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1、2024ANNUAL REPORT Stock Code:2390(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)CONTENT2Corporate Information4Key Highlights8Business Review and Outlook12Management Discussion and Analysis20Directors Report50Directors and Senior Man
2、agement54Corporate Governance Report74Other Information84Independent Auditors Report92Consolidated Balance Sheets94Consolidated Statements of Operations and Comprehensive Loss96Consolidated Statements of Changes in Shareholders Equity98Consolidated Statements of Cash Flows100Notes to the Consolidate
3、d Financial Statements168Definitions2Zhihu Inc.CORPORATE INFORMATIONEXECUTIVE DIRECTORMr.Yuan Zhou(周源)(Chairman and Chief Executive Officer)NON-EXECUTIVE DIRECTORSMr.Dahai Li(李大海)(redesignated from an executive Director to a non-executive Director with effect from June 5,2024)Mr.Zhaohui Li(李朝暉)Mr.Bi
4、ng Yu(于冰)INDEPENDENT NON-EXECUTIVE DIRECTORSMr.Hanhui Sam Sun(孫含暉)Ms.Hope Ni(倪虹)Mr.Derek ChenAUDIT COMMITTEEMr.Hanhui Sam Sun(孫含暉)(Chairman)Ms.Hope Ni(倪虹)Mr.Derek ChenCOMPENSATION COMMITTEEMr.Yuan Zhou(周源)Mr.Hanhui Sam Sun(孫含暉)(Chairman)Ms.Hope Ni(倪虹)NOMINATION COMMITTEEMr.Yuan Zhou(周源)Mr.Hanhui Sam
5、 Sun(孫含暉)Ms.Hope Ni(倪虹)(Chairwoman)Mr.Derek ChenCORPORATE GOVERNANCE COMMITTEEMr.Hanhui Sam Sun(孫含暉)Ms.Hope Ni(倪虹)Mr.Derek Chen(Chairman)COMPANY SECRETARYMs.Yee Wa Lau(劉綺華)AUTHORISED REPRESENTATIVESMr.Yuan Zhou(周源)Ms.Yee Wa Lau(劉綺華)HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN CHINANo.18 Xueqing Ro
6、adHaidian District,BeijingThe Peoples Republic of ChinaPRINCIPAL PLACE OF BUSINESS IN HONG KONGRoom 1912,19/F,Lee Garden One,33 Hysan Avenue,Causeway Bay,Hong KongREGISTERED OFFICEPO Box 309Ugland HouseGrand Cayman KY1-1104Cayman IslandsAUDITORPricewaterhouseCoopersCertified Public AccountantsRegist
7、ered Public Interest Entity Auditor22/F,Princes BuildingCentralHong KongAnnual Report 20243CORPORATE INFORMATIONLEGAL ADVISORSAs to Hong Kong law and U.S.lawSkadden,Arps,Slate,Meagher&Flom and affiliates42/F,Edinburgh TowerThe Landmark15 Queens Road CentralHong KongAs to Cayman Islands lawMaples and
8、 Calder(Hong Kong)LLP26th Floor,Central Plaza18 Harbour RoadWan ChaiHong KongAs to PRC lawGlobal Law Office15&20/F Tower 1,China Central Place No.81 Jianguo Road,Chaoyang District Beijing,ChinaCOMPLIANCE ADVISORGuotai Junan Capital Limited27/F,Low BlockGrand Millennium Plaza181 Queens Road CentralHo
9、ng KongHONG KONG SHARE REGISTRARComputershare Hong Kong Investor Services LimitedShops 1712-1716,17th FloorHopewell Centre183 Queens Road East,Wan ChaiHong KongPRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICEMaples Fund Services(Cayman)LimitedPO Box 1093,Boundary HallCricket SquareGrand Cayman,KY1-1102
10、Cayman IslandsPRINCIPAL BANKPing An Bank,Beijing Dongzhimen branchA-C,6/F,Dongfang Yinzuo Office Building48 Dongzhimenwai StreetDongcheng District,BeijingThe Peoples Republic of ChinaSTOCK CODEHKEX:2390NYSE:ZHCOMPANY WEBSITE4Zhihu Inc.KEY HIGHLIGHTSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
11、 COMPREHENSIVE LOSS For the Year Ended December 31,20202021202220232024(RMB in thousand)Revenues1,352,1962,959,3243,604,9194,198,8893,598,905Gross profit757,7971,553,9011,808,0522,295,8482,180,829Loss from operations(602,881)(1,390,709)(1,603,751)(1,072,225)(481,083)Loss before income tax(516,470)(1
12、,293,437)(1,564,220)(827,696)(178,358)Net loss(517,550)(1,298,880)(1,578,403)(839,528)(168,967)Net loss attributable to Zhihu Inc.s shareholders(1,198,284)(1,469,465)(1,581,157)(843,641)(171,802)Total comprehensive loss(660,876)(1,442,070)(1,305,093)(794,271)(136,003)Total comprehensive loss attribu
13、table to Zhihu Inc.s shareholders(1,341,610)(1,612,655)(1,307,847)(798,384)(138,868)Adjusted loss from operations(1)(422,791)(837,864)(1,218,803)(887,984)(405,361)Adjusted net loss(1)(337,460)(747,130)(1,195,855)(659,093)(96,270)Note:(1)The adjusted loss from operations and adjusted net loss are def
14、ined by excluding the impact of share-based compensation expenses,amortization of intangible assets resulting from business acquisitions and the tax effects of the non-GAAP adjustments,which are non-cash expenses.Annual Report 20245KEY HIGHLIGHTSCONDENSED CONSOLIDATED BALANCE SHEETSAs of December 31
15、,20202021202220232024(RMB in thousand)AssetsCurrent assets3,720,1668,334,1657,319,7996,377,8805,484,634Non-current assets41,275471,000336,440417,392248,318 Total assets3,761,4418,805,1657,656,2396,795,2725,732,952 Liabilities,mezzanine equity and shareholders(deficit)/equityCurrent liabilities1,014,
16、5681,897,7141,824,8411,945,4881,524,656Non-current liabilities169,302137,130148,17412,610 Total liabilities1,014,5682,067,0161,961,9712,093,6621,537,266 Total mezzanine equity7,891,348 Total Zhihu Inc.s shareholders (deficit)/equity(5,144,475)6,730,6545,653,6964,599,8104,136,123Noncontrolling intere
17、sts7,49540,572101,80059,563Total shareholders(deficit)/equity(5,144,475)6,738,1495,694,2684,701,6104,195,686Total liabilities,mezzanine equity and shareholders(deficit)/equity3,761,4418,805,1657,656,2396,795,2725,732,952 6Zhihu Inc.KEY HIGHLIGHTSFor the Year Ended December 31,20242023Change(%)(RMB i
18、n thousands,except percentages)Total revenues3,598,9054,198,889(14.3)%Gross profit2,180,8292,295,848(5.0)%Loss from operations(481,083)(1,072,225)(55.1)%Net loss(168,967)(839,528)(79.9)%Non-GAAP financial measures:Adjusted loss from operations(405,361)(887,984)(54.4)%Adjusted net loss(96,270)(659,09
19、3)(85.4)%For the Year Ended December 31,20242023Change(%)(in millions)Average monthly active users(MAUs)(1)83.0105.3(21.2)%Average monthly subscribing members(2)15.014.53.7%Notes:(1)MAUs refers to the sum of the number of mobile devices that launch our mobile apps at least once in a given month,or m
20、obile MAUs,and the number of logged-in users who visit our PC or mobile website at least once in a given month,after eliminating duplicates.(2)Monthly subscribing members refers to the number of members who subscribed for our membership packages in a specified month.Average monthly subscribing membe
21、rs for a period is calculated by dividing the sum of monthly subscribing members for each month during the specified period by the number of months in such period.Annual Report 20247KEY HIGHLIGHTSNON-GAAP FINANCIAL MEASURESIn evaluating its business,the Company considers and uses non-GAAP financial
22、measures,such as adjusted loss from operations and adjusted net loss,to supplement the review and assessment of its operating performance.The Company defines non-GAAP financial measures by excluding the impact of share-based compensation expenses,amortization of intangible assets resulting from busi
23、ness acquisitions,and tax effects of the non-GAAP adjustments,which are non-cash expenses.The Company believes that the non-GAAP financial measures facilitate comparisons of operating performance from period to period and company to company by adjusting for potential impacts of items,which the Compa
24、nys management considers to be indicative of its operating performance.The Company believes that the non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Companys consolidated results of operations in the same manner as they help the Comp
25、anys management.The non-GAAP financial measures are not defined under U.S.GAAP and are not presented in accordance with U.S.GAAP.The presentation of the non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.The use of the non-GAAP financial measu
26、res has limitations as an analytical tool,and investors should not consider them in isolation from or as a substitute for analysis of our results of operations or financial condition as reported under U.S.GAAP.The following tables set forth the unaudited reconciliation of GAAP and non-GAAP financial
27、 measures for the periods indicated.For the Year Ended December 31,20242023(RMB in thousands)Loss from operations(481,083)(1,072,225)Add:Share-based compensation expenses59,262164,656Amortization of intangible assets resulting from business acquisitions16,46019,585 Adjusted loss from operations(405,
28、361)(887,984)Net loss(168,967)(839,528)Add:Share-based compensation expenses59,262164,656Amortization of intangible assets resulting from business acquisitions16,46019,585Tax effects on non-GAAP adjustments(3,025)(3,806)Adjusted net loss(96,270)(659,093)8Zhihu Inc.BUSINESS REVIEW AND OUTLOOKBUSINESS
29、 REVIEW FOR THE REPORTING PERIODThe year of 2024 marked a transformative turnaround for Zhihu where we successfully executed the strategic roadmap laid out at the start of the year and delivered results that far surpassed our expectations.Strategically,we strengthened our commitment to narrowing los
30、ses and concentrated on our core strengths and the most crucial aspects of our development in the AI era.This involved a series of tactical adjustments,including resource reallocation and organizational optimization.Simultaneously,we remained committed to Zhihus long-term vision,prioritizing the enh
31、ancement of core user experience and strengthening“trustworthiness”within the community.This approach ensures our long-term competitive edge is continually reinforced and enhanced.We made substantial progress toward our break-even target by enhancing operating efficiency and accelerating loss reduct
32、ion,with our net loss narrowing by 79.9%to RMB169.0 million in 2024 from RMB839.5 million in 2023.Our gross margin expanded to 60.6%in 2024,reaching the highest level in the past five years.Meanwhile,for the first time ever,we reported an adjusted net income of RMB97.1 million and adjusted operating
33、 profit of RMB23.1 million in the fourth quarter of 2024,building on the momentum we picked up during the first three quarters of the year with gradually narrowing losses.This strong end to the year underscores the progress we have made toward sustainable profitability and reflects our disciplined o
34、perational execution.Our ongoing efforts to strengthen“trustworthiness”within the Zhihu community have significantly contributed to its prosperity,leading to notable growth in core user engagement,retention rates,and DAU time spent.Building on this foundation,we have been actively investing in AI ap
35、plication scenarios designed to empower our diverse,professional,and reliable community while also seeking opportunities beyond Zhihu.We are confident that the growing potential of our AI search solution,Zhihu Zhida(知乎直答),along with the value we continue to unlock across the Zhihu community,will inj
36、ect fresh momentum into our sustainable growth.Our Progress in AIIn 2024,we made significant strides in exploration of AI through internal initiatives and deeper integration with Zhihu community,recognizing and harnessing its potential to unlock opportunities for our long-term growth.With our long-t
37、erm vision remaining focused on building a diverse,professional,and trustworthy community,we have been investing in AI applications that support these goals while also exploring opportunities beyond our own platform.A prime example is Zhihu Zhida(知乎直答),where this AI search solution,after a year of d
38、evelopment,has evolved into a trusted and reliable tool for users.In March 2024,we launched a trial version of our AI-powered search feature,quickly earning positive feedbacks from our users.In June,we officially introduced Zhihu Zhida(知乎直答),enhancing the user experience on querying,searching,and su
39、mmarizing on the PC platform,followed by a Zhida(直答)tab launched on the Zhihu app in late August which further improved accessibility and functionality for users on mobile devices.In October,we launched the“Professional Search”feature within Zhihu Zhida(知乎直答),designed to meet the needs of academic r
40、esearchers and professionals.This feature integrated over 50 million Chinese and English academic articles from licensed academic database,and it supports file uploads and advanced document processing,providing in-depth reading and specialized Q&A tools for academic and professional use.Annual Repor
41、t 20249BUSINESS REVIEW AND OUTLOOKFurthermore,we have been accelerating the AI application to further enhance our operating efficiency across every aspect of our businesses.For example,AI has enabled us to achieve more efficient community content identification and content moderation,growth and enha
42、nced profitability in paid membership promotions,and improved sales and service efficiency in our vocational training business.As a leading content-centric community,Zhihu serves as a landing platform where professionals engage in the internets most extensive and in-depth discussions on AI-related t
