• Adjusted Net Income: RMB97.1 million, compared to RMB91.3 million in the same period last year.
• Adjusted Operating Profit: RMB23.1 million, compared to an adjusted net operating loss of RMB165.3 million in the first quarter last year.
• Total Revenue (Q4 2024): RMB859.2 million.
• Total Revenue (Full Year 2024): RMB3,598.9 million, a decrease of 14.3% from last year.
• Average Monthly Active Users (MAUs): 81.4 million, up 0.3% sequentially.
• Pay Membership Revenue: RMB420.2 million.
• Marketing Services Revenue: RMB315.9 million.
• Vocational Training Revenue: RMB84 million, a decrease of 50.4% year over year.
• Gross Profit: RMB540.7 million.
• Gross Margin: 62.9%.
• Selling and Marketing Expenses: Decreased by 40.1% to RMB316.2 million.
• Research and Development Expenses: Decreased by 37% to RMB146.6 million.
• General Administrative Expenses: Decreased by 27.5% to RMB66 million.
• Cash and Cash Equivalents: RMB4.9 billion as of December 31, 2024.

• Warning! GuruFocus has detected 1 Warning Sign with FRA:2LC.

Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zhihu Inc (NYSE:ZH) reported its first-ever adjusted net income of RMB97.1 million, showcasing a significant turnaround from previous losses.
• The company achieved an adjusted operating profit of RMB23.1 million, a substantial improvement from an adjusted net operating loss of RMB165.3 million in the first quarter of the previous year.
• Zhihu Inc (NYSE:ZH) successfully reduced community user acquisition expenses by 88% year over year, contributing to its profitability.
• The platform's AI initiative, Juda, achieved over 10 million monthly active users (MAU) and received positive feedback for its response completeness and accuracy.
• Zhihu Inc (NYSE:ZH) maintained a stable user base with average monthly active users (MAUs) of 81.4 million, while improving user engagement metrics such as time spent per daily active user (DAU), which grew by 23% year over year.

Negative Points

• Total revenues for the full year 2024 decreased by 14.3% to RMB3,598.9 million, reflecting strategic adjustments away from lower-quality revenue streams.
• Pay membership revenue saw a slight decline, with average monthly paying members decreasing by 0.8% year over year.
• Vocational training revenue decreased by 50.4% year over year to RMB84 million, as the company streamlined its acquired business.
• Marketing services revenue declined compared to the previous year, with a focus on optimizing service offerings to enhance margins.
• Despite achieving profitability, Zhihu Inc (NYSE:ZH) indicated that it might maintain a slight overall loss temporarily in 2025 to pursue AI integration opportunities.

Q & A Highlights

Q: Can management share insights regarding the size and impact of Zhihu Juda on the community ecosystem? Additionally, is there concern that advancements in AI could replace Zhihu? A: Over the past six months, Juda's user base has grown significantly, reaching 10 million MAUs. This growth is driven by high repeat visits and positive word of mouth. Zhihu's community holds a unique position due to its network of experts, which is crucial in an era of AI-generated content. AI products lack the ability to connect with real experts, a gap Zhihu fills. AI will enhance Zhihu's development rather than replace it, as trustworthiness and expert networks become more essential.

Q: What changes and innovations can we expect on the product side this year, particularly regarding AI integration? A: This year, Zhihu focuses on strengthening social interactions and enhancing its brand as a trusted content platform. Developments include social circles for short-form content and subscription plans for longer content. AI integration will deepen, amplifying the impact of Zhihu's expert network and boosting content creation and distribution efficiency. The aim is to explore new possibilities in the AI era, leveraging Zhihu's high-quality content.

Q: How can AI and new models benefit online marketing products? Do you have any examples? A: AI is transforming advertising monetization. Zhihu's knowledgeable users and in-depth content, once seen as challenges, are now competitive advantages in the AI era. AI prioritizes high-quality content, increasing traffic to expert-generated content. Advertisers focus on content marketing and brand reputation on Zhihu. The shift from SEO to GEO (Generative Engine Optimization) highlights the importance of managing content visibility in AI-generated answers.

Q: What is the long-term margin profile for Zhihu, and how should we think about the 2025 margin outlook and cash utilization? A: Zhihu achieved profitability for the first time with an 11% non-GAAP net profit margin. UGC platforms typically have net margins ranging from 25% to 50%. AI presents a historic opportunity, and Zhihu may temporarily maintain a slight loss to capture AI integration opportunities. Despite market value increases, Zhihu remains undervalued, prompting continued share buybacks.

Q: What are the strategic priorities for Zhihu in 2025? A: Zhihu aims to enhance community trustworthiness and profitability while exploring AI applications. The focus is on reinforcing the expert network, improving content production efficiency, and leveraging AI to serve a broader user base. Strategic investments will be made to maximize long-term profitability and competitive advantages in the AI domain.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.