Zhihu Inc. Annual Report: A Simple Guide

I’ve put together this guide to help you understand how Zhihu performed this year. Instead of digging through hundreds of pages of financial filings, I’ve broken down the key takeaways to help you decide if this company fits your goals.

1. What does this company do?

Think of Zhihu as the "Quora of China." It is a massive online platform where people ask questions, share knowledge, and discuss various topics. By the end of 2024, the platform averaged 90.6 million monthly active users. They make money in four main ways: Advertising (RMB 1.03 billion), Paid Memberships (RMB 1.76 billion), Vocational Training (RMB 660 million), and Other Services (RMB 620 million).

2. The "Big Picture" Structure

When you buy Zhihu stock, you are not buying a direct stake in their Chinese operations. Because of Chinese regulations, Zhihu uses a "Variable Interest Entity" (VIE) structure. You are buying shares in a Cayman Islands holding company that holds contracts with the actual Chinese businesses.

This matters for three reasons:

• No direct ownership: You have no direct claim on the assets of the Chinese companies that generate the revenue.
• Legal uncertainty: These contracts have not been fully tested in Chinese courts. If the government bans these structures, your investment could be at risk.
• Growing reliance: Revenue from these "contracted" entities is rising, hitting 68.7% of total revenue in 2025, up from 58.3% in 2023.

3. Financial Health & Performance

Zhihu is moving from "growth-at-all-costs" toward operational efficiency. Total revenue for 2024 reached RMB 4.07 billion. While the company is not yet profitable, they significantly narrowed their losses. The net loss for 2024 was RMB 325 million, a major improvement from the RMB 1.58 billion loss in 2023. With RMB 3.5 billion in cash and short-term investments, they have enough money to fund their AI and content projects for now.

4. Major Wins and Challenges

• Wins: Strong partnerships with Tencent and Kuaishou help drive traffic and keep Zhihu integrated into the Chinese internet ecosystem. Also, their "Salt" membership program now has over 15 million subscribers, proving that people are willing to pay for their content.
• Challenges:
  • Regulatory Risk: As a Chinese internet company, they face strict government oversight regarding content and data privacy.
  • Share Dilution: The company issued RMB 280 million in stock-based pay to keep top talent. This creates more shares, which reduces your ownership percentage. The company must grow its profit faster than it issues new shares to keep your investment valuable.
  • Competition: Platforms like ByteDance and Kuaishou are moving into Zhihu’s territory with short-form educational videos.

5. Future Outlook

Management is focused on two goals: turning more users into paying members and using AI to improve advertising. They aim to reach profitability by growing their vocational training segment and spending less on marketing.

6. Is it a good investment?

Zhihu is a high-risk, high-reward play. You are betting on their ability to make money from a loyal user base in a crowded market. Given the complex ownership structure and the path to profitability, this is a "watch and wait" stock for most. If you invest, ensure you are comfortable with the risks of the Chinese regulatory environment.

Pro-tip: Before making a move, check their next quarterly update to see if they continue to narrow their losses as promised—that will be the clearest sign that their shift toward efficiency is actually working.