43、opics.Our community of creators includes many leading entrepreneurs and industry pioneers who engage in multi-dimensional,professional,and thorough discussions.As of the end of 2024,both the amount of AI-related content and the number of creators in our community have surged with double-digit year-o
44、ver-year growth.Earlier in 2025,we were thrilled to be selected by DeepSeek as the exclusive Chinese content platform to release the latest details and cost-benefit analysis of their latest open-source models.Going forward,we will continue to invest in AI technology at the application layer.As we re
45、main dedicated to deepening the community trustworthiness,our advancements in AI enable us to enhance operating efficiency across our existing businesses and to unlock emerging potential beyond the Zhihu community.Zhihu ContentIn 2024,our strategy for cultivating scenario-orientated content ensured
46、a continuous stream of authentic,in-depth,high-quality content based on our users own experiences.In addition,we deepened penetration in our cornerstone verticals,inspiring content creators to engage in more in-depth content generated by professional users.Leveraging a technology-driven approach,we
47、optimized our content operations and continually evaluated content effectiveness.As of December 31,2024,the cumulative pieces of content on our platform reached 874.6 million,up 12.9%year over year.Our thriving and active community ecosystem remains both our core asset and a growing strategic advant
48、age in the AI era.Leveraging the support of the Zhihu community and our unique positioning,our premium short stories continue to captivate and resonate with our users.Our premium content library,including short stories,continued to expand in 2024,attracting new subscribers while encouraging increase
49、d consumption among existing subscribers.We continued to unlock the monetization potential of our vast array of premium short story IPs,spearheading our expansion into the short drama market and consistently setting new industry benchmarks for growth.Short dramas adapted from stories in Zhihus conte
50、nt library,such as“Zhibi”(執筆)and“Love in a Dream”(借寧安),achieved a new record high for popularity on their debut days on Tencents micro-drama platform.10Zhihu Inc.BUSINESS REVIEW AND OUTLOOKZhihu UsersFollowing our streamlined community-related user acquisition spending,average monthly active users i
51、n 2024,as a measure of user scale,has decreased to some extent,consistent with our expectations and strategic focus.However,engagement among our monthly active users increased,core user retention sustained its growth momentum,and daily active user time spent also increased significantly during the y
52、ear.Furthermore,our average monthly subscribing members continued to grow to 15.0 million in 2024 from 14.5 million in 2023.We have a young and diverse user base.As of December 31,2024,73.8%of our active users were under 30,and female users accounted for 59.4%of our total number of active users in D
53、ecember 2024.In our decade-long journey as a leading online content community,we are pleased to have served professional users with expertise in specific fields.Many of them joined Zhihu during their education journeys and have become long-term users and,simultaneously,high-quality content creators.
54、Our commitment to serving their demands for content,inspiring their content creation,and catering to their content consumption needs remains strong.Content CreatorsOur community culture has inspired our users to contribute and become content creators.We strive to discover,develop,and empower them to
55、 generate content and encourage content diversity,enabling content creators to realize their potential.We continue to equip our content creators with a variety of user-friendly creation tools,offering professional and supportive environments to help them reap financial rewards.In 2024,the total numb
56、er of content creators who earned income on Zhihu grew by 20%year over year.As of December 31,2024,Zhihu had 77.7 million cumulative content creators,increasing by 8.9%from 71.3 million as of December 31,2023.MonetizationOur total revenues were RMB3.6 billion in 2024,representing a decrease of 14.3%
57、from RMB4.2 billion in 2023.Our content-centric monetization channels currently include marketing services,paid membership,vocational training and other services.Annual Report 202411BUSINESS REVIEW AND OUTLOOKOur paid membership services remained our largest source of revenue,with a slight 3.5%year-
58、over-year decrease to RMB1.76 billion in 2024 from RMB1.83 billion in 2023.Our incentive programs for premium content creators worked effectively,continually strengthening the appeal of premium content.Furthermore,we have launched various initiatives to offer our subscribing members more in-depth co
59、nsumption scenarios,such as audio books and radio plays,to increase subscribers lifetime commercial value.For our marketing services,our purpose-driven structural adjustments are starting to yield tangible results.Our trust-centric marketing service model continues to gain traction,while key clients
60、 increasingly recognize the premium value of our high-quality user base and brand equity.An increasing number of original content creators are now monetizing through the Zhishi platform,enriching the supply of high-quality commercial content.Our vocational training services generated RMB468.1 millio
61、n revenue in 2024 compared RMB565.6 million in 2023.We strategically streamlined our portfolio to concentrate on high-performing categories in which we demonstrate a competitive edge.We are dedicated to utilizing AI in all our services to boost our operating efficiency.Driven by enhanced operational
62、 efficiency and disciplined cost management,our total costs and operating expenses in 2024 decreased by 25.5%and 21.0%,respectively.For a detailed discussion of our results,see“Management Discussion and Analysis.”IMPORTANT EVENTS AFTER THE REPORTING PERIODSave as disclosed herein,there was no signif
63、icant event that might affect the Company after the Reporting Period and up to the date of this report.BUSINESS OUTLOOKIn 2024,we demonstrated the effectiveness of our strategic decisions and effective execution through fruitful financial results,as well as a clear path to profitability.Our strategi
64、c priorities for 2025 will align with the direction we set in 2024.We will continue to motivate user engagement and high-quality content creation in our community.Building on our commitment to core user experience and community trustworthiness,we will continue refining our commercial ecosystem by st
65、rengthening Zhihus brand premium,addressing high-value user needs and optimizing the community atmosphere.At the same time,we will enhance the balance between our commercial and community content ecosystem,driving greater monetization efficiency and establishing a solid foundation for the exploratio
66、n of broader commercial opportunities beyond our community.We will further enhance operating efficiency and narrow losses through more disciplined spending and sustained optimization of our costs and expense structure.Additionally,we will continue to unlock our emerging potential in the AI field,and
67、 we expect the empowerment of generative AI technology to support the well-rounded growth of our business and enhance the efficiency of our various business lines.We expect our core competitive edges such as our high-value brand and distinctive user positioning to remain intact.We will maintain our
68、strong strategic execution and continue to pursue long-term sustainable profitability,and drive greater returns for our shareholders.12Zhihu Inc.MANAGEMENT DISCUSSION AND ANALYSISFor the Year Ended December 31,20242023(RMB in thousands)Revenues:Marketing services1,247,0921,652,992 Paid membership1,7
69、61,9781,826,557 Vocational training468,111565,585 Others121,724153,755 Total revenues3,598,9054,198,889 Cost of revenues(1,418,076)(1,903,041)Gross profit2,180,8292,295,848 Selling and marketing expenses(1,599,186)(2,048,090)Research and development expenses(732,553)(901,452)General and administrati
70、ve expenses(330,173)(418,531)Total operating expenses(2,661,912)(3,368,073)Loss from operations(481,083)(1,072,225)Other income/(expenses):Investment income65,44141,695 Interest income114,964158,671 Fair value change of financial instruments78,405(5,170)Exchange gains1,01397 Others,net42,90249,236 A
71、nnual Report 202413MANAGEMENT DISCUSSION AND ANALYSISFor the Year Ended December 31,20242023(RMB in thousands)Loss before income tax(178,358)(827,696)Income tax benefits/(expenses)9,391(11,832)Net loss(168,967)(839,528)Net income attributable to noncontrolling interests(2,835)(4,113)Net loss attribu
72、table to Zhihu Inc.s shareholders(171,802)(843,641)Net loss(168,967)(839,528)Other comprehensive income:Foreign currency translation adjustments32,96445,257 Total other comprehensive income32,96445,257 Total comprehensive loss(136,003)(794,271)Comprehensive income attributable to noncontrolling inte
73、rests(2,865)(4,113)Comprehensive loss attributable to Zhihu Inc.s shareholders(138,868)(798,384)14Zhihu Inc.MANAGEMENT DISCUSSION AND ANALYSISREVENUESOur total revenues were RMB3.6 billion in 2024,representing a decrease of 14.3%from RMB4.2 billion in 2023.The following table sets forth a breakdown
74、of our revenues by business line in absolute amounts and as percentages of our total revenues in 2024 and 2023,respectively:For the Year Ended December 31,20242023RMB%RMB%(in thousands,except percentages)Revenues Marketing services1,247,09234.71,652,99239.4 Paid membership1,761,97849.01,826,55743.5
75、Vocational training468,11113.0565,58513.5 Others121,7243.3153,7553.6 Total3,598,905100.04,198,889100.0 Marketing services revenue was RMB1.2 billion in 2024,compared with RMB1.7 billion in 2023.The decrease was primarily due to our proactive and ongoing refinement of service offerings to strategical
76、ly focus on margin improvement.Paid membership revenue was RMB1.76 billion in 2024,compared with RMB1.83 billion in 2023.The slight decrease was primarily attributable to a marginal decline in our average revenue per subscribing members.Vocational training revenue was RMB468.1 million in 2024,repres
77、enting a 17.2%decrease from RMB565.6 million in 2023.The decrease was primarily attributable to lower revenue contribution from our acquired businesses,partially offset by the growth of our self-operated course offerings.Other revenues were RMB121.7 million,compared with RMB153.8 million in 2023.Ann
78、ual Report 202415MANAGEMENT DISCUSSION AND ANALYSISCOST OF REVENUESOur cost of revenues decreased by 25.5%from RMB1.9 billion in 2023 to RMB1.4 billion in 2024.The decrease was primarily due to reduced content and operating costs associated with the decline in our revenues and a decrease in cloud se
79、rvices and bandwidth costs resulting from our improved technological efficiency.The following table sets forth a breakdown of our cost of revenues in absolute amounts and as percentages of our total revenues in 2024 and 2023,respectively:For the Year Ended December 31,20242023RMB%RMB%(in thousands,e
80、xcept percentages)Cost of revenues Content and operational costs707,71019.71,033,87824.6 Cloud service and bandwidth costs195,2485.4280,0456.7 Staff costs218,8736.1248,6785.9 Payment processing costs168,1514.7198,1994.7 Others128,0943.5142,2413.4 Total1,418,07639.41,903,04145.3 GROSS PROFIT AND MARG
81、INGross profit slightly decreased by 5.0%from RMB2.3 billion in 2023 to RMB2.2 billion in 2024.Gross margin expanded from 54.7%in 2023 to 60.6%in 2024,primarily attributable to our monetization enhancements and improvements in our operating efficiency.16Zhihu Inc.MANAGEMENT DISCUSSION AND ANALYSISOP
82、ERATING EXPENSESTotal operating expenses decreased by 21.0%to RMB2.7 billion in 2024 from RMB3.4 billion in 2023.Selling and marketing expenses decreased by 21.9%to RMB1.6 billion in 2024 from RMB2.0 billion in 2023.The decrease was primarily attributable to more disciplined promotional spending and
83、 decrease in personnel-related expenses.Research and development expenses decreased by 18.7%to RMB732.6 million in 2024 from RMB901.5 million in 2023.The decrease was primarily attributable to more efficient spending on technological innovation and a decrease in personnel-related expenses.General an
