Zhihu Inc (ZH) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Zhihu, Inc. Third Quarter 2021 Financial Results Conference Call.

(Operator Instructions)

Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jingjing Du, Head of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Hello, everyone. Welcome to our third quarter 2021 financial results conference call. Joining us today are Mr. Yuan Zhou, Chairman and CEO of Zhihu; and Mr. Sun, Wei, our CFO. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and this discussion. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. In addition, a webcast replay of this conference call will be available on our website at ir.zhihu.com. I will now turn the call over to Mr. Sun, Wei, our CFO.

Okay. Thank you, Jingjing. I'm pleased to deliver today's opening remarks on behalf of Mr. Zhou, Yuan, Founder and CEO of Zhihu. Thank you for joining Zhihu's 2021 third quarter earnings conference call. As one of the largest online content communities in China, we have always been committed to the development of our content-centric ecosystem through continuous community infrastructure enhancements, user base expansion and monetization capability improvement. Our fast-growing user base is primarily young and cross-generational, infusing our platform with vitality, while our content-centric monetization model differentiates us with sizable growth potential.

Against the backdrop of rapidly changing macroeconomic conditions, our distinctive model vibrant user community and the continuous accumulation of high-quality content serves as not only a moat in the competitive pan-entertainment arena, but as compounding driving forces propelling long-term sustainable growth of our user base and monetization channel.

In Q3, we delivered another solid set of financial and operating results with our average MAUs reaching 101.2 million, up 40% year-over-year, and average monthly viewers growing to 542 million. As of the end of the third quarter, the cumulative pieces of content on our platform reached 458.9 million, including 398.4 million questions and answers, representing a year-over-year increase of 43% and 38%, respectively.

Additionally, our average number of monthly active content creators increased to 3.6 million, of which, the average number of monthly video content creators increased 86% year-over-year. Meanwhile, our content-centric monetization initiatives continued to gain traction, evidenced by a 115% year-over-year increase in revenue to RMB 823.5 million, and a 110% year-over-year increase in average monthly paying members to 5.5 million.

During the second quarter, we upgraded our high-quality content assessment standard by introducing sense of fulfillment. We took further steps in Q3 to update the mechanism for content creation, distribution, consumption and platform interactions and made remarkable progress. High-quality content with characteristics of broadening horizon, providing solutions and resonating with mind was widely recognized by both users and content creators and helped drive the growth of our community.

In categories which carry more sense of fulfillment content, including engineering, economics and law, graphics and text views increased by 136%, 58% and 112% and related user engagement increased by 102%, 134% and 111%, all within just 2 months. The views of high-quality video content with a sense of fulfillment on our platform increased by over 140% in the 2 months. The implementation of the standard of a sense of fulfillment brought users with fulfilling content and prompt higher levels of user engagement on our platform. Before the final announcement of the winner of the Nobel Prize in Physiology or Medicine this year, under the topic of 2021 Nobel price tour, a Zhihu user has successfully predicted the sub-display with the highest probability of winning with supporting reasons. In addition to targeting a massive user base, in the quarter, we focused particularly on enriching content that met our new sense of fulfillment standard to appeal to various user communities. For example, in October this year, our published children's popular science cartoon book titled A Hundred Thousand Whys, was well received by young parents.

Beyond heightening user consumption, sense of fulfillment content also benefits creators by encouraging more user engagement and providing more opportunities for commercial income generation. A good example comes from SHEN Shao, Neo, one of our veteran digital content creator. He had accumulated more than 1,000 high-quality answers over the past 8 years on Zhihu, recently released detailed sharing of entry-level watch selections, which not only yield 13,000 upvotes, but also provided the creator with corresponding commercial income. Content creation on Zhihu's platform has now become an important income source for him.

The successful implementation of the new content standard not only provided our users with broadly expanded content coverage, but also demonstrated our differentiated value proposition in our ability to influence topic direction and discussion depths. For example, during the Tokyo Olympics, while many community platforms were just celebrating team victories or focusing on individual performances, the Zhihu community was having in-depth discussions on the reasons behind wins or loses. Prominent topics on Zhihu fell under threat, like "how the Chinese women's volleyball team lost to the United States at 0 to 3", where various perspectives were shared on strategies, rules, economics, etc. It's these types of discussions and the user interests that have given rise to Zhihu's nickname (foreign language), which means, master of skills or tactics.

