Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu Inc. Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] 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, Sara. Hello, everyone. Welcome to Zhihu's 2025 Second Quarter Financial Results Conference Call. Joining me today on the call from the senior management team are Mr. Zhou Yuan, Founder, Chairman and Chief Executive Officer; and Mr. Wang Han, Chief Financial Officer. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. As such, the actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our public filings with the U.S. Securities and Exchange Commission and Hong Kong Stock Exchange. The company does not assume any obligation to update any forward-looking statements, except as required under 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. Today, Zhou Yuan, our Founder and CEO; and Wang Han, our CFO, will have their prepared remarks delivered in English through their representative AI voice agents. The content is prepared by them while the agents serve only as the voice interface. As the agents are still learning, we appreciate your understanding. First, let's hear from Zhou Yuan's agent, Victor. Victor, please go ahead.

Thank you, Yolanda. Hello, everyone, and thank you for joining Zhihu Second Quarter 2025 Earnings Call. I am [ Victor Joe ], an AI- powered voice agent of Zhou Yuan. I am pleased to deliver today's opening remarks on behalf of Mr. Zhou Yuan, Founder, Chairman and CEO of Zhihu. We posted our third consecutive quarter of non-GAAP profitability, once again beating market expectations by a wide margin. Adjusted net income for the second quarter reached RMB 91.3 million compared to a loss of RMB 44.6 million in the same period last year, while gross margin expanded by approximately 3 percentage points year-over-year. These results highlight the strength of our disciplined operating strategy and the value of our AI-powered productivity gains. Zhihu's ecosystem continues to flourish with our trustworthy content and professional creators, enriching the experience for users and creators alike. In particular, leading experts continue to drive deeper engagements within the community, steadily amplifying the influence and strengthening the ecosystem. This increased engagement is clearly reflected in several key user metrics. While MAUs remained stable from last quarter, daily time spent, core user retention and high-tier creator engagement, all posted notable gains, both sequentially and year-over-year. Our expanding in-house AI capabilities and growing industry influence have reinforced our platform's unique value proposition as the go-to destination for professional trustworthy Chinese language content with an increasing number of users and creators flocking to the platform. Notably, our platform has emerged as the preferred launch pad for new AI technologies and products while becoming the leading network for AI talent and expertise. As our synergistic development of high-quality content, trusted creator network and AI capabilities accelerates, Zhihu is delivering greater and differentiated value to users and clients not only on our platform, but also across the broader Internet continuously widening our…

Now I will review the details of our second quarter financials. For a complete overview of our second quarter 2025 results, please refer to our press release issued earlier today. In the second quarter, we maintained our trajectory of non-GAAP profitability for the third consecutive quarter. Gross margin also continued to expand year-over-year. These results underscore the ongoing strengthening of our financial fundamentals, supported by a leaner cost structure and more efficient operations. Our total revenues for the quarter were RMB 716.9 million compared with RMB 933.8 million in the same period of 2024. The decrease was driven by our ongoing business optimization. The year-over-year decline also narrowed slightly for the second straight quarter in line with our expectations as we transition toward a more resilient and higher- quality revenue mix. Our marketing services revenue for the quarter was RMB 222.8 million compared with RMB 344 million in the same period of 2024, this decrease was mainly due to our continued refinement of service offerings and our strategic focus on improving margins. Encouragingly, revenue grew 13.1% sequentially and the year-over-year decline also narrowed meaningfully, reflecting a more stable phase in our adjustment cycle. Paid membership revenue was RMB 402 million, down slightly from RMB 432.7 million in the same period of 2024. This was primarily due to a decrease in new subscriptions following a shift in our focus towards acquiring users with longer life cycles and higher ROI potential. Vocational training revenue was RMB 62.1 million compared with RMB 133.6 million in the same period of 2024. The decline resulted from the ongoing refinement of our acquired businesses as we continue to prioritize faster-growing self-operated course offerings. Other revenues were RMB 30 million compared with RMB 23.5 million in the same period of 2024. Our gross profit for the quarter…

[Operator Instructions] And now we're going to take the first question. And it comes from the line of Xueqing Zhang from CICC.

[Foreign Language] Thanks management for taking my questions. The prepared remarks delivered by AI agent is really impressive. So my question is also about AI regarding to whose AI and the large language model related products. Does the company have any new plans? And how should we think as current progress?

[Foreign Language]

[Interpreted] Thank you, Xueqing, for the question. And this is from Zhou Yuan, CEO of Zhihu. So other progress in AI is kept pace with the broader large language model industry. And over the past quarter, we've seen a lot of new integrations of many new models, including both open sources and the closed sources. And we believe our capability will naturally rise along with all these new models. And we are accelerating the upgrade of our agentic capability to more fully leverage this increase and innovation of the entire industry.

[Foreign Language]

[Interpreted] So that is our key products at the application layer for us. And it has performed very well over the past quarter with its penetration and usage, both continue to grow. So this progress reflects our ongoing innovation and product updates as well as increasing word of mouth among our users.

[Foreign Language]

[Interpreted] The evolution of Zhihu Zhida has gone through 2 stages. First, as AI search, then AI search combined with a knowledge base. We see these not as accoladed feature upgrades, but as necessary scenario extensions of AI + community.

[Foreign Language]

[Interpreted] Just last week, on August 22 to be specific. We see knowledge-based entries became shareable and securable within our community. The experience is seamless, so our users don't even notice they are already engaging with containers that spans both community native and AI-native domains. Something really seen in the stand-alone AI applications as we believe the room for this future upgrades is substantial.

[Foreign Language]

[Interpreted] Looking ahead, we believe AI search and the knowledge base will become further integrated with the community scenarios. In Q4, we plan to deliver a more significant experience updates on top of this foundation. So please stay tuned. Thank you for your question.

