BEIJING, March 26, 2024 /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 and fiscal year ended December 31, 2023.
Fourth Quarter 2023 Highlights
Total revenues were RMB1,138.3 million (US$160.3 million) in the fourth quarter of 2023, representing a 2.2% increase from the same period of 2022. Gross margin expanded to 59.1% in the fourth quarter of 2023 from 56.4% in the same period of 2022. Net loss was RMB103.1 million (US$14.5 million) in the fourth quarter of 2023, narrowed by 42.6% from the same period of 2022. Adjusted net loss (non-GAAP)[1] was RMB91.3 million (US$12.9 million) in the fourth quarter of 2023, narrowed by 31.9% from the same period of 2022. Average monthly active users (MAUs)[2] reached 99.0 million in the fourth quarter of 2023. Average monthly subscribing members[3] reached 14.2 million in the fourth quarter of 2023, representing a 9.2% increase from the same period of 2022.
Fiscal Year 2023 Highlights
Total revenues were RMB4,198.9 million (US$591.4 million) in 2023, representing a 16.5% increase from 2022. Gross margin expanded to 54.7% in 2023 from 50.2% in 2022. Net loss was RMB839.5 million (US$118.2 million) in 2023, narrowed by 46.8% from 2022. Adjusted net loss (non-GAAP)[1] was RMB659.1 million (US$92.8 million) in 2023, narrowed by 44.9% from 2022.
"In the fourth quarter of 2023, we successfully navigated a challenging macroeconomic and competitive environment and achieved meaningful revenue growth and efficiency improvement through our multi-engine monetization approach, bolstered by our valuable community ecosystem," said Mr. Yuan Zhou, chairman and chief executive officer of Zhihu. "We also honed our content strategy to fortify our position as a trustworthy online content community. By prioritizing user experience and improving our strategic execution, cost control and overall efficiency, we have set the stage for sustainable growth and continued value creation for our users and stakeholders."
Mr. Han Wang, chief financial officer of Zhihu, added, "While we faced a myriad of challenges in 2023, we remained resilient and dedicated to our multi-engine monetization strategy. As a result, our total revenues for the fourth quarter and full year increased by 2.2% and 16.5% year over year, respectively. Through prudent cost control and operating leverage, we were pleased to conclude the year with a further enhanced gross margin and significantly narrowed bottom-line loss. Going forward, we will remain committed to boosting our operating efficiency to reinforce our trajectory towards profitability."
Fourth Quarter 2023 Financial Results
Total revenues were RMB1,138.3 million (US$160.3 million), representing a 2.2% increase from RMB1,114.0 million in the same period of 2022.
Marketing services revenue[4] was RMB465.2 million (US$65.5 million), compared with RMB572.4 million in the same period of 2022.
Paid membership revenue was RMB455.9 million (US$64.2 million), representing a 13.3% increase from RMB402.5 million in the same period of 2022. The increase was primarily driven by the continued growth of our subscribing members.
Vocational training revenue was RMB169.3 million (US$23.8 million), representing a 100.1% increase from RMB84.6 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 vocational training businesses.
Other revenues were RMB48.0 million (US$6.8 million), compared with RMB54.5 million in the same period of 2022.
Cost of revenues decreased by 4.2% to RMB465.2 million (US$65.5 million) from RMB485.4 million in the same period of 2022, primarily attributable to a decrease in cloud services and bandwidth costs resulting from our improved efficiency.
Gross profit increased by 7.1% to RMB673.1 million (US$94.8 million) from RMB628.5 million in the same period of 2022. Gross margin expanded to 59.1% from 56.4% 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 RMB851.3 million (US$119.9 million), compared with RMB844.8 million in the same period of 2022.
Selling and marketing expenses increased to RMB527.6 million (US$74.3 million) from RMB509.2 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 RMB232.6 million (US$32.8 million) from RMB212.5 million in the same period of 2022. The increase was primarily attributable to our increased spending on technology innovation.
