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spk07: Ladies and gentlemen, thank you for standing by and welcome to the Juhu Inc. Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a Q&A session. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jingjing Du. Head of Industrial Relations. Please go ahead, Nim.
spk10: Thank you, operator. Hello, everyone. Welcome to our third quarter 2021 financial results conference call. Joining us today are Mr. Zhou Yuan, Chairman and CEO of Zhihu, and Mr. Sun Wei, our CFO. Before we start, we would like to remind you that today's discussion may contain forward-looking statements which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and this discussion. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhuhu.com. I will now turn the call over to Mr. Sun Wei, our CFO. Okay.
spk00: Thank you, Jingjing. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, founder and CEO of Zhuhu. Thank you for joining Zhuhu's 2021 Third Quarter Earnings Conference Call. As one of the largest online content communities in China, we have always been committed to the development of our content-centric ecosystem through continuous community infrastructure enhancements, user base expansion, and monetization capability improvement. Our fast-growing user base is primarily young and cross-generational, infusing our platform with vitality, while our content-centric monetization model differentiates us with sizable growth potential. Against the backdrop of rapidly changing macroeconomic conditions, our distinctive model, vibrant user community, and the continuous accumulation of high-quality content serves as not only a moat in the competitive entertainment arena, but as compounding driving forces, providing long-term sustainable growth of our user base and monetization channel. In Q3, we delivered another solid set of financial and operating results, with our average MAUs reaching 101.2 million, up 40% year-over-year, and average monthly viewers growing to 542 million. As of the end of the third quarter, the cumulative pieces of content on our platform reached 458.9 million, including 398.4 million questions and answers. representing a year-over-year increase of 43% and 38%, respectively. Additionally, our average number of monthly active content creators increased to 3.6 million, of which the average number of monthly video content creators increased 86% year-over-year. Meanwhile, our content-centric monetization initiatives continue to gain traction, evidenced by a 115% year-over-year increase in revenue to RMB 823.5 million and a 110% year-over-year increase in average monthly paying members to 5.5 million. During the second quarter, we upgraded our high-quality content assessment standard by introducing sense of fulfillment. We took further steps in Q3 to update the mechanisms for content creation, distribution, consumption, and platform interaction, and made remarkable progress. High-quality content with characteristics of a broadening horizon, providing solutions, and resonating with minds was widely recognized by both users and content creators and helped drive the growth of our community. In categories which carry more sense of fulfillment content, including engineering, economics, and law. Graphics and text views increased by 136%, 58%, and 112%. And the related user engagement increased by 102%, 134%, and 111%, all within just two months. The views of high-quality video content with a sense of fulfillment on our platform increased by over 140% in the two months. The implementation of the standard of a sense of fulfillment brought users with fulfilling content and prompt higher levels of user engagement on our platform. Before the final announcement of the winner of the Nobel Prize in Physiology or Medicine this year, under the topic of 2021 Nobel Prize Tour, a Zhihu user had successfully predicted the sub-discipline with the highest probability of winning with supporting reasons. In addition to targeting a massive user base, in the quarter, we focused particularly on enriching content that met our new sense of fulfillment standard to appeal to various user communities. For example, in October this year, our published children's popular science cartoon book titled A Hundred Thousand Wives was well received by young parents. Beyond heightening user consumption, sense of fulfillment content also benefits creators by encouraging more user engagement and providing more opportunities for commercial income generation. A good example comes from Shen Shao, one of our veteran digital content creators. He had accumulated more than 1,000 high-quality answers over the past eight years on Zhihu, recently released detailed sharing of entry-level watch selection, which not only yield 13,000 apples but also provided the creator with corresponding commercial income. Content creation on Zhihu's platform has now become an important income source for him. The successful implementation of the new content standard not only provided our users with broadly expanded content coverage but also demonstrated our differentiated value proposition in our ability to influence topic direction and discussion depth. For example, during the Tokyo Olympics, while many community platforms were just celebrating team victories or focusing on individual performances, the Zhihu community was having in-depth discussions on the reasons behind wins or loses. Prominent topics on Zhihu fell under threats like how the Chinese women's volleyball team lost to the United States at 0-3, where various perspectives were shared on strategies, rules, economics, et cetera. It's these types of discussion and the user interest that have given rise to Ji Hu's nickname, Ji Zhan Shu Da Chi, which means master of skills or tactics. After Xu Xin and Liu Shiwen lost the ping pong mixed doubles during the Olympics, Zhihu users responded with intellectual curiosity and theories. Rather than emotionally driven discussions, Zhihu's community gave rise to topics such as gold medal theory and Olympic spirit, which became the positive and guiding force of online