Zhihu Q1 2025 Earnings Report

Zhihu EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.03
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Zhihu Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $701.95 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Zhihu Announcement Details

• Quarter: Q1 2025
• Date: 5/27/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 27, 2025
• Conference Call Time: 8:00AM ET

Zhihu (NYSE:ZH) operates an online content community in the People's Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People's Republic of China.

Zhihu Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1, Zhuhu delivered its first non-GAAP net profit in a first quarter since IPO, reporting RMB 6.9 million vs. a loss of RMB 135.7 million a year ago.
• Total revenue declined 15.1% year over year to RMB 729.7 million, driven by a 40.4% drop in marketing services as the company prioritizes higher-quality content.
• Core user engagement improved, with average daily time per DAU up 17.6% year over year, enhanced retention rates and AI-related professional content growth of 46%.
• The board approved a new share repurchase program of up to 10% of issued shares, and management has repurchased approximately US 93.4 million in stock year-to-date.
• Paid membership remained resilient with 14.2 million average monthly subscribers (up 1.2% sequentially) and stable revenue of RMB 417.9 million quarter over quarter.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Johal Inc. First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Today's conference is being recorded and webcasted.

[Operator]

At this time, I would like to turn the conference over to Yolonde Lejio, Director of Investor Relations. Please go ahead, ma'am.

[Yolanda Liu, Director - IR at Zhihu]

Thank you, Heidi. Hello, everyone. Welcome to Juuku's first quarter financial results conference call. Joining me today on the call from the senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer and Mr.

[Yolanda Liu, Director - IR at Zhihu]

Wang Han, our Chief Financial Officer. Before we begin, I'd like to remind you that today's discussion will include forward looking statements made under the Safe Harbor provisions of The US Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the US Securities and Exchange Commission and the Hong Kong Stock Exchange.

[Yolanda Liu, Director - IR at Zhihu]

The company does not assume any obligation to update any forward looking statements except as required under applicable law. Additionally, the discussion today will include both GAAP and non GAAP financial measures for comparison purpose only. For reconciliation of these non GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our IR website at ir.zhuhu.com. I will now turn the call over to Mr.

[Yolanda Liu, Director - IR at Zhihu]

Wang Han, CFO of Zhuhu. Han, please go ahead.

[Wang Han, Chief Financial Officer at Zhihu]

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhuhu's first quarter twenty twenty five earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO of Zhuhu. In the first quarter, we carried our momentum of improving profitability forward, delivering another quarter of positive bottom line results in terms of non GAAP net income that significantly exceeded market expectations.

[Wang Han, Chief Financial Officer at Zhihu]

This marks the first time we have achieved a non GAAP net profit in the first quarter of the year since our IPO. Adjusted net income for quarter was RMB6.9 million compared with an adjusted net loss of RMB135.7 million during the same period last year. This milestone reflects the continued execution and enhancement of our operating strategy, as well as increased operating leverage enabled by AI integration. Deep and engaging discussions across various professional fields and continue to take place on the Juhu platform, expanding the influence of our trustworthy content and contributors within and beyond our community. Our time spent per DAU, core user retention rate and creator activeness all showed improvements in the first quarter.

[Wang Han, Chief Financial Officer at Zhihu]

Our active and a healthy community as long as a group of experts passionate about sharing knowledge, experience and insights forms a foundation and core advantage for our transition into the AI era. Investment in and exploration of AI applications remains a top priority for us. In the first quarter, we launched a contributor attribution feature, a key step for the broader integration of AI with our community. By attributing high quality content to contributor, this feature further amplifies the influence of our expert network built over years of professional accumulation. This innovative feature helps reduce AI hallucination in specialized domains and has been well received by users.

[Wang Han, Chief Financial Officer at Zhihu]

We believe AI will catalyze our rapid growth and through its deep integration with our community, enable us to expand the reach of our differentiated value proposition, high quality content, trusted creator network and AI capabilities to broaden user use cases. In the first quarter, we saw growth in both content consumption and creation, along with a stronger sense of community belonging. Increased engagement was evident in several of our key user metrics. While our monthly active user base remained stable, average daily user time span reached nearly thirty eight minutes, up 17.6% year over year. Core user retention rate improved both sequentially and year over year.