General and administrative expenses decreased by 26.0% to RMB91.1 million (US$12.8 million) from RMB123.1 million in the same period of 2022. The decrease was primarily attributable to a decline in personnel-related expenses.
Loss from operations was narrowed by 17.6% to RMB178.2 million (US$25.1 million) from RMB216.3 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1] decreased to RMB165.3 million (US$23.3 million) from RMB170.3 million in the same period of 2022.
Net loss was narrowed by 42.6% to RMB103.1 million (US$14.5 million) from RMB179.5 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] was narrowed by 31.9% to RMB91.3 million (US$12.9 million) from RMB134.1 million in the same period of 2022.
Diluted net loss per American depositary share ("ADS") was RMB0.18 (US$0.03), compared with RMB0.29 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of December 31, 2023, the Company had cash and cash equivalents, term deposits and short-term investments of RMB5,462.9 million (US$769.4 million), compared with RMB6,261.5 million as of December 31, 2022.
Fiscal Year 2023 Financial Results
Total revenues were RMB4,198.9 million (US$591.4 million), representing a 16.5% increase from RMB3,604.9 million in 2022.
Marketing services revenue[4] was RMB1,653.0 million (US$232.8 million), compared with RMB1,956.5 million in 2022.
Paid membership revenue was RMB1,826.6 million (US$257.3 million), representing a 48.4% increase from RMB1,230.8 million in 2022. The increase was primarily driven by the continued growth of our subscribing members.
Vocational training revenue was RMB565.6 million (US$79.7 million), representing a 127.8% increase from RMB248.3 million in 2022. The significant increase was primarily attributable to our further enriched online course offerings and the revenue contributions from our recently acquired vocational training businesses.
Other revenues were RMB153.8 million (US$21.7 million), compared with RMB169.4 million in 2022.
Cost of revenues increased to RMB1,903.0 million (US$268.0 million) from RMB1,796.9 million in 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 payment processing costs driven by our revenue growth, partially offset by the decrease in cloud services and bandwidth costs.
Gross profit increased by 27.0% to RMB2,295.8 million (US$323.4 million) from RMB1,808.1 million in 2022. Gross margin expanded to 54.7% from 50.2% in 2022, primarily attributable to our enhanced monetization efforts and the improvement of cloud services and bandwidth utilization efficiency.
Total operating expenses decreased to RMB3,368.1 million (US$474.4 million) from RMB3,411.8 million in 2022.
Selling and marketing expenses were RMB2,048.1 million (US$288.5 million), compared with RMB2,026.5 million in 2022.
Research and development expenses increased to RMB901.5 million (US$127.0 million) from RMB763.4 million in 2022. The increase was primarily attributable to our increased spending on technology innovation.
General and administrative expenses decreased to RMB418.5 million (US$58.9 million) from RMB622.0 million in 2022. The decrease was primarily attributable to lower share-based compensation expenses.
Loss from operations was narrowed by 33.1% to RMB1,072.2 million (US$151.0 million) from RMB1,603.8 million in 2022.
Adjusted loss from operations (non-GAAP)[1] was narrowed by 27.1% to RMB888.0 million (US$125.1 million) from RMB1,218.8 million in 2022.
Net loss was narrowed by 46.8% to RMB839.5 million (US$118.2 million) from RMB1,578.4 million in 2022.
Adjusted net loss (non-GAAP)[1] was narrowed by 44.9% to RMB659.1 million (US$92.8 million) from RMB1,195.9 million in 2022.
Diluted net loss per ADS was RMB1.41 (US$0.20), compared with RMB2.59 in 2022.
Share Repurchase Program
As of December 31, 2023, 26.3 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) had been repurchased for a total price of US$58.5 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 7:00 a.m. U.S. Eastern Time on March 26, 2024 (7:00 p.m. Beijing/Hong Kong time on March 26, 2024).
