Zhihu Inc - ADR Stock

Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu, Inc. Second Quarter 2026 Financial Results Conference Call. [Operator Instructions]. Today's conference is being recorded and webcasted. At this time, I would like to turn the conference over to [indiscernible] of Investor Relations. Please go ahead, ma'am.

Thank you, Sharon. Hello, everyone. Welcome to Zhihu Second Quarter 2026 Financial Results Conference Call. Joining me today from our senior management team are Mr. Zhou Yuan, Founder, Chairman Keurig Office; Mr. Wang Han, Chief Financial Officer; and Mr. [ Jan Long Wu ], Chief Operating Officer.

Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Ligation Reform Act of 1995. This statement involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding this included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Additionally, today's discussion will include both GAAP and non-GAAP financial measures for comparation purposes only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. A replay of this conference call will be available on our IR website at ir.zhihu.com. And today, Mr. Zhou Yuan will deliver prepared remarks in Chinese and followed by English translation. Please go ahead, sir.

[Interpreted] Hello, everyone, and thank you for joining Zhihu Second Quarter 2026 Earnings Call. Today, I will cover 3 areas. Our core business performance in the second quarter, how AI is expanding the value of our community content, IP and expert network and our priorities for [indiscernible].

Let me start with our core businesses. Overall, our core business remains stable, while some areas continue to address and recover. In the second quarter, total revenue were RMB 619 million, down 3.7% year-over-year and up 5.9% sequentially with a year-over-year decline narrowing further. Adjusted net loss were RMB 10.25 million, reflecting changes in the revenue mix and faced business investments.

Our CFO will discuss the financial details shortly. Community engagement among core users remained stable. Average daily time spent was about 39 minutes, broadly for daily creation of high-quality content grew more than 16%. As [ AIGC ] makes content creation easier, authentic experiences, clear sourcing and professional judgment are becoming more valuable. These remain the foundation of Zhihu and our long-term value.

Turning to Marketing Services. Revenue were RMB 199 million, down 10.7% year-over-year and up 4% sequentially. We continue to focus on key verticals, including technology, automotive, consumer electronics and home appliances and gaming, spanning our performance sequentially, including a 22% increase in gaming. This has not yet translated into a broader recovery in the marketing revenue. but it supports our strategy of strengthening key verticals, products and algorithms. Marketing services remain in structural recovery, and we'll continue to improve the matching of professional content, user needs and client demand.

Revenue reached RMB 426 million, up 4.4% year-over-year and 5.9% sequentially. Average monthly subscriber numbers were 13.11 million, broadly stable while member ARPU also remains stable. We continue to improve membership content and product experience while expanding knowledge-based offerings. IP operations continued to contribute incremental growth. Licensing increasing 105% sequentially and 6% year-over-year. We're expanding [indiscernible] story IP from onetime licensing toward multi-format for life cycle development.

Overall, challenges remain, but our business mix continues to adjust and our strategic direction remains unchanged. We'll continue to stabilize our core businesses while maintaining the investment discipline.

I would like to focus on Zhihu in the AI area, Zhihu starts with the community, in bringing the value accumulated within Zhihu to more people through new product formats and use cases real users, professional content IP and our next expert network remain our most important assets. AI is helping expand this capability into new applications and commercial scenarios.

First, the community will become more open. They are changing how content is discovered and used. For Zhihu, openness does not mean changing our positioning, it means enabling the high-quality cost to reach more eases and developers through the AI tools and applications. This requires clear cultures around content sourcing, greater rights and community values.

We are further integrating Zhihu [ Chida ] with Zhihu Search making AI-powered such a new gateway community content rather than a substitute for it. Earlier testing has shown positive signals for user retention. We're also exploring community agents AI [indiscernible] is one example. Rather than another general purpose chatbot, we wanted to help users explore Zhihu and discover real people professional content and diverse perspectives.

The product remains at an early testing stage and our focus is on content discovery, interaction and retention. AI works now holds more than 2,600 AI projects. While the data -- open data platform, [ API ] has attracted more than 17,600 professional developers, about 20% was not previously Zhihu created.

We also released an update Zhihu [indiscernible] AI, making it easy to discover and use who content across AI tool. Through AI search, agents open platforms and developer tools, Zhihu's content and professional capabilities can reach more easiest developers and clients beyond the Zhihu app. We believe AI is becoming a new medium that can help existing content reach new audiences, enable new applications and create new opportunities in content licensing, brand content assets and export services.

Second, marketing services are evolving from traffic value towards the content asset value. As more information discovery happens through AI, brands increasingly care not only about visibility, but also whether the professional information can be accurately understood and cited by AI, while helping brands build promotional content assets with clear sourcing. Unlike a one-off campaign, these assets can continue to be discovered and used across such AI and other channels, creating longer-term value.

Our AI content asset offering remains at early stage. In the second quarter, the number of clients increased 50% sequentially. This does not yet represent a stable or scalable revenue contribution but it's beginning to demonstrate new commercial value. Going forward, we'll focus on client outcomes with demand and product standardization.

AI is accelerating the expansion of IP into [indiscernible]. AI is lowering the cost and barriers of timing tax multimedia formats. For Zhihu, this allows our large base of original content to be developed more efficiently into comic dramas, short dramas, film and television and other formats. A meaningful portion of the comic drama projects monetized this quarter came from the work created in 2025 or earlier.

This shows that high-quality IP can return value over time. what technology improves the development efficiency and expense its reach. In the first half, we also explored income with some projects showing encouraging early results. However, we'll remain disciplined and will not materially increase asset heavy investments. We'll flexibly choose more licensing in-house and commission production based on the project economics. Going forward, we'll continue to strengthen our capabilities in IP selection, development and cross-format operations to unlock more value from our content library.

Fourth, expert data solutions are evolving from project delivery towards reusable capabilities. AI is creating new ways to use Zhihu's expert capabilities, not only creating content for uses, experts cannot help translate the professional judgment into model capabilities through training data, model evaluation and complex design. We position as a research-driven data lab.

We identify modern capability gaps and develop training data, evaluation systems and complex task environment to help improve the model performance. In the first half, we completed projects across coating, search and deep research varying and agents. While building capability spending model analysis, our expert network plays an important role in defining the professional tasks setting quality standards and evaluating whether [ motor ] output meet the professional requirements.

We're also becoming more proactive in identifying motor gaps, developing training data and valuation methods in-house and validating the value through the actual model performance. Our goal is not one or it's not one-off data delivery, but reusable capabilities that can evolve across clients and model iterations. In the next phase, we'll continue and extend them into products, complex tasks and environment.

And finally, let me briefly summarize. In the second quarter, our core community remains resilient. [ PET ] content remained stable. IP operation continues to grow and Marketing Services improved sequentially. Our position in the AI area is also becoming clear. Our authentic professional and trustworthy community remain the foundation while AI helps us which uses applications to commercial scenarios.

In the second half, we'll focus on 2 priorities: first, words by improving in experience, maintaining a stable membership base improving IP development efficiency and advancing the structural recovery of marketing services. And second, we'll continue to validate AI-driven opportunities across our open community ecosystem. AI content assets IP and export data solution by focusing on real demand client value capability reuse and ROI.

Initial validation does not mean these initiatives have become stable growth drivers. Ability may fluctuate due to the business timing and safe investments. Our long-term goals of improving operating efficiency and returning sustainable profitability remain unchanged. Over the long term, we want Zhihu to be not only an authentic professional and trustworthy community but also an important platform, connecting content, knowledge and AI applications. Thank you. I will now hand over to our CFO to review the quarter's financial performance.

I will now go over our second quarter issued earlier today. During the second quarter, our revenue trend continued to improve sequentially, supported by growth in takeout and IP operations. At the same time, disciplined cost management drove year-over-year reduction in operating expenses and operating losses. Now turning to the financial highlights of the second quarter.

Our total revenues for the quarter were [ RMB 690.1 million, ] down [ 7% ] year-over-year and up 5. 9% sequentially. The sequential growth was primarily driven by content and then the operations. Marketing services revenue was RMB 199 million compared with RMB 222.8 million in the same period of 2025. Decrease primarily reflected our proactive and ongoing refinement of service offerings. Sequentially, marketing services revenue increased by 4%, with improving traction in key verticals and performance-based for us.

We also continue to make early progress in AI-related commercial use cases. Content and IP operations revenue was RMB 425.9 million, up 4.4% year-over-year and 5.9% sequentially, primarily driven by continued growth in IP operations. Average monthly subscriber members remained stable at 13.1 million. We will continue to strengthen our paid content offerings while developing and modernizing selected IP across multiple formats with disciplined attention to project returns and risk.

Our revenues were RMB 86 million in the same period of 2025. The decrease was primarily due to the continued strategic refinements of our vocational training business. Sequentially, other revenues increased by 12.7%, year-over-year decline continue to narrow. Our gross profit for the quarter was RMB 393.4 million compared with RMB 448.2 million in the same period of 2025.

Gross margin was 57% compared with 62.5% in period of 2025. The decline in gross margin primarily reflected our continued efforts to broaden and enhance our patent offerings. Total operating expenses decreased by 15% to RMB 469.4 million from RMB 539.2 million in the same period [indiscernible] reflecting continued efficiency improvements across our operations.

Selling and marketing expenses decreased by 5.4% to RMB 308.7 million from RMB 326. 3 million, bringing in the same period disciplined marketing spending. Research and development expenses decreased by 25.4% to RMB 108.6 million from RMB 145.7 million in the same period of 2025, primarily attributable to the continued improvements in our research and development efficiency.

General administrative expenses decreased by 22.7% to RMB 52 million from RMB 67.3 million in the same period of 2025, primarily attributable to lower personnel-related expenses [indiscernible] period. On a non-GAAP basis, adjusted loss from operations narrowed by 32% to RMB 48.7 million from RMB 71.5 million in the same period of 2025. Investment income was RMB 16.4 million compared with RMB 14.8 million in same period of 2025. The decrease was primarily due to unrealized gain from the fair value remeasurement of our investment in a privately hold company in the same period of 2025.

RMB 37.4 million compared with net income of RMB 72.5 million in the same period of 2025. On a non-GAAP basis, adjusted [indiscernible] loss was RMB 10.3 million compared with adjusted net income of RMB 91.3 million in the same period of 2025. As of [indiscernible], 2026, we have RMB 4.4 billion in cash and cash equivalents, term deposits, restricted cash and short-term investments, maintaining a solid liquidity position to support our [indiscernible].

As of June 13, 2026, we had repurchased aggregate of $41.3 million Class A ordinary shares for a total consideration of USD 77.9 million on both New York Stock Exchange and the Stock Exchange of Hong Kong. During the second quarter, we repurchased 6.5 million Class A ordinary shares for a total consideration of USD 7.2 million. Looking ahead, we will continue to balance selective investments in new initiatives with operating [indiscernible]. In our quarterly profitability may be affected this investment.

