Q4 2024 Zhihu Inc Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by and welcome to Zhihu Inc.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to choose who Inc. Fourth quarter and full year 'twenty 'twenty full 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.
Operator: fourth quarter and full year 2024 financial results conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. Today's conference is being recorded and webcasted.
Speaker Change: Answer session. Today's conference is being recorded and webcast at this time I'd like to turn the conference over to Orlando Lille Director of Investor Relations. Please go ahead ma'am.
Yolanda Liu: At this time, I'd like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am. Thank you, Amberlynn.
Yolanda Liu: Hello, everyone. Welcome to Zhihu's fourth quarter and full year 2024 financial results conference call.
Amber Li: Thank you Amber Li Hello, everyone welcome to Duke <unk> fourth quarter, and full year, 'twenty 'twenty, four and financial results Conference call.
Yolanda Liu: Joining me on the call today from the senior management team are Mr. Zhou Yuan, our founder, chairman, and the chief executive officer, and Mr. Wang Han, our chief financial officer. 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 Solicitation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Full information regarding these and other risks and uncertainties is included in our public filings with the U.S.
Amber Li: Joining me on the call today from that stay in your management team are Mr. Julien, Our founder Chairman and Chief Executive Officer, and Mr. Huang Wang our Chief Financial Officer.
Amber Li: 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 Securities legislation Reform Act of 1995. These statements involve inherent risks and uncertainties.
Amber Li: 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 Securities and Exchange Commission.
Yolanda Liu: Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements as required under the applicable law. Additionally, the discussion today will include both GAAP and non-GAAP financial measures for comparison purposes only.
Amber Li: And the Hong Kong stock exchange.
The company does not assume any obligation to update any forward looking statements.
Amber Li: As required under the applicable law.
Amber Li: Additionally, the discussion today will include both GAAP and non-GAAP financial measures for a couple of duration purpose only.
Yolanda Liu: For reconciliation of these non-gap measures to the most directly comparable gap measures, please refer to our earnings release issue earlier today.
Amber Li: Or wait a couple of the Asian, all these non-GAAP measures to the most directly comparable GAAP measures. Please refer to our earnings release issued earlier today.
Han Wang: In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com Now I will turn the call over to Mr. Wang Han, CFO of Zhihu. Han, please go ahead. Thank you Yolanda.
Amber Li: In addition.
Amber Li: Costs were at play of this conference call will be available on our IR website.
Amber Li: I got Ya, who dot com.
Mr. Hwang: Now I will turn the call over to Mr. Hwang CFO of Chu, who haven't please go ahead.
Han Wang: Hello everyone and thank you for joining Zhihu's fourth quarter and full year 2024 earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, founder, chairman and CEO of Zhihu. 2024 marked a transformative turnaround for Zhihu, where we successfully executed the strategic roadmap laid out at the first of the year and delivered results that far surpassed our expectations. The fourth quarter was a strong finish, 2.24, with robust profitability. For the first time ever, we reported adjusted net income of RMB 97.1 million compared to an adjusted net loss of RMB 91.3 million in the same period last year.
Thank you Linda Hello, everyone and thank you for joining Joe who is fourth quarter and full year 'twenty 'twenty four earnings call I'm pleased to deliver today's opening remarks on behalf of Mr. Yoga, founder Chairman and CEO of <unk>.
Mr. Hwang: 204 marked a transformative turnaround, Portugal, where we successfully executed our strategic roadmap laid out at the first of the year and delivered results, thus far surpassed our expectations.
Mr. Hwang: The fourth quarter was a strong finish with 104 with robust profitability.
Mr. Hwang: For the first time ever we reported adjusted net income of RMB $97 1 million compared to an adjusted net loss of RMB 91, 3 million in the same period last year.
Han Wang: Moreover, we swung from an adjusted net operating loss of RMB 165.3 million in the first quarter last year to an adjusted operating profits of RMB 23.1 million this quarter. The strategic decisions made at the beginning of 2024, combined with consistent quarter-after-quarter execution, yielded significantly better than expected financial results this quarter, showcasing the strengths of our strategic judgment and execution capability. By prioritizing community trust and enhancing a core user experience, we made a deliberate choice to forego some peripheral users. This approach not only saved the community user acquisition-related expenses by 88% year-over-year, which is one of the key drivers to profitability, it also resulted in notable growth in key engagement metrics, time span, retention, and content creation, while maintaining a stable overall user base.
Speaker Change: Moreover, we swung from a Japan.
Speaker Change: Adjusted net operating loss of RMB $165 3 million in the fourth quarter last year to an adjusted operating profile.
Speaker Change: Operating profit of RMB $23 1 million this quarter.
Speaker Change: The strategic decision is made at the beginning of 204 combined with consistent quarter after quarter execution unit significantly better than expected financial results. This quarter showcasing the strength of our strategic Jocelyn and execution capabilities.
Speaker Change: By prioritizing community Trust any housing in our core user experience, we made a deliberate choice to forego some periphery users.
Speaker Change: This approach not only save the community user acquisition related expenses by 88% year over year, which is one of the key drivers to profitability. Now also resulted in notable growth in key engagement metrics time span re change in content creation, while maintaining a stable overall user base.
Han Wang: AI represents a historic opportunity for Zhihu. As the AI landscape evolves, it is more and more clear that authentic, professional, and in-depth content created by real individuals are the most valuable assets to help AI overcome hallucinations, and this is the most unique asset that Zhihu has been accumulating for 14 years. In essence, the Zhihu community is a dynamic network of real experts who continuously share knowledge, experiences, and insights. Through rigorous community peer review, content is validated through discussions across diverse fields, driving the creation of high-quality and multidimensional content.
Speaker Change: AI represents a historic opportunity for example.
Speaker Change: As the landscape evolves is more and more clear that authentic professional and in depth content created by Rio any ratios and most valuable assets to help AI overcoming hallucinations and data is the most unique assets that <unk>, who has been accumulated for 14 years.
Speaker Change: Yeah.
Speaker Change: In assets that you hold community, it's a dynamic network of real experts, who continuously shared knowledge experiences and insights.
Speaker Change: So rigorous comparative peer review Collyn is validated through just contracts across diverse fields driving the creation of high quality multi dimensional content.
Han Wang: Just two days ago, Zhihua underwent another major upgrade. Users can now clearly see the contribution of our professional creators to each piece of Zhida's artwork. They can also proactively engage with specific Zhihu content creators who are real experts with a certificated professional background within the community. Currently, JILA has achieved over 10 million MAU on our app and PC platforms and continues to receive positive user feedback in key areas such as response completeness, accuracy, and reduction of hallucinations. Going forward, we will continue enhancing our product in this direction, further strengthening the synergies between Jida and Zhihu community while reinforcing trust between users and creators through professional, authentic, and in-depth contact.
Speaker Change: Just two days ago do not enter with another major upgrades.
Speaker Change: Users can now clearly see the contribution of our professional creators to each piece of Judas output.
Speaker Change: They can also proactively engaged with specific true who content creators who are real experts with sturdy certificated professional background within the community.
Speaker Change: Currently <unk> has achieved over 10 minutes I mean, you are app and PC platforms and continues to receive positive user feedback in key areas such as response, coupled with news accuracy and reduction of policy missions.
Speaker Change: Going forward, we will continue enhancing our product in this direction further strengthening the synergies between <unk> and <unk>, who community, while reinforcing trust between users and creators through professional authentic and in types content.
Han Wang: Moving to our user and content. During the fourth quarter, we maintain our focus on improving user engagement, retention, and acquisition efficiency. Average MUs were 81.4 million, up 0.3% sequentially. A strong result even our strategic decision to decrease community-related promotional expenses by over 45% from Q3 and nearly 90% every year. This focused approach delivered clear results during the quarter with improved user engagement. Time span per DAU grew 23% year-over-year, while core user retention rates improved both sequentially and year-over-year. Throughout 2024, we comprehensively optimized our community ecosystem through product enhancement, refined content strategies, and algorithmic algorithms. These initiatives have made high-quality content more discoverable and consumable.
