Zhihu Inc.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the CHUHU Inc. Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Today's conference call is being recorded, and at this time, I would like to turn the conference over to Ms. Yolanda Lau, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Operator. Hello, everyone. Welcome to JUHU's third quarter 2024 financial results conference call. Senior management joining me today are Mr. Zhou Yuan, our founder, chairman, and chief executive officer, and Mr. Wang Han, our chief financial officer. Before we get started, 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 Security Legitimacy 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. SEC and 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 matters we will discuss today will include both GAAP and non-GAAP financial measures for consideration purpose only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please see the earnings release issue earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.jufu.com. I will now turn the call over to Mr. Wang Han, CFO of Jufu. Han, please go ahead.

Thank you, Linda. Hello, everyone. Thank you for joining Jufu's third quarter 24 earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yan, founder, chairman, and CEO of Jufu. We delivered solid third quarter results across key financial metrics thanks to our continued focus on efficiency enhancement and cost reduction. The world's property margin improved by over 10 percentage points year over year, reaching 63.9%, the highest level since our listing. Total costs and operating expenses decreased by more than 35.6%, 3.5% respectively, leading to a net loss of 9 million RMBs. 96.8% year-over-year. Our efforts to optimize the community ecosystem are also yielding positive results. Crypt user engagement in the third quarter propelled a sequential increase in our user base. What's more, we further enhanced content creators' experience across our community, fostering a renewed sense of confidence and driving more active contributions. This, in turn, has cultivated a professional, insightful community atmosphere. imbued with a balanced rational optimism. Furthermore, in line with our commitment to exploring AI applications, we'll launch the professional search feature for Zhihu Zhida at the end of October. This initiative marks a significant step in our differentiated approach to enhancing product capabilities and elevating the user experience, leveraging our massive pool of high-quality data and content. I'll delve deeper into Zhihu Zhida later in the call. Now let me focus on users and content. This quarter marked the third consecutive period of our refined user strategy. We achieved the same improvements across key user metrics, alongside a sequential recovery in user growth. NIU for Q3 bonded quarter to quarter to 81.1 million. We saw our continued reduction in community-related promotional spending. Overall user engagement across Google community also increased sequentially. with core user retention showing significant year-over-year growth. Additionally, daily active user time span rose nearly 20% year-over-year and maintained its upward trend quarter-to-quarter. As we continued to elevate the experience for content creators and core users, we saw a notable rise in both the scale and engagement of high-tier content creators, with the number of income-generating content creators increasing by over 25% year-over-year. Since the beginning of this year, we have given our focus on cultivating new, high-tiered content creators across diverse fields. By offering advanced creative tools and signature initiatives unique to Juhu, we fostered their growth and enriched the Juhu library with the steady influx of diverse, authentic, and professional content. Throughout the third quarter, Juhu delivered highly differentiated, rewarding, high-quality content to Internet users nationwide through in-depth professional discussions on major societal events. For example, the 2004 Juhu Science Season launched in tandem with Nobel Prize announcements sparked a wealth of contributions across the Juhu community, including predictions, insights, and educational content. Among its content, discussions on the 2004 Nobel Prize in Physics alone generated over 1.5 million interactions within the Juhu community. This dynamic engagement earned Juhu the reputation of being the second home of the Nobel Prize. As of the end of the third quarter, Juhu had amassed a cumulative content volume of 854.5 million pieces, representing an annual growth of 14.9%. This includes 641.4 million Q&A entries, an increase of 11.8% compared to the same period last year. The Juho community now boasts a total of 77 million content creators, marking an 11.6% year-over-year rise. As the experience of both content creators and users have continued to improve, the Juho community, distinguished by professional discourse and rational optimism, has grown stronger. This progress is underscored by a steady decline in active feedback from users and a notable increase in positive interactions. Average daily engagement per BAU has consistently rise quarter-over-quarter, with the monthly average of upvote surging by over 25% year-over-year in the quarter. Next, I would like to share some details about the progress we have made with Zhuhu Zhudai. We have capitalized on Zhuhu Zhudai's extensive content library and robust source tracking