Zhihu Inc. Q4 FY2025 Earnings Call

Thank you, Hadi. Hello, everyone. Welcome to Zhihu's 2025 Fourth Quarter and Full Year Financial Results Conference Call. Joining me today on the call from senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer; and Mr. Wang Han, Chief Financial Officer. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Additionally, the discussion today will include both GAAP and non-GAAP financial results for comparison purposes only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com. Today, Victor Zhou, an AI agent, representing Mr. Zhou Yuan, will deliver prepared remarks in English on his behalf. As Victor is still being refined, we appreciate your understanding. Victor, please go ahead.

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu's fourth quarter and full year 2025 earnings call. I am Victor Zhou, and I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO. In 2025, we achieved our first-ever full year non-GAAP profit. This historic milestone validates our strategic transformation and underscores the structural durability of our operational leverage. Full year 2025, adjusted net income reached RMB 37.9 million, on a substantial turnaround from the adjusted net loss of RMB 96.3 million in 2024. Our community engagement continues to thrive. In Q4, average daily time spent per user increased to over 41 minutes on the platform. Our ecosystem of trusted creators remains vibrant, consistently delivering authentic and high-quality content across diverse fields. At the same time, we accelerated AI integration within our community. The synergistic evolution of our high-quality content times the expert network times AI capabilities continuously strengthened Zhihu's competitive mode in the AI era. In 2025, we successfully optimized our business structure. With a healthier commercial ecosystem, total revenue trend improved meaningfully in the fourth quarter, driven by a double-digit sequential increase in marketing services. Entering 2026, amid the surging AI adoption, we are leveraging Zhihu's unique advantages to scale AI-driven commercialization, including rapidly building industry-leading export data solutions and deploying AI productivity tools to accelerate IP monetization of our Yan'an Stories franchise. These initiatives will unlock new commercial opportunities for Zhihu. These efforts are anchored by a robust self-sustaining ecosystem. The powerful synergies between high-quality content, our expert network, and expanding AI capabilities have created a positive feedback loop, driving heightened community activity and interaction. In the fourth quarter, our data engagement metrics strengthened significantly. Average daily time spent per user increased sharply both year-over-year and sequentially to over 41 minutes. Substantial year-over-year growth in positive user interactions also drove notable improvements in both short- and long-term new user intention. High-quality content on our platform continues to surge. In Q4, daily creation of high-quality content rose by over 20% year-over-year, contributing to over 31% growth for the full year. Notably, professional AI-related content increased by over 30% year-over-year. As the global AI landscape has shifted from capability races to architectural innovation and system integration, Zhihu remains a leading forum for prominent researchers and frontline engineers to share insights, unpack complex topics and debate key issues. At the vanguard of the AI revolution, our community hosted extensive high-level discussions on key topics such as DeepSeek's Engram architecture, Qwen's new RIF's winning mechanisms, and the continuous iterations of Kimi and Zhipu. The conversation has moved from stronger models to effective system deployment, emphasizing tiered agent architectures and workflow redesign in products like Open Cloud and Cloud Co-Work. The debut of Unitree Robots at the Spring Festival Gala, together with Tesla and the figures progress towards mass-producing humanoid robots has filled a critical analysis of embodied AI road maps as founders and the employees from leading AI enterprises personally engaged on Zhihu to answer questions and address concerns. Our platform remains an attractive space where AI innovations are first explained, validated, and responsibly disseminated. We continue to leverage AI to upgrade our community governance and content mechanism. By replacing many operations with algorithm-driven automated workflows, we enhanced community governance, efficiency, and precision. We introduced new metrics for trustworthy content recognition and promotion, while integrating user feedback into our evaluation framework. These measures effectively reduce system noise, dynamically suppressing low-quality content and elevating the overall user experience. Professional creators remain the backbone of Zhihu's expert network. In the fourth quarter, daily active high-tier creators grew by double digit year-over-year. A number of verified honored creators rose by nearly 30% as we continue to strengthen incentives for top-tier creators while supporting their efforts to expand industry influence. Our Zhihu 2025 annual review highlighted exceptionally robust high-tier creator engagement. In AI and technology, leading AI companies, including DeepSeek, Moonshot, Tongyi Qianwen, ByteDance Seed, Zhipu, and StepFun actively engaged on our platform through their official accounts. Creators with frontline industry and R&D backgrounds consistently shared cutting-edge insights on our platform, contributing to major industry discussions. For the