Zhihu adjusted profit surges on cost controls despite slower revenue

Zhihu (NYSE:ZH) reported a sharp increase in adjusted profitability for the first quarter of 2026, overcoming a contraction in top-line revenue through disciplined operational efficiency and reduced overhead.

The Beijing-based Q&A and content platform managed to significantly compress its losses while expanding margins, signaling a strategic shift toward bottom-line sustainability over raw user acquisition.

Total revenue for the three-month period fell to RMB651.6 million, down from RMB729.7 million in the same quarter last year.

Despite the lower sales volume, Zhihu maintained a resilient gross margin of 59.6%.

The revenue deceleration was countered by an aggressive corporate belt-tightening campaign, which drove total operating expenses down 10.4% year over year, highlighting the company's success in streamlining its content delivery and administrative infrastructure.

As a result of these cost-reduction measures, Zhihu’s net loss narrowed down to RMB8.5 million for the quarter.

On a non-GAAP basis, which strips out share-based compensation and non-recurring items, adjusted net income rose 147.2% year over year to RMB17.2 million.

The platform continues to leverage a highly engaged core audience, reporting an average of 13.1 million monthly subscribing members during the first three months of the year.

Zhihu enters the remainder of 2026 with a robust balance sheet, holding cash, cash equivalents, and short-term investments totaling RMB4,490.3 million.

The company also maintained its commitment to shareholder returns amid the shifting regulatory and market conditions for Chinese technology equities.

To date, Zhihu has repurchased 34.8 million Class A ordinary shares on the open market for a total consideration of US$70.7 million, reflecting management's belief that the company’s current market valuation understates its long-term operational cash-generation potential.