Zhihu Inc. Reports Unaudited Fourth Quarter and Fiscal Year 2023 Financial Results
BEIJING, March 26, 2024 /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 and fiscal year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Total revenues were RMB1,138.3 million (US$160.3 million) in the fourth quarter of 2023, representing a 2.2% increase from the same period of 2022.
- Gross margin expanded to 59.1% in the fourth quarter of 2023 from 56.4% in the same period of 2022.
- Net loss was RMB103.1 million (US$14.5 million) in the fourth quarter of 2023, narrowed by 42.6% from the same period of 2022.
- Adjusted net loss (non-GAAP)[1] was RMB91.3 million (US$12.9 million) in the fourth quarter of 2023, narrowed by 31.9% from the same period of 2022.
- Average monthly active users (MAUs)[2] reached 99.0 million in the fourth quarter of 2023.
- Average monthly subscribing members[3] reached 14.2 million in the fourth quarter of 2023, representing a 9.2% increase from the same period of 2022.
Fiscal Year 2023 Highlights
- Total revenues were RMB4,198.9 million (US$591.4 million) in 2023, representing a 16.5% increase from 2022.
- Gross margin expanded to 54.7% in 2023 from 50.2% in 2022.
- Net loss was RMB839.5 million (US$118.2 million) in 2023, narrowed by 46.8% from 2022.
- Adjusted net loss (non-GAAP)[1] was RMB659.1 million (US$92.8 million) in 2023, narrowed by 44.9% from 2022.
"In the fourth quarter of 2023, we successfully navigated a challenging macroeconomic and competitive environment and achieved meaningful revenue growth and efficiency improvement through our multi-engine monetization approach, bolstered by our valuable community ecosystem," said Mr. Yuan Zhou, chairman and chief executive officer of Zhihu. "We also honed our content strategy to fortify our position as a trustworthy online content community. By prioritizing user experience and improving our strategic execution, cost control and overall efficiency, we have set the stage for sustainable growth and continued value creation for our users and stakeholders."
Mr. Han Wang, chief financial officer of Zhihu, added, "While we faced a myriad of challenges in 2023, we remained resilient and dedicated to our multi-engine monetization strategy. As a result, our total revenues for the fourth quarter and full year increased by 2.2% and 16.5% year over year, respectively. Through prudent cost control and operating leverage, we were pleased to conclude the year with a further enhanced gross margin and significantly narrowed bottom-line loss. Going forward, we will remain committed to boosting our operating efficiency to reinforce our trajectory towards profitability."
Fourth Quarter 2023 Financial Results
Total revenues were RMB1,138.3 million (US$160.3 million), representing a 2.2% increase from RMB1,114.0 million in the same period of 2022.
Marketing services revenue[4] was RMB465.2 million (US$65.5 million), compared with RMB572.4 million in the same period of 2022.
Paid membership revenue was RMB455.9 million (US$64.2 million), representing a 13.3% increase from RMB402.5 million in the same period of 2022. The increase was primarily driven by the continued growth of our subscribing members.
Vocational training revenue was RMB169.3 million (US$23.8 million), representing a 100.1% increase from RMB84.6 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 vocational training businesses.
Other revenues were RMB48.0 million (US$6.8 million), compared with RMB54.5 million in the same period of 2022.
Cost of revenues decreased by 4.2% to RMB465.2 million (US$65.5 million) from RMB485.4 million in the same period of 2022, primarily attributable to a decrease in cloud services and bandwidth costs resulting from our improved efficiency.
Gross profit increased by 7.1% to RMB673.1 million (US$94.8 million) from RMB628.5 million in the same period of 2022. Gross margin expanded to 59.1% from 56.4% 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 RMB851.3 million (US$119.9 million), compared with RMB844.8 million in the same period of 2022.
Selling and marketing expenses increased to RMB527.6 million (US$74.3 million) from RMB509.2 million in the same period of 2022. The increase reflects our continued efforts in promoting our product and service offerings.
Research and development expenses increased to RMB232.6 million (US$32.8 million) from RMB212.5 million in the same period of 2022. The increase was primarily attributable to our increased spending on technology innovation.
General and administrative expenses decreased by 26.0% to RMB91.1 million (US$12.8 million) from RMB123.1 million in the same period of 2022. The decrease was primarily attributable to a decline in personnel-related expenses.
Loss from operations was narrowed by 17.6% to RMB178.2 million (US$25.1 million) from RMB216.3 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1] decreased to RMB165.3 million (US$23.3 million) from RMB170.3 million in the same period of 2022.
