Q4 2023 Zhihu Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Fourth Quarter and Full Year 2023 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session.
Yeah.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the.
Speaker Change: G, who inc, fourth quarter and full year 2023 financial results conference call.
At this time, all participants having to be sent only mode.
Speaker Change: After the speaker's presentation, there will be a Q&A session.
Operator: Today's conference is being recorded. At this time, I would like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am.
Speaker Change: Today's conference is being recorded.
This time I would like to turn the conference over to Yolanda Liu director of and they start really shouldn't. Please go ahead maam.
Yolanda Lian Liu: Thank you, Operator. Hello, everyone. Welcome to our fourth quarter and full year 2023 Financial Results Conference Call. Participants on today's call include Mr. Zhou Yuan, our Founder, our Chairman and Chief Executive Officer, and Mr. Wang Han, our Chief Financial Officer. Before we continue, please know that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities and Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from those expressed today.
Yolanda Lian Liu: Thank you operator, Hello, everyone welcome to our fourth quarter and full year 2023 financial results Conference call participants on today's call include Mr. Gioia, Our founder Chairman and Chief Executive Officer and Mr.
Yolanda Lian Liu: Mr Huang our Chief Financial Officer.
Yolanda Lian Liu: Four we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995.
Yolanda Lian Liu: We're looking statements involve inherent risks and uncertainties as such our results may be materially different from the views expressed today well the information regarding these and other risks and uncertainties is included in our public filings with the U S. D C and the Hong Kong stock exchange.
Yolanda Lian Liu: Full information regarding these and other risks and uncertainties is included in our public filings with the USICC 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. During today's call, management will also discuss certain non-GAAP financial measures for a comparison purpose only.
Yolanda Lian Liu: The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Yolanda Lian Liu: During today's call management will also discuss certain non-GAAP financial measures, where it can be a ratio purposes only.
Yolanda Lian Liu: For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhihu.com. I will now turn the call over to Mr. Wang Han, CFO of Zhihu. Mr. Wang, please go ahead.
Yolanda Lian Liu: A definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at IR Dot Yahoo Dot Com I will now turn the call over to Mr. Wang CFO of <unk>.
Wang: Google has please go ahead.
Wang Han: Thank you, Yolanda. Hello, everyone. Thank you for joining Zhihu's fourth quarter and school year 2023 earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, founder, chairman, and CEO of Zhihu. In 2023, we faced a blend of challenges and opportunities. Despite a dynamic macro environment and competitive industry landscape, we achieved substantial progress in commercialization and efficiency, both in the first quarter and throughout the year. Furthermore, we made considerable strides in improving our bottom line while actively exploring and investing in AI technology. Our primary focus in 2003 was motivating our content creators through a variety of innovative, As a result, the cumulative number of content creators on our platform increased by 13% year-over-year, reaching 71.3 million by the end of 2020. The cumulative cases of content grew to 774.7 million, up 19.3% over a year.
Wang: Thank you the Orlando Hello, everyone. Thank you for joining <unk> fourth quarter and full year 2023 earnings call I'm pleased to deliver today's opening remarks on behalf of Mr. Joel Gay founder Chairman and CEO of <unk>.
Wang: In Q3, we faced Atlanta of challenges and opportunities despite a dynamic macro environment and competitive industry landscape, we achieved substantial progress in commercialization and efficiency, but also in the fourth quarter and throughout the year.
Wang: Furthermore, we made considerable strides improving our bottom line, while actively exploring and investing in AI technology.
Wang: Our primary focus in 2000 to three what's motivating our content creators through a variety of usage of place.
Wang: As a result, the accumulative content creators on our platform increased by 13% year over year.
Wang: $71 $3 million by the end of 'twenty timeframe.
Accumulative pieces of content grew to $774 7 million.
Wang: 19, 3% year over year.
Wang Han: Additionally, the average MEU for two years increased by 4% year-over-year, or monetization progress remains robust throughout the U.S. We achieved a 16.5% annual increase in our food year revenues to RMB 4,199 million. With enhanced operating efficiency, our overall cost margin for 2023 improved by more than 4 percentage points year-over-year to 54.7%. Furthermore, our operating loss margin for 2023 is significantly narrowed by 19%, and adjusting now was decreased by 44.9%, both on a year-over-year basis.
Wang: Additionally, the average meus, but full year increased by 4% year over year.
Wang: Or monetization progress remained robust throughout the year, we achieved a 16, 5% year over year increase.
Wang: Revenue to RMB 4190 $9 million.
Wang: With enhanced operating efficiency.
Wang: Overall gross margin for two or three improved by more than four percentage points year over year to 54, 7%.
Wang: Furthermore, our operating loss margin for <unk> pretty significantly narrowed by 19 percentage points and adjusted now was decreased by 44, 9%.
Year over year basis.
Wang: During the fourth quarter, our dedication to user growth.
Wang Han: During the fourth quarter, our dedication to user growth, resource allocation, and operating efficiency improvements began to pay off. As high-quality content continues to thrive across the community, we proactively refine our user growth strategy and significantly reduce acquisition costs for new users. Our focus has shifted towards driving efficient and sustainable organic user growth by elevating engagement and retention rates among our highly active core users. We also continue to fortify our modernization model's resilience through diverse growth drivers.
Wang: Allocation and operating efficiency improvements begin to pay off.
Speaker Change: Hi, called you Conan continue described crawls the community, we proactively refine our user growth strategy has significantly reduced acquisition costs for new users.
Speaker Change: Our focus shifted towards driving efficient and sustainable organic user growth elevating engagement and retention rates are highly active core users.
Speaker Change: We also continue to fortify our monetization models resilience through a diverse growth drivers.
Speaker Change: Our total revenue for the fourth quarter of 'twenty. One story reached RMB, one 1 billion, primarily fueled by the strong growth in our PT membership and vocational training business.
Speaker Change: Our increasing brand with an expanded program offerings that strengthen the dilution is competitive competitiveness.
Speaker Change: Our revenue growth.
Speaker Change: Beyond two who community.
Speaker Change: Together. These two segments achieved a robust revenue growth of 28, 8% year over year with fourth quarter of 2023.
Wang Han: Our total revenue for the first quarter of 2023 reached RMB 1.1 billion, primarily fueled by the strong growth in our paid membership and vocational training business. Our increasing brand influence and expanded program offerings have strengthened this division's competitiveness, extending our revenue growth beyond the Zhihu community. Together, these two segments achieved robust revenue growth of 28.3% year-over-year for the first quarter of 2023. Enhancing cost control effectiveness and operating efficiency remain our key strategic priorities for the fourth quarter. We continue to invest judiciously in cutting-edge technologies such as AI for optimizing our fixed cost structure. These initiatives resulted in an expanded gross margin of 59.1% for the first quarter. We also drove a significant 31.9% year-over-year reduction in adjusting net loss, which is the narrowest quarterly level since our US epidemic began.
Speaker Change: You're housing cost control activities and operating efficiency.
Speaker Change: Our key strategic priorities during the fourth quarter.
Speaker Change: We continue to invest judiciously in cutting edge technologies, such as AI, while optimizing our fixed cost structure.
Speaker Change: This initiative resulted in expanded gross margin of 59, 1% for the fourth quarter.
Speaker Change: It also drove a significant 31, 9% year over year over year reduction just in Dallas.
Rich its narrowest quarterly level since our U S IPO.
Speaker Change: As we move towards 104 will further optimize our financial performance.
Speaker Change: Elevating trustworthy news within the community.
Speaker Change: We're confident that an era of AI generated content user will increasingly valuable professional teams and authentic content as well as discussion of feedback mobile users.
Speaker Change: By fostering an environment of trust because female its user interactions and inspired content creators passion and creativity.
Speaker Change: We're really driving organic community growth.
Speaker Change: Meanwhile, we also believe that a prudent application of AI large luxury models can improve user experience and experience into feedback mechanics for content creators enhancing our communities atmosphere and operating efficiency.
Speaker Change: No I love to delve into the details of our initiatives and achievements in Toronto three across Cott integrators as well as our commercialization progress.
Speaker Change: Let's start with our content and content creators.
Speaker Change: As I just mentioned, we revisited our user growth strategy in two 103 to promote organic community growth through high quality content and a thriving community ecosystem.
We shifted our focus to posting our core users activities and our retention rates were also reducing user acquisition cost.
Wang Han: As we move through 2024, we'll further optimize our financial performance while elevating trustworthiness within the Zhihu community. We're confident that in the area of AI-generated content, users will increasingly value professional, in-depth, and authentic content, as well as discussion and feedback among real users. By fostering an environment of trust, we can stimulate user interactions and inspire content creators' passion and creativity, ultimately driving organic community growth.
Speaker Change: How is it currently our average Ami use the fourth quarter were $99 million.
Speaker Change: Decreased one 6% year over year.
Speaker Change: However, we reduce user acquisition cost in fourth quarter, a more than 40% year over year accounting for less than 35% of total promotion and advertising expenses.
Speaker Change: This trip drove sequential increases in our daily active users time spent.
Speaker Change: Additionally, in the fourth quarter, we saw a significant year over year improvement in both the con increasing contribution rate in next months retention rates for a highly active users.
Regarding content with further refine our kind of operations by deeply integrating training topics and user demand will continually strengthening recommendation technology.
Speaker Change: These initiatives combined with our diverse incentive plans were calling creators propelled rapid growth in our community is high quality kind of cool.
Wang Han: Meanwhile, we also believe that a prudent application of AI large language models can improve user experience and strengthen the feedback mechanism for content creators, enhancing our community's atmosphere and operating efficiency. Now, I'd love to delve into the details of our initiatives and achievements in 2023 across content creators, as well as our commercialization program. Let's start with our content and content creators.
Speaker Change: At the end of 'twenty, three accumulative pieces of content increased to $774 7 million, among which the cumulative number of Q&A reached $592 8 million.
Speaker Change: We also leveraged Zhu whose position as China's leading college centric community to encourage is tencent preferred professional just cautious on training topics.
Speaker Change: For instance, in two 103 accumulator discussion volume related generated AI alert like Remodels under application surpassed $1 2 billion across digital community.
Speaker Change: Kingrey SKU of ponder and keep your vital first from leading Hello, and company has joined the discussion onto who contributed their valuable insights.
Speaker Change: Science and engineering related content wasn't notwithstanding.
Speaker Change: About 85, 6% year over year in 2033.
Wang Han: As I just mentioned, we revisited our user growth strategy in 2023 to promote organic community growth through high-quality content and a thriving community ecosystem. We shifted our focus to boosting our core users' activeness and retention rate, and we're also reducing user acquisition costs. Consequently, our average MAUs in the fourth quarter were 99 million, a slight decrease of 1.6% year-over-year.
Speaker Change: Our high end plan continues to serve as a crucial.
Speaker Change: For content creators.
Speaker Change: Since their release of high at 510, you May 23, we have consistently promoted professional content creation, driving creativity and productivity through initiatives such as our Blue label certification.
Speaker Change: In trying to penetrate this program covers 130 verticals with nearly 200000 users 35.
Speaker Change: Furthermore, we provided a broader array of avenues with concrete.
Speaker Change: <unk>.
Speaker Change: During the fourth quarter. The total number of content creators, who earn income our platform increased by 17, 4% year over year.
Wang Han: However, we reduced user acquisition costs in the fourth quarter by more than 40% year-over-year, accounting for less than 35% of total promotion and advertising expenses. This shape draws sequential increases in our daily active users' timescales. Additionally, in the fourth quarter, we saw a significant year-over-year improvement in both the current increasing contribution rate and next month's retention rate for our highly active users. Regarding content, we further refine our content operations by deeply integrating training topics and user demands for continually strengthening our recommendation technology. This initiative, combined with our diverse incentive plans for content creators, propelled rapid growth in our community's high-quality content. By the end of 2023, the cumulative pieces of content increased to 774.7 million, among which the cumulative number of Q&As reached 592.8 million. We also leverage Zhihu's position as China's leading content-centric community to encourage extensive professional discussions on training topics. For instance, in 2003, the cumulative discussion volume related to generative AI and large-language models and their applications surpassed 1.2 billion across the Chihu community.