capabilities to achieve rapid traffic growth and earn an excellent reputation across the industry. According to newly released data from Simulweb, Zhuhu Zhida's traffic reached 4.7 million in September, a remarkable increase over 180% compared to August. In Befinance AI product rankings for September, Zhuhu Zhida ranked third among Chinese products in terms of sequential page view growth. Additionally, it claimed its second position on the domestic web growth leaderboard. during a spot in the top three for two consecutive months. In October, we introduced Professional Search for Zhugu Zhidan, a new feature meticulously crafted to meet the evolving needs of a wide range of users engaged in academic research and professional work. Integrated over 50 million Chinese and English academic articles from specialized content sources such as Wikipedia and Zhuhu were enhancing Zhuhu's accessibility to fulfill users' searching queries with high-quality content. Professional Search also supports file uploads and comprehensive document parsing, providing tools like single-article in-depth reading and source-specific Q&A to address users' academic research and professional needs. Moving on to our business performance by segment. Our paid membership business continued to demonstrate steady growth momentum in third quarter. The number of prescribing members rose by 11.5% every year to 16.5 million, while the segment delivered revenue of RMB 469.4 million, increasing its revenue contribution to 54%. In late August, content creators on Zhu Hu Yan's story produced a series of derivative works inspired by Journey to the West, a classic Chinese tale that also forms the core of season's most popular domestically produced 3A game. These works presented a more interpretation of the classic saga. Also, building on game's momentum, we launched a Journey to the West special series featuring multiple stories that compare Asian and modern perspectives to highlight a classic story's timeless lure, a release that has resonated strongly with our users. Turning to marketing services, in the third quarter, rounding from our marketing services was R&B $266.6 million, a 33% decline over the year. Although brand advertising and CCS decreased compared to last year, we encourage our key clients growing recognition of Juhu's brand and the high value they attribute to our users. This progress validates our commitment to optimizing our commercial ecosystem and enhancing the Juhu's community's trustworthiness as a strong and viable growth path for our marketing services. According to the iResearch report released in late October, Chihuahua has established itself as the most trusted content community for consumer decision-making. Furthermore, the survey's findings indicated that nearly 50% of users reported making purchases after reading product recommendations on Chihuahua. In this year's W11 event, we also established the Chihuahua reviewers' jewelry in the Recommended Goodies 100 campaign. providing consumers with professional, authentic, and timely answers to their purchasing questions. This quarter, brand advertising delivered a solid year-over-year performance in IT and 3C and e-sports. Top clients in the automotive and fast-moving consumer goods sectors also ramped up their advertising spending on Juhu. International FMCG brands in particular noted that Juhu's high-quality user base aligns well with their target demographics. Consequently, despite tighter budgets across the broader advertising network, it's up to increase our allocations on Drupal. In addition, our ongoing improvements in data analysis and operational efficiency have generated positive returns on investment for this premium plan. For our CCS business, after a rigorous crackdown on low-quality content, we have gradually integrated high-tier content creators from the Drupal community into our CCS program. driving a steady increase in premium content contributions. This quarter, customer satisfaction and repurchase rates have significantly improved compared to the beginning of the year, while content creators have benefited from increased earnings. Next, our vocational training business. We continue to streamline this segment's structure and strategy this quarter. We transitioned from a wide array of niche offerings to a focused lunch and shop high-performing categories where we hold a competitive edge. Overall revenue declined by 27.4% over year, mainly due to our streamlined acquired business. Our self-operated course has demonstrated strong year-over-year growth, along with notable improvements in profitability sequentially. Our self-operated business, closely connected to our community, continues to perform strongly with increasing predictability and profitability. Programs in BI categories, such as media production and film post-production, remain extremely popular among learners, reflecting long lifecycle potential. What's more, our business structure optimization is a quarterly enhanced overall ROI, allowing us to strategically allocate resources toward high-efficiency program categories, thereby supporting greater operational stability. Moving forward, we'll focus on narrowing this business segment's losses and aim to achieve break-even as soon as possible. In summary, the third quarter highlighted our unwavering commitment to strategic refinement and execution, delivering financial results that once again exceeded our