Net loss was narrowed by 42.6% to RMB103.1 million (US$14.5 million) from RMB179.5 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] was narrowed by 31.9% to RMB91.3 million (US$12.9 million) from RMB134.1 million in the same period of 2022.
Diluted net loss per American depositary share ("ADS") was RMB0.18 (US$0.03), compared with RMB0.29 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of December 31, 2023, the Company had cash and cash equivalents, term deposits and short-term investments of RMB5,462.9 million (US$769.4 million), compared with RMB6,261.5 million as of December 31, 2022.
Fiscal Year 2023 Financial Results
Total revenues were RMB4,198.9 million (US$591.4 million), representing a 16.5% increase from RMB3,604.9 million in 2022.
Marketing services revenue[4] was RMB1,653.0 million (US$232.8 million), compared with RMB1,956.5 million in 2022.
Paid membership revenue was RMB1,826.6 million (US$257.3 million), representing a 48.4% increase from RMB1,230.8 million in 2022. The increase was primarily driven by the continued growth of our subscribing members.
Vocational training revenue was RMB565.6 million (US$79.7 million), representing a 127.8% increase from RMB248.3 million in 2022. The significant increase was primarily attributable to our further enriched online course offerings and the revenue contributions from our recently acquired vocational training businesses.
Other revenues were RMB153.8 million (US$21.7 million), compared with RMB169.4 million in 2022.
Cost of revenues increased to RMB1,903.0 million (US$268.0 million) from RMB1,796.9 million in 2022. The increase was primarily due to the growth of content and operating costs as we continued to enhance our content attractiveness, and an increase in payment processing costs driven by our revenue growth, partially offset by the decrease in cloud services and bandwidth costs.
Gross profit increased by 27.0% to RMB2,295.8 million (US$323.4 million) from RMB1,808.1 million in 2022. Gross margin expanded to 54.7% from 50.2% in 2022, primarily attributable to our enhanced monetization efforts and the improvement of cloud services and bandwidth utilization efficiency.
Total operating expenses decreased to RMB3,368.1 million (US$474.4 million) from RMB3,411.8 million in 2022.
Selling and marketing expenses were RMB2,048.1 million (US$288.5 million), compared with RMB2,026.5 million in 2022.
Research and development expenses increased to RMB901.5 million (US$127.0 million) from RMB763.4 million in 2022. The increase was primarily attributable to our increased spending on technology innovation.
General and administrative expenses decreased to RMB418.5 million (US$58.9 million) from RMB622.0 million in 2022. The decrease was primarily attributable to lower share-based compensation expenses.
Loss from operations was narrowed by 33.1% to RMB1,072.2 million (US$151.0 million) from RMB1,603.8 million in 2022.
Adjusted loss from operations (non-GAAP)[1] was narrowed by 27.1% to RMB888.0 million (US$125.1 million) from RMB1,218.8 million in 2022.
Net loss was narrowed by 46.8% to RMB839.5 million (US$118.2 million) from RMB1,578.4 million in 2022.
Adjusted net loss (non-GAAP)[1] was narrowed by 44.9% to RMB659.1 million (US$92.8 million) from RMB1,195.9 million in 2022.
Diluted net loss per ADS was RMB1.41 (US$0.20), compared with RMB2.59 in 2022.
Share Repurchase Program
As of December 31, 2023, 26.3 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) had been repurchased for a total price of US$58.5 million on both the New York Stock Exchange and The Stock Exchange of Hong Kong Limited under the Company's existing US$100 million share repurchase program established in May 2022 and extended in May 2023 (the "Repurchase Program"), which is effective until June 10, 2024. 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.
[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 7:00 a.m. U.S. Eastern Time on March 26, 2024 (7:00 p.m. Beijing/Hong Kong time on March 26, 2024).
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/10187223/fbcf65bd2c
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 April 2, 2024, by dialing the following telephone numbers:
United States (toll free): | +1-877-344-7529 |
International: | +1-412-317-0088 |
Replay Access Code: | 4320125 |
About Zhihu Inc.
