111, Inc. reported fourth‑quarter and full‑year 2025 results that reflected a deliberate shift to an asset‑light warehouse partnership model. Net revenues fell 26.7% to RMB 2.8 billion (US$403.3 million) in Q4, and the company posted a net loss of RMB 6.5 million (US$0.9 million). The operating loss narrowed dramatically to RMB 0.3 million (US$0.05 million), a 95.6% improvement from the RMB 7.3 million loss in Q4 2024, and the non‑GAAP operating loss was only RMB 0.2 million (US$0.03 million) versus RMB 2.3 million in the prior year quarter.
The revenue decline is largely attributable to the strategic divestiture of legacy fulfillment centers and the transition to a commission‑based partnership model, which temporarily reduced top‑line sales. However, the company’s promotional‑product segment grew 76.2% year‑over‑year, partially offsetting the decline in other areas. The B2B gross‑margin expanded to 5.6% in Q4 from 5.0% in Q4 2024, underscoring the benefit of the new model and improved pricing power in the B2B channel.
Operating performance improved markedly. The company achieved non‑GAAP operating profitability in both the quarter and the full year, a turnaround from previous losses. The asset‑light model reduced fixed‑cost exposure, while AI‑driven operational efficiencies helped maintain margin expansion. The B2B gross‑margin increase reflects higher‑margin contract mix and better cost control in the new partnership framework.
For the full year, net revenues declined 12.8% to RMB 12.6 billion (US$1.8 billion). The company recorded a loss from operations of RMB 2.4 million (US$0.3 million), compared with an operating income of RMB 2.1 million in 2024. Non‑GAAP operating income rose to RMB 7.7 million (US$1.1 million) from RMB 22.3 million in 2024, while the net loss widened to RMB 22.5 million (US$3.2 million) from RMB 20.8 million. Despite the higher net loss, the company generated positive operating cash flow for both the quarter and the year, indicating improved liquidity.
Management highlighted the strategic importance of the transition. CEO Junling Liu noted that the shift to a warehouse partnership model “has strengthened our profitability and liquidity profile.” He also emphasized the integration of AI across operations to drive efficiency and the company’s focus on margin expansion through a more streamlined, intelligent operating model.
The market reacted positively to the earnings, with analysts pointing to the successful transition to an asset‑light model, margin expansion, and positive operating cash flow as key drivers. The revenue decline was understood as a deliberate consequence of the strategic pivot, and the company’s improved profitability metrics mitigated concerns about the lower top line.
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