expectations. Commercial and operational efficiencies have been critical metrics during our operations, empowering us to optimize our user-accompanied resources. Looking ahead, we will remain dedicated to enhancing the user experience and strengthening the trustworthiness of our community, while strategically refining our operational model to unlock the full potential of Zhihu's brand and high-value user base. With robust fundamentals and a steady focus on achieving profitable growth, we are confident of creating value and delivering meaningful returns for our shareholders. This concludes Mr. Julian's remarks. Now I will review the details of our third quarter financials. For a complete overview of our third quarter 2004 results, please refer to our press release issued earlier today. Our commitment to enhancing operational efficiency through discipline and cost control drove a significant margin expansion in this quarter. These efforts also led to narrowing losses, propelling us even closer to profitability. which achieved our lowest quality loss since our US FTO in this quarter, demonstrating our momentum in building a more resilient business and sustainable trading value. Our market services revenue for quarter was RMB $256.6 million, compared with RMB $308.8 million in the same period of 2003. This decline is largely a result of our strategic ongoing optimization of service offerings, with a focus on margin improvements. Pay membership revenue for the third quarter was RMB 459.4 million, slightly decreased from 466.8 million in the same period of last year. Notably, our average number of monthly subscribing members sustained its growth trajectory both year over year and sequentially. This progress was propelled by the growing quality of Juhu's premium offerings, which are consistently attracting new pay members from both within and beyond the Juhu community. The initial training revenue per quarter was RMB $105.1 million, compared with RMB $144.8 million in the same period of 2003. This decrease was primarily due to our strategic refinement of acquired business, with a focus on prioritizing the faster-growing, self-operated program. The gross profit per quarter was RMB $540.1 million. compared with RMB for 548.5 million in the same period of 2003. Both said power enhanced operating efficiency, a gross margin also further improved year-over-year, reaching 63.9% of record high. For total operating expenses per quarter, RMB 624.5 million, a 30.5% decrease from RMB 898.6 million in the same period last year. Italian marketing expenses decreased by 27.4% to RMB 388 million, down from RMB 534.3 million in the same period of 2003. Trade action was primarily driven by more disciplined promotional spending and a decrease in personnel-related expenses. R&D expenses per quarter decreased by 28.2% to RMB 179.3 million, down from RMB 249.7 million in the same period of 2003. This reduction was primarily attributable to more efficient spending on technological innovation. Q&A expenses decreased by 50.1% to RMB 57.2 million from RMB 114.6 million in the same period of 2003. Decrease was primarily attributable to lower share-based composition expenses Consequently, our GAAP net loss was recorded narrow significantly, decreasing by 96.8% year-over-year. Our adjusted net loss on non-GAAP basis was RMB 13.1 million, compared with RMB 225.3 million in the same period of 2003. Our adjusted net loss margin decreased more than 20% this year-over-year to 1.5% in this quarter. As of September 30th, In 2004, the company has passed cash equivalents, term deposit, restricted cash, and short-term investment of RMB 5 billion, compared with RMB 5.5 billion as of the December 2020. From our Hong Kong IPO until September 13, 2004, we had repurchased 31.1 million Class A ordinary shares at an aggregate price of US $56.5 million on the open market and canceled such shares. We also repurchased a total of $10.1 million plus eight ordinary shares at an aggregate price of $16.5 million to be equalized upon investing of restricted shares in the future. In addition, we had repurchased another $33 million plus eight ordinary shares at an aggregate price of $38.5 million via tender offer, which were completed on November 8, 2004. In total, the company has purchased 74.2 million plus day auditor shares for a total price of US $121.5 million. As we approach the end of 2024, we'll continue to elevate content quality and enhance the experiences of both users and creators across the Google community by harnessing the power of innovation and technology. We remain committed to optimizing resource allocation advancing towards profitability, and unlocking the potential of true risk brand and high-value user base. By building a more dynamic platform, we further foster our user engagement and support common creator success, firming our position as a leader in the knowledge sharing and community value. This concludes my prepared remarks on our financial performance for this quarter. Let us turn the call over to the operator for the Q&A session.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. 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. In the interest of time, please ask one question for each time. If you have any follow-up questions, you may re-enter the question queue. Thank you and please hold until we update. get an order together. And the first question will come from Zhuqing Zhang with CICC. Please go ahead.

