UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number: 001-40253
Zhihu Inc.
(Registrant’s Name)
A5 Xueyuan Road
Haidian District, Beijing
100083
People’s Republic
of China
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
By |
: |
/s/ Henry Dachuan Sha |
| |
Name |
: |
Henry Dachuan Sha |
| |
Title |
: |
Director and Chief Financial Officer |
Date: August 23, 2023
Exhibit 99.1
Zhihu Inc. Reports Unaudited Second Quarter
2023 Financial Results
BEIJING, China, August 23, 2023 — 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 ended June 30, 2023.
Second Quarter 2023 Highlights
| ● | Total revenues were RMB1,044.2 million (US$144.0 million)
in the second quarter of 2023, representing a 24.9% increase from the same period of 2022. |
| ● | Net loss was RMB279.1 million (US$38.5 million) in the
second quarter of 2023, narrowed by 42.7% from the same period of 2022. |
| ● | Adjusted net loss (non-GAAP)[1] was RMB222.3
million (US$30.7 million) in the second quarter of 2023, narrowed by 49.9% from the same period of 2022. |
| ● | Average monthly active users (MAUs)[2] reached
109.4 million in the second quarter of 2023, up from 105.9 million in the same period of 2022. |
| ● | Average monthly subscribing members[3] reached
14.0 million in the second quarter of 2023, representing a 65.3% increase from the same period of 2022. |
“In the second quarter of 2023, we continued
to achieve high-quality growth and optimize our operating efficiency,” said Mr. Yuan Zhou, chairman and chief executive officer
of Zhihu. “Meanwhile, our dedication to content enrichment encouraged deeper user engagement and inspired our content creators.
Bolstered by Zhihu’s prominent brand name and comprehensive product offerings, our paid membership and vocational training businesses
continued to grow rapidly. We also remained committed to investing in cutting-edge technology to improve content consumption efficiency
and develop new user experiences.”
Mr. Henry Sha, chief financial officer of Zhihu,
added, “Our multi-engine business model delivered solid results this quarter with sustainable growth momentum. Our total revenue
increased by 24.9% year over year, benefiting from our robust and growing paid membership and vocational training businesses. Our gross
margin also expanded further during the quarter, by 6 percentage points year over year to 53.8%, boosted by our effective and ongoing
cost control measures. In comparison with the same period last year, our adjusted net loss narrowed by 49.9%. Going forward, we will continue
to concentrate on our loss reduction strategy and working to achieve healthy growth.”
Second Quarter 2023 Financial Results
Total revenues were RMB1,044.2 million (US$144.0 million) in
the second quarter of 2023, representing a 24.9% increase from RMB836.0 million in the same period of 2022.
Marketing services revenue[4] was RMB412.7
million (US$56.9 million), compared with RMB478.1 million in the same period of 2022. The decrease was primarily due to ongoing refinement
of service offerings to strategically focus on margin improvement.
Paid membership revenue was RMB449.1 million (US$61.9 million),
representing a 65.6% increase from RMB271.2 million in the same period of 2022. The increase was primarily attributable to the continued
growth of our subscribing members, driven by our content enhancements and improved user experience.
Vocational training revenue was RMB144.5 million (US$19.9 million),
representing a 213.3% increase from RMB46.1 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 businesses in the period.
Other revenues were RMB37.9 million (US$5.2 million), compared
with RMB40.7 million in the same period of 2022.
Cost of revenues increased by 10.5% to RMB482.1 million (US$66.5
million) from RMB436.4 million in the same period of 2022. The increase was primarily due to the growth of content and operating costs
as we continued to enhance our content attractiveness, as well as an increase in payment processing costs driven by our revenue growth,
and was partially offset by the decrease in cloud services and bandwidth costs.
Gross profit increased by 40.7% to RMB562.1 million (US$77.5
million) from RMB399.6 million in the same period of 2022. Gross margin expanded to 53.8% from 47.8% 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 RMB889.3 million (US$122.6 million),
compared with RMB860.3 million in the same period of 2022.
Selling and marketing expenses increased to RMB540.6 million
(US$74.6 million) from RMB532.4 million in the same period of 2022. The slight increase reflects our continued efforts in promoting our
product and service offerings.
Research and development expenses increased to RMB236.2 million
(US$32.6 million) from RMB223.6 million in the same period of 2022. The increase was primarily attributable to our increased spending
in technology innovation.
General and administrative expenses increased to RMB112.5 million
(US$15.5 million) from RMB104.3 million in the same period of 2022. The increase was primarily due to increased share-based compensation
expenses.
Loss from operations narrowed by 29.0% to RMB327.2 million (US$45.1
million) from RMB460.7 million in the same period of 2022.
Adjusted loss from operations (non-GAAP)[1]
narrowed by 35.4% to RMB269.4 million (US$37.2 million) from RMB416.8 million in the same period of 2022.
Net loss narrowed by 42.7% to RMB279.1 million (US$38.5 million)
from RMB487.0 million in the same period of 2022.
Adjusted net loss (non-GAAP)[1] narrowed by 49.9%
to RMB222.3 million (US$30.7 million) from RMB443.8 million in the same period of 2022.
Diluted net loss per American Depositary Share (“ADS”)
was RMB0.46 (US$0.06), compared with RMB0.79 in the same period of 2022.
Cash and cash equivalents, term deposits and short-term investments
As of June 30, 2023, the Company had cash and cash equivalents, term
deposits and short-term investments of RMB6,158.6 million (US$849.3 million), compared with RMB6,261.5 million as of December 31, 2022.
Share Repurchase Program
As was previously announced, the Company established a share repurchase
program in May 2022, which was extended in May 2023, under which the Company may repurchase up to US$100 million of Class A ordinary shares
or ADSs until June 10, 2024 (the “Repurchase Program”). 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. As of June 30, 2023, approximately 13.0 million Class A ordinary shares
(including Class A ordinary shares underlying the ADSs) had been repurchased on both the New York Stock Exchange and The Stock Exchange
of Hong Kong Limited under the Repurchase Program for a total price of US$30.8 million.
[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 8:00 a.m. U.S. Eastern Time on August 23, 2023 (8:00 p.m. Beijing/Hong Kong time on August 23, 2023).
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/10181708/fa277db324
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 August 30, 2023, by dialing the following telephone numbers:
| United States (toll free): |
+1-877-344-7529 |
| International: |
+1-412-317-0088 |
| Replay Access Code: |
6924451 |
About Zhihu Inc.
Zhihu Inc. (NYSE: ZH; HKEX: 2390), 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 Measure
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 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
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 RMB7.2513 to US$1.00, the exchange rate in effect as of June 30, 2023 as set forth
in the H.10 statistical release of the Federal Reserve Board.
Safe Harbor Statement
This announcement contains forward-looking
statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform
Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to
differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by
words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,”
“aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,”
“is/are likely to,” or other similar expressions. Further information regarding these and other risks, uncertainties or factors
is included in the Company’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release
is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under
applicable law.
For investor and media inquiries, please contact:
In China:
Zhihu Inc.
Email: ir@zhihu.com
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
Email: zhihu@tpg-ir.com
In the United States:
Piacente Financial Communications
Brandi Piacente
Phone: +1-212-481-2050
Email: zhihu@tpg-ir.com
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(All amounts in thousands, except share, ADS, per
share data and per ADS data)
| | |
For the Three Months Ended | | |
For the Six Months Ended | |
| | |
June 30,
2022 | | |
March 31,
2023 | | |
June 30,
2023 | | |
June 30,
2022 | | |
June 30,
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
US$ | |
| Revenues: | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Marketing services | |
| 478,051 | | |
| 392,137 | | |
| 412,740 | | |
| 56,919 | | |
| 922,155 | | |
| 804,877 | | |
| 110,998 | |
| Paid membership | |
| 271,168 | | |
| 454,769 | | |
| 449,098 | | |
| 61,933 | | |
| 492,838 | | |
| 903,867 | | |
| 124,649 | |
| Vocational training | |
| 46,127 | | |
| 106,998 | | |
| 144,520 | | |
| 19,930 | | |
| 85,671 | | |
| 251,518 | | |
| 34,686 | |
| Others | |
| 40,670 | | |
| 40,316 | | |
| 37,851 | | |
| 5,220 | | |
| 78,579 | | |
| 78,167 | | |
| 10,780 | |
| Total revenues | |
| 836,016 | | |
| 994,220 | | |
| 1,044,209 | | |
| 144,002 | | |
| 1,579,243 | | |
| 2,038,429 | | |
| 281,113 | |
| Cost of revenues | |
| (436,414 | ) | |
| (482,001 | ) | |
| (482,131 | ) | |
| (66,489 | ) | |
| (844,098 | ) | |
| (964,132 | ) | |
| (132,960 | ) |
| Gross profit | |
| 399,602 | | |
| 512,219 | | |
| 562,078 | | |
| 77,513 | | |
| 735,145 | | |
| 1,074,297 | | |
| 148,153 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling and marketing expenses | |
| (532,375 | ) | |
| (445,565 | ) | |
| (540,593 | ) | |
| (74,551 | ) | |
| (1,038,960 | ) | |
| (986,158 | ) | |
| (135,997 | ) |
| Research and development expenses | |
| (223,589 | ) | |
| (182,960 | ) | |
| (236,245 | ) | |
| (32,580 | ) | |
| (390,107 | ) | |
| (419,205 | ) | |
| (57,811 | ) |
| General and administrative expenses | |
| (104,290 | ) | |
| (100,438 | ) | |
| (112,460 | ) | |
| (15,509 | ) | |
| (414,922 | ) | |
| (212,898 | ) | |
| (29,360 | ) |
| Total operating expenses | |
| (860,254 | ) | |
| (728,963 | ) | |
| (889,298 | ) | |
| (122,640 | ) | |
| (1,843,989 | ) | |
| (1,618,261 | ) | |
| (223,168 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss from operations | |
| (460,652 | ) | |
| (216,744 | ) | |
| (327,220 | ) | |
| (45,127 | ) | |
| (1,108,844 | ) | |
| (543,964 | ) | |
| (75,015 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other income/(expenses): | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investment income | |
| 20,596 | | |
| 6,006 | | |
| 11,793 | | |
| 1,626 | | |
| 41,320 | | |
| 17,799 | | |
| 2,455 | |
| Interest income | |
| 10,480 | | |
| 39,493 | | |
| 39,987 | | |
| 5,514 | | |
| 19,835 | | |
| 79,480 | | |
| 10,961 | |
| Fair value change of financial instruments | |
| (101,197 | ) | |
| (3,582 | ) | |
| (9,016 | ) | |
| (1,243 | ) | |
| (92,744 | ) | |
| (12,598 | ) | |
| (1,737 | ) |
| Exchange gains/(losses) | |
| 49,126 | | |
| (5,649 | ) | |
| 7,076 | | |
| 976 | | |
| 44,971 | | |
| 1,427 | | |
| 197 | |
| Others, net | |
| 1,001 | | |
| 6,333 | | |
| 644 | | |
| 89 | | |
| 2,931 | | |
| 6,977 | | |
| 962 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss before income tax | |
| (480,646 | ) | |
| (174,143 | ) | |
| (276,736 | ) | |
| (38,165 | ) | |
| (1,092,531 | ) | |
| (450,879 | ) | |
| (62,177 | ) |
| Income tax expense | |
| (6,375 | ) | |
| (4,829 | ) | |
| (2,330 | ) | |
| (321 | ) | |
| (8,773 | ) | |
| (7,159 | ) | |
| (987 | ) |
| Net loss | |
| (487,021 | ) | |
| (178,972 | ) | |
| (279,066 | ) | |
| (38,486 | ) | |
| (1,101,304 | ) | |
| (458,038 | ) | |
| (63,164 | ) |
| Net income attributable to noncontrolling interests | |
| - | | |
| (2,383 | ) | |
| (775 | ) | |
| (107 | ) | |
| - | | |
| (3,158 | ) | |
| (436 | ) |
| Net loss attributable to Zhihu Inc.’s shareholders | |
| (487,021 | ) | |
| (181,355 | ) | |
| (279,841 | ) | |
| (38,593 | ) | |
| (1,101,304 | ) | |
| (461,196 | ) | |
| (63,600 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss per share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| (1.59 | ) | |
| (0.59 | ) | |
| (0.92 | ) | |
| (0.13 | ) | |
| (3.62 | ) | |
| (1.52 | ) | |
| (0.21 | ) |
| Diluted | |
| (1.59 | ) | |
| (0.59 | ) | |
| (0.92 | ) | |
| (0.13 | ) | |
| (3.62 | ) | |
| (1.52 | ) | |
| (0.21 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss per ADS (Two ADSs represent one Class A ordinary share) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| (0.79 | ) | |
| (0.30 | ) | |
| (0.46 | ) | |
| (0.06 | ) | |
| (1.81 | ) | |
| (0.76 | ) | |
| (0.10 | ) |
| Diluted | |
| (0.79 | ) | |
| (0.30 | ) | |
| (0.46 | ) | |
| (0.06 | ) | |
| (1.81 | ) | |
| (0.76 | ) | |
| (0.10 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of ordinary shares outstanding | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 307,101,052 | | |
| 305,245,036 | | |
| 304,068,362 | | |
| 304,068,362 | | |
| 303,843,801 | | |
| 304,052,681 | | |
| 304,052,681 | |
| Diluted | |
| 307,101,052 | | |
| 305,245,036 | | |
| 304,068,362 | | |
| 304,068,362 | | |
| 303,843,801 | | |
| 304,052,681 | | |
| 304,052,681 | |
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,
2022 | | |
March 31,
2023 | | |
June 30,
2023 | | |
June 30,
2022 | | |
June 30,
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
US$ | |
| Share-based compensation expenses included in: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
| 3,839 | | |
| 4,400 | | |
| 2,146 | | |
| 296 | | |
| 8,609 | | |
| 6,546 | | |
| 903 | |
| Selling and marketing expenses | |
| 6,196 | | |
| 8,758 | | |
| 6,384 | | |
| 881 | | |
| 12,668 | | |
| 15,142 | | |
| 2,088 | |
| Research and development expenses | |
| 14,294 | | |
| 21,205 | | |
| 14,941 | | |
| 2,060 | | |
| 30,064 | | |
| 36,146 | | |
| 4,985 | |
| General and administrative expenses | |
| 17,108 | | |
| 21,555 | | |
| 28,976 | | |
| 3,996 | | |
| 235,163 | | |
| 50,531 | | |
| 6,968 | |
ZHIHU INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
| | |
As of December 31,
2022 | | |
As of June 30,
2023 | |
| | |
RMB | | |
RMB | | |
US$ | |
| ASSETS | |
| | |
| | |
| |
| Current assets: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| 4,525,852 | | |
| 4,033,624 | | |
| 556,262 | |
| Term deposits | |
| 948,390 | | |
| 1,068,551 | | |
| 147,360 | |
| Short-term investments | |
| 787,259 | | |
| 1,056,376 | | |
| 145,681 | |
| Trade receivables | |
| 834,251 | | |
| 751,276 | | |
| 103,606 | |
| Amounts due from related parties | |
| 24,798 | | |
| 9,833 | | |
| 1,356 | |
| Prepayments and other current assets | |
| 199,249 | | |
| 239,671 | | |
| 33,052 | |
| Total current assets | |
| 7,319,799 | | |
| 7,159,331 | | |
| 987,317 | |
| Non-current assets: | |
| | | |
| | | |
| | |
| Property and equipment, net | |
| 7,290 | | |
| 9,410 | | |
| 1,298 | |
| Intangible assets, net | |
| 80,237 | | |
| 131,688 | | |
| 18,161 | |
| Goodwill | |
| 126,344 | | |
| 191,077 | | |
| 26,351 | |
| Long-term investments | |
| - | | |
| 30,000 | | |
| 4,137 | |
| Right-of-use assets | |
| 100,119 | | |
| 82,138 | | |
| 11,327 | |
| Other non-current assets | |
| 22,450 | | |
| 29,946 | | |
| 4,130 | |
| Total non-current assets | |
| 336,440 | | |
| 474,259 | | |
| 65,404 | |
| Total assets | |
| 7,656,239 | | |
| 7,633,590 | | |
| 1,052,721 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
| Current liabilities | |
| | | |
| | | |
| | |
| Accounts payables and accrued liabilities | |
| 916,112 | | |
| 1,136,723 | | |
| 156,761 | |
| Salary and welfare payables | |
| 283,546 | | |
| 239,535 | | |
| 33,033 | |
| Taxes payables | |
| 25,975 | | |
| 29,028 | | |
| 4,003 | |
| Contract liabilities | |
| 355,626 | | |
| 378,279 | | |
| 52,167 | |
| Amounts due to related parties | |
| 24,861 | | |
| 16,580 | | |
| 2,286 | |
| Short term lease liabilities | |
| 53,190 | | |
| 61,024 | | |
| 8,416 | |
| Other current liabilities | |
| 165,531 | | |
| 229,399 | | |
| 31,636 | |
| Total current liabilities | |
| 1,824,841 | | |
| 2,090,568 | | |
| 288,302 | |
| Non-current liabilities | |
| | | |
| | | |
| | |
| Long term lease liabilities | |
| 43,367 | | |
| 19,759 | | |
| 2,725 | |
| Deferred tax liabilities | |
| 11,630 | | |
| 24,711 | | |
| 3,408 | |
| Other non-current liabilities | |
| 82,133 | | |
| 153,084 | | |
| 21,111 | |
| Total non-current liabilities | |
| 137,130 | | |
| 197,554 | | |
| 27,244 | |
| Total liabilities | |
| 1,961,971 | | |
| 2,288,122 | | |
| 315,546 | |
| | |
| | | |
| | | |
| | |
| Total Zhihu Inc.’s shareholders’ equity | |
| 5,653,696 | | |
| 5,271,380 | | |
| 726,958 | |
| Noncontrolling interests | |
| 40,572 | | |
| 74,088 | | |
| 10,217 | |
| Total shareholders’ equity | |
| 5,694,268 | | |
| 5,345,468 | | |
| 737,175 | |
| | |
| | | |
| | | |
| | |
| Total liabilities and shareholders’ equity | |
| 7,656,239 | | |
| 7,633,590 | | |
| 1,052,721 | |
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,
2022 | | |
March 31,
2023 | | |
June 30,
2023 | | |
June 30,
2022 | | |
June 30,
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
US$ | | |
RMB | | |
RMB | | |
US$ | |
| Loss from operations | |
| (460,652 | ) | |
| (216,744 | ) | |
| (327,220 | ) | |
| (45,127 | ) | |
| (1,108,844 | ) | |
| (543,964 | ) | |
| (75,015 | ) |
| Add: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Share-based compensation expenses | |
| 41,437 | | |
| 55,918 | | |
| 52,447 | | |
| 7,233 | | |
| 286,504 | | |
| 108,365 | | |
| 14,944 | |
| Amortization of intangible assets resulting from business acquisition | |
| 2,400 | | |
| 3,490 | | |
| 5,365 | | |
| 740 | | |
| 4,800 | | |
| 8,855 | | |
| 1,221 | |
| Adjusted loss from operations | |
| (416,815 | ) | |
| (157,336 | ) | |
| (269,408 | ) | |
| (37,154 | ) | |
| (817,540 | ) | |
| (426,744 | ) | |
| (58,850 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| (487,021 | ) | |
| (178,972 | ) | |
| (279,066 | ) | |
| (38,486 | ) | |
| (1,101,304 | ) | |
| (458,038 | ) | |
| (63,164 | ) |
| Add: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Share-based compensation expenses | |
| 41,437 | | |
| 55,918 | | |
| 52,447 | | |
| 7,233 | | |
| 286,504 | | |
| 108,365 | | |
| 14,944 | |
| Amortization of intangible assets resulting from business acquisition | |
| 2,400 | | |
| 3,490 | | |
| 5,365 | | |
| 740 | | |
| 4,800 | | |
| 8,855 | | |
| 1,221 | |
| Tax effects on non-GAAP adjustments | |
| (600 | ) | |
| (600 | ) | |
| (1,069 | ) | |
| (147 | ) | |
| (1,200 | ) | |
| (1,669 | ) | |
| (230 | ) |
| Adjusted net loss | |
| (443,784 | ) | |
| (120,164 | ) | |
| (222,323 | ) | |
| (30,660 | ) | |
| (811,200 | ) | |
| (342,487 | ) | |
| (47,229 | ) |
Exhibit 99.2
Hong Kong Exchanges
and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this announcement.
Zhihu Inc.
(A
company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
(NYSE: ZH; HKEX: 2390)
INTERIM
RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED
JUNE 30, 2023
The board (the
“Board”) of directors (the “Directors”) of Zhihu Inc. (the “Company”) is pleased
to announce the unaudited condensed interim consolidated results (the “Unaudited Interim Results”) of the Company,
its subsidiaries and consolidated affiliated entities (the “Group” or “Zhihu”) for the six months
ended June 30, 2023 (the “Reporting Period”), together with the comparative figures for the corresponding period
in 2022. These interim results have been prepared in accordance with accounting principles generally accepted in the United States of
America (the “U.S. GAAP”). The unaudited condensed interim consolidated financial information for the Reporting Period
was reviewed by PricewaterhouseCoopers, the independent auditor of the Company, in accordance with International Standard on Review Engagements
2410, “Review of interim financial information performed by the independent auditor of the entity ”.
In this announcement, “we”,
“us” or “our” refers to the Company and where the context otherwise requires, the Group (as defined under the
“General Information” section).
FINANCIAL PERFORMANCE HIGHLIGHTS
| | |
For the Six Months | | |
| |
| | |
Ended June 30, | | |
| |
| | |
2023 | | |
2022 | | |
Change (%) | |
| | |
(Unaudited) | | |
(Unaudited) | | |
| |
| | |
(RMB in thousands, except percentages) | |
| Total revenues | |
| 2,038,429 | | |
| 1,579,243 | | |
| 29.1 | % |
| Gross profit | |
| 1,074,297 | | |
| 735,145 | | |
| 46.1 | % |
| Loss from operations | |
| (543,964 | ) | |
| (1,108,844 | ) | |
| (50.9 | )% |
| Net loss | |
| (458,038 | ) | |
| (1,101,304 | ) | |
| (58.4 | )% |
| | |
| | | |
| | | |
| | |
| Non-GAAP financial measures: | |
| | | |
| | | |
| | |
| Adjusted loss from operations | |
| (426,744 | ) | |
| (817,540 | ) | |
| (47.8 | )% |
| Adjusted net loss | |
| (342,487 | ) | |
| (811,200 | ) | |
| (57.8 | )% |
| | |
For the Six Months | | |
| |
| | |
Ended June 30, | | |
| |
| | |
2023 | | |
2022 | | |
Change (%) | |
| | |
| | |
(in millions) | | |
| |
| Average monthly active users (MAUs)(1) | |
| 105.9 | | |
| 103.7 | | |
| 2.1 | % |
| Average monthly subscribing members(2) | |
| 14.4 | | |
| 7.7 | | |
| 88.1 | % |
Notes:
| (1) | 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. |
| (2) | Monthly
subscribing members refers to the number of our Yan Selection (鹽選)
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. |
Non-GAAP Financial Measures
In evaluating its
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 acquisition, and tax effects of the non-GAAP
adjustments, which are non-cash expenses. The Company believes that the non-GAAP 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 measure presented by other companies. The use of the non-GAAP measures have 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.
The following tables
set forth the unaudited reconciliation of GAAP and non-GAAP results for the periods indicated.
| | |
For the Six Months | |
| | |
Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| | |
(RMB in thousands) | |
| Loss from operations | |
| (543,964 | ) | |
| (1,108,844 | ) |
| Add: | |
| | | |
| | |
| Shared-based compensation expenses | |
| 108,365 | | |
| 286,504 | |
| Amortization of intangible assets resulting from business acquisition | |
| 8,855 | | |
| 4,800 | |
| Adjusted loss from operations | |
| (426,744 | ) | |
| (817,540 | ) |
| | |
| | | |
| | |
| Net loss | |
| (458,038 | ) | |
| (1,101,304 | ) |
| Add: | |
| | | |
| | |
| Shared-based compensation expenses | |
| 108,365 | | |
| 286,504 | |
| Amortization of intangible assets resulting | |
| | | |
| | |
| from business acquisition | |
| 8,855 | | |
| 4,800 | |
| Tax effects on non-GAAP adjustments | |
| (1,669 | ) | |
| (1,200 | ) |
| | |
| | | |
| | |
| Adjusted net loss | |
| (342,487 | ) | |
| (811,200 | ) |
BUSINESS REVIEW AND OUTLOOK
Business Review for the Reporting
Period
In the first half
of 2023, we are delighted to have achieved inspiring operational and financial results with solid revenue growth, improved gross margin,
and narrowed net losses. Our community ecosystem continues to serve as the bedrock of our business and key to our long-term success along
our journey in the pursuit of monetization efficiency. Guided by our “Community Ecosystem Comes First” strategy, we continued
to foster our community culture by encouraging the creation of fulfilling content, refining the experience of our users and content creators,
and upgrading our technology infrastructure. All these efforts contributed to boosting the vitality and prosperity of our community ecosystem,
driving our average MAUs to 109.4 million in the second quarter of 2023, up from 105.9 million in the second quarter of 2022.
Around the flourishing
community culture of Zhihu, our multi-channel, content-centric business model delivered solid financial performance, highlighted by a
29.1% year-over-year growth in total revenues to RMB2,038.4 million and a significantly narrowed net loss by 58.4% year-over-year in
the first half of 2023. In particular, our paid membership growth momentum remained strong with an increase in revenue by 83.4% year-over-year
to RMB903.9 million in the first half of 2023. Vocational training further increased its contribution to our total revenues, from RMB85.7
million in the first half of 2022 to RMB251.5 million in the first half of 2023. Meanwhile, we have been focusing on improving our operating
efficiency, expanding gross margin, and narrowing net losses. Though we prioritized our newly initiated investments in the research and
development of the latest technologies, particularly the generative AI technology, our net loss was significantly narrowed from RMB1.1
billion in the first half of 2022 to RMB458.0 million in the same period of 2023.
Our Progress in AI
During
the first half of 2023, we continued to advance our technological development through both internal initiatives and collaboration
with other external groups, highlighted by the explorations on generative AI, as we firmly believe the recent development in AI
technology unleashed significant opportunities to Zhihu to better serve users and beyond. In April 2023, we have launched our
first Large Language Model (“LLM”), Zhihaitu AI (知海圖
AI) with tens of billions of parameters. Currently, we are accelerating our progress in
integrating AI technology across various application scenarios throughout our ecosystem. Our goal is to enhance the efficacy of
content recommendations, improve the efficiency of the search function, and empower content creation to enrich our content pool. AI
will allow our users to find their desired contents more efficiently, accelerate their readings in a more enjoyable way, assist
content creators to generate more high-quality contents and stimulate more engagements on their creations.
Leveraging the
abundant data and contents accumulated in our community, we are exploring more potential application scenarios in our community to better
support our content creators, refine our content quality, and boost our monetization efficiency. With our preliminary yet promising progress
in AI, we remain optimistic about unlocking the potential of generative AI technology to better serve our community ecosystem.
Zhihu Content
In the first half
of 2023, we continued to broaden our content coverage and optimize our content composition and formats to better satisfy users’
evolving needs. To that end, while deepening penetration in our cornerstone verticals, such as inspiring content creators to engage in
more in-depth contents generated by professional users and other forms of content creation, we expanded our content library to cover
more lifestyle and consumption scenarios. In addition, we have significantly upgraded the functional tools for content creators to produce
short-form content to capture the evolving users’ demand for reading in fragmented time. Meanwhile, we also leverage a technology-driven
approach to optimize the operation of our fulfilling content and follow up to reassess such content. As of June 30, 2023, we had
711.3 million cumulative pieces of content covering over 1,000 verticals.
Our
ongoing efforts to expand our premium content offerings unlock the commercialization potential and to benefit wider audience. In May 2023,
we officially launched Yanyan Story (鹽 言故事) ,
an app dedicated to boutique short-form stories for subscribing members who prefer a dedicated and immersive reading experience. We are
also diligently expanding other premium content offerings to satisfy the demand of our growing subscribing members, which effectively
contributed to the rapid growth in paid membership revenue.
Zhihu Users
Our content continued
to enable us to expand our diverse user base in a high-quality manner, driving the average MAUs in the second quarter of 2023 to 109.4
million. We integrate our “Community Ecosystem Comes First” strategy with all aspects of our operations, including our brand
promotion and user growth efforts. Our high-quality content and strong brand have enabled us to effectively expand our user base, while
maintaining high user engagement and loyalty.
We have a young
and diverse user base. As of June 30, 2023, approximately 76% of our active users were under 30, and female users accounted for
58.4% of our total number of active users in June 2023. In our decade-long journey as an online content community, we are pleased
to have served a group we label as new-generation professionals: young professionals having professional expertise in specific fields.
Many of them have joined Zhihu community during their education journeys and become our long-term users and, simultaneously, high-quality
content creators. Our commitment remains strong in serving their demands for content, inspiring their professional content creation and
catering to their consumption needs.
Content Creators
Our community culture
has inspired our users to contribute and become content creators. We have strived to discover, develop, and empower them to generate
content and encourage content diversity, enabling content creators to realize their potential.
We
continued to support the different needs of content creators at different stages. In addition, we provide ongoing support and guidance
to content creators to increase the frequency of content creation, including rewarding them financially from their creative works through
various channels. For example, our upgraded Haiyan Plan 5.0 (海鹽計劃 5.0)
will center around the new-generation professionals, motivating them with highly efficient tools
to realize their monetization potentials. In April 2023, we upgraded our professional creator identification recognition function
to indicate verified professional identity of our content creators. We are glad to find out that the introduction of the function has
brought a large amount of additional contents generated by professional users that are trustworthy and reliable and effectively enhanced
their community engagement. As of June 30, 2023, Zhihu had 66.6 million cumulative content creators, increasing by 12.8% year-over-year
from 59.1 million.
Monetization
Our total revenues
were RMB2.0 billion in the first half of 2023, representing a growth of 29.1% from RMB1.6 billion for the same period of 2022. The growth
underscores our effective development of monetization channels aligned with our “Community Ecosystem Comes First” strategy
and the community culture that we hold dear. Our content-centric monetization channels currently include marketing services, paid membership,
vocational training, and other services such as sales of our private label products and book series. Among these channels, paid membership
and vocational training have brought resilient and diverse growth engines, and the growth in our professionally generated content under
our motivation have been fueling the growth of such businesses.
At the beginning
of 2023, we optimized our organizational structure by synchronizing our advertising and content-commerce solutions services as an integrated
“marketing services” business, offering our merchants and brands more effective and comprehensive marketing solutions. We
are continuing to enhance the effectiveness of our marketing services based on more accurate distribution to users powered by technology
with more diverse advertising products. For our paid membership, we are pleased to record an 83.4% increase in revenues and an 88.1%
increase in the number of subscribing members in first half of 2023 compared to the same period of 2022, attributable to the expansion
of our premium content library and its popularity among the Zhihu users. Our incentive programs for content creators also contribute
to the attractiveness of our premium content, in turn fostering the revenue growth of this business line. Our vocational training services,
which generated RMB251.5 million revenue in the first half of 2023 representing a 193.6% year-over-year increase, presented a comprehensive
product mix covering a wide range of vocational training demands. This business serves as another robust growth engine, particularly
resonating with new-generation professionals who typically desire for self-development and excellence. We are also dedicated to spanning
digitalization to all our services to revitalize our operating efficiency. For a detailed discussion of our results, see “Management
Discussion and Analysis.”
Important Events After the Reporting
Period
Save as disclosed
herein, there was no significant event that might affect the Company after the Reporting Period and up to the date of this announcement.
Business Outlook
Looking ahead to
the second half of 2023, we will strategically dedicate our resources on development and monetization of generative AI technology. With
a focus on professional users and content creators, we will motivate their engagements in our community to enhance our community culture
and high-quality content creation. We are still facing challenges from the uncertainty of the macroeconomy and the increasing competition
in China’s internet industry. By diversifying our monetization model into paid membership and vocational training business, our
revenue growth will be more resilient and sustainable. We will further expand discussions and search scenarios in the Zhihu community
as we respond to the evolving needs, thereby better serving both users and clients. The empowerment of generative AI technology is expected
to support the well-rounded growth of our business and enhance the efficiency of our various business lines. We are also focusing on
refining our operating efficiency to expand our margins while achieving the healthy and sustainable business growth.
| MANAGEMENT DISCUSSION AND ANALYSIS |
|
|
|
|
| | |
For the Six Months | |
| | |
Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| | |
(RMB in thousands) | |
| Revenues: | |
| | |
| |
| Marketing services | |
| 804,877 | | |
| 922,155 | |
| Paid membership | |
| 903,867 | | |
| 492,838 | |
| Vocational training | |
| 251,518 | | |
| 85,671 | |
| Others | |
| 78,167 | | |
| 78,579 | |
| Total revenues | |
| 2,038,429 | | |
| 1,579,243 | |
| Cost of revenues | |
| (964,132 | ) | |
| (844,098 | ) |
| Gross profit | |
| 1,074,297 | | |
| 735,145 | |
| Selling and marketing expenses | |
| (986,158 | ) | |
| (1,038,960 | ) |
| Research and development expenses | |
| (419,205 | ) | |
| (390,107 | ) |
| General and administrative expenses | |
| (212,898 | ) | |
| (414,922 | ) |
| Total operating expenses | |
| (1,618,261 | ) | |
| (1,843,989 | ) |
| Loss from operations | |
| (543,964 | ) | |
| (1,108,844 | ) |
| Other income/(expenses): | |
| | | |
| | |
| Investment income | |
| 17,799 | | |
| 41,320 | |
| Interest income | |
| 79,480 | | |
| 19,835 | |
| Fair value change of financial instruments | |
| (12,598 | ) | |
| (92,744 | ) |
| Exchange gains | |
| 1,427 | | |
| 44,971 | |
| Others, net | |
| 6,977 | | |
| 2,931 | |
| Loss before income tax expense | |
| (450,879 | ) | |
| (1,092,531 | ) |
| Income tax expense | |
| (7,159 | ) | |
| (8,773 | ) |
| Net loss | |
| (458,038 | ) | |
| (1,101,304 | ) |
| Net income attributable to noncontrolling interests | |
| (3,158 | ) | |
| – | |
| Net loss attributable to Zhihu Inc.’s shareholders | |
| (461,196 | ) | |
| (1,101,304 | ) |
| | |
For the Six Months | |
| | |
Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| | |
(RMB in thousands) | |
| Other comprehensive income: | |
| | | |
| | |
| Foreign currency translation adjustments | |
| 94,436 | | |
| 160,977 | |
| Total other comprehensive income | |
| 94,436 | | |
| 160,977 | |
| Total comprehensive loss | |
| (363,602 | ) | |
| (940,327 | ) |
| Net income attributable to noncontrolling interests | |
| (3,158 | ) | |
| – | |
| Comprehensive loss attributable to Zhihu Inc.’s shareholders | |
| (366,760 | ) | |
| (940,327 | ) |
Revenues
Our total revenues were RMB2.0 billion for the
six months ended June 30, 2023, representing a growth of 29.1% from RMB1.6 billion for the same period of 2022. The increase was
primarily driven by the expansion of our user base, as well as our diversified revenue sources under our content ecosystem. The following
table sets forth a breakdown of our revenues by business line in absolute amounts and as percentages of our total revenues for the six
months ended June 30, 2023 and 2022, respectively.
| | |
For the Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
% | | |
RMB | | |
% | |
| | |
(Unaudited) | | |
| | |
(Unaudited) | | |
| |
| | |
(in thousands, except percentages) | |
| Revenues | |
| | |
| | |
| | |
| |
| Marketing services(1) | |
| 804,877 | | |
| 39.5 | | |
| 922,155 | | |
| 58.4 | |
| Paid membership | |
| 903,867 | | |
| 44.3 | | |
| 492,838 | | |
| 31.2 | |
| Vocational training | |
| 251,518 | | |
| 12.3 | | |
| 85,671 | | |
| 5.4 | |
| Others | |
| 78,167 | | |
| 3.9 | | |
| 78,579 | | |
| 5.0 | |
| Total | |
| 2,038,429 | | |
| 100.0 | | |
| 1,579,243 | | |
| 100.0 | |
Note:
| (1) | 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. |
Marketing
services revenue was RMB804.9 million for the six months ended June 30, 2023, compared with RMB922.2 million for the same
period of 2022. The decrease was primarily due to the soft macro environment and our ongoing refinement of service offerings to strategically
focus on margin improvement.
Paid
membership revenue was RMB903.9 million for the six months ended June 30, 2023, representing a 83.4% increase from RMB492.8
million for the same period of 2022. The significant increase was primarily attributable to the continued growth of subscribing members,
driven by our content enhancements and improved user experience.
Vocational
training revenue was RMB251.5 million for the six months ended June 30, 2023, representing a 193.6% increase from RMB85.7
million for the same period of 2022. The significant increase was primarily attributable to our further enriched online course offerings
and the revenue contributions from the acquired businesses in the period.
Other
revenues were RMB78.2 million for the six months ended June 30, 2023, compared with RMB78.6 million for the same period
of 2022.
Cost of Revenues
Cost of revenues increased by 14.2% to RMB964.1
million for the six months ended June 30, 2023 from RMB844.1 million for the same period of 2022. The increase was primarily due
to an increase in content and operating costs as we continued to enhance our content attractiveness, as well as an increase in payment
processing costs driven by our revenue growth, and was partially offset by the decrease in cloud services and bandwidth costs.
The following table sets forth a breakdown of
our cost of revenues in absolute amounts and as percentages of our total revenues for the six months ended June 30, 2023 and 2022,
respectively.
| | |
For the Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
% | | |
RMB | | |
% | |
| | |
(Unaudited) | | |
| | |
(Unaudited) | | |
| |
| | |
(in thousands, except percentages) | |
| Cost of revenues | |
| | |
| | |
| | |
| |
| Content and operational costs | |
| 532,951 | | |
| 26.1 | | |
| 408,593 | | |
| 25.9 | |
| Cloud service and bandwidth costs | |
| 133,950 | | |
| 6.6 | | |
| 203,447 | | |
| 12.9 | |
| Staff costs | |
| 123,978 | | |
| 6.1 | | |
| 110,042 | | |
| 7.0 | |
| Payment processing costs | |
| 104,293 | | |
| 5.1 | | |
| 54,447 | | |
| 3.4 | |
| Others | |
| 68,960 | | |
| 3.4 | | |
| 67,569 | | |
| 4.2 | |
| Total | |
| 964,132 | | |
| 47.3 | | |
| 844,098 | | |
| 53.4 | |
Gross Profit and Margin
Gross
profit increased by 46.1% to RMB1.1 billion for the six months ended June 30, 2023 from RMB735.1 million for the same
period of 2022. Gross margin expanded to 52.7% for the six months ended June 30, 2023 from 46.6% for the same period of 2022, primarily
attributable to our enhanced monetization efforts and the improvement of cloud services and bandwidth utilization efficiency.
Operating Expenses
Total operating expenses were RMB1.6 billion for the six months ended
June 30, 2023, representing a 12.2% decrease from RMB1.8 billion for the same period of 2022.
Selling
and marketing expenses decreased by 5.1% to RMB986.2 million for the six months ended June 30, 2023 from RMB1.0 billion
for the same period of 2022. The decrease was primarily attributable to more disciplined promotional spending and decrease in salaries
and welfare expenses in the first half of 2023.
Research
and development expenses increased by 7.5% to RMB419.2 million for the six months ended June 30, 2023 from RMB390.1 million
for the same period of 2022. The increase was primarily attributable to our increased spending on technology innovation.
General
and administrative expenses decreased by 48.7% to RMB212.9 million for the six months ended June 30, 2023 from RMB414.9
million for the same period of 2022. The decrease was primarily due to lower share-based compensation expenses recognized and the decrease
in professional service fees.
Loss from Operations
Loss
from operations decreased by 50.9% to RMB544.0 million for the six months ended June 30, 2023 from RMB1.1 billion for
the same period of 2022.
Adjusted Loss from Operations (Non-GAAP)
Adjusted
loss from operations (non-GAAP) decreased by 47.8% to RMB426.7 million for the six months ended June 30, 2023 from RMB817.5
million for the same period of 2022.
Net Loss
Net
loss decreased by 58.4% to RMB458.0 million for the six months ended June 30, 2023 from RMB1.1 billion for the same period
of 2022.
Adjusted Net Loss (Non-GAAP)
Adjusted
net loss (non-GAAP) decreased by 57.8% to RMB342.5 million for the six months ended June 30, 2023 from RMB811.2 million
for the same period of 2022.
Liquidity and Capital Resources
During the six months ended June 30, 2023,
we have financed our operations primarily through our existing cash and capital resources. We had cash and cash equivalents, term deposits,
and short-term investments of RMB6.3 billion and RMB6.2 billion as of December 31, 2022 and June 30, 2023, respectively. The
net cash used in operating activities was narrowed to RMB58.3 million during the Reporting Period.
The following table sets forth a summary of our cash flows for the
periods indicated:
| | |
For the Six Months | |
| | |
Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| | |
(RMB in thousands) | |
| Net cash used in operating activities | |
| (58,341 | ) | |
| (515,109 | ) |
| Net cash (used in)/provided by investing activities | |
| (390,396 | ) | |
| 805,756 | |
| Net cash (used in)/provided by financing activities | |
| (102,868 | ) | |
| 6,989 | |
| Effects of exchange
rate changes on cash, cash equivalents and restricted cash | |
| 59,377 | | |
| 76,199 | |
| Net (decrease)/increase in cash, cash equivalents and restricted cash | |
| (492,228 | ) | |
| 373,835 | |
| Cash and cash equivalents at the beginning of the period | |
| 4,525,852 | | |
| 2,157,161 | |
| Cash, cash equivalents and restricted cash at the end of the period | |
| 4,033,624 | | |
| 2,530,996 | |
Significant Investments
We did not make or hold any significant investments during the six
months ended June 30, 2023.
Material Acquisitions and Disposals
We did not have any material acquisitions or disposals of subsidiaries,
consolidated affiliated entities, associated companies or joint ventures during the six months ended June 30, 2023.
Pledge of Assets
As of June 30, 2023, no property, plant and equipment of ours
was pledged.
Future Plans for Material Investments or Capital Assets
We did not have detailed future plans for significant investments or
capital assets as of June 30, 2023.
Gearing Ratio
As of June 30, 2023, our gearing ratio, calculated
as total interest-bearing borrowings divided by total equity, was zero.
Foreign Exchange Risk
Our expenditures are mainly denominated in Renminbi
and, therefore, we are exposed to risks related to movements between Renminbi and U.S. dollars. We enter into hedging transactions in
an effort to reduce our exposure to foreign currency exchange risk when we deem appropriate. In addition, the value of your investment
in our Shares and American depositary shares (the “ADSs”) will be affected by the exchange rate between U.S. dollars
and Renminbi because the value of our business is effectively denominated in Renminbi, while our ADSs are traded in U.S. dollars.
To the extent that we need to convert U.S. dollars
or other currencies into Renminbi for our operations, appreciation of Renminbi against U.S. dollars would have an adverse effect on the
Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars or other currency for the
purpose of making payments to suppliers or for dividends on our Class A ordinary shares (“Class A Ordinary Shares”)
or ADSs or for other business purposes, appreciation of U.S. dollars against Renminbi would have a negative effect on the U.S. dollar
amounts available to us.
Interest Rate Risk
Our exposure to interest rate risk primarily relates
to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits and wealth management products.
Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in market
interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.
From time to time, we may invest the net proceeds
that we receive from our overseas offerings in interest-earning instruments. Investments in both fixed-rate and floating rate interest-earning
instruments carry a degree of interest rate risk. Fixed-rate securities may have their fair market value adversely impacted due to a rise
in interest rates, while floating-rate securities may produce less income than expected if interest rates fall.
Contingent Liabilities
As of June 30, 2023, we did not have any material contingent liabilities.
Employees and Remuneration
As of June 30, 2023, we had 2,980 full-time
employees. The following table sets forth the total number of our employees by function as of June 30, 2023:
| | |
Number of | | |
| |
| Function | |
Employees | | |
Percentage | |
| Content and Content-Related Operations | |
| 976 | | |
| 32.8 | % |
| Research and Development | |
| 1,079 | | |
| 36.2 | % |
| Sales and Marketing | |
| 684 | | |
| 22.9 | % |
| General Administration | |
| 241 | | |
| 8.1 | % |
| | |
| | | |
| | |
| Total | |
| 2,980 | | |
| 100.0 | % |
We offer employees competitive salaries, performance-based
cash bonuses, regular awards, and long-term incentives. As required by PRC laws and regulations in respect of our PRC employment, we participate
in housing fund and various employee social insurance plans that are organized by applicable competent authorities, including housing,
pension, medical, work-related injury, maternity, and unemployment insurance, under which we make contributions at specified percentages
of the salaries of our employees. We also purchase commercial health and accidental insurance coverage for our employees. Bonuses are
generally discretionary and based in part on the overall performance of our business and in part on employee performance. We have adopted
share incentive plans to grant share-based incentive awards to our eligible employees to incentivize their contributions to our growth
and development.
OTHER INFORMATION
Compliance with the Corporate Governance Code
During the Reporting Period, the Company has continued
to regularly review and monitor its corporate governance practices to ensure compliance with the latest version of the Corporate Governance
Code (the “Corporate Governance Code”) set forth in Appendix 14 to the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (the “Listing Rules”) and the
Company has complied with all the code provisions of the Corporate Governance Code, save for the following:
Pursuant to code provision C.2.1 of the Corporate
Governance Code, companies listed on the Stock Exchange are expected to comply with, but may choose to deviate from the requirement that
the responsibilities between the chairperson and the chief executive officer should be segregated and should not be performed by the same
individual. The Company does not have a separate chairman and chief executive officer and Mr. Yuan Zhou currently performs these
two roles. The Board believes that vesting the roles of both chairperson and chief executive officer in the same person has the benefit
of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group.
The Board considers that the balance of power
and authority for the present arrangement will not be impaired and this structure will enable the Company to make and implement decisions
promptly and effectively. In addition, all major decisions are made in consultation with members of the Board, including the relevant
Board committees, and the independent non-executive Directors. The Board will continue to review and consider splitting the roles of chairman
of the Board and the chief executive officer of the Company if and when it is appropriate taking into account the circumstances of the
Group as a whole.
Other than the above, during the Reporting Period,
the Company has complied with all applicable principles and code provisions of the Corporate Governance Code.
Compliance with the Model Code for Securities Transactions by Directors
The Company has adopted the Code for Dealings
in Securities by Management (the “Company’s Code”), with terms no less exacting that the Model Code for Securities
Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, as its own securities dealing code to regulate
all dealings by Directors and relevant employees of securities in the Company and other matters covered by the Company’s Code.
Specific enquiry has been made to all the Directors
and the relevant employees and they have confirmed that they have complied with the Company’s Code during the Reporting Period and
up to the date of this announcement.
Audit Committee
The Company has established the audit committee
of the Board (the “Audit Committee”) in compliance with Rule 3.21 of the Listing Rules and the Corporate
Governance Code. The primary duties of the Audit Committee are to review and supervise the financial reporting process and the risk management
and internal control systems of the Group, review and approve connected transactions and provide advice and comments to the Board.
The Audit Committee comprises of three independent
non-executive Directors, namely Mr. Hanhui Sam Sun, Ms. Hope Ni, and Mr. Derek Chen. Mr. Hanhui Sam Sun, being the
chairman of the Audit Committee, is appropriately qualified as required under Rules 3.10(2) and 3.21 of the Listing Rules.
The Audit Committee has reviewed the Unaudited
Interim Results of the Group for the Reporting Period and has met with the independent auditor, PricewaterhouseCoopers. The Audit Committee
has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control and financial
reporting matters with senior management members of the Company.
Purchase, Sale or Redemption of the Company’s Listed Securities
During the Reporting Period, the Company repurchased
approximately 12,984,979 of ADSs representing a total of 6,492,489 Class A Ordinary Shares (the “Repurchased Shares”)
of the Company on the New York Stock Exchange at an aggregate consideration of US$14,121,534. Particulars of the Repurchased Shares are
as follows:
| Month of | |
No. and Method of | |
| Price paid per share | | |
| Aggregate | |
| Repurchase | |
Repurchased Shares | |
| Highest | | |
| Lowest | | |
| Consideration | |
| March 2023 | |
420,719 on the New York Stock Exchange | |
| US$ |
2.54 | | |
| US$ |
2.46 | | |
| US$ |
1,057,356 | |
| April 2023 | |
1,399,731 on the New York Stock Exchange | |
| US$ |
2.40 | | |
| US$ |
2.08 | | |
| US$ |
3,196,731 | |
| May 2023 | |
1,688,242 on the New York Stock Exchange | |
| US$ |
2.28 | | |
| US$ |
1.92 | | |
| US$ |
3,482,970 | |
| June 2023 | |
2,983,797 on the New York Stock Exchange | |
| US$ |
2.24 | | |
| US$ |
1.98 | | |
| US$ |
6,384,477 | |
During the Reporting Period, the number of Class A
Ordinary Shares in issue was reduced by 4,225,791 shares as a result of the cancellation of the Repurchased Shares on January 20,
2023 and June 9, 2023. Upon cancellation of the Repurchased Shares, Mr. Yuan Zhou, the weighted voting rights (“WVR”)
beneficiary (“WVR Beneficiary”) of the Company simultaneously reduced his Shares carrying WVR in the Company proportionately
by way of converting his 249,187 Class B ordinary shares (“Class B Ordinary Shares”) into Class A Ordinary
Shares on a one-to-one ratio pursuant to Rule 8A.21 of the Listing Rules on January 20, 2023 and June 9, 2023, such
that the proportion of shares carrying WVR of the Company shall not be increased, pursuant to the requirements under Rules 8A.13
and 8A.15 of the Listing Rules.
Save as disclosed above, neither the Company nor
any of its subsidiaries purchased, sold or redeemed any of the Company’s securities listed on the Stock Exchange during the Reporting
Period.
Material Litigation
The Company was not involved in any material litigation
or arbitration during the Reporting Period. The Directors are also not aware of any material litigation or claims that are pending or
threatened against the Company during the Reporting Period and up to the date of this announcement.
Interim Dividend
The Board did not recommend the distribution of an interim dividend
for the Reporting Period.
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS
(All amounts in thousands, except for share and per share data)
| | |
| |
For the Six Months | |
| | |
Note | |
Ended June 30, | |
| | |
| |
2023 | | |
2022 | |
| | |
| |
RMB | | |
RMB | |
| Revenues | |
6 | |
| 2,038,429 | | |
| 1,579,243 | |
| Cost of revenues | |
| |
| (964,132 | ) | |
| (844,098 | ) |
| | |
| |
| | | |
| | |
| Gross profit | |
| |
| 1,074,297 | | |
| 735,145 | |
| Operating expenses: | |
| |
| | | |
| | |
| Selling and marketing expenses | |
| |
| (986,158 | ) | |
| (1,038,960 | ) |
| Research and development expenses | |
| |
| (419,205 | ) | |
| (390,107 | ) |
| General and administrative expenses | |
| |
| (212,898 | ) | |
| (414,922 | ) |
| | |
| |
| | | |
| | |
| Total operating expenses | |
| |
| (1,618,261 | ) | |
| (1,843,989 | ) |
| | |
| |
| | | |
| | |
| Loss from operations | |
| |
| (543,964 | ) | |
| (1,108,844 | ) |
| Other income/(expenses): | |
| |
| | | |
| | |
| Investment income | |
| |
| 17,799 | | |
| 41,320 | |
| Interest income | |
| |
| 79,480 | | |
| 19,835 | |
| Fair value change of financial instruments | |
| |
| (12,598 | ) | |
| (92,744 | ) |
| Exchange gains | |
| |
| 1,427 | | |
| 44,971 | |
| Others, net | |
| |
| 6,977 | | |
| 2,931 | |
| | |
| |
| | | |
| | |
| Loss before income tax | |
| |
| (450,879 | ) | |
| (1,092,531 | ) |
| Income tax expense | |
7 | |
| (7,159 | ) | |
| (8,773 | ) |
| | |
| |
| | | |
| | |
| Net loss | |
| |
| (458,038 | ) | |
| (1,101,304 | ) |
| Net income attributable to noncontrolling interests | |
| |
| (3,158 | ) | |
| – | |
| | |
| |
| | | |
| | |
| Net loss attributable to Zhihu Inc.’s shareholders | |
| |
| (461,196 | ) | |
| (1,101,304 | ) |
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS (CONTINUED)
(All amounts in thousands, except for share and per share data)
| | |
| | |
For the Six Months | |
| | |
Note | | |
Ended June 30, | |
| | |
| | |
2023 | | |
2022 | |
| | |
| | |
RMB | | |
RMB | |
| Net loss | |
| | | |
| (458,038 | ) | |
| (1,101,304 | ) |
| Other comprehensive income: | |
| | | |
| | | |
| | |
| Foreign currency translation adjustments | |
| | | |
| 94,436 | | |
| 160,977 | |
| | |
| | | |
| | | |
| | |
| Total other comprehensive income | |
| | | |
| 94,436 | | |
| 160,977 | |
| | |
| | | |
| | | |
| | |
| Total comprehensive loss | |
| | | |
| (363,602 | ) | |
| (940,327 | ) |
| Net income attributable to noncontrolling interests | |
| | | |
| (3,158 | ) | |
| – | |
| Comprehensive loss attributable to Zhihu Inc.’s shareholders | |
| | | |
| (366,760 | ) | |
| (940,327 | ) |
| | |
| | | |
| | | |
| | |
| Net loss per share, basic and diluted | |
| 5 | | |
| (1.52 | ) | |
| (3.62 | ) |
| Weighted average
number of ordinary shares, basic and diluted | |
| 5 | | |
| 304,052,681 | | |
| 303,843,801 | |
| | |
| | | |
| | | |
| | |
| Share-based compensation expenses included in: | |
| | | |
| | | |
| | |
| Cost of revenues | |
| | | |
| 6,546 | | |
| 8,609 | |
| Selling and marketing expenses | |
| | | |
| 15,142 | | |
| 12,668 | |
| Research and development expenses | |
| | | |
| 36,146 | | |
| 30,064 | |
| General and administrative expenses | |
| | | |
| 50,531 | | |
| 235,163 | |
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data)
| | |
| | |
As of | | |
As of | |
| | |
| | |
June 30, | | |
December 31, | |
| | |
Note | | |
2023 | | |
2022 | |
| | |
| | |
RMB | | |
RMB | |
| Current assets: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| | | |
| 4,033,624 | | |
| 4,525,852 | |
| Term deposits | |
| | | |
| 1,068,551 | | |
| 948,390 | |
| Short-term investments | |
| | | |
| 1,056,376 | | |
| 787,259 | |
| Trade receivables | |
| 3 | | |
| 751,276 | | |
| 834,251 | |
| Amounts due from related parties | |
| | | |
| 9,833 | | |
| 24,798 | |
| Prepayments and other current assets | |
| | | |
| 239,671 | | |
| 199,249 | |
| Total current assets | |
| | | |
| 7,159,331 | | |
| 7,319,799 | |
| | |
| | | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | | |
| | |
| Property and equipment, net | |
| | | |
| 9,410 | | |
| 7,290 | |
| Intangible assets, net | |
| | | |
| 131,688 | | |
| 80,237 | |
| Goodwill | |
| | | |
| 191,077 | | |
| 126,344 | |
| Long-term investments | |
| | | |
| 30,000 | | |
| – | |
| Right-of-use assets | |
| | | |
| 82,138 | | |
| 100,119 | |
| Other non-current assets | |
| | | |
| 29,946 | | |
| 22,450 | |
| | |
| | | |
| | | |
| | |
| Total non-current assets | |
| | | |
| 474,259 | | |
| 336,440 | |
| Total assets | |
| | | |
| 7,633,590 | | |
| 7,656,239 | |
| | |
| | | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
| Current liabilities | |
| | | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
| 4 | | |
| 1,136,723 | | |
| 916,112 | |
| Salary and welfare payables | |
| | | |
| 239,535 | | |
| 283,546 | |
| Taxes payable | |
| | | |
| 29,028 | | |
| 25,975 | |
| Contract liabilities | |
| | | |
| 378,279 | | |
| 355,626 | |
| Amounts due to related parties | |
| | | |
| 16,580 | | |
| 24,861 | |
| Short-term lease liabilities | |
| | | |
| 61,024 | | |
| 53,190 | |
| Other current liabilities | |
| | | |
| 229,399 | | |
| 165,531 | |
| | |
| | | |
| | | |
| | |
| Total current liabilities | |
| | | |
| 2,090,568 | | |
| 1,824,841 | |
| | |
| | | |
| | | |
| | |
| Non-current liabilities | |
| | | |
| | | |
| | |
| Long-term lease liabilities | |
| | | |
| 19,759 | | |
| 43,367 | |
| Deferred tax liabilities | |
| | | |
| 24,711 | | |
| 11,630 | |
| Other non-current liabilities | |
| | | |
| 153,084 | | |
| 82,133 | |
| | |
| | | |
| | | |
| | |
| Total non-current liabilities | |
| | | |
| 197,554 | | |
| 137,130 | |
| | |
| | | |
| | | |
| | |
| Total liabilities | |
| | | |
| 2,288,122 | | |
| 1,961,971 | |
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except for share and per share data)
| |
| |
As of | | |
As of | |
| |
| |
June 30, | | |
December 31, | |
|
Note | |
2023 | | |
2022 | |
| |
| |
RMB | | |
RMB | |
| Shareholders’ equity: |
| |
| | | |
| | |
| Class A Ordinary shares (US$0.000125 par value, 1,550,000,000 and 1,550,000,000 shares authorized as of December 31, 2022 and June 30, 2023, respectively; 297,419,878 and 295,222,700 shares issued and outstanding as of December 31, 2022 and June 30, 2023, respectively) |
| |
| 233 | | |
| 234 | |
| Class B Ordinary shares (US$0.000125 par value, 50,000,000 and 50,000,000 shares authorized as of December 31, 2022 and June 30, 2023, respectively; 18,940,652 and 18,691,465 shares issued and outstanding as of December 31, 2022 and June 30, 2023, respectively) |
| |
| 15 | | |
| 15 | |
| Treasury stock |
| |
| (69,796 | ) | |
| (33,814 | ) |
| Additional paid-in capital |
| |
| 13,635,469 | | |
| 13,615,042 | |
| Accumulated other comprehensive income/(loss) |
| |
| 28,628 | | |
| (65,808 | ) |
| Accumulated deficit |
| |
| (8,323,169 | ) | |
| (7,861,973 | ) |
| |
| |
| | | |
| | |
| Total Zhihu Inc.’s shareholders’ equity |
| |
| 5,271,380 | | |
| 5,653,696 | |
| Noncontrolling interests |
| |
| 74,088 | | |
| 40,572 | |
| |
| |
| | | |
| | |
| Total shareholders’ equity |
| |
| 5,345,468 | | |
| 5,694,268 | |
| |
| |
| | | |
| | |
| Total liabilities and shareholders’ equity |
| |
| 7,633,590 | | |
| 7,656,239 | |
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL
INFORMATION
Zhihu Inc. (the
“Company” or “Zhihu”), previously known as Zhihu Technology Limited, was incorporated in the Cayman Islands
on May 17, 2011 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company, through its
consolidated subsidiaries and variable interest entities (“VIEs”) (collectively referred to as the “Group”)
is primarily engaged in the operation of one online content community and monetizes through paid membership services, marketing
services and vocational training in the People’s Republic of China (the “PRC” or “China”). In
March 2021, the Company completed its initial public offering (the “IPO”) on the New York Stock Exchange in the
United States of America. In April 2022, the Company successfully listed its Class A ordinary shares on the Main Board of
The Stock Exchange of Hong Kong Limited.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
The accompanying unaudited condensed
interim consolidated financial information has been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed interim consolidated financial information
has been prepared on the same basis as the audited consolidated financial statements as of December 31, 2022 and for the year ended
December 31, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair
statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily
indicative of the results of operations for the full year or any other interim period.
The unaudited condensed interim consolidated
financial information and related disclosures have been prepared with the presumption that users of the unaudited condensed interim consolidated
financial information should be read in conjunction with the audited consolidated financial statements as of December 31, 2022 and
for the year ended December 31, 2022. The condensed interim consolidated balance sheet at December 31, 2022 has been derived
from the audited financial statements at that date for interim reporting purpose and hence it does not include all the information and
footnotes required by U.S. GAAP.
| (b) | Principles of consolidation |
The unaudited condensed interim consolidated
financial statements include the financial statements of the Company, its subsidiaries, the VIEs and subsidiaries of the VIEs for which
the Company are the primary beneficiary.
Subsidiaries are those entities in
which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority
of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to
govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
Consolidated VIEs are entities in which
the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact
the entities’ economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity,
and therefore the Company or its subsidiary is the primary beneficiary of the entity.
All transactions and balances among
the Company, its subsidiaries, the consolidated VIEs and subsidiaries of the VIEs have been eliminated upon consolidation.
