This article first appeared on GuruFocus .
Release Date: June 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Zhihu Inc ( NYSE:ZH ) reported a strong start to 2026 with improved financial performance and operational efficiency.
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Average daily time spent per DAU increased to approximately 42 minutes, indicating higher user engagement.
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Revenue from paid content and IP operations grew by 15.8% sequentially, driven by strong IP operations.
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The company successfully integrated AI capabilities across its platform, enhancing social interactions and content creation.
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Zhihu Inc ( NYSE:ZH ) maintained a strong cash position with RMB4.5 billion in cash and cash equivalents as of March 31, 2026.
Negative Points
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Total revenue for the quarter declined year-over-year from RMB729.7 million in Q1 2025 to RMB651.6 million in Q1 2026.
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Gross margin decreased to 59.6% from 61.8% in the same period of 2025, although it improved sequentially.
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Operating expenses remained high, with total operating expenses at RMB451.2 million, despite a year-over-year decrease.
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The company faced challenges in the macro environment and industry competition, requiring a long-term perspective.
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Research and development expenses decreased by 22.4% year-over-year, which could impact future innovation.
Q & A Highlights
Q: Could management share some of the latest strategic thinking and roadmap around AI, particularly in terms of integrating AI with the community? A: Unidentified_6 (COO): The integration of AI with our community is not about AI itself but enhancing cognitive experiences and real connections. Our strategy focuses on building a high-quality, trustworthy community. We are advancing in two areas: developing a data platform with high-quality community data and an open platform for community API to empower creators. Our initiatives include sustained community investment, product simplification, technical infrastructure, and AI innovation.
Q: The company merged paid membership revenue with IP-related revenue into a single category. Does this reflect a new strategic view on market potential and growth drivers? A: Unidentified_6 (COO): Yes, this reclassification reflects our strategic view of paid content and IP operations. It showcases the full lifecycle value of our content and IP, moving from a single subscription model to a full-chain IP operation. Our competitive advantages include a vast library of premium short stories and a strong creator ecosystem, which are crucial for IP monetization.
Q: Can management elaborate on the specific allocation of AI investment and how it balances with profitability goals? A: Unidentified_6 (CFO): We focus on AI dramas, comic dramas, and expert data solutions, which have healthy cash flow profiles. Our strategy is not to burn cash for growth but to build core long-term capabilities. We aim to deliver superior products while maintaining a balance between new investments and profitability.
Q: Are there any updates to the shareholder return plan, such as methods and scale? A: Unidentified_6 (CFO): We remain committed to our share repurchase program. Since 2022, we have repurchased 63.5 million Class A shares for a total of $130 million. In 2026, we repurchased 4.61 million shares, representing 1.674% of total shares outstanding, and all shares repurchased in Q1 2026 have been canceled.
Q: How does Zhihu plan to leverage AI to enhance its content and community interactions? A: Unidentified_6 (COO): We are integrating AI capabilities across content creation, discovery, consumption, and community interactions. Our open platform and API empower developers and creators to explore AI-native content formats. We focus on leveraging AI to enhance creative efficiency and maintain a high-quality content ecosystem.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