Our long-term objective of improving operating efficiency and return to sustainable profitability remains unchanged. We will also maintain a disciplined approach to our capital allocation and continue to execute share repurchase to enhance long-term shareholder returns. This concludes my prepared remarks on our financial performance for the quarter. I'll turn the call over to the operator for the Q&A session.

[Operator Instructions]. And your first question today comes from the line of Thomas Chong from Jefferies.

[Interpreted] So my question is how should we think the revenue and profit trend in the second half of the year. And under the business adjustments and new business investment, are there any fluctuation between quarters?

[Interpreted] Looking into the second half, we do not think it's a -- like the sequential improvement seen in the second quarter and different businesses have different operating [indiscernible] and marketing services remain in a period of structural recovery like we mentioned before and may continue to be affected by changes in client budgets and industrial demand. We'll strengthen our product R&D and especially the performance advertising capabilities and also increase the value per unit of traffic rather than drive.

Paid content remains relatively stable while IP operations will be influenced by project timing. Recent changes in industry standards and filing requirements may also affect the launch timing of certain projects.

At the same time, we're still validating the new capabilities like AI content assets and export data solutions. We have seen like [indiscernible] client validation but it might take time until we see scalable revenue contribution and will also require some near-term investments.

So at this stage, we are more focused on the stability of our core businesses, while the new initiatives can create real client value and reuse [indiscernible] and ROI. We'll continue to invest prudently. Our long-term goals remain to improve our revenue mix and return to sustainable profitability segments.

Your next question today comes from the line of Vicky Wei from Citi.

[Interpreted] Will management share some color about your view on the AI generated committees? And how should we think of Zhihu's advantages?

[Interpreted]. This is speaking on behalf of COO. We are very positive on the AI comic [indiscernible] market and believe the industry Zhihu is in a clear growth trend. One hand, AI content generation capabilities continue to improve rapidly, including like character consistency, virtual quality motion and the overall production efficiency. And on the other hand, as more [ greatest ] enter the market, we're seeing greater diversity in ideas and formats. So AI core dramas are gradually becoming a new form of content construction. As the production continues to improve, we expect an quality and user acceptance to rise further.

At the same time, the basis of computation is also changing. In the early stage, the focus was on like who could abort AI faster and produce content at lower cost. As AI production in [indiscernible] more widely available the real [indiscernible] shifts back to the content itself, like the group story sustainable pipeline or creative ideas and the ability to consistently turn IP into compelling virtual content.

And this is will Zhihu has a clear advantage through into and other products. We have viewed a broad ecosystem, both original stories and created. Our advantage is not simply decide or the library, but our ability to continuously generate the new content and identify the strongest titles supported by will establish create and this helps reduce the trail and our costs in IP development and improved the overall efficiency of our content portfolio.

We're already seeing validated in the AI comic. According to the third [ quality ] data in the first half of '26 [indiscernible] became one of the leading IP providers for native iconic dramas on TikTok and ranked among the top 3 IP providers on [indiscernible]. We also began the in-house and commission production in the second quarter and have seen encouraging key [indiscernible] so far. As AI creates new media formats, a strong story can be visualized. And in this way, AI hub extend the life cycle of quality IP and improve the monetization efficiency of our existing content assets.

Strategically, our focus is to build on Zhihu's strength in the content and our greater ecosystem, like we mentioned before, we're using AI to improve the development efficiency across scripting production and distribution. We remain flexible in our business models, including licensing in-house, where the market demand and project economics will validate, we may selectively move further option in the value chain.

Over the long term, we believe Zhihu in this market will come from a combination of capabilities, including a sustainable supply of the original IP content selection based on real user behavior, a stable created ecosystem and a clear license framework and AI enable cross media IP development.

Your next question today comes from the line of Xueqing Zhang from CICC.

[Interpreted]. Can management elaborate a little more on the base model for data solutions? And what's the Zhihu's advantage in this business?

[Interpreted]. As a data lab focused on improving front-tier motor categories. So simply, we continuously study where motors still have capability gaps. I identified tasks, they cannot perform reliably and then design the training data, complex cost environments and benchmarks around these gaps. We then validate whether these efforts actually improve the performance through the training and evaluation. Our goal is not simply to deliver data but to solve the specific model capability problems for our clients.

Our business model currently includes the customized R&D projects based on the client's [indiscernible], while we're also increasing our own research and exploring ways to product types selected like capable. And we complete more projects. We aim to standardize and reduce our data pipelines environment building capabilities, like evaluation framework and know-how across like more clients and different generations of models. And these should improve both scalability and capability reuse.

[indiscernible] network is an important part. At the same time, we are building an end-to-end R&D look from identifying motor gaps and designing tests and training signals to building environment and greater and ultimate validating model performance. In areas such as coating search and deep research, data production increasingly rely on the motor requirements rather than the large-scale menu work. Exports, therefore, play a greater role in siting standards, providing the professional judgment and evaluating the results.

The investment profile of this business will differ from the traditional one. Going forward, more or will be directed toward compute model usage and R&D infrastructure with the goal of building capabilities that can continuously evolve and be reused. At this stage, we are focused on 3 things, whether we can consistently improve the motor performance, whether the long-term relationships with the clients and whether our capitalists can be reused across them. So if these metrics continue to validate sources in a measured way based on the client demand and the ROI.

Thank you. That concludes today's Q&A session. At this time, I will turn the conference back to [indiscernible] for any additional or closing remarks.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to Zhihu Inc.'s First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded and webcasted. At this time, I'd like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Amber. Hello, everyone. Welcome to Zhihu's First Quarter 2026 Results Conference Call. Joining me today on the call from the senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer; Mr. Wang Han, Chief Financial Officer; and Mr. Jan Hulu, our Chief Operating Officer.

Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

The company does not assume any obligation to update any forward-looking statements, except as required under as per law.

Additionally, the discussion today will include both GAAP and non-GAAP financial measures for comparation purpose only. For a consolidation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today.

In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com. Today, Victor Zhou, an AI agent representing Mr. Zhou Yuan, will deliver prepared remarks in English on his behalf. As Victor is still being refined, we appreciate your understanding. Victor, please go ahead.

[ AI Agent -- Victor Zhou ]

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu's First Quarter 2026 Earnings Call.

I am Victor Zhou, and I'm pleased to deliver the opening remarks on behalf of Mr. Zhou Yuan, our Founder, Chairman and CEO. The first quarter of 2026 marked a strong start to the year as we advanced our high-quality growth strategy, our community ecosystem continued to thrive, fueled by a more dynamic user base, deeper social connections and a stronger engagement. Average daily time spent per DAU reached nearly 42 minutes. Our content creators remain highly active and expanded across AI and other specialized domains, further strengthening our trusted expert network.

This quarter, professional, authentic and in-depth content from real people continued to flourish across our community. Its influence extended beyond our platform and reinforced our unique competitive mode in the AI era. We also accelerated the integration of AI capabilities across our platform and business operations, with social interactions significantly enhanced across multiple use cases.

Building on this solid foundation, Zhihu has continued to gain momentum along its recovery trajectory. In the first quarter, our total revenues achieved a positive sequential growth and year-over-year decline narrowed substantially, reflecting our healthier business ecosystem and more efficient monetization. Our core businesses are showing encouraging signs of recovery, while our new initiatives continue to gain momentum and deliver steady growth.

Specifically, marketing services saw a meaningful narrowing of the year-over-year decline, signaling near-term stabilization. Revenue from IP operations delivered robust growth. Capitalizing on our premium IP library, we have significantly elevated both the production capacity and the quality of our short drama and comic drama adaptations. Multiple short dramas and coming dramas garnered billions of views and consistently topped popularity charts. This success serves as a strong validation of the commercial potential of our high-quality IPs. Our expert data solutions have started to gain traction among key clients with gradually taking shape.

Our vibrant community fosters genuine connections and deep user trust assets that are increasingly valuable in the age of AI. This has directly fueled continued growth in user engagement on our platform. In 1Q '26, average daily time spent per DAU reached approximately 42 minutes, increasing on both year-over-year and quarter-over-quarter basis. The daily active user coverage of positive interactions also grew year-over-year. Underpinning this momentum, our content ecosystem is getting at a healthy pace.

As of the end of the first quarter, cumulative content volume reached 972 million entries and cumulative topics grew to 4.38 million, up 8.8% and 15.7%, respectively, from the same period last year. High-quality content creation continued to gain momentum. This quarter, daily creation of high-quality content rose 18% year-over-year with the professional AI-related content growing over 30% year-over-year.

Against the backdrop of rapid AI evolution, Zhihu's professional ecosystem and a high-quality creator network continue to offer distinct differentiated value as a hub for frontline developers, researchers and tech professionals. Zhihu remains the premier platform where cutting-edge industry trends are first discussed, rigorously analyzed and professionally evaluated. In the first quarter, we saw heightened engagement from subject matter experts across top universities, leading Internet companies and AI labs.

They actively participated in deep discussions on topics such as AI self-evolution, next-generation large model development, video generation, model iteration and open-source ecosystems. From computer science scholars at institutions like Shenghua University to R&D leaders at tech giants and leading AI start-ups like Alibaba, ByteDance and Moonshot AI, Kimi. A growing number of professionals are sharing their frontline insights technical reproductions and in-depth analysis on Zhihu. Substantial cohort of core experts from top-tier labs has joined the platform and remains highly active.

In addition, updates to mainstream AI products consistently spark systematic technical interpretations and the professional evaluations within our community. Notably, this quarter, saw substantial in-depth discussions surrounding DeepSeek's expert mode, Alibaba's new video model, Happy Horse and developments related to Google's Gen4. This high-quality content ecosystem continuously enriched by frontline practitioners, not only enhances Zhihu's professional credibility but also further solidifies our core competitive mode in the AI era.

Professional creators are the core engine that powers the vitality, trustworthiness and the uniqueness of our expert network. In the first quarter, the number of verified honored creators on Zhihu grew over 10% year-over-year, reflecting our continued commitment to amplifying their industry influence. Momentum in AI-related creator activity remains strong. We have aggregated over 19 million AI-focused creators who not only fill our community's high-quality content ecosystem, but also represent a robust pipeline of potential 2B service providers.

We also saw a notable influx of top research teams, institutional executives and the core developers in fields like commercial, aerospace and frontier technology. Their active participation has further solidified Zhihu's standing as a hub for professional discounts on advanced tech. At the same time, in the film, entertainment and cultural verticals, we deepened our reach and engagement among upstream IP holders, co-production teams and dedicated enthusiasts. In May, we hosted a 12th Zhihu Conference, Shinsuna in Beijing. This year's event placed a strong focus on the value of human creativity in the AI era, exploring the irreplaceable works and core strength of authentic creators amid rapid technological advancements.

Overall, sustained engagement of high-quality creators across diverse verticals, not only strengthens our foundation of professional trustworthy content but also enhances the strategic value of our content assets. This ecosystem directly accelerates our AI-driven commercialization and reinforces the unique competitive advantages of our trusted network. Alongside the deeper professional engagement our ecosystem is also becoming increasingly social and interactive.

