Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Third Quarter 2022 Financial Results Conference Call. At this time all participants are in listen-only mode. After the speakers' presentation, there will be a Q&A session. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jingjing Du, Head of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Hello, everyone. Welcome to our third quarter 2022 financial results conference call. Joining us today are Mr. Zhou Yuan, our Chairman and CEO of Zhihu; and Mr. Sun Wei, our CFO. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and this discussion. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see our earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhihu.com. I will now turn the call over to Mr. Sun Wei, our CFO.

Thank you, Jingjing. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder and CEO of Zhihu. Thank you for joining Zhihu's third quarter 2022 earnings call. We've delivered another quarter of solid execution on our community ecosystem first strategy and are delighted with the strides we have made promoting our community's prosperity. Starting from the beginning of this year, we shifted our specific focus toward growing quality users and further bolstering the strength and resilience of our content-centric business model. In Q3, the activeness rate of our app users at DAU over MAU reached its highest level in the past three quarters of this year, and the time spent per daily active users climbed both year-over-year and quarter-over-quarter. Despite the still challenging macro environment, our community ecosystem demonstrated strength and resilience during the third quarter. Total revenues were up by double-digit on a year-over-year basis as we continue to expand and optimize our content offerings and enhance our content creators user experience. Furthermore, our initiative to heighten operating efficiencies drove significant improvements in our bottom line performance for the quarter. In Q3, total revenues reached RMB911.7 million, increasing by 11% compared with the same period last year and net loss narrowed by 39% quarter-over-quarter. Our paid membership retained robust growth momentum increasing by 88% year-over-year and contributed 37% of the total revenue during the quarter. Meanwhile, vocational training services continue to accelerate their contribution to total revenues with a 458% growth rate year-over-year. Continuing efforts to refine our business lines and improve operational efficiencies during the quarter helped to make our ecosystem stronger and more resilient. The Zhihu community is striving and becoming more healthier and healthier. The result of our efforts gives us further confidence to invest in long-term growth while striving for profitability…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Thank you. Today’s first question comes from Steve Qu with Goldman Sachs. Please go ahead.

[Foreign Language] Thank you for taking my questions and congrats on the progress of cost contained initiatives. I have a question on MAU, so noticing that your MAU has declined over the quarter, yet the time spent and monetization efficiency per MAU was much better. Did you shift your strategy from pursuing absolute MAU growth to extract the lifetime value for the high quality user? And could you share some insights on our long-term user growth potential? Thank you.

[Foreign Language] Thank you for this question. The answer from Mr. Zhou Yuan, the CEO of the company. At the beginning of the year, we set our annual strategy as a year of transitioning that is to keep our community ecosystem first, and that means a good experience for content creators, fulfilling content as well as a good atmosphere for the community. And more importantly, that is to have a commercialization that goes in line with our current community or simply to achieve stability – profitability as soon as possible. [Foreign Language] In the year, while we are pushing forward our strategy of year of transitioning and community ecosystem, first, we had make some adjustment. We believe that our volume numbers remained quite stable and we had hit our strategy target such as revenue and volume output targets. [Foreign Language] In the past year, we have made quite a lot of effort in fulfilling content optimization, quality control, as well as the algorithm improvement on the user side, the rewarding to the content creators as well as upgrades of our product. And I would like to talk a little bit more details about this. [Foreign Language] Be more specific, we keep improving the experience of the content creators. They are more active on our community. High level content creators on this quarter had an increase of 27% increase of daily activity rate, and they keep injecting high quality professional content to our community. And in May this year, we have launched our high yen plan4.0. And in this system, the content creators with specialties in key areas are enjoying better tools and growth support, as well as rewards to their content creation. And the average income per income making creator had a revenue increase of 47% in Q3 year-over-year. [Foreign…

Thank you. And our next question today comes from Xueqing Zhang with CICC. Please go ahead.

[Foreign Language] My question is related to paid membership business. The membership business once again demonstrated strong growth this quarter, so could the management share more details about the reason behind it, and how should we think about this business in the long-term? Thank you.

[Foreign Language] Thank you for this question. Well, it was three years ago, since we are beginning to launch our membership program. And up to here now, you see our membership growth is faster than our expectation at the very beginning. We believe that the demand for the paying for the premium content is still there and will remain resilient for a long time. And it corrects as a matter, only relies on the supply of the good content that we’re paying for. And we believed our entire community serves as a supplier for great contents. And that is why you see that we have entered into a very good cycle of supply and demand for premium content was paying for. And as a result, you could see that our membership business started off with losing money, and now it’s getting more and more sustainable in driving profit and also to the net profit we have as a whole community. [Foreign Language] Our membership growth is a healthy and a fast one. And as you can see our high quality content and high quality content creators are the main drivers for our membership business. And the third quarter our membership content creator – member content creator had an increase of 40% year-over-year and the income per member creator increased by 29% year-over-year. And our most popular YanPlus content column had an increase offering of over 130% year-over-year. And this popular content has transformed more new members to us. For the third quarter, our monthly paying users is over 10 million, and as of September effective paying user number is over 11 million. And we see that this number keeps increasing and we think that these had provide very good driver force for paying members both in and outside of the…

Thank you. And our next question today comes from Ashley Xu with Credit Suisse. Please go ahead.