Zhihu Inc. (NYSE:ZH, HKEX: 2390))) is 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 Measures
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 financial 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 financial 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 RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: [email protected]
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: [email protected]
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: [email protected]
ZHIHU INC. | |||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(All amounts in thousands, except share, ADS, per share data and per ADS data) | |||||||||||||
For the Three Months Ended | For the Year Ended | ||||||||||||
December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | December 31, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Revenues: | |||||||||||||
Marketing services | 572,387 | 382,962 | 465,153 | 65,515 | 1,956,480 | 1,652,992 | 232,819 | ||||||
Paid membership | 402,531 | 466,784 | 455,906 | 64,213 | 1,230,804 | 1,826,557 | 257,265 | ||||||
Vocational training | 84,591 | 144,795 | 169,272 | 23,841 | 248,266 | 565,585 | 79,661 | ||||||
Others | 54,456 | 27,622 | 47,966 | 6,756 | 169,369 | 153,755 | 21,656 | ||||||
Total revenues | 1,113,965 | 1,022,163 | 1,138,297 | 160,325 | 3,604,919 | 4,198,889 | 591,401 | ||||||
Cost of revenues | (485,442) | (473,712) | (465,197) | (65,522) | (1,796,867) | (1,903,041) | (268,038) | ||||||
Gross profit | 628,523 | 548,451 | 673,100 | 94,803 | 1,808,052 | 2,295,848 | 323,363 | ||||||
Selling and marketing expenses | (509,229) | (534,328) | (527,604) | (74,311) | (2,026,468) | (2,048,090) | (288,467) | ||||||
Research and development | (212,495) | (249,662) | (232,585) | (32,759) | (763,362) | (901,452) | (126,967) | ||||||
General and administrative | (123,107) | (114,564) | (91,069) | (12,827) | (621,973) | (418,531) | (58,949) | ||||||
Total operating expenses | (844,831) | (898,554) | (851,258) | (119,897) | (3,411,803) | (3,368,073) | (474,383) | ||||||
Loss from operations | (216,308) | (350,103) | (178,158) | (25,094) | (1,603,751) | (1,072,225) | (151,020) | ||||||
Other income/(expenses): | |||||||||||||
Investment income | 5,922 | 11,617 | 12,279 | 1,729 | 70,380 | 41,695 | 5,873 | ||||||
Interest income | 33,671 | 40,363 | 38,828 | 5,469 | 68,104 | 158,671 | 22,348 | ||||||
Fair value change of financial | (4,619) | (7,352) | 14,780 | 2,082 | (176,685) | (5,170) | (728) | ||||||
Exchange (losses)/gains | (1,524) | (393) | (937) | (132) | 71,749 | 97 | 14 | ||||||
Others, net | 6,099 | 27,227 | 15,032 | 2,117 | 5,983 | 49,236 | 6,935 | ||||||
Loss before income tax | (176,759) | (278,641) | (98,176) | (13,829) | (1,564,220) | (827,696) | (116,578) | ||||||
Income tax (expense)/benefit | (2,755) | 256 | (4,929) | (694) | (14,183) | (11,832) | (1,667) | ||||||
Net loss | (179,514) | (278,385) | (103,105) | (14,523) | (1,578,403) | (839,528) | (118,245) | ||||||
Net income attributable to | (164) | (289) | (666) | (94) | (2,754) | (4,113) | (579) | ||||||
Net loss attributable to Zhihu | (179,678) | (278,674) | (103,771) | (14,617) | (1,581,157) | (843,641) | (118,824) | ||||||
Net loss per share | |||||||||||||
Basic | (0.59) | (0.94) | (0.36) | (0.05) | (5.19) | (2.82) | (0.40) | ||||||
Diluted | (0.59) | (0.94) | (0.36) | (0.05) | (5.19) | (2.82) | (0.40) | ||||||
Net loss per ADS (Two ADSs | |||||||||||||
Basic | (0.29) | (0.47) | (0.18) | (0.03) | (2.59) | (1.41) | (0.20) | ||||||
Diluted | (0.29) | (0.47) | (0.18) | (0.03) | (2.59) | (1.41) | (0.20) | ||||||
Weighted average number of | |||||||||||||
Basic | 304,665,906 | 297,742,064 | 291,056,615 | 291,056,615 | 304,836,318 | 299,132,894 | 299,132,894 | ||||||
Diluted | 304,665,906 | 297,742,064 | 291,056,615 | 291,056,615 | 304,836,318 | 299,132,894 | 299,132,894 | ||||||
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 Year Ended | ||||||||||||
