ZKH Group Ltd (ZKH) Q1 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to ZKH Group Limited's first quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Desi Xu, Head of Investor Relations. Please go ahead, ma'am.

Good morning and welcome to ZKH's first quarter of 2026 earnings conference Corps. With me are Mr. Eric Chen, our founder, chairman, and CEO, and Mr. Max Lai, our CFO. Today's discussion may include forward-looking statements. Related factors are described in our today's press release, and we will also discuss certain non-GAAP financial measures for comparison purposes only. Please refer to the earning relief for definitions of these measures and a reconciliation of gap-to-non-gap results. With that, I will turn the call over to Eric.

Eric, please go ahead. 大家好,欢迎各位参加振昆行 2026年第一季度业绩发布会。 2026年开局, 公司延续去年下半年以来的恢复增长势头, 业务规模稳步扩张的同时, 增长质量实现进一步改善。 在收入端,公司总体GMV和收入均连续第二季度实现同比加速增长,其中GMV重回双位数增长区间,升速创下近几个季度以来新高。 在盈利端 公司经质量持续优化 毛利率得到环比提升 处于稳步提升趋势 得益于经济化运营 组织效率提升 以及经营杠杆效应的进一步释放 一季度经调整净利润同比大幅改善103% 并首次实现一季度经调整后盈利 一季度通常是爱猫行业的传统弹级 在此期间能实现GMV双位数增长和整体盈利 进一步加强了我们对实现全年GMV双位数增长和全年盈利目标的信心 现金流方面 经营活动现金净流出只要去年同期大幅收窄 财务任性进一步增强 As a result, in several months, we have seen the changes in the market, the building of customers, and the development of the product that has been developed are still developing the effect of the market, and the development of the company will improve the demand.

Hello everyone, thank you for joining our first quarter 2026 earnings conference call. We entered 2026 with strong momentum, building on the recovery trajectory established in the second half of last year. As our business steadily scaled, the quality of our growth also improved. In the first quarter, both GMV and revenue growth accelerated year-over-year for the second consecutive quarter. GMV returned to double-digit growth, and revenue delivered its strongest year-over-year performance in recent quarters. On the profitability front, our operating quality continued to improve. Gross margin achieved expansion sequentially, reflecting an improving trend. Driven by refined operations, improved organizational efficiency, and the ongoing benefits of operating leverage, Adjusted net profit was up 103 year-over-year, marking the first time we have achieved adjusted profitability in the first quarter. Delivering these solid results during the first quarter, and off-season for the MRO industry, reinforces our confidence in achieving double-digit GMB growth and full-year profitability in 2026. From a cash flow perspective, net cash outflow from operating activities narrowed significantly year over year, further enhancing our financial resilience. Overall, the strategic initiatives we have implemented over the past several quarters focused on optimizing customer mix and operational efficiency, continue to deliver tangible results, and position us for steadier, higher quality growth going forward. 我将终点介绍一下 一季度我们在业务场面的主要进展 一季度 GMV同比增长12.9% 较去年同期和上季度均有显著的提升 按目前订单和发货趋势来看 二季度 GMV增长有望实现进一步的加速 强劲的业务增长势头 得益于我们不断扩大的客户基础 First quarter GMV increased 12.9% year-over-year, representing a meaningful acceleration compared with both the year-ago period and the prior quarter. Based on current order activity shipment trends, we expect GMV growth to accelerate further in the second quarter. This strong performance was fueled by the continued expansion of our customer base. During the quarter, the number of transacting customers increased 11% year-over-year to 66,000. reflecting the accelerating adoption of online procurement among Chinese manufacturers.

