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The call presents a broadly positive operational and strategic picture: ZTO delivered above-industry parcel growth, strong revenue growth, robust operating cash flow, significant retail segment expansion, and measurable cost and productivity gains from automation and AI. Management also strengthened shareholder returns (dividend and $1.5B buyback) and provided upbeat 2026 guidance. However, the company faces margin pressure driven by higher total costs, rising KA unit costs and increased volume incentives, which led to declines in gross profit and operating profit for the year. On balance, the financial and strategic positives (volume outperformance, cash generation, technology-driven efficiency, and enhanced capital returns) outweigh the profitability headwinds, while management has explicit plans to address cost and network fairness issues.
Management guided 2026 parcel‑volume growth of 10–13% YoY, implying annual parcel volume of 42.37–43.52 billion (vs. 38.5 billion in 2025) and an intent to outpace the Postal Bureau’s ~8% industry forecast; they emphasized quality and network stability while pursuing cost and last‑mile efficiency. On capital allocation, the Board approved a semi‑annual cash dividend of $0.39 per ADS (40% payout ratio), a new 24‑month $1.5 billion share buyback program through March 2028, and an enhanced policy to return no less than 50% of prior‑year adjusted net income (2025 adjusted net income: RMB 9.5 billion). They also issued $1.5 billion of 5‑year convertible bonds (net ~ $1.4 billion) to fund buybacks, reported having completed roughly $600 million of repurchases already and plan to repurchase the remaining ~ $800 million over the coming year.
Q4 parcel volume reached 10.56 billion, up 9.2% year-over-year; full-year 2025 parcel volume was 38.5 billion, up 13.3% year-over-year. ZTO's market share expanded by 0.8 percentage points in Q4 while the industry reached a 200 billion parcel milestone with ~13.6% growth for the year.
Total revenue grew 12.3% to RMB 14.5 billion in Q4 and increased 10.9% to RMB 49.1 billion for the full year. Adjusted net income was RMB 2.69 billion in Q4 and RMB 9.5 billion for 2025, reflecting continued scale and profitability.
Operating cash flow surged 50.6% in Q4 to RMB 4.2 billion and reached RMB 12.0 billion for the year (excl. prior-year one-time RMB 850 million franchise deposit refunds). CapEx for 2025 was RMB 6.1 billion. Board approved semi-annual dividend of USD 0.39 per ADS, a new $1.5 billion 24-month buyback program, and an enhanced shareholder return target of at least 50% of prior-year adjusted net income (dividends + buybacks).
Annual retail parcel volume grew 46% year-over-year and daily retail volume in Q4 approached 10 million parcels. Retail mix contributed to Q4 ASP positive movement and supported core revenue growth while alleviating pressure from volume-based subsidies.
Combined unit cost for transportation and sorting decreased by 4.5% (RMB 0.04) in Q4 and 8.8% (RMB 0.06) for the full year, driven by economies of scale and productivity initiatives. Line-haul unit cost fell 7.5% in Q4 to RMB 0.37 and 12.2% for the year to RMB 0.36; sorting unit cost remained steady at RMB 0.26 in Q4 and decreased 3.7% for the year.
Deployment of 3D digital twins and computer vision in 25 super sorting centers reduced missorting rates by ~50–60%. AI-powered customer service automates over 70% of end-to-end work orders; intelligent assistants cover >80% of routine outlet inquiries. AI-enabled dispatch and mapping reduced short-haul transport costs by >20% for large outlets and improved order allocation at scale.
Company guided 2026 parcel volume growth of 10%–13% (implying 42.37–43.52 billion parcels), signaling management's confidence to grow faster than the industry (Postal Bureau estimate ~8%) despite a larger base and ongoing industry transition.
Good day and welcome to the ZTO Express Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. I would now like to turn the conference over to Sophie Li, Head of Capital Markets. Please go ahead.
Thank you, Rocco. Hello, everyone, and thank you for joining us today. The company's results and the Investor Relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer, and Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Ms.
Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations in our current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filings wi...