Zhihu Inc 6-K, filed May 24, 2023
Zhihu Inc. (ZH)
About this 6-K
Zhihu Inc filed this 6-K on May 24, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2023
Commission File Number: 001-40253
Zhihu Inc.
(Registrant’s Name)
A5 Xueyuan Road
Haidian District, Beijing 100083
People’s Republic of China
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release—Zhihu Inc. Reports Unaudited First Quarter 2023 Financial Results |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Zhihu Inc. | |||
| By | : | /s/ Henry Dachuan Sha | |
| Name | : | Henry Dachuan Sha | |
| Title | : | Director and Chief Financial Officer | |
Date: May 24, 2023
Exhibit 99.1
Zhihu Inc. Reports Unaudited First Quarter 2023 Financial Results
BEIJING, China, May 24, 2023 — Zhihu Inc. (“Zhihu” or the “Company”) (NYSE: ZH; HKEX: 2390), a leading online content community in China, today announced its unaudited financial results for the quarter ended March 31, 2023.
First Quarter 2023 Highlights
| ● | Total revenues were RMB994.2 million (US$144.8 million) in the first quarter of 2023, representing a 33.8% increase from the same period of 2022. |
| ● | Net loss was RMB179.0 million (US$26.1 million) in the first quarter of 2023, narrowed by 70.9% from the same period in 2022. |
| ● | Adjusted net loss (non-GAAP)[1] was RMB120.2 million (US$17.5 million) in the first quarter of 2023, narrowed by 67.3% from the same period of 2022. |
| ● | Average monthly active users (MAUs)[2] reached 102.4 million in the first quarter of 2023, compared with 101.6 million in the same period of 2022. |
| ● | Average monthly subscribing members[3] reached 14.9 million in the first quarter of 2023, representing a 116.0% increase from the same period of 2022. |
“We are pleased to report a strong first quarter of 2023, with impressive revenue growth and another quarter of significantly narrowed loss. Our user growth reaccelerated during this quarter, and in March our MAUs surpassed 110 million, driven by our diverse content formats and enriched consumption scenarios. Our paid membership revenue reached the historical high while vocational training revenue continued to grow rapidly, as we extended our user coverage beyond the Zhihu community and deepened our services along the industry value chain. Our outstanding performance is a testament to our continued innovation in content community development and integration of cutting-edge AI technology.” said Mr. Yuan Zhou, chairman and chief executive officer of Zhihu.
Mr. Henry Sha, chief financial officer of Zhihu, added, “We outperformed this quarter by beating market consensus in terms of both top line and bottom line. Our total revenues for the quarter increased by 33.8% year over year to RMB994.2 million, driven by robust growth in both paid membership and vocational training businesses, and our gross margin expanded to 51.5% from 45.1% in the same period last year. We also achieved RMB59.9 million operating cash flow during the first quarter. It is the first time that Zhihu generates positive operating cash flow since its initial public offering. We will continue to focus on our core business development and remain prudent in exploring potential opportunities.”
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First Quarter 2023 Financial Results
Total revenues were RMB994.2 million (US$144.8 million) in the first quarter of 2023, representing growth of 33.8% from RMB743.2 million in the same period of 2022.
Marketing services revenue[4] was RMB392.1 million (US$57.1 million), compared with RMB444.1 million in the same period of 2022. The decrease was primarily due to the challenging macroeconomic environment.
Paid membership revenue was RMB454.8 million (US$66.2 million), representing a 105.2% increase from RMB221.7 million in the same period of 2022. The increase was primarily attributable to the continued growth of our average monthly subscribing members which reached 14.9 million from 6.9 million in the same period of 2022.
Vocational training revenue was RMB107.0 million (US$15.6 million), representing a 170.6% increase from RMB39.5 million in the first quarter of 2022. The significant increase was primarily attributable to our further enriched online course offerings and the revenue contributions from our recently acquired businesses in the period.
Other revenues were RMB40.3 million (US$5.9 million), representing a 6.3% increase from RMB37.9 million in the same period of 2022. The year-over-year increase was primarily attributable to the increased sales of our private label products and book series.
Cost of revenues increased by 18.2% to RMB482.0 million (US$70.2 million) from RMB407.7 million in the same period of 2022. The increase was primarily due to an increase in content and operating costs to enhance our content attractiveness, as well as an increase in payment processing costs in connection with our revenue growth, partially offset by the decrease in cloud services and bandwidth costs resulting from our improved technology efficiency.
Gross profit was RMB512.2 million (US$74.6 million), representing a 52.7% increase from RMB335.5 million in the same period of 2022. Gross margin expanded to 51.5% from 45.1% in the same period of 2022, primarily attributable to our enhanced monetization efforts and the improvement of cloud services and bandwidth utilization efficiency.
