ZKH Group Faces Revenue Declines Despite Growing Customer Base and Operational Challenges

ZKH Group Faces Challenges Amid Revenue Declines but Customer Base Grows

ZKH Group Limited, a leading procurement service platform specializing in maintenance, repair, and operations (MRO) in China, experiences a challenging fourth quarter and fiscal year ending December 31, 2024. The company reports a significant drop in Gross Merchandise Volume (GMV), which declines by 16.1% year-over-year to RMB 2,690,311. This downturn is mirrored in the overall fiscal year GMV, which sees a reduction of 5.4%, totaling RMB 10,479,461 compared to RMB 11,083,035 in 2023. The ZKH Platform GMV specifically drops 16.2%, while the GBB Platform, although facing a decline, performs relatively better with a 14.9% decrease.

Despite the declines in GMV, ZKH Group shows resilience through an increase in its customer base. The company reports a 9.4% rise in customers during the fourth quarter, reaching 46,192, and a notable 26.1% increase year-over-year, totaling 83,958 customers. This growth in customer numbers suggests a potential for recovery and future revenue stabilization, as the company adapts to market realities. However, net revenues for Q4 decrease by 3.0% to RMB 2,370,223, while the annual revenue shows marginal growth of 0.5% to RMB 8,761,318.

The financial results reveal other concerning trends, including a significant increase in operating losses, which surge by 380.7% in Q4 to RMB 32,589. While total losses for the year improve by 15.0% to RMB 338,770, the company’s net profit shifts dramatically from a profit of RMB 20,229 in Q4 2023 to a loss of RMB 29,102 in the current year, marking a 243.9% decline. Non-GAAP EBITDA also reflects challenges, with a loss of RMB 13,330 for the fourth quarter, although the fiscal year loss sees a slight improvement to RMB 193,258.

Looking ahead, ZKH Group’s ability to convert its growing customer base into consistent revenue will be crucial for mitigating losses and driving operational efficiency. The company is in a position to capitalize on its established platform and customer relationships, which could serve as a foundation for recovery. As ZKH navigates these financial hurdles, its focus on customer retention and engagement will be key in rebuilding its market position and addressing the challenges ahead.