知乎-W(02390.HK):C端业务增长强劲 AI大模型应用或加速落地

Zhihu-W (02390.HK): Strong C-side business growth, big AI model application may accelerate implementation

中金公司 ·  11/30/2023

3Q23 non-GAAP net loss is basically in line with our expectations

Zhihu announced 3Q23 results: revenue of $1.02 billion, up 12.1% year on year, in line with Bloomberg's unanimous expectations ($1.02 billion) and our expectations ($1.02 billion); non-GAAP net loss of $225 million, which is basically in line with Bloomberg's unanimous expectations ($243 million) and our expectations ($214 million).

Development trends

The C-side business has maintained a high growth rate, and the advertising business has yet to pick up. In the third quarter, Zhihu MAU reached 145 million people, an increase of 1.0% over the previous quarter. Focusing on the “new employee” group, the platform continues to support creators, such as launching the “One Million KOP Incubation Program”. In the third quarter, the paid membership business revenue was 467 million yuan, up 39.2% year on year, of which the number of paid members was 14.8 million, up 35.9% year on year; there have been excellent cases of IP membership content this year, and the company plans to further experiment with multi-media formats in the future. In the third quarter, vocational education revenue was 145 million yuan, an increase of 85.6% over the previous year. Among them, there was a significant increase in the number of users who paid for training courses related to ESG and AI technology; the company focused on building a technical center for the education business this year, and we judge that there may be more efficiency improvements next year. Marketing service revenue for the third quarter was 383 million yuan, down 17.1% from the previous year. The industry made limited progress in business repair during the off-season; the company said at the performance meeting that it had observed a business recovery trend in the fourth quarter and plans to continue to increase the construction of commercial products for performance data.

Gross margin increased significantly year over year, and non-GAAP net loss narrowed year over year. The gross profit margin for the third quarter was 53.7%, a significant improvement of 4.9ppt over the previous year, mainly due to the continuous optimization of projects such as bandwidth servers and labor costs.

The total absolute value of expenses (management/R&D/sales) for the third quarter increased 24.3% year-on-year. Expenses were higher than our expectations. We judge that it was mainly due to C-side business promotion investment and headquarters relocation expenses of about 18 million yuan.

Overall, the 3Q23 non-GAAP net loss was 225 million yuan, which is 10% narrower than the same period last year.

The filing of the “Zhihaitu AI” model was approved, empowering business scenarios across the board. Current model application scenarios include:

1) Help improve the efficiency of community content classification systems, search recommendations, etc. in terms of content understanding; 2) commercial content title rewriting, advertising content recommendation optimization, etc.; 3) paid member content cover generation, creative assistants, virtual character interaction, etc.; 4) vocational education support work correction, automatic response to simple questions, etc. The company stated at the performance meeting that with the completion of the filing of the large model in early November, it plans to apply it to more C-side scenarios and functions to continuously improve creative efficiency and user content consumption experience.

Profit forecasting and valuation

Considering the relatively slow recovery process of the advertising business, we lowered 2023/2024 revenue by 2%/3% to 41.3/5.05 billion yuan; at the same time, due to continued short-term C-side business investment, we adjusted the non-GAAP net loss in 2023 from 674 million yuan to 753 million yuan, and adjusted the 2024 non-GAAP net profit of 5.03 million yuan to the non-GAAP net loss of 171 million yuan. Currently, both US and Hong Kong stocks are trading 1.0/0.8 times 2023/2024 P/S. Maintaining an outperforming industry rating, considering the lengthening progress of loss reduction, we lowered the target price of US/Hong Kong stocks by 10%/8% to $1.4 /HK$22, both corresponding to 1.4/1.2 times 2023/2024 P/S. The upward margin for US/Hong Kong stock prices is 36%/45%, respectively.


The recovery of the marketing services business fell short of expectations, the growth of the C-side business slowed, and the cost reduction and efficiency increase fell short of expectations.

The translation is provided by third-party software.

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