Speaker Change: Moving to our user and content.
Speaker Change: During the first quarter, we maintain our focus on improving user engagement retention and acquisition efficiency.
Speaker Change: Average <unk> were $81 4 million up seven 3% sequentially.
Speaker Change: Wrong result, given our strategic decision to decrease community related promotional expenses by over 45% from Q3, and nearly 90% year over year.
Speaker Change: This focused approach delivered clear results during the quarter with improved user engagement.
Speaker Change: Time spent per day grew 23% year over year, while core user retention rates improved both sequentially and year over year.
Speaker Change: Throughout 104, we comprehensively optimized our community ecosystem through product enhancements refined contact strategies and algorithm upwards.
Speaker Change: This initiative has made high quality content more discoverable and consumable.
Han Wang: Inspiring and motivating creators to produce their best work. As a result, we all witnessed the most insightful and dynamic discussions in various professional domains take place in our community, making us the go-to platform for professional and in-depth discussions. Notably, our community has already become a center for AI related topics, long before engaging discussions sparked by deep six open source release of the R1 model has continued to gain momentum since In the fourth quarter, both AI-related content volume and AI-focused creators grew more than 50% every year. Our community of creators includes many leading entrepreneurs and industry pioneers who engage in multidimensional, professional, and in-depth discussions, such as Wang Xinxin, CEO of Unitree Robotics, who has been an active contributor in Zhihu's community since 2016.
Speaker Change: Inspiring and motivating creators to produce their best work.
Speaker Change: As a result, we are witness the most insightful and dynamic discussions in various professional demand take place in our community, making us the go to platform for professional and in depth discussions.
Speaker Change: Notably our community has already become a center for AI related topics long before engaging discussions sparked by deep six open source release up to our model. It has continued to gain momentum since then.
Speaker Change: In the fourth quarter, both AI related content volume and AI focused <unk> grew more than 50% year over year.
Speaker Change: Our community of creators includes many leading entrepreneurialism and industry pioneers, who engaged in multi dimensional professional and in depth discussions with this one.
Speaker Change: <unk> CEO of unitary robotics, who has been an active contributor in Jewish community since 2016.
Han Wang: In early March, we were honored to be selected by DeepSeek as exclusive Chinese content platforms to release the latest details and cost benefit analysis of their open source model. This demonstrates that we are the community with the highest concentration of AI professionals and entrepreneurs and the most important discussion hub for AI trends across the Internet. Users join our community for insightful discussions spanning diverse topics.
Speaker Change: In early March we were honored to be selected by deep stake as exclusive Chinese content platforms to release, the latest details and cost benefit analysis of their open source model.
Speaker Change: This demonstrates that we are a community was the highest concentration of AI professionals instrument errors and most important discussion hub for AI trends across the internet.
Speaker Change: Users join our community before insightful discussions spanning diverse topics.
Han Wang: For example, during the U.S. President election cycle, our community generated more than 23,000 answers across nearly 200 questions, driving over 140 million page views of related content. We remain dedicated to discovering new high-quality cotton creators and supporting their growth through advanced creation tools and operational initiatives unique to our product. This commitment ensures a dynamic creator base and a continuous flow of diverse, authentic, and professional content. As of the end of Q4, cumulative content volume on our platform reached 874.6 million pieces, an increase of 12.9% every year. This included 654.8 million Q&A entries, up 10.5% year-over-year.
Speaker Change: For example, during at U S presidential election cycle or community generated more than 23000 houses across nearly 200 questions driving over 140 million page views of related content.
Speaker Change: We remain dedicated to discovering new high quality content creators and supporting their growth through advanced creation chores and operational initiatives unique to our platform.
This commitment ensures that dynamic creator base and a continuous flow of diverse authentic and professional content.
Speaker Change: As of the end of Q4 accumulative content volume our platform reached $874 6 million cases, an increase of 12, 9% year over year.
Speaker Change: This included $654 8 million in Q&A interest up 10, 5% year over year.
Han Wang: The Zhihu community is now home to 77.7 million content creators, up 8.9% year-over-year. The growing vibrancy of our content creators' community is reflected in the growing daily activities of high-tier creators. Income-generating creditors increased substantially by over 22% year-over-year during the quarter, with high-chair creditors accounting for the most significant gain. The revenue share of Zhizhi plant grew by nearly 20% between September and December 2024. During the quarter, we prioritize the onboarding of new high-tier creators. Notably, many podcasters have demonstrated their ability to develop exceptional visual and reading content that drives strong user engagement with our community.
Speaker Change: Did you who committee is now home to $777 7 million content creators up eight 9% year over year.
Speaker Change: Okay.
Speaker Change: The growing vibrancy of our content creators community is reflected in our growing daily activities of high Chilcot Equators.
Speaker Change: Income generating creators increased substantially by over 22% year over year during the quarter was high Tech quitters accounting for most significant gains.
And revenue share of Jujube plan grew by nearly 20% between September and.
Speaker Change: December 24.
Speaker Change: During the quarter, we prioritize the onboarding of new Hyatt <unk> <unk>.
Notably Mallipo contracts has demonstrated ability to develop exceptional visual and breeding content that drives strong user engagement with our community.
Han Wang: Within 30 days of joining, these creators achieved a daily active rate of over 90% on an average.
Speaker Change: With a 30 days of joining <unk> achieved a daily active rate of over 90% on average.
Han Wang: In late January 2025, Li Ziqi, the renowned short video creator celebrated for showcasing the beauty of Chinese culture, officially became Zhihu's Intangible Cultural Heritage of the Year. During the Chinese New Year holiday, her insights into the first World Intangible Cultural Heritage Edition Spring Festival and detailed explanations of Siu Chuan's holiday costumes sparked widespread community discussions about regional traditions. As we continue optimizing the creators and user experiences and enhanced community atmosphere, negative user feedback has declined consistently while positive engagement has increased. Average daily engagements per DAU rose consistently on a sequential basis throughout the year, with the fourth quarter's mostly average upwards surging over 30% year-over-year.
Speaker Change: Led generate $1 five Liza key.
Speaker Change: The renowned short video creator celebrated for showcasing the beauty of Chinese culture officially became Jew host intangible cultural Heritage Officer.
Speaker Change: Given the Chinese new year holiday and insight into the first worrying chargeable kosher Heritage edition Spring Festival and detailed explanations of Charles Holley costumes sparked widespread community discussions about regional traditions.
Speaker Change: As we continue optimizing and creators and user experiences and enhanced community atmosphere not get user feedback has declined consistently while positive engagement has increased.
Speaker Change: Average daily engagement as per <unk> rose consistently on a sequential basis throughout the year with the fourth quarter as monthly average Apple are surging over 30% year over year.
Han Wang: A healthy and consistent active community ecosystem remains our core assets, providing us with strong competitive advantages in AI era.
Speaker Change: Healthy and consistent active community ecosystem remains our core assets, providing us with strong competitive advantages in AI era.
Speaker Change: Yeah.
Han Wang: Moving to commercialization. Since April 2004, we have prioritized the core user experience and community trustworthiness by actively managing the proportion of commercial content distributed and ensuring differentiated experiences for distinct user groups. This strategy has driven the ongoing optimization of our community ecosystem and enhanced the trustworthiness of our brand. While this approach has short-term trade-offs, including sunsetting lower-quality revenue streams, we're confident that the long-term value from strengths and trust in our brand and improved health of our community will prove more impactful. Total revenues during the fourth quarter were RMB 859.2 million, which revenues for full year 2024 came in at RMB 3,598.9 million, a decrease of 14.3% from last year as a result of strategic adjustments away from lower quality revenue.
Speaker Change: Moving to commercialization.
Speaker Change: Since April 104, we have prioritized the core user experience and community Trust worthiness by actually managing the proportion of commercial content distributed and ensuring differentiated.
Speaker Change: Services for existing user groups.
Speaker Change: This strategy has driven the ongoing optimization of our community ecosystem the house the trustworthiness of our grant.
