Zhihu Inc. Reports Unaudited Second Quarter 2023 Financial Results
BEIJING, Aug. 23, 2023 /PRNewswire/ -- Zhihu Inc. ("Zhihu" or the "Company") (NYSE: ZH; HKEX: 2390), a leading online content community in China, today announced its unaudited financial results for the quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Total revenues were RMB1,044.2 million (US$144.0 million) in the second quarter of 2023, representing a 24.9% increase from the same period of 2022.
- Net loss was RMB279.1 million (US$38.5 million) in the second quarter of 2023, narrowed by 42.7% from the same period of 2022.
- Adjusted net loss (non-GAAP)[1] was RMB222.3 million (US$30.7 million) in the second quarter of 2023, narrowed by 49.9% from the same period of 2022.
- Average monthly active users (MAUs)[2] reached 109.4 million in the second quarter of 2023, up from 105.9 million in the same period of 2022.
- Average monthly subscribing members[3] reached 14.0 million in the second quarter of 2023, representing a 65.3% increase from the same period of 2022.
"In the second quarter of 2023, we continued to achieve high-quality growth and optimize our operating efficiency," said Mr. Yuan Zhou, chairman and chief executive officer of Zhihu. "Meanwhile, our dedication to content enrichment encouraged deeper user engagement and inspired our content creators. Bolstered by Zhihu's prominent brand name and comprehensive product offerings, our paid membership and vocational training businesses continued to grow rapidly. We also remained committed to investing in cutting-edge technology to improve content consumption efficiency and develop new user experiences."
Mr. Henry Sha, chief financial officer of Zhihu, added, "Our multi-engine business model delivered solid results this quarter with sustainable growth momentum. Our total revenue increased by 24.9% year over year, benefiting from our robust and growing paid membership and vocational training businesses. Our gross margin also expanded further during the quarter, by 6 percentage points year over year to 53.8%, boosted by our effective and ongoing cost control measures. In comparison with the same period last year, our adjusted net loss narrowed by 49.9%. Going forward, we will continue to concentrate on our loss reduction strategy and working to achieve healthy growth."
Second Quarter 2023 Financial Results
Total revenues were RMB1,044.2 million (US$144.0 million) in the second quarter of 2023, representing a 24.9% increase from RMB836.0 million in the same period of 2022.
Marketing services revenue[4] was RMB412.7 million (US$56.9 million), compared with RMB478.1 million in the same period of 2022. The decrease was primarily due to ongoing refinement of service offerings to strategically focus on margin improvement.
Paid membership revenue was RMB449.1 million (US$61.9 million), representing a 65.6% increase from RMB271.2 million in the same period of 2022. The increase was primarily attributable to the continued growth of our subscribing members, driven by our content enhancements and improved user experience.
Vocational training revenue was RMB144.5 million (US$19.9 million), representing a 213.3% increase from RMB46.1 million in the same period of 2022. The significant increase was primarily attributable to our further enriched online course offerings and the revenue contributions from our recently acquired businesses in the period.
Other revenues were RMB37.9 million (US$5.2 million), compared with RMB40.7 million in the same period of 2022.
Cost of revenues increased by 10.5% to RMB482.1 million (US$66.5 million) from RMB436.4 million in the same period of 2022. The increase was primarily due to the growth of content and operating costs as we continued to enhance our content attractiveness, as well as an increase in payment processing costs driven by our revenue growth, and was partially offset by the decrease in cloud services and bandwidth costs.
Gross profit increased by 40.7% to RMB562.1 million (US$77.5 million) from RMB399.6 million in the same period of 2022. Gross margin expanded to 53.8% from 47.8% in the same period of 2022, primarily attributable to our enhanced monetization efforts and the improvement of cloud services and bandwidth utilization efficiency.
Total operating expenses were RMB889.3 million (US$122.6 million), compared with RMB860.3 million in the same period of 2022.
Selling and marketing expenses increased to RMB540.6 million (US$74.6 million) from RMB532.4 million in the same period of 2022. The slight increase reflects our continued efforts in promoting our product and service offerings.
Research and development expenses increased to RMB236.2 million (US$32.6 million) from RMB223.6 million in the same period of 2022. The increase was primarily attributable to our increased spending in technology innovation.
General and administrative expenses increased to RMB112.5 million (US$15.5 million) from RMB104.3 million in the same period of 2022. The increase was primarily due to increased share-based compensation expenses.
Loss from operations narrowed by 29.0% to RMB327.2 million (US$45.1 million) from RMB460.7 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1] narrowed by 35.4% to RMB269.4 million (US$37.2 million) from RMB416.8 million in the same period of 2022.
