Zhihu's Q2 net loss decreased significantly by 71.1% year-on-year, AI search product "Zhihu Direct Answers" received positive reviews

With the AI search product "ZHIHU-W Direct Answer" receiving praise, user retention rate and daily active user duration continue to increase, Zhihu's financial report for the second quarter shines. The gross profit margin has risen, and the net loss has decreased significantly by 71.1% year-on-year, marking the lowest loss since Zhihu went public.

After the financial report was released, Zhihu's stock price fell by 0.75%.

On Friday, August 23, Zhihu announced its financial report for the second quarter of 2024:

Key Financial Data

Operating Revenue: Total revenue for the second quarter was RMB 934 million (USD 129 million), lower than RMB 1.044 billion in the same period last year;

Operating Costs: Operating costs in the second quarter decreased by 21.8% year-on-year to RMB 377 million (USD 52 million);

Gross Profit: Gross profit for the second quarter was RMB 557 million (USD 77 million), lower than RMB 562 million in the same period last year;

Gross Profit Margin: Gross profit margin for the second quarter was 59.6%, higher than 53.8% in the same period last year;

Net Loss: Net loss for the second quarter was RMB 81 million (USD 11 million), a 71.1% decrease year-on-year;

Adjusted Net Loss (non-GAAP): Adjusted net loss for the second quarter was RMB 45 million (USD 6 million), a 79.9% decrease year-on-year;

Average Monthly Active Users (MAU): 81 million;

Average Monthly Subscribers: 15 million.

Repurchase Plan

The company established a new stock repurchase plan ("2024 Repurchase Plan") in June 2024, valid until June 26, 2025. The total number of shares that can be repurchased under the "2024 Repurchase Plan" (including shares represented by American Depositary Shares) and the remaining shares that can be repurchased under the 2022 repurchase plan will not exceed 10% of the total issued shares as of June 26, 2024 (excluding any treasury shares).

"ZHIHU-W Direct Answer" Receives Praise, Net Loss Decreases by Over 70%

In the second quarter, the paid reading business remains Zhihu's largest source of revenue, followed by marketing service revenue of RMB 344 million and professional training service revenue of RMB 143 million.

Zhihu's AI search product "ZHIHU-W Direct Answer" has received positive feedback from users, leading to further improvement in user retention rate. According to the financial report, this quarter's revenue from paid members was RMB 433 million (USD 59.5 million), slightly lower than last year's RMB 449 million, as marginal revenue from each subscriber has decreased. Zhihu's founder, chairman, and CEO, Zhou Yuan, stated:

"Zhihu continues to enhance the core user experience, with increasing user retention rate and daily active user duration. With the growing credibility of our community, we launched Zhihu Direct Answers at the end of June, marking a significant advancement in the field of artificial intelligence search. The further improvement in user retention rate and the positive user feedback received for Zhihu Direct Answers demonstrate our unique advantages and ability to capture the enormous opportunities in this field."

Meanwhile, due to reduced revenue, this has led to a decrease in content costs and operating expenses.

In the second quarter, Zhihu's operating costs and operating expenses both decreased by over 16%, with a significant year-on-year decrease of 71.1% in net loss. Among them, research and development expenses decreased by 11.4% to RMB 209 million (USD 29 million), mainly attributed to more efficient technology innovation spending. Zhihu's CFO, Wang Han, stated:

"The second quarter was the lowest loss recorded since our initial public offering in the United States. This quarter, we maintained restrained spending while achieving a high level of return on investment across all business lines. Looking ahead, we will continue to strengthen strategic execution while pursuing long-term sustainable profitability."