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01/11 12:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite achieving profitability and executing strategic shifts, Zhihu faces significant revenue declines and competitive pressures. The revenue drop across segments, especially in marketing services and vocational training, coupled with unclear guidance, paints a concerning picture. The share repurchase plan is a positive, yet it may not offset the negative sentiment from declining revenues and market pressures. The Q&A reveals management's evasiveness on revenue trends, exacerbating uncertainties. Without a clear market cap, but considering the overall negative indicators, a negative stock price reaction is anticipated.
Total Revenue RMB729.7 million, down 24% year-over-year from RMB960.9 million; decrease reflects ongoing adjustment to business and strategic focus on improving revenue quality and mix.
Marketing Services Revenue RMB197 million, down 40.4% year-over-year from RMB330.5 million; decrease driven by proactive optimization of service offerings to strategically expand margins.
Paid Membership Revenue RMB417.9 million, down 7.1% year-over-year from RMB449.7 million; average monthly subscribing members declined slightly year-over-year but increased by 1.2% sequentially.
Vocational Training Revenue RMB94.5 million, down 35% year-over-year from RMB145.4 million; decrease due to strategic refinement of acquired business, prioritizing faster growing self-operated programs.
Other Revenues RMB20.3 million, down 42.4% year-over-year from RMB35.2 million; specific reasons for the decrease were not mentioned.
Gross Profit RMB451.1 million, down from RMB543.5 million year-over-year; gross margin expanded by 5.2 percentage points year-over-year to 61.8% due to improved operational efficiency.
Total Operating Expenses RMB503.7 million, down 34.4% year-over-year; decrease reflects better cost management and ongoing efficiency improvements.
Selling and Marketing Expenses RMB320.6 million, down 32.9% year-over-year from RMB478 million; decrease due to more disciplined promotional spending and a decrease in personnel-related expenses.
R&D Expenses RMB141.9 million, down 28.1% year-over-year from RMB197.4 million; decrease driven by more efficient spending on technological innovation.
G&A Expenses RMB41.2 million, down 55.6% year-over-year from RMB92.9 million; specific reasons for the decrease were not mentioned.
GAAP Net Loss Narrowed by 93.9% year-over-year; specific figures not provided.
Non-GAAP Net Income RMB6.9 million, compared to an adjusted net loss of RMB135.7 million in the same period of 2024; reflects improved operational efficiency and execution of strategy.
Cash and Cash Equivalents RMB4.8 billion as of March 31, 2025, down from RMB4.9 billion as of December 31, 2024; specific reasons for the decrease were not mentioned.
Contributor Attribution Feature: Launched a contributor attribution feature to integrate AI with the community, enhancing content quality and reducing AI hallucination.
Yanyan Story Long Form Writing Marathon: Launched Season 4 of the Yanyan Story Long Form Writing Marathon, inviting submissions of high-quality long form stories.
Marketing Services Revenue: Revenue from marketing services reached RMB197 million, down 40.4% year-over-year due to the adoption of a trustworthy content model.
Paid Membership Revenue: Paid membership revenue was RMB417.9 million, stable quarter-over-quarter, with average monthly paid members up 1.2% sequentially.
Gross Margin: Gross margin expanded by 5.2 percentage points year-over-year, reaching 61.8% due to improved operational efficiency.
Operating Expenses: Total operating expenses declined by 34.4% year-over-year to RMB503.7 million, reflecting better cost management.
AI Integration: Investment in AI applications remains a top priority, with a focus on enhancing community engagement and content quality.
Share Repurchase Program: Approved a new share repurchase program effective until June 25, 2026, with a maximum repurchase size of 10% of total issued shares.
Regulatory Risks: The company acknowledges inherent risks and uncertainties in forward-looking statements, which may lead to actual results differing materially from expectations.
Competitive Pressures: Zhihu faces competitive pressures in the AI content space, as highlighted by the need to maintain high-quality content to remain a leading source of professional information.
