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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission File Number: 001-40253

Zhihu Inc.

(Exact Name of Registrant as Specified in Its Charter)

N/A

(Translation of Registrant’s Name into English)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

A5 Xueyuan Road

Haidian District, Beijing 100083

People's Republic of China

(Address of Principal Executive Offices)

Wei Sun, Chief Financial Officer

Telephone: +86 (10) 8271-6605

Email: ir@zhihu.com

A5 Xueyuan Road

Haidian District, Beijing 100083

People’s Republic of China

(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12 (b) of the Act:

Title of Each Class

    

Trading Symbol

    

Name of Each Exchange on Which Registered

American depositary shares, two American depositary shares representing one Class A ordinary share, par value US$0.000125 per share

ZH

 

New York Stock Exchange

Class A ordinary shares, par value US$0.000125 per share*

 

* Not for trading, but only in connection with the listing of American depositary shares on the New York Stock Exchange.

Securities registered or to be registered pursuant to Section 12 (g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15 (d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report : 279,835,705 Class A ordinary shares (excluding the 11,681,119 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plan), par value US$0.000125 per share, and 19,227,592 Class B ordinary shares, par value US$0.000125 per share, as of December 31, 2021.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

  Yes       No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

  Yes       No

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  Yes       No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

  Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-Accelerated Filer 

Emerging Growth Company 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

    

International Financial Reporting Standards

    

as issued by the International Accounting Standards Board

Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

  Item 17     Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

  Yes       No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

  Yes      No

TABLE OF CONTENTS

INTRODUCTION

ii

FORWARD-LOOKING INFORMATION

v

PART I.

1

Item 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

1

Item 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

1

Item 3.

KEY INFORMATION

1

Item 4.

INFORMATION ON THE COMPANY

57

Item 4A.

UNRESOLVED STAFF COMMENTS

102

Item 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

102

Item 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

119

Item 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

129

Item 8.

FINANCIAL INFORMATION

131

Item 9.

THE OFFER AND LISTING

132

Item 10.

ADDITIONAL INFORMATION

132

Item 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

143

Item 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

144

PART II.

146

Item 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

146

Item 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

146

Item 15.

CONTROLS AND PROCEDURES

146

Item 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

148

Item 16B.

CODE OF ETHICS

148

Item 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

148

Item 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

148

Item 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

148

Item 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

148

Item 16G.

CORPORATE GOVERNANCE

149

Item 16H.

MINE SAFETY DISCLOSURE

149

PART III.

150

Item 17.

FINANCIAL STATEMENTS

150

Item 18.

FINANCIAL STATEMENTS

150

Item 19.

EXHIBITS

151

i

INTRODUCTION

In this annual report, unless otherwise indicated or unless the context otherwise requires:

“ADRs” refers to the American depositary receipts that evidence the ADSs;
“ADSs” refers to the American depositary shares, two of which represent one Class A ordinary share;
“average revenue per subscribing member” for a period is calculated by dividing the paid membership revenue for a specified period by the average monthly subscribing members in the specified period;
“engagements” refers to 13 kinds of virtual engagement activities in the Zhihu community, such as upvotes, downvotes, comments, likes, follows, favorites, and shares, among others;
“CAGR” refers to compound annual growth rate;
“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong, Macau, and Taiwan;
“Class A ordinary shares” refers to our Class A ordinary shares with a par value of US$0.000125 per share;
“Class B ordinary shares” refers to our Class B ordinary shares with a par value of US$0.000125 per share;
“content creators” refers to users who have generated at least one piece of content;
“mobile MAUs” refers to the number of mobile devices that launch our mobile app at least once in a given month. “average mobile MAUs” for a period is calculated by dividing the sum of mobile MAUs for each month during a specified period by the number of months in the period;
“monthly active content creators” refers to the number of content creators who generate at least one piece of content in a given month. “average monthly active content creators” for a period is calculated by dividing the sum of monthly active content creators for each month during the specified period by the number of months in such period;
“monthly renewal rate” for a period is calculated by dividing the number of subscribing members that subscribed for our monthly membership services in a specified month with renewed membership services in the following month by the total number of subscribing members that subscribed for our monthly membership services during the specified month. “average monthly renewal rate” for a period is calculated by dividing the sum of monthly renewal rates for each month during a specified period by the number of months in the specified period;
“monthly active users” or “MAUs” refers to the sum of our mobile 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. “average MAUs” for a period is calculated by dividing the sum of MAUs for each month during a specified period by the number of months in the period;
“monthly subscribing members” refers to the number of our Yan Selection (盐选) members in a specified month. “average monthly subscribing members” for a period is calculated by dividing the sum of monthly subscribing members for each month during a specified period by the number of months in the period;