Speaker Change: As I previously mentioned one of our one of our top priorities for 'twenty, one before is to enhance the trustworthy news with industry. It will come in.
Speaker Change: To that end, we have been prudently empowering our community was AI leveraging a large language models to better connect human knowledge experience and insight and make them more accessible to a broader audience.
Speaker Change: I don't have a recent discovery conference on March <unk>, we introduced a new search feature called discovery.
Speaker Change: Leveraging our two high two large language model.
Speaker Change: This significant advancement in a certain area of law allows our users to initiate initiated discussions directly with content creators across the entirety of a community with a single question.
Speaker Change: The corner featuring discovery comes from professional content creators within our communities.
Speaker Change: This feature facilitates more efficient knowledge sharing by enhancing the efficiency of content consumption experience, particularly users.
Speaker Change: Also providing feedback to our content creators.
Speaker Change: With the hospitals like discovery, we aim to strengthen.
Speaker Change: <unk> development and drive the continued emergence of high quality trustworthy content.
Speaker Change: We firmly believe that a combination of professional in depth authentic content for culture of severity and risk that as well as our transparent and efficient inflammation Mccann has further enhanced our community is trustworthy news.
Speaker Change: This in turn will drive user engagement and retention throughout your whole community filling the efficient sustainable organic growth of our user base in the long run.
Speaker Change: Moving to our multi Andrew commercialization in first quarter, our total revenue increased by two 2% year over year to RMB, one 1 billion.
Speaker Change: Empower power driving community pay membership in vocational training and maintain their robotics gross.
Wang Han: A distinguished group of founders and key developers from leading LLM companies joined the discussion on Zhihu, contributing their valuable insights. Science and engineering-related content was another standout, increasing by 85.6% year-over-year in 2015. Our Haiyan plan continues to serve as a crucial incentive for content creators. Since the release of Haiyan 5.0 in May 2023, we have consistently promoted professional content creation, driving creativity and productivity through initiatives such as our Blue Label certification. In 2023, this program covered 130 verticals, with nearly 200,000 users certified.
Speaker Change: Together, they expanded our monetization capability beyond digital community.
Speaker Change: We are building more than 50% of total Romney proposed to fourth quarter and so we are talking about.
Speaker Change: This strong performance underscores the resilience and effectiveness of our business model and diversified revenue growth engine.
Speaker Change: In terms of revenue growth by sector.
Speaker Change: Training and pay membership revenues led the way.
Speaker Change: I think by 28, 3% to RMB $625 2 million.
Speaker Change: Notably revenue from location on training doubled compared to the fourth quarter last year.
Speaker Change: Its revenue contribution remained at over 10% throughout 2019.
Speaker Change: While marketing services has yet to fully recover on a yearly basis, it picked up sequentially quarter over quarter growth 21, 5% in the fourth quarter.
Speaker Change: Particularly display based advertising to deliver sequential growth of over 33%.
Speaker Change: In addition, we saw rapid year over year growth in various verticals.
Wang Han: Furthermore, we've provided a broad array of avenues for content creators to earn income. During the first quarter, the total number of content creators who earned income on our platform increased by 17.4% year-over-year. As I previously mentioned, one of our top priorities for 2024 is to enhance trustworthiness within the Drupal community. To that end, we have been prudently empowering our community with AI, leveraging large-language models to better connect human knowledge, experience, and insight and make them more accessible to a broader audience. At our recent Discovery Conference on March 20th, we introduced a new search feature called Discovery, leveraging our Zhihai-2 large-language model.
Speaker Change: Requires a longer decision, making processes, such as <unk> and home appliances.
Speaker Change: This highlights the wider rollout was professional is up.
Speaker Change: And authentic content and consumer decision, making.
Speaker Change: We continue to streamline and upgrade our CSS business offerings throughout 'twenty three to drive further marketing efficiency improvements in a lot greater commercial potential in this business segment.
Speaker Change: Increasingly diverse premium content has contributed to consistent growth in our payment membership business.
Speaker Change: In the first quarter, our paid membership revenue increased by 13, 3% year over year to RMB $455 9 million.
Speaker Change: The first quarter of 'twenty, three average monthly subscribers reached $14 2 million representing.
Speaker Change: Nine 2% year over year increase average revenue per user or <unk> also improved year over year.
Speaker Change: There were two primary growth drivers.
Speaker Change: First the expansion of both our high quality content categories in our target audience.
Speaker Change: This vast and diverse library of premium content encompasses not only knowledge based content like columns research papers and ebooks, but also short stories that are gaining popularity among users.
Wang Han: This significant advancement in the search scenario allows our users to initiate discussions directly with content creators across the entire Zhihu community with a single question. The content featured in Discovery comes from professional content creators within the community. This feature facilitates more efficient knowledge sharing by enhancing search efficiency and content consumption experience for Google users.
Speaker Change: And all three are kind of elaborate amounts $4 9 million visits an increase of 15, 7% year over year.
Speaker Change: Additionally, the number of premium content creators who earn income.
Speaker Change: And 203 Q4 search pack series 6.8.
Speaker Change: 8% year over year.
Speaker Change: Joining our massive kind of elaborate meta horror short stories or originate from professional discussion in Zhou who Q&A community.
Wang Han: We're also providing feedback to our content creators. With enhancements like Discovery, we aim to strengthen community development and drive the continued emergence of high-quality, trustworthy content. We firmly believe that a combination of professional, in-depth, authentic content, a culture of sincerity and respect, as well as our transparent and efficient information mechanism will further enhance our community's trustworthiness. This, in turn, will drive user engagement and retention throughout the Chihu community, building the efficient and sustainable organic growth of our user base in the long run. Moving into our modern engine commercialization.
Speaker Change: Since the launch of <unk> in May 203.
Speaker Change: <unk> has emerged as a front runner in Monaco and daughters trough story market in terms of both cost and production and consumption.
Today, the accumulative number of content creators on Guyana story exit 600.
Speaker Change: With accumulated over 100000 stories published.
Speaker Change: How do we go coverage has expanded beyond the platform's original romance professional as expense January encompass over 180 subcategories.
Speaker Change: What accounting categories popular among female users continue to grow we're also expanding into categories favor by mail users such as science fiction and mystery.
Wang Han: In the first quarter, our total revenue increased by 2.2% year-over-year to RMB 1.1 billion. Empowered by our thriving community, paid membership, and vocational training maintained their robotic growth. Together, they expanded our monetization capability beyond the Zhihu community, contributing more than 50% to total revenue for both the fourth quarter and four-year term.
Speaker Change: Meanwhile, did you who community financial rewards effectively motivated our premium content creators.
Speaker Change: Over a hendrix.
Speaker Change: <unk> has earned more than 1 million RMB.
Speaker Change: Also in 233 average monthly income of spine Kannan creators on Union was close to 10000 RMB nearly doubling the average income other platforms.
Speaker Change: Second media format that diversification and IP monetization continued to bolster Albert users long term value.
Speaker Change: In the first quarter, we introduced a variety of formats to boost cotton consumption, including audiobooks and radio dramas.
Wang Han: This strong performance underscores the resilience and effectiveness of our business models and diversified revenue growth engine. In terms of revenue growth by sector, vocational training and pay membership revenues led the way, increasing by 28.3% to RMB625.2 million. Notably, rounding from vocational training doubled compared to the first quarter last year. His revenue contributions will remain at over 10% throughout 2020. While marketing services had yet to fully recover on a yearly basis, it picked up sequentially, with quarter-over-quarter growth of 21.5% in the first quarter.
Speaker Change: The initiatives carefully designed to provide our subscribers with immersive and fulfilling storytelling experience.
Speaker Change: By leveraging our expanding media formats and deepening our penetration across our balance sheet, we're expanding from short story market to a broader IP monetization market.
Speaker Change: The success of our short form four clusters, clearly reflects the strong IP development potential within the Union story properly.
Speaker Change: Moving forward, we will harnessed the power of AI alert mono technology to explore and develop integrated content formats.
Speaker Change: Unleashing the value of <unk> premium content.
Speaker Change: This approach will help enhance our subscribers LTV.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Our vocational training business continued to grow robustly robustly with fourth quarter revenue was judged by Henrik one 1% year over year.
Speaker Change: Looking ahead, we officially announced our development strategy focusing on digital empowerment for Ultrashape home brand at our annual Education Conference in January we talked about before.
Tricia is a vocational training platform dedicated to providing comprehensive and practical learning services for new generation professionals throughout their life long personal development journey.
Wang Han: Particularly, display-based advertising delivers sequential growth of over 33%. In addition, we saw rapid year-over-year growth in various verticals that require a longer decision-making process, such as ID3C and Home Appliance. This highlights the vital role of Zhihu's professional, in-depth, and authentic content in consumer decision-making. We will continue to streamline and upgrade our CCS business offerings throughout 2023 to drive further marketing efficiency improvements and unlock greater commercial potential in this big business sector. The increasingly diverse premium content has contributed to consistent growth in our payment membership business. In the first quarter, our paid membership revenue increased by 13.3% year-over-year to RMB455.9 million. In the first quarter of 2023, average monthly subscribers reached 14.2 million, representing a 9.2% year-over-year increase. Average revenue per user, or pool, also improved year-over-year. They are the two primary growth drivers.
Speaker Change: Currently expanded course offerings over three main categories.
Speaker Change: Make improvements such as post graduate exams in English proficiency proficiency test career.
Speaker Change: Career enhancement, such as Seattle, accounting, ESG exam, and other vocational skills interests, such as writing skills at Agi horses.
Speaker Change: The location of extraneous factor offers immense opportunities the one thing visualization.
Lower luxury models are poised to reboot, which are not industry, leading to efficiency improvements and significant shape user experience.
Speaker Change: Leveraging AI and AI agent applications in vocational training scenarios.
The digitalization of process, such as job selection exam practice and homework correction.
Speaker Change: Or vocational trainee business success underscores <unk> unique position.
Speaker Change: Started as a community, but we are expanding beyond it.
Speaker Change: Moreover, its rapid revenue growth will bring us greater scale advantages in terms of coastal dilution and efficiency improvement.
Speaker Change: We'll continue to control and optimize its business, causing expenses to continually boosted overall operating efficiency.
Speaker Change: In the first quarter marketing services revenue decreased by 87% year over year, but increased by 21, 5% quarter over quarter.
Speaker Change: The year over year decline can be attributed to the challenging economy.
Speaker Change: <unk> hate it market competition.
Speaker Change: As well as our proactive efforts to prioritize user experience by reducing the distribution of commercial content timing negatively impact our users.
Speaker Change: However, the cornerstone verticals, our community continued to demonstrate robust growth.
Reaffirms our core users recommendation of our professional content value, particularly in the current environment emphasizing cost effect and rationale consumption.
Wang Han: First, the expansion of both our high-quality content categories and our target audience. Zhihu's vast and diverse library of premium content encompasses not only knowledge-based content like columns, research papers, and e-books but also short stories that are gaining popularity among users. As of the end of 2023, our county library amassed 4.9 million visits, an increase of 15.7% year-over-year.
Speaker Change: Specifically the <unk> vertical grew by nearly 40% year over year in the fourth quarter of 293.
Speaker Change: This trend is also evident in other consumer verticals involving significant decision, making processes, such as renovation pallets and order activity.
Speaker Change: <unk> appears to our core users.
Speaker Change: Joes unique content.
Speaker Change: Images and ongoing product efficiency upgrade empowered brand and merchant to gain deep insights into users evolving MISO, allowing them to influence decision, making and purchase behavior.
