What are ZTO's 2026 priorities under anti-involution (market share, profit, network governance)? Does the RMB 200 million fund signal more partner support? Is the faster GMV growth than volume growth in early 2026 mix-driven or structural, and will competition shift to quality?

ZTO's core strategy integrates service quality, market share, and reasonable profit, with network ecosystem stability being paramount. The RMB 200 million special service incentive fund is for quality priority and partner support. The GMV trend confirms a structural industry transformation from low-price volume to value restoration, driven by macro fundamentals and anti-involution, leading to quality-driven competition. “ZTO remained steadfast in our fundamental approach of integrating service quality market share and a reasonable level of profit, which serves as our core strategy revolved on our resolve to navigate cycles and seize long-term opportunities.”

What were the considerations for the recent convertible bond issuance and the expected pace of share buybacks? What are the major applications of AI and large models at ZTO?

The $1.5 billion 5-year convertible bond was issued in February 2026 to leverage low-cost financing when ZTO's market value was underassessed, with proceeds intended for share buybacks to enhance EPS. Approximately $600 million has been completed, with the remaining $800 million planned over the next year. AI applications include 3D digital twins in sorting centers (60% missorting reduction), AI customer service (70% work orders handled), and AI dispatching (20% short-haul cost reduction). Large models are used for deep business analysis and high-precision forecasting. “The convertible bond in February 2026, the company issued $1.5 billion 5-year convertible bond we launched it during a window where we can take advantage of our low-cost financing tool during a period where the company's market value was underassessed.”

ZTO

ZTO Express (ZTO) Q4 FY25 earnings call: guidance and Q&A

Q: What are the updates on anti-involution, its sustainability, regulatory attitude, and expected pricing trends? What is the industry growth outlook and competitive landscape given these factors?

The anti-involution policy remains effective, leading to improved competitive landscape and recovered parcel prices, sustaining competition above cost. ZTO aligns with government efforts, prioritizing service quality and partner interests. Industry growth is expected to decelerate (Postal Bureau estimates 8% for 2026, ZTO guides 10-13%), with market concentration increasing among service and efficiency-focused leaders. “Since the introduction of the anti-evolution policy in the third quarter last year, the industry's competitive landscape has steadily improved. Parcel prices have recovered and the focus has turned towards safeguarding the interest of frontline people such as the outlet and couriers.”

Earnings call· Dec 2025 (Q4 FY25)· Industrials· Mar 18, 2026

Source: earnings call transcript

Executive summary

ZTO Express Q4 FY25 — Strong Volume Growth and Enhanced Shareholder Returns

ZTO Express delivered strong Q4 and full-year 2025 results, marked by robust parcel volume growth and solid profitability, despite an industry-wide moderation. The company is strategically aligning with government anti-involution policies, focusing on high-quality development, cost reduction through AI integration, and optimizing network policies to support partners. ZTO also announced an enhanced shareholder return program, underscoring its commitment to long-term value creation.

Highlights

Q4 parcel volume reached 1.56 billion, an increase of 9.2% year-over-year, expanding market share by 0.8 percentage points.
Full-year 2025 parcel volume grew 13.3% to 38.5 billion, maintaining steady market share.
Achieved Q4 adjusted net income of RMB 2.69 billion and full-year adjusted net income of RMB 9.5 billion.
Retail parcel volume surged 46% year-over-year in 2025, significantly outpacing e-commerce growth.
Board authorized a new 24-month $1.5 billion share buyback program and enhanced shareholder return target of no less than 50% of adjusted income.

Concerns

Q4 income from operations decreased 7.6% to RMB 3.2 billion, and full-year decreased 11% to RMB 10.5 billion.
Gross profit margin rate decreased 3.7 points to 25.4% for Q4 and 6 points to 25% for the full year.
Core express delivery unit cost rose RMB 0.08 to RMB 1 in Q4 and RMB 0.07 to RMB 0.04 for the full year.
Total cost of revenue increased 18.2% to RMB 10.8 billion in Q4 and 20.5% to RMB 36.8 billion for the full year.

Guidance & targets

Category	Target	Timeline	Confidence
Parcel volume growth	10% to 13% year-over-year high materiality	FY26	High
Aggregate annual shareholder return ratio	No less than 50% of adjusted income high materiality	Annual, starting from 2026 · FY26	High

ZTO operating KPIs by quarter

ZTO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Parcel volume	—	9.67B Parcel volume reached 9.67 billion, up 13.2% year-over-year, significantly outpacing industry growth with market share expanding by 1.2 percentage points, further solidifying our leadership position. Source: earnings call transcript	10.49B Parcel volume reached 10.49 billion, up 6.5% year-over-year with market share expanding by 0.4 percentage points, entrenching our industry leadership position. Source: earnings call transcript	+8.5%
Daily retail volume	<10M In the fourth quarter, daily retail volume reached close to 10 million parcels. Source: earnings call transcript	~9.7M In Q1, average daily retail parcel volume reached approximately 9.7 million, which indicates a meaningful growth rate. Source: earnings call transcript	11.7M+ In the second quarter, average daily retail parcel volume exceeded 11.7 million, of which return parcels averaged approximately 9.8 million each day, increased approximately 80% year-over-year. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Market uncertainties and transition to quality growth Ongoing

Not quantified

Mitigation:Adhering to strategies for healthy and sustainable development, focusing on transit and last-mile capability building, optimizing network policies.