ii

“monthly viewers” refers to the sum of the number of mobile devices that launch our mobile app at least once in a specified month and the number of independent cookies that visit our PC or mobile website at least once in a specified month. The number of monthly viewers is calculated by treating each distinguishable independent cookie or mobile device as a separate user even though some individuals may access our community with more than one independent cookie or using more than one mobile device and multiple individuals may access our community with the same independent cookie or using the same mobile device;
“ordinary shares” or “shares” refers to our Class A ordinary shares and Class B ordinary shares, par value US$0.000125 per share;
“paying ratio” for a given period refers to the ratio of our average monthly subscribing members divided by the average MAUs in the period;
“piece of content” refers to any piece of questions, answers, articles, videos, groups, or live streaming in our community;
“PGC” refers to professionally generated content;
“PUGC” refers to professional user-generated content;
“Renminbi” or “RMB” refers to the legal currency of China;
“retention rate,” as applied to any cohort of YanPlus users in a given period, refers to the percentage of these YanPlus users who made at least one repeated visit to Zhihu after a certain duration. The “12th-month retention rate” for any cohort of YanPlus users in a given month refers to the retention rate in the 12th month after that month. “YanPlus users” for a given month refers to the active users, each with a Yan value of 300 or above. Yan value is a rating that is assigned to users based on their engagement in our community;
“services offered to businesses and merchants” refers to online advertising services and content-commerce solutions;
“UGC” refers to user-generated content;
“U.S. dollars” or “US$” refers to the legal currency of the United States;
“VIEs” refers to variable interest entities and “our VIEs” refers to Beijing Zhizhe Tianxia Technology Co., Ltd., or Zhizhe Tianxia, Shanghai Pinzhi Education Technology Co., Ltd., or Shanghai Pinzhi, and Shanghai Biban Network Technology Co., Ltd., or Shanghai Biban;
“WFOEs” refers to wholly foreign-owned enterprises, and “our WFOEs” refers to Zhizhe Sihai (Beijing) Technology Co., Ltd., or Zhizhe Sihai, Shanghai Zhishi Commercial Consulting Co., Ltd., or Shanghai Zhishi, and Shanghai Paya Information Technology Co., Ltd., or Shanghai Paya; and
“Zhihu,” “we,” “us,” “our company,” or “our” refers to Zhihu Inc., a Cayman Islands holding company, and its subsidiaries and, when describing our operations and consolidated financial information, also including our VIEs and their respective subsidiaries. Where the context requires, in respect of the period prior to our company becoming the holding company of its present subsidiaries, such subsidiaries as if they were subsidiaries of our company at the relevant time.

iii

In this annual report, city tiers are determined based on a study published in 2021 by China Business Network, a finance media company in China. In particular, tier 1 cities refer to Shanghai, Beijing, Shenzhen, and Guangzhou; new tier 1 cities refer to Chengdu, Hangzhou, Chongqing, Xi’an, Suzhou, Wuhan, Nanjing, Tianjin, Zhengzhou, Changsha, Dongguan, Foshan, Ningbo, Qingdao, and Shenyang; tier 2 cities refer to Hefei, Kunming, Wuxi, Xiamen, Jinan, Fuzhou, Wenzhou, Dalian, Harbin, Changchun, Quanzhou, Shijiazhuang, Nanning, Jinhua, Guiyang, Nanchang, Changzhou, Jiaxing, Zhuhai, Nantong, Huizhou, Taiyuan, Zhongshan, Xuzhou, Shaoxing, Taizhou, Yantai, Lanzhou, Weifang, and Linyi.

Any discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

Our reporting currency is Renminbi. This annual report contains translations from Renminbi to U.S. dollars solely for the convenience of the reader. Unless otherwise stated, all translations from Renminbi to U.S. dollars were made at a rate of RMB6.3726 to US$1.00, which was the exchange rate in effect as of December 30, 2021 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. We make no representation that any Renminbi amounts referred to in this annual report could have been, or could be, converted into U.S. dollars, as the case may be, at any particular rate, or at all.

iv

FORWARD-LOOKING INFORMATION

This annual report contains forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Known and unknown risks, uncertainties and other factors, including those included in “Item 3. Key Information—D. Risk Factors,” may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “might,” “will,” “would,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue,” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy, and financial needs. These forward-looking statements include statements relating to:

our goals and strategies,
our future business development, financial condition, and results of operations,
the expected outlook of the online content market in China,
our expectations regarding demand for and market acceptance of our products and services,
our expectations regarding our relationships with our users, clients, business partners, and other stakeholders,
competition in our industry,
relevant government policies and regulations relating to our industry, and
general economic and business conditions globally and in China.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B. Business Overview,” “Item 5. Operating and Financial Review and Prospects,” and other sections in this annual report. You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

We operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

v

PART I.

