On November 26, Zhihu (NYSE: ZH; HKEX: 2390) released the 2024 third-quarter financial report. The financial report shows that Zhihu's revenue in the third quarter was 0.845 billion yuan, and the net loss decreased by 96.8% year-on-year to 9 million yuan, once again creating the largest reduction in losses and the lowest net loss in a single quarter since its listing, exceeding market expectations. Zhihu's AI search product, Zhihu Zhida, continued to maintain high growth in the third quarter and launched a new feature 'Professional Search' at the end of October, entering a stage of expanding professional and practical deep search capabilities.

The net loss has decreased to within 10 million, accelerating the achievement of profitability goals.

From a financial perspective, Zhihu continues to advance its multi-engine business strategy, and various businesses are steadily overcoming the adjustment period. Among them, the paid reading business, as the largest source of income, contributed 0.459 billion yuan in revenue, with the revenue share exceeding half for the first time, reaching 54%. The marketing services business and professional education business contributed 0.257 billion yuan and 105 million yuan in revenue, respectively, with the professional education self-operated business continuing to maintain positive growth.

In the third quarter, Zhihu continued to improve operational efficiency, optimize the investment structure of costs and expenses, and achieved good results. The net loss decreased by 96.8% year-on-year to 9 million yuan, achieving the best single-quarter record since listing in terms of both reduction in losses and net loss amount. The gross margin reached 63.9%, the highest level since listing. Zhihu's loss reduction progress far exceeded market expectations and is accelerating towards the goal of quarterly profitability and long-term profit growth.

On the operational front, Zhihu continues to consolidate the core values and advantages of its trusted community, further expanding the high-value content pool, with creators remaining active. By the end of the third quarter, Zhihu's cumulative content creation reached 0.855 billion, a year-on-year increase of 14.9%, with a total of 77.7 million content creators on the platform, an 11.6% year-on-year increase. In the third quarter, Zhihu's monthly average active users (MAUs) reached 81.1 million, showing a rebound in growth, with various indicators such as user health, user activity rate, and core user retention steadily improving. Leveraging the healthy development of the paid reading business, Zhihu's average monthly subscribed members reached 16.5 million, achieving growth both year-on-year and month-on-month.

Zhihu's Founder, Chairman, and CEO, Zhou Yuan, said, "In the third quarter, Zhihu further fulfilled its commitment to reducing losses and accurately executed the company's strategy. Positive results were achieved in optimizing the community ecosystem during this period, including steady improvements in core user health indicators and month-over-month growth in active users. This also enhanced creators' confidence, continuously improving content quality, user activity, and strengthening the community atmosphere. In addition, the user traffic for the AI search product Zhihu Zhida grew rapidly. The introduction of the Professional Search feature based on this laid the foundation for further exploration into deep scenarios. Looking ahead, Zhihu will continue to focus on enhancing user experience and community trustworthiness to fully unleash the potential of the Zhihu brand and user base."

Zhihu's CFO, Wang Han, added, "In the third quarter, Zhihu continued to increase profitability and achieved another milestone of the lowest loss quarter since its initial public offering in the USA. Furthermore, Zhihu's gross margin expanded to 63.9%, benefiting from improved operational efficiency and strict cost management, with total costs and operating expenses decreasing by 35.6% and 30.5%, respectively, compared to the same period last year. Looking ahead, Zhihu will invest more resources to strategically explore business models that can strengthen the high-value brand image and unique user positioning of Zhihu. In the long run, Zhihu's goal is to achieve sustainable profit growth and provide substantial value returns to shareholders."

Zhihu's direct answers continue to grow, and professional search opens up deep capability exploration.

Since the beginning of this year, Zhihu has accelerated the pace of AI application. The AI search product Zhihu Direct Answer effectively improves the efficiency of community content circulation and user experience, gradually becoming a productivity tool trusted by creators. Since its launch in June this year, Zhihu Direct Answer has achieved continuous high-speed growth in traffic and excellent industry reputation, known as the "Chinese version of Perplexity".

At the end of October this year, Zhihu Direct Answer officially launched the "Professional Search" feature, introducing professional content sources such as Weipu and Zhihu Featured, covering over 50 million pieces of Chinese and English literature data. It also supports document uploads, ultra-long document parsing, and functions such as single-article reading and designated source Q&A, better suiting the productivity scenarios of professionals.

The introduction of the professional search function signifies that Zhihu Direct Answer has become the first domestic product to provide an AI search and legit paper library one-stop solution. It also marks Zhihu's entry into a more professional and practical deep search capability extension phase in the AI search field.