Net loss narrowed by 42.7% to RMB279.1 million (US$38.5 million) from RMB487.0 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] narrowed by 49.9% to RMB222.3 million (US$30.7 million) from RMB443.8 million in the same period of 2022.
Diluted net loss per American Depositary Share ("ADS") was RMB0.46 (US$0.06), compared with RMB0.79 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of June 30, 2023, the Company had cash and cash equivalents, term deposits and short-term investments of RMB6,158.6 million (US$849.3 million), compared with RMB6,261.5 million as of December 31, 2022.
Share Repurchase Program
As was previously announced, the Company established a share repurchase program in May 2022, which was extended in May 2023, under which the Company may repurchase up to US$100 million of Class A ordinary shares or ADSs until June 10, 2024 (the "Repurchase Program"). The repurchases made under the Repurchase Program were covered by the general unconditional mandate to purchase the Company's own shares approved by shareholders at the Company's annual general meetings held on June 10, 2022 and June 30, 2023, respectively. As of June 30, 2023, approximately 13.0 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) had been repurchased on both the New York Stock Exchange and The Stock Exchange of Hong Kong Limited under the Repurchase Program for a total price of US$30.8 million.
[1] Adjusted loss from operations and adjusted net loss are non-GAAP financial measures. For more information on the non-GAAP financial measures, please see the section of "Use of Non-GAAP Financial Measures" and the table captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release. |
[2] MAUs refers to the sum of the number of mobile devices that launch our mobile apps at least once in a given month, or mobile MAUs, and the number of logged-in users who visit our PC or mobile website at least once in a given month, after eliminating duplicates. |
[3] Monthly subscribing members refers to the number of our Yan Selection members in a specified month. Average monthly subscribing members for a period is calculated by dividing the sum of monthly subscribing members for each month during the specified period by the number of months in such period. |
[4] Starting with the first quarter of 2023, we report revenues generated from advertising and content-commerce solutions collectively as "marketing services revenue" to better present our business and results of operation in line with our overall strategies. Revenues for the applicable comparison periods of 2022 have been retrospectively re-classified. |
Conference Call
The Company's management will host an earnings conference call at 8:00 a.m. U.S. Eastern Time on August 23, 2023 (8:00 p.m. Beijing/Hong Kong time on August 23, 2023).
All participants wishing to join the conference call must pre-register online using the link provided below. Once the pre-registration has been completed, each participant will receive a set of dial-in numbers, a passcode, and a unique registrant ID which can be used to join the conference call. Participants may pre-register at any time, including up to and after the call start time.
Participant Online Registration: https://dpregister.com/sreg/10181708/fa277db324
Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at https://ir.zhihu.com.
A replay of the conference call will be accessible approximately one hour after the conclusion of the live call, until August 30, 2023, by dialing the following telephone numbers:
United States (toll free): | +1-877-344-7529 |
International: | +1-412-317-0088 |
Replay Access Code: | 6924451 |
About Zhihu Inc.
Zhihu Inc. (NYSE: ZH; HKEX: 2390), a leading online content community in China where people come to find solutions, make decisions, seek inspiration, and have fun. Since the initial launch in 2010, we have grown from a Q&A community into one of the top comprehensive online content communities and the largest Q&A-inspired online content community in China. For more information, please visit https://ir.zhihu.com.
Use of Non-GAAP Financial Measure
In evaluating the business, the Company considers and uses non-GAAP financial measures, such as adjusted loss from operations and adjusted net loss, to supplement the review and assessment of its operating performance. The Company defines non-GAAP financial measures by excluding the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisitions and the tax effects of the non-GAAP adjustments, which are non-cash expenses. The Company believes that the non-GAAP measures facilitate comparisons of operating performance from period to period and company to company by adjusting for potential impacts of items, which the Company's management considers to be indicative of its operating performance. The Company believes that the non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's consolidated results of operations in the same manner as it helps the Company's management.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The presentation of the non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. The use of the non-GAAP measures has limitations as an analytical tool, and investors should not consider it in isolation from, or as a substitute for analysis of, our results of operations or financial condition as reported under U.S. GAAP. For more information on the non-GAAP financial measures, please see the tables captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release.
