ZTO Express (Cayman) Inc. (NYSE:ZTO) shares edged 1.86% lower in pre-market trading on Wednesday despite the Chinese delivery group reporting strong second-quarter earnings and double-digit revenue growth.
Adjusted earnings per ADS reached RMB3.79 ($0.56), while revenue increased 23.0% year-on-year to RMB14.55 billion ($2.14 billion) from RMB11.83 billion in the corresponding quarter of 2025.
Adjusted net income showed an even stronger improvement, jumping 50.3% from a year earlier to RMB3.1 billion.
Parcel Volumes Rise as ZTO Expands Market Share
ZTO handled 10.5 billion parcels during the second quarter, representing a 6.5% increase compared with the previous year.
The company said its volume growth exceeded the wider industry average by 2.3 percentage points, helping its market share expand to 19.9%.
Revenue growth was supported by both higher parcel volumes and improved pricing. Average revenue per parcel increased 15.5%, benefiting from a greater contribution from higher-value key-account customers, including rapidly expanding reverse-logistics operations.
“In the second quarter of 2026, ZTO remained focused on elevating service quality and customer experience, improving operational efficiency, and fostering fair, transparent network policies,” said Meisong Lai, Founder, Chairman and Chief Executive Officer. “Daily average retail parcel volume continued to grow faster than traditional e-commerce parcel volumes. This structural shift boosted parcel volumes while enhancing overall profit margins.”
Gross Margin and Cash Flow Improve
Profitability strengthened alongside the increase in revenue. Gross profit climbed 26.8% year-on-year to RMB3.73 billion, while gross margin expanded to 25.7% from 24.9% in the second quarter of 2025.
Operating cash generation also improved substantially. Cash flow from operations reached RMB4.6 billion during the quarter, more than double the RMB2.2 billion generated in the same period last year.
The combination of higher pricing, growing parcel volumes and improved operational efficiency contributed to the 50.3% increase in adjusted net income.
ZTO Revises Full-Year Parcel Growth Outlook
Despite its strong second-quarter performance, ZTO adjusted its expectations for parcel volumes as growth across China’s express delivery industry begins to moderate.
The company now forecasts full-year 2026 parcel volume growth of between 6.0% and 10.0% year-on-year, translating into approximately 40.8 billion to 42.4 billion parcels.
Management cited changing market conditions and slower industry growth as factors behind the revised outlook.
Although ZTO delivered substantial gains in revenue, adjusted profit, margins and operating cash flow, the more cautious full-year volume expectations appeared to temper investor enthusiasm following the results.