Speaker Change: While this approach has short term trade offs, including sunsetting lower quality revenue streams. We are confident that the long term value from strains and trust in our brand and improved housing our community will prove more impactful.
Speaker Change: Total revenues during the fourth quarter were RMB $859 2 million with revenues for full year 2004 came in at RMB $3598 9 million a decrease of 14, 3% from last year as a result of strategic adjustments away from lower quality revenue.
Han Wang: Diving into our performance by seconds. For pay membership business, we focus on maximizing ROI in an environment of rising user acquisition costs and channel expenses. We drove an increase in output of 7% sequentially Average monthly pay members were $14.1 million during the quarter, a slightly decrease of 0.8% every year, while pay membership revenue were RMB $420.2 million. Our leadership in premium short-form paid content, strengthened as our Zhihu Yanyan Story brand continues to gain user mindshare. In December 2024, Zhihu Yanyan Story hosted the 2024 Short Story Impact Night in Bo'ao, Hainan Province, honoring 76 outstanding creators and stories.
Speaker Change: So that means you are.
Speaker Change: Format by segments.
Speaker Change: We're paying membership business, we focused on maximizing ROI, you're in an environment of rising user acquisition cost and channel expenses.
Speaker Change: We drove an increase in <unk> up 7% sequentially during the quarter, while maintaining a relatively stable membership base.
Speaker Change: Average monthly pay members were $14 1 million during the quarter, a slightly decrease of <unk> <unk>.
Speaker Change: <unk>, 8% year over year, while paying membership revenue were RMB $422 million.
Our leadership in premium short form paid content strengthen as our typical Union story brand continues to gain user mindshare.
Speaker Change: In December 2024, Ju Yang story hosted <unk> for straw story impact night in Boral Hainan Province.
676, offsetting quitters and stories.
Han Wang: This event introduced new categories like Best Audio Drama and Rookie Creators of the Year. for expanding the influence of Zhihu Yansari creators across platforms and reinforcing our multimedia short-form content ecosystem. With an improved content supply and creator ecosystem, income-generating creators for pay members shares by 78.3% year-over-year during the fourth quarter. We also further unlock the monetization potential of Yanyan Storage's IP, driving a nearly 50% sequential increase in IP revenue during the fourth quarter. Going forward, we'll continue leveraging the strengths of our premium short-form paid content to drive paid membership engagement while exploring new diverse paid content formats and monetization opportunities.
Speaker Change: This event introduced new categories like fast audio drama and Rohit creators after year.
Speaker Change: For expanding the influence of <unk>.
Speaker Change: Waiters across platforms and reinforcing our multi media short form content ecosystem.
Speaker Change: With an improved kind of supplier and creator ecosystem income generating quite creators for paid members cherished by 78, 3% year over year during the fourth quarter.
Speaker Change: We also further unlock the monetization potential of union storage IP driving a nearly 50% sequential increase in IP revenue during the fourth quarter.
Speaker Change: Going forward, we will continue leveraging the strength of our premium short form content to drive paid membership engagement, while exploring new divers paid content formats and monetization opportunities.
Han Wang: Turning to marketing services, in line with our company-wide focus on trust and quality, we're establishing a new baseline for marketing services revenue, which reached RMB315.9 million during the quarter. Encouragingly, the rate of decline narrowed compared to the third quarter of 2024, with revenue growing 23.1% sequentially. Brand advertising was resilient, maintaining a stable performance despite the high baseline. Key clients increasingly recognize the premium value of our high-quality user base and brand equity. It is clearly seen by the year-over-year increase in brand advertiser output during 2024, with standout growth in sectors like e-commerce, IT and 3C, beauty and personal care, FMCG and healthcare.
Speaker Change: Turning to marketing services in line with our companywide focus on trials and quality, we're establishing a new baseline for marketing services revenue, which race.
Speaker Change: RMB $315 9 million during the quarter.
Speaker Change: And currently the rate of decline narrowed compared to the third quarter of 104 with revenue growing 23, 1% sequentially.
Speaker Change: Brand advertising was resilient maintaining a stable performance despite the high base last year.
Speaker Change: Key clients increasingly recognize the premium value of our high quality user base and brand equity.
Speaker Change: Is it clearly seen by year over year increase in brand Advertiser ARPA June before we start with standout growth in sectors like E Commerce, <unk> beauty and personal care <unk> and healthcare.
Han Wang: We strengthen our presence in the automotive sector by hosting the first E-Club Qingzhi Technology Conference in Chengdu, where we brought together key industry players like BYD, Chang'an Qiyuan, and Expon, alongside with our automotive expert network. The event facilitated in-depth, professional, and impartial discussions on EV trends and technologies, generating 630 million online impressions and 30 million views.
Speaker Change: We strengthened our presence in automotive sectors by hosting the first E Club Changer Technology conference in Chengdu, while we brought together key industry players like BYD chance, you add exome alongside with our automotive expert network.
Speaker Change: The event facilitated <unk> professional in parts or discussions on EBIT trends and technologies generating 633.
Speaker Change: 630 million online impressions and 30 million video views.
Han Wang: For CCS business, current optimization remains our central focus. to reduce low-quality commercial content by over 50% year-over-year and sequentially during the quarter, further enhancing advertisers' trustworthiness for users. This show was 15% sequential decline in negative user feedback on commercial content. Looking to 2025, we will empower more emerging product categories, especially those with technological barriers to increase their market exposure and credibility leveraging our professional ecosystem and the trust of our high value users. At the same time, we will deepen greater partnerships, enable them to monetize their expertise, and maximize earnings through our platform.
Speaker Change: For Ccs business current optimization remains our central focus.
Speaker Change: We've reduced low quality commercial content by over 50% year over year and sequentially during the quarter following housing advertisers trustworthiness support users.
Speaker Change: This show a 15% sequential decline in active user feedback on commercial content.
Speaker Change: Looking to 295.
Speaker Change: We will empower more emerging product categories, especially those with technology co barriers to increase your market exposure and credibility leveraging our professional ecosystem and the trust of our high value users.
Speaker Change: At the same time, we will deepen our creative partnerships enable them to monetize their expert expertise and maximize earnings through our platform.
Han Wang: Luckily, our vocational training business, where revenue decreased 50.4% every year to RMB$84 million during the quarter as we streamlined the acquired business. Our soft-operated business maintains robust momentum, delivering double-digit growth year-over-year and achieving a turnaround in operating profitability. A strong increase in revenue from our self-operated business was driven by our strategic focus, a high-performing focus, high-performing courses categories like AGI and film post-production, which remained highly popular during the quarter. Deep community integration continues to foster a loyal user base with an extended lifecycle. Operating efficiency initiatives show further ROI improvements during the quarter, with over 80% of courses now delivering returns exceeding 2x, leading a clear path towards profitability for our vocational training business.
Speaker Change: Luckily our vocational training business, where revenue decreased 15, 4% year over year to RMB $84 million during the quarter as we streamline the acquired business.
Speaker Change: Our self operated business maintained robust momentum delivering double digit growth year over year, and achieving a turnaround in operating profitability.
Speaker Change: The strong increase in revenue from our self operated business was driven by our strategic focus a high performing focused high performing courses categories like Agi in film post production will remit, which remained highly popular during the quarter.
Speaker Change: Deep community integrations continues to foster a loyal.
Speaker Change: <unk> user base was extended last cycle.
Speaker Change: Operating efficiency initiatives, Joe quarter, Oi improvements during the quarter with over 80% of our courses now delivering returns exceeding <unk>, Larry and a clear path towards profitability for our vocational training business.
Han Wang: The integration of advanced AI is accelerating these gains in operating efficiency. During the quarter, AI job conversion efficiency gains by 10% and reduced costs by 20% for our proprietary live streaming platform. We also piloted a new AI-driven sales model during Carter, which is already making solid progress. For example, the customer service to user ratio for our proprietary writing course tripled when we compared to the manual processes we previously deployed. Going forward, our priorities include deeper integration of our vocational training business across our community, developing additional proprietary high-margin courses that address evolving user demand and fostering greater engagement.