In the first quarter, we optimized both the creation and consumption experiences for our short-form Ideas product. This initiative effectively lowered barriers to entry, while significantly boosting community vitality. Looking ahead, we will focus on deepening the synergies between ideas and our community-based circle product by implementing more refined operations and expanding distribution scenarios. We aim to drive further positive momentum in core user retention and total time spent.

Ultimately, this will unlock and expand a wider range of native commercial monetization opportunities. We continue to integrate core AI capabilities across content creation, discovery, consumption and community interactions. Through our open platform, API [indiscernible] and off-line events like the AI Hackathon, we empower developers and creators to explore AI native content and interaction formats, further extending the practical application of AI technologies across the Zhihu community.

As we embrace AI as a tool for creative efficiency, we further refine our AI-generated content governance framework to rigorously filter out low-quality machine-generated spend. Since the start of 2026, we have removed over 250,000 pieces of low-quality AI-generated content and have penalized more than 11,000 violating accounts. These efforts have meaningfully safeguarded Zhihu's authentic atmosphere and significantly enhanced the experience for our creators and users.

Now turning to commercialization. In the first quarter, total revenues grew sequentially, and the year-over-year decline narrowed significantly, signaling a clear recovery underpinned by a healthier commercial ecosystem. Our monetization efficiency continues to improve with new growth momentum steadily materializing. Let's take a closer look at our performance by segment.

First, paid content and IP operations. Starting from the first quarter of 2026, we combined IP-related revenue previously included in other revenues with our existing paid membership revenue into paid content and IP operations revenue. This change more accurately reflects the commercialization potential of our Yan'an Stories franchise. This quarter, revenue from paid content and IP operations reached RMB 402.3 million, increasing 15.8% and sequentially, driven primarily by the rapid growth of our IP operations, which reflected strong momentum in unlocking the commercial value of our original content IP.

Average monthly subscribing members reached 13.1 million, up 7.9% sequentially with structural optimization. This growth was primarily driven by seasonal content consumption during the Chinese New Year holiday and improved customer acquisition efficiency with Zhihu's premium short-form paid content continuing to play a key role in attracting and retaining users. We maintained disciplined high ROI standards by proactively optimizing inefficient acquisition channels to drive high-quality growth in our subscriber base. Meanwhile, synergies between our AI-powered comic dramas and paid membership businesses are gradually emerging by distributing Zhihu's high-quality IP and adopted content beyond our community.

We effectively attract new users to in-community consumption scenarios, creating a strong connection with membership benefits. This strategy expands the reach of our IP while driving conversion among potential members, improving overall acquisition efficiency and enabling us to continuously optimize returns our marketing spend. Revenue from IP operations delivered a strong growth momentum this quarter. The number of our IP partnerships grew more than fivefold year-over-year and more than doubled sequentially. Several of our top titles sold both film and gaming rights, and we signed additional licensing deals in verticals like science fiction.

Together, these deals further validate both the depth of our IP monetization capabilities and the pricing power of our IP assets supported by our IP library. Both the production capacity and the content quality of our short drama and economic drama adaptations remained stable in the first quarter. Multiple short dramas and comic titles achieved billions of views consistently ranking at the top of various major platforms. Looking ahead, leveraging our strong IP pipeline, we will continue to pursue end-to-end multidimensional commercialization and further extend the life cycle of each individual IP.

Moving to marketing services. In the first quarter, Marketing Services revenue was RMB 191.4 million, broadly in line with the same period last year. Our disciplined execution across the client mix optimization and the product upgrades continue to deliver results. On client mix, ARPU rose sharply both year-over-year and sequentially in core verticals like gaming and automotive. Our industry mix also continued to improve with commercial efficiency improving notably across gaming, travel and transportation. This was supported by the ongoing consumption recovery and the wave of new game launches during the quarter.

On commercial products, in March, we launched our technology SIM IP tech bites, Textura at this year's appliance and electronics world expo with a focus on the home appliance and consumer electronics sector. At the on-site immersive exhibition zone, Zhihu creators hosted guided work-throughs to answer consumer questions with professional technical insights. They also share the latest trends in home appliances and consumer electronics. At the same time, Zhihu reviewers jury hosted online discussion forum, helping decade industry jargon and highlight the real value behind the product innovation.

Turning to other revenues. In the first quarter, Other revenues were RMB 57.8 million. As I mentioned earlier, we have reclassified IP-related revenue into our new paid content and IP operations segment, which better reflects how each business is developing. Within other revenues, our expert data solutions business won recognition from leading enterprise clients and began generating revenue this quarter. As a pioneer in defining and delivering high-value data solutions, we are now translating our expertise into tangible value for our clients.

Our differentiated value has been firmly validated by the top-tier AI Labs. Looking ahead through the rest of 2026, we remain committed to deepening our services for key clients while expanding our footprint into new industries.

To wrap up, the first quarter gave us a solid start to the year. As we move through 2026, our priorities remain clear. We will continue to strengthen operational profitability while leveraging our unique strength in the AI area to drive higher quality, accelerated growth, we believe the combined power of high-quality content times expert network times AI capabilities will further set the Zhihu apart in this new era. Over the next 3 quarters, we will continue to execute on our strategy with discipline. We expect our core businesses to show an accelerated recovery.

In parallel, our AI-related new initiatives should continue to gain traction and contribute meaningfully to growth. With that, I will hand the call over to our CFO, Wang Han, whose remarks will be delivered through his AI voice agent. Han, please go ahead.

I will now go over our first quarter 2026 financials. For a complete overview of our results, please refer to our press release issued earlier today.

The first quarter marked a strong start to the year with our operations and financial performance, both improving. Building on the full year non-GAAP profitability achieved in 2025, we delivered a strong sequential return to profitability in the first quarter, supported by continued gross margin recovery, disciplined cost management and focused resource allocation. These results reflect the cumulative impact of our multi-quarter structural optimization and provide a strong foundation for continued growth as we move through 2026.

Now turning to the financial highlights of first quarter 2026. At the non-GAAP level, we are pleased to report that adjusted net profit turned positive in the first quarter of 2026, reaching RMB 17.2 million compared with an adjusted net loss of RMB 39.4 million in the fourth quarter of 2025. Our total revenue for the quarter reached RMB 651.6 million, compared with RMB 729.7 million in the same period of 2025. The year-over-year decline reflects our continued efforts to optimize revenue mix and to prioritize high-quality services.

More importantly, revenue grew on a sequential basis driven by strong revenue contribution from our paid content and IP operations segment. Our Marketing Services revenue for the quarter was RMB 191.4 million compared with RMB 197 million in the same period of 2025. The stabilization in Marketing Services reflects our proactive and ongoing refinement of service offerings with notably improving sequential trend. Paid content and IP operations revenue was RMB 402.3 million compared with RMB 420.9 million in the same period of 2025.

Average monthly subscribing members were 13.1 million, an increase of 7.9% on a quarterly basis. We continue to focus our resources on strengthening user engagement and monetization opportunities. In addition, revenue growth from our IP operations served as an earnings driver, supported by expanding IP initiatives. Other revenues were RMB 57.8 million compared with RMB 111.8 million in the same period of 2025. The decrease was primarily due to strategic refinement of our vocational training business.

Our gross profit for the quarter was RMB 388.3 million compared with RMB 451.1 million in the same period of 2025. Gross margin was 59.6% compared with 61.8% in the same period of 2025. Notably, gross margin improved sequentially from 53.6% in the fourth quarter of 2025. This improvement was attributable to prudent cost controls across content and cloud operations. Our total operating expenses decreased by 10.4% year-over-year to RMB 451.2 million in the first quarter of 2026 compared with RMB 503.7 million in the same period of 2025. The decrease in total operating expenses was in line with revenue, supported by management's careful cost controls, R&D expenses fell by 22.4% year-over-year, while selling and marketing expenses also decreased by 11.1% year-over-year.

Selling and marketing expenses decreased by 11.1% year-over-year to RMB 285.1 million from RMB 320.6 million in the same period of 2025. The decrease was primarily due to more disciplined marketing spending and a decrease in personnel-related expenses. Research and development expenses decreased 22.4% year-over-year to RMB 110.1 million from RMB 141.9 million in the same period of 2025. The decrease was primarily driven by ongoing improvements in our research and development efficiency.

General and administrative expenses were RMB 56 million compared with RMB 41.2 million in the same period of 2025. The increase was primarily attributable to an increase in the allowance for expected credit losses on trade receivables. Accordingly, our net loss narrowed by 15.6% to RMB 8.5 million from RMB 10.1 million in the same period of 2025.

On a non-GAAP basis, adjusted net income increased by 147.2% year-over-year to RMB 17.2 million from RMB 6.9 million in the same period of 2025. As of the 31st of March 2026, the company had RMB 4.5 billion in cash and cash equivalents, term deposits, restricted cash and short-term investments. As of the 31st of March 2026, the company has repurchased 34.8 million Class A ordinary shares on the open market for an aggregate value of USD 70.7 million on both the New York Stock Exchange and the stock exchange of Hong Kong. During the first quarter of 2026, the company repurchased 3.7 million Class A ordinary shares for a total consideration of USD 4.2 million. The share repurchase program continues to deliver value back to our shareholders.

Building on the solid momentum achieved in the first quarter, we expect 2026 to be a year of high-quality growth. remain focused on strengthening operational profitability and improving execution efficiency while further leveraging the unique advantages from our high-quality content, expert network and AI capabilities. As these 3 pillars continue to evolve in unison, they will further highlight our distinctive value in the AI era. Looking ahead, we will continue to execute our established strategy with discipline and focus driving sustainable growth and long-term shareholder value.

This concludes my prepared remarks on our financial performance for this quarter. Let's turn the call over to the operator for the Q&A session.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from the line of Sarina of CICC.

[Foreign Language] My question is about could management share some of the latest strategic thinking and road map around AI. For example, in terms of integrating AI with the Zhihu community, what's the latest plan and progress?

Thank you for the question. I believe the relationship between the community is not AA+ or plus AI. So as I mentioned earlier, average daily time spent per DAU increased and I recommend it's mainly seen from our position and core strategy over the past period, which centers on building a high-quality trustworthy community. So in other words, the interpersonal connections are becoming more active. And this vibrancy will occur even without AI. So what users truly need is not an AI itself but rather like cognitive enhancement experience sharing and real connections.

So building a high-quality trust with the community is what Zhihu has been doing since day 1, and whether navigating the -- like the Internet area or today's AI era, our underlying mission has never changed. Therefore, rather than viewing the community as an AI application scenario, we focus on how to leverage technology to better people.

Take the Shinji conference as an example. This year, on-site attendance exceeded 80,000, which is setting a historical record. We have over 100 partners on site and featuring numerous workshops and coffee chats related to AI. And there's also non-AI activities such as workshops, fitness areas and food markets. So limit people together for the engagement. And the meaning of Shinji does normally represent the new knowledge, but the new cognition and the new connections and this is precisely the core value of the Zhihu community.