Speaker Change: Furthermore, we have established a feedback mechanism where data collaborations with e-commerce platforms like Taobao and JD com.
Wang Han: Additionally, the number of premium content creators who earn income on Zhihu in 2023-2024 surged by 36.8% year-over-year. Joining our NASA Tunnel Library, many of our short stories originate from professional discussions in the Zhihu Q&A community. Since the launch of Zhihu Yanyan Stories in May 2003, it has emerged as a frontrunner in the multi-billion dollar short story market in terms of both content production and consumption. Today, the cumulative number of content creators on Yanyan Stories exceeds 600,000, with a cumulative number of over 100,000 short stories published. Topical coverage has expanded beyond the platform's original romance and suspense genres to encompass over 180 subcategories. While the content categories popular among female users continue to grow, we are also expanding into categories favored by male users, such as science fiction and mystery.
Speaker Change: Leveraging virtualized data to help brands and merchants achieve their business objectives more effectively by putting out a car rates strong visit and category penetration rates as well as lower lowering customer acquisition costs.
Speaker Change: Our marketing services.
Speaker Change: Made substantial progress during the double 11 period with average conversion rate from zero two brands online stores reached 6%.
Speaker Change: Across our verticals.
Speaker Change: Post transaction, we raised a new a new.
Speaker Change: New customer acquisition rates outperformed the industry.
Speaker Change: As we progress through 'twenty 'twenty, four and elevated communities Trust worthiness, we will.
Speaker Change: Also continued to build out our scientific.
Speaker Change: <unk> based marketing system across two primary aspects.
Speaker Change: First we will continue to upgrade our underlying capability to further improve the efficiency of commercial content recommendation.
Speaker Change: Since the beginning of this year, we have sought to cover major advertising categories with the library of great Labor SB used so that we can establish a user evolution system empowered by AI, so well below more suitable product to be recommended by a broader base of content creators.
Speaker Change: Second we will strive to maintain a high level of user experience, especially for a highly active users the users to submit a feedback indicating no interest or piece of content user we're no longer fit commercial content for that product.
Speaker Change: Moving onto our key Australia for 304.
Wang Han: Meanwhile, the Zhihu community's financial rewards effectively motivate our premium content creators. Over a hundred paid content creators on Zhihu have earned more than one million RMB. Also, in 2023, the average monthly income of signed content creators on Yanyan was close to 10,000 RMB, nearly doubling the average income on other platforms. Second, media format diversification and IP modernization have continued to bolster our users' long-term value. In the first quarter, we introduced a variety of formats to boost content consumption, including audiobooks and radio dramas.
Speaker Change: As the operating efficiency and accelerating profitability remain our core strategic objective for sustainable growth.
Speaker Change: Alongside ongoing efforts to improve our commercialization efficiency, we're committed to optimizing our cost and expenses structure.
Speaker Change: Efficiency will be a pivotal performance indicators at each bu level.
Speaker Change: This approach will expedite our journey towards profitability.
Speaker Change: Meanwhile, we will prioritize initiatives that contribute significantly to the community its long term growth and sustainability.
Speaker Change: Additionally, we will defend our commitment to protecting our core users engagement and creative contributions reflecting to grow in value replace our trustworthy community kosher and professional in depth and authentic content.
Speaker Change: Finally in terms of AI investment will shift our focus to developing application scenarios.
Wang Han: This initiative is carefully designed to provide our subscribers with an immersive and fulfilling storytelling experience. By leveraging our expanding media formats and deepening our penetration across the value chain, we're expanding from a short story market to a broader IP monetization market. The success of our short-form blockbuster security reflects strong IP development potential within Yanyan Story Plus. Moving forward, we will harness the power of AI large-language model technology to explore and develop integrated content formats, further unleashing the value of Zhihu's premium content. This approach will help enhance our subscribers' LTV in the long term. Our vocational training business continues to grow robustly, with fourth quarter revenues increasing by 100.1% year over year. Looking ahead, we officially announced our development strategy focusing on digital empowerment for our ZhiXueTang brand at our annual Chihu education conference in January. Xu Xuetang is a vocational training platform dedicated to providing comprehensive and practical learning services for new generation professionals throughout their lifelong personal development journey.
Speaker Change: We will prudently integrate AI into offered diverse professional and trustworthy community for once you who users.
Speaker Change: <unk> access to our massive library of trustworthy answers and unlock greater expansion opportunities beyond it.
Mr. Julia: This concludes Mr. Julia's remarks.
Speaker Change: Now I will review the details of our fourth quarter financials.
Speaker Change: For a company overview of our fourth quarter and full year 203 results. Please see our press release issued earlier today.
Speaker Change: While we continue to face various challenges.
Speaker Change: Resilient and devoted to our multi engine monetization strategy.
Speaker Change: Our total revenue increased by two 2% and 61, 5% year over year fourth quarter and full year respectively.
Speaker Change: We're also pleased to be able to deliver measurable progress refining our cost controls and operating leverage achieving a record high gross margins with our U S IPO and significantly narrowed the net loss for the fourth quarter.
Speaker Change: Our paid membership revenue for the quarter increased 13, 3% year over year to RMB $555 9 million.
Speaker Change: These costs were primarily driven by continued expansion of our subscribers, which increased by nine 2% year over year to $14 2 million as a result of content enhancements and user experience improvements.
Speaker Change: Our location of our training business round, you for fourth quarter surged by 104, 1% year over year to RMB $169 3 million.
Speaker Change: Impressive growth can be attributed to our ongoing efforts to expand our course offerings.
Speaker Change: Our courses.
Speaker Change: <unk> designed to meet our users' evolving demand covering areas such as academic improvement career advancement and other vocational skills and interests continue to garner market recognition for our programs and drive sustainable development.
Wang Han: Currently, it's expanded course offerings over three main categories: Academic improvements, such as post-graduate exams and English proficiency exams; Career Enhancement, such as CFA, Accounting, and ESJ exams; and other vocational skills and interests, such as writing, IT skills, and AGI.
The overall macro environment and uncertainties in the advertising market pressured our marketing services throughout 'twenty one.
Speaker Change: The first quarter marketing services surrounding declined by 18, 7% year over year.
Speaker Change: However, it would cover 521, 5% quarter over quarter, driven by our product enhancement.
Speaker Change: Sustained increasing performance in verticals, such as IGN pristine home play.
Speaker Change: Gross profit for the first quarter increased by seven 1% year over year to RMB $673 1 million with gross margin expanding to 59, 1%.
Wang Han: The vocational training factor offers immense opportunities for advancing digitalization. AI learning models are poised to revolutionize the industry, leading to efficiency improvements and a significant shift in user experience. By leveraging AI LLM and AI agent applications in vocational training scenarios, we can advance the digitalization of processes such as job selection, exam practice, and homework correction.
Speaker Change: High level since our USW.
Speaker Change: The gross margin improvement reflects our enhanced monetization efforts as well as improved efficiency and cloud services and bandwidth utilization.
Speaker Change: Total operating expenses were RMB $851 3 million.
Speaker Change: For the fourth quarter compared with RMB $844 8 million for the same period of <unk>.
Speaker Change: Selling and marketing expenses for the fourth quarter increased to RMB $527 6 million from RMB $509 2 million for the same period of time too.
Wang Han: Our vocational training business success underscores Chu's unique position. We started as a community, but we are expanding beyond it. Moreover, its rapid revenue growth will bring us greater scale advantages in terms of cost of dilution and efficiency improvement. We will continue to control and optimize its business costs and expenses to continually boost its overall operating efficiency. In the fourth quarter, marketing services revenue decreased by 18.7% earlier, but it increased by 21.5% quarter over quarter. The year-over-year decline can be attributed to the challenging economic environment and heightened market competition.
Speaker Change: As we continue to invest in product and service offering promotions with a prudent arrived based approach.
Speaker Change: Research and development expenses slightly increased to RMB $232 6 million for the fourth quarter from RMB $212 5 million for the same period of time.
Speaker Change: The increase was primarily attributable.
Speaker Change: Attributable to our increased spending on technology innovation.
Speaker Change: General and Amit <unk>.
Speaker Change: General and administrative expenses for the quarter decreased by 26% to RMB $91 1 million from RMB $123 1 million in the same.
Speaker Change: Pure rate of 202.
Speaker Change: Primarily attributable to a decline in personnel related expenses as we continue to improve operating efficiency.
Speaker Change: Driven by our ongoing efforts to control costs and enhancing operating efficiency, our GAAP net loss per quarter narrowed significantly year over year by 42, 6% to RMB $103 one minute.
Wang Han: As well as our proactive effort to prioritize user experience by reducing the distribution of commercial content that may negatively impact our users. However, the cornerstone verticals of our community continue to demonstrate strong growth. This reaffirms our core users' recognition of our professional content's value, particularly in the current environment, emphasizing cost-effective and rational content. Specifically, the ID3C vertical grew by nearly 40% year-over-year in the first quarter of 2019.
Speaker Change: Our non-GAAP adjusted net loss, which primarily excludes share based compensation expenses and amortization of intangible assets, resulting from business acquisitions narrowed by 31, 9% year over year to RMB $91 3 million for the fourth quarter.
Speaker Change: Moving forward as we continue to optimize our cost structure control our operating expenses.
Speaker Change: Record growth driven by our multi engine our monetization model, we expect to further enhance our operating leverage.
Speaker Change: As of December 31st 103, we had cash and cash equivalents term deposits and short term investment of RMB, five 5 billion compared with RMB six 3 billion as of December 31, 2022.
Wang Han: This trend is also evident in other consumer verticals, involving significant decision-making processes, such as home renovation, paths, and outdoor activities, which appeals to our core users. Zhihu's unique content advantages and ongoing product efficiency upgrade empower brands and merchants to gain deep insights into users' evolving mindsets, allowing them to influence decision-making and purchase. Furthermore, we have established a feedback mechanism for data collaborations with e-commerce platforms like Leveraging virtualized data, we help brands and merchants achieve their business objectives more effectively by boosting ad card rates, store visits, and category penetration rates, as well as lowering customer acquisition costs. Our market services made substantial progress during the 2011 period, with the average conversion rate from Zhihu to brand online stores reaching 6% across our vertical. Moreover, both transaction rates and new customer acquisition rates all perform the same.
Speaker Change: Also as of December 30, 123.
Speaker Change: Purchased $26 3 million plus eight ordinary shares including Aes <unk>.
Speaker Change: Total of $58 5 million U S dollars on both the New York Stock Exchange and the stock exchange of Hong Kong.
Speaker Change: This concludes my prepared remarks on our financial performance for the quarter, let's turn the call over to the operator for a Q&A session.
Speaker Change: Thank you TCT conference operator, we will now begin the question and answer session.
Speaker Change: One wishes to ask a question May press star and one on desktop stone telephone.
Speaker Change: We'll pause for a moment participants joining the queue.
Speaker Change: The first question is from Vicky Wei with Citi. Please go ahead.
Vicky Wei: Grunenthal milestones such as this all with Aquila.
Vicky Wei: Is it going to tell you today, yes.
So Glenn.
Also that's only that's only get no momentum Glenn anytime they will Memphis gentlewoman joke with that that's been answered we all the time.
Speaker Change: Guangzhou definitely just yet.
Speaker Change: Management for taking my question well management share some color about the key strategic focus.
Speaker Change: For 2024, thank you.
Speaker Change: Yeah.
Speaker Change: Well sure.
Speaker Change: Single Women Ali asked me when I'm talking to you.
Wang Han: As we progress through 2024 and elevate the community's trustworthiness, we will also continue to build our scientific trust-based marketing system across two primary aspects. First, we will continue to upgrade our underlying capability to further improve the efficiency of commercial content recommendations. Since the beginning of this year, we have sought to cover major advertising categories with a library of rated and labeled SPUs so that we can establish a user evolution system empowered by AI.
Cynthia: So cynthia.
Cynthia: Well, it's all quiet shannon's unique.