This growing customer base provides a solid foundation for our long-term sustainable growth. 中小企业客户的需求通常更加分散 采购场景也更加多元 更能体现公司的平台化服务能力 随着越来越多中小制造业客户加速线上化采购 相信公司在这一客群中的渗透率仍具被较大的提升空间

Beyond overall customer growth, he also saw broad-based strengths across customer segments. GMV from SME customers on the ZKH platform increased more than 20% year-over-year. You're sustaining strong. SMEs typically have more fragmented demand and a broader range of procurement needs, making them a strong indicator of our platform's service capabilities. As online procurement adoption continues to deepen among small and medium-sized manufacturers, we believe there is significant room to further increase penetration in this customer segment. We also saw a more pronounced recovery among central SLE customers during the quarter, with GMV returning to double-digit year-over-year growth and improving meaningfully on both a sequential and year-over-year basis. 均实现超过20%的强劲增长 并在半导体 储能 光模块 机器人及光通信等新兴产业

领域持续积累头部客户资源 供邦邦平台继续保持高速增长 GMA同比增长超过30% 作为公司面向次中端分销客户和小微客户的重要平台 供邦邦依托更加标准化电商化的运营模式 performance among our industry key accounts was in line with expectations,

with GMV growing more than 20% year-over-year across major verticals, including electrical manufacturing, communications electronics, new energy, and steel and non-ferrous metals. We also expanded our presence in emerging sectors such as semiconductors, energy storage, optical modules, robotics, and optical communications, strengthening our customer base among industry leaders in these high-growth markets. The GBB platform also maintained strong momentum, with GMB increasing more than 30% year-over-year. As a key platform serving distributors, resellers, and micro and small businesses, GBB leverages a more standardized e-commerce-driven operating model to expand customer coverage and improve online conversion. More importantly, it creates strong synergies with the VKH platform, effectively extending our service reach and providing an additional growth driver for the broader business. 同时,我们也在稳步推进美国本土业务部局,持续完善产品开发,多取到销售,以及末端履约能力。

海外业务在整体经营策略上,我们坚持高质量发展导向,更注重经营质量与投入效率。 今年,我们对海外业务的目标是实现全年盈亏平衡。 Turning to our international business,

We continue to expand both our customer base and geographic footprint during the quarter, delivering robust growth with revenues increasing more than six-fold year over year. While continuing to strengthen our end-to-end capabilities to support Chinese manufacturers expanding overseas, we also advanced our local U.S. operations through enhancements in product development, multi-channel sales, and fulfillment. From an operating strategy perspective, we remain committed to high-quality growth with a strong focus on operating discipline and investment efficiency. Our goal for this year is to reach break-even for our international business. The continued expansion of our customer base and business scale reflects our long-term investments in building core capabilities and the strong execution behind these efforts. During the quarter, with customer value at the heart of our strategy, we expanded our product portfolio, strengthened our supply chain capabilities, and accelerated AI adoption across business scenarios, further enhancing our one-stop platform service capabilities.

FAA工厂自动化、电器自动化、 泵管阀、高距等十大重点产线 加大资源投入 并通过加强产销协同、 巨量采购以及提升专业化运营能力 进一步提升重点产线的竞争力 以 FAA工厂自动化产线为例 我们上线了 FAA商城 打造面向自动化产业链的 一站式数字化采购与技术服务平台 该平台不仅涵盖

Starting with product capabilities, we further strengthened our core product offering by sharpening our focus on high-value industries and highly specialized industrial scenarios. During the quarter, we identified 10 priority product lines, including factory automation, electrical automation, pumps, pipes, and valves, and cutting tools, and increased resource allocation to support their growth. By improving coordination between production and sales, optimizing bulk procurement, and enhancing specialized operational capabilities, we further bolstered the competitiveness of these key product lines. Taking factory automation, or SA, as an example, we launched the SA Mall during the quarter, a one-stop digital procurement and technical services platform tailored to the automation value chain. The platform offers a broad range of SA components and integrates key capabilities such as intelligent product selection, 3D modeling, and technical support.