Exchange Rate Information
This announcement contains translations of certain Renminbi amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at a rate of RMB7.2513 to US$1.00, the exchange rate in effect as of June 30, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: [email protected]
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: [email protected]
ZHIHU INC. | |||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(All amounts in thousands, except share, ADS, per share data and per ADS data) | |||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | June 30, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Revenues: | |||||||||||||
Marketing services | 478,051 | 392,137 | 412,740 | 56,919 | 922,155 | 804,877 | 110,998 | ||||||
Paid membership | 271,168 | 454,769 | 449,098 | 61,933 | 492,838 | 903,867 | 124,649 | ||||||
Vocational training | 46,127 | 106,998 | 144,520 | 19,930 | 85,671 | 251,518 | 34,686 | ||||||
Others | 40,670 | 40,316 | 37,851 | 5,220 | 78,579 | 78,167 | 10,780 | ||||||
Total revenues | 836,016 | 994,220 | 1,044,209 | 144,002 | 1,579,243 | 2,038,429 | 281,113 | ||||||
Cost of revenues | (436,414) | (482,001) | (482,131) | (66,489) | (844,098) | (964,132) | (132,960) | ||||||
Gross profit | 399,602 | 512,219 | 562,078 | 77,513 | 735,145 | 1,074,297 | 148,153 | ||||||
Selling and marketing expenses | (532,375) | (445,565) | (540,593) | (74,551) | (1,038,960) | (986,158) | (135,997) | ||||||
Research and development | (223,589) | (182,960) | (236,245) | (32,580) | (390,107) | (419,205) | (57,811) | ||||||
General and administrative | (104,290) | (100,438) | (112,460) | (15,509) | (414,922) | (212,898) | (29,360) | ||||||
Total operating expenses | (860,254) | (728,963) | (889,298) | (122,640) | (1,843,989) | (1,618,261) | (223,168) | ||||||
Loss from operations | (460,652) | (216,744) | (327,220) | (45,127) | (1,108,844) | (543,964) | (75,015) | ||||||
Other income/(expenses): | |||||||||||||
Investment income | 20,596 | 6,006 | 11,793 | 1,626 | 41,320 | 17,799 | 2,455 | ||||||
Interest income | 10,480 | 39,493 | 39,987 | 5,514 | 19,835 | 79,480 | 10,961 | ||||||
Fair value change of financial | (101,197) | (3,582) | (9,016) | (1,243) | (92,744) | (12,598) | (1,737) | ||||||
Exchange gains/(losses) | 49,126 | (5,649) | 7,076 | 976 | 44,971 | 1,427 | 197 | ||||||
Others, net | 1,001 | 6,333 | 644 | 89 | 2,931 | 6,977 | 962 | ||||||
Loss before income tax | (480,646) | (174,143) | (276,736) | (38,165) | (1,092,531) | (450,879) | (62,177) | ||||||
Income tax expense | (6,375) | (4,829) | (2,330) | (321) | (8,773) | (7,159) | (987) | ||||||
Net loss | (487,021) | (178,972) | (279,066) | (38,486) | (1,101,304) | (458,038) | (63,164) | ||||||
Net income attributable to | - | (2,383) | (775) | (107) | - | (3,158) | (436) | ||||||
Net loss attributable to Zhihu | (487,021) | (181,355) | (279,841) | (38,593) | (1,101,304) | (461,196) | (63,600) | ||||||
Net loss per share | |||||||||||||
Basic | (1.59) | (0.59) | (0.92) | (0.13) | (3.62) | (1.52) | (0.21) | ||||||
Diluted | (1.59) | (0.59) | (0.92) | (0.13) | (3.62) | (1.52) | (0.21) | ||||||
Net loss per ADS (Two ADSs | |||||||||||||
Basic | (0.79) | (0.30) | (0.46) | (0.06) | (1.81) | (0.76) | (0.10) | ||||||
Diluted | (0.79) | (0.30) | (0.46) | (0.06) | (1.81) | (0.76) | (0.10) | ||||||
Weighted average number of | |||||||||||||
Basic | 307,101,052 | 305,245,036 | 304,068,362 | 304,068,362 | 303,843,801 | 304,052,681 | 304,052,681 | ||||||
Diluted | 307,101,052 | 305,245,036 | 304,068,362 | 304,068,362 | 303,843,801 | 304,052,681 | 304,052,681 | ||||||
ZHIHU INC. | |||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) | |||||||||||||
(All amounts in thousands, except share, ADS, per share data and per ADS data) | |||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | June 30, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Share-based compensation | |||||||||||||
