Q3 2024 Zhihu Inc Earnings Call
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going yellow and I you know.
Operator: Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Zhihu Inc. 3rd Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.
Good morning ladies and gentlemen. Thank you for standing by and welcome to the Choohoo Inc. 3rd quarter 2024. Financial results conference call.
At this time, all participants are on the listen only mode.
After the speaker's presentation, there will be a question and answer session.
Yolanda Liu: Today's conference call is being recorded, and at this time, I would like to turn the conference over to Ms. Yolanda Liu, Director of Investor Relations.
Today's conference call is being recorded and at this time, I would like to turn the conference over to Miss Yolanda Lau, director of investor relations, please go ahead, ma'am.
Yolanda Liu: Please go ahead, ma'am. Thank you, operator.
Thank you operator. Hello everyone. Welcome to Zhou's 3rd quarter, 2024 financial results conference call.
Yuan Zhou: Hello, everyone. Welcome to Zhihu's third quarter 2024 Financial Results Conference call. Senior Managements joining me today are Mr. Zhou Yuan, our Founder, Chairman, and Chief Executive Officer, and Mr. Wang Han, our Chief Financial Officer.
Senior managements joined me today are Mr. Zhou Yan, our founder, chairman and chief executive officer, and Mr. Wang Han, our chief financial officer.
Yuan Zhou: Before we get started, I'd like to remind you that today's discussion will include forward looking statements made under the safe harbor provisions of the U.S. Private Security Legislation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. SEC and Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.
Before we get started.
I'd like to remind you that today's discussion will include for-looking statements made under the Safe Harbor provisions of the US private security ligation Reform Act of 1995.
These statements involve inherent risks and uncertainties.
As such, actual results may be materially different from the views expressed today.
Further information regarding this and other risks and uncertainties is included in our public filings with the US SEC and Hong Kong Stock Exchange.
The company does not assume any obligation to update any forward looking statements except as required under applicable law. Additionally, the matters we will discuss today will include both gap and non-GAAP financial measures.
Yuan Zhou: Additionally, the matters we will discuss today will include both GAAP and non-GAAP financial measures.
Yuan Zhou: For compilation purposes only.
For consideration purpose only.
Yuan Zhou: For a definition of non-GAAP financial measures, and 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.
Adapt 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 irr.yahoo.com.
I will now turn the call over to Mr. Wang Han, CFO of Zhou.
Wang Han: I will now turn the call over to Mr. Wang Han, CFO of Zhihu.
Can please go ahead.
Wang Han: Han, please go ahead. Thank you, Yolanda.
Thank you, Linda.
Hello everyone. Uh thank you for joining Jus 3rd quarter 294.
Wang Han: Hello, everyone. Thank you for joining Zhuhu's third quarter 2024 earnings talk. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Jian, Founder, Chairman, and CEO. We deliver solid per-quarter results across key financial metrics thanks to our continued focus on efficiency. The world's property margin improved by over 10.2% over a year, reaching 63.9%, the highest level since our last meeting. Total costs and operating expenses decreased by more than $35,000.
And please to deliver today's opening remarks on behalf of Mr. Jolian, founder, chairman and CEO of Drupal.
We deliver solid 3 quarter results across key uh financial metrics likes to our continued focus on efficiency enhancement and cost reduction.
Well the property margin improved by over 10% points year over year.
Reaching 63.9%.
highest level since our listing.
and operating expenses decreased by more than 35.6% and 30.5% respectively.
Leading to an analog of 9 million RMB.
Wang Han: and many more. Thank you. So that's 6.8.
So 96.8% year over year.
Graphers to optimize the community ecosystem and also yielding positive results.
Wang Han: Our efforts to optimize the community ecosystem are also early and positive. What's more, we further enhance content creators' experience across our...
user engagement in the 3rd quarter propelled a sequential increase in our user base.
What's more in house common creators experience across our community.
Fostering a renew renewed sense of confidence and driving more active contributions.
Wang Han: demonstrating a renewed sense of confidence in driving more active This, in turn, has cultivated a professional encyclopedic community at MIT.
This in turn has cultivated a professional insightful community atmosphere.
In bill with the balanced rational optimism.
Or more in line with our commitment to exploring AI applications will launch the professional search feature for you which is at the end of October.
Wang Han: Furthermore, in line with our commitment to exploring AI applications, we'll launch the professional search feature for Zhihu Zhizhen at the end of This initiative marks a significant step in our differentiated approach to enhancing product capabilities and elevating the user experience.
This initiative marks a significant step, you know, differentiate, uh, approach to to enhancing product capabilities and elevating the user experience.
Averaging our massive pool of high quality data and content.
Wang Han: are a massive pool of high-quality data.
I tell people in that later in the car.
Wang Han: I'll delve deeper into Zhihu Zhidao later in the video. Now let me focus on users. This quarter marked the third consecutive period of our refined user We achieved sustained improvement across key user metrics, alongside a sequential recovery in users. I know you for Q3 you bonded quarter over quarter to 81.1 million. Is that our continued reduction in community-related promotion? Overall, user engagement across your community also increases. court user retention is showing significant year-over-year Additionally, daily active user time span rose nearly 20% year-over-year and maintained its upward trend. As we continue to elevate the experience for content creators and for users, we saw a notable rise in both the scale and engagement of high-tiered content creators, with the number of income-generating content creators increasing by over 25% year-over-year.
No, let me focus on users and content.
This call marked the 3rd consecutive period of our refined user strategy.
We achieve sustained improvements across key user metrics alongside a sequential recovery in user growth.
I know you you you bonded quarter to quarter to 81.1 million.
Is that our continued reduction in community-related promotional spending.
Overall user engagement across your community also increased sequentially.
Sport user retention showing significant year over year growth.
Additionally, the active user time span rose nearly 20% year year and maintain its upward trend quarter to quarter.
As we continue to elevate the experience for common creators and for users, we saw a notable rise in both the scale and engagement of high tier con craters with a number of income generating current cres increasing by over 25% year over year.
since the beginning of this year, we have given our focus on cultivating new high tiered common craters across Iversfield.
Wang Han: Since the beginning of this year, we have driven our focus on cultivating new, high-tiered content creators across diverse By offering advanced creative tools and signature initiatives unique to Zhihu, we foster their growth and enrich the Zhihu library with the steady influx of diverse, authentic, and professional Throughout the third quarter, we delivered highly differentiated, rewarding, high-quality content to internet users nationwide through in-depth professional discussions on major societal events. For example, the 2014 Zhihu Science Season launched in tandem with the Nobel Prize announcement sparked a wealth of contributions across the Zhihu community, including productions, insights, educational, Among its contents, discussions on 204 Nobel Prizes in physics alone generated over 1.5 million interactions with the individual.
Uh offering advanced creative tools and uh signature initiatives in need with foster the growth and enrich the library with the steady influx of diverse authentic and professional.
Throughout the 3rd quarter
Who delivered highly depreciated rewarding high quality content to internet users nationwide through in-depth professional discussions on major societal but.
For example, the 2014 you who sign season launched in tandem with Nobel Prize announcement.
Spark the wealth of contributions across community.
Including productions inside and educational content.
Most contentions on 24 Nobel Prize in physics alone generates over 1.5 mil interactions within the community.
This engagement or the reputation of being the second home of the Nobel Prize.
Wang Han: This dynamic engagement earned Zhihu the reputation of being the second home of the Nobel Prize. As of the end of Q3, Zhihu had amassed a cumulative content volume of 854.5 million. representing an annual growth of 14.9% This includes 641.4 million Q&A entries and incorporates up to 11.8% of the total number of questions.
I thought the end of quarter. 2 who had amassed accumulated content volume 854.5 million pieces.
Representing a year over year growth of 14.9%.
This includes 6041.4 million Q&A entries and increase of 11.8% compared to the same period last year.
Wang Han: back to the same period. The Zhihu community now boasts a total of 77 million common critters, marking an 11.6% yearly arrival. As the experience of both content creators and users has continued to improve, the Zhihu community, distinguished by professional discourse and rational optimism, has grown stronger.
The Jew community now boasts a total of 77 million kind cretters marking at 11.6%, you're right.
Have to experience of both con creators and users have continued to improve. The Jew community distinguished by professional discourse and rational optimism.
has grown stronger.
This progress is underscored by a steady decline in negative feedback from user and a notable increase in positive interactions.
Wang Han: Liu's progress is underscored by a steady decline in active feedback from users and a notable increase in positive feedback. Average yearly engagement for BAU has consistently rised quarter over quarter with the monthly average of upvotes surging by over 25% year over year in the quarter.