84、d administrative expenses decreased by 21.1%to RMB330.2 million in 2024 from RMB418.5 million in 2023.The decrease was primarily attributable to the lower share-based compensation expenses in 2024.LOSS FROM OPERATIONSLoss from operations decreased by 55.1%to RMB481.1 million in 2024 from RMB1.1 bill
85、ion in 2023.ADJUSTED LOSS FROM OPERATIONS(NON-GAAP)Adjusted loss from operations(non-GAAP)decreased by 54.4%to RMB405.4 million in 2024 from RMB888.0 million in 2023.NET LOSSNet loss decreased by 79.9%to RMB169.0 million in 2024 from RMB839.5 million in 2023.ADJUSTED NET LOSS(NON-GAAP)Adjusted net l
86、oss(non-GAAP)decreased by 85.4%to RMB96.3 million in 2024 from RMB659.1 million in 2023.Annual Report 202417MANAGEMENT DISCUSSION AND ANALYSISLIQUIDITY AND CAPITAL RESOURCESIn 2024,we have financed our operations primarily through our existing cash and capital resources.We had cash and cash equivale
87、nts,term deposits,restricted cash and short-term investments of RMB4.9 billion and RMB5.5 billion as of December 31,2024 and 2023,respectively.The net cash used in operating activities was narrowed to RMB280.2 million in 2024.The following table sets forth a summary of our cash flows for the periods
88、 indicated:For the Year Ended December 31,20242023(RMB in thousands)Net cash used in operating activities(280,185)(415,527)Net cash provided by/(used in)investing activities2,562,617(1,681,140)Net cash used in financing activities(403,862)(365,056)Effects of exchange rate changes on cash,cash equiva
89、lents and restricted cash14,85142,510 Net increase/(decrease)in cash,cash equivalents and restricted cash1,893,421(2,419,213)Cash and cash equivalents at the beginning of the year2,106,6394,525,852 Cash,cash equivalents and restricted cash at the end of the year4,000,0602,106,639 SIGNIFICANT INVESTM
90、ENTSWe did not make or hold any significant investments in 2024.MATERIAL ACQUISITIONS AND DISPOSALSWe did not have any material acquisitions or disposals of subsidiaries,consolidated affiliated entities,associated companies or joint ventures in 2024.18Zhihu Inc.MANAGEMENT DISCUSSION AND ANALYSISPLED
91、GE OF ASSETSAs of December 31,2024,no group assets of ours was pledged.FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETSWe did not have detailed future plans for significant investments or capital assets as of December 31,2024.GEARING RATIOAs of December 31,2024,our gearing ratio,calculated as
92、 total interest-bearing borrowings divided by total equity,was zero.FOREIGN EXCHANGE RISKOur expenditures are mainly denominated in Renminbi and,therefore,we are exposed to risks related to movements between Renminbi and U.S.dollars.We enter into hedging transactions in an effort to reduce our expos
93、ure to foreign currency exchange risk when we deem appropriate.In addition,the value of your investment in our Shares and ADSs will be affected by the exchange rate between U.S.dollars and Renminbi because the value of our business is effectively denominated in Renminbi,while our ADSs are traded in
94、U.S.dollars.To the extent that we need to convert U.S.dollars or other currencies into Renminbi for our operations,appreciation of Renminbi against U.S.dollars would have an adverse effect on the Renminbi amount we receive from the conversion.Conversely,if we decide to convert Renminbi into U.S.doll
95、ars or other currency for the purpose of making payments to suppliers or for dividends on our Class A Ordinary Shares or ADSs or for other business purposes,appreciation of U.S.dollars against Renminbi would have a negative effect on the U.S.dollar amounts available to us.To date,we have not entered
96、 into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.INTEREST RATE RISKOur exposure to interest rate risk primarily relates to the interest income generated by excess cash,which is mostly held in interest-bearing bank deposits and wealth management pro
97、ducts.Interest-earning instruments carry a degree of interest rate risk.We have not been exposed to material risks due to changes in market interest rates,and we have not used any derivative financial instruments to manage our interest risk exposure.From time to time,we may invest the net proceeds t
98、hat we receive from our overseas offerings in interest-earning instruments.Investments in both fixed-rate and floating rate interest-earning instruments carry a degree of interest rate risk.Fixed-rate securities may have their fair market value adversely impacted due to a rise in interest rates,whil
99、e floating-rate securities may produce less income than expected if interest rates fall.Annual Report 202419MANAGEMENT DISCUSSION AND ANALYSISCONTINGENT LIABILITIESAs of December 31,2024,we did not have any material contingent liabilities.EMPLOYEES AND REMUNERATIONAs of December 31,2024,we had 1,887
100、 full-time employees.The following table sets forth the total number of our employees by function as of December 31,2024:FunctionNumber of EmployeesPercentage Content and Content-Related Operations59331.4%Research and Development75440.0%Sales and Marketing38520.4%General Administration1558.2%Total1,
101、887100.0%We offer employees competitive salaries,performance-based cash bonuses,regular awards,and long-term incentives.As required by PRC laws and regulations in respect of our PRC employment,we participate in housing fund and various employee social insurance plans that are organized by applicable
102、 competent authorities,including housing,pension,medical,work-related injury,maternity,and unemployment insurance,under which we make contributions at specified percentages of the salaries of our employees.We also purchase commercial health and accidental insurance coverage for our employees.Bonuses
103、 are generally discretionary and based in part on the overall performance of our business and in part on employee performance.We have adopted share incentive plans to grant share-based incentive awards to our eligible employees to incentivize their contributions to our growth and development.We have
104、 built all-in-one talent training system that encompasses various trainings to our employees.20Zhihu Inc.DIRECTORS REPORTThe Board is pleased to present this Directors Report,together with the consolidated financial statements of the Group for the year ended December 31,2024(the“Consolidated Financi
105、al Statements”).BOARD OF DIRECTORS AND SENIOR MANAGEMENTThe Directors who held office during the Reporting Period and up to the Latest Practicable Date are:(i)Mr.Yuan Zhou(周源)and Mr.Henry Dachuan Sha(沙大川)(resigned with effect from February 19,2024)as executive Directors;(ii)Mr.Dahai Li(李大海)(redesign
106、ated from an executive Director to a non-executive Director with effect from June 5,2024),Mr.Zhaohui Li(李朝暉)and Mr.Bing Yu(于冰)as non-executive Directors;and(iii)Mr.Hanhui Sam Sun(孫含暉),Ms.Hope Ni(倪虹)and Mr.Derek Chen as independent non-executive Directors.As of the Latest Practicable Date,the Board c
107、omprises of seven Directors,including one executive Director,three non-executive Directors and three independent non-executive Directors.As of the Latest Practicable Date,there are three members of senior management of the Company.Biographical details of the Directors and senior management of the Gr
108、oup are set out in the section headed“Directors and Senior Management”in this annual report.GENERAL INFORMATIONThe Company was incorporated in the Cayman Islands on May 17,2011 under the Companies Act(As Revised)of the Cayman Islands as an exempted company with limited liability.In March 2021,the Co
109、mpany completed its initial public offering on the New York Stock Exchange in the U.S.(NYSE Ticket:ZH).In April 2022,the Company successfully listed its Class A Ordinary Shares on the Main Board of the Stock Exchange(HKEX stock code:2390).PRINCIPAL ACTIVITIESThe Group is primarily engaged in the ope
110、ration of one online content community and monetizes through paid membership services,marketing services and vocational training in China.BUSINESS REVIEWThe business review of the Group,as required by Schedule 5 to the Companies Ordinance,including a fair review of the Companys business,a descriptio
111、n of the principal risks and uncertainties facing the Company,particulars of important events affecting the Company that have occurred since the end of the financial year,an indication of likely future developments in the Groups business,an analysis of the Groups financial performance and the Groups
112、 key relationships with its stakeholders who have a significant impact on the Group and on which the Groups success depends,is set out in the sections headed“Business Review and Outlook”and“Management Discussion and Analysis”of this annual report.Further discussions on the Groups environmental polic
113、ies and performance,and an account of the Groups key relationships with its stakeholders are set out in the Environmental,Social and Governance Report to be published on the same day as this annual report.These discussions form part of this Directors report.Events affecting the Company that have occ
114、urred since the end of the financial year are set out in the section headed“Important Events After the Reporting Period”in this annual report.SUBSIDIARIESParticulars of the Companys subsidiaries are set out in Note 1 to the Consolidated Financial Statements.Annual Report 202421DIRECTORS REPORTPRINCI
115、PAL RISKS AND UNCERTAINTIESOur business involves certain risks as set out in the section headed“Risk Factors”in the Prospectus and the Form 20-F for the year ended December 31,2024 filed with the United States Securities and Exchange Commission.Below is a summary of certain principal risks and uncer
116、tainties facing the Group,some of which are beyond our control.Risks Relating to Our Business and Industry Our business depends on our ability to offer high-quality user-generated content for our users.Our success depends on our ability to attract and maintain an engaged user base.If we fail to main
117、tain and strengthen our community culture,brand,and reputation,our ability to expand our user base and enhance content-centric monetization could be impaired,and our business,financial condition,and results of operations could be materially and adversely affected.We have incurred net loss and negati
118、ve operating cash flow in the past,which may continue in the future.We may not be able to manage our growth effectively,which may compromise the success of our business.We are subject to risks associated with financing activities and liquidity.If we fail to retain or attract merchants and brands,or
119、to increase their spending with us,our business,financial condition,and results of operations may be materially and adversely affected.We cannot assure you that our new business initiatives and monetization strategies will be successfully implemented.We operate in a highly competitive market,and may
120、 not be able to compete effectively.If we fail to keep up with the technological developments,our business,financial condition,results of operations,and prospects may be materially and adversely affected.Our business is subject to complex and evolving laws and regulations regarding cybersecurity and
121、 data privacy.22Zhihu Inc.DIRECTORS REPORTRisks Relating to Our Corporate Structure We are a Cayman Islands holding company with no equity ownership in the Consolidated Affiliated Entities and we conduct our operations in China through(i)our PRC subsidiaries and(ii)the Consolidated Affiliated Entiti
122、es,with which we have maintained contractual arrangements,and their subsidiaries.Investors in our ADSs thus are not purchasing equity interest in the Consolidated Affiliated Entities in China but instead are purchasing equity interest in a Cayman Islands holding company.If the PRC government deems t
123、hat our contractual arrangements with the Consolidated Affiliated Entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries,or if these regulations or the interpretation of existing regulations change in the future,we could be subject to severe penaltie
124、s or be forced to relinquish our interests in those operations.Our holding company in the Cayman Islands,the Consolidated Affiliated Entities,and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arr
125、angements with the Consolidated Affiliated Entities and,consequently,significantly affect the financial performance of our Consolidated Affiliated Entities and our company as a group.Our contractual arrangements may not be as effective in providing operational control as direct ownership and shareho