And we have always believed that Zhihu's community ecosystem is not filed to serve like shallow attention and the increase in time spent corresponds and not to a concept of like everyone, but to the active growth of mid- to tie attention user cohort. So our core priority is to continuously built into a positive feedback system that helps people elevate the cognition and establish connections. And to achieve this, we have executed 4 initiatives over the past 2 years. So the first 1 would be the sustained investment in the community operations. And second would be the simplification of the product experience. And third one will be the long-term investment in the underlying technical infrastructure. And last one would be the advancement in like AI innovation and efficiency.

Regarding AI, we have 1 principle. So AI is not the angle but paper war, so like in the Phase I for Zhihu, we aim to integrate AI search with our Transport community content, ensuring answers not just generated from the models but could be tracked back to real people and experiences. And the Phase 2, which is our current stage, we are advancing in 2 areas. So firstly, we are building on a data platform. we're gaining like the high-quality, long-term community data that have been cleaned and credibly ramped. It's open to develop via like MCP or skills.

And secondly, we are building an open platform, which is our community APIs, and we host our first open platform-based. Now it's currently project-based and we're turning to projects in the long-term open platform to enable the engineers and AI creators to continuously innovate. Therefore, integrating the community and AI is not simply dropping into. It's about to leverage open platform to empower more creators to generate new value.

Our exploration extends further. If the open platform unlocks creativity, AI short dramas or the comics unlock the value of our IP, our paid content in story and today's AI dramas are all organic extensions of our authentic discussions. This exemplifies our strategy of starting form and extending beyond the community. Community creates content and content generate IP, which leverages the new technologies to reach broader users. As the AI drama industry shifts from the volume growth to quality, we believe the value of our IP will further unlock.

And finally, Zhihu believes in long term. Our current progress is not driven by scale focused tactics. Our core strategy remains unchanged, deeply cultivate the community and focus on people and leverage AI innovation to better serve and empower people and continue to drive the positive cycle or starting from the community and expanding beyond it. So such transition cannot materialize within a single quarter or even a full year. Our current results from consistent execution over the past 2 years, while our ongoing efforts are laying groundwork for structural improvements in the next 3 years.

We will now proceed to take our next question from the line of Vicky Wei of Citi.

We noticed that starting from the first quarter, the company merged original paid membership revenue with membership-related copyright licensing and IP derivatives revenue into a single category. Does this change reflect a new strategy within by management regarding the market potential and growth drivers of this business? And third more, how should we think of those advantages and opportunities within this newly defined market space?

Thank you for the question, Vicky. This is from Juhu COO, Zhonghong. Look, this revenue reclassification indeed reflects our strategic offering in how we view our paid content and IP operations. Previously, the market saw our paid content is just membership revenue. But as China's top premium short-form original platform, the growth of Yan'an Stories has unlocked broader value beyond the subscriptions. Our IPs now monetized through like short dramas, comic, or TV shows and games. Creators are already becoming writers and producers. So effective since the first quarter of 20 the reclassification aims to better showcase the full life cycle value of our content and IP.

This means its upgrade from a single subscription model to the full chain IT operation and development. It remains as a crucial foundation, helping us validate the content creation the user willingness to pay and IP potential. A building on this content could unleash like commercial value through the IP partnerships, script adoptions, short dramas and et cetera. And we aim to form a complete closed loop from the content to consumption and to the IP screaming and multi-format monetization.

In this new market landscape, we believe Zhihu has 4 competitive advantages. Our Yan'an Stories is the leading player in the short story track. It has accumulated a vast library of premium short stories over time. Short stories is naturally feature concentrated plots, clear character relationships and like high-density conflicts, making them highly suitable for the adoption into new content. Compared to intimidating content from scratch, adapting the existing IPs deliver high efficiency in both content screening and monetization conversion.

We continue to strengthen our ceator ecosystem through the incentive mechanism. We discovered the big mid-tier agrees and extend their life cycle by enabling the transition from novel writing to script adoption. Meanwhile, our creators are showing high potential in utilizing AI for content inspiration and video gen motors. So in first quarter, total creative earnings surged 5.6x year-over-year, further demonstrating the IP monetization.

AI short dramas are really speeding up our IP monetization. So in the first quarter, our total IP partnerships such like 564% year-over-year and 248% quarter-over-quarter and fully validating the commercial dip and the premium pricing power of Zhihu's content assets. Computation will ultimately return to the quality of the content. As the industry evolves, the lifetime value of individual IPs will be further unlocked.

AI has increased the production capacity. Our short-form IP offer a natural high-yield advantages for adoption. As we deepen our participation leveraging AI for storyboarding image generation, scripting and distribution, and we anticipate the lower cost and higher margin Ultimately, AI doesn't just increase output, it empowers creativity.

Therefore, the revenue reclassification isn't just an accounting adjustment. It reflects how we redefine the commercial potential of in story and our original IP. Going forward, we will drive deeper synergies across paid content IP licensing dramatic and other formats. And this allows us to maximize the LTV of each IP and turning the paid content and IP operation into a growth driver.

We will now proceed to take our next question from Luqing Zhou of Goldman Sachs.

My question is regarding the AI investment. Can management elaborate more on the specific areas of allocation of your AI been if you plan to balance those new investments with the group's long-term overall profit goals?

Thank you for the question, Luqing. This is from Zhihu CFO, Han Wang. We are certainly integrating AI into all aspects of our operations. However, I understand that the market is likely most concerned about when AI-driven revenue will accelerate our growth. We maintain our previous strategic focus, specifically targeting 2 films. The AI short dramas, comic dramas and the solution. The former represents the AI-generated content that users are most willing to pay for, whether the later served as the selling water and shovels to the AI industry. Therefore, regarding how we balance new business investments with profitability. These 2 selections represent some of the healthiest cash flow profiles among all AI verticals and Zhihu holds a distinct competitive advantages here.

Of course, the challenges ranging from industry competition to the macro environment, which would require a medium- to long-term perspective. However, we will not pursue a strategy of burning cash to chase growth. Our investments will focus on building core long-term capabilities to deliver fundamentally superior products.

We will now proceed to take our next question from the line of Daisy Chen of Haitong International.

Zhihu's profit has shown a significant improvement in Q1. Does management have any update to the shareholder return plan such as the resource and the payout scale?

Yes. Thank you for the question, Daisy. We remain firmly committed to our share repurchase. We believe Zhihu has been 1 of the most active Chinese ADRs in terms of buyback intensity over the past 2 years. And since 2022, the company has repurchased accumulative like 63.5 million Class A ordinary shares in the open market with a total cost of USD 130 million. And year-to-date in 2026, the company has repurchased 4.61 million shares for over the cost of USD 5.06 million, representing 1.74% of total shares outstanding and share repurchase during the first quarter of 2026 have all been fully canceled. Thank you.

That concludes today's question-and-answer session. At this time, I'll turn the conference back to Yolanda Liu for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly for Christensen Advisory. Thank you. Thank you all.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded and webcasted.

At this time, I would like to turn the conference over to you, Yolanda Liu, Head of IR and Capital Markets. Please go ahead, madam.

Thank you, Hadi. Hello, everyone. Welcome to Zhihu's 2025 Fourth Quarter and Full Year Financial Results Conference Call.

Joining me today on the call from senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer; and Mr. Wang Han, Chief Financial Officer.

Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Additionally, the discussion today will include both GAAP and non-GAAP financial results for comparison purpose only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today.

In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com.

Today, Victor Zhou, an AI agent, representing Mr. Zhou Yuan, will deliver prepared remarks in English on his behalf. As Victor is still being refined, we appreciate your understanding.

Victor, please go ahead.

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu's fourth quarter and full year 2025 earnings call. I am Victor Zhou, and I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO.

In 2025, we achieved our first ever full year non-GAAP profit. This historic milestone validates our strategic transformation and underscores the structural durability of our operational leverage. Full year 2025, adjusted net income reached RMB 37.9 million, on a substantial turnaround from the adjusted net loss of RMB 96.3 million in 2024.

Our community engagement continues to thrive. In Q4, average daily time spent per user increased to over 41 minutes on the platform. Our ecosystem of trusted creators remains vibrant, consistently delivering authentic and high-quality content across diverse fields. At the same time, we accelerated AI integration within our community. The synergistic evolution of our high-quality content times the expert network times AI capabilities continuously strengthened Zhihu's competitive mode in the AI era.

In 2025, we successfully optimized our business structure. With a healthier commercial ecosystem, total revenue trend improved meaningfully in the fourth quarter, driven by a double-digit sequential increase in marketing services. Entering 2026, amid the surging AI adoption, we are leveraging Zhihu's unique advantages to scale AI-driven commercialization, including rapidly building industry-leading export data solutions and deploying AI productivity tools to accelerate IP monetization of our Yan'an Stories franchise. These initiatives will unlock new commercial opportunities for Zhihu. These efforts are anchored by a robust self-sustaining ecosystem.

The powerful synergies between high-quality content, our expert network and expanding AI capabilities have created a positive feedback loop, driving heightened community, activity and interaction.

In the fourth quarter, our data engagement metrics strengthened significantly. Average daily time spent per user increased sharply both year-over-year and sequentially to over 41 minutes. Substantial year-over-year growth in positive user interactions also drove notable improvements in both short- and long-term new user intention.

High-quality content on our platform continues to surge. In Q4, daily creation of high-quality content rose by over 20% year-over-year, contributing to over 31% growth for the full year. Notably, professional AI-related content increased by over 30% year-over-year.

As the global AI landscape has shifted from capability races to architectural innovation and system integration, Zhihu remains a leading forum for prominent researchers and frontline engineers to share insights, unpack complex topics and debate key issues.

At the vanguard of the AI revolution, our community hosted extensive high-level discussions on key topics such as DeepSeek's Engram architecture, Qwen's new RIF's winning mechanisms, and the continuous iterations of Kimi and Zhipu. The conversation has moved from stronger models to effective system deployment, emphasizing tiered agent architectures and workflow redesign in products like Open Cloud and Cloud Co-Work.

The debut of Unitree Robots at the Spring Festival Gala, together with Tesla and the figures progress towards a mass-producing humanoid robots have filled a critical analysis of embodied AI road maps as founders and the employees from leading AI enterprises personally engaged on Zhihu to answer questions and address concerns. Our platform remains attractive space where AI innovations are first explained, validated and responsibly disseminated.

We continue to leverage AI to upgrade our community governance and content mechanism. By replacing many operations with algorithm-driven automated workflows, we enhanced community governance ,efficiency and precision. We introduced new metrics for trustworthy contents recognition and promotion ,while integrating user feedback into our evaluation framework. These measures effectively reduce system noise, dynamically suppressing low-quality content and elevating the overall user experience.

Professional creators remain the backbone of Zhihu's expert network. In the fourth quarter, daily active high-tier creators grew by double digit year-over-year. A number of verified honored creators rose by nearly 30% as we continue to strengthen incentives for top-tier creators while supporting their efforts to expand industry influence.