Average daily engagement for BAU has consistently arrived, uh, quarter quarter.
With the monthly average of upload.
surging by over 25%, you you're in the quarter.
next, I would like to share some details about the progress we've made with Zhu Huzhida.
Wang Han: Next, I would like to share some details about a progress we have made with Drupal 2. We have capitalized on Zhihu's extensive content library and robust source tracking capabilities to achieve rapid traffic growth and earn an excellent reputation across China. According to newly released data from Siminal Lab, Zhihu Jidao's traffic reached 4.7 million. a remarkable increase over 180% compared to August. C-FINANCE AI product rankings for September, Zhihu Jidao ranked 3rd among Chinese products in terms of sequential payments. Additionally, it claims the second position on a domestic bathrobes leader. You're in a spot in the top three for two consecutive years.
We have a couple of eyes on the library and robust source tracking capabilities to achieve rapid traffic goals and earn excellent reputation across the industry.
According to newly released data from similar labs.
that traffic reached 4.7 million in September.
Remarkable increase over 180%.
Compared to August.
Finance AI product rankings for September, who did not ranked the 3rd among Chinese products in terms of sequential page view grows.
Additionally, it claims the 2nd position on a domestic web grows leaderboard.
You're in a spot in top 3 for 2 consecutive months.
In October, we introduced professional search for uguzda.
Wang Han: In October, we introduced professional search for Zhihu Jidao, a new feature meticulously crafted to meet the evolving needs of a wide range of users engaging in academic research. integrated over 50 million Chinese and English academic articles from specialized content sources such as Wikipedia and Zhihu for enhancing Zhihu.com's ability to fulfill users' search inquiries with high-quality Professional search also supports file upload and comprehensive document parsing. providing tools like single-article in-depth reading and source-specific Q&A to address users' academic risk.
Near future meticulously crowded to meet the evolving needs of a wide range of users engaged in academic research and professional work.
be integrated over 50 million Chinese and English epidemic articles from specialized content sources such as Wikipedia and for enhancing to who's ability to fulfill users searching queries with high quality.
Professional search also supportsile uploads and comprehensive document parsing.
Providing chores like single Oracle in depth reading and source specific Q&A to address users academic research and professionally if needed.
Moving on to our business performance by segment.
Wang Han: Moving on to our business performance website. Our paid membership business continues to demonstrate steady growth, momentum, and support. The number of subscribing members rose by 11.5% year-over-year to 16.5 million.
Or paid membership business continue to demonstrate steady growth momentum in the forest.
The number of subscribing members rose by 11.5% every year to 16.5 million.
Florida segment delivered rounding of RMB 459.4 mm, increasing its revenue contribution to 54%.
In late August, quitters on yan story produced a series of derivative works inspired by uh Jeruba.
Wang Han: In late August, current creators on Zhihu Yanyan's story produced a series of derivative works inspired by Journey to the West. This is a classic Chinese tale that also forms the core of Shizhen's most popular domestically produced three-egg These works present a more reinterpretation of the classic style. Also, building on Games' momentum, we launched a Journey to the West special series featuring multiple stories that compare Asian and modern perspectives to highlight a collective story's timeless, blurred, the relief that has resonated strongly with our youth.
A classic Chinese tale that also forms the core of season's most popular domestically produced 3 A games.
This works, uh, presented a more reinterpretation of the classic, classic saga.
Also, building on games momentum will launch a journey to the West special series featuring multiple stories that compare Asian and modern perspective to highlight the classy story is timeless.
The relief that has resonated strongly with our users.
In terms of marketing services.
Wang Han: and Mark.
Your 3rd quarter round it from our marketing services was R&B 256.6 million.
Wang Han: Thank you. In the third quarter, Rounding Formal Marketing Services was R&B $256.6 million, a 33% decline over year. Out of brand advertising and CCS decrease compared to last year, we encourage our key clients growing recognition of Zhihu's brand and high value they attribute to our users.
33% decline every year.
A brand advertising and CBS decrease compared to last year. We encouraged our key clients growing recognition of who's brand and high value they attribute to our users.
This progress validates our commitments to optimizing our commercial ecosystem and enhancing the true community trust person is is a strong and viable growth path.
Wang Han: This progress validates our commitment to optimizing our commercial ecosystem and enhancing the Zhuhu's community trustworthiness as a strong and viable growth path for our market. According to the iResearch report released in late October, Zhou has established itself as the most trusted content community for consumer. the survey findings indicated that nearly 50 percent of users reported making purchases In this year's W11 event, we also established the two reviewers' juries in their recommended goodies, the Hendry for providing consumers with professional, authentic, and timely answers to their purchasing. This quarter, Brand Advertising delivered a solid year-over-year performance in ID&C.
For our marketing services.
According to the eye research report released in late October.
Drew has established itself as the most uh most trusted community for con uh consumer decision making.
Furthermore, the survey is finding indicated that nearly 50% of users supported making purchases after reading product recommendations on triple.
In this year 7-11 event, we also established that you who reviewer jewelry in the recommended goodies 100 campaign.
Providing consumers with professional authentic and timely answers to their purchasing process.
It's quarter.
Grant advertising delivered a solid year over year performance in IT and 3C and eSports.
To clients in the automotive and fast moving consumer goods factors also ramped up their advertising spending on Drupal.
Wang Han: Top clients in the automotive and fast-moving consumer goods sectors also ramped up their advertising spending. International, FMCG Branding particularly noted that Zhihu's high quality user base aligns well with your target demographic. Consequently, despite tighter budgets across the broader advertising network, we opt to increase our allocation. In addition, our ongoing improvements in data analysis and operational efficiency have generated positive returns on investment for this. For CCS business, after a rigorous crackdown on low-quality content, we have gradually integrated high-tiered content creators from Zhihu community into our system. reporter, customers' satisfaction and repurchase rates have significantly improved compared to the beginning of this year.
International FMCG brands in particularly, uh, noted that you who's high, high quality user base aligns well with your target demographics.
I can wait, uh, despite tighter budgets across the broader advertising network up to increase your allocations on Drupal.
In addition, our ongoing improvement in data analysis and operational efficiency. I've generated positive returns on investments for this premium fund.
Of course this last business after a rigorous crackdown on low quality content. We are gradually integrated high tier congrators from ihu community in George sales program.
a steady increase in premium economy contributions.
Is it a quarter, uh, customer satification and repurchase rate have significantly improved compared to the beginning of the year.
What kind of glitters has been benefited from increased earnings.
Wang Han: Well, congluters has been benefited from increased earnings.
Next, our vocational training business.
Wang Han: Next, our vocational training. continue to streamline the segment's structure and strategy. In addition, from a wide array of niche offerings to a focused selection of high-performing categories where we hold a competitive edge. Well, overall, Ravni declined by 27.4% year-over-year, mainly due to our streamlined acquired... Our self-operated course has demonstrated strong year-over-year growth, along with notable improvements in profitability. Our self-operated business, closely connected to our community, continues to perform strongly with increasing predictability and profitability. Programs in BFI categories such as media production and film post-production remain extremely popular among learners reflecting long life.
We continue to streamline this segment structure and strategy disorder.
We transitioned from a wide array of offerings to a focus lesson of high performing categories where we hold a competitive edge.
But overall revenue decline by 27.4% your your mainly due to our streamlined acquire business. Our staff operated course as demonstrated strong year over year growth, a lot, along with notable improvements in profitability.
Our self operated business closely connected to our community continues to perform strongly with increasing predictability and profitability.
Programs in categories such as media production and post production remained extremely popular among learners reflecting long life cycle potential.
What's more, our business structure optimization is a quarterly enhanced overall ROI.
Wang Han: Our business structure optimization is a quarterly enhanced overall ROI, allowing us to strategically allocate resources toward high-efficiency programs. thereby supporting greater operation of Moving forward, we'll focus on narrowing business segment's losses and aim to achieve an even business.
Blowing out strategically allocate resources to work high efficiency programs.
categories.
Thereby supporting greater operational stability.
Moving forward, we'll focus on learning this business segments losses and aim to achieve with event as soon as possible.
In summary, the third quarter highlighted our unwavering commitment to strategic refinement and execution.
Wang Han: In summary, the third quarter highlighted our unwavering commitment to strategic refinement and execution, delivering financial results that once again exceeded our expectations. Our commercial and operational efficiencies have been critical metrics during our operations, empowering us to optimize our user-community. Looking ahead, we will remain dedicated to enhancing the user experience and strengthening their trustworthiness. We are strategically refining our operational model to unlock the full potential of Zhihu's brand and high-value e-commerce. with robust fundamentals and a steady focus on achieving profitable growth. We're confident of creating value and delivering meaningful returns for our shareholders.
