ZTO Express (Cayman) Inc. (ZTO) Q4 2025 Earnings Call Transcript

Good day, and welcome to the ZTO Express 4th Quarter and Fiscal Year 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than 1 on your telephone keypad, and to withdraw your question, please press star than 2. we do ask you please limit yourself to two questions please also note today's event is being recorded I would now like to turn the conference over to Sophie Lee head of capital markets please go ahead Thank You Rocko critical phase of industry transformation ZTO stay

committed to our high quality development strategy continuously in house differentiated product offering and service capability. Facing intense competition, CTO actively responded to the government's call. Our robust infrastructure, data-driven operations guarded our competitive advantages in quality, scale, and profitability. Our annual retail parcel value grew by 46% year-over-year, significantly outpacing the overall growth of e-commerce parcels. In the fourth quarter, daily retail volume, which close to $10 million, has enhanced brand recognition and opportunity, while providing strong support for core revenue growth and alleviating the impact from volume-based subsidies. We continue to strengthen standardized operations and coordination across our transit segments, improving both operational efficiency and service time limits. Unified unit cost for transportation and sorting decreased with a stable SG&A structure. A consensus on high-quality development, stable microeconomics continue to optimize focusing on access to public and platform service indicators into performance evaluation. With accountability assigned to specific positions, individuals, and by targeting, the continuously optimizing our product mix, we will impound our service capability and the differentiation to expand our brand interaction and operational efficiency to solidify cost of leadership. Centered around better integration from end-to-end implementation of direct linkage model, we will establish standardized, visualized, and comparable benchmark targets to achieve achieve optimal cost efficiency across. Focus on steady volume. We will rely on detailed analysis for regions with lacking market share to enhance the efficiency of cost. The deployment of free industry remains possible. Leading enterprises continue to turn to intrinsic value. The industry landscape will further bifurcate and the concentration will increase. ZTO remains committed to its long-term strategy of integrating service quality, market share, and a reasonable profit. As the industry shifts from food value preparation, we must lead the way in our diversified and differentiated products, reinforcing our infrastructure foundation, harness the productivity of digital operations, unlocking the potential of end-to-end cost reduction, and prioritizing the long-term trust and the stability of our franchising network can we seize opportunities and navigate through cycles for over 20 years being our best has been the constant for zto amidst all building on our shared will take permission of bringing happiness happiness to this new journey of high quality development sustainable and long-term value for the zto community let's invite miss yen to present the financials thank you chairman And thank you, Sophie.

Hello to everyone on the call. As I go through our financials specifically mentioned, all numbers quoted are percentage changes referred to. Again, detailed financial information and performances posted on our website. And I'll only go through some of the highlights here. In the fourth quarter, benefiting from the government's call against involution, we prioritized service quality and core competency to drive sustainable growth. Our parcel volume growth comes from operations as our corporate spending remained stable and efficient at $7 billion and $9.8 billion. Profit declined 2.1% to $3.7 billion, 2.5% to $12.3 billion for 2025. 5. Gross profit margin rate decreased 3.7.5 billion for the year. Associated margin dropped 4.7 points to 5.3 points refunds to 4 last year. Our cash flow from operations expenditures for the year to our business on current market conditions, 2026, committed to growing our volume for my annual cash dividend of established 40% payout ratio substantially completed 24 month 1.5 billion share buyback program targets

and aggregate annual return to ask a question you may press star than one on your telephone keypad if you're using a speakerphone please pick up your handset before pressing the keys if at any time your question has been addressed you If you would like to withdraw your question, please press star then two. We do ask you please limit yourself to two questions. At this time, we'll pause for just a moment to assemble our roster. And today's first question comes from Queen Lei Fan with Morgan Stanley. Please go ahead.

Thank you operator. 管理层好,感谢接受我的提问,我有两个小问题,那第一个小问题还是关于粉内卷的,就是我们在春节之后也有看到各种新闻关于各地粉内卷的一些新的动向,那么想请教一下管理层对今年粉内卷的这个持续性的一个判断,以及对这个监管态度的一个理解。 The second small question is related to the market increase and competition. Now, if you're looking at the Finagent now, there are some costs on the cost. Now, we're looking at the market increase. So, in this case, how do you look at the market increase? Let me translate for myself. Thank you, Najiman, for taking my question. I have two questions. The first question is about anti-involution. After the Chinese New Year, we have seen lots of news on the anti-involution dynamics everywhere in China. So, is there any new updates on the anti-involution initiatives? How do you expect the sustainability of the such anti-involution driven price hikes? What's your take on the attitude from the regulatory towards anti-envolution? And what's your expectation on the potential pricing trends for the rest of the year? The second question is about industry growth outlook and competition landscape. So taking into consideration of potential price hikes amid anti-evolution, what's your expectation on the four-year industry growth outlook? And with this outlook, what's your expectation on the industry competition landscape and market share dynamics? ...of the entire in the third quarter line. Thank you very much.

Thank you. And our next question today comes from Stephen Q with Norman Sachs.

Please come ahead. 我们的网点生态治理 那也留意到我们推出了 两亿元的服务专项奖励基金 那是否意味着 我们将阶段性的加大 对一线员工和网点治理的 一个支持力度 那我的第二个小问题是 2026年1到2月呢 其实整个行业的GMV增速呢 也是就两年以来 首次超过了一个 快递件量的一个增速哈 那也想请教管理层 我们怎么看待 今年行业整体市场结构的演变 那比如说这个变化呢 更多是一个低价件初清带来的一个阶段性的改善还是说市场结构有一些深层次的变化 那如果是后者是否意味着行业竞争有机会从过去的价格导向啊 阶段性的转向服务质量导向然后为这个ASP改善提供一个更持续的支撑 我简单翻译一下 Good morning management. I have two questions. My first question is under the anti-involution scheme what is the 2026 priority for your company? Is it market share, profit, or network governance? And also, does the $200 million fund that you dedicated to support your frontline employee as well as your network signal more support for your partners? My second question is, given the generated February GMV growth industry-wide has been faster than the volume growth and which has been a first time since 2023 so is this mix driven or structural and could the competition shift to quality as the target the networks intrinsic motivation by optimizing profit sharing

mechanism reinforcing our brand advantage while building a win-win And our next question comes from Aaron Luo with UBS.

Please go ahead.

Thank you. Thank you. Thank you. Thank you. Thank you. 还有一个更重要的就是 回购我们大概会按一个什么节奏进行了 这是第一个问题 第二个问题是有关AI大模型的 因为这个一直在投资人之间讨论的比较火热嘛 那所以想问一下 咱们在AI还有大模型上的应用主要有哪些 So let me translate myself Thank you for taking my question And I have two questions. One is about our recent insurance of convertible bonds in early February. So, just would like to understand a bit more of our major considerations behind our recent GDP insurance, and more importantly, at what pace should we expect for the share buybacks to proceed? The second question is about AI, which has been continuing to be a very hot topic among investors. So just curious about what are the major applications of A&M and even large models at our company. Thank you so much.

In 2016, the company issued a $1.5 billion five-year convertible during a period. The pace with the market is full price range, but I think I'll just take this opportunity to provide some insights. We established a consistent and integrated shareholder return system. and this is going to be combined dividend and buyback mechanism. Thank you very much for your question.

This concludes our question and answer session. I'd like to turn the conference back over to the company for closing remarks.

Thank you, everyone, again, for joining us. As the chairman had pointed out, that the industry is entering into a stable growth stage and we are committed to grow our volume faster than the industry.

That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.