Investment Rating - The report maintains a "Buy" rating for the company, with a target price of $1.03 per ADS based on a 1.2x PS valuation for 2024 [4][20]. Core Views - The company reported a revenue of 4.199 billion RMB in 2023, a year-on-year increase of 16.5%, while the net profit attributable to the parent company was a loss of 844 million RMB, reducing losses by 738 million RMB compared to the previous year [2][20]. - The marketing services segment faced challenges, with a revenue decline of 15.5% to 1.653 billion RMB in 2023, primarily due to macroeconomic impacts and a strategic optimization of marketing content [2][20]. - The paid membership revenue grew by 48.4% to 1.827 billion RMB, driven by a 47.5% increase in average monthly subscribers to approximately 14.5 million [2][20]. - The company aims to achieve profitability on a Non-GAAP basis by Q4 2024, focusing on cost reduction and operational efficiency [2][20]. Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 4.199 billion RMB, with a year-on-year growth of 16.5% [3][17]. - The adjusted net loss for 2023 was 659 million RMB, a reduction of 537 million RMB from the previous year [3][20]. - The average monthly active users (MAU) for 2023 was 105 million, a 4% increase year-on-year, but Q4 2023 saw a decline to 99 million MAU, a 1.6% decrease [2][10]. Revenue Breakdown - Marketing services revenue decreased by 15.5% to 1.653 billion RMB in 2023 [2][20]. - Paid membership revenue increased by 48.4% to 1.827 billion RMB, with a significant rise in subscribers [2][20]. - The vocational training segment saw a remarkable growth of 127.8%, achieving a revenue of 566 million RMB [2][20]. Profitability and Cost Management - The company's gross margin improved to 54.7%, an increase of 4.5 percentage points year-on-year, while sales and management expense ratios decreased [2][20]. - The company plans to focus on cost control and operational efficiency, with a target to reduce user acquisition costs by over 40% [2][20]. Future Projections - Revenue projections for 2024-2026 are estimated at 3.652 billion RMB, 3.836 billion RMB, and 4.059 billion RMB, respectively, with expected growth rates of -13.0%, 5.0%, and 5.8% [3][20]. - The company anticipates a gradual recovery in user growth and revenue driven by quality content [15][20].

Financial Data and Key Metrics Changes - The total revenue for the full year 2023 increased by 16.5% year-over-year to RMB4,199 million, with a fourth-quarter revenue of RMB1.1 billion, reflecting a 2.2% year-over-year increase [7][34] - The overall gross margin improved by more than 4 percentage points year-over-year to 54.7% for the full year and reached 59.1% in the fourth quarter, marking the highest level since the U.S. IPO [7][35] - The adjusted net loss for the full year decreased by 44.9% year-over-year, while the quarterly adjusted net loss narrowed by 31.9% year-over-year to RMB91.3 million [7][37] Business Line Data and Key Metrics Changes - The paid membership revenue for the fourth quarter increased by 13.3% year-over-year to RMB555.9 million, driven by a 9.2% year-over-year increase in average monthly subscribers to 14.2 million [21][34] - The vocational training business revenue surged by 100.1% year-over-year to RMB169.3 million in the fourth quarter, attributed to expanded course offerings [34][25] - Marketing services revenue decreased by 18.7% year-over-year but increased by 21.5% quarter-over-quarter, indicating a recovery in this segment [28][35] Market Data and Key Metrics Changes - The cumulative content creators on the platform increased by 13% year-over-year to 71.3 million, with cumulative pieces of content growing to 774.7 million, a 19.3% year-over-year increase [6][13] - The average monthly active users (MAUs) for the full year increased by 4% year-over-year, while the average MAUs in the fourth quarter were 99 million, a slight decrease of 1.6% year-over-year [6][11] - Revenue from vocational training and paid membership contributed over 50% to total revenue for both the fourth quarter and full year 2023 [18] Company Strategy and Development Direction - The company aims to achieve profitability as soon as possible by optimizing cost and expense