discussions. As we continue our efforts to improve creation, distribution, and consumption of our content with a sense of fulfillment, we have also preserved community compliance. Through proactive community governance and the scrutiny of long-compliant content, we strive to enhance users' trustworthiness by fostering a community characterized by sincerity, expertise, and respect. In Q3, tightening content timeliness provided users a better platform experience by enabling them to more quickly and easily find fulfilling content with timeliness within our massive content library. This was proven particularly effective with the devastating floods in Henan, which we shared in our previous call. More than 160 topics related to the Henan floods were generated within 10 days on Zhihu's platform, with nearly 150 million page views. After the astonishing news about Wu Yifan broke, Zhihu users carried out national in-depth discussions on associated legal factors under the table rules of entertainment industry. and the fan economy. The average number of pieces of content with timeliness generated on our platform on a daily basis increased by 40% this September versus this April. It is encouraging to see more and more users in our community consuming content with timeliness, with the related DAO penetration rate exceeding 40% at the end of third quarter. To better satisfy user demand for high-quality content in various categories and diverse formats, we encourage creators with different specialties to work together and jointly introduce more content, especially video-like content. In Q3, the number of average monthly uploaded videos increased by 290% year-over-year. The average number of pieces of content consumed per user and over video tab and core Q&A scenarios also continue to increase. As of the end of September, the number of DAUs who consume the video content increased to 37%. In October, we launched a new feature named Join Creation, which allows text creators to authorize video creators to use their original answers as the basis for a video script and share the copyright with them. Initiatives like this not only amplified our high quality content library, but also prompt more user engagement. A video named Looking at the World Through Data, How Far is the Gap Between Su Bing Tian and the Boat? is an excellent case, demonstrating the synergy effect of content visualization through joint creation. This video was adapted from a blockbuster graphic and text content with 10,000 uploads originally. created by Chen Qin, a 10-year Zhihu creator veteran. The video extension of this content was widely spread, receiving over 2 million views across our platform and gaining vast recognition inside and outside Zhihu's platform. Driven by the abundant coverage, diversified formats, and improved timeliness of high-quality content, our user base maintained its high growth momentum. During the third quarter, our average MAUs exceeded 100 million, a record high. Average monthly viewers reached 540 million, and among which the penetration rate of MAUs increased to 18.7%. More than that, the value proposition of our community is steadily attracting users across ages and across regions, making our user base increase in a more balanced and healthy manner. In Q3, the percentage of female users grew to 47% from 44% in the same period of last year. Along with the improvement of content timeliness, our user group of those who over 30 also grew steadily in both numbers and the activities, further solidifying our unique and vibrant community ecosystem. At the same time, expanding our content format capabilities enabled us to satisfy younger generations' demand for learning, life, and entertainment. In preparation for the school season starting in September, we launched a series of programs titled First Lessons for Universities, where graduates were invited to share their valuable experiences and insights. Delving into six relevant topics, the series resonated strongly with younger users, attracting more than 800 million views and prompting massive discussions. Geographically, the number of users in Tier 2 cities or below also continue to increase in Q3. Through expanding content category coverage, providing more content with timeliness, and offering diversified consumption formats, we aim to create an inclusive platform where all users in our community can feel a sense of belonging. Our massive and active user base infuses our communities with energy and constantly reinforces it by generating high quality content, which in return attracts more talented content creators to join us and make contributions. As of the end of Q3, the cumulative number of content creators on the Zhihu platform reached 53.1 million. By providing more and better tools, assistance, and incentives for the content creators based on their differentiated capabilities and needs, we were able to help them improve their creation experience under the new standard and further gain recognition and user trust within our community. In addition to further upgrading the tools, video sectioning and match to Q&As launched last quarter, we iterated the function to generate PPT videos through OneClick. The joint creation feature launched in October was designed and aimed to help creators improve their creation capabilities by allowing them to focus on what they do best. For example, a high-quality answer about the brain with 41,000 uploads generated by a Zhihu user, Xie Xiong Maojun, was adapted into a video by a video creator, Da'an Shiwu Suo, and it received more than 4 million views. Supported by high-quality text content, The video named How Big is the Impact of College Entrance Examination on Future Income and How to Quantify the Long-Term Impact of Poor Scores in College Entrance Exams received more than 2.59 million views and more than 3,000 uploads on our platform since its launch. By the middle of November, thousands of graphic and text creators had participated in content authorization through joint creation. with the total accumulated authorized content exceeding 1.8 million pieces, which demonstrated