126、lders of the Consolidated Affiliated Entities may fail to perform their obligations under our contractual arrangements.Our current corporate structure and business operations may be affected by the Foreign Investment Law.Risks Relating to Doing Business in China Changes in Chinas economic,political
127、or social conditions,or government policies could materially and adversely affect our business and results of operations.The Chinese laws,rules and regulations and their interpretation and enforcement may evolve quickly,which could have a material adverse effect on us.The PRC governments oversight o
128、ver our business operations could result in a material adverse change in our operations and the value of our Class A ordinary shares and the ADSs.If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in C
129、hina,or if we are required to take compliance actions in this regard,our business,financial condition,and results of operations may be materially and adversely affected.The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statement
130、s and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely a
131、uditors located in China.The delisting of the ADSs,or the threat of their being delisted,may materially and adversely affect the value of your investment.Annual Report 202423DIRECTORS REPORTRisks Relating to Our Class A Ordinary Shares and the ADSs The trading prices of our Class A Ordinary Shares a
132、nd the ADSs have been and may be volatile,which could result in substantial losses to investors.Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Sha
133、res and the ADSs may view as beneficial.ENVIRONMENTAL POLICIES AND PERFORMANCEThe Group is committed to fulfilling social responsibility,promoting employee benefits and development,protecting the environment and giving back to community and achieving sustainable growth.For details of the Companys en
134、vironmental policies and performance,please refer to the Environmental,Social and Governance Report to be published on the same day as this annual report.COMPLIANCE WITH RELEVANT LAWS AND REGULATIONSDuring the Reporting Period,as far as the Board is aware,the Group has complied with the relevant law
135、s and regulations that have a significant impact on the Group in all material respects.CONNECTED TRANSACTIONSWe have entered into a number of continuing agreements and arrangements with our connected persons in our ordinary and usual course of business,which constitute continuing connected transacti
136、ons under the Listing Rules.During the Reporting Period,we strictly follow the respective pricing policies and mechanisms for each of the below continuing connected transactions as detailed in the Prospectus and the announcement of the Company dated November 26,2024.The table below sets forth connec
137、ted persons of our Company,with whom we have entered into certain continuing connected transactions.NameConnected relationshipShenzhen Tencent Computer Systems Company Limited(深圳市騰訊計算機系統有限公司)(“Tencent Computer”)Tencent Computer is a subsidiary of Tencent(together with its affiliated companies but ex
138、cluding the China Literature Group(defined below),the“Represented Tencent Group”).Tencent is one of our substantial shareholders.Yueting Information Technology(Shanghai)Co.,Ltd.(閱霆信息技術(上海)有限公司)(“Shanghai Yueting”)Shanghai Yueting is a subsidiary of China Literature Limited(HKEX stock code:772)(toget
139、her with its subsidiaries and consolidated affiliated entities,the“China Literature Group”),which is a subsidiary of Tencent.Tencent is one of our substantial shareholders.24Zhihu Inc.DIRECTORS REPORTWe set out below details of the continuing connected transactions for our Group,in compliance with t
140、he requirements of Chapter 14A of the Listing Rules.1.Advertising ServicesOn April 6,2022,Zhizhe Sihai(Beijing)Technology Co.,Ltd.(智者四海(北京)技術有限公司)(“Zhizhe Sihai”)(for itself and on behalf of other members of our Group)entered into a framework agreement(the“Tencent Framework Agreement”)with Tencent C
141、omputer to regulate(i)the provision of advertising services by our Group to the Represented Tencent Group through our online platforms and the You Liang Hui(優量匯)platform or other digital advertising platforms operated by the Represented Tencent Group(the“Tencent Advertising Platforms”);and(ii)the pr
142、ovision of cloud services and technical services by the Represented Tencent Group following the Listing.The term of the Tencent Framework Agreement commenced on the Listing Date and will end on December 31,2024(both days inclusive).Further details of the transactions are set out in the Prospectus.Fo
143、r the year ended December 31,2024,the aggregate amount of advertising services provided to the Represented Tencent Group through our platforms and the Tencent Advertising platforms amounted to approximately RMB15.2 million.2.Literary Content Cooperation with the China Literature GroupOn April 7,2022
144、,Beijing Zhizhe Tianxia Technology Co.,Ltd.(北京智者天下科技有限公司)(“Zhizhe Tianxia”)(for itself and on behalf of other members of our Group)entered into a framework agreement(the“China Literature Framework Agreement”)with Shanghai Yueting(for itself and on behalf of the China Literature Group)to regulate the
145、 parties literary content cooperation following the Listing.The term of the China Literature Framework Agreement commenced on the Listing Date and will end on December 31,2024(both days inclusive).Further details of the transactions are set out in the Prospectus.For the year ended December 31,2024,t
146、he aggregate amount of literary content cooperation purchased from the China Literature Group by us amounted to approximately RMB6.7 million.3.Cloud Services and Technical ServicesPursuant to the Tencent Framework Agreement,the Represented Tencent Group will provide cloud services and other cloud-re
147、lated technical services to us for service fees.Cloud services and other cloud-related technical services include but are not limited to computing and network,cloud servers,cloud database,cloud security,monitoring and management,domain name resolution services,video services,big data and AI and othe
148、r products and services.Further details of the transactions are set out in the Prospectus.For the year ended December 31,2024,the aggregate amount of cloud services and technical services purchased from the Represented Tencent Group by us amounted to approximately RMB14.7 million.As the Tencent Fram
149、ework Agreement and the China Literature Framework Agreement expired on December 31,2024 and in order to renew the said agreements for a term of three years effective from January 1,2025,Zhizhe Sihai(on behalf of the Group)and Tencent Computer,and Zhizhe Tianxia(on behalf of the Group)and Shanghai Y
150、ueting,entered into the 2025 Tencent Framework Agreement and the 2025 China Literature Framework Agreement on November 26,2024.Further details of the above agreements are set out in the announcement of the Company dated November 26,2024.Annual Report 202425DIRECTORS REPORT4.Tencent Payment Services
151、Framework AgreementOn November 26,2024,Zhizhe Sihai(on behalf of the Group)and Tencent Computer entered into a new framework agreement(the“Tencent Payment Services Framework Agreement”),pursuant to which the Represented Tencent Group shall provide the payment services to the Group for the period com
152、mencing from December 1,2024 to December 31,2026.Further details of the transactions are set out in the announcement of the Company dated November 26,2024.For the year ended December 31,2024,the aggregate amount of payment service purchased from Tencent Group by us amounted to approximately RMB3.4 m
153、illion.5.Contractual ArrangementsDuring the Reporting Period,we conducted the operations of our Zhihu online platforms and other online platforms,our publication business,our online professional exam preparation classes and our online language exam preparation classes through our Consolidated Affili
154、ated Entities in the PRC,which were subject to foreign investment restriction or prohibition in accordance with applicable PRC laws(the“Relevant Business”).The major types of Relevant Business of which our operations were material during the Reporting Period are summarized below.Consolidated Affilia
155、ted EntitiesBusiness activities and relevant foreign investment requirementsZhizhe TianxiaOperation of our Zhihu online platformsZhizhe Tianxia operates our Zhihu website and the Zhihu App,through which we provide contents or information in various forms and features such as Q&As,articles,videos and
156、 live streaming.We also offer paid membership programs,advertising services,content-commerce solutions and e-commerce services through our Zhihu platforms.The relevant foreign investment requirements are as set out below.(i)Value-added telecommunication servicesThe provision of contents and informat
157、ion through our Zhihu online platforms described above constitutes commercial internet information services,hence constituting value-added telecommunication business under the applicable PRC laws and requiring an ICP License.Zhizhe Tianxia holds an ICP License.According to the 2024 Negative List,pro
158、vision of value-added telecommunication services,which include commercial internet information services pursuant to the PRC Telecommunications Regulations(中華人民共和國電信條例),is a“restricted”business and the shareholding percentage of foreign investors in companies engaged in such services shall not exceed
159、 50%.26Zhihu Inc.DIRECTORS REPORTConsolidated Affiliated EntitiesBusiness activities and relevant foreign investment requirements(ii)Provision of online pharmaceutical information serviceAs the content offerings on our Zhihu platforms include pharmaceuticals information,Zhizhe Tianxia is required to
160、 hold an Internet Medicine Information Service Qualification(互聯網藥品信息服務資格證書)or complete the internet information service filing for medicines and medical appliances(藥品醫療器械網絡信息服務備案)under applicable PRC laws and regulations.Zhizhe Tianxia has completed such filing,and its filed service is of commercial
161、 nature.(iii)Radio and television program production and operationZhizhe Tianxia engages in the production of content in video format,which constitutes radio and television program production and operation under the applicable PRC laws and regulations.Therefore,Zhizhe Tianxia is required to hold,and
162、 has obtained,a Radio and Television Program Production and Operation License(廣播電視節目製作經營許可證).Under the 2024 Negative List,radio and television program production is a“prohibited”business for which foreign investment is not permitted.(iv)Operation of commercial internet culture activitiesThe Zhihu we
163、bsite and the Zhihu App display contents in various formats including videos,games,animation and so on,which constitutes operation of commercial internet culture activities under the applicable PRC laws and regulations.The operating entity of Zhihu website and the Zhihu App therefore needs to hold a
164、n Internet Cultural Business License(網絡文化經營許可證)(“ICB License”).Zhizhe Tianxia,being the operator of the Zhihu website and the Zhihu App,has obtained an ICB License.Under the 2024 Negative List,operation of internet culture activities is a“prohibited”business for which foreign investment is not permi
165、tted.Annual Report 202427DIRECTORS REPORTConsolidated Affiliated EntitiesBusiness activities and relevant foreign investment requirements(v)Internet audio-visual program servicesZhizhe Tianxia provides video and audio content on our Zhihu online platforms,which falls within the scope of internet aud
166、io-visual programs services(互聯網視聽節目服務)under the Administrative Regulations on Internet Audio-visual Program Service(互聯網視聽節目服務管理規定).According to the Administrative Regulations on Internet Audio-Visual Program Service,entities that provide internet audio-visual program services shall obtain an Audio-V
167、isual Permit or complete a registration with relevant authority.According to the Guiding Opinions on Strengthening the Standardized Management of Network Live Broadcasting(關於加強網絡直播規範管理工作的指導意見),live streaming platforms that carry out internet audio-visual program services must hold the Audio-Visual P
168、ermit(or complete the registration in the national internet audio-visual platforms information registration and management system)and carry out an ICP filing.In addition,according to the Administrative Regulations on Internet Audio-Visual Program Service,applicants for the Audio Visual Permit shall,