[Wang Han, Chief Financial Officer at Zhihu]

Quhu has long been the go to platform for in-depth and vibrant discussion across a wide range of professional fields. We're seeing a robust flow of high quality content that both deepens our user trust and drives more exercise interactions. During the quarter, AI related professional content grew by 46% year over year. Our high quality content continues to rank highly on major search engines and is increasingly cited by large language models and AI powered search applications. According to QUBIC Research Institute, in professional domains, AI assistance site community platform content 62.4 of the time with Juhu ranking highest, set it almost four times as much as the number two platform, highlighting the importance of content quality and professional credibility in AI era.

[Wang Han, Chief Financial Officer at Zhihu]

Zhuhu is emerging as a leading source of trustworthy professional content. The number of daily active high tier content creators continue to grow sequentially in Q1, with verified owner creators increasing 20% year over year. Our higher tier creators include frontline experts in niche topics. In AI or community not only discusses macro level topics like LMs, intelligent agents, but also dives into foundational technologies such as embodied AI, autonomous driving and motor compression. For example, Ji Yu, founder of Xinyuan IC and Yang Shuo, a top robotics contributor and former Tesla engineer, chose Zhihu as the first platform to discuss their startup journeys.

[Wang Han, Chief Financial Officer at Zhihu]

Xuhua Zhi, founder of StarMap, Zhou Buoyu of SUS Tech regularly posts their technical insights on Zhuhu generating widespread discussion across the broader internet. He was parallel scaling lead author and core byteance trade and Mars code developers also use Zhuhu to share their ideas and development progress. The integration of AI within our community remains our priority this year. The user base for Zhuhu Juda has grown steadily as a result by the March, mostly active users grew over 37% compared to the start of the quarter with improved usage frequency and user stickiness in high value fields like technology, finance, workplace and health. One of our next major updates will include a public knowledge base built on top of existing personal knowledge libraries, enabling professional content creators and expert network to deliver even greater value at scale.

[Wang Han, Chief Financial Officer at Zhihu]

Turning to commercialization, we remain committed to balancing commercial growth with protecting the integrity of our community and user experience. Our trustworthy content and active professional creator ecosystem enhanced the commercial appeal of our brand and monetization potential. We believe a healthy and sustainable commercial flywheel will over time further drive our use engagement and improve community vitality. In the first quarter, our total revenue was RMB729.7 million, down 15.1% sequentially. Now turning to our performance by segment.

[Wang Han, Chief Financial Officer at Zhihu]

In the first quarter, revenue from our marketing services business reached RMB197 million, representing a year over year decline of 40.4%. This decrease was primarily due to the adoption of trustworthy content model, which identifies and distributes both commercial and organic content. As of the end of the quarter, the consumption of low quality marketing costs declined by more than 90% year over year.

[Wang Han, Chief Financial Officer at Zhihu]

At

[Wang Han, Chief Financial Officer at Zhihu]

the same time, we're optimizing our client mix. Since the beginning of 2025, we have expanded our experts facing client base, working with partners such as Huawei's Harmony OS, Mac developers, and China Mobile Cloud services, unlocking the commercial value of our high quality user base and strong brand influence. Leveraging our trusted AI content framework and vibrant professional creator ecosystem, we're also helping brand partners explore new AI application scenarios. At twenty twenty five AWE and in the SIEM AI technology, AI Life, we partner with brands such as Haier, GRI, LOG and Baidu's Xiaodu to create an immersive offline experience within the Juhu future questions store. Based on user interaction data and content insights, we identify five key AI home appliance and AI lifestyle themes, helping brand partners establish credibility and improve the visibility of their next gen tech products.

[Wang Han, Chief Financial Officer at Zhihu]

We're using this experience to accumulate valuable content and data assets for future AI use cases. Top tier AI related advertisers also remain active on our platform this quarter. Additionally, leveraging our in house AI capabilities, we continue to upgrade our marketing product suite. In Q1, we maintained AI load as one of the lowest historical level while improving CPM performance across most product categories, driving higher commercial efficiency for brand partners. Overall, ad exposure volume remains stable.

[Wang Han, Chief Financial Officer at Zhihu]

ARPU increased steadily. As AI rapidly reshapes content distribution and brand marketing to who's emerging as a key upstream node in AI search value chain, driven by our trustworthy content and network of professional creators in specialized fields. We believe our marketing services business has reached a strategic inflection point. One is just under traditional commercial paradigm is not increasingly transforming into structural advantages in AI era. For our paid membership business, we continue to prioritize ROI in user acquisition, resulting in an improved return profile of new members.

