BEIJING, Nov. 29, 2023 /PRNewswire/ — 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 September 30, 2023.
Third Quarter 2023 Highlights
Total revenues were RMB1,022.2 million (US$140.1 million) in the third quarter of 2023, representing a 12.1% increase from the same period of 2022. Net loss was RMB278.4 million (US$38.2 million) in the third quarter of 2023, narrowed by 6.5% from the same period of 2022. Adjusted net loss (non-GAAP)[1] was RMB225.3 million (US$30.9 million) in the third quarter of 2023, narrowed by 10.1% from the same period of 2022. Average monthly active users (MAUs)[2] reached 110.5 million in the third quarter of 2023. Average monthly subscribing members[3] reached 14.8 million in the third quarter of 2023, representing a 35.9% increase from the same period of 2022.
"Our significant strides in commercialization and the vibrant dynamism across the Zhihu community once again drove sustainable business growth during the third quarter of 2023. Our total revenues for the quarter continued their year-over-year growth momentum, fueled by accelerated development in paid memberships and our vocational training business," said Mr. Yuan Zhou, chairman and CEO of Zhihu. "We will devote more resources to our multi-engine monetization strategy on a mid- to long-term basis. This strategy enabled us to deliver resilient revenue growth this year despite the macro uncertainties. I am committed to narrowing losses by improving strategy execution. Zhihu will continue to integrate cutting-edge AI technology into its products and business operations to enhance content quality and user experience."
Mr. Henry Sha, CFO of Zhihu, added, "We achieved another strong quarter with total revenues increasing by 12.1% year over year. Among our various revenue streams, our paid membership revenue grew by 39.2% while our vocational training business soared 85.6%, both year over year. We further enhanced our gross margin through ongoing cost efficiency refinements. Despite the challenging economic climate, we are well-positioned to execute our growth strategy and achieve our financial targets."
Third Quarter 2023 Financial Results
Total revenues were RMB1,022.2 million (US$140.1 million) in the third quarter of 2023, representing a 12.1% increase from RMB911.7 million in the same period of 2022.
Marketing services revenue[4] was RMB383.0 million (US$52.5 million), compared with RMB461.9 million in the same period of 2022.
Paid membership revenue was RMB466.8 million (US$64.0 million), representing a 39.2% increase from RMB335.4 million in the same period of 2022. The increase was primarily driven by the continued growth of our subscribing members.
Vocational training revenue was RMB144.8 million (US$19.8 million), representing an 85.6% increase from RMB78.0 million in the same period 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 RMB27.6 million (US$3.8 million), compared with RMB36.3 million in the same period of 2022.
Cost of revenues increased by 1.4% to RMB473.7 million (US$64.9 million) from RMB467.3 million in the same period of 2022. The increase was primarily due to the growth of content and operating costs as we continued to enhance our content attractiveness, and an increase in staff costs, partially offset by the decrease in cloud services and bandwidth costs.
Gross profit increased by 23.4% to RMB548.5 million (US$75.2 million) from RMB444.4 million in the same period of 2022. Gross margin expanded to 53.7% from 48.7% 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 were RMB898.6 million (US$123.2 million), compared with RMB723.0 million in the same period of 2022.
Selling and marketing expenses increased to RMB534.3 million (US$73.2 million) from RMB478.3 million in the same period of 2022. The increase reflects our continued efforts in promoting our product and service offerings.
Research and development expenses increased to RMB249.7 million (US$34.2 million) from RMB160.8 million in the same period of 2022. The increase was primarily attributable to our increased spending on technology innovation.
General and administrative expenses increased to RMB114.6 million (US$15.7 million) from RMB83.9 million in the same period of 2022. The increase was primarily due to higher rental expenses and the increased share-based compensation expenses from our business acquisition.
Loss from operations increased to RMB350.1 million (US$48.0 million) from RMB278.6 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1] increased to RMB295.9 million (US$40.6 million) from RMB231.0 million in the same period of 2022.
Net loss was narrowed by 6.5% to RMB278.4 million (US$38.2 million) from RMB297.6 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] was narrowed by 10.1% to RMB225.3 million (US$30.9 million) from RMB250.6 million in the same period of 2022.
Diluted net loss per American Depositary Share ("ADS") was RMB0.47 (US$0.06), compared with RMB0.49 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of September 30, 2023, the Company had cash and cash equivalents, term deposits and short-term investments of RMB5,654.2 million (US$775.0 million), compared with RMB6,261.5 million as of December 31, 2022.
