Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Fourth Quarter and Full Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Today's conference is being recorded and webcasted. At this time, I would like to turn the conference over to Yolanda Liu, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Amberlynn. Hello, everyone. Welcome to Zhihu's fourth quarter and full year 2024 financial results conference call. Joining on the call today from the senior management team are Mr. Zhou Yuan, our Founder, Chairman and Chief Executive Officer; and Mr. Wang Han, our Chief Financial Officer. Before we get started, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, actual results may be materially different from the views expressed today. Full information regarding these and other risks and uncertainties is included in our public filings with the US Securities and Exchange Commission and the Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements as required under the applicable law. Additionally, the discussion today will include both GAAP and non-GAAP financial measures for comparison purpose only. For a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures, please refer to our earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our IR website at ir.zhihu.com. Now, I will turn the call over to Mr. Wang Han, CFO of Zhihu. Han, please go ahead.

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu's fourth quarter and full year 2024 earnings call. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO of Zhihu. 2024 marked a transformative turnaround for Zhihu, where we successfully executed the strategic roadmap laid out at the first of the year and delivered results that far surpassed our expectations. The fourth quarter was a strong finish to 2024 with robust profitability. For the first time ever, we reported adjusted net income of RMB97.1 million compared to an adjusted net loss of RMB91.3 million in the same period of last year. Moreover, we swung from an adjusted net operating loss of RMB165.3 million in the fourth quarter last year to an adjusted operating profit of RMB23.1 million this quarter. The strategic decisions made at the beginning of 2024 combined with consistent quarter-after-quarter execution yielded significantly better-than-expected financial results this quarter, showcasing the strength of our strategic judgment and execution capabilities. By prioritizing community trust and enhancing the core user experience, we made a deliberate choice to forgo some peripheral users. This approach not only saved the community user acquisition related expenses by 88% year-over-year, which is one of the key drivers to profitability, it also resulted in notable growth in key engagement metrics, time span, retention and content creation, while maintaining a stable overall user base. AI represents a historic opportunity for Zhihu. As the AI landscape evolves, it is more and more clear that authentic, professional and in-depth content created by real individuals and most valuable assets to help AI overcoming hallucinations, and this is the most unique asset that Zhihu has been accumulated for 14 years. In essence, the Zhihu community is a dynamic network of real experts who continuously…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We will now take our first question from the line of Xueqing Zhang from CICC. Please ask your question, Xueqing.

[Foreign Language] Thanks management for taking my question, and congratulations on the first profit quarter on both GAAP and non-GAAP basis. My question about Zhihu Zhida. Could management share your insights regarding the user size data of Zhihu Zhida? How does it benefit over our Zhihu community ecosystem? Additionally, from an industrial perspective, is there any concern that with the advancements in LLM inference capabilities, Zhihu could be replaced by AI? Thank you.

[Foreign Language] [Interpreted] Thank you, Xueqing. This is from Zhihu CEO, Zhou Yuan. Thanks for your long time support for the company. So, I will just start by addressing your first question. Over the past six months, Zhida's user base data grow healthily, and the MAU have grown from the scale of about 1 million to 10 million. And we believe this strong organic growth has been driven by the high repeat visits and the positive word-of-mouth. [Foreign Language] [Interpreted] And to your second question on how Zhida benefits our overall community. So, Zhihu community has an irreplaceable and unique position over the whole Internet with this network of experts. This network is increasingly crucial, because the expansion of the AI-generated content and AI hallucination has made trustworthy content [indiscernible] demand. [Foreign Language] [Interpreted] Although many AI products have already existed today, they lack ability to genuinely connect with real people, especially experts. [Foreign Language] [Interpreted] And we believe this question may be answered in an alternative way. Zhihu Zhida latest, we have a very latest update, have perfectly addressed this need. And we can see now the PC platform fully rolled out and in our Zhihu app, it's already in the grayscale testing now. In this update, we've introduced two new ways to build these connections within the community through AI. Firstly, the inquiry of results of Zhihu Zhida can now directly be traced back to the actual community contributor. And secondly, you can directly ask/mention special contributor. This effectively turning every Zhihu expert into users' interaction personal knowledge base. [Foreign Language] [Interpreted] And we are very glad to see, lastly, Zhida received many positive feedbacks from our own country -- content creator, sorry. I just come across an excellent content this afternoon. This is from one of our…

Thank you. Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.

[Foreign Language] Thanks management for taking my question. My question is also about AI. What other changes and innovation can we expect on the product side this year? Are there any new directions about AI integration? Thank you.

