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ZKH Group Limited Announces Second Quarter 2024 Unaudited Financial Results

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SHANGHAI, Aug. 22, 2024 /PRNewswire/ — ZKH Group Limited (“ZKH” or the “Company”) (NYSE: ZKH), a leading maintenance, repair and operations (“MRO”) procurement service platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Operational and Financial Highlights

in thousand RMB, except for number of
customers, percentage and basis points (“bps”)

Second Quarter

2023

2024

Change

GMV[1]

2,608,851

2,754,591

5.6 %

GMV by Platform

    ZKH Platform

2,375,584

2,479,915

4.4 %

    GBB Platform

233,267

274,676

17.8 %

GMV by Business Model

    Product Sales (1P)

1,995,108

2,185,351

9.5 %

    Marketplace (3P)

613,743

569,240

-7.3 %

Number of Customers[2]

38,980

48,766

25.1 %

    ZKH Platform

28,909

34,360

18.9 %

    GBB Platform

10,071

14,406

43.0 %

Net Revenues[3]

2,073,453

2,249,996

8.5 %

Gross Profit

335,071

382,991

14.3 %

    % of Net Revenues

16.2 %

17.0 %

86.2bps

Operating Loss

(123,093)

(71,213)

-42.1 %

    % of Net Revenues

-5.9 %

-3.2 %

277.2bps

Non-GAAP EBITDA[4]

(107,851)

(47,068)

-56.4 %

    % of Net Revenues

-5.2 %

-2.1 %

311.0bps

Net Loss

(129,580)

(66,289)

-48.8 %

    % of Net Revenues

-6.2 %

-2.9 %

330.3bps

Non-GAAP Adjusted Net Loss[5]

(129,498)

(34,857)

-73.1 %

    % of Net Revenues

-6.2 %

-1.5 %

469.6bps

Mr. Eric Long Chen, Chairman and Chief Executive Officer of ZKH, stated, “Bolstered by our leadership position in the MRO industry, we achieved solid performance in the second quarter of 2024, driving further profitability improvement despite macroeconomic headwinds. Specifically, we continued to invest in strengthening our supply chain capabilities, enabling us to offer better value-for-money product offerings. Concurrently, we enhanced our customer coverage and service capabilities by optimizing the sales team structure to foster closer customer engagement. In parallel, we redoubled our efforts to advance our digitalization and artificial intelligence capabilities by promoting digital and intelligent applications across various business areas. Looking ahead, we remain steadfast in our commitment to doing what is right for the long-term success of our business. Our unique value proposition of providing digitalized and one-stop MRO procurement solutions to our customers serves as the foundation for our continued growth. Leveraging this strong market positioning, we are well-poised to seize the vast opportunities in the MRO market and deliver sustainable revenue growth.”

Mr. Max Chun Chiu Lai, Chief Financial Officer of ZKH, added, “We are pleased with the solid growth in the second quarter, with GMV and net revenue increasing by 5.6% and 8.5% year over year, respectively. This performance was underpinned by a 25.1% year-over-year increase in customer numbers and continued strong demand in the MRO market. While delivering continued topline growth, our profitability strengthened further with an improvement in the gross margin and a narrowing of the net loss. Our gross profit increased by 14.3% with gross margin expanding by 86.2 basis points year over year and adjusted net loss narrowed by 73.1%, with a corresponding margin improvement of 469.6 basis points year over year, marking our ninth consecutive quarter of year-over-year improvement. Moving forward, we will continue our share repurchase program initiated earlier this year and remain focused on sustaining growth and delivering long-term value to all our stakeholders.”

[1] GMV is the total transaction value of orders placed on the Company’s platform and shipped to customers, excluding taxes, net of the returned amount.

[2] Customers are customers that transacted with the Company during the period of time, which mainly include enterprise customers in various industries.

[3] The proportion of GMV generated by the marketplace model was 23.5% and 20.7% for the second quarter of 2023 and 2024, respectively.

[4] Non-GAAP EBITDA is defined as net loss before interest expenses, income tax expenses/(benefits) and depreciation and amortization expenses.

[5] Non-GAAP adjusted net loss is defined as net loss excluding share-based compensation expenses.

Second Quarter 2024 Financial Results

Net Revenues. Net revenues were RMB2,250.0 million (US$309.6 million), representing an increase of 8.5% from RMB2,073.5 million in the same period of 2023, mainly due to the strong increase in customer numbers and continued growth in MRO market demand.

 in thousand RMB, except for percentage    

Second Quarter

2023

2024

Change

Net Revenues

2,073,453

2,249,996

8.5 %

    Net Product Revenues

1,986,555

2,163,721

8.9 %

         From ZKH Platform

1,756,114

1,893,447

7.8 %

         From GBB Platform

230,441

270,274

17.3 %

    Net Service Revenues

69,865

69,161

-1.0 %

    Other Revenues

17,033

17,114

0.5 %

Net Product Revenues. Net product revenues were RMB2,163.7 million (US$297.7 million), representing an increase of 8.9% from RMB1,986.6 million in the same period of 2023. The increase was mainly due to higher net product revenues generated from both the ZKH and GBB platforms, primarily driven by the strong increase in customer numbers.