Now we're going to take our next question. Just you give us a moment. And the question comes from the line of Vicky Wei from Citi.

[Foreign Language] So will management share some color about the current user matrix for Zhihu Zhida? How does management view the unique value of Zhihu's authentic user-generated content? What opportunities has Zhihu identified and what are the biggest challenges facing?

[Foreign Language]

[Interpreted] Thank you, Vicky, for your question. This is from Zhou Yuan, Zhihu's CEO. As I just mentioned earlier, this quarter, Zhida's penetration with the community continue to grow. At the same time, we believe the definition of Zhihu Zhida itself is also involving. Of course, Zhida initially just launched as many people's understanding is for AI search within the community. But now definitely, it stand beyond of that definition. It should be understood as our AI capability apply across diverse community scenarios.

[Foreign Language]

[Interpreted] You also asked about the value of human-generated content. In my opinion, its value is huge, and its value is the currency of trust in the AI era, the gold standard, where the quality and authenticity of content that the baseline of this as well.

[Foreign Language]

[Interpreted] And from our understanding, the opportunity we see here is in how trust can scale what we call scaling law of trust. So our path forward is a variable formula of trusted content times, expert network times AI capabilities and we will move forward with strong conviction along this direction. Thank you. Thank you for your question.

Now we're going to take our next question. And the question comes from the line of Lincoln Kong from Goldman Sachs.

[Foreign Language] So can management provide some color on the growth outlook for the marketing service, paid membership and the vocational training business. So how should we think about the key drivers for each segment in the second half? And how should we think about the full year profitability for 2025?

[Foreign Language]

[Interpreted] Thank you, Lincoln, for your question. This is from Zhihu's CFO, Wang Han. So I will just start with your first question.

[Foreign Language]

[Interpreted] So first on our marketing services. In the past several quarters, we have often mentioned that we are in an adjustment base. Now we can say that this phase is nearing its end, and we expect to see a stabilization and a recovery in the coming quarters with a return to positive year-over-year growth.

[Foreign Language]

[Interpreted] Our focus will be on optimizing our client structures and upgrading our commercial products. On client structure-wise, we will further leverage Zhihu brands and high-quality user base to expand into more trust-driven categories such as high-value FMCG and maternal and infant products as well as clients with stronger professional B2B attributes.

[Foreign Language]

[Interpreted] At the same time, we'll also continue to strengthen the monetization of Zhihu's high-profile commercial IPs.

[Foreign Language]

[Interpreted] For our paid membership business, we are currently in a stage of active experimentation with the core goal of improving renewal and retention as well as driving our true growth across multiple dimensions.

[Foreign Language]

[Interpreted] So on retention wise, we have optimized the structure of new members to attract users with longer life cycle -- life cycles such as expand our monthly paid members to more like half year and annual pay numbers. We're also actively exploring media and longer- form content.

[Foreign Language]

[Interpreted] On ARPU, we are expanding premium content formats and service benefits for our members. For example, like I mentioned, the voice live streaming.

[Foreign Language]

[Interpreted] At the same time, we will further accelerate the monetization efficiency of our IPs of the payment membership, thereby to strength and member stickiness and to enhance the commercial value of each member.

[Foreign Language]

[Interpreted] On vocational training, our operating strategy remain focused on efficiency and profitability.

[Foreign Language]

[Interpreted] In the second half of this year, we will continue to address both our model and contents though -- these adjustments are already approaching a more stable stage.

[Foreign Language]

[Interpreted] So strategically, we will keep moving towards a more social and knowledge-sharing oriented model, enabling knowledge-based content to better meet our users' needs and experience and to foster healthy circulation and consumption within the community. In return, we believe it will further strengthen the community's ecosystem.

[Foreign Language]

[Interpreted] So this is basically about the current development of all our business services. Thank you for your questions.

Now we'll go and take our next question. Just give us a moment. And the question comes from line of [ Sao Handerson ] from [indiscernible].

[Foreign Language] Thank you for giving me the opportunity to ask questions. I would like to ask the management to share how we should anticipate the method and extent of shareholder returns going forward?

[Foreign Language]

[Interpreted] This is still from Zhihu's CFO, Han, and we will just pick up the question about the shareholder return first, and then I will add on the second question from Lincoln about the outlook of the full year profitability.

[Foreign Language]

[Interpreted] We need a 10% of share repurchase authorization approved by our Board and the shareholders earlier this year. We remain firmly committed to enhance shareholders returns through buybacks.

[Foreign Language]

[Interpreted] As disclosed in today's earlier earnings release, by June 30, we had repurchased 7.41 million ordinary shares in open markets, representing 2.8% of total shares outstanding.

[Foreign Language]

[Interpreted] And since this July, we have also continued to execute actively on the repurchase program. And we believe in the second half of this year, we will stay the same course and carry out the strategy with a strong commitment. Also, over the past 2 years, for a -- and for the foreseeable future, we expect to remain one of the most significant U.S.-listed Chinese companies in terms of a share repurchase ratio.

[Foreign Language]

[Interpreted] And now I will just add on about the second question raised from Lincoln, it's on about our full year profitability.

[Foreign Language]

[Interpreted] In the first half of this year, we achieved a profitability on both the GAAP and non-GAAP net income basis in each of these 2 quarters also existing expectations on market and this has not only provided us with more flexibility to make adjustments in certain businesses for longer-term healthy development, but also significantly increase the likelihood, the possibilities of reaching near breakeven on a full year non-GAAP basis.

[Foreign Language]

[Interpreted] Thank you for -- thank you all for your questions.

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

directly or Christensen Advisory. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]