Zeekr Group (NYSE: ZK)

Zeekr Group's Q1 2025 financial performance demonstrated strong operational execution and successful integration benefits. Total revenues increased 1.1% year-over-year to RMB22.0 billion, driven primarily by a 16.1% increase in vehicle sales to RMB19.1 billion. While other sales and services declined 45.2% due to reduced battery pack sales and R&D services, the core vehicle business showed robust growth.

Vehicle margin expansion was a standout achievement, reaching 16.5% in Q1 2025 compared to 13.1% in Q1 2024. This remarkable 340 basis point improvement reflects the company's ongoing cost-saving initiatives and enhanced platform synergies from the Zeekr-Lynk & Co integration. The Zeekr brand achieved an exceptional vehicle margin of 21.2%, up from 14.4% in the prior year.

Gross profit increased 18.8% to RMB4.2 billion, with gross margin expanding 280 basis points to 19.1%. This improvement was driven by sustained vehicle cost-saving initiatives and operational efficiencies, demonstrating the company's ability to enhance profitability despite competitive market conditions.

Zeekr significantly reduced its net loss by 60.2% to RMB763 million from RMB1.9 billion in Q1 2024. On a non-GAAP basis, excluding share-based compensation expenses, the adjusted net loss decreased 66.5% to RMB640 million. This substantial improvement reflects the company's focus on operational efficiency and disciplined cost management.

Zeekr brand performance was particularly strong with 41,403 vehicle deliveries, representing 25.2% year-over-year growth. The brand achieved an industry-leading vehicle margin of 21.2%, up from 14.4% in Q1 2024. This exceptional margin performance demonstrates Zeekr's premium positioning and operational excellence in the luxury electric vehicle segment.

Lynk & Co delivered 72,608 vehicles, achieving 18.9% year-over-year growth. Notably, 52.4% of Lynk & Co deliveries came from New Energy Vehicle (NEV) models, reflecting the successful transition toward electrification. The brand's vehicle margin improved to 11.4% from 11.8% in Q1 2024, showing continued profitability focus.

The combined delivery performance of 114,011 units represents strong momentum for both brands, with Zeekr Group's global user base now exceeding 1.9 million customers. This growth was achieved despite seasonal factors that typically affect Q1 performance, demonstrating the resilience of both brands' market positions.

April 2025 continued the positive trend with 41,316 total vehicles delivered, marking a 1.5% increase compared to March. The Zeekr brand delivered 13,727 vehicles while Lynk & Co contributed 27,589 vehicles, maintaining the momentum established in Q1.

Zeekr Group demonstrated its commitment to innovation and market expansion through several significant product launches and announcements during Q1 2025:

Zeekr Brand Innovations

• Zeekr 7GT Launch: The brand's second shooting brake was launched in China on April 15, 2025, featuring advanced silicon carbide-powered e-motors enabling 0-100 km/h acceleration in just 2.95 seconds
• Zeekr 9X Unveiling: The flagship luxury SUV was revealed at the Shanghai Auto Show as the first hybrid model under the Zeekr brand, setting new benchmarks in design and performance
• Global Expansion: The Zeekr 9X is slated for a global launch in Q3 2025, marking a significant step in international market expansion

Lynk & Co Developments

• Lynk & Co 900 Launch: Deliveries commenced on April 28 for this large six-seater family SUV built on the SPA Evo platform
• Advanced Technology: The top-tier variant features the G-Pilot H7 package with NVIDIA's DRIVE AGX Thor computing platform, delivering industry-leading 700 TOPS of processing power
• Market Response: The model has garnered over 40,000 pre-orders since its December debut, indicating strong market demand

These product launches demonstrate Zeekr Group's strategic focus on premium positioning, technological innovation, and global market expansion. The company's ability to deliver cutting-edge features while maintaining profitability reflects its strong R&D capabilities and efficient platform strategy.

Zeekr Group's operating expense management in Q1 2025 reflected strategic investments in future growth balanced with disciplined cost control:

• Research & Development: Expenses increased 25.0% to RMB2.9 billion, primarily due to incremental costs for new vehicle platform development. This strategic investment supports the company's innovation pipeline and platform consolidation benefits
• SG&A Expenses: Selling, general and administrative expenses decreased 9.2% to RMB2.6 billion, reflecting disciplined cost management under the company's 2025 efficiency enhancement program
• Loss from Operations: Improved by 25.7% to RMB1.3 billion, while non-GAAP loss from operations decreased 32.8% to RMB1.1 billion, excluding share-based compensation expenses

The company's R&D investment strategy focuses on developing next-generation vehicle platforms that enable sharing across both Zeekr and Lynk & Co brands. This approach drives economies of scale and accelerates the pace of innovation while optimizing development costs.

Zeekr's 2025 efficiency enhancement program has resulted in meaningful cost reductions in sales and marketing expenses, demonstrating the company's ability to optimize operations while maintaining growth trajectory. The 64% improvement in share-based compensation-adjusted operating performance reflects successful operational leverage.

Zeekr Group maintains a solid financial foundation to support its growth initiatives and operational requirements:

• Cash Position: Cash and restricted cash totaled RMB9.9 billion as of March 31, 2025, providing substantial liquidity for operations and growth investments
• Total Assets: Decreased to RMB61.1 billion from RMB68.2 billion at December 31, 2024, primarily reflecting seasonal working capital adjustments
• Inventory Management: Inventories remained stable at RMB10.3 billion, indicating effective supply chain management and demand forecasting
• Property, Plant & Equipment: Net PPE of RMB10.7 billion supports the company's manufacturing capabilities and expansion plans

The company's debt structure includes short-term borrowings of RMB9.4 billion and long-term borrowings of RMB6.6 billion. The increase in short-term borrowings reflects working capital financing needs and provides financial flexibility for operational requirements.

Zeekr's total shareholder deficit of RMB25.0 billion reflects the accumulated losses from the company's growth investment phase. However, the substantial improvement in quarterly profitability metrics indicates progress toward sustainable profitability and improved shareholder value creation.

Zeekr Group's strategic focus centers on leveraging the successful integration of Zeekr and Lynk & Co brands to drive sustainable growth and profitability:

Integration Synergies

• Platform Consolidation: The two brands' technological consolidation has boosted profitability through optimized R&D and shared platforms
• Supply Chain Optimization: Enhanced platform synergies and disciplined supply chain management drove record profitability in Q1 2025
• Resource Integration: Management remains focused on deepening resource integration to unlock greater synergistic value

Management Commentary

CEO Andy An highlighted the milestone achievement: "We achieved a major milestone during the first quarter with the full integration of Zeekr and Lynk & Co, which expanded our global user base to over 1.9 million." He emphasized the company's commitment to redefining premium mobility through technology-driven experiences.

CFO Jing Yuan noted the financial improvements: "Enhanced platform synergies and disciplined supply chain management drove record profitability, with our overall vehicle margin reaching 16.5% and the Zeekr brand's margin rising to an unprecedented 21.2%."

Future Focus Areas

• Accelerating global market expansion with new model launches
• Continuing to enhance operational efficiency and margin expansion
• Strengthening position as the world's leading premium NEV group
• Delivering enhanced returns for shareholders through sustainable value creation