that this is the right strategy to meet content creators' most real and pressing needs. Driven by the richness of high-quality content with a sense of fulfillment, the commercial value of our community and our young and cross-generational user base both maintain their growth momentum, further solidifying our community ecosystem. In recognition of our increasing branding value in October, Zhihu was once again named in brand Z list of top 100 most valuable Chinese brands for 2021, ranking seven places higher than last year. Enterpained by Zhihu's increasingly prominent brand and unique content-centric monetization model, our commercial efficiency has continuously improved. More brands and business partners are recognizing Zhihu as an important platform to gain visibility. As more content creators joined Zhihu's ecosystem, we were able to cooperate with a huge number of commercial content creators in different specialties and together make achievements and share the benefits by expanding user coverage and improving commercial efficiency. In Q3, revenue from CCS increased by more than five times compared to the same period last year. reaching RMB 278 million. Average monthly paying members reached 5.5 million, representing 110% year-over-year growth. And the revenue from paid membership increased by 96% to RMB 178 million year-over-year. Moving forward, we plan to further enrich high-quality content and strengthen our content-centric monetization solution, especially in categories including e-commerce and vocational education, further enhancing our closed-loop ecosystem, as well as increasing our value as a business partner. Before our CFO provides highlights and additional color on our financial results, I would like to share with you some major progress we have made centering around our content ecosystem in Q3. To better serve our content creators and to improve their commercial and community influence. In September, we updated our CHIS platform by using composite influence index and formally released the ranking of content creators on CHIS platform. This platform is aimed to help content creators improve their monetization capability by providing a transparent transaction model, multitasking mode, and effective data indicator assessment. In the third quarter, the number of creators who achieved commercial income tripled compared to the same period of last year. Our creators may now increase their commercial income to six diversified channels, including commercial content, paying membership content, recommended goodies, and consulting solutions, et cetera. The experience of , one of our selection authors, is a great example of this. Through his Urban Story series, which attracted nearly 160,000 users, he was able to realize close to 1 million RMB income during the third quarter. As an important platform influencing the young generation's lifestyle and consumption decisions, we have become the desirable platform with effective content-centric commercial solutions for thousands of brands and merchants. in the fields of beauty, cosmetics, personal care, e-commerce, FMCG, vocational education, et cetera. In the third quarter, the number of brands and merchants that used our content commerce solution increased 200% compared to the same period of last year. And GMV on our platform reached a new high of nearly RMB 5 billion, representing a year-over-year increase of 92%. as of the end of third quarter. We released our 2021 Zhihu Top 100 list at the end of October. The list comprises 100 products across various categories, including clothing, food, housing, and travel, selected by participating Zhihu users based on their professional and personal experience, as well as our big data analysis. Users were not only impressed by items like the payload with the most apples, most eat snail powder, and the handiest cookware, but also enjoyed fulfilling content while reading through the selection experience, leading to a mutual gain for both users and the creators. High-quality content with a sense of fulfillment is not only a key factor in inspiring the trustworthiness among users, content creators, and the Zhihu community, It is also a statement in strengthening Zhihu's industry-leading position. As we forge ahead, we will continue to encourage content creators to produce more high-quality and fulfilling content and help brands and merchants achieve healthy business growth. We believe that the meaningful interplay between users, content, and monetization is the driving engine in advancing our robust community ecosystem. reaching new heights and achieving sustained long-term growth. This concludes the remarks from Mr. Zhu Yuan. I will now review and provide more details of our financial performance for Q3 2021. As just mentioned, we achieved another strong quarter, recording total revenue of RMB 823.5 million, which represented a year-over-year increase of 115%. Our unique content-centric business model is increasingly showing its strength and ability to drive our business growth, keeping pace with our fast-growing and vibrant user base. In the third quarter, Content Commerce Solutions and paid membership combined to contribute over 55% of the total revenue. Our commitment to our Content Commerce Solutions strategy has continued to gain market awareness. In Q3, Content Commerce Solutions contributed RMB 278.4 million to total revenue. This five-fold year-over-year increase cost Content Commerce Solutions as a percentage of total revenue to grow significantly. It is further underpinned by the continuous improvement of our commercial content ecosystem, as well as increasing recognition and growing demand from our diverse business partners and merchants. the number of our CCS customers tripled in the third quarter compared to the same period in 2020. As we broaden our coverage to encompass over 20 industries, moreover, we also saw a significant increase in content creator participation in this business line, facilitated through our Chief Platform, which launched in late May this year. In the third quarter, the number of creators who have joined