Zhihu Releases First Financial Report Since Listing, Stock Price Down 27%

After going public on the NYSE in March last year, Zhihu Inc., an online content community in China, on Monday announced its unaudited financial results for the quarter and fiscal year ended December 31, 2021.

Its average monthly active users (MAUs) reached 103.3 million in the fourth quarter of 2021, representing growth of 36.4% year-on-year. Average MAUs for the year was 95.9 million, representing growth of 40.0% from 2020.

Its average monthly paying members reached 6.1 million in the fourth quarter of 2021, representing a year-on-year increase of 102%. Average monthly paying members for the year was 5.1 million, a year-on-year increase of 114.8%.

Total revenues were 1.0192 billion yuan ($159.9 million) in the fourth quarter of 2021, representing year-on-year growth of 96.1%, while total revenues for the year were 2.9593 billion yuan, representing growth of 118.9% from 2020.

Gross profit was 479.8 million yuan in the fourth quarter of 2021, representing an increase of 44.1% over the fourth quarter of 2020, while gross profit for the year was 1,553.9 million yuan, representing an increase of 105.1% from 2020.

Zhihu is continuing to explore more business models. For example, a large quantity of vocational education content on the platform can fully meet the needs of core users aged 18 to 36, and has huge space for value growth.

Sun Wei, Chief Financial Officer of Zhihu, added, “We are delighted to announce another strong set of quarterly results. During the fourth quarter of 2021, our content-commerce solutions and paid membership businesses continued to grow rapidly, expanding 380.2% and 100%, respectively, in terms of revenue on a year-over-year basis, and collectively contributed 56.5% of our total revenue in the quarter. At the same time, despite headwinds faced by the general advertising sector, our advertising business grew by 18.4% during the quarter on a year-over-year basis.”

However, Zhihu’s net loss was 383.3 million yuan in the fourth quarter of 2021, compared with 90.1 million yuan in the same period of 2020. Its adjusted net loss (non-GAAP) was 240.8 million yuan in the fourth quarter of 2021, compared with 26.3 million yuan in the same period of 2020.

From the whole year view, Zhihu’s net loss was 1,298.9 million yuan in 2021, compared with 517.6 million yuan in 2020. Adjusted net loss (non-GAAP) was 747.1 million yuan in 2021, compared with 337.5 million yuan in 2020.

As of December 31, 2021, the company had cash and cash equivalents, term deposits and short-term investments of 7.4 billion yuan, compared with 3.1 billion yuan as of December 31, 2020.

However, the financial report appears to have been unsatisfactory for the public and investors. Zhihu‘s stock price closed at $1.53 per share on Monday, decreasing 27.49%. Its share price has fallen about 77.79% since its trading debut in March last year. The Beijing Internet Information Office also summoned Zhihu in December last year in response to its repeated display of information and content on the platform that was deemed to violate national laws and regulations.

SEE ALSO: Chinese Q&A Site Zhihu Summoned by Beijing Cyberspace Regulator

In terms of the outlook for the first quarter of 2022, the company expects its total revenues to be between 720 million yuan and 740 million yuan. The above outlook is based on current market conditions and reflects the company’s preliminary estimates, which are subject to change.

Zhou Yuan, Chairman of the Board and Chief Executive Officer of Zhihu, said on the earnings call that the revenue growth for the whole year in 2022 is expected to be 60-65%. The firm’s “content-commerce solutions” are expected to become its largest revenue source, accounting for more than a third of revenue. Sun Wei added that Zhihu‘s education business is expected to maintain rapid growth in 2022, accounting for more than 5% of revenue in the first quarter this year, and more than 20% in the long run.