structures, focusing on efficiency across all business units [39][40] - There is a strong emphasis on enhancing the trustworthiness of the community and improving the user experience through AI applications and high-quality content [10][39] - The company plans to expand its vocational training offerings and leverage AI technology to revolutionize user experiences and operational efficiency [26][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a dynamic macro environment and competitive industry landscape but highlighted substantial progress in commercialization and efficiency [5][10] - The focus for 2024 includes narrowing losses for emerging businesses and achieving quarterly breakeven on a non-GAAP net profit level by the fourth quarter [42][44] - The company believes that the unique value proposition of authentic, high-quality content will become increasingly important in the age of AI-generated content [63] Other Important Information - The cumulative discussion volume related to generative AI and large language models surpassed 1.2 billion in 2023, indicating strong community engagement in trending topics [13] - The company has repurchased RMB26.3 million worth of shares, reflecting confidence in its long-term value [38] Q&A Session Summary Question: What is the key strategic focus of Zhihu for 2024? - The CEO emphasized achieving profitability, optimizing cost structures, and enhancing user experience through AI applications [39] Question: What is the timetable for breakeven? - The CFO stated the aim is to achieve quarterly breakeven on a non-GAAP net profit level by the fourth quarter of 2024 [42] Question: How does management view the growth rate of paid users? - The CFO explained that Zhihu's premium content attracts users beyond the community, driving overall content consumption growth [46] Question: Can management elaborate on Zhihu's education development? - The CEO highlighted the rapid growth of the vocational training business and the integration of AI to enhance efficiency and user experience [52][56] Question: What is the outlook for the advertising business in 2024? - The CFO noted that while there are external challenges, the company is enhancing commercial content governance to foster trustworthiness [58]

Investment Rating - The report maintains a "BUY" rating for Zhihu with a target price adjusted to US$1.8, reflecting a potential upside of 153.5% from the current price of US$0.71 [4][24]. Core Insights - Zhihu's 4Q23 results exceeded expectations with a revenue increase of 2.2% YoY, driven by strong performance in marketing services and vocational training, while the adjusted net loss narrowed to RMB91 million [2][3]. - For FY24E, the management is prioritizing margin improvement and has set a breakeven target for 4Q24E, despite forecasting a 10% decline in total revenue [2][3]. - The company is expected to leverage its user data and analytics capabilities to benefit from AIGC trends, while focusing on high-margin vocational training subjects [2][3]. Financial Summary - Revenue for FY23 was RMB4,199 million, with a forecasted decline to RMB3,798 million in FY24E, followed by a slight recovery to RMB4,089 million in FY25E [20]. - Adjusted net profit is projected to improve from a loss of RMB659.1 million in FY23 to a loss of RMB226.1 million in FY24E, with a return to profitability expected in FY25E [20][21]. - The gross margin is expected to remain stable at around 54.6% in FY24E, with operating margins improving as the company focuses on cost discipline [20][22]. Revenue Breakdown - The revenue forecast for FY24E includes a 20% decline in marketing services, while membership revenue is expected to remain flat and vocational training revenue is projected to grow by 5% [2][3]. - The company has repurchased 26.3 million Class A ordinary shares for US$58.5 million as part of its buyback program [2][3]. Market Position - Zhihu is well-positioned to capture growth opportunities in the AIGC sector, leveraging its extensive user data and analytics capabilities [2][3]. - The company is focusing on strategic adjustments to its business model, particularly in its marketing services and vocational training segments, to enhance profitability [2][3].

