Zhihu, Inc. ((ZH)) has held its Q4 earnings call. Read on for the main highlights of the call.
Zhihu, Inc. recently held its earnings call, revealing a mixed sentiment with a notable turnaround in profitability despite challenges in revenue streams such as marketing services and vocational training. The company highlighted its strategic focus on AI integration and community enhancement as key drivers for a positive outlook.
Turnaround in Profitability
Zhihu reported its first-ever adjusted net income of RMB97.1 million, a significant improvement from the adjusted net loss of RMB91.3 million in the same period last year. The company also transitioned from an adjusted net operating loss of RMB165.3 million to an adjusted operating profit of RMB23.1 million, marking a pivotal shift in its financial health.
Significant Reduction in User Acquisition Costs
The company achieved an impressive 88% year-over-year reduction in community user acquisition-related expenses. This reduction played a crucial role in Zhihu’s improved profitability, demonstrating effective cost management strategies.
Growth in Key Engagement Metrics
Zhihu saw a 23% year-over-year increase in time spent per daily active user, alongside improved core user retention rates. The average monthly active users reached 81.4 million, showing a slight sequential increase, indicating growing user engagement.
AI Integration and Community Enhancement
Zhihu’s AI platform, Zhida, reached over 10 million monthly active users, receiving positive feedback for its response completeness and accuracy. This integration with the community of experts underscores Zhihu’s commitment to leveraging AI for community enhancement.
Expansion of Content and Creator Base
The cumulative content volume on Zhihu’s platform increased by 12.9% year-over-year, reaching 874.6 million. The community of content creators also grew to 77.7 million, up 8.9% year-over-year, highlighting the platform’s expanding content ecosystem.
Strong Performance in Self-Operated Vocational Training
Zhihu’s self-operated vocational training business achieved a turnaround in operating profitability, with double-digit growth year-over-year, showcasing the potential of this segment despite overall revenue declines.
Decline in Total Revenue
Total revenues for the fourth quarter were RMB859.2 million, reflecting a 24.5% decrease from the same period in 2023. This decline was attributed to strategic adjustments away from lower-quality revenue streams.
Decrease in Marketing Services Revenue
Marketing services revenue fell to RMB315.9 million, down from RMB465.2 million in the same period of 2023. This decrease was due to the optimization of service offerings as part of Zhihu’s strategic realignment.
Vocational Training Revenue Decline
Revenue from vocational training decreased by 50.4% year-over-year to RMB84 million, attributed to strategic refinement of acquired business, reflecting a challenging environment for this segment.
Slight Decline in Paid Membership Revenue
Paid membership revenue slightly decreased to RMB420.2 million from RMB455.9 million in the same period of 2023, with a minor decline in average monthly subscribing members.
Forward-Looking Guidance
Zhihu’s forward-looking guidance reflects a significant financial turnaround, with an adjusted net income of RMB97.1 million for the fourth quarter of 2024. The company emphasized its strategic focus on enhancing user engagement and optimizing its community ecosystem. With key user engagement metrics showing growth and a strong cash position of RMB4.9 billion, Zhihu is poised for continued progress.
In summary, Zhihu’s earnings call highlighted a positive shift in profitability, driven by strategic cost reductions and enhanced user engagement. Despite revenue challenges, the company’s focus on AI integration and community growth offers a promising outlook for the future.