Earnings call transcript: 36Kr Holdings Q2 2025 sees improved margins, stock dips

36Kr Holdings Inc. (KRKR) reported Q2 2025 earnings with a significantly reduced net loss of RMB 4.8 million (from RMB 95.9 million) and an improved gross profit margin of 54.4% (up from 44.4%), driven by strategic cost-cutting and operational efficiencies. Despite these positive profitability metrics, revenue declined to RMB 93.2 million, which likely contributed to the stock's 6.83% pre-market decline. The company projects achieving profitability by the end of 2025, supported by expanded AI-powered content offerings and global expansion initiatives.

Analysis

36Kr Holdings Inc. (KRKR) presented a mixed Q2 2025 financial report, demonstrating significant progress in operational efficiency but persistent top-line challenges. The company achieved a stark improvement in profitability, narrowing its net loss to just RMB 4.8 million from RMB 95.9 million year-over-year, driven by a 52.3% reduction in operating expenses and a 10-percentage-point expansion in gross profit margin to 54.4%. This turnaround is a direct result of aggressive cost-cutting measures, including workforce optimization and office relocations. However, these bottom-line gains were overshadowed by a revenue decline to RMB 93.2 million from RMB 102.4 million in the prior year, a key factor likely contributing to the stock's 6.83% pre-market decline. Management's forward guidance remains optimistic, forecasting a return to profitability by the end of 2025. This outlook is predicated on strategic pivots towards AI-powered content, new product launches like an AI tools review platform, and an expansion of global services. Early indicators of this strategy's potential are visible in the 52% YoY revenue growth from internet clients and a 17-quarter streak of follower growth, suggesting that while the broader business contracts, specific high-growth verticals are responding positively. The market's reaction reflects this core tension: despite the stock's strong 109.25% return over the past six months, investors are cautious about the revenue headwind in a competitive tech media sector.

Key Decisions for Investors

• Investors should weigh the successful operational turnaround, evidenced by a 95% reduction in net loss and a 10-point margin expansion, against the persistent 8.9% year-over-year revenue decline, as the investment thesis hinges on translating cost discipline into sustainable top-line growth.
• Monitor the adoption and monetization of new AI products and the performance of global expansion initiatives, as these are the primary catalysts management has outlined to reverse the revenue trend and achieve its goal of profitability by the end of 2025.
• Consider the stock's valuation context; despite the post-earnings drop, its strong six-month performance combined with its position well below the 52-week high may present a speculative opportunity for those confident in the company's strategic pivot and execution capabilities.
• Closely track revenue from key growth segments, such as the internet and FMCG client cohorts which grew 52% and 27% respectively, as a leading indicator of whether the company's portfolio optimization strategy is gaining traction.