Financial Performance - Total revenue for the year ended December 31, 2023, increased by 16.5% to RMB 4,198.9 million compared to RMB 3,604.9 million in 2022[2] - Net loss narrowed significantly by 46.8% to RMB 839.5 million in 2023, compared to RMB 1,578.4 million in 2022[6] - Adjusted operating loss decreased by 27.1% to RMB 887.98 million in 2023 from RMB 1,218.8 million in 2022[5] - Operating loss decreased to RMB 1,072,225 for the year ended December 31, 2023, from RMB 1,603,751 in the previous year, representing a reduction of approximately 33%[34] - Net loss attributable to Zhihu shareholders for the year ended December 31, 2023, was RMB 843,641, compared to RMB 1,581,157 for the year ended December 31, 2022, indicating a year-over-year improvement of 46.6%[34] - Gross profit rose by 27.0% to RMB 2.3 billion in 2023, with a gross margin increase from 50.2% in 2022 to 54.7% in 2023[19] User Engagement - Average monthly active users rose by 4.0% to 105.3 million in 2023 from 101.3 million in 2022[2] - Average monthly subscription members surged by 47.5% to 14.5 million in 2023, up from 9.8 million in 2022[2] - The average monthly active users in 2023 reached 105.3 million, with 74.1% of active users under the age of 30[9] - The number of content creators increased to 71.3 million, a year-on-year growth of 13.0% from 63.1 million[10] Revenue Streams - Revenue from paid membership business grew by 48.4% to RMB 1,826.6 million in 2023[6] - Revenue from vocational training business increased from RMB 248.3 million in 2022 to RMB 565.6 million in 2023[6] - Marketing services revenue was RMB 1,652.99 million, down from RMB 1,956.48 million in 2022[14] - Paid membership revenue increased by 48.4% to RMB 1.83 billion in 2023, compared to RMB 1.23 billion in 2022[17] - Vocational training revenue surged by 127.8% to RMB 565.6 million in 2023, up from RMB 248.3 million in 2022, driven by enhanced online course offerings and contributions from acquired vocational training businesses[17] Operational Efficiency - The total operating expenses for 2023 were RMB 3,368.1 million, a slight decrease from RMB 3,411.8 million in 2022[14] - Operating expenses remained stable at RMB 3.4 billion in both 2022 and 2023, with R&D expenses increasing by 18.1% to RMB 901.5 million[19] - The operating loss decreased by 33.1% to RMB 1.1 billion in 2023, compared to RMB 1.6 billion in 2022[19] Cash and Assets - Cash and cash equivalents decreased to RMB 5.5 billion as of December 31, 2023, down from RMB 6.3 billion at the end of 2022[20] - Total assets as of December 31, 2023, were RMB 6,795,272, a decrease from RMB 7,656,239 as of December 31, 2022[36] - Total liabilities increased to RMB 2,093,662 as of December 31, 2023, compared to RMB 1,961,971 as of December 31, 2022, reflecting a rise of approximately 6.7%[37] - Cash and cash equivalents as of December 31, 2023, were RMB 2,106,639, down from RMB 4,525,852 as of December 31, 2022, indicating a significant decrease of 53.5%[36] Corporate Governance - The company did not recommend the distribution of an annual dividend for the reporting period[33] - The company has complied with all applicable principles and provisions of the corporate governance code during the reporting period, except for the separation of the roles of Chairman and CEO[27] - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited annual results for the reporting period[29] - The company has adopted a code for securities transactions by directors and relevant employees, confirming compliance during the reporting period[28] - The company plans to continue reviewing its corporate governance practices to ensure compliance with the latest standards[27] Strategic Initiatives - The company launched its first large language model, Zhihai Map AI, with over 100 billion parameters in November 2023[7] - The company is focusing on advancing generative AI technology to enhance user experience and content creation[7] - The company aims to optimize monetization efficiency through improved user experience and support for content creators[7] - The company aims to enhance community culture and high-quality content creation in 2024, focusing on professional users and content creators[13] - The company plans to leverage generative AI technology to support comprehensive business growth and improve operational efficiency[13] Shareholder Communication - The annual performance announcement is published on the Hong Kong Stock Exchange website and the company's website[56] - The annual report for the reporting period will be sent to shareholders at an appropriate time[56] - The company emphasizes the importance of accurate information dissemination to stakeholders[56] - The announcement date is March 26, 2024, indicating a timely update on financial performance[56] - Shareholders can access the annual report on the specified websites for detailed financial insights[56] - The announcement reflects the company's ongoing communication strategy with investors[56]