Cynthia: She's well known.
Cynthia: And you can be at trough levels or are you going to surgical.
Cynthia: C J.
Cynthia: Teva polar Thiago Thiago.
Cynthia: We are going to see when does that delay ingalls.
Ingalls and doing well, but on the children.
Cynthia: I mean the salt.
Cynthia: Once all of whom control womens.
Cynthia: They ask me and Bill chime in I'll go GA.
Cynthia: Thank you Ricky for the question. This is Gil Yang CEO of <unk>.
Gil Yang: Moving forward to 2020 for our key strategic focus will be achieving profitability as soon as possible to achieve this we will.
Wang Han: So this will allow more suitable products to be recommended by a broader base of content creators. Second, we will strive to maintain a high level of user experience, especially for highly active users. If a user submits feedback indicating no interest in a piece of content, the user will no longer seek commercial content for that product.
Gil Yang: Optimized cost and expense structure to prioritize efficiency.
Cocoa across our Guinea operation and for each business unit.
Speaker Change: Jonathan I'm, sorry, not so soon.
Speaker Change: With all of them kind of one.
Speaker Change: One more closings.
Wang Han: Moving on to our key strategy for 2024, enhancing operating efficiency and accelerating profitability remain our core strategic objectives for sustainable growth. Alongside ongoing efforts to improve our commercialization efficiency, we're committed to optimizing our cost and expenses structure. Efficiency will be a pivotal performance indicator at each BU level.
Speaker Change: Youll PA so cheap.
Speaker Change: Yes.
Speaker Change: The Lowe's home Colgate disposal.
Speaker Change: Yes.
Speaker Change: Chinese symbol.
Speaker Change: Sure.
Speaker Change: Sure Ian.
Speaker Change: Okay.
Speaker Change: Yes, just bolted on normal tissue.
Speaker Change: Okay.
Speaker Change: Gotcha.
Mcdonald.
Joseph.
Speaker Change: And secondly.
Speaker Change: Our key focus will be to protect the professional and in gas consumption experience for users.
Wang Han: This approach will expedite our journey towards profitability, and, at the same time, we'll prioritize initiatives that contribute significantly to the community's long-term growth and sustainability. Additionally, we will defend our commitment to protecting our core users' engagement and creative contributions, reflecting the growing value we place on a trustworthy community culture and professional, in-depth, and authentic. Finally, in terms of AI investment, we will presently integrate AI into our diverse, professional, and trustworthy community to provide Zhihu users with efficient access to our massive library of trustworthy answers and unlock greater expansion opportunities beyond. This concludes Mr. Julian's remarks. Now, I will review the details of our fourth quarter financials. For a complete overview of our fourth quarter and full year 2003 results, please see our press release issued earlier today. While we continue to face various challenges, we remain resilient and devoted to our multi-engine modernization strategy.
Speaker Change: Users were focused to enhance the retention and reputation for our high quality and trustworthy companies.
Speaker Change: Thank you.
Speaker Change: Skiers and friendly atmosphere for communication between patients.
Speaker Change: Sometimes that's on me I will note junior and listening.
Speaker Change: Hello, George.
Speaker Change: Strong dollar.
Yeah.
Speaker Change: Okay.
Speaker Change: And some of them.
Speaker Change: Gotcha.
Speaker Change: Oh gosh.
Speaker Change: So if that's your call.
Speaker Change: Yes, yes.
Can I ask also on the call.
Speaker Change: Sure sure.
Speaker Change: Bob.
Speaker Change: <unk> 4 million.
I believe the hospital to the shortage home sulfate Boston.
Speaker Change: Frank with you.
Frank: I don't see it at all.
Frank: Jacob.
Speaker Change: Hey, Luke.
Speaker Change: That's when a list we will continue to focus to keep our focus on the application to different blue application scenarios. We will continue to enhance the search function the convenience and the efficiency of our search function and also.
Speaker Change: Our two established a feedback system that come next designing and separation of dysfunction with the feedback system.
Speaker Change: So what are you sort of saw them. All so you said should put as you said shoe.
Speaker Change: Okay.
Speaker Change: Sorry, if I just took a hard answer.
Speaker Change: Yeah.
Speaker Change: Oh, that's so well materially it's advertising growth she's all Chris important pathogenic Geneva Jimmy.
Speaker Change: <unk>, Georgetown Boston, Massachusetts.
Wang Han: Our total revenue increased by 2.2% and 16.5% year-over-year for the 4th quarter and 3rd year, respectively. We were also pleased to deliver measurable progress in refining our cost controls and operating leverage, achieving a record high of gross margins since our U.S. IPO and a significantly narrow net loss for the 4th quarter. Our paid membership revenue for the quarter increased 13.3% every year to RMB 555.9 million. This growth was primarily driven by the continued expansion of our subscribers, which increased by 9.2% every year to 14.2 million as a result of content enhancement and user experience improvement. Our occasional training business revenue for the fourth quarter surged by 100.1% year-over-year to RMB 169.3 million.
Speaker Change: Chemicals eligible.
To summarize in the next year.
Focus on our key objective that we started from a commodity but we are expanding beyond age.
Speaker Change: Moving forward around our multi engine growth.
Speaker Change: Right you narrowed the loss for some of our business that is still emerging and to achieve the overall profitability in the future.
Speaker Change: Thank you for your question.
Speaker Change: Okay.
Speaker Change: Thank you operator.
Speaker Change: The next question is from.
Qiang Zhang: Hum Qiang Zhang from C. ICC. Please go ahead.
Qiang Zhang: Thank you Tien tsin.
Qiang Zhang: Julian but she got a nice unions adrianne, Nicole Dawes, she definitely niche notley government shutdowns.
Qiang Zhang: Tim Glenn <unk>.
Speaker Change: It sure does she said losing them in Baghdad.
Yes.
Speaker Change: Thanks for taking my question the company, Jason mentioned that article.
Wang Han: This impressive growth can be attributed to our ongoing efforts to expand our course offerings. All our courses are specifically designed to meet our users' evolving demands, covering areas such as academic improvement, career advancement, and other vocational skills and interests. We continue to garner market recognition for our programs and drive their sustainable development. The overall macro environment and uncertainties in the advertising market pressured our marketing services throughout. In the first quarter, marketing services revenue roundly declined by 18.7% year-over-year.
Speaker Change: Thank you Denise.
Speaker Change: But profitability and if so what's the attached tables for break even and.
Speaker Change: Benjamin Thank you decorate that more on the path to achieve it. Thank you.
Speaker Change: Okay.
Speaker Change: Wonderful.
Speaker Change: Well you are seeing in acoustics again due to the non-GAAP net profit.
Speaker Change: Thank you Jason for the question. This is <unk> CFO of <unk> to first start we aim to achieve breakeven quarterly breakeven on a non-GAAP net loss net profit level in the fourth quarter. This year.
Speaker Change: Hum.
Jason: Sure Joanna.
Jason: Jonathan.
Speaker Change: Was there anything else going.
Wang Han: However, it recovered by 21.5% quarter over quarter, driven by our product enhancement and sustained increasing performance in verticals such as IE and 3C in home appliances. Gross profit for the first quarter increased by 7.1% year-over-year to RMB673.1 million, with its gross margin expanding to 59.1%. This is the highest level since our U.S. embassy. The gross margin improvement reflects our enhanced modernization efforts, as well as improved efficiency in cloud services and bandwidth utilization. Total operating expenses were RMB 851.3 million for the fourth quarter, compared with RMB 844.8 million for the same period of time last year.
Speaker Change: Yes.
Speaker Change: The initial <unk> hydro <unk>.
Speaker Change: What else on commodity in the ICU.
Speaker Change: As we all know that Yahoo has grown into a widely known name over the past 14 years.
Speaker Change: We believe many of you on this call like myself.
Speaker Change: Have been spontaneously opening the two who app on our phone rather than being directed to any promotional link.
Speaker Change: So this is Eric <unk>.
Speaker Change: Sure.
Speaker Change: Carlos as Johan <unk> with children.
Speaker Change: I'm kind of hopeful that.
Eric: Regarding our new <unk> two was that geopolitical.
Once you are in <unk> 40 of pool finish.
Eric: Sean.
Eric: He was I don't know how you guys.
Eric: Before I joined this company I believe that you have presented a large base of genuine and loyal users. After I joined the company I have reconfirmed this backed with numbers.
Eric: Majority of active users in 2023 are those who have been with Q2.
Wang Han: Selling and marketing expenses for the first quarter increased to RMB527.6 million from RMB509.2 million for the same period of time, as we continue to invest in product and service offering promotions with a prudent ROI basis. Research and development expenses slightly increased to RMB232.6 million for the fourth quarter from RMB212.5 million for the same period of 2002. The increase was primarily attributable to our increased spending on technological innovation. General and administrative expenses for the quarter decreased by 26% to RMB 91.1 million from RMB 123.1 million in the same period of 2002, primarily attributable to a decline in personnel-related expenses as we continue to improve operating efficiency.
Eric: 2022.
Eric: Which is even larger than I previously expected.
Eric: Sure.
As usual Julia with human tissue ablation.
Eric: And that's really to get onto them.
Eric: The multi unit issue, what you do but he's got a new <unk>.
Eric: <unk> will go into the other partner Wuxi.
Eric: Just on the essential who tripled.
Eric: Please go here in Seattle.
Eric: Additionally, at the user generated content community to who has much nature operating cost compared to other business part of the company.
Eric: Our gross margin has maintained at over 50% for five consecutive quarters, reaching 15, nine 1%, Inc. Fourth quarter last year. It is obvious that you have.
Speaker Change: Who are you there.
Contribute notably high profit.
Speaker Change: Yes sure Joe.
Speaker Change: Mcauliffe will fall.
Joe: It will be more.
Joe: Continuing with it lets you know how much would you pay a quite a few completions recently.
Joe: In other words.
Joe: We proactively and prudently reduce brand promotion expenses with nowhere.
Joe: <unk> prioritize easier quality over quantity, we believe that you can continue to narrow losses and progress towards profitability.
Wang Han: Driven by our ongoing efforts to control costs and enhance operating efficiency, our gap net loss per quarter narrowed significantly year-over-year by 42.6% to RMB 103.1 million. Our non-GAAP-adjusted net loss, which primarily excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, narrowed by 31.9% year-over-year to RMB 91.3 million for the fourth Moving forward, as we continue to optimize our core structure, control our operating expenses, and record growth driven by our multi-engine monetization model, we expect to further enhance our operating leverage. As of December 31st, 2023, we had cash and cash equivalents on term deposit and short-term investment of RMB 5.5 billion, compared with RMB 6.3 billion as of December 31st, 2023. Also, as of December 31, 2023, we purchased 26.3 million Class A auditor shares, including ADS, for a total of 58.5 million U.S. dollars on both the New York Stock Exchange and the Stock Exchange of Hong Kong. This concludes my prepared remarks on our financial performance for this quarter. Let's turn the call over to the operators for the Q&A session. Thank you.
Speaker Change: Oh sure.
Speaker Change: Sure Sean.
Speaker Change: Cost with Felicia.
Speaker Change: Q2 will show it to the Yorkshire.
Speaker Change: <unk> sure.
Speaker Change: So as Ginger Tokyo visit function.
Speaker Change: <unk> <unk> with Goldman Sachs interim Ginger.
Speaker Change: Yeah.
Speaker Change: Meanwhile, in terms of our commercialization model Q, who has developed.
Speaker Change: <unk>, which breakthrough the limits of users scale by leveraging the communities advantages.
Speaker Change: Our youngest story and just your top brand has shown great potential on this regard.
Speaker Change: So you can go on lunch <unk> gotcha.
Speaker Change: Yeah Jonathan.
Speaker Change: And also they don't do you assume the two halves.
Speaker Change: Hey, Joel.