our Chief Platform and achieved commercial income exceeded 10,000. We believe this demonstrates that we are on the right track in helping our content creators reach their commercial goals. Advertising in the third quarter maintained its strong momentum, despite ad industry headwinds. In the quarter, advertising revenue was RMB 321.1 million, representing a 39% year-over-year increase. underpinned by our advantage as a comprehensive content platform. An increasingly wide range of advertisers now consider us as a must-have marketing platform due to our ability to connect their adwords with our broad user base. In the third quarter, companies from the fields of e-commerce, personal care and cosmetics, automobiles, IT and 3C were our strongest growing contributors. Our paid membership contributed RMB 178.3 million to total revenue in the quarter, representing an increase of 96% compared to the same period of last year. As of the end of the third quarter, our average monthly paying members reached 5.5 million, with a paying ratio of 5.4%. The strong momentum in this business line also benefited from enhanced content creator commercialization capabilities, Other revenues mainly comprising e-commerce and vocational education achieved year-over-year growth exceeding 200% in the third quarter, increasing to RMB 45.7 million. Our e-commerce business continued its rapid growth momentum, with GMOE exceeding RMB 1.4 billion in the quarter. As Joanne just mentioned, we made further strides to enhance our recommended goodies business By bringing more fulfilling content and a greater engagement to our commercial ecosystem, we can better meet our users' needs and create synergies with our other content-centric monetization approaches. Our vocational education services business, which primarily provides online vocational and professional training for adults, has had great success with its self-paced courses, including those covering video production skills, and postgraduate entrance exam preparation. We maintained a strong gross margin of 52% in the third quarter while remaining dedicated to continuous investment in our content ecosystem. The third quarter also witnessed improvements in operating efficiency as our total operating expenses of RMB 747.3 million declined as a percentage of total revenue. On both a year-over-year and a quarter-over-quarter basis. Our operating expenses in the quarter were primarily composed of sales and marketing expenses and investments in human resources. Our user acquisition strategies leveraging our high-quality content library have proven themselves to be of great economic benefit. We've seen that content with timeliness, including content related to the Tokyo Olympics and the topics related to the start of the academic year, and the college recruitment, not only drove organic incremental user growth, but also effectively encouraged user interactions in the Chihu community. As a result, our non-GAAP adjusted net loss, which excludes share-based compensation expenses, was RMB 112.4 million in the third quarter of 2021. As of September 2021, the company had cash and cash equivalents term deposits, restricted cash, and short-term investments of RMB 7.6 billion, compared with RMB 3.1 billion as of December 2020. Finally, on to our financial outlook. Looking to the fourth quarter of 2021, the company expects total revenues to be in the range of RMB 1.01 billion to RMB 1.03 billion. reflecting a year-over-year increase of between 94.3% and 98.2%. As a reminder, this outlook reflects Jehu's current and preliminary estimates, and its subject could change. This concludes our prepared remarks. Operator, we are ready for the Q&A. Thank you.
spk07: Thank you. And we will now begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star, then two. At this time, we will pause for a moment to assemble our roster. Our first question today will come from Yawing Zong. of China Renaissance. Please go ahead.
spk01: Good evening, management. Thanks for taking my question. I have two questions. First question is regarding our CCS business. We noticed there are a number of new products announced during the W11 promotion. For example, we have the Zhuhu Top 100 list. Can you show more color around what we did during this W11 campaign? And then secondly is our idealization strategy. Can you discuss in details from both supplier and the consumption side? For example, on the supply side, we have the joint operated program announced. On the consumption side, we noticed that the video cap on the homepage. So can you discuss in more details? Thank you.
spk03: Please log ahead. Okay.
spk01: The second question is about a video-based strategy. I'd like to ask you to share the progress from a consumer side to a content production side. For example, after we saw the new version of the consumer side, the video tab was the first one to appear in the main page. And then in a production side, we have a joint creation. I'd like to ask the company to share some details. Thank you.
spk00: Okay, I'll just answer the first question in Chinese, and Julian will take number two. Sorry. I'll first briefly introduce the progress of our CCS this quarter. As I just mentioned in the remarks, our CCS this quarter is growing at a very fast pace, more than five times. Even in terms of return, there is a growth of more than 30%. This is mainly due to the continuous construction of the entire quality content ecosystem. Okay, so CA for first to address the first question.
spk09: As we explained in the remarks, the CCS has improved a lot, continues to improve a lot, especially in this quarter. We had a year-on-year increase of over 500 times and a quarter-on-quarter increase of over 30%. And this is basically due to our constant construction of a good ecosystem for high-quality content on Zhihu, and also we are playing a more and more profound influence over people's buying decisions. And there are more brands and merchants and units of commercials joining our platform, and you see that we have a much better and ever-improving reputation in the market year-on-year. Okay.