Net Service Revenues. Net service revenues were RMB69.2 million (US$9.5 million), a decrease of 1.0% from RMB69.9 million in the same period of 2023, primarily due to lower proportion of GMV generated by the marketplace model on the ZKH platform.

Other Revenues. Other revenues were RMB17.1 million (US$2.4 million), compared with RMB17.0 million in the same period of 2023.

Cost of Revenues. Cost of revenues was RMB1,867.0 million (US$256.9 million), representing an increase of 7.4% from RMB1,738.4 million in the same period of 2023, which was lower than the growth in product revenues, mainly attributable to the payoff of the Company’s measures to reduce the overall product procurement costs.

Gross Profit and Gross Margin. Gross profit was RMB383.0 million (US$52.7 million), an increase of 14.3% from RMB335.1 million in the same period of 2023. Gross margin was 17.0%, compared with 16.2% in the same period of 2023. The increase in gross margin was driven by higher gross margin of product sales model (1P) and increased take-rate of marketplace model (3P) on the ZKH platform, partially offset by lower gross margin of the GBB platform.

in thousand RMB, except for percentage and
basis points (“bps”)

Second Quarter

2023

2024

Change

Gross Profit

335,071

382,991

14.3 %

    % of Net Revenues

16.2 %

17.0 %

86.2bps

    Under Product Sales (1P)

        ZKH Platform

240,896

294,022

22.1 %

           % of Net Product Revenues from ZKH Platform

13.7 %

15.5 %

181.1bps

        GBB Platform

13,565

15,133

11.6 %

            % of Net Product Revenues from GBB Platform

5.9 %

5.6 %

-28.7bps

    Under Marketplace (3P)[6]

69,865

69,161

-1.0 %

        % of Net Service Revenues

100.0 %

100.0 %

–

    Others

10,745

4,675

-56.5 %

        % of Other Revenues

63.1 %

27.3 %

-3,576.7bps

[6] Take rate of marketplace model was 12.2% and 11.4% for the second quarter of 2024 and 2023, respectively. Take rate of market place model represents gross profit from marketplace model divided by GMV from marketplace model.

Operating Expenses. Operating expenses were RMB454.2 million (US$62.5 million), a decrease of 0.9% from RMB458.2 million in the same period of 2023. Operating expenses as a percentage of net revenues were 20.2%, compared with 22.1% in the same period of 2023, demonstrating the Company’s improved operational efficiency.

Fulfillment Expenses. Fulfillment expenses were RMB99.1 million (US$13.6 million), a decrease of 7.1% from RMB106.7 million in the same period of 2023. The decrease was primarily attributable to lower employee benefit costs and warehouse rental costs, partially offset by higher distribution expenses. Fulfillment expenses as a percentage of net revenues were 4.4%, compared with 5.1% in the same period of 2023.

Sales and Marketing Expenses. Sales and marketing expenses were RMB157.7 million (US$21.7 million), a decrease of 6.5% from RMB168.6 million in the same period of 2023. The decrease was primarily attributable to lower travel expenses and employee benefit costs. Sales and marketing expenses as a percentage of net revenues were 7.0%, compared with 8.1% in the same period of 2023.

Research and Development Expenses. Research and development expenses were RMB38.4 million (US$5.3 million), a decrease of 16.4% from RMB46.0 million in the same period of 2023. The decrease was primarily attributable to lower employee benefit costs. Research and development expenses as a percentage of net revenues were 1.7%, compared with 2.2% in the same period of 2023.

General and Administrative Expenses. General and administrative expenses were RMB159.0 million (US$21.9 million), an increase of 16.1% from RMB136.9 million in the same period of 2023. The increase was primarily attributable to higher share-based compensation expenses, partially offset by the decrease in employee benefit costs. General and administrative expenses as a percentage of net revenues were 7.1%, compared with 6.6% in the same period of 2023.

Loss from Operations. Loss from operations was RMB71.2 million (US$9.8 million), compared with RMB123.1 million in the same period of 2023. Operating loss margin was 3.2%, compared with 5.9% in the same period of 2023.

Non-GAAP EBITDA. Non-GAAP EBITDA was negative RMB47.1 million (US$6.5 million), compared with negative RMB107.9 million in the same period of 2023. Non-GAAP EBITDA margin was negative 2.1%, compared with negative 5.2% in the same period of 2023.

