ZKH Group's Q2 2025: Unraveling Contradictions in European Expansion, Revenue Expectations, and Tariff Strategies

Expansion into Europe, expected revenue and profit from overseas operations, overseas expansion and market strategy, tariff mitigation and U.S. market strategy are the key contradictions discussed in ZKH Group Limited's latest 2025Q2 earnings call.



GMV and Profitability Trends:
- ZKH Group reported a GMV of RMB 2.42 billion in Q2 2025, a 12.1% year-over-year decline.
- The decline was primarily due to business adjustments related to SOE customers and a high comparison base from the previous year.
- However, excluding these factors, the underlying GMV showed year-on-year growth.

Gross Margin Expansion:
- The company's gross margin on GMV basis reached 14.8% in Q2 2025, representing a 0.8 percentage point year-over-year increase.
- This expansion was driven by procurement cost optimizations and robust growth in high-margin private label products.
- It marked the sixth consecutive quarter of year-over-year gross margin expansion.

Operational Efficiency Improvements:
- ZKH's operating expenses decreased by 5.6% year-over-year to RMB 454.2 million.
- This was achieved despite the inclusion of approximately RMB 25 million in overseas business-related expenses.
- The improvement was due to lower employee benefits and warehouse rental costs, as well as optimized processes and AI tool adoption.

Overseas Business Growth:
- The company's U.S. revenue grew by 260% in Q2 2025 compared to Q1 2025.
- This growth was attributed to the localization strategy in the U.S. market, leveraging supply chain strength, and a curated product portfolio.
- The expansion into the European market is expected by the end of the year, further enhancing global business presence.