spk00: to help users make decision-making decisions and purchase products. We also cooperated with several e-commerce platforms including JD.com and Aliexpress, covering clothing, clothing, and other very large-scale products. At the same time, the users of Zhihu created the sense of achievement that we proposed in the decision-making process. By the end of the third quarter, the total GMV generated by our delivery content is 49.7 billion. This figure is the same as the growth For this double 11 South Gala specifically, we have launched activities such as top 100 list,
spk09: to promote and make recommendations on our community to help our users to make buying decisions and purchase the goods they want. And we are working together with e-commerce platforms such as JD.com and Alibaba that covers a number of sectors, including clothes, food, traveling, and living. And also our users are able to enjoy a sense of fulfillment during their their decision-making process. The GMV we had for the third quarter is 4.97 billion RMB, which represented a year-on-year growth of 92%. And our daily order number in Q3 increased by 31%. And also at the same time, what is worth noting is that Zhihu's tick rate had increased by over 200%.
spk00: At the same time, the business model of our e-commerce business is still in constant exploration and development. We will continue to promote the integration of goods with brand and business content marketing, which is the most likely to improve the efficiency of quality content transformation. At the same time, we will also explore the e-commerce platform model in the community, and continue to promote our self-serve business and our free brand in the field of e-commerce.
spk09: At the same time, we continue to explore and develop our business models in terms of e-commerce. We will continue to have further business integrations with regard to goods recommendations and brand building and content commerce-based marketing activities by the merchants so as to make the monetization more efficient. And also, we're exploring ways to have a closed-loop e-commerce platform within our community and to further build on our self-branded businesses and brand building activities inside of our Zhihu platform.
spk02: So this is from CEO Zhou Yan. We're very happy that you have noticed
spk09: difference in our product actually this is not the final version this is just a great version or a better version that we just launched um
spk02: There are three aspects. The first one is to surround the users of the community itself, which involves their attention, dynamics, and their social isolation experience optimization. The second is to involve the improvement of our video. As you can see, we will have a new tab for a small test. The third aspect Thank you.
spk09: Just as I said, this is just a version for exploration for new practices. And it's not just for videos. It's more than videos. We want to launch this to improve our monitoring on the users, on our community, to try to understand their attention, their behaviors, as well as their private traffic, private domain traffic and behavior. to understand their interactions and engagement on our community. And second, as you rightly pointed out, that is that we have a video tab on our homepage. And third thing, I want to, you know, just keep it secret for the time being because, you know, after we officially launch it in December, we will give you more details in due time. So all of those efforts are to try to make our user experience more simplified and more interesting.
spk02: So from the current version of our test, from the consumer side of the data, whether it is now you see this video tab of this VV, our test user's storage and market, as well as some more universal indicators, such as the card show of the big plate, etc., are still relatively obvious. In this process, we are also continuing to collect some
spk09: So since we are testing this, we saw very nice feedbacks, first of all, from the consumer side. From the consumer side, from the consumption of the videos, you see that we have very nice metrics, including very nice CV and the retention rate, as well as time spent and cost show. They all have displayed very nice potentials. And we keep heeding the users for their feedbacks and we have very quick updates and iterations of this beta version that we have.
spk02: Let's take a look at the data from the creation page in the video. As I said earlier, the upload volume of the Japanese army this quarter is about 300%. The number of users has increased by almost 90%. Especially after we introduced the content sense, that is, the content sense standard, we saw that there are a lot of creators in the community ecosystem who are creative and have more control over the content. Video creators have become very popular in the community.
spk09: From the content creation side of the story, you see that our daily uploads of videos increased by nearly 300 percentage points, and our monthly active video content creators increased by 86%. And after we have pushed forward the standard for sense of fulfillment for making video content, we have received very good support from the content creators, especially those who have high sense of creativity and great imaginations who actively join us as a content creator for videos in the ecosystem.
spk02: The data on the consumption side has actually been growing relatively healthy. Our video consumption in DAU has exceeded 37%. Last quarter, the penetration rate was almost 30%. This is a little bit about this joint creation. This may have been seen by everyone recently. This joint creation is a change that is happening in the community ecosystem. In fact, in the community, we have a lot of users who are good at making videos. At the same time, there are a lot of people with opinions, knowledge, and stories. This is the master of each field. They are actually creating a lot of new I want to say something more about joint creation. As you know that on the content creation part, we have very nice video makers together with very nice
spk09: you know, users who have nice views and ideas. So they work together through sharing copyrights. They delivered very nice video content. So we believe that it is not only a new product, but it is also a new format of generation of content and consumption of content. And I also want to share two numbers with you. That is the consumption of videos on our community keeps increasing. the video consumption penetration rate in DAU for this quarter was 37% versus 30% in the last quarter. Okay.
spk01: Okay, thank you.
spk07: Our next question today will come from Ashley Hsieh of Credit Suisse. Please go ahead with your question.