Net Loss. Net loss was RMB66.3 million (US$9.1 million), compared with RMB129.6 million in the same period of 2023. Net loss margin was 2.9%, compared with 6.2% in the same period of 2023.

Non-GAAP Adjusted Net Loss. Non-GAAP adjusted net loss was RMB34.9 million (US$4.8 million), compared with RMB129.5 million in the same period of 2023. Non-GAAP adjusted net loss margin was 1.5%, compared with 6.2% in the same period of 2023.

Basic and Diluted Net Loss per ADS[7] and Non-GAAP Adjusted Basic and Diluted Net Loss per ADS[8]. Basic and diluted net loss per ADS were RMB0.40 (US$0.06), compared with RMB14.52 in the same period of 2023. Non-GAAP adjusted basic and diluted net loss per ADS were RMB0.21 (US$0.03), compared with RMB3.43 in the same period of 2023.

[7] ADSs are American depositary shares, each of which represents thirty-five (35) Class A ordinary shares of the Company.

[8] Non-GAAP adjusted basic and diluted net loss per ADS is a non-GAAP financial measure, which is calculated by dividing non-GAAP net loss attributable to the Company’s ordinary shareholders by the weighted average number of ADSs.

Balance Sheet and Cash Flow

As of June 30, 2024, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB2.04 billion (US$280.8 million), compared with RMB2.12 billion as of December 31, 2023.

Net cash generated from operating activities was RMB122.1 million (US$16.8 million) in the second quarter of 2024, compared with net cash used in operating activities of RMB236.2 million in the same period of 2023.

Exchange Rate

This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB7.2672 to US$1.00, the exchange rate in effect as of June 28, 2024, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been, or could be, converted into US$ or RMB, as the case may be, at any particular rate, or at all.

Conference Call Information

The Company’s management will hold a conference call on Thursday, August 22, 2024, at 8:00 A.M. U.S. Eastern Time or 8:00 P.M. Beijing Time to discuss its financial results and operating performance for the second quarter of 2024.

United States (toll free):

+1-888-317-6003

International:

+1-412-317-6061

Mainland China (toll free):

400-120-6115

Hong Kong (toll free):

800-963-976

Hong Kong:

+852-5808-1995

Access Code:

7845776

The replay will be accessible through August 29, 2024, by dialing the following numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

2271132

A live and archived webcast of the conference call will also be available on the Company’s investor relations website at https://ir.zkh.com.

About ZKH Group Limited

ZKH Group Limited (NYSE: ZKH) is a leading MRO procurement service platform in China, dedicated to propelling the MRO industry’s digital transformation to drive cost reduction and efficiency improvement industry-wide. Leveraging its outstanding product selection and recommendation capabilities, ZKH provides digitalized, one-stop MRO procurement solutions that enable its customers to transparently and efficiently access a wide selection of quality products at competitive prices. The Company also facilitates timely and reliable product delivery with professional fulfillment services. By catering specifically to the needs of MRO suppliers and customers through its unmatched digital infrastructure, the Company empowers all participants in the value chain to achieve more.

For more information, please visit: https://ir.zkh.com.

Use of Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP adjusted net profit/(loss), non-GAAP adjusted net profit/(loss) per ADS, basic and diluted, and non-GAAP EBITDA. The non-GAAP financial measures should not be considered in isolation from or construed as alternatives to their most directly comparable financial measures prepared in accordance with accounting principles generally accepted in the United States of America. Investors are encouraged to review the historical non-GAAP financial measures in reconciliation to their most directly comparable GAAP financial measures.

The Company defines non-GAAP adjusted net profit/(loss) for a specific period as net profit/(loss) in the same period excluding share-based compensation expenses. The Company defines non-GAAP EBITDA as profit/(loss) before interest expenses, income tax expenses/(benefits) and depreciation and amortization expenses. Non-GAAP adjusted net profit/(loss) per ADS is calculated by dividing adjusted net profit/(loss) attributable to the Company’s ordinary shareholders by the weighted average number of ordinary shares outstanding during the periods and then multiplied by 35.

The Company presents these non-GAAP financial measures because they are used by the management to evaluate the Company’s operating performance and formulate business plans. The Company believes that these non-GAAP financial measures help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that are included in net profit/(loss) and certain expenses that are not expected to result in future cash payments or that are non-recurring in nature. The Company also believes that the use of these non-GAAP financial measures facilitates investors’ assessment of its operating performance, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by the management in financial and operational decision making.