Delivering financial results that once again exceeded our expectations.
Commercial and operational efficiencies has been critical metrics during our operations, employing us to optimize our usercom resources.
Looking at we remain delegated to enhancing the user experience and strengthening the trustworthiness of our community.
Or strategically refining our operational model to unlock the full potential of who's brand and high value user base.
With robust fundamentals and the steady focus on achieving profitable growth.
We're confident of creating value and delivering meaningful returns for shareholders. This concludes Mr. Julian's remarks.
Wang Han: This concludes Mr. Julian's. Now I will review the details of our third quarter financial.
Now I will review the details of our 3rd quarter financials.
For complete overview of our quarter 24 results, please refer to our press release issued earlier today.
Wang Han: For a complete overview of our third quarter 2004 results, please refer to our press release issued earlier today. Our commitment to enhancing operational efficiency through discipline and cost control drove a significant margin expansion in this report. These efforts also led to narrowing levels, propelling us even closer to profitability. which achieved our lowest quality loss in U.S. FDO this quarter, demonstrating our momentum in building a more resilient business and sustainable trading value. Our market services revenue for the quarter was RMB256.6 million compared with RMB308.3 million in the same period of time. This decline is largely a result of our strategic, ongoing optimization of service offerings.
Our commitment to enhancing operational efficiency through discipline and cost control drove a significant margin expansion in the supporter.
His efforts also led to narrowing was propelling us even closer to profitability.
Which achieved our lowest quality loss or USFO in this quarter.
Demonstrating our momentum in building a more resilient business and sustainable value.
Our marketing services running for quarter was R&B 256.6 million compared with RMB 3083 million in the same period of 23.
Just a client is largely a result of our strate strategic ongoing optimization of service offering.
We just focus on margin improvement.
Wang Han: focus on marginalized communities. The membership revenue for the third quarter was RMB459.4 million, slightly decreased from RMB466.8 million in the same period. Notably, our average number of monthly subscribing members has seen its growth trajectory both year over year. This progress was propelled by the growing quality of Juul's premium offerings, which are consistently attracting new pay members from both within and beyond the Juul committee. Additional training revenue for the quarter was RMB 105.1 million, compared with RMB 144.8 million in the same period of time. This decrease was primarily due to our strategic refinement of requirements. focus on prioritizing the faster-growing sub-operations.
Free membership brand me for the 3rd quarter was RMB 459.4 million. Slightly decrease from 400, 466.8 million in the same period of last year.
notably our average number of monthly subscribing members sustain its growth trajectory both year over year and sequentially.
This program was propelled by the growing quality of Jewish premium offerings, which are consistently attracting new pay members from both within and beyond the community.
Occasional training around if a quarter was RMB 105.1 million.
Compared with R&B 144.8 million in the same period of 23.
This decrease was primarily due to our strategic requirement of acquired.
It's the focus on prioritizing the faster growing self operated programs.
Oh gross profit but was R&B 540 from 1 million compared with RMB for 548.5 m.
Wang Han: The gross profit for this quarter was RMB 540.1 billion. The parrot was armed before 548.5 million years in period. Boasted by our enhanced operating efficiency, a gross margin also further improves your For total operating expenses per quarter for RMB 624.5 billion, a 30.5% decrease from RMB 898 billion.
our enhanced operating efficiency, a gross margin also further improve your, your reaching 63.9% record high.
For total operating expenses for quarter or RMB 2 624.5 billion, that's 30.5% decrease from RMB 898.6 million in the same period last year.
Calling and marketing expenses decreased by 27.4% to RMB 388.
Wang Han: I'm telling you I'm marking the extent that's decreased by 27%.
from R&B 534.3 million in the same period of 13.
Wang Han: Thank you very much. Thank you. The cost reduction was primarily driven by more disciplined promotional spending and a decrease in personnel relativeness.
This reduction was primarily driven by more disciplined promotional spending and a decrease in personnel related expenses.
R&D expensive record decrease by 28.2% to RMB.
Wang Han: are in the expense of a quarter to quits by... to RMB 179.7 million, from RMB 249.7 million in the same period of time. This reduction was primarily attributable to more efficient spending on technological innovations. Q&A expenses decreased by 15.1% to RMB $57.2 million from RMB $114.6 million in the same period. Chris was primarily attributable to lower shirt-based composition extensibility. Consequently, her gap in alleles was a quarter narrow significantly, decreasing by 96.8% year-over-year. Our adjusted net loss on a non-GAAP basis was RMB$13.1 million. The total amount compared was RMB 225.3 million in the same period of time.
179.7.
Don't walk from or be 249.7 million in the period of.
This reduction was primarily attributable to more efficient spending on technological innovation.
You expenses decreased by 50.1% to RMB 57.2 million from R&B 1014.6 million the same period of 3.
was primarily attributable to low lower share based uh composition, uh, expensive.
Consequently, a gap now was quarter now significantly.
decreasing by 96.8% year over year.
Or just in now on non-GAAP basis was RMBA 13.1 million.
compare it with R&B 225.3 million in the same period of time.
Well just in now was margin decreased more than 50% point over a year to 1.5% in this quarter.
Wang Han: The overall adjusted and non-loss margin decreased more than 20% this over year to 1.5%. As of September 30, 1994, the company has passed in cash equivalents, term deposits, restricted cash, and short-term investment of RMB5 billion, compared with RMB1.4 billion. From our Hong Kong IPO until September 13th, 2004, we had repurchased 31.1 million Class A ordinary shares at an aggregate price of US$266.5 million from the open market in Kansas, Georgia. We also repurchased a total of 10.1 million KOS-808s. And we're good. In addition, we had purchased another $33 million worth of orange juice at an aggregate price of $38.5 million.
As of September 30 and then 4. The company has constant and term deposit restricted cash, and short term investment RMB 5 billion.
I'm probably with R&B 5.5 billion of the December.
One more Hong Kong I feel until um September 13th, 24.
Uh, we had repurchased 3 1.1 million plus ordinary shares at an aggregate uh price of US 56.5 million on the open market and cancel structures.
It also repurchase a total of 10.1 million plus 8 ear shares at an aggregate price of US 16.5 minutes to be equalized upon vesting of restricted shares in the future.
We had to purchase in another 33 mailing the shares and aggregate size of 38.5 million.
Uh, be you offer.
Uh, which we were completed on November 8th, 4.
Wang Han: which were completed on November 8th. In total, the company has purchased $74.2 million worth of auditory shares for a total price of US$121.5 million.
So, the company has purchased 74.2 million plus the own shares for a total price of US 1021.5 million.
As we approach the end of 24 will continue to elevate content quality in house, uh, you have to experiences of both users and creators across community.harvesting the power of innovation and technology.
Wang Han: As we approach the end of 2024, we'll continue to elevate content quality and enhance the experiences of both users and creators across the global community by harnessing the power of innovation and We remain committed to optimizing resource allocation, advancing towards profitability, and unlocking the potential of truly brand and high value users. by building a more dynamic platform with quarter of posterity user engagement. four common critters. for confirming our position as a leader in the knowledge sharing and community values.
We remain committed to optimizing research allocationvancing towards profitability and unlocking the potential of true spread.
And high value user base.
By building a more dynamic platform user engagement and support common greater success.
Affirming our position as a leader in the knowledge sharing and community values.
This concludes my prepared remarks on our financial performance for this quarter.
Operator: This concludes my prepared remarks on our financial performance for this quarter. Let's turn the call over to the operator for the Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star, then two. In the interest of time, please ask one question for each time. If you have any follow-up questions, you may re-enter the question queue. Thank you, and please hold until we update.
I was trying to call over to the operator for the Q&A session.
Thank you. We will now begin the question and answer session.
To ask a question, you may press star and one on your touch tone phone.
If you're using a speakerphone, please pick up your handset before pressing the keys.
And to withdraw your question, please press star, then 2.
In the interest of time, please ask one question for each time.
If you have any follow up questions.
You may reenter the question queue.
Thank you and please hold.
Until we uh
Get an order together.
Operator: in an order together.
And the first question will come from
Xueqing Zhang: And the first question will come from Xueqing Zhang with CICC. Please go ahead.
Zuing with Zu Qing Zhang with C I C C. Please go ahead.
