BEIJING,Aug. 23,2024 -- Zhihu Inc. ("Zhihu" or the "Company") (NYSE: ZH; HKEX: 2390),a leading online content community in China,today announced its unaudited financial results for the quarter ended June 30,2024.

Second Quarter 2024 Highlights

Total revenueswere RMB933.8 million (US$128.5 million) in the second quarter of 2024,compared with RMB1,044.2 million in the same period of 2023.

Gross margin expanded to 59.6% in the second quarter of 2024 from 53.8% in the same period of 2023.

Net losswas RMB80.6 million (US$11.1 million) in the second quarter of 2024,narrowed by 71.1% from the same period of 2023.

Adjusted net loss (non-GAAP)[1] was RMB44.6 million (US$6.1 million) in the second quarter of 2024,narrowed by 79.9% from the same period of 2023.

Average monthly active users (MAUs)[2] were 80.6 million in the second quarter of 2024.

Average monthly subscribing members[3]were 14.7 million in the second quarter of 2024.

"Our strategic decisions and effective execution yielded impressive financial results in the second quarter of 2024," said Mr. Yuan Zhou,chairman and chief executive officer of Zhihu. "At the same time,we made substantial strides in enhancing our core user experience,evidenced by the continued growth in user retention and DAU time spent. Building on our community's enhanced trustworthiness,we launched Zhihu Zhida (知乎直答) in late June,marking a major advancement in our AI search initiatives. Further improvements in user retention and the positive user feedback Zhihu Zhida has received demonstrate our unique advantages and ability to capture the tremendous opportunities in this field."

Mr. Han Wang,chief financial officer of Zhihu,added,"The second quarter marked our lowest quarterly loss since our U.S. IPO. During the quarter,we maintained disciplined spending while achieving a high ROI across all business lines. Additionally,we are committed to enhancing shareholder returns through various means. Moving forward,we will continue to emphasize strong strategic execution as we pursue long-term sustainable profitability."

Second Quarter 2024 Financial Results

Total revenues were RMB933.8 million (US$128.5 million) in the second quarter of 2024,044.2 million in the same period of 2023.

Marketing services revenue was RMB344.0 million (US$47.3 million),compared with RMB412.7 million in the same period of 2023. The decrease was primarily due to our proactive and ongoing refinement of service offerings to strategically focus on margin improvement.

Paid membership revenue was RMB432.7 million (US$59.5 million),compared with RMB449.1 million in the same period of 2023. The slight decrease was primarily attributable to a marginal decline in our average revenue per subscribing member.

Vocational training revenuewas RMB133.6 million (US$18.4 million),compared with RMB144.5 million in the same period of 2023. The decrease was primarily driven by lower revenue contributions from our acquired businesses.

Other revenues were RMB23.5 million (US$3.2 million),compared with RMB37.9 million in the same period of 2023.

Cost of revenues decreased by 21.8% to RMB377.3 million (US$51.9 million) from RMB482.1 million in the same period of 2023. The decrease was primarily due to reduced content and operating costs associated with the decline in our revenues.

Gross profit was RMB556.5 million (US$76.6 million),compared with RMB562.1 million in the same period of 2023. Gross margin expanded to 59.6% from 53.8% in the same period of 2023,primarily attributable to our monetization enhancements and improvements in our operating efficiency.

Total operating expenses decreased by 16.7% to RMB740.4 million (US$101.9 million) from RMB889.3 million in the same period of 2023.

Selling and marketing expenses decreased by 22.9% to RMB417.0 million (US$57.4 million) from RMB540.6 million in the same period of 2023. The decrease was primarily due to more disciplined promotional spending and a decrease in personnel-related expenses.

Research and development expensesdecreased by 11.4% to RMB209.3 million (US$28.8 million) from RMB236.2 million in the same period of 2023. The decrease was primarily attributable to more efficient spending on technology innovation.

General and administrative expenses were RMB114.1 million (US$15.7 million),compared with RMB112.5 million in the same period of 2023.

Loss from operations narrowed by 43.8% to RMB183.9 million (US$25.3 million) from RMB327.2 million in the same period of 2023.

