Zhihu Inc. Reports Second Quarter and First Half 2022 Unaudited Financial Results
Zhihu Inc. reported its Q2 2022 financial results, showing 31% revenue growth to RMB836 million (US$124.8 million). Monthly active users reached 105.9 million, a rise of 12.3%. Paid memberships soared 78.3% to 8.5 million. Despite overall growth, advertising revenue fell to RMB237.6 million due to economic headwinds. Total operating loss widened to RMB460.7 million, compared to RMB350.5 million a year ago. The net loss was RMB487 million, worsening from RMB321.1 million year-over-year. The company maintains a strong cash position with RMB7 billion available.
- Total revenues up 31% YoY to RMB836 million.
- Paid membership revenue increased 75.1% YoY.
- Average monthly active users reached 105.9 million, a 12.3% growth.
- Advertising revenue decreased to RMB237.6 million from RMB248.3 million YoY.
- Total operating loss widened to RMB460.7 million from RMB350.5 million YoY.
- Net loss increased to RMB487 million from RMB321.1 million YoY.
BEIJING, Aug. 30, 2022 /PRNewswire/ -- Zhihu Inc. ("Zhihu" or the "Company") (NYSE: ZH; HKEX: 2390), the operator of Zhihu, a leading online content community in China, today announced its unaudited financial results for the three months and six months ended June 30, 2022.
Second Quarter 2022 Highlights
- Total revenues were RMB836.0 million (US
$124.8 million ) in the second quarter of 2022, representing a growth of31.0% over the second quarter of 2021. - Average monthly active users (MAUs)[1] reached 105.9 million in the second quarter of 2022, representing a growth of
12.3% over the second quarter of 2021. - Average monthly paying members[2] reached 8.5 million in the second quarter of 2022, representing a growth of
78.3% over the second quarter of 2021.
"The recent COVID-19 pandemic situation and macroeconomic condition created challenging environment in the second quarter. Against this backdrop, we focused on retaining high quality user growth in a sustainable and efficient manner," said Mr. Yuan Zhou, Chairman of the Board and Chief Executive Officer of Zhihu." Driven by our 'Community Ecosystem Comes First' strategy, we are actively expanding our fulfilling content offerings to strengthen the thriving vibrancy of our community. Our initiatives to inspire content creators and upgrade our infrastructure for supporting content creation are yielding expected results and improving our commercial value. In the second quarter, we successfully managed to continue growing our user base while further enhancing our operating efficiency and narrowed our operating loss on a sequential basis. Going forward, we will continue to innovate service offerings within our ecosystem and further unlock commercial value that catalyze sustainable long-term development."
Mr. Wei Sun, Chief Financial Officer of Zhihu, added, "Our content-centric business model again demonstrated its exciting growth potential in the quarter with total revenues increasing by
Second Quarter 2022 Financial Results
Total revenues were RMB836.0 million (US
Advertising revenue was RMB237.6 million (US
Paid membership revenue was RMB271.2 million (US
Content-commerce solutions revenue was RMB240.5 million (US
Vocational Training revenue[3] was RMB46.1 million (US
Other revenues were RMB40.7 million (US
Cost of revenues increased to RMB436.4 million (US
Gross profit was RMB399.6 million (US
Gross margin in the second quarter of 2022 was
Total operating expenses were RMB860.3 million (US
Selling and marketing expenses were RMB532.4 million (US
Research and development expenses were RMB223.6 million (US
General and administrative expenses were RMB104.3 million (US
Loss from operations was RMB460.7 million (US
Other income/(expenses) comprised investment income, interest income, fair value change of financial instruments, exchange gains/(losses) and others, net. The year-over-year changes were mainly due to the following.