And she goes to do bujian u uh not xiangqing weaguani since that they doing equing and the ing on the the whole uh Qingguaning Chen Fenn Xia Ya do early on Yanjhang and go see the Weing Yan hua the zhenjianghidog which she likessunami, uh, she, uh, sent management for taking my question. Um congratulations on the further uh reducing loss in the 3rd quarter.
Xueqing Zhang: 谢谢管理层接受我提问,恭喜公司三季度进一步减亏。 那想请问一下管理层,我们现在对四季度盈亏平衡的信心是怎么样的? 然后也想请管理层分享一下,对于2025年展望,公司认为明年主要的增长驱动会是来自哪里? 谢谢。 谢谢管理层接受我提问,恭喜公司三季度进一步减亏。 然后想请管理层分享一下,对于2025年展望,公司认为明年主要的增长驱动会是来自哪里?
And management share more power on the commitment about achieving a break in the 1st quarter, uh, and, uh, what's I look for 2025. Uh, what will be the main drivers. Thank you.
Yeah, we should make a sample.
Stella Wang: I'm Stella Wang, I'm from Hong Kong. Yi Wei, Wang Han, Cici Cheng, Han Wang, Zhihuang Zhang, All right, that should be about two thousand. The rate is 22%, we only have 1.5% this year.
And
The Eugen yeah.
that can.
And if it comes out to, to take on.
Did you
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from the cheering.
So you know you're the two cent under to.
Cyanan Jingo.
I do.
She's gonna shower and dog even though.
Wang Han: So in this situation, our path to Q4 Pre-Given should be... Thank you for your question, Xueqing.
Uh
Um, thank you for your question, Xu Jing. Uh, this is, uh, from Han Zhu CFO, um, we have been firmly focused on our Q4 break even target this year, achieving a significant reduction in losses in both Q2 and Q3 have folder boosted our confidence in reaching this goal.
Wang Han: This is from Han, Zhihu CFO. We have been firmly focused on our Q4 break-even target this year. Achieving a significant reduction in losses in both Q2 and Q3 have further boosted our confidence in reaching this goal. After reducing adjusted net loss by nearly 80% year-over-year in Q2, we further decreased the adjusted net loss by 70% quarter-over-quarter and 94% year-over-year for Q3. Our adjusted net margin in Q3 of last year was 22%. Well, this year, it is only 1.5%. So the path to the break-even in Q4 now is quite clear.
After reducing an adjusted net loss by nearly 80% your year in Q2. We further decrease, um, the adjusted now lost by 70% quarter over quarter and uh 94% year over year for Q3.
Our justice net margin in Q3 of uh last year was 22%. Well this year it is only 1.5%.
So the path to the break even in Q4, now it's quite clear.
how you are.
Wang Han: And then about the focus of 2025, we have two strategies. The first one is from the angle of the island. 全年維度上的 The two strategic priorities for 2025 are quite clear. First of all, from a financial perspective, our primary objective is to sustainably reduce annual losses and potentially approach profitability on a full-year basis. The second is from the business side, our core is to enhance the user experience of the core users. On the operational front, our focus is to enhance core users' experience and engagement level and strengthen Zhihu's content reputation and trustworthiness across all platforms. We created a friendly environment so that the most professional users can discuss and export more.
coming together.
See from the.
Uh, the two strategic priorities for 25 are quite clear. Uh, first of all, from a financial perspective, our uh primary objective is to sustainably uh reduce annual losses and potentially approached probability on a full year basis.
That.
who the names and the like.
On the operational front, our focus is to enhance core users' experience and engagement level.
And strengthen who's content reputation and trustworthiness across all platforms.
You know your joining will be the Asian.
Wang Han: This is Zhihu's history. Creating an environment that encourages our most professional users to actively participate and contribute remains the foundation of Zhihu's identity. In this large-scale business model, we will go deep into the professional creativity of Zhihu, and make low-level innovations to get out of the real and play Zhihu. For our other business models, we will continue to innovate, centered around Zhihu community's professionalism and trustworthiness. This approach will comprehensively leverage Zhihu's unique advantages. In terms of marketing services, we will first continue to reduce the low-quality, user-unreliable commercial applications. Liu Shan, Moshe, Jenny, Lincoln Kong, So to be more specific, in terms of our marketing services, we will continue to reduce low quality and untrusted commercial content.
Creating an environment that encourages our most professional users to actually participant and contribute remains the foundation of Zhihu's identity.
I wash it shouldn't to go.
that you should have done.
Um, for our, um, other business models, we will continue to innovate, centered around um Juhu communities professionalism and trustworthiness. This approach will comprehensively leverage Zu's unique advantages.
I one of the teacher that you will be seen in the new.
She's still what my first phone washer 2 on.
who's your time and I can see.
So, uh, to be more specific, um, in terms of our marketing services, we will continue to reduce low quality and untrusted commercial content. We aim to innovate and make improvements through business model refinements and uh data infrastructure updates. Building Zhou's uh commercialization on a solid and the trustworthy foundation.
Wang Han: We aim to innovate and make improvement through business model refinements and data infrastructure updates. building Zhihu's commercialization on a solid and trustworthy foundation.
And it should be.
Unnamed: as well as in this conversation, I would like to take this opportunity to extend my grateful thanks to Prince moved on and concentrate on the work of teen and job castingoday. This, indeed, is indeed the work of teachers and individuals. This is truly something as one should, as acolor people know, as satisfaction as one is when class is completed. Please accept them in all sincerity. Thank you very much.
Well.
Wang Han: is the biggest warrior. the other two people that uh they had to get into another office and they had to find another office and they had to find another office and they We are working to achieve break-even within the vocational training business while strengthening its integration and interaction with Zhuhu community. This will establish a faster feedback mechanism for user demands and accelerate service capability development. In terms of membership, we need to make the most of the community's content and services to create a better level of membership. For our paid membership business, we will also leverage community content and user feedback to create a better product mechanism for this business, and to further enhance Yan Selection members' renewal rate, and consequently, increasing the lifetime value, LTV, of our paid members.
from.
We are working to achieve break even within the vocational training business while strengthening it uh integration and uh interaction with juu community. This will establish a faster feedback mechanism or user demands and accelerate service capability development.
I was like, I mean did I uh.
For our pay membership business, we will also leverage community content and uh user feedback to create a better product mechanism for this business, um, and to further enhance selection members, renewal rates and consequently, increasing the lifetime value LTV of our pay members.
you know
So in summary,
Our fundamental driver here is still a healthy prosperous community along with the sustainable business ecosystem that can fully integrate and interact with the community itself.
Wang Han: So in summary, our fundamental driver here is still a healthy, prosperous community along with a sustainable business ecosystem that can fully integrate and interact with the community itself.
Thank you for your question.
Daisy Chen: Thank you for watching. The next question will come from Daisy Chen with Haitong International. Please go ahead. Okay, thank you for accepting my question. I would like to ask about the community and users. In the third quarter, we saw that the trend of MAU on the platform has improved, and the yellow bar also went straight down. Although it is the same as the previous year, we think that the trend is getting better. At the beginning of the year, we also mentioned that the community and users have been adjusted. I would like to ask you to give a detailed explanation.
The next question will come from Daisy Chen with Ha Tong International. Please go ahead.
Uh, how does she qiyu wa so thank you to the huaanda Zintai but MAO Xuanhua uh she does not have that.
Um, that means the whole woman just hours before yo qing gui zu yuanjian the finding the qi yong Xing fashion hua.
Daisy Chen: What do you think is the most successful or the most critical point in this? Also, what changes have occurred in the behavior of the community and users under the influence of these indicators?
Now how how you go and do Xiao one that uh and i i we go uh Tongbizia ha mm that's meant for taking my question. My question is about the users and the community. This quarter, uh, we noted that the NU has improved and uh stopped the sequential delay, uh, at the year of the beginning, you made some uh assessment to the community and the users uh can measure provide more details on the adjust
Daisy Chen: And I have another question. I would like to ask when do you think the trend of MAU will return to the same growth trend? Thank you for taking my question.
Daisy Chen: My question is about the users and the community. This quarter, we noted that Zhihu's MAU has improved and stopped the sequential decline. At the beginning of the year, you made some substantial adjustments to the community and users. Can management provide more details on the adjustments you have done, and what are the key strategies you think that are accepted for, and what changes were made on Zhihu's community and user behavior? And one more question is about when do you expect Zhihu's MAU to recover to a positive year-on-year growth? Thank you.
you have done and uh what are the key strategies do you think that are for and the uh what the changes were made on to community and the user behavior and the, uh, one more question about, um, when do you expect to to and you to recover to a positive year in go. Thank you.