Our Zhihu 2025 annual review highlighted exceptionally robust high-tier creator engagement. In AI and technology, leading AI companies, including DeepSeek, Moonshot, Tongyi Qianwen, ByteDance Seed, Zhipu and StepFun actively engaged on our platform through their official accounts. Creators with frontline industry and R&D backgrounds consistently shared cutting-edge insights on our platform, contributing to major industry discussions.

For the full year, AI-focused creators grew by approximately 16%. In fundamental sciences such as astronomy and chemistry, high-profile creators actively joined our flagship online and offline science programs. Their authoritative content sparked a widespread discussion beyond our community, driving higher search interest for related topics.

On the product side, Ideas remains the primary channel for high-frequency knowledge sharing by professional creators, while Circle facilitates engagement around common interest. For the full year, average daily content volume on Ideas grew 73.5%, and the average daily interactions doubled. This momentum persisted in the fourth quarter with double-digit sequential growth across both metrics. We also increased support for mid-tier creators during the quarter, fostering a dynamic growth-oriented ecosystem. Leveraging AI agents, we significantly improved our efficiency in identifying and nurturing talent. In Circles AI-powered proms and standardized tools lowered creation variants and enhanced content distribution.

As a result, average daily content creation in Circles surged over 100% sequentially with daily views up 72%. Beyond the AI-driven efficiency gains in content operations, creator support and ecosystem management, Q4 also saw accelerated advances in our foundational AI capabilities enhancing experiences for both creators and the users.

In search, creation and consumption, we continue to deepen the integration of AI into the Zhihu community experience. In search, we completed an AI upgrade to our integrated search in December, introducing cross topic content aggregation and hot trend summarization to create a new entry point for high-quality content discovery.

We also tailored the answer formats to different query types, which drove a double-digit increase in click-through rates for our AI direct answer cards and meaningfully increased average AI search interactions per user through more multi-turn conversations. In creation, AI is increasingly becoming a practical tool for creators on Zhihu.

Since the fourth quarter, we have rolled out features such as content publishing and one-click enhancement powered by intelligent editing, automated formatting and image pairing capabilities. These tools lower the barrier to creation, improve readability and distribution efficiency and help creators turn ideas into shareable content more efficiently. We are also introducing multimodal capabilities such as AI-generated illustrations and image summarization to make long-form content more visually engaging and improve user conversion in the feed.

In consumption and circulation, AI is helping Zhihu content transcend traditional community boundaries through external ecosystem partnerships, we are extending our content capabilities into more intelligent assistant scenarios. Within the community users are beginning to use AI in common thrives for fact checking and professional explanation, which supports more authentic interaction and follow-up discussions.

Meanwhile, our AI reading panel on PC has improved the efficiency of long-form reading through one-click summarization and terminology explanation and is beginning to generate more valuable interest signals for future recommendation and monetization.

Now turning to commercialization. Our efforts to optimize our commercial structure have yielded notable results. With a healthier business ecosystem, total revenue has entered a recovery phase, reaching RMB 643.5 million in the fourth quarter as the pace of sequential decline continued to narrow. This shows a clear top line recovery trajectory. At the same time, we are exploring new scalable AI-powered monetization avenues with an unwavering focus on long-term value and operational excellence.

Let's take a closer look at our performance by segment. In the fourth quarter, marketing services revenue reached RMB 234.8 million, up 24% sequentially as our adjustment cycle bottomed out. Disciplined execution in optimizing client mix and upgrading commercial products capitalizes momentum, strengthening our appeal to high-value clients. We elevated the overall client quality, deepened industry penetration and accelerated new customer acquisition.

In the fourth quarter, ARPU rose significantly among clients in high-value verticals such as technology and e-commerce. We also reached the new segments in sectors such as automotive and health care. In December, we hosted the Electric Club New Knowledge Technology Conference, which brought together automotive engineers, autonomous driving specialists and leading tech experts from the Zhihu community to explore NEV safety and intelligent upgrades.

The event drove 140% year-over-year increase in participating clients enabling industry leaders like BYD, Mitsubishi and Voyah to articulate their technological strength and the safety value through targeted engagement and build trusted content assets.

On commercial product upgrades, we leveraged our trusted content and expert network to expand the community-driven monetization and amplify the commercial value of our key IPs such as Zhihu Science Season and Zhihu Reviewers Jewelry.

Revenue from IP-related projects increased 21% year-over-year, supported by deeper brand collaborations across our IP portfolio. At the same time, our Idea Plus solution gained strong momentum during the quarter. By offering a lightweight precisely targeted format, Idea Plus extended our native advertising capabilities into short-form content, significantly shortening the path from discovery to purchase, capitalizing on 106% year-over-year increase in daily ideas, interactions.

Idea Plus achieved a 62% sequential increase in client numbers and 200% sequential growth in average daily client spend. In 2026, supported by a healthier commercial ecosystem, we aim to drive continued recovery and sustainable long-term growth in marketing services.

Next, turning to the business we currently report on the paid membership, which we increasingly see evolving into a broader content and IP operations business. Paid membership remains a revenue contributor of this segment. In the fourth quarter, average monthly paid members reached 12.2 million, generating RMB 333.5 million in revenue.

Short-term membership fluctuations aligned with expectations as our structural adjustments prioritize fundamental improvements in service experience and profitability to support a smooth transition during this phase, we are exploring new growth drivers, initiatives to improve member retention and ARPU are yielding results.

Q4 average ARPU increased by 1.4% sequentially and overall quarterly renewal rates improved by 2.7 percentage points. Beyond the paid memberships, we are maximizing content IP's value across media adaptations and licensing.

IP monetization revenue, which is currently recognized in other revenues grew more than fivefold year-over-year in the fourth quarter and doubled for the full year, underscoring the significant growth potential of this business. The monetization potential of our Yan'an Stories IP continued to translate into tangible results. In December, 2 adapted short dramas Fang and Xia, and The Seventh Year Of Secret Love For My Childhood Friend premiered on Tencent Video, quickly ranking among the platform's top releases.

Fang and Xia set all-time popularity record for vertical short dramas on the platform, while Seventh Year Of Secret Love For My Childhood Friend topped the charts and sparked widespread discussion across social media. These results demonstrate our IP's strong adaptation potential and mainstream appeal.

During the quarter, we released our short story influence list for the third consecutive year recognizing 62 outstanding works and 20 authors. The selection includes both mature IP already adapted into film and television as well as a pipeline of high-quality titles with strong multi-format development potential. Together, these initiatives highlight our scalable pathway for long-term value creation, cultivating high-quality content, structuring an IP portfolio and extending it across multiple formats to unlock compounding growth.

Looking ahead, rapid advances in multimodal AI and the rising industry productivity are expected to further expand monetization opportunities for Yan'an Stories IP creating new growth potential for our content and IP operations business.

Building on this, we are exploring a new format for IP development, AI-powered comic dramas and emerging formats driven by demand for lightweight content and improved generative model efficiency. Positioned upstream, Zhihu leverages a dense network of high-quality creators and rich content assets giving us a natural advantage as a stable source of premium IP.

Strategically, we will pursue a dual-track approach of IP licensing and in-house incubation. We will also collaborate with platforms and studios to unlock mature IP value, while building in-house AI production capabilities.

Turning to other revenues. Beginning in the third quarter to improve profitability, we consolidated our vocational training and the new initiatives into other revenues, which totaled RMB 75.2 million in Q4. We believe 2026 will mark another leap in AI productivity complemented by rapid expansion of real-world applications. Leveraging Zhihu's unique strength we are accelerating exploration of AI-related monetization.

We also see growing potential in export data solutions as competition among other ends, increasingly shifts from scale alone to alignment, quality and real-world generalization, high-value, traceable and structured data is now the core driver of model performance.

With our long-standing expert network and authentic discussion scenarios, Zhihu is well positioned upstream in the supply of high-quality knowledge and insights and we believe we can be among the earliest platforms in China to systematically define and commercialize high-value data solutions.

To support this opportunity, we are developing our export data solution capabilities. At the same time, we are also exploring how to engage experts more deeply in data construction and labeling processing that supports model training and alignment.

In summary, achieving full year non-GAAP profitability in 2025 marks a pivotal milestone for Zhihu, validating the resilience of our strategy and the strength of our execution.

In 2026, we remain committed to prioritizing disciplined operations, while accelerating AI integration across our community and commercial models. We are sharpening our strategic focus and optimizing resource allocation.

In our established businesses, we will continue to prioritize ecosystem health and the user experience, leveraging AI to drive efficiency gains and elevate content quality. At the same time, we are doubling down on AI-driven monetization innovations to cultivate new scalable growth engines. We are confident that 2026 will usher in a new era for high-quality growth for Q4, defined by the further realization of our unique AI capabilities and monetization potential.

With that, I will hand the call over to our CFO, Wang Han, whose remarks will be delivered through his AI voice agent. Han, please go ahead.

I will now go over our fourth quarter financials for a complete overview of our results, please refer to our press release issued earlier today. 2025 represents a structural upgrade in Zhihu's financial profile. As Victor noted, we achieved our first full year non-GAAP profitability milestone.

Financially, this progress was driven by sustained cost discipline, improved operating leverage and tighter expense control, while maintaining healthy gross margins. For the full year, we recorded non-GAAP net income of RMB 37.9 million, and our non-GAAP operating loss narrowed by 33.6% year-over-year. These results reflect the cumulative impact of our multi-quarter structure optimization and provide a strong foundation to build on as we enter 2026.

Now turning to the fourth quarter. Our total revenues for the quarter were RMB 643.5 million compared with RMB 859.2 million in the same period of 2024. The year-over-year decrease continue to reflect our ongoing efforts to optimize revenue mix and focus on sustainable, high-quality growth. Notably, the pace of sequential decline continued to narrow, reinforcing a clear top line recovery trajectory.

Our marketing services revenue for the quarter was RMB 234.8 million compared with RMB 315.9 million in the same period of 2024, while the year-over-year decline reflects our proactive refinement of service offerings, the sequential trend was notably positive. Marketing services revenue grew 24% sequentially, marking a clear inflection point in our recovery.

This momentum was driven by stronger client quality, deeper industry penetration and the successful ramp-up of new commercial products. Paid membership revenue was RMB 333.5 million compared with RMB 422 million in the same period of 2024. Average monthly subscribing members were 12.2 million. The year-over-year decline in membership was expected and reflects our deliberate prioritization of unit economics over scale. That said, we delivered sequential improvements in both ARPPU and renewal rates during the quarter, which we view as early validation that our retention initiatives are gaining traction.

Other revenues were RMB 75.2 million compared with RMB 123.1 million in the same period of 2024. The decrease primarily reflected the strategic refinement of our vocational training business, partially offset by growth of revenues generated from our intellectual property derivatives business. Our gross profit for the quarter was RMB 344.8 million, compared with RMB 540.7 million in the same period of 2024. Gross margin was 53.6% compared with 62.9% in the same period of 2024. The decrease in gross margin was primarily due to our ongoing efforts to broaden and enhance content offerings for all users.