[Foreign Language] I’ll interpret, I’ll translate by myself. My question is related to the ADS and the CCS revenue. What’s the driver of third quarter decline and how is the fourth quarter outlook? Could management provide more color by different verticals? Thank you.

[Foreign Language] Thank you very much for this question. The answer comes from our CFO Mr. Sun Wei.

Well, thank you. Overall speaking in our third quarter demand decreased – slightly decreased from the ADS and CCS. This is mainly due to a weaker market environment as a whole and also a struggling environment due to COVID. I think overall speaking, if you compare advertisement and CCS as a whole, our CCS business remained more resilient against a struggling environment compared with traditional advertisement business. So they’re rather resilient and they only had a single digit decrease. [Foreign Language]. Okay. Overall speaking in our key and strength sectors, the results remain positive, especially in IT, 3C, automobile and games. They all registered year-over-year increase. [Foreign Language] And IT, 3C, automobile and games are exactly the strength areas that we have in our community and also in our content offerings. So that in a way proves that our content and our community are really popular amongst the users as well as the merchandisers on CCS area. Okay. [Foreign Language] And if you refer to the specific approval we get from our merchants, they’re spending per paying client still increased by five percentage points year-over-year even with a weaker macro environment. So this proves that we are still trustworthy method of marketing and we keep gaining market share even despite some headwinds in the entire economic backdrop. [Foreign Language] Okay. By way of attracting and gaining market share against this market headwinds, we try to iterate our product from the lab IP [ph] series to cheese platforms to tree planting. We’ve tried various ways of marketing to showcase the brand so as to bring longer lasting and sustainable marketing values for our client. And I think this has been proven by our results and also in our premium content in our CCS product. [Foreign Language] Okay. Our advantage that based on the commercial product, based on the premium content and community has always been our competitive advantage. And for the long term, this will remain so for the future. So when the market comes back, when the consumption recovers, we will be able to go back to a fast growth track due to our advantageous position in CCS and gain more market share in the marketing world. Okay. [Foreign Language] As for the look-out for the fourth quarter we believe that we will register a double-digit growth, but compared with the high base in the fourth quarter of last year the – to be business for advertisement [indiscernible] in fourth quarter will probably be still subject to the COVID situation and the weaker economic environment. [Foreign Language] As for the projection in the 2023, I think it pretty much depends on the macro economy as well as the COVID policy evolution. So we're keeping close eye on those market situations. But so far we are not able to make an accurate prediction as to what will happen next year. [Foreign Language]

Thank you. And our next question today comes from Yiwen Zhang with China Renaissance. Please go ahead

[Foreign Language] So my question is regarding our location. [indiscernible] Thank you.

[Foreign Language] Thank you very much. The answer from CEO, Mr. Zhou Yuan. So for our vocational training business for this year we had already registered multiple times of growth for three consecutive quarters. And for this quarter particularly the contribution from vocational training to total revenue is expanding to over 8% and will continue to increase in the coming days. And our vocational training curriculums center around our target users demand scenarios i.e., academic improvement and career promotion and we are expanding our paying curriculum offerings in those two specific areas for our users. [Foreign Language] We provide a diversity of curriculums to matter – to cater for the needs for the users to study and improve their skills. To be more specific the graduate school examination related program saw a record high enrollment numbers, and our users are really happy and give us some positive feedbacks for our high quality contents. And exam related for instance, CSA or CPA as well as some skills training for instance, new media operation, writing courses as well as video editing are also main contributors and key contributors to our revenues. And in a third quarter, our paying user number increased by nearly 300% year-over-year and with a quarter-over-quarter 40%, but still right now the paying users are relatively small and still has a great, great room for further growth. And we will keep diversifying and enriching our training programs to cater for their needs and to give them better content for their demands. [Foreign Language] Another point I want to make is to expand our vocational training business through M&A activities. In October this year, we had acquired a teacher qualification training company so as to make our offerings more comprehensive. And also thanks to the great branding value and word…

Thank you. And ladies and gentlemen, this concludes our question-and-answer session. At this time, I will turn the conference back to Jingjing for any additional or closing remarks.

Thank you all once again for joining us today. If you have any further questions, please contact our IR team directly or TPG Investment relationship. Thank you. Bye.

Ladies and gentlemen, this concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.