Uh
Well.
Yuan Zhou: Thank you, Daisy. This is from Zhou Yuan, Zhihu CEO. So I will just start with the answer to your second question. So our MAU members may be influenced by two factors here. First of all, the reduction in community related promotion spending which may lead to the loss of the low frequency users. And the second, our focus on enhancing our core users experience consequently the high frequency users have been growing. This is actually an increase of one point. So, we can't give an estimate of the growth of the number yet. But we can be very sure that we will continue to increase the experience of the core users.
Thank you Daisy. Uh, this is from uh Zhou Yuan Zhu CEO.
Oh, we took a dog one just uh uh the.
Uh, you found me lunch while a cofounder.
See you.
so that
In my family at home take uh Yoho uh Tamingqiyang and uh Gozoao yo.
Uh, so I will just start it uh with the answer to you, uh, second question, um, so our MEU members may be influenced by two factors here, uh, first of all, the reduction in community-related promotions spending, which may lead to the loss of the low frequency users and the second, our focus on enhancing our core users experience. Consequently, um, the high
frequency users have been growing.
This is a nice game though.
So I take a time shoot turn down come here you're gonna or just have me on my pocket.
That's on you.
the.
So the combination of these two factors may not guarantee the overall numeral MAU growth in next year. However, what is certain is that we will continue to increase the uh investments in um our core deserts experience.
Yuan Zhou: So the combination of these two factors may not guarantee the overall numeral MAU growth in next year. However, what is certain is that we will continue to increase the investment in our core users' experience.
I'm gonna just.
Yuan Zhou: I would like to talk about the data change in Q3. In fact, a lot of work still comes from the work in the first half of this year. I think this cycle is still relatively short. 社区的工作呢很像是Work like a farmer What we are doing now corresponds to the changes in the next two years. What I want to address here is that the improvements in Q3 actually stem more from the work we've done in the first half of the year. I believe we have still a long way to go. Community work is pretty much like working as a farmer, or as I just mentioned, work like a farmer.
Uh, to you.
and the
Uh.
A bigger one.
So the.
it's also
work like a farmer.
A woman on the phone.
What I want to um address here is that the improvement in Q3 actually stem more from the work we've done in the first half of the year. I believe we have still uh a long way to go.
Community work is pretty much like uh work uh working as a farmer or as I just mentioned, work, uh, like a farmer. The work with doing now may contribute to the improvements in 2 years later.
Yuan Zhou: The work we're doing now may contribute to the improvements in two years later. For our work this year, we are still very focused. First of all, we focus on the optimization of algorithms. The purpose is to encourage more professional, deep and real content, to expand their influence in the community. We also focus on the mechanism of algorithms, to increase the weight of following, sharing and collecting. As an improvement we've made so far this year, so firstly, we've been focusing on the algorithm optimization to encourage more professional, in-depth, and authentic content and increase the visibility of them in our community.
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that
So the yohua uh on the.
to take.
I believe that.
Um, as an improvement we've made so far this year.
So firstly, we've been focusing on the algorithm optimization to encourage more professional in depth and authentic content, uh.
And, uh, increase the visibility uh of them in our community and we significantly increase the weighting of like photos or shares and forests, um, as high engagement of, uh, often aligned with our uh criteria for high quality content.
Yuan Zhou: And we significantly increased the weighting of FOLO's, SHARE's, and FERO's as high engagement often align with our criteria for high-quality content. From the results, we can see that the number of users is constantly increasing. This means that users are looking forward to seeing more and more high-quality content in various fields. As a result of these adjustments, user retention has also risen. This shows that our users are eager to consume high-quality content across virus professionals. In the creator side, we are constantly strengthening the experience of the creator from the tools, product mechanisms, and revenue mechanisms of creation.
To Shanghai to the the the.
you just right now your fish she like the kind of the draining the.
Yo.
As a result of this um adjustments. User retention has also risen. This shows that our users are eager to consume high quality content across virus uh professional views.
I Chang Chong Guozhoo was so uh.
be right should have told wrong one is uh, uh, fish singing.
Yuan Zhou: For example, from the perspective of the community, we are very insistent on strictly controlling the content of the AI infrastructure. However, we will open up good AI tools to the creators of the community to help you improve the effect of creation. For our content creators, we have been continuously improving the creation experience and income mechanism for them by enhancing the experience in a lot of ways and by all means. For example, for a community perspective, we strictly control AIGC content but have been integrating user-friendly AI tools into our creation tools to improve the creation efficiency.
Ah, there's no.
the trouble.
For our content creators, we have been um continuously improving the creation experience and um in income mechanism for them, uh, by enhancing um like the experience in a lot of ways and by all means, uh, for example, for a community perspective, we strictly control AIGC content, but have been integrating user friendly AI tools into our creation tools to
improve the creation efficiency.
uh, uh.
Yuan Zhou: Recently, we have restored the feature of the exhibition, which is loved by creators and core users. The product mechanism has been upgraded before. There will be further upgrades at the end of this year. Welcome to use it. We also recently reinstated the Zhihu column feature, which was popular among creators and core users with upgraded product mechanism. And in the rest of the year, we will keep this upgraded feature. In terms of the income of the creators, in the three consecutive quarters of this year, the number of creators who have earned income has increased by more than 25%.
Uh.
So Andy, how your team.
find that
Um
We also recently uh reinstated the Jufu column feature which was popular among creators and core users uh with upgraded product, uh, mechanism and the in the rest of the year, we will keep uh this upgrading.
And I saw your family and send the uh show you the so those like last week saw the I saw you on the show.
Yuan Zhou: The structure of the income is also more diversified, which is more consistent with the income of the important creators. In terms of creators revenue mechanism, for three consecutive quarters this year, the number of creators earning income has grown by over 25% year-over-year, with a better diversified revenue stream. At the same time, Zhihu continues to prioritize income opportunity for those mid-tier and long-tail craze. Overall, professional, deep, and real content has gained better momentum from all angles. In terms of 3D high-level creators, their average and per capita PV and positive interactivity have increased by a double digit.
In terms of uh creators revenue mechanism for uh free consecutive quarters this year. The number of creators earning income has grown by over 25% year over year with uh better diversified revenue streams.
At the same time, who continues to prioritize income opportunity for those uh me here and the long tail creators.
So that one year Shendu.
Google.
You don't send you to the time and the Heren in the TV show to the competition.
It sum up, um, the professional authentic and in-depth content has has uh gained more visibility across various dimensions in the community and the high-level creators saw double digits year over year growth in both average views per post and uh positive uh interaction per user in Q3.
Yuan Zhou: To sum up, the professional, authentic, and in-depth content has gained more visibility across various dimensions in the community. And the high-level creators saw double-digit year-over-year growth in both average views per post and positive interaction per user engagement.
This is our most interesting like uh uh Suihuang.
Yuan Zhou: Thanks for watching, remember to like and share 数据情况低级内容在推荐页曝光的占比 dot data content is below average for assignment pages 跟我们年初来进行对比下降超过40% compared to our early losing averages is worse by 40% 那来自用户的反馈既然年初的水平下降超过30% therefore webinar feedback from users says it reduces by 30% 我们的正向互动反馈的行为 Our surrounding interaction feedback model will be lowbroсs, 以上的媒体日选人数及视频涨值量 courtship over over 1% So the latest data reviews that the average exposure share of relatively low quality content on the recommendation page have decreased by over 40% compared to the beginning of the Well, NAXA feedback from users has dropped by more than 30%. At the same time, positive interactive behaviors have grown steadily.
Teaching they don't figure on the time.
Goanchu.
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I the.
And the song Huang Xi just uh send you all the.
about.
So the latest data reviews that um the average exposure share of uh.
relatively low quality content, uh, on the recommendation page have decreased over uh by over 40% compared to the beginning of the year. Well, next to feedback from users has uh dropped by more than 30%.
At the same time, positive um interactive behaviors have grown steadily.
I just I know for your.
Yuan Zhou: Next, we will have a systematic and rhythmical continuous study of the ecological environment in the community. This is also a long-term job, as I said just now. work a lot of fun. Going ahead, we will take a systematic approach and step-by-step to enhance our community ecosystem. I believe this is a long-term project, just as I mentioned earlier, Work Like a Farmer.
Yeah, so you got a handy ones.
Look like a farm.
I
Going ahead, we will take a systematic approach and step by step, uh, to enhance our community ecosystem.
This is, um, I believe this is a long term project just as I mentioned earlier, work like a farmer.
Thank you again for your question.
