On August 23, the company released the performance report for the second quarter of 2024. $Zhihu (ZH.US)$ $ZHIHU-W (02390.HK)$ The financial report shows that Zhihu's total revenue in the second quarter was 0.934 billion yuan, and the adjusted net loss decreased by 79.9% to 44.6 million compared to the same period last year, creating the largest single-season reduction in losses and the lowest net loss since its listing, exceeding market expectations. Zhihu's new AI search product 'Zhihu Direct Answers,' launched in the second quarter, has seen continuous improvement in user data and word of mouth, bringing new momentum to further consolidate its trusted community.

The largest reduction in losses since listing, accelerating towards the profit target.

On the financial front, Zhihu's multi-engine revenue model is steadily progressing, and its commercialization capabilities for high-quality content and services are continuing to be recognized by the industry. Paying reading business remains the largest source of income, generating 0.433 billion in revenue, contributing over 46% of the total revenue; marketing services and professional education business revenue were 0.344 billion yuan and 134 million yuan, respectively.

At the same time, Zhihu's operational efficiency has further improved, with the gross margin increasing from 53.8% in the same period last year to 59.6%. The adjusted net loss decreased by 79.9% to 44.6 million year-on-year, achieving the largest reduction in net losses since its listing. At the same time, both the net loss amount and the adjusted net loss rate reached the lowest level in a single quarter, demonstrating Zhihu's huge potential for profitable growth and accelerating the achievement of its quarterly profit target.

From an operational perspective, Zhihu continues to consolidate the core value and advantages of a trusted community, promoting further expansion of the high-value content pool and sustaining active creators. As of the end of the second quarter, Zhihu has accumulated a total of 0.831 billion pieces of content, a year-on-year growth of 16.8%. The platform has reached a cumulative total of 74.9 million content creators, a year-on-year increase of 12.5%. In the second quarter, Zhihu's monthly active users (MAUs) reached 80.6 million, and various indicators such as user health, user activity rate, and core user retention have steadily improved.

In the second quarter, the paid reading business continued to provide users with quality paid content and experiences, with an average of 14.7 million subscribers per month. Among them, Zhihu's Salt Story brand has built a good reputation in the internet literature and film and television industry, releasing a strong influence on works and prospects for film and television development.

Zhou Yuan, the founder, chairman, and CEO of Zhihu, said: "Our strategic decision-making and efficient execution have brought outstanding financial performance in the second quarter of 2024. At the same time, we have made significant progress in improving the core user experience, with increasing user retention and daily active user duration. Under the premise of a trusted community, we launched Zhihu Direct in late June, marking an important milestone in our progress in the field of AI search. The continuous improvement of user retention and positive feedback from users demonstrate our unique advantages and enormous development potential in this field."

Zhihu CFO Wang Han added: "The second quarter was the lowest loss quarter since our initial public offering in the United States. This quarter, we achieved high returns on investment in all business lines while maintaining disciplined spending. In addition, we are committed to providing shareholder returns in various ways. Looking ahead, we will continue to strengthen strategic execution and pursue long-term sustainable profitability."

AI search empowers a trustworthy community with Zhihu Direct

At the 10th YAN Club New Knowledge Youth Conference, Zhihu officially launched the new AI search product "Zhihu Direct", which brings new productivity tools to users and creators through the application of large models, exploring new forms of questioning. This is one of Zhihu's powerful explorations in the field of large model applications.

Zhihu Direct has received unanimous praise from users since its launch. According to the AITOP product list, Zhihu Direct's visit volume in July increased by as much as 430%, leading all domestic AI products and ranking fifth in the global AI product growth list, becoming a strong competitor in the recent AI search field.

Zhihu Direct further enhances the efficiency and trustworthiness of the community ecosystem, integrating and amplifying the value of productivity tools and the community. On the one hand, Zhihu Direct relies on Zhihu's powerful high-quality corpus to provide users with professional and efficient tool scenarios, greatly improving the efficiency of community content search and distribution; on the other hand, Zhihu Direct achieves professional content traceability, further strengthening the interaction and connection between users and creators, and helping the community grow with high quality.

In the second half of the year, Zhihu's direct answers will continue to be upgraded and iterated in terms of product features, algorithms, and performance, such as launching the mobile end, adding multi-modal functionality, exploring more industry application scenarios, and continuously optimizing product features and user experience.