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/10187223/fbcf65bd2c
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 April 2, 2024, by dialing the following telephone numbers:
United States (toll free):
+1-877-344-7529
International:
+1-412-317-0088
Replay Access Code:
4320125
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 financial 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 financial 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 RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: [email protected]
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: [email protected]
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except share, ADS, per share data and per ADS data)
For the Three Months Ended
For the Year Ended
December 31,
2022
September 30,
2023
December 31,
2023
December 31,
2022
December 31,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Revenues:
Marketing services
572,387
382,962
465,153
65,515
1,956,480
1,652,992
232,819
Paid membership
402,531
466,784
455,906
64,213
1,230,804
1,826,557
257,265
Vocational training
84,591
144,795
169,272
23,841
248,266
565,585
79,661
Others
54,456
27,622
47,966
6,756
169,369
153,755
21,656
Total revenues
1,113,965
1,022,163
1,138,297
160,325
3,604,919
4,198,889
591,401
Cost of revenues
(485,442)
(473,712)
(465,197)
(65,522)
(1,796,867)
(1,903,041)
(268,038)
Gross profit
628,523
548,451
673,100
94,803
1,808,052
2,295,848
323,363
Selling and marketing expenses
(509,229)
(534,328)
(527,604)
(74,311)
(2,026,468)
(2,048,090)
(288,467)
Research and development
expenses
(212,495)
(249,662)
(232,585)
(32,759)
(763,362)
(901,452)
(126,967)
General and administrative
expenses
(123,107)
(114,564)
(91,069)
(12,827)
(621,973)
(418,531)
(58,949)
Total operating expenses
(844,831)
(898,554)
(851,258)
(119,897)
(3,411,803)
(3,368,073)
(474,383)
Loss from operations
(216,308)
(350,103)
(178,158)
(25,094)
(1,603,751)
(1,072,225)
(151,020)
Other income/(expenses):
Investment income
5,922
11,617
12,279
1,729
70,380
41,695
5,873
Interest income
33,671
40,363
38,828
5,469
68,104
158,671
22,348
Fair value change of financial
instruments
(4,619)
(7,352)
14,780
2,082
(176,685)
(5,170)
(728)
Exchange (losses)/gains
(1,524)
(393)
(937)
(132)
71,749
97
14
Others, net
6,099
27,227
15,032
2,117
5,983
49,236
6,935
Loss before income tax
(176,759)
(278,641)
(98,176)
(13,829)
(1,564,220)
(827,696)
(116,578)
Income tax (expense)/benefit
(2,755)
256
(4,929)
(694)
(14,183)
(11,832)
(1,667)
Net loss
(179,514)
(278,385)
(103,105)
(14,523)
(1,578,403)
(839,528)
(118,245)
Net income attributable to
noncontrolling interests
(164)
(289)
(666)
(94)
(2,754)
(4,113)
(579)
Net loss attributable to Zhihu
Inc.’s shareholders
(179,678)
(278,674)
(103,771)
(14,617)
(1,581,157)
(843,641)
(118,824)
Net loss per share
Basic
(0.59)
(0.94)
(0.36)
(0.05)
(5.19)
(2.82)
(0.40)
Diluted
(0.59)
(0.94)
(0.36)
(0.05)
(5.19)
(2.82)
(0.40)
Net loss per ADS (Two ADSs
represent one Class A
ordinary share)
Basic
(0.29)
(0.47)
(0.18)
(0.03)
(2.59)
(1.41)
(0.20)
Diluted
(0.29)
(0.47)
(0.18)
(0.03)
(2.59)
(1.41)
(0.20)
Weighted average number of
ordinary shares outstanding
Basic
304,665,906
297,742,064
291,056,615
291,056,615
304,836,318
299,132,894
299,132,894
Diluted
304,665,906
297,742,064
291,056,615
291,056,615
304,836,318
299,132,894
299,132,894
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 Year Ended
December 31,
2022
September 30,
2023
December 31,
