Operator
Good day, and welcome to the ZTO to announce second quarter and half-year 2026 financial results. All participants will be in a 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 then 1 on your touch-tone phone, and to withdraw your question, please press star then 2. Please limit yourself to two questions. And please note that this event is being recorded. I would now like to turn the conference over to Ms. Sophie Lee, Company Secretary. Please go ahead.
The company's result is a company that's now under anti-involution competition became increasingly rational. tangible benefits volume reached 10.3 per revenue diversification that intelligent transforms refined operation initiative surrounding staircase fair profit distribution mechanisms at full performance visibility and the traceability we continue to enhance last month both real
financials please note that unless specifically mentioned fall numbers quoted are in rmb and percentage changes refer to year-over-year comparisons detailed information on our financial performance unit, and I'll go through some of the highlights here. In the second quarter, our long-term profitable growth strategy delivered solid results. Anti-involution regulatory, our resilient franchise network, continued to drive steady market share expansion with industry-leading efficiency. Our parcel volume grew 6.5% to $10.49 billion, with a 0.4 points increase in the market share. Total revenue increased 23% to $14.5 billion, while operating income risen to $3.23 billion. Adjusted net income grew 50.3% to $3.1 billion, benefiting from a $344.3 million tax refund as our wholly owned subsidiary qualified for a 10% preferential tax rate for tax year 2025. P for our core 19 cents or increased driven by a 17 cent mainly from increased K-verse logistics and a 2 cent increase from revenue was $10.8 billion which increased 21.7 delivery business increased 14.6 percent or 12 cents which includes K-cost increase of $0.14 that was consistent with the strategic increase in K-A volume. Despite cost pressure stemming from the rise of combined unit sorting, decreased by to digitization and lean operations. Specifically, unit cost of line-haul transportation decreased by to $0.32, reflecting optimized unit sorting costs to $0.24, Continued improvements in productivity increased 26.8% to $3.7 billion, and gross profit margin rate increased. SG&A expenses, excluding SBC, decreased 10.5% to $555.5 million. SG&A excluding SBC as a percentage of revenue. Income from operations and associated margin increased 1.3 points to 22.2%. Operating cash flow totaled $4.6 million, an interest income realized upon maturities of long-term financial products and favorable terms on sizable fuel payables due for payment in the next quarter. Adjusted EBITDA increased 20% to $4.2 billion, capital expenditure for $252 million, and we anticipate the annual CapEx in 2026 to be around $6 million. Now, moving on to our guidance. Considering the current economic conditions and anticipated industry parcel volume growth, we have updated our full-year parcel volume growth guidance to six-year-over-year, representing a parcel volume range of $40.83 billion to $42.37 billion. These estimates reflect management's current preliminary view and are such a our prepared remarks. Open the line for questions.
Operator
Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you please limit yourself to two questions. And at this time, we'll pause momentarily to assemble our roster. In the first question, we'll come from Quayley Finn with Morgan Stanley. Please go ahead. Pardon me, we have Mr. Steve Koi with Goldman Sachs as our first questioner. Please go ahead.
I'd like to ask a question about AI-driven efficiency gains. So I've noticed that a company has deployed 3D digital twin and market machine vision technologies at its sorting hubs and upgrade voice customer service and network outlets as well as accelerate regional management and decision making. Could you share VGO's high-level strategic thinking on digitalization as well as AI, as well as your thoughts on the specific use cases in the operational workflows and where it's been implemented?
100 million daily parcels and our matured network operations to continuously optimize network-wide costs, reinforcing loop of lower costs, building digital technological mode that is not easily replicated up to delivery, specifically on the presentation side. In transportation, our proprietary intelligent routing and dispatch are common scenarios. By optimizing routes, it unlocks idle capacity in load rate, coordinated parcel volume grow 120% year-over-year, and stranded parcels. In the first half, a cost-saving achieved by AI in transportation, in transit nationwide. Mission Vision monitors operations in real-time and flags 28 types working with on-site alerts and 3D visualization data. You can see rows for unloading and picking up and delivery. Our precision address system now covers more than 250,000 front-line couriers with building-level location accuracy of 99.98%. It supports dispatch applications optimization, improving 90% actively lowering labor consumer side with AI stepping in earlier, customer satisfaction nearly 90%. Management front, building on the data agent, we now push standardized best to more than 6,000 outlets across with a response rate of 88% to be replicated in scale. Looking ahead, we will continue to deepen the integration of AI across our operations and market leadership.