December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | December 31, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Share-based compensation | |||||||||||||
Cost of revenues | 3,663 | 1,630 | 1,575 | 221 | 11,861 | 9,751 | 1,373 | ||||||
Selling and marketing | 5,019 | 5,741 | (7,001) | (986) | 24,334 | 13,882 | 1,955 | ||||||
Research and development | 15,831 | 13,758 | (57) | (8) | 62,503 | 49,847 | 7,021 | ||||||
General and administrative | 18,032 | 27,662 | 12,983 | 1,829 | 275,197 | 91,176 | 12,842 | ||||||
ZHIHU INC. | |||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(All amounts in thousands) | |||||
As of December 31, 2022 | As of December 31, 2023 | ||||
RMB | RMB | US$ | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 4,525,852 | 2,106,639 | 296,714 | ||
Term deposits | 948,390 | 1,586,469 | 223,449 | ||
Short-term investments | 787,259 | 1,769,822 | 249,274 | ||
Trade receivables | 834,251 | 664,615 | 93,609 | ||
Amounts due from related parties | 24,798 | 18,319 | 2,580 | ||
Prepayments and other current assets | 199,249 | 232,016 | 32,679 | ||
Total current assets | 7,319,799 | 6,377,880 | 898,305 | ||
Non-current assets: | |||||
Property and equipment, net | 7,290 | 10,849 | 1,528 | ||
Intangible assets, net | 80,237 | 122,645 | 17,274 | ||
Goodwill | 126,344 | 191,077 | 26,913 | ||
Long-term investments | - | 44,621 | 6,285 | ||
Right-of-use assets | 100,119 | 40,211 | 5,664 | ||
Other non-current assets | 22,450 | 7,989 | 1,125 | ||
Total non-current assets | 336,440 | 417,392 | 58,789 | ||
Total assets | 7,656,239 | 6,795,272 | 957,094 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | 916,112 | 1,038,531 | 146,274 | ||
Salary and welfare payables | 283,546 | 342,125 | 48,187 | ||
Taxes payables | 25,975 | 21,394 | 3,013 | ||
Contract liabilities | 355,626 | 303,574 | 42,758 | ||
Amounts due to related parties | 24,861 | 26,032 | 3,667 | ||
Short term lease liabilities | 53,190 | 42,089 | 5,929 | ||
Other current liabilities | 165,531 | 171,743 | 24,189 | ||
Total current liabilities | 1,824,841 | 1,945,488 | 274,017 | ||
Non-current liabilities | |||||
Long term lease liabilities | 43,367 | 3,642 | 513 | ||
Deferred tax liabilities | 11,630 | 22,574 | 3,179 | ||
Other non-current liabilities | 82,133 | 121,958 | 17,177 | ||
Total non-current liabilities | 137,130 | 148,174 | 20,869 | ||
Total liabilities | 1,961,971 | 2,093,662 | 294,886 | ||
Total Zhihu Inc.'s shareholders' equity | 5,653,696 | 4,599,810 | 647,870 | ||
Noncontrolling interests | 40,572 | 101,800 | 14,338 | ||
Total shareholders' equity | 5,694,268 | 4,701,610 | 662,208 | ||
Total liabilities and shareholders' equity | 7,656,239 | 6,795,272 | 957,094 | ||
ZHIHU INC. | |||||||||||||
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | |||||||||||||
(All amounts in thousands) | |||||||||||||
For the Three Months Ended | For the Year Ended | ||||||||||||
December 31, 2022 | September 30, 2023 | December 31, 2023 | December 31, 2022 | December 31, 2023 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Loss from operations | (216,308) | (350,103) | (178,158) | (25,094) | (1,603,751) | (1,072,225) | (151,020) | ||||||
Add: | |||||||||||||
Share-based compensation | 42,545 | 48,791 | 7,500 | 1,056 | 373,895 | 164,656 | 23,191 | ||||||
Amortization of intangible | 3,490 | 5,365 | 5,365 | 756 | 11,053 | 19,585 | 2,758 | ||||||
Adjusted loss from | (170,273) | (295,947) | (165,293) | (23,282) | (1,218,803) | (887,984) | (125,071) | ||||||
Net loss | (179,514) | (278,385) | (103,105) | (14,523) | (1,578,403) | (839,528) | (118,245) | ||||||
Add: | |||||||||||||
Share-based compensation | 42,545 | 48,791 | 7,500 | 1,056 | 373,895 | 164,656 | 23,191 | ||||||
Amortization of intangible | 3,490 | 5,365 | 5,365 | 756 | 11,053 | 19,585 | 2,758 | ||||||
Tax effects on non-GAAP | (600) | (1,069) | (1,069) | (151) | (2,400) | (3,806) | (536) | ||||||
Adjusted net loss | (134,079) | (225,298) | (91,309) | (12,862) | (1,195,855) | (659,093) | (92,832) | ||||||
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SOURCE Zhihu Inc.