2023
December 31,
2022
December 31,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Share-based compensation
expenses included in:
Cost of revenues
3,663
1,630
1,575
221
11,861
9,751
1,373
Selling and marketing
expenses
5,019
5,741
(7,001)
(986)
24,334
13,882
1,955
Research and development
expenses
15,831
13,758
(57)
(8)
62,503
49,847
7,021
General and administrative
expenses
18,032
27,662
12,983
1,829
275,197
91,176
12,842
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
As of December 31,
2022
As of December 31,
2023
RMB
RMB
US$
ASSETS
Current assets:
Cash and cash equivalents
4,525,852
2,106,639
296,714
Term deposits
948,390
1,586,469
223,449
Short-term investments
787,259
1,769,822
249,274
Trade receivables
834,251
664,615
93,609
Amounts due from related parties
24,798
18,319
2,580
Prepayments and other current assets
199,249
232,016
32,679
Total current assets
7,319,799
6,377,880
898,305
Non-current assets:
Property and equipment, net
7,290
10,849
1,528
Intangible assets, net
80,237
122,645
17,274
Goodwill
126,344
191,077
26,913
Long-term investments
–
44,621
6,285
Right-of-use assets
100,119
40,211
5,664
Other non-current assets
22,450
7,989
1,125
Total non-current assets
336,440
417,392
58,789
Total assets
7,656,239
6,795,272
957,094
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities
916,112
1,038,531
146,274
Salary and welfare payables
283,546
342,125
48,187
Taxes payables
25,975
21,394
3,013
Contract liabilities
355,626
303,574
42,758
Amounts due to related parties
24,861
26,032
3,667
Short term lease liabilities
53,190
42,089
5,929
Other current liabilities
165,531
171,743
24,189
Total current liabilities
1,824,841
1,945,488
274,017
Non-current liabilities
Long term lease liabilities
43,367
3,642
513
Deferred tax liabilities
11,630
22,574
3,179
Other non-current liabilities
82,133
121,958
17,177
Total non-current liabilities
137,130
148,174
20,869
Total liabilities
1,961,971
2,093,662
294,886
Total Zhihu Inc.’s shareholders’ equity
5,653,696
4,599,810
647,870
Noncontrolling interests
40,572
101,800
14,338
Total shareholders’ equity
5,694,268
4,701,610
662,208
Total liabilities and shareholders’ equity
7,656,239
6,795,272
957,094
ZHIHU INC.
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(All amounts in thousands)
For the Three Months Ended
For the Year Ended
December 31,
2022
September 30,
2023
December 31,
2023
December 31,
2022
December 31,
2023
RMB
RMB
RMB
US$
RMB
RMB
US$
Loss from operations
(216,308)
(350,103)
(178,158)
(25,094)
(1,603,751)
(1,072,225)
(151,020)
Add:
Share-based compensation
expenses
42,545
48,791
7,500
1,056
373,895
164,656
23,191
Amortization of intangible
assets resulting from
business acquisitions
3,490
5,365
5,365
756
11,053
19,585
2,758
Adjusted loss from
operations
(170,273)
(295,947)
(165,293)
(23,282)
(1,218,803)
(887,984)
(125,071)
Net loss
(179,514)
(278,385)
(103,105)
(14,523)
(1,578,403)
(839,528)
(118,245)
Add:
Share-based compensation
expenses
42,545
48,791
7,500
1,056
373,895
164,656
23,191
Amortization of intangible
assets resulting from
business acquisitions
3,490
5,365
5,365
756
11,053
19,585
2,758
Tax effects on non-GAAP
adjustments
(600)
(1,069)
(1,069)
(151)
(2,400)
(3,806)
(536)
Adjusted net loss
(134,079)
(225,298)
(91,309)
(12,862)
(1,195,855)
(659,093)
(92,832)
Source : Zhihu Inc. Reports Unaudited Fourth Quarter and Fiscal Year 2023 Financial Results
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