full year, AI-focused creators grew by approximately 16%. In fundamental sciences such as astronomy and chemistry, high-profile creators actively joined our flagship online and offline science programs. Their authoritative content sparked widespread discussion beyond our community, driving higher search interest for related topics. On the product side, Ideas remains the primary channel for high-frequency knowledge sharing by professional creators, while Circle facilitates engagement around common interests. For the full year, average daily content volume on Ideas grew by 73.5%, and the average daily interactions doubled. This momentum persisted in the fourth quarter with double-digit sequential growth across both metrics. We also increased support for mid-tier creators during the quarter, fostering a dynamic growth-oriented ecosystem. Leveraging AI agents, we significantly improved our efficiency in identifying and nurturing talent. In Circles, AI-powered prompts and standardized tools lowered creation variants and enhanced content distribution. As a result, average daily content creation in Circles surged over 100% sequentially with daily views up 72%. Beyond the AI-driven efficiency gains in content operations, creator support, and ecosystem management, Q4 also saw accelerated advances in our foundational AI capabilities enhancing experiences for both creators and the users. In search, creation, and consumption, we continue to deepen the integration of AI into the Zhihu community experience. In search, we completed an AI upgrade to our integrated search in December, introducing cross-topic content aggregation and hot trend summarization to create a new entry point for high-quality content discovery. We also tailored the answer formats to different query types, which drove a double-digit increase in click-through rates for our AI direct answer cards and meaningfully increased average AI search interactions per user through more multi-turn conversations. In creation, AI is increasingly becoming a practical tool for creators on Zhihu. Since the fourth quarter, we have rolled out features such as content publishing and one-click enhancement powered by intelligent editing, automated formatting, and image pairing capabilities. These tools lower the barrier to creation, improve readability and distribution efficiency, and help creators turn ideas into shareable content more efficiently. We are also introducing multimodal capabilities such as AI-generated illustrations and image summarization to make long-form content more visually engaging and improve user conversion in the feed. In consumption and circulation, AI is helping Zhihu content transcend traditional community boundaries through external ecosystem partnerships. We are extending our content capabilities into more intelligent assistant scenarios. Within the community, users are beginning to use AI in common threads for fact-checking and professional explanation, which supports more authentic interaction and follow-up discussions. Meanwhile, our AI reading panel on PC has improved the efficiency of long-form reading through one-click summarization and terminology explanation and is beginning to generate more valuable interest signals for future recommendation and monetization. Now turning to commercialization. Our efforts to optimize our commercial structure have yielded notable results. With a healthier business ecosystem, total revenue has entered a recovery phase, reaching RMB 643.5 million in the fourth quarter as the pace of sequential decline continued to narrow. This shows a clear top line recovery trajectory. At the same time, we are exploring new scalable AI-powered monetization avenues with an unwavering focus on long-term value and operational excellence. Let's take a closer look at our performance by segment. In the fourth quarter, marketing services revenue reached RMB 234.8 million, up 24% sequentially as our adjustment cycle bottomed out. Disciplined execution in optimizing client mix and upgrading commercial products capitalizes on momentum, strengthening our appeal to high-value clients. We elevated the overall client quality, deepened industry penetration, and accelerated new customer acquisition. In the fourth quarter, ARPU rose significantly among clients in high-value verticals such as technology and e-commerce. We also reached new segments in sectors such as automotive and healthcare. In December, we hosted the Electric Club New Knowledge Technology Conference, which brought together automotive engineers, autonomous driving specialists, and leading tech experts from the Zhihu community to explore NEV safety and intelligent upgrades. The event drove a 140% year-over-year increase in participating clients, enabling industry leaders like BYD, Mitsubishi, and Voyah to articulate their technological strength and the safety value through targeted engagement and build trusted content assets. On commercial product upgrades, we leveraged our trusted content and expert network to expand community-driven monetization and amplify the commercial value of our key IPs such as Zhihu Science Season and Zhihu Reviewers Jewelry. Revenue from IP-related projects increased by 21% year-over-year, supported by deeper brand collaborations across our IP portfolio. At the same time, our Idea Plus solution gained strong momentum during the quarter. By offering a lightweight, precisely targeted format, Idea Plus extended our native advertising capabilities into short-form content, significantly shortening the path from discovery to purchase, capitalizing on a 106% year-over-year