Adjusted loss from operations (non-GAAP)[1] narrowed by 45.4% to RMB147.1 million (US$20.2 million) from RMB269.4 million in the same period of 2023.

Net loss narrowed by 71.1% to RMB80.6 million (US$11.1 million) from RMB279.1 million in the same period of 2023.

Adjusted net loss (non-GAAP)[1] narrowed by 79.9% to RMB44.6 million (US$6.1 million) from RMB222.3 million in the same period of 2023.

Diluted net loss per American depositary share ("ADS")[4] was RMB0.89 (US$0.12),compared with RMB2.76 in the same period of 2023.

Cash and cash equivalents,term deposits,restricted cash and short-term investments

As of June 30,2024,the Company had cash and cash equivalents,restricted cash and short-term investments of RMB5,061.5 million (US$696.5 million),compared with RMB5,462.9 million as of December 31,2023.

Share Repurchase Programs

As of June 30,the Company had repurchased 31.1 million Class A ordinary shares (including Class A ordinary shares underlying the ADSs) for a total price of US$66.5 million on both the New York Stock Exchange and The Stock Exchange of Hong Kong Limited under the Company's existing US$100 million share repurchase program (the "2022 Repurchase Program"),established in May 2022 and extended until June 26,2025. In addition,a concurrent share repurchase program (the "2024 Repurchase Program") was established in June 2024,effective until June 26,2025. The maximum number of shares (including shares underlying the ADSs) that can be repurchased under the 2024 Repurchase Program,together with the remaining number of shares (including shares underlying the ADSs) that can be repurchased under the 2022 Repurchase Program,will not exceed 10% of the total number of issued shares of the Company (excluding any treasury shares) as of June 26,the date of the resolution granting the general unconditional mandate to purchase the Company's own shares approved by shareholders.

[1] Adjusted loss from operations and adjusted net loss are non-GAAP financial measures. For more information on the non-GAAP financial measures,please see the section "Use of Non-GAAP Financial Measures" and the table captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release.

[2] MAUs refers to the sum of the number of mobile devices that launch our mobile apps at least once in a given month,or mobile MAUs,and the number of logged-in users who visit our PC or mobile website at least once in a given month,after eliminating duplicates.

[3] Monthly subscribing members refers to the number of our Yan Selection members in a specified month. Average monthly subscribing members for a period is calculated by dividing the sum of monthly subscribing members for each month during the specified period by the number of months in such period.

[4] On May 10,we effected a change in the ratio of our ADSs to Class A ordinary shares from two ADSs representing one Class A ordinary share to a new ratio of one ADS representing three Class A ordinary shares. Basic and diluted net loss per ADS have been retrospectively adjusted to reflect this ADS ratio change for all periods presented.

Conference Call

The Company's management will host an earnings conference call at 8:00 p.m. U.S. Eastern Time on August 22,2024 (8:00 a.m. Beijing/Hong Kong time on August 23,2024).

All participants wishing to join the conference call must pre-register online using the link provided below. Once the pre-registration has been completed,each participant will receive a set of dial-in numbers,a passcode,and a unique registrant ID which can be used to join the conference call. Participants may pre-register at any time,including up to and after the call start time.

Participant Online Registration: https://dpregister.com/sreg/10191716/fd413a8bd8

Additionally,a live and archived webcast of the conference call will be available on the Company's investor relations website athttps://ir.zhihu.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call,until August 29,by dialing the following telephone numbers:

United States (toll free):

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

4215305

About Zhihu Inc.

Zhihu Inc. (NYSE: ZH; HKEX: 2390) is a leading online content community in China where people come to find solutions,make decisions,seek inspiration,and have fun. Since the initial launch in 2010,we have grown from a Q&A community into one of the top comprehensive online content communities and the largest Q&A-inspired online content community in China. For more information,please visithttps://ir.zhihu.com.