Speaker Change: The integration of <unk> AI is excellent accelerating these gains in operating efficiency.
Speaker Change: During the quarter agile conversion efficiency gains by 10% and reduce costs by 20% for our proprietary live streaming platform.
Speaker Change: We also piloted a new AI driven sales model during the quarter, which is already making some progress.
Speaker Change: For example, the customer service, we use a ratio for our proprietary writing course triple when we compare to the matter of processes.
Speaker Change: We personally deployed.
Speaker Change: Going forward our priorities include deeper integration of our vocational training business across our community developing additional proprietary high margin courses that address evolving user demand and fostering greater.
Han Wang: Simultaneously, we will expand the deployment of AI to enhance operational efficiency and accelerate our path to sustainable long-term profitability.
Speaker Change: Greater engagement.
Speaker Change: Maintaining Italy.
Speaker Change: The deployment of AI to enhance operational efficiency and accelerate our path to sustainable long term profitability.
Han Wang: In the first quarter of 2024, we not only drove a turnaround in both net income and operating profits, but also achieved a double-digit net margin. demonstrating our profitability potential. AI presents a historic opportunity for growth, and our substantial cash reserves gives us the flexibility to invest in strategic initiatives that may evolve short-term losses. We view these investments as crucial steps towards achieving long-term profitabilities and maximizing our competitive advantages in AI era. From an operational standpoint, we will focus on reinforcing the trust and credibility that underpin the Zhihu community and unlock the commercial opportunities by catering to evolving needs of high value users and consumers.
Speaker Change: First quarter, and 104, where not only Java turnaround in both net income and operating profit, but also achieved a double digit net margin.
Speaker Change: Demonstrating our profitability potential.
Speaker Change: AI presents a historic opportunity for growth and our substantial cash reserves gives that gave us gives us flexibility to invest in strategic initiatives.
Speaker Change: <unk> short term losses.
Speaker Change: <unk> investments as crucial steps towards achieving our long term profitability and maximizing our competitive advantages in AI era.
Speaker Change: From an operational standpoint, we will focus on reinforcing the trust and credibility that underpins the juku community and unlock the commercial opportunities are carrying two evolving needs of high value users from consumers.
Han Wang: We believe this will solidify our unique position and competitive advantage in AI area as we continue to explore innovative AI applications that effectively leverage Zhihu's distinct strengths.
Speaker Change: Philip This was the ladyfy, our unique position and competitive advantage.
Speaker Change: In Asia area as we continue to explore innovative applications that effectively leverage <unk> distinct strengths. This concludes Mr. Joe Johns remarks.
Han Wang: This concludes Mr. Zhou's remarks. Now I will review the details of our fourth quarter financials. For a complete overview of our fourth quarter 2024 results, please refer to our press release issued earlier today.
Speaker Change: Okay.
Speaker Change: Now I will review the details of our fourth quarter financials for a complete overview of our fourth quarter <unk> results. Please refer to our press release issued earlier today.
Han Wang: The fourth quarter of 2004 was a true milestone for us, an inflection point that underscores our strategic focus and strong execution. For the first time, we achieved positive operating profits and net income on a both gap and non-gap basis, a clear testament to the strength of our approach and the momentum we have built. Total revenues for the quarter were RMB 859.2 million, compared with RMB 1,138.3 million in the same period of 2023, reflecting our strategy to prioritize trust, quality, and return on investment. Our revenue mix has become more diversified, with paid membership and vocational training contributing over 62% of total revenue.
Speaker Change: The fourth quarter of 104 was a true milestone for us.
Speaker Change: Flexion point that underscores our strategic focus and strong execution.
Speaker Change: But first time, we achieved positive operating profit and net income on both GAAP and non-GAAP basis, because there are testament to the strength of our approach and momentum we have built.
Speaker Change: Total revenues for the quarter were RMB $859 2 million compared with RMB $1138 3 million in the same period of <unk> hundred three reflecting our strategy to prioritize charts quality and return on investment.
Speaker Change: Our revenue mix has became a more diversified with pay membership and vocational training contributing over 60 62 portion of total revenues.
Han Wang: Our market services revenue for the quarter was RMB 315.9 million compared with RMB 465.2 million in the same period of 2023. The decline was mainly driven by our proactive and continuous optimization of service offerings strategically aimed at enhancing market cap. Pay membership revenue was RMB 420.2 million, compared with RMB 455.9 million in the same period of 2023. While our average monthly subscribing members saw a slight year-over-year decline, our premium paid content continued to maintain high engagement rates among paying users. Well, our pool declined year-over-year. It grew 7.3% sequentially. Vocational training revenue was RMB 84 million compared with RMB 169.3 million in the same period of 2023.
Speaker Change: Our marketing services revenue for the quarter was RMB $315 9 million compared with RMB $465 2 million in the same period of up to 103.
Speaker Change: The decline was mainly driven by our proactive and continuous optimization of service offerings strategically aimed at enhancing margins.
Speaker Change: Paying membership revenue was RMB $420 2 million compared with RMB $455 9 million in same period of 203, well, while our average monthly subscribing members saw a slight year over year decline our premium.
Speaker Change: Content continue to maintain high engagement rates well.
Speaker Change: Paying users.
Speaker Change: <unk> declined year over year is grew at seven 3% sequentially.
Speaker Change: Location and training revenue was RMB $84 million compared with RMB $169 3 million in the same period of up to 103 a.
Han Wang: The decrease was primarily due to our strategic refinement of acquired business with a continued focus on prioritizing the fast-growing self-operated program. Other revenues were RMB39.1 million, compared with RMB48 million in the same period of 2013. Our gross profit for the first quarter was RMB540.7 million compared with RMB673.1 million in the same period of 2003. Driven by improved operational efficiency, our gross margin expanded further year-over-year, reaching 62.9%. Driven by disciplined cost management and enhanced efficiency from technological innovation, our total operating expenses per quarter declined by 37.9% year-over-year to RMB 528.8 million. Selling and marketing expenses decreased by 40.1% to RMB316.2 million from RMB527.6 million in the same period of 2023.
Speaker Change: The decrease was primarily due to our strategic refinement of acquired business with a continued focus on prioritizing the fast growing self operated programs.
Speaker Change: Auto revenues were RMB, $39 1 million compared with RMB 48 million in the same period of two 103.
Speaker Change: Our gross profit for the first quarter was RMB $540 7 million compared with RMB $673 1 million in the same period of 203 driven.
Speaker Change: Driven by improved operational efficiency, our gross margin expanded year over year, reaching 62, 9%.
Speaker Change: Driven by disciplined cost management and in house efficiency from technological innovation, our total operating expenses per quarter declined by 37, 9% year over year to RMB $528 8 million.
Speaker Change: Selling and marketing expenses decreased by 41.
Speaker Change: 1% to RMB $316 2 million from RMB $527 6 million in the same period out of 133.
Han Wang: The decrease was primarily driven by more disciplined promotional spending and a decrease in personnel-related expenses. Research and development expenses decreased by 37% to RMB 146.6 million from RMB 232.6 million in the same period of 2003. The decrease was primarily attributable to more efficient spending on technological innovation. General administrative expenses decreased by 27.5% to RMB66 million or RMB91.1 million in the same period of 2020.
Speaker Change: The decrease was primarily driven by more disciplined promotional spending.
Speaker Change: In personnel related expenses.
Speaker Change: Research and development expenses decreased by 77% to RMB 146 6 million.
Speaker Change: From RMB $232 six minutes in the same period of two 103.
Speaker Change: The decrease was primarily attributable to more efficient spending on technological innovation.
Speaker Change: General.
Speaker Change: Administrative expenses decreased by 27, 5% to RMB 66 million or RMB $91 1 million in same period of 203.