Speaker Change: Women Youll introduction Hangul <unk> analogy for yourself and then we'll be Huntsman pension excuse me I know you won't see any change any.
Speaker Change: We also expect similar potential with our AI.
Speaker Change: Empowered search discovery function the real time conversion based interaction built on top of our high quality long form text and graphic Q&A can unlock greater user and commercial potential.
Speaker Change: So on the lateral sharepoint with Juliet Consequently, Calvin she'd have social media platform.
Speaker Change: Are you, leaving.
Speaker Change: So to summarize we are gradually explore paths to scalable profitability differs from other social media platform.
Speaker Change: Thank you.
The next question is from David Chang with Hi, Tom International. Please go ahead.
David Chang: Uh huh.
David Chang: Anytime you don't watch a single user conference there will be things like on the 20th idea about chipotle.
David Chang: Great.
David Chang: Oh man deeper without question.
I don't watch it because what that does like golf course relationships.
David Chang: But you know once you shouldn't buy these oh, yes.
Operator: This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. We will pause for a moment as participants join the queue. The first question is from Vicky Wei with Citi. Please go ahead.
David Chang: I'll, let you go out of Yanbu should they didn't know about.
David Chang: Particularly you have to fail.
Well, we have always taken that with people surely I'm sure.
David Chang: Cleveland.
David Chang: Equally on the Shaw well they need to digest that Michael mentioned.
David Chang: Oh, she can't wake up on Asia, and what's your musical Anthony how about once you if you will I E.
Yeah.
David Chang: So I was talking about just like you don't usually.
Speaker Change: Oh checking myself Beckman for taking my question first of all wore congratulation found Apple Chamberlain.
Vicky Wei: Good evening, Management. Thank you for accepting my question. Congratulations on the outstanding performance of Zhihu.
Speaker Change: Blank okta hooks efficiency improvement strategy.
Vicky Wei: My question is about the strategic focus of the company in 2024. Can you share with us the main strategic direction and focus of Zhihu in 2024? Thank you.
Speaker Change: I saw that about Q1 loss ratio also Mary too.
Speaker Change: Single digit level.
Speaker Change: Thank you.
Speaker Change: My question is about no brushy obviously.
Speaker Change: I noted that the growth rates of that mostly pay to you with it.
Yuan Zhou: Thanks, Management, for taking my question. Would you please share some comments about the key strategic focus of Zhihu for 2024? Thank you. Hello, Vicky.
Speaker Change: You've seen our rate in recent quarters.
Speaker Change: Back to the number of the Npls and the pay ratio theory remains about 14.
Speaker Change: 40% Okay.
Yuan Zhou: I'm Yuan Zhou. In our strategy for 2024, the first thing is to speed up profit-making. One of the most important tasks is to optimize the investment structure for cost and fees. The second task is to constantly improve the quality of the product during the whole process. The two jobs will go through our full-scale work in 2024. Thank you, Vicky, for the question. This is Zhou Yuan, CEO of Zhihu. Moving forward to 2024, our key strategic focus will be on achieving profitability as soon as possible. To achieve this, we will optimize cost and expense structures to prioritize efficiency as the pivotal goal across our daily operations and for each business unit.
Speaker Change: Can I ask about how how the management Peter Alexander Feeney now I'm paying users and how that's you are how how does management think that.
Speaker Change: Gulf rate Oh Feldman.
Speaker Change: The next one or two quarters, but you mean Gary.
Speaker Change: What did that are quite bumpy Debbie thank you.
Speaker Change: Okay.
Speaker Change: Our you didn't pay a whole Nicola will tell you that <unk> come to something like <unk>.
Speaker Change: <unk> be helpful.
Nicola: Sure Doug enquiries that those came out of it.
Nicola: So I'm going to let you know that you don't go ahead of it.
Nicola: Thank you for the question. This is <unk> CFO of <unk>, who I understand your question may involve three underlying the questions firstly, whether the percentage of paid members too.
Speaker Change: <unk> is already big.
Speaker Change: Really relatively high and secondly, it's the potential growth ceiling of.
Speaker Change: The short story sector, and certainly would be the competitive landscape within the online literature sector.
Yuan Zhou: The second thing is that we will put our strategic focus on optimizing the experience of the core users of the community, including their memory, taste, and so on. We need to increase professional depth. [inaudible] And secondly, our key focus will be to protect the professional and in-depth consumption experience for Zhihu's core users. We will focus on enhancing the retention and reputation for our high quality and trustworthy content and to enhance a sincere and friendly atmosphere for communication between individuals. Thirdly, in terms of AI, our strategic focus this year is to develop AI application scenarios. AI has the opportunity to... improve the value of the whole community, which is to improve accessibility and usefulness. Our AI search engine has just been launched and needs to be continuously polished.
Speaker Change: Chosen turned I'm not completely.
Speaker Change: Sure <unk>.
Speaker Change: Yes.
Two of the ABB that we would have changed.
Speaker Change: So firstly six traditional logic are paying members is based on the concept of converting that.
Users from the entire user base.
Speaker Change: The same thing would be the total number of users.
Speaker Change: Sure.
Speaker Change: Yeah, we can publish my question isn't obvious yet.
Speaker Change: Joe you want a needle gypsum John Sheehan.
We can push can you tell me, what you'll have that target because we cannot conclude.
Speaker Change: However people who has pioneered.
Speaker Change: New growth trajectory for paying member growth.
Speaker Change: Premium content to attract users beyond the community to subscribe breathing that Yahoo community.
Speaker Change: Not only eliminates the glass ceiling imposed by user base, leading to app, but it was it brings in additional users to the community.
Speaker Change: So as you would expect.
Speaker Change: Canadian retail phase should you know how valuable it is helping titled the Georgia, what's happening almost everything.
Speaker Change: Yeah.
In addition, these users consumption of non story content actually surpassed that of the historic content driving overall content consumption growth.
Yuan Zhou: We are also working hard to quickly move from consumption to production. [inaudible] Last but not least, we will continue to shift our focus on AI applications to different real application scenarios. We will continue to enhance the search function, the convenience and the efficiency of our search function, and also to establish a feedback system that connects the designing and establishment of these functions with the feedback system.
Speaker Change: Sure.
Speaker Change: Sure sure Jim Offerdahl, 13 quarters from childhood obesity.
Speaker Change: Ken.
Speaker Change: Welcome back.
Speaker Change: Now go forward trajectory.
Ken: You bet.
Ken: Shifting to the corporate higher product anyway.
Ken: Yeah.
Ken: Secondly, regarding the competitive landscape.
Ken: Who is the largest platform to both produce and consume short stories across the entire in Tonight.
Ken: It is the preferred platform for many short story content creators to submit their work.
Ken: <unk>, leading market position can be attributed to two factors.
Yuan Zhou: Finally, I would like to say that we are committed to the commercial development of multi-brands in the community. This direction is unchanging, but we will also speed up the progress of profit for the disadvantaged. At the same time, this year, we will also strengthen the establishment of the multi-brand and community trust wheels.
Ken: The support from the community and our distinctive value proposition.
Ken: All of it or that you would have been combating that patent and got polishing D. Hudson here, especially what you're talking about <unk>.
Ken: <unk> syndrome quiet.
Speaker Change: Sure I'm going to call China going back.
Speaker Change: Tricia will go through data Shanghai Gotcha.
Speaker Change: Content creators of two who can find inspiration engaging topic discussion and developed in the course of Q&A discussion to naturally krage at a weighted high quality and high volume content.
Yuan Zhou: To summarize, in the next year, we will focus on our key objective that we started with a community, but we are expanding beyond it. And moving forward with our multi-engine growth, we will try to narrow the losses for some of our business that is still emerging and achieve overall profitability in the future. Thank you for your questions.
This value of acquisitions of an ecosystem is irreplaceable.
Speaker Change: Sure sure I'll talk a bit about maybe being in Washington to accomplish it.
Speaker Change: Sure you saw it was a huge hunks yourself.
Speaker Change: When you social challenges.
Speaker Change: Would you be with you today.
Speaker Change: Additionally, most of the online literature apps available in the market operates through an advertising model focusing on maximizing users' time spent.
Operator: [inaudible] The next question is from Xueqing Zhang from CICC, please go ahead. ???????????,????????,2024????????????,??????????????????????????????????????????????? Thank you for listening.
Speaker Change: Resulting in Nancy slow paced and no information density.
Speaker Change: Sure sure.
Speaker Change: The thing that Moshe.
Tom: Sure Tom with ourselves.
Tom: <unk>.
We're going to think why the whole needle.
Tom: Jeremy GM was much anecdotal so I would sort of true I would put in select geographies.
Tom: But in contrast, Q4 upgrades to a.
Tom: Subscription model, which prioritize the delivery of high quality content that users are willing to pay for it.
Tom: This unique value proposition has established two distinct content characteristics and value position in the market.
Wang Han: Let me answer some questions. We expect that in 2024, Q4, there will be a three-quarter non-gap profit. Thank you, Xueqing, for the question. This is Wang Han, CFO of Zhihu. To start, we aim to achieve breakeven, quarterly breakeven, on the non-gap net profit level in the first quarter this year. If you go back to the beginning, Zhihu has grown in the past 14 years as a family-oriented company. I believe many people in the phone booth are like me.
Speaker Change: Great job on.
Speaker Change: So I think it was 100% sure Sean.
Speaker Change: Sure.
Speaker Change: Actual tussle cutoff.
In terms of gross Sterling.
Speaker Change: The short story segment represents emerging sector, where two who has taken part in establishing it as a pioneer we have been actively expanding and driving to expand its daily.
Speaker Change: She's got a proven at all hydraulic pollinium away from.
Speaker Change: We made our initial hopefully it in general that combo chip.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Currently.
Speaker Change: Our premium content, primarily consist of tax and graphic formats.
Wang Han: For many years, they have been directly opening the Zhihu app on their phones without going through any advertising links. As we all know that Zhihu has grown into a widely known name over the past 14 years, I believe many of you on this call, like myself, have been spontaneously opening the Zhihu app on our phones rather than being directed through any promotional link. Before I joined the company, I believed that Zhihu would have a large number of real loyal customers. After joining the company, I also saw the numbers of internships. That's exactly what happened.
Formats. However, here is the larger auto space and greater commercial potential in audio and video contents, such as radio play audio books and shorts drama.
So if you're in a quarter or two I don't want you shouldn't be coming from.
Speaker Change: So hopefully that's clear.
Speaker Change: In sugarcane <unk> traditionally seen.
Speaker Change: So to say that those.
Speaker Change: Those are focused on <unk>.
Speaker Change: We can debate.
Speaker Change: Short stories actually share some similarities with shorts drama than longer narrative.
Speaker Change: Q4 stories are known for is <unk> engaging plus.
Speaker Change: Rapid creation and real world rather link.
Speaker Change: There are these are essential elements to produce blockbuster short term as well.
Wang Han: We looked at a number. Before the end of 2022, the number of clients in Zhihu accounted for a very absolute majority of the total number of users in the past 2023. It's a little higher than I thought.
Speaker Change: We already put that system.
Speaker Change: So all of our questions.
Speaker Change: By the end user to them, which I think will be helpful.
<unk> got the article went on.
Speaker Change: Utilization, especially those yet.
Speaker Change: Yes.
Speaker Change: We recently announced a partnership with quite a show in the area of short drama.
Wang Han: Before I joined this company, I believed that Zhihu possessed a large base of genuine and loyal users. After I joined the company, I have reconfirmed this fact with numbers. The majority of active users in 2023 are those who have been with Zhihu since 2022, which is even larger than I previously expected. At the same time, there is the UGC community, which only uses business costs, which is much lighter than other types of businesses. Therefore, our gross profit has been stable at more than 50% for five consecutive quarters.
Speaker Change: Right.
Speaker Change: High quality short story IP will be increasingly valuable puts you who some of the short drama adapted from tool IP have already achieved market the market below market performance and we anticipate more success in the future.