After Xu Xin and Liu Shiwen lost the Ping-Pong Mixed Doubles during the Olympics, Zhihu users responded with intellectual curiosity and theories, Rather than emotionally-driven discussions, Zhihu's community gave rise to topics such as "medal theory" and "Olympics Spirit", which became the positive and guiding force of online discussion.

As we continue our efforts to improve creation, distribution and the consumption of our content with a sense of fulfillment, we have also preserved community compliance. Through proactive community governance and the scrutiny of non-compliance content, we strive to enhance user's trustworthiness by fostering a community characterized by sincerity, expertise and respect.

In Q3, heightening content timeliness provided users a better platform experience by enabling them to more quickly and easily find fulfilling content with timeliness within our massive content library. This was proven particularly effective with the devastating floods in Henan, which we shared in our previous call. More than 160 topics related to the Henan floods were generated within 10 days on Zhihu platform, with nearly 150 million page views. After the astonishing news of WU Yifan broke, Zhihu users carry out national in-depth discussions on associated legal factors under the table rules of entertainment industry and the fan economy. The average number of pieces of content with timeliness generated on our platform on a daily basis increased by 40% this September versus this April.

It is encouraging to see more and more users in our community consuming content with timeliness with the related DAU penetration rate exceeding 40% at the end of third quarter. To better satisfy user demand for high-quality content in various categories and diverse formats, we encourage creators with different specialties to work together and jointly introduce more content, especially videolized content. In Q3, the number of average monthly uploaded videos increased by 290% year-over-year. The average number of pieces of video content consumed per user under our video tab and core Q&A scenario also continue to increase. As of the end of September, the number of DAUs who consume video content increased to 37%.

In October, we launched a new feature named, "Joint Creation", which allows text creators to authorize video creators to use their original answers as the basis for video script and share the copyright with them. Initiatives like this not only amplifies our high-quality content library, but also prompt more user engagement. A video named, "Looking at the word through data, how far is the gap between SU Bingtian and bolt", is an excellent case, demonstrating the synergy effect of content utilization through joint creation. This video was adapt from a blockbuster graphic and text content with 10,000 upvotes originally created by Chenqin, a 10-year Zhihu creator veteran. The video extension of this content was widely spread, receiving over 2 million views across our platform and gaining vast recognition inside and outside Zhihu's platform.

Driven by the abundant coverage, diversified formats, and improved timeliness of high-quality content, our user base maintained its high growth momentum. During the third quarter, our average MAUs exceeded 100 million, a record high. Average monthly viewers reached 540 million, and among which the penetration rate of MAUs increased to 18.7%. More than that, the value proposition of our community is steadily attracting users across ages and across regions, making our user base increase in a more balanced and healthy manner.

In Q3, the percentage of female users grew to 47% from 44% in the same period of last year. Along with the improvement of content timeliness, our user group of those who over 30 also grew steadily in both numbers and activeness, further solidifying our unique and vibrant community ecosystem. At the same time, expanding our content format capabilities enables us to satisfy younger generations' demands for learning, life and entertainment. In preparation for the school season starting in September, we launched a series of program titled First Lessons for University, where graduates were invited to share their valuable experiences and insights.

Delving into 6 relevant topics, the series resonated strongly with younger users, attracting more than 800 million views and the promising massive discussions. Geographically, the number of users in Tier 2 cities or below also continued to increase in Q3. Through expanding content category coverage, providing more content with timeliness and offering diversified consumption formats, we aim to create an inclusive platform where all users in our community can feel a sense of belonging.

Our massive and active user base infuses our communities with energy and constantly reinforces it by generating high-quality content, which in return, attracts more talented content creators to join us and make contributions. As of the end of Q3, the cumulative number of content creators on the Zhihu platform reached 53.1 million. By providing more and better tools, assistance and incentives for the content creators based on their differentiated capabilities and needs, we were able to help them improve their creation experience under the new standard and further gain recognition and user trust within our community. In addition to further upgrading the tools, "video sectioning" and "match the Q&A" launched last quarter. We iterated the function to generate PPT video through OneClick. The Joint Creation feature launched in October was designed and aim to help creators improve their creation capabilities by allowing them to focus on what they do best.