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.    KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with Our VIEs and Their Shareholders

Zhihu Inc. is a Cayman Islands holding company with no equity ownership in its VIEs and their subsidiaries and not a Chinese operating company. We conduct our operations in China through (i) our PRC subsidiaries and (ii) our VIEs, with which we have maintained contractual arrangements, and their subsidiaries. PRC laws and regulations restrict and impose conditions on foreign investment in value-added telecommunication services and certain other businesses. Accordingly, we operate these businesses in China through our VIEs and their subsidiaries, and rely on contractual arrangements among our PRC subsidiaries, our VIEs, and their nominee shareholders to control the business operations of our VIEs. Revenues contributed by our VIEs accounted for 15.3%, 27.4%, and 25.9% of our total revenues in 2019, 2020, and 2021, respectively. As used in this annual report, “we,” “us,” “our company,” “our,” or “Zhihu” refers to Zhihu Inc., its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs in China, including but not limited to Beijing Zhizhe Tianxia Technology Co., Ltd., or Zhizhe Tianxia, Shanghai Pinzhi Education Technology Co., Ltd., or Shanghai Pinzhi, and Shanghai Biban Network Technology Co., Ltd., or Shanghai Biban. Investors in our ADSs are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

A series of contractual agreements, including exclusive business cooperation agreement or exclusive technology development, consultancy and services agreements, shareholders’ rights entrustment agreement or powers of attorney, share pledge agreements, and exclusive option agreements, have been entered into by and among our PRC subsidiaries, our VIEs, and their respective shareholders. There is no material difference between the effect of each set of contractual arrangements. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of our VIEs, and we have consolidated the financial results of these companies in our consolidated financial statements. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with Our VIEs and Their Shareholders.”

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs and their subsidiaries and we may incur substantial costs to enforce the terms of the arrangements. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—Our contractual arrangements may not be as effective in providing operational control as direct ownership and shareholders of our VIEs may fail to perform their obligations under our contractual arrangements.” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—The equity holders, directors, and executive officers of our VIEs, as well as our employees who execute other strategic initiatives may have potential conflicts of interest with our company.”

There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with our VIEs and their nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or, if adopted, what they would provide. If we or any of our VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required licenses, permits, registrations, or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating our business do not comply 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” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—Our current corporate structure and business operations may be affected by the Foreign Investment Law.”

1

Our corporate structure is subject to risks associated with our contractual arrangements with our VIEs. If the PRC government deems that our contractual arrangements with our VIEs 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 or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our Cayman Islands holding company, our PRC subsidiaries and VIEs and their subsidiaries, and investors of our company face uncertainty with respect to potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and our company as a whole. For a detailed description of the risks associated with our corporate structure, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.”

We face various risks and uncertainties relating to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on overseas offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a stock exchange in the United States or other foreign country. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks relating to doing business in China, see “Item 3.D. Key Information—Risk Factors—Risks Relating to Doing Business in China.”

The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature, such as data security or anti-monopoly related regulations, may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s oversight over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The legal system in China embodies uncertainties which could limit the legal protections available to us or impose additional requirements and obligations on our business, and PRC laws, rules, and regulations can evolve quickly, which may materially and adversely affect our business, financial condition, and results of operations.”

The Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states that if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC should prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is not currently inspected by the PCAOB, which may impact our ability to remain listed on a United States or other foreign exchange. The related risks and uncertainties could cause the value of our ADSs to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives our investors with the benefits of such inspections” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Our ADSs will be prohibited from trading in the United States under the HFCAA in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or in 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

2

Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiaries and VIEs in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and VIEs and their subsidiaries have obtained the requisite licenses, permits, and registrations from the PRC government authorities that are material for their business operations in China, including, among others, Value-Added Telecommunication Business Operation Licenses, or ICP Licenses, Internet Cultural Business Licenses, or ICB Licenses, Radio and Television Program Production and Operation Licenses, an Internet Medicine Information Services Qualification, and Publication Operation Licenses. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, registrations, filings or approvals for our business operations in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—If we fail to obtain and maintain the requisite licenses and approvals required under the complex regulatory environment applicable to our businesses in China, 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.”

Furthermore, in connection with our issuance of securities to foreign investors, under current PRC laws, regulations, and rules, as of the date of this annual report, we, our PRC subsidiaries and our VIEs, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not been asked to obtain or denied such permissions by any PRC authority.

However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas by and/or foreign investment in China-based issuers. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s oversight over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

Cash and Asset Flows Through Our Organization

Zhihu Inc. is a holding company with no operations of its own. We conduct our operations in China primarily through our subsidiaries and VIEs in China. As a result, although other means are available for us to obtain financing at the holding company level, Zhihu Inc.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and service fees paid by our VIEs and their subsidiaries. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Zhihu Inc. In addition, under PRC laws and regulations, our PRC subsidiaries are permitted to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Furthermore, our PRC subsidiaries and VIEs and their subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Holding Company Structure.”

Our VIEs may transfer cash to the relevant WFOE by paying service fees according to the exclusive business cooperation agreement or exclusive technology development, consultancy and services agreements. In 2019, 2020, and 2021, the total amount of such service fees that VIEs paid to the relevant WFOE under the relevant agreements was RMB215.2 million, RMB159.7 million and RMB45.6 million, respectively.