The non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies. The Company’s non-GAAP financial measures do not include all income and expense items that affect the Company’s operations. They may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider the non-GAAP financial measures as substitutes for, or superior to, their most directly comparable financial measures prepared in accordance with GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of Non-GAAP Results” set forth at the end of this press release.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expects,” “anticipates,” “aim,” “estimates,” “intends,” “plans,” “believes,” “is/are likely to,” “potential,” “continue,” and similar statements. Among other things, the quotations from management in this press release and ZKH’s strategic and operational plans contain forward-looking statements. ZKH may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press release and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about ZKH’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: ZKH’s mission, goals and strategies; ZKH’s future business development, financial condition and results of operations; the expected changes in its revenues, expenses or expenditures; the expected growth of the MRO procurement service industry in China and globally; changes in customer or product mix; ZKH’s expectations regarding the prospects of its business model and the demand for and market acceptance of its products and services; ZKH’s expectations regarding its relationships with customers, suppliers, and service providers on its platform; competition in the Company’s industry; government policies and regulations relating to ZKH’s industry; general economic and business conditions in China and globally; the outcome of any current and future legal or administrative proceedings; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in ZKH’s filings with the SEC. All information provided herein is as of the date of this announcement, and ZKH undertakes no obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

ZKH Group Limited
IR Department
E-mail: IR@zkh.com

Piacente Financial Communications
Hui Fan
Tel: +86-10-6508-0677
E-mail: zkh@thepiacentegroup.com

In the United States:

Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: zkh@thepiacentegroup.com

 

ZKH GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, ADS, per share and per ADS data)

As of
December 31,

As of
June 30,

2023

2024

RMB

RMB

US$

Assets

Current assets:

Cash and cash equivalents

1,090,621

1,308,972

180,121

Restricted cash 

159,751

150,305

20,683

Short-term investments

874,210

581,203

79,976

Accounts receivable (net of allowance
   for credit losses of RMB107,032 and
   RMB127,007 as of December 31,
   2023 and June 30, 2024,
   respectively)

3,639,794

3,398,738

467,682

Notes receivable

352,997

274,726

37,804

Inventories 

668,984

672,534

92,544

Prepayments and other current assets

168,117

182,692

25,138

Total current assets

6,954,474

6,569,170

903,948

Non-current assets:

Property and equipment, net

145,288

173,586

23,886

Land use right

11,033

10,920

1,503

Operating lease right-of-use assets, net

224,930

196,811

27,082

Intangible assets, net

20,096

17,918

2,466

Goodwill

30,807

30,807

4,239

Total non-current assets

432,154

430,042

59,176

Total assets

7,386,628

6,999,212

963,124

Liabilities

Current liabilities:

Short-term borrowings

585,000

591,000

81,324

Accounts and notes payable

2,883,370

2,599,001

357,634

Operating lease liabilities

91,230

86,940

11,963

Advance from customers

19,907

19,095

2,628

Accrued expenses and other current
   liabilities

448,225

362,294

49,854

Total current liabilities

4,027,732

3,658,330

503,403

Non-current liabilities:

Long-term borrowings

–

19,813

2,726

Non-current operating lease liabilities

146,970

122,024

16,791

Other non-current liabilities

507

441

61

Total non-current liabilities

147,477

142,278

19,578

Total liabilities

4,175,209

3,800,608

522,981

ZKH Group Limited shareholders’
        equity:

Ordinary shares (USD0.0000001 par value;
   500,000,000,000 and 500,000,000,000 shares
   authorized; 5,621,490,964 and 5,652,210,884 shares
   issued and outstanding as of December 31, 2023
   and June 30, 2024, respectively)

4

4

1

Additional paid-in capital

8,139,349

8,274,123

1,138,557

Statutory reserves

6,013

6,013

827

Accumulated other comprehensive loss

(25,154)

(12,683)

(1,745)

Accumulated deficit

(4,908,793)

(5,065,983)

(697,102)

Treasury stock

–

(2,870)

(395)

Total ZKH Group Limited
       shareholders’ equity

3,211,419

3,198,604

440,143

Non-controlling interests

–

–

–

Total shareholders’ equity

3,211,419

3,198,604

440,143

Total liabilities and shareholders’ deficit

7,386,628

6,999,212

963,124

 

ZKH GROUP LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(All amounts in thousands, except share, ADS, per share and per ADS data)

For the three months ended

For the six months ended

June 30, 2023

June 30, 2024

June 30, 2023

June 30, 2024

RMB

RMB

US$

RMB

RMB

US$

Net revenues

Net product revenues

1,986,555

2,163,721

297,738

3,853,214

3,938,740

541,989

Net service revenues

69,865

69,161

9,517

128,933

135,815

18,689

Other revenues

17,033

17,114

2,355

30,066

35,850

4,933

Total net revenues

2,073,453

2,249,996

309,610

4,012,213

4,110,405

565,611

Cost of revenues

(1,738,382)

(1,867,005)

(256,908)

(3,346,344)

(3,393,338)

(466,939)

Operating expenses

Fulfillment

(106,674)

(99,097)

(13,636)

(217,582)

(196,445)

(27,032)

Sales and marketing

(168,620)

