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01/11 12:00
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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.
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.
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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