Zhihu, Inc. Reports Mixed Q1 Earnings Results

Zhihu, Inc. ((ZH)) has held its Q1 earnings call. Read on for the main highlights of the call.

Zhihu, Inc.’s recent earnings call highlighted a blend of positive achievements and ongoing challenges. The company reported its first non-GAAP net profit in a first quarter since its IPO, showcasing improvements in user engagement and content growth. However, significant revenue declines in key segments such as marketing services and vocational training were also noted. The strategic focus on AI and community engagement appears promising, yet the revenue shortfalls indicate areas needing continued attention.

First Quarter Non-GAAP Net Profit

Zhihu achieved a non-GAAP net income of RMB6.9 million, a significant turnaround from an adjusted net loss of RMB135.7 million in the same period last year. This marks the first time the company has reported a non-GAAP net profit in the first quarter since its IPO, signaling a positive shift in financial performance.

Improved User Engagement Metrics

The company reported a 17.6% year-over-year increase in average daily user time spent, reaching nearly 38 minutes. Additionally, the core user retention rate improved both sequentially and year-over-year, highlighting enhanced user engagement on the platform.

Growth in AI-Related Content

AI-related professional content on Zhihu grew by 46% year-over-year, underscoring the platform’s position as a leading source of trustworthy professional content. This growth reflects Zhihu’s strategic focus on AI and its potential to drive future content development.

Expansion of Professional Creator Network

Zhihu saw a sequential increase in the number of daily active high-tier content creators, with verified owner creators rising by 20% year-over-year. This expansion indicates a strengthening of the platform’s professional creator network.

Decline in Total Revenue

Total revenue for the quarter was RMB729.7 million, down from RMB960.9 million in the same period of 2024. This decline reflects ongoing adjustments to the business model and highlights areas that require further strategic focus.

Marketing Services Revenue Decline

Revenue from marketing services dropped to RMB197 million, a 40.4% year-over-year decline. This decrease was attributed to changes in the content model and a reduction in low-quality marketing content consumption.

Vocational Training Revenue Drop

Vocational training revenue fell by 35% year-over-year to RMB94.5 million, as Zhihu transitions to a new business model. This decline highlights challenges in adapting to market changes in this segment.

Forward-Looking Guidance

Zhihu’s forward-looking guidance includes maintaining a strong cash position of RMB4.8 billion as of March 31, 2025, and a new 2025 share repurchase program authorizing the buyback of up to 10% of the total issued shares, pending shareholder approval. Despite revenue challenges, the company achieved a gross margin improvement of 5.2 percentage points to 61.8% and a 34.4% reduction in total operating expenses.

In summary, Zhihu’s earnings call presented a mixed picture of achievements and challenges. The company’s first non-GAAP net profit in a first quarter since its IPO and improvements in user engagement are promising. However, revenue declines in key segments highlight areas requiring strategic focus. The forward-looking guidance suggests a cautious yet optimistic outlook as Zhihu continues to navigate its business model adjustments.