Under PRC laws and regulations, our PRC subsidiaries and VIEs and their subsidiaries are subject to certain restrictions with respect to payment of dividends or otherwise transfers of any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the PRC State Administration of Foreign Exchange, or SAFE. These restrictions are benchmarked against the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of our VIEs in which we have no legal ownership. As of December 31, 2019, 2020, and 2021, the total amount of such restriction to which our PRC subsidiaries and VIEs and their subsidiaries are subject was RMB143.5 million, RMB754.4 million, and RMB3.6 billion (US$560.7 million), respectively. For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in China—We principally rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have. Any limitation on the ability of our PRC subsidiaries to make payments to us could materially and adversely affect our ability to conduct our business or financial condition.”

3

Under PRC laws, Zhihu Inc. may fund our PRC subsidiaries only through capital contributions or loans, and fund our VIEs or their subsidiaries only through loans, subject to satisfaction of applicable government registration and approval requirements. As of December 31, 2019, 2020, and 2021, the aggregate amount of capital contribution by Zhihu Inc. to our intermediate holding companies and subsidiaries was RMB4.5 billion, RMB5.9 billion, and RMB10.5 billion (US$1.7 billion), respectively, and the outstanding balance of the principal amount of loans by Zhihu Inc. to our VIEs and their subsidiaries was RMB45.7 million, RMB45.7 million, and RMB51.7 million (US$8.1 million), respectively.

In 2019, 2020, and 2021, no assets other than cash were transferred through our organization.

Zhihu Inc. has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.”

A.[reserved]

Selected Financial Data

The following selected consolidated statements of operations data and selected consolidated statements of cash flow data for the years ended December 31, 2019, 2020, and 2021 and the selected consolidated balance sheet data as of December 31, 2020 and 2021 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. Our historical results are not necessarily indicative of results expected for future periods. You should read this selected financial data together with our audited consolidated financial statements and the related notes and information under “Item 5. Operating and Financial Review and Prospects” in this annual report. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.

4

The following table sets forth our selected consolidated statements of operations data for the years indicated.

For the Year Ended December 31,

2019

2020

2021

 

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

Selected Consolidated Statements of Operations Data:

 

  

 

  

 

  

 

  

Revenue

 

670,511

 

1,352,196

 

2,959,324

 

464,382

Cost of revenue

 

(358,241)

 

(594,399)

 

(1,405,423)

 

(220,542)

Gross profit

 

312,270

 

757,797

 

1,553,901

 

243,840

Selling and marketing expenses

 

(766,465)

 

(734,753)

 

(1,634,733)

 

(256,525)

Research and development expenses

 

(351,012)

 

(329,763)

 

(619,585)

 

(97,226)

General and administrative expenses

 

(253,268)

 

(296,162)

 

(690,292)

 

(108,322)

Total operating expenses

 

(1,370,745)

 

(1,360,678)

 

(2,944,610)

 

(462,073)

Loss from operations

 

(1,058,475)

 

(602,881)

 

(1,390,709)

 

(218,233)

Investment income

 

25,035

 

56,087

 

59,177

 

9,286

Interest income

 

28,669

 

24,751

 

31,305

 

4,912

Fair value change of financial instrument

 

7,132

 

(68,818)

 

27,846

 

4,370

Exchange (losses)/gains

 

(9,216)

 

62,663

 

(16,665)

 

(2,615)

Others, net

 

2,675

 

11,728

 

(4,391)

 

(689)

Loss before income tax

 

(1,004,180)

 

(516,470)

 

(1,293,437)

 

(202,969)

Income tax expense

 

(40)

 

(1,080)

 

(5,443)

 

(854)

Net loss

 

(1,004,220)

 

(517,550)

 

(1,298,880)

 

(203,823)

Net loss per share

 

  

 

  

 

  

 

  

Basic

 

(22.99)

 

(18.36)

 

(6.12)

 

(0.96)

Diluted

 

(22.99)

 

(18.36)

 

(6.12)

 

(0.96)

Weighted average shares used in net loss per share

 

  

 

  

 

  

 

  

Basic

 

62,249,946

 

65,279,970

 

240,174,108

 

240,174,108

Diluted

 

62,249,946

 

65,279,970

 

240,174,108

 

240,174,108

5

The following table sets forth our selected consolidated balance sheet data as of the dates indicated.

