Zhihu (ZH) Q2 2026 Earnings Call Transcript

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DATE

Wednesday, Aug. 26, 2026 at 7 a.m. ET

CALL PARTICIPANTS

• Investor Relations - Jamie Leung
• Founder, Chairman and Executive Officer - Yuan Zhou
• Chief Financial Officer - Wang Han
• Chief Operating Officer - Zhang Ronghua

TAKEAWAYS

• Total Revenue -- RMB 690.1 million, reflecting a 3.7% decrease year over year while rising 5.9% sequentially.
• Adjusted Net Loss -- RMB 10.3 million, compared to an adjusted net income of RMB 91.3 million in the same period of 2025.
• Marketing Services Revenue -- RMB 199.0 million, declining 10.7% year over year due to proactive refinement of service offerings.
• Paid Content and IP Operations Revenue -- RMB 425.9 million, growing 4.4% year over year driven by increased IP licensing activity.
• Average Monthly Subscribing Members -- 13.1 million, remaining broadly stable compared to the prior-year period.
• IP Licensing Revenue -- increased 600% year over year, representing a 105% sequential rise as the company expanded its multi-format development.
• Other Revenues -- RMB 65.2 million, decreasing from RMB 86.0 million last year primarily due to the strategic refinement of the vocational training business.
• Gross Margin -- 57.0%, down from 62.5% year over year as the company increased investments to broaden and enhance content offerings.
• Total Operating Expenses -- RMB 469.4 million, decreasing 13.0% year over year through efficiency improvements across operations.
• Selling and Marketing Expenses -- RMB 308.7 million, down 5.4% year over year reflecting more disciplined marketing spending.
• Research and Development Expenses -- RMB 108.6 million, declining 25.4% year over year as a result of improved research efficiency.
• General and Administrative Expenses -- RMB 52.0 million, decreasing 22.7% year over year due to lower personnel-related costs.
• Average Daily Time Spent -- 39 minutes, remaining consistent with core user engagement levels from previous periods.
• High-Quality Content Creation -- grew more than 16% year over year, supported by professional creators and AIGC tools.
• Gaming Performance Spending -- rose 22% sequentially, indicating traction in specific performance-based marketing verticals.
• AI Content Asset Clients -- increased 50% sequentially, although management noted this does not yet represent scalable revenue contribution.
• AI Works Projects -- reached more than 2,600, demonstrating growth in the open community ecosystem.
• Open Data Platform Developers -- exceeded 17,600, with approximately 20% of these users being new to the Zhihu platform.
• Cash and Liquidity -- RMB 4.4 billion, providing a solid position for selective investments in new initiatives.
• Share Repurchases -- 6.5 million Class A ordinary shares for a total consideration of $7.2 million during the second quarter.

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RISKS

• Wang warned that "Recent changes in industry standards and filing requirements may also affect the launch timing of certain projects," potentially impacting IP operation revenue.
• Zhou noted that the structural recovery in marketing services has not yet translated into a broader recovery in segment revenue, as results remain susceptible to changes in client budgets and industrial demand.

SUMMARY

Management reported that Zhihu Inc. (NYSE:ZH) focused on stabilizing its core content community while validating new commercial scenarios driven by artificial intelligence. The company achieved sequential revenue growth and significantly narrowed its operating losses through disciplined cost management and R&D efficiency. Strategic priorities centered on expanding the monetization of intellectual property through multi-format developments and establishing the company as a data lab for frontier AI model capabilities. Management stated that the authentic and professional nature of the community remains the foundation for extending content licensing, brand assets, and expert services into new AI-driven applications.

• The company is evolving its marketing services from traffic value toward content asset value, helping brands build professional information that AI models can accurately cite.
• Zhihu's IP monetization is expanding into multimedia formats, with Yanyan Story ranking as one of the top three IP providers for native AI comic dramas on Hongguo.
• Management is monetizing its historical content library by developing high-quality IP created in 2025 or earlier into comic dramas and short dramas.
• Zhang stated that Zhihu is positioning itself as a "research-driven data lab" to help improve model performance through training data and professional evaluation.
• Zhou indicated that AI-powered search serves as a gateway to discover community content instead of serving as a replacement for original contributions.
• The company completed expert data projects across coding, search, and deep research, focusing on reusable capabilities that evolve across different model iterations.