spk08: Thank you, Guan Yu, for accepting my question. I just want to ask about the situation in Xiamen. Thanks, management, for taking my question. It's mainly related to our lower QCD penetration. Just want to understand how is our visualization helping us in these regions And how is the user behavior different between higher and lower tier cities? And if you look forward, what's our plan and strategy to expand our penetration in lower tier cities? Thank you.
spk02: Okay, thank you for your question. I've already talked about some of the data in the video business. I'm not going to repeat it. So the key point of the video business at this stage is This is to enhance the sense of achievement of video in the entire community ecosystem, the increase in the number and experience of consumption. This part is also a core part of video long-term differentiation and competitiveness.
spk09: So the focus of our video is to focus on getting more videos with sense of fulfillment on our community, especially on the supply and consumption of such videos. We believe that this is some strategy that we will stick to for the longer term to depreciate ourselves and also to build our core competitiveness.
spk02: Speaking of the sense of achievement, let me start by saying that the sense of achievement is a general orientation in terms of content standards. In our recent user surveys, it has also received a lot of user recognition. At the same time, in the past few seasons, we have been attacking the content of low quality. This has also provided more exposure to our high quality content.
spk09: Since the fulfillment as a new standard that we propose for video content has been very well received and very well recognized by our users as proved by our survey recently.
spk02: So in this quarter, we have increased this, that is, after the distribution and exposure of the content, we actually see that the whole content Okay.
spk09: As we are cracking down low-quality videos and give more focus and priority to high-quality videos, you see that we have seen improved popularity of high-quality videos, especially those that have a sense of fulfillment as we improved our discover and distribution mechanisms for those videos. Those videos have been saved for more times, shared for more times, and has also helped us to improve the retention rates of users, especially you see the second month retention rate for users have improved one percentage point this quarter.
spk02: The video response to this series of product upgrades is actually far and wide. It provides more tools for creators. At present, the video content of our joint creation is indeed growing rapidly. In fact, after we uploaded it for a very short time, it has exceeded the authorization of 1.8 million pictures. A lot of high praise responses are actually Okay.
spk09: So the supply side of the video content, we have the joint creation mechanism as well as answers by videos. So all this are the upgrades to the product side and the tools side to help people provide more video content. So right now our joint creation are increasing very quickly. We now have over 1.8 million authorizations of the text and images for video making, that helps us to translate more and more highly voted answers in text and images to highly voted videos. By way of example, the cooperation between Xishu Maojun and Dan Shu, they delivered a four million viewed video by, you know, jointly by creating based on a, you know, highly voted answer with over 410 upvotes. So that is a very good example of how joint creation has been effectively working for us in the supply side of the content. .
spk02: Now we mean, you know, I think what's a good name that you don't forget.
spk09: Oh, uh, uh, uh, uh, uh, on the consumption side of the video content, uh, well, actually the consumers of the deals are pretty much the same as the general users that we have in terms of the profiling of users, uh, except that they are younger. Well, they have three percentage higher in terms of those who are under 30 years old for video conformance versus the general users. So on that, I believe that does actually means that our video content is pretty much in line with those who are with the demands of those on our community, especially we had been able to, you know, cover more uses and cater for their demands with our video content creation.
spk03: Okay, that's it. Thank you.
spk07: And our next question today will come from of Goldman Sachs. Please go ahead.
spk06: Thank you for taking my question. First, on the third quarter, when I combined advertising and TPS, you grew 117%, despite the pressures on the advertising market in general. Could you take us through the verticals that have come through very nicely for you for the quarter? And in looking at your guidance for the fourth quarter, for almost 100% growth, could you give us the building blocks of that, both in terms of NAU, as well as how strongly I'd expect advertising to grow in the fourth quarter? And while this is very early, could we also look forward to this 2022? I realize it's very preliminary, but nonetheless, and give us a feel for the pace of growth you would expect on a preliminary basis, if possible.
spk03: Thank you very much.
spk00: Okay. Thanks, Trish. Regarding our vertical growth in advertising, basically, we are now looking at Thank you very much for your question. In terms of advertisement and advertisement verticals,
spk09: Well, for Q3, you see that the most affected sectors, such as K-12 education and insurance, well, they used to have very small percentage points in our advertisement contribution. Therefore, the impact is very minimal to our business.
spk00: 从分领域来看,电商,快销,网服,IT3C这些领域, Okay.