Use of Non-GAAP Financial Measures

In evaluating the business,the Company considers and uses non-GAAP financial measures,such as adjusted loss from operations and adjusted net loss,to supplement the review and assessment of its operating performance. The Company defines non-GAAP financial measures by excluding the impact of share-based compensation expenses,amortization of intangible assets resulting from business acquisitions and the tax effects of the non-GAAP adjustments,which are non-cash expenses. The Company believes that the non-GAAP financial measures facilitate comparisons of operating performance from period to period and company to company by adjusting for potential impacts of items,which the Company's management considers to be indicative of its operating performance. The Company believes that the non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's consolidated results of operations in the same manner as they help the Company's management.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The presentation of the non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. The use of the non-GAAP financial measures has limitations as an analytical tool,and investors should not consider it in isolation from,or as a substitute for analysis of,our results of operations or financial condition as reported under U.S. GAAP. For more information on the non-GAAP financial measures,please see the tables captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain Renminbi amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all translations from Renminbi to U.S. dollars were made at a rate of RMB7.2672 to US$1.00,the exchange rate in effect as of June 28,2024 as set forth in the H.10 statistical release of the Federal Reserve Board.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties,and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases,forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release,and the Company does not undertake any duty to update such information,except as required under applicable law.

For investor and media inquiries,please contact:

In China:

Zhihu Inc.

Email: ir@zhihu.com

Piacente Financial Communications

Helen Wu

Tel: +86-10-6508-0677

Email: zhihu@tpg-ir.com

In the United States:

Piacente Financial Communications

Brandi Piacente

Phone: +1-212-481-2050

Email: zhihu@tpg-ir.com

ZHIHUINC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,except share,ADS,per share data and per ADS data)

For the Three Months Ended

For the Six Months Ended

June 30,

2023

March 31,

2024

June 30,

2023

June 30,

2024

RMB

RMB

RMB

US$

RMB

RMB

US$

Revenues:

Marketing services

412,740

330,542

343,979

47,333

804,877

674,521

92,817

Paid membership

449,098

449,724

432,652

59,535

903,867

882,376

121,419

Vocational training

144,520

145,436

133,633

18,389

251,518

279,069

38,401

Others

37,851

35,161

23,546

3,240

78,167

58,707

8,078

Total revenues

1,044,209

960,863

933,810

128,497

2,038,429

1,894,673

260,715

Cost of revenues

(482,131)

(417,384)

(377,266)

(51,914)

(964,132)

(794,650)

(109,347)

Gross profit

562,078

543,479

556,544

76,583

1,074,297

1,100,023

151,368

Selling and marketing expenses

(540,593)

(477,954)

(416,985)

(57,379)

(986,158)

(894,939)

(123,148)

Research and development expenses

(236,245)

(197,356)

(209,323)

(28,804)

(419,205)

(406,679)

(55,961)

General and administrative expenses

(112,460)

(92,917)

(114,107)

(15,702)

(212,898)

(207,024)

(28,487)

Total operating expenses

(889,298)

(768,227)

(740,415)

(101,885)

(1,618,261)

(1,508,642)

(207,596)

Loss from operations

(327,220)

(224,748)

(183,871)

(25,302)

(543,964)

(408,619)

(56,228)

Other income/(expenses):

Investment income

11,793

16,902

21,811

3,001

17,799

38,713

5,327

Interest income

39,987

30,763

26,754

3,681

79,480

57,517

7,915

Fair value change of financial instruments

(9,016)

9,408

31,412

4,322

(12,598)

40,820

5,617

Exchange gains

7,076

120

289

40

1,427

409

56

Others,net

644

3,043

15,947

2,194

6,977

18,990

2,613

Loss before income tax

(276,736)

(164,512)

(87,658)

(12,064)

(450,879)

(252,170)

(34,700)

Income tax (expenses)/benefits

(2,330)

(1,284)

7,063

972

(7,159)

5,779

795

Net loss

(279,066)

(165,796)

(80,595)

(11,092)

(458,038)

(246,391)

(33,905)

Net (income)/loss attributable to

noncontrolling interests

(775)

950

(2,144)

(295)

(3,158)

(1,194)

(164)

Net loss attributable to Zhihu Inc.'s

shareholders

(279,841)

(164,846)

(82,739)

(11,387)

(461,196)

(247,585)

(34,069)

Net loss per share

Basic

(0.92)

(0.59)

(0.30)

(0.04)

(1.52)

(0.88)

(0.12)

