indicator for the company, reflecting its ability to increase sales despite the challenging market conditions.

Operational Insights

ZKH Group’s unaudited financial results for the first quarter also highlighted operational changes. The company’s Gross Merchandise Volume (GMV) saw a slight decrease of 7.5% to RMB2,171,997 thousand from RMB2,348,640 thousand in the previous year. This decline was observed across both the ZKH Platform and GBB Platform, with the ZKH Platform experiencing an 8.0% decrease and the GBB Platform a 2.5% decrease.

Interestingly, the company’s business model showed a shift in focus. Product Sales (1P) increased by 7.1%, while Marketplace (3P) sales saw a significant drop of 52.7%. This shift indicates a strategic pivot towards direct product sales, which could be a response to market demands or operational efficiencies.

The number of customers increased by 30.3%, with the ZKH Platform and GBB Platform seeing growth of 10.8% and 73.0%, respectively. This customer growth is a positive sign, suggesting that ZKH Group is expanding its market reach and potentially laying the groundwork for future profitability.

Market Reaction and Outlook

As of May 20, 2025, ZKH Group’s stock was trading at a close price of USD 2.76, with a market capitalization of USD 3.48 billion. The company’s price-to-earnings ratio stood at -13.32, reflecting the current losses. Despite the negative earnings, the narrowed loss and revenue growth may instill confidence in investors about the company’s potential for recovery.

Looking ahead, analysts have mixed expectations for ZKH Group’s financial performance. For the quarter ending March 31, 2025, one analyst projected a loss per share of -0.330 CNY, a slight improvement from the previous year’s -0.080 USD per share. Revenue estimates for the quarter were set at 331.0 million CNY, compared to 258.8 million USD in the prior year.

For the fiscal year, analysts are forecasting a loss per share of -0.350 CNY, with revenue projections averaging 9.71 billion CNY. These figures suggest cautious optimism, with expectations of continued revenue growth despite ongoing losses.

Conclusion

ZKH Group Ltd.’s first-quarter results for 2025 show a company in transition, with narrowed losses and increased revenue signaling potential for future success. The operational shifts and customer growth are promising developments that may pave the way for the company to achieve profitability. As ZKH Group continues to navigate the competitive landscape of the MRO procurement service industry, investors and stakeholders will be closely monitoring its progress in the coming quarters.