[Wang Han, Chief Financial Officer at Zhihu]

In this context, we are pleased that our average monthly paying members remain resilient in the first quarter, are up by 1.2% on a sequential basis to 14,200,000.0. Our paid membership revenue was RMB 417,900,000.0, remaining stable quarter over quarter. We continue to drive paid user conversion and engagement rates through our premium short form paid content and are actively exploring new paid content formats and monetization opportunities. Our recent highlights is the original audio drama Love with Gold King over three lifetimes, a debit from a popular story by a Yin Yang writer. Upon release, the series quickly rose to the top of our training charts and lead in the weekly streaming rankings.

[Wang Han, Chief Financial Officer at Zhihu]

Building on the strong momentum of our short form content, we've also expanded into longer form content. On May 8, we launched Season four of Union Story Long Form Writing Marathon, a six month competition that invites submissions of high quality long form stories from across the internet. This season features four creative categories, including historical fiction, mystery, women's fiction, and speculative fiction with a prize of RMB 100,000 for top writers. Going forward, we will continue to leverage a combination of premium short form and mid to long form content to fulfill the needs of a more diverse audience, reinforcing Yan Yan stories of leadership in a paid reading space. Lastly, our vocational training business recorded revenue of RMB94.5 million in Q1, down 35% year over year.

[Wang Han, Chief Financial Officer at Zhihu]

This performance reflects our ongoing strategic transformation of the vocational training business, leveraging our high quality content ecosystem and trusted professional creator network. We're streaming away from a traditional subject based expansion model, which focused on a few core categories towards a more socially interactive and knowledge sharing driven one. This transition expected to further enhance operational efficiency and profitability over time. A core of this transformation is our goal to empower professional creators. Product development will increasingly focus on integrating paid knowledge content with social interactions.

[Wang Han, Chief Financial Officer at Zhihu]

For example, our column product can not only better address the learning and knowledge needs of users, but also enable creators to publish in-depth, exercise driven content while building their own communities and amplifying their personal influence. Going forward, we will continue to build on this new business model, expanding our product and service offerings while further unlocking the value of Zhuhu's high quality content and trusted creator network. As we move further into 2025, we remain determined to capitalize on historic opportunity created by AI. Building on a strong foundation of community trust, we will further enhance connections and engagement among our high value user base. By accelerating this synergistic evolution of high quality content, a trusted creator network and AI reasoning capabilities, we aim to continuously strengthen competitive advantages and deepen our competitive advantage in the AI area.

[Wang Han, Chief Financial Officer at Zhihu]

We believe this strategy will position Zhuhu for sustained leadership in the next generation of intelligent content platforms. This concludes Mr. Zhou Yeon's remarks.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Now I will review the details of our first quarter financials. For a complete overview of our first quarter twenty twenty five results, please refer to our press release issued earlier today.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

In the first quarter, we achieved a non GAAP profitability and expanded our gross margin as we continue to execute strongly and enhance operational efficiency. We're encouraged by the progress we made to start off the year and remain firmly focused on building upon this momentum to lay a stronger foundation for sustainable growth. Our total revenue for the quarter were RMB729.7 million compared with RMB960.9 million in the same period of 2024. The decrease reflects the ongoing adjustment to our business and our strategic focus on improving revenue quality and mix. Our marketing services revenue for the quarter was RMB197 million compared with RMB330.5 million in the same period of 2019.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

The decrease was mainly driven by our proactive ongoing optimization of service offerings to strategically expand margins. Payment machine revenue were RMB417.9 million compared with RMB449.7 million in the same period of 2024. While average monthly subscribing members declined slightly year over year, they increased by 1.2 sequentially. Notably, user engagement with premium content remained strong throughout the quarter, reinforcing the value of our client ecosystem. Vocational training revenue was RMB94.5 million compared with RMB145.4 million in the same period of 2024.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

The decrease was primarily due to our strategic refinement of acquired business as we continue to prioritize faster growing self operated programs. Our revenues were RMB20.3 million compared with RMB35.2 million in the same period of 2024. Our gross profit for the quarter was RMB451.1 million compared with RMB543.5 million in the same period of 2024. Supported by improved operational efficiency, our gross margin expanded by 5.2 percentage points year over year, reaching 61.8%. Our total operating expenses for the quarter declined by 34.4% year over year to RMB503.7 million.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