Thank you, Mr. Guan. Congratulations to the company for its three-year progress. I would like to ask Mr. Guan, what is our confidence in the four-year profit and loss balance? Thank management for taking my question. Congratulations on the further reducing loss in the third quarter. Commendment share more power on the commitment about achieving a break even in the first quarter. And what's your outlook for 2025? What will be the main drivers? Thank you.

Yeah. Q3 has been adjusted to 22%. We only have 1.5% this year. In this way, the path should be clearer.

Thank you for your question, Shiting. This is from Han, Zhufu CFO. We have been firmly focused on our Q4 break-even target this year. Achieving a significant reduction in losses in both Q2 and Q3 have further boosted our confidence in reaching this goal. After reducing adjusted net loss by nearly 80% year-to-year in Q2, We further decrease the adjusted net loss by 70% quarter over quarter and 94% year over year for Q3. Our adjusted net margin in Q3 of last year was 22%. Well, this year it is only 1.5%. So the path to the breakeven in Q4 now is quite clear.

The two strategic priorities for 2025 are quite clear. First of all, from a financial perspective,

Our primary objective is to sustainably reduce annual losses and potentially approach probability on a full year basis.

On the operational front,

Our focus is to enhance core users' experience and engagement level and strengthen Zhihu's content reputation and trustworthiness across all platforms. Creating an environment that encourages our most professional users to actively participate and contribute remains the foundation of Zhihu's identity.

For our other business models, we will continue to innovate

centered around Zhihu community's professionalism and trustworthiness. This approach will comprehensively leverage Zhihu's unique advantages.

So to be more specific,

In terms of our marketing services, we will continue to reduce low-quality and untrusted commercial content. We aim to innovate and make improvements through business model refinement and data infrastructure updates, building Zhihu's commercialization on a solid and trustworthy foundation. We are working to achieve breakeven within the vocational training business while strengthening its integration and interaction with Juhu community. This will establish a faster feedback mechanism for user demands and accelerate service capability development. For our pay membership business, we will also leverage community content and user feedback to create a better product mechanism for this business and to further enhance YAN selection members' renewal rate and, consequently, increasing the lifetime value LTV of our pay members.

So in summary, our fundamental driver here is still a healthy, prosperous community, along with a sustainable business ecosystem that can fully integrate and interact with the community itself.

Thank you for your question.

The next question will come from Daisy Chin with Haitong International. Please go ahead.

Okay, thank you for your question. I would like to ask the community and users. In the third quarter, we saw that the trend of MAU on the platform has improved, and the interest rate has dropped. However, although it is the same as the fall, we think this trend is already going well. Thank you for taking my question. My question is about the users and the community. This quarter, we noted that the Chihuahua MAU has improved and stopped the sequential decline. At the beginning, you made some substantial adjustments to the community and the users. Can management provide more details on the adjustments you have done and what other key strategies you think that are successful and what changes were made to the community and the users' behavior? And one more question is about when do you expect the Zhuhu's MAU to recover to our positive year-end goals? Thank you.

Thank you, Daisy. I'm Zhou Yuan.

Thank you, Daisy. This is from Zhou Yuan, Zhuhu's CEO. Let me answer your second question.

There may be two factors in the change of user scale. So I will just start it with the answer to your second question. So our MAU members may be influenced by two factors here.

First of all, the reduction in community-related promotion spending, which may lead to the loss of the low-frequency users. And the second, our focus on enhancing our core users' experience. Consequently, the high-frequency users have been growing. So the combination of these two factors may not guarantee the overall numeral MAU growth in next year. However, what is certain is that we will continue to increase the investment in our core users' experience.

我想跟大家講的就是我們Q3的數據變化呢, Work like a farmer. Our current work corresponds to changes in the next two years.

What I want to address here is that the improvements in Q3 actually stem more from the work we've done in the first half of the year. I believe we have still a long way to go. Community work is pretty much like working as a farmer, or as I just mentioned, work like a farmer. The work we're doing now may contribute to the improvements in two years later.

For our work since this year, we are still very focused. First of all, we focus on the optimization of the algorithm. The purpose is to encourage more professional, in-depth and real content to expand their influence in the community. We also increase the number of people who pay attention to, share and collect the algorithm.

As an improvement we've made so far this year, so firstly, we've been focusing on the algorithm optimization to encourage more professional, in-depth, and authentic content and increase the visibility of them in our community. And we significantly increased the weighting of follows, shares, and forwards as high engagement often align with our criteria for high-quality content.

