Detailed narrative
Turnaround to Operating Profitability and Expense Discipline
ZKH reached an inflection point in Q2 FY26 by delivering positive operating profit, positive non-GAAP EBITDA of RMB 42 million, and non-GAAP adjusted net profit of RMB 39 million, reversing from negative RMB 39 million and negative RMB 37 million, respectively, in Q2 FY25.
Total operating expenses edged down 0.8% YoY to RMB 425 million, improving operating expenses as a percentage of net revenues to 17.4% from 19.8% in the prior-year period. Fulfillment expenses improved 50 bps YoY to 3.7% of net revenues, sales and marketing declined 70 bps to 6.2%, general and administrative dropped 70 bps to 6.1%, and R&D declined 50 bps to 1.4%.
Customer Segmentation and SME Acceleration
Growth broadened across key customer groups, led by regional SMEs (defined by ZKH as enterprises with revenues around RMB 1 billion) whose GMV expanded 30% YoY, outperforming overall company growth. SMEs now represent 30% of total GMV, while large key accounts and state-owned enterprises account for 60%.
Centrally administered SOEs and industry key accounts delivered double-digit GMV expansion, with total SOE GMV rebounding over 20% YoY following strategic adjustments made in the prior year. The shift toward SMEs aids mix and profitability as they yield higher gross margins and demand end-to-end supply chain integration.
Industry Vertical Momentum and Specialized MRO Expansion
GMV expanded strongly across traditional and advanced manufacturing industries. Steel and nonferrous metals GMV surged over 100% YoY, utilities expanded 57%, fine chemicals and pharmaceuticals grew 37%, food and agricultural products rose 37%, and communications and electronics grew 35%. Specialized electrical automation GMV jumped 160% YoY across sensors, industrial IoT, industrial safety, and robotics, driven by customer line modernization.
Semiconductor customer GMV expanded more than 100-fold YoY from an early baseline, positioning the platform to benefit from high automation intensity sectors.
International Expansion and Dual Sourcing
International expansion gained significant traction, with H1 2026 international GMV surpassing RMB 95 million, up over tenfold compared to the prior-year period. Overseas operations follow a two-pronged strategy: accompanying Chinese manufacturing clients abroad with one-stop sourcing, compliance, and fulfillment; and expanding localized warehousing and digital channels in target regions like Texas.
Online private-label traction through Amazon for product categories like forklifts and industrial fans contributed to growth, backed by an established dual-sourcing model between China and international suppliers.
AI Technology Architecture and AI Subsidiary Spin-off
ZKH launched Domino in June 2026, an industrial supplies big data engine powered by over 1 billion parameters to support data governance, model training, and traceability. Building on this infrastructure, its Linglong foundation model and specialized agents such as AI Materials Manager have served over 8,600 customers (up 93% YoY) and processed more than 24 million rows of data, generating initial commercial revenue.
Management confirmed plans to establish an independent AI subsidiary to afford organizational agility, separate talent models, and capital-raising flexibility while retaining commercial synergies with the core MRO business.