As of December 31,

2020

2021

    

RMB

    

RMB

    

US$

(in thousands)

Selected Consolidated Balance Sheet Data:

 

  

 

  

 

  

Cash and cash equivalents

 

957,820

 

2,157,161

 

338,506

Term deposits

 

1,092,921

 

2,815,509

 

441,815

Short-term investments

 

1,046,000

 

2,239,596

 

351,441

Total current assets

 

3,720,166

 

8,334,165

 

1,307,813

Term deposits

 

 

159,393

 

25,012

Intangible assets, net

 

23,478

 

68,308

 

10,719

Total non-current assets

 

41,275

 

471,000

 

73,909

Total assets

 

3,761,441

 

8,805,165

 

1,381,722

Accounts payable and accrued liabilities

 

501,848

 

1,026,534

 

161,086

Salary and welfare payables

 

231,847

 

313,676

 

49,223

Contract liabilities

 

159,995

 

239,757

 

37,623

Total current liabilities

 

1,014,568

 

1,897,714

 

297,793

Net current assets

 

2,705,598

 

6,436,451

 

1,010,020

Total non-current liabilities

 

 

169,302

 

26,567

Total liabilities

 

1,014,568

 

2,067,016

 

324,360

Net assets

 

2,746,873

 

6,738,149

 

1,057,362

Total mezzanine equity

 

7,891,348

 

 

Total shareholders’ (deficit)/equity

 

(5,144,475)

 

6,738,149

 

1,057,362

Total liabilities, mezzanine equity and shareholders’ (deficit)/equity

 

3,761,441

 

8,805,165

 

1,381,722

The following table sets forth our selected consolidated statements of cash flow data for the years indicated.

For the Year Ended December 31,

2019

2020

2021

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

Selected Consolidated Statements of Cash Flow Data:

 

  

 

  

 

  

 

  

Net cash used in operating activities

 

(715,522)

 

(244,421)

 

(440,234)

 

(69,084)

Net cash (used in)/generated from investing activities

 

(2,102,488)

 

430,113

 

(3,136,503)

 

(492,185)

Net cash generated from financing activities

 

2,997,575

 

9,286

 

4,876,247

 

765,190

Effect of exchange rate changes on cash and cash equivalents

 

7,491

 

(137,508)

 

(100,169)

 

(15,718)

Net increase in cash and cash equivalents

 

187,056

 

57,470

 

1,199,341

 

188,203

Cash and cash equivalents at the beginning of the year

 

713,294

 

900,350

 

957,820

 

150,303

Cash and cash equivalents at the end of the year

 

900,350

 

957,820

 

2,157,161

 

338,506

Financial Information Relating to Our VIEs

The following tables present the condensed consolidating schedules for our consolidated variable interest entities and other entities for the years and as of the dates indicated.

6

Selected Condensed Consolidated Statements of Operations and Comprehensive Loss Data

    

For the Year Ended December 31, 2021

    

    

    

WFOEs as

    

    

    

Parent

Other

Primary

VIEs and Their

Consolidated

Company

Subsidiaries

Beneficiaries

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Inter-company revenues(1)(4)

 

85,835

 

1,817,488

 

196

 

(1,903,519)

 

Third-party revenues

 

2,187,253

 

6,039

 

766,032

 

 

2,959,324

Inter-company cost(1) (4)

 

(1,487,138)

 

(85,844)

 

(330,486)

 

1,903,468

 

Third-party cost

 

(444,113)

 

(587,920)

 

(373,390)

 

 

(1,405,423)

Gross profit

 

341,837

 

1,149,763

 

62,352

 

(51)

 

1,553,901

Others, net

 

11,770

 

(13,075)

 

(3,137)

 

51

 

(4,391)

Share of loss of subsidiaries and VIEs and VIEs' subsidiaries(2)

(1,268,461)

 

(1,308,592)

 

(22,746)

 

 

2,599,799

 

Loss before income tax

(1,298,880)

 

(1,267,933)

 

(1,308,592)

 

(17,831)

 

2,599,799

 

(1,293,437)

Income tax expense

 

(2,008)

 

 

(3,435)

 

 

(5,443)

Net loss

(1,298,880)

 

(1,269,941)

 

(1,308,592)

 

(21,266)

 

2,599,799

 

(1,298,880)

Foreign currency translation adjustments

(143,190)

(65,566)

65,566

(143,190)

Accretions of convertible redeemable preferred shares to redemption value

(170,585)

 

 

 

 

 

(170,585)

Comprehensive loss attributable to Zhihu Inc.’s shareholders

(1,612,655)

 

(1,335,507)

 

(1,308,592)

 

(21,266)

 

2,665,365

 

(1,612,655)

For the Year Ended December 31, 2020

    

    

    

WFOE as

    

    

    

Parent

Other

Primary

VIE and its

Consolidated

Company

Subsidiaries

Beneficiary

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Inter-company revenues(1)(4)

 

 

30,547

 

991,771

 

1,113

 

(1,023,431)

 

Third-party revenues

 

 

982,821

 

442

 

368,933

 

 

1,352,196

Inter-company cost(1)(4)

 

 

(804,374)

 

(31,064)

 

(187,993)

 

1,023,431

 

Third-party cost

 

 

(101,203)

 

(315,598)

 

(177,598)

 

 

(594,399)

Gross profit

 

 

107,791

 

645,551

 

4,455

 

 