spk09: If you look at the breakdown of advertisement verticals by sector, you see that e-commerce, consumer goods, internet services, IT, and CECs are the main sectors that we have advertisements from, and they all had very stable and nice growth of 80% year-on-year. And I think we benefited a lot because our merchant client, the advertisement clients are switching their marketing expenses from traditional media platforms to some platforms like us, which we can produce very nice contents and deliver nice and holistic content comment solutions. 同时在汽车和房产家居这些领域
spk00: 我们也有着这个创新性的优势,那在这两个领域也取得了显著的增长,都是这个两位数以上的增长。 For automobiles and housing furnitures, we had very nice and innovative benefits and registered double-digit growth in those two sectors and more. 我刚提到这几个领域基本上占到了我们整个这个广告主的所在的行业的这个
spk09: So the above-mentioned sectors put together accounted for over 60% of our advertisements. 主要原因我刚才也提到了就是这个我们作为
spk00: Um.
spk09: And we believe that going into the fourth quarter, we will continue to have very nice growth coming out of e-commerce, FMCG, 3C, IT, and et cetera. And reasons, as I explained before, that we as a content community are able to provide good platforms for people to build their brand, to deliver very nice and quality content. for their marketing efforts and to have diversified advantages in helping the advertisers to market themselves.
spk00: Yes, so if we look at 2022, we also think that in 2022, the overall commercialization revenue should still maintain a 100% revenue. In 2022, it should still maintain a relatively fast growth. Going into 2022, we believe that our total revenue will continue to grow in a fast pace, and the percentage points
spk09: as contributed from CCS and advertisement, will again account for about 70% to 75% of the total revenue we make. Sorry, the percentage points actually means the number for Q4, not for 2022. Sorry. Okay. Thank you.
spk07: Our next question today will come from Natalie Wu of Haitong International. Please go ahead.
spk08: Hi, everyone. Thank you for the question. Two small questions. The first is a follow-up to the question. In Q4, we said that advertising and CCS are 71 to 75 points in terms of revenue. Other members and e-commerce companies, can you help us figure out the growth of this business line? This is in our Q4, this is almost a three-digit growth, an outlook inside, underground. The second small question is about e-commerce. I also noticed that we have been pushing for a business business since the beginning of the year. I wonder how much the G&B's contribution to business e-commerce in the third quarter is. I will translate myself. Thanks for taking my question. And I have two questions here. The first one is a simple follow-up to the last question. So just wondering for your current first quarter outlook on those triple-digit goals. Can you help us break down among each business line specifically for the rest of the two, like membership and e-commerce and other business lines revenue growth for the fourth quarter? And secondly, for the e-commerce business, We noticed that you have ramped up your 1P business recently. We're just wondering for your e-commerce GMV in the third quarter, how much comes from your 1P business, which initiated just like I think this summer. Also, just curious how should we think of the strategic position for your 1p and 3p business going forward, and also future spread for, let's say, for their GMB goals. Thank you.
spk00: 关于Q4的收入结构, 我刚才大概提到了, 我们的广告和CCS这个占比, 至少会高于70%, 差不多在70%到75之间。 我们的会员收入基本差不多占在20%, 剩下的others里面, including our education, our e-commerce, and some other small income, the ratio will still be about 5%. This is the whole Q4 of our expected income composition. And then Natalie just asked about e-commerce. I think I probably mentioned some judgments about e-commerce when I was answering other questions. Overall, it seems that the logic of e-commerce is one of the core of the logic. Good content is good business. Basically, every question on Zhihu is like a shopping street. One question, one street, one answer, one store. Good content can really show why a product is good and why users should buy it. Through Zhihu's Q&A mechanism and our user voting mechanism, we can select the real reliable answer about the product and become the basis of user consumption decision and ultimately assist in the completion of the transaction. This is Zhihu's e-commerce business logic and basis. At this stage, we can also observe that the business is more and more paying attention to the call community and helping us to build this platform together. The creator, the user and the business share such a complete currency. We also saw that in Q3, I just mentioned a few data. The call's business content, through the decision making, and the final transaction, the GMV is generated. 49.7 billion, which is an increase of 92%. The order volume has also increased by 30%. Our take rate has also increased by 100%. However, the e-commerce model, we think, is still in constant exploration and exploration. It is still just an e-commerce version of 1.0. We will continue to promote the integration of goods and the content marketing of brands and merchants. We hope to increase the edge efficiency of quality content as much as possible. Thank you for your question.