INDUSTRY GLOSSARY

• AIGC: Artificial Intelligence Generated Content, referring to content created or enhanced by generative AI tools.
• AI Kanshan: A community AI agent designed to help users explore Zhihu and discover diverse perspectives and professional content.
• AI Works: An open platform hosted by Zhihu that supports AI-related projects and developer initiatives.
• Yanyan Story: Zhihu's subscription-based platform for short stories and professional storytelling IP.
• Zhihu Zhida: An AI-powered search product integrated into the Zhihu community to facilitate content discovery.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu, Inc. Second Quarter 2026 Financial Results Conference Call. [Operator Instructions]. Today's conference is being recorded and webcasted. At this time, I would like to turn the conference over to Jamie Leung of Investor Relations. Please go ahead, ma'am.

Unknown Executive: Thank you, Sharon. Hello, everyone. Welcome to Zhihu's Second Quarter 2026 Financial Results Conference Call. Joining me today from our senior management team are Mr. Zhou Yuan, Founder, Chairman and Executive Officer; Mr. Wang Han, Chief Financial Officer; and Mr. Zhang Ronghua, Chief Operating Officer. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Additionally, today's discussion will include both GAAP and non-GAAP financial measures for comparison purposes only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. A replay of this conference call will be available on our IR website at ir.zhihu.com. And today, Mr. Zhou Yuan will deliver prepared remarks in Chinese and followed by English translation. Please go ahead, sir.

Yuan Zhou: [Interpreted] Hello, everyone, and thank you for joining Zhihu's Second Quarter 2026 Earnings Call. Today, I will cover 3 areas: our core business performance in the second quarter, how AI is expanding the value of our community content, IP and expert network and our priorities for. Let me start with our core businesses. Overall, our core business remained stable, while some areas continue to adjust and recover. In the second quarter, total revenue were RMB 690 million, down 3.7% year-over-year and up 5.9% sequentially with a year-over-year decline narrowing further. Adjusted net loss was RMB 10.25 million, reflecting changes in the revenue mix and phased business investments. Our CFO will discuss the financial details shortly.

Community engagement among core users remained stable. Average daily time spent was about 39 minutes, broadly unchanged. Daily creation of high-quality content grew more than 16%. As AIGC makes content creation easier, authentic experiences, clear sourcing and professional judgment are becoming more valuable. These remain the foundation of Zhihu and our long-term value. Turning to Marketing Services. Revenue were RMB 199 million, down 10.7% year-over-year and up 4% sequentially. We continue to focus on key verticals, including technology, automotive, consumer electronics and home appliances and gaming. Spending on performance 1% sequentially, including a 22% increase in gaming.

This has not yet translated into a broader recovery in the marketing revenue, but it supports our strategy of strengthening key verticals, products and algorithms. Marketing services remain in structural recovery and we will continue to improve the matching of professional content, user needs and client demand. For paid content and IP, revenue reached RMB 426 million, up 4.4% year-over-year and 5.9% sequentially. Average monthly subscribing members were 13.11 million, broadly stable, while member ARPU also remained stable. We continue to improve membership content and product experience while expanding knowledge-based offerings. IP operation continued to contribute incremental growth. Licensing increasing 105% sequentially and 600% year-over-year. We're expanding Yanyan Story IP from onetime licensing towards multi-format for life cycle development.

Overall, challenges remain, but our business mix continues to adjust and our strategic direction remain unchanged. We'll continue to stabilize our core businesses while maintaining the investment discipline. Next, I would like to focus on Zhihu in the AI area. Zhihu starts with the community bringing the value accumulated within Zhihu to more people through new products, formats and use cases. The real users, professional content IP and our expert network remain our most important assets. AI is helping extend these capabilities into new applications and commercial scenarios. First, the community will become more open. AI changing how content is discovered and used. For Zhihu, openness does not mean changing our positioning.

It means enabling the high-quality content to reach more users and developers through the AI tools and applications. This requires clear cultures around content sourcing, creator rights and community values. We are further integrating Zhihu Zhida with Zhihu Search, making AI-powered search a new gateway to community content rather than a substitute for it. Early testing has shown positive signals for user retention. We're also exploring community agents. AI Kanshan is one example. Rather than another general purpose chatbot, we wanted to help users explore Zhihu and discover real people, professional content and diverse perspectives. The product remains at an early testing stage and our focus is on content discovery, interaction and retention.