Financial Performance - Total revenue for Q4 2023 was RMB 1,138.3 million (USD 160.3 million), representing a 2.2% increase compared to RMB 1,114.0 million in Q4 2022[6] - Total revenue for the fiscal year 2023 was RMB 4,198.9 million (USD 591.4 million), a 16.5% increase from 2022[6] - Total revenue for the three months ended September 30, 2023, was RMB 1,022,163 thousand, a decrease from RMB 1,113,965 thousand for the same period in 2022, representing a decline of approximately 8.2%[18] - Total revenue for the nine months ended September 30, 2023, was RMB 1,630,000, a decrease from RMB 3,663,000 in the same period of 2022, reflecting a decline of approximately 55%[19] Profitability Metrics - Gross margin improved from 56.4% in Q4 2022 to 59.1% in Q4 2023[6] - Adjusted net loss for the fiscal year 2023 was RMB 659.1 million (USD 92.8 million), a reduction of 44.9% compared to 2022[6] - Operating loss narrowed by 17.6% from RMB 216.3 million in 2022 to RMB 178.2 million (USD 25.1 million)[9] - Net loss for Q4 2023 narrowed by 42.6% to RMB 103.1 million (USD 14.5 million) from RMB 179.5 million in Q4 2022[6] - Net loss decreased by 42.6% from RMB 179.5 million in 2022 to RMB 103.1 million (USD 14.5 million)[9] - Operating loss for Q3 2023 was RMB (350,103), compared to RMB (216,308) in Q3 2022, marking an increase in operating losses of approximately 62%[21] - Adjusted net loss for Q3 2023 was RMB (225,298), compared to RMB (134,079) in Q3 2022, representing an increase in adjusted losses of approximately 68%[21] User Engagement - Average monthly active users (MAUs) reached 99.0 million in Q4 2023[6] - Monthly active users and average monthly subscribers were highlighted as key metrics for assessing user engagement and growth[11] Revenue Streams - Paid membership revenue grew by 13.3% to RMB 455.9 million (USD 64.2 million) in Q4 2023, driven by an increase in subscription numbers[8] - Revenue from vocational training surged by 100.1% to RMB 169.3 million (USD 23.8 million) in Q4 2023, attributed to enriched online courses and contributions from newly acquired vocational training businesses[8] - Marketing services revenue decreased to RMB 465.2 million (USD 65.5 million) in Q4 2023 from RMB 572.4 million in Q4 2022[8] - Paid membership revenue grew by 48.4% to RMB 1,826.6 million (USD 257.3 million) from RMB 1,230.8 million in 2022, driven by a continuous increase in subscription numbers[9] Expenses - R&D expenses increased from RMB 212.5 million in the same period of 2022 to RMB 232.6 million (USD 32.8 million) due to increased investment in technological innovation[9] - General and administrative expenses decreased by 26.0% from RMB 123.1 million in 2022 to RMB 91.1 million (USD 12.8 million), primarily due to a decline in employee-related expenses[9] - The company reported a total operating expenses of RMB 898,554 thousand for the three months ended September 30, 2023, compared to RMB 844,831 thousand for the same period in 2022, reflecting an increase of approximately 6.3%[18] - Research and development expenses for the three months ended September 30, 2023, were RMB 249,662 thousand, up from RMB 212,495 thousand for the same period in 2022, indicating an increase of about 17.5%[18] - The company reported a significant increase in general and administrative expenses, which rose to RMB 27,662 in Q3 2023 from RMB 18,032 in Q3 2022, an increase of approximately 53%[19] Shareholder Actions - The company repurchased 26.3 million Class A ordinary shares under a USD 100 million share repurchase program, totaling USD 58.5 million[11] Future Outlook - The company aims to enhance operational efficiency and strengthen profitability capabilities moving forward[7] - The company plans to hold an earnings conference call on March 26, 2024, to discuss financial performance and future outlook[12] Financial Position - The company’s cash and cash equivalents decreased to RMB 2,106,639 as of December 31, 2023, down from RMB 4,525,852 as of December 31, 2022, representing a decline of about 53%[20] - The company’s total assets decreased to RMB 6,795,272 as of December 31, 2023, from RMB 7,656,239 as of December 31, 2022, a reduction of about 11%[20] - The company’s total liabilities increased to RMB 2,093,662 as of December 31, 2023, compared to RMB 1,961,971 as of December 31, 2022, reflecting an increase of about 7%[20] Currency and Reporting - The company utilized a specific exchange rate of 7.0999 RMB to 1 USD for currency conversion in the report[16] - The company emphasizes the use of non-GAAP financial measures to provide a clearer view of its operational performance, excluding stock-based compensation and amortization of intangible assets from acquisitions[15] - Forward-looking statements are included in the report, highlighting inherent risks and uncertainties that may cause actual results to differ significantly from those projected[17] Loss Per Share - The company reported a net loss per share of RMB (0.94) for Q3 2023, compared to RMB (0.59) for the same period in 2022, indicating a 59% increase in losses year-over-year[19] Share Count - The weighted average number of ordinary shares outstanding for Q3 2023 was 297,742,064, a decrease from 304,665,906 in Q3 2022, indicating a reduction of about 2%[19]

BEIJING, March 13, 2024 /PRNewswire/ -- Zhihu Inc. ("Zhihu" or the "Company") (NYSE: ZH; HKEX: 2390), a leading online content community in China, today announced that it will report its unaudited financial results for the quarter and full year ended December 31, 2023 before the U.S. market opens on March 26, 2024.The Company's management will host a conference call at 7:00 A.M. U.S. Eastern Time on Tuesday, March 26, 2024 (7:00 P.M. Beijing/Hong Kong Time on Tuesday, March 26, 2024) to discuss the results. ...