Han Wang: As of December 31st, 2024, the company has cash and cash equivalents, term deposit, restricted cash, and short-term investment of RMB4.9 billion compared with RMB5.5 billion as of December 31st, 2024. Since our Hong Kong IPO up until December 31st, 2024, we repurchased 31.1 million closet ownerships for an aggregate value of US$66.5 million on the open market, and it subsequently is cancelled. We also repurchased a total of 11.1 million Class A ordinary shares for an aggregate value of US$17.8 million to be utilized upon investing of restricted shares in future. In addition, we purchased another 33 million classic orange shares for an aggregate value of US$38.5 million via tender offers, which we completed on November 8th, 2020.
Speaker Change: As of December 31, 201 for the company has cash and cash equivalents term deposits.
Speaker Change: Restricted cash and short term investments of RMB, one 9 billion compared with RMB five 5 billion as of December 31 timeframe.
Since our Hong Kong IPO up until December 30, <unk> <unk> hundred four we repurchased $31 1 million class a ordinary shares for an aggregate value of U S. Dollar $66 5 million on an open market and subsequently canceled them.
Speaker Change: We also repurchased a total of Eli one wyman and costs eight ordinary shares for an aggregate value of 17.
Speaker Change: $17 8 million to be utilized upon vesting of restricted shares in future.
Speaker Change: In addition, we repurchased another 33 million class a ordinary shares for an aggregate value of CRT.
Speaker Change: $38 5 million via a tender offers which we completed on November eight to 104 in total the company purchased $75 3 million class a ordinary shares for an aggregate value of $1 2 billion.
Han Wang: In total, the company purchased 75.3 million Class A ordinary shares for an aggregate value of US$1.2 billion.
Han Wang: Looking ahead to 2025, we will focus on continuously enhancing the trustworthiness of our community while strengthening our profitability for steering a mutually reinforcing journey of shareholder returns and enterprise value growth. This concludes my prepared remarks on our financial performance for this quarter.
Speaker Change: Looking ahead to two 105, we are focused on continuously enhancing the trustworthiness upper community, while strengthening our profitability for staying a mutually reinforcing journey of shareholder returns enterprise value growth. This concludes my prepared remarks, our financial performance for this quarter I will turn the call over to <unk>.
Operator: Let's turn the call over to the operator for the Q&A session. Thank you.
Speaker Change: Operator for the Q&A session.
Operator: We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Speaker Change: We will now begin the question and answer session to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Operator: In the interest of time, please ask one question each time. If you have any follow-up questions, please go back to the queue. Once again, that's star 11 for questions.
Speaker Change: And the interest of time. Please ask one question. Each time, if you have any follow up questions. Please go back to the queue. Once again Thats star one one for questions.
Xueqing Zhang: We will now take our first question from the line of Xueqing Zhang from CICC. Please ask your question, Xueqing. Thank you for accepting my question. First of all, congratulations to the four-quarter milestone. You have gained the first profit on the GAP and non-GAP levels.
Speaker Change: We will now take our first question from the line of Shred Kim Jong from fee ICC. Please ask your question switching.
Speaker Change: Got any changes.
Speaker Change: So again long cycle goes to consider strategic region base should give Simeon Dodge.
Xueqing Zhang: My question is about Zhihu. Can you share with us the user guide and data for searching for answers? How does Zhihu help the ecosystem of the Zhihu community? Also, from an industry perspective, are we worried that Zhihu will be replaced by AI on the basis of new LMM reasoning capabilities? Thank you.
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Jamie: Jamie Let me just.
Jamie: Just locally at the edge.
Xueqing Zhang: Thanks, management, for taking my question. Congratulations on the first profit quarter on both GAP and non-GAP basis. My question is about Zhihu. Can management share your insights regarding the user size data of Zhihu? How does it benefit the overall Zhihu community ecosystem? Additionally, from an industrial perspective, is there any concern that with the advancements in LLM inference capabilities, Zhihu could be replaced by AI? Thank you.
Speaker Change: Thanks management for taking my question and congratulations on your first profit Qatar, both GAAP and non-GAAP basis.
Speaker Change: My question about Chipotle.
Speaker Change: Could management share your insights.
Speaker Change: Your size data of just whats your docks.
Speaker Change: Okay.
Speaker Change: Come into ecosystem. Additionally, in that industrial perspective is there any concern escalated.
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Speaker Change: Capabilities Chu, who could be replenished.
Speaker Change: Thank you.
Yuan Zhou: Thank you Xueqing, I am Yuan Zhou. Thank you for your attention to Zhihu. Actually, you asked three questions just now. The first question is about the data of Zhihu Zhida. In the past six months, Zhihu Zhida has been growing very healthily. The size of users of Zhida has increased from... We have a million active users and more than 10 million active users. This process is the result of a natural growth. It mainly comes from the users' reviews and reputation. Thank you, Xueqing.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Two quick questions.
Speaker Change: <unk>.
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Speaker Change: Highlights for the.
Speaker Change: Colby.
Yuan Zhou: This is from Zhihu CEO, Zhou Yuan. Thanks for your longtime support for the company.
Speaker Change: Thank you for your team.
Julian: <unk> from Jefferies CEO Julian Thanks for your long time for the company.
Yuan Zhou: So I will just start by addressing your first question. Over the past six months, Zhida's user-based data grow healthily. And the MAU have grown from the scale of about 1 million to 10 million. And we believe this strong organic growth has been driven by the high repeat visits and the positive word of mouth.
Julian: I will just start by addressing your first question over the past six months.
Julian: Judith.
Speaker Change: Is there a user base data grow healthily.
Speaker Change: I mean, you have Brian from the scale up about 1 million to $10 million and we believe this strong organic growth has been driven by the high repeat visits and positive word of mouth.
Yuan Zhou: The second question you asked is about the impact on the community. Today, we can see that the Zhihu community has an irreplaceable, unique expert network on the Internet. Today, the expert network has become very, very important. Because of AIGC's brilliant content and various AI illusions, creative content consumption and interactive environment have become a practical challenge for users today. And to your second question on how Jiudao benefits our overall community. So Zhihu community has a replaceable and unique position over the whole internet with this network of experts. This network is increasingly crucial because the expansion of the AI-generated content and AI hallucination has made trustworthy content and environment a rigid demand.
Speaker Change: Okay.
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Speaker Change: Inkjet systems.
Speaker Change: This is on the balance sheet.
Speaker Change: And to your second question, how <unk> benefits our overall community.
Speaker Change: Duke community has.
Speaker Change: We are collectible and unique position.
Speaker Change: Over the whole internet.
Speaker Change: This network of experts.
Speaker Change: This network is increasingly crucial because.
Speaker Change: The expansion of the AI generated content and AI hallucination has made trustworthy content and environment a range eight demand.
Yuan Zhou: Although we have a lot of different AI products today, But you will find that there is no product that can directly establish a relationship with real people and those experts who can bring credible content. Although many AI products have already existed today, they lack the ability to generally connect with real people, especially experts. Now, we have a new solution for this problem or this demand.
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Speaker Change: And that was the fact that this is.
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Speaker Change: Certainly on a trend.
Speaker Change: Yes generally.
Speaker Change: Although many AI products.
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Speaker Change: The lack of ability to chianti rolling connect with real people, especially experts.
Speaker Change: I thought I'd take a one tier CCAR participant.
Yuan Zhou: We have released the latest version of Alipay in the past two days. The PC version is fully available, and the mobile version, the app version, is now being deployed. You should be able to get it soon. Today, you will find that we have two new ways Secondly, you can also directly add a user, so that every Zhihu user becomes your knowledge base for interaction. And we believe this question may be answered in an alternative way. Juhu Jida, our latest, we have a very latest update, have perfectly addressed this need. And we can see now the PC platform fully rolled out.
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Speaker Change: So with Agila boats.
Speaker Change: 19 of them.
Speaker Change: And we believe this question may be answered in.
Speaker Change: Alternative way.
Speaker Change: Q4, due to our latest well we have a very latest update Pat.
Speaker Change: Perfectly address this need.
Speaker Change: And we can see now the PC platform truly rollout and in Albert <unk>, who app.