(157,689)

(21,699)

(348,496)

(321,802)

(44,281)

Research and development   

(45,977)

(38,431)

(5,288)

(93,718)

(78,267)

(10,770)

General and administrative

(136,893)

(158,987)

(21,877)

(276,584)

(321,380)

(44,223)

Loss from operations

(123,093)

(71,213)

(9,798)

(270,511)

(200,827)

(27,634)

Interest and investment income

17,606

14,446

1,988

29,417

32,500

4,472

Interest expense

(4,507)

(5,522)

(760)

(7,600)

(11,217)

(1,544)

Others, net

(19,537)

(3,934)

(541)

21,432

22,508

3,097

Loss before income tax 

(129,531)

(66,223)

(9,111)

(227,262)

(157,036)

(21,609)

Income tax expenses

(49)

(66)

(9)

(181)

(154)

(21)

Net loss

(129,580)

(66,289)

(9,120)

(227,443)

(157,190)

(21,630)

Less: net income attributable to non-
   controlling interests

(33)

–

–

238

–

–

Less: net income attributable to redeemable
   non-controlling interests

(7)

–

–

(193)

–

–

Net loss attributable to ZKH Group
      Limited

(129,540)

(66,289)

(9,120)

(227,488)

(157,190)

(21,630)

Accretion on preferred shares to
  redemption value

(419,425)

–

–

(475,803)

–

–

Net loss attributable to ZKH Group
      Limited’s ordinary shareholders

(548,965)

(66,289)

(9,120)

(703,291)

(157,190)

(21,630)

Net loss

(129,580)

(66,289)

(9,120)

(227,443)

(157,190)

(21,630)

Other comprehensive loss:

Foreign currency translation adjustments

(81,370)

(9,121)

(1,255)

(60,220)

(12,471)

(1,716)

Total comprehensive loss

(210,950)

(75,410)

(10,375)

(287,663)

(169,661)

(23,346)

Less: comprehensive income attributable
   to non-controlling interests

(33)

–

–

238

–

–

Less: comprehensive loss attributable to
   redeemable non-controlling interests

(7)

–

–

(193)

–

–

Comprehensive loss attributable to ZKH
      Group Limited

(210,910)

(75,410)

(10,375)

(287,708)

(169,661)

(23,346)

Accretion on Preferred Shares to 
   redemption value

(419,425)

–

–

(475,803)

–

–

Total comprehensive loss attributable to
     ZKH Group Limited’s ordinary
     shareholders

(630,335)

(75,410)

(10,375)

(763,511)

(169,661)

(23,346)

Net loss per ordinary share attributable
      to ordinary shareholders

Basic and diluted

(0.41)

(0.01)

(0.00)

(0.53)

(0.03)

(0.00)

Weighted average number of shares 

Basic and diluted

1,322,841,307

5,747,591,752

5,747,591,752

1,322,841,307

5,745,856,349

5,745,856,349

Net loss per ADS attributable to
      ordinary shareholders

Basic and diluted

(14.52)

(0.40)

(0.06)

(18.61)

(0.96)

(0.13)

Weighted average number of ADS (35
      Class A ordinary shares equal to 1
      ADS)

Basic and diluted

37,795,466

164,216,907

164,216,907

37,795,466

164,167,324

164,167,324

 

ZKH GROUP LIMITED

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except share, ADS, per share and per ADS data)

For the three months ended 

For the six months ended 

June 30, 2023

June 30, 2024

June 30, 2023

June 30, 2024

 RMB

 RMB

US$

RMB

RMB

US$

 Net loss

(129,580)

(66,289)

(9,120)

(227,443)

(157,190)

(21,630)

Income tax expenses

49

66

9

181

154

12

Interest expense

4,507

5,522

760

7,600

11,217

1,544

Depreciation and amortization expense

17,173

13,633

1,876

40,586

28,703

3,950

 Non-GAAP EBITDA

(107,851)

(47,068)

(6,475)

(179,076)

(117,116)

(16,124)

For the three months ended 

For the six months ended

June 30, 2023

June 30, 2024

June 30, 2023

June 30, 2024

RMB

RMB

US$

RMB

RMB

US$

Net loss

(129,580)

(66,289)

(9,120)

(227,443)

(157,190)

(21,630)

Add: 

Share-based compensation expenses

82

31,432

4,325

11,072

78,874

10,853

Non-GAAP adjusted net loss

(129,498)

(34,857)

(4,796)

(216,371)

(78,316)

(10,777)

Non-GAAP adjusted net loss
      attributable to ordinary shareholders
      per share

Basic and diluted

(0.10)

(0.01)

(0.00)

(0.16)

(0.01)

(0.00)

