Zhihu Inc. Achieves Profitability in 2024 Financial Journey
Zhihu Inc. Announces Impressive Financial Performance for 2024
Zhihu Inc. (NYSE: ZH), a prominent online content community, reported its impressive unaudited financial results for the year ending December 31, 2024. The company showcased remarkable performance driven by strategic planning and execution that led to an optimal turnaround.
Fourth Quarter 2024 Highlights
In the fourth quarter of 2024, Zhihu achieved total revenues of RMB859.2 million (approximately US$117.7 million), marking a significant year-over-year increase. This growth reflects a strategic shift in service offerings and user engagement policies that contributed to improved financial outcomes across various revenue streams.
Profitability Milestone
The company's gross margin saw a substantial rise to 62.9%, up from 59.1% in the previous year, indicating better cost management and operational efficiency. Additionally, Zhihu reported a net income of RMB86.4 million (approximately US$11.8 million) compared to a loss of RMB103.1 million in the same quarter of 2023.
User Engagement Metrics
As of the fourth quarter, Zhihu boasted an impressive average of 81.4 million monthly active users, demonstrating a steady increase in user engagement. Furthermore, the number of average monthly subscribing members rose to 14.1 million, reflecting the company’s commitment to enhancing its user experience.
Fiscal Year 2024 Overview
Throughout the fiscal year 2024, total revenues reached RMB3,598.9 million (approximately US$493.0 million), compared to RMB4,198.9 million in 2023. While showing a slight decrease in total revenue, improvements in margins and efficiencies led to a narrowed net loss of RMB169.0 million (US$23.1 million), a significant 79.9% reduction from the prior year's loss.
Marketing and Membership Revenue
In 2024, marketing services revenue totaled RMB1,247.1 million (about US$170.9 million), showing a deliberate focus on margin improvement. Paid membership revenue also remained strong at RMB1,762.0 million (around US$241.4 million), indicating a slight decline due to a reduced average revenue per subscriber.
Operational Efficiency
The Zhihu team focused on optimizing its operational expenses, which decreased by 21.0% to RMB2,661.9 million (approximately US$364.7 million). This reduction was largely driven by disciplined spending in marketing and research and development. The reduced expenses helped the company achieve positive operating profit for the first time, alongside improved gross profit margins.
Management Insights
Mr. Yuan Zhou, chairman and CEO, highlighted the company’s strategic roadmap and emphasized the focus on enhancing user vibrancy and trust within the community. “Our strategic investments in AI applications and content creation have unlocked new possibilities and redefined user interactions,” said Mr. Zhou.
Mr. Han Wang, CFO of Zhihu, added, “The fourth quarter represents a significant inflection point for Zhihu as we achieved our first positive operating profit and net income on both GAAP and non-GAAP bases.”
Looking Ahead
As Zhihu moves into 2025, it aims to build on the momentum generated in 2024. The company plans to continue harnessing AI and content-driven strategies to further enrich the user experience, ensuring long-term sustainable growth and maximizing shareholder value.
Frequently Asked Questions
1. What were the key financial metrics for Zhihu in 2024?
Zhihu reported total revenues of RMB3,598.9 million and a net income of RMB86.4 million in Q4 2024.
2. How did Zhihu improve its gross margin?
The gross margin expanded due to effective cost management and strategic enhancements in monetization efforts.
3. What is Zhihu's strategy for user engagement?
Zhihu focuses on enhancing user interaction through AI applications and content creation to drive community trust and activity.
4. When did Zhihu achieve profitability?
Zhihu achieved profitability for the first time in the fourth quarter of 2024.
5. What are the future plans for Zhihu Inc.?
Zhihu plans to leverage AI and strategic content initiatives to enhance user experience and ensure sustainable growth moving forward.
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