Yuan Zhou: And in our Juhu app, it's already in the grayscale testing now. In this update, we've introduced two new ways to build these connections within the community through AI. Firstly, the inquiry of results of Juhu Jida can now directly be traced back to the actual community contributor. And secondly, you can directly, as mentioned, special contributor. This effectively turning every Juhu expert into users' interaction personal knowledge base. We are very happy to see that after the launch of the new app, we have seen a lot of positive reviews from users in the community. I just received a message this afternoon.
Speaker Change: Already in the Gray scale testing now.
Speaker Change: In this update with introduced two new ways to build this connection within that community through AI Firstly the inquiry.
Speaker Change: The results of Q4, <unk> can now directly be traced back to the actual community contributor and secondly, you can directly apps mention special contributor.
Speaker Change: This effectively attorney average shufu experts into users interaction personal knowledge base.
Josh: Well Josh.
Speaker Change: Similar to that as a whole when we come out of that so it's Helena Thompson a pitch on door GTE Tim again.
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Yuan Zhou: in single-player games and paintings. è©±é¡Œé ˜åŸŸçš„å„ªç§€æ‰“ä¸»Scott 他評價 He said that if the pre-upgraded Alipay address is defined as a high-efficiency AI search tool, the upgraded address will become a way for people to connect with each other. This is very interesting. There is also a blogger who said that he used to think that the industry was a bit big. Yao Bukeji Now, through the app, you can stand on the shoulders of giants. Zhihu's update has truly made Zhihu's knowledge universal.
Josh: Thank you.
Josh: <unk> used with agile Scott.
Josh: Hudson yards.
Speaker Change: So I'll take Oh, Cindy tender throughput to them anyway cause elder social engine now mature Cynthia holder to that so again Taylor Zhang agenda, it's only in their phones.
Joe: Sure Joe.
Joe: However, the auto saw you hinted at a higher power <unk>.
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Yuan Zhou: That's all I have to say. I hope everyone can use Zhihu Jida more. And we are very glad to see, lately, Jida received many positive feedbacks from our own content creators. I just come across an excellent content this afternoon. This is from one of our content creators, Scotty, who specializes in single-player games, painting, and art topics. Gauti just mentioned, if the pre-update Zhihu-Zhida was defined as an efficient AI search tool, then the post-upgrade Zhida has now become a form of human-to-human connection. This is very in Zhihu style. And I will just quote from another Zhihu content creator.
Joe: Well, Joe, but also by EBITDA towards <unk>, Georgia Dock.
Joe: And we are very glad to see Leslie Judah received many positive feedbacks from our own country country.
Speaker Change: Content creators, sorry, just come across and excellent content.
Speaker Change: This afternoon. This is from one of our client greater Scottie, who specialize in single player games.
Speaker Change: And art topics.
Speaker Change: You just mentioned.
Speaker Change: The pre update you will do that.
Speaker Change: Was defined as an efficient AI search tool than the post upgrades to that has now become a form of human to human connection. This is a very <unk> for style.
Speaker Change: And our just quotes from another.
Speaker Change: Kannan crater.
Yuan Zhou: This creator said, I used to think industry leaders were out of reach. But now, with this app feature, I can stand on the shoulders of giants. This Jada update has truly taken knowledge accessibility to the extreme.
Speaker Change: That's greater stat I used to think industry leaders were out of range.
Speaker Change: But now with this feature.
Speaker Change: Sure I can stand on the shoulders of Giants.
Speaker Change: This update.
Speaker Change: <unk> truly take.
Speaker Change: Knowledge acceptability to the extreme so I will just helped here a little bits and you are all welcome to try it out more.
Yuan Zhou: So I will just pause here a little bit, and you are all welcome to try it out more.
Yuan Zhou: Your third question is about whether AI will replace Zhihu. I want to say that on the contrary, AI will greatly promote the development of Zhihu. Now, just to address your third question, is about whether AI could replace. We believe ... Actually, it's uncontroversial. AI will significantly enhance Zhihu's development. First of all, in the era of AI, we all face a reliable problem that everyone knows. This makes the expert network a necessity, and Zhihu is the strongest expert network. In an AI-driven era, we believe trustworthiness is paramount, making an expert network very essential. Zhihu has the strongest expert network available.
And just final one here.
Speaker Change: To date, we also ought to go attack it sounds like.
Speaker Change: So here are those full game.
Speaker Change: John.
Speaker Change: Now just to address your third question is about whether AI could replace.
Speaker Change: Well I believe.
Speaker Change: Actually uncontrolled <unk>.
Speaker Change: AI will significantly enhance Chu, who will step out.
Speaker Change: So I cannot answer that.
Speaker Change: Thank you.
Speaker Change: Tableau to the other.
Speaker Change: Okay.
Speaker Change: So I'll turn that one well, it's just it will be on time and you got <unk> PCT.
Speaker Change: Uh huh.
Speaker Change: So, let's say you got to another level.
Speaker Change: And then.
Speaker Change: Hi, driven era.
Speaker Change: We believe tests of worthiness is paramount, making and expert know where they are essential.
Speaker Change: <unk>, who has the strongest expert network available.
Yuan Zhou: Secondly, after that, the expert network is actually made up of a variety of new producers in various industries. They lead the progress of the changes and industries of the previous year. They are very good at using and embracing new technologies, including AI technology. They will become a stronger... The combination of human and AI. In fact, professional creators will not only be replaced by AI, but also 10% of the top experts in each industry will be expanded. As more and more experts in the community, the content ecology of Zhihu will become more credible and better. Second, Zhihu's expert network has attracted pioneers from diverse industries who lead cut-edging transformations and industry evolutions.
Speaker Change: Okay.
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Speaker Change: How are you couldn't Honda.
Speaker Change: Yes.
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Speaker Change: So you're not going to tell you the tomo Zimbabwe badge.
Speaker Change: Finally, I'll make a hire but I can just take a toll booth tanja jobs some of it from that.
Speaker Change: Great job guys, how much I know.
Speaker Change: So it's really meant but doesn't bento not so further Nielsen that youll hit the question I'll go ahead.
Speaker Change: And second.
Speaker Change: Q, who is expert network has attract pioneers from diverse industries, who are who lead caught edging transformations and industry evolution.
Yuan Zhou: As they embrace and use new technologies, including AI technologies, they embody a seamless integration of human and AI capabilities. So far from being replaced by AI, the value of the top tier experts, for example, the top 10% with their respective industries, will actually be amplified. As more and more experts join and engage with our community, our content ecosystem will become even more credible and trustworthy. So, on this basis, the production, distribution, and efficiency of high-quality content in the community will be further enlarged to attract and serve more users. With the credibility and trust at our foundation, we can leverage AI to further improve the efficiency of high quality content production and dimensionation, attracting and serving an even wider range of users.
Speaker Change: As they embrace and use new technologies, including AI technologies, they embody assembler integration of humans and AI capabilities.
Speaker Change: Far from being replaced by AI the value of the top tier experts for example, the top 10%.
Speaker Change: Their respective industries, well actually be amplified.
Speaker Change: More and more experts joined and engage with our community our content ecosystem will become even more credible and trustworthy.
Speaker Change: So you have to go to all our.
Speaker Change: Associated costs.
Speaker Change: <unk> tombaugh salt liquid team, but they found that <unk> seen her for long time ago.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Whereas the credibility and trust as our foundation, we can leverage AI to further improve the efficiency of high quality content production and diamond and dimension nation, attracting and serving an even wider range of users.
Yuan Zhou: Thank you, thank you for your question. Thank you.
Speaker Change: Thank you for your question.
Thomas Chong: Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas. Good evening. Thank you, Management, for accepting my question. My question is also related to AI. I would like to ask if there will be any changes or innovations at the product level this year. On the other hand, will there be any new direction in AI integration? Thanks, Management, for taking my question. My question is also about AI. What other changes and innovations can we expect on the product side this year? Are there any new directions about AI integration? Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question Thomas.
Speaker Change: So I'll take that.
Speaker Change: So what it is.
Speaker Change: Right.
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Speaker Change: Julien.
Speaker Change: But.
Speaker Change: At least they have been promising.
Speaker Change: Alright, and then finally on the highlights.
Speaker Change: You said, it's in that zone.
