On November 29th, Zhihu (NYSE: ZH; 2390. HK) released its unaudited third quarter financial results. In the three months ended September 30th, Zhihu's total revenue was 1.022 billion yuan, a year-on-year increase of 12.1%. After adjustment, the net loss was 225 million yuan, a year-on-year decrease of 10.1%, and the gross profit margin increased from 48.7% in the same period last year to 53.7%. At the operational level, the average monthly subscription membership of Zhihu in the third quarter reached 14.8 million, a year-on-year increase of 35.9%; The average monthly active users (MAUs) continued to climb, reaching 111 million.
The China Business Daily reporter noticed that Zhihu's revenue is mainly divided into four business sectors. In the third quarter, the paid membership (paid reading business) and vocational education represented by the to C business saw significant growth, contributing revenue of 467 million yuan and 145 million yuan respectively, with year-on-year growth rates of 40% and 86% respectively; As the second largest source of revenue, marketing service revenue reached 383 million yuan, compared to 462 million yuan in the same period last year; Other income is approximately 28 million yuan.
Zhou Yuan, founder, chairman, and CEO of Zhihu, stated that significant progress in the Zhihu community and commercialization will drive sustainable business growth in the third quarter of 2023. Especially in paid reading and vocational education businesses, there is a significant growth momentum. At the same time, Zhou Yuan pointed out that more resources will be invested in the medium to long term to continue promoting the multi engine commercialization strategy, in order to ensure resilient income growth in a macroeconomic uncertain environment.
The big model of vocational education becoming a growth highlight has been applied
During the discussion of the financial report, CFO of Zhihu, Sha Dachuan, pointed out that in the third quarter, Zhihu continued to improve cost-effectiveness and further increased its gross profit margin to 53.7%, an increase of 5 percentage points compared to the same period last year. "Despite facing a challenging economic situation, we are still fully prepared and strive to implement growth strategies to achieve financial goals."
From the financial report data, it can be seen that vocational education business is the business sector with the fastest year-on-year growth in revenue for Zhihu, and it is also the second growth curve that Zhihu is building. The revenue in the third quarter reached 145 million yuan, a year-on-year increase of nearly 86%, accounting for 14% of the total revenue.
The reporter learned that vocational education can be said to be a new type of business that has grown from the Zhihu Q&A community. Since the beginning of this year, Zhihu has established its own "Zhihu Zhixue" education brand, which has developed into an internet education platform covering multiple course tracks such as postgraduate entrance exams, civil service exams, education funding, CPA (Certified Public Accountant), CFA (Chartered Financial Analyst), MBA (Master of Business Administration), and vocational education through a business model of "self operation+investment". Zhihu's vocational training business saw significant growth in the third quarter, indicating that vocational education has broad development potential at the commercial level.
It is worth mentioning that Zhihu is one of the participants in this year's domestic AI big model "melee". Zhihu's Chinese big model "Zhihai Map AI" has been applied in multiple learning scenarios of Zhihu Zhixue, and has launched multiple intelligent teaching functions such as AI intelligent essay correction, intelligent essay correction, and AI academic leadership.
At the recently held 2023 World Internet Conference, Zhou Yuan publicly stated, "Zhihu has made a very firm investment in the field of big models and believes that big models can bring new imagination and opportunities to Zhihu." For the next plan, Zhihu will closely combine the advantages of internet technology data platforms with the vocational education industry, establish a digital education platform, and use technology to promote the digital transformation of the education industry, To reach a wider audience with higher efficiency.
Paid reading business has entered the right track, and IP value is beginning to emerge
"Zhihu has successfully explored and verified three business paths: marketing services, paid reading, and vocational education, which together constitute the multi engine driving model of Zhihu's sustainable development." Zhou Yuan pointed out that "Zhihu's paid reading business has been on the right track and has become Zhihu's largest source of revenue." The financial report shows that paid reading business accounts for about 45.7% of revenue, and its contribution value still ranks first. It should be pointed out that Zhihu launched the Salt Story App in May this year, operating Salt Story as an independent product and content category, further expanding Zhihu's paid reading content matrix and consumption scenarios, consolidating Zhihu's advantage in the short story track. As of now, nearly 100 works have sold film and television copyrights, and IP value continues to be released. Especially in October of this year, the film and television drama "For the Hidden Fragrance" adapted from "Washing the Lead Hua" was launched and broadcasted on Youku, attracting the attention of the film and television industry and becoming a representative work of the IP film and television transformation of Zhihu Yanyan Stories. Zhihu believes that with the film and television transformation of "Washing the Lead Flower" as a symbol, Zhihu's salt story further expands the path of IP film and television transformation, and is expected to become the "next rich mine of film and television IP".
When it comes to the model of paid reading business, Zhihu pointed out that based on the community ecosystem, it accumulates a massive high-quality content library, including salt stories, e-books, journal articles, etc., to provide users with a diverse digital reading experience; On the other hand, it is to incubate and cultivate a large number of excellent native creators, and through the membership system, creators can obtain considerable profits. According to official disclosure by Zhihu, in the paid reading content library of Zhihu, the content of Yanyan stories has reached tens of thousands, making it the largest short story production base on the entire network. The number of creators in Zhihu's paid reading business has reached hundreds of thousands, with over 100 creators earning over a million yuan.