ZKH Group Limited (NYSE:ZKH), a key player in China’s maintenance, repair, and operations (MRO) procurement sector, posted third-quarter results on Thursday that came in below Wall Street expectations. The stock slipped 0.33% in pre-market trading after the release.

The company generated $319.43 million in revenue, well under the $363.54 million consensus forecast. Although ZKH recorded breakeven earnings per share and continued to demonstrate operational improvements, the top-line miss weighed on investor sentiment. Revenue grew 2.1% year-over-year, but still missed analysts’ projections by a wide margin.

Gross margin edged down slightly to 16.8%, compared with 17.0% in the prior-year period, reflecting a reduced share of higher-margin marketplace revenue. Even so, ZKH made meaningful strides in profitability, cutting its operating loss margin to -1.4%, an improvement of more than 320 basis points from last year’s -4.6%.

“In the third quarter, we drove strengthening momentum in our business,” said Eric Long Chen, Chairman and Chief Executive Officer of ZKH. “Our GMV and revenues returned to approximately prior-year levels, while higher-margin private-label GMV grew in the mid-teens year over year, further enhancing our profit mix.”

The company reported robust customer expansion, with its active client base rising 48% year-over-year to 70,800, fueled by growth across both large enterprises and small-to-mid-sized businesses. ZKH also underscored advancements in artificial intelligence, noting that its ProductRecom Agent has contributed over RMB100 million in incremental revenue since launching in late 2024.

Despite the revenue shortfall, the company posted stronger operating cash flow, generating RMB105.5 million ($14.8 million) in the quarter. As of September 30, ZKH held a solid liquidity position, with $267.2 million in cash, restricted cash, and short-term investments.

ZKH Group stock price

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