Weighted average number of ordinary
      shares

Basic and diluted

1,322,841,307

5,747,591,752

5,747,591,752

1,322,841,307

5,745,856,349

5,745,856,349

Non-GAAP adjusted net loss
      attributable to ordinary shareholders
      per ADS

Basic and diluted

(3.43)

(0.21)

(0.03)

(5.72)

(0.48)

(0.07)

Weighted average number of ADS (35
      Class A ordinary shares equal to 1  
      ADS)

Basic and diluted

37,795,466

164,216,907

164,216,907

37,795,466

164,167,324

164,167,324

 

View original content:https://www.prnewswire.com/news-releases/zkh-group-limited-announces-second-quarter-2024-unaudited-financial-results-302228436.html

SOURCE ZKH Group Limited

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Haloid Poll: Majority of Public Safety and Commercial Radio Administrators Would Consider Starlink Integration With LMR Two-Way Radio Networks, but Disruption Unlikely

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STONY BROOK, N.Y., Oct. 25, 2026 /PRNewswire/ — Following Starlink’s announced entry into the mobile communications space, Haloid’s consulting team polled government and business land mobile radio (LMR) administrators on whether Starlink could replace, or complement, their LMR systems. We found that most radio administrators were receptive to the nascent technology but did not see it as a replacement for their LMR networks.

Sixty-seven percent of radio administrators said they would be willing to integrate Starlink technology if it allowed them to expand coverage or lower infrastructure costs. When asked whether Starlink could completely replace their LMR networks, fewer than 15 percent said yes; the vast majority believed Starlink is not as reliable as the custom networks they have built. Among administrators who already use two-way radio over cellular (also known as push-to-talk over cellular, or PoC), however, nearly 80 percent said that Starlink’s satellite coverage, combined with its newly acquired cellular spectrum, would make it more desirable than the industry’s wireless incumbents because it could eliminate dead spots where cellular does not reach.

In the U.S., hundreds of thousands of radio users rely on traditional cellular carriers for push-to-talk communications, and that number grows each year. While the migration to two-way radio over cellular has affected the LMR industry, it has not replaced it. Many public safety agencies never made the switch, citing the risk that cellular networks could go down during weather events, power outages, or cyberattacks and jeopardize emergency communications.

In fact, during recent cellular outages, Starlink was used to provide emergency communications to affected areas, because its satellite connectivity does not depend on cell towers. But Starlink’s integration with the 800 MHz cellular spectrum — “Starlink 2.0,” as some experts are calling it — exposes it to some of the same vulnerabilities as traditional wireless carriers.

While Starlink’s satellite service might still function if local cell towers go down, a critical portion of an agency’s communications might rely on local towers using the 800 MHz spectrum, leaving the agency vulnerable in a storm or outage.

Expect evolution, not disruption

“Just like cellular didn’t replace LMR, we don’t see Starlink as an existential risk,” said Jeremy Alicandri, President of Haloid Solutions. He expects Starlink to accelerate the industry’s evolution toward shared communications infrastructure, also known as hybrid LMR. “We have public safety customers already using Starlink in their vehicles to extend the coverage of their radios. This trend will continue as Starlink devices become more ubiquitous.”

The stock prices of Verizon, T-Mobile, and AT&T were affected by Starlink’s recent announcement. LMR stocks such as L3Harris, JVCKENWOOD, and BK Technologies, maker of the Bendix King brand, have been unaffected, as Wall Street views Starlink as unlikely to replace LMR technology for the same reasons cellular did not. “But it may be too early to predict the industry’s winners and losers,” Alicandri added. “The cellular incumbents have many advantages, including low-cost devices, existing infrastructure, and their own satellite ambitions.”

About Haloid Solutions Research

Haloid’s Starlink poll drew on respondents to its LMR brand loyalty study, which measures radio administrators’ sentiment toward the ownership and after-sales experience. Haloid’s LMR research is sponsored by investors in the mission-critical communications space.

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SOURCE HALOID SOLUTIONS

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Newborn Town and Viggle Launch AI-Powered 3D Interactive Game, Bringing World Models to Social Gaming

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HONG KONG, Oct. 26, 2026 /PRNewswire/ — Recently, Newborn Town’s game-oriented social platform TopTop has launched “Slap Showdown”, an AI-powered 3D interactive mini-game developed in collaboration with Viggle, a company specializing in physics-native world models. The launch brings world model technology into social gaming, offering users a more personalized and engaging interactive experience.

Developed by TopTop and powered by Viggle’s self-developed Joint Space-Time (JST) world model, “Slap Showdown” lets users turn uploaded photos into customized 3D characters and take them straight into the game.

Launched in September, “Slap Showdown” has gained particular traction in Japan, among Spanish-speaking users in North America, and across the Middle East. It is now available in multiple countries and regions worldwide.