169、among others,be state wholly owned or state-controlled.Therefore,Zhizhe Tianxia is not eligible to apply for an Audio-Visual Permit but has completed a registration in the National Internet Audio-Visual Platforms Information Registration and Management System(全國網絡視聽平臺信息登記管理系統).According to the 2024
170、Negative List,foreign investors are prohibited from holding equity interests in any enterprise engaging in internet audio-visual program services.28Zhihu Inc.DIRECTORS REPORTConsolidated Affiliated EntitiesBusiness activities and relevant foreign investment requirements(vi)Publication operationZhizh
171、e Tianxia engages in distribution of electronic publications through our Zhihu platforms as an integral part of our content offerings,which falls within publication distribution business subject to the Regulations on the Administration of the Publication Market(出版物市場管理規定)(the“Publication Regulations
172、”)effective on June 1,2016.Zhizhe Tianxia is therefore required to,and has obtained,a Publication Operation License(出版物經營許可證)under the Publication Regulations.According to the Publication Regulations,foreign-invested enterprises are permitted to engage in publication distribution business in the PRC
173、.Since the distribution of the electronic publications is an inherent part of our content offerings and must be conducted through our Zhihu platforms,it is an inseparable part of the business carried out by Zhizhe Tianxia which is subject to foreign investment prohibitions and restrictions as descri
174、bed above.Tianjin Zhizhe Wanjuan Culture Co.,Ltd.(“Tianjin Zhizhe”)Publication businessAs part of our ordinary business,we publish books leveraging on the contents generated on our Zhihu platforms.We also carry out publication related businesses such as publication distribution and sales.We conduct
175、our publication business and publication related businesses primarily through Tianjin Zhizhe.The relevant foreign investment requirements are as set out below.Annual Report 202429DIRECTORS REPORTConsolidated Affiliated EntitiesBusiness activities and relevant foreign investment requirements(i)Public
176、ationTo conduct businesses of publishing books,newspapers,periodicals,audiovisual products or electronic publications,or internet publishing services,a license for such online or offline business(“Publication License”)is required under the applicable PRC laws and regulations.Tianjin Zhizhe currently
177、 engages in publication business in partnerships with third-party enterprises that hold a Publication License by entrusting such party to publish publication materials,and is in the process of applying for a Publication License and expects to carry out the publication business on its own after recei
178、ving the license.Tianjin Zhizhe will not operate any new business that is not subject to any foreign investment restrictions or prohibitions until it has obtained the Publication License or any other required license to operate such business.According to the 2024 Negative List,foreign investors are
179、prohibited from holding equity interests in businesses of editing,publishing and production of books,newspapers,periodicals,audio-visual products and electronic publications,or internet publishing services.As we intend to continue to carry out publication business and continue to apply for a Publica
180、tion License,it is impractical for us to reorganize Tianjin Zhizhe to be a foreign-invested entity as foreign-invested entities are not eligible to apply for the Publication License.30Zhihu Inc.DIRECTORS REPORTConsolidated Affiliated EntitiesBusiness activities and relevant foreign investment requir
181、ements(ii)Publication operationTianjin Zhizhe also distributes publications,which constitutes publication distribution business and requires a Publication Operation License(出版物經營許可證)under the Publication Regulations.Tianjin Zhizhe holds a Publication Operation License.According to the Publication Re
182、gulations,foreign-invested enterprises are permitted to engage in publication distribution business in the PRC.However,the publication distribution business of Tianjin Zhizhe is inseparable from its publication business as Tianjin Zhizhes experience in running publication distribution business contr
183、ibutes to its credentials in procuring the Publication License.Further,since the Company organizes its business contracts relating to the publication business primarily under Tianjin Zhizhe,it is operationally natural and efficient to use the same entity to distribute the publications Tianjin Zhizhe
184、 publishes.Our Directors believe that the Contractual Arrangements are fair and reasonable because:(i)the Contractual Arrangements were freely negotiated and entered into between the WFOEs and our Consolidated Affiliated Entities;(ii)by entering into exclusive service and consultation agreements wit
185、h the WFOEs,being subsidiaries of our Company,our Consolidated Affiliated Entities will enjoy better economic and technical support from us,as well as a better market reputation after Listing;and(iii)a number of other companies in the same or similar industries to those in which we operate use simil
186、ar arrangements to accomplish the same purpose.The Contractual Arrangements,through which we are able to exercise control over and derive the economic benefits from our Consolidated Affiliated Entities,have been narrowly tailored to achieve our business purpose and minimize the potential for conflic
187、t with relevant PRC laws and regulations to the maximum extent.Annual Report 202431DIRECTORS REPORTRisks Relating to the Contractual Arrangements and actions taken to mitigate the risks If the PRC government finds that the agreements that establish the structure for operating our business do not com
188、ply with PRC laws and regulations,or if these regulations or their interpretations change in the future,we could be subject to severe penalties or be forced to relinquish our interests in those operations;Our contractual arrangements may not be as effective in providing operational control as direct
189、 ownership and shareholders of the Consolidated Affiliated Entities may fail to perform their obligations under our contractual arrangements;Our current corporate structure and business operations may be affected by the Foreign Investment Law;We may lose the ability to use,or otherwise benefit from,
190、the licenses,approvals,and assets held by the Consolidated Affiliated Entities,which could,render us unable to conduct some or all of our business operations and constrain our growth;The contractual arrangements with the Consolidated Affiliated Entities may be subject to scrutiny by the tax authorit
191、ies in China.Any adjustment of related party transaction pricing could lead to additional taxes,and therefore substantially reduce our consolidated profit and the value of your investment;The equity holders,directors,and executive officers of the Consolidated Affiliated Entities,as well as our emplo
192、yees who execute other strategic initiatives may have potential conflicts of interest with our company;and If we exercise the option to acquire equity ownership of the Consolidated Affiliated Entities,the ownership transfer may subject us to certain limitations and substantial costs.32Zhihu Inc.DIRE
193、CTORS REPORTOur Group has adopted but not limited to the following measures to ensure the effective operation of our Group with the implementation of the Contractual Arrangements and our compliance with the Contractual Arrangements:major issues arising from the implementation and compliance with the
194、 Contractual Arrangements or any regulatory enquiries from government authorities will be submitted to our Board,if necessary,for review and discussion on an occurrence basis;our Board will review the overall performance of and compliance with the Contractual Arrangements at least once a year;our Co
195、mpany will disclose the overall performance of and compliance with the Contractual Arrangements in our annual reports;and our Company will engage external legal advisors or other professional advisors,if necessary,to assist the Board to review the implementation of the Contractual Arrangements,revie
196、w the legal compliance of the WFOEs and our Consolidated Affiliated Entities to deal with specific issues or matters arising from the Contractual Arrangements.Summary of the Material Terms of the Contractual ArrangementsA description of each of the specific agreements that comprise the Contractual A
197、rrangements is set out below.Exclusive Business Cooperation AgreementsZhizhe Tianxia entered into an exclusive business cooperation agreement with Zhizhe Sihai on December 21,2021(the“Exclusive Business Cooperation Agreement”),pursuant to which Zhizhe Tianxia agrees to engage Zhizhe Sihai as its exc
198、lusive provider of business support,technical and consulting services,including without limitation technical services,network support,business consultation,intellectual property licensing,equipment and leasing,market consultancy,system integration,product research and development and system maintena
199、nce,and management consulting services relating to Zhizhe Tianxias operations,in exchange for service fees.Under these arrangements,the service fees,subject to Zhizhe Sihais adjustment,are equal to all of the net profit of Zhizhe Tianxia and its subsidiaries.Zhizhe Sihai may adjust the service fees
200、at its sole discretion,after consideration of certain factors,including but not limited to the deduction of necessary costs,expenses,taxes and other statutory contribution in relation to the respective fiscal year,and may also include accumulated losses of Zhizhe Tianxia and its subsidiaries from pr
201、evious financial periods.If Zhizhe Tianxia runs into financial deficit or suffers severe operation difficulties,Zhizhe Sihai will provide financial support to Zhizhe Tianxia.Intellectual property rights are developed during the normal course of business of Zhizhe Tianxia and its subsidiaries.Pursuan
202、t to the Exclusive Business Cooperation Agreement,Zhizhe Sihai will have the exclusive and proprietary rights to all intellectual properties developed by Zhizhe Tianxia and its subsidiaries,in connection with performance of the Exclusive Business Cooperation Agreement.Annual Report 202433DIRECTORS R
203、EPORTUnless otherwise terminated early by Zhizhe Sihai,the Exclusive Business Cooperation Agreement will remain effective unless terminated in the event that(a)the entire equity interests held by the Registered Shareholders in Zhizhe Tianxia or the entire assets of Zhizhe Tianxia have been transferr
204、ed to Zhizhe Sihai;(b)in accordance with the other provisions of the Exclusive Business Cooperation Agreement.Shanghai Pinzhi Education Technology Co.,Ltd.(上海品職教育科技有限公司)(“Shanghai Pinzhi”)entered into an exclusive technology development,consultancy and services agreement with Shanghai Zhishi Technol
205、ogy Co.,Ltd.(上海知匙科技有限公司)(“Shanghai Zhishi”)on September 7,2021(the“Pinzhi Exclusive Business Cooperation Agreement”),pursuant to which Shanghai Pinzhi agrees to engage Shanghai Zhishi as its exclusive provider of technology development,consultancy and services in exchange for service fees.The servic
206、e fees shall be equal to the total consolidated net profit of Shanghai Pinzhi,after deducting the business expenses as confirmed by both parties.Shanghai Zhishi may adjust the service fees at its sole discretion,taking into account the content of the services provided during the year and the busines
207、s need of Shanghai Pinzhi.Shanghai Zhishi may provide financial support to Shanghai Pinzhi to ensure Shanghai Pinzhi can meet its operational cash flow requirements and/or to support it when it suffers operational losses.Unless otherwise terminated early by mutual agreement or pursuant to provisions
208、 set forth therein,the Pinzhi Exclusive Business Cooperation Agreement shall have a term of twenty years from the date of signing.The remaining principal terms of the Pinzhi Exclusive Business Cooperation Agreement are substantially similar to those under the Exclusive Business Cooperation Agreement
209、 as set out above.Shanghai Biban Network Technology Co.,Ltd.(上海彼伴網絡科技有限公司)(“Shanghai Biban”)entered into an exclusive technology development,consultancy and services agreement with Shanghai Paya Information Technology Co.,Ltd.(上海杷雅信息科技有限公司)(“Shanghai Paya”)on November 9,2021,the principal terms of w
