Zhihu Inc. (ZH) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Revenues RMB 658.9 million in the third quarter, compared with RMB 845 million in the same period of 2024. This represents a year-over-year decrease, mainly due to efforts to optimize revenue mix and focus on sustainable, high-quality growth.
Marketing Services Revenue RMB 189.4 million, compared with RMB 256.6 million in the same period of 2024. The year-over-year decrease was driven by refining service offerings and optimizing client mix. However, the decrease narrowed, indicating the adjustment cycle has bottomed out.
Paid Membership Revenue RMB 385.6 million, compared with RMB 459.4 million in the same period of 2024. The decrease was due to a drop in average monthly subscribing members year-over-year, but there was an 8.1% sequential growth in members to 14.3 million, driven by enhanced retention and ARPU initiatives.
Other Revenues RMB 83.9 million, compared with RMB 129 million in the same period of 2024. The decrease was primarily due to the strategic refinement of the vocational training business.
Gross Profit RMB 403.6 million, compared with RMB 540.1 million in the same period of 2024. Gross margin was 61.3%, down from 63.9% in the same period of 2024, reflecting changes in revenue mix.
Operating Expenses RMB 503.5 million, a decrease of 19.4% year-over-year. This was due to a more efficient cost structure and disciplined resource allocation.
Selling and Marketing Expenses RMB 330.1 million, a 14.9% decrease from RMB 388 million in the same period of 2024. The decrease was due to tighter control over promotional spending and optimized personnel-related expenses.
Research and Development Expenses RMB 114.4 million, a 36.2% decrease from RMB 179.3 million in the same period of 2024. This was driven by improved productivity and efficiency in R&D.
General and Administrative Expenses RMB 59 million, compared with RMB 57.2 million in the same period of 2024, showing a slight increase.
GAAP Net Loss RMB 46.7 million, compared with RMB 9 million in the same period of 2024, reflecting a higher loss year-over-year.
Non-GAAP Adjusted Net Loss RMB 21 million, compared with RMB 13.1 million in the same period of 2024, indicating a higher adjusted loss year-over-year.
Cash and Cash Equivalents RMB 4.6 billion as of September 30, 2025, compared with RMB 4.9 billion as of December 31, 2024, showing a decrease in cash reserves.
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Operating Highlights
AI integration: Accelerated agentic AI upgrades to deliver trusted and differentiated experiences. AI-focused content increased by over 30% year-over-year.
Content creation tools: Enhanced tools like Zhihu Zhida for smarter search results and multistep reasoning, improving user experience and creator influence.
International expansion: Yanyan Story debuted at the Frankfurt Book Fair, showcasing Chinese digital literature globally. Licensed over 100 titles for publication in Asian markets and partnered with international platforms for translations.
Client acquisition: Expanded high-value client base in sectors like technology, automotive, and healthcare. Hosted TechClub Conference to strengthen brand positioning for companies like Huawei and China Mobile.
Cost management: Disciplined cost control led to a 16.3% year-over-year reduction in non-GAAP operating loss.
Content ecosystem: Daily creation of high-quality content increased by 25% year-over-year. Professional creators and verified honored creators grew significantly.
Vocational training refinement: Reclassified vocational training revenue and focused on improving operational efficiency.
AI-driven monetization: Launched GEM marketing solution to enhance brand visibility and SEO performance in AI-generated answers.
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Risk or Challenges
Revenue Decline: Total revenues for the quarter decreased to RMB 658.9 million from RMB 845 million in the same period of 2024, primarily due to optimization of revenue mix and focus on sustainable growth. This decline could impact financial stability and growth potential.
Marketing Services Revenue Drop: Marketing services revenue fell to RMB 189.4 million from RMB 256.6 million in the same period of 2024, driven by adjustments in service offerings and client mix. This could hinder the company's ability to attract and retain high-value clients.
Paid Membership Revenue Decline: Paid membership revenue decreased to RMB 385.6 million from RMB 459.4 million in the same period of 2024, despite a sequential rebound in subscribers. This indicates challenges in maintaining long-term member retention and ARPU.
Vocational Training Business Refinement: Other revenues dropped to RMB 83.9 million from RMB 129 million in the same period of 2024, primarily due to strategic adjustments in the vocational training business. This could limit diversification of revenue streams.
Operating Expenses: Total operating expenses decreased by 19.4% year-over-year to RMB 503.5 million, but the reduction in R&D expenses by 36.2% could impact innovation and long-term competitiveness.
Net Loss Increase: GAAP net loss increased to RMB 46.7 million from RMB 9 million in the same period of 2024, reflecting financial strain despite cost optimization efforts.
Economic and Market Conditions: The company faces challenges in recovering marketing services revenue and optimizing client mix, indicating potential difficulties in navigating economic uncertainties and market conditions.
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Guidance & Outlook
AI Integration and Content Ecosystem: Zhihu is accelerating its agentic AI upgrades to deliver trusted and differentiated experiences to users. The company is leveraging its high-quality content and expert network to create expanding opportunities for collaboration in the AI industry. AI-focused content creation increased by over 30% year-over-year, and Zhihu aims to strengthen its position as a trusted content provider in the emerging AI ecosystem.
