Zhihu (ZH) Q1 2025 earnings summary

Executive summary

• Achieved first-ever Q1 non-GAAP net profit since IPO, with adjusted net income of RMB 6.9 million versus a loss of RMB 135.7 million a year ago, continuing profitability momentum from Q4 2024.

• Net loss narrowed by 93.9% year over year to RMB 10.1 million, driven by improved operational efficiency and AI integration.

• Gross margin expanded to 61.8% from 56.6% year over year, reflecting monetization and operational improvements.

• User engagement and content quality improved, with average daily user time up 17.6% year over year and core user retention rates rising.

• Average monthly subscribing members were 14.2 million in Q1 2025.

Financial highlights

• Total revenue was RMB 729.7 million, down 24% year over year, reflecting a strategic shift to higher-quality revenue streams.

• Gross profit reached RMB 451.1 million, with gross margin expanding 5.2 percentage points year over year to 61.8%.

• Cost of revenues decreased by 33.3% to RMB 278.6 million, driven by lower content, operating, and cloud costs.

• Total operating expenses declined 34.4% year over year to RMB 503.7 million, with reductions in selling, marketing, R&D, and G&A expenses.

• Diluted net loss per ADS was RMB 0.12, compared to RMB 1.76 in Q1 2024.

Outlook and guidance

• Management expects continued business model optimization in 2025, focusing on aligning community ecosystem with commercial operations and enhancing brand value.

• Confident that financial performance will exceed initial expectations for the year, supported by ongoing operational refinement and AI-driven initiatives.

• Management remains focused on enhancing commercialization and unlocking community value for sustainable growth and profitability.

• Plans to deliver long-term shareholder value through disciplined execution and operational efficiency.