210、hich are substantially the same as those under the Pinzhi Exclusive Business Cooperation Agreement.In June 2024,the shareholders of Shanghai Biban transferred all its shares in Shanghai Biban to a subsidiary that is indirectly wholly owned by Wuhan Xinyue,and such contractual arrangements were termi
211、nated accordingly.Exclusive Option AgreementsZhizhe Tianxia and its Registered Shareholders entered into an exclusive option agreement with Zhizhe Sihai dated December 21,2021(the“Exclusive Option Agreement”),pursuant to which Zhizhe Sihai or its designee is granted an irrevocable and exclusive righ
212、t to purchase all of the equity interest in and/or assets of Zhizhe Tianxia for a nominal price,unless the relevant government authorities or the PRC laws request that another amount be used as the purchase price,in which case the purchase price shall be the lowest amount under such request.Subject
213、to relevant PRC laws and regulations,the Registered Shareholders of Zhizhe Tianxia and/or Zhizhe Tianxia shall return any amount of purchase price they have received to Zhizhe Sihai or its designee.At Zhizhe Sihais request,the Registered Shareholders of Zhizhe Tianxia will promptly transfer their re
214、spective equity interests in and/or the relevant assets of Zhizhe Tianxia to Zhizhe Sihai or its designee after Zhizhe Sihai exercises its purchase right.Unless otherwise terminated early by Zhizhe Sihai through written notice,the Exclusive Option Agreement will remain effective until when all the p
215、urchased equity interests and/or the relevant assets are transferred to Zhizhe Sihai and/or the designee and Zhizhe Sihai and its subsidiaries have the right to legally conduct the business of Zhizhe Tianxia according to the PRC law.34Zhihu Inc.DIRECTORS REPORTDuring the term of the Exclusive Option
216、 Agreement,Zhizhe Tianxia is not allowed to,and shall procure its subsidiaries not to sell,transfer,mortgage or otherwise dispose of any of its assets(exceeding the value of RMB1 million)without the prior written consent of Zhizhe Sihai.In addition,the Registered Shareholders are not allowed to requ
217、est for any distributions,gains or other form of profits sharing and should forgo such distributions,gains or any other form of profits sharing within the scope permitted by the PRC law.In the event that the Registered Shareholders of Zhizhe Tianxia receive any distribution from Zhizhe Tianxia and/o
218、r its subsidiaries and subject to the PRC laws,the Registered Shareholders must immediately pay or transfer such distribution to Zhizhe Sihai or its designee.If Zhizhe Sihai exercises its purchase right,all or any part of the equity interests in and/or assets of Zhizhe Tianxia acquired would be tran
219、sferred to Zhizhe Sihai and the benefits of equity ownership and/or assets,as applicable,would flow to us and our Shareholders.As provided in the Exclusive Option Agreement,without the prior written consent of Zhizhe Sihai,Zhizhe Tianxia shall not,and shall procure its subsidiaries not to,among othe
220、r things,(i)sell,transfer,pledge or dispose of in any manner any of its assets for a value more than RMB1 million;(ii)execute any material contract for a value more than RMB1 million,except any contracts in the ordinary course of business and any contracts entered into with any members of our Group;
221、(iii)provide any loan,financial support,pledge or guarantees in any form to any third party,or allow any third party create any pledge or other security interest on its assets or equity;(iv)incur,inherit,guarantee or allow any debt that is not incurred in the ordinary course of business of Zhizhe Ti
222、anxia or not disclosed and consented to by Zhizhe Sihai;(v)enter into any consolidation or merger with any third party,or acquire or invest in any third party;(vi)increase or reduce its registered capital,or alter the structure of the registered capital in any other way.As such,the potential adverse
223、 effect on Zhizhe Sihai and us in the event of any loss suffered from Zhizhe Tianxia and/or its subsidiaries can be limited to a certain extent.Shanghai Pinzhi entered into an exclusive option agreement with Shanghai Zhishi on September 7,2021(the“Pinzhi Exclusive Option Agreement”),pursuant to whic
224、h Shanghai Zhishi or its designee is granted an irrevocable and exclusive right to purchase all of the equity interest in and/or assets of Shanghai Pinzhi for RMB10 or the lowest amount allowed by PRC laws and regulations.The Pinzhi Exclusive Option Agreement shall take effect from the date of signi
225、ng and terminate when all the purchased equity interests and/or assets are transferred to Shanghai Zhishi or its designee.The remaining principal terms of the Pinzhi Exclusive Option Agreement are substantially similar to those under the Exclusive Option Agreement,except that the materiality thresho
226、ld under the Pinzhi Exclusive Option Agreement for the corporate actions that require Shanghai Zhishis consent is RMB500 thousand or higher(rather than RMB1 million).In 2024,we exercised the redemption right in connection with our investment arrangements with Shanghai Pinzhi to require Shanghai Pinz
227、hi and its founders to repurchase our shareholding interest,as its performance did not meet certain criteria.The parties are currently resolving the pending disputes and litigations,and we may terminate the contractual arrangements with Shanghai Pinzhi and its subsidiaries if the disputes are settle
228、d.Shanghai Biban entered into an exclusive option agreement with Shanghai Paya on November 9,2021,the principal terms of which are substantially the same as those under the Pinzhi Exclusive Option Agreement.In June 2024,the shareholders of Shanghai Biban transferred all its shares in Shanghai Biban
229、to a subsidiary that is indirectly wholly owned by Wuhan Xinyue,and such contractual arrangements were terminated accordingly.Annual Report 202435DIRECTORS REPORTShareholders Rights Entrustment Agreement and Powers of AttorneyPursuant to the shareholders rights entrustment agreement entered into amo
230、ng the Registered Shareholders of Zhizhe Tianxia,Zhizhe Sihai and Zhizhe Tianxia on December 21,2021(the“Shareholders Rights Entrustment Agreement”),and the irrevocable power of attorney executed by each of the Registered Shareholders of Zhizhe Tianxia on the same day(the“Power of Attorney”),whereby
231、 the Registered Shareholders appointed Zhizhe Sihai or a director of its offshore holding company or his or her successor(including a liquidator replacing such director)as their exclusive agent and attorney to act on their behalf on all matters concerning Zhizhe Tianxia and to exercise all of its ri
232、ghts as a registered shareholder of Zhizhe Tianxia;such attorney cannot be the Registered Shareholder himself/herself or another Registered Shareholder of Zhizhe Tianxia.These rights include(i)the right to propose,convene and attend shareholders meetings;(ii)the right to sell,transfer,pledge or disp
233、ose of shares;(iii)the right to exercise shareholders voting rights;and(iv)the right to appoint the legal representative(chairperson),the director,supervisor,the chief executive officer(or general manager)and other senior management members of Zhizhe Tianxia.The authorized person is entitled to sign
234、 minutes,file documents with the relevant companies registry and exercise voting rights in Zhizhe Tianxia on behalf of the relevant Registered Shareholders.As a result of the Shareholders Rights Entrustment Agreement and the Powers of Attorney,we,through Zhizhe Sihai,are able to exercise management
235、control over the activities that most significantly impact the economic performance of Zhizhe Tianxia.The Shareholders Rights Entrustment Agreement and the Powers of Attorney shall automatically terminate once Zhizhe Sihai or its designee directly holds the entire equity interests in and/or the enti
236、re assets of Zhizhe Tianxia once permitted under the then PRC laws and Zhizhe Sihai or its designee is allowed to conduct the Relevant Businesses of Zhizhe Tianxia.The Registered Shareholders of Shanghai Pinzhi each entered into a power of attorney on September 7,2021(the“Pinzhi Powers of Attorney”)
237、in favor of Shanghai Zhishi,the principal terms of which are substantially similar to those under the Shareholders Rights Entrustment Agreement as set out above except that the Pinzhi Power of Attorney shall terminate upon the earlier of(a)the relevant Registered Shareholder ceasing to be a sharehol
238、der of Shanghai Pinzhi and(b)when the attorney terminates such Power of Attorney by written notice to the relevant Registered Shareholder.The Registered Shareholders of Shanghai Biban each entered into a power of attorney on November 9,2021 in favor of Shanghai Paya,the principal terms of which are
239、substantially the same as those under the Pinzhi Powers of Attorney.In June 2024,the shareholders of Shanghai Biban transferred all its shares in Shanghai Biban to a subsidiary that is indirectly wholly owned by Wuhan Xinyue,and such contractual arrangements were terminated accordingly.36Zhihu Inc.D
240、IRECTORS REPORTShare Pledge AgreementZhizhe Tianxia,the Registered Shareholders of Zhizhe Tianxia and Zhizhe Sihai entered into a share pledge agreement on December 21,2021(the“Share Pledge Agreement”).Under the Share Pledge Agreement,the Registered Shareholders of Zhizhe Tianxia will pledge all of
241、their respective equity interests in Zhizhe Tianxia to Zhizhe Sihai as collateral security for any or all of their payments due to Zhizhe Sihai and to secure performance of their obligations under the Exclusive Business Cooperation Agreement,the Exclusive Option Agreement,Shareholders Rights Entrust
242、ment Agreement and the Powers of Attorney.The Share Pledge Agreement will not terminate until(i)all obligations of Zhizhe Tianxia and its Registered Shareholders are satisfied in full;(ii)Zhizhe Sihai exercises its exclusive option to purchase the entire equity interests held by the Registered Share
243、holders in Zhizhe Tianxia and/or the entire assets of Zhizhe Tianxia pursuant to the Exclusive Option Agreement when it is permitted to do so under the applicable PRC laws;(iii)Zhizhe Sihai exercises its unilateral and unconditional right of termination;or(iv)the Share Pledge Agreement is required t
244、o be terminated in accordance with applicable PRC laws.Should an event of default(as provided in the Share Pledge Agreement)occur,unless it is successfully resolved to Zhizhe Sihais satisfaction within 30 days upon being notified by Zhizhe Sihai,Zhizhe Sihai may demand that Zhizhe Tianxia immediatel
245、y pay all outstanding payments due under the Exclusive Business Cooperation Agreement,repay any loans and make all other payments due to it,and/or dispose of the pledged equity interests and use the proceeds to repay any outstanding payments due to Zhizhe Sihai.The Registered Shareholders of Zhizhe
246、Tianxia have pledged their equity interests in Zhizhe Tianxia to Zhizhe Sihai and registered such pledges with the relevant PRC governmental authority pursuant to PRC laws and regulations.Shanghai Pinzhi,the Registered Shareholders of Shanghai Pinzhi and Shanghai Zhishi entered into a share pledge a
247、greement on September 7,2021(the“Pinzhi Share Pledge Agreement”)which shall terminate upon all obligations of Shanghai Pinzhi and its Registered Shareholders under the Pinzhi Exclusive Business Cooperation Agreement,the Pinzhi Exclusive Option Agreement and the Pinzhi Powers of Attorney are satisfie
248、d in full.The remaining principal terms of the Pinzhi Share Pledge Agreement are substantially similar to those under the Share Pledge Agreement as set out above.Shanghai Biban,the Registered Shareholders of Shanghai Biban and Shanghai Paya entered into a share pledge agreement on November 9,2021,th
249、e principal terms of which are substantially the same as those under the Pinzhi Share Pledge Agreement.In June 2024,the shareholders of Shanghai Biban transferred all its shares in Shanghai Biban to a subsidiary that is indirectly wholly owned by Wuhan Xinyue,and such contractual arrangements were w
250、as terminated accordingly.On August 8,2023,Zhizhe Tianxia transferred all of it equity interest in Nanjing Zhihu Technology Co.,Ltd.(南京知著科技有限公司)(“Nanjing Zhizhu”,one of our Consolidated Affiliated Entities)to Wuhan Xinyue Network Technology Co.,Ltd.(武漢昕越網絡科技有限公司)(“Wuhan Xinyue”),a limited liability
251、company established under the laws of the PRC and owned as to 99%by Mr.Zhou and 1%by Mr.Rongle Zhang(張榮樂).On July 31,2023,Wuhan Xinyue,Wuhan Bofeng Technology Co.,Ltd.(武漢博烽科技有限公司)(our wholly owned subsidiary),Mr.Zhou and Mr.Rongle Zhang entered into a series of contractual arrangements(“Wuhan Xinyue