Helping customers address traditional procurement pain points, including complex product selection and high technical barriers. 核心竞争优势 此外 我们持续完善平台整体供给体系 截至一季度末 平台HQ数量从上季度末的2300万 进一步增加至2700万 在此基础上 我们继续推进自由品牌建设 通过加速新品开发 持续丰富产品俱正 一季度 自由品牌产品共上限超过400个新品 其中包括透气型、轻型防状帽、防径电手套等多款创新产品

自由品牌产品GMA实现超过20%的增长 占比提升至约9.7%

覆盖个人防护、工具、清洁、办公等多元场景 进一步提升了自由品牌的产品竞争力与客户覆盖能力

As our T product lines continue to advance We have also deepened customer penetration in core industries. By category, professional and high-precision MRO products such as FA components, industrial lubricants, and chemical reagents all achieved solid, double-digit GMB growth, further solidifying our core competitive advantage in highly specialized industrial scenarios. In addition, we continue to strengthen our platform's overall supply capabilities. By the end of the first quarter, the number of sellable SKUs on the platform increased to 27 million, up from 23 million at the end of the prior quarter. Building on this foundation, we further expanded our private label portfolio by accelerating new product development. In the first quarter, we introduced more than 400 new private label SKUs, including innovative items such as lightweight breathable bump caps and anti-static gloves, covering diverse scenarios from personal protection and tools to cleaning and office supplies. These efforts further enhanced the competitiveness of our private label products and expanded our customer reach.

GMV from private label products grew by over 20% year-over-year and accounted for approximately 9.7% of total GMV in the first quarter of 2026. 第一季度,我们的自营运力规模持续扩容,推动末端配送覆盖广度与响应时效进一步提升,同时得益于前期仓内布局优化和自动化设备的持续投入,仓库品效同比提升36%。

On the fulfillment front, we continue to enhance our warehouse network and strengthen last mile delivery capabilities, further reinforcing our multi-tier operating system. In the first quarter, the capacity of our self-operated fleet continued to grow, improving both delivery coverage and responsiveness. At the same time, our prior investments in warehouse network optimization and automation drove a 36% year-over-year improvement in warehouse utilization efficiency. These end-to-end enhancements across warehousing, transportation, and delivery contributed to a 17% year-over-year reduction in our comprehensive fulfillment expenses for the quarter. Looking ahead, as we continue upgrading warehouse operations and digitalizing fleet scheduling, we believe there is further room to drive down our comprehensive fulfillment cost ratio. While continuing to strengthen our product and fulfillment capabilities, we are also actively forging future-proof long-term technological advantages.

Guided by our goal of building industry-leading full-stack AI capabilities for industrial supplies, we are systematically deploying AI across key industry use cases. 关联化与场景化能力 并通过数据AI标注 进一步提升产品数据治理质量 为AI应用能力的强化 使用坚实的数据基础 2026年 我们的目标是 构建行业首个覆盖一级工业用品数据 以千万级行业关系的行业知识图谱 以进一步强化AI在复杂工业场景中的理解与应用能力 以寻报价场景为例 除了系统对接 寻报价也是客户采购的重要入口 目前在寻报价场景中 约30%的物料匹配和确定以实现用AI完成 At the data layer, we continue to enhance the ZKH data dictionary

and industry knowledge graph capabilities, improving the structure, interconnectivity, and real-world applicability of industrial product data. We also strengthened data governance through AI-powered data annotation. Together, these efforts have established a stronger data foundation for broader AI applications across our business. In 2026, our goal is to build the industry's first knowledge graph, exceeding 100 million industrial product data points and 10 million industry relations. This will further strengthen AI's ability to understand and operate in complex industrial supply scenarios. Taking the request for quotes scenario as an example. While many procurement needs can be fulfilled directly through our online platform, quotation workflows remain an important customer entry point. Today, approximately 30% of material matching and product identification tasks within quotation workflows are already handled by AI. By the end of 2026, we aim to increase the overall AI-powered product identification rate to 70%, with data-intensive product lines such as fasteners, pumps, pipes, and valves, and hand tools expected to reach 80% to 90%. We believe these advancements will meaningfully improve quotation completion rates, inventory turnover, and sales conversion rates. In the graphic model, the At a model layer, our Hangjia Linlong MRO Vertical Large Language Model continued to evolve, further improving its ability to understand, reason, and execute tasks in complex industrial supply scenarios. During the quarter, we expanded image-based training to strengthen the model's multimodal capability and officially launched Hangjiao Huiyan, the industry's first intelligent visual search engine for MROs. Powered by advanced image recognition, Hangjiao Huiyan can rapidly identify material types and specifications, and pair them with specific application contexts to deliver intelligent diagnostics and product recommendations. This significantly improves communication and procurement efficiency in complex industrial supply scenarios.