For example, a high-quality answer about the brain with 41,000 upvotes generated by a Zhihu user, (foreign language) was adapted into a video by a video creator (foreign language) and received more than 4 million views. Supported by high-quality text content, the video named, "how big is the impact of college entrance examination of future income", "how to quantify the long-term impact of poor scores in college entrance exams", received more than 2.59 million views and more than 3,000 upvotes on our platform since its launch.

By the mid of November, thousands of graphics and text creators had participated in content authorization through Joint Creation, with the total accumulated authorized content exceeding 1.8 million pieces, which demonstrated that this is the right strategy to meet content creators most real and pressing needs.

Driven by the richness of high-quality content with a sense of fulfillment, the commercial value of our community and our young and cross-generational user base both maintained their growth momentum, further solidifying our community ecosystem.

In recognition of our increasing brand value in October, Zhihu was once again named in Kantar BrandZ list of "top 100 Most Valuable Chinese Brands" for 2021, ranking 7 places higher than last year. Underpinned by Zhihu's increasingly prominent brand and unique content-centric monetization model, our commercial efficiency has continuously improved. More brands and business partners are recognizing Zhihu as an important platform to gain visibility. As more content creators joined the Zhihu's ecosystem, we were able to cooperate with a huge number of commercial content creators in different specialties and together make achievements and share the benefits by expanding user coverage and improving commercial efficiency.

In Q3, revenue from CCS increased by more than 5x compared with the same period last year, reaching RMB 278 million. Average monthly paying members reached 5.5 million, representing 110% year-over-year growth. And the revenue from paid membership increased by 96% to RMB 178 million year-over-year.

Moving forward, we plan to further enrich high-quality content and strengthen our content-centric monetization solution, especially in categories, including e-commerce and vocational education, further enhancing our closed-roof ecosystem as well as increasing our value as a business partner.

Before our CFO provides highlights and additional color on our financial results, I would like to share with you some major progress we have made centering around our content ecosystem in Q3. To better serve our content creators and to improve their commercial and community influence, in September, we updated our Cheese Platform by using composite influence index and formally released the ranking of content creators on Cheese Platform. This platform is aimed to help content creators improve their monetization capability by providing a transparent transaction model, multitasking mode and effective data indicator assessment.

In the third quarter, the number of creators who achieved commercial income tripled compared to the same period of last year. Our creators may now increase their commercial income through 6 diversified channels, including commercial content, paying membership content, Recommended Goodies and consulting solutions, et cetera. The experience of ZHE Sanye, one of our Yan selection authors, is a great example of this. Through his urban story series, which attracted nearly 160,000 users, he was able to realize close to RMB 1 million income during the third quarter.

As an important platform influencing the young generation lifestyle and the consumption decisions, we have become the desirable platform with effective content-centric commercial solutions for thousands of brands and merchants in the fields of beauty, cosmetics, personal care, e-commerce, FMCG, vocational education, et cetera. In the third quarter, the number of brands and merchants that use our content-commerce solutions increased 200% compared to the same period of last year. And GMV on our platform reached a new high of nearly RMB 5 billion, representing a year-over-year increase of 92% as of the end of third quarter.

We released our 2021 Zhihu Top 100 list at the end of October. The list comprises 100 products across various categories, including clothing, food, housing and travel, selected by participating Zhihu users based on their professional and personal experience as well as our big data analysis. Users are not only impressed by items like the "pillow with the most upvotes" , "must eat snail powder" and "the handiest cookware", but also enjoyed fulfilling content while reading through the selection experiences, leading to a mutual gain for both users and creators.

High-quality content with a sense of fulfillment is not only a key factor in inspiring the trustworthiness among users, content creators and the Zhihu community, it is also a determinant in strengthening Zhihu's industry-leading position. As we forge ahead, we will continue to encourage content creators to produce more high-quality and fulfilling content and help brands and merchants achieve healthy business growth.

We believe that the meaningful interplay between users, content and monetization is the driving engine in advancing our robust community ecosystem, reaching new heights and achieving sustained long-term growth.

This concludes the remarks from Mr. Yuan Zhou. I will now review and provide more details of our financial performance for Q3 2021.

As just mentioned, we achieved another strong quarter recording total revenue of RMB 823.5 million, which represented a year-over-year increase of 115%.