Revenue Decline: Total revenue decreased by 15.1% sequentially, with marketing services revenue down 40.4% year-over-year, indicating challenges in maintaining revenue streams.
Supply Chain Challenges: The company is optimizing its client mix and adapting to changes in marketing strategies, which may indicate underlying supply chain or operational challenges.
Economic Factors: The ongoing adjustment to business strategies reflects broader economic factors affecting revenue quality and mix.
Vocational Training Business: Revenue from vocational training decreased by 35% year-over-year, indicating challenges in this segment as the company shifts its business model.
AI Integration: Investment in and exploration of AI applications remains a top priority for us. We launched the contributor attribution feature, which amplifies the influence of our expert network and helps reduce AI hallucination in specialized domains.
Content Growth: AI-related professional content grew by 46% year-over-year, highlighting the importance of content quality and professional credibility in the AI era.
Commercialization Strategy: We are committed to balancing commercial growth with protecting the integrity of our community and user experience, enhancing the commercial appeal of our brand and monetization potential.
Vocational Training Transformation: We are transitioning our vocational training business towards a more socially interactive and knowledge-sharing driven model, which is expected to enhance operational efficiency and profitability.
Share Repurchase Program: The Board has approved a new 2025 share repurchase program, effective until June 25, 2026, with a maximum repurchase size of 10% of total issued shares.
Revenue Expectations: Our total revenue for the quarter was RMB729.7 million, down 15.1% sequentially, reflecting ongoing adjustments to our business and strategic focus on improving revenue quality and mix.
Paid Membership Growth: Our average monthly paid members remain resilient, up by 1.2% sequentially to 14.2 million.
Profitability Outlook: We achieved a non-GAAP profit for the second consecutive quarter, with adjusted net income of RMB6.9 million, compared to an adjusted net loss of RMB135.7 million in the same period last year.
Future Focus: We will continue strengthening our commercialization capabilities and capitalizing on long-term growth potential within our community, aiming for sustainable growth and profitability.
Share Repurchase Program: As of May 26, 2025, Zhihu repurchased 31.1 million Class A ordinary shares for an aggregate value of $66.5 million on the open market. Additionally, 17.8 million Class A ordinary shares were repurchased for an aggregate value of $26.9 million through the trustee of the company. A new share repurchase program for 2025 has been approved, effective until June 25, 2026, with a maximum repurchase size of 10% of total issued shares, subject to shareholder approval.
Despite challenges like decreased revenues and increased losses, management's optimistic guidance and AI progress provide a counterbalance. The Q&A highlighted positive AI integration and a healthy user ecosystem. The commitment to share buybacks also supports sentiment. However, the absence of clear market cap data and ongoing financial pressures suggest a cautious outlook, resulting in a neutral prediction.
The earnings call presents mixed signals: a decline in revenue and specific segments, but an improvement in gross margin, cost control, and profitability. The Q&A section reveals cautious optimism, with management focusing on AI integration and shareholder returns. However, the lack of specific guidance and avoidance of detailed plans may concern investors. The share repurchase program and profitability turnaround are positives, but the overall sentiment remains balanced, leading to a neutral stock price prediction.
While Zhihu showed improved profitability and a new share repurchase program, revenue declines in key segments and unclear guidance suggest a balanced outlook. The positive EPS surprise and improved gross margin are offset by revenue declines and supply chain challenges. The focus on AI and community trust is promising but not enough to outweigh the immediate revenue concerns. Overall, the mixed signals from financial performance and strategic initiatives suggest a neutral stock price movement.
Despite achieving profitability and executing strategic shifts, Zhihu faces significant revenue declines and competitive pressures. The revenue drop across segments, especially in marketing services and vocational training, coupled with unclear guidance, paints a concerning picture. The share repurchase plan is a positive, yet it may not offset the negative sentiment from declining revenues and market pressures. The Q&A reveals management's evasiveness on revenue trends, exacerbating uncertainties. Without a clear market cap, but considering the overall negative indicators, a negative stock price reaction is anticipated.
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