BEIJING, Feb. 19, 2024 /PRNewswire/ -- Zhihu Inc. (NYSE: ZH; HKEX: 2390) ("Zhihu" or the "Company"), a leading online content community in China, today announced the appointment of Mr. Han Wang as the chief financial officer of the Company, effective immediately. Mr. Henry Dachuan Sha resigned as a director and the chief financial officer and is appointed as the chief investment officer of the Company, effective immediately. "Mr. Wang has extensive experience in finance and capital markets, and we are delig ...

BEIJING, Dec. 29, 2023 /PRNewswire/ -- Zhihu Inc. (NYSE: ZH; HKEX: 2390) ("Zhihu" or the "Company"), a leading online content community in China, today announced that it has received a letter from the New York Stock Exchange (the "NYSE") dated December 28, 2023, notifying the Company that it is below compliance standards due to the trading price of Zhihu's American depositary shares (the "ADSs"). The notice has no immediate impact on the listing of the Company's ADSs, which will continue to be listed and tr ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was RMB 1.0 billion, representing a year-over-year increase of 12.1% [11][22] - Paid membership revenue grew by 39.2% year-over-year to RMB 466.8 million, with average monthly subscribing members increasing by 35.9% to 14.8 million [23][24] - Vocational training revenue surged by 85.6% year-over-year to RMB 144.8 million [24] - Gross margin expanded by 5 percentage points to 53.7% [23][25] - Non-GAAP net loss narrowed by 10.1% year-over-year to RMB 225.3 million [27] Business Line Data and Key Metrics Changes - Membership and vocational training businesses contributed 45.7% and 14.2% of total revenues, respectively [6] - The number of MAUs reached 110.5 million, indicating growth in user engagement [6] - The average financial income of content creators increased by over 30% year-over-year [10] Market Data and Key Metrics Changes - Marketing services revenue was RMB 383 million, with significant growth in IT, 3C, and home appliance sectors [24][15] - During the Double 11 campaign, content search volume increased by 188% year-over-year, and the average selling price of commerce products exceeded USD 1,300 [44] Company Strategy and Development Direction - The company is focusing on multi-engine commercialization and enhancing operational efficiency [5][21] - There is a strong emphasis on integrating AI technologies to improve content creation and user interaction [19][20] - The company aims to leverage its IP library of over 100,000 stories for potential film and television adaptations [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of marketing services and the potential for growth in the vocational training sector [17][48] - The company anticipates achieving breakeven in the next year, with a focus on improving operational efficiency and cost control [55][56] Other Important Information - The company has repurchased approximately 18.3 million Class A ordinary shares for a total of USD 42.6 million [27] - The large language model, Zhihaitu AI, has reached 100 billion parameters and received regulatory approval, enhancing the company's capabilities in content comprehension and marketing services [30][36] Q&A Session Summary Question: Progress of the large language model Zhihaitu AI and future monetization roadmap - Management highlighted significant progress in building large language model capabilities and plans to apply Zhihaitu AI across various business scenarios [29][30] Question: Strategy for the Membership business and views on micro drama series - The Membership business has shown resilient growth, with ongoing improvements in operating efficiency through technology innovation [37][38] Question: Recent progress of the marketing service business and Double 11 performance - The marketing services business has seen historical marks during the Double 11 campaign, with significant increases in content search volume and transaction rates [42][44] Question: Growth rate and margins for the Vocational Education business - The Vocational Training business is expected to continue strong growth, with a focus on expanding course offerings and enhancing operational efficiency [48][52]