Our unique content-centric business model is increasingly showing its strength and ability to drive our business growth, keeping pace with our fast growing and vibrant user base.

In the third quarter, content-commerce solutions and paid membership combined to contribute over 55% of the total revenue. Our commitment to our content-commerce solutions strategy has continued to gain market awareness.

In Q3, content-commerce solutions contributed RMB 278.4 million to total revenue. This fivefold year-over-year increase caused content-commerce solutions as a percentage of total revenue to grow significantly. It is further underpinned by the continuous improvement of our commercial content ecosystem, as well as increasing recognition and growing demand from our diverse business partners and merchants. The number of our CCS customers tripled in the third quarter compared to the same period in 2020, as we broaden our coverage to encompass over 20 industries, Moreover, we also saw a significant increase in content creator participation in this business line, facilitated through our Cheese Platform, which launched in late May this year.

In the third quarter, the number of creators who have joined our Cheese Platform and achieved commercial income exceeded 10,000. We believe this demonstrates that we are on the right track and helping our content creators reach their commercial goals. Advertising in the third quarter maintained its strong momentum despite ad industry headwinds. In the quarter, advertising revenue was RMB 321.1 million, representing a 39% year-over-year increase. Underpinned by our advantage as a comprehensive content platform, an increasingly wide range of advertisers now consider us as a must-have marketing platform due to our ability to connect their adverts with our broad user base.

In the third quarter, companies from the field of e-commerce, personal care and cosmetics, automobile (including new energy and traditional brands), IT and 3C were our strongest growing contributors.

Our paid membership contributed RMB 178.3 million to total revenue in the quarter, representing an increase of 96% compared to the same period of last year. As of the end of the third quarter, our average monthly paying members reached 5.5 million, with a paying ratio of 5.4%. The strong momentum in this business line also benefited from enhanced content creator commercialization capabilities.

Other revenues mainly comprising the e-commerce and vocational education achieved year-over-year growth, exceeding 200% in the third quarter, increasing to RMB 45.7 million. Our e-commerce business continued its rapid growth momentum, with GMV exceeding RMB 1.4 billion in the quarter. As Zhou Yuan just mentioned, we made further strides to enhance our Recommended Goodies business. By bringing more fulfilling content and greater engagement to our commercial ecosystem, we can better meet our users' needs and create synergies with our other content-centric monetization approaches.

Our vocational education services business which primarily provides online vocational and professional training for adults, has had a great success with the self-paced courses, including those covering video production skills and the postgraduate entrance exam preparation.

We maintained a strong gross margin of 52% in the third quarter, while remaining dedicated to continuous investments in our content ecosystem.

The third quarter also witnessed improvements in operating efficiency as our total operating expenses of RMB 747.3 million declined as a percentage of total revenue, on both a year-over-year and a quarter-over-quarter basis. Our operating expenses in the quarter were primarily composed of sales and marketing expenses and investments in human resources. Our user acquisition strategies leveraging our high-quality content library have proven themselves to be of great economic benefit. We've seen that content with timeliness, including content related to the Tokyo Olympics and the topics related to the start of the academic year and college recruitment not only drove organic incremental user growth but also effectively encourage user interactions in Zhihu community.

As a result, our non-GAAP adjusted net loss, which excludes share-based compensation expenses, was RMB 112.4 million in the third quarter 2021. As of September 2021, the company had cash and cash equivalents, term deposits, restricted cash and short-term investments of RMB 7.6 billion, compared with RMB 3.1 billion as of December 2020.

Finally, on to our financial outlook. Looking to the fourth quarter of 2021, the company expects total revenue to be in the range of RMB 1.01 billion to RMB 1.03 billion, reflecting a year-over-year increase of between 94.3% and 98.2%. As a reminder, this outlook reflects Zhihu's current and preliminary estimate and is subject to change.

This concludes our prepared remarks. Operator, we are ready for the Q&A.

(Operator Instructions)

Our first question today, we'll come from Yiwen Zhang of China Renaissance.

I have 2 questions. First question is regarding our CCS business. We noticed there are a number of new products launched in the Double 11 promotion. For example, we have the Zhihu top 100 list. Can you share more color around what we did during this Double 11 campaign? And the second is our videolization strategy. Can you discuss in details from both supplier and the consumption side. For example, on the supply side with the joint operated program announced; on the consumption side, we noticed that the video cap and now the first on the home page. So can you give us any more details?

