Zhihu Inc. reported a smaller-than-expected revenue decline in the second quarter of 2026, though its stock fell 3.5% as executives outlined ongoing challenges in monetization. Total revenue reached RMB 690.1 million, down 3.7% from RMB 716.2 million in the same period last year, but up 5.9% sequentially from Q1 2026.
The narrowing decline reflected growth in paid content and intellectual property operations, which rose 4.4% year-over-year to RMB 425.9 million. Marketing services revenue, however, continued to decline, dropping 10.7% to RMB 199 million. Other revenue streams increased 12.7% sequentially. Gross profit totaled RMB 393.4 million, with gross margin contracting to 57% from 62.5% in Q2 2025.
Operating expenses fell 13% year-over-year to RMB 469.4 million, driven by reductions in selling and marketing (down 5.4% to RMB 308.7 million), research and development (down 25.4% to RMB 108.6 million), and general and administrative expenses (down 22.7% to RMB 52 million). The adjusted operating loss narrowed by 32% to RMB 48.7 million, compared with RMB 71.5 million in the prior-year quarter. Investment income declined sharply to RMB 16.4 million from RMB 114.8 million a year earlier.
Zhihu’s GAAP net loss totaled RMB 37.4 million, a reversal from a net profit of RMB 72.5 million in Q2 2025. Management cited higher content costs and competitive pressures in advertising as key headwinds. The company maintained a strong balance sheet with RMB 4.4 billion in cash, term deposits, restricted cash, and short-term investments as of June 30, 2026. Liquidity ratios remained robust, with a current ratio of 3.78 and a debt-to-equity ratio of 0.01.
User engagement metrics showed stability, with average daily time spent on the platform holding steady at 39 minutes year-over-year. The number of monthly subscribing members remained flat at 13.11 million. High-quality content creation grew more than 16% year-over-year, while performance-based product consumption surged 31% sequentially, with gaming industry consumption up 22%.
AI initiatives gained traction, with the AI Works platform accumulating over 2,600 AI projects and the open data platform API attracting more than 17,600 professional developers, including a 20% increase in new developers outside Zhihu’s creator ecosystem. The company highlighted YanYan Stories as a top provider in the comic drama market, ranking among the top three on Hongguo and a leading native AI comic drama provider on Douyin in the first half of 2026.
Zhihu repurchased 6.5 million Class A ordinary shares for US$7.2 million during the quarter, bringing total repurchases to 41.3 million shares for US$77.9 million year-to-date. The stock fell 3.48% in premarket trading to $3.05, extending declines from its 52-week high of $5.55.