Intense competition Ongoing

Not quantified

Mitigation:Actively responding to government calls to maintain healthy industry order, leveraging robust infrastructure, data-driven operations, and management capabilities.

Impact from volume-based subsidies Q4 FY25

Alleviated

Mitigation:Product mix optimization, enhanced brand recognition and affinity, providing strong support for core revenue growth.

Gradual deceleration of industry growth FY26

Postal Bureau estimated 8% growth for 2026

Mitigation:Focusing on high-quality development, service and operational efficiencies, and market concentration among leading enterprises.

What to watch in Q1 FY26

Industry parcel volume growth

FY26

Current FY25: 13.6% YoY; Q4 FY25: 5% YoY

Target 8% YoY (Postal Bureau estimate for 2026)

Why it matters

This indicates the success of anti-involution policies and the industry's shift towards quality over volume, impacting ZTO's operating environment.

Note that the Postal Bureau has estimated a 8% growth for 2026 and ZTO has given a guidance of growth between 10% to 13%, which certainly implies the development faster than the industry average.

Find out whether ZTO delivers this. Inve re-checks your case every morning.

Q&A highlights

What are the updates on anti-involution, its sustainability, regulatory attitude, and expected pricing trends? What is the industry growth outlook and competitive landscape given these factors?

The anti-involution policy remains effective, leading to improved competitive landscape and recovered parcel prices, sustaining competition above cost. ZTO aligns with government efforts, prioritizing service quality and partner interests. Industry growth is expected to decelerate (Postal Bureau estimates 8% for 2026, ZTO guides 10-13%), with market concentration increasing among service and efficiency-focused leaders.

“Since the introduction of the anti-evolution policy in the third quarter last year, the industry's competitive landscape has steadily improved. Parcel prices have recovered and the focus has turned towards safeguarding the interest of frontline people such as the outlet and couriers.”

asked by Qianlei Fan · answered by Huiping Yan

2 min read 5 chapters

Detailed narrative

Industry Transformation and Anti-Involution Initiatives

The express delivery industry is undergoing a significant transformation, moving from a volume-driven model to one focused on high-quality development. This shift is supported by government agencies advocating against 'involution' (irrational competition) and promoting the protection of grassroots interests. ZTO has actively responded to this call, leading in maintaining a healthy industry order, which has resulted in overall pricing stabilization and recovery.

The company's strategy is well-aligned with these efforts, prioritizing service quality and a balanced development approach.

Strategic Focus on Quality, Cost Leadership, and Network Stability

ZTO remains committed to its high-quality development strategy, continuously enhancing differentiated product offerings and service capabilities. This includes optimizing its product mix, with annual retail parcel volume growing 46% year-over-year and daily retail volume approaching 10 million parcels in Q4.

The company also focuses on cost reduction and operational efficiency, achieving a RMB 0.06 decrease in combined unit cost for transportation and sorting for the full year, driven by economies of scale and productivity initiatives. Network policies are being optimized to ensure fairness and transparency for partners and couriers.

Enhanced Shareholder Returns and Capital Allocation

The company's board approved a semi-annual cash dividend of USD 0.39 per ADS, consistent with a 40% payout ratio. Additionally, a new 24-month $1.5 billion share buyback program was authorized, effective through March 2028, following the substantial completion of the previous $2 billion program.

ZTO also announced an enhanced shareholder return program, targeting an aggregate annual return ratio of no less than 50% of the previous fiscal year's adjusted income, comprising both cash dividends and share buybacks, to optimize capital allocation and deliver long-term value.

AI and Digital Transformation for Efficiency

ZTO is deeply integrating AI technology across its express delivery chain to drive cost reduction and efficiency. Key applications include 3D digital twins and computer vision in 25 super sorting centers, reducing missorting rates by over 60% and lowering labor costs.

An AI-powered customer service system handles over 70% of end-to-end work orders. For last-mile dispatching, AI-driven route planning and order allocation have reduced short-haul transportation costs by over 20% for large-scale outlets. The company is also leveraging large models for deep business analysis and high-precision forecasting.

Industry Outlook and Competitive Landscape

The industry is expected to see a gradual deceleration of growth, with the Postal Bureau estimating 8% growth for 2026, while ZTO targets 10-13%. The competitive landscape is becoming more rational, with market share expected to concentrate among leading enterprises that prioritize service and operational efficiencies.

This trend, driven by policy guidance and self-regulation, is fostering a healthier and more orderly environment, shifting competition from price-driven to quality-driven.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.