Zhihu's Q1 2025: Key Contradictions in Profitability Goals, AI Strategy, and Revenue Growth

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Positive Financial Performance:
- Zhihu Inc. achieved a non-GAAP net profit of RMB6.9 million for Q1 2025, marking the first time they've achieved a non-GAAP net profit in the first quarter since their IPO.
- This milestone reflects the company's continued execution of their operating strategy and the increased operating leverage enabled by AI integration, leading to significantly improved profitability.

User Engagement and AI Initiatives:
- The average daily user time span reached nearly 38 minutes, up 17.6% year-over-year, and core user retention rate improved both sequentially and year-over-year.
- Growth in user engagement and AI-related professional content is attributed to the launch of the contributor attribution feature, which enhances the influence of the expert network and reduces AI hallucination in specialized domains.

Strategic Shift in Marketing Services:
- Zhihu's total revenue was RMB729.7 million, down 15.1% sequentially, with marketing services revenue reaching RMB197 million, representing a year-over-year decline of 40.4%.
- The decrease in marketing services revenue is primarily due to the adoption of a trustworthy content model, which focuses on reducing low-quality marketing content and optimizing the client mix.

Investment in AI and Content Quality:
- Zhihu is focusing on integrating high-quality content and AI capabilities to create value, as evidenced by the AI-related professional content growing by 46% year-over-year.
- The integration of AI within the community is aimed at expanding the range of value propositions, while the user base for Zhihu Zhida has grown over 37% in the first quarter.

Shareholder Returns and Strategic Focus:
- Zhihu's board approved a new 2025 share repurchase program, authorizing the repurchase of up to 10% of issued and outstanding shares.
- The strategic focus is on AI-driven initiatives, enhancing shareholder returns, and positioning Zhihu for long-term growth in the AI era by leveraging its trusted content and expert network.