252、 Contractual Arrangements”),which are substantially similar to those under the Exclusive Business Cooperation Agreement,the Exclusive Option Agreement,the Shareholders Rights Entrustment Agreement and the Share Pledge Agreement set out above.The Wuhan Xinyue Contractual Arrangements were reproduced
253、from our pre-existing Contractual Arrangements under the terms and conditions of the Renewal and Reproduction Waiver,as defined and detailed below.Annual Report 202437DIRECTORS REPORTIn April,2024,Beijing Radio and Television Station(北京廣播電視臺)(“BRTS”),an independent third party investor,completed its
254、 investment of RMB0.2 million in Zhizhe Tianxia to acquire 1%of Zhizhe Tianxias enlarged registered capital.BRTS is not a party to the contractual arrangements that are currently in effect among Zhizhe Sihai,Zhizhe Tianxia and Zhizhe Tianxias other shareholders.As such,following the investment we ar
255、e able to enjoy 99%of the economic benefits and exercise effective control over Zhizhe Tianxia and its subsidiaries,but we are not able to purchase or have BRTS pledge its 1%equity interests in Zhizhe Tianxia in the same manner as agreed under existing contractual arrangements,nor are we granted the
256、 authorization of voting rights over these 1%equity interests.However,we believe Zhizhe Sihai,our wholly-owned subsidiary,still controls and is the primary beneficiary of Zhizhe Tianxia as it continues to have a controlling financial interest in Zhizhe Tianxia after the investment.BRTS is entitled t
257、o customary economic rights in proportion to its equity ownership,and certain minority shareholder rights such as the right to appoint a director to Zhizhe Tianxias three-member board of directors,and veto rights over certain matters related to content decision,and certain future financings of Zhizh
258、e Tianxia.Apart from the above,(i)there were no Contractual Arrangements entered into,renewed or reproduced during the Reporting Period,(ii)there was no material change in the Contractual Arrangements and/or the circumstances under which they were adopted during the Reporting Period,and(iii)none of
259、the Contractual Arrangements had been terminated during the Reporting Period as none of the restrictions that led to the adoption of the contracts under the Contractual Arrangements were removed.Listing Rules Implications and WaiversFor the purposes of Chapter 14A of the Listing Rules,and in particu
260、lar the definition of“connected person,”the Consolidated Affiliated Entities will be treated as our Companys wholly-owned subsidiaries,and their directors,chief executives or substantial shareholders(as defined in the Listing Rules)and their respective associates will be treated as our Companys“conn
261、ected persons”.Therefore,the transactions contemplated under the Contractual Arrangements constitute continuing connected transactions of our Company.In view of the Contractual Arrangements,we have applied to the Stock Exchange for,and the Stock Exchange has granted us,waivers from strict compliance
262、 with(i)the announcement,circular and independent shareholders approval requirements pursuant to Rule 14A.105 of the Listing Rules,(ii)the requirement to set annual caps under Rule 14A.53 of the Listing Rules,and(iii)the requirement to limit the term to three years or less under Rule 14A.52 of the L
263、isting Rules,for so long as our Class A Ordinary Shares are listed on the Stock Exchange subject to the following conditions.38Zhihu Inc.DIRECTORS REPORTNo change without independent non-executive Directors approvalSave as described below,no change to the Contractual Arrangements(including with resp
264、ect to any fees payable to the WFOE thereunder)will be made without the approval of our independent non-executive Directors.No change without independent Shareholders approvalSave as described below,no change to the agreements governing the Contractual Arrangements will be made without the approval
265、of our independent Shareholders.Once independent Shareholders approval of any change has been obtained,no further announcement or approval of the independent Shareholders will be required under Chapter 14A of the Listing Rules unless and until further changes are proposed.The periodic reporting requ
266、irement regarding the Contractual Arrangements in the annual reports of our Company will however continue to be applicable.Economic benefits and flexibilityThe Contractual Arrangements shall continue to enable our Group to receive the economic benefits derived by the Consolidated Affiliated Entities
267、 through(i)our Groups options(if and when so allowed under the applicable PRC laws)to acquire,all or part of the equity interests in the Consolidated Affiliated Entities for nil consideration or the minimum amount of consideration permitted by applicable PRC laws and regulations,(ii)the business str
268、ucture under which the profit generated by the Consolidated Affiliated Entities is substantially retained by our Group,such that no annual cap shall be set on the amount of service fees payable to the WFOE by our Consolidated Affiliated Entities under the Contractual Arrangements,and(iii)our Groups
269、right to control the management and operation of,as well as,in substance,a substantial portion of the voting rights of the Consolidated Affiliated Entities.Renewal and reproductionOn the basis that the Contractual Arrangements provide an acceptable framework for the relationship between,on the one h
270、and,our Company and the subsidiaries in which our Company has direct shareholding and,on the other hand,the Consolidated Affiliated Entities,this framework may be renewed and/or reproduced without an announcement,circular,or obtaining the approval of our Shareholders(i)upon the expiry of the existin
271、g arrangements,(ii)in connection with any changes to the shareholders or directors of,or of their shareholdings in,the Consolidated Affiliated Entities,or(iii)in relation to any existing,new or acquired wholly foreign-owned enterprise or operating company(including branch company)engaging in a busin
272、ess similar or relating to those of our Group(the“Renewal and Reproduction Waiver”).The directors,chief executive or substantial shareholders of any existing,new or acquired wholly foreignowned enterprise or operating company(including branch company)engaging in a business similar or relating to tho
273、se of our Group will,upon renewal and/or reproduction of the Contractual Arrangements,be treated as connected persons of our Group and transactions between these connected persons and our Group other than those under similar Contractual Arrangements shall comply with Chapter 14A of the Listing Rules
274、.This condition is subject to relevant PRC laws,regulations and approvals.Any such renewed or reproduced agreements will be on substantially the same terms and conditions as the existing Contractual Arrangements.Annual Report 202439DIRECTORS REPORTOngoing reporting and approvalsWe will disclose deta
275、ils relating to the Contractual Arrangements on an ongoing basis:the Contractual Arrangements in place during each financial period will be disclosed in our Companys annual report and accounts in accordance with the relevant provisions of the Listing Rules;our independent non-executive Directors wil
276、l review the Contractual Arrangements annually and confirm in our Companys annual report that for the relevant year(i)the transactions carried out during such year have been entered into in accordance with the relevant provisions of the Contractual Arrangements,(ii)no dividends or other distribution
277、s have been made by our Consolidated Affiliated Entities to the holders of its equity interests which are not otherwise subsequently assigned or transferred to our Group,and(iii)any new contracts entered into,renewed or reproduced between our Group and the Consolidated Affiliated Entities are fair a
278、nd reasonable,or advantageous,so far as our Group is concerned and in the interests of our Shareholders as a whole;our Companys Auditors will carry out review procedures annually on the transactions carried out pursuant to the Contractual Arrangements and will provide a letter to our Directors with
279、a copy to the Stock Exchange,confirming that the transactions have been approved by our Board,have been entered into in accordance with the relevant Contractual Arrangements and that no dividends or other distributions have been made by our Consolidated Affiliated Entities to the holders of its equi
280、ty interests which are not otherwise subsequently assigned or transferred to our Group;for the purpose of Chapter 14A of the Listing Rules,and in particular the definition of connected person,our Consolidated Affiliated Entities will be treated as our Companys subsidiaries,but at the same time,the d
281、irectors,chief executives or substantial shareholders of the Consolidated Affiliated Entities and their associates will be treated as connected persons of our Company as applicable under the Listing Rules(excluding for this purpose,the Consolidated Affiliated Entities themselves),and therefore trans
282、actions between these connected persons and our Group(including for this purpose,the Consolidated Affiliated Entities),other than those under the Contractual Arrangements,will be subject to requirements under Chapter 14A of the Listing Rules;and our Consolidated Affiliated Entities will,for so long
283、as our Class A Ordinary Shares are listed on the Stock Exchange,provide our Groups management and our Companys Auditors with full access to their relevant records for the purpose of reporting on the connected transactions.40Zhihu Inc.DIRECTORS REPORTConfirmation from Independent Non-executive Direct
284、orsThe independent non-executive Directors have reviewed the above continuing connected transactions and confirmed that these transactions have been entered into:in the ordinary and usual course of business of the Company;either on normal commercial terms or on terms no less favourable to the Compan
285、y than terms available to or from(as appropriate)independent third parties;in accordance with relevant agreement governing them on terms that are fair and reasonable and in the interest of the Shareholders as a whole;the transactions under the Contractual Arrangement carried out during the Reporting
286、 Period have been entered into in accordance with the relevant provisions of the Contractual Arrangements;and no dividends or other distributions have been made by the Consolidated Affiliated Entities to the holders of its equity interests which are not otherwise subsequently assigned or transferred
287、 to the Group during the Reporting Period.Confirmation from the Companys Independent AuditorThe auditor of the Company has performed the relevant procedures regarding the Continuing Connected Transactions in accordance with Hong Kong Standard on Assurance Engagements 3000(Revised)“Assurance Engageme
288、nts Other Than Audits or Reviews of Historical Financial Information”and with reference to Practice Note 740(Revised)“Auditors Letter on Continuing Connected Transactions under the Hong Kong Listing Rules”issued by Hong Kong Institute of Certified Public Accountants.The Auditor has issued an unquali
289、fied letter containing findings and conclusions in respect of the continuing connected transactions disclosed by the Group in the paragraph above in accordance with Rule 14A.56 of the Listing Rules.The Auditor has confirmed in a letter to the Board that,with respect to the aforesaid continuing conne
290、cted transactions entered into in the Reporting Period:nothing has come to the Auditors attention that causes the Auditor to believe that the disclosed continuing connected transactions have not been approved by the Board;for transactions involving the provision of goods or service by the Group,noth
291、ing has come to the Auditors attention that causes the Auditor to believe that the continuing connected transactions were not,in all material respects,in accordance with the pricing policies of the Group;Annual Report 202441DIRECTORS REPORT nothing has come to the Auditors attention that causes the
292、Auditor to believe that the transactions were not entered into,in all material respects,in accordance with the relevant agreements governing such transactions;with respect to the aggregate amount of each of the continuing connected transactions(other than those transactions with the Consolidated Aff