Total operating expenses decreased by 25.9% to RMB729.0 million (US$106.1 million) from RMB983.7 million in the same period of 2022.
Selling and marketing expenses decreased by 12.0% to RMB445.6 million (US$64.9 million) from RMB506.6 million in the same period of 2022, primarily due to more disciplined promotional spending and decrease in salaries and welfare expenses.
Research and development expenses increased to RMB183.0 million (US$26.6 million) from RMB166.5 million in the same period of 2022. The increase was primarily attributable to the increase in the salaries and welfare of research and development personnel, as well as the increased spending in technology innovation.
General and administrative expenses decreased by 67.7% to RMB100.4 million (US$14.6 million) from RMB310.6 million in the same period of 2022, primarily due to lower share-based compensation expenses recognized and the decrease in professional service fees.
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Loss from operations decreased by 66.6% to RMB216.7 million (US$31.6 million) from RMB648.2 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1] decreased by 60.7% to RMB157.3 million (US$22.9 million) from RMB400.7 million in the same period of 2022.
Net loss decreased by 70.9% to RMB179.0 million (US$26.1 million) from RMB614.3 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] decreased by 67.3% to RMB120.2 million (US$17.5 million) from RMB367.4 million in the same period of 2022.
Diluted net loss per American Depositary Share (“ADS”) was RMB0.30 (US$0.04), compared with RMB1.02 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of March 31, 2023, the Company had cash and cash equivalents, term deposits and short-term investments of RMB6,257.7 million (US$911.2 million), compared with RMB6,261.5 million as of December 31, 2022.
Share Repurchase Program
The Company announced a share repurchase program in May 2022 under which the Company may repurchase up to US$100 million of Class A ordinary shares or ADSs for a 12-month period, which was approved by shareholders at the Company’s annual general meeting held on June 10, 2022. As of March 31, 2023, approximately 6.9 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) had been repurchased on both the New York Stock Exchange and The Stock Exchange of Hong Kong Limited under the program for a total price of US$17.8 million.
The board of directors of the Company has approved to extend the share repurchase program until June 10, 2024, which is subject to the shareholders’ approval for granting a general mandate to the board of directors to repurchase shares and/or ADSs of the Company not exceeding 10% of the total number of issued shares of the Company as of the date of such approval at the forthcoming annual general meeting of the Company.
[1] Adjusted loss from operations and adjusted net loss are non-GAAP financial measures. For more information on the non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.
[2] MAUs refers to the sum of the number of mobile devices that launch our mobile app at least once in a given month, or mobile MAUs, and the number of logged-in users who visit our PC or mobile website at least once in a given month, after eliminating duplicates.
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[3] Monthly subscribing members refers to the number of our Yan Selection members in a specified month. Average monthly subscribing members for a period is calculated by dividing the sum of monthly subscribing members for each month during the specified period by the number of months in such period.
[4] Starting with the first quarter of 2023, we report revenues generated from advertising and content-commerce solutions collectively as “marketing services revenue” to better present our business and results of operation in line with our overall strategies. Revenues for the applicable comparison periods of 2022 have been retrospectively re-classified.
Conference Call
The Company’s management will host an earnings conference call at 7:30 a.m. U.S. Eastern Time on May 24, 2023 (7:30 p.m. Beijing/Hong Kong time on May 24, 2023).
All participants wishing to join the conference call must pre-register online using the link provided below. Once the pre-registration has been completed, each participant will receive a set of dial-in numbers, a passcode, and a unique registrant ID which can be used to join the conference call. Participants may pre-register at any time, including up to and after the call start time.
Participant Online Registration: https://dpregister.com/sreg/10179092/f976dce55c
Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.zhihu.com.
A replay of the conference call will be accessible approximately one hour after the conclusion of the live call, until May 31, 2023, by dialing the following telephone numbers:
| United States (toll free): | +1-877-344-7529 |
| International: | +1-412-317-0088 |
| Replay Access Code: | 1172692 |
About Zhihu Inc.
Zhihu Inc. (NYSE: ZH; HKEX: 2390), a leading online content community in China where people come to find solutions, make decisions, seek inspiration, and have fun. Since the initial launch in 2010, we have grown from a Q&A community into one of the top comprehensive online content communities and the largest Q&A-inspired online content community in China. For more information, please visit https://ir.zhihu.com.