Share Repurchase Program
As of September 30, 2023, 18.3 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) had been repurchased for a total price of US$42.6 million on both the New York Stock Exchange and The Stock Exchange of Hong Kong Limited under the Company’s existing US$100 million share repurchase program established in May 2022 and extended in May 2023 (the "Repurchase Program"), which is effective until June 10, 2024. The repurchases made under the Repurchase Program were covered by the general unconditional mandate to purchase the Company’s own shares approved by shareholders at the Company’s annual general meetings held on June 10, 2022 and June 30, 2023, respectively.
[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 apps 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.
[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 6:00 a.m. U.S. Eastern Time on November 29, 2023 (7:00 p.m. Beijing/Hong Kong time on November 29, 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/10184549/fb0dd38135
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 December 6, 2023, by dialing the following telephone numbers:
United States (toll free):
+1-877-344-7529
International:
+1-412-317-0088
Replay Access Code:
4452699
About Zhihu Inc.
Zhihu Inc. (NYSE: ZH; HKEX: 2390) is 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 Measures
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.
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 RMB7.2960 to US$1.00, the exchange rate in effect as of September 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: [email protected]
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: [email protected]
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except share, ADS, per share data and per ADS data)
For the Three Months Ended
For the Nine Months Ended
September 30,
2022
June 30,
2023
September 30,
2023
September 30,
2022
September 30,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Revenues:
Marketing services
461,938
412,740
382,962
52,489
1,384,093
1,187,839
162,807
Paid membership
335,435
449,098
466,784
63,978
828,273
1,370,651
187,863
Vocational training
78,004
144,520
144,795
19,846
163,675
396,313
54,319
Others
36,334
37,851
27,622
3,786
114,913
105,789
14,500
Total revenues
911,711
1,044,209
1,022,163
140,099
2,490,954
3,060,592
419,489
Cost of revenues
(467,327)
(482,131)
(473,712)
(64,928)
(1,311,425)
(1,437,844)
(197,073)
Gross profit
444,384
562,078
548,451
75,171
1,179,529
1,622,748
222,416
Selling and marketing expenses
(478,279)
(540,593)
(534,328)
(73,236)
(1,517,239)
(1,520,486)
(208,400)
Research and development
expenses
(160,760)
(236,245)
(249,662)
(34,219)
(550,867)
(668,867)
(91,676)
General and administrative
expenses
(83,944)
(112,460)
(114,564)
(15,702)
(498,866)
(327,462)
(44,882)
Total operating expenses
(722,983)
(889,298)
(898,554)
(123,157)
(2,566,972)
(2,516,815)
(344,958)
Loss from operations
(278,599)
(327,220)
(350,103)
(47,986)
(1,387,443)
(894,067)
(122,542)
Other income/(expenses):
Investment income
23,138
11,793
11,617
1,592
64,458
29,416
4,032
Interest income
14,598
39,987
40,363
5,532
34,433
119,843
16,426
Fair value change of financial
instruments
(79,322)
(9,016)
(7,352)
(1,008)
(172,066)
(19,950)
(2,734)
Exchange gains/(losses)
28,302
7,076
(393)
(54)
73,273
1,034
142
Others, net
(3,047)
644
27,227
3,732
(116)
34,204
4,688
Loss before income tax
(294,930)
(276,736)
(278,641)
(38,192)
(1,387,461)
(729,520)
(99,988)
Income tax (expense)/benefit
(2,655)
(2,330)
256
35
(11,428)
(6,903)
(946)
Net loss
(297,585)
(279,066)
(278,385)
(38,157)
(1,398,889)
(736,423)
(100,934)
Net income attributable to
noncontrolling interests
(2,590)
(775)
(289)
(40)
(2,590)
(3,447)
(472)
Net loss attributable to Zhihu
Inc.’s shareholders
(300,175)
(279,841)
(278,674)
(38,197)
(1,401,479)
(739,870)
(101,406)
Net loss per share
Basic
(0.98)
(0.92)
(0.94)
(0.13)
(4.60)
(2.45)
(0.34)
Diluted
(0.98)
(0.92)
(0.94)
(0.13)
(4.60)