Fair value change of financial instruments was a loss of RMB101.2 million (US
Exchange gains/(losses) were gains of RMB49.1 million (US
Net loss was RMB487.0 million (US
Adjusted net loss (non-GAAP)[4] was RMB443.8 million (US
Basic and diluted net loss per ADS was RMB0.79 (US
Cash and cash equivalents, term deposits, restricted cash and short-term investments
As of June 30, 2022, the Company had cash and cash equivalents, term deposits, restricted cash and short-term investments of RMB7.0 billion (US
First Half 2022 Financial Results
Total revenues were RMB1.6 billion (US
Advertising revenue was RMB454.9 million (US
Paid membership revenue was RMB492.8 million (US
Content-commerce solutions revenue was RMB467.2 million (US
Vocational training revenue[3] was RMB85.7 million (US
Other revenues were RMB78.6 million (US
Cost of revenues increased to RMB844.1 million (US
Gross profit was RMB735.1 million (US
Gross margin for the six months ended June 30, 2022 was
Total operating expenses were RMB1,844.0 million (US
Selling and marketing expenses were RMB1,039.0 million (US
Research and development expenses were RMB390.1 million (US
General and administrative expenses were RMB414.9 million (US
Loss from operations was RMB1,108.8 million (US
Other income/(expenses) comprised investment income, interest income, fair value change of financial instruments, exchange gains/(losses) and others, net. The year-over-year changes were mainly due to the following.
Fair value change of financial instruments was a loss of RMB92.7 million (US
Exchange gains/(losses) were gains of RMB45.0 million (US
Net loss was RMB1,101.3 million (US
Adjusted net loss (non-GAAP)[4] was RMB811.2 million (US
Basic and diluted net loss per ADS was RMB1.81 (US
Share Repurchase Program
In May 2022, the Company announced a share repurchase program of up to US
[1] MAUs refers to the sum of the number of mobile devices that launch our mobile app 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. [2] Average monthly paying members for a period is calculated by dividing the sum of monthly paying members for each month during the specified period by the number of months in such period. [3] Effective in the first quarter of 2022, the Company separately reported the revenue of its vocational training business, which was formerly included in "revenue – others," in light of the significant growth of the revenue contribution from vocational training to the Company's total revenues. For comparison purposes, the revenue of vocational training business and the revenue in "others" for each quarter of 2021 have been retrospectively re-classified. [4] Adjusted net loss is a non-GAAP financial measure. For more information on the non-GAAP financial measure, please see the section of "Use of Non-GAAP Financial Measure" and the table captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release. |
Conference Call
The Company's management will host an earnings conference call at 7:30 a.m. U.S. Eastern Time on August 30, 2022 (7:30 p.m. Beijing/Hong Kong time on August 30, 2022).
All participants must pre-register online using the link provided below. Once the pre-registration has been completed, participants will receive 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.
PRE-REGISTER LINK: https://dpregister.com/sreg/10170482/f41885ff42
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 September 6, 2022, by dialing the following telephone numbers:
United States: | +1-877-344-7529 |
International: | +1-412-317-0088 |
Replay Access Code: | 3352639 |
About Zhihu Inc.
Zhihu Inc. (NYSE: ZH; HKEX: 2390), the operator of Zhihu, a leading online content community in China where people come to find solutions, make decisions, seek inspiration, and have fun. We have been dedicated to expanding our content and service offerings to enable our users to explore and enjoy "fulfilling content" (有获得感的內容) that broadens horizons, provides solutions, and resonates with minds. Since the initial launch in 2010, we have grown from a Q&A community into one of the top five comprehensive online content communities and the largest Q&A-inspired online content community in China, both in terms of average mobile MAUs and revenue in 2019, 2020, and 2021, according to CIC. For more information, please visit https://ir.zhihu.com.
Use of Non-GAAP Financial Measure
In evaluating the business, the Company considers and uses adjusted net loss, a non-GAAP financial measure, to supplement the review and assessment of its operating performance. The Company defines adjusted net loss as net loss adjusted for the impact of share-based compensation expenses, amortization of intangible assets resulting from business acquisition and tax effects of the non-GAAP adjustments, which are non-cash expenses. The Company believes that the non-GAAP measure facilitates 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 measure provides 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 measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. The presentation of the non-GAAP financial measure may not be comparable to similarly titled measure presented by other companies. The use of the non-GAAP measure 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 measure, 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 RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars were made at a rate of RMB6.6981 to US
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: ir@zhihu.com
The Piacente Group, Inc.
Helen Wu
Tel: +86-10-6508-0677
Email: zhihu@tpg-ir.com
In the United States:
The Piacente Group, Inc.