Operator
The next question will come from Quayley Finn with Morgan Stanley.
Please go ahead. 观察到逆向件其实对公司的引力增长起到了非常重要的助力 那么想请教一下现在逆向件的日单量的情况 然后对应的同比增速的情况 然后今年我们到了旺季有没有什么样的目标 以及明年这个逆向件增长的目标 这第一个问题 那第二个问题是关于社保对公司成本和经营的影响 我们今年有听到一些其他的行业在讨论这个社保全额视角 也是在逐渐的推进当中 就想请教一下这个社保全额视角对公司成本和经营的影响 历史上我们也观察到就是全行业的成本上升 也大部分通过涨价的形式去pass through给整个这个收入端 Let me translate for myself. Thank you, Benjamin, for taking my questions. And congratulations on a very strong profit growth in the quarter. I have two questions. The first question is about the reverse logistics process. it's it's encouraging to see that the retail parcels have contributed a solid foundation for our profit growth just wondering in terms of daily volume what where are we now and what's the yet implied young year growth do we have any targets towards the peak season of this year and in next year the same question is about social insurance so this in this year we start to hear more discussion about a full social insurance contribution implementation gradually pushed by regulators wondering what's the potential impacts on our costs and operations specifically historically we We have seen that industry-wide cost inflation could be passed through by industry-wide price hikes. Do you think if there are any cost inflation related with this full social insurance contribution, the industry has opportunities to pass that cost inflation through?
Thank you very much for your question. is a key component of CTO's high-quality strategy and it demonstrates exceeded 11.5. Supported overall probability, focusing increases, ability gain across data sharing system being implemented, regulators shared social security system. Together with the beginning, the company have consistently upheld the of shared success, protecting the interests of our Lee, improving legitimate rights, encouraging and helping unique security initiatives in the foreseeable future. Lee coverage, reduce career turnover, CTO will continue to stay at the full-time answer. Thank you very much. Thank you.
Operator
The next question will come from Aaron Lau with UBS.
Please go ahead. 莱总 严总 苏维总 你们好 感谢接受我的提问 我这边有两个问题了 第一个是看到咱们也给了新的全年业务量指引 所以想请教一下你们对这个行业下半年增速的一个展望 包括咱们公司下半年整体的一个在量价这块的这个战略 那另一个问题是关于成本的 Let me translate it for myself. Thanks, Ms. Lai, Ms. Yan, and Sophie for taking my questions. The first one is regarding our new full-year volume guidance. I'd like to seek a bit more of your insights on the industry's second-half growth outlook and our company's strategic plan. for the second half and also on the cost side do we have any cost guidance for the future and what is the sensitivity of our costs to oil prices thank you so much as the anti-evolution
policy continue to take effect in the first half of the year the express delivery industry has undergone gradually shifted away from quality driven development leveraging operating efficiency Looking ahead, the industry's transformation will continue to deepen, focusing more in service quality and operational efficiency to pay the parcel volume growth for the entire industry to be a steady level. development. The company remains committed to a sustainable turn-scale expansion. We will continue to focus on these priorities for market share, building differentiated service capabilities and advancing end-to-end. Solidifying our leadership in parcel volume, we will place great quality market share and maintain sound profitability. Continually, trees development is, and continues to be on market share leadership initiatives, specifically on, in the second quarter, transportation costs per parcel was a rising fuel cost added roughly about two cents, using our optimized future and route, making prudent transit times duration, and effectively lower. We continue to strengthen fleet management, consistently refining diesel costs at the quarter. Looking into the second half, highly uncertain. Unit, hopefully, continued to weigh on per parcel transportation costs by the fuel price. We are vehicles, to be exact, because really the total cost has increased more than a year. On the equipment front, increased level of automation enforced accountability at the labor product targets a full year leveraging digital tool quality and reduce over her year.
Operator
With you to share the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