Marketing Services Revenue: The company expects marketing services revenue to begin growing on a sequential basis in the fourth quarter, following a bottoming out of its adjustment cycle. Zhihu is focusing on high-value accounts and upgrading advertising products to drive growth.
Paid Membership Business: Average monthly paid members increased by 8.1% sequentially to 14.3 million in Q3 2025. Zhihu plans to enhance content supply, membership benefits, and personalized experiences to improve member retention and ARPU. The company also sees potential for IP development and commercialization to unlock new growth opportunities.
International Expansion: Zhihu is expanding its international reach through IP licensing and partnerships. The Yanyan Story initiative has licensed over 100 titles for publication in major Asian markets and is translating works into multiple languages to grow its global presence.
Operational Efficiency and Profitability: Zhihu is confident in achieving its full-year profitability target on a non-GAAP basis. The company plans to maintain stability while investing prudently for sustainable growth, focusing on AI capabilities and operational efficiency.
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Shareholder Return Plan
Share Repurchase: As of September 30, 2025, Zhihu repurchased 31.1 million Class A ordinary shares for an aggregate value of USD 66.5 million on the open market. Additionally, the company repurchased a total of 22.5 million Class A ordinary shares for an aggregate value of USD 34.5 million through the trustee of the company as of the end of the third quarter.
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Key Q&A
Q:Will management share some color about the AI progress of Zhihu? For example, the penetration rate of Zhihu Zhida and the progress of the AI integration with the Zhihu Community.
A:Zhihu Zhida's penetration rate exceeded 15% in Q3, nearly 4x higher than the same period last year. AI integration has been progressing with features like AI search capability, cross-topic content aggregation, and community trend summaries. AI tools for content creation, such as smart headlines and grammar checking, have been adopted by over 20% of users. Future plans include AI-powered multi-model content conversion and intelligent formatting. AI is also being used to enhance content consumption and distribution, such as AI-powered daily briefings and discussion summaries.
Q:How do you see the current status of Zhihu's user ecosystem? Could management share more color on the directions for improving Zhihu's future product design and how is the progress so far?
A:Zhihu's ecosystem is healthy, focusing on content quality, user structure, and creator incentives. High-quality content creation has seen double-digit growth for several quarters, and user engagement has increased with daily time spent growing year-over-year for 6 consecutive quarters. The user base is young, with 65% aged 18-30, and includes professionals in technology and AI. Future product direction focuses on utility and identity, integrating AI to enhance user experience and fostering human connections within the community.
Q:Could management update the progress of the adjustments in each business line? Did you see any signs that the revenue has bottomed out or started to rebound? In particular, how do you expect the future of the advertising business? Could you share your outlook on the company's profitability?
A:Q3 is expected to be the revenue bottom, with sequential recovery starting in Q4. Marketing services are projected to stay above Q3's baseline next year. Pay membership is still in transition, and its revenue bottom has not been confirmed. The vocational training business has been reclassified and is no longer a drag on profitability. The company expects to achieve its first full-year non-GAAP profitability in 2025, despite a small loss in Q3. Investments are being made to strengthen Zhihu's position in AI, real people interactions, and trusted content.
Q:Could management share some more color about the shareholder return pay in progress?
A:Zhihu has been one of the most active buyback companies among U.S.-listed Chinese firms over the past 2 years. The company believes it is significantly undervalued, with its market cap below the cash on its balance sheet. It plans to maintain its buyback program and remain active in repurchasing shares.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses provided detailed and specific information.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI content
AI creator
AI ecosystem
AI upgrade
China
English
Foundation
IP development
Mobile
Securities
Zhou
activity humanity
analysis
brand product
campaign
citation
collaboration
column creator
company
creation distribution
creator AI
creator activity
creator column
creator content
digit
enterprise client
event
health
increase
industry
initiative
literature
member retention
non
number
potential IP
product client
progress client
provider
reasoning
retention ARPU
science AI
solution
view AI
work
ZH Transcript
Zhihu Inc. (ZH) Q1 2026 Earnings Call Transcript
Unknown6-3
The earnings call revealed mixed signals: strong adjusted net income and reduced net loss, but declining gross profit and margins. AI integration and strategic shifts in membership revenue show long-term potential, yet lack immediate impact. Shareholder returns are positive, but no new partnerships or guidance changes were announced. The Q&A highlighted strategic AI focus but lacked specifics, leaving uncertainties. Without market cap data, a neutral prediction is prudent, as positive long-term strategies are counterbalanced by short-term financial challenges.
Zhihu Inc. (ZH) Q4 2025 Earnings Call Transcript
Unknown3-25
Despite challenges in financial performance, such as revenue declines and increased net loss, Zhihu's strategic focus on AI and international expansion shows potential for future growth. The positive sentiment from management's detailed Q&A responses about AI impact and future strategies balances the negative aspects. The stock price reaction is likely to be neutral, considering the mixed signals from financial metrics and strategic initiatives.
Zhihu Inc. (ZH) Q3 2025 Earnings Call Transcript
Unknown11-25
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.
Zhihu Inc. (ZH) Q2 2025 Earnings Call Transcript
Unknown8-27
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.
ZH Report
Frequently Asked Questions
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