AI 能力以标准化低门槛的方式快速赋能各业务团队 同时,我们在公司内部推行 AI 数字化全员计划 鼓励各业务团队结合业务场景自主开发和应用 AI 工具 加速 AI 能力在公司内部的普及与落定 仅第一季度,团队便开发并上限超过 60 个 AI 智能体

有效提升了运营效率 阅读释放能力超过2000公尺 同时,IT团队研发效能持续提升 2026年,我们的目标是将AI代码生成率 从目前的30%提升至80% At the orchestration layer, we are also actively building our MRO AI developer platform by integrating proprietary models in AI toolchains standardizing advanced AI capabilities and making them easier for cross-functional teams to access and apply. We also launched our AI for All initiative across the organization, encouraging teams to develop and deploy AI tools tailored to specific business scenarios and accelerating AI adoption across the company. In the first quarter alone, our teams developed and launched more than 60 AI agents and RPA bots, driving meaningful efficiency gains and freeing up more than 2,000 human labor hours per month. Our IT development efficiency also continue to improve. In 2026, we aim to increase our AI cogeneration rate from approximately 30% today to 80%.

销售,运营,客服等核心业务环节的一体化AI应用体系, 形成了包括AI巡报架,AI物料管家,AI推品大脑等在内的多元AI智能体具阵, AI商业价值逐步释放,今年我们将进一步优化迭代核心智能体应用, 预计由AI带动的销售金额将加速增长。

At the application layer, we have established an integrated AI ecosystem spanning core business functions, including merchandising, sales, operations, and customer service. Within this ecosystem, we have developed a diverse portfolio of AI agents, such as AI quotation assistant, AI material manager, and product recum, which are increasingly delivering tangible business value across our operations. In 2026, as we continue to refine and scale these AI applications, we expect AI-driven sales to grow meaningfully. As we move through 2026, we will continue investing in product capabilities, fulfillment capacity, and AI innovation, further strengthening our comprehensive service offerings for complex industrial scenarios, and reinforcing our long-term competitive advantages. Building on this foundation, we will remain focused on high-quality growth by driving greater operational efficiency and earnings, steadily advancing toward our goal of full-year profitability. I'll now turn the call over to our CFO, Max Lai, to present our financial results. Thank you, everyone.