Our total operating expenses for the quarter were RMB 608.7 million compared with RMB 528.8 million in the same period of 2024. The increase was primarily due to a onetime non-cash goodwill impairment charge of RMB 126.3 million, which was primarily associated with our prior acquisitions, mainly driven by lower valuations amid the current market conditions.

Excluding this item, underlying operating expenses continued to decline year-over-year as we further streamline spending across key areas. Selling and marketing expenses decreased by 13% to RMB 275.2 million from RMB 316.2 million in the same period of 2024, driven by more disciplined marketing spend and lower personnel-related expenses.

Research and development expenses decreased 16% to RMB 123.1 million from RMB 146.6 million in the same period of 2024. The decrease was primarily driven by ongoing improvements in our research and development efficiency.

General and administrative expenses were RMB 84 million compared with RMB 66 million in the same period of 2024, primarily due to higher share-based compensation expenses.

Our GAAP net loss for the quarter was RMB 210.8 million compared with RMB 86.4 million in the same period of 2024. On a non-GAAP basis, adjusted net loss was RMB 39.4 million compared with adjusted net income of RMB 97.1 million in the same period of 2024. As of the 31st of December 2025, we held RMB 4.5 billion in cash and cash equivalents, current and non-current term deposits, restricted cash and short-term investments compared with RMB 4.9 billion as of the 31st of December 2024.

As of the 31st of December 2025, we repurchased 31.1 million Class A ordinary shares on the open market for an aggregate value of USD 66.5 million. In addition, throughout 2025, we repurchased a total of 16.6 million Class A ordinary shares through the company's trustee for an aggregate value of USD 23.4 million, representing 6.29% of the total issued ordinary shares.

Looking ahead, we will further enhance earnings quality and scalability by prioritizing higher-margin, more capital-efficient revenue streams. We will continue to strengthen our monetization capabilities and explore new AI-powered revenue models, while leveraging Zhihu's core strength, high-quality content, a respected expert network and advanced AI capabilities, coupled with disciplined capital allocation, including share repurchases. These actions will reinforce our financial resilience and support sustainable long-term value creation.

[Operator Instructions] We will take our first question. Your first question comes from the line of Xueqing Zhang from CICC.

[Foreign Language]

Thanks management for taking my question. And my question about your financial outlook. So firstly, what's the earnings outlook in 2026 and how to balance the investment with the cash flow and the profitability?

[Foreign Language]

[Interpreted] This is from Zhihu CFO, Wang Han. So first, 2025 demonstrated that Zhihu can achieve profitability. But more importantly, we believe, given our unique assets and positioning Zhihu's opportunity set in the AI era is meaningfully larger than what we current scale reflect. So we are not pursuing a single path of delivering profitability this year, more profitability next year.

And then turning to dividends. At our current scale, that would not generate a particular meaningful level of returns for our shareholders. So what we want to do instead is stay focused on the opportunities created by AI and invest behind them. At the same time, this does not mean we will abandon the bottom line discipline that we worked hard to achieve or return to the old model of burning significant cash for growth.

We will be disciplined in selecting new initiatives concentrating our investments on areas with visible ROI potential and a strong fit with Zhihu's core strength. In other words, we want to deliver growth in new AI-driven revenue stream. At the same time, to keep the overall bottom line on a healthy and responsive track. Thanks for the question.

Thank you. We will take our next question. Your next question comes from the line of Daisy Chen from Haitong International.

[Foreign Language] I'll translate it myself. As of current stage, what is your strategy in terms of our commercialization? And what are the company's core priorities for 2026?

[Foreign Language]

[Interpreted] So thanks for your question. I will get started with my answers. This is from Zhihu CFO, Wang Han. So in terms of the priority and the strategy in 2026, these are mainly centered on 2 tracks. First of all, in our core community business, we want to continue using AI to improve efficiency and deliver a better product experience for our users and the content creators. At the same time, to maintain stable revenue and a healthier level of operating profitability.

In other words, we want to -- our core business to maintain steady, while becoming increasingly AI-enhanced and financially stronger over time.

[Foreign Language]

[Interpreted] At the same time, we want to fully leverage Zhihu's unique assets to develop new AI businesses. As I mentioned earlier, the new initiatives we choose will not be built around aggressive cash burn. We will focus on areas where we can see a path to a healthy cash flow. Right now, we are mainly focused on 2 areas.

[Foreign Language]

[Interpreted] The first is AI-enabled short-form drama and comic adaption. As text to video and image to video models continue to evolve. The production chain is becoming increasingly streamlined. In that process, the scarce asset is high-quality upstream IP, and that is not something that can be acquired overnight, simply by spending heavily.

Zhihu's advantage is not only that we have accumulated a large library of high-quality copyrighted content, but also that we have a highly active creator ecosystem that continue to generate new ideas and new IPs. More importantly, AI-generated short drama and the comic style content have already shown that users are willing to pay for this type of AI content. So we believe this is one of the most promising areas where focused investment could generate meaningful and scalable AI revenue for us.

[Foreign Language]

[Interpreted] The second area is data -- AI data services. At a time when many AI applications are still operating with heavy cash burn, there are only a few categories in the ecosystem that can capture structurally attractive economies. One, of course, is represented by companies like NVIDIA. Another on a relatively smaller but still very attractive scale is high-quality data area.

In U.S. companies such as Scale AI, Surge AI and McClure has grown rapidly within just a few years by providing high-quality data services to leading LLM developers, while also demonstrating a healthy cash flow characteristics.

So with our strong export network and depending on understanding of high-quality model data, we believe Zhihu is well positioned to provide differentiated data solutions for all of these AI developers. At the same time, our community can continuously service new areas of expertise, emerging knowledge, and involving capabilities that LLMs have not yet fully covered. This gives Zhihu a very differentiated advantage in this field. And we believe this is also a business with a clear opportunity to generate positive cash flow.

[Foreign Language]

[Interpreted] So in a word, what we want to deliver is a stable core business that continue to upgrade through AI with improving product capability and a healthy financial profile. Alongside new AI revenue streams that can grow in a disciplined way. The goal is not to pursue growth through excessive spending, but also -- but to build a new AI business with visible monetization potential and a path to positive cash flow. Thank you for the question.

[Operator Instructions] We will take our next question. The question comes from the line of Vicky Wei from Citi.

[Foreign Language]

So could management share some data that will help us better understand the impact of AI on the Zhihu community? And additionally, with regard to product upgrades and user experience enhancement in the coming year, what new initiatives does Zhihu have in place?

[Foreign Language]

[Interpreted] Thanks for your question. I will take this question. This is from Zhihu CEO, Zhou Yuan. So first of all, the impact of AI on our community has not been passive. Over the past few quarters, we have been actively driving this accelerating and deeper integration between AI and the Zhihu community with a clear focus on improving such as content consumption, creator experience and so on. Broadly speaking, the positive changes from AI adoption can be seen across 2 groups: our core retained users and our new users.

[Foreign Language]

[Interpreted] Starting with our core retained user, AI is helping users and creators better understand and connect with each other, which further strength the social nature of a real human interaction on our platform.

In 4Q, both the coverage and frequency of the positive user interactions on the platform increased year-over-year. We are also seeing users actively call on AI capabilities, aka Zhida. In the comments section for things like fact checking, explaining professional topics and the following training discussions. Importantly, this is happening without disrupting the community atmosphere. Instead, it is helping drive -- is helping drive more interaction and the follow-on discussion among real users.

More recently, we launched AI reading panel on PC, with features such as one-click summaries and explanations of professional terms. It has meaningfully improved the reading efficiency of long-form content and significantly enhance the deep reading experience for our core users.

[Foreign Language]

As we mentioned earlier, daily newly added high-quality content in the community grew by over 20% year-over-year in 4Q. But beyond content volume, while we are more -- what we care more about is a positive shift in user and the creators' behaviors. So through like AI capabilities, such as intelligence editing and multi-model associated creation, we're continuing to lower the barrier. So we can see like in the per user's interaction improved significantly in this quarter.

[Foreign Language]

[Interpreter] For new users entering the community, AI is also lowering the barrier to content discovery, joining discussions and participating in interactions. In 4Q '25, the direct MAUs of Zhihu Zhida continued to grow by more than 260% year-over-year, while next month's retention improved by about 83% year-over-year. In February '26, average daily search queries per DAU increased by more than 16% compared with November '25.

[Foreign Language]

[Interpreter] As we shared previously, we mentioned that we completed another upgrade of AI capability within Zhihu's main search to further integrate Zhida with our broader search experience and making it a new entry point for high-quality content for our users. So we see this happened in December. And after this upgrade, search can present more suitable answer formats based on different types of queries. Since launch, user coverage of a AI Zhida cards have increased meaningfully. CTR, click-through rate saw double-digit improved and average AI searches per user also increased noticeably.

[Foreign Language]

Continue to standby, the conference will resume shortly. [Technical Difficulty]

[Interpreter] Okay. I will continue to deliver answers from our CEO, Zhou Yuan. So for the looking forward perspective, our plans are focused on 2 areas. First, we will continue investing in the experience gains we are already seeing from AI, both in terms of enabling more social interaction and efficiency for core return users and new users. So this direction here is already quite clear, and we have been building toward it step-by-step.

On top of that, we are preparing to upgrade the Zhida's core capability from AI search towards an agent-based experience. We believe this could bring broader product experience upgrades to users across community. Although there is still an innovation and execution process ahead of us, and we will continue to work through that rollout. So this is from Zhihu CEO, Zhou Yuan. Thanks for your question again.

Thank you. That concludes today's Q&A session. I will now turn the call back to Yolanda for additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or Christensen Advisory. Thank you. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Today's conference is being recorded and webcasted. At this time, I would like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Hello, everyone. Welcome to Zhihu's Third Quarter 2025 Financial Results Conference Call. Joining me today on the call from the senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer; and Mr. Wang Han, Chief Financial Officer.

Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

Additionally, the discussion today will include both GAAP and non-GAAP financial measures for comparison purpose only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com.

This quarter, Victor Zhou, Zhou Yuan's AI agent will once again deliver the prepared remarks in English on his behalf. Victor is still in training, so we appreciate your patience as he continues to improve. Victor, please go ahead.

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu Third Quarter 2025 Earnings Call. I am Victor Zhou, and I am pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO of Zhihu. The third quarter marked another meaningful step toward our goal of achieving non-GAAP breakeven on a full year basis. As our structural optimization initiatives continue to take effect, we further refined our service offerings and balanced commercialization with community health. We also maintained disciplined cost control and improved operating efficiency. As a result, our non-GAAP operating loss narrowed by 16.3% year-over-year in the third quarter. At the same time, our community ecosystem continues to strengthen user mix and engagement improved, while MAUs increased modestly from the second quarter.