Speaker Change: Thanks management for taking my question. My question is also about AI.
Speaker Change: Other changes in innovation and we expect on the potash side this year.
Speaker Change: Any new direction about AI.
Speaker Change: Integration. Thank you.
Thomas Chong: Okay, Thomas, thank you for your question. The focus of this year's product is social and credible content. As you can see, a lot of positive changes have been happening this year. One is the short-term content, high-quality circles, and new ideas. The other is the long-term content and long-term content, new exhibitions and podcasts. These two are becoming the new areas of consumption and interaction in the community. Thank you for your question, Thomas.
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Speaker Change: Thank you for your question. Thomas This is the problem that you have with CEO Joanne.
Yuan Zhou: This is from the Zhihu CEO, Zhou Yuan. So this year, our focus is on strengthening social interactions and enhancing our brand as a trusted content platform. We have already seen very encouraging developments since the start of this year. So in the product environment direction, we have been developing social circles and new ideas suitable for the shorter form and high-frequency content, and a column and a podcast for longer form content and a subscription plan. Establishing this as important values for community engagement and a content conception. In terms of content brands, content IPs such as Dazhu Review Group, Yan Club, and Zhihu's Science and Technology will be the focus of this year.
Speaker Change: This year, our focus is on strengthening social interactions and enhancing our brand as a trusted content platform. We have already seen very encouraging developments since the start of this year so in the quarter.
Speaker Change: The romance direction, we have been developing social circles, and new ideas suitable for the shore shorter form and high frequency content and columns and the program co cost for longer form content.
Speaker Change: And the subscription plans, establishing this as important.
Speaker Change: Values for community engagement and content consumption.
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Yuan Zhou: We will further categorize these content brand IPs and continue to expand new native influence IPs. This is based on Hang Shi's Kexin content brand which would give more business opportunities. So, in terms of content branding, IEP initiatives such as our Zhihu Renewal Jewelry and Yan Club and Science Season will be key areas of focus this year. We also plan to expand into more specialized verticals and introduce new original IKEAs, further strengthening our position as a trusted content brand while creating new commercial opportunities. So I want to say that this is a professional influencer and credible content brand.
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Speaker Change: Yes.
Sundar Sanya hotel Zoe.
Speaker Change: Okay.
Speaker Change: So in terms of the content branding.
Speaker Change: Image Adas search such as ever.
Speaker Change: Who renew where jewelry and Ian Clark and assign Suzanne will be key area of focus. This year. We also plan to expand into more specialized verticals and introduce new original IP.
Speaker Change: We're strengthening our position as a trusted content brand well, creating new commercial opportunities.
Speaker Change: So it wasn't sure Sean.
Speaker Change: The entirely Dodge Hook, Sydney Olympian Pat.
Yuan Zhou: are undoubtedly the most important assets in today's world. Zhihu has enough advantages to diversify. Our work will continue to make this asset increase and grow. So in this era, we believe the influential experts, contributors, and the trusted content brand are most valuable than ever. This is where we stand out. We have a very clear-cut advantage here, and our priority is to maximize the value of these assets. You just mentioned the combination of AI work and AI. AI plus community is undoubtedly the direction of our important products. AI will also promote the entire ceiling of our product strategy.
Speaker Change: Sometimes it does show that we used to see so many other.
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Speaker Change: One other comment on that.
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Johann: So.
Johann: In this era where belief.
Johann: The inflation.
Johann: Experts contributors and trusted content brand, our most valuable than effort.
Johann: This is where we stand out we.
Speaker Change: There are clear cats.
Speaker Change: Advent advantage here and our priority is to maximize the value of these assets.
Speaker Change: Chip I will take the.
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Speaker Change: Nah AI start ups so cheap.
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Yuan Zhou: Specifically, with the launch of the new version, we have started to use completely different methods to make deep connections between AI and the community. This integrated work will continue to evolve in order to better expand The second direction is that there are a lot of workflows in the community that will be re-enabled by AI and bring higher quality content production, including the efficiency of this transmission. So, I believe, as you mentioned, you want to know more about our plan to better integrate AI with our entire community. So our AI-related initiatives will take these questions to the next level, and we will advance on two fronts.
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Speaker Change: No.
Speaker Change: I thought I can go to their own Nielsen Center.
Speaker Change: But what are the time Buda cellular tissue.
Speaker Change: So I believe you are yours to agile.
Speaker Change: As you mentioned you want to know more about our plan.
Speaker Change: To better integrate AI with upper our entire community.
Speaker Change: Our AI related in nature, Adas, so well take a question to the next level and we're well advanced on two fronts first of all the latest fairchild's chip would you that we have implemented completely new ways for AI to integrated with <unk>.
Yuan Zhou: First of all, the latest version of Qubuji Data, we have implemented completely new ways for AI to integrate with our community. We will continue deepening this integration to amplify the impact of our expert network. And second, AI will empower many of our community workflows, boosting the efficiency of high quality content creation and distribution. We believe this is a brand new beginning. Facing the big era of AI, we are conducting a lot of new explorations and experiments. We also believe that in order to keep the high-quality content of Zhihu community we are in a very good position to embrace this new era better.
Speaker Change: Energy.
Speaker Change: Well continue depending this integration to amplify the impact of our expert network.
Speaker Change: And second.
Speaker Change: Yeah, well in power many of our community workflows boosting the efficiency up high quality content creation and distribution.
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Yuan Zhou: Thank you. We believe this is a new beginning for us. In the era of AI, we are exploring and experimenting with many new possibilities. We believe that, thanks to Zhihu's continuous accumulation of high quality content, we are well positioned to better embrace this new era. Thank you.
Speaker Change: We believe this is a new beginning for us in the era of AI, we are exploring exploring and experimenting with many new possibilities.
Speaker Change: Believe that thanks to Chew Foods' continued accumulation of high quality content, we are well positioned to better embrace this new era. Thank you.
Daisy Chin: Our next question comes from the line of Daisy Chin. From Haitong International, please ask your question, Daisy. Thank you, Director Chen, for your kind words. You just mentioned the impact of the big model on Zhihu. I would like to ask a more detailed question. I would like to ask if you have any help for the big model online marketing. Do you have any examples or data to provide for our reference? Good evening, Benjamin. Thank you for taking my question. You just have mentioned that you just have talked about the AI and the large-networked model, and the influence on the Zhihu community.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line of Daisy chain.
Speaker Change: Hi, Tal International Please ask your question Daisy.
Speaker Change: Oh, Okay go ahead.
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Angela: You sound like you kind of take on the on your restaurants Angela.
Speaker Change: And I'll just use the ocean lead the whole social GE.
Angela: So you don't get Wynn Macau.
Speaker Change: Good evening management for taking my question, Hey, Jeff had mentioned.
Speaker Change: You guys have talked about the AI and data.
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Daisy Chin: My question is about how can the AI and the large-networked model benefit Zhihu's online marketing product? Do you have any example or data to share? Thank you. Thank you for your question.
Speaker Change: My question is about how kids are yeah, and mathematically get modal many states to joke with Maxim.
Speaker Change: Do you have any in deco or data package that thank.
Speaker Change: Thank you.
Han Wang: I am Wang Han from CFO. As we all know, the advertising revenue model of AI is still in the exploration stage. I would like to share some of our thoughts. Thank you for the question, Dizzy. This is from Zhihu CFO Wang Han. AI is changing the monetization model of advertising, and the most industry players are now staying in the exploration stage. But I can share some of our current thinking. Have you noticed a very interesting phenomenon? In the past, everyone's challenges to Alipay were... How do I put it? Everyone said that those challenges have become our most AI-native features today.
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Speaker Change: Thank you for your question Debbie.
Speaker Change: This is a problem cheerful CFO Wuhan.
Speaker Change: AI is changing the monetization model of advertising and the most industry players are now staying in the exploration stage.
Speaker Change: But I can share some of our current thinking.