This decrease reflects better cost management and ongoing efficiency improvements driven by technological innovation. Selling and marketing expenses decreased by 32.9% to RMB320.6 million from RMB478 million in the same period of 2024. The decrease was primarily due to the more disciplined promotional spending and a decrease in personnel related expenses. R and D expenses decreased by 28.1% to RMB141.9 million from RMB197.4 million in the same period of 2024. The decrease was primarily driven by more efficient spending on technological innovation.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

G and A expenses decreased by 55.6% to RMB41.2 million from RMB92.9 million in the same period of 2024. As a result, our GAAP net loss for the quarter narrowed by 93.9% year over year. On a non GAAP basis, we remain profitable for the second consecutive quarter recording adjusted net income of RMB6.9 million compared with an adjusted net loss of RMB135.7 million in the same period of 2024. As of 03/31/2025, we have a cash and cash equivalents term deposit, restricted cash and short term investment of RMB4.8 billion compared with RMB4.9 billion as of 12/21/2024. As of 05/26/2025, we repurchased 31,100,000.0 Class A ordinary shares for aggregate value of US66.5 million dollars on open market.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

We also repurchased a total of 17,800,000.0 Class A ordinary shares for aggregate value of US26.9 million dollars through the trustee of the company. In addition, the board has approved the new 2025 share repurchase program, which which will be effective until 06/25/2026, with a maximum repurchase size of 10% of total issued shares, subject to shareholder approval at our upcoming Annual General Meeting. Looking ahead, we will continue strengthening our commercialization capabilities and capitalizing on the long term growth potential within our community. Our goal remains clear to drive sustainable growth and profitability and to deliver lasting value to our shareholders. This concludes my prepared remarks on our financial performance for the quarter.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Let's turn the call over to the operator for the Q and A session.

[Operator]

Thank you. We will now begin the question and answer session. We will take our first question. Your first question comes from the line of Ziqing Zhang from CICC. Please go ahead.

[Operator]

Your line is open.

[Xueqing Zhang, Media Analyst at China International Capital Corporation (CICC)]

Management for taking my question. The management mentioned about Zhuhu's strategic AI plans in the prepared remarks and also shared some metrics and user feedback on Zhuhu. It sounds like Juda is not only AI product of Juhu. So what other AI initiatives can we expect next both within the Juhu community and beyond? Thanks.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Thank you for your question, Shixin. This is from Zhihu CEO, Zhou Yuan. So, on macro level, we expect over next two years, the intelligence selling of AI models will continue rising. So, our strategic focus in AI centers around trustworthy content and our expert network. In fact, we believe this can be summarized as a simple formula, trustworthy content times community expert network times AI capabilities equals to a scalable growth path.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

As you just mentioned, Truly, Truly, Truly, as an AI interface of the entire community of us, or you could say a new entry point to our community. What you are seeing today is only a partial realization of our provision. In fact, how our users are engaging and be active with it is providing us with invaluable feedback. We didn't choose to roll out a series of cookie cutter or repeated features. On one hand, we believe many of these functions will soon be overtaken by the rising intelligence selling of foundation models.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

On the other, we don't see value in customizing features just to showcase model capabilities if they don't provide lasting value to our users. So fundamentally, I believe there are two more fundamental tasks in the context of what I mentioned of these rapid model evolution. First of all, we are integrating more experts. It's what we refer to as the expert network, Juhu expert network. Our initial milestone here was to enable contributor attribution or traceability, which is now fully rolled out and has been possibly received by our users.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

We will definitely continue integrating on this front. Second, we aim to aggregate more high quality content. So, next step is to launch public knowledge basis, which will help us scale our library of trustworthy content. We plan to introduce expert knowledge basis in different diversified sectors during the upcoming Gaokao, the college entrance examination season in China, providing reliable support for students in making informed decisions. Looking ahead, both of these two pillars will continue to involve themselves.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Today, the expert network primarily manifests through content, but with the development of agent based technology, the value of the expert network may increasingly extend beyond content itself and enter a new stage of the evolution. Thank you for your question again.

[Operator]

Thank you. We will take our next question. Your next question comes from the line of Lincoln Kong from Goldman Sachs. Please go ahead. Your line is open.