Daily time spent continued to trend higher year-over-year and quarter-over-quarter. Our users and creators remain highly active, supporting improved core user retention and a steady stream of reliable high-quality content on the platform. With our high-quality content, expert network and AI capabilities working greater synergy. We are accelerating our agentic AI upgrades to deliver trusted and differentiated experiences to users, both within and beyond the community. As the AI industry enters a new phase of real-world integration and accelerated deployment, Zhihu as a trusted source of high-quality content and data upstream of Chinese LLMs and AI applications is gaining prominence, creating expanding opportunities for collaboration. With rising high-quality content, a highly active base of professional creators and accelerating AI integration, our community ecosystem radiates vitality. Our competitive moat of trusted content continues to strengthen.

In the third quarter, daily creation of high-quality content increased by over 25% year-over-year, with professional AI-focused content up by more than 30% compared to the same period last year. As AI technologies and applications rapidly advance in China, Zhihu remains a go-to platform for frontline engineers and researchers for sharing and lively discussions. AI-focused content covers a range of subjects, including deep technical analysis, innovative product applications, emerging industry trends, personal growth, career development and a growing array of emerging topics driven by rapid AI adoption from the technical debate between MiniMax and Moonshot AI over efficient attention, which sparks heated discussions on Zhihu and highlighted China's diverse approaches to LLM innovation to the in-depth engineering analysis of new models shared by leading companies.

Zhihu has become a trusted source for authentic first-hand exchanges. These discussions have made our platform a place where AI innovations are first interpreted, validated and shared. Meanwhile, we continue to strengthen our trustworthy content ecosystem through ongoing improvements to content governance mechanisms and recommendation algorithms. Professional creators are a vital force in our community. In the third quarter, daily active high-tier creators increased significantly on both year-over-year and a sequential basis. The number of verified honored creators also grew by 29% year-over-year. Engagement among AI-focused creators also continues to strengthen. Zhihu now brings together more than 60 million continuous learners and 3.56 million proficient creators in science and AI and 150,000 ecosystem builders. These contributors not only add consistent high-quality input to our AI content ecosystem, but also show significant potential as future service providers for enterprises.

Beyond the science and AI, creator activity in humanities and social sciences also remains strong across the platform. In September, we launched the co-benefit co-creation initiative [Foreign Language] in collaboration with leading institutions such as Alibaba Foundation, Tencent Charity Foundation, One Foundation, and Greenpeace alongside the psychologists, medical experts and the writers. This initiative generated a wide range of high-quality content across disability rights, mental health, environmental protection and more joining over 80 million views. We also hosted the 2025 Zhihu Humanities Season, Zhihu Renwenji event, which brought creators together through a blend of online and offline engagement. The campaign attracted nearly 30 influential creators, driving a 7.5% quarter-over-quarter increase in creator activity in the humanities category and generating 5.82 million topic views, reinforcing Zhihu's professional influence and cultural relevance.

To better support professional creators, we continue to enhance the content creation and distribution experience. Our ideas product supports knowledge-based expression from high-tier creators and enables more diverse short-form content creation among mid-tier creators. As a result, average daily content volume and interactions increased by 21.7% and 33.1% quarter-over-quarter, respectively. Our Circles product also continues to serve as a focused space for users with shared interests to gather and interact with average daily views more than tripling sequentially during the quarter. We also continue to advance our agentic AI upgrades across the community. From a product perspective, Zhihu Zhida evolved into the agentic mode at the end of September, delivering more accurate and smarter search results. Most notably, Zhihu Zhida now serves as a helpful partner for deep thinking and creativity, capable of understanding user intent, performing multistep reasoning and synthesizing information across research, learning and content creation.

Our advancements in agentic AI are also amplifying the value of our creators. By strengthening the attribution of content to trusted creators across the knowledge base and search, AI-generated responses now sites to verify the knowledge during the reasoning stage, significantly reducing hallucination and improving trust. This strengthens creator influence within the generative AI landscape and gives Zhihu a distinct advantage as a trusted content provider in the emerging AI ecosystem.

Now moving on to commercialization. In the third quarter, our commercialization continued to recover on a healthier base with total revenues reaching RMB 658.9 million in the third quarter. We also made notable progress in exploring new monetization avenues by leveraging our core strengths. Let's take a closer look at our performance by business unit. In the third quarter, marketing services revenue was RMB 189.4 million. Notably, the year-over-year decrease narrowed, indicating the bottoming out of our adjustment cycle. We expect marketing services revenue to begin growing on a sequential basis in the fourth quarter. During the quarter, we made a solid progress in both optimizing our client mix and upgrading our advertising products. We continue to optimize client mix by deepening our focus on high-value accounts with our brand power and expanding commercial IP, driving strong uptake from enterprise clients, particularly in technology and other high-value verticals.

In late September, we hosted the TechClub Conference, bringing together AI experts and some of the most influential tech creators from the Zhihu community to explore the latest developments and future applications of AI. The event showcased the technology's transforming role in everyday life and our unique ability to connect professional content with meaningful brand engagement, further expanding our high-value client base. Through the Zhihu platform, leading companies such as Gree, China Mobile, Huawei and FY Tech further strengthened their brand positioning in technological innovation and product excellence. Backed by the credibility of our brand and strong commercial efficiency created by professional discussions across our community, we made a solid progress in acquiring new clients across diverse sectors such as automotive, consumer and health care.

This quarter, we also further upgraded a wide range of our commercial products by integrating AI more deeply across our portfolio. Our dual ecosystem optimization and product efficiency engines drove a significant increase in positive feedback from clients. For example, we launched the upgraded CCS for idea scenarios and introduced the product to more clients. By offering this short content plus precise scenarios format, it bridges authentic experiences and purchase decisions for brands and merchants. At the same time, it makes content consumption and the decision-making for users substantially more efficient. We are also seeing rising demand from clients to improve brand and product presentation in AI-generated answers. Leveraging our trusted content and high citation rate across the Internet, we launched our new GEM marketing solution in early November.

This new solution provides core insights such as visibility across AI platforms and citation analytics. Leading technology clients we have worked with include Lenovo, FlightTech, Vivo and Proa. We have received a positive endorsement as we help enhance both their SEO and GEO performance for brands and new products. Looking ahead, with a healthier ecosystem, stronger client base and more robust service offerings, we will continue to leverage AI to drive a steady recovery and long-term growth in our marketing services business. And now for our paid membership business. In the third quarter, average monthly paid members increased by 8.1% sequentially to 14.3 million, with revenue reaching RMB 386 million. Our efforts to boost member retention and ARPU through diversified initiatives continue to generate positive feedback from both creators and users.

The Yanyan Story long-form writing marathon came to a successful close in late October after 6 months campaign, generating tens of thousands of submissions in the third quarter alone. This initiative opened up new development pathways for aspiring creators and provided a steady pipeline of content for our library and the future IP development. At the same time, voice live streaming saw a further improvement in paid conversion rates. We also unlocked further commercial potential for our IP adaptations in China and overseas. During the quarter, revenue from IP licensing maintained its triple-digit growth rate year-over-year and generated high double-digit growth quarter-over-quarter. Year-to-date, revenue has nearly doubled compared with the same period last year.

In mid-October, Yanyan Story debuted at the Frankfurt Book Fair, showcasing Chinese digital literature on a global stage for the first time. It also draw coverage from the U.K. magazine, the bookseller, which noted the new growth path for Chinese short-form digital literature in the international markets. By the end of October, Yanyan Story licensed more than 100 titles for publication across major Asian markets, including Japan, South Korea, Thailand and Vietnam. A number of works have also been adapted into short dramas for overseas markets and performed well, reflecting the growing popularity of Chinese short-form content abroad. Meanwhile, Yanyan Story has established partnerships with international platforms such as Mobile Reader and GoodNovel to translate works into English, Spanish, Japanese, Korean, Portuguese, Thai, Indonesian and other languages, further expanding its international reach. Going forward, we will pursue a diversified set of initiatives to improve member retention and ARPU.

By enhancing content supply, membership benefits and personalized experiences, we aim to strengthen long-term member value. As AI enables more efficient content creation, the potential for IP development and commercialization will expand, unlocking new growth opportunities for our membership business. Starting this quarter, we are simplifying our revenue breakdown and will begin reclassifying vocational training revenue into other revenues to align with our overall strategy. Other revenues were RMB 83.9 million, of which we will continue to adjust our vocational training business with a focus on improving operational efficiency and prioritization. Although our vocational training business has been reclassified, we continue to build on its creator-driven foundation with the development of our column product. Designed primarily to serve super creators, column is intended to enhance the creator ecosystem rather than act as a new commercial growth driver.

During the quarter, we enhanced the product by rolling out a PC version and AI tools that help creators generate column descriptions and cover designs. This enhancement drove sequential growth in both the number of leading column creators and creator user engagement. Monetization models for column creators is also becoming more diversified with overall GMV more than doubling compared with last quarter. Going forward, we will continue to operate with discipline, maintaining stability while investing prudently for sustainable growth. With the ongoing enhancements in efficiency and steady cost optimization, we are confident in achieving our full year profitability target. Building on this foundation, we will continue to invest with a long-term view to strengthen our AI capabilities and improve the efficiency of our core operations. Deeper AI integrations will drive greater synergies across content creation, distribution and monetized on Zhihu.

Meanwhile, we will further refine our product and marketing strategies to capitalize on new growth opportunities from high-quality users and enterprise clients. With a healthier operating structure and ongoing innovation, we are well positioned to thrive in this next stage of high-quality growth.

With that, I will hand the call over to our CFO, Wang Han. Han, please go ahead.

Now I will review the details of our third quarter financials. For a complete overview of our third quarter 2025 results, please refer to our earnings release issued earlier today. In the third quarter, we maintained disciplined cost management and drove further improvements in operational efficiency. As a result, our non-GAAP operating loss narrowed by 16.3% year-over-year. We continue to invest in areas that reinforce our long-term growth potential, striking a healthy balance between efficiency and investment. Our total revenues for the quarter were RMB 658.9 million compared with RMB 845 million in the same period of 2024. The decrease was mainly the result of our continued efforts to optimize revenue mix and focus on sustainable, high-quality growth. Notably, the year-over-year decrease narrowed for the third consecutive quarter, in line with our expectations.

Our marketing services revenue for the quarter was RMB 189.4 million compared with RMB 256.6 million in the same period of 2024. This decrease was mainly driven by our proactive refining of service offerings and optimization of client mix. Encouragingly, the year-over-year decrease narrowed meaningfully, indicating that our adjustment cycle has bottomed out. Paid membership revenue was RMB 385.6 million compared with RMB 459.4 million in the same period of 2024. While the number of average monthly subscribing members fell year-over-year, they rebounded and grew 8.1% sequentially to 14.3 million. We also continued to enhance retention and ARPU through diversified content and membership initiatives.

