Subject: ZTO Delivers Solid Volume Growth Amid Margin Pressures in Q1 2025
ZTO Express kicked off 2025 with a strong operational performance, highlighted by a 19.1% year-over-year surge in parcel volume to 8.5 billion—a clear reflection of robust market demand and the company's deepening competitive moat in China’s express delivery landscape. The company reiterated its full-year volume growth guidance of 20% to 24%, underscoring management's confidence in sustained momentum.
Despite revenue increasing 9.4% to RMB10.89 billion, gross profit fell 10.4% year-over-year to RMB2.69 billion, pointing to margin compression likely driven by elevated operating costs or pricing pressures in a competitive market. Nonetheless, ZTO preserved earnings growth, with net income rising sharply by 40.9% to RMB2.04 billion, reflecting favorable tax items or non-operating income, though this was moderated when adjusted: adjusted net income rose 1.6% to RMB2.3 billion.
Cash flow generation remained healthy with RMB2.36 billion in net operating cash, an improvement from the prior-year quarter, signaling solid underlying business fundamentals and cash discipline.
Operational infrastructure continued to scale, with over 31,000 pickup/delivery outlets, 6,000 direct network partners, and a growing fleet of over 10,000 self-owned line-haul vehicles, of which more than 9,400 are high-capacity models. This positions ZTO well to absorb increasing demand while maintaining service reliability.
In summary, ZTO’s volume-driven strategy is working, even as profitability faces some pressure. The company’s ability to grow parcel volume ahead of market growth while preserving service quality and cash flow bodes well for its medium-term outlook. Focus now turns to managing costs and maintaining pricing discipline to support margin recovery in upcoming quarters.
First Quarter 2025 Financial Highlights
- Revenues were RMB10,891.5 million (US$1,500.9 million), an increase of 9.4% from RMB9,960.0 million in the same period of 2024.
- Gross profit was RMB2,689.2 million (US$370.6 million), a decrease of 10.4% from RMB3,002.1 million in the same period of 2024.
- Net income was RMB2,039.2 million (US$281.0 million), an increase of 40.9% from RMB1,447.7 million in the same period of 2024.
- Adjusted EBITDA[3] was RMB3,686.7 million (US$508.0 million), an increase of 0.7% from RMB3,660.4 million in the same period of 2024.
- Adjusted net income was RMB2,259.3 million (US$311.3 million), an increase of 1.6% from RMB2,224.0 million in the same period of 2024.
- Basic and diluted net earnings per American depositary share ("ADS"[4]) were RMB2.50 (US$0.34) and RMB2.44 (US$0.34), an increase of 41.2% and 39.4% from RMB1.77 and RMB1.75 in the same period of 2024, respectively.
- Adjusted basic and diluted earnings per American depositary share attributable to ordinary shareholders[5] were RMB2.77 (US$0.38) and RMB2.71 (US$0.37), an increase of 1.1% and 1.1% from RMB2.74 and RMB2.68 in the same period of 2024, respectively.
- Net cash provided by operating activities was RMB2,363.0 million (US$325.6 million), compared with RMB2,031.0 million in the same period of 2024.
Operational Highlights for First Quarter 2025
- Parcel volume was 8,539 million, an increase of 19.1% from 7,171 million in the same period of 2024.
- Number of pickup/delivery outlets was over 31,000 as of March 31, 2025.
- Number of direct network partners was approximately 6,000 as of March 31, 2025.
- Number of self-owned line-haul vehicles was over 10,000 as of March 31, 2025, out of which, over 9,400 were high capacity 15 to 17-meter-long models compared to over 9,100 as of March 31, 2024.
- Number of line-haul routes between sorting hubs was over 3,900 as of March 31, 2025.
- Number of sorting hubs was 95 as of March 31, 2025, among which 91 were operated by the Company and 4 by the Company's network partners.
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