On August 23, Zhihu (NYSE: ZH; HKEX: 2390) released the results report for the second quarter of 2024. According to financial reports, Zhihu's total revenue for the second quarter was 0.934 billion yuan, and the adjusted net loss decreased by 79.9% year-on-year to 44.6 million, setting a quarterly record for the largest loss reduction and the lowest net loss amount since listing, exceeding market expectations. Zhihu's new AI search product “Zhihu Direct Answer”, launched in the second quarter, ushered in a continuous increase in user data and reputation, bringing new impetus to further strengthen the trustworthy community.
Reduced losses by the largest margin since listing and accelerated progress towards profit targets
At the financial level, Zhihu's multi-engine revenue model is progressing steadily, and Zhihu's ability to commercialize high-quality content and services continues to be recognized by the industry. The paid reading business remains the largest source of revenue, generating 0.433 billion revenue, accounting for more than 46% of total revenue; revenue from marketing services and vocational education businesses was 0.344 billion yuan and 134 million yuan, respectively.
At the same time, Zhihu's operating efficiency was further improved, and gross margin increased to 59.6% from 53.8% in the same period last year. Adjusted net loss decreased by 79.9% year-on-year to 44.6 million, creating the biggest net loss drop since listing. At the same time, both net loss amount and adjusted net loss ratio reached the lowest in a single quarter. This also shows that Zhihu has great potential to achieve profitable growth and accelerate the achievement of profit targets for the single quarter.
At the operational level, Zhihu continues to consolidate the core values and advantages of a trustworthy community, promote the further expansion of the high-value content pool, and continue to be active by creators. By the end of the second quarter, Zhihu's cumulative content creation volume reached 0.831 billion, up 16.8% year on year, and the cumulative number of content creators on the platform reached 74.9 million, up 12.5% year on year. The average monthly active users (MAUs) of Zhihu in the second quarter reached 80.6 million. Many indicators such as user health, user activity rate, and core user retention had improved steadily.
In the second quarter, the paid reading business continued to provide users with high-quality paid content and experiences, with an average monthly subscription of 14.7 million. Among them, the Zhihu Yanyan Story brand has formed a good reputation in the online literature and film industry, unleashing strong influence of works and prospects for film and television development.
Zhou Yuan, founder, chairman and CEO of Zhihu, said, “Our strategic decisions and efficient execution brought excellent financial results in the second quarter of 2024. At the same time, we have made significant progress in improving the core user experience, and the user retention rate and length of daily active users continue to increase. On the premise that the community can be trusted, we launched Zhihu Direct Answer at the end of June, marking significant progress in the field of artificial intelligence search. Zhihu's continuous improvement in user retention rates and positive feedback from users shows our unique advantages and huge development potential in this field.”
Zhihu CFO Wang Han added, “The second quarter was our lowest loss quarter since our initial public offering in the US. This quarter, we achieved a high level of return on investment across all business lines while maintaining moderate spending. Additionally, we are committed to improving shareholder returns in a number of ways. Looking ahead, we will continue to strengthen strategy execution while pursuing long-term sustainable profits.”
Empowering AI search, Zhihu Direct Answer helps trusted communities
At the 10th Salt Club New Knowledge Youth Conference, Zhihu officially launched the new AI search product “Zhihu Direct Answer”. Through big model application innovation, it brings new productivity tools to users and creators and explores new forms of questioning. This is one of Zhihu's powerful explorations in the field of large model applications.
As soon as Zhihu Direct Answer was launched, it received unanimous praise from users. According to the AITOP product list, the number of visits to Zhihu Direct Response increased by 430% in July, leading all domestic AI products, ranking fifth in the global AI product growth list, and recently becoming a strong competitor in the AI search field.
Zhihu Direct Answer has further promoted the efficiency and trustworthiness of the community ecosystem, integrating and amplifying the value of productivity tools and the community. On the one hand, Zhihu Direct Answers relies on Zhihu's powerful high-quality corpus, which not only provides users with professional and efficient tool scenarios, but also greatly improves the efficiency of community content search and distribution. On the other hand, Zhihu Direct Answers enables professional content traceability, further strengthens the interactive connection between users and creators, and helps the community grow in high quality.
In the second half of the year, Zhihu Direct Answer will continue to upgrade and iterate product functions, algorithms, and performance, such as launching mobile devices, adding multi-modal functions, exploring more industry application scenarios, and continuously optimizing product functions and user experience.