Other revenues were RMB 83.9 million compared with RMB 129 million in the same period of 2024. The decrease was primarily due to the strategic refinement of our vocational training business. Our gross profit for the quarter was RMB 403.6 million compared with RMB 540.1 million in the same period of 2024. Gross margin was 61.3% compared with 63.9% in the same period of 2024. Our total operating expenses for the quarter decreased by 19.4% year-over-year to RMB 503.5 million. The decrease was primarily due to a more efficient cost structure and disciplined resource allocation across key operating areas. Selling and marketing expenses decreased by 14.9% to RMB 330.1 million from RMB 388 million in the same period of 2024. The decrease was mainly due to tighter control over promotional spending and optimized personnel-related expenses.

Research and development expenses decreased by 36.2% to RMB 114.4 million from RMB 179.3 million in the same period of 2024. The decrease was primarily driven by continued improvement in research and development productivity and efficiency. General and administrative expenses were RMB 59 million compared with RMB 57.2 million in the same period of 2024. Our GAAP net loss for this quarter was RMB 46.7 million compared with RMB 9 million in the same period of 2024. On a non-GAAP basis, our adjusted net loss was RMB 21 million compared with RMB 13.1 million in the same period of 2024. As of the 30th of September 2025, we had cash and cash equivalents, term deposits, restricted cash and short-term investments of RMB 4.6 billion compared with RMB 4.9 billion as of the 31st of December 2024.

As of the 30th of September 2025, we repurchased 31.1 million Class A ordinary shares for an aggregate value of USD 66.5 million on the open market. Additionally, we repurchased a total of 22.5 million Class A ordinary shares for an aggregate value of USD 34.5 million through the trustee of the company as of the end of the third quarter. Looking ahead, we are on track to achieve full year breakeven on a non-GAAP basis. We will continue to further strengthen our monetization capabilities and pursue new revenue opportunities that leverage Zhihu's strength in high-quality content creator expertise and AI-driven innovation. Together, these efforts will reinforce our business resilience and support sustainable long-term growth.

This concludes my prepared remarks on our financial performance for this quarter. Let's turn the call over to the operator for the Q&A session.

[Operator Instructions]

We will now begin with our first question, and this is from Vicky Wei from Citi.

Will management share some color about the AI progress of Zhihu? For example, the penetration rate of Zhihu Zhida and the progress of the AI integration with the Zhihu Community.

[Interpreted] Thank you for question. This is from Zhou Yuan, Zhihu CEO. First of all, I would like to say sorry about my weak voice because I didn't recover yet from my cold. Anyway, I would just start with your first question. So as you can see, Zhida remains one of our key products. Its overall usage and penetration rate continued to increase in the third quarter with the penetration rate existing 15%, nearly 4x higher than the same period last year. This not only reflects the ongoing evolution of our foundational AI capability across the community, but also demonstrates strong user endorsement of a very strategic depending of AI plus community. This also gives us a very strong confidence to continue upgrading this AI plus community experience updates across more touch points.

Now let me just share some recent progress and upcoming plans. First of all, in the search scenario, by late November, Zhida will fully augment our general AI search capability to include Zhida-generated content for all users. Additionally, we will soon launch pilot features such as cross-topic content aggregation and the community trend summaries. This will formally navigate Zhida from secondary entry point to a primary one, further boosting AI adoption across the entire community. And second of all, on the content creation side, we are empowering professionals with strong AI copilot. In this quarter, we launched a suite of AI assistant writing tools for our creation assistant, which includes smart headlines, grammar and fact checking and lead paragraph generation. This will help creators optimize long-form structures and expert-level content. So by the end of 3Q, adoption of these new AI features has already surpassed 20%.

Looking ahead, we plan to introduce additional capabilities such as AI-powered multi-model content conversion, intelligent formatting and short-form content generation and et cetera. These tools will significantly lower the barrier to entry for mid-tier creators, enabling more users to express themselves effortlessly to increase posting frequency, creation frequency and engage more actively. In addition, on the content consumption and distribution side, we are also expanding Zhida into high-frequency consumption scenarios. For example, AI-powered daily briefing on Zhihu's training topics and other vertical-specific topics as well as the ability to mention Zhida in threats or to also summarize discussions and surface key insights will help users quickly grasp complex conversations and participate more meaningfully. We believe this will further strengthen user engagements and community stickiness. Thank you.

We'll now take the next question. This is from Luqing Zhou from Goldman Sachs.

So my question is on how do you see the current status of Zhihu's user ecosystem? And based on that, could management share more color on the directions for improving Zhihu's future product design and how is the progress so far?

[Interpreted] Thank you for your question. This is from Zhou Yuan, Zhihu CEO. We believe, overall, the community ecosystem is very healthy. We do not rely on any single metric to assess its health. Instead, we focus on content quality, user structure and user quality and whether our content creator incentives are forming a virtuous cycle. We have also deployed AI as a core product driver at a strategic level. Over the past few quarters, we have made the synergistic development of high-quality content, multiply expert network, multiply AI capabilities as a core path for driving our ecosystem in a positive direction. From this perspective, our ecosystem is stable and continuously improving. This is fully in line with our expectations as well.

First of all, the trustworthiness and professionalism of our content are very crucial. They are crucial indicators of the ecosystem health. Over the past few quarters, we have continued to strengthen our trustworthy content ecosystem and our expert network while also cracking down on low-quality content and traffic to keep the ecosystem healthy at its core and reinforce the virtuous cycle. As a result, we have delivered several consecutive quarters of double-digit growth in daily high-quality content creation. The AI category is the most reflective of this progress with the professional AI-related content regarding double-digit growth for 4 consecutive quarters. On this basis, users' trust in our content has also continued to increase steadily.

And secondly, our user structure and user quality have improved and users' need across different scenarios has been addressed. As we can see from last Q4, our MAU has remained stable on a sequential basis for 4 consecutive quarters. And building on that, average daily user time spent, which we believe as a proxy for engagement and retention has delivered double-digit year-over-year growth for 6 consecutive quarters. Our users remain mainly young and focused on learning and growth with user age between 18 to 30, accounting for more than 65% of our total user base. Among them frontline professionals in technology and AI have become one of the most representative groups. They have long-term professional learning, frontier exploration and interest development needs and contribute more content and provide a stronger positive feedback to the ecosystem.

And last but not the least, the content -- the creator ecosystem continues to grow and expand. Output from top-tier professional creators have remained stable over 7 consecutive quarters. At the same time, by using AI tools, we are continuously lowering the creation threshold for mid-tier creators and increasing the creation frequency of the entire creator group. This makes the supply side of the community more diverse and keep social interaction within the community growing. So in summary, ecosystem health is foundational to Zhihu. Going forward, we'll continue to invest in trust content and expert network so that as a community scales, it can maintain its professionalism, vibrancy and trustworthiness.

Let me just turn to the second question you mentioned. It's about our core product going forward plan. Here, we hold a few key beliefs. First of all, over the next 3 years, people will consume more AIGC content. At the same time, human-to-human interaction will become more valuable. So we believe both trends will coexist. And the second belief we hold here is that stronger AI becomes, the more people will experience a sense of diminished presence, which means the participation, social capital and relationships enabled by community will become increasingly scarce and increasingly demanded.

And the third belief here is that high-quality human-generated content and data will become extremely scarce as well as valuable on the supply end. This supply matters on both ends. It's crucial for the advancement of AI as well as for human development. So going forward, Zhida will definitely integrate with our users' functional social needs. For example, when a user wants to ask a question, search or look for resources, AI will dramatically raise efficiency. And Zhida will push the community further towards utility, enabling even the first day users to get a meaningful experience immediately. At the same time, we will double down on the social needs that come from real human connection things like building recognized, growing together and finding people who share your identity. We want to build these things with user feel like a sense of belonging in an environment grounded in real people, real culture and trusted interactions.

So our future product direction is built around 2 pillars: utility and identity. My hope is for Zhihu to become the connection layer for humans in AI era as a place where people can use AI tools to understand the world as well as a community where they can find renaissance and understanding from one another. At the same time, we plan to build a trusted content and expert network as 2 foundational layers of infrastructure.

Thank you. Thank you again for your question.

We will take next question. This is from Daisy Chen from Haitong International.

Could management update the progress of the adjustments in each business line? Did you see any signs that the revenue has bottomed out or started to rebound? In particular, how do you expect the future of the advertising business? And also, could you share your outlook on the company's profitability?

[Interpreted] Thank you for your question, Daisy. This is from Wang Han, Zhihu CFO. So I will just pick up your second question. Here's a quick take on our profitability outlook. After delivering solid profits in the first 2 quarters, we now see a very high likelihood of achieving our first full year non-GAAP profitability in 2025. So with that buffer in place, we are using Q3 and Q4 as a window to keep fine-tuning and investing where needed. That's why you will see -- you can see a small loss in Q3, which is well within what we can comfortably take.

Let me just walk through the adjustments across our major revenue lines. First, about the marketing services. As we mentioned last quarter, this Q3 is -- it will become the bottom. And we expect a sequential recovery starting in Q4. What we see now give us confidence to maintain that guidance. Looking ahead to next year, our goal is for each quarter to stay above the baseline set by Q3 this year. And second, about the pay membership. This segment is still in a transition period. As we said before, even the best libraries and bookstores separate fiction from nonfiction, the real challenge here is how to differentiate and integrate them in a way that feels natural to users. We will continue experimenting here. So we cannot say membership -- pay membership revenue has hit its bottom yet. But even if there is some decline, it will be about products or cohorts with lower ROI and weaker profitability or less than ideal retention.

Search is about vocational training. This business is no longer a drag on our overall bottom line. Given this relatively low base or small scale, we have now reclassified it into others. So overall, you've seen us deliver several consecutive quarters of profitability followed by the small loss in Q3. Even though we remain confident in achieving full year profitability. With that foundation, we are taking this period to make necessary adjustments and targeted investments. As we approach our first full year of profitability, we also want to use this moment to shed some legacy inefficiencies and to start fresh.

We have no intention of staying where we are and simply just squeezing out profits. We are now operating from a healthier foundation and getting back onto a trajectory that aligns with Zhihu's long-term development. Also, we have a solid -- very solid cash position, and we are not reverting to the old model of spending aggressively just forth go. And this new AI cycle or in this AI era, our focus is on strengthening Zhihu's position in real people interactions, expert network and trusted content areas. And these capabilities are becoming increasingly important and carry real social value.

Thank you for your questions.

We will now take the next question. And this is from [ Jing Yi Wang from Guangfa ].

Could management share some more color about the shareholder return pay in progress.

[Interpreted] Thank you for your question. This is from Wang Han, Zhihu CFO. We can see over the past 2 years, we've been one of the most active buyback companies among U.S.-listed Chinese names. That conviction came from our confidence in reaching profitability. And this year, we expect to demonstrate that our outlook and the targets set 2 years ago are being delivered. Even so Zhihu's current market cap remains significantly below the cash on our balance sheet. So we believe we are super undervalued. Therefore, we intend to maintain our buyback program and expect to remain one of the most active repurchase in this sector.

Thank you again for your question.

That concludes today's Q&A session. At this time, I will turn the conference back to Yolanda for any additional or closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact our IR team directly or Christensen Advisory. Thank you so much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]