Core Insights - The company reported better-than-expected adjusted net profit of 91.34 million yuan for Q2 2025, despite a revenue decline of 23% year-on-year to 717 million yuan, which was slightly below the expected 730 million yuan [1][2] - The company is seeing initial success from business adjustments, particularly in marketing services and paid membership, with expectations for a turning point in upcoming quarters [1][2] Revenue and Profit Trends - Q2 2025 revenue from marketing services decreased by 35% year-on-year, but the company is optimistic about future improvements in the advertising structure [1] - Paid membership revenue fell by 7% year-on-year, but the average revenue per paying user (ARPPU) is expected to grow by 3% [1] - The company is shifting its focus towards acquiring long-lifecycle users and enhancing user engagement through new content formats [1] AI Integration and Community Value - The company upgraded its core AI product, Zhihu Zhidao, enhancing its knowledge base functionality, which has led to a significant increase in active usage penetration [2] - The presence of 365,000 professional creators in discussions related to technology and AI highlights the growing value of the company's content community [2] - The company’s quality content is becoming a valuable data asset, with AI assistants citing Zhihu more frequently than other content communities [2] Financial Performance and Share Buyback - The company achieved adjusted profitability for three consecutive quarters, with a decrease in operating expense ratio by 4 percentage points year-on-year [2] - In the first half of 2025, the company repurchased 7.42 million shares, representing about 3% of the total share capital [2] Revenue and Profit Forecast - Revenue forecasts for 2025 and 2026 have been revised down by 8.2% and 9.9% to 2.82 billion yuan and 2.97 billion yuan, respectively, due to ongoing adjustments in marketing services and vocational training [2] - Adjusted net profit for 2025 has been revised from a loss of 72.86 million yuan to a profit of 31.80 million yuan, while the 2026 adjusted net profit forecast has been reduced from 140 million yuan to 77.07 million yuan [2] - The current stock price corresponds to 1.0 times the price-to-sales ratio for 2025/2026, with a target price of 16 HKD/6.1 USD, indicating an upside potential of 25%/24% [2]

Core Viewpoint - The company reported its first non-GAAP net profit since its IPO in Q1 2025, continuing the profitability trend from Q4 2024, despite a 24% year-over-year decline in revenue [1][3]. Revenue Summary - Q1 2025 revenue was 730 million yuan, down from 960 million yuan in Q1 2024 [3]. - Revenue sources include marketing services, paid memberships, vocational training, and others, with paid memberships contributing the largest share at 420 million yuan, a 7% decrease from 450 million yuan year-over-year [3]. - The average monthly paid subscribers decreased to 14.2 million from 14.8 million in the previous year [3]. - Marketing services revenue fell to 200 million yuan, a 40.4% decline from 330 million yuan in the same period last year [3]. - Vocational training and other segments generated 94.5 million yuan and 20.3 million yuan, respectively, with vocational training revenue down 35% due to reduced contributions from acquired businesses [3]. Expense Summary - Total operating expenses decreased by 34.4% to 500 million yuan from 770 million yuan in Q1 2024 [4]. - Sales and marketing expenses dropped to 320 million yuan, a 32.9% reduction from 480 million yuan [4]. - R&D expenses decreased by 28.1% to 140 million yuan from 200 million yuan [4]. - General and administrative expenses fell by 55.6% to 41.2 million yuan from 92.9 million yuan [4]. Profitability and Financial Position - The company achieved a non-GAAP net profit of 6.9 million yuan in Q1 2025, compared to a net loss of 136 million yuan in the same period last year [3]. - Gross margin improved by 5.2 percentage points year-over-year, indicating enhanced operational efficiency [4]. - As of the end of Q1 2025, the company had cash and cash equivalents totaling 4.77 billion yuan [5]. - The company's stock price was reported at $3.93, with a total market capitalization of $345 million [5].