Okay. I'll just answer the first question in Chinese, and Zhou Yuan will take number 2.

(foreign language)

[Interpreted] Okay. So CFO, for just the first question. As we explained in the remarks, the CCS has improved a lot -- continues to improve a lot, especially in this quarter. We had a year-over-year increase of over 500x and a quarter-on-quarter increase of over 30%. And this is basically due to our constant construction of a good ecosystem for high-quality content on Zhihu. And also, we are playing in more and more profound influence over people's buying decisions, and there are more brands and merchants and units of commercials joining our platform, and you see that we have a much better ever-improving reputations in the market year-over-year.

(foreign language)

[Interpreted] For this Double 11 sales gala specifically, we have launched activities such as top 100 list to promote and make recommendations on our community to help our users to make buying decisions and purchase the goods they want. And we are working together with e-commerce platforms such as JD.com and Alibaba, that covers a number of sectors, including clothing, food, traveling and living, and also our users are able to enjoy a sense of fulfillment during their decision-making process. The GMV we had as of the end of third quarter is RMB 4.97 billion, which represented a year-on-year growth of 92%, and our daily order number in Q3 increased by 31%. And also at the same time, what is worth noting is that Zhihu's take rate had increased by over 200%.

(foreign language)

[Interpreted] At the same time, we continue to explore and develop our business models in terms of e-commerce. We will continue to have further business integrations with regard to our goods recommendations and brand building and our content commerce-based marketing activities by the merchants. So as to make the monetization more efficient, and also, we're exploring ways to have a close-loop e-commerce platform within our community and to further build on our self-branded businesses and brand building activities inside of our Zhihu platform.

(foreign language)

[Interpreted] So this is from CEO, Zhou Yuan. We are very happy that you have noticed a difference in our product. Actually, this is not the final version, this just a grey version or better version that we just launched.

(foreign language)

[Interpreted] Just as I said, this is just a version for exploration for new practices, and it's not just for videos, it's more than videos. We want to launch this to improve our monitoring on the users on our community to try to understand their attention, their behaviors as well as their private traffic -- private domain traffic, and to understand their interactions and engagement on our community. And second, as you rightly pointed out, that is that we have a video tab on our home page. And third thing, I want to just keep it secret for the time being, because after we officially launched it in December, we will give you more details in due time. So all of these efforts are to try to make our user experience more simplified and more interesting.

(foreign language)

[Interpreted] So since we are testing that we saw very nice feedbacks. So they're from the consumer side -- from the consumer side, from the consumption of the video, you see that we have very nice -- very nice metrics, including very nice VV and the retention rate as well as time spent and cardshow, they all have displayed very nice potentials. And we keep hitting the users for their feedback, and we have very quick updates and iterations of this better version that we have.

(foreign language)

[Interpreted] From the content creation side of the story, you see that our daily uploads of videos increased by nearly 300 percentage points and our monthly active video content creators increased by 86%. And after we have pushed forward the standard sense of fulfillment for making video content, we have received very good support from the content creators, especially those who have high sense of creativity and great imaginations, who actively join us as a content creator for videos in the ecosystem.

(foreign language)

[Interpreted] I want to say something more about Joint Creation. As you know that on the content creation part, we have very nice video makers together with very nice users who have nice views and ideas. So they work together through sharing copyright. They delivered very nice video content. So we believe that it is not only a new product, but it -- is also a new format of generation of content and consumption of content. And I also want to share 2 numbers with you, that is the consumption of videos as our community keeps increasing. The video consumption penetration rate in DAU for this quarter was 37% versus 30% in the last quarter.

Our next question today will come from Ashley Xu of Credit Suisse.

(foreign language)

[Interpreted] It's mainly related to our lower-tier city penetration. Just want to understand how is our videolization helping us in these regions? And how is the user behavior different between higher and lower tier cities? And if you look forward, what's our plan and strategy to expand our penetration in lower-tier cities?

(foreign language)

[Interpreted] So the focus of our video is to focus on getting more videos with sense of fulfillment on our community, especially on the supply and consumption of such videos. We believe that this is some strategy that we will stick to for the longer term to differentiate ourselves and also to build our core competitiveness.