Thank you, Eric, and thanks, everyone, for making time to join our earnings call today. Now, let me work you through our financial performance for the first quarter of 2026. We started the year with solid momentum across key financial metrics. In the first quarter, we derived accelerated top-line growth, improved operating efficiency, and greatly enhanced the probability. Notably, we achieved a non-gap adjusted probability, marking our first profitable first quarter on an adjusted basis, and a meaningful turnaround from the same period last year. These results reflect the improving quality of our growth, increasing the credibility of our operating model, and ongoing benefits of strategic initiatives we've been implemented over the past several quarters. Let's now take a closer look at first quarter's financial performance, starting with the top line. During the quarter, we built on the improving trend established in the second half of last year, with both GMV and revenues accelerated year over year for the second consecutive quarter. GMV increased by 12.9% year-over-year to R&B $2.45 billion, while total revenues grew by 9.2% year-over-year to R&B $2.11 billion, both representing our strongest quarterly growth in recent period. This performance was supported by the continued expansion of our customer base and stronger platform engagement. Our earnings profile also strengthened during the quarter, supported by improved operating leverage and ongoing efficiency gain. Gross profit increased by 6.6% year-over-year to R&B $354 million, while gross margin moderated slightly year-over-year from 17.2% to 16.7%. Our underlying margin trends improved sequentially, with GME-based gross margin increased by 90 basis points. Going forward, we will continue to improve business quality for three priorities, a more balanced customer and product mix, higher contribution from private legal products, and greater supply chain efficiency. On operational efficiency, we maintained strong cost discipline while continuing to invest in capabilities that support our long-term growth. Total operating expenses decreased by 8.8% year-over-year to R&B $376.5 million, representing 17.8% of net revenues compared with 21.3% in the same period last year. Breaking this down, fulfillment expenses decreased by 16.8% year-over-year to R&B $77.6 million. Sales and marketing expenses remained relatively stable at R&B $137.6 million. R&D expenses decreased by 25.9% year-over-year to R&B $29.3 million. General and administrative expenses decreased by 7.9% year-over-year to R&B $131.9 million. These improvements reflected continued reinforcement of our operating model, enhanced organizational efficiency, and more disciplined resources allocation. During the quarter, GMV per effective employee increased by over 20% year-over-year. reflecting a meaningful improvement in our workforce productivity. In addition, as we mentioned earlier, we continue to optimize our overseas business strategy with a stronger focus on operating quality and investment efficiency. This contributes to lower overseas-related spending and further improvement in our overall expense structure. These efficiency gains translated into significant improvements in probability compared to the same period last year. Operating loss narrowed by 72.2% to RMB 22.5 million, with operating loss margin improving to negative 1.1% from negative 4.2%. Non-GAAP EBITDA turned positive at RMB 4.2 million, compared with negative RMB 52 million in the prior year period, with margin increasing to positive 0.2% from negative 2.7%. Most notably, we achieved a non-GAAP adjusted net profit of RMB 1.7 million, compared with non-gap adjusted net loss of RMB $50.2 million in the same period last year. This significant turnaround refresh the combined impact of top-right recovery, improved operating efficiency, and further operating leverage. Turning to balance sheet, we maintained a healthy liquidity position. As of March 31, 2026, our cash and cash recruitment, restricted cash, and short-term investments totaled R&B $1.84 billion, providing us with ample financial feasibility to support our business operations and strategic priorities. Operating cash flow also improved meaningfully year over year. Net cash used in operating activity was R&B $34 million in the first quarter, compared with cash outflow of RMB 97.1 million in the same period of 2025, reflecting continued improvement in our working capital management. To recap, the first quarter marked a strong start to 2026, which referred accelerated top-line growth, continued improvement in operating efficiency and substantial gains in probability. Notably, we achieved our first non-gap adjusted net net probability in the seasonally soft first quarter. Looking ahead, our focus remains on high quality growth and discipline execution. This concludes our prepared remarks. Thank you. We would now like to open the call for the questions. Operators, please go ahead.

For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Again, it is star than one to ask a question. The first question comes from Leo Chang with Deutsche Bank. Please go ahead.

Thank you, management, for taking my question. The first quarter company's gross margin improved over quarter, but it still declined year-over-year. Could management share your view on the long-term trend of gross margin, and what factors could counter and further improve them in gross margin, and what action has the company taken to improve gross margin?