AI Works now hosts more than 2,600 AI projects. While the open data platform API has attracted more than 17,600 professional developers, about 20% were not previously Zhihu creators. We also released an updated Zhihu CLI, making it easier to discover and use Zhihu content across AI tools. Through AI search, agents, open platforms and developer tools, Zhihu's content and professional capabilities can reach more user developers and clients beyond the Zhihu app. We believe AI is becoming a new medium that can help existing content, reach new audiences, enable new applications and create new opportunities in content licensing, brand content assets and expert services. Second, marketing services are evolving from traffic value towards the content asset value.

As more information discovery happens through AI, brands increasingly care not only about visibility, but also whether the professional information can be accurately understood and cited by AI. We're helping brands build professional content assets with clear sourcing. Unlike a one-off campaign, these assets can continue to be discovered and used across search, AI and other channels, creating longer-term value. Our AI content asset offering remains at early stage. In the second quarter, the number of clients increased 50% sequentially. This does not yet represent a stable or scalable revenue contribution, but it's beginning to demonstrate new commercial value. Going forward, we'll focus on client outcomes with demand and product standardization.

Third, AI is accelerating the expansion of IP into multimedia formats. AI is lowering the cost and barriers of turning text-based IP into multimedia formats. For Zhihu, this allows our large base of original content to be developed more efficiently into comic dramas, short dramas, film and television and other formats. A meaningful portion of the comic drama projects monetized this quarter came from the works created in 2025 or earlier. This shows that high-quality IP can return value over time, while technology improves the development efficiency and expands its reach. In the first half, we also explore in-house with some projects showing encouraging early results. However, we'll remain disciplined and will not materially increase asset heavy investment.

We flexibly choose more licensing in-house and commission production based on the project economics. Going forward, we'll continue to strengthen our capabilities in IP selection, development and cross-format operations to unlock more value from our content library. Fourth, expert data solutions are evolving from project delivery towards reusable capabilities. AI is creating new ways to use Zhihu's experts capabilities, not only creating content for users, experts can now help translate the professional judgment into model capabilities through training data, model evaluation and complex task design. We position as a research-driven data lab. We identify model capability gaps and develop training data, evaluation systems and complex task environments to help improve the model performance.

In the first half, we completed projects across coding, search and deep research, visual reasoning and agents while building capabilities spanning model analysis. Our expert network plays an important role in defining the professional tasks, setting quality standards and evaluating whether model outputs meet the professional requirements. We're also becoming more proactive in identifying model gaps, developing training data and valuation methods in-house and validating the value through the actual model performance. Our goal is not one-off data delivery, but reusable capabilities that can evolve across clients and model iterations. In the next phase, we'll continue and extend them into products, complex, tasks and environments. Finally, let me briefly summarize. In the second quarter, our core community remained resilient.

Paid content remained stable, IP operation continued to grow and marketing services improved sequentially. Our position in the AI area is also becoming clear. Our authentic professional and trustworthy community remain the foundation, while AI helps us reach new users application and commercial scenarios. In the second half, we'll focus on 2 priorities. First, will [indiscernible] improving user experience, maintaining a stable membership base, improving IP development efficiency and advancing the structural recovery of marketing services. And second, we'll continue to validate AI-driven opportunities across our open community ecosystem, AI content assets, IP and expert data solutions by focusing on real demand, client value, capability reuse and ROI. Initial validation does not mean these initiatives have become stable growth drivers.

Sustainability may fluctuate due to the business timing and phase investments. Our long-term goals of improving operating efficiency and returning sustainable profitability remain unchanged. Over the long term, we want Zhihu to be not only an authentic, professional and trustworthy community, but also an important platform connecting content, knowledge and AI applications. Thank you. I will now hand over to our CFO to review the quarter's financial performance.

Wang Han: I will now go over our second quarter issued earlier today. During the second quarter, our revenue trend continued to improve sequentially, supported by growth in paid content and IP operations. At the same time, disciplined cost management drove year-over-year reduction in operating expenses and operating losses. Now turning to the financial highlights of the second quarter. Our total revenues for the quarter were RMB 690.1 million, down 3.7% year-over-year and up 5.9% sequentially. The sequential growth was primarily driven by content and operations. Marketing services revenue was RMB 199 million compared with RMB 222.8 million in the same period of 2025. The decrease primarily reflected our proactive and ongoing refinement of service offerings.

