Financial Data and Key Metrics - Gross margin increased by 5.8 percentage points year-over-year to 59.6% [5] - Total operating expenses decreased by more than RMB 140 million year-over-year, including a reduction of RMB 120 million in marketing expenses [5] - Adjusted net loss declined by 79.9% year-over-year to RMB 44.6 million, marking the lowest quarterly loss since the U.S. IPO [5] - Marketing services revenue decreased by 16.7% year-over-year to RMB 344 million, with brand advertising and performance-based advertising growing by 17% and 28.4% respectively [13] - Paid membership revenue decreased slightly by 3.7% year-over-year to RMB 432.7 million, with the number of subscribing members growing by 4.7% year-over-year to 14.7 million [16][22] - Vocational training revenue decreased to RMB 133.6 million, primarily due to strategic refinements in acquired businesses [18][22] - Gross profit for the quarter was RMB 556.5 million, with a gross margin of 59.6%, the highest since the U.S. IPO [22] - Total operating expenses decreased by 16.7% year-over-year to RMB 740.4 million, with selling and marketing expenses down by 22.9% and R&D expenses down by 11.4% [23] - GAAP and non-GAAP net losses narrowed by 71.1% and 79.9% year-over-year respectively [23] Business Line Performance - Marketing services revenue declined by 16.7% year-over-year, but brand and performance-based advertising showed robust growth [13] - Paid membership revenue grew to 46% of total revenue, driven by a 4.7% increase in subscribing members [16] - Vocational training GMV grew by over 50% year-over-year, with AI and AGI-related programs receiving positive feedback [19] - The number of premium content creators earning income increased by 77.4% year-over-year [17] Market and User Engagement - Cumulative content on Zhihu reached 830.9 million, a 16.8% year-over-year increase, with content creators growing by 12.5% to 74.9 million [7] - User engagement during the Gaokao period saw double-digit growth in response rates [8] - Paris Olympics-related content views exceeded 600 million, with over 500,000 discussions [9] - Average daily engagements per year grew by nearly 40% year-over-year, with monthly average upwards increasing by over 47% year-over-year [9] - Zhihu Zhida's total visits increased by 430% in July compared to June, with user retention doubling by the end of July [11] Strategic Direction and Industry Competition - The company is focusing on AI-powered products, with the launch of Zhihu Zhida marking a significant milestone in AI search initiatives [6][10] - Zhihu Zhida's integration with content creators and emphasis on human-centric content differentiates it from other AI-driven search products [10] - The company aims to enhance user experience and operational efficiency through AI technologies [12] - Strategic focus on high-margin self-operated vocational training programs and AI-related offerings [17][19] Management Commentary on Operating Environment and Future Outlook - Management remains confident in achieving quarterly profitability targets, with a focus on improving user experience and operational efficiency [20] - The company plans to achieve non-GAAP net profit in the fourth quarter of 2024 [27] - Management highlighted the importance of high-quality content and user retention in maintaining a stable user base [30] - The company is optimistic about the commercialization potential of AI search but is currently focused on improving user experience [32] Other Important Information - The company has cash and cash equivalents of RMB 5.1 billion as of June 30, 2024 [24] - Zhihu Zhida's multi-round response capability outperformed market peers, earning high praise from professionals [11] - The company is preparing to launch Zhihu Zhida on mobile platforms, with features still in development [32] Q&A Session Summary Question: Progress on achieving breakeven target - The company plans to achieve non-GAAP net profit in the fourth quarter of 2024, with significant progress in reducing losses [27] Question: User base stability and AI search progress - User retention has improved due to high-quality content and in-depth content cultivation [30] - Zhihu Zhida has seen significant improvements in user retention and engagement, with commercialization not being the current priority [32] Question: Advertising performance during 618 - Brand and performance-based advertising showed strong growth, driven by high-value user engagement and professional discussion forums [35][36] Question: Growth drivers for paid user base - Growth is driven by expanding user base through co-brand memberships and distribution channels, as well as enriching membership benefits [39] Question: Future of vocational training business - The company is focusing on improving efficiency and accelerating loss reduction in vocational training, with a long-term focus on synergy with the community [42][43]
ZHIHU(ZH) - 2024 Q2 - Earnings Call Transcript