ZKH Group Limited (ZKH) Q2 2026: GMV Growth Accelerates 19% with Operating Profitability Milestone
ZKH Group Limited accelerated its gross merchandise volume (GMV) growth to 18.9% year-over-year in Q2 2026, marking the fastest pace in recent quarters and achieving operating profitability for the first time. The company’s momentum is driven by broad-based demand across SMEs, key accounts, and high-growth industrial sectors, alongside expanding private-label sales and AI integration. Management expects further acceleration in GMV growth and profitability in the second half of 2026, supported by operational leverage and international expansion.
Summary
- Balanced Customer Growth: Strong SME penetration complements sustained double-digit growth from key accounts and SOEs.
- Strategic Capability Build: Expansion in private-label products and AI-driven solutions enhance margins and operational efficiency.
- International Expansion Progress: Tenfold increase in international GMV sets stage for profitability in overseas markets.
Business Overview
ZKH Group Limited operates as a leading maintenance, repair, and operations (MRO) procurement platform in China, serving customers primarily through its ZKH and GBB online platforms. The company generates revenue by facilitating product sales (first-party or 1P) and marketplace transactions (third-party or 3P), complemented by value-added services. Its core business segments include SME customers, industry key accounts (KAs), and central state-owned enterprises (SOEs), with growing private-label offerings and expanding international operations.
Performance Analysis
In Q2 2026, ZKH reported GMV of RMB 2.88 billion, up 18.9% year-over-year, driven by 23% GMV growth on the ZKH platform and a 50.7% surge in marketplace GMV. Net revenues increased 12.8% to RMB 2.44 billion, while gross profit rose 20.3% to RMB 430 million, lifting gross margin by over 110 basis points to 17.6%. This margin expansion reflects a more favorable product mix, including a 25% increase in private-label GMV, which now accounts for roughly 10% of total GMV.
The company achieved operating profitability for the first time, with operating income of RMB 4 million (0.2% margin), a substantial turnaround from a loss of RMB 72 million in Q2 2025. Non-GAAP EBITDA also swung positive to RMB 42 million, and net profit reached RMB 27 million, reversing prior losses. Operating expenses declined slightly year-over-year and improved as a percentage of net revenues, supported by efficiency gains in fulfillment and tighter cost management. Fulfillment expenses fell to 3.7% of revenues from 4.2% a year ago, and research and development expenses declined 15.2% in absolute terms.
- Customer Mix Shift: SMEs now represent about 30% of GMV, growing 30% year-over-year and contributing higher margins than larger accounts.
- Industry Diversification: High-growth sectors including steel and non-ferrous metals (103% GMV growth), utilities (57%), fine chemicals (37%), and communications (35%) fueled momentum.
- Operational Leverage: Continued scale benefits and AI adoption drove margin expansion and profitability despite modest revenue growth.
Overall, ZKH’s financial performance reflects a maturing business model with expanding scale, improving customer quality, and enhanced profitability. The company’s ability to convert strategic investments in AI and private-label products into tangible financial results signals a strengthening competitive position in China’s fragmented MRO market.
Executive Commentary
"Building on a strong start to the year, our business gained further momentum in the second quarter, with GMV and revenue posting their fastest year-over-year growth in the past several quarters. This performance was broad-based across the industries we serve... We expect growth to accelerate further in the second half of the year."
Eric Long Chen, Chairman and Chief Executive Officer
"The second quarter marked an important milestone in our earnings trajectory, as we achieved operating profitability for the first time. This achievement was underpinned by our continued scale expansion and stronger operating leverage... Looking ahead, we enter the second half of 2026 in a stronger financial position, and remain confident in our ability to deliver sustainable and profitable growth over the long term."
Jerry Qian Wang, Chief Financial Officer
Strategic Positioning
1. Deepening SME Market Penetration
ZKH has successfully increased its SME customer GMV by approximately 30% year-over-year, now constituting about 30% of total GMV. SMEs offer higher growth margins and more fragmented demand, enabling ZKH to improve customer mix quality and profitability. The company’s enhanced product and service capabilities are driving this segment’s expansion, reflecting a shift from sales-driven to supply-driven procurement.
2. Expanding Private-Label Offerings
Private-label products grew over 25% year-over-year and now represent 10% of GMV, contributing roughly 10% higher margins than non-private-label items. ZKH is investing in end-to-end capabilities including product development and rigorous quality testing, which underpin differentiation and margin expansion. The long-term target is for private labels to reach 30% of sales, positioning ZKH for sustained profitability improvements.