757,797

Share of loss of subsidiaries and VIE and VIE's subsidiaries(2)

 

(507,712)

 

(524,073)

 

(13,422)

 

 

1,045,207

 

Loss before income tax

 

(517,550)

 

(513,520)

 

(524,073)

 

(6,534)

 

1,045,207

 

(516,470)

Income tax expense

 

 

(31)

 

 

(1,049)

 

 

(1,080)

Net loss

 

(517,550)

 

(513,551)

 

(524,073)

 

(7,583)

 

1,045,207

 

(517,550)

Foreign currency translation adjustments

(143,326)

(98,859)

98,859

(143,326)

Accretions of convertible redeemable preferred shares to redemption value

 

(680,734)

 

 

 

 

 

(680,734)

Comprehensive loss attributable to Zhihu Inc.’s shareholders

 

(1,341,610)

 

(612,410)

 

(524,073)

 

(7,583)

 

1,144,066

 

(1,341,610)

7

Selected Condensed Consolidated Statements of Operations and Comprehensive Loss Data (Continued)

For the Year Ended December 31, 2019

    

    

    

WFOE as

    

    

    

Parent

Other

Primary

VIE and its

Consolidated

Company

Subsidiaries

Beneficiary

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Inter-company revenues(1)(4)

 

 

26,744

 

395,960

 

438

 

(423,142)

 

Third-party revenues

 

 

567,074

 

1,280

 

102,157

 

 

670,511

Inter-company cost(1)(4)

 

 

(364,471)

 

(26,743)

 

(31,928)

 

423,142

 

Third-party cost

 

 

(59,696)

 

(226,422)

 

(72,123)

 

 

(358,241)

Gross profit

 

 

169,651

 

144,075

 

(1,456)

 

 

312,270

Share of loss of subsidiaries and VIE and VIE's subsidiaries(2)

 

(1,000,119)

 

(1,010,630)

 

(15,943)

 

 

2,026,692

 

Loss before income tax

 

(1,004,220)

 

(1,004,310)

 

(1,010,630)

 

(11,712)

 

2,026,692

 

(1,004,180)

Income tax expense

 

 

(40)

 

 

 

 

(40)

Net loss

 

(1,004,220)

 

(1,004,350)

 

(1,010,630)

 

(11,712)

 

2,026,692

 

(1,004,220)

Foreign currency translation adjustments

(4,021)

(14,494)

14,494

(4,021)

Accretions of convertible redeemable preferred shares to redemption value

 

(426,781)

 

 

 

 

 

(426,781)

Comprehensive loss attributable to Zhihu Inc.’s shareholders

 

(1,435,022)

 

(1,018,844)

 

(1,010,630)

 

(11,712)

 

2,041,186

 

(1,435,022)

8

Selected Condensed Consolidated Balance Sheet Data

As of December 31, 2021

    

    

    

WFOEs as

    

    

    

Parent

Other

Primary

VIEs and Their

Consolidated

Company

Subsidiaries

Beneficiaries

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Cash and cash equivalents

 

94,427

 

478,265

 

1,525,156

 

59,313

 

 

2,157,161

Term deposits

 

 

2,815,509

 

 

 

 

2,815,509

Short-term investments

 

 

941,909

 

863,182

 

434,505

 

 

2,239,596

Trade receivable, net

 

 

771,225

 

2,121

 

58,282

 

 

831,628

Amounts due from related parties

 

 

5,818

 

4,407

 

7,971

 

 

18,196

Amounts due from Group companies(3) (4)

 

12,711

 

62,646

 

1,553,054

 

7,742

 

(1,636,153)

 

Prepayments and other current assets

 

42,232

 

33,149

 

145,941

 

50,753

 

 

272,075

Total current assets

 

149,370

 

5,108,521

 

4,093,861

 

618,566

 

(1,636,153)

 

8,334,165

Property and equipment, net

 

 

2,700

 

6,608

 

557

 

 

9,865

Intangible assets, net

 

 

 

2,122

 

66,186

 

 

68,308

Goodwill

 

 

 

 

73,663

 

 

73,663

Investment in subsidiaries and VIEs and VIEs' subsidiaries(2)

 

6,666,713

 

3,260,373

 

7,708

 

 

(9,934,794)

 

Long-term investments

 

 

19,127

 

 

 

 

19,127

Term deposits

 

 

159,393

 

 

 

 

159,393

Right-of-use assets

 

 

14,504

 

106,130

 

5,878

 

 

126,512

Other non-current assets

 

 

791

 

13,098

 

243

 

 

14,132

Total non-current assets

 

6,666,713

 

3,456,888

 

135,666

 

146,527

 

(9,934,794)

 

471,000

Total assets

 

6,816,083

 

8,565,409

 

4,229,527

 

765,093

 

(11,570,947)

 

8,805,165

Accounts payable and accrued liabilities

 

30,828

 

455,139

 

420,510

 

120,057

 

 

