The Latest: Online Q&A site Zhihu Inc. (ZH.US; 2390.HK) reported on Wednesday that its third-quarter revenue increased 10.7% year-on-year to 911.7 million yuan ($128.2 million), while its net loss widened 10% to 300.2 million yuan.

Looking Up: Paid membership was a major growth driver for the company, with revenue of 335.4 million yuan, up 88.1% year-on-year. Average monthly paying members reached 10.9 million, up by an even stronger 99.5%.

Take Note: Advertising revenue, which used to be Zhihu’s main revenue source, fell 63.2% year-on-year to 196.7 million, which the company attributed to “challenging macroeconomic conditions and the resurgence of the Covid-19 pandemic across China.”

Digging Deeper: Often dubbed the “Quora of China,” Zhihu has been trying to diversify its revenue from advertising to other sources like paid memberships for premium content and subscription-based services since its New York IPO last year. The strong paid membership growth has provided the company with a solid base for income in additional areas like vocational training, which the company is pursuing with the launch of a separate app in March this year. Despite its increasingly diverse revenue base, the company continues to post losses.

Market Reaction: Zhihu’s stock was largely unchanged after the announcement, closing up about 1% in New York at $1.06 after the release of its earnings. The company’s Hong Kong-listed shares were down 2.1% on Thursday in Hong Kong by the mid-day break.

Reporting by Chan Ka Po

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