Brandi Piacente
Phone: +1-212-481-2050
Email: zhihu@tpg-ir.com
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 Six Months Ended | ||||||||||||
June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | June 30, 2022 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Revenues: | |||||||||||||
Advertising | 248,272 | 217,317 | 237,597 | 35,472 | 462,002 | 454,914 | 67,917 | ||||||
Paid membership | 154,872 | 221,670 | 271,168 | 40,484 | 281,444 | 492,838 | 73,579 | ||||||
Content-commerce solutions | 207,431 | 226,787 | 240,454 | 35,899 | 328,276 | 467,241 | 69,757 | ||||||
Vocational Training | 6,584 | 39,544 | 46,127 | 6,887 | 9,635 | 85,671 | 12,790 | ||||||
Others | 21,193 | 37,909 | 40,670 | 6,072 | 35,281 | 78,579 | 11,732 | ||||||
Total revenues | 638,352 | 743,227 | 836,016 | 124,814 | 1,116,638 | 1,579,243 | 235,775 | ||||||
Cost of revenues | (261,798) | (407,684) | (436,414) | (65,155) | (467,414) | (844,098) | (126,021) | ||||||
Gross profit | 376,554 | 335,543 | 399,602 | 59,659 | 649,224 | 735,145 | 109,754 | ||||||
Selling and marketing expenses | (443,229) | (506,585) | (532,375) | (79,481) | (789,862) | (1,038,960) | (155,113) | ||||||
Research and development expenses | (120,620) | (166,518) | (223,589) | (33,381) | (226,922) | (390,107) | (58,241) | ||||||
General and administrative expenses | (163,243) | (310,632) | (104,290) | (15,570) | (325,439) | (414,922) | (61,946) | ||||||
Total operating expenses | (727,092) | (983,735) | (860,254) | (128,432) | (1,342,223) | (1,843,989) | (275,300) | ||||||
Loss from operations | (350,538) | (648,192) | (460,652) | (68,773) | (692,999) | (1,108,844) | (165,546) | ||||||
Other income/(expenses): | |||||||||||||
Investment income | 11,791 | 20,724 | 20,596 | 3,075 | 21,453 | 41,320 | 6,169 | ||||||
Interest income | 8,251 | 9,355 | 10,480 | 1,565 | 11,578 | 19,835 | 2,961 | ||||||
Fair value change of financial instruments | 10,610 | 8,453 | (101,197) | (15,108) | 10,610 | (92,744) | (13,846) | ||||||
Exchange gains/(losses) | 5,458 | (4,155) | 49,126 | 7,334 | 4,765 | 44,971 | 6,714 | ||||||
Others, net | (5,076) | 1,930 | 1,001 | 149 | 933 | 2,931 | 438 | ||||||
Loss before income tax | (319,504) | (611,885) | (480,646) | (71,758) | (643,660) | (1,092,531) | (163,110) | ||||||
Income tax expense | (1,580) | (2,398) | (6,375) | (952) | (2,117) | (8,773) | (1,310) | ||||||
Net loss | (321,084) | (614,283) | (487,021) | (72,710) | (645,777) | (1,101,304) | (164,420) | ||||||
Accretions of convertible redeemable preferred shares to redemption value | - | - | - | - | (170,585) | - | - | ||||||
Net loss attributable to Zhihu Inc.'s shareholders | (321,084) | (614,283) | (487,021) | (72,710) | (816,362) | (1,101,304) | (164,420) | ||||||
Net loss per share | |||||||||||||
Basic | (1.09) | (2.04) | (1.59) | (0.24) | (4.45) | (3.62) | (0.54) | ||||||
Diluted | (1.09) | (2.04) | (1.59) | (0.24) | (4.45) | (3.62) | (0.54) | ||||||
Net loss per ADS (Two ADSs represent one Class A ordinary share) | |||||||||||||
Basic | (0.55) | (1.02) | (0.79) | (0.12) | (2.22) | (1.81) | (0.27) | ||||||
Diluted | (0.55) | (1.02) | (0.79) | (0.12) | (2.22) | (1.81) | (0.27) | ||||||
Weighted average number of ordinary shares outstanding | |||||||||||||
Basic | 293,735,095 | 300,483,336 | 307,101,052 | 307,101,052 | 183,518,197 | 303,843,801 | 303,843,801 | ||||||
Diluted | 293,735,095 | 300,483,336 | 307,101,052 | 307,101,052 | 183,518,197 | 303,843,801 | 303,843,801 | ||||||
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 Six Months Ended | ||||||||||||
June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | June 30, 2022 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Share-based compensation expenses included in: | |||||||||||||