Sequentially, marketing services revenue increased by 4%, with improving traction in key verticals and performance-based products. We also continue to make early progress in AI-related commercial use cases. Content and IP operations revenue was RMB 425.9 million, up 4.4% year-over-year and 5.9% sequentially, primarily driven by continued growth in IP operations. Average monthly subscribing members remained stable at 13.1 million. We will continue to strengthen our paid content offerings while developing and monetizing selected IP across multiple formats with disciplined attention to project returns and risk. Other revenues were RMB 86 million in the same period of 2025. The decrease was primarily due to the continued strategic refinement of our vocational training business.

Sequentially, other revenues increased by 12.7% and year-over-year decline continued to narrow. Our gross profit for the quarter was RMB 393.4 million compared with RMB 448.2 million in the same period of 2025. Gross margin was 57% compared with 62.5% in the period 2025. The decline in gross margin primarily reflected our continued efforts to broaden and enhance our content offerings. Total operating expenses decreased by 13% to RMB 469.4 million from RMB 539.2 million in the same period of 2025, reflecting continued efficiency improvements across our operations. Selling and marketing expenses decreased by 5.4% to RMB 308.7 million from RMB 326.3 million in the same period disciplined marketing spending.

Research and development expenses decreased by 25.4% to RMB 108.6 million from RMB 145.7 million in the same period of 2025, primarily attributable to continued improvements in our research and development efficiency. General and administrative expenses decreased by 22.7% to RMB 52 million from RMB 67.3 million in the same period of 2025, primarily attributable to lower personnel-related expenses. On a non-GAAP basis, adjusted loss from operations narrowed by 32% to RMB 48.7 million from RMB 71.5 million in the same period of 2025. Investment income was RMB 16.4 million compared with RMB 140.8 million in the same period of 2025.

The decrease was primarily due to an unrealized gain from the fair value remeasurement of our investment in a privately held company in the same period of 2025. RMB 37.4 million compared with net income of RMB 72.5 million in the same period of 2025. On a non-GAAP basis, adjusted net loss was RMB 10.3 million compared with adjusted net income of RMB 91.3 million in the same period of 2025.

As of June 30, 2026, we had RMB 4.4 billion in cash and cash equivalents, time deposits, restricted cash and short-term investments, maintaining a solid liquidity position to support our -- as of June 30, 2026, we had repurchased an aggregate of 41.3 million Class A ordinary shares for a total consideration of USD 77.9 million on both New York Stock Exchange and the Stock Exchange of Hong Kong. During the second quarter, we repurchased 6.5 million Class A ordinary shares for a total consideration of USD 7.2 million. Looking ahead, we will continue to balance selective investments in new initiatives with operating efficiency. So our quarterly profitability may be affected investment.

Our long-term objective of improving operating efficiency and returning to sustainable profitability remains unchanged. We will also maintain a disciplined approach to our capital allocation and continue to execute share repurchase to enhance long-term shareholder returns. This concludes my prepared remarks on our financial performance for the quarter. I'll turn the call over to the operator for the Q&A session.

Operator: [Operator Instructions] And your first question today comes from the line of Thomas Chong from Jefferies.

Thomas Chong: [Interpreted] So my question is how should we think the revenue and profit trend in the second half of the year? And under the business adjustments and new business investments, are there any fluctuation between quarters?

Yuan Zhou: [Interpreted] This is speaking on behalf of CEO. Looking into the second half, we do not think it's the sequential improvement seen in the second quarter and different business have different operating rhythms. And marketing services remain in a period of structural recovery like we mentioned before and may continue to be affected by changes in client budgets and industrial demand. Will strengthen our product R&D and especially the performance advertising capabilities and also increase the value per unit of traffic rather than drive. Paid content remains relatively stable, while IP operations will be influenced by project timing. Recent changes in industry standards and filing requirements may also affect the launch timing of certain projects.

At the same time, we're still validating the new capabilities like AI content assets and expert data solutions. We have seen like demand and client validation, but it might take time until we see scalable revenue contribution and will also require some near-term investments. So at this stage, we are more focused on the stability of our core businesses while new initiatives can create real client value and reusable stuff and ROI. We'll continue to invest prudently. Our long-term goals remain to improve our revenue mix and return to sustainable profitability.