Yuan Zhou: Thank you again for your question.
The next question will come from Lincoln Kong with Goldman Sachs. Please go ahead.
Lincoln Kong: The next question will come from Lincoln Kong with Goldman Sachs. Please go ahead. Thank you, Guanchen, for accepting my question.
To going to different as well. Now what I want you to going to the uh to the jumping person, uh, I took a teaching that data.
Lincoln Kong: My question is about the product itself and Zhihu. Zhihu has recently launched a professional search feature. Can you share with me, Guanchen, what other rich features Zhihu may have in the future? What kind of form will it combine with the Zhihu community and commercialization? Thank you, Guanchen, for taking my question.
Uh, kind of take a look at which we like to go to the to the uh, and Guangzhou.
So, thank you much for taking my question.
My question is about uh the uh product upgrade and uh as well as the zhida. So recently we launched this a professional search function to could imagine share with us what are other features that could be added to this in the future and how um might this integrate uh with the local community, um, our multiization efforts and uh that's all right, uh, strategy to our product. Thank you.
Lincoln Kong: My question is about the Zhihu product upgrade as well as Zhihu Zhida. Recently, we launched Zhihu Zhida, a professional search function. Can you share with us what other features could be added to Zhihu in the future? How might this integrate with the Zhihu community, our monetization efforts, and our AI strategy to our product? Thank you.
social income for.
Yuan Zhou: Thank you, Lincoln. I am Yuan Zhou. We launched this professional搜索, and the core function is that we can not google, but see the data. Now each has only one way to access the data, and search at the end. We can see the data through this project. It is very easy to understand here, but there is still a mixing problem. Workflow is the most important thing for people, which is the need for different groups of people. Workflow is the steel need. This is also a direct way to upgrade. Thank you for your question, Lincoln.
No, that's that's how, uh, something.
I think that uh
To in a sense
a woman that's the.
Workflow. Do you use and I also put in the.
She's out.
What floor
I told you.
Thank you for your question, Lincoln, um, and I will just take this question. This is uh Zhou Yuan Zhu CEO, um, so the lunch um of Juhu Judas professional search feature is uh fundamentally about scenario oriented updates. I was thinking is that uh the workflow in different scenarios is the most critical factor in uh addressing the needs of different user groups.
Yuan Zhou: And I will just take this question. This is Zhou Yuan, Zhihu's CEO. So the launch of Zhihu, Zhida's professional search feature, is fundamentally about scenario-oriented updates. Our thinking is that the workflow in different scenarios is the most critical factor in addressing the needs of different user groups. Workflow represents a fundamental need, and this is also the direction for GDAS integration. For example, the function of professional search is closer to professional people, such as academic research, finance, law, medicine, etc. When searching for specific professional concepts or topics, users can directly visit the corresponding thesis, and can also generate a single transcript, as well as extend the specified range of questions.
Workflow represents a fundamental needs and this is also the direction for Juda interation.
You as well take the social part.
Gotcha and try your angel, uh, Hejingal.
And so in the guy.
No, what's the kids they have fun.
doing the no.
Yeah, I'm going.
Uh, Hainan Jing Xing found.
Uh, I mean just the angel for it.
Yuan Zhou: We also support users to upload their own research data. and conduct customized questions and in-depth research. For example, professional search is tailored to suit academic research and professional work scenarios across finance, law, healthcare, and other fields. When searching for a specific professional concept or questions, user can directly access full text papers and take advantage of extended features, such as single article detailed rating and a customized Q&A with specified scope. Additionally, user can upload papers. And this is a very personalized Q&A and in-depth analysis. This is professional knowledge about a certain vertical field. From understanding the general direction, to collecting relevant documents, to reading the content, to asking more details, to giving a comprehensive analysis and analysis.
Uh, the.
Um, for example, uh, professional search is tailored to suit academic research and professional work scenarios across finance, um, law, health care, and other views.
When searching for a specific professional concept or uh uh or questions, user can directly access food tax papers and take advantage of extended features such as single article detailed reading, and the customized Q&A with um specific uh uh specsified scope, um, additionally, user can upload papers and this is uh very personal, uh, personalized Q&A and in-depth analysis.
just just uh uh.
Uh, Tong.
Yi Xiang the lao xiao Qingduo.
Uh, it's a dog with the.
So I have to join your thoughts on what you should.
Yuan Zhou: because of that I have no other choice. are taking the 也是可以多場景上畫的。 This means that for specialized knowledge in a vertical field, like from getting an overview of a topic, collecting related literature, and definitely reading and analyzing documents, to answering follow-up questions and offering comprehensive breakdowns and insights. This capability can also be generalized across multiple scenarios. And besides that, Zhihu Jida can provide a one-stop solution. We think that the importance of updating the culture of the future, which includes an End-to-End society to the community is critical to what direction we want to go. But at the moment, we don't want to talk about it in detail.
A chicken only.
Yeah, do changjinghahua.
Um
This means that for specialized knowledge in a vertical field, like from getting an overview of a topic uh collecting related literature and reading and analysis um documents, um, to answering follow up questions and uh offering comprehensive breakdowns and insights. This capability can also be generalized across uh multiple scenarios and uh uh
Besides that, that can provide a one-stop solution.
Oh you mean like.
Oh
So
Uh, time.
Sing.
OK.
Yuan Zhou: I don't have much to say about the new features. We believe that one of the future directions for upgrading Zhihu Jida is integration with Zhihu community itself. However, at this stage, we're not ready to review too much about the specified new features.
We believe that um one of the
future directions for upgrading toujina is uh integration with um Zhuu community itself.
Um, however, at this stage we're not um ready to review too much about this. Firstly new features.
Thank you, Lincoln for your question.
Lincoln Kong: Thank you, Lincoln, for your question.
The next question will come from Vicky Way, West City. Please go ahead.
Vicky Wei: The next question will come from Vicky Wei with Citi. Please go ahead. This is where your line is open.
This is where your line is opened.
The next question will come from can you hear me?
Vicky Wei: The next question will come from Stella Wang. Hello, can you hear me? Yes, Ma'am, your line is open. Okay, sorry. Xiexie. Thanks, management, for taking my questions. Will management share some color about the fourth quarter outlook for the advertising business and the CCS business adjustment progress? My second question is related to the membership business. Will management share some color about the competition landscape, user growth, and Apple 10? Thank you.
Yes ma'am, your line is open.
OK, sorry. Um, Guan Li Tong and Shanghai just show what the T1 for the wind you should bring you Guanghoo yeah how woman the yuan yeah that get the jiu yu qi guo ya with the u shi hold on CCS yeah u tiaozhang uh iaozhong, the Jingjian what the one or the other one here should go on your hui yuan yeah u qing guani Xia Xia Jingzhong Tai Yingguanchaodao the yonghuzhongzhang the u shi
the 2 yeah thanks management for taking my questions. What management share some color about the 4th quarter outlook for the advertising business and the CCS business adjustment progress. My second question is related to the membership business management share some color about the competition landscape, um, use the growth and Apple Chan. Thank you.
what I what I.
I just.
Uh, thank you for your question, uh, I would take, uh, this question, uh, the, the first question is about the uh advertising or the marketing services, uh, business.
Wang Han: Thank you for your question, Vicky. I will take this question. The first question is about advertising or the marketing services business. This is Wang Han, Zhihu CF. The three of us want the same basic protection for your health. To fundamentally safeguard and potentially enhance the differentiated advantage we gain from our high-value audience and brands, we will continue to reduce low-quality, untrustworthy commercial content. To that end, we will remain quite focused on innovating and transforming our product mechanism and the data infrastructure. I believe that there is a lot of relationship between the creators of high-quality content and the brands and business partners.
Uh, this is, um,
Wang Zhifu CFO.
When the user.
They want me to make this issue can be.
No.
Um
to fundamentally safeguard um and potentially enhance the differentiated advantage we gain from our high value audience and friends will continue to reduce uh low quality um uh trusted uh trustworthy commercial content to that end, we will remain quite focused on um innovating and the transforming um our product mechanism and the data infrastructure.
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I need your help.
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So what then you where.
You can change whether to show.
Wang Han: So we will also be very determined to make these adjustments. Recently, we have been reviewing and refining our collaboration models with quality content creators and brands to further boister the trustworthiness of Zhihu community. So there are a lot of dimensions that we make this thinking and do the upgrading. Our commitment to make this adjustment is resolute, even if it means temporarily sacrificing some low-quality content. 要圍繞幫助品牌對高價值 So the know-how here is that Jupiter is increasingly solidating its commercial strength and expertise, specifically focusing on help brands build premium value with high quality and high value audience.