Cost of revenues | 2,349 | 4,770 | 3,839 | 573 | 4,581 | 8,609 | 1,285 | ||||||
Selling and marketing expenses | 4,614 | 6,472 | 6,196 | 925 | 9,417 | 12,668 | 1,891 | ||||||
Research and development expenses | 2,709 | 15,770 | 14,294 | 2,134 | 10,317 | 30,064 | 4,489 | ||||||
General and administrative expenses | 111,073 | 218,055 | 17,108 | 2,554 | 227,557 | 235,163 | 35,109 | ||||||
ZHIHU INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands) | |||||
As of December 31, 2021 | As of June 30, 2022 | ||||
RMB | RMB | US$ | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 2,157,161 | 2,249,117 | 335,784 | ||
Term deposits | 2,815,509 | 935,569 | 139,677 | ||
Short-term investments | 2,239,596 | 2,664,610 | 397,816 | ||
Restricted cash | - | 281,879 | 42,083 | ||
Trade receivables | 831,628 | 832,216 | 124,247 | ||
Amounts due from related parties | 18,196 | 39,229 | 5,857 | ||
Prepayments and other current assets | 272,075 | 187,380 | 27,975 | ||
Total current assets | 8,334,165 | 7,190,000 | 1,073,439 | ||
Non-current assets: | |||||
Property and equipment, net | 9,865 | 8,155 | 1,217 | ||
Intangible assets, net | 68,308 | 57,863 | 8,639 | ||
Goodwill | 73,663 | 73,663 | 10,997 | ||
Long-term investments | 19,127 | 12,383 | 1,849 | ||
Term deposits | 159,393 | 885,905 | 132,262 | ||
Right-of-use assets | 126,512 | 123,035 | 18,369 | ||
Other non-current assets | 14,132 | 14,132 | 2,110 | ||
Total non-current assets | 471,000 | 1,175,136 | 175,443 | ||
Total assets | 8,805,165 | 8,365,136 | 1,248,882 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payables and accrued liabilities | 1,026,534 | 1,213,206 | 181,127 | ||
Salary and welfare payables | 313,676 | 244,600 | 36,518 | ||
Taxes payables | 66,184 | 35,479 | 5,297 | ||
Contract liabilities | 239,757 | 269,932 | 40,300 | ||
Amounts due to related parties | 83,591 | 84,174 | 12,567 | ||
Short term lease liabilities | 40,525 | 51,586 | 7,702 | ||
Other current liabilities | 127,447 | 216,551 | 32,330 | ||
Total current liabilities | 1,897,714 | 2,115,528 | 315,841 | ||
Non-current liabilities | |||||
Long term lease liabilities | 82,133 | 66,849 | 9,980 | ||
Deferred tax liabilities | 14,030 | 12,830 | 1,915 | ||
Other non-current liabilities | 73,139 | 84,324 | 12,589 | ||
Total non-current liabilities | 169,302 | 164,003 | 24,484 | ||
Total liabilities | 2,067,016 | 2,279,531 | 340,325 | ||
Total Zhihu Inc.'s shareholders' equity | 6,730,654 | 6,069,913 | 906,214 | ||
Noncontrolling interests | 7,495 | 15,692 | 2,343 | ||
Total shareholders' equity | 6,738,149 | 6,085,605 | 908,557 | ||
Total liabilities and shareholders' equity | 8,805,165 | 8,365,136 | 1,248,882 | ||
ZHIHU INC. UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (All amounts in thousands) | |||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | June 30, 2022 | |||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Net loss | (321,084) | (614,283) | (487,021) | (72,710) | (645,777) | (1,101,304) | (164,420) | ||||||
Add: | |||||||||||||
Share-based compensation expenses | 120,745 | 245,067 | 41,437 | 6,186 | 251,872 | 286,504 | 42,774 | ||||||
Amortization of intangible assets resulting from business acquisition | - | 2,400 | 2,400 | 358 | - | 4,800 | 717 | ||||||
Tax effects on non-GAAP adjustments | - | (600) | (600) | (90) | - | (1,200) | (179) | ||||||
Adjusted net loss | (200,339) | (367,416) | (443,784) | (66,256) | (393,905) | (811,200) | (121,108) | ||||||
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SOURCE Zhihu Inc.
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