ZTO Express (Cayman) Q2 Earnings Call Highlights

ZTO Express (Cayman) NYSE: ZTO reported second-quarter 2026 results that showed higher revenue, profit and parcel volume as China’s express-delivery market moved toward what management described as more rational competition and improved pricing conditions.

Chairman and Chief Executive Officer Meisong Lai said industry parcel volume grew 4.2% year over year during the quarter, while anti-monopoly policies helped shift the sector away from price-driven competition.

ZTO’s parcel volume increased 6.5% to 10.9 billion, according to Chief Financial Officer Huiping Yan, and the company gained 0.4 percentage points of market share.

Total revenue rose 23% to CNY14.5 billion, while operating income increased 30.4% to CNY3.23 billion.

Adjusted net income climbed 50.3% to about CNY3.1 billion, aided in part by a CNY344.3 million tax refund tied to a wholly owned subsidiary qualifying for a 10% preferential tax rate for tax year 2025.

Yan said the average selling price for ZTO’s core express-delivery business increased CNY0.19, or 15.5%, year over year.

The increase included a CNY0.17 benefit primarily tied to a greater mix of key-account volume, including higher-value reverse-logistics services, as well as a CNY0.02 increase resulting from higher average parcel weight.

Total cost of revenue rose 21.7% to CNY10.8 billion.

Core express-delivery unit costs increased CNY0.12, or 14.6%, including a CNY0.14 increase associated with the company’s strategic expansion of key-account volume.

Despite pressure from higher oil prices, ZTO reduced its combined unit sorting and transportation costs by CNY0.02 year over year.

Unit line-haul transportation costs declined 3.7% to CNY0.32, while unit sorting costs fell 2.6% to CNY0.24.

Yan attributed the reductions to route optimization, improved load rates, labor productivity and automation.

Gross profit increased 26.8% to CNY3.7 billion, and gross margin expanded 0.8 percentage points to 25.7%.

Selling, general and administrative expenses excluding share-based compensation declined 10.5% to CNY555.5 million, representing 3.8% of revenue.

Adjusted EBITDA rose 20% to CNY4.2 billion, while operating cash flow totaled CNY4.6 billion.

Lai highlighted retail parcels and reverse logistics as an important part of ZTO’s product-diversification strategy.

Retail parcel volume rose 47% year over year during the quarter, he said.

Average daily retail parcel volume exceeded 11.87 million in the second quarter, including approximately 9.8 million daily return parcels.

Return-parcel volume increased about 80% from a year earlier, according to Lai.

While reverse-logistics parcel pricing has declined amid market competition, Lai said the business continues to genera...