Thank you. 从三个方面来说 主要三个方面 一个是产品的品类结构 一个是客户结构 还有自由品牌 这三个方面 那品类结构这方面呢 就公司的产品线和HQ非常分散 不同产品的毛利率呢 差异还是比较大 部分产品线毛利率较低 但毛利额呢 和GMV增长还较快 短期可能拉低整体毛利率 但如果能够整体能够带来客户渗透 供用能力的扩张和绝对毛利率的增长 仍然具有金融的价值 同时部分MO产品期限的毛利率和毛利率同步提升 是我们的强势优势产现 例如个人防护、清洁、OEM警部件、搬运存储、安防等产线 体现出更好的利润转化效率 随着这些高质量产品线占米逐渐提升 有助于改善整体毛利率结构

谢谢您欢迎 Thank you for the question I will take this question from three parts So, namely category mix, customer mix, and private labels. So, for category mix, we have lots of SKUs and product lines, and so things are quite fragmented. And the gross margins of different products vary greatly. For some product lines, gross margins are lower, but the growth for their gross profits and the GMB is relatively fast. So in the short run, they might drive down the overall growth margins, but if they're able to still drive customer penetration, extend our supply capabilities, and contribute to the growth of our absolute growth profits, then there's still value in operating those categories. At the same time, some MRO products' growth margins and growth profits are going up simultaneously, especially for our advantageous product lines. By that, I mean things like PPE or personal protective equipment, cleaning, OEM fasteners, handling and storage, and security, et cetera. And these categories are reflecting better profit conversion efficiency, so to speak. And as these high-quality product lines are taking a higher share out of the entire portfolio, this will be conducive to improving our overall growth margin structure.

So, let's continue. 总结来看,去年的第四季度和今年第一季度的,如果比同比毛利率略有下降的话,主要的因素还是我们小大宗产品,包括柴油,变压汽油,硅光片,这一类的低毛利率的产品呢,增速达到了41%。 So in terms of your question about Q1 being lower year over year, it was primarily due to the gross margin drop in categories including diesel, transformer, oil, and silicon photonics.

wait first. And that has written down our growth margin. But overall, our growth margin is pretty solid. Thank you. For my second point about customer mix, usually the growth margin for SME customers are higher than key accounts or large customers. And so the share of the GMB on the part of SME customers, that trend will impact the trend of our overall growth margins. So currently, SME customers' GMB accounts for about 30-plus percent of the total, while key accounts' GMB accounts for about 60 percent. And the SME customers are growing at 20 percent GMB-wise. So from a customer-mix perspective of a growth margin is improving. 公司管理毛利率不会只追求单一产品或单一季度毛利率的最大化 而是更关注整体产品供用能力的提升 客户覆盖加深和绝对毛利额的增长 不同产品线毛利率差异较大 阶段性产品组合变化会影响整体毛利率 In terms of private labels, gross margins for private labels are typically higher than non-private labels. So that trend will also impact the overall gross margin trend. and private label GMB currently accounts for 9.7%, and our long-term goal for it is to reach over 30%. Overall, the growth margin, so in terms of managing growth margin, we will not pursue the maximization of a single product or a single quarter for the growth margin to maximize, but we care more about the improvement of our overall supply capabilities the deepening of our customer reach, and the growth of our absolute growth profits. And we understand how growth margin across different product lines varies by a lot. So the adjustment and changes to product portfolio for different stages of our development will impact overall growth margin, but our long-term goal is to drive growth profits continuously by way of advantageous product lines, private labels, and the optimization of customer mix and improvement of our purchasing efficiency.

Are you ready for your next question? The next question comes from Jing Wan with CICC.

Please go ahead. 恭喜公司这个季度取得了不错的业绩啊 我的问题是关于我们的一些计算行业的表现 就是我们观察到一些高技术制造业的话 在一到四月的增速有一些环比的加速 然后比如说通信电子汽车制造和设备制造行业的景气度都还不错 前面管理层也分享了一些 然后能不能请管理层进一步分享一下公司内部观察到的一些情况 以及公司的这些计算行业的表现 I will translate myself. We noticed that high-tech manufacturing, such as communication, electronic, also manufacturing and equipment manufacturing accelerate its growth in first quarter and April. Could management share more about whether we are seeing similar change and how is our performance in these subsectors? and also annual initiatives has been introduced to expand our market share in this sector.

