On June 12th, Zhihu (NYSE: ZH; HKEX: 2390) released its Q1 2024 performance report. The financial report shows that Zhihu's total revenue for the first quarter was RMB 961 million, with further improvement in operational efficiency and a 6.1% YoY increase in gross profit, with the gross margin rising from 51.5% in the same period last year to 56.6%, firmly advancing towards the goal of profitability as soon as possible; Zhihu's average monthly active users (MAUs) in the first quarter reached 89 million, with an average of 14.8 million subscribed members per month, and the accumulated content creation at the end of the quarter reached 804 million. On the basis of building a trustworthy community, Zhihu will continue to explore the full new growth opportunities beyond the community.

Continuously improving operational efficiency, with the goal of achieving profitability as soon as possible.

On the financial side, in Q1 Zhihu continued to consolidate its multi-engine business model, jointly building resilience and anti-pressure for business development. The revenue of paid reading business was RMB 450 million, accounting for an increased proportion of 46.8%, ranking first in revenue. The revenue from professional education was RMB 145 million, a YoY increase of 35.9%, with the proportion exceeding 15% for the first time; the revenue from marketing services reached RMB 331 million.

At the same time, Zhihu continued to improve operational efficiency, with good results. Gross profit in the first quarter increased by 6.1% YoY, and gross margin increased from 51.5% in the same period last year to 56.6%. The company also further adjusted the form of resource allocation, improved personnel efficiency, explored new opportunities for growth, and firmly moved towards the goal of continuing to reduce losses and achieve profitability as soon as possible.

On the operational level, Zhihu has strengthened high-quality growth, created a trustworthy community, promoted the continuous expansion of the high-value content pool, and kept creators active. By the end of the first quarter, the accumulated content creation on Zhihu had reached 804 million, a YoY increase of 18.1%, and the accumulated content creators on the platform had reached 73.6 million, a YoY increase of 13.0%. In Q1, Zhihu's average monthly active users (MAUs) reached 89 million. At the same time, the paid reading business has continued to provide users with high-quality paid content and experience, with an average of 14.8 million subscribed members per month.

Zhihu founder, chairman and CEO Zhou Yuan said: "In 2024, we have made substantial progress in achieving the goal of achieving balance between revenues and expenses by improving operational efficiency and accelerating loss reduction. In addition, by enhancing the credibility of the Zhihu community and promoting the prosperity of the community, we have significantly increased the activity, retention rate, and daily active user visit duration of core users. We believe that the potential of AI search and the continuously emerging value of the trustworthy community will provide us with new driving force for sustainable growth, and also clarify the direction of single quarter profit for this year."

Zhihu CFO Wang Han added: "In this quarter, we optimized the cost structure and improved the efficiency of commercialization. Our gross margin has continued to increase YoY for six consecutive quarters. At the same time, we significantly reduced the new user acquisition costs related to the community and maintained high investment returns in multiple business lines. We firmly believe that with continuous and strong strategic execution, we will steadily advance towards the goal of achieving profitability."

Focusing on core strengths, exploring new growth opportunities

As a Q&A community with professional discussions as its core positioning, Zhihu has a strong high-value content source and business growth space. In the first quarter, Zhihu focused on its core strengths and explored new growth opportunities on the basis of a trustworthy community.

Zhihu Yan Yan story has become an important part of the development of online literature and even the film and television industry. Recently, the Yan Yan story content library was first included in the "2023 China Network Literature Blue Book" edited by the China Writers Association, and many works have won industry awards such as the "2023 China Network Literature Influence List" and the "Third Network Literature Youth List". At the same time, Zhihu accelerated the development of the value of content IP, and the short drama works adapted from the Salt Yan story, "The Pen" and "The Record of the Consort's Daily Life", garnered market attention. The film and television rights for the "New Zhihu Three Wonders" voted by readers were purchased, and self-produced short dramas, self-produced radio dramas, and audio dramas are also being intensively developed and produced.

Zhihu Zhixuetang continues to promote the company's growth in the field of professional education. In the first quarter, Zhixuetang consolidated its advantageous categories such as CFA, AGI, and Software Examination, and joined forces with the CFA Association, Microsoft, and other institutions to bring users high-quality content and services. On the other hand, it continuously expanded its product line and added a category of English proficiency test courses to meet more segmented demands of users.