Zhihu, Inc. ((ZH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Zhihu, Inc. recently held its earnings call, revealing a generally positive sentiment characterized by notable achievements in profitability and operational efficiency. The company has made significant strides in AI integration and user engagement, although challenges remain in revenue growth, particularly in marketing services and vocational training.
Non-GAAP Profitability Achieved
Zhihu has successfully achieved non-GAAP profitability for the third consecutive quarter, reporting an adjusted net income of RMB 91.3 million. This marks a significant turnaround from a loss of RMB 44.6 million in the same period last year, underscoring the effectiveness of the company’s disciplined operating strategy.
Improved Gross Margin
The company reported an improved gross margin of 62.5%, up from 59.6% in the same period of 2024. This improvement is attributed to enhanced monetization capabilities and operational efficiency, reflecting Zhihu’s strategic focus on financial health.
AI Integration and Content Growth
Zhihu has seen a remarkable year-over-year growth of over 45% in AI-related content for two consecutive quarters. The platform continues to serve as a launch pad for new AI technologies and products, highlighting its commitment to innovation and content expansion.
Increased Engagement Metrics
User engagement metrics have shown positive trends, with average daily user time spent increasing by 15% year-over-year. Additionally, core user retention has improved significantly both sequentially and year-over-year, indicating a stronger user base.
Expansion of AI Capabilities
The company has launched a major update to Zhihu Zhida, integrating AI more deeply into user interactions. This update aims to reduce AI hallucinations in professional domains, enhancing the overall user experience.
Revenue Decline
Despite operational successes, Zhihu experienced a decline in total revenue, which fell to RMB 716.9 million from RMB 933.8 million in the same period of 2024. This decrease is attributed to ongoing business optimization efforts.
Marketing Services Revenue Drop
Marketing services revenue decreased to RMB 222.8 million from RMB 344 million in the same period of 2024. However, the year-over-year decline has narrowed, suggesting potential stabilization in this segment.
Vocational Training Revenue Fall
Vocational training revenue fell to RMB 62.1 million from RMB 133.6 million in the same period of 2024. The decline is due to a strategic shift towards high-performing course categories.
Forward-Looking Guidance
Looking ahead, Zhihu anticipates continued non-GAAP profitability, with a focus on enhancing user engagement and optimizing content quality. The company expects stable Monthly Active Users (MAUs) and further growth in daily user time spent and high-quality content creation. Despite a slight sequential decline in paid membership revenue, marketing services revenue saw a quarter-over-quarter growth of 13.1%, indicating potential recovery.
In conclusion, Zhihu’s earnings call reflects a positive outlook with significant achievements in profitability and operational efficiency, driven by AI integration and enhanced user engagement. While challenges in revenue growth persist, the company’s strategic focus on innovation and user experience positions it well for sustainable growth.