(2.45)
(0.34)
Net loss per ADS (Two ADSs
represent one Class A
ordinary share)
Basic
(0.49)
(0.46)
(0.47)
(0.06)
(2.30)
(1.22)
(0.17)
Diluted
(0.49)
(0.46)
(0.47)
(0.06)
(2.30)
(1.22)
(0.17)
Weighted average number of
ordinary shares outstanding
Basic
306,621,507
304,068,362
297,742,064
297,742,064
304,837,976
302,063,397
302,063,397
Diluted
306,621,507
304,068,362
297,742,064
297,742,064
304,837,976
302,063,397
302,063,397
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
For the Nine Months Ended
September 30,
2022
June 30,
2023
September 30,
2023
September 30,
2022
September 30,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Share-based compensation
expenses included in:
Cost of revenues
(411)
2,146
1,630
223
8,198
8,176
1,121
Selling and marketing
expenses
6,647
6,384
5,741
787
19,315
20,883
2,862
Research and development
expenses
16,608
14,941
13,758
1,886
46,672
49,904
6,840
General and administrative
expenses
22,002
28,976
27,662
3,791
257,165
78,193
10,717
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
As of December 31,
2022
As of September 30,
2023
RMB
RMB
US$
ASSETS
Current assets:
Cash and cash equivalents
4,525,852
3,133,073
429,423
Term deposits
948,390
1,147,648
157,298
Short-term investments
787,259
1,373,502
188,254
Trade receivables
834,251
624,251
85,561
Amounts due from related parties
24,798
12,834
1,759
Prepayments and other current assets
199,249
330,762
45,335
Total current assets
7,319,799
6,622,070
907,630
Non-current assets:
Property and equipment, net
7,290
10,865
1,489
Intangible assets, net
80,237
126,399
17,324
Goodwill
126,344
191,077
26,189
Long-term investments
–
30,000
4,112
Right-of-use assets
100,119
44,772
6,137
Other non-current assets
22,450
23,072
3,162
Total non-current assets
336,440
426,185
58,413
Total assets
7,656,239
7,048,255
966,043
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities
916,112
954,069
130,766
Salary and welfare payables
283,546
287,626
39,422
Taxes payables
25,975
14,621
2,004
Contract liabilities
355,626
359,325
49,250
Amounts due to related parties
24,861
9,187
1,259
Short term lease liabilities
53,190
47,784
6,549
Other current liabilities
165,531
238,980
32,755
Total current liabilities
1,824,841
1,911,592
262,005
Non-current liabilities
Long term lease liabilities
43,367
3,657
501
Deferred tax liabilities
11,630
23,642
3,240
Other non-current liabilities
82,133
127,487
17,474
Total non-current liabilities
137,130
154,786
21,215
Total liabilities
1,961,971
2,066,378
283,220
Total Zhihu Inc.’s shareholders’ equity
5,653,696
4,894,135
670,797
Noncontrolling interests
40,572
87,742
12,026
Total shareholders’ equity
5,694,268
4,981,877
682,823
Total liabilities and shareholders’ equity
7,656,239
7,048,255
966,043
ZHIHU INC.
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands)
For the Three Months Ended
For the Nine Months Ended
September 30,
2022
June 30,
2023
September 30,
2023
September 30,
2022
September 30,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Loss from operations
(278,599)
(327,220)
(350,103)
(47,986)
(1,387,443)
(894,067)
(122,542)
Add:
Share-based compensation
expenses
44,846
52,447
48,791
6,687
331,350
157,156
21,540
Amortization of intangible assets
resulting from business
acquisition
2,763
5,365
5,365
735
7,563
14,220
1,949
Adjusted loss from operations
(230,990)
(269,408)
(295,947)
(40,564)
(1,048,530)
(722,691)
(99,053)
Net loss
(297,585)
(279,066)
(278,385)
(38,157)
(1,398,889)
(736,423)
(100,934)
Add:
Share-based compensation
expenses
44,846
52,447
48,791
6,687
331,350
157,156
21,540
Amortization of intangible
assets resulting from
business acquisition
2,763
5,365
5,365
735
7,563
14,220
1,949
Tax effects on non-GAAP
adjustments
(600)
(1,069)
(1,069)
(146)
(1,800)
(2,738)
(375)
Adjusted net loss
(250,576)
(222,323)
(225,298)
(30,881)
(1,061,776)
(567,785)
(77,820)
Source : Zhihu Inc. Reports Unaudited Third Quarter 2023 Financial Results
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