The Q&A site is trying to stay ahead of AI by focusing on leading topics where online material is still relatively rare, as well as real-world events that cater to desire for human interaction

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Key Takeaways:

  • Knowledge-sharing site operator Zhihu reported its rate of revenue decline slowed sharply in the first quarter, as it focuses on areas where it believes it has an edge over AI
  • The company's focus on discussion for leading-edge topics and offline events could have big potential, though its online novel and video initiative could face stiff competition

How do you outfox AI? You get to the source of the original information first, before AI can find it. That's one of several new approaches being tried by Zhihu Inc. (NYSE:ZH) (2390.HK), a knowledge-sharing community sometimes called the "Quora of China," as it tries to stay one step ahead of AI large language models (LLM) that are stealing its business.

While Zhihu can't offer much advantage over AI for people seeking things like weekend trip suggestions, it believes it can offer an edge in emerging topics like next-generation large model development, AI-assisted video generation and model iteration. It does that by hosting discussions and bringing related experts onto its platform as the topics are still emerging, creating a category of "verified honored creators" just for such people.

Zhihu is also turning to a few more "human-centric," activities where AI has difficulty competing to boost its sagging businesses whose revenue have been falling for the last two years. Its most advanced initiative on that front is building up a new platform, called Yanyan Story, separate from its core Q&A business, offering user-generated short-form novels and videos that compete with a lot of similar platforms already out there.

Last but not least, Zhihu is also drawing on offline events to appeal to users who crave real human connections. In a nod to this need, the company repeatedly referred to terms like "real people," "real users" and "real user community," in its first quarter results released last week. Somewhat ironically, in that regard, opening remarks usually delivered by Zhihu founder and Chairman Zhou Yuan were delivered by his AI doppelganger "Victor Zhou" on the call, though the real Zhou Yuan answered questions during the analyst Q&A that followed.

"Building on this solid foundation, our core businesses are showing encouraging signs of recovery, while our new business initiatives continued to gain momentum and to deliver meaningful incremental growth," said Victor Zhou in the prepared remarks.

The multi-pronged strategy seems to be showing some early good results, reflected by a sharp improvement in the company's rate of revenue decline during the first quarter. At the same time, the report also contained a few potential red flags, including a steep cut to R&D spending that is critical for internet companies like Zhihu, as well as a big provision for potential non-payments from some of its struggling customers.

But on the whole, the report looked quite upbeat, especially for a company whose existence was being questioned by some just a year ago due to AI's ability to replicate Zhihu's original core knowledge-sharing functions.

Investors greeted the latest report with indifference, as Zhihu's shares were largely unchanged after the release of the results. Those yawns may represent a "wait and see" attitude, as people wait for data on some of the new initiatives that seem to have promise. While Zhihu talked up the new initiatives, it gave out very few actual numbers, especially in terms of revenue, indicating they have yet to start making a significant contribution to its top line.

Revenue nears turning point

Zhihu is quite well known in China, and has always enjoyed a reputation as the place to go for quality content. But it faced difficulty in monetizing that popularity, with the result that it was still losing money at the time of its IPO in 2021. It finally reached profitability in the fourth quarter of 2024, but then fell back into the red in the second half of last year. It continued in the red with a net loss of 8.5 million yuan ($1.25 million) in this year's first quarter, though executives pointed out the company was profitable on an adjusted basis.

Zhihu's revenue peaked in 2023, before declining over the last two years as AI began to eat into its business. Compounding the declines, the company's newer education services, which previously showed big promise, also began to fall sharply.

Zhihu reported its revenue fell 10.7% year-on-year in the first quarter to 652 million yuan from 730 million yuan a year earlier. That marked a big improvement from the 25% decline in the fourth quarter, and a 25% decline for all of 2025. The company's two biggest revenue generators, marketing services and paid content and IP operations, both recorded low single-digit declines, falling 3% to 191 million yuan and 4.5% to 402 million yuan, respectively. Its "other revenues" category, which includes education services, continued to struggle, with revenue down 48% year-on-year to 57.8 million yuan.

The company's average monthly subscribers during the first quarter totaled 13.1 million, which was down from 14.3 million a year earlier, but up sequentially from 12.2 million in last year's fourth quarter. The company also noted its average daily time spent per daily active user (DAU) reached 42 minutes, noting that figure was up both year-on-year and quarter-on-quarter, without being more specific.

As we noted earlier, one slight cause for concern is R&D spending, which dropped to 16.9% of revenue in the latest quarter from 19.5% a year earlier. Another was a sharp rise in its general and administrative expenses, as it cited an allowance for expected credit losses on trade receivables for customers not paying their bills.

We'll close with some more detail on the three new initiatives, which seem to offer potential to revive the company but are clearly still in the early stages. In terms of hosting discussions and tapping experts on emerging topics, the company said that during the quarter it saw "deep discussions" on a number of such topics, and noted that a "substantial cohort of core experts from top-tier labs has joined the platform and remains highly active."

As to Yanyan Story, Zhihu said total creator earnings on the short-form novel and video platform surged 5.6 times year-on-year during the quarter, though it didn't provide figures. And in offline events, the company noted that its Xinzhi Youth Conference this year attracted more than 80,000 onsite participants and 100 onsite partners, and featured both workshops related to AI, as well as on lower-tech topics like handicrafts.

We have to give Zhihu credit for not just sitting by idly while its core business gets stolen by AI. Its new initiatives look relatively well thought-out, especially the hosting of cutting-edge discussions to stay ahead of AI and offline events where AI can't replicate the social interaction. The Yanyan Story initiative also looks potentially promising, though Zhihu will face stiff competition from a crowded field in that area.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.