Financial Performance - Total revenue for Q3 2023 was RMB 1,022.2 million (USD 140.1 million), an increase of 12.1% compared to RMB 911.7 million in Q3 2022[6] - Net loss for Q3 2023 narrowed to RMB 278.4 million (USD 38.2 million), a decrease of 6.5% from RMB 297.6 million in Q3 2022[9] - Adjusted net loss (non-GAAP) for Q3 2023 was RMB 225.3 million (USD 30.9 million), a reduction of 10.1% from RMB 250.6 million in Q3 2022[9] - Total revenue for the three months ended September 30, 2023, was RMB 1,022,163, a decrease of 1.8% compared to RMB 1,044,209 for the same period in 2022[15] - Net loss attributable to Zhihu shareholders for the three months ended September 30, 2023, was RMB 278,674, slightly improved from RMB 279,841 in the previous quarter[16] - The total net loss for the nine months ended September 30, 2023, was RMB (1,398,889) thousand, compared to RMB (736,423) thousand for the same period in 2022, representing an increase of about 89.8%[18] - The adjusted net loss for the nine months ended September 30, 2023, was RMB (1,061,776) thousand, compared to RMB (567,785) thousand in the same period of 2022, reflecting an increase of approximately 86.7%[18] User Metrics - Average monthly active users (MAUs) reached 110.5 million in Q3 2023[6] - Average monthly subscription members increased by 35.9% year-over-year to 14.8 million in Q3 2023[6] Revenue Streams - Paid membership revenue grew by 39.2% year-over-year to RMB 466.8 million (USD 64.0 million) in Q3 2023[7] - Vocational training revenue surged by 85.6% year-over-year to RMB 144.8 million (USD 19.8 million) in Q3 2023[7] Profitability and Expenses - Gross profit increased by 23.4% year-over-year to RMB 548.5 million (USD 75.2 million), with a gross margin of 53.7%[7] - Total operating expenses rose to RMB 898.6 million (USD 123.2 million) in Q3 2023, compared to RMB 723.0 million in Q3 2022[8] - Operating loss for the three months ended September 30, 2023, was RMB 350,103, compared to RMB 327,220 for the same period in 2022, indicating a worsening of 7.0%[15] - The company reported a significant increase in operating losses, with Q3 2023 losses reaching RMB (350,103) thousand, compared to RMB (278,599) thousand in Q3 2022, marking an increase of about 25.7%[18] Cash and Assets - Cash and cash equivalents, term deposits, and short-term investments amounted to RMB 5,654.2 million (USD 775.0 million) as of September 30, 2023[9] - Cash and cash equivalents decreased to RMB 3,133,073 as of September 30, 2023, down from RMB 4,525,852 as of December 31, 2022[17] - Total assets as of September 30, 2023, were RMB 7,048,255, a decrease from RMB 7,656,239 as of December 31, 2022[17] Share Repurchase Program - As of September 30, 2023, the company repurchased approximately 18.3 million Class A ordinary shares under its existing $100 million share repurchase program, totaling about $42.6 million[10] - The company’s share repurchase plan was approved by shareholders at the annual general meetings held on June 10, 2022, and June 30, 2023[10] - The company has extended its existing share repurchase program until June 10, 2024[10] Non-GAAP Measures - The company uses non-GAAP financial measures, such as adjusted operating loss and adjusted net loss, to supplement its review and assessment of operational performance[12] - The company emphasizes that non-GAAP financial measures may not be comparable to similar measures presented by other companies[12] Future Events - The company will hold an earnings conference call on November 29, 2023, at 6:00 AM EST[11]