Recently we have been uh reviewing and refining our um collaboration models with quality content creators and uh brands um to follow a boer their trustworthiness of um Zhufu community. So there are a lot of um dimensions that we uh make this thinking and uh do the upgrading, um, our commitments to make this adjustments is resolute.
Um, even if it means temporarily sacrificing some low quality content.
I
with those courses.
You should.
They are going to go that range toujianjia.
So, um, the, the know-how here is that Drupu is increasingly um.
then.
Uh
some dripping sound.
Wang Han: 上一季度,我們跟大家分享了《金瓶一戰》 Last season, we shared with you the first battle of 《金瓶一戰》 Thank you for joining us. In the second quarter, we shared examples such as Toshiba Refrigerator launched their campaign in Zhuhu with this first stop for a new product and Vivo's collaboration with Zhuhu, Zhuhu's Lighthouse program to promote their Blue Heart AI accessibility feature. Gou. Some similar cases that we can see in our Q3 also highlighted the premium value of the high-end brands and audience. For example, TCL's new embedded refrigerator gains strong word-of-mouth and seating effect through Zhihu's First Stop for New Products campaign, achieving better than expected results.
You don't goal leader for legal
you
I
Um, in the 2nd quarter, we shared examples such as uh Toshiba refrigerator, lunch and uh launch their campaign in Juhu, uh with this uh first stop for a new product and uh Vivos collaboration with Zhou, uh, Zhu Hu's lighthouse program to promote their Blue Heart AI accessibility feature.
that is uh the.
to go I got you.
I'm sure.
that to.
Um
Some similar cases uh that we can see in our Q3 also highlighted the the premium value of the high-end brands and audience, um, for, for example, TCLs are new, um, embedded refrigerator gain strong uh word of mouth and uh seeing effect for you who's first off for new products campaign, achieving better than expected um results.
I
and the luxury brand by Jing Yanjian.
Wang Han: For example, the Luxury Brand, Baoguli, during this year's Qixi Festival Similarly, like the Bvlgari, the luxury brand, during this year's Qixi Festival, they chose Zhihu as a primary platform for its nationwide campaign, recognizing Zhihu's high concentration of affluent, high conception users. So these examples perfectly illustrate our trustworthiness and our high-quality contents value and the ability to deliver commercialization results, driving win-win outcomes for our customers.
That.
arrange the new uh.
Is that how the Shaa that you show.
Um
Similarly, um, like the Bulgari, uh, the luxury brand, uh, during this year's Qixi Festival, um, they chose, um, Zhuu as a primary platform for its nationwide campaign, uh, recognizing who's high concentration of affluent, high conception users.
So these examples perfectly illustrate our trustworthy, um, and our high quality contents value and uh the ability to deliver commercialization results, uh, driving win-win outcoms for ourselves.
Right yeah off with Danny and then you go, oh, you're never here and such a good.
doing good you have found me out.
Wang Han: Next, we will answer questions from the audience. I'm such a good And for your second question, I believe, is about our paid membership business. So we're not seeing significant changes in the competitive landscape here. Zhihu Yanyan Starry continues to hold its leading position in the short-form paid content sector. In the third quarter, the number of double-digit increases for our members, Tongbi and Huanbi, reaching 1,650 in total. In the third quarter, our average monthly subscribing members achieved double-digit growth both year-over-year and quarter-over-quarter, reaching 16.5 million. 关于增长动力,其实内容业务核心仍然就是最好的内容,我们仍然依托于延延最精品的短故事内容,并探索多个渠道共同增长这个用户规模,包括在内和在外。 China. And the growth momentum for our paid memberships, I believe, also relies on Yanyan Star's premium content, the Vantage itself.
And the Yang Xing.
Um
And for your second question, I believe, uh, is about uh our pay membership business, so we, we're, um, not seeing significant changes in the competitive landscape here, uh, Zhu Hu Yan Yan story continues to hold its uh leading position in the short form paid um content sector and uh.
So
That
And you do now.
Are you one.
In, in the 3rd quarter, um, our average monthly subscribing members achieve uh double digit growth both year over year and a quarter over quarter reaching 16.5 million.
I'm going through that I don't he told you in
more.
like
ambition.
Uh
That to go to.
And the gross momentum for our paid uh memberships I believe are also relies on Yang Yanar is premium content of advantage itself, um, we are exploring the multiple channels to extend our pay membership, uh, uh, pay membership space including like withinful community and beyond Zhiu community and so um we, we are aiming to uh further foster the brand recognition.
Wang Han: We are exploring the multiple channels to extend our paid membership space, including within Zhihu community and beyond Zhihu community. And we are aiming to further foster the brand recognition and the positive word of mouth of the Indiana itself. As for ARPU, we did not directly intervene in the pricing strategy. But our core goal has always been to continue to enrich the rights of the members. I believe that... Our strategy does not call for the direct intervention in pay members' ARPU. Rather, the core focus is on enraging our members' benefits, which we believe will lead to an increase in the lifetime value, LTV, for our pay members.
And the positive word of mouth of Indian itself.
Ongoing or in that mail I think to go no gay.
Our strategy does not um cover the, um, the direct, um intervention in pay members are poor, um, rather the core focus is on um engaging our members' benefits, um, which we believe will lead to um to an increase in the lifetime value LTV for other pay members.
I'll send you to a woman high yeah.
Wang Han: In the third quarter, we have diversified the price of the members of the Singers' Association. In addition to the pre-released audio-visual radio play, which has new content, we have also added new member rights to the short play. This order is also in progress. And in this quarter, through our premium paid membership, Changshan Huiyuan, supported by its differentiated pricing strategy, we not only expanded the current offerings in audiobooks and radio dramas that we launched before, but also introduced a broader range of membership benefits, including short dramas, which significantly boosted the demand and order growth. In addition, the potential of the visualization of the IP of Zhihu Yanyan's story is still being released.
Uh, but I got you.
Um, and in this quarter, um, through our premium paid membership, uh, Chang Xianhuiyuan supported by its differentiated pricing strategy, we not only expanded um the current offerings um in audio books and uh radio dramas that we launched before but also introduce a broader uh range of membership benefits, including short dramas, which significantly boosted the demand and order growth.
course that's good.
APD in hua she has a the.
Um, and additionally, Yanyan uh story's ability to transfer its uh premium IPs into uh video form content is also being constantly unlashed.
Wang Han: Additionally, Yan Yan's ability to transfer its premium IPs into video-formed content is also being constantly unleashed. In the third quarter, the author of Zhihu, Su Meimei's Supermarket, and Jizhen Jianwen 2, Life Guard, have all been selected for the third year of the Yangtze River Internet Literature Grand Prize. In the third quarter, two works by Yanyan Story creators, Remember the Mission and Live Well, Su Meimei de Chaoshi, and The Story of Er II, Di Zhen Jian Wen Er, Sheng Ming Shou Hu Jing Xing Shi, were selected for the third Yangtze River Online Literature's Most Potential IP List.
Uh, Sanje to who the yuanzhong.
I are.
You IP Chaiba.
Um, in the 3rd quarter, 2 works by Yan story creators, uh, remember the mission and to live well. Sue made the chaoshi and the story of ER second Digenn Jiang Wen are homing shohu jingxing shi were selected um for the, for the 3rd, uh, Yangtze River online literatures, um, most potential IP list.
The time I got in the Jews and ijo.
Wang Han: Based on their changes, the short film will be released in 7 hours. The number of broadcasts has exceeded 10 million, and the topic has exceeded 100 million. So in the future, we still have a lot of new product forms based on the story of Yanyan and the community linkage and the increase of membership rights. The short drama adapted from the Remember the Mission and Live Well achieved over 10 million views and within just seven hours of its release and inspired over 100 million released topics. So looking ahead, we expected to launch new product formats and more membership benefits based on the synergy between Yanyan's story and the Zhihu community.
They won't have.
The short drama adapted from uh the Remember the mission and live well, achieved over 10 million views and uh uh within just 7 hours of its release and inspired over 100 million released the topics. So looking ahead, we expected to launch new product formats and more membership benefits, um, based on the synergy between Yinyan story and the Zhiu community. So please stay tuned.
Unnamed: So please stay tuned.
Operator please um next question.
The next question will come from Stella Wang with TH. Please go ahead.