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Han Wang: Thank you. I don't know whether you may notice or not, what were once seen as the challenges for Jukul in traditional internet era has now become our biggest competitive advantage and are in the most AI-native way. In the past, in the Internet age, everyone mentioned Zhihu's business model, which is that it's too difficult, right? Your users are too smart, too knowledgeable, and the content is too deep. So, in terms of the commercialization of the platform, it's not easy to see it, so the time will be relatively short compared to these video platforms, so it's more difficult for you to write.
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Speaker Change: I don't know, whether you may noticed or not what were one thing as the challenges for juku in traditional Internet era has now become <unk>.
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Han Wang: This is in the form of traffic, time, and conversion on the Internet. Zhihu is indeed worse than those entertainment-type platforms. In the past, Zhihu has been recognized for its highly knowledgeable users and in-depth content features which were maybe regarded as difficult to monetize in the traditional internet paradigm that prioritized high traffic and lengthy user engagement. And these may often favor entertainment-focused platforms. But with the arrival of AI, the situation is almost completely reversed. AI has to give the best users the most professional head-to-toe content in order to get the best answer. However, in this era, in the AI era, this has completely reversed.
Speaker Change: Sure Jonathan how does your furniture, George just repeat next year Youre looking at the total number of natural gas liquid.
Speaker Change: And in the past <unk>, who has been recognized for his highly knowledgeable users and in depth content features which were maybe regard as difficult to monetize in the traditional internet paradigm.
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Speaker Change: Prioritize high traffic and lengthy user engagements.
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Speaker Change: However in this era in the AI era this has completely reversed.
Han Wang: And AILLM now prioritizes the most high-quality answers generated by top-tier experts. Therefore, traffic will focus on the best content.
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Han Wang: Let me give you an example. You can see a lot of chatbots, tools, etc. But you can see that the majority of the answers are from Zhihu's professional content. The popularity is very high. Consequently, traffic is increasing down towards the highest quality content. I can give you an example here. For example, this example comes from the chatbox. Many popular AI chatbots rely heavily on Zhihu's real expert-generated content for their index responses, attributing its considerable importance. If this is the case, then the customers will pay more attention to the content and word of mouth in Zhihu.
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Han Wang: In the past, everyone did SEO, the optimization of the search engine. Now, there is a more and more established consensus that everyone should deploy the SEO of the AI era in advance, which is called geo, which is called generative engine optimization. Do you want to get more commercial exposure and commercial opportunities in the AI file? Then you have to do more content in Zhihu, which is the highest in power. Is it a convenient choice? So for advertisers, they are becoming increasingly focused on the content marketing and brand reputation management on our platform. Previously, the industry also mentioned, well, often mentioned on the SEO, search engine optimization.
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Han Wang: And today, this is shifting towards GEO, or Generative Engine Optimization, to gain visible and AI-generated answers. So if you aim to maximize business opportunities and monetization efficiency within AI-generated results, actively managing their content, you should actively managing your content on our platform. Thank you. Thank you for your question. Thank you. Our next question comes from the line of Vicky Wei from Citi. Please ask your question, Vicky. Thank you for accepting my questions. Congratulations to the company for achieving a very strong and above-expected result. My question is about finance. I would like to ask the management how to view our long-term stable profit margin and how we should view the overall profit margin this year and the direction of our cash use.
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Speaker Change: If you aim to maximize the business opportunities and monetization efficiency within AI generated without actively managing their content you should actively managing your content on our platform.
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Speaker Change: Thank you. Thank you for your question.
Speaker Change: Our next question comes from the line of Vicky Wei from Citi. Please ask your questions Vicki.
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Vicky Wei: Thanks management for taking my question and congrats on a very solid quarter. My question is regarding to the long-term margin profile. So how should we think of the long-term profitability of Zhihu and how should we think of the 2025 margin outlook for this year and how should we think of the cash utilization? Thank you.
Speaker Change: Management will taking my question and congrats on another solid quarter. My question is regarding to the long term margin profile. So how should we think of the long term profitability of <unk>.
Speaker Change: We think of the 2025 margin outlook for this year.
Speaker Change: Should we think of the cash utilization. Thank you.
Han Wang: Hi, I'm Wang Han from CYF. Let me answer your question. Thank you for your question, Vicky. This is from Zhihu's CFO, Wang Han. This year's Q4 is the first quarter in our history where we have a double-digit profit rate, 11% non-gap profit rate. This Q4, we achieved profitability for the first time in our history with a double-digit non-gap net profit margin of 11%. Looking at other UGC social media platforms around the world, the net profit margin is usually around 25%, 40%, or even more than 50%. This is the advantage of UGC platforms and other media platforms that require content purchase.
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Mickey: Thank you for your question Mickey This is from an <unk> who is CFO.
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Mickey: This Q4, we achieved profitability for the first time in our history with a double digit non-GAAP net profit margin of 11% conclusion.
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Han Wang: If we look broadly across the global landscape of the UGC platform, the user-generated content platform, we believe that net margins typically range from 25% to 40% or even higher to 50%. This reflects the fundamental advantage of UGC platforms over maybe media platforms which incur copyright-related costs. Speaking of 2025, we think that AI is a historical opportunity for Zhihu. We have plenty of cash, so we still have a chance to pursue AI and Zhihu. Looking ahead to our profitability outlook for 2025, we believe AI represents a historical opportunity for Zhihu, and also given our strong cash position, we may choose to maintain a slightly overall loss temporarily to continue pursuing and capturing the potential opportunities arising from deeper integration between Zhihu and AI.
Speaker Change: If we look broadly across the global landscape.
Speaker Change: The UGC platform that user generated content to our platform.
Speaker Change: We believe our net margins are typically range from 25% to 40% or even higher to the 50%. This reflects the fundamental advantage of <unk>.
Speaker Change: GC platform over maybe media platform, which incur copyright related costs.
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Jonathan: Sure it's Jonathan.
Jonathan: So when the woman around <unk> <unk>.
Jonathan: The accretion is you're controlling that tissue pursue <unk>.
Jonathan: Looking ahead to our profitability outlook for 2025, we believe AI represents a historical opportunity for <unk>.
Jonathan: And also given our strong cash position, we may chose when they choose to maintain or slightly over overall loss temporarily to continue pursuing and capturing the potential opportunities arising from deeper integration between Q4 and AI.
Han Wang: Regarding the use of cash, although our market value has risen a little in the past few months, it is still much lower than that of cash. In this obviously lower stage, we will continue to buy back the public market. In fact, for a period of time, we were also the company with the highest share return ratio among the listed companies in China. So regarding cash utilization, although our market value has increased in recent months, it still remains significantly below our net cash position. At this clear undervalued stage, we will continue to conduct open market buybacks at appropriate times.
Jonathan: Questions industry on what we're seeing this should just trends in jewelry, we just found out there doing that.
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Jonathan: Digital media and deep what did you do.
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Jonathan: Got it.
Jonathan: Yeah.
Jonathan: So.
Jonathan: Cash utilization.
Jonathan: Though our market value has increased in recent months.
Jonathan: Still remains significantly below our net cash position at this clear undervalued stage, we will continue to.
Jonathan: Conduct open market buybacks at appropriate times in fact looking back over the past period.
Operator: In fact, looking back over the past period, We have been one of the US listed Chinese companies with the highest share repurchase ratio. Yeah, that's This concludes our answers. Thank you. That concludes today's question-and-answer session.
Jonathan: Having one of the U S release that Chinese companies with the highest share repurchase ratio.
Jonathan: Yes, it does thank.
Thank you.
Jonathan: And this concludes.
Jonathan: However.
Jonathan: Answers. Thank you.
Jonathan: Thank you.
Yolanda Liu: At this time, I'll turn the conference back to Yolanda for any additional or closing remarks. Thank you, Operator, and thank you all again for joining us today. If you have any further questions, please contact our IR team directly or Chris at Adversary. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: That concludes today's question and answer session. At this time I'll turn the conference back to your Atlanta for any additional or closing remarks.
Speaker Change: Thank you operator, and thank you all again for joining us today.
Speaker Change: Any further questions. Please contact our IR team directly or a Christmas and anniversary. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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