Business Context and Reporting Period
Zhihu Inc. (NYSE: ZH; HKEX: 2390) is a Cayman Islands holding company operating a leading online content community in China. The company utilizes a Variable Interest Entity (VIE) structure to conduct its primary operations, with VIEs contributing 68.7% of total revenues in 2025. This filing covers the fiscal year ended December 31, 2025. Zhihu monetizes its ecosystem through marketing services, paid membership subscriptions (Yan Selection), and other services including vocational training.
Key Financial Metrics (Fiscal Year 2025)
| Metric | 2025 (RMB) | 2025 (US$) | 2024 (RMB) |
|---|---|---|---|
| Total Revenues | 2,749,004 | 393,103 | 3,598,905 |
| Gross Profit | 1,647,745 | 235,625 | 2,180,829 |
| Gross Margin | 59.9% | - | 60.6% |
| Net Loss | (195,161) | (27,906) | (168,967) |
| Net Loss Attributable to Shareholders | (192,901) | (27,583) | (171,802) |
| Operating Cash Flow | (363,605) | (51,993) | (280,185) |
| Cash & Equivalents (Year End) | 3,369,154 | 481,783 | 3,999,160 |
| Total Assets | 5,190,874 | 742,286 | 5,732,952 |
Note: US$ amounts are translated at the rate of RMB 6.9931 to US$1.00 as of December 31, 2025.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 23.6% year-over-year (YoY) to RMB 2.75 billion. This was driven by declines across all segments: Marketing Services (-32.3%), Paid Membership (-12.7%), and Other Services (-37.9%).
- Membership Contraction: Average monthly subscribing members fell to 13.5 million in 2025 from 15.0 million in 2024, a decrease of 10.0%.
- Goodwill Impairment: The company recorded a full goodwill impairment charge of RMB 126.3 million (US$18.1 million) in 2025, compared to nil in 2024. This was driven by updated forecasts reflecting current market conditions and a market capitalization lower than the carrying amount of net assets.
- Expense Reduction: Operating expenses decreased 19.0% YoY to RMB 2.16 billion. Selling and marketing expenses dropped 21.7%, and R&D expenses fell 28.3% due to improved efficiency and disciplined spending.
- Investment Income Surge: Investment income increased significantly to RMB 231.9 million (from RMB 65.4 million in 2024), primarily due to unrealized gains from re-measuring the fair value of a long-term investment in a privately held company.
Guidance, Outlook, and Risks
Management Commentary & Strategy: Zhihu is prioritizing user quality and engagement over aggressive user acquisition. The company is refining its monetization strategies, specifically scaling back less effective content-commerce solutions and vocational training offerings. Management is heavily investing in Generative AI (e.g., Zhihu Zhida) to enhance search capabilities, content creation, and operational efficiency. The company maintains a disciplined approach to cost control.
Key Risks & Contingencies:
- VIE Structure: Zhihu operates through contractual arrangements with VIEs in China. There is uncertainty regarding the enforceability of these arrangements under PRC law. If the PRC government deems the structure non-compliant, the company could face severe penalties or be forced to relinquish interests in its operations.
- Regulatory Environment: The company faces evolving regulations in China regarding data security, cybersecurity, content moderation, and foreign investment. Specific risks include the potential requirement for cybersecurity reviews and restrictions on cross-border data transfers.
- HFCAA & Delisting: While the PCAOB currently has access to inspect auditors in China, future inability to do so could lead to delisting of ADSs from U.S. exchanges under the Holding Foreign Companies Accountable Act (HFCAA).
- Profitability: The company has incurred net losses for the past three years and cannot assure future profitability. Continued losses may require additional financing, which could be dilutive.
Investor Verification Checklist
- Revenue Mix Sustainability: Verify the long-term viability of the "Paid Membership" segment given the 10% decline in subscribers and the strategic shift away from vocational training.
- Goodwill Impairment Impact: Assess whether the RMB 126.3 million impairment charge signals a broader devaluation of the company's assets or is a one-time adjustment to market conditions.
- AI Monetization: Evaluate the commercial success of AI initiatives (Zhihu Zhida) and whether they are generating sufficient revenue to offset the decline in traditional marketing services.
- Liquidity Position: Confirm that the RMB 3.37 billion cash balance is sufficient to fund operations for the next 12+ months given the negative operating cash flow of RMB 363.6 million.
- VIE Compliance: Monitor any new PRC regulatory actions regarding the enforceability of the VIE structure or restrictions on foreign investment in internet content services.