Speaker Change: You did about general C&I yanbu to the IP.
Speaker Change: So realizing ship onto this.
Speaker Change: Yes.
Speaker Change: Additionally, revenue from our IP copyrights currently only represents a small percentage of our total revenue.
Speaker Change: As the market increasingly recognizes the value of our unions IP revenue share from film and TV copyrights.
Wang Han: Last year, QoS reached 59.1%. So it's obvious that the core customers of Zhihu can contribute a lot of profit. Additionally, as a user-generated content community, Zhihu has much lighter operating costs compared to other business models of other companies. Our growth margin has maintained at over 50% for five consecutive quarters, reaching 59.1% in the fourth quarter last year.
Speaker Change: It's really increased.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Operator, we can continue with the next question. Please.
Eileen Lin: Thank you. The next question is from Aileen lean with China Renaissance. Please go ahead.
Aileen Lean: Yeah.
Eileen Lin: Hey, guys Yeah Bonnie.
Eileen Lin: What I'm, particularly interested health I am taking a new day at that electrical I would tell you that way and then looking at each other here Jonathan does Jason go anymore, well tell me if I got that don't yet meet women don't see real AI influenced your food and deli.
Speaker Change: Well thanks for taking my question I have one question relate HDI education.
I imagine we'll share more color with education development, such as student as a strategic priority to focus and how AI can be integrated into the education business. Thank you.
Wang Han: It is obvious that Zhihu's core users will contribute notably high profits. ROI, [inaudible] In other words, as long as we proactively and prudently reduce brand promotion expenses with lower ROI, and prioritize user quality over quantity, we believe that Zhihu can continue to narrow losses and progress toward profitability. At the same time, in Zhihu's profit model, we have already explored some advantages of community assistance, but the number of users in the community is not completely limited to the Tianhua version of the platform. Yan Yan, Meanwhile, in terms of our commercialization model, Zhihu has developed its own approach, which breaks through the limits of users' scale by leveraging the community's advantages. Our Yanyan Story and ZhiJueTang brands have shown us great potential in this regard. [inaudible] We also expect similar potential with our AI-empowered search discovery function.
Speaker Change:
Speaker Change: I was visiting with you all take care of them, they're telling me no.
Speaker Change: It's almost one oh shoot.
Speaker Change: Hi.
Speaker Change: So youll with Hutchison seal Jacob clean claw bingo.
Speaker Change: Social tension on both on the social Sunshine.
Speaker Change: Thank you for your question. This is Joanne feel off Joel.
Speaker Change: We all know that our vocational training business has been growing rapidly in the recent quarters.
Joanne: And he has achieved synergies between our self operated acreage in the training business and our acquired location returning business.
Joanne: Since you acquired it.
Joanne: So someone that took them to do.
Jimmy.
Jimmy: Oh good.
Speaker Change: Good day.
Speaker Change: No.
Speaker Change: So little class.
Speaker Change: Particularly you offer those thresholds.
Speaker Change: Right.
Speaker Change: Bingo the quantum that had a huge hole trading appears to be out of town.
Speaker Change: Conduct.
Speaker Change: So firstly, our self operated business is closer tied to our community.
Speaker Change: Putting higher profit and we'll speak with great responding to evolving user demands.
Speaker Change: Well, our acquired business segments offers greater demand certainty and larger addressable market.
Well I'm not so sure John I'll do it.
Speaker Change: Sure sure.
Wang Han: The real-time conversion-based interaction built on top of our high-quality long-form text and graphic Q&A can unlock greater user and commercial potential. In short, it will gradually explore a different scale of profitability from other social media platforms. So to summarize, Zhihu will gradually explore a path to scalable profitability that differs from other social media platforms. Thank you.
Speaker Change: So how much of that to go crazy.
Speaker Change: Our client.
Speaker Change: Sure sure.
Speaker Change: You all for the attention.
Speaker Change: Assumption in the future.
Speaker Change: Oh, I'm sorry of course in the product.
Speaker Change: Yes.
Speaker Change: You can put on it.
Speaker Change: Our comment if he has continually empowered our vocational training business. Firstly, we will be able to discover the specific demand thing bottling demands of our users.
Daisy Chen: The next question is from Daisy Chen with Haitong International; please go ahead. Okay, thank you for accepting my question. First of all, I'd like to congratulate the company on achieving a very good result in this quarter. And I also see that the loss rate in the fourth quarter has also reached certain levels for the first time in 21 years. Yes, actually, my question is about the membership business of Yanyan Story. In fact, we have observed that the membership business has slightly decreased in the last two quarters. However, the number of members and the loss rate are still stable at more than 14 million and 14%, respectively.
Speaker Change: And achieve greater certainty in terms of our course offerings compared to other industry players.
Speaker Change: We won't know until the quarter Sanjay says will call <unk>.
Speaker Change: Danielle.
Hollywood fish on the other AI agi.
Speaker Change: Yeah.
Speaker Change: She was this whole polo and Joel.
Speaker Change: How do you want to look at home depot.
Speaker Change: Sure.
Speaker Change: For example, with some of our cornerstone course offerings for example, with the Viking courses the multimedia training courses.
Speaker Change: The artificial general intelligence courses, they actually stemmed from the Q&A discussions within the community and cater to the evolving demands of our users.
Daisy Chen: So I'd like to ask the management how they consider the problem of the member's growth and the income of the membership business in the next one to two years and the related driving factors. I would like to thank myself for taking the time to answer my question. First of all, congratulations on the remarkable achievement of Zhihu's efficiency improvement strategy. I saw that the Q4 demonstration also narrowed to a single digit level since 2021. But my question is about the membership business. I noticed that the growth rate of the monthly paid users seems to decelerate in the last two quarters. But the number of MPUs and the pay ratio still remains about 14 million and 40 percent this quarter.
Speaker Change: So we have aligned all of them.
Speaker Change: Hopefully the Shawcor does it go towards that.
Speaker Change: Just hold on Doj, Yoshi, downhole, touchy, but she'll be ops issue.
Speaker Change: How do you move to sort of put it.
Speaker Change: In the future they will continue to leverage our advantages to expand our course offerings.
Speaker Change: Saturday to extend beyond the evolving need and also the greater the need with the demand space greater certainty for our court.
Speaker Change: So, let's just say a woman she's autonomous.
Speaker Change: Although you saw the two so no question the wholesale door to my question.
Speaker Change: So beyond our community empowerment to users and content creators within the community cannot only inspire and support the research and development of our new course offerings.
Wang Han: Can I ask about how the measurement considers the feelings of the paid users? And how does it affect the growth rate of the membership business in the next one or two quarters or two years? And what are the corresponding drivers?
Speaker Change: We can power multiple existing premium courses.
Speaker Change: Well I'm going to tell me and sources for you here in Tennessee.
Speaker Change: Well I know them all high to make sure it does.
Speaker Change: So as usual.
Speaker Change: How come the other tumbled toilets.
Speaker Change #100: Now she's intelligent I'll call Bullsh essentially.
Speaker Change #100: Our labor productivity stays at a top ranked in the industry and our course offerings become mature.
Wang Han: Thank you. Thank you for your question. I understand that your question is related to three deeper issues. The first one is whether the proportion of members of the Association is already high enough. The second one is the issue of the ceiling on the short-term story track.
Speaker Change #100: The scale of economies.
Speaker Change #100: We will continue to strengthen.
Speaker Change #100: And moving forward, we can further cultivate our content creators in our community to become our teachers, helping.
Wang Han: The third one is the issue of the competition structure of the networked network track. Thank you, Daisy, for the question. This is Wang Han, CFO of Zhihu. I understand your question may involve three underlying sub-questions. Firstly, whether the percentage of paying members to Zhihu's MAU has already become relatively high, and secondly, the potential growth ceiling of the short story sector. And thirdly, the competitive landscape within the online literature sector. First of all, the traditional payment logistics is the concept of full-scale transformation. The ceiling is at the full scale of the user scale of the app.
Speaker Change #100: Helping our content creators to achieve their financial goals.
Speaker Change #100: Hum.
Speaker Change #100: So she was less so she's al Jazeera.
Speaker Change #100: So she's hold or your thoughts just as much issue on the tissue.
Speaker Change #100: So that was the.
Speaker Change #100: So I'm sure we'll come we'll tell you what.
Speaker Change #100: So should you know.
Speaker Change #100: So our users of our content our course offerings.
Speaker Change #100: Our comes to <unk> with the aim to improve themselves and they can also serve as the users for our vocational training business.
Speaker Change #100: Our vocational training is actually extending beyond our community now.
Speaker Change #101: Oh, well I'm not sure I know you've heard me talk a little bit on the.
Speaker Change #101: She's had your own coffee, sorry, two central Holly.
Speaker Change #101: Following on that just a woman.
Wang Han: So firstly, the traditional logic of paying members is based on the concept of converting a subset of users from the entire user base; the selling point would be the total number of users. But Zhihu's membership business has found a new path of growth. Yi Wei, Yolanda Liu, Daisy Chen, Dachuan Sha, Dahai Li, Eileen Lin, Wang Han, Zhihu However, Zhihu has pioneered a new growth trajectory for paying member growth. Zhihu's premium content can attract users beyond the community to subscribe within the Zhihu community. This not only eliminates the growth ceiling imposed by the user base within the app but also brings in additional users to the community. Furthermore, these users' non-story-type content consumption is actually greater than story-type consumption. Everyone is consuming almost the entire plate of content.
Speaker Change #101: Bingo.
Speaker Change #101: Got that.
Speaker Change #101: So it's good for them to take a.
Speaker Change #101: She ship boxes are doing so.
Speaker Change #101: So you'll have a total.
Speaker Change #101: Sure.
Speaker Change #101: The users not only generates word of mouth effect, but it will still generate high quality commercial content based on their learning experience attracting new students.
Speaker Change #101: This greatly improved our acquired business and to improve the conversion rate and our.
Speaker Change #101: Two to continue to maintain a dynamically optimal customer acquisition Roy.
Speaker Change #101: In their respective segments.
Speaker Change #101: Oh challenging associated.
So there's always a few months away.
Speaker Change #102: So this is heng Chen.
Speaker Change #102: One call out Florida.
No no.
Speaker Change #102: Well I'll take a quick walk so it's a hard one to full element of teen bingo.
Speaker Change #102: And the other thing Thats even close.
Speaker Change #102: So beyond that our tissue brand actually formed a close loop ecosystem.
Speaker Change #102: Can empower our self operated business in return.
Wang Han: In addition, these users' consumption of non-story contents actually surpassed that of the story contents, driving the overall content consumption growth. [inaudible] Zhihu is the largest short story production and sales base on the Internet and is the first platform for short story writers to apply. The reason why we are able to maintain this market position is because of the two core sectors. [inaudible] Secondly, regarding the competitive landscape, Zhihu is the largest platform to both produce and consume short stories across the entire internet. It is the preferred platform for many short story content creators to submit their work.
Speaker Change #102:
Speaker Change #102: Take according to them the answer is yes.
Speaker Change #102: So it sounds like Hubei Humboldt.
Speaker Change #102: So much of the patient.
Speaker Change #102: So you'll see that our tissue.
Speaker Change #102: We believe that the expenses in context with our expenditure will be further diluted with the growth of our revenue from the vocational training business and our commercialization efficiency will be further elevated.
Speaker Change #102: So yeah, that's sort of Hollywood insourcing.
Speaker Change #102: Okay.
Speaker Change #102: Sorry, the T cell.
Yahoo.
Speaker Change #102: We believe that also AI technology to highly enhance our efficiency and carbon Lucia nice our user experiences.
Speaker Change #102: I'm a woman so that's what the assistant muscle tone. This industry so true now.
Wang Han: Zhihu's leading market position can be attributed to two factors, the support from the community and our distinctive value proposition. In Zhihu's Q&A, creators can find inspiration, discuss topics, and plots. With the help of the community, they can innovate faster, have higher quality, and have more output. This is an irreplaceable ecological value.
