Zhihu (ZH) Q3 2025: AI Penetration Quadruples to 15%, Catalyzing Content Ecosystem Shift
AI integration is rapidly reshaping Zhihu’s platform, with Zhida’s penetration rate surging to 15%—a fourfold increase year over year—driving deeper user engagement and content creation. As structural optimization narrows losses and paid memberships rebound sequentially, management signals full-year breakeven is within reach. With a renewed focus on trusted content and expert networks, Zhihu positions itself as a foundational layer for human connection in the AI era, while maintaining aggressive buybacks amid perceived undervaluation.
Summary
- AI Adoption Accelerates: Zhida’s usage quadrupled, validating strategic AI-community integration.
- Content Ecosystem Strengthens: High-quality and AI-focused content creation posted double-digit growth.
- Profitability in Sight: Management remains confident in achieving full-year breakeven, leveraging cost discipline and platform vitality.
Performance Analysis
Zhihu’s third quarter results reflect a business in disciplined transition, as the company’s non-GAAP operating loss narrowed by 16.3% year over year, underscoring the impact of ongoing cost optimization and operational efficiency initiatives. Revenue contracted across business lines, with total revenue at RMB 658.9 million, a decline attributed to deliberate revenue mix optimization and a focus on sustainable growth rather than volume for its own sake. Marketing services revenue fell, but the year-over-year decline narrowed for a third consecutive quarter, signaling stabilization after a prolonged adjustment cycle.
Paid membership, a core recurring revenue stream, saw sequential recovery as monthly subscribers rose 8.1% to 14.3 million, though still trailing last year’s levels. Gross margin held at 61.3%, reflecting robust monetization of high-value content and services. Cost controls were evident in a 19.4% reduction in total operating expenses, with R&D spend down 36.2% and selling/marketing expenses trimmed nearly 15%. The company’s cash and equivalents stood at RMB 4.6 billion, with continued share repurchases highlighting management’s conviction in intrinsic value.
- AI-Driven Content Creation Surges: Daily high-quality content grew over 25%, with professional AI-focused content up more than 30% YoY.
- Membership Revenue Rebounds Sequentially: Paid members increased 8.1% QoQ, signaling stabilization after earlier declines.
- Cost Discipline Tightens: Operating expenses fell 19.4% YoY, supporting margin resilience despite top-line contraction.
Management’s strategic patience is visible: they are prioritizing ecosystem health, trusted content, and AI-enabled experiences over short-term revenue, betting that this foundation will yield sustainable, defensible growth as AI adoption accelerates across China’s digital landscape.
Executive Commentary
"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."
Victor Zhou (AI Agent for Zhou Yuan, Founder, Chairman, and CEO)
"We continue to invest in areas that reinforce our long-term growth potential, striking a healthy balance between efficiency and investment... Looking ahead, we are on track to achieve full-year breakeven on a non-GAAP basis."
Wang Han, Chief Financial Officer
Strategic Positioning
1. AI as Platform Differentiator
Zhihu is rapidly advancing its “AI plus community” strategy, with Zhida, its AI-powered search and assistant, reaching over 15% penetration—nearly four times last year’s level. This validates Zhihu’s thesis that AI-enabled features can drive both user engagement and creator productivity, lowering barriers for mid-tier creators and enriching the knowledge base for both users and enterprise clients.
2. Content Quality and Trust as Moat
The platform’s competitive edge centers on trusted, high-quality content and a vibrant expert network, which management sees as essential infrastructure for the AI era. Daily creation of high-quality content rose by over 25%, and professional AI-focused content by more than 30%, reinforcing Zhihu’s status as a hub for technical discourse and authoritative knowledge, especially in fast-moving fields like AI and science.
3. Monetization Recalibration and Segment Realignment
Marketing services, once a major revenue engine, are being rebuilt with a focus on high-value enterprise clients and AI-enhanced ad products. Sequential revenue growth is expected in Q4, as the client mix shifts toward technology, automotive, and healthcare sectors. Paid membership is also in transition, with ongoing experiments to balance fiction and non-fiction content, aiming to maximize ARPU and retention. Vocational training has been de-emphasized and reclassified, reflecting a sharper strategic focus.
4. Capital Allocation and Shareholder Returns
Management continues to execute significant share buybacks, citing a market cap below balance sheet cash as evidence of undervaluation. This capital return is positioned as a vote of confidence in Zhihu’s long-term prospects and a commitment to shareholder value, even as near-term profitability remains a work in progress.
Key Considerations
This quarter marks a pivotal moment as Zhihu balances ecosystem health, AI innovation, and disciplined monetization. Investors should focus on:
- AI-Community Synergy: Zhida’s quadrupled penetration rate demonstrates user acceptance of AI features, but ongoing product innovation will be required to maintain momentum.
- Content and Creator Network Expansion: Sustained double-digit growth in high-quality and AI-focused content strengthens the platform’s moat against both traditional and AI-native competitors.
- Monetization Transition: Marketing services are stabilizing, but paid membership remains in flux; success hinges on product-market fit and differentiated value for both creators and consumers.
- Cost Structure Reset: Operating expense reductions have bought time for strategic reinvention, but future growth will depend on scalable, high-margin revenue streams.
- Shareholder Alignment: Aggressive buybacks signal management’s confidence, but investors should watch for sustainable profitability and not just capital return as a value driver.
Risks
Revenue visibility remains limited as marketing services and paid membership are both in transition, and the competitive landscape for AI-driven content platforms is intensifying. Execution risk is high as Zhihu pivots to AI-centric product development while maintaining community trust and content quality. Regulatory scrutiny and shifts in user behavior could further challenge growth and monetization.
Forward Outlook
For Q4 2025, Zhihu guided to:
- Sequential revenue growth in marketing services, signifying a bottoming out of the adjustment cycle.
- Continued cost discipline and targeted investment in AI and content ecosystem enhancements.
For full-year 2025, management maintained guidance:
- On track for first full-year non-GAAP profitability.
Management highlighted:
- Ongoing AI feature rollouts, including expanded Zhida search and creator tools.
- Continued focus on high-value enterprise clients and diversified membership offerings.
Takeaways
Zhihu is actively redefining its platform around AI and content trust, using disciplined cost control and renewed product focus to position for sustainable growth.
- AI Penetration Validates Strategy: Quadrupling of Zhida’s usage shows users are embracing AI-powered features, creating a feedback loop that strengthens the content ecosystem.
- Monetization Recovery Not Uniform: While marketing services are stabilizing, paid membership remains in transition, requiring ongoing product innovation and value differentiation.
- Watch for Sustainable Profitability: Investors should monitor execution on AI integration, community engagement, and monetization, as well as management’s ability to translate operational efficiency into durable earnings growth.
Conclusion
Zhihu’s Q3 2025 results mark a turning point as AI integration and content ecosystem health take center stage. Management’s confidence in full-year breakeven and aggressive buybacks underline a conviction in the platform’s long-term value, but the real test will be sustaining user engagement and monetization in an increasingly competitive AI-driven landscape.
Industry Read-Through
Zhihu’s results spotlight a broader industry shift: AI-powered content curation and community engagement are rapidly becoming table stakes for knowledge platforms in China. Platforms that can combine trusted content, expert networks, and AI-enabled user experiences are best positioned to capture both consumer and enterprise demand as the digital knowledge economy evolves. The transition from volume-based advertising to high-value, AI-driven engagement will likely define winners and losers across the sector, with implications for both established and emerging players in digital media, edtech, and social platforms.