Zhihu Inc. reported a sharp slowdown in its rate of revenue decline during the first quarter, as the company focuses on areas where it believes it has an edge over artificial intelligence. The knowledge-sharing community, often called the "Quora of China," is prioritizing discussions on emerging topics and real-world events to differentiate its offerings from AI-generated content. This strategic pivot aims to address the competitive pressure from large language models that have impacted its core business over the last two years.

The company's financial results for the period show revenue falling 10.7% year-on-year to 652 million yuan, down from 730 million yuan in the prior year. This performance marks a notable recovery compared to the 25% decline seen in the fourth quarter and the 25% drop for all of 2025. Zhihu recorded a net loss of 8.5 million yuan ($1.25 million) for the quarter, though management noted the company was profitable on an adjusted basis.

Financial Performance

Zhihu's two primary revenue streams, marketing services and paid content and IP operations, experienced low single-digit declines. Marketing services revenue fell 3% to 191 million yuan, while paid content and IP operations decreased 4.5% to 402 million yuan. The "other revenues" category, which includes education services, continued its struggle with a 48% year-on-year drop to 57.8 million yuan.

Operational metrics showed mixed trends. The average monthly subscribers totaled 13.1 million, a decrease from 14.3 million a year earlier but an increase from 12.2 million in the fourth quarter. The average daily time spent per daily active user reached 42 minutes, rising both year-on-year and quarter-on-quarter.

Strategic Initiatives

To combat the encroachment of AI, Zhihu is concentrating on "verified honored creators" and hosting discussions on next-generation large model development and AI-assisted video generation. The company reported that a substantial cohort of core experts from top-tier labs has joined the platform. Additionally, Zhihu is expanding into offline events to cater to user demand for human interaction. Its Xinzhi Youth Conference attracted over 80,000 onsite participants and 100 onsite partners.

The company is also developing Yanyan Story, a separate platform for user-generated short-form novels and videos. While specific revenue figures were not disclosed, Zhihu noted that total creator earnings on this platform surged 5.6 times year-on-year during the quarter. However, the company faces stiff competition in this sector.

Cost Management and Risks

The first quarter results revealed a reduction in research and development spending, which dropped to 16.9% of revenue from 19.5% a year earlier. Conversely, general and administrative expenses rose sharply due to an allowance for expected credit losses on trade receivables from struggling customers. Investors reacted with indifference to the report, keeping shares largely unchanged, possibly adopting a "wait and see" approach regarding the new initiatives.