Speaker Change #102: Now I'll tell you one thing I.
Speaker Change #102: Tell him than me.
Speaker Change #102: Jay.
Speaker Change #102: You all put up solid season.
Speaker Change #102: Hello.
Speaker Change #102: We will start from the court is for users and promote the application of AI language model.
Speaker Change #102: To empower the full process of our education give Rick narrows.
Speaker Change #102: Usually they will tell.
Speaker Change #102: Tell us the chance to let's say a patient.
Wang Han: Content creators of Zhihu can find inspiration, engage in topic discussion, and develop plots in the course of Q&A discussions to naturally create innovative, high-quality, and high-volume content. This value of acquisition of the ecosystem is irreplaceable. At the same time, most of the Internet apps in the market are advertising models., Additionally, most of the online literature apps available in the market operate through an advertising model, focusing on maximizing users' time spent, often resulting in lengthy, slow-paced, and low information density. Zhihu is not an advertising model.
Speaker Change #103: Hey promotion side.
Panels in the EU.
Speaker Change #103: Susan.
Speaker Change #103: We believe that in the next one or two years, we aim to expand the application of <unk>.
AI and Deutsche Bank, which model across the full process of our vocational training business. Thank you very much.
Speaker Change #103: The next question is from Luke Haynesville with Goldman Sachs. Please go ahead.
Speaker Change #103: Okay.
Luke Haynesville: Welcome and thank you.
Luke Haynesville: Okay.
Luke Haynesville: Thank you Bob.
Speaker Change #105: Well you have hung up on the multilingual hub.
Speaker Change #106: Thanks management for taking my question.
Speaker Change #106: Appetizing does move on behalf of London call and wanting to ship.
Speaker Change #106: More lifelong advertising business, including concluded quite all of them.
Speaker Change #106: I'll look for online marketing services for 2024, Thank you.
Speaker Change #107: Good afternoon, everyone.
Speaker Change #107: Sure.
Speaker Change #107: Our new yarn spinning in the queue.
Speaker Change #107: When he is with your last meal for the drug.
Speaker Change #107: Sure Mitch will continue or not shiny literally.
Speaker Change #107: But even this year.
Speaker Change #107: <unk> will be data.
Yeah.
Speaker Change #108: Thank you for your question. This is <unk> CFO for <unk> in 2000.
CFO: In the fourth quarter of 2023 in addition to the external macro factors the main ingredient for delivering.
CFO: Year over year recovery is that we have proactively enhanced the commercial content governance.
Wang Han: Zhihu is a subscription model. It is not based on fashion but focuses on providing users with good content that they are willing to pay for. But in contrast, Google operates through a subscription model, which prioritizes the delivery of high-quality content that users are willing to pay for. This unique value proposition has established Zhihu's distinct content characteristics and value position in the market. As for the skyboard, it's still a new track.
CFO: In order to foster the trustworthy news reading the tuple community, we chose to phase out some near term low quality business income.
Speaker Change #110: I'm sure you wouldn't want to put us yet.
Speaker Change #110: However at the same time, we have made remarkable strides across our businesses.
Speaker Change #110: So as you well know who has internet user.
Future quarter loosen our push towards that.
Speaker Change #111: So to start with.
Speaker Change #111: The retention rate average revenue per user and content consumption volume.
Speaker Change #111: High quality users across our core verticals have all been steadily increasing.
Speaker Change #112: Yeah sure.
Wang Han: Zhihu has always been a leader in the market, and the skyboard is what we work hard to explore and develop. In terms of growth scaling, the short story segment represents an emerging sector where Zhihu has taken part in establishing it as a pioneer. We have been actively expanding and striving to expand its sales. BASED ON TRANSLATIONS FROM CHINESE, PLEASE REFER TO TEXT ON SCREEN. Currently, our premium content primarily consists of text and graphics-based formats. However, there is a larger audience base and greater commercial potential for audio and visual content, such as radio plays, audio books, and short drama. , Zhihu,,,,,,,, Zhihu's stories are known for their brevity and engaging plots.
Speaker Change #113: I was hoping only it goes out you will be sure to iron clad.
Speaker Change #113: Nope I Ritchie charter too many vehicles horizontal Coca Cola tableau.
Speaker Change #113: The second phase the consumption power and high quality of <unk> users have been further recognized in the industry.
Speaker Change #113: According to third party surveys, 72% Q, who users are willing to pay a higher price for our quality products.
Speaker Change #113: <unk> will go to.
Speaker Change #113: Jim you called out that P.
Pgi called out without any harm.
Speaker Change #113: Yes.
In addition, as much as 86% of dual users have made repeat purchases on JD dot com during the past year.
Speaker Change #113: It's a target index, namely TGI, reaching an impressive 500 in Q.
Speaker Change #113: Significantly outperforming the industry average.
Speaker Change #113: Is India.
Speaker Change #113: What should you be at one.
Speaker Change #113:
Speaker Change #113: Cobalt Kingdom, Arizona.
Speaker Change #114: Sure <unk>.
Speaker Change #114: <unk> owns.
Speaker Change #114: And looking nationally alcoholic Angelman syndrome.
Speaker Change #114: Right.
Speaker Change #114: Sure.
Speaker Change #114:
Speaker Change #114: In addition.
Speaker Change #114: We are optimizing our closed loop data ecosystem, we have strengthened our data partnership with E Commerce platform, such as Taobao, and JD dot com through initiatives, such as Japan and Japan.
Speaker Change #114: By providing visualized state hub, we if these brands and merchants to better validates the value and ROI of their program.
Speaker Change #114: Their promotional efforts to drive further increase in marketing services older patients.
Wang Han: Wrappage, Creation, and Real World Relevance. These are essential elements to produce blockbuster short dramas. We have already produced them. Recently, we announced a cooperation with Kuaishou in the field of short stories. A large number of high-quality short story IDs will be a very obvious advantage. ZhihuIP, [inaudible] We recently announced a partnership with Kuaishou in the area of short drama. A great array of high-quality short story IPs will be increasingly valuable for Zhihu. Some of the short dramas adapted from Zhihu IPs have already achieved remarkable market performance, and we anticipate more success in the future. In addition, film and television copyright income is now very low, and the IP value of Yanyan Story is increasingly recognized by the market, so in the future, the contribution of film and television copyright will also increase gradually. Additionally, revenue from our intellectual property copyrights currently only represents a small percentage of our total revenue.
Speaker Change #114: Hardy Har soon here.
Speaker Change #114: Some years its hold on John.
Speaker Change #114: Your password password.
Speaker Change #114: Password sharing and can you tell me I'm not sure.
Speaker Change #114: In 2024, we expect to remain in a period of.
Speaker Change #114: Product upgrading and adjustments for our marketing services business.
Speaker Change #114: We will continue to explore business model that can foster stronger trustworthiness.
Speaker Change #114: Optimizing our data infrastructure. Thank you very much.
Speaker Change #114: Yeah.
Speaker Change #115: The next question is from Chi Chi Tsang with C. L. S. A please go ahead.
Speaker Change #116: Oh sure no problem.
Speaker Change #117: Let's see.
Speaker Change #118: Well no.
Speaker Change #118: John.
Speaker Change #118: Yeah.
Speaker Change #118: She does.
Speaker Change #118: So you'll walk when one blah blah blah.
Speaker Change #118: Gotcha.
Speaker Change #118: Sure.
Speaker Change #118: Oh Wow.
Yes.
Speaker Change #119: For taking my questions Okay.
Speaker Change #119: Okay.
Speaker Change #119: Our all star game.
Speaker Change #119: Sure.
Speaker Change #119: Okay.
Speaker Change #119: Charlie.
Speaker Change #119: Rachel Thanks.
Speaker Change #119: I'm, saying that he is not.
Speaker Change #119: Tony will then hopefully you're going to you about.
Speaker Change #119: Sundar.
Speaker Change #119: When we kick off with you Wilson.
Speaker Change #120: It shows you the question Ashwin.
Wilson: Do you think can push on with them.
Wang Han: As the market increasingly recognizes the value of our Yanyan's IP, revenue share from film and television copyrights will gradually increase. Thank you. Operator, we can continue with the next question, please. Thank you. The next question is from Eileen Lin with China Renaissance. Please go ahead.
Ashwin: Thank you for your question. This is <unk> CFO of <unk>.
Here, we took proactive approach to adjust our user growth strategy.
Simply pursuing larger scale <unk>, we will be focused on improving our core users retention rate and further.
Eileen Lin: , Zhihu,,,, AI, Thanks for taking my question. I have a question related to education. Can management share more color on Zhihu's education development, such as student-based strategic focus, and how AI can be integrated into the education business? Thank you. Thank you for your question. Our education is increasing rapidly. As you know, our education business is made up of self-profit and merger. Thank you for your questions.
Ashwin: I think the person is within our community.
Ashwin: Typically we will establish a commercialization model that is unique to jetblue.
Ashwin: 300, <unk> media content.
Ashwin: I can tell you it will touch all the BD.
Ashwin: Sure.
Ashwin: Tricia will go for you.
Speaker Change #123: With all your bar.
Speaker Change #123: It is worth mentioning that although our sales and marketing expenses.
Speaker Change #123: <unk> revenue may seem significant the direct user acquisition cost for our apps were only half of the total promotional cost.
Speaker Change #123: So that's now less than half of the total promotional Houston.
Speaker Change #123: Well on Eric <unk>.
Speaker Change #123: So as you hope it won't be.
Speaker Change #124: She changed I'll talk about this issue.
Speaker Change #125: <unk> tell me I'm not sure.
Speaker Change #125: Sure.
Speaker Change #125: The absolute amount.
Speaker Change #125: Customer acquisition costs in the fourth quarter of 2023 increased by only 40% year over year.
Speaker Change #125: Our <unk> only experienced a slight decline.
Speaker Change #125: Demonstrate loyalty of <unk> core users.
Speaker Change #125: Sure.
Speaker Change #125: We'll put them onto a yogurt with Jack <unk>.
Speaker Change #125: From essentially <unk> to create that timetable there'll be.
Yuan Zhou: This is Zhou Yuan, CEO of Zhihu. As we all know, our vocational training business has been growing rapidly in recent quarters, and it has achieved synergies between our self-operated vocational training business and our acquired vocational training business. What are the characteristics of the private sector?
Speaker Change #125: Mass market sure yogurt in Heidelberg, Bcl two crucial to Darby.
Speaker Change #125: Sure.
Speaker Change #125: Yeah.
Speaker Change #125: <unk> has a group of users with the highest quality and greatest value, we believe that Farmington, well will yield the potential commercial rewards.
Speaker Change #125: We do now need to follow the other mass market social entertainment platform to pursue user growth at any cost.
Yuan Zhou: It is closer to the community, has higher profits, and grows faster. In fact, it is also faster to meet the needs of users. The demand for bingo is definitely higher, and the market is bigger.
Speaker Change #126: We should follow our own path.
Speaker Change #126: Okay, and then what kind of as you guys and all that.
Speaker Change #127: Hello, much on finished your question on that Julien, we gotta usage here or.
Speaker Change #127: Autos fiduciary culture down there will be kind of getting old.
Yuan Zhou: So firstly, our self-operated business is closer tied to our community, yielding higher profits and will swiftly respond to evolving user demands, while our acquired business segment offers greater demand certainty and a larger addressable market. Our community mechanism has a lot of benefits for the professional education business. First of all, it allows us to discover the real needs of the users more quickly and continuously. This allows us to expand the course faster and more definitively. Our community has continually empowered our vocational training business. Firstly, we will be able to discover the specific demands and evolving demands of our users and achieve greater certainty in terms of our core offerings compared to other industry players. For example, many of our courses, such as cooperative learning, multimedia, and the needs of AI and AGI that have been discussed a lot this year, are all generated from discussions.