293、iliated Entities under the Contractual Arrangements),nothing has come to the Auditors attention that causes the Auditor to believe that the disclosed continuing connected transactions have exceeded the annual caps as set by the Company;and with respect of the disclosed continuing connected transacti
294、ons with the Consolidated Affiliated Entities under the contractual arrangements,nothing has come to the Auditors attention that causes the Auditor to believe that dividends or other distributions have been made by the Consolidated Affiliated Entities to the holders of the equity interests of the Co
295、nsolidated Affiliated Entities which are not otherwise subsequently assigned or transferred to the Group.Other than the transactions as disclosed above,none of the related party transactions as disclosed under Note 21 to the Consolidated Financial Statements of this annual report constitute connecte
296、d transactions or continuing connected transactions that are subject to announcement,circular,shareholders approval and/or reporting requirements under Chapter 14A of the Listing Rules.Save as disclosed in this annual report,during the Reporting Period,the Company had no connected transactions or co
297、ntinuing connected transactions which are required to be disclosed under the Listing Rules.The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules with respect to the continuing connected transactions of the Group during the Reporting Period.WEIGHTED VOTING R
298、IGHTSThe Company is controlled through weighted voting rights.Under this structure,the Companys share capital comprises Class A Ordinary Shares and Class B Ordinary Shares.Each Class A Ordinary Share entitles the holder to exercise one vote,and each Class B Ordinary Share entitles the holder to exer
299、cise ten votes,on any resolution tabled at the Companys general meetings,except for resolutions with respect to the Reserved Matters,in relation to which each Share is entitled to one vote.The WVR Structure enables the WVR Beneficiary to exercise voting control over the Company notwithstanding that
300、the WVR Beneficiary does not hold a majority economic interest in the share capital of the Company.This will enable the Company to benefit from the continuing vision and leadership of the WVR Beneficiary who will control the Company with a view to its long-term prospects and strategy.Investors are a
301、dvised to be aware of the potential risks of investing in companies with a WVR Structure,in particular that the interests of the WVR Beneficiary may not necessarily always be aligned with those of our Shareholders as a whole,and that the WVR Beneficiary will be in a position to exert significant inf
302、luence over the affairs of our Company and the outcome of Shareholders resolutions.Investors should make the decision to invest in the Company only after due and careful consideration.42Zhihu Inc.DIRECTORS REPORTThe table below sets out the ownership and voting rights held by the WVR Beneficiary as
303、at the Latest Practicable Date:WVR BeneficiaryClass of SharesNumber of SharesPercentage of voting rights(other than with respect to Reserved Matters)Mr.ZhouClass A Ordinary Shares21,407,8005.30%Class B Ordinary Shares15,446,77838.27%Class B Ordinary Shares may be converted into Class A Ordinary Shar
304、es on a one-to-one ratio.As of the Latest Practicable Date,assuming all the issued and outstanding Class B Ordinary Shares are converted into Class A Ordinary Shares,the Company will issue 15,446,778 Class A Ordinary Shares,representing approximately 6.20%of the total number of issued Class A Ordina
305、ry Shares.The weighted voting rights attached to Class B Ordinary Shares will cease when the WVR Beneficiary has no beneficial ownership of any of the Class B Ordinary Shares,in accordance with 8A.22 of the Listing Rules.This may occur:(i)upon the occurrence of any of the circumstances set out in Ru
306、le 8A.17 of the Listing Rules,in particular where the WVR Beneficiary is:(1)deceased;(2)no longer a member of our Board;(3)deemed by the Stock Exchange to be incapacitated for the purpose of performing his duties as a director;or(4)deemed by the Stock Exchange to no longer meet the requirements of a
307、 director set out in the Listing Rules;(ii)when the holders of Class B Ordinary Shares have transferred to another person the beneficial ownership of,or economic interest in,all of the Class B Ordinary Shares or the voting rights attached to them,other than in the circumstances permitted by Rule 8A.
308、18 of the Listing Rules;(iii)where a vehicle holding Class B Ordinary Shares on behalf of a WVR Beneficiary no longer complies with Rule 8A.18(2)of the Listing Rules;or(iv)when all of the Class B Ordinary Shares have been converted to Class A Ordinary Shares.Annual Report 202443DIRECTORS REPORTPURCH
309、ASE,SALE OR REDEMPTION OF THE COMPANYS LISTED SECURITIESDuring the Reporting Period,the Company has conducted the following repurchase of Shares:(a)in January 2024 and March 2024,the Company repurchased approximately 9,509,450 ADSs representing a total of 4,754,725(Note 1)Class A Ordinary Shares(the
310、“Repurchased Shares”)on the New York Stock Exchange at an aggregate consideration of US$8,044,051 to repurchase shares and/or ADSs of the Company not exceeding 10%of the total number of issued and outstanding shares of the Company(excluding any treasury Shares);and(b)on July 19,2024,the Company anno
311、unced its conditional voluntary cash offer to buy back,subject to fulfilment of certain conditions,up to the maximum number of 46,921,448 Class A Ordinary Shares(including in the form of ADSs)at a cash consideration of HK$9.11 per Class A Ordinary Share(equivalent of US$3.50 per ADS).On November 8,2
312、024,a total of 33,016,016 Class A Ordinary Shares(the“Cash Offer Buy-back Shares”)were bought back and cancelled by the Company on completion of the offer.For further details,please refer to the Companys announcements dated July 19,2024,October 30,2024 and November 8,2024.The repurchase was effected
313、 for the enhancement of shareholder value in the long term.Particulars of the repurchase of Shares are summarized as follows:Month of RepurchaseNo.and Method of Shares RepurchasedPrice paid per shareAggregate ConsiderationHighestLowest January 20244,628,395(Note 3)on the New York Stock ExchangeUS$1.
314、80US$1.54US$7,870,404March 2024126,326(Note 3)on the New York Stock ExchangeUS$1.38US$1.35US$173,647November 202433,016,016(Note 4)off marketUS$1.17US$1.17US$38,518,685During the Reporting Period,the number of Class A Ordinary Shares in issue was reduced in total by 45,767,659(Note 2)shares as a res
315、ult of the cancellation of the Repurchased Shares on February 2,2024 and June 28,2024 and the Cash Offer Buy-back Shares on November 8,2024.Upon cancellation of the Repurchased Shares and Cash Offer Buy-back Shares,Mr.Zhou,the WVR Beneficiary simultaneously reduced his WVR in the Company proportiona
316、tely by way of converting his 471,562,280,377 and 1,946,888 Class B Ordinary Shares into Class A Ordinary Shares on February 2,2024,June 28,2024 and November 8,2024,respectively,on a one-to-one ratio pursuant to Rule 8A.21 of the Listing Rules,such that the proportion of shares carrying WVR of the C
317、ompany shall not be increased,pursuant to the requirements under Rules 8A.13 and 8A.15 of the Listing Rules.44Zhihu Inc.DIRECTORS REPORTNotes:(1)represents 9,509,450 ADSs repurchased corresponding to a total of 4,754,725 underlying Class A Ordinary Shares,which were initially determined based on the
318、 ADS ratio of two ADSs representing one Class A Ordinary Shares prior to the ADS ratio change effective on 10 May 2024(the“ADS Ratio Change”).As a result of the ADS Ratio Change,such total number of underlying Class A Ordinary Shares was adjusted to 4,754,721 and were cancelled on June 28,2024.For d
319、etails of the ADS Ratio Change,please refer to the announcement of the Company dated April 26,2024.(2)among the 45,767,659 shares being cancelled,7,996,992 Repurchased Shares were cancelled on February 2,2024,4,754,721 Repurchased Shares were cancelled on June 28,2024(for details,please see note(1)a
320、bove)and 33,016,016 Cash Offer Buy-back Shares were cancelled on November 8,2024.(3)these figures represent the numbers of underlying Class A Ordinary Shares initially determined based on the ADS ratio of two ADSs representing one Class A Ordinary Shares prior to the ADS Ratio Change.(4)the total of
321、 33,016,016 Cash Offer Buy-back Shares comprise of a total of 13,138,898 Class A Ordinary Shares under the non-U.S.offer and a total of 6,625,706 ADSs(equivalent to 19,877,118 Class A Ordinary Shares)under the U.S.offer.For details,please refer to the Companys announcement dated November 8,2024.Save
322、 as disclosed above,neither the Company nor any of its subsidiaries purchased,sold or redeemed any of the Companys securities listed on the Stock Exchange(including sale of treasury Shares)or on the New York Stock Exchange during the Reporting Period.As of December 31,2024,the Company did not hold a
323、ny treasury Shares.MAJOR SUPPLIERS AND MAJOR CUSTOMERSDuring the Reporting Period,the five largest customers of the Group accounted for approximately 15.8%of the Groups total revenues while the largest customer of the Group accounted for approximately 4.4%of the Groups total revenues.In addition,for
324、 the Reporting Period,the five largest suppliers of the Group accounted for approximately 10.5%of the Groups total purchase amounts while the largest supplier for the Reporting Period,accounted for approximately 3.2%of our total purchase amount.During the Reporting Period and up to the Latest Practi
325、cable Date,none of our Directors,their respective close associates,or any Shareholders of the Company(who or which to the knowledge of the Directors owned more than 5%of the Companys issued share capital)had any interest in any of our top five customers or top five suppliers,except that a Tencent af
326、filiate is one of the cloud and bandwidth service providers.PRE-EMPTIVE RIGHTSThere are no provisions for pre-emptive rights under our Articles of Association or the laws of the Cayman Islands that would oblige the Company to offer new Shares on a pro-rata basis to existing Shareholders.Annual Repor
327、t 202445DIRECTORS REPORTTAX RELIEF AND EXEMPTIONThe Directors are not aware of any tax relief and exemption available to Shareholders by reason of their holding of the Companys securities.PROPERTY,PLANT AND EQUIPMENTDetails of movements in the property,plant and equipment of the Group during the Rep
328、orting Period are set out in Note 7 to the Consolidated Financial Statements.None of the Groups properties are held for development and/or sale or for investment purposes.SHARE CAPITAL AND SHARES ISSUEDDetails of movements in the share capital of the Company for the Reporting Period are set out in t
329、he Consolidated Statements of Changes in Shareholders Equity to the Consolidated Financial Statements.SUFFICIENCY OF PUBLIC FLOATBased on the information publicly available to the Company and to the knowledge of the Directors,during the Reporting Period and up to the Latest Practicable Date,the Comp
330、any has maintained sufficient public float as required by the Listing Rules.CHANGES TO DIRECTORS INFORMATIONChanges in Directors information are set out below pursuant to Rule 13.51B(1)of the Listing Rules since the date of the 2024 Interim Report of the Company and up to the Latest Practicable Date
331、:Ms.Hope Ni has served as an independent non-executive director of VISEN Pharmaceuticals,a company listed on the Stock Exchange with HKEx stock code 2561,since April 2021.VISEN Pharmaceuticals was listed on the Stock Exchange in March 2025.Biographical details of the Directors and senior management
332、of the Company are set out in the section headed“Directors and Senior Management”of this annual report.Save for the information disclosed herein,there has been no change to the information of the Directors which is required to be disclosed pursuant to Rule 13.51B(1)of the Listing Rules since the dat
333、e of 2024 interim report to the Latest Practicable Date.46Zhihu Inc.DIRECTORS REPORTDEBENTURE ISSUEDThe Company did not issue any debentures during the Reporting Period.EQUITY-LINKED AGREEMENTSSaved as disclosed in the section headed“Share Incentive Plans”in this annual report,the Company did not enter into any equity-linked agreement during the Reporting Period.DIVIDENDThe Board does not recommen
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