Operator: Your next question today comes from the line of Vicky Wei from Citi.

Yi Jing Wei: [Interpreted] Would management share some color about your view on the AI-generated comic dramas? And how should we think of Zhihu's advantages?

Zhang Ronghua: [Interpreted] This is speaking on behalf of COO. We are very positive on the AI comic drama market and believe the industry is still in a clear growth trend. On one hand, AI content generation capabilities continue to improve rapidly, including like character consistency, visual quality motion and the overall production efficiency. And on the other hand, as more creators enter the market, we're seeing greater diversity in ideas and formats. So AI comic dramas are gradually becoming a new form of content consumption. As the production continue to improve, we expect content quality and user acceptance to rise further. At the same time, the basis of competition is also changing.

In the early stage, the focus was on like who could adopt AI faster and produce content at lower cost. As AI production become more widely available, the real scarcity shifts back to the content itself, like the good stories is a sustainable pipeline of creative ideas and the ability to consistently turn IP into compelling virtual content. And this is where Zhihu has a clear advantage through Yanyan Story and other products. We have built a broader -- a broad ecosystem of original stories and creators. Our advantage is not simply the size of the library, but our ability to continuously generate the new content and identify the strongest titles supported by well-established creators.

And this helps reduce the trial and error costs in IP development and improved the overall efficiency of our content portfolio. We're already seeing validated in the AI comic. According to the third-party data, in the first half of 2026, Yanyan story became one of the leading IP providers for native AI comic dramas on TikTok and ranked among the top 3 IP providers on Hongguo. We also began the in-house and commission production in the second quarter and have seen encouraging hit rate so far.

As AI creates new media formats, a strong story can be visualized and in this way, AI helps extend the life cycle of quality IP and improve the monetization efficiency of our existing content assets. Strategically, our focus is to build on Zhihu's strength in the content and our creator ecosystem, like we mentioned before. While using AI to improve the development efficiency across the scripting production and distribution, we will remain flexible in our business models, including licensing in-house where the market demand and project economics are well validated, we may selectively move further upstream in the value chain.

Over the long term, we believe Zhihu's moat in this market will come from a combination of capabilities including a sustainable supply of the original IP content selection based on real user behavior, a stable creator ecosystem and a clear license framework and AI-enabled cross-media IP development.

Operator: Your next question today comes from the line of Xueqing Zhang from CICC.

Xueqing Zhang: [Interpreted] Can management elaborate a little more on the business model for expert data solutions and what's Zhihu's advantage in this business?

Zhang Ronghua: [Interpreted] As a data lab focused on improving frontier model capabilities. So simply put, we continuously study where models still have capability gaps, identify the tasks they cannot perform reliably and then design the training data, complex task environments and benchmarks around these gaps. We then validate whether these efforts actually improve the performance through the training and evaluation. Our goal is not simply to deliver data, but to solve the specific model capability problems for our clients. Business model currently includes the customized R&D projects based on the clients' frontier needs, where we're also increasing our own research and exploring ways to productize selected like capabilities.

As we complete more projects, we aim to standardize and reuse our data pipelines, environment building capabilities, like evaluation frameworks and know-how across like more clients and different generations of models. And these should improve both scalability and capability reuse. Zhihu expert network is an important part. At the same time, we are building an end-to-end R&D loop from identifying model gaps and designing tasks and training signals, to building environments and graders and ultimately validating model performance. In areas such as coding, search and deep research, data production increasingly rely on the model requirements rather than the large-scale manual work. Experts, therefore, play a greater role in setting standards, providing the professional judgment and validating the results.

The investment profile of this business will differ from the traditional one. Going forward, more investment will be directed towards compute model usage and R&D infrastructure with the goal of building capabilities that can continuously evolve and be reused. So at this stage, we are focused on 3 things: whether we can consistently improve the model performance, whether the long-term relationships with the clients and whether our capabilities can be reused across them. So if these metrics continue to validate, resources in a measured way based on the client demand and the ROI. And thank you.

Operator: That concludes today's Q&A session. At this time, I will turn the conference back Jamie for any additional or closing remarks. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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