As a result of these adjustments,

user retention has also risen. This shows that our users are eager to consume high-quality content across various professional views.

In terms of creators, we are constantly strengthening the experience of creators in many aspects, including the tools, product mechanisms, and income mechanisms. For example, in this community, we are For our content creators, we have been continuously improving the creation experience.

and income mechanism for them by enhancing the experience in a lot of ways and by all means. For example, for a community perspective, we strictly control AIGC content but have been integrating user-friendly AI tools into our creation tools to improve the creation efficiency.

We also recently reinstated the Zhihu column feature, which was popular among creators and core users.

with upgraded product mechanism, and in the rest of the year, we will keep this upgrading. In terms of creators' revenue mechanism, for three consecutive quarters this year, the number of creators earning income has grown by over 25% year-over-year, with better diversified revenue streams. At the same time, Drupal continues to prioritize income opportunity for those mid-tier and long-tail creators.

professional, deep, and real content has gained better traffic from all angles. Our high-level creators in the third quarter, their average and average PV and this kind of interaction volume has been increased by double.

Sum up, the professional, authentic, and in-depth content has gained more visibility across various dimensions in the community. And the high-level creators saw double-digit year-over-year growth in both average views per post and positive interaction per user in Q3.

So the latest data reviews that the average exposure share of

relatively low-quality content on the recommendation page have decreased by over 40% compared to the beginning of the year, while NAXA feedback from users has dropped by more than 30%. At the same time, positive interactive behaviors have grown steadily. 我们接下来会有节奏系统性地对社区生态进行持续的建设, Going ahead, we will take a systematic approach and step-by-step to enhance our community ecosystem. I believe this is a long-term project. Just as I mentioned earlier, work like a farmer. Thank you again for your questions.

The next question will come from Lincoln Kong with Goldman Sachs. Please go ahead.

Thank you, Mr. Guan. That's my question. My question is about our product itself and the recent Zihu Zida. We see that Zihu Zida has recently launched its professional search function. Could you please share with us the future Zihu Zida may have a series of rich functions? So thank you, Benjamin, for taking my question. My question is about the Zhihu product upgrade as well as this Zhihu Jada. So recently, we launched this Jada, a professional search function. So could management share with us what are the other features that could be added to this Jada in future? And how might this integrate with the Zhihu community, our monetization efforts, and as well as our AI strategy to our product? Thank you.

Thank you, Lincoln. I am Zhou Yuan. I will answer this question. We have launched the professional search function on Zhida. The core is the upgrade of the scene. Our thinking is the workflow of different scenes. For people, that is, for the needs of different people, it is the most important. Workflow, it is steel. This is also a direction of Zhida's upgrade.

Thank you for your question, Lincoln. And I will just take this question. This is Zhou Yuan, Zhihu CEO. So the launch of Zhihu Zhida's professional search feature is fundamentally about scenario-oriented updates. Our thinking is that the workflow in different scenarios is the most critical factor in addressing the needs of different user groups. Workflow represents a fundamental need, and this is also the direction for GDAS integration.

For example, professional search is tailored to suit academic research and professional work scenarios across finance, law, healthcare, and other fields.

When searching for a specific professional concept or questions, users can directly access full text papers and take advantage of extended features such as single article detailed reading and customized Q&A with specified scope. Additionally, users can upload papers, and this is very personalized Q&A and in-depth analysis.

Ah.

This means that for specialized knowledge in a vertical field, like from getting an overview of a topic, collecting related literature, and decorating and analyzing documents, to answering follow-up questions and offering comprehensive breakdowns and insights. This capability can also be generalized across multiple scenarios. And besides that, Zhihu Zhida can provide a one-stop solution.

We believe that one of the

future directions for upgrading Zhuhu Zhida is integration with Zhuhu community itself. However, at this stage, we're not ready to review too much about the specified new features. Thank you, Lincoln, for your question.

The next question will come from Vicky Wei with Citi. Please go ahead. Mrs. Wei, your line is open. The next question will come from Stella Wang.