increase in daily ideas interactions. Idea Plus achieved a 62% sequential increase in client numbers and 200% sequential growth in average daily client spend. In 2026, supported by a healthier commercial ecosystem, we aim to drive continued recovery and sustainable long-term growth in marketing services. Next, turning to the business we currently report on paid membership, which we increasingly see evolving into a broader content and IP operations business. Paid membership remains a revenue contributor of this segment. In the fourth quarter, average monthly paid members reached 12.2 million, generating RMB 333.5 million in revenue. Short-term membership fluctuations aligned with expectations as our structural adjustments prioritize fundamental improvements in service experience and profitability to support a smooth transition during this phase. We are exploring new growth drivers; initiatives to improve member retention and ARPU are yielding results. Q4 average ARPU increased by 1.4% sequentially, and overall quarterly renewal rates improved by 2.7 percentage points. Beyond the paid memberships, we are maximizing content IP's value across media adaptations and licensing. IP monetization revenue, which is currently recognized in other revenues, grew more than fivefold year-over-year in the fourth quarter and doubled for the full year, underscoring the significant growth potential of this business. The monetization potential of our Yan'an Stories IP continued to translate into tangible results. In December, two adapted short dramas, Fang and Xia, and The Seventh Year Of Secret Love For My Childhood Friend premiered on Tencent Video, quickly ranking among the platform's top releases. Fang and Xia set an all-time popularity record for vertical short dramas on the platform, while The Seventh Year Of Secret Love For My Childhood Friend topped the charts and sparked widespread discussion across social media. These results demonstrate our IP's strong adaptation potential and mainstream appeal. During the quarter, we released our short story influence list for the third consecutive year recognizing 62 outstanding works and 20 authors. The selection includes both mature IP already adapted into film and television as well as a pipeline of high-quality titles with strong multi-format development potential. Together, these initiatives highlight our scalable pathway for long-term value creation, cultivating high-quality content, structuring an IP portfolio, and extending it across multiple formats to unlock compounding growth. Looking ahead, rapid advances in multimodal AI and the rising industry productivity are expected to further expand monetization opportunities for Yan'an Stories IP, creating new growth potential for our content and IP operations business. Building on this, we are exploring a new format for IP development, AI-powered comic dramas and emerging formats driven by demand for lightweight content and improved generative model efficiency. Positioned upstream, Zhihu leverages a dense network of high-quality creators and rich content assets giving us a natural advantage as a stable source of premium IP. Strategically, we will pursue a dual-track approach of IP licensing and in-house incubation. We will also collaborate with platforms and studios to unlock mature IP value, while building in-house AI production capabilities. Turning to other revenues. Beginning in the third quarter to improve profitability, we consolidated our vocational training and the new initiatives into other revenues, which totaled RMB 75.2 million in Q4. We believe 2026 will mark another leap in AI productivity complemented by rapid expansion of real-world applications. Leveraging Zhihu's unique strength, we are accelerating exploration of AI-related monetization. We also see growing potential in export data solutions as competition among other ends increasingly shifts from scale alone to alignment, quality, and real-world generalization. High-value, traceable, and structured data is now the core driver of model performance. With our long-standing expert network and authentic discussion scenarios, Zhihu is well-positioned upstream in the supply of high-quality knowledge and insights, and we believe we can be among the earliest platforms in China to systematically define and commercialize high-value data solutions. To support this opportunity, we are developing our export data solution capabilities. At the same time, we are also exploring how to engage experts more deeply in data construction and labeling processing that supports model training and alignment. In summary, achieving full year non-GAAP profitability in 2025 marks a pivotal milestone for Zhihu, validating the resilience of our strategy and the strength of our execution. In 2026, we remain committed to prioritizing disciplined operations, while accelerating AI integration across our community and commercial models. We are sharpening our strategic focus and optimizing resource allocation. In our established businesses, we will continue to prioritize ecosystem health and the user experience, leveraging AI to drive efficiency gains and elevate content quality. At the same time, we are doubling down on AI-driven monetization innovations to cultivate new scalable growth engines. We are confident that 2026 will usher in a new era for high-quality growth for Q4, defined by the further realization of our unique AI capabilities and monetization potential. With that, I will hand the call over to our CFO, Wang Han, whose remarks will be delivered through his AI voice agent. Han, please go ahead.