Cost of revenues | 3,839 | 4,400 | 2,146 | 296 | 8,609 | 6,546 | 903 | ||||||
Selling and marketing | 6,196 | 8,758 | 6,384 | 881 | 12,668 | 15,142 | 2,088 | ||||||
Research and development | 14,294 | 21,205 | 14,941 | 2,060 | 30,064 | 36,146 | 4,985 | ||||||
General and administrative | 17,108 | 21,555 | 28,976 | 3,996 | 235,163 | 50,531 | 6,968 | ||||||
ZHIHU INC. | |||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(All amounts in thousands) | |||||
As of December 31, 2022 | As of June 30, 2023 | ||||
RMB | RMB | US$ | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 4,525,852 | 4,033,624 | 556,262 | ||
Term deposits | 948,390 | 1,068,551 | 147,360 | ||
Short-term investments | 787,259 | 1,056,376 | 145,681 | ||
Trade receivables | 834,251 | 751,276 | 103,606 | ||
Amounts due from related parties | 24,798 | 9,833 | 1,356 | ||
Prepayments and other current assets | 199,249 | 239,671 | 33,052 | ||
Total current assets | 7,319,799 | 7,159,331 | 987,317 | ||
Non-current assets: | |||||
Property and equipment, net | 7,290 | 9,410 | 1,298 | ||
Intangible assets, net | 80,237 | 131,688 | 18,161 | ||
Goodwill | 126,344 | 191,077 | 26,351 | ||
Long-term investments | - | 30,000 | 4,137 | ||
Right-of-use assets | 100,119 | 82,138 | 11,327 | ||
Other non-current assets | 22,450 | 29,946 | 4,130 | ||
Total non-current assets | 336,440 | 474,259 | 65,404 | ||
Total assets | 7,656,239 | 7,633,590 | 1,052,721 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payables and accrued liabilities | 916,112 | 1,136,723 | 156,761 | ||
Salary and welfare payables | 283,546 | 239,535 | 33,033 | ||
Taxes payables | 25,975 | 29,028 | 4,003 | ||
Contract liabilities | 355,626 | 378,279 | 52,167 | ||
Amounts due to related parties | 24,861 | 16,580 | 2,286 | ||
Short term lease liabilities | 53,190 | 61,024 | 8,416 | ||
Other current liabilities | 165,531 | 229,399 | 31,636 | ||
Total current liabilities | 1,824,841 | 2,090,568 | 288,302 | ||
Non-current liabilities | |||||
Long term lease liabilities | 43,367 | 19,759 | 2,725 | ||
Deferred tax liabilities | 11,630 | 24,711 | 3,408 | ||
Other non-current liabilities | 82,133 | 153,084 | 21,111 | ||
Total non-current liabilities | 137,130 | 197,554 | 27,244 | ||
Total liabilities | 1,961,971 | 2,288,122 | 315,546 | ||
Total Zhihu Inc.'s shareholders' equity | 5,653,696 | 5,271,380 | 726,958 | ||
Noncontrolling interests | 40,572 | 74,088 | 10,217 | ||
Total shareholders' equity | 5,694,268 | 5,345,468 | 737,175 | ||
Total liabilities and shareholders' equity | 7,656,239 | 7,633,590 | 1,052,721 | ||
ZHIHU INC. | |||||||||||||
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | |||||||||||||
(All amounts in thousands) | |||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | June 30, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Loss from operations | (460,652) | (216,744) | (327,220) | (45,127) | (1,108,844) | (543,964) | (75,015) | ||||||
Add: | |||||||||||||
Share-based compensation | 41,437 | 55,918 | 52,447 | 7,233 | 286,504 | 108,365 | 14,944 | ||||||
Amortization of intangible assets | 2,400 |
3,490 | 5,365 | 740 | 4,800 | 8,855 | 1,221 | ||||||
Adjusted loss from operations | (416,815) | (157,336) | (269,408) | (37,154) | (817,540) | (426,744) | (58,850) | ||||||
Net loss | (487,021) | (178,972) | (279,066) | (38,486) | (1,101,304) | (458,038) | (63,164) | ||||||
Add: | |||||||||||||
Share-based compensation | 41,437 | 55,918 | 52,447 | 7,233 | 286,504 | 108,365 | 14,944 | ||||||
Amortization of intangible | 2,400 | 3,490 | 5,365 | 740 | 4,800 | 8,855 | 1,221 | ||||||
Tax effects on non-GAAP | (600) | (600) | (1,069) | (147) | (1,200) | (1,669) | (230) | ||||||
Adjusted net loss | (443,784) | (120,164) | (222,323) | (30,660) | (811,200) | (342,487) | (47,229) | ||||||
SOURCE Zhihu Inc.
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