1,026,534

Salary and welfare payables

 

 

29,956

 

281,247

 

2,473

 

 

313,676

Taxes payable

 

 

3,359

 

60,317

 

2,508

 

 

66,184

Contract liabilities

 

 

108,994

 

343

 

130,420

 

 

239,757

Amounts due to related parties

 

 

 

67,288

 

16,303

 

 

83,591

Amounts due to Group companies(3) (4)

 

54,601

 

1,139,697

 

21,444

 

420,411

 

(1,636,153)

 

Short term lease liabilities

 

 

5,927

 

32,985

 

1,613

 

 

40,525

Other current liabilities

 

 

89,204

 

15,706

 

22,537

 

 

127,447

Total current liabilities

 

85,429

 

1,832,276

 

899,840

 

716,322

 

(1,636,153)

 

1,897,714

Long term lease liabilities

 

 

9,130

 

69,314

 

3,689

 

 

82,133

Deferred tax liabilities

 

 

 

 

14,030

 

 

14,030

Other non-current liabilities

 

 

64,700

 

 

8,439

 

 

73,139

Total non-current liabilities

 

 

73,830

 

69,314

 

26,158

 

 

169,302

Total liabilities

 

85,429

 

1,906,106

 

969,154

 

742,480

 

(1,636,153)

 

2,067,016

Total Zhihu Inc.’s shareholders’ equity

 

6,730,654

 

6,651,808

 

3,260,373

 

22,613

 

(9,934,794)

 

6,730,654

Noncontrolling interests

 

 

7,495

 

 

 

 

7,495

Total shareholders’ equity

 

6,730,654

 

6,659,303

 

3,260,373

 

22,613

 

(9,934,794)

 

6,738,149

Total liabilities and shareholders’ equity

 

6,816,083

 

8,565,409

 

4,229,527

 

765,093

 

(11,570,947)

 

8,805,165

9

Selected Condensed Consolidated Balance Sheet Data (Continued)

As of December 31, 2020

    

    

    

WFOE as

    

    

    

Parent

Other

Primary

VIE and its

Consolidated

Company

Subsidiaries

Beneficiary

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Cash and cash equivalents

 

6,834

 

845,198

 

19,301

 

86,487

 

 

957,820

Term deposits

 

 

1,092,921

 

 

 

 

1,092,921

Short-term investments

 

 

207,035

 

787,486

 

51,479

 

 

1,046,000

Trade receivable, net

 

 

453,039

 

700

 

32,307

 

 

486,046

Amounts due from related parties

 

 

5,420

 

360

 

8,063

 

 

13,843

Amounts due from Group companies(3) (4)

 

11,530

 

74,839

 

321,610

 

6,587

 

(414,566)

 

Prepayments and other current assets

 

183

 

23,781

 

76,220

 

23,352

 

 

123,536

Total current assets

 

18,547

 

2,702,233

 

1,205,677

 

208,275

 

(414,566)

 

3,720,166

Property and equipment, net

 

 

840

 

7,212

 

53

 

 

8,105

Intangible assets, net

 

 

 

2,430

 

21,048

 

 

23,478

Investment/(deficit) in subsidiaries and VIE and VIE’s subsidiaries(2)

 

2,760,778

 

656,208

 

(58,307)

 

 

(3,358,679)

 

Right-of-use assets

 

 

1,180

 

2,061

 

 

 

3,241

Other non-current assets

 

 

241

 

6,180

 

30

 

 

6,451

Total non-current assets

 

2,760,778

 

658,469

 

(40,424)

 

21,131

 

(3,358,679)

 

41,275

Total assets

 

2,779,325

 

3,360,702

 

1,165,253

 

229,406

 

(3,773,245)

 

3,761,441

Accounts payable and accrued liabilities

 

5,500

 

235,618

 

209,409

 

51,321

 

 

501,848

Salary and welfare payables

 

 

15,538

 

214,772

 

1,537

 

 

231,847

Taxes payable

 

 

3,107

 

3,372

 

587

 

 

7,066

Contract liabilities

 

 

82,803

 

200

 

76,992

 

 

159,995

Amounts due to related parties

 

 

 

41,041

 

4,942

 

 

45,983

Amounts due to Group companies(3) (4)

 

26,952

 

235,311

 

30,926

 

121,377

 

(414,566)

 

Short term lease liabilities

 

1,013

 

1,880

 

 

 

2,893

Other current liabilities

 

40,388

 

7,445

 

17,103

 

 

64,936

Total current liabilities

 

32,452

 

613,778

 

509,045

 

273,859

 

(414,566)

 

1,014,568

Total liabilities

 

32,452

 

613,778

 

509,045

 

273,859

 

(414,566)

 

1,014,568

Total mezzanine equity

 

7,891,348

 

 

 

 

 

7,891,348

Total shareholders’ (deficit)/equity

 

(5,144,475)

 

2,746,924

 

656,208

 