Diluted

(0.92)

(0.59)

(0.30)

(0.04)

(1.52)

(0.88)

(0.12)

Net loss per ADS (One ADS represents

three Class A ordinary shares)

Basic

(2.76)

(1.76)

(0.89)

(0.12)

(4.55)

(2.65)

(0.36)

Diluted

(2.76)

(1.76)

(0.89)

(0.12)

(4.55)

(2.65)

(0.36)

Weighted average number of ordinary

shares outstanding

Basic

304,068,362

281,549,707

279,241,647

279,647

304,052,681

280,403,026

280,026

Diluted

304,026

ZHIHUINC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(All amounts in thousands,

2024

RMB

RMB

RMB

US$

RMB

RMB

US$

Share-based compensation expenses included in:

Cost of revenues

2,146

2,497

750

103

6,247

447

Selling and marketing expenses

6,384

3,272

(6,063)

(834)

15,142

(2,791)

(384)

Research and development expenses

14,941

3,680

4,439

611

36,146

8,119

1,117

General and administrative expenses

28,976

16,363

33,515

4,612

50,531

49,878

6,863

ZHIHUINC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands)

As of December 31,

2023

As of June 30,

2024

RMB

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

2,106,639

3,159,325

434,738

Term deposits

1,586,469

1,204,062

165,684

Short-term investments

1,769,822

646,321

88,937

Restricted cash

-

51,774

7,124

Trade receivables

664,615

532,929

73,333

Amounts due from related parties

18,319

41,236

5,674

Prepayments and other current assets

232,016

201,338

27,705

Total current assets

6,377,880

5,836,985

803,195

Non-current assets:

Property and equipment,net

10,849

9,670

1,331

Intangible assets,net

122,645

61,698

8,490

Goodwill

191,077

126,344

17,386

Long-term investments,net

44,621

51,176

7,042

Right-of-use assets

40,211

21,959

3,022

Other non-current assets

7,989

372

51

Total non-current assets

417,392

271,219

37,322

Total assets

6,795,272

6,108,204

840,517

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued liabilities

1,531

913,225

125,664

Salary and welfare payables

342,125

219,681

30,229

Taxes payables

21,394

16,967

2,335

Contract liabilities

303,574

283,465

39,006

Amounts due to related parties

26,032

10,685

1,470

Short-term lease liabilities

42,089

24,834

3,417

Short-term borrowings

-

51,124

Other current liabilities

171,743

159,014

21,881

Total current liabilities

1,945,488

1,679,645

231,126

Non-current liabilities

Long-term lease liabilities

3,642

2,071

285

Deferred tax liabilities

22,574

8,030

1,105

Other non-current liabilities

121,958

18,253

2,512

Total non-current liabilities

148,174

28,354

3,902

Total liabilities

2,093,662

1,707,999

235,028

Total Zhihu Inc.'s shareholders' equity

4,599,810

4,312,294

593,392

Noncontrolling interests

101,800

87,911

12,097

Total shareholders' equity

4,701,610

4,400,205

605,489

Total liabilities and shareholders' equity

6,517

ZHIHUINC.

UNAUDITEDRECONCILIATIONSOF GAAP AND NON-GAAP RESULTS

(All amounts in thousands)

For the Three Months Ended

For the Six Months Ended

June 30,

2024

RMB

RMB

RMB

US$

RMB

RMB

US$

Loss from operations

(327,228)

Add:

Share-based compensation expenses

52,447

25,812

32,641

4,492

108,365

58,453

8,043

Amortization of intangible assets resulting from

business acquisitions

5,365

5,365

4,115

566

8,855

9,480

1,304

Adjusted loss from operations

(269,408)

(193,571)

(147,115)

(20,244)

(426,744)

(340,686)

(46,881)

Net loss

(279,905)

Add:

Share-based compensation expenses

52,043

Amortization of intangible assets resulting

from business acquisitions

5,304

Tax effects on non-GAAP adjustments

(1,069)

(1,069)

(756)

(104)

(1,669)

(1,825)

(251)

Adjusted net loss

(222,323)

(135,688)

(44,595)

(6,138)

(342,487)

(180,283)

(24,809)