3. Strengthening AI and Data Capabilities
ZKH continues to build industry-leading AI applications such as the Domino industrial supplies data engine and AI Materials Manager, which serves over 8,600 customers with a 93% year-over-year user growth. AI integration is enhancing customer procurement efficiency, data governance, and internal operations, saving over 12,000 employee hours this quarter. The planned October launch of Linglong Huiyan, an edge AI model for industrial vision in partnership with Intel, signals further innovation.
4. Optimizing Fulfillment and Supply Chain
The company’s fulfillment network now includes over 30 distribution centers, 109 warehouses, 200+ delivery vehicles, and 6,000+ smart vending machines at customer sites. The completion of a hazardous materials warehouse in Hebei enhances compliance and supply security. Fulfillment expenses declined as a percentage of revenue, reflecting improved warehouse operations and transportation scheduling, which support operating leverage and customer experience.
5. Accelerating International Expansion
International GMV increased tenfold to RMB 95 million in H1 2026, with continued growth expected. ZKH is advancing a dual approach: supporting Chinese manufacturers expanding overseas and building localized operations, particularly in the U.S. (Texas). Online channels like Amazon have contributed to strong sales of private-label products. Management aims for overseas business profitability in the second half of 2026 while maintaining disciplined investment.
Key Considerations
ZKH’s Q2 results demonstrate the company’s transition from growth recovery to sustainable profitability, driven by strategic investments in customer segmentation, product innovation, and AI integration.
- SME Growth Sustains Momentum: Continued SME expansion is critical given higher margins and delivery efficiencies, but requires maintaining service quality at scale.
- Private-Label Scale-Up: Achieving the 30% long-term private-label GMV target will be pivotal for margin expansion but depends on successful product development and quality assurance.
- AI as a Competitive Differentiator: AI adoption is reshaping procurement behaviors and internal operations, offering efficiency gains and new revenue streams.
- International Market Risks: Overseas expansion offers growth but entails execution complexity and investment discipline to reach profitability.
- Operating Leverage Trajectory: Further margin improvements hinge on scaling revenues while controlling fulfillment and operating expenses.
Risks
ZKH faces risks including intensifying competition in the fragmented MRO market, potential delays in private-label and AI product development, and execution challenges in international expansion. Currency fluctuations and regulatory changes could also affect financial performance. Sustaining profitability depends on continued operational efficiency and successful customer and product mix management.
Forward Outlook
For Q3 2026, ZKH expects GMV growth to accelerate beyond the 18.9% achieved in Q2, driven by ongoing SME momentum and seasonal order peaks in December. Management targets full-year GMV growth of 15% to 20%, with continued margin expansion and operating leverage gains. The international business is anticipated to turn profitable in the second half of 2026 as investments mature. Operating expenses are expected to remain controlled, supporting further profitability improvements.
Takeaways
ZKH’s Q2 2026 results mark a strategic inflection point where growth acceleration coincides with profitability milestones, validating the company’s multi-pronged approach focused on customer diversification, product innovation, and AI integration.
- Growth Quality Improvement: The shift toward higher-margin SME customers and private-label products is enhancing profitability and providing a more resilient earnings base.
- AI and Digitalization as Growth Enablers: AI-driven procurement solutions and internal automation are creating operational efficiencies and new value propositions, positioning ZKH ahead in industrial digital transformation.
- International Expansion as a Long-Term Catalyst: While nascent, the rapid international GMV growth and planned profitability set the stage for meaningful contribution to future revenue and margin expansion.
Conclusion
ZKH Group Limited’s Q2 2026 earnings reflect a company successfully scaling its platform with improved customer segmentation, product differentiation, and AI capabilities. Achieving operating profitability alongside accelerating GMV growth underscores the strength of its execution and strategic positioning in China’s MRO market. The outlook for continued acceleration and international profitability provides a positive trajectory for investors.
Industry Read-Through
ZKH’s performance highlights several broader industry trends in the MRO and industrial procurement sector. The rising importance of AI-powered procurement tools and data quality is reshaping customer buying behaviors and vendor offerings. The shift toward private-label products as a margin lever is evident across industrial distribution platforms. Additionally, the rapid internationalization of Chinese industrial supply chains underscores the growing need for localized fulfillment and compliance capabilities. Competitors and investors should monitor how AI integration and supply chain digitization become critical differentiators in this fragmented market.