I will now go over our fourth quarter financials for a complete overview of our results, please refer to our press release issued earlier today. 2025 represents a structural upgrade in Zhihu's financial profile. As Victor noted, we achieved our first full year non-GAAP profitability milestone. Financially, this progress was driven by sustained cost discipline, improved operating leverage, and tighter expense control, while maintaining healthy gross margins. For the full year, we recorded non-GAAP net income of RMB 37.9 million, and our non-GAAP operating loss narrowed by 33.6% year-over-year. These results reflect the cumulative impact of our multi-quarter structure optimization and provide a strong foundation to build on as we enter 2026. Now turning to the fourth quarter. Our total revenues for the quarter were RMB 643.5 million compared with RMB 859.2 million in the same period of 2024. The year-over-year decrease continued to reflect our ongoing efforts to optimize revenue mix and focus on sustainable, high-quality growth. Notably, the pace of sequential decline continued to narrow, reinforcing a clear top line recovery trajectory. Our marketing services revenue for the quarter was RMB 234.8 million compared with RMB 315.9 million in the same period of 2024, while the year-over-year decline reflects our proactive refinement of service offerings, the sequential trend was notably positive. Marketing services revenue grew 24% sequentially, marking a clear inflection point in our recovery. This momentum was driven by stronger client quality, deeper industry penetration, and the successful ramp-up of new commercial products. Paid membership revenue was RMB 333.5 million compared with RMB 422 million in the same period of 2024. Average monthly subscribing members were 12.2 million. The year-over-year decline in membership was expected and reflects our deliberate prioritization of unit economics over scale. That said, we delivered sequential improvements in both ARPPU and renewal rates during the quarter, which we view as early validation that our retention initiatives are gaining traction. Other revenues were RMB 75.2 million compared with RMB 123.1 million in the same period of 2024. The decrease primarily reflected the strategic refinement of our vocational training business, partially offset by growth of revenues generated from our intellectual property derivatives business. Our gross profit for the quarter was RMB 344.8 million, compared with RMB 540.7 million in the same period of 2024. Gross margin was 53.6% compared with 62.9% in the same period of 2024. The decrease in gross margin was primarily due to our ongoing efforts to broaden and enhance content offerings for all users. Our total operating expenses for the quarter were RMB 608.7 million compared with RMB 528.8 million in the same period of 2024. The increase was primarily due to a one-time non-cash goodwill impairment charge of RMB 126.3 million, which was primarily associated with our prior acquisitions, mainly driven by lower valuations amid the current market conditions. Excluding this item, underlying operating expenses continued to decline year-over-year as we further streamline spending across key areas. Selling and marketing expenses decreased by 13% to RMB 275.2 million from RMB 316.2 million in the same period of 2024, driven by more disciplined marketing spend and lower personnel-related expenses. Research and development expenses decreased 16% to RMB 123.1 million from RMB 146.6 million in the same period of 2024. The decrease was primarily driven by ongoing improvements in our research and development efficiency. General and administrative expenses were RMB 84 million compared with RMB 66 million in the same period of 2024, primarily due to higher share-based compensation expenses. Our GAAP net loss for the quarter was RMB 210.8 million compared with RMB 86.4 million in the same period of 2024. On a non-GAAP basis, adjusted net loss was RMB 39.4 million compared with adjusted net income of RMB 97.1 million in the same period of 2024. As of the 31st of December 2025, we held RMB 4.5 billion in cash and cash equivalents, current and non-current term deposits, restricted cash, and short-term investments compared with RMB 4.9 billion as of the 31st of December 2024. As of the 31st of December 2025, we repurchased 31.1 million Class A ordinary shares on the open market for an aggregate value of USD 66.5 million. In addition, throughout 2025, we repurchased a total of 16.6 million Class A ordinary shares through the company's trustee for an aggregate value of USD 23.4 million, representing 6.29% of the total issued ordinary shares. Looking ahead, we will further enhance earnings quality and scalability by prioritizing higher-margin, more capital-efficient revenue streams. We will continue to strengthen our monetization capabilities and explore new AI-powered revenue models, while leveraging Zhihu's core strength, high-quality content, a respected expert network, and advanced AI capabilities, coupled with disciplined capital allocation, including share repurchases. These actions will reinforce our financial resilience and support sustainable long-term value creation.