Use of Non-GAAP Financial Measure
In evaluating the business, the Company considers and uses non-GAAP financial measures, such as adjusted loss from operations and adjusted net loss, to supplement the review and assessment of its operating performance. The Company defines non-GAAP financial measures by excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisitions and the tax effects of the non-GAAP adjustments, which are non-cash expenses. The Company believes that the non-GAAP measures facilitate comparisons of operating performance from period to period and company to company by adjusting for potential impacts of items, which the Company’s management considers to be indicative of its operating performance. The Company believes that the non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s consolidated results of operations in the same manner as it helps the Company’s management.
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The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The presentation of the non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. The use of the non-GAAP measures has limitations as an analytical tool, and investors should not consider it in isolation from, or as a substitute for analysis of, our results of operations or financial condition as reported under U.S. GAAP. For more information on the non-GAAP financial measures, please see the tables captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.
Exchange Rate Information
This announcement contains translations of certain Renminbi amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at a rate of RMB6.8676 to US$1.00, the exchange rate in effect as of March 31, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: ir@zhihu.com
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: zhihu@tpg-ir.com
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: zhihu@tpg-ir.com
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ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except share, ADS, per share data and per ADS data)
| For the Three Months Ended | ||||||||||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Revenues: | ||||||||||||||||
| Marketing services | 444,104 | 572,387 | 392,137 | 57,100 | ||||||||||||
| Paid membership | 221,670 | 402,531 | 454,769 | 66,219 | ||||||||||||
| Vocational Training | 39,544 | 84,591 | 106,998 | 15,580 | ||||||||||||
| Others | 37,909 | 54,456 | 40,316 | 5,870 | ||||||||||||
| Total revenues | 743,227 | 1,113,965 | 994,220 | 144,769 | ||||||||||||
| Cost of revenues | (407,684 | ) | (485,442 | ) | (482,001 | ) | (70,185 | ) | ||||||||
| Gross profit | 335,543 | 628,523 | 512,219 | 74,584 | ||||||||||||
| Selling and marketing expenses | (506,585 | ) | (509,229 | ) | (445,565 | ) | (64,879 | ) | ||||||||
| Research and development expenses | (166,518 | ) | (212,495 | ) | (182,960 | ) | (26,641 | ) | ||||||||
| General and administrative expenses | (310,632 | ) | (123,107 | ) | (100,438 | ) | (14,625 | ) | ||||||||
| Total operating expenses | (983,735 | ) | (844,831 | ) | (728,963 | ) | (106,145 | ) | ||||||||
| Loss from operations | (648,192 | ) | (216,308 | ) | (216,744 | ) | (31,561 | ) | ||||||||
| Other income/(expenses): | ||||||||||||||||
| Investment income | 20,724 | 5,922 | 6,006 | 875 | ||||||||||||
| Interest income | 9,355 | 33,671 | 39,493 | 5,751 | ||||||||||||
| Fair value change of financial instruments | 8,453 | (4,619 | ) | (3,582 | ) | (522 | ) | |||||||||
| Exchange losses | (4,155 | ) | (1,524 | ) | (5,649 | ) | (823 | ) | ||||||||
| Others, net | 1,930 | 6,099 | 6,333 | 922 | ||||||||||||
| Loss before income tax | (611,885 | ) | (176,759 | ) | (174,143 | ) | (25,358 | ) | ||||||||
| Income tax expense | (2,398 | ) | (2,755 | ) | (4,829 | ) | (703 | ) | ||||||||
| Net loss | (614,283 | ) | (179,514 | ) | (178,972 | ) | (26,061 | ) | ||||||||
| Net income attributable to noncontrolling interests | - | (164 | ) | (2,383 | ) | (347 | ) | |||||||||
| Net loss attributable to Zhihu Inc.’s shareholders | (614,283 | ) | (179,678 | ) | (181,355 | ) | (26,408 | ) | ||||||||
| Net loss per share | ||||||||||||||||
| Basic | (2.04 | ) | (0.59 | ) | (0.59 | ) | (0.09 | ) | ||||||||
| Diluted | (2.04 | ) | (0.59 | ) | (0.59 | ) | (0.09 | ) | ||||||||
| Net loss per ADS (Two ADSs represent one Class A ordinary share) | ||||||||||||||||
| Basic | (1.02 | ) | (0.29 | ) | (0.30 | ) | (0.04 | ) | ||||||||
| Diluted | (1.02 | ) | (0.29 | ) | (0.30 | ) | (0.04 | ) | ||||||||
| Weighted average number of ordinary shares outstanding | ||||||||||||||||
