After years of searching since its founding in 2010, knowledge-sharing platform Zhihu Inc. (2390.HK) finally found an answer to its profitability challenge in last year’s fourth quarter, to the delight of investors who waited more than a decade for the breakthrough.
The profit came as Zhihu became more selective about its users, forgoing less profitable ones to focus on bigger spenders. The company also held out big potential for AI to take its knowledge-sharing content to the next level, saying it is using the technology to complement answers traditionally provided by experts to user questions.
Zhihu reported a profit of 86.4 million for the quarter, reversing a net loss of 103.1 million a year earlier, despite a relatively steep 25% year-over-year revenue decline to 859.2 million yuan over that period, according to its landmark report. Its move to the black owed in part to a gross margin that improved by 3.8 percentage points to 62.9%.