Hello, can you hear me? Yes, ma'am, your line is open. Can you hear me? Okay, sorry. Good evening, Ms. Wang. Thank you for accepting my question. 我的问题是关于广告业务和我们的会员业务的。 能不能请管理层给我们分享一下您观察到的四季度预期广告业务的趋势和我们CCS业务调整的进展。 我的第二个问题是关于会员业务。 能不能请管理层给我们分享一下最新的竞争动态,您观察到的用户增长的趋势和up-pull的趋势。 谢谢。 Thanks management for taking my questions. Will management share some color about the fourth quarter outlook for the advertising business and the CCS business adjustment progress? My second question is related to the membership business. Will management share some color about the competition landscape, user growth, and ARPU 10? Thank you.

Thank you.

Thank you for your question, Vicky. I will take this question. The first question is about advertising or the marketing services business. This is Wang Han, Zhifu CFO.

We want to basically protect and strengthen the differentiated advantage of Zhifu, which is a high-end brand. So we are going to continue to reduce the low-quality content and the unreliable content. We will create a new model based on the low-quality products.

To fundamentally safeguard and potentially enhance the differentiated advantage we gain from our high-value audience and brands, we will continue to reduce low-quality, untrustworthy commercial content. To that end, we will remain quite focused on innovating and transforming our product mechanism and the data infrastructure.

We have been thinking a lot about the collaboration mode between the best content creators and the brand and the business side. We are discussing its model upgrade. After the upgrade, we will strongly increase the number of calls. So we will also be very determined to make some adjustments, even if it only needs a short period of time to save a part of the money.

Recently, we have been reviewing and refining our collaboration models with quality content creators and brands to further boister the trustworthiness of Jufu community. So there are a lot of dimensions that we make this thinking and do the upgrading. Our commitment to make this adjustment is resolute. even if it means temporarily sacrificing some low-quality content.

So the know-how here is that Zhihu is increasingly

solidating its commercial strength and expertise, specifically focusing on how brands build premium value with high quality and high value audience.

In the

Second quarter, we shared examples such as Toshiba Refrigerator launched their campaign in Zhuhu with this first stop for a new product. And Vivo's collaboration with Zhuhu, Zhuhu's Lighthouse program to promote their Blue Heart AI accessibility feature.

Some similar cases that we can see in our Q3 also highlighted the premium value of the high-end brands and audience. For example, TCL's new

embedded refrigerator gains strong word-of-mouth and seeding effect through Zhihu's first off for new products campaign, achieving better than expected results.

Another example is Baobo Li's luxury brand. During this year's Q&A, we chose Zhihu as the main platform in the selection process, and we focused on the high-end people of Zhihu.

Similarly, like the Bulgari, the luxury brand, during this year's Qixi Festival, they chose Zhihu as a primary platform for its nationwide campaign, recognizing Zhihu's high concentration of affluent, high-conception users. So these examples perfectly illustrate our trustworthy and our high-quality content value and the ability to deliver commercialization results, driving win-win outcomes for ourselves. And for your second question, I believe it's about our paid membership business. So we're not seeing significant changes in the competitive landscape here. Zhufu Yanyan's story continues to hold its leading position in the short-form paid content sector.

In the third quarter, our paid members have increased by double the number.

In the third quarter, our average monthly subscribing members achieved double-digit growth both year-over-year and quarter-over-quarter, reaching 16.5 million.

And the growth momentum for our paid memberships, I believe, also relies on Yanyan Star's premium content advantage itself.

We are exploring the multiple channels to extend our pay membership space, including within Zhifu community and beyond Zhifu community. And so we are aiming to further foster the brand recognition and the positive word of mouth of Yanyan itself. 关于二普的情况,我们没有直接去在定价上面去做价格策略的干预。

Our strategy does not call for the direct intervention in pay members' ARPU. Rather, the core focus is on enriching

our members' benefits, which we believe will lead to an increase in the lifetime value LTV for our paid members.

And in this quarter,

Through our premium paid membership, Changsha Hui Yuan, supported by its differentiated pricing strategy, we not only expanded the content offerings in audiobooks and redo dramas that we launched before, but also introduced a broader range of membership benefits, including short dramas, which significantly boosted the demand and order growth.