(foreign language)

[Interpreted] In terms of sense of fulfillment, as a new standard that we propose for video content has been very well received and very well recognized by our users as proved by our survey recently.

(foreign language)

[Interpreted] As we are cracking down low quality videos, the deal gives a more focus and priority to high-quality videos. You see that we have seen improved popularity of high-quality videos, especially those who has -- that has a sense of fulfillment as we improved our discovery and distribution mechanisms for those videos. There -- those videos have been saved for more time, shared for more time and has also help us to improve the retention rates of users, especially you see the second month retention rate for users have improved 1 percentage point this quarter.

(foreign language)

[Interpreted] So the supply side of the video content, we have this Joint Creation mechanism as well as answers by videos. So all these are the upgrades to the product side and the tools side to help people provide more video content. So right now, our joint creation are increasing very quickly. We now have over 1.8 million authorizations of text and images for video making that helps us to translate more and more highly voted answers in text and images to highly voted videos. By way of example, the cooperation between (foreign language) and (foreign language), they delivered a 4 million viewed video by jointly -- by creating based on a highly voted answer with over 410 upvotes. So that is a very good example of how joint creation has been effectively working for us in the supply side of the content.

(foreign language)

[Interpreted] On the consumption side of the video content, well, actually the consumers of the video are pretty much the same as the general users that we have in terms of the profiling of users, except that they are younger. Well, they have 3 percentage higher in terms of those who are under 30 years old for video consumption versus the general users. So on that -- I believe that this actually means that our video content is pretty much in line with those with the demands of those on our community, especially we had been able to cover more uses and cater their demands with our video content creation.

And our next question today will come from Piyush Mubayi of Goldman Sachs.

The first on the third quarter, when I combine advertising and CCS, you grew 117% despite the pressures on the advertising market in general. Can you take us through the verticals that have come through very nicely for you for the quarter? And then looking at your guidance for the fourth quarter of almost 100% growth, could you give us the building blocks of that, both in terms of MAU as well as how strongly I expect advertisers to grow in the fourth quarter? And while this is very early, could you also look forward to that 2022, I realize it's very preliminary, but nonetheless, and give us a feel for the pace of growth you would expect on a preliminary basis, if possible?

(foreign language)

[Interpreted] Thank you very much for your question. In terms of advertisement and advertisement verticals, well, for Q3, you see that the most affected sectors such as K-12 education and insurance, well, they used to have very small percentage points in our advertisement contribution, therefore the impact is very minimal to our business.

(foreign language)

[Interpreted] If you look at the breakdown of advertisement verticals by sector, you see that e-commerce, consumer goods, internet services, IT, and CCS are the main sectors that we have advertisements from, and they all had very stable and nice growth of 80% year-on-year. And I think we benefited a lot because our merchant client -- the advertisement clients are switching their marketing expenses from traditional media platforms to some platforms like us, which we can produce very nice content and deliver nice and holistic content commerce solution.

(foreign language)

[Interpreted] For automobiles and housing furniture, we have very a nice and innovative benefits and registered double-digit growth in those 2 sectors and more.

(foreign language)

[Interpreted] So the above-mentioned factors put together accounted for over 60% of our advertisement.

(foreign language)

[Interpreted] And we believe that going into the fourth quarter, we will continue to have very nice growth coming out of e-commerce, FMCG, 3C, IT and et cetera. And reasons that I explained before, that we, as a content community, are able to provide good platforms for people to build their brands to deliver very nice and quality content for the marketing efforts and to have a diversified advantages in helping the advertisers to market themselves.

(foreign language)

[Interpreted] Going into 2022, we believe that our total revenue will continue to grow in a fast pace and the percentage point has contributed from CCS and advertisement, will again account for about 70% to 75% of the total revenue we make.

(foreign language)

[Interpreted] Sorry, the percentage points actually means the number for Q4, not for 2022; I'm sorry.

Our next question today will come from Natalie Wu of Haitong International.

(foreign language)

I will translate myself. And I have 2 questions here. The first 1 is a follow-up to the last question. So just wondering for our current fourth quarter outlook, almost triple-digit growth. Can you help us break down among each business line, specifically for the rest of 2, like membership and e-commerce and other business line revenue growth for the fourth quarter? And secondly, for the e-commerce business, we noticed that you have ramped up your 1P business recently, just wondering for our e-commerce GMV in the third quarter, how much comes from your 1P business, which initiated like, I think, this number? Also just curious how should we think of the strategic position for your 1P and 3P business going forward? And also future split for like GMV growth?

