Zhihu Q1 Profit Driven by Cost Cuts as Revenue Falls for Third Year; Can AI Webtoons Fuel Growth?

Zhihu posted its first-quarter 2026 results, revealing a mixed picture of narrowing losses but weakening revenue. The report shows Q1 revenue of 652 million yuan, down 10.7% year over year, with a slight 1.3% sequential increase. While the net loss narrowed to 8.504 million yuan, what truly eased market concerns was adjusted net profit reaching 17.16 million yuan, soaring 147.2% year over year and marking a successful turnaround on a quarterly basis.

Looking at the revenue mix, Zhihu is increasingly defined by membership and IP monetization. Revenue from paid content and IP operations in Q1 hit 402 million yuan, accounting for 61.7% of total revenue and establishing itself as the core pillar. Marketing services brought in 191 million yuan, or 29.4%, while other income contributed 57.8 million yuan, representing 8.9%.

During the earnings call, management zeroed in on AI-driven short dramas and AI manga dramas. CFO Wang Han identified these two areas—AI short dramas and manga dramas, along with AI data services—as key strategic focuses. The former represents the AIGC content category with the highest user willingness to pay, while the latter positions the company as a "shovel seller" within the industrial infrastructure. Since ramping up efforts in this space in 2025, Zhihu's IP expansion has accelerated dramatically. In the first quarter of 2026, the total number of copyright collaborations on the platform surged 564% year over year and 248% sequentially. Short dramas such as "Golden House Hides the Spoiled Child" and "Your Heart Is Like a Disease" have accumulated over 3 billion views across all platforms, while AI manga dramas like "The Noblewoman's Tears" have also crossed 1 billion views.

This explosive growth highlights two distinct strategies in the current AI manga landscape. The first is the "mass production" model, adopted by companies like Yanyan Story and Yuewen, which leverage extensive web novel IP libraries to churn out a large number of titles and capture baseline traffic. Data shows that between January and May this year, Yanyan Story generated an additional 6.834 billion views from 251 AI dramas, firmly leading the industry. The second is the "premium hit" approach, exemplified by firms like AiKan Interactive, which strictly control release volume to focus resources on improving individual work quality. With just 27 titles, they generated 3.584 billion additional views, achieving the highest per-drama efficiency in the industry. Zhihu executives also noted that the sector is shifting from broad, high-volume production toward deeper content quality and originality.

However, beneath the surface of improved profitability, Zhihu's core business still faces significant headwinds. The report shows revenue declining for three consecutive years, with the company remaining in a prolonged loss position. While it has made strides in the AI manga drama space through its own web novel IP, intensifying competition, tightening regulatory oversight, and rising customer acquisition costs mean that Zhihu's current profitability owes more to cost reduction than to revenue growth. Whether the company can truly achieve a breakthrough by boosting revenue through AI short dramas and manga dramas, and fully reverse its operational challenges, will require time and market validation.