Thank you for taking my question. I would like to know about your financial outlook. Specifically, what is the earnings outlook for 2026 and how do you plan to balance investment with cash flow and profitability?

This is from Zhihu CFO, Wang Han. First, 2025 has shown that Zhihu can achieve profitability. More importantly, we believe that due to our unique assets and positioning, Zhihu's opportunities in the AI era are significantly greater than our current scale suggests. We are not just focusing on achieving profitability this year and increasing it next year. Regarding dividends, at our current scale, that wouldn't provide a meaningful return for our shareholders. Instead, we want to remain focused on the opportunities presented by AI and invest in them. However, this does not mean we will lose our commitment to maintaining a healthy bottom line or revert to the previous model of spending excessively for growth. We will be careful in choosing new initiatives and focus our investments on areas with clear return potential and strong alignment with Zhihu's core strengths. In other words, we aim to foster growth in new AI-driven revenue streams while keeping our overall bottom line healthy and responsive. Thank you for the question.

I'll translate it myself. As of now, what is your strategy regarding our commercialization? What are the company's main priorities for 2026?

Thank you for your question. I will begin answering it. This is from Zhihu CFO, Wang Han. Regarding our priorities and strategy for 2026, we are focusing on two main areas. First, in our core community business, we aim to use AI to enhance efficiency and provide a better product experience for our users and content creators. We also want to ensure stable revenue and maintain a healthy level of operating profitability. In other words, we want our core business to remain steady while becoming increasingly enhanced by AI and financially stronger over time. The second area is AI data services. While many AI applications still face significant cash burn, only a few sectors within the ecosystem can capture structurally attractive economics. One of these is epitomized by companies like NVIDIA. A smaller yet equally promising area is high-quality data. In the U.S., companies such as Scale AI, Surge AI, and McClure have rapidly expanded in just a few years by offering high-quality data services to top LLM developers, all while showcasing strong cash flow characteristics. With our robust expert network and understanding of high-quality model data, we believe Zhihu is well-positioned to deliver unique data solutions for these AI developers. Additionally, our community can continuously address new areas of expertise, emerging knowledge, and evolving capabilities that LLMs have not yet fully addressed. This provides Zhihu with a distinct advantage in this sector, and we see this as a business with a clear path to generating positive cash flow.

Could management share some data that will help us better understand the impact of AI on the Zhihu community? Additionally, regarding product upgrades and user experience enhancement in the coming year, what new initiatives does Zhihu have in place?

Thanks for your question. I will take this question. This is from Zhihu CEO, Zhou Yuan. First of all, the impact of AI on our community has not been passive. Over the past few quarters, we have been actively driving a deeper integration between AI and the Zhihu community with a clear focus on improving content consumption and the creator experience. Broadly speaking, the positive changes resulting from AI adoption can be observed in two groups: our core retained users and our new users. Starting with our core retained users, AI is helping users and creators better understand and connect with each other, which further strengthens the social nature of real human interaction on our platform. In the fourth quarter, both the coverage and frequency of positive user interactions on the platform increased year-over-year. We are also seeing users actively call on AI capabilities, known as Zhida, in the comments section for tasks such as fact-checking, explaining professional topics, and facilitating training discussions. Importantly, this is occurring without disrupting the community atmosphere. Instead, it is fostering more interaction and follow-on discussions among real users. More recently, we launched an AI reading panel on PC, featuring one-click summaries and explanations of professional terms. This has significantly improved the reading efficiency of long-form content and enhanced the deep reading experience for our core users. As we mentioned earlier, daily newly added high-quality content in the community grew by over 20% year-over-year in Q4. Beyond content volume, we are more focused on a positive shift in user and creator behaviors. Through AI capabilities, such as intelligent editing and multi-model associated creation, we are continuing to lower the barrier. As a result, we have seen user interactions improve significantly this quarter. For new users entering the community, AI is lowering the barrier to content discovery, joining discussions, and participating in interactions. In the fourth quarter of 2025, the direct monthly active users of Zhihu Zhida continued to grow by more than 260% year-over-year, while next month's retention improved by about 83% year-over-year. In February 2026, average daily search queries per daily active user increased by more than 16% compared with November 2025. We previously shared that we completed another upgrade of AI capability within Zhihu's main search to further integrate Zhida with our broader search experience and make it a new entry point for high-quality content for our users. This upgrade took place in December. Following this enhancement, search can present more suitable answer formats based on different types of queries. Since the launch, user coverage of AI Zhida cards has increased significantly. The click-through rate has improved by double digits, and the average AI searches per user have also increased noticeably. Our plans for the future are focused on two main areas. First, we will continue to invest in the benefits we are already experiencing from AI, which enhances social interaction and efficiency for both returning and new users. This path is clear, and we have been making progress toward it gradually. Additionally, we are preparing to enhance Zhida's core functionality from AI search to an agent-based experience. We believe this could lead to broader upgrades in product experience for users throughout the community. Although there are still challenges in innovation and execution, we will keep working through that process. Thank you for your question again.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or Christensen Advisory. Thank you. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect.