Page 1

InvestorRoom Zhihu Inc. Reports Second Quarter 2021 Unaudited Financial Results BEIJING , Aug. 16 , 2021 / PRNewswire / -- Zhihu Inc. ( " Zhihu " or the " Company " ) ( NYSE : ZH ) , the operator of Zhihu , a leading online content community in China , today announced its unaudited financial results for the second quarter ended June 30 , 2021 . Second Quarter 2021 Highlights • Average monthly active users ( MAUS ) [ 1 ] reached 94.3 million in the second quarter of 2021 , representing a growth of 46.2 % over the second quarter of 2020 . • Average monthly paying members [ 2 ] reached 4.7 million in the second quarter of 2021 , representing a growth of 121.1 % over the second quarter of 2020 . • Total revenues were RMB638.4 million ( US $ 98.9 million ) in the second quarter of 2021 , representing a growth of 144.2 % over the second quarter of 2020 . • Gross profit was RMB376.6 million ( US $ 58.3 million ) in the second quarter of 2021 , representing a growth of 197.9 % over the second quarter of 2020 . • Gross margin increased to 59.0 % in the second quarter of 2021 from 48.4 % in the same period of last year . " We are delighted to report another strong quarter , with solid growth in both operating and financial performance . We believe our founding belief , establishing a content - centric ecosystem and sustainable commercialization model , is the fundamental driver behind our achievements as a company . We continued to strive towards this goal in the quarter , by optimizing our content structure and refining our evaluation standards for quality content , thereby enhancing a " sense of fulfilment " for our users . We believe such quality content will broaden horizons , provide resolutions and resonate with minds . We further believe this " sense of fulfilment " will not only strengthen trust amongst users , content creators and our platform , but will also be a key element that will enhance our unique position in the market and further solidify our leadership position in the long - term . " said Mr. Yuan Zhou , Chairman of the Board and Chief Executive Officer of Zhihu . Mr. Wei Sun , Chief Financial Officer of Zhihu , added , " We have continued to deliver outstanding operating and financial results in the second quarter of 2021. In the quarter , our user base continued its rapid growth , with average MAUS increasing by 46 % year - over - year to 94.3 million . Our content - centric monetization also enjoyed robust enhancement , yielding a 144 % year - over - year growth in revenue . Our revenue structure diversified further in the quarter with a higher percentage of revenue coming from content - commerce solutions and paid memberships . At the same time , our gross margin remained strong at 59 % for the quarter , compared with 48 % for the same period last year , which significantly reinforces our strong capability in upgrading our content infrastructure and allows us to continue creating long - term value for our users , business partners and shareholders . " Second Quarter 2021 Financial Results Total revenues were RMB638.4 million ( US $ 98.9 million ) in the second quarter of 2021 , representing an increase of 144.2 % from RMB261.4 million in the same period of 2020. The increase was driven by our expanding user scale and continued growth of our average revenue per user . Advertising revenue was RMB248.3 million ( US $ 38.5 million ) in the second quarter of 2021 , representing an increase of 48.4 % from RMB167.3 million in the same period of 2020. The year - over - year increase was primarily attributable to the continued expansion of our user base coupled with an increased average advertising revenue generated per MAU . Paid membership revenue was RMB154.9 million ( US $ 24.0 million ) in the second quarter of 2021 , representing an increase of 123.5 % from RMB69.3 million in the same period of 2020. The year - over - year increase was primarily attributable to an increase in our overall user base coupled with an enhanced paying ratio for the period . Content - commerce solutions revenue was RMB207.4 million ( US $ 32.1 million ) in the second quarter of 2021 , compared with RMB12.7 million in the second quarter of 2020. The strong year - over - year growth was primarily driven by the rapid increases of both our user base and average content - commerce solutions revenue per MAU , which reflected our continued commitment to our content - centric commercialization strategy . Other revenues were RMB27.8 million ( US $ 4.3 million ) in the second quarter of 2021 , compared with RMB12.0 million in the same period of 2020. The year- over - year increase was primarily attributable to the continued growth of our e - commerce services and online education services that provide vocational training and professional courses for adults . Cost of revenues increased to RMB261.8 million ( US $ 40.5 million ) in the second quarter of 2021 from RMB135.0 million in the same period of 2020. The increase was primarily due to increased execution costs for our advertising services and content - related costs . The rapid growth in user traffic in the quarter also resulted in increases in our cloud services and bandwidth costs . Gross profit was RMB376.6 million ( US $ 58.3 million ) in the second quarter of 2021 , compared with a gross profit of RMB126.4 million in the same period of 2020 . Gross margin in the second quarter of 2021 was 59.0 % , compared to 48.4 % in the same period of 2020 . Total operating expenses were RMB727.1 million ( US $ 112.6 million ) in the second quarter of 2021 , compared with RMB284.0 million in the same period of 2020 . Selling and marketing expenses were RMB443.2 million ( US $ 68.6 million ) in the second quarter of 2021 , compared with RMB146.7 million in the second quarter of 2020. The increase was primarily due to the increased expenses in promotion and advertising activities to attract new users , as well as to strengthen our brand recognition . Research and development expenses were RMB120.6 million ( US $ 18.7 million ) in the second quarter of 2021 , compared with RMB83.6 million in the same period of 2020. The increase was primarily due to the increased headcount in our research and development personnel as we continued to invest in technical infrastructure , research and development . General and administrative expenses were RMB163.2 million ( US $ 25.3 million ) in the second quarter of 2021 , compared with RMB53.7 million in the same period of 2020. The increase was primarily due to the increased share - based compensation expenses . Loss from operations was RMB350.5 million ( US $ 54.3 million ) in the second quarter of 2021 , compared with RMB157.7 million in the same period of 2020 . Net loss was RMB321.1 million ( US $ 49.7 million ) in the second quarter of 2021 , compared with RMB116.1 million in the same period of 2020 . Adjusted net loss ( non - GAAP ) [ 3 ] was RMB200.3 million ( US $ 31.0 million ) in the second quarter of 2021 , compared with RMB70.2 million in the same period of 2020 . Basic and diluted net loss per ADS was RMB0.55 ( US $ 0.08 ) in the second quarter of 2021 , compared with RMB2.22 in the same period of 2020 . Cash and cash equivalents , term deposits , restricted cash and short - term investments As of June 30 , 2021 , the Company had cash and cash equivalents , term deposits , restricted cash and short - term investments of RMB7,703.1 million