[Lincoln Kong, Executive Director at Goldman Sachs]

So thank you, management, for taking my questions. My question is about the user and the community.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Thank you for your question, Lincoln. As you may know, our current priority is the quality of our entire ecosystem. Since last year, we've executed this strategy with strong conviction. Well, overall community user scale has remained quite stable. What's more important here is that all key user health metrics have continued to improve.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

And we're seeing a stronger and a more engaged community atmosphere. This is very much in line with our expectations. Just last week, we wrapped up the eleventh Zhuhu Youth Knowledge Conference. And on-site, we heard a lot of positive feedbacks from long time and the new creators, including many who've been contributing to Jufu for over a decade. This kind of early positive momentum is encouraging.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

I believe that incremental changes will compound into many breakthroughs and over time we'll see greater returns. In the first quarter, the number of our professional creators honored under our key programs, such as outstanding contributors, rising contributors, blue label professionals, and navigators grew significantly year over year. These creators are expanding their influence both within community and beyond with evidenced by interactions per creator and per post surging more than 4595% year over year respectively. We also upgraded our column and idea features to better support both long and short form content professional content creation and offered improved channels for interaction and monetization. Since the rollout of new column feature in March, we've achieved two consecutive months of rapid growth in both content creation and user consumption.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Likewise, the volume ideas generated by professional creators search in the first quarter showing exceptionally user engagement. Thank you.

[Operator]

Thank you. We will take our next question. Your next question comes from the line of Thomas Chong from Jefferies. Please go ahead. Your line is open.

[Thomas Chong, Managing Director at Jefferies]

So I'll transfer myself. Thanks, management, for taking my question. So my question is, could management share some color on the revenue trends for each business segment in 2025 and the profitability outlook?

[Wang Han, Chief Financial Officer at Zhihu]

Thank you for your question. This is from Zhihu CFO, Wang Han. So, 2025 is another very important year of business model optimization for us. Our key focus is to further align our community ecosystem with our commercial operations, while enhancing the Juhu brand commercial value and the pricing power to build a more sustainable long term business flywheel. Although our Q1 revenue declined year over year, but each of our business streams is entering a new phase of growth with involving monetization models.

[Wang Han, Chief Financial Officer at Zhihu]

For our marketing services, it has been evidence that low, relatively low quality marketing content consumption has dropped to a very low level. And we are now seeing accelerated momentum in both client mix optimization and commercial product updates. On top of that, AI is unlocking new marketing product opportunities. In terms of our paid membership, we are broadening our content offering to include a mix of a premium short form and mid to long form content. This strategy strengthens our competitive edge in this sector.

[Wang Han, Chief Financial Officer at Zhihu]

For our vocational training business, we are transitioning from a traditional model to a more socially engaging knowledge sharing model that better leverages our community's strength. On the innovation front, we remain disciplined with our investments, particularly in AI driven initiatives that align Zhuhu's core strengths in content and community. Our ongoing ecosystem upgrades and AI initiatives come with both opportunities and challenges. With continued operational refinements and a more granular management execution, we are confident our financial performance will exceed our initial expectations for the year.

[Wang Han, Chief Financial Officer at Zhihu]

Thank

[Wang Han, Chief Financial Officer at Zhihu]

you. Thank you for your question.

[Operator]

Thank you. We will take our next question. Your next question comes from the line of Vicky Wei from Citi. Please go ahead. Your line is open.

[Vicky Wei, Vice President - Citi Internet Research team at Citi]

Thanks management for taking my question and congrats on the stronger than its third quarter. And would management share some color in your thoughts about the shareholder return program this year? Thank you.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Thank you for your question, Wiki. This year, we remain committed to enhancing shareholder returns through our share repurchase plan. Earlier today, our board approved the 2025 buyback plan authorizing a repurchase of up to 10% of our issued and outstanding shares. So, we will execute the buyback in the open market on the best effort basis. We believe the current share price does not fully reflect the value of our company, and this well underscores management's confidence in our long term success.

[Yuan Zhou, Founder, Chairman & CEO at Zhihu]

Thank you. Thank you again.

[Vicky Wei, Vice President - Citi Internet Research team at Citi]

Thank you.

[Operator]

That concludes today's Q and A session. At this time, I will turn the conference back to Yolanda for any additional or closing remarks.

[Yolanda Liu, Director - IR at Zhihu]

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or Kristin Sands Advisory. Thank you. Thank you so much.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Yolanda Liu, Director - IR
• Wang Han, Chief Financial Officer
• Yuan Zhou, Founder, Chairman & CEO

Analysts

• Xueqing Zhang, Media Analyst at China International Capital Corporation (CICC)
• Lincoln Kong, Executive Director at Goldman Sachs
• Thomas Chong, Managing Director at Jefferies
• Vicky Wei, Vice President - Citi Internet Research team at Citi