Zhihu (ZH) Q1 2024 earnings summary

Executive summary

• Q1 2024 marked a strategic shift with a focus on core strengths, AI-driven development, and resource reallocation to drive profitability in the AI era.

• Total revenues for Q1 2024 were RMB 960.9 million, down from RMB 994.2 million year-over-year, while gross margin improved to 56.6% from 51.5%.

• Net loss narrowed by 7.4% to RMB 165.8 million, with non-GAAP net loss at RMB 135.7 million.

• Average monthly active users reached 89.0 million, with 14.8 million average monthly subscribers, and user engagement and retention increased.

• Management emphasized progress toward break-even, improved operating efficiency, and continued investment in AI and community trust.

Financial highlights

• Gross profit for Q1 2024 increased by 6.1% year-over-year to RMB 543.5 million, with gross profit margin rising to 56.6%.

• GAAP net loss narrowed by 7.4% year-over-year to RMB 165.8 million; non-GAAP net loss was RMB 135.7 million.

• Paid membership revenue reached RMB 449.7 million, with 14.8 million average monthly subscribers.

• Vocational training revenue grew 35.9% year-over-year to RMB 145.4 million, surpassing 15% of total revenue.

• Marketing services revenue was RMB 330.5 million, down 15.7% year-over-year.

Outlook and guidance

• The company expects to achieve single-quarter non-GAAP breakeven in Q4 2024.

• Management reiterated confidence in profitability goals, citing ongoing cost optimization and monetization improvements.

• Strategic focus remains on user quality, high-quality content, and leveraging AI for operational efficiency.