From Better Gameplay to a Richer Ecosystem: How World Models Could Redefine Social Gaming on TopTop

In terms of gameplay, “Slap Showdown” combines AI-generated 3D characters with multiplayer interaction. Players can simply upload a photo from their phone and generate a personalized 3D character in around 30 seconds, whether it’s an anime protagonist, a cyberpunk cyborg, or a LEGO minifigure. They can then bring their custom characters into the game and face off against other players in fun, interactive battles.

As players use controls such as press-and-hold, tap, and drag, the 3D characters respond with realistic, physics-based movements. This takes AI-generated characters beyond visual customization, integrating them directly into the gameplay experience.

According to TopTop’s operations team, “Slap Showdown” has attracted a growing base of highly engaged, high-spending-potential players in its first month since launch. The game has recorded a 97% match completion rate, while its game-start rate has also exceeded the platform-wide average.

The depth of user engagement is further illustrated by individual player activity. One player in Japan completed 1,041 matches over 22 days, reaching a daily peak of 151 matches and averaging one match every 9.5 minutes. Another particularly avid player in Eastern Europe completed 735 matches in just 11 days, averaging 66.8 matches per day and peaking at 126 matches in a single day.

For a UGC-driven social gaming platform such as TopTop, mini-games serve as entry points and traffic drivers, while social features underpin retention and monetization. Personalized 3D avatars add another dimension to that experience. Beyond their visual appeal, they give users new ways to express themselves, interact with friends and share memorable moments. In turn, richer gameplay and more meaningful social interactions can help improve retention, attract new users and strengthen engagement across the platform.

“Slap Showdown” marks a successful step in TopTop’s efforts to deepen its application of AI technology, as well as a starting point for using world models to enhance gaming and social experiences. TopTop’s operations team said future game releases could make greater use of AI-powered 3D generation, extending beyond avatars to include customized environments. Existing games could also be revitalized by the introduction of new gameplay features, potentially driving stronger retention and user acquisition.

Beyond enriching gameplay, world model capabilities could also reshape social interaction itself, enabling more immersive, face-to-face experiences in virtual spaces. “We’re constantly exploring how AI can transform gaming and social interaction, while bringing new energy and capabilities to our UGC ecosystem,” TopTop’s operations team said.

Viggle Unveils Physics-Native Model JST-2, Setting Its Sights on Becoming the Infrastructure Layer for Physical AI

The world model technology powering “Slap Showdown” is provided by Viggle.

Founded in 2022, Viggle has focused on developing physics-native world foundation models. Its self-developed JST model can generate 3D characters, motion and environments directly, providing a foundation for gaming and a growing range of AI applications.

Viggle previously attracted widespread attention with Meme Maker, its AI-powered video creation product. The tool enables users to animate static characters and generate videos by applying specified movements, making AI character animation and video creation more accessible. In August 2024, Viggle raised USD 19 million in a Series A funding round led by Silicon Valley venture capital firm Andreessen Horowitz (a16z).

However, video creation was an early application of this technology. Viggle’s longer-term ambition is to make JST a foundational technology for AI-powered experiences across gaming, social platforms and other applications.

Viggle is now further expanding its technological boundaries. On 19 October, Viggle launched JST-2 in full, likening its significance for world models to GPT-2’s role in the evolution of language models.

Unlike many world models that infer physical structure indirectly from pixels, JST-2 is built around a physics-native architecture designed to learn the structure and dynamics of the 3D world directly. Its underlying representation consists of units resembling digital “atoms.” Each has a defined position in three-dimensional space, along with physical properties such as material, color and mass, and information describing how it moves and responds to forces. This allows the model to do more than generate convincing images. It can represent and generate 3D characters, motion and scenes with an underlying understanding of their physical properties.

To support this approach, Viggle has developed an integrated technology stack spanning tokenization, model architecture, data engine, pre-training and post-training. After four years of research and development, JST-2 can generate characters, motion and scenes within a single unified architecture.

Compared with other approaches, JST-2 also demonstrates cost efficiency. JST-2 can generate a 3D scene in seconds, at an inference cost of less than one US cent. Once created, the content can be rendered locally without repeatedly running the foundation model to generate each frame.

It is noteworthy that world model technology remains at an early stage, but Viggle is already working toward more advanced capabilities.

Its next-generation model, JST-3, is intended to become a comprehensive world simulator. Such a system could underpin future game and graphics engines, while also serving as a virtual training environment for robotics and other forms of physical AI.

The longer-term goal is for JST-3 to learn the physical rules governing its simulated world directly from data, rather than relying on rules explicitly written by developers.

For Newborn Town, its investment in and partnership with Viggle represents an important step in exploring how advanced AI can reshape social gaming, promoting a deep integration of AI technology with its business operations.

As a leading global social entertainment company, Newborn Town has continued to deepen the use of AI across key areas in recent years, including product R&D, social recommendation systems, intelligent operations, safety and risk management, and marketing and user acquisition, supporting ongoing business growth.