Thanks. 光模块 机器人及光通信等行业领域持续提升越来越多的客户资源 那增长较快的行业包括啊 有些金属行业 一到四月份 这个一到四月日经订单同比增长100% 那通信电子呢 一到四月日经订单增长了45% 新能源1-4月日经订算增长33%, 精气化工,医药,电气制造等也都带来了快速的增长。 Thank you for the question.

Indeed, we have seen how players in the advanced manufacturing sector buying more in terms of MROs. And these include sectors like electrical manufacturing, communication, electronics, alternative energy or new energy, and non-ferrous metals. The GMB for the aforementioned sectors all achieved a year-over-year growth of over 20%. And for semiconductors, energy storage, optical modules, robotics, and optical communication, these emerging sectors, we are accumulating more and more customer resources. And other sectors that have been growing relatively fast are steel, so specifically for steel and non-ferrous metal, if we look at the daily average order volume January through April, this metric has grown 100% for steel and non-ferrous metals. And this for the same metric, so basically daily average water volume, Jan through April, grew by 45% for communication electronics and 33% for alternative energies.

And refined chemicals, pharmaceuticals, electrical manufacturing have all grown very quickly. 主要三件事 一方面呢 组建行业的销售 专门的行业销售团队 专门开发覆盖这些行业的客户资源 那第二个呢 在不断丰富和深耕 覆盖这个行业需求的行业商品池和重点客户的客户商品池 那第三点呢 针对机器人和未来各类设备的智能化发展的需求

And in terms of the measures we're taking to improve our sector penetration and our share, we did three things. First is we have formed sector-specific sales forces to target these customers in these specific sectors. Secondly, we're building out a sector-specific commodity pool and a customer-specific commodity pool for these sectors. And in order to embrace e-growth in robotics and smart products, we have launched the FA or Factory Automation Mall, as was alluded to in the prepared remarks. That was my answer to this question. Thank you.

Next question comes from Brooke Wong with CITIC. Please go ahead. Hello.

Thank you for the opportunity. I have a little bit of a question. I would like to introduce you to the United States. In 2020, I have seen a big deal of this six years. Can I introduce you to the United States of the United States? And then, I would like to ask you a question. You mentioned before the company's overseas business revenue increased by six-fold year-over-year in the first quarter.

Could you please introduce this year's strategy for the overseas business? 今天前几个月呢,我们海外的业务不仅跟去年同期比较实现了比较快速的增长 环比每个月呢,我们也是实现了增长 那我们的海外策略呢,主要还是两个方面 一个方面呢,是服务中国企业出海 意图利用好已有的中国客户的关系 撬动更多的海外的定端 强化海外不同国家区域的这个末端的交付能力 这是中国企业出海方面 那另外一方面我们很重要的业务是美国本地化的经营 那美国本地化的业务呢我们更加聚焦 不断的收敛更加聚焦 重点开发仓库经营过程中需要的产品 我们现在希望把这个品类先做强再增加其他的品类 Thank you for that question.

Yes, indeed. For the first few months of this year, we not only achieved the yield via growth, We also achieved month-over-month growth. Two things about overseas business. Firstly, we are primarily serving Chinese companies going abroad. So we will be relying and leveraging our existing customer relations with those Chinese customers to drive more overseas orders. We will also strengthen our last mile fulfillment capabilities when it comes to serving the different geographies overseas. Secondly, localized operations in America is extremely important to us. So we will be more focused, more laser-focused in our business there, and specifically we'll be focusing on providing the categories needed for warehousing operations. We will get that done well before we branch out into other SKUs and categories. Overall, when it comes to developing and expanding our business in overseas markets, we will focus more on the efficiency and returns of our investments and the spend. And we would not spend ahead of time. And our goal is to try to break even for overseas business this year. That concluded my answer to this question.

And that concludes the question and answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. You can find the webcast of today's call on ir.vkf.com. If you have any further questions, please feel free to contact us. Our contact information can be found in today's press release. Thank you and have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.