The preparation of the Group’s
unaudited condensed interim consolidated financial information in conformity with the U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet
date and reported revenues and expenses during the reported periods in the unaudited condensed interim consolidated financial information
and accompanying notes. Significant accounting estimates include but are not limited to assessment for the allowance for credit losses
on trade receivables and purchase price allocation in relation to acquisitions.
| (d) | Functional currency and foreign currency translation |
The Group uses Renminbi
(“RMB”) as its reporting currency. The functional currency of the Company and its overseas subsidiaries which are
incorporated in the Cayman Islands, the British Virgin Islands and Hong Kong is United States dollars (“US$”). The
functional currency of the Group’s PRC entities is RMB.
In the unaudited condensed interim consolidated
financial information, the financial information of the Company and other entities located outside of the PRC have been translated into
RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical
exchange rates, and revenues, expenses, gains and losses are translated using the periodic average exchange rate. Translation adjustments
are reported as foreign currency translation adjustments and are shown as a component of other comprehensive income/(loss) in the unaudited
condensed interim consolidated statements of operations and comprehensive loss.
Foreign currency transactions denominated
in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are
included in others, net in the unaudited condensed interim consolidated statements of operations and comprehensive loss.
Operating segments are defined as components
of an enterprise engaging in business activities for which separate financial information is available that is regularly evaluated by
the Group’s chief operating decision makers (“CODM”). Based on the criteria established by ASC 280 “Segment Reporting”,
the Group’s CODM has been identified as the Chief Executive Officer, who reviews consolidated results of the Group when making decisions
about allocating resources and assessing performance.
The Group’s CODM reviews consolidated
results including revenue and operating income at a consolidated level. This resulted in only one operating and reportable segment in
the Group.
The Group’s long-lived assets
are substantially all located in the PRC and substantially all the Group’s revenues are derived from within the PRC, therefore,
no geographical segments are presented.
| 3. |
TRADE RECEIVABLES |
|
|
|
|
| |
Trade receivables consisted of (in thousands): |
|
|
|
|
| | |
As of | | |
As of | |
| | |
June 30, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
RMB | |
| Trade receivables, gross | |
| 861,397 | | |
| 927,132 | |
| Provision of allowance for expected credit losses | |
| (110,121 | ) | |
| (92,881 | ) |
| | |
| | | |
| | |
| Trade receivables, net | |
| 751,276 | | |
| 834,251 | |
An aging analysis based on the relevant recognition dates
is as follows (in thousands):
| | |
As of | | |
As of | |
| | |
June 30, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| | |
| RMB | | |
| RMB | |
| 0-3 months | |
| 479,614 | | |
| 451,360 | |
| 3-6 months | |
| 82,524 | | |
| 143,434 | |
| 6-12 months | |
| 155,677 | | |
| 153,255 | |
| Over 1 year | |
| 143,582 | | |
| 179,083 | |
| | |
| | | |
| | |
| Trade receivables, gross | |
| 861,397 | | |
| 927,132 | |
| 4. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
An aging analysis of accounts payable
and accrued liabilities is as follows (in thousands):
| | |
As of | | |
As of | |
| | |
June 30, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
RMB | |
| 0-3 months | |
| 902,231 | | |
| 840,404 | |
| 3-6 months | |
| 144,122 | | |
| 48,298 | |
| 6-12 months | |
| 78,375 | | |
| 26,119 | |
| Over 1 year | |
| 11,995 | | |
| 1,291 | |
| | |
| | | |
| | |
| Total | |
| 1,136,723 | | |
| 916,112 | |
Accrued liabilities primarily reflect
receipts of goods and services that have not yet been invoiced to the Group. When the Group is invoiced for these goods and services,
this balance will be reclassed to accounts payable. Aging analysis of accounts payable has been presented based on billing date and the
amounts of accrued liabilities were categorized as 0-3 months.
Basic and diluted loss per share have
been calculated in accordance with ASC260 for the six months ended June 30, 2022 and 2023. Shares issuable for little consideration
have been included in the number of outstanding shares used for basic and diluted loss per share.
| | |
For the Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| Numerator (RMB in thousands): | |
| | |
| |
| Net loss | |
| (458,038 | ) | |
| (1,101,304 | ) |
| Net income attributable to noncontrolling interests | |
| (3,158 | ) | |
| – | |
| Net loss attributable to ordinary shareholders | |
| (461,196 | ) | |
| (1,101,304 | ) |
| Denominator: | |
| | | |
| | |
| Weighted average number of ordinary shares outstanding, basic | |
| 304,052,681 | | |
| 303,843,801 | |
| Weighted average number of ordinary shares outstanding, diluted | |
| 304,052,681 | | |
| 303,843,801 | |
| Net loss per share, basic (RMB) | |
| (1.52 | ) | |
| (3.62 | ) |
| Net loss per share, diluted (RMB) | |
| (1.52 | ) | |
| (3.62 | ) |
Basic and diluted loss per ordinary
share are computed using the weighted average number of ordinary shares outstanding during the year. Both Class A and Class B
ordinary shares are included in the calculation of the weighted average number of ordinary shares outstanding, basic and diluted.
The following ordinary shares equivalents
were excluded from the computation of dilutive net loss per share to eliminate any antidilutive effect:
| |
|
For the Six Months Ended June 30, |
|
| |
|
|
2023 |
|
|
|
2022 |
|
| Share options |
|
|
4,041,669 |
|
|
|
7,309,039 |
|
Key revenues streams are as below (in
thousands):
| | |
For the Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
RMB | |
| Marketing services | |
| 804,877 | | |
| 922,155 | |
| Paid membership service | |
| 903,867 | | |
| 492,838 | |
| Vocational training | |
| 251,518 | | |
| 85,671 | |
| Others | |
| 78,167 | | |
| 78,579 | |
| | |
| | | |
| | |
| Total revenue | |
| 2,038,429 | | |
| 1,579,243 | |
| (a) | Value-added tax (“VAT”) |
The Group’s subsidiaries, consolidated
VIEs and VIEs’ subsidiaries incorporated in China are subject to statutory VAT rate of 6% for services rendered and 9% or 13% for
goods sold.
Cayman Islands
Under the current laws of the Cayman
Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company in the Cayman
Islands to their shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
Under the current Hong Kong Inland
Revenue Ordinance, from the year of assessment 2018/2019 onwards, the subsidiaries in Hong Kong are subject to profits tax at the rate
of 8.25% on assessable profits up to HK$2 million, and 16.5% on any part of assessable profits over HK$2 million. The payments of dividends
by these companies to their shareholders are not subject to any Hong Kong withholding tax.
China
On March 16, 2007, the National
People’s Congress of PRC enacted the Enterprise Income Tax(“EIT”) Law, under which Foreign Invested Enterprises (“FIEs”)
and domestic companies would be subject to EIT at a uniform rate of 25%. Preferential tax treatments will continue to be granted to FIEs
or domestic companies which conduct businesses in certain encouraged sectors and to otherwise classified as “Software Enterprises”,
“Key Software Enterprises” and/or “High and New Technology Enterprises” (“HNTEs”). The Enterprise
Income Tax Law became effective on January 1, 2008. The aforementioned preferential tax rates are subject to annual review by the
relevant tax authorities in China. One subsidiary and two subsidiaries of the Company were accredited as HNTEs and are entitled to a preferential
income tax rate at 15% for the six months ended June 30, 2022 and 2023, respectively. All other major PRC incorporated entities of
the Group were subject to a 25% income tax rate for the six months ended June 30, 2022 and 2023.
The components of income tax expenses
for the six months ended June 30, 2022 and 2023 are as follows (in thousands):
| | |
For the Six Months Ended June 30, | |
| | |
2023 | | |
2022 | |
| | |
RMB | | |
RMB | |
| Current income tax expenses | |
| 8,828 | | |
| 9,973 | |
| Deferred income tax benefit | |
| (1,669 | ) | |
| (1,200 | ) |
| | |
| | | |
| | |
| Total | |
| 7,159 | | |
| 8,773 | |
No dividends were declared or paid for
the six months ended June 30, 2022 and 2023.
PUBLICATION OF THE INTERIM RESULTS ANNOUNCEMENT
AND INTERIM REPORT
This interim results announcement is published
on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (https://ir.zhihu.com/). The interim report for the Reporting
Period will be dispatched to the Company’s shareholders and made available for review on the same websites in due course.
| |
By Order of the Board |
| |
Zhihu Inc. |
| |
Yuan Zhou |
| |
Chairman |
Hong Kong, August 23, 2023
As of the date of this announcement, the Board
of the Company comprises Mr. Yuan Zhou, Mr. Dahai Li and Mr. Henry Dachuan Sha as executive Directors, Mr. Zhaohui
Li and Mr. Bing Yu as non-executive Directors, and Mr. Hanhui Sam Sun, Ms. Hope Ni and Mr. Derek Chen as independent
non-executive Directors.
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