Speaker Change #127: Jamie.
Speaker Change #127: Women, who push you're making should hold or Silicon Valley Peninsula agenda shown yet what's your pleasure.
Speaker Change #127: Yes.
As we approach and era.
Speaker Change #127: Hey, I generated content authentic and trustworthy human generated content will become increasingly scarce across the internet too.
Speaker Change #127: Q, who represent the place to generate and share genuine high quality content protecting a unique value proposition in the market.
Speaker Change #127: AI technology will enable us to blaze a trail that is different from traditional time spent brentwood and explore new business models with greater potential.
Speaker Change #127: <unk> opened another younger.
Speaker Change #127: I should add <unk>, which you're already on.
Speaker Change #127: Yes.
Speaker Change #127: Okay.
Speaker Change #127: The way that <unk> is actually the place that is demanded by the market in the age of AI technology.
Speaker Change #128: Thank you.
Speaker Change #128: Okay.
Speaker Change #129: Thank you that concludes today's Q&A session.
Speaker Change #129: Session at this time I would turn the conference back to Yolanda for any additional or closing remarks.
Yuan Zhou: They can finally become our courses. For example, some of our cornerstone course offerings, such as the writing courses, the multimedia training courses, the artificial general intelligence courses, they actually stemmed from Q&A discussions within the community and catered to the evolving demands of our users. So in the future, our course or the expansion of the department will continue to make full use of this advantage. Then, in this demand-continuous, the development space is relatively large, and we will continue to expand. In the future, we will continue to leverage our advantages to expand our course offerings, especially to expand beyond the evolving needs and demands for our courses.,, So, beyond our community empowerment, the users and content creators within the community can not only inspire and support the research and development of our new course offerings but also empower multiple existing premium courses. , In the future, we will continue to attract more creators in the community to become our teachers, so that the creators can reap the benefits at the same time.
Yolanda: Thank you operator.
Yolanda: Thank all of you once again for joining US today. If you have any further questions. Please contact our IR team directly or Rps and financial communications. Thank you.
Yolanda: Okay.
Yolanda: Okay.
Yolanda: Okay.
Yolanda: [music].
Yolanda: Okay.
Yolanda: [music].
Yolanda: Okay.
Yolanda: Thanks.
Yes.
[music].
Yolanda: Yes.
Yolanda: [music].
Yolanda: Yes.
Yolanda: [music].
Yolanda: Yes.
Yolanda: Yes.
Yolanda: [music].
Yolanda: Hum.
Yolanda: Yes.
Yolanda: [music].
Yuan Zhou: Our labor productivity stays at the top rank in the industry, and as our course offerings become mature, the scale of economies will continue to strengthen, and moving forward, we can further cultivate our content creators in our community to become our teachers, helping all content creators to achieve their financial goals. From the perspective of the students, in fact, in the community, these users who have self-improvement needs are actually the foundation of the students.
Yolanda: Yeah.
Yolanda: [music].
Yuan Zhou: At the same time, our self-drinking products are no longer limited to the community. So the users of our course offerings come to Zhihu with the aim of improving themselves, and they also serve as users for our vocational training business. Our vocational training is actually expanding beyond our community now.
Yolanda: Yes.
Yuan Zhou: [inaudible] The users will not only generate word-of-mouth effects but also generate high-quality commercial content based on their learning experience, attracting new students. This greatly improved our acquired business, and also improved the conversion rate, and our ability to continue to maintain a dynamically optimal customer acquisition ROI in their respective segments. , Zhiquetang has also completed the closed-loop service, which enables us to re-energize our self-employed through digitalization. We have purchased a lot of high-end courses. So beyond that, our Chizhitang brand actually formed a closed-loop ecosystem that can empower our self-operated business in return. [inaudible] In the future, the fixed cost will be increased as the income increases, and will be further embezzled.
Yolanda: [music].
Yolanda: Yeah.
Yolanda: [music].
Yuan Zhou: [inaudible] We believe that the expenses and costs associated with our expenditure will be further diluted with the growth of our revenue from the vocational training business, and our commercialization efficiency will be further elevated. For AI, we believe that AI's adaptability can bring efficiency improvements and user experience changes. We believe that AI technology will also highly enhance our efficiency and revolutionize our user experiences. What we are doing now is to start from the core demand and to promote the landing of AI in the entire user scene to improve efficiency. We will start from the core needs of our users and promote the application of AI-based large language models to empower the full process of our education in different scenarios. We expect that in the next 1-2 years, the entire vocational training will be realized. The AI model is the application of the whole process. We believe that in the next one or two years, we aim to expand the application of the AI large-frame bridge model across the full process of our vocational training business. Thank you very much. The next question is from Lu Qinzu of Goldman Sachs. Please go ahead.
Yolanda: Yes.
Yolanda: [music].
Lu Qinzu: Good evening, Guan Yucheng. Thank you for accepting my question. I would like to ask you about the 2024 business plan and key points of the business plan. Thanks, management, for taking my question. And I'm asking about the advertising business. On behalf of LinkedIn.com, can management shed more light on the advertising business, including strategic priorities and outlook for online marketing services for 2024? Thank you. Okay, let me answer this question.
Wang Han: Shangguang's Q4 in 2023, except for the external and macro factors, there was no major internal reason for the recovery of the currency, which led us to take the initiative to implement Shangyuan Yang's governance. Zhihu, in order to gain a sense of trust, sacrificed some short-term low-income income as a substitute. Thank you for your question. This is Wang Han, CFO of Zhihu. In the fourth quarter of 2023, in addition to the external and macro factors, the main reason for the delayed year-over-year recovery is that we have proactively enhanced commercial content governance. In order to foster trustworthiness within the Zhihu community, we chose to phase out some near-term, low-quality business income.
Yolanda: Yeah.
[music].
Wang Han: At the same time, there are still a lot of bright spots in business. However, at the same time, we have made remarkable strides across our businesses. First of all, our core products, high-quality customers' storage, ARPU, and consumption frequency are constantly growing. To start with, the retention rate, average revenue per user, and content consumption volume of high-quality users across our core verticals have all been steadily increasing. Second, the consumer's ability to consume high-value products is further recognized by the market. According to the survey, 72% of residents are willing to pay a higher price for better products.
Wang Han: Secondly, the purchasing power and high quality of Zhihu users have been further recognized in the industry. According to third-party surveys, 72% of Zhihu users are willing to pay a higher price for quality products. In recent years, the number of users who have repurchased in JD has reached 86%, and TGI has reached 402%.
Wang Han: In addition, as much as 86% of Zhihu users have made repeat repurchases on JD.com during the past year, with a target group index, namely TGI, reaching an impressive 502, significantly outperforming the industry leverage. The third point is that we are also optimizing the data reserve. We have strengthened the data cooperation between Taobao, Jingdong, and e-commerce, which is the new plan. By verifying the data, we can help brands and merchants better verify the value of plants and ROI, and then use the following to launch a large-scale product.
Wang Han: In addition, we are optimizing our closed-loop data ecosystem. We have strengthened our data partnership with e-commerce platforms such as Taobao and JD.com through initiatives such as Qingzhi Plan and Qingzhi AI. By providing visualized data, we assist brands and merchants to better validate the value and ROI of their promotional efforts to drive further increases in marketing services order placement. In 2024, we will still be in the adjustment period of commercial product upgrade while strengthening and optimizing data infrastructure to explore more attractive commercial platforms. In 2024, we expect to remain in a period of product upgrading and adjustments for our marketing services business. We will continue to explore business models that can foster stronger trustworthiness while optimizing our data infrastructure. Thank you very much. The next question is from Qiqi Cheng with CLSA. Please go ahead.
Yolanda: Okay.
Yolanda: Yeah.
Yolanda: [music].
Kewei Chen: Hello, I have a question. What is our overall growth target for our users in 2024, and how do we look at the trend of long-term market inflows? How big is the optimization space?
Kewei Chen: How do we look at the long-term market inflows? Thanks, management, for taking my question. Can management share some color on the user growth target for 2084? And how can we model the long-term self-enlarging corporate ratio?
Yolanda: Yes.
Yolanda: [music].
Wang Han: Thank you. Thank you for your question. We have taken the initiative to adjust the user growth strategy. We will not continue to pursue large-scale user growth but focus on improving the flow of core users, further improving the reliability of the community. Based on this, we have come up with our own unique business model. Thank you for your question. This is Wang Han, CFO of Zhihu. This year, we took a proactive approach to adjust our user growth strategy.
Yolanda: Okay.
Wang Han: Instead of simply pursuing a larger-scale MAU, we will be focused on improving our core users' retention rate and further enhancing the trustworthiness within our community. Ultimately, we will establish a commercialization model. It is worth mentioning that although our income is not low, the direct payment for the community app is less than half. It is worth mentioning that although our sales and marketing expenses as a portion of revenue may seem significant, the direct user acquisition costs for our app were only half of the total promotional costs. Thank you very much. Less than half of the total promotional expenses. In 2020, Q4, our community purchase and investment costs decreased by more than 40% in the same period as last year.
Yolanda: Yeah.
Yolanda: [music].
Wang Han: But MAU is just a slight drop, which proves Zhihu's loyalty to its international users and the community. The absolute amount of customer acquisition costs in the fourth quarter of 2023 increased by only 40% year-over-year, while our MAU only experienced a slight decline, that demonstrates Zhihu's core users. Unknown Executive, Xueqing Zhang, Dachuan Sha, Dahai Li, Eileen Lin, Wang Han, Zhihu We believe that if we focus on serving this part of the market and its users, we can bring a very objective commercial return. There is no need to follow the logic of other mass-market social entertainment platforms.
Yolanda: Right.
Yolanda: Oh.
[music].
Wang Han: We must pursue huge users. Zhihu should have the ability to do this. Zhihu has a group of users with the highest quality and greatest value. We believe that serving them well will yield substantial commercial rewards. We do not need to follow the other mass market social entertainment platforms to pursue user growth at any cost. We should follow our own path.
Wang Han: The age of AI content is coming. However, real, credible content on the Internet is becoming scarce. Zhihu is the origin of real, high-quality content sharing. It has a unique market position. AI has given us the opportunity to explore new business models based on the thinking framework of the past media market logic. As we approach an era of AI-generated content, authentic and trustworthy human-generated content will become increasingly scarce across the internet. Zhihu represents a place to generate and share genuine, high-quality content, possessing a unique value proposition in the market. AI technology will enable us to blaze a trail that is different from the traditional time-spent framework and explore new business models with greater potential. Zhihu's original appearance is the most needed appearance by society in the age of AI. The way that Zhihu forms is actually the place that is demanded by the market.
Yolanda: Okay.
Yolanda: [music].
Yolanda:
Yolanda Lian Liu: Thank you. Thank you, that concludes today's Q&A session. At this time, I will turn the conference back to Yolanda for any additional or closing remarks. Thank you, Operator. Thank you all once again for joining us today. If you have any further questions, please contact our IR team directly or PSN Financial Communications. Thank you. [inaudible] [inaudible] The crew got on board around the starboard side of the Rhibi. The crew got on board around the starboard side of the Rhibi.
Operator: [inaudible] Thanks for watching! [inaudible] [inaudible] Zheng Dangyi, Deng Z salmon soup restaurant, Huulingfeng, Huachtai, Ziguro, and Guangzhou Huulingfeng, Huachtai ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? [inaudible] A Toast to the Future [inaudible]. [inaudible] [inaudible] © BF-WATCH TV 2021 © BF-WATCH TV 2021 [inaudible] Translated by Hua Chenyu English Subs [inaudible] © BF-WATCH TV 2021 [inaudible] Director of Photography Production Manager Edited by Edited by Edited by Edited by Director of Photography Edited by Edited by Edited by Edited by Edited by Edited by [inaudible] © BF-WATCH TV 2021, [inaudible]