spk09: Well, as I mentioned in Q4, our revenue outlook will be 70% to 75% coming from CCAs and advertisement together and 20% for membership. And for the others, education, e-commerce, and others coming together will be 5 percentage points. So furthermore on our e-commerce business, we believe that our e-commerce development will continue to center around good content because we believe good content is good business. and we believe that one question is one street and one answer is a good shop. We continue to help the consumers and users to identify those goods that are worth buying by our app voting system to select the most reliable answers and then continue to help them with the transaction. And we believe that this is going to deliver very well and to bring benefits to both content creators, merchants, as well as the Zhihu community as a whole. And as I mentioned, the GMV we had for the third quarter is 4.97 billion RMB, and with the daily order increased on a daily basis of 31 percentage points, and our take rate also increased by more than 100%. And all of those efforts are helping us to improve the monetization efficiency. And for our 1P business, we are trying out in helping the brands and also to help them to create content-based marketing and promotion. And this is by far the final version of 1P e-commerce that we have. revolutionizing the models as we're going forward. And we believe that this will deliver better and better results going forward in the future.
spk03: Yep, thank you.
spk07: Our next question will come from Alex Jacques of JP Morgan. Please go ahead.
spk05: Good evening, I would like to ask two questions. The first question is that the strategy of attracting content creators on the video end is different from the strategy of attracting content creators on the text end. And then further, because the video end of the market The content supply is actually more entertaining. Then we put it on the content of the video as a platform. This is a slogan that breaks through the content and then spreads to more entertaining content. This idea is that we still have to insist on our own main tone. Then it is based on a video content strategy with knowledge and content that is a little higher. So my first question is about the strategy to attract the content contributors on the video content sites, are we doing anything different compared to the content strategy on the picture and the text sites? Particularly, China's video market is predominantly driven by entertainment-oriented content. So on the video content side, are we using this opportunity to broaden the content jira and the coverage into entertainment-oriented content supply? Or are we sticking to our core platform and the community attributes and still focusing on the knowledge-based content jiras? And the second question is about the implementation of the PIPL. which took place on 1st of November. Are you guys seeing any difference before and after the implementation of PNTL, and how should we think about the impact on operation and monetization? Thank you.
spk02: Okay, thank you. I'm Zhou Yuan. Let me answer your question. First of all, the first one is about the video creator. First of all, the first point is that We are not actually increasing the content of the video in the entire community. This is a result. The video is actually an important part of the content ecosystem. We actually use this to build the ecosystem well, so that the video can grow more in the ecosystem. This is actually one of our ultimate goals.
spk09: Answer from CEO Zhou Yuan. So for the first question, video is not the result. Video is not what we want to do by choice. It's a natural result of our strategy of running the community. We believe that video is an indispensable part and parcel of our community. And by building a nice ecosystem, we are able to to let the video content organically grow out of our good community.
spk02: Okay.
spk09: For video content creators, we believe that they are versatile. Let us just call them a full-stack video content creator. They're very good at making videos. They're very good at answering questions. They can also do live streaming. And by utilizing different formats of content, they're able to deliver the best possible results and attract the most attention from the community.
spk02: For the time being, you see a lot of upgrades in terms of the tools that we give to content creators and operational, you know, transformation that gives more, you know, attention to the video content.
spk09: Actually, answer by video is not just something new. We believe that video is just a more suitable format of people giving answers and does just grow very fast naturally. Second is the joint creation. We believe that it is by no means using videos to replace text and images. We believe that by putting them all together, we could deliver one plus one is more than two kind of result in our community.
spk02: The topics and discussions you see on our community covers all kinds of factors and with an umbrella principle that is
spk09: a sense of fulfillment. So by, you know, asking and encouraging content creators to make videos that can bring sense of fulfillment, you see very nice engagement and very nice growth.
spk02: Okay, let me go back to the issue of supervision, especially recently with the Gopal Act. In a way, in general, what does supervision actually want? What does it want? What does it want? What does it want? Now with regard to new regulations PAPL, we believe that the purpose of having, you know,
spk09: the businesses like us to be compliant as for the better goods of the entire industry to make it healthy, to make it more sustainable for the longer term.
spk02: It's not something we're doing now. We've been doing this for a while now. We've been doing this for a while now. We've been doing this for a while now. We've been doing this for a while now. We've been doing this for a while now. We've been doing this for a while now. We've been doing this for a while now. In terms of our own compliance efforts, we keep talking very
spk09: very frequently with regulators, and I think this is a long-term thing. In our own internal practices or operations, we keep trying out good solutions for user experience and testing out the data, et cetera. We believe that this will gradually become a new normal, and we have always been proactive in cooperating with the regulators and make sure that we are coping with all the requirements.
spk03: Thank you.
spk07: And ladies and gentlemen, at this time, we will conclude our question and answer session. I'd like to turn the conference back over to Jingjing for any additional or closing remarks.
spk10: Thank you once again for joining us today. And if you have any further questions, please contact our IR team directly or TPG Investor Relations. Thank you all. Bye. Thank you.
spk07: At this time, the conference is now concluded, and we thank you for attending today's presentation. You may now disconnect your lines.
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