Sorry, sorry, I was on mute just now.

(foreign language)

[Interpreted] Well, as I mentioned in Q4, our revenue outlook will be 70% to 75% coming from CCS and advertisement together, and 20% for membership. And for the others, education, e-commerce and others coming together will be 5 percentage points. So furthermore on our e-commerce business, we believe that our e-commerce development will continue to center around good content, because we believe good content is good business. And we believe that one question is one street and one answer is a good shop. We keep -- we continue to help the consumers and users to identify those goods that are worth buying by our uploading systems to select the most reliable answers and then continue to help them with the transaction. And we believe that this is going to deliver very well and to bring benefits to both content creators merchants as well as Zhihu community as a whole.

And as I mentioned, the GMV we have for the third quarter is RMB 4.97 billion, and with the daily -- order increased on a daily basis of 31 percentage points and our take rate also increased by more than 100%. And all of those efforts are helping us to improve the monetization efficiency. And for our 1P business, we are trying now in helping the brands and also to help them to create content based marketing and promotion. And this is by far the final version of 1P e-commerce that we have -- revolutionizing the models as we going forward, and we believe that those will deliver better and better results going forward in the future.

Our next question will come from Alex Yao of JPMorgan.

(foreign language)

So my first question is about the strategy to attract the content contributors on the video content side. Are we doing anything different compared to the content strategy on the picture and the text side. Particularly, China's video market is predominantly driven by entertainment or any content. So on the video content side, are we using this opportunity to broaden content jar and the coverage into entertainment already to content supply? Or are we sticking to our core platform and the community attributes and still focusing on the knowledge-based content drivers? And the second question is about the implementation of the PIPL, which took place on 1st of November. Are you guys seeing any difference before and after the implementation of PIPL? And how should we think about the impact on operation and monetization?

(foreign language)

[Interpreted] Answer from CEO, Zhou Yuan. So for the first question, video is not the result. Video is not what we want to do by choice. It is a natural result of our strategy of running the community. We believe that video is indispensable part and parcel of our community, and by building a nice ecosystem, we are able to let the video content organically grow out of our good community.

(foreign language)

[Interpreted] Our video content creators, we believe that they are versatile, let us just call them a full stack of video content creator. They're very good at making videos, very good at answering questions. They can also do live streaming. And by utilizing different formats of content, they are able to deliver the best possible results and attract the most attention from the community.

(foreign language)

[Interpreted] For the time being, you see a lot of upgrades in terms of the tours that we give to content creators and operational transformation that gives more attention to the video content. Actually answered by video is not just something new. We believe that video is just a more suitable format of people giving answers and this just grow very fast naturally. Second is the Joint Creation. I would believe that it is by no means using videos to replace text and images. We believe that by putting them all together, we could deliver one plus one is more than 2 kind of result in our community.

(foreign language)

[Interpreted] These topics and discussions you see on our community covers all kinds of sectors. And with an umbrella principle that is a sense of the fulfillment. So by asking and encouraging content creators to make videos that can bring sense of fulfillment, you see very nice engagement and very nice growth.

(foreign language)

[Interpreted] Now with regard to new regulations PIPL we believe that the purpose of having the businesses like us to be compliant as for the better good of the entire industry to make it healthy, to make it more sustainable for the longer term.

(foreign language)

[Interpreted] In terms of our own compliance efforts, we keep talking very frequently with the regulators. And I think this is a long-term thing. And our own internal practices or operations, we keep trying out good solutions for user experience and testing out the data and et cetera. We believe that this will virtually become a new normal, and we are -- we have always been proactive in cooperating with the regulators and make sure that we are coping with all the requirements.

Thank you. And ladies and gentlemen, at this time, we will conclude our question-and-answer session. I'd like to turn the conference back over to Jingjing for any additional or closing remarks.

Thank you once again for joining us today. And if you have any further questions, please contact our IR team directly, or TPG Investor Relations. Thank you all. Bye.

Thank you.

At this time, the conference has now concluded, and we thank you for attending today's presentation. You may now disconnect your line.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]