[Foreign Language] [Interpreted] Thank you for your question, Thomas. This is from Zhihu CEO, Zhou Yuan. So, this year, our focus is on strengthening social interactions and enhancing our brand as a trusted content platform. We have already seen very encouraging developments since the start of this year. So, in the product environment direction, we have been developing social circles and new ideas suitable for the shorter-form and high-frequency content, and the columns and the podcast for longer-form content and the subscription plans. Establishing this as important values for community engagements and content consumption. [Foreign Language] [Interpreted] So, in terms of content branding, IP initiatives such as our [indiscernible] season will be key area of focus this year. We also plan to expand into more specialized verticals and introduce new original IPs, further strengthening our position as a trusted content brand, while creating new commercial opportunities. [Foreign Language] [Interpreted] So, in this era, we believe the influential experts, contributors and trusted content brands are most valuable than ever. This is where we stand out. We have a very clear cut advantage here, and our priority is to maximize the value of these assets. [Foreign Language] [Interpreted] So, I believe you're -- as you mentioned, you want to know more about our plan to better integrate AI with our entire community. So, our AI-related initiatives will take these questions to the next level, and we will advance on two fronts. First of all, the latest version of Zhihu Zhida, we have implemented completely new ways for AI to integrate with our community. We will continue deepening this integration to amplify the impact of our expert network. And second, AI will empower many of our community workflows, boosting the efficiency of high-quality content creation and distribution. [Foreign Language] [Interpreted] We believe this is a new beginning for us. In the era of AI, we are exploring and experimenting with many new possibilities. We believe that thanks to Zhihu's continuous accumulation of high-quality content, we're well positioned to better embrace this new era. Thank you.

Thank you. Our next question comes from the line of Daisy Chen from Haitong International. Please ask your question, Daisy.

[Foreign Language] Good evening, management, for taking my question. You just have mentioned that -- you just have talked about the AI and the large language model, how do you -- yeah, and the inference about the influence on the Zhihu community. My question is about how can the AI and large language model benefit Zhihu's online marketing product? Do you have any example or data case for us? Thank you.

[Foreign Language] [Interpreted] Thank you for your question, Daisy. This is from Zhihu CFO, Wang Han. AI is, changing the monetization model of advertising, and the most industry players are now staying in the exploration stage. But I can share some of our current thinking. [Foreign Language] [Interpreted] I don't know whether you may notice or not, what were one thing as the challenges for Zhihu in traditional Internet era has now become our biggest competitive advantage, and are in the most AI native way. [Foreign Language] [Interpreted] In the past, Zhihu has been recognized for its highly knowledgeable users and in-depth content features, which were maybe regarded as difficult to monetize in the traditional Internet paradigm, that prioritize high traffic and lengthy user engagement. And these may often favor entertainment-focused platforms. [Foreign Language] [Interpreted] However, in this era, in the AI era, this has completely reversed. And AI LLMs now prioritize the most high-quality answer generated by top-tier experts. [Foreign Language] [Interpreted] Consequently, traffic is increasing down towards the highest-quality content. I can give you an example here. For example, come -- this example comes from the chatbot. Many popular AI chatbot rely heavily on Zhihu's real expert-generated contents for their in-depth responses, attributing its considerable importance. [Foreign Language] [Interpreted] So, for advertisers, they are becoming increasingly focused on the content marketing and the brand's reputation management on our platform. Previously, the industry will also mentioned -- well, often mentioned on the SEO, search engine optimization. And today, this is shifting towards GEO, or generative engine optimization, to gain visible in AI-generated answers. So, if you aim to maximize business opportunities and monetization efficiency within AI-generated results, actively managing their content, you should actively managing your content on our platform. Thank you. Thank you for your question.

Thank you. Our next question comes from the line of Vicky Wei from Citi. Please ask your question, Vicky.

[Foreign Language] Thanks management for taking my question, and congrats on a very solid quarter. My question is regarding to the long-term margin profile. So, how should we think of the long term profitability of Zhihu? And how should we think of the 2025 margin outlook for this year? And how should we think of the cash utilization? Thank you.

[Foreign Language] [Interpreted] Thank you for your question, Vicky. This is from Zhihu's CFO, Wang Han. [Foreign Language] [Interpreted] This Q4, we achieved a profitability for the first time in our history with a double-digit non-GAAP net profit margin of 11%. [Foreign Language] [Interpreted] If we look broadly across the global landscape of the UGC platform, the user-generated content platform, we believe net margins typically range from 25% to 40% or even higher to 50%. This reflects the fundamental advantage of UGC platforms over maybe media platforms, which incur copyright related costs. [Foreign Language] [Interpreted] Looking ahead to our profitability outlook for 2025, we believe AI represents a historical opportunity for Zhihu. And also, given our strong cash position, we may chose, we may choose to maintain a slightly over overall loss, temporally to continue pursuing and capturing the potential opportunities arising from deeper integration between Zhihu and AI. [Foreign Language] [Interpreted] So, regarding cash utilization, although our market value has increased in recent months, it still remains significantly below our net cash position. At this clear undervalued stage, we will continue to conduct open market buybacks at appropriate times. In fact, looking back over the past period, we have been one of the US-listed Chinese companies with the highest share repurchase ratio. Yes. That's it. Thank you.

This concludes our answers. Thank you.

Thank you. That concludes today's question-and-answer session. At this time, I'll turn the conference back to Yolanda for any additional or closing remarks.

Thank you, operator, and thank you all again for joining us today. If you have any further questions, please contact our IR team directly or Christensen Advisory. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.