InvestorsObserver
×
News Home

Zhihu Inc. Reports Unaudited Third Quarter 2023 Financial Results

Wednesday, November 29, 2023 03:45 AM | PR Newswire via QuoteMedia

Mentioned in this article

Zhihu Inc. Reports Unaudited Third Quarter 2023 Financial Results
Zhihu Inc. Reports Unaudited Third Quarter 2023 Financial Results

PR Newswire

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 202 2. G ross 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: 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

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)

Cision View original content: https://www.prnewswire.com/news-releases/zhihu-inc-reports-unaudited-third-quarter-2023-financial-results-302000358.html

SOURCE Zhihu Inc.

You May Also Like

Get the InvestorsObserver App

InvestorsObserver App
iOS App Android App