Meanwhile, the company also continued to invest across the AI ecosystem, backing projects in areas including world models, AI companionship, AI Agents and AI interactive gaming. These investments have further enriched its AI application ecosystem, with Viggle among the AI companies previously backed by Newborn Town.

“Slap Showdown” represents an early step in bringing world models into social gaming. For Newborn Town and Viggle, the next challenge is to turn increasingly sophisticated AI capabilities into experiences that users find genuinely engaging — and compelling enough to keep coming back.

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SOURCE Newborn Town

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HKICEC Launches First-Ever Global Mobile Exchange Pavilion at Mobile Electronics Show

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Charting a New Milestone with Outstanding Achievements

HONG KONG, Oct. 26, 2026 /PRNewswire/ — The Hong Kong International Communications Electronic Chamber (HKICEC) made a landmark debut at the Global Sources Mobile Electronics Show, held from October 18-21, 2026, with the inaugural launch of the HKICEC Global Mobile Exchange Pavilion. Spanning 600 square meters, the pavilion brought together nearly 60 industry leaders from mainland China, Hong Kong, India, Japan, the UAE, the US and the UK. As the largest themed pavilion in the mobile electronics sector and a premier highlight of the exhibition, this event marks a new developmental milestone for HKICEC. The pavilion underscores the chamber’s dedication to bridging global markets and serving the communications and electronics industry, injecting vital new momentum into the synergy between Hong Kong’s technology sector and international trade.

The grand opening ceremony on October 18 marked the official launch of the first B2B pavilion in Hong Kong and Asia dedicated exclusively to mobile communications equipment. The milestone event was officiated by a distinguished lineup of devices global business, including  Dr. the Hon. Starry Lee Wai King, GBS, JP, Member of the Standing Committee of the National People’s Congress and President of the Legislative Council; Mr. Zhu Xiaodong, Director of the Kowloon Affairs Department of the Liaison Office of the Central People’s Government in the HKSAR; Dr. the Hon. Horace Cheung Kwok Kwan SBS JP, Deputy Secretary for Justice, HKSAR; Mr. Liu Maozhou, Level 1 Bureau Rank Official, the Economic and Financial Department II, Liaison Office of the Central People’s Government in the HKSAR; Mr. Ho Lap Ki, Denny, JP, District Officer (Kwun Tong), Home Affairs Department; Mr James Liu, CEO of Global Sources; and Mr. Jacky Tse, Chairman of HKICEC, alongside HKICEC Management team. Together, they witnessed the official launch of the first B2B pavilion in Hong Kong and Asia dedicated to mobile communications equipment. The ceremony drew over a hundred political and business leaders, industry representatives, international exhibitors, and major media outlets, reflecting the event’s importance and the industry’s green trading development. Following the inauguration, officials toured the pavilion for high-level discussions with global exhibitors, signaling robust institutional backing for the industry and HKICEC’s strategic expansion.

During the four-day exhibition, the pavilion experienced a continuous flow of visitors. Communications and electronics suppliers and global buyers from overseas visited specifically for business matchmaking and negotiations, unlocking numerous commercial opportunities. Notably, the pavilion also featured a retrospective exhibit of 16 classic mobile phones, tracing the industry’s evolution from early ‘brick’ devices to Mainland China’s first official Apple release, the iPhone 3GS. The historical display proved to be a standout attraction, gathering large crowds throughout the event.

Beyond the exhibition floor, the chamber partnered with Global Sources to co-host an international forum on October 19. Under the theme ” From New Devices to New Life: Building a Global Mobile Device Lifecycle Ecosystem”, the event gathered experts from ecoATM, PCS Wireless, Cenwood, Our Hong Kong Foundation, and the Global Mobile Association. They engaged in profound discussions on cutting-edge topics including the global economic landscape, inventory management, ESG development, the circular ecology of new and used devices, and AI technology.  Attended by over 200 international representatives, the forum successfully catalyzed cross-border collaboration and established a new standard for sustainability discourse in the global mobile industry.

As a capstone to the comprehensive four-day events, HKICEC convened over 500 industry leaders, VIPs, and exhibitors for a high-profile networking banquet designed to accelerate cross-border business alliances. The gathering provided a premier platform for delegates to solidify collaborative ties and exchange strategic insights initiated from the pavilion. Ahead of the exhibition’s conclusion, a special ” Pearl Of The Orient • Victoria Harbour Cruise Party” was organized to showcase Hong Kong’s unique charm as a cosmopolitan city to global guests, providing a memorable networking experience against Hong Kong’s iconic skyline to formally cap off the week’s successes.

High-resolution images: https://bit.ly/3WqHMxu

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SOURCE The Hong Kong International Communications Electronic Chamber (HKICEC)

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