And additionally, Yan Yan's story's ability to transfer its premium IPs into video form content is also being constantly unleashed. 三季度由知乎的会员作者创作的苏梅梅的超市

In the third quarter, two works by Yanyan Story Creators, Remember the Mission and Live Well, Su Mei Mei's Supermarket, and the Story of ER Second, Di Zhen Jian Wen Er, Sheng Ming Shou Hu Jing Xing Shi, were selected for the third Yangtze River online literature's most potential IP list.

The short drama adapted from the Remember the Mission and Look Well

achieved over 10 million views within just seven hours of its release, and inspired over 100 million released topics. So looking ahead, we expect to launch new product formats and more membership benefits based on the synergy between Yanyan Story and the Zhihu community. So please stay tuned. Operator, please, next question.

The next question will come from Stella Wang with TH Capital. Please go ahead.

谢谢。 So I will translate myself. Good evening, management. Thanks for taking my question. My question is about the advancement in optimizing the vocational training business. Could the management share some colors about this progress and what's the financial target in the long term? Thank you.

Thank you for your question. This is from . Currently, the primary goal of our vocational training business remains improving efficiency and accelerating loss reduction with the goal of achieving breakeven for this segment itself by the end of 25.

So, in terms of this goal, our adjustment in Q2 and Q3 is mainly aimed at those courses that are not so good in terms of profitability and the companies that have purchased them. We are doing some shrinkage and focusing more resources on some advantageous courses and the expansion of new courses. We have actually achieved this efficiency level and profit improvement at the same time. In terms of this management, we have significantly reduced the loss of financial losses in Q3.

So to that end, our Q2 and Q3 adjustments pretty much focused on the scaling back on profitable course offerings and like the low margin acquired business. This allowed us to concentrate more resources on expanding our strong performing courses, resulting in improved overall efficiency and profitability. So from a management perspective, both operating losses and the net losses for the vocational training segment declined quarter over quarter for the Q3. So looking ahead, we aim to foster a faster and closer integration between the vocational training business and the community. This will enable us to quickly validate new demands leverage precise customer acquisition advantages and build brand reputation and user recognition. We expect this effort to deliver the substantial empowerment and eventually translate it into sustained positive unit economics. This adjustment process will spend the fourth quarter of this year and continue throughout the next year. Thank you for your question.

The next question will come from C.C. Chang with CLSA. Please go ahead.

Thank you for accepting my question. We are very happy to hear that the company is continuing to reduce losses, and we may have been on track to break even in the fourth quarter. So on this basis, I would like to ask if the company has considered other arrangements on shareholder return after breaking even, and in this way, are we more inclined to encourage or to do a buyback? Thanks, Megan, for taking my question. It's very encouraging to hear that the company is on track to achieve break-even in the first quarter. In light of this, whether the company has any plan to consider a shareholder arrangement post-break-even in order to enhance shareholder return, and whether the company prefers share repatriates or dividends? Thank you.

Thank you for the question. This is Wang Han, Zhihu CFO. As we mentioned earlier,

Since our Hong Kong IPO, we have repurchased over 120 million US dollars worth of shares via virus means, including open market buybacks and tender offers. So the total number of shares that we repurchased exceeds 25% of the total issued and outstanding shares, if calculated using the total number of the outstanding shares.

So, on the one hand, this results in a significant enhancement in shareholders' value. On the other,

This clearly demonstrated the management's strong confidence in the undervaluation of its assets.

在十月初,我们完成了首单香港美国两地主要上市的要求回购,规模达到三亿港元。 此外,我们以后还会继续进行all market的回购,继续表达管理层对盈利回贷业务的信心。

This is also worth mentioning that earlier in the beginning of November, we completed a share buyback via tender offers both in Hong Kong and US market. This is the very first practice in the market. And for a total consideration of over 300 million Hong Kong dollars. And on the open market side, we will continue to do the buyback on open market to further demonstrate the management's confidence. So at the same time, we're also accelerating our path to profitability and a positive cash flow. So with this foundation, we will consider exploring more diverse methods for the shareholder returning. Thank you for your question.

This concludes today's question and answer session. At this time, I would like to turn the conference back over to Ms. Yolanda

any closing remarks please go ahead ma'am thank you and thank you all once again for joining us today if you have any further questions please contact our ir team directly or psn financial communications thank you all the conference is now concluded thank you for attending today's presentation you may now disconnect