| Basic | 300,483,336 | 304,665,906 | 305,245,036 | 305,245,036 | ||||||||||||
| Diluted | 300,483,336 | 304,665,906 | 305,245,036 | 305,245,036 | ||||||||||||
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ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(All amounts in thousands, except share, ADS, per share data and per ADS data)
| For the Three Months Ended | ||||||||||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Share-based compensation expenses included in: | ||||||||||||||||
| Cost of revenues | 4,770 | 3,663 | 4,400 | 641 | ||||||||||||
| Selling and marketing expenses | 6,472 | 5,019 | 8,758 | 1,275 | ||||||||||||
| Research and development expenses | 15,770 | 15,831 | 21,205 | 3,088 | ||||||||||||
| General and administrative expenses | 218,055 | 18,032 | 21,555 | 3,138 | ||||||||||||
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ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
As of December 31, 2022 | As of March 31, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | 4,525,852 | 4,172,007 | 607,491 | |||||||||
| Term deposits | 948,390 | 744,020 | 108,338 | |||||||||
| Short-term investments | 787,259 | 1,341,687 | 195,365 | |||||||||
| Trade receivables | 834,251 | 758,352 | 110,425 | |||||||||
| Amounts due from related parties | 24,798 | 19,127 | 2,785 | |||||||||
| Prepayments and other current assets | 199,249 | 215,087 | 31,319 | |||||||||
| Total current assets | 7,319,799 | 7,250,280 | 1,055,723 | |||||||||
| Non-current assets: | ||||||||||||
| Property and equipment, net | 7,290 | 7,057 | 1,028 | |||||||||
| Intangible assets, net | 80,237 | 76,667 | 11,164 | |||||||||
| Goodwill | 126,344 | 126,344 | 18,397 | |||||||||
| Long-term investments | - | 30,000 | 4,368 | |||||||||
| Right-of-use assets | 100,119 | 94,188 | 13,715 | |||||||||
| Other non-current assets | 22,450 | 22,450 | 3,270 | |||||||||
| Total non-current assets | 336,440 | 356,706 | 51,942 | |||||||||
| Total assets | 7,656,239 | 7,606,986 | 1,107,665 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payables and accrued liabilities | 916,112 | 1,001,454 | 145,823 | |||||||||
| Salary and welfare payables | 283,546 | 284,801 | 41,470 | |||||||||
| Taxes payables | 25,975 | 21,293 | 3,101 | |||||||||
| Contract liabilities | 355,626 | 377,637 | 54,988 | |||||||||
| Amounts due to related parties | 24,861 | 21,006 | 3,059 | |||||||||
| Short term lease liabilities | 53,190 | 60,639 | 8,830 | |||||||||
| Other current liabilities | 165,531 | 174,400 | 25,395 | |||||||||
| Total current liabilities | 1,824,841 | 1,941,230 | 282,666 | |||||||||
| Non-current liabilities | ||||||||||||
| Long term lease liabilities | 43,367 | 33,616 | 4,895 | |||||||||
| Deferred tax liabilities | 11,630 | 11,030 | 1,606 | |||||||||
| Other non-current liabilities | 82,133 | 89,154 | 12,982 | |||||||||
| Total non-current liabilities | 137,130 | 133,800 | 19,483 | |||||||||
| Total liabilities | 1,961,971 | 2,075,030 | 302,149 | |||||||||
| Total Zhihu Inc.’s shareholders’ equity | 5,653,696 | 5,479,882 | 797,933 | |||||||||
| Noncontrolling interests | 40,572 | 52,074 | 7,583 | |||||||||
| Total shareholders’ equity | 5,694,268 | 5,531,956 | 805,516 | |||||||||
| Total liabilities and shareholders’ equity | 7,656,239 | 7,606,986 | 1,107,665 | |||||||||
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ZHIHU INC.
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands)
| For the Three Months Ended | ||||||||||||||||
March 31, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Loss from operations | (648,192 | ) | (216,308 | ) | (216,744 | ) | (31,561 | ) | ||||||||
| Add: | ||||||||||||||||
| Share-based compensation expenses | 245,067 | 42,545 | 55,918 | 8,142 | ||||||||||||
| Amortization of intangible assets resulting from business acquisition | 2,400 | 3,490 | 3,490 | 508 | ||||||||||||
| Adjusted loss from operations | (400,725 | ) | (170,273 | ) | (157,336 | ) | (22,911 | ) | ||||||||
| Net loss | (614,283 | ) | (179,514 | ) | (178,972 | ) | (26,061 | ) | ||||||||
| Add: | ||||||||||||||||
| Share-based compensation expenses | 245,067 | 42,545 | 55,918 | 8,142 | ||||||||||||
| Amortization of intangible assets resulting from business acquisition | 2,400 | 3,490 | 3,490 | 508 | ||||||||||||
| Tax effects on non-GAAP adjustments | (600 | ) | (600 | ) | (600 | ) | (87 | ) | ||||||||
| Adjusted net loss | (367,416 | ) | (134,079 | ) | (120,164 | ) | (17,498 | ) | ||||||||
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