Cici Cheng: Reader, please ask questions. The next question will come from Stella Wang with TH Capital. Please go ahead. Good evening, management. Thank you for taking my question. My question is about the advancement in optimizing the vocational training program. Can you share some detailed information about the progress and what is our long-term financial goal for this business? Thank you. So I will translate myself. Good evening, management. Thanks for taking my question. My question is about the advancement in optimizing the vocational training business. Could the management share some colors about this progress and what is the financial target in the long term?
Uh, well, it's on my how can she with the event tissue guan yu jia what they go you passing but to shu for long goi like kind of uh it's not i like to shamai, uh, so I will translate by myself uh for the evening management. Thanks for taking my question. My question is about the advancement in optimizing the uh vocational training.
business for the management share some colors about this progress and what's the financial target in the long term. Thank you.
Oh well.
Uh
Wang Han: Thank you. Thank you for your questions. The most important goal of Zhihu's vocational education is to improve efficiency and speed up the loss reduction. We hope to achieve this goal in the next 2-5 years. Thank you for your question.
I who the teacher with the Sumo has
Uh, well, she wants.
Thank you for your question. Uh, this is uh from Wang Hanfu CFO, uh, currently the primary goal of our vocational training business remains um improving efficiency and accelerating loss reduction, uh, with the goal of achieving break event for this for this segment itself by the end of 25.
Wang Han: This is from Wang Han, Zhihu CFO. Currently, the primary goal of our vocational training business remains improving efficiency and accelerating loss reduction, with the goal of achieving break-even for this segment itself by the end of 2025. Following this objective, the orientation Q2 Q3 was response to the narrowing of students from sites with poor perspective and the companies that have purchased, and concentrating more resources on the modern districts. We have achieved an increase in efficiency and profit at the same time. In terms of management, Q3's port loss and gold loss are significantly reduced. So to that end, our Q2 and Q3 adjustments pretty much focused on scaling back on profitable course offerings and like the low margin acquired business.
I should have.
Uh
I'm not too good.
the teacher.
So she's like her.
Jim, Jim.
Um, so to that end, our Q2 and Q3 adjustments, um, pretty much focused on the scaling back on profitable course offerings and uh like um the low uh low margin acquired business. Um, this allowed us to concentrate more resources on expanding our strong performing courses, resulting in improved the overall efficiency and profitability.
Wang Han: This allowed us to concentrate more resources on expanding our strong performing courses, resulting in improved overall efficiency and profitability. So, from a management perspective, both operating losses and the net losses for the vocational training segment declined quarter over quarter for the Q3. In the direction of business development, we hope to connect with the community more quickly and more closely in the future to take advantage of Zhihu. From verifying new needs, more accurate customers, to creating reputation and users' confidence, we can bring more significant benefits and eventually transform them into a continuous positive unit profit. So, this adjustment includes revising this year's four-year plan.
Um, so from a management perspective, both operating losses and the net losses for the vocational training segment declined quarter over quarter for the Q3.
Uh, a year that I was like I'm like what maybe like she won something.
Right, so user so it should be.
So, looking ahead, um, we aim to um to foster a faster and closer integration uh between the vocational training business and the community. This will enable us to uh quickly uh validate new demands, uh, leverage, uh, precise customer acquisition advantages and the build brands uh reputation and user recognition. We expect this effort to deliver um
Wang Han: So looking ahead, we aim to foster a faster and closer integration between the vocational training business and the community. This will enable us to quickly validate new demands, leverage precessed customer acquisition advantages, and build brand reputation and user recognition. We expect this effort to deliver the substantial empowerment and eventually translate it into sustained positive unit economy. This adjustment process will span the fourth quarter of this year and continue throughout the next.
Uh, the substantial empowerment and uh eventually translated into sustained positive unit economics. This, um, adjustments, um, process will add a little uh span the 4th quarter of this year and continues throughout the next year.
Thank you for your question.
The next question will come from CC Chang with C L S A, please go ahead.
Unnamed: Thank you for watching.
Cici Cheng: The next question will come from Cici Cheng with CLSA. Please go ahead. Thank you, Yolanda Liu, for accepting my question. I am very happy to hear that the company is continuously losing money. We have been on track to break even for the past four quarters. So, on this basis, I would like to ask if the company has considered making other arrangements in terms of shareholder returns after the break-even, and whether we are more inclined to encourage or buy back in this way. Thanks, Maggie, for taking my question. It's very encouraging to hear that the company is on track to achieve break-even in the fourth quarter.
Uh, OK, it's on that one, to,, fish on gaore now just go for that system where home because way on track to break even. So the school is actually teach song when zia gong that break even to hold your milk you decided the fun we should go and see now you sound so a quick go. Uh, thanks, ma'am, for taking my question. And is there encouraging to hear that the company is on track to
break even and the 4th quarter, uh, in light of this, whether the company has any plan to consider a shareholder arrangement post to break even, uh, in order to enhance shareholder return and whether the company prefer uh uh share repurchase or uh dividend. Thank you.
Cici Cheng: In light of this, whether the company has any plan to consider a shareholder arrangement post-break-even in order to enhance shareholder return, and whether the company prefers a share repurchase or dividend.
Oh, Zhiqian, uh, already in the.
Wang Han: Thank you. Thank you for your question. As we mentioned before, from the launch of Hong Kong stock market to today, we have bought more than $200 million worth of stocks through various means, such as public market repurchase and online repurchase. Thank you for your question. This is Wang Han, Zhihu CFO. As we mentioned earlier, since our Hong Kong IPO, we have repurchased over 120 million U.S. dollars worth of shares via virus means, including open market buybacks and tender offers. So the total number of shares that we repurchased exceeds 25% of the total issued and outstanding shares, if calculated using the total number of the outstanding shares prior to the tender offers.
You.
Um
Thank you for your question. Uh, this is uh Wang Han, who's CFO, as we mentioned earlier, um,
Uh, since our Hong Kong IPO, we have repurchased over $120 million US dollars worth of shares uh via virus means including open market buybacks and uh tender often uh tender offers. Um, so the total number of shares that we, we purchased exists uh 25% of the total issued and outstanding shares, um, if calculated, uh, using the total number of the
outstanding shares uh prior to the tender offers.
Did you you got me a uh what maybe
Wang Han: On the one hand, we have brought a very significant increase in shareholding efficiency to the shareholders. On the other hand, we have also fully demonstrated our vision of self-reliance. So, on the one hand, this results in a significant enhancement in shareholders' value. On the other, this clearly demonstrated the management's strong confidence in the undervaluation of its assets. At the beginning of November, we completed the first order of Hong Kong, the United States, and the two main places to be listed in the U.S. The scale has reached 300 million Hong Kong dollars. In addition, we will continue to do on-market repurchase in the future and continue to express this management strategy.
So on the one hand, um, this uh results in a significant enhancement in shareholders' value, uh, on the other, um, this clear, uh, this clearly demonstrated um the management strong confidence in the under uh valuation of its assets.
And so I show you a short.
market.
you should be as well.
Um, this is also, uh, worth mentioning that um earlier in the beginning of uh November, we completed um a share buyback by a tender offers both in Hong Kong and the US market. This is the very first practice in the market. Um, and for a total consideration of over 300 million Hong Kong dollars.
Wang Han: This is also worth mentioning that earlier in the beginning of November, we completed a share buyback via tender offers, both in Hong Kong and the U.S. market. This is the very first practice in the market, and for a total consideration of over 300 million Hong Kong dollars. On the open market side, we will continue to do the buyback on open market to further demonstrate the management's confidence. In addition, if we can achieve full-year profit and positive cash flow next year, we will consider further increasing the number of shareholders. So at the same time, we're also accelerating our path to profitability and a positive cash flow.
Um, and it, on the open market side we will continue to do the uh buyback on open market to further demonstrate the management's confidence.
It's a dry now, uh.
One Joiu.
Um, so at the same time, um, uh, we're also accelerating our path uh to preferability and a positive cash flow. So with this foundation, uh, we will consider exploring more diverse methods for um.
Wang Han: So with this foundation, we will consider exploring more diverse methods for the shareholder returning.
The shareholder returning.
Thank you for your question.
This concludes today's question and answer session.
Unnamed: Thank you for watching.
At this time, I would like to turn the conference back over to Miss Yolanda.
Yolanda Liu: This concludes today's question-and-answer session. At this time, I would like to turn the conference back over to Ms. Yolanda for any closing remarks. Please go ahead, ma'am.
For any closing remarks, please go ahead, ma'am.
Thank you, uh, and thank you all once again for joining us today. Um, if you have any further questions, please contact our IR team directly or PS and financial communications. Thank you all.
Yolanda Liu: Thank you. And 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 all.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.