(44,453)

 

(3,358,679)

 

(5,144,475)

Total liabilities, mezzanine equity and shareholders’ (deficit)/equity

 

2,779,325

 

3,360,702

 

1,165,253

 

229,406

 

(3,773,245)

 

3,761,441

10

Selected Condensed Consolidated Statements of Cash Flow Data

    

For the Year Ended December 31, 2021

    

    

    

WFOEs as

    

    

    

Parent

Other

Primary

VIEs and Their

Consolidated

Company

Subsidiaries

Beneficiaries

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Purchases of goods and services from Group Companies(1)

 

(676,191)

 

(95,561)

 

(45,579)

 

817,331

 

Sales of goods and services to Group Companies(1)

 

115,561

 

701,770

 

 

(817,331)

 

Other operating/administrative activities with external parties

(3,182)

 

1,490,154

 

(2,359,237)

 

432,031

 

 

(440,234)

Net cash provided by/(used in) operating activities

(3,182)

 

929,524

 

(1,753,028)

 

386,452

 

 

(440,234)

Purchases of short-term investments

 

(2,532,000)

 

(3,016,000)

 

(870,000)

 

 

(6,418,000)

Proceeds of maturities of short-term investments

 

1,804,592

 

2,940,000

 

490,000

 

 

5,234,592

Purchases of term deposits

(64,596)

 

(3,719,638)

 

(1,162,729)

 

 

 

(4,946,963)

Proceeds from withdrawal of term deposits

64,707

 

1,788,963

 

1,164,726

 

 

 

3,018,396

Investment in subsidiaries and VIEs and VIEs' subsidiaries(2)

(4,695,120)

 

(3,301,321)

 

 

 

7,996,441

 

Other investing activities with external parties

(19,380)

 

(2,571)

 

31,049

 

(33,626)

 

 

(24,528)

Net cash used in investing activities

(4,714,389)

 

(5,961,975)

 

(42,954)

 

(413,626)

 

7,996,441

 

(3,136,503)

Proceeds from issuance of Class A ordinary shares upon the completion of IPO, net of issuance cost

4,853,293

 

 

 

 

 

4,853,293

Investment from Group Companies(2)

 

4,695,120

 

3,301,321

 

 

(7,996,441)

 

Other financing activities with external parties

15,544

 

 

7,410

 

 

 

22,954

Net cash provided by financing activities

4,868,837

 

4,695,120

 

3,308,731

 

 

(7,996,441)

 

4,876,247

Effect of exchange rate changes on cash and cash equivalents

(63,673)

 

(29,602)

 

(6,894)

 

 

 

(100,169)

Net increase/(decrease) in cash and cash equivalents

87,593

 

(366,933)

 

1,505,855

 

(27,174)

 

 

1,199,341

Cash and cash equivalents at beginning of the year

6,834

 

845,198

 

19,301

 

86,487

 

 

957,820

Cash and cash equivalents at end of the year

94,427

 

478,265

 

1,525,156

 

59,313

 

 

2,157,161

11

Selected Condensed Consolidated Statements of Cash Flow Data (Continued)

    

For the Year Ended December 31, 2020

    

    

    

WFOE as

    

    

    

Parent

Other

Primary

VIE and its

Consolidated

Company

Subsidiaries

Beneficiary

Subsidiaries

Eliminations

Total

RMB

(in thousands)

Purchases of goods and services from Group Companies(1)

 

(965,110)

 

(35,230)

 

(159,651)

 

1,159,991

 

Sales of goods and services to Group Companies(1)

 

35,230

 

1,124,761

 

 

(1,159,991)

 

Other operating/administrative activities with external parties

(2,606)

 

837,392

 

(1,304,643)

 

225,436

 

 

(244,421)

Net cash provided by/(used in) operating activities

(2,606)

 

(92,488)

 

(215,112)

 

65,785

 

 

(244,421)

Purchases of short-term investments

 

(1,013,104)

 

(4,965,000)

 

(175,000)

 

 

(6,153,104)

Proceeds of maturities of short-term investments

 

1,199,676

 

5,230,000

 

165,000

 

 

6,594,676

Purchases of term deposits

 

(2,328,717)

 

 

 

 

(2,328,717)

Proceeds from withdrawal of term deposits

356,580

 

1,962,621

 

 

 

 

2,319,201

Proceeds from repayments of loans to Group companies

978,735

 

 

45,000

 

 

(1,023,735)

 

Loans to Group companies

 

 

(70,000)

 

 

70,000

 

Investment in subsidiaries and VIE and VIE's subsidiaries(2)

(1,407,173)

 

(893,805)

 

 

 

2,300,978

 

Other investing activities with external parties

 

(586)

 

(1,357)

 

 

 

(1,943)

Net cash provided by/(used in) investing activities

(71,858)

 

(1,073,915)

 

238,643

 

(10,000)

 

1,347,243

 

430,113

Repayments of loans from Group companies