Zhihu (02390.HK) disclosed its unaudited financial performance for the third quarter of 2024 on the 26th of the previous month. According to the financial report data, Zhihu achieved a revenue of 845 million yuan in the third quarter of 2024, reflecting a year-on-year decline of 17.34%. However, the net loss decreased significantly by 96.8% year-on-year to a mere 9 million yuan, marking the most substantial reduction in losses and the lowest net loss figure in a single quarter since its initial public offering, with the gross margin increasing from 53.7% in the corresponding period of the previous year to 63.9%.

Key Financial Data:

Revenue: The company attained operational revenue of 845 million yuan in the third quarter, contrasting with 1.0222 billion yuan in the equivalent period in 2023, representing a 17.34% decrease.

Net Loss: The company recorded a net loss of 9 million yuan in the third quarter, denoting a 96.8% decrease compared to the previous year.

Gross Margin: The company's gross margin for the third quarter surged from 53.7% in the same period of the prior year to 63.9%, reaching its highest level since going public.

Total Costs and Operating Expenses: The company's total costs and operating expenses in the third quarter decreased by 35.6% and 30.5% respectively compared to the same period last year.

Underneath this achievement lies Zhihu's notable progress in cost containment and profitability. The increase in gross margin from 53.7% in 2023 to 63.9% showcases the company's ability to manage costs more efficiently while maintaining steady revenue, thereby enhancing profit margins.

Enhanced Revenue Composition Driven by Paid Reading and AI Products

Specifically, the paid reading segment has become Zhihu's primary revenue source, generating 459 million yuan, constituting over half for the first time, reaching 54%. This shift indicates further refinement of Zhihu's revenue composition, reducing reliance on advertising operations while enhancing content quality and user engagement.

In terms of user statistics, by the end of the third quarter, the Zhihu platform had accumulated 77 million content creators, an 11.6% year-on-year increase; the average monthly active users (MAUs) in the third quarter totaled 81 million, with an average monthly subscription membership of 16.5 million and a total community content volume of 855 million. These figures demonstrate Zhihu's continued strong position in attracting and retaining users.

Regarding business expansion, Zhihu's AI search tool "Zhihu Direct Answers" continues to experience significant growth and introduced the "Professional Search" feature at the end of October, further enhancing differentiated exploration in complex scenarios. This feature not only improves user experience but also provides robust support for professional content exploration within Zhihu.

Zhihu's founder, chairman, and CEO, Zhou Yuan, stated: "In the third quarter, Zhihu furthered its commitment to reducing losses and implemented corporate strategies with precision. During this period, improvements in key user metrics, increased active users, and enhanced confidence among content creators have been observed. The user traffic for the AI search tool Zhihu Direct Answers has grown rapidly. The introduction of the professional search function signifies another step towards advanced exploration. Moving forward, Zhihu will focus on enhancing user experience and community trust to fully realize the potential of the Zhihu brand and user base."

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